With a significant miss on the bottom line in its latest quarter, Healthcare Services Group (HCSG 2.01%) made for a sickly stock on Wednesday. The shares dived by 14%, even though the quarter was actually a mixed one for the company.
Healthcare Services Group's third-quarter results, published Wednesday morning, saw the company book revenue just shy of $416 million, representing a nearly 5% decline from the same quarter last year. Net income suffered a steeper decline, a vertigo-inducing 65%, to fall to just over $9.5 million ($0.13 per share).
While that top line exceeded the average analyst estimate of $410.2 million, the collective expectation for per-share net profit was $0.26.
During the quarter, Healthcare Services Group was grappling with a set of issues that hurt its business. The company quoted CEO Ted Wahl as saying that the "third quarter results reflect the impact of the supply chain disruption, labor availability, and significant inflation in the cost of goods that many industries have experienced."
He also cited the delta variant surge in the coronavirus and a "broad workforce exit" that affected nursing homes, a key healthcare client base for the company.
Despite the lackluster quarter, Healthcare Services Group says it's heading for better times. Wahl said that "we remain confident in the longer-term growth outlook for the Company given our market leadership, efficient operating model, and attractive demographics."
As if to reinforce confidence in its future, the company also made the usual incremental increase in its quarterly dividend. The new payout is 0.6% higher than its predecessor at $0.21 per share, and will be paid on Dec. 23 to stockholders of record as of Nov. 19. It would yield 4.2% at the current share price.