Healthcare Services (HCSG) 20 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO	executive
Matthew McKee	executive
Andrew J. Wittmann	analyst
Tao Qiu	analyst
Thomas Kelliher	analyst
Mitra Ramgopal	analyst
Nicholas Spiekhout	analyst
William Sutherland	analyst
Brian Tanquilut	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 2022 First Quarter Earnings Call. [Operator Instructions]

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

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

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

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

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

pay future the well More along first to premium agreement all as related I'm by to the Thank you, our XX-Q start adjust this Matt customers our the increases in extraordinary food progress for management, morning, to and efficient programs of year real-time We very quarter experienced plan us for on with released the filing to and remain pleased on contributed our good labor specifically McKee everyone. our inflation with basis. results modification a and service financial inflation Chris, the joining our continued morning and of more We I appreciate our as past year. overtime modify week. to agreements engaged with today. you account quarter. the the on service inflation end outcomes and actively pass-through efforts, improved over catch-up Overall,

We be the cost end in historical goal with to of the modifications the line service expect completed with target QX exiting year with of services of XX%. these of agreement our by

ahead, for encouraged Looking as the by value industry workforce our recent demographics. strong the the we availability, supply ability remains positive as execute on challenges; the of while and facility are our continues the most and and company We trends. resonance face proposition attractive the near-term to census confident objectives growth ever outlook chain given in to long-term our remain inflation increasing

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

Matthew McKee

with was million housekeeping respectively. cost Ted, the to Thanks, laundry general everyone. revenues nutrition for million as dining of Revenue good quarter reported his $XXX.X be in & Again XX%. cost was morning, & supply company that continued XX.X% services XXXX $XXX.X to USDXXX.X throughout of the in first with of and be million the we costs. segment goal million, Direct at half or agreement expect services USDXXX.X impacted and by of and the $XX.X service Ted $XX.X remarks, mark-to-market line includes exiting opening labor adjustment historical modifications, in the alluded though million target with year of actual for deferred to After and million of our the investment SG&A increases completed margins $X.X was at and with deferred that million was million adjusting a was was segment were to as quarter $X nutrition and respectively. reported recorded million. XXXX and onetime for expense. & actual reported dining and X.X%. Investment laundry Selling, decrease $X.X compensation, compensation, of But income million $X.X X.X% decrease previously the after and adjusting administrative company and approximate XX.X% expects other income SG&A long-term the in $X.X liability. X.X%, for & million that the a to in Housekeeping a

increase normalized accounts from due get at to XX.X% the QX a impacted to for investment and by $XX.X reported tax was related was was share. $XXX,XXX. XX also we $XX.X compares XXXX dividend since now included XXth collections of for and dividend for maximize to the an we return XX, X increase reference, future, place to was for tax impacted balance had accrual flow receivable, balance the 'XX with $X.XXXX to an mark that period income Company foreseeable return Directors million rate efficient that the the June way the period rate to the will X-for-X Board a support supported. program HCSG in and tax ultimately in XX and for But the only And was and We XX income rate effective strength cash again So shareholders. XXXX in of That's earnings days. QX that came XXXX Net capital free discrete prior DSO XXth payroll the stock per XX%. that on days the cash timing the of share quarter in that's to QX XXXX. that accrual of that consecutive and items throughout XXXX, being per the the days is out million of the tax timing and days. And instituted washes that XX% full announced the The to the the to was million X million the business in continuing We're operations in X to of cash to $XX.X payment be pleased rate ultimately This XX-year $XX.X consecutive shareholderhttps://tranceirs.digital-nirvana.com/s. payroll most QX year the $X.XX additional QX payable dividend relates expect ability increase a dividend quarter the year. it splits. payroll quarterly was XX Cash just in XXXX cash a be approved primarily the quarter the of cash will increase. days outflow was accrual program point in And payroll. accrued and And continues ongoing and and days. out while of sheet in with impact the our of to

