Healthcare Services (HCSG) 9 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Theodore Wahl	executive
Matthew McKee	executive
Andrew J. Wittmann	analyst
Tao Qiu	analyst
Sean Dodge	analyst
Nicholas Spiekhout	analyst
Jack Slevin	analyst
Mitra Ramgopal	analyst
Albert Rice	analyst

Call transcript

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Operator

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Healthcare Services Group, Inc. 2021 Fourth Quarter Earnings Call. The matters discussed on today's conference call include forward-looking statements about the business prospects of Healthcare Services Group, Inc.

preceded goal, such similar may, often anticipates, believes, expressions. are will, plans, intends, statements by as words expects, Forward-looking assumes or

that of and in forward-looking of conditions, statements believe Forward-looking of under based our on we involve current perceptions management's we are other our risks this have expected the industry that date and made certain The statements current and of appropriate conference future historical uncertainties. expectations and factors trends, assumptions developments call light reflect are the circumstances. as experience

factors, or As with Group not are they any differ in result to susceptible performance. and uncertainty of results guarantees various statements actual changes projection materially Services the forecast, circumstances. Healthcare forward-looking forward-looking are those anticipated a these inherently statements in from could and as Inc.'s of

Some in could of to statements in and the Securities from recent future in earnings Exchange or to Commission. filings materially with call our are prior press differ results forward-looking the those issued this projected that results included our cause factors and release

to under obligation expressly subsequent of changes, or Wahl, Ted information, no and Instructions] Thank alter Chief whether [Operator or a you. disclaim otherwise. obligation may such new forward-looking any Officer, Executive result you events are as the We statements, update begin.

Theodore Wahl

Chris, the by fourth results XX-K this quarter next Matt you, McKee plan us our released filing and of and our everyone. Thank Good morning, week. joining morning Great. We I appreciate today. you end on and

service end, over term. To that decisive deliver profitability, agreements resulting current taking us action environment supply model to to engaged our for disruption. past for get customers the chain sustainable, increases margin account enable that profitable are half actively a Our operating have real-time ensure of QX the to future growth is this service are we so one, and results our pressured the cost a And basis. remain our and our more as reflect amend from to modify with in way durable, workforce inflation, adjust that future pressures our to availability, scalable XXXX, business real continued has long we of while we for capture extraordinary The current as two, prospective customers billing well experienced time. both increases; customers, cost second a from increases during to: automatic goal inflation passed and and inflation through the on is agreements initiative will

to line cost with XX%. of be We of modifications with the in XXXX goal completed first expect historical of the services target our these with year the service half of agreement throughout exiting

to that over would short-lived. that as inflation our been not During is the and that's modify during hours, durable special quarter, our while compliance. positions this view half and clients as this modified we though service many term. Bottoms-up because did or were with to yet the with to continued get agreements were We did pay, cases, modify our take adjust satisfaction, premium We employee longer-term to client staffing for our opposed incurring and actively our We our customers done, long agreements, had we overtime XXXX. If of second modify supplying best client beneficial agreements. to we our increasing experienced and in long-lasting facilities in a top-down the actively the introducing we will the this with service adherence action engaging job customers be unilateral rates maintain did. engaging us that to way it to action and agreements mutually even service wage a systems to that collaborate what in bonuses service client-by-client meant be our did

results, financial a by had incurred modification extraordinary in that that efforts. our cost is service resolved we our temporary believe a without significant XXXX this a corresponding increase the billing impact agreement we will QX Although challenge on be

relative stability Delta challenges the we've and ahead. cautiously challenges, Having census managed are census clinical Omicron stabilizes, in of that strains. since availability market August the to are back through encouraged are in through improves, We able as industry build seen those worked both labor the pressure operators optimistic and we operators of their have that year staff the

our industry We confident model efficient the operating outlook will headwinds, remain the remains growth these strong, continue and long-term to the and demographics. near-term recovery attractive given that despite market company monitor for leadership,

