HCSG Reports Q4 2024 Results: A Strong Finish to the Year

Healthcare Services Group (HCSG) has reported its Q4 2024 results, marking a strong finish to the year with revenue growth and improved profitability. The company's strategic pivot from recovery to renewed growth has been evident in its recent performance, as highlighted by its Q4 results and positive momentum heading into 2025.



Fourth Quarter Results

Revenue for the quarter was reported at $437.8 million, with the Housekeeping & Laundry segment generating revenue of $192.7 million and a 10.2% margin, while the Dining & Nutrition segment reported revenue of $245.1 million with a 4.7% margin. The company expects mid-single digit revenue growth in 2025 and Q1 revenue in the range of $440.0 to $450.0 million.

Cost of services was reported at $379.2 million or 86.6%, inclusive of new business start-up costs. The company aims to manage cost of services in the 86% range in 2025. SG&A was reported at $44.8 million, with actual SG&A of $44.4 million or 10.1% after adjusting for deferred compensation. HCSG targets managing SG&A into the 8.5% to 9.5% range in 2025.

Net income and diluted EPS were reported at $11.9 million and $0.16, respectively, inclusive of new business start-up costs. Cash flow from operations was reported at $36.2 million, with actual cash flow from operations of $27.0 million after adjusting for the payroll accrual. The company estimates 2025 actual cash flow from operations, excluding the change in payroll accrual, in the range of $45.0 to $60.0 million.



Balance Sheet and Liquidity

HCSG maintains a strong financial position with $135.8 million in cash and marketable securities, plus a $500.0 million credit facility. The company has repurchased over $16.0 million of its common stock since February 2023, including over $5.0 million in 2024. HCSG has 6.0 million shares remaining under its authorization.

Conference Call and Upcoming Events

The company will host a conference call on Wednesday, February 12, 2025, at 8:30 a.m. Eastern Time to discuss its results for the three months ended December 31, 2024. The call may be accessed via phone at 1 (800) 715-9871, Conference ID: 9951274. The call will be simultaneously webcast under the "Events & Presentations" section of the Investor Relations page on the Company’s website, www.hcsg.com. A replay of the webcast will also be available on the website for one year following the date of the earnings call.

The Company will be participating in Oppenheimer’s 35th Annual Healthcare MedTech & Services Conference, which will be conducted virtually on March 19, 2025.

Outlook for 2025

HCSG's 2025 guidance suggests confidence in sustainable growth, with projected cash flow from operations of $45-60 million. The targeted SG&A reduction to 8.5-9.5% of revenue, down from the current 10.1%, indicates potential margin expansion through operational leverage. The ongoing share repurchase program reflects management's commitment to shareholder returns while maintaining strategic flexibility.

In conclusion, HCSG's Q4 2024 results demonstrate the company's strong performance and strategic progress. With a robust liquidity position and a clear path to optimizing costs, HCSG is well-positioned to deliver on its growth expectations in 2025 and beyond. Investors should closely monitor the company's progress as it continues to execute on its strategic priorities and capitalize on its strong business fundamentals.