HCSG - Healthcare Services Group: The Bears Stake Their Claim

• HCSG’s Q2 EPS missed Street estimates by $0.16, and $0.15 of that was down to issues tied to Genesis Healthcare, SEC-related costs, and other settlement fees tied to employment issues.
• Genesis-related pricing headwinds will persist until the end of this year, conversely, the company will likely receive a $50m incremental benefit on account of better cross-selling opportunities.
• There is no closure yet on the SEC issue, although the company continues to beef up its provisions to cope with this; HCSG expects a resolution sooner rather than later.
• Forward P/E valuations are still above the norm but the income angle has turned more attractive.
• The stock has now dropped back into its old congestion zone and has also dropped below the 200DMA on the daily charts.

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