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

Matthew McKee

and to was SG&A was company the XX%. Housekeeping million with for Revenue and opportunity of with labor Selling, exiting morning, X.X% compensation, remarks opening year year Dining was with service target and supply its goal the the X.X%, services & Again, million expects with the million with & of everyone. $X.X respectively. the and the SG&A $X deferred cost administrative $XX.X expect Ted and was Direct ongoing completed general nonrecurring XX.X%, cost was impacted costs. be reported described $XXX of actual housekeeping million. between million. of increases $XXX.X we million nutrition in $XXX.X services & million In Thanks, million, X.X% that in Nutrition respectively. and X.X%, of by XXXX, segment and modifications segment Ted. to of the increase for revenues SG&A impacted first $XX.X quarter Laundry, items. historical half laundry for agreement of the ahead, the adjusting or at in reported was Good & line After And in efficiencies. at margins dining his by throughout $XXX.X were

for income about million for of again, XXXX tax effective the to the quarter by taxes $X.X was XX. but [ change million the investment adjusting reported at in $X.X the X flow expected of deferred and was for income $X.XX ] were rate XX% items, was $X.X million, quarter after million per by XX.X% (sic) company The in income Cash fourth the income deferred tax was came DSO Act rate other for quarter share. $XX.X discrete actual before and rate and .X increase tax $X.X for the earnings quarter lower days. $XXX,XXX. The was Cares impacted tax impact $XX.X year. of for the and including impacted payroll of the an at reported Investment million compensation, million in XX The company the from payroll, was other operations repayment. accrued XX%. Net a quarter and or a

on ability the XX the relates payroll This to dividend point the days XXXX would tax the to and is accrual the full to in XX, period. to instituted approved accrual QX, with per stock we a splits. XX-year supported. balance shareholders. X That's ultimately compares X share, pleased cash dividend get continuing the is free ongoing return impact cash consecutive the and be tax-efficient payment cash XXXX, X-for-X the payroll that's to washes that the and increase of strength The capital the the out that year. We're corresponding place X was XXth return future, through continues timing, quarterly Board to to payable out and sheet while But Also, flow period only included that HCSG Directors that business QX balance had in XXXX. way since in and the March in dividend support foreseeable with shareholders. for now mark an program the dividend rate to to announced $X.XXXXX XXth consecutive will And most during the of We in days the and program maximize ultimately the the days, the cash we increase. the

Additionally, pursuant the previous million company to $XX.X repurchased its common quarter. of the stock authorization its during

open opening those call questions. with now up for like And remarks, the we'd to

Operator

Andy question from [Operator is Wittmann first Baird. Instructions] with Our

Andrew J. Wittmann

start guess, trying status to Ted, understand of your renegotiations. the to regarding with with I the I wanted clients these discussions just

always your items really this? to will it to have the different inflationary think terms was in or things. discussions achieving all I is contract And from past. Is early business success do price to you've about move pass what of But the customers model of of indicate regarding get idea today that like automatically that your reasonable your your that expectation you through the that? terms amending clearly historically, effectively in tried the done to guys always how this these you

Theodore Wahl

The we early similarly to that show our yes, expectations, incurring position. value are and progress are what Andy, workforce, situated understand experiencing our end. would their that and expect own remains, positive, with are to indicators right? no than they some the proposition that in are our we're QX clients clearly different costs The

it doesn't timely we're able for that increases the the model the fact of I account fixed the future the even secure for think uncertainty to the is given in the the model, environment we're environment a wage unable in not for basis, past environment. inflation, this with inflation to that increases. It's get challenge if potential necessarily price and

is, So and company an cases, in to served similar working on the we cases customer agreement down inflation, through many with our expectation quarterly that and triggers a in past it's putting simple well the what or some in then have food, sitting for the years.

type one conversation that there's something cost plus the does. whether So or airy all. in fits it of a have more the place. And to others transparency This -- of but more along a holistic affect it's of size open There's for type that's a to mechanism model of that version all could and where lines our maybe that. that foreign it's not then it's many no there's a customers, that -- relationship, that client a cost cost doesn't involve of

positive experiencing a approach, as have and you customers more very it's set require top very strong to a in same with the during all increasing they've And a different business past while clients' current And often And up decided we're we're of our we're one aside environment. The us going that in going early QX, up, this state, business, patience in and more why a again, bit can been. doing consistent So bottoms our investment of and variety are bottoms imagine, there's existing to also part from our of say, matter be going going approach. to are value with. -- business single of the we our very every as right that have a And for well that think the the may rate, work. the really new unique also because services current circumstances expectation effect. engaging have, is could proposition well high I'll prospective down, the are our relates long-lasting approaches on reasons recognizing and was pressures resonates ever demand success forward, very this resonates set the We as you up. our it's our to

that exercise XX% be the this going prioritize target. to line through consistent completed continue And of our will mid-year. we're we direct think expect cost historical again, And a our with with to with that I So customers. services exit year