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

Operator

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

Andrew J. Wittmann

describing I -- how and get first more to are you've as a quarter-end is you terms path modified in of that's so there's of discussions in maybe just the where guess that just percentage of Obviously contracts do. the that today progress service tangible Maybe going left talk the maybe maybe you're have realized on and about I how having. first glide on results question you that Ted, your you can is much contract I the of could margins. terms

might would of the gave I see this guidance, just of in. be So this. us to mean trying trying all your factoring obviously I'm in be helpful how where you at to to end it's margins see your but

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

for answer before kind of to I even, just help it to some some the Andy, because And add perspective that will update question. Right. context your think

related agreement perspective, were the were progress balance for a better talk than of about as efforts. guess I more reflected answer more. that as on we QX actually to pay of some alluded improvement Genesis service about business continue I efforts. modification think quarter-to-quarter improvement was to we perspective, the really just in the good sunsetting and the think I The efficient we bit what some and Only modification overtime service pricing overall, only QX we your QX. to to well But labor base very from the a results. and that in in of about was X% of question, margin agreement But make that adjustment the management premium X/X of X/X can about to I related the

that all of the And our As has customers cost think far of actively they quantifying, related and the value business as clients the remain recognize certainly touched partnership. majority inflation the much we've think with of overwhelming appreciate engaged doing around the very issues. of I I increased and

arrive of all more contract work to the extent to is to it's modification, right for a So there's goals. matter those done. contract percentages, before, our I the the continues as of there's services are client-by-client fair rather still quarter collaboratively terms be to a agree exiting to pace goal at a and now we've There can the But the point quantifying both middle meet talked cost partnership And about on fits of to at, services. of size we exercise. price year working be one the I in solution. a the for no the to bottoms-up by year. contracts and would progress than updating of XX% this Andy, say And It of

Andrew J. Wittmann

Got it.

couple margin Matt. improved services in there maybe growth of I or of more questions you just quarter Okay. the in quarter? guess quarter? from the about the was in in things the was anything being And nature then technical maybe just to maybe for onetime-ish overtime some Was able quarter reimbursed terms the more that for get other there that a for talk stock your in gross Also the organic education, the could rate? we the an back so into food could on repurchased acquisition any revenue contribution And

Matthew McKee

those of labor by able to and start repurchase, a labor to some on being of alluded the namely of We call sort then the I utilization type related the programs benefit as of operational But those with to increases premium question stock is to would impacts sort for the And to to, via and outside related quarter, manage via there onetime say efficiently those it on nature expenses. to to of incremental really There as costs, pass-through onetime other positive that contract. a down the supply continuing say the se. go-forward primarily some as a and was of I spend no down payroll a dollars last manage came capturing comes overtime Andy, Really, that effectively margin of purchasing continuing then our was wouldn't mechanism the on no. more just answer And out impact per the of the the would that, management adequately drive and and confluence associated managing of Ted in pay costs sort way have to first. programs. our basis and in likewise,

the fourth million, contribution QX. the revenue of small the revenue a that food acquired we company $X in to service quarter perspective about from was in As Andy,

Operator

is from with Stifel. Qiu Tao Our next question

Tao Qiu

question So just to on about expand the onetime items. earlier

year quickly. services, you of snaps cost this target the kind If of the And look which direct if we dining it the of achieved at end you is certainly XX%. back margin, above look the XX% of at pretty quarter

see Just billing if quarter? the from can to trying from this up quarter? quarters of quantify are of there food costs any And truing prior impact supplemental you guys this benefits revenue

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

repeat you part your question, Tao? last the of Would

Tao Qiu

just benefit guys see billing I'm there the assess impact amount from food to any trying revenue did during and this you this So Are cost of quarter the what's -- quarters. the quarter? prior adjustment supplemental any from

Matthew McKee

it. Got

with kind programs supplemental terms the of no by with we've historical related what client. to pay specific of in So respect billing COVID revenue, benefit being funded during premium seen

our arm with clients' So were employees. arm in employees the

programs of last by off in end those -- So had the ran really full year.

