HCSG 2026年第3四半期決算説明会：NEXDINEが2027年の成長見通し引き上げを後押し

主なポイント

• 2026年第3四半期の売上高は4億7,960万ドルとなり、HCSGにとって過去10四半期で9回目の四半期ベース増収を記録しました。純利益は2,490万ドル（希薄化後1株当たり0.36ドル）でした。
• サービス原価は3億9,920万ドル（売上高比83.2%）で、堅実な業務執行と貸倒損失の減少が寄与しました。経営陣は長期的ターゲットとして引き続き売上高比約86%を目指しています。
• HCSGは2026年第4四半期の売上高を5億3,500万ドル〜5億4,500万ドルと予想しています。経営陣は、1桁台半ばのオーガニック成長とNEXDINEによる貢献を含め、2027年の売上高成長率の見通しを1桁台半ばから10%台前半へと引き上げました。
• HCSGは10月6日にNEXDINE Hospitalityを買収しました。経営陣は、同事業が同等の利益率で年間1億5,000万ドル以上の売上高に貢献し、収益に即座にプラス寄与すると見込んでいます。
• 同社は、破産申請前のGenesisに対する債権に関連して610万ドルの回収を計上しました。追加回収の可能性もありますが、その金額および時期は現時点で合理的に見積もることができません。
• HCSGの第3四半期末時点の現金および有価証券は2億430万ドル、未利用の与信枠（クレジット・ファシリティ）は3億ドルでした。年初来の自社株買い総額は5,660万ドルに達しました。

主要財務データ

事業および業績ハイライト

新規顧客の獲得と90%を超える顧客維持率が売上成長を後押ししました。経営陣は、当四半期のサービス利益率向上について、顧客体験の向上、システム遵守、規制遵守、および予算規律の強化によるものと説明しました。

貸倒損失の改善もコスト構成を支えました。HCSGは、貸倒損失費用の相殺としてGenesisからの回収金610万ドルを計上しました。これにより、純貸倒益は360万ドルとなりました。Genesisの回収金を除いた貸倒損失費用は約250万ドルで、売上高の0.5%未満でした。

NEXDINEの買収により、HCSGのシニアリビングおよびホスピタリティ市場への展開が拡大します。経営陣はNEXDINEを2桁成長の機会と説明し、その契約は通常、食材やその他の価格上昇分を顧客に転嫁できる仕組みになっていると述べました。社内の統合マイルストーンは年内に完了する見込みですが、NEXDINEは独自のブランドアイデンティティと企業文化を維持します。

HCSGは、エネルギーおよびサプライ市場における継続的な変動が引き続き注力領域であると述べました。経営陣は、ベンダーとの関係や改定された契約枠組みにより、調達の柔軟性が確保され、避けられないコスト上昇分の転嫁が可能になると考えています。

経営陣の見通し（ガイダンス）

経営陣は、第4四半期の成長にはNEXDINEと継続的なオーガニックな成長モメンタムの双方が反映されるはずだと述べました。2027年の見通しには、経営管理能力の開発時期や顧客のサービス開始時期の希望が織り込まれています。

同社は、買収のために9,000万ドル以上の現金を使用したことによる受取利息の減少効果を含めても、NEXDINEがEPSに即座にプラス寄与すると見込んでいます。無形資産の償却や条件付対価を含む買収会計項目は、現在も評価中です。

リスクと注視すべきポイント

• 貸倒損失や労災保険費用は変動する可能性があります。経営陣は、直近の業績が今後の四半期の業績を予測するものではないと注意を促しました。
• HCSGが86%のサービス原価目標を維持しているのは、持続可能なより低い水準を確立するための十分な過去のデータがまだ揃っていないためです。
• Genesisからの追加回収は、債権の承認、届出債権総額、および分配可能な資産に依存します。経営陣は債権全体の100%回収は見込んでいません。
• 販売管理費のレバレッジ効果は、従業員、研修、テクノロジーへの投資に加え、法務、アドバイザリー、その他のM&A関連費用によって定期的に相殺される可能性があります。
• NEXDINEの買収会計処理は未完了であり、最終的な無形資産の償却費やアーンアウト負債は未確定のままです。