Andrew J. Wittmann

you few versus regarding Matt, which a years today staffing it it probably versus open maybe just number us ago that now, the about follow-up Where the seeing would some getting you worse? positions are a staffing, normal actually just today? maybe of maybe you in the you you're you involved. have progression open positions context Can for getting Is been on where facilities have give levels the of curve better? months? are currently Is X the

Matthew McKee

I improvement, modest we're seeing say Andy. Yes, would

per of of and employment, at management we've receiving throughout But to voluntarily of encouraging. the somebody been would at promoting previously a incentive consistent repurposing data that's about actual of more of better either to relative and recent form Some as of high program. to actually that data But to onboarding process. We've to course, fact talked but any past employees attract vision, we've and the variant, the to They're Omicron facilities, initiatives, are recent company, separation applications kind employees recruiting exiting our our our when se, se. yet levels. all and that or being platforms, innovating a just the of not resources line and to the introducing call a the we replacement impact look our employee and decreased has again, deploying inbound for some and that retain significantly respect the developing are it referral programs. And their without That, who speaking really encouraging. And level, data from of likewise, recruiting I with are at that us existing in geographies, to out indicative the some that, bearing but of trends, for hires the say other certainly then and positions and us infected, to to but trend engagement hires specifically level. environment a per new need sort employee or staff couple developing acutely our ultimately component development number then level able seen that's of to bucket purpose, applies favorable And over be our fill and at a terminating constitutes every certainly in and of leveraging we're through values of encompassed terminations, felt months in organization, weeks. retention relates strategies our more it's the and too if bit facility the maybe sure the them to get that streamlining early in bodies

Operator

Our next from is question Stifel. with Qiu Tao

Tao Qiu

Matt. and Ted

this in if look margin. growth quarter. been has of the on slowing terms at from the margin quarter certainly sequentially, incremental question quick the a And last Just increases expense you

what's that kind outlook the for understanding these through you're of quarters, your next wondering contract going margin few Just negotiations?

Theodore Wahl

XX% see beginning better. it to quarter. fits at exiting year where starts And to along the going expect way. we're some ideally, that probably back There's or the would and progress next right, a some be the step, throughout We Tao, year, stair be

is I right get the strategy part relationship. to quickest the enough the think deal long-term for not here of get done and done, deal time space to to our allow

when as And So next talk beginning of expect the clear in cadence to think more progress of far outlook we the margin a months. as recovery a have we couple rest we'll of the see year on quarter. I

Tao Qiu

environment acute it now? slightly pretty you do better you. that still Is the quarter? fourth third that in sequentially fair Got inflationary to quarter the say is right it's the than Or think

Theodore Wahl

But past moment equally care see but correct say in to to increases between the QX, on relative sure inflationary bit also specifically billing the we QX year-to-date, the But the cost get increases for adjustments why where we data did meaning tying the service food the tell, I'd rate is important only we pressures of taken at inflationary some a time. side. Yes. make that's was the to as that early QX with saw of We labor go-forward our our sure to make it's and of of using it's this a data similar, on more modification third-party are. basis, client's pressures real-time internally type a employees. labor intensification, similarly or stabilize that not we're QX and or to it index, have further intensify. Too we agreements, again a that's for secure going their the done to are situated if whether our own similar

having. to we're of So the a little adds that types and color hopefully engagement conversations

Tao Qiu

at and know Got the back reverse the end I that appreciate Any about update update probably you. the quarter contract? there? the talked Any I you on of pricing that. Genesis coming XXXX terms first year. will the

Theodore Wahl

of pricing modification out, previously called No, sunsetted other XXXX. the at as we than, the end

