Business
Healthcare Services Group, Inc. Reports Q4 2022 Results
Achieves Direct Cost Target, Rebalances Capital Allocation Strategy BENSALEM, Pa.--(BUSINESS WIRE)-- Healthcare Services Group, Inc. (NASDAQ:HCSG) (the
About this update from Healthcare Services Group, Inc.
[{"type":"text","content":"\nAchieves Direct Cost Target, Rebalances Capital Allocation Strategy\n\n BENSALEM, Pa.--(BUSINESS WIRE)--\nHealthcare Services Group, Inc. (NASDAQ:HCSG) (the “Company”) reported for the three months ended December 31, 2022 revenue of $424.0 million, net income of $16.2 million, or $0.22 per basic and diluted common share, and cash flow from operations of $22.9 million. The Company also announced that, as part of a comprehensive rebalancing of its capital allocation strategy, its Board of Directors has suspended the quarterly cash dividend on its common stock and authorized the repurchase of up to 7.5 million shares of its common stock.\n\nQ4 Results\n\n\nRevenue for the quarter was reported at $424.0 million, with housekeeping & laundry and dining & nutrition segment revenues of $198.0 million and $226.0 million, respectively.\n\n\nHousekeeping & laundry and dining & nutrition segment margins were 8.7% and 4.3%, respectively.\n\n\nDirect cost of services was reported at $366.8 million, or 86.5%. Direct cost included a $9.8 million benefit related to favorable workers’ compensation loss development trends offset, in part, by an $8.6 million increase in AR reserves.\n\n\nSelling, general and administrative (“SG&A”) was reported at $39.5 million; after adjusting for the $2.1 million increase in deferred compensation, actual SG&A was $37.4 million, or 8.8%.\n\n\nThe effective tax rate was 19.4% for the fourth quarter and 23.2% for full year 2022. The Company expects a 2023 tax rate of 24% to 26%.\n\n\nCash flow from operations for the quarter was $22.9 million and was impacted by a $3.1 million decrease in accrued payroll, including the impact of the second half, or $24.4 million, of the deferred FICA payment. DSO for the quarter was 72 days.\n\n\nTed Wahl, Chief Executive Officer, stated, “I’m pleased with our fourth quarter results, which underscore the resilience of our business model and continued passion and perseverance of our people in a challenging operating environment. We achieved our 2022 goal of exiting the year with cost of services in line with our historical target of 86%, met our Q4 goal of ‘collecting what we bill,’ and have a growing pipeline of future client-partners as we head into 2023.”\n\nMr. Wahl continued, “While the industry continues to face headwinds related to workforce availability, inflation and suppl...