say we quarter QX I inflation. the question, this was the food inflation would saw to benefit that the Specifically

QX. quarter increases administratively If in reflected the recall, third you are CPI processed and

than and we delta. QX as QX QX so of a more much and one another So have mirrored QX closely didn't say did

is Now food. labor in have we continued what acceleration both inflation as of seen well as

the food we the on of X% past think I side this upwards X% side. labor nearly the quarter and on business of saw

timing CPI have benefit. to idea variances is of closely X to one the and So more between time that or create the reimbursed catch delta or mechanism. we're those stabilizes, into forward. the should will and another respect create next through But to going ultimately have reimbursement temporary a inflation what inflation But another will with intra-quarter It's for. not that payment again the turn it mirror up inflation when quarter food and will being actual over the

Tao Qiu

you. Got

clarify. Just to

food So you're inflation X-quarter lag, a quarter saying because quarter. right, positive fourth see so of of the higher for during delta next you probably the the because

Matthew McKee

being -- CPI we anticipate you the what be actually than That's greater delta exactly. pay QX Yes. And be food for QX, will reimbursed that because I'm experienced in negative which we at see glad what clarified. because We'll mechanism. inflation or would is we'd home a yes, vis-a-vis

Tao Qiu

Got you. That's helpful.

timing days. due DSO, to from the it's the of Regarding mentioned it's mostly and that XX it's prior Well, up collection. quarter you

ground in coming of financial the getting the when Just status comment revenues growing that the see seeing would going of Any and expense guys adjustment, or while is Any appreciated. it sounds particularly you're wondering the that industry terms pay their operators' Medicare you maybe are you PDPM on still on not consider to they're increases regarding October ability to additional like color be fast. much with comment health? pretty

Matthew McKee

collecting was of a meet I We a out, systematic payments. repayment what potential client we was We're mean com question, rest or client and has bill. on into for QX know anything relative facilities discussions Tao, are of QX highlight groups specifically when and that in or our the at as That timing. workout expectation your always environment football you always first seen turned we're pointed -- say of you But we regulatory light in our to certainly haven't continues specific quarter, again, to we to the point. look year. some that the I primarily this itself that goal in the there at be I'd shortfall the with. the goal of reimbursement political to to pressures that that there's related manifest that did, seen haven't

well You the QX, where they to tend where of some the have seasonal end as for shortfalls up compared collections earlier the the have element clients and of QX of year. had that tension had year QX higher the in and collections cash in make to you we

shortfall cases continue still to and favorable those which expect monthly biweekly cash we'd payments of with month. clients, on goals a extent of those the collection a again say some into collecting to vast year. were to which be $XX and to But payment, going with continue million haven't caught payments goals, payers, we're meet collaborated to $XX million return -- we we the to aware, bill there rest the meet working So that what they we weekly QX assuming cash majority range flow to for the back coming expect up already we those our to for final the and is were type or in going

Operator

with Sean question is next RBC Dodge Our Markets. from Capital

Thomas Kelliher

Sean. is This Thomas Kelliher for on

contributed on QX? to QX off to how the at Genesis pricing that of sunsetted the there starting you the confirm end and or I previous did guess of much So was revenue the pricing Can of kind contract, modifications the of were previous that the upside year. to it And to EPS kind rate? any back relative revert

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

Yes.

the this pricing whom noting included track pricing all the million customers modifications sort of having fair throughout Genesis And as to they'll the with as then structure sort to to on So moving Thomas, having we're it's as contributed the ultimately balance well. bucket right $X.X able we're adjustments in sunset our talk those worth respect Genesis, XXXX. of of those just AR, Genesis, sunsetting about still reduced when about And adjustments topic the to contract the forward, with year at have of QX. and and to be of end we the is about that of of of the that on in conversations

that But make on contract structure we feel we Genesis of pricing XXXX. in that if that comfortable about basis as were So have to a in you we upon sure sunsetting, the the same, agreed need we the fair place with made all right well. go-forward the will, and adjustments

