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Jun 30, 2023
HCSG Q2 2023 Earnings Report
Reported Q2 2023 results with a robust new business pipeline setting the stage for second half of year growth.
Key Takeaways
Healthcare Services Group reported Q2 2023 revenue of $418.9 million, GAAP net income of $8.6 million, or $0.12 per basic and diluted common share, and adjusted EBITDA of $26.3 million.
Revenue for the quarter was reported at $418.9 million, with housekeeping & laundry and dining & nutrition segment revenues of $190.8 million and $228.1 million, respectively.
Housekeeping & laundry and dining & nutrition segment margins were 8.7% and 5.5%, respectively.
Direct cost of services was reported at $367.7 million, or 87.8%. Direct cost included an $11.3 million increase in CECL AR reserves.
Cash flow from operations for the quarter was $7.4 million and was impacted by an $18.8 million increase in accrued payroll and a $39.0 million increase in accounts receivable related to the timing of cash collections. DSO for the quarter was 83 days.
Forward Guidance
The Company enters the second half of the year with three clear priorities: managing direct costs at 86% (excluding CECL), collecting what they bill, and realizing new facility starts from business development efforts.
Positive Outlook
- Continuing to manage direct costs at 86%, excluding CECL.
- Collecting what we bill, building on the strong momentum gained in May and June.
- Realization of our business development efforts yielding new facility starts.
- Pivoting to growth mode through the back half of 2023 and into 2024.
- Industry fundamentals continue to improve.
Challenges Ahead
- Navigating a difficult cash collections environment.
- There remains uncertainty as to what a minimum staffing requirement might look like for the industry.
- Impact of potential tariffs and COVID-19.
- Continued inflation particularly if increases in the costs of labor and labor-related costs, materials, supplies and equipment used in performing services cannot be passed on to our customers.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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