BENSALEM, PA — Healthcare Services Group, Inc. (NASDAQ: HCSG) has announced robust first-quarter financial results for the period ending March 31, 2024, demonstrating strong performance and resilience in the face of adversity. CEO Ted Wahl highlighted the company’s effective cost management and growth in its business and manager-in-training pipelines as key drivers behind its success.
Despite traditionally lower cash collections in the first quarter, HCSG maintained a 95% collection rate. However, the company faced unexpected challenges due to the February Change Healthcare cyberattack, which impacted claims submissions and billing activities across the healthcare sector, affecting many of HCSG’s clients. Wahl expressed confidence that the delays in cash collections caused by this incident would be temporary and recoverable in subsequent months, reaffirming the company’s adjusted cash flow projections for 2024.
Wahl also noted positive industry trends, such as improving workforce availability, near pre-pandemic occupancy levels, and a proposed Medicare rate increase by CMS. He further discussed the recent CMS staffing rule, predicting its likely revision or non-implementation due to potential litigation and changes in legislation or administration.
For the quarter, HCSG reported revenues of $423.4 million, aligned with expectations. The housekeeping & laundry and dining & nutrition segments contributed revenues of $190.5 million and $232.9 million, respectively, with respective margins of 9.7% and 7.6%. The company successfully managed its adjusted cost of services at 84.4%, striving to maintain it within the 86% target range. Adjusted SG&A was reported at 10.1%, with ongoing goals to reduce it to between 8.5% and 9.5%.
Earnings per share stood at $0.21 on a diluted basis, with an adjusted figure of $0.22 per share. HCSG’s liquidity remains solid, evidenced by a current ratio of 2.8 to 1, cash and marketable securities totaling $129.6 million, and access to a $500.0 million credit facility expiring in November 2027. The company reiterated its confident outlook for 2024, with an adjusted cash flow from operations expected to range between $40.0 million to $55.0 million.
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