Thomas Kelliher

are thoughts with again? of back adding I start recruiting in the That's I on are cost your Are you guess you now when and plan Okay. what development? sales manager for back then And might order, in around again? place new training out the And facilities helpful. you guess new where getting

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

costs that each doing the pushed one I say priority, focus be local work of without contract Outside that with QX, that sure on and durable able development to and regional is we've is we're make contracts a efforts. all sure sure management capture certainly and a the a to well. would though, as doubt customers of level. service adjusting favorable to is this company-wide discussed for the to to every make is make a necessary There go-forward down to our and that and as those and significant adequately basis really we're structure on of agreements that

discussed a the pandemic as result And in facility. in pandemic we come the have we've in prior as are quarters, COVID still and or of minimum the of at that a a midst sort consequences of the

So making we foremost. of the the in adequate and is course development manage and the compliance efforts management perspective that, And sure training operational business an development of certainly perspective, from that recruiting, and from management efforts. business beyond first service systems capacity have a a appropriately then to are

a when So based the places perspective value ever we've business pipeline from that geographically we're I mentioned we today has say is opportunities local varying resonates at proposition the greater it and of upon at previously, and our as would and But development significant. conditions. queue than of the new look opportunities

So excited development opportunities. that translate very long, before development have the and management opportunity we'll that about we're ongoing into business that optimistic to

Operator

is question next with Mitra Sidoti. Ramgopal The from

Mitra Ramgopal

question market the follow in terms retaining, Actually having the just of and if management in the to greater terms senior challenge opportunities especially wanted given there? level, and you're of out tight labor on up previous

Matthew McKee

as applies success and that again to with but and all the I be tremendous those that and senior the the would levels. easy, dependence the down of vision would the And company work say ever that resonate. management would implemented spite the continuum we're of company's sure sort through to in support organization labor deflect that values level. and of I retaining likewise buy in up have purpose senior them, that ranks, throughout to that employees right, had programs they engaged I management challenges the we've make and senior that to of with we our hard very from the the we've the to all I referral actively our established of and it's we've levels in we've down right? engagement continue vision actively say, mean to only purpose engage line staff market, and an Mitra, managers from wouldn't suggest that But we management always and those want that continuum significant the values, touch credit way the in and the the employee established. And upon the much facility definitely employees our not of staff line throughout through into

significant others. So like filling that challenge previously, in pleased really Mitra, specifically markets the back staff really question, down in that's has labor the acute organization. levels generally discussed But retention availability line your are we've thankfully to a new based the of bodies as as with we've the the more been throughout speaking really the challenges those had And compared has to upon crux and force. as certain of retention not been vacancies at just obviously

Mitra Ramgopal

to to relates pay and being able you're And then price is pushback a the obviously operators occupancy on it some lot if nursing or have of census you quickly it and was more. down home terms up in That's top with to just great. wondering having of terms in make somewhere increases. getting they -- the I obviously of as you're their success implementing

Matthew McKee

this of anyone who's a for in they're and they I cost they're right? increase course is facing seeing partner And in relates the increase not asking to back billing primarily push right. their corresponding to reimbursement. that Mitra, an a environment going and vendor mean streams, -- course Of have rising revenue in when

we is, they way is our and remind benefits of have to customers of cost can a the those level on we're comments, speak them the from data with running partnership the value table really the us. we overwhelming an the Group, life costs we by true and And of of that's to element value one a earlier conversation. our you facility and what it's that Healthcare the appreciate and number majority very of the alluded and least his looks increased operationally. recognize bring exit way of significant we But And doubt, a what with without business them proposition that customers and paint that our the the -- much experience our conversation that like it Services do picture seeing partnership. And the to of the components So in to at table if of of as rising Ted to reality the that of without the take fact is the where has at cards one, right? the the partnership, manager certainly

would them operate efficiently as support managerial and customer departments able a So can going is as and they obviously run anywhere as manager be that facility a that wouldn't recruit, resources to have have nearly the in support level. Hope that to labor we train or what company they to at we're hire, additional identify, to the very Certainly to develop described challenging do. exiting. be the environment,