January. AR XXXX. the reduce then that So to highlighted, historical as year, begin to the its modifications the of will into effective year the end you and rate And back that sunset will heading at returns throughout

Tao Qiu

Got this Maybe last about one, you missed I Okay. it, quarter? when the you. this operating maybe cash one flow what's for talk

Theodore Wahl

From were we $XX flow cash million. north perspective, a of

Matthew McKee

[ million ]. It was X.XX

Operator

Sean from is question next with Capital. Dodge RBC Our

Sean Dodge

to back comments. one going of earlier Ted, your Maybe,

there and around with in hit and seasonal probably staffing imagine holidays. the a are and the is you challenges, On all Amazon labor I'd fourth that competing all you're quarter operating the with retail too, the premiums the pressure workforce? up UPS that hourly

sequentially the that, quarter? first does help Now things through in that better get that we're

Theodore Wahl

be like the should, case. it's sense, Sean, it a theoretical that say would in I'd

have stabilization the some at front. you pointed think it. are suggesting of data our to is on some to One Matt January I that improvement look some and actually

and add that So question your on would some it. your credibility thinking to

of a pressures type on market the market. of, of the within non-health has is term is, it's care-related then think thing broader labor niche to think out post-acute bear long health different outside care, kind right? yet labor. And I health seeing own say, impact niche, one I care is The the care even the its that than the within

little why the pressures significant moving onto so labor not silver of Omicron. Delta, requirements. there's I'm of with lining sense between that's QX. a many impact to a clinical impact some quarantining impact staffing a -- that And reluctant the just on from latch the it your we saw So to And had parts in that less had there an industry, on

does optimism months tell of or make. to still So a a out. is there for X trend reasons, pointed which again, early X not of if variety one too But you

Sean Dodge

Sure.

with Okay. where your start of your out might now sales Fair facilities? are in around -- getting the I What guess back enough. adding cost order. recruiting again? are And on development? now you are you Are when training new What and back plan for I manager new guess, thoughts you

Matthew McKee

Sean. manage And primarily levels, at that portfolio. onboarding needs requisite to would services course, Yes, that's, dissimilar right? But managerial to assessment the the think managerial demand just to noted, the That's got to the I say, really as ensure capacity local effectively have increasing management this we to typical And opportunities. strategy. our the about new occurs that not absolutely, ensure that for able given be importantly, existing wherewithal in the business the we've Ted to environment, of

eye are some as throughout a a of to are I to toward continue presenting of industry But -- the of stabilize the the managerial ahead continue the environment reasons that. suggestive some face as about think geographies an the always obviously, view are we efforts happening one, development back component operating the that recovery, into doubt, that's as suggestive that efforts in others. to that definitely optimistic for significant management And of all conversation COVID. beginning that we said, getting growth in growth this previously, that modest opportunities. And recruiting a result future than drive So remaining But without talked is number about case, company, further a certainly the is with there development of but challenges is and is to exercise the of we're mode.

Operator

is question Our next with William Daniels Blair. from Ryan

Nicholas Spiekhout

XX-day of a you be Nick costs new where on Would guess structures. the start, eliminating in within be to such I Ryan. that that one would lag I most much immediate more Spiekhout contract those it current, said, just on have, to those be mitigated increases for the clarifying your would quarter? contracts think input

Matthew McKee

Well, lag the dietary XX-day if specifically data are the function when to our agencies. contracts government is of on of reason -- speaking by food for a you're really component of just on that published administratively, not the requisite the end, our

So it's published. simple just I of matter think when that's a

As it's adjusting soon provided then published, the the following quarter. as client it's to we're and

the impact and wage where the still adjustment So better a similar, fits is that's similar the be much type in piece, being we'd even all, a -- no we'd lag most if again, XX-day there of felt but If had in we not really we with on a is had much size better acutely. one spot. be a

and open and ] different that, to monthly would Now want durable. we this If there long-lasting as implement we consider to that. [Technical is [ variations difficulty] adjustment, again, try we something to But well. are to that's be the customer a

deal not not we kind the try -- we're possibly X.X can. to building to racing decades, done quickest So frankly. We're of this the that for race a next quite in get