アナリストQ&Aの要点

アナリストは、上方修正された2027年の見通しの内訳に注目しました。経営陣は、新規案件のパイプラインと90%を超える顧客維持率に支えられ、10%台前半の売上高成長率には1桁台半ばのオーガニック成長にNEXDINEが加わっていることを確認しました。

利益率に関して、HCSGはサービス原価の好結果の主な要因は業務執行であり、貸倒損失の減少が追加の恩恵をもたらしたと述べました。経営陣は、貸倒損失や労災保険費用が引き続き予測困難であることを理由に、86%の目標の引き下げは見送りました。

NEXDINEに関して、経営陣は、買収した事業の利益率が同等であり、連結売上高の10%未満を占めるに過ぎないことから、モデリングにあたってはHCSGの既存の全社利益率プロファイルを継続して使用するよう投資家に助言しました。戦略的焦点は、HCSGのインフラ、顧客関係、ベンダーパートナーシップ、共有された業務慣行を通じてNEXDINEの成長を加速させることです。

経営陣はまた、報告されるキャッシュフローに対する人件費未払金の影響についても概要を説明しました。2026年第4四半期には約1,800万ドルのマイナス影響があり、続く2027年には第1四半期に約1,900万ドルのプラス影響、第2四半期に900万ドルのマイナス影響、第3四半期に1,300万ドルのプラス影響、第4四半期に1,800万ドルのマイナス影響が生じると予想しています。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to the Healthcare Services Group 2026 Third Quarter Earnings Call. [Operator Instructions] The matters discussed on today's conference call include forward-looking statements about the business prospects of Healthcare Services Group, Inc. For Healthcare Services Group, Inc.'s most recent forward-looking statement notice, please refer to the press release issued this morning, which can be found on our website, www.hcsgcorp.com. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the Risk Factors, MD&A and other sections of the annual report on Form 10-K and Healthcare Services Group, Inc.'s other SEC filings, and as indicated in our most recent forward-looking statements notice. Additionally, management will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in this morning's press release. I will now hand the conference over to Ted Wahl, Chief Executive Officer. Please go ahead.

Theodore Wahl

Good morning, everyone, and welcome to HCSG's Third Quarter 2026 Earnings Call. With me today are Matt McKee, our Chief Communications Officer; and Vikas Singh, our Chief Financial Officer. Earlier this morning, we released our third quarter results and plan on filing our 10-Q by the end of the week. Today, in my opening remarks, I'll discuss our Q3 highlights, share our perspective on the general business environment and discuss our outlook for Q4 and 2027. Matt will then provide a more detailed discussion on our Q3 results, and then Vikas will provide an update on our liquidity position and capital allocation progression. We will then open up the call for Q&A. So with that overview, I'd like to now discuss our Q3 highlights. Our strong third quarter results reflect the underlying strength of our business fundamentals and disciplined operational execution. New client wins and high retention rates drove our Q3 top line growth, our ninth sequential revenue increase over the past 10 quarters and our field-based team's operational excellence led to high-quality service outcomes and consistent margins. The acquisition of NEXDINE Hospitality on October 6 represents a significant milestone as it expands our footprint in the senior living and hospitality-driven markets and deepens our service capabilities across our family of brands. NEXDINE is expected to contribute over $150 million in annual revenue at comparable margins and be immediately accretive to earnings. We are thrilled to partner with our NEXDINE colleagues in their next phase of growth and innovation. On October 14, the bankruptcy court approved the sale of Genesis to 101 West State Street. The outcome of the Genesis restructuring creates stronger, healthier HCSG client facilities, provides balance sheet clarity for our stakeholders and enables future expansion opportunities with a growth-oriented client partner. Our current estimated recovery of pre-petition claims is $6.1 million. There remains a substantially higher potential upper range recovery subject to certain variables and contingencies, the resolutions of which are not known and cannot be reasonably estimated at this time. I'd like to now share our perspective on the general business environment. Overall industry fundamentals continue to gain strength, highlighted by the multi-decade demographic tailwind that is now beginning to work its way into the broader senior care environments. In 2026, the first of the baby boomers are turning 80. And by the year 2030, all 70 million-plus boomers will be over the age of 65, with the oldest being in their mid-80s. We expect the demand and opportunities for senior care service providers in the health and hospitality space, especially for those with compelling value propositions, durable business models and market-leading positions to only increase in the months and years ahead. Beyond our core industry trends, we continue to monitor the broader macro landscape, including sustained volatility in energy and supply markets. Our role as financial stewards for our clients remains our highest priority in this environment and the depth of our long-standing vendor partnerships provides the critical visibility to pivot sourcing and mitigate direct exposure. Ultimately, our enhanced contractual frameworks allow us to pass through unavoidable cost increases, ensuring we are preserving our margins while continuing to deliver market-leading service. Looking ahead to Q4 and 2027, the organic growth inflection we planned for and are now delivering sets the stage for fourth quarter revenue in the range of $535 million to $545 million. We expect to carry that positive momentum into 2027 and are raising our 2027 revenue growth outlook from the mid-single digits to low double digits. The strong demand for our services, our expanded operational expertise and extraordinary team members give us great confidence in our growth trajectory across health care, senior living and campus environments. And with the industry at the beginning of a multi-decade demographic tailwind, our unified health and hospitality platform strategically positions us to fulfill our vision and drive sustained long-term value creation for our shareholders. So with those introductory comments, I'll turn the call over to Matt.

