Industry Overview - The long-term and post-acute care environment is characterized as supportive due to demographic trends, with the first baby boomers turning 80 in 2026, leading to increased demand for services in the sector [1] - Positive operating trends include steady occupancy, improving workforce availability, and a stable reimbursement environment [1] Company Performance - Healthcare Services Group (NASDAQ:HCSG) reported over 7% year-over-year revenue growth in 2025, generating significant free cash flow while maintaining costs within targeted ranges [2][3] - The company closed fiscal 2025 with Q4 revenue of $466.7 million and net income of $31.2 million, translating to an EPS of $0.44 [5][7] - The campus division was a notable growth driver, surpassing $100 million in revenue during the year [2][5] Financial Metrics - Cost of services was $394.6 million, representing 84.6% of revenue, benefiting from strong service execution and efficiencies [6] - SG&A expenses were $46.2 million, or 9.8% of revenue, after adjustments [6] - Cash flow from operations for Q4 was reported at $17.4 million, adjusted to $36.4 million after accounting for a decrease in payroll accrual [7] 2026 Outlook - Management projects mid-single-digit revenue growth for 2026, with Q1 revenue expected to be in the range of $460 million to $465 million [5][8] - Cost of services is targeted to be around 86%, with SG&A aimed at 9.5% to 10.5% [9] Contract and Liquidity Management - The company has upgraded contracts to improve margin visibility and collections, transitioning to service-day billing [11][12] - As of the end of 2025, the company had $203.9 million in cash and an undrawn $300 million revolving credit facility [13] Capital Allocation - The company completed a $50 million share repurchase plan ahead of schedule and plans to repurchase an additional $75 million of common stock [14][15] - Management emphasized that the liquidity position allows for pursuing organic growth, acquisitions, and share repurchases without compromising any priority [16] Long-term Strategy - The company believes its business fundamentals, contract visibility, and training platforms position it to capitalize on long-term demand trends in the markets it serves [17]