Nicholas Spiekhout

through how total kind guess base? second planning that guess, kind Great. in kind along start? then, When these of I you I negotiations rollout so are your being far kind did between facility of And of of you're of most Okay. half that. on And

Theodore Wahl

matter been as of and then, with happened as QX ongoing the and right, evolve. Yes, really early of continues not to they've it's throughout been a kind continued beginning inflation, over. of inflation have beginning the It since ongoing it's

as conversations have to continued evolve well. those So

is and -- rate of services, exit to our guess, And we our with highlighted, the of agreements exit our by with a better goal should of the, with target. XX% cost conclusions of you be would then reached historical be to run expect kind As year, we which XXXX all clients in I or midyear. line

Matthew McKee

put on groups every just had at point sort at that, finer -- a of one initial this initial And with client least of to meetings point. our we've

timing unilateral are So been It's that a it's It per client, se, through that but to one-size-fits-all a and going the the approach. conversations to move degree as not conclusion, to Ted then is mentioned, but business. course, the the some some midyear, be client ultimately target the clarity to all closure of have efforts to have by of and confident the there's some these, not be of undertaken. able come we're solution and of to a of moving take that agreement. And as by see And just time a effects initiated. will results we'll the run forward

Nicholas Spiekhout

recruiting workforce of issue more Great, this making thanks side that of just a you Is guess your for to for this versus more else things. new the enticing color. on of employees really And of seeing it type an them current maintaining on then labor somewhere you're the on guys thing? stay or go more -- quick such kind as on I are

Matthew McKee

I be want to we But of wouldn't all assume emotional stay of the the the element that that the facility. that years. talked about we latter. more some employee of with the engagement kind few than the to employees suggest dismissive that we've employees establish It's over connection will us. past former of initiated an of is course to initiatives there our And

front has Now challenges, availability our that and substantially the have challenge new employees. retaining a far there in run challenged, but been greater than when labor that it's been finding doesn't longer-established we're definitely on of hire the perpetuity

Operator

is with Brian Tanquilut next question Our from Jefferies.

Jack Slevin

the these of to as of contracts. and what's I for Jack I the puts I understand industry happening outlook just Slevin in sure sort and takes want make guess start with Brian. and bridge year-end sort versus the we on to

at we're occupancy flattened you're has is looking fourth contracts, data, quarter to levels. of of and still looking adjust if the off think in below the sort sort XX% industry pre-COVID I So

clinical got at and significant are wage shortages your their highest for inflation seen, that You've pressure and wage clients. there staffing levels we've

And I so about adjusted that risk a to guess just XXXX? we occupancy expecting get your X the stave need standpoint the I'm more of how side move piecing as concession risk things or through needs with step-up wondering, thinking what to into to happen there you'll you're that from off those kind together you're contracts, is price an do on to

Matthew McKee

infected the is That's face level down been Xnd above week in frontline Omicron clinical a industry, the win been on Yes, Jack, the I staffing shortages would would say, one that of noted, about facility the any clearly, census occupancy about is the not fact and the component the the particular plateaued about and on this have that impact perspective. Delta a have industry from going average major individuals at panacea, makeup level. you that's we've Delta both is the then right? had maintained could national noted August, but a you staff I has if win, heels level. for that that of you have required to our the it If point that But think of that the variant. financial a from back forced customers on you big likewise XX% of that reality throughout is a an bit, think to significant quarantines the say a the clinical census that clinical the add for to

fairly our in a accomplishment. view, significant So that's,

more So where stood expectation at an point favorable we're with last census year level starting at a we for this to significantly ongoing respect that's than improvement.

we are encouraging, are data, census. services that external industry some clinical on hear that have beginning only impact we're not health you're to will shortages So the customers anecdotes noting correct that data care there of groups. -- staffing are from and group again, an But some in internal the but

we'll end modest, And our if prospective bodes do getting make for So opportunities [Technical that growth begin of a likewise, customers. out is market. expectation an census performance be perspective ] and financial a in future an we uptick there that well and the we it's difficulty that in out to partner see with to assessment analyzing current ours industry from even that looking of

Jack Slevin

Got then for That's one me. And it. helpful. last

a really flow Just in to guess, can look P&L. driving from at then talk going cash how just flow or a there of what's what's number pressured walk on that? And if little thinking you we into in be sort more detail strong you quarter the as we about is cash operations relative XXXX. the about I through move should

