Q4 2023 Healthcare Services Group Inc Earnings Call

Speaker Change: [music].

Okay.

Speaker Change: Thanks for standing by and welcome to the H C. F. G 2023 fourth quarter earnings call.

Operator: Thanks for standing by, and welcome to the HCSG 2023 fourth quarter earnings call. I would now like to welcome Ted Wahl, President and CEO, to begin the call. Ted, over to you.

Speaker Change: I would now like to welcome Ted Wahl, President and CEO to begin the call Ted over to you.

Theodore Wahl: Thank you and good morning, everyone, Matt Mckee and I. Appreciate you joining us today, we released our fourth quarter results. This morning and plan on filing our 10-K by the end of the week.

Theodore Wahl: Thank you and good morning, everyone. Matt McKee and I appreciate you joining us today. We released our fourth quarter results this morning and plan on filing our 10-K by the end of the week. Today, in my opening remarks, I'll first discuss our Q4 financial highlights and key accomplishments. I'll then share our perspective on the latest industry trends and developments. And then, lastly, I'll discuss our 2024 Outlook. I'll then turn the call over to Matt to provide a more detailed discussion of the quarter.

Theodore Wahl: Today in my opening remarks, I will first discuss our Q4 financial highlights and key accomplishments.

Matthew J. McKee: I'll then share our perspective on the latest industry trends and developments and then lastly, I'll discuss our 'twenty 'twenty four outlook I'll, then turn the call over to Matt to provide a more detailed discussion on the quarter.

Matthew J. McKee: So with that overview I'd now like to discuss our Q4 financial highlights and key accomplishments.

Theodore Wahl: So with that overview, I'd now like to discuss our two and four financial highlights and key accomplishments. For the three months ended December 31, 2023, we reported revenue of $423.8 million and adjusted revenue of $425 million, which was in line with expectations. Net income and diluted EPS of $22.6 million and 31 cents, an adjusted net income and adjusted diluted EPS of $14.6 million and 20 cents, adjusted EBITDA of $26.5 million, a 14.2% increase over Q4 2022, and cash flow from operations of $49.5 million, and adjusted cash flow from operations of $27.9 million, a 7.1% increase over Q4 2022. Our team delivered strong fourth-quarter results, building on our momentum throughout 2023.

Matthew J. McKee: For the three months ended December 31, 2023, we reported revenue of $423 8 million and adjusted revenue of 425 million, which was in line with expectations.

Matthew J. McKee: Net income and diluted EPS up 22.6 million and 31 cents.

Matthew J. McKee: And adjusted net income and adjusted diluted EPS of $14 6 million and 20 cents.

Matthew J. McKee: Adjusted EBITDA of $26 5 million up 14.2% increase over Q4 2022 and.

Matthew J. McKee: And cash flow from operations of $49 5 million and adjusted cash flow from operations of 27.9 million a seven 1% increase over Q4 2022.

Matthew J. McKee: Our team delivered strong fourth quarter results building on our momentum throughout 2023.

Theodore Wahl: Against the backdrop of an ongoing industry recovery, we achieved 98% cash collections, managed the adjusted cost of services under 86%, and exceeded our cash flow projections for the quarter and second half of 2023. We also continue to grow our new business, and manager, and training pipelines and remain confident that we will deliver on our goal of year-over-year growth in 2021. I'd now like to share our perspective on the latest industry trends and developments. Industry operating metrics continue to improve, highlighted by a stabilizing labor market, with the sector adding over 60,000 jobs in 2023, bringing the total workforce to 1.45 million, 100,000 jobs higher than the April 2022 low, but still 140,000 jobs below pre-pandemic levels. A solid reimbursement environment, with the October Medicare increase of 4% and continued positive trends at the state level, and rising occupancy, which now sits at 79.2%, only 100 basis points below its pre-pandemic level.

