Healthcare Services Group, Inc.

Thank you for standing by. My name is Rebecca and I will be your conference operator today. At this time, I would like to welcome everyone to the HCSG 2026 first quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, Simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. The matters discussed on today's conference call include forward-looking statements about the business prospects of Healthcare Services Group Incorporated. For Healthcare Services Group Incorporated's most recent forward-looking statement notice, please refer to the press release issued this morning which can be found on our website, www.hcsg.com. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the Risk Factors MD&A and other sections of the Annual Report on Form 10-K and Healthcare Services Group Incorporated, other SEC filings, and as indicated in our most recent forward-looking statements notice. Additionally, management will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in this morning's press release. I would now like to turn the call over to Ted Wall, CEO. Please go ahead.

Good morning, everyone, and welcome to HCSG's first quarter 2026 earnings call. With me today are Matt McKee, our Chief Communications Officer, and Vikas Singh, our Chief Financial Officer. Earlier this morning, we released our fourth quarter results and plan on filing our 10Q by the end of the week. Today, in my opening remarks, I'll discuss our Q1 highlights, share our perspective on the general business environment, and discuss our strategic priorities for Q2. Matt will then provide a more detailed discussion on our Q1 results, and then Vikas will provide an update on our liquidity position and capital allocation progression. We will then open up the call for Q&A. So with that overview, I'd like to now discuss our Q1 highlights. We delivered strong first quarter results across revenue, earnings, and cash flow, and we have carried that positive momentum into the second quarter. New client wins and high retention rates drove our year-over-year top-line growth, and our field-based team's operational excellence led to quality service outcomes and consistent margins. We also returned $24 million of capital through our share repurchase program and ended the quarter with a strong balance sheet and ROIC profile. underscoring our focus on value-creating capital deployment. I'd like to now share our perspective on the general business environment. Industry fundamentals continue to gain strength, highlighted by the multi-decade demographic tailwind that is now beginning to work its way into the long-term and post-acute care system. In 2026, the first baby boomers will turn 80 years old, and by the year 2030, All 70 million plus boomers will be over the age of 65, with the oldest being in their mid-80s, the primary age cohort for long-term and post-acute care utilization. We expect that the demand and opportunities for service providers in this space, especially for those with compelling value propositions, durable business models, and market-leading positions, to only increase in the months and years ahead. The most recent industry operating trends remain positive as well, highlighted by steady occupancy, increasing workforce availability, and a stable reimbursement environment. We remain optimistic that the administration will continue to prioritize the rationalization of regulations and policy to better align with the changing and expanding needs of our nation's most vulnerable and the provider communities we service. Beyond our core industry trends, we are closely monitoring the broader macro landscape, including the volatility in global energy and supply markets resulting from ongoing geopolitical conflicts. Our role as financial stewards for our clients remains a non-negotiable priority and serves as our north star as we navigate this environment. To that end, while we have not observed direct on invoice impact from these global events, Our purchasing and procurement teams are actively monitoring the landscape and surveying our supply chain to stay ahead of any developing trends. Fundamental to these efforts is the depth of our longstanding vendor partnerships, which provide critical visibility and stability necessary to navigate market volatility with confidence. In the event that specific supplies or food items experience outsized inflationary or cost pressure, we are prepared to pivot our sourcing strategies to mitigate direct exposure. Ultimately, the rigorous work we have done to enhance our contractual frameworks allows us to pass through unavoidable cost increases, ensuring we preserve our margins while continuing to deliver market-leading service. Looking ahead to Q2, our top three strategic priorities remain driving growth by developing management candidates converting sales pipeline opportunities, and retaining our existing facility business, managing cost through field-based operational execution and prudent spend management at the enterprise level, and optimizing cash flow with increased customer payment frequency, enhanced contract terms, and disciplined working capital management. We are confident that continuing to execute on our strategic priorities supported by our robust business fundamentals, will enable us to drive growth while delivering sustainable, profitable results. So with those introductory comments, I'll turn the call over to Matt.

Thanks, Ted, and good morning, everyone. Revenue was reported at $462.8 million, a 3.4% increase over the prior year. Segment revenues and margins for environmental services were reported at 208.3M dollars and 12.1%. Segment revenues and margins for dietary services were reported at 254.5M dollars and 9%. Our 2026 growth plans are oriented around mid single digit revenue growth with Q2 revenue in the 465 to 475M dollar range. and sequential revenue growth in the second half of the year compared to the first half of the year. Cost of services was reported at $386.9 million, or 83.6%. Cost of services benefited from strong service execution, workers' comp and general liability efficiencies, and lower bad debt expense. Our goal is to manage cost of services in the 86% range. SG&A was reported at $42 million. After adjusting for the $1.6 million decrease in deferred compensation, SG&A was $43.6 million, or 9.4%. Our goal is to manage SG&A in the 9.5% to 10.5% range based on investments that we've made and spoken about in previous quarters with the longer-term goal of managing those costs into the 8.5% to 9.5% range. Our effective tax rate was reported at 24.6%. We expect our 2026 effective tax rate to be approximately 25%. Net income and diluted earnings per share were reported at $26.1 million and 37 cents per share. I'd now like to turn the call over to Vikas.