Matthew McKee

Thanks, Ted, and good morning, everyone. Revenue was reported at $479.6 million. Segment revenues and margins for Environmental Services were reported at $217.2 million and 13.3%. Segment revenues and margins for Dietary Services were reported at $262.4 million and 8.7%. As Ted mentioned in his remarks, we are expecting Q4 revenue in the $535 million to $545 million range and low double-digit revenue growth in 2027. Cost of services was reported at $399.2 million or 83.2%. Cost of services benefited from strong service execution and lower bad debt expense.

Our goal is to manage the cost of services in the 86% range. SG&A was reported at $48.5 million. After adjusting for the $600,000 decrease in deferred compensation, SG&A was $49.1 million or 10.2%. Our goal is to manage SG&A in the 9.5% to 10.5% range with the longer-term goal of managing these costs into the 8.5% to 9.5% range. Our effective tax rate was reported at 26.2%, and we expect our 2026 effective tax rate to be approximately 25%. Net income and diluted earnings per share were reported at $24.9 million and $0.36 per share. I'd now like to turn the call over to Vikas.

Vikas Singh

Thank you, Matt, and good morning, everyone. Starting with our liquidity and cash flows. Our primary sources of liquidity are cash flows from operating activities, cash and cash equivalents and our revolving credit facility. Cash flow from operations was reported at $30.2 million. After adjusting for the $9.5 million decrease in the payroll accrual, cash flow from operations was $20.7 million. As of the end of the third quarter, we had cash and marketable securities of $204.3 million and an unutilized $300 million credit facility. We continue to execute on our capital allocation priorities across organic growth, M&A and share repurchases.

Our approach continues to be grounded and disciplined, and our balance sheet provides us the flexibility to pursue all of these priorities in tandem. With regards to share repurchases, we announced plans in February 2026 to further accelerate the pace of our share buybacks and target $75 million of our common stock over 12 months. In the third quarter, we repurchased $11.7 million of our common stock, bringing our year-to-date total to $56.6 million. We now have 7.7 million shares remaining under our share repurchase authorization. With that, we will conclude our opening remarks and open up the call for Q&A.

Operator

Your first question from the line of A.J. Rice with UBS.

質疑応答

James Kurek

This is James on for A.J. Congrats on the good quarter. I guess on the 2027 outlook calling for low double-digit top line growth, it seems like that's embedding some mid-single-digit organic growth. And if so, is there any likelihood that organic growth could accelerate potentially the high single digits just given that demographic tailwinds you've been pointing to in the nursing home industry and potential likelihood for that happening?

