Healthcare Services Group(HCSG) - 2024 Q4 - Annual Report

Revenue and Financial Performance - Total revenues for 2024 reached $1,715,682, an increase of 2.0$1,671,389 in 2023[211]. - Net income for 2024 was $39,471, reflecting a growth of 2.8$38,386 in 2023[211]. - Basic earnings per share increased to $0.54 in 2024, up from$0.52 in 2023[211]. - The Company reported consolidated revenues of $765.4 million,$766.7 million, and $795.7 million for the years ended December 31, 2024, 2023, and 2022, respectively, from housekeeping services[264]. - Dietary services generated consolidated revenues of$950.3 million, $904.7 million, and$894.5 million for the years ended December 31, 2024, 2023, and 2022, respectively, indicating a growth of 5.8% from 2023 to 2024[265]. Accounts Receivable and Bad Debt - The company recorded bad debt provisions of $46.8 million for the year ended December 31, 2024, compared to$35.6 million in 2023 and $32.0 million in 2022, indicating an increase in credit risk exposure[60]. - The total net accounts receivable as of December 31, 2024, was$423.4 million, an increase from $408.3 million in 2023, reflecting a growth of 3.0$17.6 million in 2024 due to outstanding invoices related to LaVie Care Centers, LLC, which filed for Chapter 11 bankruptcy protection[279]. - The allowance for doubtful accounts for notes receivable decreased from $10.880 million in 2023 to$6.657 million in 2024, reflecting a write-off of $4.275 million during the year[286]. - The Company utilizes financial modeling to determine an allowance for doubtful accounts, reflecting the best estimate of lifetime expected credit losses on accounts and notes receivable[235]. Assets and Liabilities - Total assets as of December 31, 2024, amounted to$802,772, a rise from $790,652 in 2023[208]. - Total current liabilities decreased to$192,547 in 2024, down from $216,928 in 2023, representing a reduction of 11.3$100.782 million as of December 31, 2024, compared to $46.760 million in 2023[286]. - The total property and equipment at cost increased from$50.803 million in 2023 to $55.821 million in 2024, with significant increases in housekeeping and dietary equipment and computer hardware and software[296]. Cash and Cash Equivalents - As of December 31, 2024, the company had$135.8 million in cash, cash equivalents, restricted cash equivalents, marketable securities, and restricted marketable securities[184]. - Cash and cash equivalents at the end of 2024 were $60,131, compared to$54,330 at the end of 2023, marking an increase of 10.3%[213]. - Total cash and cash equivalents and restricted cash equivalents increased to $60.131 million as of December 31, 2024, compared to$54.330 million in 2023, reflecting a growth of about 10.3%[229]. Investment and Marketable Securities - The company’s investment portfolio includes municipal bonds, treasury bonds, and corporate bonds, which are subject to market fluctuations[54]. - The total marketable securities at fair value decreased to $50,535,000 in 2024 from$93,131,000 in 2023, a decline of 45.8%[318]. - The Company recorded unrealized losses of $500,000 on marketable securities for the year ended December 31, 2024, compared to unrealized gains of$1,600,000 in 2023[313]. - The total debt securities available-for-sale decreased from $95,466,000 in 2023 to$75,640,000 in 2024, reflecting a gross unrealized loss of $3,056,000[323]. Employee and Operational Insights - Approximately 35,300 employees were employed as of December 31, 2024, with 4,000 in corporate and field management[40]. - The company emphasizes employee health and safety, providing various health and welfare programs to support employee well-being[41]. - The company has a high deductible insurance program, retaining substantial risk associated with possible losses, which could impact financial results if claims exceed estimates[63]. Regulatory and Compliance Risks - The company is subject to various federal, state, and local laws and regulations, and changes in these regulations could increase operating costs and liability exposure[75]. - Changes in government regulations and reimbursement rates from Medicare and Medicaid could adversely affect the cash flows of the company's customers, impacting their ability to meet payment obligations[59]. - The company is subject to federal and state ESG requirements, which may lead to increased costs and operational changes to achieve compliance[83]. Cybersecurity and Technology - The company experienced a cybersecurity incident on October 9, 2024, involving unauthorized activity within its systems, although it is not expected to disrupt business operations[84]. - The company maintains insurance coverage for cyber risks, but it may be insufficient to cover all potential losses[86]. - The company is evaluating the implementation of generative artificial intelligence (Gen AI) technologies, which may present additional risks if not managed properly[87]. Shareholder and Equity Information - The Company issued 204 shares in connection with equity incentive plans in 2024, compared to 167 shares in 2023, representing a growth of approximately 22.2$9,165,000, slightly increasing from $8,985,000 in 2023[324].