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Revenue: $447.7 million, an increase of 5.7% over the prior year.
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Net Income: $17.2 million.
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Diluted EPS: $0.23 per share.
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Cash Flow from Operations: $32.1 million, an increase of $41.3 million over the prior year.
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Environmental Services Revenue: $196.3 million with a margin of 10.8%.
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Dietary Services Revenue: $251.3 million with a margin of 7.6%.
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Cost of Services: $379.7 million or 84.8% of revenue.
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SG&A Expenses: $46.4 million or 10.4% of revenue.
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Cash and Marketable Securities: $143.9 million.
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Days Sales Outstanding (DSO): 78 days, improved from 88 days in Q1 2024.
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Share Repurchases: Approximately $7 million repurchased in Q1, totaling $23 million since February 2023.
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Acquisition Impact: Recent acquisition expected to contribute about 1% to 2025 revenue.
Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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First quarter revenue and cash flows were the best in five years, indicating strong financial performance.
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Revenue increased by 5.7% over the prior year, reaching $447.7 million.
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Net income and diluted EPS were reported at $17.2 million and $0.23, respectively.
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The company successfully reduced Days Sales Outstanding (DSO) from 88 days to 78 days, improving cash collection efficiency.
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Healthcare Services Group Inc (NASDAQ:HCSG) made a strategic acquisition, contributing to revenue growth and marking its first acquisition since late 2021.
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Cost of services was high at 84.8%, with a goal to manage it in the 86% range, indicating ongoing cost management challenges.
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SG&A expenses were reported at $45 million, with a longer-term goal to reduce these costs to the 8.5% to 9.5% range.
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Food inflation continues to be a concern, with food at home inflation increasing sequentially.
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The company faces challenges in certain markets with ongoing labor shortages, despite overall improvements in workforce availability.
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Revenue guidance for Q2 suggests only a small increase, indicating potential challenges in achieving significant sequential growth.
Q: Can you expand on the regulatory environment and any changes that might affect your position in the industry? A: The fundamentals of the industry are strong, supported by demographic trends. The key concern for our customers is the link between staffing availability and census, as labor availability is crucial for occupancy growth. Recent occupancy data is positive, and CMS proposed a 2.8% increase for Medicare rates, which is well-received. The Texas court ruling that struck down key provisions of the minimum staffing rule provides clarity and removes an overhang for the industry.