Theodore Wahl

James, you're right in that our outlook of low double digits is inclusive of that mid-single-digit growth target organically as well as NEXDINE. And that organic growth outlook is grounded in the positive top line momentum we expect to carry into the new year, along with the strength of our new business pipeline and then our assessment of the timing considerations related to management capacity and client start date preference. And we continue to successfully execute on the organic growth strategy by developing management candidates to support new business opportunities while retaining greater than 90% of our base business. So the momentum is very strong. And as far as additional updates on 2027 pipeline developments, as the pipeline matures, we will most certainly share those updates, but very strong momentum heading into the new year.

James Kurek

Okay. Great. And then maybe just one more. On the Genesis, there was a $6.1 million recovery you mentioned. Did that have any flow-through impact to 3Q earnings or expected to be a potential benefit in 4Q? And then maybe on the upper end range you called out, I think previously you had accounts receivable in the amount of $65 million. Would that be considered like the top end of potential recoveries? And any color there would be great.

Vikas Singh

Yes. The $6.1 million is flowing through the P&L like any other bad debt expense. In this case, it's a bad debt offset. It's a benefit to our cost of sales. So it is flowing through the P&L and falling down to the net income line on a post-tax basis. In terms of the higher end, the number you quoted is closer to our total exposure, and we do not expect like just about every other bankruptcy, to have 100% recovery here. Our expectation is what we've recognized at $6.1 million basically takes our write-off from 100% down to a level that's in excess of 90%. If we look back at our history of bankruptcies, it's fairly consistent in terms of what that percentage and number implies. But based on recent events, there is a possibility based on a number of contingencies that the number could go higher and our recoveries could improve, but we don't see a scenario where we will end up with 100%.

Operator

Your next question from the line of Sean Dodge with BMO Capital Markets.

Christopher Charlton

It's Chris Charlton on for Sean here. Maybe beginning on the cost. Cost of services was again well below the 86% target. Is there anything more you can share just on the strength from service execution versus the lower bad debt and how much of a benefit this was compared to the prior few quarters?

Matthew McKee

Yes. Chris, just at a high level, as we previously stated, the primary driver, as you note, is the overall service execution, right? I mean, from our perspective, the recent positive trends in customer experience, systems adherence, which is critical, both operationally and from a budgetary compliance perspective, that regulatory adherence and compliance and ultimately yielding budget discipline, all of those components are near-term margin drivers, and that carried into Q3. The expectation is that, that carries through the balance of 2026 and beyond. So that's why we remain confident in our ability to continue to manage cost of services in that 86% range. And we want to recognize the field-based management teams for executing to deliver on those expectations, and they certainly deserve a lot of credit for that execution. There's no guarantee, and it is a daily grind to deliver on all of those marks relative to the systems adherence, the compliance, the budgetary discipline, all of that yielding the great customer experience. So that said, this has always been the case that there's going to be some movement month-to-month, quarter-to-quarter and the timing of certain items can have an impact in any given quarter.

Vikas Singh

Yes. And Chris, to add on topics like bad debt expense. So if you think about this quarter, the bad debt benefit, it was not an expense this quarter, was $3.6 million, and that was driven by our Genesis assessment. But even if you include the Genesis assessment, the benefit of $6.1 million -- our bad debt expense for the quarter was only about $2.5 million or less than 0.5% of revenue. That is much lower than what we've been doing in the recent past. That number by itself would have been our lowest bad debt number in the last 6 quarters. So I think combined with the operational execution that Matt talked about, all the attempts and efforts we've been putting into managing bad debt have been yielding results. Now obviously, with bad debt, I constantly like to remind everyone that while we are very pleased with what we've achieved in the last few quarters, performance in any given quarter does not predict what will happen in the next one. And bad debt by its very nature can be a little more lumpy in terms of when we come across bad debt expenses. But keep in mind, our historical average in the pre-CECL era was between 1% to 1.5% of revenue. So the fact that without Genesis, we would have been sitting at 0.5% of revenue in bad debt expense does provide a nice uplift to our cost of sales story in addition to the operational excellence.

