Q3 2024 Healthcare Services Group Inc Earnings Call
Operator: Thank you for standing by.
Operator: Thank you for standing by.
Jeanne: My name is Jeanne, and I will be your conference operator today. At this time, I would like to welcome everyone to the HCFG 2024 third quarter conference. The matters discussed on today's conference call include forward looking statements about the business prospects of healthcare services group.
Jeannie: My name is Jeannie, and I will be your conference operator today.
Thank you for standing by my name is Jamie and I will be your conference operator today.
Unknown Executive: At this time, I would like to welcome everyone to the HCFG 2024 third quarter conference call. The matters discussed on today's conference call include forward-looking statements about the business prospects of Healthcare Services Group Inc. For Healthcare Services Group Inc.'s most recent forward-looking statement notice, please refer to the press release issued this morning, which can be found on our website, www.hcsg.com.
At this time I would like to welcome everyone to the H C. S. G 2024 third quarter conference call.
Speaker Change: The matters discussed on today's conference call include forward looking statements about the business prospects of healthcare Services Group Inc.
Jeanne: For Healthcare Services Group Inc's most recent forward-looking statement notice, please refer to the press release issued this morning, which can be found on our website, www.hcsg.com. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the risk factors, MD&A, and other sections of the annual report on Form 10-K, and Healthcare Services Group Inc.'s other CESSEC filings, and as indicated in our most recent forward-looking statement.
Speaker Change: For Health Care Services Group, Inc. 's. Most recent forward looking statement notice. Please refer to the press release issued this morning, which can be found on our web site Www Dot H C. S. G Dot com.
Unknown Executive: Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the risk factors, MD&A, and other sections of the annual report on Form 10-K, and Healthcare Services Group Inc's other CES, FEC filings, and is indicated in our most recent forward-looking statement.
Speaker Change: Actual results may differ materially from those expressed or implied as a result of various risks uncertainties and important factors, including those discussed in the risk factors MD&A and other sections of the annual report on Form 10-K, and health care services groups inks, others see E S.
Speaker Change: Our SEC filings and as indicated in our most recent forward looking statement.
Unknown Executive: Additionally, management will be discussing certain non-GAAP financial measures; a reconciliation of these items to U.S. GAAP can be found in this morning's press release. All lines have been placed on mute to prevent any background noise. After the speakers are marked, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star. Went again. Thank you.
Jeanne: Additionally, management will be discussing certain non-GAAP financial measures. Reconciliation of these items to U.S. GAAP can be found in this morning's press.
Speaker Change: Additionally, management will be discussing certain non-GAAP financial measures.
Speaker Change: A reconciliation of these items to U S. GAAP can be found in this morning's press release.
Jeanne: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone. If you would like to withdraw your question, press star 1 again. Thank you.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: After the Speakers' remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question Press Star one again.
Chad Lowe: I would now like to turn the conference over to Chad Lowe. You may begin your conference.
Jeanne: I would now like to turn the conference over to Ted Lowe, you may begin your conference.
Speaker Change: Thank you IRA.
Speaker Change: I'd now like to turn the conference over to Ted Wahl you May begin your conference.
Chad Lowe: Thank you and good morning, everyone. Matt and I appreciate you joining us today. We released our third quarter results this morning in Plano, filing our 10-Q by the end of the week. We're very pleased with our third quarter results, which underscore the positive momentum we're carrying into the fourth quarter. Executing on our three strategic priorities of driving growth, managing costs, and optimizing collections is clearly paying off, resulting in sequential and year-over-year growth in revenue, earnings, and cash growth. For the three months ended September 30th, 2024, we reported revenue of 428.1 million, in line with expectations, net income, and diluted EPS of 14 million and 19 cents per share, and reported and adjusted cash flow from operations of 4.3 million and 19 million.
Ted Lowe: Thank you and good morning everyone. Matt McKee and I appreciate you joining us today. We released our third quarter results this morning and plan on filing our 10-Q by the end of the week. We're very pleased with our third quarter results, which underscored the positive momentum we're carrying into the fourth quarter. Executing on our three strategic priorities of driving growth, managing costs, and optimizing collections is clearly paying off, resulting in sequential and year-over-year growth in revenue, earnings, and cash flow. For the three months ended September 30, 2024, we reported revenue of $428.1 million in line with expectations, net income and diluted EPS of $14.019 per share.
Ted Wahl: Thank you and good morning, everyone, Matt Mckee and I. Appreciate you joining us today, we released our third quarter results. This morning and plan on filing our 10-Q by the end of the week.
Ted Wahl: We're very pleased with our third quarter results, which underscore the positive momentum we're carrying into the fourth quarter.
Ted Wahl: Executing on our three strategic priorities of driving growth managing costs and optimizing collections is clearly paying off resulting in sequential and year over year growth in revenue earnings and cash flow.
Ted Wahl: For the three months ended September 32024, we reported revenue of $428 1 million in line with expectations net income and diluted EPS of $14 19 per share.
Ted Lowe: and reported and adjusted cash flow from operations of $4.3 million and $19 million.
Ted Wahl: Reported and adjusted cash flow from operations of $4 3 million and $19 million.
Chad Lowe: I'd like to now share our perspective on the latest industry trends and developments. Industry fundamentals continue to trend positively, highlighted by rising occupancy, which now sits at 79.8%, just under the low 80s pre-pandemic levels; a continued increase in workforce availability, with the industry adding over 100,000 jobs since the beginning of 2023. And the stable reimbursement environment, which includes CMS's 4.2% increase in Medicare rates for the fiscal year 2025, which became effective October 1st, as well as continued positive reimbursement trends at the state level. On the regulatory front, we continue to believe that CMS's final minimum staffing rule will either undergo significant revision during the extended phase-in period or will not be implemented, especially given pending litigation and the potential for legislation or administration change.
Ted Lowe: I'd like to now share our perspective on the latest industry trends and developments. Industry fundamentals continue to trend positively, highlighted by rising occupancy, which now sits at 79.8% just under the low 80s pre-pandemic levels. a continued increase in workforce availability, with the industry adding over 100,000 jobs since the beginning of 2023, and a stable reimbursement environment, which includes CMS's 4.2% increase in Medicare rates for the fiscal year 2025, which became effective October 1st, as well as continued positive reimbursement trends at the state level. On the regulatory front, we continue to believe that CMS's final minimum staffing rule will either undergo significant revision during the extended phase-in period or will not be implemented, especially given the pending litigation and the potential for legislation or administration changes.
Ted Wahl: I'd like to now share our perspective on the latest industry trends and developments in.
Ted Wahl: Industry fundamentals continue to trend positively highlighted by rising occupancy, which now sits at 79, 8% just under the low eighty's pre pandemic levels.
Ted Wahl: Continued increase in workforce availability with the industry, adding over 100000 jobs since at the beginning of 2023.
Ted Wahl: And the stable reimbursement environment, which includes CMS is four 2% increase in Medicare rates for the fiscal year 2025, which became effective October 1st as well as continued positive reimbursement trends at the state level.
Ted Wahl: On the regulatory front, we continue to believe that Cms's final minimum staffing rule will either undergo significant revision during the extended phase in period or will not be implemented, especially given the pending litigation and the potential for legislation or administration change.
Chad Lowe: As we head into the final months of the year, our strategic priorities remain unchanged. We are confident that our focus on these priorities, supported by our strong business fundamentals, will enable us to further accelerate growth, enhance profitability, and maximize cash flow through 2025 and beyond.
Ted Lowe: As we head into the final month of the year, our strategic priorities remain unchanged. We are confident that our focus on these priorities, supported by our strong business fundamentals, will enable us to further accelerate growth, enhance profitability, and maximize cash flow through 2025 and beyond.
Ted Wahl: As we head into the final months of the year, our strategic priorities remain unchanged. We are confident that our focus on these priorities supported by our strong business fundamentals will enable us to further accelerate growth enhanced profitability and maximize cash flow through 2025 and beyond.
Matt: So, with those introductory comments, I'll turn the call over to Matt for a more detailed discussion on the quarter. Thank you, Ted. Good morning, everyone. Revenue was reported at $428.1 million, in line with the company's expectation of $425 to $435 million. Housekeeping and laundry revenue was $191.1 million, and the margin was 6.4%. Dining and nutrition revenue was $237 million, and the margin was 5.3%. The company's Q4 expected revenue range is $430 to $440 million. Cost of services was reported at $364.7 million or 85.2%. And the company's goal is to continue to manage cost of services, excluding Cecil, in the 86% range.
Ted Lowe: So with those introductory comments, I'll turn the call over to Matt for a more detailed discussion on the program.
Speaker Change: So with those introductory comments I'll turn the call over to Matt for a more detailed discussion on the quarter.
Matt Mckee: Thank you, Ted, and good morning, everyone. Revenue was reported at $428.1 million, in line with the company's expectation of $425 to $435 million. Housekeeping and laundry revenue was $191.1 million and the margin was 6.4%. Dining and nutrition revenue was $237 million, and the margin was 5.3%.
Matt Mckee: Thank you Todd and good morning, everyone.
Matt Mckee: Revenue was reported at $428 1 million in line with the company's expectation of $425 million to $435 million.
Matt Mckee: Housekeeping and laundry revenue was $191 $1 million and the margin was six 4%.
Matt Mckee: Dining and nutrition revenue was $237 million and the margin was five 3%.