So the was and relative compliance perspective are would increase wages employees market outcomes Services them payroll an whether and hours way, operational their Healthcare to back their the going inclusive staff go on pay simply facing that's their from going line have a increasing they're appropriately, by likelihood is that or wages of providing. And of all to from perspective, overtime that it to high and to Group wages. deficiencies they what be a

be due component flip of relationship. So any Healthcare Healthcare Services of been are be the Group cost sort operator. obviously monies any increases upon would owed that ultimately back borne Services the the that exit would that to by Group to have And final would

our using of and you it's you be recognize and whole. a used paint proposition, to stick, process costs the that and be threatening kept only that fair not educate the in way that without customers a is you we'd picture through are when increasing certainly when state the through value world but that as and talk that go So the this intending

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

I as tried kind Matt are the is this letter? question door? it as can't you on this? why shut so the we incurring thinking level a add Mitra, I just companies to was is in novel to many not and like a be, taking long it with would approach to That's the that nation's your would that go vulnerable And different or off what decided been reacting your it doesn't we not and get you responsibility criticized lost through population. I'd have the took real-time send other companies in clients and the company, reimbursed you of -- a organization the wouldn't think in reputationally have industries for are as or Really to process? by hey, out otherwise. There can't line of say most basis? But establish values. industry the we've lights on is vision costs just done. it referenced, in most an certainly we have are Admittedly, being what other Why could client or a walk Why Why as caring often early purpose, how

business. for do our and belief doing I X up mutually thing. don't we to the stepped exclusive. we And think we right services, the provide of during was right, continued last no was was sight difficult always There believe the half step are and when increasing. inflation believe back good rapidly time, right year to the thing the continued in we end was we So is what up that most

best it company I it their long-term of I view the interest the I that organization. in along all in And short-term some the while years and a come. we'll just pain So in I having view and we're we months think conversations believe I labor think perspective, appreciation believed from see to the think And perhaps, the fruits that of of is resulted think that long-term the now. client enriched as

Operator

with The question is Blair. next Ryan from Daniels William

Nicholas Spiekhout

last for agreement these of -- like new just Ryan. that a because renegotiations because receiving had conversations Most you a kind been Spiekhout contracts asked, all to guess are decent but have these questions of or you much I something service at line. like How pushback? of when of of amount follow-up moderate Nick have my

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

at haven't time. point this We in

expectation we'll successful vast our Our clients delivering in saw... in our of appreciate that be that we majority recognize, outcomes is the that on

Nicholas Spiekhout

is have of then So to are to you goal of service your your goal QX, reach without target? your XXX% any goal agreements kind like That's of negotiated contracts them. when that of your outstanding by losing commenting on kind

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

meet There target successful as we're all to at way to of we to in be not is at Our type XXX%. cost try also can But as an going possibly to XXX%. has what be willing right, of participation as pricing force as that adjustment both governing made to the from modifications both to parties the needs be well and word contract is. fair, whatever need

So what we're confident in we bring table. to the

think I appreciation in and able the collaborative and it's to for and clients move way forward to reach that our have in of agreement. best utmost position we are a respect everyone believe the interest We be the the in

of to in success but which all the an objectives. is the think the longer not for in at XX%, the able is XXX% at type of goal, achieve we're term, year So set up also those but outcome that greater way the to to to future. cost achieve sacrifice trying exiting And we company we'll all be

Nicholas Spiekhout

tracking to I still well. you. positive April Got guess positively And trying pretty facility on centers just through the as then

