Fri, Apr 25, 8:04 PM (16 days ago)
**Healthcare Services Group, Inc. (HCSG) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** Q1 2025 revenue increased by 5.7% to $447.7 million compared to $423.4 million in Q1 2024. Housekeeping revenues rose by 3.0% to $196.3 million, while Dietary revenues increased by 7.9% to $251.3 million. - **Profit Margins:** Operating costs and expenses increased by 5.8% to $379.7 million. The cost of services provided as a percentage of revenues remained stable at 84.8%. The company aims to manage this ratio within the 86% range for the full year. - **Net Income:** Net income increased by 12.5% to $17.2 million, with earnings per share rising from $0.21 to $0.23. - **Cash Flow:** Operating cash flow improved significantly, with a positive cash flow of $27.5 million in Q1 2025 compared to a negative $26.0 million in Q1 2024. This improvement was driven by higher net income and changes in operating assets and liabilities. - **Liquidity:** As of March 31, 2025, the company had $114.8 million in cash and cash equivalents, $29.1 million in restricted marketable securities, and a working capital of $376.2 million. **Segment Performance:** - **Housekeeping:** Revenues increased by 3.0%, driven by contractual price increases. Segment expenses as a percentage of revenues slightly increased to 89.2%. - **Dietary:** Revenues increased by 7.9%, driven by new business additions and increases in contractual pass-through costs. Segment expenses as a percentage of revenues decreased to 92.4%. **Trends and Uncertainties:** - **Inflation Impact:** The company experienced increased payroll and payroll-related costs due to ongoing inflation, which affected selling, general, and administrative expenses. - **Customer Concentration:** The company's customers are primarily providers of long-term care, which are reliant on Medicare, Medicaid, and third-party payers' reimbursement funding rates. Changes in legislation or regulations could impact the company's customers and, consequently, HCSG. - **Credit Risk:** The company's accounts and notes receivable are subject to credit risk, with a significant portion due from Genesis Healthcare, Inc. Any discontinuance or reduction of revenues from this customer could materially impact HCSG's operations. **Future Operations and Impact:** - **Capital Expenditures:** The company estimates capital expenditures of $5.0 million to $7.0 million for 2025, with $1.7 million already spent in Q1 2025. - **Line of Credit:** The company has a $300 million line of credit, with no borrowings as of March 31, 2025. The line of credit expires on November 22, 2027. - **Share Repurchase:** The company repurchased 0.7 million shares for $7.0 million in Q1 2025, with 5.4 million shares remaining authorized for repurchase. **Market Risk:** - The company had $143.9 million in cash and cash equivalents, restricted cash equivalents, marketable securities, and restricted marketable securities as of March 31, 2025. The fair value of these investments is subject to interest rate risk. **Controls and Procedures:** - The company's management concluded that its internal control over financial reporting was effective as of March 31, 2025. There were no changes in internal controls that materially affected the company's financial reporting.