Christopher Charlton

Okay. Great. That's helpful. And then is there anything else you can share on NEXDINE's profile? I appreciate the commentary on the comparable margins, but how should we think about the growth trajectory of this business or its cash conversion? And then do the contracts here, do they have similar pass-through protections?

Theodore Wahl

Yes. I would start with the premise of the opportunity as a natural extension of our dining offering that favorably positions us in a compelling way within senior living, health care and the campus end market. Our businesses are highly complementary of one another, starting with our deeply aligned cultures and that we share a common belief system that's grounded in a greater purpose and serving, which are foundational to behaviors and expectations. So that's foundational to the partnership and to the acquisition. NEXDINE promotes an environment for an entrepreneurial spirit and promotion from within pathways very similar to HCSG, which then allows our differences in size, scale and end market focus to be a strength and a massive opportunity to learn from one another to share ideas and create even more possibilities for the future. So we are thrilled to have them as a partner in their future growth journey and as part of our unified health and hospitality platform. I think specifically to the growth opportunities that lie ahead, we do see them as a double-digit growth opportunity as we evaluate it currently. So that will add to our family of brands, including Campus Services Group and Meriwether Godsey on the campus side, NEXDINE with a focus more on the senior living and hospitality-driven markets and then Healthcare Services, HCSG is that core health care offering. So we're very well positioned for future growth, and we're excited about the possibilities.

Vikas Singh

Yes. On the contracts and the ability to pass along costs, NEXDINE is similar to how we've modified and upgraded our contracts over the last few years. They have contracts in place that allow them to pass along any price increase they encounter. And that system has been working fairly well for them if we look back over the last few years when there have been periods and pockets of elevated price movement with respect to food purchases.

Operator

Your next question from the line of Ryan Daniels with William Blair.

Matthew Mardula

This is Matthew Mardula on for Ryan. So I want to talk about the Q4 revenue guidance. So when I'm taking the midpoint of the Q4 revenue guidance, it implies roughly a $60 million sequential increase from Q3 compared with quarterly increases of about $8 million to $9 million over the past 2 quarters. So how much of the Q4 increase is coming from the acquisition versus organic segment? And then within the organic segment, it still seems like an increase compared to previous quarters. And of course, timing is going to be a big factor for revenue. But with that accelerated growth for the organic segment, what's giving you that confidence for Q4?

Theodore Wahl

Yes. To your point, Matthew, as far as the Q4 breakdown, our revenue range, $435 million (sic) [ $535 million ] to $445 million (sic) [ $545 million ] with NEXDINE contributing annual revenues in excess of $150 million, to that total. So the remainder of that growth in Q4 is organic business momentum. And as I mentioned earlier in the call, we have very strong momentum heading into Q4 and expect to carry that into the new year.

Matthew Mardula

Got it. And then with SG&A as a percentage of revenue coming within the short-term guidance range this quarter. As you look forward, what are the key drivers that could create maybe some additional operating leverage and the timing of that for SG&A? And then how should we think about the company reaching the maybe low end of that short-term guidance as a realistic 2027 opportunity? Or is this kind of more of a longer-term goal?

Vikas Singh

Yes. So on the SG&A front, from our perspective, as we think about the composition of how SG&A is built up for us, I would approximate it as something that's, call it, half fixed, half variable. We have the growth momentum, and we have the discipline around how we manage our costs with respect to vendors, employees and other programs that go within SG&A. So we see a natural cadence driven by organic growth, inorganic growth such that SG&A comes down over time as a percentage of revenue. So that's the story to an improving profile. That said, we'll always have situations and quarters where the requisite investments in the business. So in the past, we've talked about investments with respect to people, training, technology.

