Staffing franchisor HireQuest Inc. (NASDAQ; HQI) reported third-quarter revenue grew 18.1% year over year to $9.3 million with a boost from its MRINetwork acquisition. HireQuest also said in a regulatory filing that its pending acquisition of TEC Staffing Services will help it restore some operating leverage.

“We achieved revenue growth in the third quarter, driven primarily by the addition of MRINetwork,” President and CEO Rick Hermanns said in a press release.

However, HireQuest’s bottom line was impacted by a net increase of $2.8 million in workers’ compensation expense.

“Workers’ compensation insurance is a critical component of our operations and is impacted by different factors, some in our control and some not,” Hermanns said. “We’re working with our partners in this area to adjust our plan to better reflect our business as it stands today and reduce its impact in the future; however, no meaningful improvement can be expected until the second quarter of next year.”

HireQuest announced earlier in November that it plans to buy TEC Staffing Services for approximately $9.8 million. TEC Staffing has 10 locations across Arkansas that provide light industrial, clerical and professional staffing. The firm had revenue of $34 million in the 12 months ended Sept. 30. The TEC offices will be converted into Snelling franchises.

“We have a long-term view in our business and as a result have maintained an operational staffing level that can support growth such as our pending acquisition of TEC Staffing Services announced earlier this month,” Hermanns said.

“Our operations team has the capacity to support the additional system sales and offices TEC brings with little to no incremental expenses, thus restoring some of the operating leverage we’ve lost due to the current economic environment,” he continued.

Click to enlarge.

Share price

Shares in HireQuest were down 18.7% to $12.90 as of 1:12 p.m. Eastern time today; they reached a new 52-week low today at $12.76.