HCSG Reports First Quarter Results
Delivers Strong Revenue, Earnings & Cash Flow
-
Revenue of
$447.7 million , an increase of 5.7% over the prior year. -
Net income and diluted EPS of
$17.2 million and$0.23 . -
Reported cash flow from operations of
$27.5 million ; cash flow from operations (excluding the change in payroll accrual) of$32.1 million , an increase of$41.3 million over the prior year. - Reiterates 2025 mid-single digit growth expectations.
-
Raises 2025 cash flow from operations forecast (excluding the change in payroll accrual) from
$45.0 to$60.0 million to$60.0 to$75.0 million .
First Quarter Results
-
Revenue was reported at
$447.7 million . Environmental and Dietary Services segment revenues and margins were$196.3 million and 10.8% and$251.3 million and 7.6%, respectively.- The Company reiterated its 2025 mid-single digit revenue growth expectations.
-
Cost of services was reported at
$379.7 million or 84.8%.- The Company’s 2025 goal is to manage cost of services in the 86% range.
-
SG&A was reported at
$45.0 million ; after adjusting for the$1.4 million decrease in deferred compensation, actual SG&A was$46.4 million or 10.4%.- The Company expects to manage SG&A in the 9.5% to 10.5% range in the near term, with the longer term goal of managing those costs into the 8.5% to 9.5% range.
-
Net income and diluted EPS were reported at
$17.2 million and$0.23 . -
Cash flow from operations was reported at
$27.5 million ; after adjusting for the$4.6 million decrease in the payroll accrual, cash flow from operations was$32.1 million .-
The Company raised its 2025 cash flow from operations forecast (excluding the change in payroll accrual) from
$45.0 to$60.0 million to$60.0 to$75.0 million .
-
The Company raised its 2025 cash flow from operations forecast (excluding the change in payroll accrual) from
Balance Sheet and Liquidity
The Company’s primary sources of liquidity are cash flow from operating activities, cash and cash equivalents, and its revolving credit facility. As of the end of the first quarter, the Company had cash and marketable securities of
Conference Call and Upcoming Events
The Company will host a conference call on
The Company will be attending and presenting at the
About
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release and any schedules incorporated by reference into it may contain forward-looking statements within the meaning of federal securities laws, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions. Words such as “believes,” “anticipates,” “plans,” “expects,” “estimates,” “will,” “goal,” “intend” and similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking information is also subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks arising from our providing services to the healthcare industry and primarily providers of long-term care; credit and collection risks associated with the healthcare industry; the impact of bank failures; our claims experience related to workers’ compensation, general liability and auto insurance; the effects of changes in, or interpretations of laws and regulations governing the healthcare industry, our workforce and services provided, including state and local regulations pertaining to the taxability of our services and other labor-related matters such as minimum wage increases; the Company's expectations with respect to selling, general, and administrative expense; the impacts of past or future cyber attacks or breaches; global events including ongoing international conflicts;
and the risk factors described in Part I of our Form 10-K for the fiscal year ended
These factors, in addition to delays in payments from customers and/or customers undergoing restructurings, have resulted in, and could continue to result in, significant additional bad debts in the near future. Additionally, our operating results have been in the past and could in the future be adversely affected by continued inflation particularly if increases in the costs of labor and labor-related costs, materials, supplies and equipment used in performing services (including the impact of potential tariffs) cannot be passed on to our customers.
In addition, we believe that to improve our financial performance we must continue to obtain service agreements with new customers, retain and provide new services to existing customers, achieve modest price increases on current service agreements with existing customers and/or maintain internal cost reduction strategies at our various operational levels. Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies. There can be no assurance that we will be successful in that regard.
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement HCSG’s consolidated financial information, which are prepared in accordance with generally accepted accounting principles in
The Company is presenting net cash flow from operations (excluding the impact of payroll accrual), earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding items impacting comparability (“Adjusted EBITDA”). We cannot provide a reconciliation of forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial statements prepared in accordance with GAAP.