Any time we decide to make those decisions, it does put upward pressure on SG&A. So that's one counter to the improvement story. The other could be what we encountered this quarter, for example, which is we did see our SG&A number go up in the third quarter. And the key reason for that was an increase in professional fees such as legal fees and M&A-related expenses. We do intend to continue down the path of inorganic growth driven by M&A. We don't have a fixed number of deals we want to do each year or each quarter, but we will remain active in evaluating those situations and moving ahead with situations that seem like the best fit -- that obviously adds to some expenses with respect to advisers and legal and other M&A-related fees. So you will see that element be present as well, but we do think over a period of time without committing to a time frame, we will look to bring SG&A down.

But that said, we will not let that objective come in the way of appropriate investments, be it people, be it technology, be it M&A, and we'll try and create the balance between the 2 objectives there.

Operator

Your next question from the line of Ryan Halsted with RBC Capital Markets.

Ryan Halsted

Maybe just to come back to the NEXDINE acquisition. Just to clarify the first point, are there specific integration milestones that we should be looking out for? Or is the assumption that it's fully integrated effective the October 6 close date?

Vikas Singh

Yes. So from our perspective, obviously, we do have a very comprehensive integration plan in place that applies at the broader corporate level for NEXDINE, but then goes down to each department and touches just about every individual in the organization. But from an external and reporting perspective, I think you should take the integration as a done deal the moment we announced. Again, I think we say that not because we don't prioritize integration. It is very important. But we also want to be cognizant of the fact that we are talking about a transaction that is less than 10% of our top line.

So it is an important milestone, but it is not a size and scale such that we will put out milestones for integration. That said, internally, we are working through different departments in terms of speed of integration. Some departments will get integrated much faster, accounting and finance and reporting. That integration is well underway. And then there will be other integrations, which will be on a more spread out time line, but our expectation is those milestones -- internal milestones will all be hit by the end of the year.

Ryan Halsted

Got it. Great. And then just on the strategic rationale, just in terms of potential synergies, I mean, I think you called out that you're looking at it as having NEXDINE having a double-digit growth opportunity. Are there revenue synergy opportunities contemplated in that goal? Is that also inclusive of some of the commentary that you made about continuing to pursue inorganic growth opportunities? Is that sort of assuming you're going to continue to kind of grow around the senior housing opportunity and the NEXDINE platform? Appreciate.

Theodore Wahl

Yes. Nothing planned on the M&A or inorganic side presently with NEXDINE, but certainly -- and it gets back to my thoughts and comments around team play. We are going to proactively, in a collaborative way, leverage existing client relationships to the extent they exist, vendor partnerships, even industry organizations. And then certainly, there's an opportunity among in between HCSG, CSG, Meriwether Godsey on the campus side and then NEXDINE to share ideas and create possibilities and opportunities for the future. So in terms of the day-to-day that's happening in the field with our clients, they'll remain their -- they'll continue with their brand identity and people culture, which is aligned with the broader health and hospitality platform we've created. But beyond that, the lines of communication are wide open, and there's plenty of opportunity to leverage one another's best ideas, share best practices and continue on our growth journey.

Ryan Halsted

Great. And then maybe just one last one for me. Good to see the update on the Genesis case and the recovery. Is there a potential updated timing on a final resolution? How should we think about the remainder?

Theodore Wahl

That's TBD. Vikas spoke to the key variables and contingencies that remain certainly for HCSG, but really any general unsecured creditor as part of the distribution process. So claim allowances are one part of it and how they're determined, the ultimate amount of claims filed and then the amount of assets available for distribution. So the resolutions of those variables, Ryan, are just not known, and that's why we aren't able to specify a time period or an amount that can be reasonably estimated beyond what we recorded for the quarter.

Ryan Halsted

Got it. Congrats on the NEXDINE acquisition and the quarter.

Operator

Your next question from the line of Andy Wittmann with Baird.

Andrew J. Wittmann

So I just wanted to ask some questions to help understand the quarter and maybe kind of the model here. So first one here, Vikas, the $6.1 million benefit that you took, can you talk about the split by segment so we can just understand kind of underlying what those segments reported in gross margins?