Matthew J. McKee: Against the backdrop of an ongoing industry recovery, we achieved 98% cash collections managed adjusted cost of services under 86% and exceeded our cash flow projections for the quarter and second half of 2023.

Matthew J. McKee: We also continued to grow our new business and manager and training pipelines and remain confident that we will deliver on our goal of year over year growth in 2024.

Speaker Change: I'd now like to share our perspective on the latest industry trends and developments.

Speaker Change: Industry operating metrics continued to improve highlighted by a stabilizing labor market with the sector, adding over 60000 jobs in 2023, bringing the total workforce to 1.4 5.100 million jobs higher than the April 2022 low but still 100.

Speaker Change: 40000 jobs below pre pandemic levels.

Speaker Change: A solid reimbursement environment with the October Medicare increase of 4% and continued positive trends at the state level and rising occupancy, which now sits at 79.2% only 100 basis points below pre pandemic levels.

Speaker Change: On the regulatory front on September one 2023, CMS proposed a minimum staffing rule, which triggered a 60 day comment period that remained open through November six over 46000 comments were submitted and although the timing of a final rule remains uncertain CMS has indicated that hope.

Theodore Wahl: On the regulatory front, on September 1st, 2023, CMS proposed the Minimum Staffing Rule, which triggered a 60-day comment period that remained open through November 6th. Over 46,000 comments were submitted, and although the timing of a final rule remains uncertain, CMS has indicated it hopes to publish a final rule by the end of the year. There is a growing list of stakeholders opposed to the rule, including healthcare industry leaders, trade associations like ACCA, MEDPAC members, and a bipartisan group of legislators, including 30 senators and council members. The reasons for their opposition include the unfunded nature of the mandate, the one-size-fits-all approach, the apparent disregard for the realities of present and future nursing availability, and the near certainty that, if implemented as proposed, the rule would lead to facility closures and ultimately reduce access to care, especially in rural areas.

Speaker Change: To publish a final rule by the end of the year.

Speaker Change: There is a growing list of stakeholder as opposed to the rule, including health care industry leaders trade associations like aka Medpac members and a bipartisan group of legislators, including 30 Senators and counting.

Speaker Change: The reasons further opposition include the unfunded nature of the mandate the one size fits all approach.

Speaker Change: The apparent disregard for the realities of present and future nursing availability.

Speaker Change: In the near certainty that if implemented as proposed the rule would lead to facility closures and ultimately reduce access to care, especially in rural areas.

Theodore Wahl: In addition to the public comment period, any rule would have to survive inevitable litigation, potential legislation, political changes in administration, and at least be funded at some level. From our perspective, there remains great uncertainty as to whether any final rule would ultimately be implemented, at least a rule that resembles the current proposal. That said, we remain hopeful that CMS will fully consider the significant impact on operators before finalizing a rule, and if one is ultimately implemented, have confidence in our customers' ability to manage it in a prudent manner. As far as our outlook for 2024, our top three priorities continue to be as follows. The first is managing the adjusted cost of services in line with our target of 86%. We do not take operational execution for granted but have full faith in the ability of our operators to deliver the services on budget.

Speaker Change: In addition to the public comment period any rule would have to survive inevitable litigation potential legislation political changes in administration and at least on some level be funded from.

Speaker Change: From our perspective, there remains great uncertainty as to whether any final rule would ultimately be implemented at least a role that resembles the current proposal.

Speaker Change: That said, we remain hopeful that CMS will fully consider the significant impact on operators before finalizing a rule and if one is ultimately implemented I have confidence in our customer's ability to manage it in a prudent manner.

Speaker Change: As far as our outlook for 'twenty 'twenty four our top three priorities continue to be as follows that.

Speaker Change: The first is managing adjusted cost of services in line with our target of 86%.

Speaker Change: We do not take operational execution for granted but have full faith in the ability of our operators to deliver the services on budget.

Theodore Wahl: It took a considerable amount of work in 2022 to modify our contracts to better capture wage inflation and cost increases in our pricing on a closer-to-real-time basis. Those contract enhancements, along with recent positive trends in customer experience, systems adherence, regulatory compliance, and budget discipline, provide strong operating momentum heading into 2024. We expect Q1 adjusted cost of services of 86%.

Speaker Change: It took a considerable amount of work in 2022 to modify our contracts to better capture wage inflation and cost increases in our pricing on a closer to a real time basis.

Speaker Change: Those contract enhancements along with recent positive trends in customer experience systems adherence regulatory compliance and budget discipline provide strong operating momentum heading into 2024 weeks.

Speaker Change: We expect Q1 adjusted cost of services of 86%.

Speaker Change: Our second priority is delivering year over year growth by executing on our organic growth strategy through hiring training and developing future manager candidates converting opportunities from our sales pipeline into new business adds.

Theodore Wahl: Our second priority is delivering year-over-year growth by executing on our organic growth strategy through hiring, training, and developing future manager candidates, converting opportunities from our sales pipeline into new business ads, and retaining our existing facility business. We estimate a Q1 adjusted revenue range of $420 to $430 million. The third priority is collecting what we bill.

Speaker Change: And retaining our existing facility business.

Speaker Change: We estimate a Q1 adjusted revenue range of $420 million to $430 million.

Speaker Change: The third priority is collecting what we bill.

Speaker Change: We view cash collections as a lagging indicator of industry recovery and while our recent trends have improved compared to 2022 in the first half of 2023. This remains an area of opportunity for the company in 2024.

Theodore Wahl: We view cash collections as a lagging indicator of industry recovery, and while our recent trends have improved compared to 2022 and the first half of 2023, this remains an area of opportunity for the company in 2024. We expect some continued choppiness in the year ahead, but anticipate that our cash collections will continue gaining strength throughout 2024 and further still into 2025. We estimate Q1 and 2024 adjusted cash flow ranges of $0 to $10 million and $40 to $55 million, respectively.

Speaker Change: We expect some continued choppiness in the year ahead, but anticipate that our cash collections will continue gaining strength throughout 'twenty 'twenty four and further still into 2025.

Speaker Change: We estimate Q1 and 2024 adjusted cash flow ranges of zero to 10 million and 40 to 55 million respectively.

Speaker Change: It's an incredibly exciting time for the company as we're rounding the turn of what has been a prolonged recovery for the industry.

Theodore Wahl: It's an incredibly exciting time for the company as we round the turn of what has been a prolonged recovery for the industry. The challenges we have navigated in the past few years have further solidified our value proposition, the durability of our business model, and our market-leading position. As we enter 2024, the company's underlying fundamentals are stronger than ever, and with the industry at the beginning of a multi-decade demographic tailwind, we are favorably positioned to capitalize on the opportunities ahead and deliver meaningful long-term shareholder value. So with those introductory comments, I'll turn the call over to Matt for a more detailed discussion on the. Thank you, Ted, and good morning, everyone.

Speaker Change: The challenge as we navigated the past few years have further solidified our value proposition the durability of our business model and our market leading position.

Speaker Change: As we enter 'twenty 'twenty four the company's underlying fundamentals are stronger than ever and with the industry at the beginning of a multi decade demographic tailwind we are favorably positioned to capitalize on the opportunities ahead and deliver meaningful long term shareholder value.

Speaker Change: So with those introductory comments I'll turn the call over to Matt for a more detailed discussion on the quarter.

Matthew J. McKee: Thank you Chad and good morning, everyone.

Matthew J. McKee: Revenue was $423.8 million; adjusted revenue was $425 million, in line with the company's expectations of $420 to $430 million. Housekeeping and Laundry, and Dining and Nutrition Segment revenues were $191.4 million and $232.4 million, respectively. Adjusted housekeeping and laundry and dining and nutrition segment revenues were $191.7 million and $233.3 million, respectively. Housekeeping and Laundry and Dining and Nutrition segment margins were 7.5% and 6.2%, respectively. Adjusted housekeeping and laundry and dining and nutrition segment margins were 7.7% and 6.5%, respectively. The cost of services was $350.4 million. The adjusted cost of services was $362.6 million, or 85.3%.

