Healthcare Services Group(HCSG) - 2025 Q4 - Annual Results

Revenue and Income - Revenue for the year was reported at $1.84 billion, reflecting a year-over-year increase of 7.1%, while fourth-quarter revenue reached $466.7 million, up 6.6% from the prior year[4]. - Net income for the year was $59.1 million, or $0.81 per diluted share, and for the quarter, net income was $31.2 million, or $0.44 per diluted share[4]. - The Campus division achieved over $100 million in revenue, marking a significant milestone in its growth journey[2]. Cash Flow and Operations - Cash flow from operations for the year was $145.0 million, with $17.4 million generated in the fourth quarter; adjusted cash flow excluding payroll accrual changes was $164.1 million for the year and $36.4 million for the quarter[4][6]. - GAAP cash flows from operations for the year ended December 31, 2025, were $144,968,000, compared to $30,802,000 in 2024, indicating a substantial increase[25]. - Adjusted cash flows from operations for Q4 2025 were $36,415,000, up from $26,957,000 in Q4 2024, marking a growth of 35.5%[25]. - The company reported an increase in operating cash flow performance, although timing of payroll payments may affect quarterly results[24]. Expenses and Costs - Cost of services was reported at $394.6 million, representing 84.6% of revenue, with a goal to manage this cost in the 86% range for 2026[5]. - Selling, general and administrative expenses (SG&A) were reported at $46.2 million, or 9.8% of revenue, with a target range of 9.5% to 10.5% for 2026[5]. - Depreciation and amortization for the year ended December 31, 2025, totaled $16,778,000, compared to $14,585,000 in 2024, reflecting an increase in asset utilization[23]. - Share-based compensation for the year ended December 31, 2025, was $12,005,000, up from $9,165,000 in 2024, indicating increased employee incentives[23]. - Interest expense for the year ended December 31, 2025, was $14,047,000, compared to $424,000 in 2024, showing a significant rise in financing costs[23]. Future Outlook - The company expects mid-single-digit revenue growth for 2026, supported by strong business fundamentals and strategic execution[4][2]. - The effective tax rate for 2025 was a 9.4% benefit for the quarter and a 13.0% expense for the year, with an expected effective tax rate of approximately 25% for 2026[12]. Share Repurchase - The company completed a $50.0 million share repurchase program and announced a new $75.0 million buyback program, set to be executed over the next 12 months[4][7]. Adjusted Metrics - Adjusted EBITDA for the year ended December 31, 2025, was $82,602,000, up from $76,267,000 in 2024, reflecting a growth of 8.4%[23]. - Adjusted EBITDA as a percentage of revenue increased to 7.1% in Q4 2025 from 4.6% in Q4 2024[23]. - The accrued payroll adjustment for Q4 2025 was $19,028,000, compared to a negative adjustment of $9,247,000 in Q4 2024, indicating a positive shift in payroll management[24]. Financial Position - The company ended the year with cash and marketable securities totaling $203.9 million and an unutilized $300.0 million credit facility[6]. - GAAP net income for Q4 2025 was $31,244,000, compared to $11,920,000 in Q4 2024, representing a significant increase[23].