Vikas Singh

It's near about even. That split did not fluctuate the segment margins in a significant fashion one way or the other, Andy.

Andrew J. Wittmann

Okay. And just -- I mean, even if you take that $6.1 and kind of add it back and you look at your underlying -- you kind of talked about this earlier, but like you're still better than the 86%. And I don't know, are you just -- is that -- and this isn't new, but are you protecting in case bad debt steps up again? Is that the swing factor? Is there something else that we should think about that would take you to that 86% level? Again, just wondering if there's anything else there in kind of the delta between the target and even the adjusted actual here that we should be considering as we think about the go forward?

Vikas Singh

Yes. No, that's a very fair question, Andy. Look, we've been fortunate to deliver the kind of performance we've delivered year-to-date or on an LTM basis. But the way we look at these metrics and goalposts is on a more longer-term basis before we implement any change. And just to put it in context, if we look at the 3-year average prior to 2026 for where cost of sales has been, that number is closer to 87%. So we are trending in the right direction. And look, with the passage of time, if we keep delivering this kind of performance, we will want to go back and revisit that number.

But for now, we don't have enough historical data to suggest that we need to move off the 86%. And if you were to look at the data in an alternative fashion, strip out bad debt expense, strip out the workers' comp benefit from cost of sales and then look at the cost of sales number exclusive of those 2 factors, our LTM percentage for that metric is very much comparable to the 3-year average. So again, we have improved operationally. It is making a difference. But then there is also the unpredictable and lumpy workers' comp and bad debt elements to it.

Now we feel we are doing whatever we can to contain bad debt in terms of internal resources, people, technology, how much time we spend with clients, how we interact with them. But that will not guarantee that there could be clients who could intentionally or unintentionally face challenges and performance in the first 3 quarters gives us no ability to predict what will happen in the next quarter. So that remains a variable. I know workers' comp, we've talked about extensively in the past with you on the last call as well.

We are trying our best to taper that number off. But again, when you talk about an organization with close to 40,000 employees and workers' comp being a metric that's driven by number of incidents and the severity, all the efforts we've put into managing that expense down through education, through safety procedures are valid, but you could always find yourself in a situation where there is an unpredicted spike in incidents and severity, which reverses the course for us on cost of sales. So your question is completely valid. It's just that we just don't have the right data points to go back and say 86% should be something else.

Andrew J. Wittmann

Okay. That's a totally fair answer. I appreciate you running me through that. Next, I wanted to ask a little bit more on NEXDINE here. And just maybe, Vikas, I know you've only owned this thing for a couple of weeks here. But to the extent you can help us, kind of help you to get kind of the street numbers right here. So a couple of the questions that come up is how much -- you said comparable margins, so we can kind of do that math. But just in terms of where it falls, what do you think the SG&A impact could be in terms of maybe like a quarterly run rate because obviously, there's going to be some of the costs that are going to fall there. I'd be also curious an initial view that you might have on the increase in intangible amortization.

You did say that you expect the deal to be immediately accretive and that amort number, obviously, noncash, but has an effect there. So I just wanted to kind of get a first view from you on that one. Keeping going on this kind of trend here, you're going to have to put a liability on your balance sheet for your expected payment of an earn-out. I think you mentioned that there was an earn-out associated with this. So maybe if you give us kind of ballpark what that liability on the balance sheet is going to be so we can think about it like you're thinking about it would be some of the questions as it relates to NEXDINE accounting.

Vikas Singh

Yes. Fair enough. So again, as we think about the P&L margin impact, I think the best way to model this out would be, again, if this was a company with revenues of $500 million or $1 billion, the assessment and analysis would be a little different. But given the size and scale, I think from a modeling perspective, looking at the revenue guidance we've given that this is a $150 million-odd revenue company and the margin profile is similar. I think as you decide to model out the future P&Ls for us, you can keep using the existing company-wide margin profile. Am I saying that their SG&A percentage is identical to ours? No, we are not. But that said, even if the SG&A for NEXDINE is different from our percentage, on a blended basis, it cannot move the needle given its limited size.