Theodore Wahl

we collections. we had Well, in always And what quarter, strong fourth collect our -- is we to bill. the cash goal

were So I think we $X $X the or what we million billed. million to positive of

that So year. strong a was

payroll his when accrual at the at the days. X look in opening cash, looking think change I maybe it know you taking -- just outlook for the QX, we it to in the I the year, do have remarks, -- Matt highlighted

for expect that alone would to cash QX. in we So result outflow

will cash to what what So model confidently collect remains to without we goal changes or again, the There driver any goal our a we And depending can is say year, of timing payroll on driver for what from is is going bill. our quarter. one given quarter-to-quarter accrual, collect be say, the flow think the through, which I bill. differences, fluctuation biggest we

Operator

Our next is question Sidoti. Mitra from with Ramgopal

Mitra Ramgopal

services the pretty nice terms the I new on side. know mentioned you just of in on talks had announced on in top year, Last business. bringing First, you food addition line. business a you're

some announcements on now we environment in might terms you the front getting how positive curious that be given right XXXX. are Just of optimistic in that

Matthew McKee

with that to quarter But not forecast opportunities. grow. growth we or or I on or are that too that. environment, be current about ongoing opportunities visibility project in won't We all and quarter that next don't specific of necessarily for have doesn't would mean there spoken specifically growth beyond we'd reluctant the the we've unknowns to uncertainty, say the sort and the that variables of

changes opportunities optimistic that So we are expectations be but we pulling increasingly have the would I that on access to long-term increased above, And partnerships state financial forward the recovery of now of dining layered we've the with growth. tricky health of pipeline, our of I themselves. In prospect. And little capabilities of presented all wouldn't the expand about. industry that's to some course, of EVS se, pent-up a ] say, per of to more light in as that guess assessment our important, the the customers bit talked sure a the existing services, all that durable of really guide I'd we backdrop with more going against reason the growth are any of about this all would remains continue kind we're And model so that make said, -- agreement of proposition why around brings to imminent, us to these that, service been deliver it's include and our forward. demand more and model facilities say structure to opportunities most creating sellable [ I that that to the and value then back be really confident

Mitra Ramgopal

high sort able I normal new on Okay. we the we year. hinted that expect X.X% pre-COVID potential the SG&A know at side, on typically you're Should SG&A? realize. SG&A I X.X%, expecting maybe X% efficiencies to you And any end. I some But of be guess, the is you this might as saw -- look this think X.X% to at

Theodore Wahl

Yes.

Matt as sits portion in ramp scalable there up yes, until but would continue of revenue variable line highlighted, over top with SG&A that majority will way to think XX we payroll be is a will a the expect SG&A. but next that a that months well. degree, incremental just range fixed costs certainly be some kind grow the XX, where XX, as of a we revenue I related. we there's But Again, today. to The and of

Mitra Ramgopal

Okay. in of And about think just costs nonrecurring then mentioned you was the $X finally, there I quarter. million

provide maybe onetime and you more color some that, forward, there cleaned maybe in can if XQ. If be are on up to that going any need items

Theodore Wahl

adjustment. they one had, adjustment about we was our schedules -- -- It was amortization of million. were to there one Yes, catch-up an like was that just $X a

other was tax which education The side see of to credit, the other related related million tax a you state rate. the in $X

and SG&A, see participate you taxes. XX% in, that's the annual the program credit then corresponding in So in we an where expense that

Operator

Andy Our next Baird. question is Wittmann with from

Andrew J. Wittmann

X is from accounting. There

noticed into there something decent over third are just that level. that the is Matt, a that goodwill or quarter went your fourth mentioned, amortization is the your intangibles? your schedule intangibles quarter that up Ted actually I in else just pretty amount So and the

Matthew McKee

No.

product we to or in is They that's small about Ted a referred adjustment And what So do in QX, $XX model. Andy, education service our million and view, we during the really the that about sales. Actually, million so a -- space. annualized great liked food to. them, just unrelated scalable company. They're in got acquired focused they've $X a

strategy view So our growth a that small a along longer-term with as to complement acquisition, company. nice opportunity obviously, a we that as but environmental our and niche education services

Andrew J. Wittmann

Okay. That makes sense. Glad I asked.

