Healthcare Services Stock Gains After Q1 Earnings Beat

• Healthcare Services Group, Inc. (NASDAQ:HCSG) reported first-quarter FY22 revenue growth of 4.7% year-over-year to $426.8 million, beating the consensus of $424.77 million.
• Segment revenue: Housekeeping & Laundry $201.7 million and Dining & Nutrition $225.1 million.
• Operating profit declined by 42.8% Y/Y to $17.81 million, and the margin contracted by 346 bps to 4.2%.
• EPS was $0.15, above the consensus of $0.06.
• Housekeeping & laundry and dining & nutrition segment margins were 10.1% and 4.2%, respectively.
• Cash outflow from operations for the quarter was $30.2 million.
• Dividend: HCSG declared a quarterly cash dividend of $0.2125 per common share, payable on June 24, 2022, to shareholders of record on May 20, 2022.
• "We remain actively engaged with our customers to modify our service agreements to adjust for the extraordinary inflation experienced over the past year, as well as account for future inflation on a real-time basis. We expect these service agreement modifications to be completed by the end of Q2, with a goal of exiting the year with cost of services in line with our historical target of 86%," commented CEO Ted Wahl.
• Price Action: HCSG shares are trading higher by 3.55% at $17.19 during the pre-market session on Wednesday.