Matthew J. McKee: Revenue was $423.8 million adjusted revenue was $425 million in line with the company's expectations of $420 million to $430 million.

Matthew J. McKee: Housekeeping and laundry and dining and nutrition segment revenues were $191.4 million and $232 $4 million respectively.

Matthew J. McKee: Adjusted housekeeping and laundry and dining and nutrition segment revenues were $191.7 million and $233 $3 million respectively.

Matthew J. McKee: Housekeeping and laundry and dining and nutrition segment margins were seven 5% and six 2% respectively.

Matthew J. McKee: Adjusted housekeeping and laundry and dining and nutrition segment margins were seven 7% and six 5% respectively.

Matthew J. McKee: Cost of services was $354 million adjusted cost of services was $362 $6 million or <unk>, 85.3%. The company's goal is to continue to manage adjusted cost of services in the 86% range.

Matthew J. McKee: The company's goal is to continue to manage adjusted cost of services in the 86 percent range. SG&A was $46.3 million. Adjusted SG&A was $42.2 million, or 9.9%, and the company's goal continues to be achieving adjusted SG&A in the eight and a half to nine and a half. Net income and diluted earnings per share were $22.6 million and 31 cents, respectively.

Matthew J. McKee: SG&A was $46 $3 million adjusted SG&A was $42 2 million or nine 9% and the company's goal continues to be achieving adjusted SG&A in the eight five to nine 5% range.

Matthew J. McKee: Net income and diluted earnings per share were $22 $6 million.31, respectively. Adjusted net income and adjusted diluted earnings per share were $14 $6 million.20, respectively.

Matthew J. McKee: Adjusted net income and adjusted diluted earnings per share were 14.6 million dollars and 20 cents, respectively. Adjusted EBITDA was $26.5 million, a 14.2% increase over the fourth quarter of 2020. Fourth quarter cash flow and adjusted cash flow from operations were $49.5 million and $27.9 million, respectively. DSO for the quarter was 82 days.

Matthew J. McKee: Adjusted EBITDA was $26 $5 million of 14.2% increase over the fourth quarter of 2022.

Fourth quarter cash flow and adjusted cash flow from operations were $49 $5 million and $27 $9 million, respectively. DSO for the quarter was 82 days.

Matthew J. McKee: Also, as part of our adjusted results, we adjust for the impact of the change in the payroll accrual, but since it will still be included in our reported cash flow from operations, we would point out that the Q1 payroll accrual is eight days. That compares to the 15 days that we had in the fourth quarter of 2023 and six days that we had in the first quarter of 2023. But again, payroll accrual only relates to quarter to quarter time.

Also as part of our adjusted results, we adjust for the impact of the change in the payroll accrual, but since it will still be included in our reported cash flow from operations. We would point out that the Q1 payroll accrual is eight days that compares to the 15 days that we had in the fourth quarter of 2023 and six days that we had in the first.

Matthew J. McKee: Quarter of 2023, but again, the payroll accrual only relates to quarter to quarter timing.

Speaker Change: So with those opening remarks, we'd now like to open up the call for questions.

Operator: So with those opening remarks, we'd now like to open up the call for questions. The floor is now open to your questions. To ask a question at this time, simply press star followed by the number one on your telephone keypad.

Speaker Change: Yeah.

Speaker Change: The floor is now open for your questions to ask a question. This time simply press star followed by the number one on your telephone keypad.

Sean Dodge: We'll now take a moment to compile our raw numbers. Our first question comes from the line of Sean Dodge with RBC Capital Markets. Please go ahead. Yes, thanks. Ted, you mentioned New Business Pipeline and Manager, and Training and Recruiting. You're ramping both to continue to position for growth this year. Can you help quantify some of that?

Speaker Change: We will now take a moment to compile a roster.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Our first question comes from the line of Sean Dodge with RBC capital markets. Please go ahead.

Sean Dodge: Yes. Thanks.

Sean Dodge: Hi, good morning.

Sean Dodge: Congratulations on the strong finish the year.

Sean Dodge: Ted you mentioned.

Sean Dodge: New business pipeline and manager and training recruiting you're ramping both to continue to position for growth this year.

Sean Dodge: Can you help quantify some of that how many new managers have you hired.

Theodore Wahl: How many new managers have you hired? How many are you looking to hire for growth? And then will this start to flow through in the first half of the year, or will this be more of a kind of second half of 24.8?

Sean Dodge: Many are you looking to hire for growth and then when they start to flow through in the first half of the year will this be more of a kind of a second half of 'twenty four dynamic.

Speaker Change: Yes, I think in terms of the cadence of the new business ramp up we definitely see it.

Theodore Wahl: Yeah, I think in terms of the cadence of the new business ramp-up, we definitely see it being not so linear and more of a, you know, of a chunky, chunky aspect to it, depending on the timing of the new business. But the second half of the year being heavier than the first half of the year, Sean, but, you know, we definitely anticipate new business ads coming online, certainly towards the end of the first quarter. And then again, that'll ramp up throughout the year in terms of our manager and training pipeline, which is great to be able to speak about again because, you know, prior to COVID, we talked about that as being the gating factor on our ability to grow, knowing the demand for the services was greater than what we were capable of managing at any point in time.

Speaker Change: Being not so linear and more of a of a.

Chunky chunky aspect to it depending on the timing of the new business, but second half of year being heavier than the first half of the year, Sean, but we definitely anticipate new business adds coming online certainly towards the end of the first quarter and then that again that will ramp up throughout the year in terms of our.

Speaker Change: Manager and training pipeline, which it's great to be able to speak about again, because prior to Covid, we talked about that as being the gating factor on our ability to grow knowing the demand for the services was greater than what we are capable of managing at any point in time. So we're really in a business as usual state obviously, if we're plan.

Theodore Wahl: So, you know, we're really in a business as usual state. Obviously, if we're planning for new business ads in certain markets, we're going to weight that heavier, and the leaders, the local leadership, are going to be more focused on hiring and training and developing more candidates, a disproportionate number of candidates, but we're well positioned to be able to take advantage of the growth opportunity and really see the year ahead as And is this growth largely going to be coming from the dining cross sell, or is there going to be any contribution or scaling on the education side? And then maybe just a quick update on how the education pilots are going and when that could be a more meaningful contributor. Yes, good morning, Sean. This is Matt.

Speaker Change: <unk> for new business adds in certain markets, we're going to wait that heavier and the the leaders at the local leadership are going to be more focused on hiring and training and developing more candidates disproportionate amount of candidates, but we're well positioned to be able to take advantage of the growth opportunity and really see the year ahead.

Speaker Change: As a year of returning to growth.

Speaker Change: And it is this growth are largely going to come in from the dining cross sell or is there going to be any contribution or scaling on the education side and then maybe just a quick update on how the education pilots or go in and when that could be a more meaningful.

Speaker Change: Meaningful contributor.

Speaker Change: Yes. Good morning, Schon. This is Matt I'll address this one.

There will be a really a combination of drivers of organic growth the first of which in most obvious of which you pointed out being the cross sell up dining services into the existing housekeeping and laundry customer base. You know obviously with the challenges that we have faced in the industry more broadly has faced through the course of the past four years or so.

Matthew J. McKee: I'll address this one. You know, there will be a combination of drivers of organic growth, the first of which and most obvious of which you pointed out being the cross-sell of dining services into the existing housekeeping and laundry customer base. You know, obviously, with the challenges that we have faced and the industry more broadly has faced through the course of the past four years or so, we've had an opportunity to really, you know, dig in and understand the operational intricacies of each and every facility where we're operating environmental services but not dining services. Perhaps more importantly, we have a front row seat to determine the financial health and wherewithal of those clients and the degree to which they hold Are they a good partner with whom we would like to expand the relationship?

Speaker Change: You know, we've had an opportunity to really dig in and understand the operational intricacies of each and every facility, where we're operating our environmental services, but not dining services and perhaps more importantly, we have a front row seat to determine the financial health and wherewithal of those clients and the degree to which they hold our relationship in.

Speaker Change: The contract with integrity, meaning are they paying us on time and in full or they're a good partner with whom we would like to expand the relationship so plenty of opportunity for us to continue to expand those environmental services partnerships to include dining services outs.

Speaker Change: Outside of that the the one other growth engine that you didn't mention was.

Speaker Change: Organic opportunities Greenfield opportunities to start environmental services relationships, we still do view within the skilled space you know the long term and post acute care space environmental services largely as.

Matthew J. McKee: So plenty of opportunity for us to continue to expand those environmental services partnerships to include dining services. Outside of that, the one other growth engine that you didn't mention was, you know, organic opportunities, greenfield opportunities to start environmental services relationships. We still do view within the skilled space, you know, the long-term and post-acute care space environmental services largely as the sell-in opportunity, the greenfield sales opportunity, and continue to view dining as the cross-sell for a lot of the reasons that I just outlined a moment ago. So that will be a contributor as well. And then on education, a really exciting opportunity that's really progressed from what had been, you know, sort of an experiment to a pilot, and it's now, you know, a component of our business that we're very much committed to. You know, we're sort of in that selling season right now.

Speaker Change: The sell in opportunity of the Greenfield sales opportunity and continue to view dining as the cross sell for a lot of the reasons that I just outlined a moment ago, so that'll be a contributor as well and then on education.

Speaker Change: Really exciting opportunity you know that's really progressed from what had been sort of an experiment to a pilot and it's now a component of our business that we're very much committed to that.

Speaker Change: We're sort of in that selling season right now we've talked about some of the seasonality and the cadence of new business opportunities that arise within the education space show.

Speaker Change: We will likely have some.

Speaker Change: More substantial or a more detailed update that we could offer Sean on the next call, but definitely building.

Speaker Change: Some momentum internally and as that brand presence begins to further grow in that marketplace. We remain very much committed and enthusiastic about the opportunity that it presents.

Speaker Change: Good good good.

Matthew J. McKee: We've talked about some of the seasonality and the cadence of new business opportunities that arise within the education space. So, you know, we'll likely have some more substantial or more detailed updates that we could offer, Sean, on the next call. But definitely building some momentum internally, and as that brand presence begins to further grow in that marketplace, we remain very much committed and enthusiastic about the opportunity that it presents. Good, good, great to hear it. Thanks again. Our next question comes from a line from Ryan Daniels with William Blair. Please go ahead. Hey, good morning, guys. This is Jax. I'm down for Ryan Daniels.

Speaker Change: Thanks again.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Ryan Daniels with William Blair. Please go ahead.

Speaker Change: Hey, Good morning, guys. This is Jack stamped on for Ryan Daniels Congrats on the strong finish to 2023 as well.

Jack: In terms of client restructurings I know this is an event brought up last quarter as well curious if a client restructurings noted this quarter are tied to the same restructurings as last quarter.

Jack: Do you expect that to be finished by now or is there a possibility we see the surface again in 2024 and first quarter of 2024.

Speaker Change: Yes, Youre exactly right that it was really a carryover. It was just the completion of the two client restructurings, we called out last last quarter that were fully resolved this quarter and we're expecting no residual impact in 2024 from those two events.