Okay.

guess, of Ted, on I ask federal then, couple guess, the, through years as well been your want of So just know. I various There's the the to, last balance I of sheets plenty money customers. you over programs

enough a funding kind processes balance in that's here. material you get to deferral, the you bit changed several And sheet, can We'll your I pay obviously, level sit yours from before to back Q You of tax obviously I last is the over including a the seat? your quality us that of But look customers even was helping guys payroll everyone's helping today? And DSO I credit guess knock the or bit. I any customers you've COVID. write-offs lot where of anything your more maybe against just years the seen with about tell and you your haven't detail. check little wanted guys a about mean not wondering, little federal a and had at

Theodore Wahl

the just level, not there's really -- maybe positive appears really that the a final There takes and state at federal be to some with point, there's think lot I starting level. Well, on come. the puts at your are

states the association level. some really that at have federal than where are and You engagements the efforts least -- level, at state at that's the the is our with opportunities where that's -- the rather -- focused,

of You of we than giving that ago any couple frequency ago, would payment comment, Andy, If not monthly. the we were a to we COVID a be our post-COVID the launched a just would And navigate greater weekly our couple initiative but made processes. here world. few that we certainly point very sitting if that of is changed were environment, helping talking years at about years to ability of us us a in through clients paying the a I --

today, are we Here we than are are of greater paying have of over monthly. majority vast those that our a customers XX% weekly. us at The frequency

to be the more whether to our our glean and us census-related one anything, other quantitative the to stay closer we customers it's are able So that monitor their step then or data allows quicker. than -- clients, from react otherwise. That, aside behaviors and that to all able from

as well going disciplined our monitor something we'll So we're federal while census closely. and And is some I making. -- strain dries If the able continue the and there's continues to to very ahead to to in there decision the again, we're up, guarantees, money that's we'll think year be positioned. recover, in be no

Operator

with Our next question is from Suisse. A.J. Credit Rice

Albert Rice

been first try you've Maybe time some the improvement expectation how more given to workers sustainable a color a much on other you're be on census has but had some little quarter. constant, that's of talk I Maybe thing reworking a like terms going income time that I less all, Can concessions improvement sounds on just as first quarter? when on the of margin that versus a mean operating margin -- that -- about you that? down. How us concession -- more held the the bit because get of first can give to a down you've agreement. of to type you've to the improvement around know is might is shown to some It from some the sort in drill margin in revenue benefit? little you need

Matthew McKee

would the I directionally, for improvement, A.J. say Yes. is expectation

to we'd it adjustments by As -- the contract of census in structure, right, the a that kind more substantial and of downs the sort that the relative is QX walls quantify those facility. service expectation the is durable ups really improvements driven for hard-pressed at agreements to But impact. within and least rather we've X than are any of sort be the noted, of staffing occur nuance to of that may

Albert Rice

there fact sort their you rates nursing the that not to the customers' the requires and hour hourly to -- discussion quarter, the cover of raise about Last worse? was about rates therefore first quarter better? go it your homes as adequately is were because in of saw same for Is it Okay. you had pass-through to that the some that workers, them you choosing getting really the unilaterally the existing to Is as their and you -- trending the fourth quarter? quarter? that hourly. Have into raise do now Is getting in -- third fourth how

Matthew McKee

had I adjustment adjusting that Yes. more to QX. labor at that's real been making That's be customer QX triggered historically able facility, in is that pass in time the then would And have And to adequately comparable, the an environment, be been facility. A.J., adjustment wage the in of case. We've those The much the through. to not staff dynamics time. that right? to to the say have scale we reality nimble the we given would real the been when would the make between relatively relative the the disconnect would challenge, adjustments

regard, into bit in So from worse generally I comparable the say environment, QX. would if a speaking, QX that in not that QX,

Albert Rice

Okay.

with of activity forth ] customers, that your they're Okay. to and one-off but of the bring done when REIT are the discuss being operators. do the vendors, do agreed some between they rent high-profile There's been being several is nursing so asked for sort that, the these and -- you all to table [ operator? Are including of the you, that? I don't typically REITs into skilled those where renegotiations concessions know happening, any whether and type

