10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                    

Commission file number: 0-12015

HEALTHCARE SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	23-2018365
(State or other jurisdiction of  incorporation or organization)	(I.R.S. Employer Identification No.)

3220 Tillman Drive, Suite 300, Bensalem, Pennsylvania

(Address of principal executive office)

19020

(Zip Code)

Registrant’s telephone number, including area code:

(215) 639-4274

Former name, former address and former fiscal year, if changed since last report:

Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HCSG	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  ☐  No  þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Common Stock, $0.01 par value: 74,195,000 shares outstanding as of April 26, 2023.

Healthcare Services Group, Inc.

Quarterly Report on Form 10-Q

For the Period Ended March 31, 2023

TABLE OF CONTENTS

		Page
PART I
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
SIGNATURES		36

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report and documents incorporated by reference into it may contain forward-looking statements within the meaning of federal securities laws, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions. Words such as “believes,” “anticipates,” “plans,” “expects,” “estimates,” “will,” “goal,” and similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking information is also subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks arising from our providing services to the healthcare industry and primarily providers of long-term care; the impact of and future effects of the COVID-19 pandemic or other potential pandemics; having a significant portion of our consolidated revenues contributed by one customer during the three months ended March 31, 2023; credit and collection risks associated with the healthcare industry; the impact of bank failures; our claims experience related to workers’ compensation and general liability insurance (including any litigation claims, enforcement actions, regulatory actions and investigations arising from personal injury and loss of life related to COVID-19); the effects of changes in, or interpretations of laws and regulations governing the healthcare industry, our workforce and services provided, including state and local regulations pertaining to the taxability of our services and other labor-related matters such as minimum wage increases; the Company’s expectations with respect to selling, general, and administrative expense; and the risk factors described in Part I of our Form 10-K for the fiscal year ended December 31, 2022 under “Government Regulation of Customers,” “Service Agreements and Collections,” and “Competition” and under Item 1A. “Risk Factors” in such Form 10-K.

These factors, in addition to delays in payments from customers and/or customers in bankruptcy, have resulted in, and could continue to result in, significant additional bad debts in the near future. Additionally, our operating results would be adversely affected by continued inflation particularly if increases in the costs of labor and labor-related costs, materials, supplies and equipment used in performing services (including the impact of potential tariffs and COVID-19) cannot be passed on to our customers.

In addition, we believe that to improve our financial performance we must continue to obtain service agreements with new customers, retain and provide new services to existing customers, achieve modest price increases on current service agreements with existing customers and/or maintain internal cost reduction strategies at our various operational levels. Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies. There can be no assurance that we will be successful in that regard.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Healthcare Services Group, Inc.

Consolidated Balance Sheets

(in thousands, except per share amounts)

	(unaudited) March 31, 2023		December 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents	$	16,153	$	26,279
Marketable securities, at fair value	95,985		95,200
Accounts and notes receivable, less allowance for doubtful accounts of $73,030 and $70,192 as of March 31, 2023 and December 31, 2022, respectively	350,784		336,777
Inventories and supplies	20,229		21,164
Taxes receivable	1,748		6,629
Prepaid expenses and other assets	25,188		22,583
Total current assets	510,087		508,632
Property and equipment, net	23,400		22,975
Goodwill	75,529		75,529
Other intangible assets, less accumulated amortization of $33,941 and $32,738 as of March 31, 2023 and December 31, 2022, respectively	14,743		15,946
Notes receivable — long–term portion, less allowance for doubtful accounts of $3,837 and $3,273 as of March 31, 2023 and December 31, 2022, respectively	32,327		32,609
Deferred compensation funding, at fair value	34,312		33,493
Deferred tax asset	27,975		28,338
Other long-term assets	760		812
Total assets	$	719,133	$	718,334
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	64,351	$	68,296
Accrued payroll and related taxes	20,394		42,704
Other accrued expenses	17,088		17,835
Borrowings under line of credit	35,000		25,000
Deferred compensation liability — short-term	1,357		1,618
Accrued insurance claims	23,974		23,166
Total current liabilities	162,164		178,619
Accrued insurance claims — long-term	67,100		65,541
Deferred compensation liability — long-term	34,263		33,764
Lease liability — long-term	8,586		8,097
Other long-term liabilities	6,448		6,141
Commitments and contingencies (Note 15)
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value; 100,000 shares authorized; 76,329 and 76,161 shares issued, and 74,194 and 74,088 shares outstanding as of March 31, 2023 and December 31, 2022, respectively	763		762
Additional paid-in capital	303,582		302,304
Retained earnings	167,190		154,495
Accumulated other comprehensive loss, net of taxes	(2,270)		(3,477)
Common stock in treasury, at cost, 2,135 and 2,073 shares as of March 31, 2023 and December 31, 2022, respectively	(28,693)		(27,912)
Total stockholders’ equity	$	440,572	$	426,172
Total liabilities and stockholders’ equity	$	719,133	$	718,334

See accompanying notes to consolidated financial statements.

1

Healthcare Services Group, Inc.

Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts) (Unaudited)

	Three Months Ended March 31,
	2023		2022
Revenues	$	417,230	$	426,811
Operating costs and expenses:
Costs of services provided	360,978		373,262
Selling, general and administrative expense	40,047		35,736
Other income (expense):
Investment and other income (loss), net	3,102		(1,523)
Interest expense	(1,751)		(509)
Income before income taxes	17,556		15,781
Income tax provision	4,872		4,452
Net income	$	12,684	$	11,329
Per share data:
Basic earnings per common share	$	0.17	$	0.15
Diluted earnings per common share	$	0.17	$	0.15
Weighted average number of common shares outstanding:
Basic	74,497		74,326
Diluted	74,518		74,333
Comprehensive income:
Net income	$	12,684	$	11,329
Other comprehensive gain (loss):
Unrealized gain (loss) on available-for-sale marketable securities, net of taxes	1,207		(5,269)
Total comprehensive income	$	13,891	$	6,060

See accompanying notes to consolidated financial statements.

2

Healthcare Services Group, Inc.

Consolidated Statements of Cash Flows

(in thousands) (Unaudited)

	Three Months Ended March 31,
	2023		2022
Cash flows used in operating activities:
Net income	$	12,684	$	11,329
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	3,720		4,147
Bad debt provision	6,907		2,851
Deferred income tax benefit	43		—
Share-based compensation expense	2,058		2,396
Amortization of premium on marketable securities	533		561
Unrealized (gain) loss on deferred compensation fund investments	(1,502)		4,074
Changes in other long-term liabilities	336		(1,760)
Net loss on disposals of fixed assets	128		173
Changes in operating assets and liabilities:
Accounts and notes receivable	(20,633)		(27,222)
Inventories and supplies	935		1,195
Prepaid expenses and other assets	4,076		(2,462)
Deferred compensation funding	683		3,605
Accounts payable and other accrued expenses	(6,422)		(3,051)
Accrued payroll, accrued and withheld payroll taxes	(21,167)		(24,933)
Income taxes receivable	(1,748)		3,764
Accrued insurance claims	2,366		3,056
Deferred compensation liability	713		(7,905)
Net cash used in operating activities	(16,290)		(30,182)
Cash flows used in investing activities:
Disposals of fixed assets	57		152
Additions to property and equipment	(1,010)		(1,407)
Purchases of marketable securities	—		(1,525)
Sales of marketable securities	210		1,519
Cash paid for acquisitions	—		(114)
Net cash used in investing activities	(743)		(1,375)
Cash flows from (used in) financing activities:
Dividends paid	—		(15,704)
Reissuance of treasury stock pursuant to Dividend Reinvestment Plan	—		25
Proceeds from the exercise of stock options	—		410
Purchases of treasury stock	(2,223)		—
Proceeds from short-term borrowings	10,000		10,000
Payments of statutory withholding on net issuance of restricted stock units	(870)		(1,069)
Net cash from (used in) financing activities	6,907		(6,338)
Net change in cash and cash equivalents	(10,126)		(37,895)
Cash and cash equivalents at beginning of the period	26,279		70,794
Cash and cash equivalents at end of the period	$	16,153	$	32,899

See accompanying notes to consolidated financial statements.

3

Healthcare Services Group, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands) (Unaudited)

	For the three months ended March 31, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss, net of taxes		Retained Earnings		Treasury Stock		Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2022	76,161	$	762	$	302,304	$	(3,477)	$	154,495	$	(27,912)	$	426,172
Comprehensive income:
Net income for the period	—	—		—		—		12,684		—		12,684
Unrealized gain on available-for-sale marketable securities, net of taxes	—	—		—		1,207		—		—		1,207
Comprehensive income for the period												$	13,891
Other share-based compensation, net	167	1		(1)		—		—		—		—
Payment of statutory withholding on issuance of restricted stock units	—	—		(870)		—		—		—		(870)
Share-based compensation expense	—	—		1,973		—		—		—		1,973
Purchases of treasury stock	—	—		—		—		—		(2,223)		(2,223)
Treasury shares issued for Deferred Compensation Plan, net	—	—		307		—		—		168		475
Shares issued pursuant to Employee Stock Plan	—	—		(139)		—		—		1,274		1,135
Other	1	—		8		—		11		—		19
Balance, March 31, 2023	76,329	$	763	$	303,582	$	(2,270)	$	167,190	$	(28,693)	$	440,572

	For the three months ended March 31, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss, net of taxes		Retained Earnings		Treasury Stock		Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2021	76,009	$	760	$	294,124	$	4,000	$	183,957	$	(30,164)	$	452,677
Comprehensive income:
Net income for the period	—	—		—		—		11,329		—		11,329
Unrealized loss on available-for-sale marketable securities, net of taxes	—	—		—		(5,269)		—		—		(5,269)
Comprehensive income for the period												$	6,060
Exercise of stock options and other share-based compensation, net of shares tendered for payment	145	2		408		—		—		—		410
Payment of statutory withholding on issuance of restricted stock and restricted stock units	—	—		(1,069)		—		—		—		(1,069)
Share-based compensation expense	—	—		2,298		—		—		—		2,298
Treasury shares issued for Deferred Compensation Plan, net	—	—		110		—		—		414		524
Shares issued pursuant to Employee Stock Plan	—	—		368		—		—		1,144		1,512
Dividends paid and accrued, $0.21 per share	—	—		—		—		(15,859)		—		(15,859)
Shares issued pursuant to Dividend Reinvestment Plan	—	—		6		—		—		19		25
Other	4	—		59		—		—		—		59
Balance, March 31, 2022	76,158	$	762	$	296,304	$	(1,269)	$	179,427	$	(28,587)	$	446,637

See accompanying notes to consolidated financial statements.

4

Healthcare Services Group, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1—Description of Business and Significant Accounting Policies

Nature of Operations

Healthcare Services Group, Inc. (the “Company”) provides management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments predominantly to clients within the healthcare industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. Although the Company does not directly participate in any government reimbursement programs, the Company’s customers receive government reimbursements related to Medicare and Medicaid. Therefore, the Company’s customers are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

The Company provides services primarily pursuant to full service agreements with its customers. In such agreements, the Company is responsible for the day-to-day management of employees located at the 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. In a management-only agreement, the Company provides management and supervisory services while the customer facility retains payroll responsibility for the non-supervisory staff. The 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.

The Company is organized into two reportable segments: housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of managing the customers’ housekeeping departments, which are principally responsible for the cleaning, disinfecting and sanitizing of resident rooms and common areas of a customer’s facility, as well as the laundering and processing of the bed linens, uniforms, resident personal clothing and other assorted linen items utilized at a customer facility.

Dietary consists of managing the customers’ dietary departments, which are principally responsible for food purchasing, meal preparation and dietitian professional services, which includes the development of menus that meet residents’ dietary needs.

Unaudited Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows. However, in the Company’s opinion, all adjustments which are of a normal recurring nature and are necessary for a fair presentation have been reflected in these consolidated financial statements. The balance sheet shown in this report as of December 31, 2022 has been derived from the audited financial statements for the year ended December 31, 2022. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future period.

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, estimates and assumptions are made that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Significant estimates are used in determining, but are not limited to, the Company’s allowance for doubtful accounts, accrued insurance claims, deferred taxes and reviews for potential impairment. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information. Management regularly evaluates this information to determine if it is necessary to update the basis for its estimates and to adjust for known changes.

5

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Healthcare Services Group, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents are held in U.S. financial institutions or in custodial accounts with U.S. financial institutions. Cash equivalents are defined as short-term, highly liquid investments with a maturity of three months or less at time of purchase that are readily convertible into cash and have insignificant interest rate risk.

Accounts and Notes Receivable

Accounts and notes receivable consist of Housekeeping and Dietary segment trade receivables from contracts with customers. The Company’s payment terms with customers for services provided are defined within each customer’s service agreement. All accounts receivables are considered short term assets as the Company does not grant payment terms greater than one year. Accounts receivable initially are recorded at the transaction amount, and are recorded after the Company has an unconditional right to payment where only the passage of time is required before payment is received. Each reporting period, the Company evaluates the collectability of outstanding receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit loss. Additions to the allowance for doubtful accounts are made by recording a charge to bad debt expense reported in costs of services provided.

Notes receivable are initially recorded when accounts receivable are transferred into a promissory note and are recorded as an alternative to accounts receivable to memorialize an unqualified promise to pay a specific sum, typically with interest, in accordance with a defined payment schedule. The Company’s payment terms with customers on promissory notes can vary based on several factors and the circumstances of each promissory note, however most promissory notes mature over a 1 to 4 year period. Similar to accounts receivable, each reporting period the Company evaluates the collectability of outstanding notes receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit losses.

Allowance for Doubtful Accounts

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification subtopic 326 Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”), Management utilizes financial modeling to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts and notes receivable which is recorded as a liability to offset the receivables. Modeling is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts and notes receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense when received.

Inventories and Supplies

Inventories and supplies include housekeeping, linen and laundry supplies, as well as food provisions and supplies. Non-linen inventories and supplies are stated on a first-in, first-out (FIFO) basis, and reduced as deemed necessary to approximate the lower of cost or net realizable value. Linen supplies are amortized on a straight-line basis over their estimated useful life of 24 months.

Revenue Recognition

The Company recognizes revenue from contracts with customers when or as the promised goods and services are provided to customers. Revenues are reported net of sales taxes that are collected from customers and remitted to taxing authorities. The amount of revenue recognized by the Company is based on the expected value of consideration to which the Company is entitled in exchange for providing the contracted goods and services and when it is probable that the Company will collect substantially all of such consideration.

6

Leases

The Company records assets and liabilities on the balance sheet to recognize the rights and obligations arising from leasing arrangements with contractual terms greater than 12 months, as permitted by U.S. GAAP. A leasing arrangement includes any contract which entitles the Company to the right of use of an identified tangible asset where there are no restrictions as to the direct of use of the asset, and the Company obtains substantially all of the economic benefits from the right of use.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, income tax expense or benefits are recognized for the amount of taxes payable or refundable for the current period. The Company accrues for probable tax obligations as required, based on facts and circumstances in various regulatory environments. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. When appropriate, valuation allowances are recorded to reduce deferred tax assets to amounts for which realization is more likely than not.

Uncertain income tax positions taken or expected to be taken in tax returns are reflected within the Company’s consolidated financial statements based on a recognition and measurement process.

Earnings per Common Share

Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is computed using the weighted-average number of common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock awards.

Share-Based Compensation

The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes valuation model for stock options, using a Monte Carlo simulation for performance restricted stock units, and using the share price on the date of grant for restricted stock units and deferred stock units. The value of the award is recognized ratably as an expense in the Company’s Consolidated Statements of Comprehensive Income over the requisite service periods, with adjustments made for forfeitures as they occur.

Identifiable Intangible Assets and Goodwill

Identifiable intangible assets are amortized on a straight-line basis over their respective lives. Goodwill represents the excess of cost over the fair value of net assets of acquired businesses. Management reviews the carrying value of goodwill annually during the fourth quarter to assess for impairment, or more often if events or circumstances indicate that the carrying value may exceed its estimated fair value.

No impairment loss was recognized on the Company’s intangible assets or goodwill during the three months ended March 31, 2023 or 2022.

Concentrations of Credit Risk

The Company’s financial instruments that are subject to credit risk are cash and cash equivalents, marketable securities, deferred compensation funding and accounts and notes receivable. At March 31, 2023 and December 31, 2022, the majority of the Company’s cash and cash equivalents and marketable securities were held in one large financial institution located in the United States. The Company’s marketable securities are fixed income investments which are highly liquid and can be readily purchased or sold through established markets.

The Company’s customers are concentrated in the healthcare industry and are primarily providers of long-term care. The revenues of many of the Company’s customers are highly reliant on Medicare, Medicaid and third party payors’ reimbursement funding rates. New legislation or changes in existing regulations could directly impact the governmental reimbursement programs in which the Company’s customers participate. As a result, the Company may not realize the full effects such programs may have on the Company’s customers until these laws are fully implemented and governmental agencies issue applicable regulations or guidance.

7

Note 2—Revenue

The Company presents its consolidated revenues disaggregated by reportable segment, as Management evaluates the nature, amount, timing and uncertainty of the Company’s revenues by segment. Refer to Note 12—Segment Information herein as well as the information below regarding the Company’s reportable segments.

Housekeeping

Housekeeping accounted for $193.5 million and $201.7 million of the Company’s consolidated revenues for the three months ended March 31, 2023 and 2022, respectively, which represented approximately 46.4% and 47.3% of the Company’s revenues in each respective period. Housekeeping services include managing 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 will typically hire and train the employees previously employed by such facility and assign an on-site manager to supervise and train the front-line personnel and coordinate housekeeping 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 and employee evaluation.

Dietary

Dietary services accounted for $223.7 million and $225.1 million of the Company’s consolidated revenues for the three months ended March 31, 2023 and 2022, respectively, which represented approximately 53.6% and 52.7% of the Company’s revenues in each respective period. Dietary services consist of managing 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 facilities which if contracted is a service bundled within the monthly service provided to customers. Upon beginning service with a customer facility, the Company will typically hire and train the employees previously employed by such facility and assign an on-site manager to supervise and train 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 and employee evaluation.

Revenue Recognition

The Company’s revenues are derived from contracts with customers. The Company recognizes revenue to depict the transfer of promised goods and services to customers in amounts that reflect the consideration to which the Company is entitled in exchange for those goods and services. The Company’s costs of obtaining contracts are not material.

The Company performs services and provides goods in accordance with its contracts with its customers. Such contracts 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. A performance obligation is the unit of account under ASC 606 and is defined as a promise in a contract to transfer a distinct good or service to the customer. The Company’s Housekeeping and Dietary contracts relate to the provision of bundles of goods, services or both, which represent a series of distinct goods and services that are substantially the same and that have the same pattern of transfer to the customer. The Company accounts for the series as a single performance obligation satisfied over time, as the customer simultaneously receives and consumes the benefits of the goods and services provided. Revenue is recognized using the output method, which is based upon the delivery of goods and services to the customers’ facilities. In limited cases, the Company provides goods, services or both, before the execution of a written contract. In these cases, the Company defers the recognition of revenue until a contract is executed. The amount of such deferred revenue was $0.3 million as of both March 31, 2023 and December 31, 2022. Additionally, substantially all such revenue amounts deferred as of December 31, 2022 were subsequently recognized as revenue during the three months ended March 31, 2023.

8

The transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services to its customers. The transaction price does not include taxes assessed or collected. The Company’s contracts detail the fees that the Company charges for the goods and services it provides. For certain contracts which contain a variable component to the transaction price, the Company is required to make estimates of the amount of consideration to which the Company will be entitled, based on variability in resident and patient populations serviced, product usage or quantities consumed. The Company recognizes revenue related to such estimates only when the Company determines that there will not be a significant reversal in the amount of revenue recognized. The Company’s contracts generally do not contain significant financing components, as payment terms are less than one year.

The Company allocates the transaction price to each performance obligation, noting that the bundle of goods, services or goods and services provided under each Housekeeping and Dietary contract represents a single performance obligation that is satisfied over time. The Company recognizes the related revenue when it satisfies the performance obligation by transferring a bundle of promised goods, services or both to a customer. Such recognition is on a monthly or weekly basis, as goods are provided and services are performed. In some cases, the Company requires customers to pay in advance for goods and services to be provided. As of March 31, 2023 the value of the contract liabilities associated with customer prepayments was $1.7 million. As of December 31, 2022, the value of the contract liabilities associated with customer prepayments was $3.1 million. The Company recognized $1.4 million of revenue during the three months ended March 31, 2023 which was recorded as a contract liability on December 31, 2022.

Transaction Price Allocated to Remaining Performance Obligations

The Company recognizes revenue as it satisfies the performance obligations associated with contracts with customers, which due to the nature of the goods and services provided by the Company, are satisfied over time. Contracts may contain transaction prices that are fixed, variable or both. The Company’s contracts with customers typically provide for an initial term of one year, with renewable one year service terms, cancellable by either party upon 30 to 90 days’ notice after an initial period of 60 to 120 days.

At March 31, 2023, the Company had $99.0 million related to performance obligations that were unsatisfied or partially unsatisfied for which the Company expects to recognize revenue. The Company expects to recognize revenue on all of the remaining performance obligations over the next 12 months. These amounts exclude variable consideration primarily related to performance obligations that consist of a series of distinct service periods with revenues based on future performance that cannot be estimated at contract inception. The Company also has elected to apply the practical expedient that permits exclusion of information about the remaining performance obligations with original expected durations of one year or less.

Note 3—Accounts and Notes Receivable

The Company’s accounts and notes receivable balances consisted of the following as of March 31, 2023 and December 31, 2022:

	March 31, 2023		December 31, 2022
	(in thousands)
Short-term
Accounts and notes receivable	$	423,814	$	406,969
Allowance for doubtful accounts	(73,030)		(70,192)
Total net short-term accounts and notes receivable	$	350,784	$	336,777
Long-term
Notes receivable	$	36,164	$	35,882
Allowance for doubtful accounts	(3,837)		(3,273)
Total net long-term notes receivable	$	32,327	$	32,609
Total net accounts and notes receivable	$	383,111	$	369,386

9

The Company makes credit decisions on a case-by-case basis after reviewing a number of qualitative and quantitative factors related to the specific customer as well as current industry variables that may impact that customer. There are a variety of factors that impact a customer’s ability to pay in accordance with the Company’s contracts. These factors include, but are not limited to, fluctuating census numbers, litigation costs and the customer’s participation in programs funded by federal and state governmental agencies. Deviations in the timing or amounts of reimbursements under those programs can impact the customer’s cash flows and its ability to make timely payments. However, the customer’s obligation to pay the Company in accordance with the contracts are not contingent upon the customer’s cash flow. Notwithstanding the Company’s efforts to minimize its credit risk exposure, the aforementioned factors, as well as other factors that impact customer cash flows or ability to make timely payments, could have an indirect, yet material adverse effect on the Company’s results of operations and financial condition.

Fluctuations in net accounts and notes receivable are generally attributable to a variety of factors including, but not limited to, the timing of cash receipts from customers and the inception, transition, modification or termination of customer relationships. The Company deploys significant resources and has invested in tools and processes to optimize Management’s credit and collections efforts. When appropriate, the Company utilizes interest-bearing promissory notes to enhance the collectability of amounts due, by instituting definitive repayment plans and providing a means by which to further evidence the amounts owed. In addition, the Company may amend contracts from full service to management-only arrangements, or adjust contractual payment terms, to accommodate customers who have in good faith established clearly-defined plans for addressing cash flow issues. These efforts are intended to minimize the Company’s collections risk.

Note 4—Allowance for Doubtful Accounts

In making the Company’s credit evaluations, management considers the general collection risk associated with trends in the long-term care industry. The Company establishes credit limits through payment terms with customers, performs ongoing credit evaluations and monitors accounts on an aging schedule basis to minimize the risk of loss. Despite the Company’s efforts to minimize credit risk exposure, customers could be adversely affected if future industry trends, including those related to COVID-19, change in such a manner as to negatively impact their cash flows. The full effects of COVID-19 on the Company’s customers are highly uncertain and cannot be predicted. As a result, the Company’s future collection experience can differ significantly from historical collection trends. If the Company’s customers experience a negative impact on their cash flows, it could have a material adverse effect on the Company’s results of operations and financial condition.

The Company evaluates its accounts and notes receivable for expected credit losses quarterly. Accounts receivables are evaluated based on internally developed credit quality indicators derived from the aging of receivables. Notes receivable are evaluated based on internally developed credit quality indicators derived from Management’s assessment of collection risk. The Company manages note receivable portfolios using a two tiered approach by disaggregating standard notes receivables, which are promissory notes in good standing, from those who have been identified by Management as having an elevated credit risk profile due to a triggering event such as bankruptcy. At the end of each period, the Company sets a reserve for expected credit losses on standard notes receivable based on the Company’s historical loss rate. Notes receivable with an elevated risk profile, which are from customers who have filed bankruptcy, are subject to collections activity or are slow payers that are experiencing financial difficulties, are aggregated and evaluated to determine the total reserve for the class of receivable.

ASC 326 permits entities to make an accounting policy election not to measure an estimate for credit losses on accrued interest if those entities write-off accrued interest deemed uncollectible in a timely manner. The Company follows an income recognition policy on all interest earned on notes receivable. Under such policy the Company accounts for all notes receivable on a non-accrual basis and defers the recognition of any interest income until receipt of cash payments. This policy was established based on the Company’s history of collections of interest on outstanding notes receivable, as we do not deem it probable that we will receive substantially all interest on outstanding notes receivable. Accordingly, the Company does not record a credit loss adjustment for accrued interest. Interest income from notes receivable for the three months ended March 31, 2023 and 2022 was $0.6 million and $0.3 million, respectively.

10

The following table presents the Company’s two tiers of notes receivable further disaggregated by year of origination, as well as write-off activity for the three months ended March 31, 2023.

	Notes Receivable
	Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	18,380	$	27,856	$	7,922	$	1,540	$	53	$	21,975	$	77,726
Elevated risk notes receivable	$	—	$	—	$	2,510	$	—	$	—	$	795	$	3,305
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	51	$	51
Current-period recoveries	—		—		—		—		—		—		—
Current-period net write-offs	$	—	$	—	$	—	$	—	$	—	$	51	$	51

The following table provides information as to the status of payment on the Company’s notes receivable which were past due as of March 31, 2023:

	Age Analysis of Past-Due Notes Receivable as of March 31, 2023
	0 - 90 Days		91 - 180 Days		Greater than 181 Days		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	3,305	$	276	$	3,414	$	6,995
Elevated risk notes receivable	136		—		795		931
	$	3,441	$	276	$	4,209	$	7,926

11

The following tables provide a summary of the changes in the Company’s allowance for doubtful accounts on a portfolio segment basis for the three months ended March 31, 2023 and 2022.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2022		Write-Offs1		Bad Debt Expense		March 31, 2023
	(in thousands)
Accounts Receivables	$	66,601	$	(3,453)	$	5,259	$	68,407
Notes Receivables
Standard notes receivable	$	6,052	$	—	$	373	$	6,425
Elevated risk notes receivable	811		(51)		1,275		2,035
Total notes receivable	$	6,863	$	(51)	$	1,648	$	8,460
Total accounts and notes receivable	$	73,464	$	(3,504)	$	6,907	$	76,867

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2023, the Company collected less than $0.1 million of accounts and notes receivables which had previously been written-off as uncollectible.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2021		Write-Offs1		Bad Debt Expense		March 31, 2022
	(in thousands)
Accounts Receivables	$	50,794	$	(5,343)	$	3,960	$	49,411
Notes Receivables
Standard notes receivable	$	13,607	$	—	$	(1,065)	$	12,542
Elevated risk notes receivable	1,183		—		(44)		1,139
Total notes receivable	$	14,790	$	—	$	(1,109)	$	13,681
Total Accounts and notes receivable	$	65,584	$	(5,343)	$	2,851	$	63,092

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2022, the Company collected $0.2 million of accounts and notes receivables which had previously been written-off as uncollectible.

12

Note 5—Changes in Accumulated Other Comprehensive Income by Component

The Company's accumulated other comprehensive income consists of unrealized gains and losses from the Company’s available-for-sale marketable securities. The following table provides a summary of the changes in accumulated other comprehensive income for the three months ended March 31, 2023 and 2022:

	Unrealized Gains and Losses on Available-for-Sale Securities1
	Three Months Ended March 31,
	2023		2022
	(in thousands)
Accumulated other comprehensive (loss) income — beginning balance	$	(3,477)	$	4,000
Other comprehensive income (loss) before reclassifications	1,206		(5,277)
Losses reclassified from other comprehensive income2	1		8
Net current period other comprehensive income (loss)3	1,207		(5,269)
Accumulated other comprehensive (loss) — ending balance	$	(2,270)	$	(1,269)

1.All amounts are net of tax.

2.Realized gains and losses were recorded pre-tax under “Investment and other income” in the Consolidated Statements of Comprehensive Income. For the three months ended March 31, 2023 and 2022, the Company recorded less than $0.1 million of realized losses from the sale of available-for-sale securities. Refer to Note 9—Fair Value Measurements herein for further information.

3.For the three months ended March 31, 2023 and 2022, the changes in other comprehensive income were net of a tax expense of $0.3 million and $1.4 million, respectively.

	Amounts Reclassified from Accumulated Other Comprehensive Income
	2023		2022
	(in thousands)
Three Months Ended March 31,
Losses from the sale of available-for-sale securities	$	(2)	$	(12)
Tax benefit	1		4
Net loss reclassified from accumulated other comprehensive income	$	(1)	$	(8)

13

Note 6—Property and Equipment

Property and equipment are recorded at cost. Depreciation is recorded over the estimated useful life of each class of depreciable asset, and is computed using the straight-line method. Leasehold improvements are amortized over the shorter of the estimated asset life or term of the lease. Repairs and maintenance costs are charged to expense as incurred.

The following table sets forth the amounts of property and equipment by each class of depreciable asset as of March 31, 2023 and December 31, 2022:

	March 31, 2023		December 31, 2022
	(in thousands)
Housekeeping and dietary equipment	$	13,980	$	13,585
Computer hardware and software	6,187		6,086
Operating lease — right-of-use assets	23,559		34,445
Other1	1,059		1,055
Total property and equipment, at cost	44,785		55,171
Less accumulated depreciation	21,385		32,196
Total property and equipment, net	$	23,400	$	22,975

1.Includes furniture and fixtures, leasehold improvements and autos and trucks.

Depreciation expense for the three months ended March 31, 2023 and 2022 was $2.5 million and $2.9 million, respectively. Of the depreciation expense recorded for the three months ended March 31, 2023 and 2022, $1.2 million and $1.6 million related to the depreciation of the Company’s operating lease - right-of-use assets (“ROU Assets”), respectively.

Note 7—Leases

The Company recognizes ROU Assets and lease liabilities (“Lease Liabilities”) for automobiles, office buildings, IT equipment, and small storage units for the temporary storage of operational equipment. The Company’s leases have remaining lease terms ranging from less than 1 year to 6 years, and have extension options ranging from 1 year to 5 years. Most leases include the option to terminate the lease within 1 year.

Upon adopting ASC 842, the Company made accounting policy elections using practical expedients offered under the guidance to combine lease and non-lease components within leasing arrangements and to recognize the payments associated with short-term leases in earnings on a straight-line basis over the lease term, with the cost associated with variable lease payments recognized when incurred. These accounting policy elections impact the value of the Company’s ROU Assets and Lease Liabilities. The value of the Company’s ROU Assets is determined as the non-depreciated fair value of its leasing arrangements and is recorded to “Property and equipment, net” on the Company’s Consolidated Balance Sheets. The value of the Company’s Lease Liabilities is the present value of fixed lease payments not yet paid, discounted using either the rate implicit in the lease contract if that rate can be determined, or the Company’s incremental borrowing rate (“IBR”) and is recorded in “Other accrued expenses” and “Lease liability — long-term portion” on the Company’s Consolidated Balance Sheets. The Company’s IBR is determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

Any future lease payments that are not fixed based on the terms of the lease contract, or fluctuate based on a factor other than an index or rate, are considered variable lease payments and are not included in the value of the Company’s ROU Assets or Lease Liabilities. The Company’s variable lease payments are mostly incurred from automobile leases and relate to miscellaneous transportation costs including repair costs, insurance, and terminal rental adjustments payments due at lease settlement. Such rental adjustment payments can result in a reduction to the Company’s total variable lease payments.

14

Components of lease expense required by ASC 842 are presented below for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Lease cost
Operating lease cost	$	1,387	$	1,386
Short-term lease cost	232		355
Variable lease cost	450		82
Total lease cost	$	2,069	$	1,823

Supplemental information required by ASC 842 is presented below for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023			2022
	(dollar amounts in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,514		$	1,711
Weighted-average remaining lease term — operating leases	4.0 years			4.4 years
Weighted-average discount rate — operating leases	5.1		%	4.2		%

During the three months ended March 31, 2023 and 2022, the Company’s ROU Assets and Lease Liabilities were reduced by $0.7 million and $0.9 million, respectively due to lease cancellations.

The following is a schedule by calendar year of future minimum lease payments under operating leases that have remaining terms as of March 31, 2023:

Period/Year	Operating Leases
	(in thousands)
April 1 to December 31, 2023	$	4,169
2024	4,308
2025	2,675
2026	1,539
2027	1,365
2028	1,389
Thereafter	116
Total minimum lease payments	$	15,561
Less: imputed lease payments	1,507
Present value of lease liabilities	$	14,054

15

Note 8—Goodwill and Other Intangible Assets

The Company’s other intangible assets consist of customer relationships, trade names, patents, and non-compete agreements which were obtained through acquisitions and are recorded at their fair values at the date of acquisition. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful lives. The weighted-average amortization period of customer relationships, trade names, patents, and non-compete agreements are approximately 10 years, 13 years, 8 years, and 4 years, respectively.

The following table sets forth the estimated amortization expense for intangibles subject to amortization for the remainder of 2023, the following five fiscal years and thereafter:

Period/Year	Total Amortization Expense
	(in thousands)
April 1 to December 31, 2023	$	2,616
2024	$	2,685
2025	$	2,685
2026	$	2,666
2027	$	1,197
2028	$	613
Thereafter	$	2,281

Amortization expense for the three months ended March 31, 2023 and 2022 was $1.2 million for both periods.

Note 9—Fair Value Measurements

The Company’s current assets and current liabilities are financial instruments and most of these items (other than marketable securities, inventories and the short-term portion of deferred compensation funding) are recorded at cost in the Consolidated Balance Sheets. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. The carrying value of the Company’s line of credit represents the outstanding amount of the borrowings, which approximates fair value. The Company’s financial assets that are measured at fair value on a recurring basis are its marketable securities and deferred compensation funding. The recorded values of all of the financial instruments approximate their current fair values because of their nature, stated interest rates and respective maturity dates or durations.

The Company’s marketable securities are held by the Company’s captive insurance company to satisfy capital requirements of the state regulator related to captive insurance companies. Such securities primarily consist of tax-exempt municipal bonds, which are classified as available-for-sale and are reported at fair value. Unrealized gains and losses associated with these investments are included in “Unrealized loss on available-for-sale marketable securities, net of taxes” within the Consolidated Statements of Comprehensive Income. The fair value of these marketable securities is classified within Level 2 of the fair value hierarchy, as these securities are measured using quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable. Such valuations are determined by a third-party pricing service. For the three months ended March 31, 2023 and 2022, the Company recorded unrealized gains, net of taxes of $1.2 million and unrealized losses, net of taxes of $5.3 million on marketable securities, respectively.

As part of a prior year acquisition of a prepackaged meal manufacturer, the Company agreed to pay royalties to the seller on all future product sales. The Company recorded a liability for the expected future payments within "Other long-term liabilities" on the Consolidated Balance Sheets and any payments within 12 months within "Other accrued expenses". The fair value of this liability is measured using forecasted sales models (Level 3). For the three months ended March 31, 2023 and 2022, the Company recorded realized losses of $0.3 million and gains of $1.7 million, respectively, associated with changes in fair value of the liability. Gains and losses are recorded within "Costs of services provided" in the Consolidated Statements of Comprehensive Income related to the subsequent measurement of the liability.

For the three months ended March 31, 2023 and 2022, the Company received total proceeds, less the amount of interest received, of $0.2 million and $1.5 million, respectively, from sales of available-for-sale municipal bonds. For both the three months ended March 31, 2023 and 2022, these sales resulted in realized losses of less than $0.1 million, which were recorded in “Other income – Investment and other income, net” in the Consolidated Statements of Comprehensive Income. The basis for the sale of these securities was the specific identification of each bond sold during the period.

16

The investments under the funded deferred compensation plan are classified as trading securities and unrealized gains or losses are recorded in “Selling, general and administrative expense” in the Consolidated Statements of Comprehensive Income. The fair value of these investments are determined based on quoted market prices (Level 1). For the three months ended March 31, 2023 and 2022, the Company recognized unrealized gains of $1.5 million and unrealized losses of $4.1 million, respectively, related to equity securities still held at the respective reporting dates.

The following tables provide fair value measurement information for the Company’s marketable securities and deferred compensation fund investments as of March 31, 2023 and December 31, 2022:

	As of March 31, 2023
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	95,985	$	95,985	$	—	$	95,985	$	—
Deferred compensation fund
Money Market1	$	2,077	$	2,077	$	—	$	2,077	$	—
Commodities	203		203		203		—		—
Fixed Income	3,923		3,923		3,923		—		—
International	3,982		3,982		3,982		—		—
Large Cap Blend	1,499		1,499		1,499		—		—
Large Cap Growth	11,195		11,195		11,195		—		—
Large Cap Value	6,084		6,084		6,084		—		—
Mid Cap Blend	2,680		2,680		2,680		—		—
Real Estate	339		339		339		—		—
Small Cap Blend	3,687		3,687		3,687		—		—
Deferred compensation fund2	$	35,669	$	35,669	$	33,592	$	2,077	$	—

	As of December 31, 2022
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	95,200	$	95,200	$	—	$	95,200	$	—
Deferred compensation fund
Money Market1	$	2,420	$	2,420	$	—	$	2,420	$	—
Commodities	170		170		170		—		—
Fixed Income	3,571		3,571		3,571		—		—
International	4,093		4,093		4,093		—		—
Large Cap Blend	1,210		1,210		1,210		—		—
Large Cap Growth	11,064		11,064		11,064		—		—
Large Cap Value	6,133		6,133		6,133		—		—
Mid Cap Blend	2,667		2,667		2,667		—		—
Real Estate	359		359		359		—		—
Small Cap Blend	3,424		3,424		3,424		—		—
Deferred compensation fund2	$	35,111	$	35,111	$	32,691	$	2,420	$	—

17

1.The fair value of the money market fund is based on the net asset value (“NAV”) of the shares held by the plan at the end of the period. The money market fund includes short-term United States dollar denominated money market instruments and the NAV is determined by the custodian of the fund. The money market fund can be redeemed at its NAV at the measurement date as there are no significant restrictions on the ability to sell this investment.

2.As of March 31, 2023 and December 31, 2022, $1.4 million and $1.6 million of short-term deferred compensation funding is included in “Prepaid expenses and other assets” on the Company’s Consolidated Balance Sheets, respectively. Such amounts of short-term deferred compensation funding represent investments expected to be liquidated and paid within 12 months of March 31, 2023.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Credit Impairment Losses1
	(in thousands)
March 31, 2023
Type of security:
Municipal bonds — available-for-sale	$	98,859	$	511	$	(3,385)	$	95,985	$	—
Total debt securities	$	98,859	$	511	$	(3,385)	$	95,985	$	—
December 31, 2022
Type of security:
Municipal bonds — available-for-sale	$	99,601	$	229	$	(4,630)	$	95,200	$	—
Total debt securities	$	99,601	$	229	$	(4,630)	$	95,200	$	—

1.The Company performs a credit impairment loss assessment quarterly on an individual security basis. As of March 31, 2023 and December 31, 2022, no allowance for credit loss impairment has been recognized as the issuers of these securities have not established a cause for default and various rating agencies have reaffirmed each security's investment grade status. The fair value of these securities have fluctuated since the purchase date as market interest rates fluctuate. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell before the recovery of the securities' amortized cost basis.

The following table summarizes the contractual maturities of debt securities held at March 31, 2023 and December 31, 2022, which are classified as “Marketable securities, at fair value” in the Consolidated Balance Sheets:

	Municipal Bonds — Available-for-Sale
Contractual maturity:	March 31, 2023		December 31, 2022
	(in thousands)
Maturing in one year or less	$	6,729	$	2,798
Maturing in second year through fifth year	33,048		35,068
Maturing in sixth year through tenth year	40,008		38,575
Maturing after ten years	16,200		18,759
Total debt securities	$	95,985	$	95,200

18

Note 10—Share-Based Compensation

The components of the Company’s share-based compensation expense for the three months ended March 31, 2023 and 2022 are as follows:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Stock options	$	212	$	314
Restricted stock, restricted stock units and deferred stock units	1,514		1,785
Performance stock units	247		199
Employee Stock Purchase Plan	85		98
Total pre-tax share-based compensation expense charged against income	$	2,058	$	2,396

The following table summarizes the components of share-based compensation expense included within the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Selling, general & administrative expense	$	2,033	$	2,365
Costs of services provided	25		31
Total share-based compensation expense	$	2,058	$	2,396

At March 31, 2023, the unrecognized compensation cost related to unvested stock options and awards was $23.3 million. The weighted average period over which these awards will vest is approximately 3.5 years.

2020 Omnibus Incentive Plan

On May 26, 2020, the Company adopted the 2020 Omnibus Incentive Plan (the “2020 Plan”) after approval by the Company’s Shareholders at the Annual Meeting of Shareholders. The 2020 Plan provides that current or prospective officers, employees, non-employee directors and advisors can receive share-based awards such as stock options, performance stock units, restricted stock units and other stock awards. The 2020 Plan seeks to encourage profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s operating objectives.

As of March 31, 2023, there were 4.5 million shares of common stock reserved for issuance under the 2020 Plan, of which 0.7 million are available for future grant. The amount of shares available for issuance under the 2020 Plan will increase when outstanding awards under the Company’s Second Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”) are subsequently forfeited, terminated, lapsed, or satisfied thereunder in cash or property other than shares. No stock award will have a term in excess of 10 years. The Nominating, Compensation and Stock Option Committee (the “NCSO”) of the Board of Directors is responsible for determining the terms of the grants in accordance with the 2020 Plan.

19

Stock Options

A summary of stock options outstanding under the 2020 Plan and the 2012 Plan as of December 31, 2022 and changes during the three months ended March 31, 2023 are as follows:

	Stock Options Outstanding
	Number of Shares	Weighted Average Exercise Price
	(in thousands)
December 31, 2022	2,375	$	31.56
Granted	207	$	13.72
Exercised	—	$	—
Forfeited	—	$	—
Expired	(132)	$	24.14
March 31, 2023	2,450	$	30.45

The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2023 and 2022 was $6.53 and $4.06 per common share, respectively. No stock options were exercised during the three months ended March 31, 2023. The total intrinsic value of stock options exercised during the three months ended March 31, 2022 was $0.1 million.

