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What changed in HEALTHCARE SERVICES GROUP INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HEALTHCARE SERVICES GROUP INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+163 added−158 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-14)

Top changes in HEALTHCARE SERVICES GROUP INC's 2025 10-K

163 paragraphs added · 158 removed · 127 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+19 added−11 removed63 unchanged
Biggest changeStates in which our customers are located could have budget deficits as a result of lower than projected revenue collections and increased demand for the funding of entitlements. As a result of these and other adverse economic factors, state Medicaid programs have and may revise reimbursement structures for nursing home services.
Biggest changeStates in which our customers are located could experience significant budget deficits and such deficits may result in reduction of reimbursements to nursing homes. States in which our customers are located could have budget deficits as a result of lower than projected revenue collections and increased demand for the funding of entitlements.
Pandemics, epidemics or outbreaks of a contagious illness, and similar events, have caused and may in the future cause harm to us, our employees, customers, vendors, supply chain partners and financial institutions, which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
Pandemics, epidemics or outbreaks of a contagious illness, and similar events, have caused and may in the future cause harm to us, our employees, customers, vendors, supply chain partners and financial institutions, which could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.
War, terrorism, other acts of violence or natural or man-made disasters may affect the markets in which the Company operates, the Company’s customers, and could have a material adverse impact on our business, results of operations, financial condition or cash flows.
War, terrorism, other acts of violence or natural or man-made disasters may affect the markets in which the Company operates, the Company’s customers, and could have a material adverse impact on our business, results of operations, financial condition and/or cash flows.
Stakeholder expectations for and compliance with federal and state environmental, social and governance (“ESG”) requirements can adversely impact our business, results of operations, financial position and cash flows. We are subject to certain federal and state rules covering ESG initiatives including mandated annual reporting and compliance with commonly accepted ESG frameworks.
Stakeholder expectations for and compliance with federal and state environmental, social and governance (“ESG”) requirements can adversely impact our business, results of operations, financial position and cash flows. We are subject to certain state rules covering ESG initiatives including mandated annual reporting and compliance with commonly accepted ESG frameworks.
Such costs and expenses could have a material adverse impact on our financial condition, consolidated results of operations and cash flows. Additionally, the taxability of our services is subject to various interpretations within the taxing jurisdictions in which we operate.
Such expenses could have a material adverse impact on our financial condition, consolidated results of operations and cash flows. Additionally, the taxability of our services is subject to various interpretations within the taxing jurisdictions in which we operate.
Dietary supplies, to a much greater extent than Housekeeping supplies, are impacted by commodity pricing factors, including the impact of tariffs and diseases in livestock, which in many cases are unpredictable and outside of our control. We seek to pass on to customers such increased costs but sometimes we are unable to do so.
Dietary supplies, to a much greater extent than EVS supplies, are impacted by commodity pricing factors, including the impact of tariffs and diseases in livestock, which in many cases are unpredictable and outside of our control. We seek to pass on to customers such increased costs but sometimes we are unable to do so.
The impacts may include, but would not be limited to: • Decreased availability and/or increased cost of supplies due to increased demand around essential cleaning supplies including disinfecting agents, personal protective equipment (“PPE”) and food and food-related products due to increased global demand and disruptions along the global supply chains of these manufactures and distributors; • Disruption to operations due to the unavailability of employees due to illness, quarantines, risk of illness, travel restrictions, vaccination mandates, or other factors that limit the availability of our existing or potential workforce; • Limitations to the availability of our key personnel due to travel restrictions and access restrictions to our customers ’ facilities; • Our ability to meet more stringent, medically-required procedures, and infection control requirements at customer facilities; • Elevated employee turnover which may impact our facility level performance and/or increase payroll expense and recruiting-related expenses; 6 Table of Contents • New or additional measures required by national, state or local governments may impact the availability of our employees and/or increase operating costs. • Decreased census in the nursing home and long-term care industry, which could impact the financial health of our customers and thereby increase our associated credit risk with customers and increase pressures to modify our contractual terms; and • Significant disruption of global financial markets, which could negatively impact our ability or our customers’ ability to access capital in the future.
The impacts may include, but would not be limited to: • Decreased availability and/or increased cost of supplies due to increased demand around essential cleaning supplies including disinfecting agents, personal protective equipment (“PPE”) and food and food-related products due to increased global demand and disruptions along the global supply chains of these manufactures and distributors; • Disruption to operations due to the unavailability of employees due to illness, quarantines, risk of illness, travel restrictions, vaccination mandates, or other factors that limit the availability of our existing or potential workforce; • Limitations to the availability of our key personnel due to travel restrictions and access restrictions to our customers ’ facilities; • Requirements to meet stringent infection control requirements at customer facilities and provide for medical procedures for employees; • Elevated employee turnover which may impact our facility level performance and/or increase payroll expense and recruiting-related expenses; • New or additional measures required by national, state or local governments which may impact the availability of our employees and/or increase operating costs; • Decreased census in the nursing home and long-term care industry, which could impact the financial health of our customers and thereby increase our associated credit risk with customers and increase pressures to modify our contractual terms; and • Significant disruption of global financial markets, which could negatively impact our ability or our customers’ ability to access capital in the future.
Any disruption or delay in the distribution of Medicaid and related payments to our customers will adversely affect their cash flows and impact their ability to pay us as agreed upon for the services provided. Governmental regulations related to labor, employment, immigration and health and safety could adversely impact our business, results of operations, financial condition and cash flows.
Any disruption or delay in the distribution of Medicaid and related payments to our customers will adversely affect their cash flows and impact their ability to pay us as agreed upon for the services provided. 11 Table of Contents Governmental regulations related to labor, employment, immigration and health and safety could adversely impact our business, results of operations, financial condition and cash flows.
Any failure to meet the market’s expectations for our revenue and operating results may have an adverse effect on the market price of our Common Stock. 7 Table of Contents Risks Related to Customers and Distributors We provide services to several customers which contribute significantly, on an individual as well as an aggregate basis, to our total revenues.
Any failure to meet the market’s expectations for our revenue and operating results may have an adverse effect on the market price of our Common Stock. Risks Related to Customers and Distributors We provide services to several customers which contribute significantly, on an individual as well as an aggregate basis, to our total revenues.
Expenses resulting from failed inspections of the departments that we service could result in our customers being fined and seeking recovery from us, which could also adversely impact our business, financial condition, results of operations and cash flows. 11 Table of Contents Federal, state and local tax rules can adversely impact our business, results of operations, financial position and cash flows.
Expenses resulting from failed inspections of the departments that we service could result in our customers being fined and seeking recovery from us, which could also adversely impact our business, financial condition, results of operations and cash flows. Federal, state and local tax rules can adversely impact our business, results of operations, financial position and cash flows.
These factors, in addition to delays in payments from customers have resulted in, and could continue to result in, significant additional bad debts. The Company has substantial investment in the creditworthiness and financial condition of our customers. The largest current asset on our balance sheet is the accounts and notes receivable balance from our customers.
These factors, in addition to delays in payments from customers have resulted in, and could continue to result in, significant additional bad debts. 8 Table of Contents The Company has substantial investment in the creditworthiness and financial condition of our customers. The largest current asset on our balance sheet is the accounts and notes receivable balance from our customers.
Our delay in passing or inability to pass such wage increases through to our customers could have a material adverse effect on our financial condition, results of operations and cash flows. Pandemics, epidemics or outbreaks of a contagious illness have in the past and may in the future adversely affect our business, results of operations, financial condition, or cash flows.
Any delay in passing or inability to pass such wage increases through to our customers could have a material adverse effect on our financial condition, results of operations and cash flows. 6 Table of Contents Pandemics, epidemics or outbreaks of a contagious illness have in the past and may in the future adversely affect our business, results of operations, financial condition, and/or cash flows.