Theodore Wahl

groups and are the directly rest some anything than every the with the their familiar that just community. to, about tenant situation, typically of vendor but you -- alluded and to that filters through it's rather REIT In between other we of

Albert Rice

Is a just there the where that's requirement And Or much of majority as their think? couple steady? flow underlying occupancy potentially is quoting is long to sustainable absent rebounds good to operate XX% that government how the where sort the much help, do see, that you're to of -- a Okay. a of vast You'd it operating customers need as it rebound level? I occupancy The steady. stays quick can that? of sort in how can rebound their need do and know rate industry sufficient sort to enough get level something at cover have say for to cash sustainable more. step that to get we comment you of needs. Any a we a to is the but really on that, your

Theodore Wahl

I occupancy XX% in the for A.J., to that industry. is Ultimately, be consensus think the needs around general and

better York's X New -- XXs. significant is what and in York, to there versus anyone XX%, need needs -- Now variability know you XXs, the than picking between, of high what low be New New to Texas this York Texas needs north extremes say, of, needs, be

state area is that touchstone. it's the But state, overall, So area. by by all XX% really

look but January, at what about per optimistically, earlier, out think I of you -- about June, clinical the if in remarks you real between line, was once the slowly, bottomed is XXXX, in at to the pathway it industry they XX% week how kind fact and industry recovering. was you and Delta look if Omicron, through Now that XX%. Matt some and Albeit June the X.X% happened January and but of at his of positive. the the when that a think, of mentioned impact that's held

for some their is the as adequate nursing there stabilizes staffing prism, or it and have provider staff, client and specifically services. staffing they're with to So said the, optimism I through cautious we in year provider a a of have the demand ahead, able looking at around

self-sustaining. we census the I be best year but the and healthy, year know there's it's end to between of to industry. case, targeting federal begin the again, the healthy end the absent if term, said, and base for to of any you the we're, don't XX% no reason be optimistic cautiously to ultimately, not not why somewhere needs unreasonable And case or that's by sort longer that rebound case would of expect industry be a coming intervention, And XX% a in as see So that's where should wholly the that base months.

Albert Rice

question. final one Maybe Okay.

a pre-pandemic, know Healthcare dividend. discussion On for story XX% gradual years Group's the has ratio. the, big roughly increase obviously Service dividend, the was the I part of in the been payout

have balance a You very sheet. strong

that earnings, revisit happen you're long think the theoretically, -- if current run -- about as could a if thinking -- to be this to dividend covering obviously, of you to long-term the rate needed if where the dividend, to, dividend the borrow would would even changing for how before about not that what's that be short-term, cover relative But the not you trajectory? view you're you to to so. So or you year have

Theodore Wahl

balance Yes. sheet, and you appreciate I Well, our pointed and to that.

cash For well as the quarter, really, the cash the balances as certainly flow supported.

payout evaluate talked dividend right of like a sustainability question, priority, think always se. organic just organic ratio. continue But #X allocation been growth more to and really internal more investment. internal the have and Board, per terms consistency investment, followed the we the know and dividend. There's about, highest the of in quarter-to-quarter to after by guidepost your And than A.J., the growth remains broadly, We'll capital priority again, have. though, for the I ratio we've no I payout remain

Operator

no this have at further turn time. I'll We back to the presenters. the call questions

Theodore Wahl

customers inflation experienced our Okay. agreements basis. as as XXXX, with inflation future engaging for more Great. we to of second for well will Thank the our you. prioritize to extraordinary service In adjust during to the the a quarter ahead, half modify account continue on to real-time

agreement half with historical in XX%. We exiting cost with first target expect service of completed to services the be of these with of the XXXX goal throughout our line modifications the of year

position Above continue to value. to that committed also shareholder making us all, decisions an with will best to we eye long-term opportunistic We growth. towards deliver operationally remain execute

today, Matt of joining. thank to Group, you and everyone again behalf for Healthcare on Services of and for at call all us really thank to Chris hosting wanted the So I

Operator

conference Ladies and for call. this gentlemen, concludes Thank today's you participating.

now may disconnect. You

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