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share data) |
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|
|
For the Three Months Ended |
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|
|
|
||||
|
|
|
2025 |
|
|
2024 |
|
Revenue |
$ |
447,662 |
|
$ |
423,433 |
|
Operating costs and expenses: |
|
|
|
||
|
Cost of services |
|
379,691 |
|
|
358,911 |
|
Selling, general and administrative |
|
44,966 |
|
|
46,911 |
|
Income from operations |
|
23,005 |
|
|
17,611 |
|
Other income, net |
|
889 |
|
|
3,703 |
|
Income before income taxes |
|
23,894 |
|
|
21,314 |
|
|
|
|
|
||
|
Income tax provision |
|
6,666 |
|
|
6,005 |
|
Net income |
$ |
17,228 |
|
$ |
15,309 |
|
|
|
|
|
||
|
Basic earnings per common share |
$ |
0.23 |
|
$ |
0.21 |
|
|
|
|
|
||
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Diluted earnings per common share |
$ |
0.23 |
|
$ |
0.21 |
|
|
|
|
|
||
|
Basic weighted average number of common shares outstanding |
|
73,670 |
|
|
73,926 |
|
|
|
|
|
||
|
Diluted weighted average number of common shares outstanding |
|
73,961 |
|
|
74,055 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) |
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|
|
|
|
|
||
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Cash and cash equivalents |
$ |
64,317 |
|
$ |
56,776 |
|
Restricted cash equivalents |
|
65 |
|
|
3,355 |
|
Marketable securities, at fair value |
|
50,496 |
|
|
50,535 |
|
Restricted marketable securities, at fair value |
|
29,051 |
|
|
— |
|
Accounts receivable, net |
|
337,896 |
|
|
330,907 |
|
Notes receivable — short-term, net |
|
49,121 |
|
|
51,429 |
|
Other current assets |
|
44,022 |
|
|
63,650 |
|
Total current assets |
|
574,968 |
|
|
556,652 |
|
|
|
|
|
||
|
Property and equipment, net |
|
29,307 |
|
|
28,198 |
|
Notes receivable — long-term, net |
|
36,197 |
|
|
41,054 |
|
|
|
80,042 |
|
|
75,529 |
|
Other intangible assets, net |
|
10,018 |
|
|
9,442 |
|
Deferred compensation funding |
|
46,832 |
|
|
49,639 |
|
Other assets |
|
45,599 |
|
|
42,258 |
|
Total assets |
$ |
822,963 |
|
$ |
802,772 |
|
|
|
|
|
||
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Accrued insurance claims — current |
$ |
25,931 |
|
$ |
25,148 |
|
Other current liabilities |
|
172,818 |
|
|
167,399 |
|
Total current liabilities |
|
198,749 |
|
|
192,547 |
|
|
|
|
|
||
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Accrued insurance claims — long-term |
|
53,259 |
|
|
51,869 |
|
Deferred compensation liability — long-term |
|
46,766 |
|
|
50,011 |
|
Lease liability — long-term |
|
7,948 |
|
|
8,033 |
|
Other long-term liabilities |
|
2,043 |
|
|
385 |
|
|
|
|
|
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Stockholders' equity |
|
514,198 |
|
|
499,927 |
|
Total liabilities and stockholders' equity |
$ |
822,963 |
|
$ |
802,772 |
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (Unaudited) |
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Reconciliation of GAAP net income to EBITDA and adjusted EBITDA (in thousands) |
|
For the Three Months Ended |
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|
|
|
|||||||
|
|
|
2025 |
|
|
|
2024 |
|
|
|
GAAP net income |
|
$ |
17,228 |
|
|
$ |
15,309 |
|
|
Income tax provision |
|
|
6,666 |
|
|
|
6,005 |
|
|
Interest, net |
|
|
(865 |
) |
|
|
1,081 |
|
|
Depreciation and amortization(1) |
|
|
3,878 |
|
|
|
3,531 |
|
|
EBITDA |
|
$ |
26,907 |
|
|
$ |
25,926 |
|
|
Share-based compensation |
|
|
3,738 |
|
|
|
2,484 |
|
|
Adjusted EBITDA |
|
$ |
30,645 |
|
|
$ |
28,410 |
|
|
Adjusted EBITDA as a percentage of revenue |
|
|
6.8 |
% |
|
|
6.7 |
% |
|
Reconciliation of GAAP cash flows provided by (used in) operations to net cash flow from operations (excluding the change in payroll accrual) |
|
For the Three Months Ended |
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|
|
|
|||||||
|
|
|
2025 |
|
|
|
2024 |
|
|
|
GAAP cash flows provided by (used in) operations |
|
$ |
27,501 |
|
|
$ |
(26,033 |
) |
|
Accrued payroll(2) |
|
|
(4,591 |
) |
|
|
(16,815 |
) |
|
Net cash flow from operations (excluding the change in payroll accrual) |
|
$ |
32,092 |
|
|
$ |
(9,218 |
) |
| 1. |
Includes right-of-use asset depreciation of |
|
| 2. |
The accrued payroll adjustment reflects changes in accrued payroll for the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20250423340474/en/
Company Contacts:
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
Chief Communications Officer
215-639-4274
investor-relations@hcsgcorp.com
Source:
