Healthcare Services Group, Inc. (HCSG) Q3 2024 Earnings Report, Transcript and Summary

Thank you, for standing by. My name is Jeanne, and I will be your conference operator today. At this time, I would like to welcome everyone to the HCSG 2024 Third Quarter Conference Call. The matters discussed on today's conference call include forward-looking statements about the business prospects of Healthcare Services Group, Inc. For Healthcare Services Group Inc.'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 Inc.'s other - SEC filings and as indicated in our most recent forward-looking statement. 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. 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. [Operator Instructions] Thank you. I would now like to turn the conference over to Ted Wahl. You may begin, your conference.

Thank you, 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. We're very pleased with our third quarter results, which underscore the positive momentum, we're carrying into the fourth quarter. Executing on our three strategic priorities of driving growth, managing costs and optimizing collections, is clearly paying off, resulting in sequential and year-over-year growth in revenue, earnings and cash flow. For the three months ended September 30, 2024, we reported revenue of $428.1 million in line with expectations, net income and diluted EPS of $14 million and $0.19 per share and reported and adjusted cash flow from operations of $4.3 million and $19 million. I'd like to now share our perspective, on the latest industry trends and developments. Industry fundamentals continue to trend positively, highlighted by rising occupancy, which now sits at 79.8% just under the low 80s pre-pandemic levels. A continued increase in workforce availability, with the industry adding over 100,000 jobs since the beginning of 2023. And a stable reimbursement environment, which includes CMS's 4.2% increase in Medicare rates for the fiscal year 2025, which became effective October 1, as well as continued positive reimbursement trends at the state level. On the regulatory front, we continue to believe that CMS's final minimum staffing rule, will either undergo significant revision during the extended phase in period, or will not be implemented, especially given the pending litigation and the potential for legislation, or administration change. As we head into the final months of the year, our strategic priorities remain unchanged. We are confident that our focus on these priorities, supported by our strong business fundamentals, will enable us to further accelerate growth, enhance profitability, and maximize cash flow through 2025, and beyond. So, with those introductory comments, I'll turn the call over to Matt, for a more detailed discussion on the quarter.

Thank you Ted, and good morning everyone. Revenue was reported at $428.1 million, in line with the company's expectation of $425 million to $435 million. Housekeeping and laundry revenue was $191.1 million and the margin was 6.4%. Dining and nutrition revenue was $237 million, and the margin was 5.3%. The company's Q4 expected revenue range is $430 million to $440 million. Cost of services was reported at $364.7 million, or 85.2%, and the company's goal is to continue to manage cost of services, excluding CECL in the 86% range. SG&A was reported at $46.9 million, but after adjusting for the $2.4 million increase in deferred compensation, actual SG&A was $44.5 million, or 10.4%. The company's goal continues to be achieving SG&A in the 8.5% to 9.5% range. Other income was reported at $2.3 million, or 0.5%, and other income includes a $2.4 million, or 0.6% increase in deferred compensation. Net income and diluted earnings per share were reported at $14 million and $0.19 respectively. Adjusted EBITDA for the quarter was $24.8 million, or 5.8%. Cash flow and adjusted cash flow from operations was $4.3 million and $19 million, respectively. The company reaffirmed its 2024, adjusted cash flow from operations range of $40 million to $55 million. And the company has repurchased over 350,000 shares, or $4 million, of its common stock so far in 2024, including over 90,000 shares, or $1 million of its common stock during the third quarter. Since the February 2023 share repurchase authorization, we have repurchased 1.4 million shares, or $15.2 million of our common stock, and we have 6.1 million shares remaining under our authorization. So with those opening remarks, we'd now like to open up the call for questions.

Thank you. [Operator Instructions] And your first question comes from line of Sean Dodge from RBC Capital Markets. Please go ahead.

Yes, thanks. Good morning. Ted, on the cash flow, you made really good progress there during the quarter. Is there anything else you can share, just around the visibility you have at this point into the full year target? I know Q4 tend to be very seasonally strong for you. You mentioned at the top of the call, the improving macro backdrop. I guess, is there still some catching up that's happening too, with all of the payments kind of posted the change outage?

Yes, Sean. And thank you for the question. We did achieve over 98.5% collections for the quarter, and that helped drive that $19 million adjusted cash flow that we posted, which was in line with our targeted range and really higher, compared to last quarter in the same period last year. So, we're proud of that accomplishment. We do have positive momentum heading into the fourth quarter, evidenced by our Q3 results and also the very positive start, we've gotten off to in October. So all of that works in our favor. And then you mentioned it, but we also have the benefit of seasonality working in our favor. Historically, Q4 has been our strongest collections quarter. We have the tension of year end, and makeup payments from prior periods. You cited Change Healthcare as an example. So yes, we do expect, in addition to what we've collected, with respect to those delays in Q3, we do expect continued collections on those Change Healthcare delays in Q4. And then, as we highlighted before in past years, we do have some year-end cash basis taxpayers. So our goal overall continues to be optimizing cash collections in the quarter ahead and 2025. We continue to expect our collections to gain strength into next year, with that improving macro backdrop that you highlighted. And again, we're going to stick - continue to focus on increasing payment frequency. Taking our customers and our clients from monthly to weekly and or biweekly, continuing to focus on using promissory notes, proactively as a protective and proactive measure. And then ultimately remaining disciplined in our decision making, for both existing business and of course, new business.

Okay. Great. And then, Matt, how many days of payroll accrual were there in the quarter, in the third quarter. And then, can you give us what that will be in days for the fourth quarter?

Yes, Sean. So the third quarter was nine days. And then for the fourth quarter, it'll be three days.

Okay. And then last from me, if we just think about the pacing of revenue, what was the revenue run rate exiting the quarter, and then anything you can share on how we should be thinking about growth heading into next year, is just annualizing the Q4 guidance. Is that a fair way to kind of start to think about 2025, or are conditions such now that we could continue to see some acceleration in the dining cross-sell? Is kind of the quarter's roll on here?

Well, I think big picture, very optimistic. Heading into 2025, we really, from a pipeline perspective, demand for the services, management, development, all of those indicators are trending very positively. I think Sean, even to zoom out for a moment, if you recall coming into the year, we shared our expectations around revenue growth, and at that time, it was more in the spirit of crawl, walk, run. We had the goal of growing the top line in the second half of the year, compared to the first half of the year. And that cadence of growth that we anticipated, was really aligned with how we were thinking about the industry recovery, and really rounding that final turn of recovery. The operating environment that existed at that time. And then, what we saw as the improving financial strength of our customer base, and ultimately future growth and client partners. So coming into the final months of 2024, I think we're confident that we're going to hit that goal that, we set at the beginning of the year. I think more specific to Q4 and 2025, we added business pretty evenly throughout the quarter. We're in the midst of prospect discussions that, we know are going to amount to more meaningful ads, certainly in the coming quarters, if not in the quarter ahead. Some of those are already signed and started. We have a pool of customers or future customers that are signed, but not yet started. And then, we have a group that are more or less in the final stages of contracting that, could be pulled forward into Q4 or pushed out into Q1. But again, overall, in the spirit of accuracy rather than precision, we're really feeling confident and bullish on the next few quarters of growth. I know we mentioned that improving visibility we have into the pipeline, compared to where we were a year or two ago. I think the timing of those ads, as I mentioned, is what really drives the impact in any given quarter relative to the estimated revenue ranges. The only other piece I'd add to is, that Matt and I are always highlighting is the importance of retention, on our existing business to new growth opportunities. We do expect know the - some of the, I'd say financial related exits we've had over the past few years post COVID, through industry recovery. We expect to subside going forward, but we have to remain disciplined in our decision making, and be nimble if we believe it's in the best long-term interest, or near term interest to exit a client group with whom we have concerns. So that's really the tale of the tape, as we think about revenue. But again overall, we're confident that we're going to hit our top line growth goal that, we had set at the beginning of the year, growing second half compared to first half. And I think we'll be in a position to more specifically talk about 2025 growth expectations, when we're together in February on this call. Certainly beyond our expectations that 2025, is going to be a year of growth, which we feel confident about.

Okay. Sounds great. Thanks and congratulations again.

Thank you, Sean.

Your next question comes from the line of Andy Wittmann with Baird. Please go ahead.

Yes, good morning, guys. Thank you for taking my questions. I have kind of one just kind of technical question, and then I'm going to follow-up with a broader picture question. But start out here, guys. In the past, recognizing that the credit adjustments under CECL accounting can be lumpy, positive or negative in any given quarter, I was just hoping that you could tell us, what the hypothetical difference between your - excuse me, hypothetical difference between your results here, GAAP results, including the CECL. How those would have compared, versus the legacy GAAP accounting standard here, either like, if you could just quantify that on a pre-tax, or on a per share basis. Obviously you've talked about this in the past, on other quarters, you're not here. But I thought, it'd be just informative for all of us to understand, what that difference was and how it contributed to the results this quarter?

Yes. So, prior to the CECL standard, we booked bad debt as it was incurred or known, right. So really bad debt this quarter would have looked quite comparable really, under the CECL standard as compared to that previous standard. But I said, you're trying to bridge to an adjustment, Andy. So the way that we've discussed it previously, is that in recent years, kind of prior to CECL, bad debt that was averaging around 70 basis points of revenue. So that's an average number. So worth noting that it was certainly certain quarters and years in, which we were well below that mark. But then you'd have a specific client restructuring or a bankruptcy, and you could see bad debt elevated for a quarter, and that would ultimately lead to some of the variability, quarter-to-quarter and then even year-to-year. So in any quarter since we introduced CECL, really inserting 70 bps of revenue Andy, as a bad debt plug, would really offer a comparison versus, what we were averaging using what you referred to, as that legacy accounting standard.

Okay. All right. Got it. All right. So then - I guess, Ted, just stepping back here a little bit, I'm just curious, like, are you seeing, what are you seeing in terms of the SNF room demand from the increasing levels of acuity that are being managed in assisted living locations? These assisted living locations seem to be functioning increasingly the way SNF's used to. And I was just wondering what the company's pathway or potential was to expand into these higher acuity assisted living facilities is. Are there like barriers, either at those facilities or structural elements of your business that prevent you, or precluding you from addressing that as a market opportunity? I'm just kind of curious, if you could just talk about, what these higher acuity assisted living places mean for you, and how you are addressing it, if at all?

Yes, and it's a great question, Andy. I think when you think big picture, right, the 2030 problem is real. You have the ongoing demographic tailwind, for companies like ours and - that operate in the senior living and/or long-term care space. And the idea that as - those macro trends continue to work in all of those companies, whether it's the provider or the service companies that operate in that space. As the macro trends continue to improve, so do the opportunities across all parts of the continuum, from independent living through, as you highlighted, senior living, more traditional assisted living opportunities right on through long-term care, nursing homes, and then ultimately hospice. So we see ourselves playing a role in that entire continuum. Obviously historically, our core focus has been in and around the traditional long-term, or post-acute care facility i.e. the nursing home. Today that makes up roughly 80% of our business, but in that other 20% is a rapidly growing, and a great opportunity part of the company we mentioned, education, that is still less than 5% of our revenues, but has tremendous opportunity. But when you think about, as you highlighted the assisted living more, higher acuity level, assisted living facilities as well as behavioral health, substance abuse centers. They all make up very attractive opportunities, for the company moving forward. We're well positioned to take advantage of those opportunities. We haven't talked about inorganic growth opportunities recently on calls like this, but we always have one eye open for different brands that could be complementary to our existing brand. But even under the HCSG umbrella, we think there's a clear runway to continue to grow and expand in that market.

And I would just distinguish, Andy, one component relative to your question in the sense that as we look at that assisted living market specifically. First off, you're absolutely correct in your assessment of increasing acuity levels in assisted living. There are folks that we see in assisted living today who even as few as six years ago, would have absolutely been in a skilled environment. So that is a dynamic that's evolving, for sure. I would point out, though that just from a demand perspective, the model relative to housekeeping services and even laundry services in assisted living facilities, tends to be still more of almost a universal aid model, right. You still have, generally speaking, most residents are able to clean their own apartment, their own space. So you have universal aid who may be contributing to cleaning common areas in the facility, and performing other random functions as a component of their facility employment. You contrast that, though with dining, where absolutely dining is a significant area of focus, and a massive component of the resident experience at an assisted living facility. So as we look to further expand our footprint in dining services, by virtue of the acquisition that we made that was intended, relative to the education end market, but is also certainly transferable into the higher end assisted living market, that remains an opportunity for us. So I would say in the near term at least, Andy, a greater opportunity in assisted living from a dining perspective, as compared to environmental services.

Okay. Great. I'll leave it there, guys. Have a good day.

Your next question comes from the line of Bill Sutherland with Benchmark. Please go ahead.

Hi, thanks. Good morning, guys. Just to follow-up on Andy's question, it got me thinking. Are you seeing any of your SNF clients see - experiencing declines in the skill mix?

Certainly, there's a variability that occurs client-to-client. There are certain clients and operators who are more focused on driving, for instance, Bill the short term, post-acute rehab type stay, versus others who are catering to more of the long-term care, the true long-term care resident within their patient mix. So I'd say it's hard to offer any specifics, Bill, relative to what we're seeing, but definitely within any particular client or end market, you could see variability.

Okay. On the SG&A number, which is right in line this quarter. And you've spoken about the potential, to use various - approaches to efficiencies and technology to do even better there and also in cost of sales. So I'm just wondering, should we think about on absolute dollar basis, SG&A being managed even lower, or is it just something that you can maybe manage flat - against a growing revenue base, to get it into the range you want as far as percent of revenue?

It's actually a mix of the two, Bill. I think when you look over the past 12 months, SG&A has been relatively flat from - on a quarter-to-quarter basis. Longer term, our goal is to manage SG&A, we think of it as a percentage opportunity in that 8.5% to 9.5% targeted range. Obviously it's higher than that today as a percentage of revenue. But we expect to continue to make the investments that we've made over the past couple years. And as we grow the top line, we're going to be able to further leverage the fixed portion of that SG&A, and really scale it relative to that top line growth. So you mentioned some of the investments. We're going to continue to invest in employee engagement and experience, which we've mentioned before, but in the midst of a company-wide initiative, that's going to continue to drive items like retention and overall operating performance, which is oftentimes reflected in the cost of services line item. Similar, we talked about marketing - and brand position, which we continue to view as critical for both external as well as those internal stakeholders I alluded to, i.e. employees in burnishing the image of the company. And their pride in working within the four walls of community, and that correlation to the HCSG brand. And then obviously technology investments, which you touched on, which we're excited about continuing to really leverage technology for more efficient service offerings and better engagement with our employees. So all the above, and we expect, as I mentioned, to be able to do that while at the same time leveraging the fixed portion of SG&A as we grow the top line.

Got it. One more I was thinking about is the Education segment. No, it's still less than 5%. I'm curious if you're starting to see some benefit or not benefit, but some seasonality with the school year in your fourth quarter, and first quarter?

Yes. So I guess just to distinguish, Bill, there is absolutely seasonality in that business, not only in sort of the ramping of headcount, right. To provide the services in the academic year, a little bit of a lull. There's project work and reallocation of some of the labor hours, during the summer months, but there's also seasonality in the selling and kind of administratively in the entree into that market. So the answer, the short answer is yes, there is absolutely seasonality that applies to that business. Does that translate into sort of, an impact on total company results and should you see any impact relative to the fourth quarter? We're not yet at a spot, Bill, where there's enough sort of meaningful revenue there that, it would have an impact on total company.

Okay. Kind of guess that, but. And then actually, let me sneak in the hurricane question. Andy comment on all the Florida issues or even Western North Carolina?

Yes certainly, first off, Bill, we would want to offer our sympathies to everybody who was affected, by the recent weather events down in the Southeast. And we had clients and employees who suffered losses, so we're very sensitive to those challenges. But to your question Bill, fortunately we had no major disruptions in our services, or our supply chains. And that's on one hand, it's fortunate, but if you fan out, it's really more than just good luck. It's really the preparation, planning and execution of our teams in both Florida and North Carolina that, helped us to mitigate those potential challenges that the storms could have created. And our team in Florida is expert in handling weather-related events, and have an unbelievable track record of demonstrating our value to our clients and the residents that we serve. So specifically in Florida, we assisted with evacuations of 29 facilities. That's over 2000 residents that we helped to relocate. And even in adjacent geographies that weren't evacuated, our managers were providing up to 48 hours of continuous presence in the facilities, to make sure that the residents were properly cared for, and then remained on call 24/7 even after the storms had cleared. So North Carolina was a little bit unique in that Helene affected geography. That's typically outside of the storm pathways. It mostly affected mountainous, rural areas where we don't have large concentration of facilities. But our teams have rolled up their sleeves and jumped into really the clean-up efforts, and are leveraging our vendor partners to help facilitate the flow of supplies, into some of those affected areas. So terrible incidents, it's heart-breaking to see the devastation that these storms have caused. But if we can modestly and with the utmost sensitivity offer any type of silver lining, it's that our client partners know that we're there for them. We have the resources and the expertise to plan, and execute in a highly effective manner. So it offers us really an opportunity to further strengthen those client relationships, and really bolster the resonance of our value proposition.

Thanks, Matt. Appreciate it.

Your next question comes from the line of Ryan Daniels with William Blair. Please go ahead.

Yes, hi, everyone, this is Jack Senft on for Ryan. Thanks for taking the questions. I think in your answer to Sean's question, it sounded like much of the growth you're guiding to has been driven by cross sell opportunity. But and I think you touched on this too in some of the previous answers, but I was just wondering if you could maybe give an update, on how the environmental services. And just the education opportunities are shaping up in terms of demand here, and really kind of how we should think about these going forward into 2025? Thanks.

I think the demand for both environmental services as you mentioned the cross-sell, but certainly for environmental services as a standalone Greenfield opportunity. And then in the education side, demand is very strong on both fronts. When you think about 2025 specifically, we would expect the growth to mirror what the current breakup is in revenues. So think more. 45, 55-ish environmental services and dining. As we grow that Greenfield EVS opportunity, we would expect that to not only create the cross-sell and dining, but as you alluded to, we have that existing EVS customer that is primed and ready for the dining and nutrition cross-sells. So that continues to be the lowest hanging fruit and a key part of our growth strategy moving forward. And I know Matt touched on it in one of the prior questions, but on the education front, high demand, it's still less than 5% of our revenues. So, we think of it heading into 2025, as more of a complement to our overall growth strategy than a specific - standalone division. But we're, we continue to be very excited about the longer term prospects there, and the opportunity that presents for the company.

Okay. Understood. Makes perfect sense. Thanks. Just a quick follow-up, too. Where are you in terms of manager or from a manager training standpoint, are you a good staffing level to fill the facilities in order to drive growth into Q4? And even as we start to look into 2025, or will this kind of be an area that - we see you guys continue to bolster up?

Very much so in a good position. I alluded to it, or mentioned it as part of my conversation with Sean earlier, but that is an absolute critical part of our growth strategy. It's not just about the demand for the services, and pairing up that demand with our leadership, local leadership at the, in a given geography. But we need to make sure we have the requisite level of management talent, and depth to service those accounts. And as we begin to enter more normal times here in '25. And then the years that follow, we would expect the most significant gating factor on our ability to grow, as being management development. We typically, when you look at years past and where we look at today, we're going to be able to train up and develop managers, in a spot where we'd be comfortable growing that top line in 2025, in that mid, maybe high-single-digit range. But as I mentioned before, we're going to be able to refine that number more in February, and give a better sense of the cadence of growth in 2025. But generally speaking, that continues to be the greatest gating factor on our ability to grow, is how quickly we can hire, develop and then deploy management talent. No one does it better than us. We have that district self-sustaining model where training centers in a given district are able to hire and train up the future management candidates. And still a very difficult part of the job. More than two-thirds of our management candidates, don't make their way out of that training program. It's very hands on and that's done by design. But we continue to believe, although our way is not the only way that that's, the best approach in making sure we have a prepared candidate, when that growth opportunity presents itself.

Perfect. Thanks. And if I can just sneak in one final sort of longer term question, but you previously mentioned mental health and substance abuse disorders, possible opportunities down the road. And I know this wouldn't be for a while, but I'm just kind of curious if you can dive a little bit deeper, into what these look like for the company. And I just kind of what the full opportunity would look like, for both of these segments? Thanks.

Yes Jack, I would say that certainly there's a lot of comparability from the skilled nursing end market, as compared to specifically the in-patient behavioral and rehab type facilities. So when we think about what makes an attractive candidate for our services, typically you're talking about an inpatient environment, and that's so that we can support financially having an onsite manager. Our preference certainly in an in-patient environment is that it's of a sufficient scale, to be able to provide an on-site manager. So that's the first qualifier. But beyond that, for both environmental services and dining services, we're finding increasing demand levels and a growing appetite, to outsource those services. So we've made inroads in certain geographies, and in certain end markets specifically. And as our expertise has continued to grow in the provision of services, into those end markets specifically, you develop that networking and can leverage that to your advantage. So we haven't really quantified rather that opportunity, as yet in either the near term or the long-term, but as an additive end market service offer. And there's a lot that we like about it.

Awesome. Thank you again, guys.

Your next question comes from the line of A.J. Rice with UBS. Please go ahead.

Hi, everybody. First, maybe looking at the other side of the labor, the hourly workforce, I know over the last few years, there was a time when the nursing homes weren't giving me updates to rates that you felt they needed to. I think that's sort of normalizing with the employment increase, you talked about across the industry. But where are we at on that? What kind of increases are you seeing? Is that adequate for you to get the hourly people that you need, to staff the positions in the client facilities?

