Healthcare Services Group Inc (HCSG, Financial) released its Q3 2023 earnings report on October 25, 2023. Despite reporting a net loss, the company has raised its cash flow expectations for the second half of 2023, reflecting a positive outlook for the remainder of the year.
Financial Highlights
The company reported a revenue of $411.4 million and an adjusted revenue of $424.0 million, which aligns with their expectations. The net income and diluted EPS were reported at ($5.5) million and ($0.07) respectively. However, the adjusted net income and adjusted diluted EPS showed a promising increase of 13.7% and 13.3% respectively over Q3 2022, standing at $12.5 million and $0.17.
Adjusted EBITDA was reported at $23.2 million, marking a 10.2% increase over Q3 2022. The cash flow from operations was $2.9 million, while the adjusted cash flow from operations stood at $18.0 million, a significant 208.9% increase over Q3 2022.
Increased Expectations
Based on the performance in Q3, HCSG has raised its expectations for the second half of 2023 cash flow from operations from a range of $20.0 million to $30.0 million, to $35.0 million to $45.0 million.
CEO Commentary
CEO Ted Wahl commented on the company's performance, stating,
We entered the second half of the year with three clear priorities and made substantial progress on all three during the quarter. We look forward to ending the year on a strong note and expect these positive operating, cash collection, and new business trends to continue into 2024.”
Balance Sheet and Liquidity
As of the end of the third quarter, the company had a current ratio of 2.8 to 1, cash and marketable securities of $121.3 million, and a $500.0 million credit facility, which expires in November 2027. Additionally, Q3 cash flow and adjusted cash flow from operations were $2.9 million and $18.0 million, respectively.
Looking Forward
Despite the challenges faced in Q3, the company remains optimistic about its performance in the coming quarters. The company's ability to manage costs, strong cash collections, and successful execution of its organic growth strategy are expected to contribute to its continued growth into 2024.
