Healthcare Services Group Inc. (NASDAQ:HCSG) Q3 2022 Earnings Conference Call October 19, 2022 8:30 AM ET

Company Participants

Ted Wahl - President, Chief Executive Officer

Matt McKee - Chief Communications Officer

Conference Call Participants

Andy Wittmann - Baird

Sean Dodge - RBC Capital Markets

Jack - William Blair

Mitra Ramgopal - Sidoti

Brian Tanquilut - Jefferies

Operator

Good morning. My name is Chris and I will be your conference operator today.

At this time, I’d like to welcome everyone to the HCSG 2022 third quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you’d like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, please press star, one again. Thank you.

Ted Wahl, President and Chief Executive Officer, you may begin.

Ted Wahl

Thank you Chris, and good morning everyone. Matt McKee and I appreciate you joining us today. We released our third quarter results this morning and plan on filing our 10-Q by the end of the week.

Our third quarter results reflect the ongoing and expected choppiness that we referenced during our second quarter call, and while we have conviction in our ability to manage the controllable components of our business, namely customer satisfaction, systems adherence, regulatory compliance and budget discipline, we are also realistic about the ongoing challenges that remain within our industry and the broader economy.

During the quarter, we successfully executed on our strategy to more favorably position our customer partnerships and agreements. We are confident that this work will yield improved results in the fourth quarter and remain on track to meet our goal of exiting the year with cost of services in line with our historical target of 86%. We will continue to adjust, adapt and aim to deliver optimal results in a way that maintains the quality and integrity of our existing partnerships and opportunistically explores future growth.

With those introductory comments, I’ll turn the call over to Matt for a more detailed discussion on our Q3 results.

Matt McKee

Thanks Ted, and good morning everyone.

Revenue for the quarter was reported at $415.8 million with housekeeping and laundry and timing and nutrition segment revenues of $197.2 million and $218.6 million respectively. As previously disclosed, the third quarter results were impacted by contract modification actions taken by the company resulting in a one-time reduction of approximately $9 million of revenue, and that compares to the previously estimated $17 million and also $9 million in operating income reduction.