The fair value of stock option awards granted in 2023 and 2022 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	Three Months Ended March 31,
	2023		2022
Risk-free interest rate	4.0	%	1.5	%
Weighted average expected life	6.9 years		6.7 years
Expected volatility	39.5	%	36.6	%
Dividend yield	—	%	4.6	%

The following table summarizes other information about the stock options at March 31, 2023:

	March 31, 2023
	(amounts in thousands, except per share data)
Outstanding:
Aggregate intrinsic value	$	31
Weighted average remaining contractual life	5.3 years
Exercisable:
Number of options	1,713
Weighted average exercise price	$	34.72
Aggregate intrinsic value	$	—
Weighted average remaining contractual life	3.9 years

Restricted Stock Units

The fair value of outstanding restricted stock units was determined based on the market price of the shares on the date of grant. During the three months ended March 31, 2023, the Company granted 0.5 million restricted stock units to its employees with a weighted average grant date fair value of $13.72 per unit. During the three months ended March 31, 2022, the Company granted 0.4 million restricted stock units with a weighted average grant date fair value of $18.10 per unit.

20

A summary of the outstanding restricted stock units as of December 31, 2022 and changes during the three months ended March 31, 2023 is as follows:

	Restricted Stock Units
	Number	Weighted Average Grant Date Fair Value
	(in thousands)
December 31, 2022	825	$	24.37
Granted	509	$	13.72
Vested	(237)	$	27.82
Forfeited	(5)	$	22.28
March 31, 2023	1,092	$	18.67

Performance Stock Units

On February 24, 2023, the NCSO granted 80,000 Performance Stock Units (“PSUs”) to the Company’s executive officers. Such PSUs are contingent upon the achievement of certain total shareholder return (“TSR”) targets as compared to the TSR of the S&P 400 MidCap Index and the participant's continued employment with the Company for the three year period ending December 31, 2025, the date at which such PSUs vest. The unrecognized share-based compensation cost of the TSR-based PSU awards at March 31, 2023 is $2.3 million and is expected to be recognized over a weighted-average period of 2.2 years.

A summary of the outstanding PSUs as of December 31, 2022 and changes during the three months ended March 31, 2023 is as follows:

	Performance Stock Units
	Number	Weighted Average Grant Date Fair Value
	(in thousands)
December 31, 2022	95	$	26.01
Granted	80	$	16.20
Vested	—	$	—
Forfeited	—	$	—
March 31, 2023	175	$	21.52

Deferred Stock Units

The Company grants Deferred Stock Units ("DSUs") to our non-employee directors. Once vested, the recipient shall be entitled to receive a lump sum payment of a number of shares equal to the total number of DSUs issued to such recipient upon the first to occur of (i) the five year anniversary of the date of grant, (ii) the recipient's death, disability or separation of service from the Board, or (iii) a change of control (as defined by the 2020 Plan). Non-employee directors can also elect to receive their Board of Directors retainer in the form of DSUs in lieu of cash. The number of DSUs granted to these directors is determined based on the stock price on the award date and approximates the cash value the directors would otherwise receive for their retainer. Two non-employee directors made an election in 2022 to receive DSUs in lieu of cash for their 2023 Board of Directors retainer. The unrecognized share-based compensation cost of outstanding DSU awards at March 31, 2023 is $0.1 million and is expected to be recognized over a weighted-average period of 0.2 years.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“ESPP”) is currently available through 2026 to all eligible employees. All full-time and part-time employees who work an average of 20 hours per week and have completed two years of continuous service with the Company are eligible to participate. Annual offerings commence and terminate on the respective year’s first and last calendar day.

Under the ESPP, the Company is authorized to issue up to 4.1 million shares of its common stock to its employees. Pursuant to such authorization, there are 1.9 million shares available for future grant at March 31, 2023.

21

The expense associated with the options granted under the ESPP during the three months ended March 31, 2023 and 2022 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	Three Months Ended March 31,
	2023	2022
Risk-free interest rate	4.8%	0.4%
Weighted average expected life (years)	1.0	1.0
Expected volatility	42.9%	36.9%
Dividend yield	7.1%	4.7%

Deferred Compensation Plan

The Company offers a Supplemental Executive Retirement Plan (“SERP”) for executives and certain key employees. The SERP allows participants to defer a portion of their earned income on a pre-tax basis and as of the last day of each plan year, each participant will be credited with a match of a portion of their deferral in the form of the Company’s common stock based on the then-current market value. Under the SERP, the Company is authorized to issue 1.0 million shares of its common stock to its employees. Pursuant to such authorization, the Company has 0.3 million shares available for future grant at March 31, 2023. At the time of issuance, such shares are accounted for at cost as treasury stock.

The following table summarizes information about the SERP during the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
SERP expense 1	$	157	$	157
Unrealized gain (loss) recorded in SERP liability account	$	1,546	$	(3,785)

1.Both the SERP match and the deferrals are included in the “selling, general and administrative” caption in the Consolidated Statements of Comprehensive Income.

Note 11—Income Taxes

The Company’s annual effective tax rate is impacted by the tax effects of option exercises and the vesting of awards, which are treated as discrete items in the reporting period in which they occur, and therefore cannot be considered in the calculation of the estimated annual effective tax rate. Discrete items increased the Company’s income tax provision recognized through the three months ended March 31, 2023 and March 31, 2022 by $0.9 million and $0.8 million, respectively.

Differences between the effective tax rate and the applicable U.S. federal statutory rate arise primarily from the effect of state and local income taxes, share-based compensation and tax credits available to the Company. The actual 2023 effective tax rate will likely vary from the estimate depending on the actual operating income earned with availability of tax credits and the exercise of stock options and vesting of share-based awards.

The Company accounts for income taxes using the asset and liability method, which results in recognizing income tax expense based on the amount of income taxes payable or refundable for the current year. Additionally, the Company regularly evaluates the tax positions taken or expected to be taken resulting from financial statement recognition of certain items. Based on the evaluation, there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The evaluation was performed for the tax years ended December 31, 2019 through 2022 (with regard to U.S. federal income tax returns) and December 31, 2018 through 2022 (with regard to various state and local income tax returns), the tax years which remain subject to examination by major tax jurisdictions as of March 31, 2023.

The Company may from time to time be assessed interest or penalties by taxing jurisdictions, although any such assessments historically have been minimal. When the Company has received an assessment for interest and/or penalties, it will be classified in the financial statements as selling, general and administrative expense. In addition, any interest or penalties relating to recognized uncertain tax positions would also be recorded in selling, general and administrative expense.

22

Note 12—Segment Information

The Company manages and evaluates its operations in two reportable segments: Housekeeping (housekeeping, laundry, linen and other services) and Dietary (dietary department services). Although both segments serve a similar customer base and share many operational similarities, they are managed separately due to distinct differences in the type of services provided, as well as the specialized expertise required of the professional management personnel responsible for delivering each segment’s services. Such services are rendered pursuant to discrete contracts, specific to each reportable segment.

The Company’s accounting policies for the segments are generally the same as described in the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and the information in the consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level using other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized in the consolidated financial statements. In addition, most corporate expenses such as corporate salary and benefit costs, certain legal costs, debt expense, information technology costs, depreciation, amortization of finite-lived intangible assets, share based compensation costs and other corporate-specific costs, are not fully allocated to the operating segments. There are also allocations for workers’ compensation and general liability expense within the operating segments that differ from the actual expense recorded by the Company under U.S. GAAP. Segment amounts disclosed are prior to elimination entries made in consolidation.

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Revenues
Housekeeping	$	193,519	$	201,704
Dietary	223,711		225,107
Total	$	417,230	$	426,811
Income before income taxes
Housekeeping	$	20,053	$	20,399
Dietary	14,666		9,433
Corporate and eliminations1	(17,163)		(14,051)
Total	$	17,556	$	15,781

1.Primarily represents corporate office costs and related overhead, recording of certain inventories and supplies and workers compensation costs at the reportable segment level which use accounting methods that differ from those used at the corporate level, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and other income and interest expense.

23

Note 13—Earnings Per Common Share

Basic and diluted earnings per common share are computed by dividing net income by the weighted-average number of basic and diluted common shares outstanding, respectively. The weighted-average number of diluted common shares includes the impact of dilutive securities, including outstanding stock options, restricted stock units, performance stock units and deferred stock units. The table below reconciles the weighted-average basic and diluted common shares outstanding:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Numerator for basic and diluted earnings per share:
Net income	$	12,684	$	11,329
Denominator
Weighted average number of common shares outstanding - basic	74,497		74,326
Effect of dilutive securities1	21		7
Weighted average number of common shares outstanding - diluted	74,518		74,333
Basic earnings per share:	$	0.17	$	0.15
Diluted earnings per share:	$	0.17	$	0.15

1.Certain outstanding equity awards are anti-dilutive and therefore excluded from the calculation of the weighted average number of diluted common shares outstanding.

Anti-dilutive outstanding equity awards under share-based compensation plans were as follows:

	Three Months Ended March 31,
	2023	2022
	(in thousands)
Anti-dilutive	3,191	3,369

Note 14—Other Contingencies

Line of Credit

At March 31, 2023, the Company had a $300.0 million bank line of credit on which to draw for general corporate purposes. Amounts drawn under the line of credit are payable upon demand and generally bear interest at a floating rate, based on the Company’s leverage ratio, and starting at the Term Secured Overnight Financing Rate ("SOFR") plus 165 basis points. As of March 31, 2023, there were $35.0 million in borrowings under the line of credit. As of December 31, 2022, there were $25.0 million in borrowings under the line of credit. The line of credit requires the Company to satisfy two financial covenants, with which the Company is in compliance as of March 31, 2023. The line of credit expires on November 22, 2027.

At March 31, 2023, the Company also had outstanding $85.7 million in irrevocable standby letters of credit, which relate to payment obligations under the Company’s insurance programs. In connection with the issuance of the letters of credit, the amount available under the line of credit was reduced by $85.7 million to $179.3 million at March 31, 2023. The letters of credit expire on January 4, 2024.

Tax Jurisdictions and Matters

The Company provides services throughout the continental United States and is subject to numerous state and local taxing jurisdictions. In the ordinary course of business, a jurisdiction may contest the Company’s reporting positions with respect to the application of its tax code to the Company’s services, which could result in additional tax liabilities.

24

The Company has tax matters with various taxing authorities. Because of the uncertainties related to both the probable outcomes and amount of probable assessments due, the Company is unable to make a reasonable estimate of a liability. The Company does not expect the resolution of any of these matters, taken individually or in the aggregate, to have a material adverse effect on the consolidated financial position or results of operations based on the Company’s best estimate of the outcomes of such matters.

Legal Proceedings

The Company is subject to various claims and legal actions in the ordinary course of business. Some of these matters include payroll and employee-related matters and examinations by governmental agencies. As the Company becomes aware of such claims and legal actions, the Company records accruals for any exposures that are probable and estimable. If adverse outcomes of such claims and legal actions are reasonably possible, Management assesses materiality and provides financial disclosure, as appropriate.

At this time, the Company is unable to reasonably estimate possible losses or form a judgment that an unfavorable outcome is either probable or remote with respect to certain pending litigation claims asserted and it is not currently possible to assess whether or not the outcome of these proceedings may have a material adverse effect on the Company.

Government Regulations

The Company’s customers are concentrated in the healthcare industry and are primarily providers of long-term care many of whom have been significantly impacted by COVID-19. The revenues of many of the Company’s customers are highly reliant on Medicare, Medicaid and third party payors’ reimbursement funding rates. New legislation or additional changes in existing regulations could directly impact the governmental reimbursement programs in which the customers participate.

Note 15—Subsequent Events

The Company evaluated all subsequent events through the filing date of this Form 10-Q. There were no events or transactions occurring during this subsequent reporting period which require recognition or additional disclosure in these financial statements.

25

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following discussion is intended to provide the reader with information that will be helpful in understanding our financial statements, including the changes in certain key items when comparing financial statements period to period. We also intend to provide the primary factors that accounted for those changes, as well as a summary of how certain accounting principles affect our financial statements. In addition, we are providing information about the financial results of our two operating segments to further assist in understanding how these segments and their results affect our consolidated results of operations. This discussion should be read in conjunction with our financial statements as of March 31, 2023 and December 31, 2022 and the notes accompanying those financial statements.

COVID-19 Considerations

While the crisis brought on by the COVID-19 pandemic has begun to show signs of abatement (e.g., new case rates remain below prior highs, the mortality rate remains low, and the Centers for Disease Control have relaxed masking requirements within healthcare facilities), our clients, who have been at the epicenter of the COVID-19 pandemic since its outset, continue to dedicate significant financial and other resources to protect their residents, employees and visitors. Moreover, we, our clients, vendors and business partners remain challenged by the lingering effects of the COVID-19 pandemic and the global economic crisis that has resulted from it. Significant supply chain disruption, inflation, labor shortages and unprecedented wage growth remain, and nursing home occupancy levels, while increasing from the lowest point in 2020, are still below the national average target to support a robust recovery of the healthcare sector. All the while, nursing home workforce participation remains depressed and is the slowest segment in the health care sector to recover toward pre-pandemic levels.

For additional information on risk factors related to the pandemic or other risks that could impact our results, please refer to “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”).

Overview

We provide 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. We believe we are the largest provider of housekeeping and laundry management services to the long-term care industry in the United States, rendering such services to approximately 2,700 facilities throughout the continental United States as of March 31, 2023.

We provide services primarily pursuant to full service agreements with our customers. Under such agreements, we are responsible for the day-to-day management of the employees located at our customers’ facilities, as well as for the provision of certain supplies. We also provide services on the basis of management-only agreements for a limited number of customers. Under a management-only agreement, we provide management and supervisory services while the customer facility retains payroll responsibility for the non-supervisory staff. In certain management-only agreements, the Company maintains responsibility for purchasing supplies. Our 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.

We are organized into two reportable segments: housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of managing our 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, we typically hire and train the employees previously employed by such facility and assign an on-site manager to supervise the front-line personnel and coordinate housekeeping 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 and employee evaluation. On-site management is responsible for all daily customer housekeeping department activities, with regular support provided by a District Manager specializing in such services.

Dietary consists of managing our 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

26

residents. On-site management is responsible for all daily dietary department activities, with regular support provided by a District Manager specializing in dietary services. We also offer clinical consulting services to our dietary customers, which may be provided as a stand-alone service or be bundled with other dietary department services. Upon beginning service with a customer facility, we typically hire and train 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 and employee evaluation.

At March 31, 2023, Housekeeping services were provided at approximately 2,700 customer facilities, generating approximately 46.4% or $193.5 million of our total revenues for the three months ended March 31, 2023. Dietary services were provided to over 1,500 customer facilities at March 31, 2023 and contributed approximately 53.6% or $223.7 million of our total revenues for the three months ended March 31, 2023.

Three Months Ended March 31, 2023 and 2022

The following table summarizes the income statement key components that we use to evaluate our financial performance on a consolidated and reportable segment basis, for the three months ended March 31, 2023 and 2022. The differences between the reportable segments’ operating results and other disclosed data and our consolidated financial results relate primarily to corporate level transactions and adjustments related to transactions recorded at the reportable segment level which use methods other than generally accepted accounting principles.

	Three Months Ended March 31,
	2023		2022		% Change
	(in thousands)
Revenues
Housekeeping	$	193,519	$	201,704	(4.1)	%
Dietary	223,711		225,107		(0.6)	%
Consolidated	$	417,230	$	426,811	(2.2)	%
Costs of services provided
Housekeeping	$	173,466	$	181,305	(4.3)	%
Dietary	209,045		215,674		(3.1)	%
Corporate and eliminations	(21,533)		(23,717)		(9.2)	%
Consolidated	$	360,978	$	373,262	(3.3)	%
Selling, general and administrative expense
Corporate and eliminations	$	40,047	$	35,736	12.1	%
Investment and other income, net
Corporate and eliminations	$	3,102	$	(1,523)	(303.7)	%
Interest expense
Corporate and eliminations	$	(1,751)	$	(509)	244.0	%
Income (loss) before income taxes
Housekeeping	$	20,053	$	20,399	(1.7)	%
Dietary	14,666		9,433		55.5	%
Corporate and eliminations	(17,163)		(14,051)		(22.1)	%
Consolidated	$	17,556	$	15,781	11.2	%

Housekeeping and Dietary revenues represented approximately 46.4% and 53.6% of consolidated revenues for the three months ended March 31, 2023, respectively.

27

The following table sets forth the ratio of certain items to consolidated revenues:

	Three Months Ended March 31,
	2023		2022
Revenues	100.0	%	100.0	%
Operating costs and expenses:
Costs of services provided	86.5	%	87.5	%
Selling, general and administrative expense	9.6	%	8.4	%
Other income (expense):
Investment and other income (loss), net	0.7	%	(0.4)	%
Interest expense	(0.4)	%	(0.1)	%
Income before income taxes	4.2	%	3.6	%
Income tax provision	1.2	%	1.0	%
Net income	3.0	%	2.6	%

Revenues

Consolidated

Consolidated revenues decreased 2.2% to $417.2 million during the three months ended March 31, 2023 compared to $426.8 million for the corresponding period in 2022, as a result of the factors discussed below under Reportable Segments.

Reportable Segments

Housekeeping revenues decreased 4.1% during the three months ended March 31, 2023 compared to the corresponding period in 2022, while Dietary revenues decreased 0.6% over the same period. The decrease in both segment revenues were driven by a decrease in the number of facilities serviced year-over-year.

Costs of Services Provided

Consolidated

Consolidated costs of services provided decreased by 3.3% to $361.0 million for the three months ended March 31, 2023 compared to $373.3 million for the three months ended March 31, 2022.

The following table provides a comparison of key indicators we consider when managing the consolidated costs of services provided:

	Three Months Ended March 31,
Costs of Services Provided - Key Indicators as a % of Consolidated Revenue	2023	2022	Change
Bad debt provision	1.7%	0.7%	1.0%
Self-insurance costs	2.4%	2.6%	(0.2)%

The increase in bad debt provision was impacted by one customer entering into an assignment for the benefit of creditors during the three months ended March 31, 2023, resulting in an approximate $4.7 million increase to the bad debt provision, and by the increase in outstanding accounts and notes receivable, and the aging of those receivables, as of March 31, 2023 compared to December 31, 2022.

Reportable Segments

Costs of services provided for Housekeeping, as a percentage of Housekeeping revenues, decreased to 89.6% for the three months ended March 31, 2023 from 89.9% in the corresponding period in 2022. Costs of services provided for Dietary, as a percentage of Dietary revenues, decreased to 93.4% for the three months ended March 31, 2023 from 95.8% in the corresponding period in 2022.

28

The following table provides a comparison of the key indicators we consider when managing costs of services provided at the segment level, as a percentage of the respective segment’s revenues:

	Three Months Ended March 31,
Costs of Services Provided - Key Indicators as a % of Segment Revenue	2023	2022	Change
Housekeeping labor and other labor-related costs	80.2%	80.4%	(0.2)%
Housekeeping supplies	6.6%	6.2%	0.4%
Dietary labor and other labor-related costs	58.5%	61.5%	(3.0)%
Dietary supplies	31.2%	31.1%	0.1%

Variations within these key indicators relate to the provision of services at new facilities and changes in the mix of customers for whom we provide supplies or do not provide supplies. Management focuses on building efficiencies and managing labor and other costs at the facility level, as well as managing supply chain costs, for new and existing facilities. Improvements in margins were driven by the Company’s efforts to renegotiate contracts with customers during 2022, managing labor costs, offset by increased prices for supplies during the quarter ended March 31, 2023 compared to the corresponding period in 2022.

Consolidated Selling, General and Administrative Expense 

Included in selling, general and administrative expense are gains and losses associated with changes in the value of investments under the deferred compensation plan. These investments represent the amounts held on behalf of the participating employees and changes in the value of these investments affect the amount of our deferred compensation liability. Gains on the plan investments during the three months ended March 31, 2023 increased our total selling, general and administrative expense, while losses on plan investments during the same period in 2022 decreased our selling, general and administrative expense for that period.

Excluding the change in the deferred compensation plan described above, consolidated selling, general and administrative expense decreased $1.0 million or 2.6% for the three months ended March 31, 2023 compared to the corresponding period in 2022. The change was driven primarily by decreases in legal expense and share-based compensation.

The table below summarizes the changes in these components of selling, general and administrative expense:

	Three Months Ended March 31,
	2023		2022		$ Change		% Change
	(dollar amounts in thousands)
Selling, general and administrative expense excluding change in deferred compensation plan liability	$	38,501	$	39,521	$	(1,020)	(2.6)	%
Gain (loss) on deferred compensation plan liability	1,546		(3,785)		5,331		(140.8)	%
Selling, general and administrative expense	$	40,047	$	35,736	$	4,311	12.1	%

Consolidated Investment and Other Income, net

Investment and other income was a $3.1 million gain for the three months ended March 31, 2023 compared to a $1.5 million loss in the corresponding 2022 period. The flux was primarily driven by market fluctuations in the value of our trading security investments representing the funding for our deferred compensation plan.

Consolidated Interest Expense

Consolidated interest expense increased 244.0% to $1.8 million for the three months ended March 31, 2023 compared to the same period in 2022 due to increased short-term borrowings during the period and increased interest rates.

29

Consolidated Income Taxes

During the three months ended March 31, 2023, the Company recognized a provision for income taxes of $4.9 million, or 27.8% effective tax rate, versus $4.5 million, or 28.2% effective tax rate, for the same period in 2022. The decrease to the Company’s tax rate is related to changes in discrete items from stock compensation expense, and, although there can be no assurance, it is expected that the full effect of such discrete items on the Company’s effective tax rate will diminish as the fiscal year progresses.

The actual annual effective tax rate will be impacted by the tax effects of option exercises or vested awards, which are treated as discrete items in the reporting period in which they occur and may vary based upon the Company’s common stock price at exercise and the volume of such exercises; therefore, these cannot be considered in the calculation of the estimated annual effective tax rate. The impact on our income tax provision for the three months ended March 31, 2023 for such discrete items was $0.9 million.

Liquidity and Capital Resources

Cash generated through operations is our primary source of liquidity. At March 31, 2023, we had cash, cash equivalents and marketable securities of $112.1 million and working capital of $347.9 million, compared to cash, cash equivalents and marketable securities of $121.5 million and working capital of $330.0 million at December 31, 2022. Our current ratio was 3.1 to 1 at March 31, 2023 versus 2.8 to 1 at December 31, 2022. Marketable securities represent fixed income investments that are highly liquid and can be readily purchased or sold through established markets. Such securities are held by our captive insurance company to satisfy capital requirements of the state regulator related to captive insurance companies.

For the three months ended March 31, 2023 and 2022, our cash flows were as follows:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Net cash used in operating activities	$	(16,290)	$	(30,182)
Net cash used in investing activities	$	(743)	$	(1,375)
Net cash from (used in) financing activities	$	6,907	$	(6,338)

Operating Activities

Our primary sources of cash from operating activities are the revenues generated from our Housekeeping and Dietary services. Our primary uses of cash from operating activities are the funding of our payroll and other personnel-related costs, as well as the costs of supplies used in providing our services. For the three months ended March 31, 2023, cash flow from operations was negative primarily due to the increase in accounts receivable, driven by timing of customer payments, and due to the timing of payroll payments to our employees, including payments made to employees associated with our deferred compensation plan made in the first quarter.

Investing Activities

Our principal uses of cash for investing activities are capital expenditures such as housekeeping and food service equipment, computer software and equipment, and furniture and fixtures (see “Capital Expenditures” below for additional information). While no purchases of marketable securities were made during the three months ended March 31, 2023, we also use cash for such purchases when deemed appropriate in line with capital funding requirements for our captive entity. Such uses of cash are partially offset by proceeds from sales of marketable securities.

Our investments in marketable securities are primarily comprised of tax-exempt municipal bonds and are intended to achieve our goal of preserving principal, maintaining adequate liquidity and maximizing returns subject to our investment guidelines. Our investment policy limits investment to certain types of instruments issued by institutions primarily with investment-grade ratings and places restrictions on concentration by type and issuer.

30

Financing Activities

The primary use of cash from financing activities is repurchases of our common stock. Prior to 2023, the primary use of cash from financing activities was the payment of dividends. On February 14, 2023, our Board of Directors authorized the repurchase of up to 7.5 million outstanding shares and suspended the quarterly dividend issued on common stock as part of our overall capital rebalancing strategy. As such, no dividends were issued during the quarter ended March 31, 2023. In the quarter ended March 31, 2022, we paid $15.7 million in cash dividends. During the three months ended March 31, 2022, we repurchased our common stock as part of the dividend reinvestment related to treasury shares held within the Deferred Compensation Plan. The number and value of the shares repurchased under the Deferred Compensation Plan were immaterial for the three months ended March 31, 2022.

We repurchased 0.2 million shares of our common stock for $2.2 million during the quarter ended March 31, 2023. We remain authorized to repurchase up to 7.3 million outstanding shares under the capital rebalancing strategy.

Line of Credit

At March 31, 2023, we had a $300 million bank line of credit on which to draw for general corporate purposes. Amounts drawn under the line of credit are payable upon demand and generally bear interest at a floating rate, based on our leverage ratio, and starting at the Term Secured Overnight Financing Rate (“SOFR”) rate plus 165 basis points. The Company’s line of credit was amended on November 22, 2022 to, among other things, provide for a five-year unsecured revolving loan facility in the aggregate amount of $300 million with, at the Company’s option, the ability to increase the revolving loan commitments to an aggregate amount not to exceed $500 million and to change the benchmark rate from the London Interbank Offered Rate (“LIBOR”) to SOFR. At March 31, 2023, there were $35.0 million in borrowings under the line of credit.

The line of credit requires us to satisfy two financial covenants. The covenants and their respective status at March 31, 2023 were as follows:

Covenant Descriptions and Requirements	As of March 31, 2023
Funded debt 1 to EBITDA 2 ratio: less than 3.50 to 1.00	1.85
EBITDA to Interest Expense ratio: not less than 3.00 to 1.00	14.96

1.All indebtedness for borrowed money including, but not limited to, capitalized lease obligations, reimbursement obligations in respect of letters of credit and guarantees of any such indebtedness.

2.Net income plus interest expense, income tax expense, depreciation, amortization, stock compensation expense, costs incurred to maintain the line of credit facility and certain third-party charges associated with the line of credit agreement or permitted acquisition-related activity, subject to limitations.

As noted above, we were in compliance with our financial covenants at March 31, 2023 and we expect to remain in compliance. The line of credit expires on November 22, 2027. We believe that our existing capacity under the line of credit provides adequate liquidity.

At March 31, 2023, we also had outstanding $85.7 million in irrevocable standby letters of credit, which relate to payment obligations under our insurance programs.

Capital Expenditures

The level of capital expenditures is generally dependent on the number of new customers obtained. Such capital expenditures primarily consist of housekeeping and food service equipment purchases, laundry and linen equipment installations, computer hardware and software, and furniture and fixtures. Although we have no specific material commitments for capital expenditures through the end of calendar year 2023, we estimate that for 2023 we will have capital expenditures of approximately $4.0 million to $6.0 million, of which we have made $1.0 million through March 31, 2023.

Although there can be no assurance, we believe that our cash from operations, existing cash and cash equivalents balance and credit line will be adequate for the foreseeable future to satisfy the needs of our operations and to fund our anticipated growth. However, should these sources not be sufficient, we would seek to obtain necessary capital from such sources as long-term debt or equity financing. In addition, there can be no assurance of the terms thereof and any subsequent equity financing sought may have dilutive effects on our current shareholders.

31

Material Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements, other than our irrevocable standby letter of credit previously discussed.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in the notes to the consolidated financial statements included in the Form 10-K for the period ended December 31, 2022. As described in such notes, we recognize revenue in the period in which the performance obligation is satisfied. Refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Form 10-K.

In preparing our financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are most significant when they involve levels of subjectivity and judgment necessary to account for highly uncertain matters or matters susceptible to change, and where they can have a material impact on our financial condition and operating performance. If actual results were to differ materially from the estimates made, the reported results could be materially affected.

Critical accounting estimates and the related assumptions are evaluated periodically as conditions warrant, and changes to such estimates are recorded as new information or changed conditions require.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

At March 31, 2023, we had $112.1 million in cash, cash equivalents and marketable securities. The fair value of all of our cash equivalents and marketable securities are determined based on “Level 1” or “Level 2” inputs, which are based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. We place our cash investments in instruments that meet credit quality standards, as specified in our investment policy guidelines.

Investments in both fixed-rate and floating-rate investments carry a degree of interest rate risk. The market value of fixed rate securities may be adversely impacted by an increase in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or if there is a decline in the fair value of our investments.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are intended to ensure that information required to be disclosed in our reports under the Exchange Act, such as this Form 10-Q, is reported in accordance with Securities and Exchange Commission rules. Disclosure controls are also intended to ensure that such information is accumulated and communicated to Management, including the Principal Executive Officer (President and Chief Executive Officer) and Principal Financial Officer (Principal Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.

Based on their evaluation as of March 31, 2023, pursuant to Securities Exchange Act of 1934, as amended (the "Exchange Act") Rule 13a-15(b), our Management, including our Principal Executive Officer and Principal Financial Officer, believe our disclosure controls and procedures (as defined in Exchange Act 13a-15(e)) are effective.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting that occurred during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to review its disclosure controls and procedures, including its internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.

32

Certifications

Certifications of the Principal Executive Officer and Principal Financial and Accounting Officer regarding, among other items, disclosure controls and procedures are included as exhibits to this Form 10-Q.

33

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, the Company is involved in various administrative and legal proceedings, including labor and employment, contracts, personal injury, and insurance matters. The Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding or governmental examination that would have a material adverse effect on the Company’s consolidated financial condition or liquidity.

At this time, the Company is unable to reasonably estimate possible losses or form a judgment that an unfavorable outcome is either probable, reasonably possible or remote with respect to certain pending litigation claims asserted.

In light of the uncertainties involved in such proceedings, the ultimate outcome of a particular matter could become material to the Company’s results of operations for a particular period depending on, among other factors, the size of the loss or liability imposed and the level of the Company’s operating income for that period.

Item 1A. Risk Factors

There have been no other material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

On February 14, 2023, our Board of Directors authorized the repurchase of up to 7.5 million outstanding shares of common stock. We remain authorized to purchase 7.3 million shares of common stock under the share repurchase plan.

Shares repurchased pursuant to the Plan during the three months ended March 31, 2023, were as follows:

Quarter Ended March 31, 2023	Total number of shares of Common Stock repurchased	Average price paid per share of Common Stock		Aggregate purchase price of Common Stock repurchases1		Number of remaining shares authorized for repurchase
				(in thousands)
January 1, 2023 - January 31, 2023	—	$	—	$	—	7,500
February 1, 2023 - February 28, 2023	90,000	$	13.63	$	1,227	7,410
March 1, 2023 - March 31, 2023	79,300	$	12.23	$	970	7,331
First quarter	169,300	$	12.93	$	2,197	7,331

1.    Excludes commissions and other costs of less than $0.1 million.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

34

Item 6. Exhibits

The following exhibits are filed as part of this Report:

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
101	The following financial information from the Company’s Form 10-Q for the quarterly period ended March 31, 2023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statement of Stockholders’ Equity, and (v) Notes to Consolidated Financial Statements
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)

35

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		HEALTHCARE SERVICES GROUP, INC.
Date:	April 28, 2023	/s/ Theodore Wahl
		Theodore Wahl
		President & Chief Executive Officer
		(Principal Executive Officer)
Date:	April 28, 2023	/s/ Andrew M. Brophy
		Andrew M. Brophy
		Vice President, Controller & Principal Accounting Officer
		(Principal Financial and Accounting Officer )

36

EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

Pursuant to Rules 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act, as Amended

I, Theodore Wahl, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Services Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 28, 2023	/s/ Theodore Wahl
		Theodore Wahl
		President & Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

Pursuant to Rules 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act, as Amended

I, Andrew M. Brophy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Services Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 28, 2023	/s/ Andrew M. Brophy
		Andrew M. Brophy
		Principal Accounting Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CertificationPursuant to

18 U.S.C. Section 1350,

As AdoptedPursuant to

Section 906 ofthe Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Healthcare Services Group, Inc. (the "Company") for the quarter ended March 31, 2023 as filed with the Securities and Exchange commission on the date hereof (the "Form 10-Q"), Theodore Wahl, the Chief Executive Officer of the Company, and Andrew M. Brophy, the Principal Accounting Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d), of the Securities Exchange Act of 1934, as amended; and

(2) That information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Theodore Wahl	/s/ Andrew M. Brophy
Theodore Wahl	Andrew M. Brophy
President & Chief Executive Officer	Principal Accounting Officer
(Principal Executive Officer)	(Principal Financial and Accounting Officer)
April 28, 2023	April 28, 2023

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2023	Apr. 26, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	0-12015
Entity Registrant Name	HEALTHCARE SERVICES GROUP, INC.
Entity Incorporation, State Code	PA
I.R.S. Employer Identification No.	23-2018365
Entity Address, Address Line One	3220 Tillman Drive
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Bensalem
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19020
City Area Code	215
Local Phone Number	639-4274
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	HCSG
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		74,195,000
Entity Central Index Key	0000731012
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 16,153	$ 26,279
Marketable securities, at fair value	95,985	95,200
Accounts and notes receivable, less allowance for doubtful accounts of $73,030 and $70,192 as of March 31, 2023 and December 31, 2022, respectively	350,784	336,777
Inventories and supplies	20,229	21,164
Taxes receivable	1,748	6,629
Prepaid expenses and other assets	25,188	22,583
Total current assets	510,087	508,632
Property and equipment, net	23,400	22,975
Goodwill	75,529	75,529
Other intangible assets, less accumulated amortization of $33,941 and $32,738 as of March 31, 2023 and December 31, 2022, respectively	14,743	15,946
Notes receivable — long–term portion, less allowance for doubtful accounts of $3,837 and $3,273 as of March 31, 2023 and December 31, 2022, respectively	32,327	32,609
Deferred compensation funding, at fair value	34,312	33,493
Deferred tax asset	27,975	28,338
Other long-term assets	760	812
Total assets	719,133	718,334
Current liabilities:
Accounts payable	64,351	68,296
Accrued payroll and related taxes	20,394	42,704
Other accrued expenses	17,088	17,835
Borrowings under line of credit	35,000	25,000
Deferred compensation liability — short-term	1,357	1,618
Accrued insurance claims	23,974	23,166
Total current liabilities	162,164	178,619
Accrued insurance claims — long-term	67,100	65,541
Deferred compensation liability — long-term	34,263	33,764
Lease liability — long-term	8,586	8,097
Other long-term liabilities	6,448	6,141
Commitments and contingencies (Note 15)
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value; 100,000 shares authorized; 76,329 and 76,161 shares issued, and 74,194 and 74,088 shares outstanding as of March 31, 2023 and December 31, 2022, respectively	763	762
Additional paid-in capital	303,582	302,304
Retained earnings	167,190	154,495
Accumulated other comprehensive loss, net of taxes	(2,270)	(3,477)
Common stock in treasury, at cost, 2,135 and 2,073 shares as of March 31, 2023 and December 31, 2022, respectively	(28,693)	(27,912)
Total stockholders’ equity	440,572	426,172
Total liabilities and stockholders’ equity	$ 719,133	$ 718,334

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts, current	$ 73,030	$ 70,192
Accumulated amortization of other intangible assets	33,941	32,738
Allowance for doubtful accounts, noncurrent	$ 3,837	$ 3,273
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock authorized (in shares)	100,000,000	100,000,000
Common stock issued (in shares)	76,329,000	76,161,000
Common stock outstanding (in shares)	74,194,000	74,088,000
Common stock in treasury (in shares)	2,135,000	2,073,000

XML

Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Revenues	$ 417,230	$ 426,811
Operating costs and expenses:
Costs of services provided	360,978	373,262
Selling, general and administrative expense	40,047	35,736
Other income (expense):
Investment and other income (loss), net	3,102	(1,523)
Interest expense	(1,751)	(509)
Income before income taxes	17,556	15,781
Income tax provision	4,872	4,452
Net income	$ 12,684	$ 11,329
Per share data:
Basic earnings per common share (in dollars per share)	$ 0.17	$ 0.15
Diluted earnings per common share (in dollars per share)	$ 0.17	$ 0.15
Weighted average number of common shares outstanding:
Basic (in shares)	74,497	74,326
Diluted (in shares)	74,518	74,333
Comprehensive income:
Net income	$ 12,684	$ 11,329
Other comprehensive gain (loss):
Unrealized gain (loss) on available-for-sale marketable securities, net of taxes	1,207	(5,269)
Total comprehensive income	$ 13,891	$ 6,060

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows used in operating activities:
Net income	$ 12,684	$ 11,329
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	3,720	4,147
Bad debt provision	6,907	2,851
Deferred income tax benefit	43	0
Share-based compensation expense	2,058	2,396
Amortization of premium on marketable securities	533	561
Unrealized (gain) loss on deferred compensation fund investments	(1,502)	4,074
Changes in other long-term liabilities	336	(1,760)
Net loss on disposals of fixed assets	128	173
Changes in operating assets and liabilities:
Accounts and notes receivable	(20,633)	(27,222)
Inventories and supplies	935	1,195
Prepaid expenses and other assets	4,076	(2,462)
Deferred compensation funding	683	3,605
Accounts payable and other accrued expenses	(6,422)	(3,051)
Accrued payroll, accrued and withheld payroll taxes	(21,167)	(24,933)
Income taxes receivable	(1,748)	3,764
Accrued insurance claims	2,366	3,056
Deferred compensation liability	713	(7,905)
Net cash used in operating activities	(16,290)	(30,182)
Cash flows used in investing activities:
Disposals of fixed assets	57	152
Additions to property and equipment	(1,010)	(1,407)
Purchases of marketable securities	0	(1,525)
Sales of marketable securities	210	1,519
Cash paid for acquisitions	0	(114)
Net cash used in investing activities	(743)	(1,375)
Cash flows from (used in) financing activities:
Dividends paid	0	(15,704)
Reissuance of treasury stock pursuant to Dividend Reinvestment Plan	0	25
Proceeds from the exercise of stock options	0	410
Purchases of treasury stock	(2,223)	0
Proceeds from short-term borrowings	10,000	10,000
Payments of statutory withholding on net issuance of restricted stock units	(870)	(1,069)
Net cash from (used in) financing activities	6,907	(6,338)
Net change in cash and cash equivalents	(10,126)	(37,895)
Cash and cash equivalents at beginning of the period	26,279	70,794
Cash and cash equivalents at end of the period	$ 16,153	$ 32,899

XML

Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss, net of taxes	Retained Earnings	Treasury Stock
Beginning balance (in shares) at Dec. 31, 2021		76,009
Beginning balance at Dec. 31, 2021	$ 452,677	$ 760	$ 294,124	$ 4,000	$ 183,957	$ (30,164)
Comprehensive income:
Net income for the period	11,329				11,329
Unrealized gain on available-for-sale marketable securities, net of taxes	(5,269)			(5,269)
Total comprehensive income	6,060
Exercise of stock options and other share-based compensation, net of shares tendered for payment (in shares)		145
Exercise of stock options and other share-based compensation, net of shares tendered for payment	410	$ 2	408
Payment of statutory withholding on issuance of restricted stock units	(1,069)		(1,069)
Share-based compensation expense	2,298		2,298
Treasury shares issued for Deferred Compensation Plan, net	524		110			414
Shares issued pursuant to Employee Stock Plan	1,512		368			1,144
Dividends paid and accrued	(15,859)		0		(15,859)
Shares issued pursuant to Dividend Reinvestment Plan	25		6			19
Other (in shares)		4
Other	59		59
Ending balance (in shares) at Mar. 31, 2022		76,158
Ending balance at Mar. 31, 2022	$ 446,637	$ 762	296,304	(1,269)	179,427	(28,587)
Beginning balance (in shares) at Dec. 31, 2022	74,088	76,161
Beginning balance at Dec. 31, 2022	$ 426,172	$ 762	302,304	(3,477)	154,495	(27,912)
Comprehensive income:
Net income for the period	12,684				12,684
Unrealized gain on available-for-sale marketable securities, net of taxes	1,207			1,207
Total comprehensive income	13,891
Exercise of stock options and other share-based compensation, net of shares tendered for payment (in shares)		167
Exercise of stock options and other share-based compensation, net of shares tendered for payment	0	$ 1	(1)
Payment of statutory withholding on issuance of restricted stock units	(870)		(870)
Share-based compensation expense	1,973		1,973
Purchases of treasury stock	(2,223)					(2,223)
Treasury shares issued for Deferred Compensation Plan, net	475		307			168
Shares issued pursuant to Employee Stock Plan	1,135		(139)			1,274
Other (in shares)		1
Other	$ 19		8		11
Ending balance (in shares) at Mar. 31, 2023	74,194	76,329
Ending balance at Mar. 31, 2023	$ 440,572	$ 763	$ 303,582	$ (2,270)	$ 167,190	$ (28,693)

XML

Consolidated Statements of Stockholders' Equity (Parenthetical)	3 Months Ended
	Mar. 31, 2022 $ / shares
Statement of Stockholders' Equity [Abstract]
Cash dividend paid per common share (in dollars per share)	$ 0.21

XML

Description of Business and Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Description of Business and Significant Accounting Policies

Note 1—Description of Business and Significant Accounting Policies

Nature of Operations

Healthcare Services Group, Inc. (the “Company”) provides management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments predominantly to clients within the healthcare industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. Although the Company does not directly participate in any government reimbursement programs, the Company’s customers receive government reimbursements related to Medicare and Medicaid. Therefore, the Company’s customers are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

The Company provides services primarily pursuant to full service agreements with its customers. In such agreements, the Company is responsible for the day-to-day management of employees located at the 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. In a management-only agreement, the Company provides management and supervisory services while the customer facility retains payroll responsibility for the non-supervisory staff. The 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.

The Company is organized into two reportable segments: housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of managing the customers’ housekeeping departments, which are principally responsible for the cleaning, disinfecting and sanitizing of resident rooms and common areas of a customer’s facility, as well as the laundering and processing of the bed linens, uniforms, resident personal clothing and other assorted linen items utilized at a customer facility.

Dietary consists of managing the customers’ dietary departments, which are principally responsible for food purchasing, meal preparation and dietitian professional services, which includes the development of menus that meet residents’ dietary needs.

Unaudited Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows. However, in the Company’s opinion, all adjustments which are of a normal recurring nature and are necessary for a fair presentation have been reflected in these consolidated financial statements. The balance sheet shown in this report as of December 31, 2022 has been derived from the audited financial statements for the year ended December 31, 2022. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future period.

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, estimates and assumptions are made that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Significant estimates are used in determining, but are not limited to, the Company’s allowance for doubtful accounts, accrued insurance claims, deferred taxes and reviews for potential impairment. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information. Management regularly evaluates this information to determine if it is necessary to update the basis for its estimates and to adjust for known changes.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Healthcare Services Group, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents are held in U.S. financial institutions or in custodial accounts with U.S. financial institutions. Cash equivalents are defined as short-term, highly liquid investments with a maturity of three months or less at time of purchase that are readily convertible into cash and have insignificant interest rate risk.

Accounts and Notes Receivable

Accounts and notes receivable consist of Housekeeping and Dietary segment trade receivables from contracts with customers. The Company’s payment terms with customers for services provided are defined within each customer’s service agreement. All accounts receivables are considered short term assets as the Company does not grant payment terms greater than one year. Accounts receivable initially are recorded at the transaction amount, and are recorded after the Company has an unconditional right to payment where only the passage of time is required before payment is received. Each reporting period, the Company evaluates the collectability of outstanding receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit loss. Additions to the allowance for doubtful accounts are made by recording a charge to bad debt expense reported in costs of services provided.

Notes receivable are initially recorded when accounts receivable are transferred into a promissory note and are recorded as an alternative to accounts receivable to memorialize an unqualified promise to pay a specific sum, typically with interest, in accordance with a defined payment schedule. The Company’s payment terms with customers on promissory notes can vary based on several factors and the circumstances of each promissory note, however most promissory notes mature over a 1 to 4 year period. Similar to accounts receivable, each reporting period the Company evaluates the collectability of outstanding notes receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit losses.

Allowance for Doubtful Accounts

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification subtopic 326 Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”), Management utilizes financial modeling to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts and notes receivable which is recorded as a liability to offset the receivables. Modeling is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts and notes receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense when received.

Inventories and Supplies

Inventories and supplies include housekeeping, linen and laundry supplies, as well as food provisions and supplies. Non-linen inventories and supplies are stated on a first-in, first-out (FIFO) basis, and reduced as deemed necessary to approximate the lower of cost or net realizable value. Linen supplies are amortized on a straight-line basis over their estimated useful life of 24 months.

Revenue Recognition

The Company recognizes revenue from contracts with customers when or as the promised goods and services are provided to customers. Revenues are reported net of sales taxes that are collected from customers and remitted to taxing authorities. The amount of revenue recognized by the Company is based on the expected value of consideration to which the Company is entitled in exchange for providing the contracted goods and services and when it is probable that the Company will collect substantially all of such consideration.

Leases

The Company records assets and liabilities on the balance sheet to recognize the rights and obligations arising from leasing arrangements with contractual terms greater than 12 months, as permitted by U.S. GAAP. A leasing arrangement includes any contract which entitles the Company to the right of use of an identified tangible asset where there are no restrictions as to the direct of use of the asset, and the Company obtains substantially all of the economic benefits from the right of use.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, income tax expense or benefits are recognized for the amount of taxes payable or refundable for the current period. The Company accrues for probable tax obligations as required, based on facts and circumstances in various regulatory environments. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. When appropriate, valuation allowances are recorded to reduce deferred tax assets to amounts for which realization is more likely than not.

Uncertain income tax positions taken or expected to be taken in tax returns are reflected within the Company’s consolidated financial statements based on a recognition and measurement process.

Earnings per Common Share

Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is computed using the weighted-average number of common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock awards.

Share-Based Compensation

The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes valuation model for stock options, using a Monte Carlo simulation for performance restricted stock units, and using the share price on the date of grant for restricted stock units and deferred stock units. The value of the award is recognized ratably as an expense in the Company’s Consolidated Statements of Comprehensive Income over the requisite service periods, with adjustments made for forfeitures as they occur.

Identifiable Intangible Assets and Goodwill

Identifiable intangible assets are amortized on a straight-line basis over their respective lives. Goodwill represents the excess of cost over the fair value of net assets of acquired businesses. Management reviews the carrying value of goodwill annually during the fourth quarter to assess for impairment, or more often if events or circumstances indicate that the carrying value may exceed its estimated fair value.

No impairment loss was recognized on the Company’s intangible assets or goodwill during the three months ended March 31, 2023 or 2022.

Concentrations of Credit Risk

The Company’s financial instruments that are subject to credit risk are cash and cash equivalents, marketable securities, deferred compensation funding and accounts and notes receivable. At March 31, 2023 and December 31, 2022, the majority of the Company’s cash and cash equivalents and marketable securities were held in one large financial institution located in the United States. The Company’s marketable securities are fixed income investments which are highly liquid and can be readily purchased or sold through established markets.

The Company’s customers are concentrated in the healthcare industry and are primarily providers of long-term care. The revenues of many of the Company’s customers are highly reliant on Medicare, Medicaid and third party payors’ reimbursement funding rates. New legislation or changes in existing regulations could directly impact the governmental reimbursement programs in which the Company’s customers participate. As a result, the Company may not realize the full effects such programs may have on the Company’s customers until these laws are fully implemented and governmental agencies issue applicable regulations or guidance.

XML

Revenue

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

Note 2—Revenue

The Company presents its consolidated revenues disaggregated by reportable segment, as Management evaluates the nature, amount, timing and uncertainty of the Company’s revenues by segment. Refer to Note 12—Segment Information herein as well as the information below regarding the Company’s reportable segments.

Housekeeping

Housekeeping accounted for $193.5 million and $201.7 million of the Company’s consolidated revenues for the three months ended March 31, 2023 and 2022, respectively, which represented approximately 46.4% and 47.3% of the Company’s revenues in each respective period. Housekeeping services include managing 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 will typically hire and train the employees previously employed by such facility and assign an on-site manager to supervise and train the front-line personnel and coordinate housekeeping 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 and employee evaluation.

Dietary

Dietary services accounted for $223.7 million and $225.1 million of the Company’s consolidated revenues for the three months ended March 31, 2023 and 2022, respectively, which represented approximately 53.6% and 52.7% of the Company’s revenues in each respective period. Dietary services consist of managing 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 facilities which if contracted is a service bundled within the monthly service provided to customers. Upon beginning service with a customer facility, the Company will typically hire and train the employees previously employed by such facility and assign an on-site manager to supervise and train 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 and employee evaluation.

Revenue Recognition

The Company’s revenues are derived from contracts with customers. The Company recognizes revenue to depict the transfer of promised goods and services to customers in amounts that reflect the consideration to which the Company is entitled in exchange for those goods and services. The Company’s costs of obtaining contracts are not material.

The Company performs services and provides goods in accordance with its contracts with its customers. Such contracts 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. A performance obligation is the unit of account under ASC 606 and is defined as a promise in a contract to transfer a distinct good or service to the customer. The Company’s Housekeeping and Dietary contracts relate to the provision of bundles of goods, services or both, which represent a series of distinct goods and services that are substantially the same and that have the same pattern of transfer to the customer. The Company accounts for the series as a single performance obligation satisfied over time, as the customer simultaneously receives and consumes the benefits of the goods and services provided. Revenue is recognized using the output method, which is based upon the delivery of goods and services to the customers’ facilities. In limited cases, the Company provides goods, services or both, before the execution of a written contract. In these cases, the Company defers the recognition of revenue until a contract is executed. The amount of such deferred revenue was $0.3 million as of both March 31, 2023 and December 31, 2022. Additionally, substantially all such revenue amounts deferred as of December 31, 2022 were subsequently recognized as revenue during the three months ended March 31, 2023.

The transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services to its customers. The transaction price does not include taxes assessed or collected. The Company’s contracts detail the fees that the Company charges for the goods and services it provides. For certain contracts which contain a variable component to the transaction price, the Company is required to make estimates of the amount of consideration to which the Company will be entitled, based on variability in resident and patient populations serviced, product usage or quantities consumed. The Company recognizes revenue related to such estimates only when the Company determines that there will not be a significant reversal in the amount of revenue recognized. The Company’s contracts generally do not contain significant financing components, as payment terms are less than one year.

The Company allocates the transaction price to each performance obligation, noting that the bundle of goods, services or goods and services provided under each Housekeeping and Dietary contract represents a single performance obligation that is satisfied over time. The Company recognizes the related revenue when it satisfies the performance obligation by transferring a bundle of promised goods, services or both to a customer. Such recognition is on a monthly or weekly basis, as goods are provided and services are performed. In some cases, the Company requires customers to pay in advance for goods and services to be provided. As of March 31, 2023 the value of the contract liabilities associated with customer prepayments was $1.7 million. As of December 31, 2022, the value of the contract liabilities associated with customer prepayments was $3.1 million. The Company recognized $1.4 million of revenue during the three months ended March 31, 2023 which was recorded as a contract liability on December 31, 2022.

Transaction Price Allocated to Remaining Performance Obligations

The Company recognizes revenue as it satisfies the performance obligations associated with contracts with customers, which due to the nature of the goods and services provided by the Company, are satisfied over time. Contracts may contain transaction prices that are fixed, variable or both. The Company’s contracts with customers typically provide for an initial term of one year, with renewable one year service terms, cancellable by either party upon 30 to 90 days’ notice after an initial period of 60 to 120 days.

At March 31, 2023, the Company had $99.0 million related to performance obligations that were unsatisfied or partially unsatisfied for which the Company expects to recognize revenue. The Company expects to recognize revenue on all of the remaining performance obligations over the next 12 months. These amounts exclude variable consideration primarily related to performance obligations that consist of a series of distinct service periods with revenues based on future performance that cannot be estimated at contract inception. The Company also has elected to apply the practical expedient that permits exclusion of information about the remaining performance obligations with original expected durations of one year or less.

XML

Accounts and Notes Receivable

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Accounts and Notes Receivable

Note 3—Accounts and Notes Receivable

The Company’s accounts and notes receivable balances consisted of the following as of March 31, 2023 and December 31, 2022:

	March 31, 2023		December 31, 2022
	(in thousands)
Short-term
Accounts and notes receivable	$	423,814	$	406,969
Allowance for doubtful accounts	(73,030)		(70,192)
Total net short-term accounts and notes receivable	$	350,784	$	336,777
Long-term
Notes receivable	$	36,164	$	35,882
Allowance for doubtful accounts	(3,837)		(3,273)
Total net long-term notes receivable	$	32,327	$	32,609
Total net accounts and notes receivable	$	383,111	$	369,386

The Company makes credit decisions on a case-by-case basis after reviewing a number of qualitative and quantitative factors related to the specific customer as well as current industry variables that may impact that customer. There are a variety of factors that impact a customer’s ability to pay in accordance with the Company’s contracts. These factors include, but are not limited to, fluctuating census numbers, litigation costs and the customer’s participation in programs funded by federal and state governmental agencies. Deviations in the timing or amounts of reimbursements under those programs can impact the customer’s cash flows and its ability to make timely payments. However, the customer’s obligation to pay the Company in accordance with the contracts are not contingent upon the customer’s cash flow. Notwithstanding the Company’s efforts to minimize its credit risk exposure, the aforementioned factors, as well as other factors that impact customer cash flows or ability to make timely payments, could have an indirect, yet material adverse effect on the Company’s results of operations and financial condition.

Fluctuations in net accounts and notes receivable are generally attributable to a variety of factors including, but not limited to, the timing of cash receipts from customers and the inception, transition, modification or termination of customer relationships. The Company deploys significant resources and has invested in tools and processes to optimize Management’s credit and collections efforts. When appropriate, the Company utilizes interest-bearing promissory notes to enhance the collectability of amounts due, by instituting definitive repayment plans and providing a means by which to further evidence the amounts owed. In addition, the Company may amend contracts from full service to management-only arrangements, or adjust contractual payment terms, to accommodate customers who have in good faith established clearly-defined plans for addressing cash flow issues. These efforts are intended to minimize the Company’s collections risk.

XML

Allowance for Doubtful Accounts

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Allowance for Doubtful Accounts

Note 4—Allowance for Doubtful Accounts

In making the Company’s credit evaluations, management considers the general collection risk associated with trends in the long-term care industry. The Company establishes credit limits through payment terms with customers, performs ongoing credit evaluations and monitors accounts on an aging schedule basis to minimize the risk of loss. Despite the Company’s efforts to minimize credit risk exposure, customers could be adversely affected if future industry trends, including those related to COVID-19, change in such a manner as to negatively impact their cash flows. The full effects of COVID-19 on the Company’s customers are highly uncertain and cannot be predicted. As a result, the Company’s future collection experience can differ significantly from historical collection trends. If the Company’s customers experience a negative impact on their cash flows, it could have a material adverse effect on the Company’s results of operations and financial condition.

The Company evaluates its accounts and notes receivable for expected credit losses quarterly. Accounts receivables are evaluated based on internally developed credit quality indicators derived from the aging of receivables. Notes receivable are evaluated based on internally developed credit quality indicators derived from Management’s assessment of collection risk. The Company manages note receivable portfolios using a two tiered approach by disaggregating standard notes receivables, which are promissory notes in good standing, from those who have been identified by Management as having an elevated credit risk profile due to a triggering event such as bankruptcy. At the end of each period, the Company sets a reserve for expected credit losses on standard notes receivable based on the Company’s historical loss rate. Notes receivable with an elevated risk profile, which are from customers who have filed bankruptcy, are subject to collections activity or are slow payers that are experiencing financial difficulties, are aggregated and evaluated to determine the total reserve for the class of receivable.

ASC 326 permits entities to make an accounting policy election not to measure an estimate for credit losses on accrued interest if those entities write-off accrued interest deemed uncollectible in a timely manner. The Company follows an income recognition policy on all interest earned on notes receivable. Under such policy the Company accounts for all notes receivable on a non-accrual basis and defers the recognition of any interest income until receipt of cash payments. This policy was established based on the Company’s history of collections of interest on outstanding notes receivable, as we do not deem it probable that we will receive substantially all interest on outstanding notes receivable. Accordingly, the Company does not record a credit loss adjustment for accrued interest. Interest income from notes receivable for the three months ended March 31, 2023 and 2022 was $0.6 million and $0.3 million, respectively.

The following table presents the Company’s two tiers of notes receivable further disaggregated by year of origination, as well as write-off activity for the three months ended March 31, 2023.

	Notes Receivable
	Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	18,380	$	27,856	$	7,922	$	1,540	$	53	$	21,975	$	77,726
Elevated risk notes receivable	$	—	$	—	$	2,510	$	—	$	—	$	795	$	3,305
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	51	$	51
Current-period recoveries	—		—		—		—		—		—		—
Current-period net write-offs	$	—	$	—	$	—	$	—	$	—	$	51	$	51

The following table provides information as to the status of payment on the Company’s notes receivable which were past due as of March 31, 2023:

	Age Analysis of Past-Due Notes Receivable as of March 31, 2023
	0 - 90 Days		91 - 180 Days		Greater than 181 Days		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	3,305	$	276	$	3,414	$	6,995
Elevated risk notes receivable	136		—		795		931
	$	3,441	$	276	$	4,209	$	7,926

The following tables provide a summary of the changes in the Company’s allowance for doubtful accounts on a portfolio segment basis for the three months ended March 31, 2023 and 2022.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2022		Write-Offs1		Bad Debt Expense		March 31, 2023
	(in thousands)
Accounts Receivables	$	66,601	$	(3,453)	$	5,259	$	68,407
Notes Receivables
Standard notes receivable	$	6,052	$	—	$	373	$	6,425
Elevated risk notes receivable	811		(51)		1,275		2,035
Total notes receivable	$	6,863	$	(51)	$	1,648	$	8,460
Total accounts and notes receivable	$	73,464	$	(3,504)	$	6,907	$	76,867

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2023, the Company collected less than $0.1 million of accounts and notes receivables which had previously been written-off as uncollectible.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2021		Write-Offs1		Bad Debt Expense		March 31, 2022
	(in thousands)
Accounts Receivables	$	50,794	$	(5,343)	$	3,960	$	49,411
Notes Receivables
Standard notes receivable	$	13,607	$	—	$	(1,065)	$	12,542
Elevated risk notes receivable	1,183		—		(44)		1,139
Total notes receivable	$	14,790	$	—	$	(1,109)	$	13,681
Total Accounts and notes receivable	$	65,584	$	(5,343)	$	2,851	$	63,092

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2022, the Company collected $0.2 million of accounts and notes receivables which had previously been written-off as uncollectible.

XML

Changes in Accumulated Other Comprehensive Income by Component

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income by Component

Note 5—Changes in Accumulated Other Comprehensive Income by Component

The Company's accumulated other comprehensive income consists of unrealized gains and losses from the Company’s available-for-sale marketable securities. The following table provides a summary of the changes in accumulated other comprehensive income for the three months ended March 31, 2023 and 2022:

	Unrealized Gains and Losses on Available-for-Sale Securities1
	Three Months Ended March 31,
	2023		2022
	(in thousands)
Accumulated other comprehensive (loss) income — beginning balance	$	(3,477)	$	4,000
Other comprehensive income (loss) before reclassifications	1,206		(5,277)
Losses reclassified from other comprehensive income2	1		8
Net current period other comprehensive income (loss)3	1,207		(5,269)
Accumulated other comprehensive (loss) — ending balance	$	(2,270)	$	(1,269)

1.All amounts are net of tax.

2.Realized gains and losses were recorded pre-tax under “Investment and other income” in the Consolidated Statements of Comprehensive Income. For the three months ended March 31, 2023 and 2022, the Company recorded less than $0.1 million of realized losses from the sale of available-for-sale securities. Refer to Note 9—Fair Value Measurements herein for further information.

3.For the three months ended March 31, 2023 and 2022, the changes in other comprehensive income were net of a tax expense of $0.3 million and $1.4 million, respectively.

	Amounts Reclassified from Accumulated Other Comprehensive Income
	2023		2022
	(in thousands)
Three Months Ended March 31,
Losses from the sale of available-for-sale securities	$	(2)	$	(12)
Tax benefit	1		4
Net loss reclassified from accumulated other comprehensive income	$	(1)	$	(8)

XML

Property and Equipment

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 6—Property and Equipment

Property and equipment are recorded at cost. Depreciation is recorded over the estimated useful life of each class of depreciable asset, and is computed using the straight-line method. Leasehold improvements are amortized over the shorter of the estimated asset life or term of the lease. Repairs and maintenance costs are charged to expense as incurred.

The following table sets forth the amounts of property and equipment by each class of depreciable asset as of March 31, 2023 and December 31, 2022:

	March 31, 2023		December 31, 2022
	(in thousands)
Housekeeping and dietary equipment	$	13,980	$	13,585
Computer hardware and software	6,187		6,086
Operating lease — right-of-use assets	23,559		34,445
Other1	1,059		1,055
Total property and equipment, at cost	44,785		55,171
Less accumulated depreciation	21,385		32,196
Total property and equipment, net	$	23,400	$	22,975

1.Includes furniture and fixtures, leasehold improvements and autos and trucks.

Depreciation expense for the three months ended March 31, 2023 and 2022 was $2.5 million and $2.9 million, respectively. Of the depreciation expense recorded for the three months ended March 31, 2023 and 2022, $1.2 million and $1.6 million related to the depreciation of the Company’s operating lease - right-of-use assets (“ROU Assets”), respectively.

XML

Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

Note 7—Leases

The Company recognizes ROU Assets and lease liabilities (“Lease Liabilities”) for automobiles, office buildings, IT equipment, and small storage units for the temporary storage of operational equipment. The Company’s leases have remaining lease terms ranging from less than 1 year to 6 years, and have extension options ranging from 1 year to 5 years. Most leases include the option to terminate the lease within 1 year.

Upon adopting ASC 842, the Company made accounting policy elections using practical expedients offered under the guidance to combine lease and non-lease components within leasing arrangements and to recognize the payments associated with short-term leases in earnings on a straight-line basis over the lease term, with the cost associated with variable lease payments recognized when incurred. These accounting policy elections impact the value of the Company’s ROU Assets and Lease Liabilities. The value of the Company’s ROU Assets is determined as the non-depreciated fair value of its leasing arrangements and is recorded to “Property and equipment, net” on the Company’s Consolidated Balance Sheets. The value of the Company’s Lease Liabilities is the present value of fixed lease payments not yet paid, discounted using either the rate implicit in the lease contract if that rate can be determined, or the Company’s incremental borrowing rate (“IBR”) and is recorded in “Other accrued expenses” and “Lease liability — long-term portion” on the Company’s Consolidated Balance Sheets. The Company’s IBR is determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

Any future lease payments that are not fixed based on the terms of the lease contract, or fluctuate based on a factor other than an index or rate, are considered variable lease payments and are not included in the value of the Company’s ROU Assets or Lease Liabilities. The Company’s variable lease payments are mostly incurred from automobile leases and relate to miscellaneous transportation costs including repair costs, insurance, and terminal rental adjustments payments due at lease settlement. Such rental adjustment payments can result in a reduction to the Company’s total variable lease payments.

Components of lease expense required by ASC 842 are presented below for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Lease cost
Operating lease cost	$	1,387	$	1,386
Short-term lease cost	232		355
Variable lease cost	450		82
Total lease cost	$	2,069	$	1,823

Supplemental information required by ASC 842 is presented below for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023			2022
	(dollar amounts in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,514		$	1,711
Weighted-average remaining lease term — operating leases	4.0 years			4.4 years
Weighted-average discount rate — operating leases	5.1		%	4.2		%

During the three months ended March 31, 2023 and 2022, the Company’s ROU Assets and Lease Liabilities were reduced by $0.7 million and $0.9 million, respectively due to lease cancellations.

The following is a schedule by calendar year of future minimum lease payments under operating leases that have remaining terms as of March 31, 2023:

Period/Year	Operating Leases
	(in thousands)
April 1 to December 31, 2023	$	4,169
2024	4,308
2025	2,675
2026	1,539
2027	1,365
2028	1,389
Thereafter	116
Total minimum lease payments	$	15,561
Less: imputed lease payments	1,507
Present value of lease liabilities	$	14,054

XML

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Note 8—Goodwill and Other Intangible Assets

The Company’s other intangible assets consist of customer relationships, trade names, patents, and non-compete agreements which were obtained through acquisitions and are recorded at their fair values at the date of acquisition. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful lives. The weighted-average amortization period of customer relationships, trade names, patents, and non-compete agreements are approximately 10 years, 13 years, 8 years, and 4 years, respectively.

The following table sets forth the estimated amortization expense for intangibles subject to amortization for the remainder of 2023, the following five fiscal years and thereafter:

Period/Year	Total Amortization Expense
	(in thousands)
April 1 to December 31, 2023	$	2,616
2024	$	2,685
2025	$	2,685
2026	$	2,666
2027	$	1,197
2028	$	613
Thereafter	$	2,281

Amortization expense for the three months ended March 31, 2023 and 2022 was $1.2 million for both periods.

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9—Fair Value Measurements

The Company’s current assets and current liabilities are financial instruments and most of these items (other than marketable securities, inventories and the short-term portion of deferred compensation funding) are recorded at cost in the Consolidated Balance Sheets. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. The carrying value of the Company’s line of credit represents the outstanding amount of the borrowings, which approximates fair value. The Company’s financial assets that are measured at fair value on a recurring basis are its marketable securities and deferred compensation funding. The recorded values of all of the financial instruments approximate their current fair values because of their nature, stated interest rates and respective maturity dates or durations.

The Company’s marketable securities are held by the Company’s captive insurance company to satisfy capital requirements of the state regulator related to captive insurance companies. Such securities primarily consist of tax-exempt municipal bonds, which are classified as available-for-sale and are reported at fair value. Unrealized gains and losses associated with these investments are included in “Unrealized loss on available-for-sale marketable securities, net of taxes” within the Consolidated Statements of Comprehensive Income. The fair value of these marketable securities is classified within Level 2 of the fair value hierarchy, as these securities are measured using quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable. Such valuations are determined by a third-party pricing service. For the three months ended March 31, 2023 and 2022, the Company recorded unrealized gains, net of taxes of $1.2 million and unrealized losses, net of taxes of $5.3 million on marketable securities, respectively.

As part of a prior year acquisition of a prepackaged meal manufacturer, the Company agreed to pay royalties to the seller on all future product sales. The Company recorded a liability for the expected future payments within "Other long-term liabilities" on the Consolidated Balance Sheets and any payments within 12 months within "Other accrued expenses". The fair value of this liability is measured using forecasted sales models (Level 3). For the three months ended March 31, 2023 and 2022, the Company recorded realized losses of $0.3 million and gains of $1.7 million, respectively, associated with changes in fair value of the liability. Gains and losses are recorded within "Costs of services provided" in the Consolidated Statements of Comprehensive Income related to the subsequent measurement of the liability.

For the three months ended March 31, 2023 and 2022, the Company received total proceeds, less the amount of interest received, of $0.2 million and $1.5 million, respectively, from sales of available-for-sale municipal bonds. For both the three months ended March 31, 2023 and 2022, these sales resulted in realized losses of less than $0.1 million, which were recorded in “Other income – Investment and other income, net” in the Consolidated Statements of Comprehensive Income. The basis for the sale of these securities was the specific identification of each bond sold during the period.

The investments under the funded deferred compensation plan are classified as trading securities and unrealized gains or losses are recorded in “Selling, general and administrative expense” in the Consolidated Statements of Comprehensive Income. The fair value of these investments are determined based on quoted market prices (Level 1). For the three months ended March 31, 2023 and 2022, the Company recognized unrealized gains of $1.5 million and unrealized losses of $4.1 million, respectively, related to equity securities still held at the respective reporting dates.

The following tables provide fair value measurement information for the Company’s marketable securities and deferred compensation fund investments as of March 31, 2023 and December 31, 2022:

	As of March 31, 2023
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	95,985	$	95,985	$	—	$	95,985	$	—
Deferred compensation fund
Money Market1	$	2,077	$	2,077	$	—	$	2,077	$	—
Commodities	203		203		203		—		—
Fixed Income	3,923		3,923		3,923		—		—
International	3,982		3,982		3,982		—		—
Large Cap Blend	1,499		1,499		1,499		—		—
Large Cap Growth	11,195		11,195		11,195		—		—
Large Cap Value	6,084		6,084		6,084		—		—
Mid Cap Blend	2,680		2,680		2,680		—		—
Real Estate	339		339		339		—		—
Small Cap Blend	3,687		3,687		3,687		—		—
Deferred compensation fund2	$	35,669	$	35,669	$	33,592	$	2,077	$	—

	As of December 31, 2022
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	95,200	$	95,200	$	—	$	95,200	$	—
Deferred compensation fund
Money Market1	$	2,420	$	2,420	$	—	$	2,420	$	—
Commodities	170		170		170		—		—
Fixed Income	3,571		3,571		3,571		—		—
International	4,093		4,093		4,093		—		—
Large Cap Blend	1,210		1,210		1,210		—		—
Large Cap Growth	11,064		11,064		11,064		—		—
Large Cap Value	6,133		6,133		6,133		—		—
Mid Cap Blend	2,667		2,667		2,667		—		—
Real Estate	359		359		359		—		—
Small Cap Blend	3,424		3,424		3,424		—		—
Deferred compensation fund2	$	35,111	$	35,111	$	32,691	$	2,420	$	—

1.The fair value of the money market fund is based on the net asset value (“NAV”) of the shares held by the plan at the end of the period. The money market fund includes short-term United States dollar denominated money market instruments and the NAV is determined by the custodian of the fund. The money market fund can be redeemed at its NAV at the measurement date as there are no significant restrictions on the ability to sell this investment.

2.As of March 31, 2023 and December 31, 2022, $1.4 million and $1.6 million of short-term deferred compensation funding is included in “Prepaid expenses and other assets” on the Company’s Consolidated Balance Sheets, respectively. Such amounts of short-term deferred compensation funding represent investments expected to be liquidated and paid within 12 months of March 31, 2023.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Credit Impairment Losses1
	(in thousands)
March 31, 2023
Type of security:
Municipal bonds — available-for-sale	$	98,859	$	511	$	(3,385)	$	95,985	$	—
Total debt securities	$	98,859	$	511	$	(3,385)	$	95,985	$	—
December 31, 2022
Type of security:
Municipal bonds — available-for-sale	$	99,601	$	229	$	(4,630)	$	95,200	$	—
Total debt securities	$	99,601	$	229	$	(4,630)	$	95,200	$	—

1.The Company performs a credit impairment loss assessment quarterly on an individual security basis. As of March 31, 2023 and December 31, 2022, no allowance for credit loss impairment has been recognized as the issuers of these securities have not established a cause for default and various rating agencies have reaffirmed each security's investment grade status. The fair value of these securities have fluctuated since the purchase date as market interest rates fluctuate. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell before the recovery of the securities' amortized cost basis.

The following table summarizes the contractual maturities of debt securities held at March 31, 2023 and December 31, 2022, which are classified as “Marketable securities, at fair value” in the Consolidated Balance Sheets:

	Municipal Bonds — Available-for-Sale
Contractual maturity:	March 31, 2023		December 31, 2022
	(in thousands)
Maturing in one year or less	$	6,729	$	2,798
Maturing in second year through fifth year	33,048		35,068
Maturing in sixth year through tenth year	40,008		38,575
Maturing after ten years	16,200		18,759
Total debt securities	$	95,985	$	95,200

XML

Share-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

Note 10—Share-Based Compensation

The components of the Company’s share-based compensation expense for the three months ended March 31, 2023 and 2022 are as follows:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Stock options	$	212	$	314
Restricted stock, restricted stock units and deferred stock units	1,514		1,785
Performance stock units	247		199
Employee Stock Purchase Plan	85		98
Total pre-tax share-based compensation expense charged against income	$	2,058	$	2,396

The following table summarizes the components of share-based compensation expense included within the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Selling, general & administrative expense	$	2,033	$	2,365
Costs of services provided	25		31
Total share-based compensation expense	$	2,058	$	2,396

At March 31, 2023, the unrecognized compensation cost related to unvested stock options and awards was $23.3 million. The weighted average period over which these awards will vest is approximately 3.5 years.

2020 Omnibus Incentive Plan

On May 26, 2020, the Company adopted the 2020 Omnibus Incentive Plan (the “2020 Plan”) after approval by the Company’s Shareholders at the Annual Meeting of Shareholders. The 2020 Plan provides that current or prospective officers, employees, non-employee directors and advisors can receive share-based awards such as stock options, performance stock units, restricted stock units and other stock awards. The 2020 Plan seeks to encourage profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s operating objectives.

As of March 31, 2023, there were 4.5 million shares of common stock reserved for issuance under the 2020 Plan, of which 0.7 million are available for future grant. The amount of shares available for issuance under the 2020 Plan will increase when outstanding awards under the Company’s Second Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”) are subsequently forfeited, terminated, lapsed, or satisfied thereunder in cash or property other than shares. No stock award will have a term in excess of 10 years. The Nominating, Compensation and Stock Option Committee (the “NCSO”) of the Board of Directors is responsible for determining the terms of the grants in accordance with the 2020 Plan.

Stock Options

A summary of stock options outstanding under the 2020 Plan and the 2012 Plan as of December 31, 2022 and changes during the three months ended March 31, 2023 are as follows:

	Stock Options Outstanding
	Number of Shares	Weighted Average Exercise Price
	(in thousands)
December 31, 2022	2,375	$	31.56
Granted	207	$	13.72
Exercised	—	$	—
Forfeited	—	$	—
Expired	(132)	$	24.14
March 31, 2023	2,450	$	30.45

The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2023 and 2022 was $6.53 and $4.06 per common share, respectively. No stock options were exercised during the three months ended March 31, 2023. The total intrinsic value of stock options exercised during the three months ended March 31, 2022 was $0.1 million.

The fair value of stock option awards granted in 2023 and 2022 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	Three Months Ended March 31,
	2023		2022
Risk-free interest rate	4.0	%	1.5	%
Weighted average expected life	6.9 years		6.7 years
Expected volatility	39.5	%	36.6	%
Dividend yield	—	%	4.6	%

The following table summarizes other information about the stock options at March 31, 2023:

	March 31, 2023
	(amounts in thousands, except per share data)
Outstanding:
Aggregate intrinsic value	$	31
Weighted average remaining contractual life	5.3 years
Exercisable:
Number of options	1,713
Weighted average exercise price	$	34.72
Aggregate intrinsic value	$	—
Weighted average remaining contractual life	3.9 years

Restricted Stock Units

The fair value of outstanding restricted stock units was determined based on the market price of the shares on the date of grant. During the three months ended March 31, 2023, the Company granted 0.5 million restricted stock units to its employees with a weighted average grant date fair value of $13.72 per unit. During the three months ended March 31, 2022, the Company granted 0.4 million restricted stock units with a weighted average grant date fair value of $18.10 per unit.

A summary of the outstanding restricted stock units as of December 31, 2022 and changes during the three months ended March 31, 2023 is as follows:

	Restricted Stock Units
	Number	Weighted Average Grant Date Fair Value
	(in thousands)
December 31, 2022	825	$	24.37
Granted	509	$	13.72
Vested	(237)	$	27.82
Forfeited	(5)	$	22.28
March 31, 2023	1,092	$	18.67

Performance Stock Units

On February 24, 2023, the NCSO granted 80,000 Performance Stock Units (“PSUs”) to the Company’s executive officers. Such PSUs are contingent upon the achievement of certain total shareholder return (“TSR”) targets as compared to the TSR of the S&P 400 MidCap Index and the participant's continued employment with the Company for the three year period ending December 31, 2025, the date at which such PSUs vest. The unrecognized share-based compensation cost of the TSR-based PSU awards at March 31, 2023 is $2.3 million and is expected to be recognized over a weighted-average period of 2.2 years.

A summary of the outstanding PSUs as of December 31, 2022 and changes during the three months ended March 31, 2023 is as follows:

	Performance Stock Units
	Number	Weighted Average Grant Date Fair Value
	(in thousands)
December 31, 2022	95	$	26.01
Granted	80	$	16.20
Vested	—	$	—
Forfeited	—	$	—
March 31, 2023	175	$	21.52

Deferred Stock Units

The Company grants Deferred Stock Units ("DSUs") to our non-employee directors. Once vested, the recipient shall be entitled to receive a lump sum payment of a number of shares equal to the total number of DSUs issued to such recipient upon the first to occur of (i) the five year anniversary of the date of grant, (ii) the recipient's death, disability or separation of service from the Board, or (iii) a change of control (as defined by the 2020 Plan). Non-employee directors can also elect to receive their Board of Directors retainer in the form of DSUs in lieu of cash. The number of DSUs granted to these directors is determined based on the stock price on the award date and approximates the cash value the directors would otherwise receive for their retainer. Two non-employee directors made an election in 2022 to receive DSUs in lieu of cash for their 2023 Board of Directors retainer. The unrecognized share-based compensation cost of outstanding DSU awards at March 31, 2023 is $0.1 million and is expected to be recognized over a weighted-average period of 0.2 years.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“ESPP”) is currently available through 2026 to all eligible employees. All full-time and part-time employees who work an average of 20 hours per week and have completed two years of continuous service with the Company are eligible to participate. Annual offerings commence and terminate on the respective year’s first and last calendar day.

Under the ESPP, the Company is authorized to issue up to 4.1 million shares of its common stock to its employees. Pursuant to such authorization, there are 1.9 million shares available for future grant at March 31, 2023.

The expense associated with the options granted under the ESPP during the three months ended March 31, 2023 and 2022 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	Three Months Ended March 31,
	2023	2022
Risk-free interest rate	4.8%	0.4%
Weighted average expected life (years)	1.0	1.0
Expected volatility	42.9%	36.9%
Dividend yield	7.1%	4.7%

Deferred Compensation Plan

The Company offers a Supplemental Executive Retirement Plan (“SERP”) for executives and certain key employees. The SERP allows participants to defer a portion of their earned income on a pre-tax basis and as of the last day of each plan year, each participant will be credited with a match of a portion of their deferral in the form of the Company’s common stock based on the then-current market value. Under the SERP, the Company is authorized to issue 1.0 million shares of its common stock to its employees. Pursuant to such authorization, the Company has 0.3 million shares available for future grant at March 31, 2023. At the time of issuance, such shares are accounted for at cost as treasury stock.

The following table summarizes information about the SERP during the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
SERP expense 1	$	157	$	157
Unrealized gain (loss) recorded in SERP liability account	$	1,546	$	(3,785)

1.Both the SERP match and the deferrals are included in the “selling, general and administrative” caption in the Consolidated Statements of Comprehensive Income.

XML

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 11—Income Taxes

The Company’s annual effective tax rate is impacted by the tax effects of option exercises and the vesting of awards, which are treated as discrete items in the reporting period in which they occur, and therefore cannot be considered in the calculation of the estimated annual effective tax rate. Discrete items increased the Company’s income tax provision recognized through the three months ended March 31, 2023 and March 31, 2022 by $0.9 million and $0.8 million, respectively.

Differences between the effective tax rate and the applicable U.S. federal statutory rate arise primarily from the effect of state and local income taxes, share-based compensation and tax credits available to the Company. The actual 2023 effective tax rate will likely vary from the estimate depending on the actual operating income earned with availability of tax credits and the exercise of stock options and vesting of share-based awards.

The Company accounts for income taxes using the asset and liability method, which results in recognizing income tax expense based on the amount of income taxes payable or refundable for the current year. Additionally, the Company regularly evaluates the tax positions taken or expected to be taken resulting from financial statement recognition of certain items. Based on the evaluation, there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The evaluation was performed for the tax years ended December 31, 2019 through 2022 (with regard to U.S. federal income tax returns) and December 31, 2018 through 2022 (with regard to various state and local income tax returns), the tax years which remain subject to examination by major tax jurisdictions as of March 31, 2023.

The Company may from time to time be assessed interest or penalties by taxing jurisdictions, although any such assessments historically have been minimal. When the Company has received an assessment for interest and/or penalties, it will be classified in the financial statements as selling, general and administrative expense. In addition, any interest or penalties relating to recognized uncertain tax positions would also be recorded in selling, general and administrative expense.

XML

Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Information

Note 12—Segment Information

The Company manages and evaluates its operations in two reportable segments: Housekeeping (housekeeping, laundry, linen and other services) and Dietary (dietary department services). Although both segments serve a similar customer base and share many operational similarities, they are managed separately due to distinct differences in the type of services provided, as well as the specialized expertise required of the professional management personnel responsible for delivering each segment’s services. Such services are rendered pursuant to discrete contracts, specific to each reportable segment.

The Company’s accounting policies for the segments are generally the same as described in the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and the information in the consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level using other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized in the consolidated financial statements. In addition, most corporate expenses such as corporate salary and benefit costs, certain legal costs, debt expense, information technology costs, depreciation, amortization of finite-lived intangible assets, share based compensation costs and other corporate-specific costs, are not fully allocated to the operating segments. There are also allocations for workers’ compensation and general liability expense within the operating segments that differ from the actual expense recorded by the Company under U.S. GAAP. Segment amounts disclosed are prior to elimination entries made in consolidation.

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Revenues
Housekeeping	$	193,519	$	201,704
Dietary	223,711		225,107
Total	$	417,230	$	426,811
Income before income taxes
Housekeeping	$	20,053	$	20,399
Dietary	14,666		9,433
Corporate and eliminations1	(17,163)		(14,051)
Total	$	17,556	$	15,781

1.Primarily represents corporate office costs and related overhead, recording of certain inventories and supplies and workers compensation costs at the reportable segment level which use accounting methods that differ from those used at the corporate level, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and other income and interest expense.

XML

Earnings Per Common Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Common Share

Note 13—Earnings Per Common Share

Basic and diluted earnings per common share are computed by dividing net income by the weighted-average number of basic and diluted common shares outstanding, respectively. The weighted-average number of diluted common shares includes the impact of dilutive securities, including outstanding stock options, restricted stock units, performance stock units and deferred stock units. The table below reconciles the weighted-average basic and diluted common shares outstanding:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Numerator for basic and diluted earnings per share:
Net income	$	12,684	$	11,329
Denominator
Weighted average number of common shares outstanding - basic	74,497		74,326
Effect of dilutive securities1	21		7
Weighted average number of common shares outstanding - diluted	74,518		74,333
Basic earnings per share:	$	0.17	$	0.15
Diluted earnings per share:	$	0.17	$	0.15

1.Certain outstanding equity awards are anti-dilutive and therefore excluded from the calculation of the weighted average number of diluted common shares outstanding.

Anti-dilutive outstanding equity awards under share-based compensation plans were as follows:

	Three Months Ended March 31,
	2023	2022
	(in thousands)
Anti-dilutive	3,191	3,369

XML

Other Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Other Contingencies

Note 14—Other Contingencies

Line of Credit

At March 31, 2023, the Company had a $300.0 million bank line of credit on which to draw for general corporate purposes. Amounts drawn under the line of credit are payable upon demand and generally bear interest at a floating rate, based on the Company’s leverage ratio, and starting at the Term Secured Overnight Financing Rate ("SOFR") plus 165 basis points. As of March 31, 2023, there were $35.0 million in borrowings under the line of credit. As of December 31, 2022, there were $25.0 million in borrowings under the line of credit. The line of credit requires the Company to satisfy two financial covenants, with which the Company is in compliance as of March 31, 2023. The line of credit expires on November 22, 2027.

At March 31, 2023, the Company also had outstanding $85.7 million in irrevocable standby letters of credit, which relate to payment obligations under the Company’s insurance programs. In connection with the issuance of the letters of credit, the amount available under the line of credit was reduced by $85.7 million to $179.3 million at March 31, 2023. The letters of credit expire on January 4, 2024.

Tax Jurisdictions and Matters

The Company provides services throughout the continental United States and is subject to numerous state and local taxing jurisdictions. In the ordinary course of business, a jurisdiction may contest the Company’s reporting positions with respect to the application of its tax code to the Company’s services, which could result in additional tax liabilities.

The Company has tax matters with various taxing authorities. Because of the uncertainties related to both the probable outcomes and amount of probable assessments due, the Company is unable to make a reasonable estimate of a liability. The Company does not expect the resolution of any of these matters, taken individually or in the aggregate, to have a material adverse effect on the consolidated financial position or results of operations based on the Company’s best estimate of the outcomes of such matters.

Legal Proceedings

The Company is subject to various claims and legal actions in the ordinary course of business. Some of these matters include payroll and employee-related matters and examinations by governmental agencies. As the Company becomes aware of such claims and legal actions, the Company records accruals for any exposures that are probable and estimable. If adverse outcomes of such claims and legal actions are reasonably possible, Management assesses materiality and provides financial disclosure, as appropriate.

At this time, the Company is unable to reasonably estimate possible losses or form a judgment that an unfavorable outcome is either probable or remote with respect to certain pending litigation claims asserted and it is not currently possible to assess whether or not the outcome of these proceedings may have a material adverse effect on the Company.

Government Regulations

The Company’s customers are concentrated in the healthcare industry and are primarily providers of long-term care many of whom have been significantly impacted by COVID-19. The revenues of many of the Company’s customers are highly reliant on Medicare, Medicaid and third party payors’ reimbursement funding rates. New legislation or additional changes in existing regulations could directly impact the governmental reimbursement programs in which the customers participate.

XML

Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

Note 15—Subsequent Events

The Company evaluated all subsequent events through the filing date of this Form 10-Q. There were no events or transactions occurring during this subsequent reporting period which require recognition or additional disclosure in these financial statements.

XML

Description of Business and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Nature of Operations

Healthcare Services Group, Inc. (the “Company”) provides management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments predominantly to clients within the healthcare industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. Although the Company does not directly participate in any government reimbursement programs, the Company’s customers receive government reimbursements related to Medicare and Medicaid. Therefore, the Company’s customers are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

The Company provides services primarily pursuant to full service agreements with its customers. In such agreements, the Company is responsible for the day-to-day management of employees located at the 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. In a management-only agreement, the Company provides management and supervisory services while the customer facility retains payroll responsibility for the non-supervisory staff. The 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.

