Healthcare Services Group Stock

Healthcare Services Group, Inc. provides management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of healthcare facilities, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States.

The company provided such services to approximately 2,700 facilities throughout the continental United States as of December 31, 2023. The company is the largest provider of housekeeping and laundry management services to the long-term care industry in the United States.

Segment Information

The company operates through two segments, Housekeeping (housekeeping, laundry, linen and other services); and Dietary (dietary department services).

The company provides Housekeeping services to approximately 2,300 customer facilities and provides Dietary services to approximately 1,700 facilities. The company’s customers receive government reimbursements related to Medicare and Medicaid and is directly affected by any legislation and regulations relating to those programs.

The company provides services primarily pursuant to full service agreements with its customers. Under such agreements, the company is responsible for the day-to-day management of the employees located at its customers’ facilities, as well as for the provision of certain supplies. The company also provides services on the basis of management-only agreements for a limited number of customers. Under a management-only agreement, the company provides management and supervisory services while the customer facility retains payroll responsibility for the non-supervisory staff. In certain management-only arrangements, the company maintains responsibility for purchasing supplies. The company’s agreements with customers typically provide for a renewable one year service term, cancellable by either party upon 30 to 90 days’ notice after an initial period of 60 to 120 days.

Housekeeping

The services provided under this segment include managing the company’s customers’ housekeeping departments, which are principally responsible for the cleaning, disinfecting and sanitizing of resident rooms and common areas of the customers’ facilities, as well as the laundering and processing of the bed linens, uniforms, resident personal clothing and other assorted linen items utilized at the customers’ facilities. Upon beginning service with a customer facility, the company typically hires and trains the employees previously employed by such facility and assign an on-site manager to supervise the front-line personnel and coordinates housekeeping services with other facility support functions in accordance with customer requests.

Dietary

This segment consists of managing the company’s customers’ dietary departments, which are principally responsible for food purchasing, meal preparation and professional dietitian services, which include the development of menus that meet the dietary needs of residents. On-site management is responsible for all daily dietary department activities, with regular support provided by a District Manager specializing in dietary services. The company also offers clinical consulting services to its dietary customers which may be provided as a stand-alone service or bundled with other dietary department services. Upon beginning service with a customer facility, it typically hires and trains the employees previously employed by such facility and assign an on-site manager to supervise the front-line personnel and coordinate dietitian services with other facility support functions in accordance with customer requests. Such management personnel also oversee the execution of various cost and quality control procedures, including continuous training, employee evaluation, management of food supplies, minimizing food waste and managing supply deliveries.

Significant Customers

For the year ended December 31, 2023, both the Housekeeping and Dietary segments earned revenue from several significant customers, including Genesis Healthcare, Inc. (Genesis).

Market

The market for the company’s services consists of a large number of facilities involved in various aspects of the healthcare industry, including long-term and post-acute care facilities (e.g., skilled nursing facilities, residential care and assisted living facilities) and hospitals (e.g., acute care, critical access and psychiatric). Such facilities may be specialized or general, privately owned or public, for-profit or not-for-profit, and may serve residents on a long-term or short-term basis. The company markets its services to facilities after consideration of a variety of factors, including facility type, size, location and service opportunities (Housekeeping or Dietary).

Marketing and Sales

The company’s services are primarily marketed and sold by its marketing and sales teams. These marketing and sales efforts are supported by all levels of the company’s corporate and operational management team. The company provides incentive compensation to its sales and operational personnel based on achieving financial and non-financial goals and objectives, which are aligned with the key elements.

The company’s services are marketed and sold primarily through referrals and solicitation of target facilities. The company also participates in industry trade shows, as well as federal and state healthcare advocacy associations and related events. Such programs are typically attended by facility owners, administrators and supervisory personnel, thus presenting marketing opportunities for the company. Indications of interest in its services arising from initial marketing efforts are followed up with a presentation regarding the company’s services and an assessment of the service requirements of the facility.

History

Healthcare Services Group, Inc., a Pennsylvania corporation, was founded in 1976. The company was incorporated in 1976.