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United States securities and exchange commission logo





                              April 10, 2024

       Andrew Brophy
       Principal Financial Officer
       HEALTHCARE SERVICES GROUP INC
       3220 Tillman Drive, Suite 300
       Bensalem, PA 19020

                                                        Re: HEALTHCARE SERVICES
GROUP INC
                                                            Item 2.02 Form 8-K
filed February 14, 2024
                                                            Response filed
March 25, 2024
                                                            File No. 000-12015

       Dear Andrew Brophy:

              We have reviewed your March 25, 2024 response to our comment
letter and have the
       following comments.

              Please respond to this letter within ten business days by
providing the requested
       information or advise us as soon as possible when you will respond. If
you do not believe a
       comment applies to your facts and circumstances, please tell us why in
your response.

              After reviewing your response to this letter, we may have
additional comments. Unless
       we note otherwise, any references to prior comments are to comments in
our March 12,
       2024 letter.

       Item 2.02 Form 8-K filed February 14, 2024

       Exhibit 99
       Reconciliations of Non-GAAP Financial Measures, page 6

   1.                                                   We note your response
to prior comment 1 from our letter dated March 12, 2024. You
                                                        define    client
restructurings    as modifications to contracts with existing customers leading
                                                        to either a reduction
in revenue or an increase in bad debt expense due to clients entering
                                                        bankruptcy,
receivership, or out-of-court workouts. You further indicate that these client
                                                        restructurings were
primarily the result of pandemic-related factors that were inherently
                                                        period and
customer-specific, are not expected to affect the future revenue generation or
                                                        cost structure with
such clients, and do not represent normal costs incurred to operate your
                                                        business. Please
address the following:
                                                            Provide us with
additional details surrounding your client restructurings. For the
                                                             periods presented,
identify each material customer contract you modified and the
 Andrew Brophy
HEALTHCARE SERVICES GROUP INC
April 10, 2024
Page 2
              underlying facts and circumstances that lead you to such
modifications. Address how
              such contract modifications impacted revenues and/or bad debt
expense; and
                In light of the periods in which the client restructurings
occurred, address how you
              determined that the client restructurings were primarily the
result of pandemic-related
              factors.
2.       You indicate that you evaluate the impact of bad debt expense on
overall profitability
         through a financial ratio comparing historical write-offs. We further
note your belief that
         the timing of your recognition of bad debt therefore is not
necessarily aligned with the
         day-to-day operating performance for services. However,
notwithstanding how your
         CODM views bad debt expense, we note that your adjustment to bad debt
expense creates
         a tailored accounting measure and therefore is not consistent with
Question 100.04 of the
         C&DIs. Please confirm you will no longer present this adjustment.
3.       You believe the disclosure of self-insurance adjustments assists the
readers of your
         financial statements to understand the extent to which your costs of
services provided was
         impacted by the adjustment to the prior period total accrued insurance
claims and that
         such adjustments are not indicative of future normal costs. However,
we note that this
         adjustment was required by GAAP due to claims development, volume, and
market
         factors. In addition, while you believe these adjustments are not
indicative of future
         normal costs, these underlying actuarial factors also impact your
expense run-rate which is
         the basis for recording self-insurance expense throughout the
following fiscal year. As
         such, we continue to believe that this adjustment results in tailored
accounting measure
         and therefore not consistent with Question 100.04 of the C&DIs. Please
confirm you will
         no longer present this adjustment.
       Please contact Jeanne Baker at 202-551-3691 or Terence O'Brien at
202-551-3355 if you
have questions regarding comments on the financial statements and related
matters.



                                                               Sincerely,
FirstName LastNameAndrew Brophy
                                          Division of Corporation Finance
Comapany NameHEALTHCARE SERVICES GROUP INC
                                          Office of Industrial Applications and
April 10, 2024 Page 2                     Services
FirstName LastName
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