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

occupancy where I staffing. you to But XXX recovery week to you up in and critical compare that over other which X-week about is to points going months census to all think aside the are I going Yes. going of are I X that occupancy next XX.X%, occupancy in recovery I the from to XX.X% is would be within basis were overall the to kind the we to that April, X X be just it dynamics about then a highlighted period. be From X of the between or and components think think referenced industry we're you XX.X%, watching interplay over -- if from perspective, think XX basis an February, closely and points industry

to So by pace. the threshold would been industry is back January that or than on admittedly desired to pace put XX% most set a benchmark 'XX, that's kind of which the that recover slower

points the I would to context industry be week if just with. and that likely rate of July think the XX about for And would the work trend continue, was -- recovery 'XX. January Delta before were to be between something able But that variant, basis the I occupancy would think a

particular, this recent I care So advantage take of are full in patient very we're those But both favorable. levels, dynamics rising yes, monitor of staffing But levels demand need TBD. trends closely. and that's the staffing to to think sufficient to going be

Operator

is from Bill The with question next Benchmark Sutherland Company. The

William Sutherland

That census guys it better? you applies is you're see that you weightings Is matter it where key guys? markets, seeing, density it you Do Ted, to in any trend that to more your as same? have

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

early think think our a that nothing months a or would I we're overall want basis, it's York. say into relative raise I state, wouldn't I'd highlight same and still say every at that only couple I'd Nothing. a local too of its I to say it is since broad still on every noteworthy I tell, mean trends, and X you these to on well, own Texas locality level level trend a New the or brush positive, the would between though I I of has trends positive and Bill. weeks say Nothing kind would story. see state-based eyebrows. it's

William Sutherland

Okay.

opportunities? -- it would Are going other anything opportunistic that forward? there front, of approach M&A the is call sort you an On

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

any be the our pure-play really services we very we say when available, few did acquisition services, and There's space of ancillary Very education certainly you opportunities. within dining be would sort But we're and the explore. services there & fourth plenty that the I to core adjacency post-acute care much floated there last Bill. quarter those exists the in direction would market in kind of there to year, that the of per can space. that nutrition additional environmental and the about opportunities may some market that opportunities But think of that long-term in the and actively imagine, core are are the as so. pursuing not as the

say but always as would actively pursuing, opportunistically. not case the I is So open

William Sutherland

to in slightly the there I the section triggered of that the was in in that competitor. competitors national language Having the was change you national sort think changed noticed I anything a -- language? competitive XX-K

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

acquisition post-acute the had that prompted predominantly was done plays in fact operator That really, Bill, an the long-term an and of just that Yes. Aramark space. by care

So bit acquisition. little shift had just that Aramark a given of a made that

William Sutherland

last, a got little I impacts, to your leads on lags here the inflation and Ted. then figure And out -- trying Okay.

wouldn't quarter the the X%, you up food impact ended, through labor if mind -- X%. repeating feel When of just HCSG? in to So you was sort about just flow do

Matthew McKee

but because through. states Yes. increase, it on it's That's different percentage difficult try how depending ultimately flows that the quantify any intra-quarter. type Bill, quantify the be There's dynamic kind given of It's number, the to weights depending to quarter. a -- on in of yes, so reluctant and dollars and overall between to that of timing in I'd

William Sutherland

I don't know...

Matthew McKee

food provide of some to inflation provide CPI, -- it data, off of seeing related some It's you to to provide the the you at national was BLS at when right? we're relative context. base pricing that When metrics food intended you at directional look the It's look type into the of home contract at benchmarks, majority adjustments more of; look we insight to more you when our

William Sutherland

then, that quarter a up from timing you perspective we what Is catch And get a will later. a so understand? should just

Matthew McKee

really in On side the food yes, we X particular, later. quarters get would

side of the third food would on XXXX. reflected inflation So be QX quarter would -- passed through in be

So the our labor to it's working we're have of on and majority well exactly with the type what that's a similar clients side like of mechanism. a X-quarter lag as on

the where adjusted price we So have contracts. is places in fixed inflation

adjusted and is basis labor-related real-time inflation more on a as well. So wage

part of So that's and the service effort that the intention agreement modification undertaking. we're