The Company is organized into two reportable segments: housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of managing the customers’ housekeeping departments, which are principally responsible for the cleaning, disinfecting and sanitizing of resident rooms and common areas of a customer’s facility, as well as the laundering and processing of the bed linens, uniforms, resident personal clothing and other assorted linen items utilized at a customer facility.

Dietary consists of managing the customers’ dietary departments, which are principally responsible for food purchasing, meal preparation and dietitian professional services, which includes the development of menus that meet residents’ dietary needs.

Unaudited Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows. However, in the Company’s opinion, all adjustments which are of a normal recurring nature and are necessary for a fair presentation have been reflected in these consolidated financial statements. The balance sheet shown in this report as of December 31, 2022 has been derived from the audited financial statements for the year ended December 31, 2022. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future period.

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, estimates and assumptions are made that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Significant estimates are used in determining, but are not limited to, the Company’s allowance for doubtful accounts, accrued insurance claims, deferred taxes and reviews for potential impairment. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information. Management regularly evaluates this information to determine if it is necessary to update the basis for its estimates and to adjust for known changes.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Healthcare Services Group, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents are held in U.S. financial institutions or in custodial accounts with U.S. financial institutions. Cash equivalents are defined as short-term, highly liquid investments with a maturity of three months or less at time of purchase that are readily convertible into cash and have insignificant interest rate risk.

Accounts and Notes Receivable

Accounts and notes receivable consist of Housekeeping and Dietary segment trade receivables from contracts with customers. The Company’s payment terms with customers for services provided are defined within each customer’s service agreement. All accounts receivables are considered short term assets as the Company does not grant payment terms greater than one year. Accounts receivable initially are recorded at the transaction amount, and are recorded after the Company has an unconditional right to payment where only the passage of time is required before payment is received. Each reporting period, the Company evaluates the collectability of outstanding receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit loss. Additions to the allowance for doubtful accounts are made by recording a charge to bad debt expense reported in costs of services provided.

Notes receivable are initially recorded when accounts receivable are transferred into a promissory note and are recorded as an alternative to accounts receivable to memorialize an unqualified promise to pay a specific sum, typically with interest, in accordance with a defined payment schedule. The Company’s payment terms with customers on promissory notes can vary based on several factors and the circumstances of each promissory note, however most promissory notes mature over a 1 to 4 year period. Similar to accounts receivable, each reporting period the Company evaluates the collectability of outstanding notes receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit losses.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification subtopic 326 Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”), Management utilizes financial modeling to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts and notes receivable which is recorded as a liability to offset the receivables. Modeling is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts and notes receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense when received.

Inventories and Supplies

Inventories and supplies include housekeeping, linen and laundry supplies, as well as food provisions and supplies. Non-linen inventories and supplies are stated on a first-in, first-out (FIFO) basis, and reduced as deemed necessary to approximate the lower of cost or net realizable value. Linen supplies are amortized on a straight-line basis over their estimated useful life of 24 months.

Revenue Recognition

The Company recognizes revenue from contracts with customers when or as the promised goods and services are provided to customers. Revenues are reported net of sales taxes that are collected from customers and remitted to taxing authorities. The amount of revenue recognized by the Company is based on the expected value of consideration to which the Company is entitled in exchange for providing the contracted goods and services and when it is probable that the Company will collect substantially all of such consideration.

Leases

The Company records assets and liabilities on the balance sheet to recognize the rights and obligations arising from leasing arrangements with contractual terms greater than 12 months, as permitted by U.S. GAAP. A leasing arrangement includes any contract which entitles the Company to the right of use of an identified tangible asset where there are no restrictions as to the direct of use of the asset, and the Company obtains substantially all of the economic benefits from the right of use.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, income tax expense or benefits are recognized for the amount of taxes payable or refundable for the current period. The Company accrues for probable tax obligations as required, based on facts and circumstances in various regulatory environments. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. When appropriate, valuation allowances are recorded to reduce deferred tax assets to amounts for which realization is more likely than not. Uncertain income tax positions taken or expected to be taken in tax returns are reflected within the Company’s consolidated financial statements based on a recognition and measurement process.

Earnings per Common Share

Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is computed using the weighted-average number of common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock awards.

Share-Based Compensation

The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes valuation model for stock options, using a Monte Carlo simulation for performance restricted stock units, and using the share price on the date of grant for restricted stock units and deferred stock units. The value of the award is recognized ratably as an expense in the Company’s Consolidated Statements of Comprehensive Income over the requisite service periods, with adjustments made for forfeitures as they occur.

Identifiable Intangible Assets and Goodwill

Identifiable intangible assets are amortized on a straight-line basis over their respective lives. Goodwill represents the excess of cost over the fair value of net assets of acquired businesses. Management reviews the carrying value of goodwill annually during the fourth quarter to assess for impairment, or more often if events or circumstances indicate that the carrying value may exceed its estimated fair value.

Concentrations of Credit Risk

The Company’s financial instruments that are subject to credit risk are cash and cash equivalents, marketable securities, deferred compensation funding and accounts and notes receivable. At March 31, 2023 and December 31, 2022, the majority of the Company’s cash and cash equivalents and marketable securities were held in one large financial institution located in the United States. The Company’s marketable securities are fixed income investments which are highly liquid and can be readily purchased or sold through established markets.

The Company’s customers are concentrated in the healthcare industry and are primarily providers of long-term care. The revenues of many of the Company’s customers are highly reliant on Medicare, Medicaid and third party payors’ reimbursement funding rates. New legislation or changes in existing regulations could directly impact the governmental reimbursement programs in which the Company’s customers participate. As a result, the Company may not realize the full effects such programs may have on the Company’s customers until these laws are fully implemented and governmental agencies issue applicable regulations or guidance.

Segments

The Company’s accounting policies for the segments are generally the same as described in the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and the information in the consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level using other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized in the consolidated financial statements. In addition, most corporate expenses such as corporate salary and benefit costs, certain legal costs, debt expense, information technology costs, depreciation, amortization of finite-lived intangible assets, share based compensation costs and other corporate-specific costs, are not fully allocated to the operating segments. There are also allocations for workers’ compensation and general liability expense within the operating segments that differ from the actual expense recorded by the Company under U.S. GAAP. Segment amounts disclosed are prior to elimination entries made in consolidation.

XML

Accounts and Notes Receivable (Tables)

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Schedule of Accounts and Notes Receivable

The Company’s accounts and notes receivable balances consisted of the following as of March 31, 2023 and December 31, 2022:

	March 31, 2023		December 31, 2022
	(in thousands)
Short-term
Accounts and notes receivable	$	423,814	$	406,969
Allowance for doubtful accounts	(73,030)		(70,192)
Total net short-term accounts and notes receivable	$	350,784	$	336,777
Long-term
Notes receivable	$	36,164	$	35,882
Allowance for doubtful accounts	(3,837)		(3,273)
Total net long-term notes receivable	$	32,327	$	32,609
Total net accounts and notes receivable	$	383,111	$	369,386

XML

Allowance for Doubtful Accounts (Tables)

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Schedule of Notes Receivable Disaggregated by Vintage Year

The following table presents the Company’s two tiers of notes receivable further disaggregated by year of origination, as well as write-off activity for the three months ended March 31, 2023.

	Notes Receivable
	Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	18,380	$	27,856	$	7,922	$	1,540	$	53	$	21,975	$	77,726
Elevated risk notes receivable	$	—	$	—	$	2,510	$	—	$	—	$	795	$	3,305
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	51	$	51
Current-period recoveries	—		—		—		—		—		—		—
Current-period net write-offs	$	—	$	—	$	—	$	—	$	—	$	51	$	51

Schedule of Age Analysis of Past-Due Note Receivable

The following table provides information as to the status of payment on the Company’s notes receivable which were past due as of March 31, 2023:

	Age Analysis of Past-Due Notes Receivable as of March 31, 2023
	0 - 90 Days		91 - 180 Days		Greater than 181 Days		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	3,305	$	276	$	3,414	$	6,995
Elevated risk notes receivable	136		—		795		931
	$	3,441	$	276	$	4,209	$	7,926

Schedule of Changes in Allowance for Doubtful Accounts

The following tables provide a summary of the changes in the Company’s allowance for doubtful accounts on a portfolio segment basis for the three months ended March 31, 2023 and 2022.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2022		Write-Offs1		Bad Debt Expense		March 31, 2023
	(in thousands)
Accounts Receivables	$	66,601	$	(3,453)	$	5,259	$	68,407
Notes Receivables
Standard notes receivable	$	6,052	$	—	$	373	$	6,425
Elevated risk notes receivable	811		(51)		1,275		2,035
Total notes receivable	$	6,863	$	(51)	$	1,648	$	8,460
Total accounts and notes receivable	$	73,464	$	(3,504)	$	6,907	$	76,867

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2023, the Company collected less than $0.1 million of accounts and notes receivables which had previously been written-off as uncollectible.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2021		Write-Offs1		Bad Debt Expense		March 31, 2022
	(in thousands)
Accounts Receivables	$	50,794	$	(5,343)	$	3,960	$	49,411
Notes Receivables
Standard notes receivable	$	13,607	$	—	$	(1,065)	$	12,542
Elevated risk notes receivable	1,183		—		(44)		1,139
Total notes receivable	$	14,790	$	—	$	(1,109)	$	13,681
Total Accounts and notes receivable	$	65,584	$	(5,343)	$	2,851	$	63,092

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2022, the Company collected $0.2 million of accounts and notes receivables which had previously been written-off as uncollectible.

Schedule of Changes in Allowance for Notes Receivable

The following tables provide a summary of the changes in the Company’s allowance for doubtful accounts on a portfolio segment basis for the three months ended March 31, 2023 and 2022.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2022		Write-Offs1		Bad Debt Expense		March 31, 2023
	(in thousands)
Accounts Receivables	$	66,601	$	(3,453)	$	5,259	$	68,407
Notes Receivables
Standard notes receivable	$	6,052	$	—	$	373	$	6,425
Elevated risk notes receivable	811		(51)		1,275		2,035
Total notes receivable	$	6,863	$	(51)	$	1,648	$	8,460
Total accounts and notes receivable	$	73,464	$	(3,504)	$	6,907	$	76,867

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2023, the Company collected less than $0.1 million of accounts and notes receivables which had previously been written-off as uncollectible.

	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2021		Write-Offs1		Bad Debt Expense		March 31, 2022
	(in thousands)
Accounts Receivables	$	50,794	$	(5,343)	$	3,960	$	49,411
Notes Receivables
Standard notes receivable	$	13,607	$	—	$	(1,065)	$	12,542
Elevated risk notes receivable	1,183		—		(44)		1,139
Total notes receivable	$	14,790	$	—	$	(1,109)	$	13,681
Total Accounts and notes receivable	$	65,584	$	(5,343)	$	2,851	$	63,092

1.Write-offs are shown net of recoveries. During the three months ended March 31, 2022, the Company collected $0.2 million of accounts and notes receivables which had previously been written-off as uncollectible.

XML

Changes in Accumulated Other Comprehensive Income by Component (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income

The following table provides a summary of the changes in accumulated other comprehensive income for the three months ended March 31, 2023 and 2022:

	Unrealized Gains and Losses on Available-for-Sale Securities1
	Three Months Ended March 31,
	2023		2022
	(in thousands)
Accumulated other comprehensive (loss) income — beginning balance	$	(3,477)	$	4,000
Other comprehensive income (loss) before reclassifications	1,206		(5,277)
Losses reclassified from other comprehensive income2	1		8
Net current period other comprehensive income (loss)3	1,207		(5,269)
Accumulated other comprehensive (loss) — ending balance	$	(2,270)	$	(1,269)

1.All amounts are net of tax.

2.Realized gains and losses were recorded pre-tax under “Investment and other income” in the Consolidated Statements of Comprehensive Income. For the three months ended March 31, 2023 and 2022, the Company recorded less than $0.1 million of realized losses from the sale of available-for-sale securities. Refer to Note 9—Fair Value Measurements herein for further information.

3.For the three months ended March 31, 2023 and 2022, the changes in other comprehensive income were net of a tax expense of $0.3 million and $1.4 million, respectively.

Schedule of Reclassification out of Accumulated Other Comprehensive Income

	Amounts Reclassified from Accumulated Other Comprehensive Income
	2023		2022
	(in thousands)
Three Months Ended March 31,
Losses from the sale of available-for-sale securities	$	(2)	$	(12)
Tax benefit	1		4
Net loss reclassified from accumulated other comprehensive income	$	(1)	$	(8)

XML

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

The following table sets forth the amounts of property and equipment by each class of depreciable asset as of March 31, 2023 and December 31, 2022:

	March 31, 2023		December 31, 2022
	(in thousands)
Housekeeping and dietary equipment	$	13,980	$	13,585
Computer hardware and software	6,187		6,086
Operating lease — right-of-use assets	23,559		34,445
Other1	1,059		1,055
Total property and equipment, at cost	44,785		55,171
Less accumulated depreciation	21,385		32,196
Total property and equipment, net	$	23,400	$	22,975

1.Includes furniture and fixtures, leasehold improvements and autos and trucks.

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Schedule of Components of Lease Expense

Components of lease expense required by ASC 842 are presented below for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Lease cost
Operating lease cost	$	1,387	$	1,386
Short-term lease cost	232		355
Variable lease cost	450		82
Total lease cost	$	2,069	$	1,823

Schedule of Supplemental Information Required by ASC 842

Supplemental information required by ASC 842 is presented below for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023			2022
	(dollar amounts in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,514		$	1,711
Weighted-average remaining lease term — operating leases	4.0 years			4.4 years
Weighted-average discount rate — operating leases	5.1		%	4.2		%

Schedule of Future Minimum Lease Payments

The following is a schedule by calendar year of future minimum lease payments under operating leases that have remaining terms as of March 31, 2023:

Period/Year	Operating Leases
	(in thousands)
April 1 to December 31, 2023	$	4,169
2024	4,308
2025	2,675
2026	1,539
2027	1,365
2028	1,389
Thereafter	116
Total minimum lease payments	$	15,561
Less: imputed lease payments	1,507
Present value of lease liabilities	$	14,054

XML

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Estimated Amortization Expense For Intangibles Subject To Amortization

The following table sets forth the estimated amortization expense for intangibles subject to amortization for the remainder of 2023, the following five fiscal years and thereafter:

Period/Year	Total Amortization Expense
	(in thousands)
April 1 to December 31, 2023	$	2,616
2024	$	2,685
2025	$	2,685
2026	$	2,666
2027	$	1,197
2028	$	613
Thereafter	$	2,281

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements

The following tables provide fair value measurement information for the Company’s marketable securities and deferred compensation fund investments as of March 31, 2023 and December 31, 2022:

	As of March 31, 2023
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	95,985	$	95,985	$	—	$	95,985	$	—
Deferred compensation fund
Money Market1	$	2,077	$	2,077	$	—	$	2,077	$	—
Commodities	203		203		203		—		—
Fixed Income	3,923		3,923		3,923		—		—
International	3,982		3,982		3,982		—		—
Large Cap Blend	1,499		1,499		1,499		—		—
Large Cap Growth	11,195		11,195		11,195		—		—
Large Cap Value	6,084		6,084		6,084		—		—
Mid Cap Blend	2,680		2,680		2,680		—		—
Real Estate	339		339		339		—		—
Small Cap Blend	3,687		3,687		3,687		—		—
Deferred compensation fund2	$	35,669	$	35,669	$	33,592	$	2,077	$	—

	As of December 31, 2022
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds — available-for-sale	$	95,200	$	95,200	$	—	$	95,200	$	—
Deferred compensation fund
Money Market1	$	2,420	$	2,420	$	—	$	2,420	$	—
Commodities	170		170		170		—		—
Fixed Income	3,571		3,571		3,571		—		—
International	4,093		4,093		4,093		—		—
Large Cap Blend	1,210		1,210		1,210		—		—
Large Cap Growth	11,064		11,064		11,064		—		—
Large Cap Value	6,133		6,133		6,133		—		—
Mid Cap Blend	2,667		2,667		2,667		—		—
Real Estate	359		359		359		—		—
Small Cap Blend	3,424		3,424		3,424		—		—
Deferred compensation fund2	$	35,111	$	35,111	$	32,691	$	2,420	$	—

1.The fair value of the money market fund is based on the net asset value (“NAV”) of the shares held by the plan at the end of the period. The money market fund includes short-term United States dollar denominated money market instruments and the NAV is determined by the custodian of the fund. The money market fund can be redeemed at its NAV at the measurement date as there are no significant restrictions on the ability to sell this investment.

2.As of March 31, 2023 and December 31, 2022, $1.4 million and $1.6 million of short-term deferred compensation funding is included in “Prepaid expenses and other assets” on the Company’s Consolidated Balance Sheets, respectively. Such amounts of short-term deferred compensation funding represent investments expected to be liquidated and paid within 12 months of March 31, 2023.

Schedule of Marketable Debt Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Credit Impairment Losses1
	(in thousands)
March 31, 2023
Type of security:
Municipal bonds — available-for-sale	$	98,859	$	511	$	(3,385)	$	95,985	$	—
Total debt securities	$	98,859	$	511	$	(3,385)	$	95,985	$	—
December 31, 2022
Type of security:
Municipal bonds — available-for-sale	$	99,601	$	229	$	(4,630)	$	95,200	$	—
Total debt securities	$	99,601	$	229	$	(4,630)	$	95,200	$	—

1.The Company performs a credit impairment loss assessment quarterly on an individual security basis. As of March 31, 2023 and December 31, 2022, no allowance for credit loss impairment has been recognized as the issuers of these securities have not established a cause for default and various rating agencies have reaffirmed each security's investment grade status. The fair value of these securities have fluctuated since the purchase date as market interest rates fluctuate. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell before the recovery of the securities' amortized cost basis.

Schedule of Contractual Maturities of Available for Sale Investments

The following table summarizes the contractual maturities of debt securities held at March 31, 2023 and December 31, 2022, which are classified as “Marketable securities, at fair value” in the Consolidated Balance Sheets:

	Municipal Bonds — Available-for-Sale
Contractual maturity:	March 31, 2023		December 31, 2022
	(in thousands)
Maturing in one year or less	$	6,729	$	2,798
Maturing in second year through fifth year	33,048		35,068
Maturing in sixth year through tenth year	40,008		38,575
Maturing after ten years	16,200		18,759
Total debt securities	$	95,985	$	95,200

XML

Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation Expense

The components of the Company’s share-based compensation expense for the three months ended March 31, 2023 and 2022 are as follows:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Stock options	$	212	$	314
Restricted stock, restricted stock units and deferred stock units	1,514		1,785
Performance stock units	247		199
Employee Stock Purchase Plan	85		98
Total pre-tax share-based compensation expense charged against income	$	2,058	$	2,396

The following table summarizes the components of share-based compensation expense included within the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Selling, general & administrative expense	$	2,033	$	2,365
Costs of services provided	25		31
Total share-based compensation expense	$	2,058	$	2,396

Schedule of Other Information of Stock Option Plans

A summary of stock options outstanding under the 2020 Plan and the 2012 Plan as of December 31, 2022 and changes during the three months ended March 31, 2023 are as follows:

	Stock Options Outstanding
	Number of Shares	Weighted Average Exercise Price
	(in thousands)
December 31, 2022	2,375	$	31.56
Granted	207	$	13.72
Exercised	—	$	—
Forfeited	—	$	—
Expired	(132)	$	24.14
March 31, 2023	2,450	$	30.45

Schedule of Assumption For Fair Value of Options Granted

The fair value of stock option awards granted in 2023 and 2022 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	Three Months Ended March 31,
	2023		2022
Risk-free interest rate	4.0	%	1.5	%
Weighted average expected life	6.9 years		6.7 years
Expected volatility	39.5	%	36.6	%
Dividend yield	—	%	4.6	%

Schedule of Summarized Information of Stock Options Outstanding

The following table summarizes other information about the stock options at March 31, 2023:

	March 31, 2023
	(amounts in thousands, except per share data)
Outstanding:
Aggregate intrinsic value	$	31
Weighted average remaining contractual life	5.3 years
Exercisable:
Number of options	1,713
Weighted average exercise price	$	34.72
Aggregate intrinsic value	$	—
Weighted average remaining contractual life	3.9 years

Schedule of Outstanding Restricted Stock Units

A summary of the outstanding restricted stock units as of December 31, 2022 and changes during the three months ended March 31, 2023 is as follows:

	Restricted Stock Units
	Number	Weighted Average Grant Date Fair Value
	(in thousands)
December 31, 2022	825	$	24.37
Granted	509	$	13.72
Vested	(237)	$	27.82
Forfeited	(5)	$	22.28
March 31, 2023	1,092	$	18.67

Schedule of Outstanding Performance Stock Units

A summary of the outstanding PSUs as of December 31, 2022 and changes during the three months ended March 31, 2023 is as follows:

	Performance Stock Units
	Number	Weighted Average Grant Date Fair Value
	(in thousands)
December 31, 2022	95	$	26.01
Granted	80	$	16.20
Vested	—	$	—
Forfeited	—	$	—
March 31, 2023	175	$	21.52

Schedule of Options Granted Estimated Expense Valuation Assumptions

The expense associated with the options granted under the ESPP during the three months ended March 31, 2023 and 2022 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	Three Months Ended March 31,
	2023	2022
Risk-free interest rate	4.8%	0.4%
Weighted average expected life (years)	1.0	1.0
Expected volatility	42.9%	36.9%
Dividend yield	7.1%	4.7%

Schedule of ESPP Annual Offerings

The following table summarizes information about the SERP during the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
SERP expense 1	$	157	$	157
Unrealized gain (loss) recorded in SERP liability account	$	1,546	$	(3,785)

1.Both the SERP match and the deferrals are included in the “selling, general and administrative” caption in the Consolidated Statements of Comprehensive Income.