Matt Mckee: The company's Q4 expected revenue range is $430 to $440 million. Cost of services was reported at $364.7 million, or 85.2%, and the company's goal is to continue to manage cost of services, excluding CECL, in the 86% range. SG&A was reported at $46.9 million, but after adjusting for the $2.4 million increase in deferred compensation, actual SG&A was $44.5 million, or 10.4%.
Matt Mckee: The company's Q4 expected revenue range is $430 million to $440 million.
Matt Mckee: Cost of services was reported at $364 7 million or <unk> 85, 2% and the company's goal is to continue to manage cost of services, excluding seasonal in the 86% range.
Matt: SGNA was reported at $46.9 million, but after adjusting for the $2.4 million increase in deferred compensation, actual SGNA was $44.5 million or $10.4%. The company's goal continues to be achieving SGNA in the eight and a half to nine and a half percent range. Other income was reported at $2.3 million or 0.5%, and other income includes a $2.4 million or 0.6% increase in deferred compensation. Net income and diluted earnings per share were reported at $14 million and 19 cents, respectively. Adjusted evidop for the quarter was $24.8 million, or 5.8%. Cash flow and adjusted cash flow from operations was $4.3 million and $19 million, respectively.
Matt Mckee: SG&A was reported at $46 $9 million, but after adjusting for the $2 $4 million increase in deferred compensation actual SG&A was $44 $5 million or 10, 4%.
Matt Mckee: The company's goal continues to be achieving SG&A in the eight and a half to nine and a half. Other income was reported at $2.3 million, or 0.5%, and other income includes a $2.4 million, or 0.6% increase in deferred compensation. Net income and diluted earnings per share were reported at $14 million and $0.19 respectively. Adjusted EBITDA for the quarter was $24.8 million, or 5.8%. Cash flow and adjusted cash flow from operations was $4.3 million and $19 million respectively.
Matt Mckee: Companys goal continues to be achieving SG&A in the eight five to nine 5% range.
Matt Mckee: Other income was reported at $2 $3 million or <unk>, 5%.
Matt Mckee: Other income includes a $2 4 million or 6% increase in deferred compensation.
Matt Mckee: Net income and diluted earnings per share were reported at $14 million and 19, respectively.
Matt Mckee: Adjusted EBITDA for the quarter was $24 $8 million or five 8%.
Matt Mckee: Cash flow and adjusted cash flow from operations was $4 3 million and $19 million respectively.
Matt: The company reaffirmed its 2024 adjusted cash flow from operations range of $40 to $55 million. And the company has repurchased over 350,000 shares or $4 million of its common stock so far in 2024, including over 90,000 shares or $1 million of its common stock during the third quarter. Since February 2023, share repurchased authorization, we have repurchased 1.4 million shares or $15.2 million of our common stock. And we have 6.1 million shares remaining under our authorization.
Matt Mckee: The company reaffirmed its 2024 adjusted cash flow from operations range of $40 to $55 million. And the company has repurchased over 350,000 shares or $4 million of its common stock so far in 2024, including over 90,000 shares or $1 million of its common stock during the third quarter. Since February 2023 share repurchase authorization, we have repurchased 1.4 million shares or $15.2 million of our common stock, and we have 6.1 million shares remaining under our authorization.
Matt Mckee: The company reaffirmed its 2024 adjusted cash flow from operations range of $40 million to $55 million.
Matt Mckee: And the company has repurchased over 350000 shares or $4 million of its common stock. So far in 2024, including over 90000 shares were $1 million of its common stock during the third quarter.
Speaker Change: Since the February 2023 share repurchase authorization, we have repurchased one 4 million shares or $15 $2 million of our common stock.
And we have $6 1 million shares remaining under our authorization.
Matt: So, with those opening remarks, we'd now like to open up the call for questions. Thank you. The floor is now open for questions.
Matt Mckee: So with those opening remarks, we'd now like to open up the call for questions. Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join.
Speaker Change: So with those opening remarks, we'd now like to open up the call for questions.
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Operator: If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join us. and the Q. If you would like to withdraw your question, simply press star one again.
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Operator: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: If you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question again, the press star one to join the queue.
Unknown Executive: And your first question comes from Sean Dodge from RBC Capital Markets. Please go ahead.
Speaker Change: And your first question comes from the line of Sean Dodge from RBC capital markets. Please go ahead.
Sean Dodge: Yeah, thanks.
Sean Dodge: Good morning. Ted, on the cash flow, you made really good progress there during the quarter. Is there anything else you can share just around visibility you have at this point into the full year target? I know, Q4 tend to be very seasonally strong for you. You mentioned at the top of the call, the improving macro backdrop. I guess, is there still some catching up that's happening to with with all of the payments kind of posted the change outage?
Unknown Executive: On the cash flow, you made really good progress there during the quarter.
Sean Dodge: Yeah. Thanks, good morning.
Sean Dodge: Ted on the cash flow you've made really good progress there during the quarter is there anything else you can share just around the visibility you have at this point into the full year target I know Q4 tend to be very seasonally strong for you you mentioned at the top of the call the improving macro backdrop.
Sean Dodge: Is there anything else you can share just around the visibility you have at this point into the four-year target. I know Q4s tend to be very seasonally strong for you. You mentioned at the top of the call, the improving macro backdrop. I guess there's still some catching up that's happening too with all of the payments kind of posted the change outage.
Sean Dodge: I guess is there still some catching up that's happening too with.
Sean Dodge: All of the payments kind of post the change outage.
Chad Lowe: Yes, Sean, and thank you for the question. We did achieve over 98.5% collections for the quarter, and that helped drive that 19 million adjusted cash flow that we posted, which was in line with our target range and really higher compared to last quarter in the same period last year. So we're proud of that accomplishment. We do have positive momentum heading into the fourth quarter, evidence by our Q3 results and also the very positive start we've gotten off to in October. So all of that works in our favor, and then you mentioned it, but we also have the benefit of seasonality working in our favor.
Ted Lowe: Yes, Sean, and thank you for the question. We did achieve over 98.5% collections for the quarter, and that helped drive that $19 million adjusted cash flow that we posted, which was in line with our targeted range and really higher compared to last quarter in the same period last year, so we're proud of that accomplishment. We do have positive momentum heading into the fourth quarter, evidenced by our Q3 results, and also the very positive start we've gotten off to in October, so all of that works in our favor, and then you mentioned it, but we also have the benefit of seasonality working in our favor.
Speaker Change: Yes, Sean and thank you for the question, we did achieve over 98, 5% collections for the quarter and that helped drive that $19 million adjusted cash flow that we posted which was in line with our targeted range and really higher compared to last quarter in the same period last year. So we're proud of that accomplishment.
Speaker Change: We do have positive momentum heading into the fourth quarter.
Speaker Change: Evidenced by our Q3 results and also the very positive start we've gotten off to an October so all of that works in our favor and then you mentioned it but we also had the benefit of seasonality working in our favor. Historically Q4 has been our strongest collections quarter. We have the attention of yearend and makeup payments from prior periods you sited.
Ted Lowe: Historically, Q4 has been our strongest collections quarter. We have the tension of year-end and make-up payments from prior periods. You cited change healthcare as an example, so yes, we do expect, in addition to what we've collected with respect to those delays in Q3, we do expect continued collections on those change healthcare delays in Q4, and then, as we highlighted before, in past years, we do have some year-end cash basis taxpayers, so our goal overall continues to be optimizing cash collections in the quarter ahead and 2025. We continue to expect our collections to gain strength into next year with that improving macro backdrop that you highlighted, and again, we're going to continue to focus on increasing payment frequency, taking our customers and our clients from monthly to weekly and or biweekly, continuing to focus on using promissory notes proactively as a protective and proactive measure, and then ultimately remaining disciplined in our decision-making for both existing business and, of course, new business.
Chad Lowe: Historically, Q4 has been our strongest collections quarter. We have the tension of year-end, the makeup payments from prior period you cited change health care as an example. So yes, we do expect, in addition to what we've collected with respect to those delays in Q3, we do expect continued collections on those Change Healthcare delays in Q4. And then, as we highlighted before in past years, we do have some year-end cash basis taxpayers.
Speaker Change: Health care as an example, so yes, we do expect in addition to what we've collected with respect to those delays in Q3, we do expect continued collections on those change healthcare delays in Q4, and then as we highlighted before in past years, we do have some year end cash basis taxpayers. So our goal.
Chad Lowe: So our goal overall continues to be optimizing cash collections in the quarter head and 2025. We continue to expect our collections to gain strength into next year with that improving macro backdrop that you highlighted. And again, we're going to stick our folks, continue to focus on increasing payment frequency, taking our customers and our clients from monthly to weekly and/or biweekly, continuing to focus on using pro, promissory notes proactively as a protective and proactive measure, and then ultimately remaining disciplined in our decision making for both existing business and, of course, new business.
Speaker Change: Overall continues to be optimizing cash collections in the quarter ahead. In 2025, we continue to expect our collections to gain strength into next year with that improving macro backdrop that you highlighted and again, we're going to stick or continue to focus on increasing payment frequency, taking our customers and our clients from.
Speaker Change: Monthly two weekly <unk> bi weekly.
Speaker Change: Continuing to focus on using promissory notes proactively as a protective and proactive measure and then ultimately remaining disciplined in our decision making for both existing business and of course new business.
Unknown Executive: Okay, great.
Sean Dodge: Okay, great.
Sean Dodge: And then Matt, how many days of payroll accrual were there in in the quarter in the third quarter? And then can you guess what that'll be in days for the fourth quarter?