Yes, I think A.J., if you look at sort of the broader labor market, we're seeing, certainly stabilization and improving conditions. Job postings are no longer declining, more than 0.25 million new jobs were created in September, which I think was a surprise to the upside. And I'm just talking about the U.S. economy in general here. But that wage growth has definitely stabilized. It's increasing slightly, and I'd say modestly. Unemployment rate has fallen back from that recent high of 4.3 back to 4.1. And wage growth, to your question A.J. appears to have more or less returned to its pre-pandemic trend. Our industry specifically, if you think about, long-term and post-acute care, we're still 120,000, I'm sorry, 112,000 jobs short relative to pre-pandemic levels. But it's improving. This was an end market that had lost almost 0.25 million jobs. So, we're clawing our way back. It's a about a pace of 4,400 jobs per month that we're seeing return to the skilled nursing space. So at this rate, the workforce should be back to pre-pandemic levels, late 2026, on our business specifically, along the lines of what we're seeing with the clients, I would say it's a stabilization. It still remains kind of that uneven recovery where in certain geographies and certainly specific markets, typically more of the metro and suburban markets A.J., the recovery is complete. If I dare say that in the sense that, we're able to fully staff, we're able to hire employees, train them and ultimately retain them. It remains a challenge though, in broadly speaking, the rural markets. And more specifically, certain rural markets are more challenged than others. But I would say, ongoing recovery and stabilization. We're almost all the way there, if not completely there, in the suburban and urban markets. But the challenges do remain in rural facilities.

Okay. Great. And then the other inflation area, we often ask about is related to food and the dining side. Anything to call out there, or what's the latest trend you're seeing there?

Yes, food inflation was back up sequentially, A.J. It was five basis points of inflation for the quarter. Yes that compared to one basis point of deflation that we actually saw in Q2. So now if you're looking at the trends, the month of August was four basis points, which was the highest monthly inflation that we've seen since January. So definitely want to keep an eye on that. But broadly speaking, 40 bps of food inflation. So nothing really outside the norm in kind of recent quarters. And that, just by way of reminder, would be passed through in our first quarter billings.

Right. Okay. And then just last on the capital deployment. I know there's the buyback and you pursue that somewhat uneven between quarters. Any updated - in your thinking there? And then, you did mention inorganic growth potential. Is that - that's always there or are you seeing a pipeline of opportunities developed that wasn't there before?

Yes, on the second question, A.J., it's always been there. The opportunities really, since we. Over the course of our history, even over the past 10 years, we've been very selective, but we have done a couple more tuck-in type opportunities with regional players. We're less I'd say, enthused about those types of opportunities, in part because we believe we have the best mousetrap out there. There's always opportunity to improve upon it, but we think we're in a pretty good position in terms of our service and operating model, as well as the fact that we have 80%, over 80% of the outsourced market share. So the reality is there's just not that many pure play, if you will, candidates out there. But certainly within our core market as complementary acquisition, or investment type opportunities. We have our eye on those as well as other opportunities, whether it be in the education space, or other attractive education related opportunities, so that's always there. And we do see with some of the more interest rate certainty that - is being projected out in the future. We see more activity, and potentially more opportunities on those fronts in the year ahead. So we're excited about that. I think from a share repurchase perspective that continues, to be part of our capital allocation framework. And we continue to view, view the buyback specifically as opportunistic. It's certainly a tax efficient way, when that those opportunities present themselves, to return capital to shareholders and just to give a little more color. We think about opportunism and really the timing of the repurchases, as being dependent on factors that exist at the time of execution that, may be our liquidity position or expected cash flow. We've talked about our share price obviously being a consideration. We look at annual dilution rates via share creep, which is really when you look at the pace over the past couple of years. We've eliminated any creep that otherwise could have existed. And then, bridging back to whether it be organic growth, or the conversation we just had about on inorganic opportunities. We're always looking at alternative use analysis, and where we can deliver the highest return. So it's a holistic view that we take, and all of those considerations are factored into the decision.

Okay. Thanks a lot.

That concludes our Q&A session. I will now turn the conference back over to Ted Wahl for closing remarks.

Okay. Great. Thank you. It's an incredibly exciting time for the company. Our underlying fundamentals are stronger than ever, and with the industry at the beginning of a multi-decade demographic tailwind. We are very favorably positioned, to capitalize on the opportunities ahead, and deliver meaningful long-term shareholder value. So on behalf of Matt and all of us at Healthcare Services Group, Jeanne, we wanted to thank you for hosting the call today. And thank you to everyone, for joining us.

This concludes today's call. You may now disconnect.