And we feel comfortable that our current guidance around margins in the aggregate will continue to hold. The story with NEXDINE will be more about how we can combine with them, give them the infrastructure resources to grow faster than what they have done. It will not be a story about how our margin profile got altered because of NEXDINE. So I think that's the best way to think about the margin profile for now. In terms of elements such as the contingent payment or the intangible, we're working through those numbers right now. I think it will be appropriate perhaps to touch upon that topic in our next earnings call when NEXDINE will get picked up in our reported numbers, but we don't have much to share on that topic right now.

And to give you an example, I mean, the intangible assessment typically takes a few weeks after transaction close. So we are working through that. It's not a number that is available yet. But again, if you think about what the company does, it's a services company. And at the end of the day, it's not asset heavy. So you can use some ballparks if you want to, but we are still working through those numbers, and we'll share those. The one caveat I will add as you model out the P&L and look at the accretion impact would be, yes, their margin profile is similar to ours, does uplift our net income and EPS numbers, but there is also the offset we've basically used $90 million plus of our own cash that was earning interest in money market mutual funds and the likes, which will no longer be at our disposal.

So there will be an offset to net income from basically losing interest income on close to $90 million to $100 million of cash that was providing interest income. But other than that, we don't have much other color to add on the margin profile beyond saying very similar, very consistent to the overall company profile.

Andrew J. Wittmann

But to be clear here, you expect it to be accretive to EPS even including the penalty of not having interest income. Is that correct? Like you're just going to earn more than the out. I just want to make sure. Yes. Okay. And then, Matt, just on the accrual days, I just -- we're going to -- can you just remind us how many days accrual is in 4Q? And then I think all of us are going to be flipping to look more closely at '27. And so maybe people are going to want to kind of get the seasonality for cash flows dialed in for '27 maybe a little bit closer here. Can you just take us through '27 and the days accruals and maybe remind for everyone's benefit, what each day is currently worth at this new run rate of revenue at the stepped-up level here?

Matthew McKee

Yes. So Andy, if we look at the fourth quarter, it's going to be a 6-day increase from 11 days in the third quarter to 5 days in the fourth quarter. So rough numbers, the change in the accrual will have about an $18 million negative impact on the reported cash flow. Looking ahead to 2027, Q1, it will be about a $19 million positive effect. It's a 6-day increase from 5 days in Q4 to 11 days in Q1. Q2 should have about a negative $9 million effect on reported cash flow. So that's a 2-day decrease from 11 days in Q1 to 9 days in Q2. Q3 will be about a $13 million positive effect on reported cash flow. That's a 2-day increase from 9 days in Q2 to 11 days in Q3. And then in Q4 of 2027, it should have an $18 million or so negative effect on reported cash flow. That's a 5-day decrease from 11 days in Q3 to 6 days in Q4. And obviously, Andy, as we continue to grow the business and grow payroll, there'll be a modest impact as to the effect of a particular day of payroll. But directionally, hopefully, this is helpful for you from a modeling perspective.

Andrew J. Wittmann

Yes. I wanted to make sure I captured that correctly with the NEXDINE acquisition contributing more revenue now. So I wanted to refresh there. I knew you'd be ready for us on that one, too. So I definitely appreciate that.

Operator

There are no further questions at this time. I will now turn the call back to Ted Wahl for closing.

Theodore Wahl

Okay. Great. Thank you, Ben. As we enter the fourth quarter of our 50th anniversary year, the company's underlying fundamentals are more robust than ever: our leadership and team members, our enhanced value proposition, our business model and the visibility we have into that business model, our positive KPI and key business trends and our strong balance sheet and ROIC profile. And with the industry at the beginning of a multi-decade demographic tailwind, our unified health and hospitality services platform strategically positions us to fulfill our vision and drive sustained long-term value creation for our shareholders. So on behalf of Matt, Vikas and all of us at Healthcare Services Group, Ben, thank you for hosting the call today, and thank you again to everyone for joining us.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.