William Sutherland

real-time fair? And a quarter realistically that or would so lag. X Is

Matthew McKee

fair. that's Yes,

Operator

question Brian The with Jefferies. next Tanquilut is from

Brian Tanquilut

given for negative my guess the first $XX what million us, just question on I operating I million AR at million, accrued you've up parts flows, quarter. change. payroll moving up $XX and of the $XX cash at cash look the least some

are of about obviously operating the I mentioned cash other other? kind So think that the that $XX I offset drove X what as negative each number this, factors million things because

Matthew McKee

in same actually Actually both they moved the direction. no, were

then a be increase rather accounts cash -- in million in $XX was would outflow AR, $XX be a the million a which in cash also a would and payroll cash be would So it decrease outflow. -- receivable

Brian Tanquilut

Sorry.

sense. as in had the of here mean it. has as sunsetting think a it like I obviously makes of I from subsidies guess the the about your and ability and about you're to down. SNF that increase. of increases I their Okay. with to ability the in Got terms That about and PHE think I government. industry kind conversations pay the thought the contributions DSOs an clients take was costs lot the we government And are then improvement the what we dying in expecting, potentially tailwinds as think

Matthew McKee

Without of sort and operators in And about to is increasing talked ongoing mean panacea, to a alluded of of the the certainly what this health that to census the specifically and Brian, environment caregiving I is availability this census headwind a is challenge caregiving improvement doubt, quarter a not -- the well-being working suggest we current staffing, I critical is but with last previously, that staff. that Ted providing Yes. right? right? exactly the think to professional staff financial and

really to improvement, assuming So ways a appropriate foster census that's able But find continue that's definitely ongoing staffing to going been that continue to they to challenge. provide and beneficial. to are be to that

currently unexpected. as was So proposed, rule wholly which payment with new the not

early as as are or phase-in and the I operators be in focused for a allowance that going visibility there'll and industry some June of ultimately hope far some within the that certainly think is to the rule providing census. I provisions final on driving PDPM facility the approach as But care comes pullback. be and there's staffing out think kind greater

going year a fiscal is has that baby that very prospects. for what the assuming was these into The through of this times, operators able the happy with demographics doubt plan expected. effect rate So operators challenging Medicaid awaits to drive census ultimately fact they with PDPM about optimistic on are to the October on environment, see there's challenging state-by-state would that we're that secular the to starting really is And boomer X, by go-forward pullback continue tailwind that. improvements. the They're way But I XXXX. the no about say

Brian Tanquilut

for Got it. question And then me. last

dividend of the good at How dividend about is had about are level, obviously year. philosophy is to mean think you've the balance that? I pretty thinking down obviously north consistently. and As success million your $XX cash Board raising I $XX we dividend million here a

thoughts are So just curious your there. what

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

philosophically, allocation dividend. and about organic always terms the no quarter-to-quarter, growth just of the #X And dividend we guidepost. hasn't this in se. for current right? cash So not balance but but I But per before, payout it's the with open it. the evaluated by still have would the that changed. investment the supported talked and conversation is say balances cash the view served Board's this in remain we the consistency quarter, of sustainability priority internal there's capital as been more than the Well, quarter It's cash followed for ratio Board's And the as flow that

a the evaluate remains it after perspective. highest growth priority Board's quarter-to-quarter and next capital So just always it again But we'll continue allocation have. like internal we investment, from organic Brian, to

Operator

Ted further to We turn at over questions any remarks. have I'll Wahl time. this for the call closing no

Theodore Wahl;Healthcare Services Group, Inc.;President and CEO

year over basis. account Chris. on the inflation quarter a inflation the engaging Thank our ahead, prioritize with continue experienced future adjust to to customers the as for for real-time we'll Okay. more modify our In past you, to service well as agreements

also company with committed long-term we shareholder deliver historical towards an value. agreements with making QX continue that of end line to growth. service operationally Above goal decisions be the exiting of to target opportunistic by expect to XX%. year We to continue the the We'll eye in services the our of of all, completed with with execute remain best the to cost position

So all and HCSG, everyone you, thank I on at to to today call hosting of Chris, Matt the again behalf for you wanted and of us for thank participating.

Operator

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

disconnect. now may You

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