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Schedule of Segment Information

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Revenues
Housekeeping	$	193,519	$	201,704
Dietary	223,711		225,107
Total	$	417,230	$	426,811
Income before income taxes
Housekeeping	$	20,053	$	20,399
Dietary	14,666		9,433
Corporate and eliminations1	(17,163)		(14,051)
Total	$	17,556	$	15,781

1.Primarily represents corporate office costs and related overhead, recording of certain inventories and supplies and workers compensation costs at the reportable segment level which use accounting methods that differ from those used at the corporate level, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and other income and interest expense.

XML

Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares

The table below reconciles the weighted-average basic and diluted common shares outstanding:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Numerator for basic and diluted earnings per share:
Net income	$	12,684	$	11,329
Denominator
Weighted average number of common shares outstanding - basic	74,497		74,326
Effect of dilutive securities1	21		7
Weighted average number of common shares outstanding - diluted	74,518		74,333
Basic earnings per share:	$	0.17	$	0.15
Diluted earnings per share:	$	0.17	$	0.15

1.Certain outstanding equity awards are anti-dilutive and therefore excluded from the calculation of the weighted average number of diluted common shares outstanding.

Schedule Anti-dilutive Outstanding Equity Awards Under Share Based Compensation Plans

Anti-dilutive outstanding equity awards under share-based compensation plans were as follows:

	Three Months Ended March 31,
	2023	2022
	(in thousands)
Anti-dilutive	3,191	3,369

XML

Description of Business and Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) institution segment	Mar. 31, 2022 USD ($)	Dec. 31, 2022 institution
Schedule of Accounting Policies [Line Items]
Renewal term	1 year
Number of reportable segments | segment	2
Payment terms	The Company’s payment terms with customers on promissory notes can vary based on several factors and the circumstances of each promissory note, however most promissory notes mature over a 1 to 4 year period. Similar to accounts receivable, each reporting period the Company evaluates the collectability of outstanding notes receivable balances and records an allowance for doubtful accounts representing an estimate of future expected credit losses
Amortization period of inventories and supplies	24 months
Goodwill and intangible asset impairment | $	$ 0	$ 0
Number of financial institutions holding cash and cash equivalents and marketable securities | institution	1		1
Minimum
Schedule of Accounting Policies [Line Items]
Cancellation notice period	30 days
Initial period preceding cancellation notice	60 days
Typically promissory notes maturity	1 year
Maximum
Schedule of Accounting Policies [Line Items]
Cancellation notice period	90 days
Initial period preceding cancellation notice	120 days
Typically promissory notes maturity	4 years

XML

Revenue - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 417,230	$ 426,811
Renewal term	1 year
Revenue recognized from contract liability	$ 1,400
Description of timing	The Company’s contracts with customers typically provide for an initial term of one year, with renewable one year service terms, cancellable by either party upon 30 to 90 days’ notice after an initial period of 60 to 120 days.
Transferred at point in time
Disaggregation of Revenue [Line Items]
Contract liabilities	$ 300		$ 300
Transferred over time
Disaggregation of Revenue [Line Items]
Contract liabilities	$ 1,700		$ 3,100
Minimum
Disaggregation of Revenue [Line Items]
Cancellation notice period	30 days
Initial period preceding cancellation notice	60 days
Maximum
Disaggregation of Revenue [Line Items]
Cancellation notice period	90 days
Initial period preceding cancellation notice	120 days
Housekeeping
Disaggregation of Revenue [Line Items]
Revenue	$ 193,519	$ 201,704
Housekeeping | Revenue, Segment Benchmark | Product Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of revenue (as a percent)	46.40%	47.30%
Dietary
Disaggregation of Revenue [Line Items]
Revenue	$ 223,711	$ 225,107
Dietary | Revenue, Segment Benchmark | Product Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of revenue (as a percent)	53.60%	52.70%

XML

Revenue - Transaction Price Allocated to Remaining Performance Obligations (Details) $ in Millions	Mar. 31, 2023 USD ($)
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 99.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation period	12 months

XML

Accounts and Notes Receivable - Schedule of Accounts and Notes Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Short-term
Accounts and notes receivable	$ 423,814	$ 406,969
Allowance for doubtful accounts	(73,030)	(70,192)
Total net short-term accounts and notes receivable	350,784	336,777
Long-term
Notes receivable	36,164	35,882
Allowance for doubtful accounts	(3,837)	(3,273)
Total net long-term notes receivable	32,327	32,609
Total net accounts and notes receivable	$ 383,111	$ 369,386

XML

Allowance for Doubtful Accounts - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Receivables [Abstract]
Interest income	$ 0.6	$ 0.3

XML

Allowance for Doubtful Accounts - Notes Receivable Disaggregated by Vintage Year (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Current-period gross write-offs
2023	$ 0
2022	0
2021	0
2020	0
2019	0
Prior	51
Total	51
Current-period recoveries
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Total	0
Current-period net write-offs
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	51
Total	51	$ 0
Standard notes receivable
Financing Receivable, Credit Quality Indicator [Line Items]
2023	18,380
2022	27,856
2021	7,922
2020	1,540
2019	53
Prior	21,975
Total	77,726
Current-period net write-offs
Total	0	0
Elevated risk notes receivable
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0
2022	0
2021	2,510
2020	0
2019	0
Prior	795
Total	3,305
Current-period net write-offs
Total	$ 51	$ 0

XML

Allowance for Doubtful Accounts - Age Analysis of Past-Due Note Receivable (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Total
Financing Receivable, Past Due [Line Items]
Notes Receivable	$ 7,926
0 - 90 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	3,441
91 - 180 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	276
Greater than 181 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	4,209
Standard notes receivable
Financing Receivable, Past Due [Line Items]
Notes Receivable	77,726
Standard notes receivable | Total
Financing Receivable, Past Due [Line Items]
Notes Receivable	6,995
Standard notes receivable | 0 - 90 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	3,305
Standard notes receivable | 91 - 180 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	276
Standard notes receivable | Greater than 181 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	3,414
Elevated risk notes receivable
Financing Receivable, Past Due [Line Items]
Notes Receivable	3,305
Elevated risk notes receivable | Total
Financing Receivable, Past Due [Line Items]
Notes Receivable	931
Elevated risk notes receivable | 0 - 90 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	136
Elevated risk notes receivable | 91 - 180 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	0
Elevated risk notes receivable | Greater than 181 Days
Financing Receivable, Past Due [Line Items]
Notes Receivable	$ 795

XML

Allowance for Doubtful Accounts - Schedule of Changes in Allowance for Notes Receivable (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Accounts Receivables
Accounts receivable, Allowance for doubtful accounts, beginning balance	$ 66,601	$ 50,794
Write-Offs	(3,453)	(5,343)
Bad Debt Expense	5,259	3,960
Accounts receivable, Allowance for doubtful accounts, ending balance	68,407	49,411
Notes Receivables
Notes receivable, Allowance for doubtful accounts, beginning balance	6,863	14,790
Write-Offs	(51)	0
Bad Debt Expense	1,648	(1,109)
Notes receivable, Allowance for doubtful accounts, ending balance	8,460	13,681
Total accounts and notes receivable
Allowance for doubtful accounts, beginning balance	73,464	65,584
Write-Offs	(3,504)	(5,343)
Bad Debt Expense	6,907	2,851
Allowance for doubtful accounts, ending balance	76,867	63,092
Accounts receivable recovered after write off	100	200
Standard notes receivable
Notes Receivables
Notes receivable, Allowance for doubtful accounts, beginning balance	6,052	13,607
Write-Offs	0	0
Bad Debt Expense	373	(1,065)
Notes receivable, Allowance for doubtful accounts, ending balance	6,425	12,542
Elevated risk notes receivable
Notes Receivables
Notes receivable, Allowance for doubtful accounts, beginning balance	811	1,183
Write-Offs	(51)	0
Bad Debt Expense	1,275	(44)
Notes receivable, Allowance for doubtful accounts, ending balance	$ 2,035	$ 1,139

XML

Changes in Accumulated Other Comprehensive Income by Component - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Accumulated other comprehensive income
Beginning balance	$ 426,172	$ 452,677
Other comprehensive income (loss) before reclassifications	1,206	(5,277)
Losses reclassified from other comprehensive income	1	8
Net current period other comprehensive income (loss)	1,207	(5,269)
Ending balance	440,572	446,637
Realized loss (less than)	100	100
Changes in other comprehensive income, tax expense	300	1,400
Accumulated Other Comprehensive Loss, net of taxes
Accumulated other comprehensive income
Beginning balance	(3,477)	4,000
Ending balance	$ (2,270)	$ (1,269)

XML

Changes in Accumulated Other Comprehensive Income by Component - Reclassification Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Losses from the sale of available-for-sale securities	$ 3,102	$ (1,523)
Tax benefit	(4,872)	(4,452)
Net income	12,684	11,329
Realized Gains (Losses) on Sale of Available-for-sale Securities | Amounts Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Losses from the sale of available-for-sale securities	(2)	(12)
Tax benefit	1	4
Net income	$ (1)	$ (8)

XML

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Total property and equipment, net		Total property and equipment, net
Operating lease — right-of-use assets	$ 23,559		$ 34,445
Total property and equipment, at cost	44,785		55,171
Less accumulated depreciation	21,385		32,196
Total property and equipment, net	23,400		22,975
Depreciation	2,500	$ 2,900
ROU Assets depreciation	1,200	$ 1,600
Housekeeping and dietary equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	13,980		13,585
Computer hardware and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	6,187		6,086
Other
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,059		$ 1,055

XML

Leases - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Lessee, Lease, Description [Line Items]
Termination option	1 year
ROU Assets and Lease Liabilities reduction due to cancellation	$ 0.7	$ 0.9
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	1 year
Extension option	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	6 years
Extension option	5 years

XML

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Lease cost
Operating lease cost	$ 1,387	$ 1,386
Short-term lease cost	232	355
Variable lease cost	450	82
Total lease cost	2,069	1,823
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$ 1,514	$ 1,711
Weighted-average remaining lease term — operating leases	4 years	4 years 4 months 24 days
Weighted-average discount rate — operating leases	5.10%	4.20%

XML

Leases - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Leases [Abstract]
April 1 to December 31, 2023	$ 4,169
2024	4,308
2025	2,675
2026	1,539
2027	1,365
2028	1,389
Thereafter	116
Total minimum lease payments	15,561
Less: imputed lease payments	1,507
Present value of lease liabilities	$ 14,054

XML

Goodwill and Other Intangible Assets - Additional Details (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 1.2	$ 1.2
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Weighted average useful life (in years)	10 years
Trade Names
Finite-Lived Intangible Assets [Line Items]
Weighted average useful life (in years)	13 years
Patents
Finite-Lived Intangible Assets [Line Items]
Weighted average useful life (in years)	8 years
Noncompete Agreements
Finite-Lived Intangible Assets [Line Items]
Weighted average useful life (in years)	4 years

XML

Goodwill and Other Intangible Assets - Estimated Amortization Expense For Intangibles Subject To Amortization (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
April 1 to December 31, 2023	$ 2,616
2024	2,685
2025	2,685
2026	2,666
2027	1,197
2028	613
Thereafter	$ 2,281

XML

Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gains on available-for-sale marketable securities, net of taxes	$ 1,200	$ 5,300
Fair value adjustment	300	(1,700)
Proceeds from available for sale municipal bonds	210	1,519
Realized loss	100	100
Unrealized gains related to equity securities	1,500
Unrealized losses related to equity securities		4,100
Municipal bonds — available-for-sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from available for sale municipal bonds	200	1,500
Realized loss	$ (100)	$ (100)

XML

Fair Value Measurements - Marketable Securities and Deferred Compensation Fund Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 95,985	$ 95,200
Deferred compensation fund	34,312	33,493
Prepaid Expenses and Other Current Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	1,400	1,600
Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	33,592	32,691
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,077	2,420
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	35,669	35,111
Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	35,669	35,111
Municipal bonds — available-for-sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	95,985	95,200
Municipal bonds — available-for-sale | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Municipal bonds — available-for-sale | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	95,985	95,200
Municipal bonds — available-for-sale | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Municipal bonds — available-for-sale | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	95,985	95,200
Municipal bonds — available-for-sale | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	95,985	95,200
Money Market | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Money Market | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,077	2,420
Money Market | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Money Market | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,077	2,420
Money Market | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,077	2,420
Commodities | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	203	170
Commodities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Commodities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Commodities | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	203	170
Commodities | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	203	170
Fixed Income | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,923	3,571
Fixed Income | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Fixed Income | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Fixed Income | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,923	3,571
Fixed Income | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,923	3,571
International | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,982	4,093
International | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
International | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
International | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,982	4,093
International | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,982	4,093
Large Cap Blend | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	1,499	1,210
Large Cap Blend | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Large Cap Blend | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Large Cap Blend | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	1,499	1,210
Large Cap Blend | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	1,499	1,210
Large Cap Growth | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	11,195	11,064
Large Cap Growth | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Large Cap Growth | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Large Cap Growth | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	11,195	11,064
Large Cap Growth | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	11,195	11,064
Large Cap Value | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	6,084	6,133
Large Cap Value | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Large Cap Value | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Large Cap Value | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	6,084	6,133
Large Cap Value | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	6,084	6,133
Mid Cap Blend | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,680	2,667
Mid Cap Blend | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Mid Cap Blend | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Mid Cap Blend | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,680	2,667
Mid Cap Blend | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	2,680	2,667
Real Estate | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	339	359
Real Estate | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Real Estate | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Real Estate | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	339	359
Real Estate | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	339	359
Small Cap Blend | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,687	3,424
Small Cap Blend | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Small Cap Blend | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	0	0
Small Cap Blend | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	3,687	3,424
Small Cap Blend | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation fund	$ 3,687	$ 3,424

XML

Fair Value Measurements - Marketable Debt Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Amortized Cost	$ 98,859	$ 99,601
Gross Unrealized Gains	511	229
Gross Unrealized Losses	(3,385)	(4,630)
Estimated Fair Value	95,985	95,200
Credit Impairment Losses	0	0
Municipal bonds — available-for-sale
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Amortized Cost	98,859	99,601
Gross Unrealized Gains	511	229
Gross Unrealized Losses	(3,385)	(4,630)
Estimated Fair Value	95,985	95,200
Credit Impairment Losses	$ 0	$ 0

XML

Fair Value Measurements - Contractual Maturities of Debt Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Maturing in one year or less	$ 6,729	$ 2,798
Maturing in second year through fifth year	33,048	35,068
Maturing in sixth year through tenth year	40,008	38,575
Maturing after ten years	16,200	18,759
Total debt securities	$ 95,985	$ 95,200

XML

Share-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	$ 2,058	$ 2,396
Selling, general & administrative expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	2,033	2,365
Costs of services provided
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	25	31
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	212	314
Restricted stock, restricted stock units and deferred stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	1,514	1,785
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	247	199
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax stock-based compensation expense charged against income	$ 85	$ 98

XML

Share-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions			3 Months Ended
	Feb. 24, 2023 shares	Jun. 04, 2022	Mar. 31, 2023 USD ($) participant $ / shares shares	Mar. 31, 2022 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost | $			$ 23.3
Period of expense of unrecognized compensation cost (in years)			3 years 6 months
Weighted average grant-date fair value of stock options granted (in dollars per share) | $ / shares			$ 6.53	$ 4.06
Aggregate intrinsic value of stock options exercised | $				$ 0.1
SERP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for issuance (in shares)			1,000,000
Remaining shares authorized for issuance (in shares)			300,000
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			509,000	400,000
Weighted average grant date fair value of stock granted (in dollars per share) | $ / shares			$ 13.72	$ 18.10
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost | $			$ 2.3
Period of expense of unrecognized compensation cost (in years)			2 years 2 months 12 days
Granted (in shares)	80,000		80,000
Weighted average grant date fair value of stock granted (in dollars per share) | $ / shares			$ 16.20
Vesting period (in years)	3 years
DSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost | $			$ 0.1
Period of expense of unrecognized compensation cost (in years)			2 months 12 days
Payout period (in years)		5 years
DSUs | Non-employee member of the Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Participants Electing To Receive Shares | participant			2
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future grant (in shares)			1,900,000
Average weekly hours of work			20 hours
Requisite service period for plan participation eligibility			2 years
Stock options authorized to issue to employees (in shares)			4,100,000
2020 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance (in shares)			4,500,000
Shares available for future grant (in shares)			700,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years

XML

Share-Based Compensation - Schedule of Stock Options Outstanding (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Number of Shares
Beginning of period (in shares) | shares	2,375
Granted (in shares) | shares	207
Exercised (in shares) | shares	0
Forfeited (in shares) | shares	0
Expired (in shares) | shares	(132)
End of period (in shares) | shares	2,450
Weighted Average Exercise Price
Beginning of period (in dollars per share) | $ / shares	$ 31.56
Granted (in dollars per share) | $ / shares	13.72
Exercised (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Expired (in dollars per share) | $ / shares	24.14
End of period (in dollars per share) | $ / shares	$ 30.45

XML

Share-Based Compensation - Assumptions for Fair Value of Options Granted (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]
Risk-free interest rate	4.00%	1.50%
Weighted average expected life	6 years 10 months 24 days	6 years 8 months 12 days
Expected volatility	39.50%	36.60%
Dividend yield	0.00%	4.60%

XML

Share-Based Compensation - Summarized Information About Stock Awards (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Outstanding:
Aggregate intrinsic value	$ 31
Weighted average remaining contractual life	5 years 3 months 18 days
Exercisable:
Number of options (in shares) | shares	1,713
Weighted average exercise price (in dollars per share) | $ / shares	$ 34.72
Aggregate intrinsic value	$ 0
Weighted average remaining contractual life	3 years 10 months 24 days

XML

Share-Based Compensation - Schedule of Restricted Stock Units (Details) - RSUs - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Number
Beginning balance (in shares)	825
Granted (in shares)	509	400
Vested (in shares)	(237)
Forfeited (in shares)	(5)
Ending balance (in shares)	1,092
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 24.37
Granted (in dollars per share)	13.72	$ 18.10
Vested (in dollars per share)	27.82
Forfeited (in dollars per share)	22.28
Ending balance (in dollars per share)	$ 18.67

XML

Share-Based Compensation - Schedule of Outstanding Performance Stock Units (Details) - PSUs - $ / shares		3 Months Ended
	Feb. 24, 2023	Mar. 31, 2023
Number
Beginning balance (in shares)		95,000
Granted (in shares)	80,000	80,000
Vested (in shares)		0
Forfeited (in shares)		0
Ending balance (in shares)		175,000
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)		$ 26.01
Granted (in dollars per share)		16.20
Vested (in dollars per share)		0
Forfeited (in dollars per share)		0
Ending balance (in dollars per share)		$ 21.52

XML

Share-Based Compensation - Assumptions For Employee Stock Purchase Plan (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	4.00%	1.50%
Weighted average expected life (years)	6 years 10 months 24 days	6 years 8 months 12 days
Expected volatility	39.50%	36.60%
Dividend yield	0.00%	4.60%
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	4.80%	0.40%
Weighted average expected life (years)	1 year	1 year
Expected volatility	42.90%	36.90%
Dividend yield	7.10%	4.70%

XML

Share-Based Compensation - Deferred Compensation Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
SERP expense	$ 2,058	$ 2,396
SERP
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
SERP expense	157	157
Unrealized gain (loss) recorded in SERP liability account	$ 1,546	$ (3,785)

XML

Income Taxes (Details) - USD ($)	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Impact of discrete tax items	$ 900,000	$ 800,000
Unrecognized tax benefits	$ 0

XML

Segment Information - Schedule of Information of Reportable Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) segment	Mar. 31, 2022 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment	2
Segment Reporting Information [Line Items]
Revenues	$ 417,230	$ 426,811
Income before income taxes	17,556	15,781
Corporate and eliminations
Segment Reporting Information [Line Items]
Income before income taxes	(17,163)	(14,051)
Housekeeping
Segment Reporting Information [Line Items]
Revenues	193,519	201,704
Housekeeping | Operating segments
Segment Reporting Information [Line Items]
Income before income taxes	20,053	20,399
Dietary
Segment Reporting Information [Line Items]
Revenues	223,711	225,107
Dietary | Operating segments
Segment Reporting Information [Line Items]
Income before income taxes	$ 14,666	$ 9,433

XML

Earnings Per Common Share - Schedule of Weighted Average Basic and Diluted Common Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator for basic and diluted earnings per share:
Net income	$ 12,684	$ 11,329
Denominator
Weighted average number of common shares outstanding - basic (in shares)	74,497	74,326
Effect of dilutive securities (in shares)	21	7
Weighted average number of common shares outstanding - diluted (in shares)	74,518	74,333
Basic earnings per share (in dollars per share)	$ 0.17	$ 0.15
Diluted earnings per share (in dollars per share)	$ 0.17	$ 0.15

XML

Earnings Per Common Share - Schedule Anti-dilutive Outstanding Equity Awards Under Share Based Compensation Plans (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Anti-dilutive (in shares)	3,191	3,369

XML

Other Contingencies (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) covenant
Short-term Debt [Line Items]
Bank line of credit	$ 300,000,000
Long-term line of credit	$ 35,000,000
Financial covenants | covenant	2
Reduction of bank line of credit	$ 85,700,000
Amount available under line of credit	179,300,000
Irrevocable standby letters of credit
Short-term Debt [Line Items]
Irrevocable standby letter of credit, outstanding	$ 85,700,000
SOFR
Short-term Debt [Line Items]
Basis spread on variable rate	1.65%