Jax: Congratulations on the strong finish to 2023 as well. In terms of client restructurings, I know this is an event brought up last quarter as well. Curious if the client restructurings noted this quarter are tied to the same restructurings as the last quarter. And do you expect this to be finished by now? Or is there a possibility we see this surface again in the first quarter of 2024?

Speaker Change: Okay perfect makes sense. Thanks.

Speaker Change: And then just a quick follow ups you given that you're entering into this growth mode Phase and you know in 2024.

Speaker Change: And it's now been about a year since the new capital allocation strategy. I guess have you guys identified any investment areas in M&A areas to help kind of supplement and support this growth maybe besides the manager pipeline and.

Speaker Change: If so can you maybe just discuss the areas of potential market opportunity ahead.

Speaker Change: Yes, I think I think for US it continues to be from a growth from a growth perspective priority number one is organic growth that is the lowest hanging fruit that is what we're prepared for in 2024, we are continuing to evaluate numerous inorganic opportunities and as they are either engaged in our completed we would certainly share that.

Matthew J. McKee: Thanks. You're exactly right that it was really a carryover, it was just the completion of the two client restructurings we called out last quarter that were fully resolved this quarter, and we're expecting no residual impact in 2024 from those two events. Okay, perfect. It makes sense.

Speaker Change: With everyone from a from a capital allocation perspective, we remain opportunistic with the buyback we did buyback over a million shares over the course of 2023 and will continue to be opportunistic on that front, but 2024 certainly.

Jax: And then just a quick follow-up: given that you're entering into this growth mode phase and, you know, in 2024, and it's now been about a year since the new capital allocation strategy, I guess, have you guys identified any investment areas and M&A areas to help kind of supplement and support this growth, maybe besides the manager pipeline? And, you know, if so, can you maybe just discuss the areas and potential market opportunities ahead?

Speaker Change: Where we're prioritizing and where we're focused on is organic growth.

Speaker Change: Perfect. Thank you and congrats again, thank you.

Speaker Change: Uh huh.

Speaker Change: I would now like to turn the call over to Ted Wahl for closing remarks.

Theodore Wahl: Fantastic well. Thank you Monday, we appreciate you hosting the call today I just wanted to reiterate what an incredibly exciting time. It is for the company as we're rounding the turn of what has been a prolonged recovery for the industry in the year ahead, we're going to remain focused on executing on our strategic priorities so as to capital.

Theodore Wahl: Thanks. Yeah, I think for us, priority number one from a growth perspective is organic growth. That is the lowest hanging fruit.

Theodore Wahl: Lies on the opportunities ahead, and deliver meaningful long term shareholder value. So on behalf of Matt and all of US at healthcare services group. Thank you for hosting the call Monday, Ben Thank you to everyone for joining us today.

Theodore Wahl: That is what we're prepared for in 2024. We are continuing to evaluate numerous inorganic opportunities, and as they are either engaged in or completed, we will certainly share that with everyone. From a capital allocation perspective, we remain opportunistic with the buyback. We did buy back over a million shares over the course of 2023 and will continue to be opportunistic on that front, but in 2024, certainly where we're prioritizing and where we're focused on is organic growth.

Speaker Change: This concludes today's call you may now disconnect.

Speaker Change: [music].

Jax: Perfect. Thank you and congratulations again. Thank you. I would now like to turn the call over to Ted Wahl for closing remarks.

Theodore Wahl: Well, thank you, Mandeep. We appreciate you hosting the call today. I just wanted to reiterate what an incredibly exciting time it is for the company as we round the turn of what has been a prolonged recovery for the industry. In the year ahead, we're going to remain focused on executing on our strategic priorities so as to capitalize on the opportunities ahead and deliver meaningful long-term shareholder value.

Theodore Wahl: So, on behalf of Matt and all of us at Healthcare Services Group, thank you for hosting the call, Mandeep, and thank you to everyone for joining us today. This concludes today's call. You may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].