Sean Dodge: And then how many days of payroll were there in the quarter and the third quarter, and then can you guess what that'll be in days for the fourth quarter? Yes, Sean, show that the third quarter was nine days, and then for the fourth quarter, it'll be three days.
Speaker Change: Okay, Great and then how many days of payroll accrual were there in the quarter in the third quarter and then can you give us what that will be in days for the fourth quarter.
Matt Mckee: Yeah, Sean, so the third quarter was nine days, and then for the fourth quarter, it'll be three days. Okay.
Speaker Change: Yes, Shawn so the third quarter was nine days and then for the fourth quarter it'll be three days.
Sean Dodge: Okay, and then last for me, if we just think about the pacing of revenue, what was the revenue run rate exiting the quarter, and then anything you can share on how we should be thinking about growth heading into next year is just annualizing the Q4 guidance.
Sean Dodge: And then last for me, if we just think about the pacing of revenue, what was the revenue run rate exiting the quarter? And then anything you can share on how we should be thinking about growth heading into next year is just annualizing the Q4 guidance. Is that a fair way to kind of start to think about 2025 or are conditions such now that we could continue to see some acceleration and the dining cross sell is kind of the quarter's role on here?
Speaker Change: Okay and then.
Speaker Change: Last for me if we just think about the pacing of revenue what was the revenue run rate exiting the quarter and then anything you can share on how we should be thinking about growth heading into next year.
Chad Lowe: Is that a fair way to kind of start to think about 2025, or are conditions such now that we could continue to see some acceleration and the dining cross those as kind of the quarters roll on here. Well, I think big picture, very optimistic heading into 2025. We've really, from a pipeline perspective, demand for the services, management development, all of those indicators are trending very positively.
Speaker Change: Just annualizing. The Q4 guidance is that a fair way to kind of start to think about 2025 or are.
Speaker Change: Such now that we could continue to see some acceleration in the dining cross sell.
Ted Lowe: Well, I think big picture, very optimistic heading into 2025. We've really, from a pipeline perspective, demand for the services, management, development, all of those indicators are trending very positively. I think, Sean, even to zoom out for a moment, if you recall, coming into the year, we shared our expectations around revenue growth. And at that time, it was more in the spirit of crawl, walk, run, we had the goal of growing the top line in the second half of the year, compared to the first half of the year. And that cadence of growth that we anticipated was really aligned with how we were thinking about the industry recovery, and really rounding that final turn of recovery, the operating environment that existed at that time, and then what we saw as the improving financial strength of our customer base, and ultimately, future growth and client partners.
Speaker Change: It's kind of the quarters roll out here.
Speaker Change: Well I think big picture very optimistic heading into 2025, we really from a pipeline perspective demand for the services management development. All of those indicators are trending very positively I think Sean even to zoom out for a moment, if you recall coming into the year, we shared our expectations around.
Chad Lowe: I think Sean, even to zoom out for a moment, if you recall coming into the year, we shared our expectations around revenue growth. And at that time, it was more in the spirit of crawl, walk, run. We had the goal of growing the top line in the second half of the year. Compared to the first half of the year. And that cadence of growth that we anticipated was really aligned with how we were thinking about the industry recovery, and really rounding that final turn of recovery, the operating environment that existed at that time. And then what we saw as the improving financial strength of our customer base, and ultimately future growth and client partners.
Speaker Change: Revenue growth and at that time it was more in the spirit of crawl walk run we had the goal of growing the top line in the second half of the year compared to the first half of the year and that cadence of growth that we anticipated was really aligned with how we were thinking about the industry recovery and really rounding that final turn of recovery the <unk>.
Speaker Change: Operating environment that existed at that at that time, and then what we saw as the improving financial strength of our customer base and ultimately future growth and client partners. So.
Ted Lowe: So, coming into the final months of 2024, I think we're confident that we're going to hit that goal that we set at the beginning of the year. I think more specific to Q4 and 2025, we added business pretty evenly throughout the quarter. We're in the midst of prospect discussions that we know are going to amount to more meaningful ads, certainly in the coming quarters, if not in the quarter ahead. The only other piece I'd add is that Matt and I are always highlighting is the importance of retention on our existing business to new growth opportunities.
Chad Lowe: So, coming into the final months of 2024, I think we're confident that we're going to hit that goal that we set at the beginning of the year. I think more specific to Q4 and 2025, we added business pretty evenly throughout the quarter. We're in the midst of prospect discussions that we know we're going to amount to more meaningful ads, certainly in the coming quarters, if not in the quarter ahead. Some of those are already signed and started. We have a pool of customers or future customers that are signed but not yet started. And then we have a group that are more or less in the final stages of contracting that could be pulled forward into Q4 or pushed out into Q1.
Speaker Change: Coming into the final months of 2024, I think we're confident that we're going to hit that goal that we set at the beginning of the year I think more specific to Q4 and 2025, we added business pretty evenly throughout the quarter. We're in the midst of prospect discussions that we know we're going to amount to more meaningful add certainly in the in the <unk>.
Speaker Change: Coming quarters, if not in the quarter ahead. Some of those are already signed and started we have a pool of customer customers or future customers that are signed but not yet started and then we have a group that are more or less in the final stages of contracting that could be pulled forward into Q4 or <unk>.
Chad Lowe: But again, overall, in the spirit of accuracy rather than precision, we're really feeling confident and bullish on the next few quarters of growth. I know we mentioned that improving visibility we have into the pipeline, compared to where we were a year or two ago. I think the timing of those ads, as I mentioned, is what really drives the impact in any given quarter relative to the estimated revenue ranges.
Speaker Change: It out into Q1, but again overall.
Speaker Change: The spirit of accuracy, rather than precision, we're really we're really feeling confident and bullish on the next few quarters of growth I.
Speaker Change: I know, we mentioned that improving visibility we have into the pipeline.
Speaker Change: Compared to where we were a year or two ago I think the timing of those adds as I mentioned is what really drives the impact in any given quarter relative to the estimated revenue range is the only other piece I'd add is that Matt and I are always highlighting is the importance of retention on our existing business to new growth.
Chad Lowe: The only other piece I'd add is that Matt and I are always highlighting is the importance of retention on our existing business to new growth opportunities. We do expect some of the financial-related exits we've had over the past few years post-COVID through industry recovery. We expect to subside going forward, but we have to remain disciplined in our decision making. And be nimble if we believe it's in the best long-term interest or near-term interest to exit a client group with whom we have concerns.
Ted Lowe: We do expect some of the, I'd say, financial-related exits we've had over the past few years post-COVID through industry recovery, we expect to subside going forward. But again, overall, we're confident that we're going to hit our top-line growth goal that we had set at the beginning of the year, growing second half compared to first half.
Speaker Change: Opportunities, we do expect.
Speaker Change: Some of the I would say financial related exits we've had over the past few years post COVID-19 through industry recovery, we expect to subside.
Speaker Change: Forward, but we have to remain disciplined in our decision, making and be nimble. If we believe it's in the best long term interest or near term interest to exit a client group with whom we have concerns. So that's that's really the tale of the tape as we think about revenue, but again overall, we're confident that we're going to hit our topline growth goal.
Chad Lowe: So that's really the tale of the tape as we think about revenue. But again, overall, we're confident that we're going to hit our top-lying growth goal that we had set at the beginning of the year, growing second half compared to first half.
Speaker Change: That we had set at the beginning of the year growing second half compared to first half and I think we'll be in a position to more specifically talk about 2025 growth expectations. When we're together in February on this call certainly beyond our expectations at 2025 is going to be a year of growth, which we feel confident about.
Chad Lowe: And I think we'll be in a position to more specifically talk about 20-25 growth expectations when we're together in February on this call. Certainly beyond our expectations that 20-25 is going to be a year of growth, which we feel confident about.
Ted Lowe: And I think we'll be in a position to more specifically talk about 2025 growth expectations when we're together in February on this call, certainly beyond our expectations that 2025 is going to be a year of growth, which we feel confident about.
Unknown Executive: Okay. Sounds great.
Sean Dodge: Okay, sounds great. Thanks and congratulations again.
Unknown Executive: Thanks and congratulations again. Thank you, Sean.
Unknown Executive: Thank you. Your next question comes from the line of Andy Wittmann with Baird.
Speaker Change: Okay sounds great thanks, and congratulations again.
Andy Whitman: Your next question comes from the line of Andy Whitman with Barrett. Please go ahead.
Speaker Change: Thank you Sean.
Andy Wittmann: Please go ahead. Yeah, good morning guys. Thank you for taking my questions.
Speaker Change: Your next question comes from the line of Andy Wittmann with Baird. Please go ahead.
Andy Whitman: Yeah, good morning, guys. Thank you for taking my questions. I have kind of one just kind of technical question, and then I'm going to follow up with a broader picture question, but start out here. Guys, you know, in the past, recognizing that the credit adjustments under peaceful accounting can be lumpy, positive or negative in any given quarter, I was just hoping that you could tell us what the hypothetical difference between here. Excuse me.
Andy Wittmann: I have kind of one just kind of technical question and then I'm going to follow up with a broader picture question. But to start out here, guys, you know, in the past recognizing that the credit adjustments under FECAL accounting can be lumpy, positive or negative in any given quarter, I was just hoping that you could tell us what the hypothetical difference between your I have hypothetical difference between your results here, GAP results, including the CECL, how those would have compared versus the legacy GAP accounting standard here, either like if you could just quantify that on a pre-tax or on a per share basis.
Speaker Change: Okay.
Andy Wittmann: Yes. Good morning, guys. Thank you for taking my questions I have kind of one just kind of a technical question and then I'm going to follow up with a broader picture question, but sort out here guys in the past recognizing that the credit adjustments under Cecil accounting can be lumpy.
Andy Wittmann: Positive or negative in any given quarter I was just hoping that you could tell us.
Andy Wittmann: What the hypothetical difference between year.
Matt: I have a medical difference between your results here, gap results, including this view, so how those would have compared versus the legacy gap accounting standard here, either like if you could just quantify that on a pre-tax or on a per share basis. I've just talked about this in the past on other quarters. You're not here, but I thought it would be just informative for all of us to understand what that difference was and how I contributed to the results in this quarter. Yes, so prior to the Cecil standard, we booked bad debt as it was incurred or known, right?
Excuse me I've aesthetical difference between your results here GAAP results, including the Q. So how those would have compared versus the legacy GAAP accounting standard here either like if you could just quantify that on a pre tax or on a per share basis.
Matt Mckee: Obviously, you've talked about this in the past on other quarters, you're not here, but I thought it'd be just informative for all of us to understand what that difference was and how it contributed to the results this quarter. Yeah, so, you know, prior to the CECL standard, we booked bad debt as it was incurred or known, right? So really, bad debt this quarter would have looked quite comparable, really, under the CECL standard as compared to that previous standard. But I said, you're trying to bridge to an adjustment, Andy. So the way that we've discussed it previously is that in recent years, you know, kind of prior to CECL, bad debt was averaging around 70 basis points of revenue.
Andy Wittmann: You've talked about this in the past on other quarters youre not here, but I thought it'd be informative for all of us to understand what that difference was and how it contributed to the results this quarter.
Andy Wittmann: Okay.
Speaker Change: Yes, so prior to the <unk> standard we book Bad debt as it was incurred are known right. So really bad debt this quarter would've looked quite comparable really under the <unk> standard as compared to that previous standard but.
Matt: So really, bad that this quarter would have looked quite comparable really under the Cecil standard as compared to that previous standard, but I said you're trying to bridge to an adjustment. And so the way that we've discussed it previously is that in recent years, prior to Cecil, bad that was averaging around 70 basis points of revenue. So that's an average number, so worth noting that it was certainly certain quarters and years in which we were well below that mark, but then you'd have a specific client restructuring or a bankruptcy, and you could see bad debt elevated for a quarter, and that would ultimately lead to some of the variability quarter to quarter and then even year to year.
Speaker Change: I said, you're trying to bridge to an adjustment Andy So the way that we've discussed previously is that in recent years.
Speaker Change: Prior to seasonal bet that was averaging around 70 basis points of revenue. So that's an average number so worth noting that it was certainly certain quarters in years in which we were well below that mark, but then you'd have a specific client restructuring or a bankruptcy and you can see bad debt elevated for a quarter and that would ultimately lead to.
Matt Mckee: So, you know, that's an average number. So worth noting that it was, you know, certainly certain quarters and years in which we were well below that mark, but then you'd have a specific client restructuring or a bankruptcy, and you could see bad debt elevated for a quarter, and that would ultimately lead to, you know, some of the variability quarter to quarter and then even year to year. So in any quarter, since we introduced CECL, really inserting 70 bits of revenue, Andy, as a bad debt plug would really offer a comparison versus what we were averaging using, you know, what you referred to as that legacy accounting standard.
Matt: So in any quarter, since we introduced Cecil, really inserting 70 bits of revenue, Andy, as a bad debt plug, would really offer a comparison versus what we were averaging using, you know, what you referred to as that legacy accounting standard. Okay, all right, got it.
Speaker Change: Some of the variability quarter to quarter, and then even year to year. So in any quarter. Since we introduced seasonal really inserting 70 bps of revenue Andy as a bad debt plug would really offer a comparison versus what we were averaging using what you referred to is that legacy accounting standard.
Andy Wittmann: All right, got it.
Andy Whitman: All right, so then I guess I'd just stepping back here a little bit, I'm just curious, like, are you seeing, what are you seeing in terms of the sniff room demand from the increasing levels of acuity that are being managed in assisted living locations? Now these assisted living locations seem to be functioning increasingly the way it's missed used to, and I was just wondering what the company's pathway or potential was to expand into these higher acuity assisted living facilities is. Are there barriers either at those facilities or structural limits of your business that prevents you or including you from addressing that as a market opportunity.
Andy Wittmann: Alright, so then, I guess, Ted, just stepping back here a little bit. I'm just curious, like, Are you seeing, what are you seeing in terms of the SNF room demand from the increasing levels of acuity that are being managed in assisted living locations? Now, these assisted living locations seem to be functioning increasingly the way SNF used to.
Speaker Change: Okay Alright.
Speaker Change: Alright got it.
Speaker Change: Alright.
Speaker Change: I guess, just stepping back here a little bit I'm just curious like.
Speaker Change: Are you seeing.
Speaker Change: What are you seeing in terms of the Smith rune demand from the increasing levels of acuity that are being managed in assisted living locations.
Speaker Change: These assisted living locations seem to be functioning increasingly the way it used to.
Ted Lowe: And I was just wondering what the company's pathway or potential was to expand into these higher acuity assisted living facilities is? Are there like barriers either at those facilities or structural elements of your business that I'm just kind of curious if you could just talk about what these higher acuity assisted living places mean for you and how you are addressing them.
Speaker Change: I was just wondering what the company's pathway or potential was to expand into these higher acuity assisted living.
Facilities is are there like barriers either at those facilities or structural elements of your business that <unk>.
Speaker Change: Prevents you or precluding you from from addressing that as a market opportunity.
Chad Lowe: I'm just kind of curious if you could just talk about what these higher acuity assisted living places mean for you and how you are addressing it. Yeah, and it's a great question, Andy. I think, you know, when you think big picture, right, the 2030 problem is real. You know, you have the ongoing demographic tailwind for companies like ours and that operate in the senior living end or long term care space, and the idea that, you know, as those macro trends continue to work in all of those companies, whether it's the provider or the service. Companies that operate in that space, as the macro trends continue to improve, so do the opportunities across all parts of the continuum from independent living through, as you highlighted, senior living, more traditional assisted living opportunities, right on through long term care, nursing homes, and then ultimately hospice.
Speaker Change: I'm just kind of curious if you could just talk about what these higher acuity assisted living places mean.
Ted Lowe: Yeah, and it's a great question, Andy. I think, you know, when you when you think big picture, right, the 2030 problem is real. You know, you have the ongoing demographic tailwind for companies like ours, and that operate in the senior living and or long term care space. And the idea that, you know, in as the as those macro trends continue to work in all of those companies, whether it's the provider or the service, companies that operate in that space, as the macro trends continue to improve, so do the opportunities across all parts of the continuum from independent living through, as you highlighted, senior living, more traditional assisted living opportunities, right on through long term care, nursing homes, and then ultimately hospice.
Speaker Change: I mean for you and how you are addressing it.
Speaker Change: If at all.
Speaker Change: Yes.
Speaker Change: And it's a great question, Andy I think when you when you think big picture right. The 2030 problem is real you know you have the ongoing demographic tailwind for companies like ours and that operate in the senior living <unk> long term care space and the idea that.
Speaker Change: As the as those macro trends continue to work in all of those companies, whether it's the provider or the service companies that operate in that space as the macro trends continue to improve so do the opportunities across all parts of the continuum from independent living through as <unk>.
Speaker Change: Delighted senior living more traditional assisted living opportunities right on through long term care nursing homes, and then ultimately hospice. So we see ourselves playing a role in that entire continuum. Obviously historically, our core focus has been in and around the traditional long term post acute care facility.
Ted Lowe: So we see ourselves playing a role in that entire continuum. Obviously, historically, our core focus has been in and around the traditional long term or post acute care facility, i.e. the nursing home. Today, that makes up roughly 80% of our business, but in that other 20% is a rapidly growing and a great opportunity part of the company. We mentioned education, that is still less than 5% of our revenues, but has tremendous opportunity. But when you think about, as you highlighted, the assisted living, more higher acuity level assisted living facilities, as well as behavioral health, substance abuse centers, they all make up very attractive opportunities for the company moving forward.
Chad Lowe: So we see ourselves playing a role in that entire continuum. Obviously, historically, our core focus has been in and around the traditional long-term or post-acute care facility, i.e., the nursing home. Today, that makes up roughly 80% of our business, but in that other 20% is a rapidly growing and a great opportunity part of the company. We mentioned education that is still less than 5% of our revenues, but has tremendous opportunity. But when you think about, as you highlighted, the assisted living, more higher acuity level assisted living facilities, as well as behavioral health substance abuse centers, they all make up very attractive opportunities for the company moving forward.
Speaker Change: <unk> I E. The nursing home today that makes up roughly 80% of our business, but in that other 20% is.
Speaker Change: As a rapidly growing and a great opportunity part of the company. We mentioned education that is still less than 5% of our revenues, but has tremendous opportunity, but when you think about as you highlighted the assisted living more higher acuity level assisted living facilities as well as behavioral health.
Speaker Change: Since abuse centers, they all make a very attractive opportunities for the company moving forward, we're well positioned to take advantage of those opportunities. We havent talked about inorganic growth opportunities recently on calls like this but we are always have one eye open for different brands that could be <unk>.
Ted Lowe: We're well positioned to take advantage of those opportunities.
Chad Lowe: We're well positioned to take advantage of those opportunities.
Ted Lowe: We haven't talked about inorganic growth opportunities recently on calls like this, but we always have one eye open for different brands that could be complementary to our existing brand, but even under the HCSG umbrella, we think there's a clear runway to continue to grow and expand in that market. And I would just distinguish, Andy, one component relative to your question in the sense that as we look at that assisted living market specifically, first off, you're absolutely correct in your assessment of increasing acuity levels in assisted living. You know, there are folks that we see in assisted living today who, you know, even as few as six years ago would have absolutely been in a skilled environment.
Chad Lowe: We haven't talked about inorganic growth opportunities recently on calls like this, but, you know, we always have one eye open for, you know, different brands that could be complimentary to our existing brand, but even under the HCS SG umbrella, you know, we think there's a clear runway to continue to grow and expand in that market. And I would just distinguish Andy one component relative to your question in the sense that as we look at that assisted living market specifically, first off you're absolutely correct in your assessment of increasing acuity levels in assisted living. You know, there are folks that we see in assisted living today who, and how even as you know, few as six years ago would have absolutely been in a skilled environment.
Speaker Change: Complementary to our existing brand, but even under the HCS SG umbrella. We think there is a clear runway to continue to grow and expand in that market.
Speaker Change: And I would just distinguish Andy one component relative to your question in the sense that as we look at that assisted living market, specifically first off you're absolutely correct in your assessment of increasing acuity levels in assisted living there are folks that we see in assisted living today, who.
Chad Lowe: So that is a dynamic that's that's evolving for sure. I would point out, though, that just from a demand perspective, the model relative to housekeeping services and even laundry services in assisted living facilities tends to be, you know, still more of almost a universal aid model, right? You still have, generally speaking, most residents are able to clean their own apartment, their own space. So you have a universal aid who may be contributing to cleaning common areas in the facility and performing other, you know, random functions as a component of their facility employment. And you can track that though with dining, where absolutely dining is a significant area of focus and, you know, a massive component of the resident, you know, experience at an assisted living facility.
Speaker Change: Even as few as six years ago would have absolutely been in a skilled environment. So that is a dynamic that's.
Ted Lowe: So that is a dynamic that's evolving for sure. I would point out, though, that just from a demand perspective, the model relative to housekeeping services and even laundry services in assisted living facilities tends to be, you know, still more of almost a universal aid model, right? You still have, generally speaking, most residents are able to clean their own apartment, their own space. So you have a universal aid who may be contributing to cleaning common areas in the facility and performing other, you know, random functions as a component of their facility employment. You contrast that, though, with dining where absolutely dining is a significant area of focus and, you know, a massive component of the resident, you know, experience at an assisted living facility.
Speaker Change: That's evolving for sure I would point out, though that just from a demand perspective, the model relative to housekeeping services and even laundry services in assisted living facilities tends to be still more of almost a universal aid model right. You still have generally speaking most residents are able to clean their own apartment their own <unk>.
Speaker Change: So you have a universal aid who may be contributing to cleaning common areas in the facility and performing other random functions as a component of their facility employment.
Speaker Change: You contrast that though with dining we're absolutely dining is a significant area of focus and.
Speaker Change: <unk>.
Speaker Change: Massive component of the resident.
Ted Lowe: So, you know, as we look to further expand our footprint in dining services, you know, by virtue of the acquisition that we made that was intended relative to the education and market but is also certainly transferable into the higher end assisted living market, that remains an opportunity for us.
Andy Whitman: So, you know, as we look to further expand our footprint in dining services, you know, by virtue of the acquisition that we made that was intended relative to the education and market, but is also certainly transferable into the higher end assisted living. So I would say in the near term, at least, Andy, a greater opportunity in assisted living from a dining perspective as compared to environmental services.
Speaker Change: Experience at an assisted living facility. So as we look to further expand our footprint and dining services by virtue of the acquisition that we made that was intended relative to the education end market, but there's also certainly transferable into the higher end assisted living market that remains an opportunity for us. So I would say in the near term at least Andy.
Ted Lowe: So I would say in the near term at least, Andy, a greater opportunity in assisted living from a dining perspective as compared to environmental services.
Speaker Change: A greater opportunity in assisted living from a dining perspective as compared to environmental services.
Unknown Executive: Okay. Great.
Andy Wittmann: Great.
Unknown Executive: I'll leave it there, guys.
Unknown Executive: All of it there, guys. Have a good day.
Unknown Executive: Have a good day.
Andy Wittmann: Okay, Great I'll leave it there guys have a good day.
Bill Sutherland: Your next question comes from the line of Bill Sutherland with Benchmark. Please go ahead.
Unknown Executive: Your next question comes from the line of Bill Sutherland with Benchmark.
Speaker Change: Yes.
Speaker Change: Yeah.
Bill Sutherland: Please go ahead. Hey, thanks.
Speaker Change: Your next question comes from the line of Bill Sutherland with benchmark. Please go ahead.
Bill Sutherland: Hey, thanks.
Bill Sutherland: Morning, guys. Just to follow up on Andy's question, it got me thinking, are you seeing any of your SNF clients experiencing declines in the skill in the skill mix? You know, certainly, there's a variability that occurs, you know, client to client, you know, there are certain clients and operators who are more focused on driving, for instance, Bill, you know, the short term, post acute rehab type stay versus others who are catering to more of the long term care, the true long term care resident, you know, within their patient mix. So I'd say it's hard to offer any specifics bill relative to what we're seeing.
Chad Lowe: Morning, guys. Just to follow up on Andy's question, I got me thinking, are you seeing any of your clients experiencing declines in the skill mix? You know, certainly there's a variability that occurs client to client. You know, there are certain clients and operators who are more focused on driving, for instance, Bill, you know, that short-term post-acute rehab tights day versus others who are catering to more of the long-term care, the true long-term care resident, you know, within their patient mix. So I'd say it's hard to offer any specific bill relative to what we're seeing, but you know, definitely within any particular client or end market, you know, you could see a variability.
Bill Sutherland: Thanks, Good morning, guys.
Bill Sutherland: Just to follow up on Andy's question, you got me thinking are you seeing any of your sniff clients.
Bill Sutherland: Experiencing declines in the skill and the school.
Bill Sutherland: Thanks.
Speaker Change: Certainly there is a.
Speaker Change: <unk> ability that occurs client to client there are.
Speaker Change: Certain clients and operators, who are more focused on driving for instance, bill that short term post acute rehab type stay versus others, who are catering to more of the long term care. The true long term care resident within their patient mix. So I'd say, it's hard to offer any specifics bill relative to.
Ted Lowe: But, you know, definitely within any particular client or end market, you know, you could see variability.
Speaker Change: What we're seeing but definitely within.
Any particular client or.
Bill Sutherland: Okay. On the SG&A number, which is riding line this quarter. And you've spoken about the potential.
Bill Sutherland: Okay.
Speaker Change: End market you can see variability.
Matt: On the SGA number, which is right in line, this quarter. And you've spoken about the potential to use various love, you know, very, very approaches to efficiencies and technology to, you know, doing under there and also in cost of sales. So I'm just wondering, should we think about, on an absolute dollar basis, SGA being managed even lower, or is it just something that you can maybe manage flat against a growing.
Speaker Change: Okay.
Speaker Change: On the SG&A number.
Speaker Change: Which is right in line this quarter.
Speaker Change: And you've spoken.
Speaker Change: About the potential.
Matt Mckee: use various love, you know, various approaches to efficiencies and technology to, you know, do even are there and also in cost of sales. So I'm just wondering, should we think about. on absolute dollar basis, SG&A. being managed even lower? Or is it just something that you can maybe manage flat on against a growing to get it into the range you want it in as far as percent. It's actually a mix of the two, Bill. I think when you look over the past 12 months, SG&A has been relatively flat from a quarter-to-quarter basis. You know, longer term, our goal is to manage SG&A.
Speaker Change:
Speaker Change: Two.
Speaker Change: Use various lump.
Speaker Change: Bruce.
Speaker Change: Approaches to efficiencies in technology.
Speaker Change: Sure.
Doing so.
Speaker Change: And also in cost of sales. So im just wondering should we think about.
Speaker Change: On absolute dollar basis SG&A.
Speaker Change: <unk>.
Speaker Change: <unk> managed to even lower or is it just something that you can maybe manage flat.
Speaker Change: Against a growing revenue base.
Speaker Change: It into the range you want it and as far as percent of revenue.
Speaker Change: It's actually a mix of the two bill I think when you look over the past 12 months SG&A has been relatively flat.
Speaker Change: From a from a on a quarter to quarter basis longer term our goal is to manage SG&A.
Matt Mckee: You know, we think of it as a percentage opportunity in that eight and a half to nine and a half percent targeted range. Obviously, it's higher than that today as a percentage of revenue, but we expect to continue to make the investments that we've made, you know, over the past couple years. And as we grow the top line, we're going to be able to further leverage the fixed portion of that SG&A and really scale it, you know, relative to that top-line growth.
Speaker Change: We think of it as a percentage opportunity in that eight five to nine 5% targeted range, obviously, it's higher than that today as a percentage of revenue, but we expect to continue to make the investments that we've made.
Speaker Change: Over the past couple of years and as we grow the top line, we're going to be able to further leverage the fixed portion of that SG&A and really scale. It relative to that top line growth. So you mentioned some of the investments we're going to continue to invest in employee engagement and experience, which we've mentioned.
Matt Mckee: So you mentioned some of the investments. We're going to continue to invest in employee engagement and experience, which, you know, we've mentioned before, but we're in the midst of a company-wide initiative that's going to continue to drive items like retention and overall operating performance, which is oftentimes reflected in the cost of services line item. Similar, we talked about marketing brand, marketing and brand positioning, which we continue to view as critical for both external as well as those internal stakeholders I alluded to, i.e. employees and burnishing the image of the company and, you know, their pride in working within the four walls of community and that correlation to the HCSG brand.
Speaker Change: Before but we're in the midst of a companywide initiative, that's going to continue to drive items like retention and overall operating performance, which is often times reflected in the cost of services line item similar we talked about marketing brand marketing and brand positioning, which we continue to view as.
<unk> for both external as well as those internal stakeholders I alluded to <unk> employees.
Speaker Change: And furnishing the image of the company and their pride in working within the four walls of community and that correlation to the ICSC brand and then.
Matt Mckee: And then, you know, obviously technology investments, which you touched on, which we're excited about continuing to really leverage technology for more efficient service offering. you know, better engagement with our employees. So all of the above, and we expect, as I mentioned, to be able to do that while at the same time leveraging the fixed portion of SG&A as we grow the top line.
Speaker Change: Obviously technology investments, which you touched on which we're excited about continuing to really leverage technology for more efficient service offerings.
Speaker Change: Better engagement with our employees. So all of the above and we expect as I've mentioned to be able to do that while at the same time leveraging the fixed portion of SG&A as we as we grow the top line.
Bill Sutherland: Got it. One more I was thinking about is the education segment. No, it's still less than 5%. But curious if you're starting to see some benefit, or not benefit, but some seasonality. school year in your fourth quarter and first quarter.
Speaker Change: Got it.
Speaker Change: <unk>.
One more just thinking about is the education segment, no it's still less than 5% I'm just curious if youre starting to see some benefit we're not going to put some.
Speaker Change: Seasonality with the school year, and your fourth quarter first quarter.
Matt Mckee: Yes, so I guess just to distinguish, Bill, there is absolutely seasonality in that business. You know, not only in, you know, sort of the ramping of, you know, headcount, right to provide the services in the academic year, you know, a little bit of a lull, there's project work and reallocation of some of the labor hours during the summer months. But there's also seasonality in the selling and kind of administratively in the entree into that market. So the answer, the short answer is yes, there is absolutely seasonality that applies to that business. Does that translate into sort of, you know, an impact on total company results?
Speaker Change: Yes, so I guess just to distinguish bill there is absolutely seasonality in that business.
Speaker Change: Not only in sort of the ramping of.
Speaker Change: Head count.
Right to provide the services in the academic year, a little bit of a lull. There is some project work in reallocation of some of the labor hours during the summer months.
Speaker Change: But there's also seasonality in the selling and kind of administratively in the entre into that market. So the answer the short answer is yes. There is absolutely seasonality of that applies to that business does that translate into sort of an impact on total company results and should you see any impact relative to the fourth.
Bill Sutherland: And should you see any impact relative to the fourth quarter?
Matt Mckee: We're not yet at a spot, Bill, where there's enough sort of meaningful revenue there that it would have an impact on total company. Okay.
Speaker Change: Fourth quarter, we're not yet at a spot bill where there is enough sort of meaningful.
Bill Sutherland: Can I guess that?
Speaker Change: Revenue there that it would have an impact on total company okay.
Bill Sutherland: And then actually, let me sneak in the hurricane question, any comment on all the Florida issues or even Western North Carolina? Yeah, you know, certainly, you know, first off, Bill, we would want to offer our sympathies to everybody who was affected by the recent weather events down in the southeast. And, you know, we had clients and employees who suffered losses. So we're very sensitive to those challenges. But, you know, to your question, Bill, you know, fortunately, we had no major disruptions in our services or our supply chains. And that's on one hand, it's fortunate. But if you fan out, it's really more than just good luck.
Speaker Change: Yes.
Speaker Change: And then actually let me sneak in the Hurricane question.
Speaker Change: Andy comment.
Speaker Change: All of the Florida issues or even western North Carolina.
Andy Wittmann: Yes, certainly first off Bill we would want to offer our sympathies to everybody who was affected by the recent weather events down in the southeast and we.
Andy Wittmann: We had clients and employees, who suffered losses, so we're very sensitive to those challenges but.
Andy Wittmann: To your question Bill Fortunately, we had no major disruptions in our services or our supply chains and that's on one hand, it's fortunate but as you point out it's really more than just good luck, it's really the preparation planning and execution of our teams in both Florida, and North Carolina that helped us to mitigate those potential challenge.
Matt Mckee: It's really the preparation, planning and execution of our teams in both Florida and North Carolina that helped us to mitigate those potential challenges that the storms could have created. And, you know, our team in Florida is expert in handling weather related events and have an unbelievable track record of demonstrating our value to our clients and the residents that we serve. So specifically in Florida, we assisted with evacuations of 29 facilities. You know, that's over 2000 residents that we helped to relocate. And, you know, and even in adjacent geographies that weren't evacuated, our managers were providing up to 48 hours of continuous presence in the facilities, you know, to make sure that the residents were properly cared for and then remained on call 24-7, even after the storms had cleared.
Andy Wittmann: Is that the storms could have created in our team in Florida as expert and handling weather related events.
Andy Wittmann: Have an unbelievable track record of demonstrating our value to our clients and the residents that we serve so specifically in Florida, we assisted with evacuations have 29 facilities.
Andy Wittmann: Over 2000 residents that we help to relocate and uneven and adjacent geographies that werent evacuated our managers were providing up to 48 hours of continuous presence in the facilities to make sure that the residents were properly cared for and then remained on call $24 seven even after the storms had cleared so north Carolina was a little bit.
Matt Mckee: So North Carolina was a little bit unique in that Helene affected geography that's typically outside of the storm pathways, you know, mostly affected mountainous rural areas where we don't have, you know, large concentration of facilities. But our teams have rolled up their sleeves and jumped into really the cleanup efforts and are leveraging our vendor partners to help facilitate the flow of supplies into some of those affected areas. So, you know, terrible incidents, you know, it's heartbreaking to see the devastation that these storms have caused. But, you know, if we can, you know, modestly and with the utmost sensitivity offer any type of silver lining, it's that, you know, our client partners know that we're there for them.
Andy Wittmann: Unique in that Helene affect the geography, thats typically outside of the storm pathways.
Andy Wittmann: Mostly affected mountainous rural areas, where we don't have large concentration of facilities, but our teams have roll up their sleeves and jumped into really the cleanup efforts and are leveraging our vendor partners to help facilitate the flow of supplies into some of those affected areas. So.
Andy Wittmann: Terrible incidents, it's heartbreaking to see the devastation that these storms have caused but if.
Andy Wittmann: If we can modestly and with the utmost sensitivity offer any type of silver lining it's there.
Matt Mckee: You know, we have the resources and the expertise to plan and execute in a highly effective manner. So it offers us really an opportunity to further strengthen those client relationships and really bolster the residents of our value proposition.
Andy Wittmann: <unk>.
Andy Wittmann: Our client partners know that we're there for them, we have the resources and the expertise to plan and execute in a highly effective manner. So it offers us really an opportunity to further strengthen those client relationships and really bolster the residents of our value proposition.
Matt Mckee: Thanks, Matt. Appreciate it.
Unknown Executive: Your next question comes from the line of Ryan Daniels with William Blair. Please go ahead. Yeah, hi, everyone. This is Jack Senft on for Ryan. Thanks for taking the questions. I think in your answer to Sean's question, it sounded like much of the growth you're guiding to has been driven by cross sell opportunity.
Speaker Change: Thanks, Matt appreciate it.
Speaker Change: Your next question comes from the line of Ryan Daniels with William Blair. Please go ahead.
Speaker Change: Yes, hi, everyone. This is Jack on for Ian Thanks for taking the questions.
Speaker Change: In your answer to Sean's question it sounded like much of the growth you're guiding to it's been driven by cross sell opportunity but.
Jack Senft: But and I think you touched on this too, in some of the previous answers, but I was just wondering if you could maybe give an update on how the environmental services and just the education opportunities are shaping up in terms of demand here and really kind of how we should think about these going forward into 2025. Thanks. I think the demand for both, you know, environmental services, you mentioned the cross-sell, but certainly for environmental services as a standalone greenfield opportunity and then in the education side, demand is very strong on both fronts. You know, when you think about 2025 specifically, we would expect the growth to mirror what the current breakup is in revenues, so think more, you know, 45, 55-ish environmental services and dining.
Speaker Change: And I think you touched on this in some of the previous answers, but I was just wondering if you could maybe.
Speaker Change: Ill give an update on how the environmental services and just the education opportunities are shaping up in terms of demand here and really kind of how we should think about these going forward into 2025.
Speaker Change: The demand for both environmental services, you mentioned, the cross sell but certainly for environmental surfaces.
As a standalone greenfield opportunity and then in the education side demand is very strong on both fronts. When you think about 2025, specifically, we would expect the growth to mirror what is the current breakup is in revenues. So think more $45 55 ish environmental service.
Ted Lowe: You know, as we grow that greenfield EVS opportunity, we would expect that to not only create the cross-sell in dining, but as you alluded to, we have that existing EVS customer that is primed and ready for the dining and nutrition cross-sales. So that continues to be the lowest hanging fruit and a key part of our growth strategy moving forward, and I know Matt touched on it in one of the prior questions, but on the education front. high demand, it's still, you know, less than 5% of our revenues.
Speaker Change: As in dining.
Speaker Change: We grow that Greenfield evs opportunity.
Speaker Change: We would expect that to not only create the cross sell in dining, but as you alluded to we have that existing evs customer that is primed and ready for the dining for the dining and nutrition cross sales. So that continues to be the lowest hanging fruit and a key part of our growth strategy moving forward and I know Matt touch.
Speaker Change: On it and one of the prior questions, but on the education front.
Jack Senft: So we think of it heading into 2025 as more of a complement to our overall growth strategy than a specific, a specific, you know, standalone division, but we're, we continue to be very excited about the longer term prospects there and the opportunity that presents for the company. Okay, understood. Makes perfect sense. Thanks.
Speaker Change: High demand, it's still less than 5% of our revenues. So we think of it heading into 2025 is more of a complement to our overall growth strategy than a specific specific standalone division, but we continue to be very excited about the longer term prospects, there and the opportunity that presents for the company.
Ted Lowe: Just a quick follow up to where are you in terms of manager or from a manager training standpoint? Are you at a good staffing level to fill the facilities in order to drive growth into Q4 and even as we start to look into 2025? Or will this kind of be an area that we see you guys continue to bolster up? Very much so in a good position. I alluded to it or mentioned it as part of my conversation with Sean earlier, but that is an absolute critical part of our growth strategy. It's not just about the demand for the services and pairing up that demand with our leadership, local leadership in a given geography, but we need to make sure we have the requisite level of management, talent and depth to service those accounts.
Speaker Change: Okay understood makes perfect sense. Thanks, just a quick follow up to where are you in terms of manager from a manager training standpoint.
Speaker Change: Are you good staffing level to fill the facilities in order to drive growth into.
Speaker Change: Q4, and even as we start to look into 2020 fiber will go.
Speaker Change: To be an area that we.
Speaker Change: We see you guys continue to bolster up.
Speaker Change: Very much so in a good position I alluded to it or mentioned it as part of my conversation with Sean earlier, but that is an absolute critical part of our growth strategy. It's not just about there.
Speaker Change: The demand for the services and pairing up that demand with.
Speaker Change: Our leadership local leadership.
Speaker Change: In a given geography, but we need to make sure we have the requisite level of management talent and depth to service those accounts and as we as we begin to enter more normal times here in 'twenty five and then the years that follow we would expect the most significant gating factor on our ability to grow.
Ted Lowe: And as we begin to enter more normal times here in 25 and then the years that follow, we would expect the most significant gating factor on our ability to grow as being management development. We typically, when you look at years past and where we look at today, we're going to be able to train up and develop managers in a spot where we'd be comfortable growing that top line in 2025 and that mid, maybe high single digit range. But as I mentioned before, we're going to be able to refine that number more in February and give a better sense of the cadence of growth in 2025.
Speaker Change: As being management development, we typically when you look at years past and where we look at today, we're going to be able to train up and develop managers in a spot where we'd be comfortable growing that top line in 2025 and that mid maybe high single digit range, but as I mentioned before we're going to be able to refine that number.
Speaker Change: More in February and give a better sense of the cadence of growth in 2025, but generally speaking that continues to be the greatest gating factor on our on our ability to grow is how quickly we can hire develop and then dip.
Ted Lowe: But generally speaking, that continues to be the greatest gating factor on our ability to grow is how quickly we can hire, develop, and then deploy management talent. No one does it better than us. We have that district self-sustaining model where training centers in a given district are able to hire and train up the future management candidates and still a very difficult part of the job. More than two-thirds of our management candidates don't make their way out of that training program.
Speaker Change: Ploy management talent no one does it better than us we have that district self sustaining model, where training centers in a given district or able to.
Speaker Change: Hire and train up the future management candidates in still a very difficult part of the job more than two thirds of our management candidates don't make their way out of that training program, it's very hands on and Thats done by design, but we continue to believe although our way is not the only way that that's the best approach and making sure we have.
Ted Lowe: It's very hands-on and that's done by design, but we continue to believe, although our way is not the only way, that that's the best approach in making sure we have a prepared candidate when that growth opportunity presents itself.
Speaker Change: Prepared candidate when that growth opportunity presents itself.
Jack Senft: Perfect. Thanks.
Jack Senft: And if I can just sneak in one final longer term question, but you previously mentioned mental health and substance abuse disorders, possible opportunities down the road. And I know this wouldn't be for a while, but I'm just kind of curious if you can dive a little bit deeper into what these look like for the company and just kind of what the full opportunity would look like for both of these segments. Thanks. Yeah, Jack, I would say that certainly there's, you know, a lot of comparability from the skilled nursing and market as compared to specifically the inpatient, behavioral and rehab type facilities.
Speaker Change: Perfect. Thanks, and if I can just sneak in one final thought longer term question, but.
Speaker Change: You previously mentioned mental health and substance abuse disorder as possible opportunities down the road and I know this would be for a while but I'm just kind of curious if you can dive a little bit deeper into what these look like for the company and just.
Speaker Change: Just kind of what the full opportunity would look like for both of these segments.
Speaker Change: Yes, Jack I would say that certainly there is a lot of.
Speaker Change: Comparability from the skilled nursing and market as compared to specifically the inpatient behavioral and rehab type facilities. So when we think about what makes an attractive candidate for our services typically youre talking about an inpatient environment and that so that we can support financially having an onsite manager.
Ted Lowe: So you know, when we think about what makes an attractive candidate for our services, typically you're talking about an inpatient environment, and that's so that we can support financially having an onsite manager, you know, our preference, certainly, in an inpatient environment is that it's of a sufficient scale to be able to provide an onsite manager.
Our preference certainly in an inpatient environment is that it is of a sufficient scale to be able to provide an on site manager. So that's the first qualifier, but beyond that for both environmental services and dining services were finding increasing demand levels and a growing appetite to outsource those services. So we've made.
Ted Lowe: So that's the first qualifier. But beyond that, you know, for both environmental services and dining services, we're finding, you know, increasing demand levels and a growing appetite to outsource those services. So you know, we've made inroads in certain geographies and in certain end markets specifically. And you know, as our expertise has continued to grow in the provision of services into those end markets specifically, you know, you develop that networking and can leverage that to your advantage. So we haven't really qualified or quantified rather, that opportunity as yet in either the near term or the long term, but as an additive end market service offering, there's a lot that we like about it.
Speaker Change: Inroads in certain geographies and uncertain end market, specifically and as our expertise has continued to grow and the provision of services into those end markets. Specifically you develop that networking and can leverage that to your advantage. So we havent really qualified or quantified rather that opportunity as yet.
Speaker Change: Neither the near term or the long term, but as an additive and market service offering there is.
Jack Senft: Awesome. Thank you again, guys.
Speaker Change: A lot that we like about it.
Speaker Change: Awesome. Thank you guys.
Unknown Executive: Your next question comes from the line of A.J. Rice with UBS.
A.J. Rice: Please go ahead. Hi, everybody. First, maybe looking at the other side of labor, the hourly workforce. I know over the last few years, there was a time when the nursing homes weren't giving the updates to rates that you felt they needed to. I think that's sort of normalizing with the employment increase you talked about across the industry. But where are we at on that? What kind of increases are you seeing? Is that adequate for you to get the hourly people that you need to staff the positions in the clients? Yeah, I think, AJ, if you look at sort of the broader labor market, we're seeing, you know, certainly stabilization and improving conditions, you know, job postings are, are no longer declining.
Speaker Change: Your next question comes from the line of a J rice with UBS. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Hi, everybody.
Speaker Change: First maybe.
Speaker Change: Looking at the other side of the labor the hourly workforce.
Speaker Change: Over the last few years, there was a time when the nursing homes or giving the updates.
Speaker Change: Right.
Speaker Change: They needed to I think thats sort of normalizing with the ultimate increase you talked about across the industry, but where are we add on that what kind of increases are you seeing is adequate for you to get the hourly people that you need to staff positions.
Speaker Change: Client facilities.
Speaker Change: Yes, I think a J if you look at sort of the broader labor market, we're seeing certainly stabilization and improving conditions job postings or are no longer declining.
Ted Lowe: You know, more than a quarter of a million new jobs were created in September, which I think was a surprise to the upside. And I'm just talking about the, you know, the US economy in general here, but that wage growth has definitely stabilized, it's increasing slightly, and I would say modestly, you know, unemployment rate has fallen back from that recent high of 4.3 back to 4.1. And wage growth, you know, to your question, AJ appears to have more or less returned to its pre pandemic trend. You know, our industry specifically, if you think about, you know, long term and post acute care, we're still 120,000, I'm sorry, 112,000 jobs short relative to pre pandemic levels, but it's improving, you know, this was an end market that had lost almost a quarter of a million jobs.
Speaker Change: More than a quarter of 1 million new jobs were created in September, which I think was a surprise to the upside and I'm just talking about the U S economy in general here, but that wage growth is definitely stabilized its increasing slightly and I'd say modestly.
Speaker Change: Unemployment rate has fallen back from the recent high of $4 three back to $4 one.
Speaker Change: Wage growth to your question AJ appears to have more or less return to its pre pandemic trend.
Speaker Change: Our industry, specifically, if you think about.
Speaker Change: Long term and post acute care, we're still 120000, I'm, sorry, 112000 jobs short relative to pre pandemic levels, but it's improving this was.
Ted Lowe: So we're clawing our way back, it's about a pace of 4400 jobs per month that we're seeing return to the skilled nursing space. So at this rate, the workforce should be back to pre pandemic, pre pandemic levels, you know, late 2026.
Speaker Change: And end market that had lost almost a quarter of a $1 billion job. So we're clawing our way back it's about a pace of 4400 jobs per month that we're seeing return to the skilled nursing space. So at this rate the workforce should be back to pre pandemic pre pandemic levels late 2026.
Ted Lowe: You know, on our business, specifically, you know, along the lines of what we're seeing with the clients, I would say it's a stabilization, it still remains kind of that uneven recovery, wherein certain geographies and certain more specific markets, typically more of the metro and suburban markets, AJ, the recovery is complete, if I dare say that, in the sense that, you know, we're able to fully staff, we're able to hire employees, train them and ultimately retain them. It remains a challenge, though, in broadly speaking, the rural markets, and more specifically, certain rural markets are more challenged than others.
Speaker Change: On our business specifically.
Speaker Change: Along the lines of what we're seeing with our clients I would say, it's a stabilization.
Speaker Change: It still remains kind of uneven recovery, where in certain geographies and certain more specific markets typically more of a metro in suburban markets a J the.
Speaker Change: The recovery is complete if I dare say that in the sense that we're able to fully staff were able to hire employees train them and ultimately retain them. It remains a challenge, though in broadly speaking the rural markets and more specifically certain rural markets are more challenged than others, but I would say ongoing.
Ted Lowe: But I would say, you know, ongoing recovery and stabilization, we're almost all the way there, if not completely there in the suburban and urban markets, but the challenges do remain in rural facilities.
Speaker Change: Recovery and stabilization where.
Speaker Change: We're almost all the way there if not completely there in the suburban and urban markets, but the challenges do remain in.
Ted Lowe: Okay, great. And then the other inflationary area we often ask about is related to food and the dining side. Anything to call out there or what's the latest? Yeah, you know, food inflation was back up sequentially, AJ. It was, you know, five basis points of inflation for the quarter. Yeah, that compared to one basis point of deflation that we actually saw in Q2. So, you know, if you're looking at the trends, you know, the month of August was four basis points, which was the highest monthly inflation that we've seen since January. So definitely want to keep an eye on that.
Speaker Change: Rural facilities.
Speaker Change: Okay, Great and then.
Speaker Change: The other inflationary area, we often ask about related to food and dining side anything to call out there.
Speaker Change: The latest trends in there.
Speaker Change: Yes, food inflation was back up sequentially a J it was.
Speaker Change: Five basis points of inflation for the quarter that compared to one basis point of deflation that we actually saw it in Q2. So if you will.
Speaker Change: Looking at the trends.
Speaker Change: The month of August was four basis points, which was the highest monthly inflation that we've seen since January so definitely want to keep an eye on that but broadly speaking.
Matt Mckee: But broadly speaking, you know, 40 bps of food inflation. So, you know, nothing really outside the norm in kind of recent quarters.
Speaker Change: 40 bps of food inflation so.
Matt Mckee: And that just by way of reminder would be passed through in our First Quarter Billing. Right, okay.
Speaker Change: Nothing really outside the norm.
Speaker Change: Kind of recent quarters and that just by way of reminder, would be pass through NR.
A.J. Rice: And then just last, on the capital deployment, I know there's the buyback and you know, you've pursued that somewhat uneven between quarters.
Speaker Change: First quarter billings.
Speaker Change: Right, Okay, and then just last.
Speaker Change: On the capital deployment.
Speaker Change: I know theres the buyback.
Matt Mckee: Any updated in your thinking there? And then you did mention inorganic growth potential. Is that just that's always there? Or are you seeing a pipeline of opportunities? developed, it wasn't there. Yeah, on the second question, AJ, it's always been there, the opportunities really, since we, we, you know, over the course of our history, even over the past 10 years, we've been very selective, but, you know, we have done a couple more tuck in type opportunities with regional players. We're, we're less, I'd say enthused about those types of opportunities, in part because, you know, we believe we have the best mousetrap out there, there's always opportunity to improve upon it, but we think we're in a pretty good position in terms of our service and operating model, as well as the fact that we have, you know, 80%, over 80% of the outsourced market share.
Speaker Change: <unk> pursue that.
Speaker Change: Somewhat uneven three quarters any updated.
Speaker Change: And your thinking there.
Speaker Change: And then you did mentioned inorganic growth potential is that does that.
Speaker Change: As always there are you seeing a pipeline of opportunities develop that wasn't there before.
Speaker Change: Yeah on the second question AJ its always been there the opportunities really since we over the course of our history, even over the past 10 years, we've been very selective, but we have done a couple more tuck in type opportunities with regional players were less I'd say.
Speaker Change: Enthused about those types of opportunities in part because.
Speaker Change: We believe we have the best Mousetrap out there, there's always opportunity to improve upon it but we think we're in a pretty good position in terms of our service and operating model.
Speaker Change: As well as the fact that we have 80% over 80% of the outsource market share. So the reality is there's just not that many pure play if you will candidates out there, but certainly within our core market as complement complementary acquisition or investment type opportunities we have.
Matt Mckee: So the reality is, there's just not that many pure play, if you will, candidates out there. But certainly within our core market, as complimentary acquisition, or, you know, investment type opportunities, we have, we have our eye on those as well as other opportunities, whether it be in the education space, or other attractive, you know, education related opportunities. So that's always there, we do see with some of the, you know, more interest rate certainty that were is being projected out in the future, we see more activity and potentially more opportunities on those fronts in the year ahead.
Speaker Change: We have our eye on those as well as other opportunities whether it be in the education space for other attractive education related opportunity. So that's always there and we do see with some of the more interest rate certainty that we're is being projected out in the future we see more activity.
Matt Mckee: So we're excited about that.
And potentially more opportunities on those fronts in the year ahead. So we're excited about that I think from a.
Matt Mckee: I think from a, you know, share repurchase perspective, that continues to be, you know, part of our capital allocation framework. And we continue to view view the buyback specifically as opportunistic, it's certainly a tax efficient way, you know, when that those opportunities present themselves to return capital to shareholders. And just to give a little more color, we think about opportunism, and really the timing of the repurchases as being dependent on factors that exist at the time of execution, that may be, you know, our liquidity position or expected cash flow, we've talked about our share price, obviously being a consideration, we look at annual dilution rates via share creep, which is really when you look at the pace, over the past couple years, we've eliminated any creep that that otherwise could have existed, and then bridging back to whether it be organic growth, or the conversation we just had about on inorganic opportunities we're always looking at alternative use analysis and where we can deliver the highest return.
Speaker Change: Share repurchase perspective that continues to be part of our capital allocation framework and we continue to view view the buyback specifically as opportunistic and certainly a tax efficient way.
Speaker Change: When those opportunities present themselves to return capital to shareholders.
Speaker Change: Just to give a little more color, we think about opportunism and really the timing of the repurchases has being dependent on factors that exist at the time of execution that may be our liquidity position or expected cash flow, we've talked about our share price, obviously being a consideration we look at annual dilution rates via share.
Speaker Change: <unk>, which is really when you look at the pace over the past couple of years, we've eliminated any creep.
Speaker Change: That otherwise could have existed and then bridging back to whether it be organic growth for the conversation. We just had about on inorganic opportunities. We're always looking at alternative use analysis and where we can deliver the highest returns. So it's a it's a holistic view that we've taken all of those considerations are factored into the decision.
Matt Mckee: So it's a it's a holistic view that we take and all of those considerations are factored into the decision.
Unknown Executive: OK, thanks a lot.
A.J. Rice: Okay, thanks a lot.
Speaker Change: Okay. Thanks, a lot.
Ted Lowe: That concludes our Q&A session.
Unknown Executive: That concludes our Q&A session.
Ted Lowe: I will now turn the conference back over to Ted Wahl for closing remarks. Okay, great. Thank you. It's an incredibly exciting time for the company. Our underlying fundamentals are stronger than ever, and with the industry at the beginning of a multi-decade demographic tailwind, we are very favorably positioned to capitalize on the opportunities ahead and deliver meaningful, long-term shareholder value.
Theodore Wahl: I will now turn the conference back over to Ted Wahl for closing remarks. OK, great. Thank you. It's an incredibly exciting time for the company. Our underlying fundamentals are stronger than ever, and with the industry at the beginning of a multi-decade demographic tailwind, we are very favorably positioned to capitalize on the opportunity to head and deliver meaningful, long-term shareholder value.
Speaker Change: That concludes our Q&A session I will now turn the conference back over to Ted Wahl for closing remarks.
Ted Wahl: Okay, great. Thank you, it's an incredibly exciting time for the company, our underlying fundamentals are stronger than ever and with the industry at the beginning of a multi decade demographic tailwind. We are very favorably positioned to capitalize on the opportunities ahead and deliver meaningful long term shareholder value.
Ted Lowe: So on behalf of Matt and all of us at Healthcare Services Group, Jeanne, we wanted to thank you for hosting the call today and thank you to everyone for joining.
Theodore Wahl: So, on behalf of Matt and all of us at Healthcare Services Group, Jeannie, we wanted to thank you for hosting the call today, and thank you to everyone for joining us.
So on behalf of Matt and all of US at Healthcare services Group Genie. We wanted to thank you for hosting the call today and thank you to everyone for joining us.
Unknown Executive: This concludes today's call. You may now disconnect.
Jeanne: This concludes today's call. You may now disconnect.
Speaker Change: This concludes today's call you may now disconnect.
Speaker Change: Yeah.