Any of these events could result in a decline in the market price of our Common Stock. Although we have taken steps to maintain our internal control structure as required, including remediating our material weakness, we cannot guarantee that a control deficiency will not result in a misstatement in the future.
Any of these events could result in a decline in the market price of our Common Stock. Although we have taken steps to maintain our internal control structure as required, we cannot guarantee that a control deficiency will not result in a misstatement in the future.
In order to provide for such collection issues and the general risk associated with the granting of credit terms, we have recorded bad debt provisions (in an Allowance for Doubtful Accounts) of $46.8 million for the year ended December 31, 2024 as compared to $35.6 million and $32.0 million for the years ended December 31, 2023 and 2022, respectively.
In order to provide for such collection issues and the general risk associated with the granting of credit terms, we have recorded bad debt provisions (in an Allowance for Doubtful Accounts) of $83.1 million for the year ended December 31, 2025 as compared to $46.8 million and $35.6 million for the years ended December 31, 2024 and 2023, respectively.
If our relationship with, or the business of, Sysco were to be disrupted, we would have to arrange alternative distributors and our operations and cost structure could be adversely affected. Risks Related to Operating Our Business We have a Paid Loss Retrospective Insurance Plan for auto, general liability and workers’ compensation insurance.
If our relationship with, or the business of, Sysco were to be disrupted, we would have to arrange alternative distributors and our operations and cost structure could be adversely affected. 9 Table of Contents Risks Related to Operating Our Business We have a Paid Loss Retrospective Insurance Plan for general liability, workers’ compensation and other insurance coverages.
We seek to pass through to our customers such tax increases. In the event we are not able to pass through any portion of the tax increase, our financial condition, consolidated results of operations and cash flows could be adversely impacted. Our business and financial results could be adversely affected by unfavorable results of material litigation or governmental inquiries.
In the event we are not able to pass through any portion of the tax increase, our financial condition, consolidated results of operations and cash flows could be adversely impacted. 12 Table of Contents Our business and financial results could be adversely affected by unfavorable results of material litigation or governmental inquiries.
Products we purchase and utilize in production are susceptible to contamination by disease-producing organisms, or pathogens, such as listeria monocytogenes, salmonella, campylobacter, hepatitis A, trichinosis and generic E. coli.
Products we purchase and utilize in production are susceptible to contamination by disease-producing organisms, or pathogens, included, but not limited to, listeria monocytogenes, salmonella, campylobacter, hepatitis A, trichinosis and generic E. coli.
In addition, if the Internal Revenue Service or other taxing authority disagrees on a tax position we have taken and upon final adjudication we are required to change such position, we could incur additional tax liability, including interest and penalties.
In addition, if the Internal Revenue Service or other taxing authority disagrees on an income tax position we have taken, including tax positions concerning the Employee Retention Tax Credit (“ERC”), and upon final adjudication we are required to change such position, we could incur additional tax liability, including interest and penalties.
In the event such vendors are not able to comply with their obligations under the agreements and we are required to seek alternative suppliers, we may incur increased costs of supplies.
We have consolidated certain supply purchases with national vendors through agreements containing negotiated prospective pricing. In the event such vendors are not able to comply with their obligations under the agreements and we are required to seek alternative suppliers, we may incur increased costs of supplies.
Therefore, we believe that our ability to recruit and sustain the internal development of managerial personnel is an important factor impacting future operating results and our ability to successfully execute projected growth strategies.
Therefore, we believe that our ability to recruit and sustain the internal development of managerial personnel is an important factor impacting future operating results and our ability to successfully execute projected growth strategies. Our professional management personnel are the key personnel in maintaining current and selling additional services to existing customers and obtaining new customers.
In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business. 10 Table of Contents Risks Related to Governmental and Regulatory Changes Changes to federal healthcare legislation may adversely affect our operating costs and results of operations.
In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
Any failure by our customers to make rent payments or comply with the provisions of their lease terms could result in the termination of such lease agreements.
Any failure by our customers to make rent payments or comply with the provisions of their lease terms could result in the termination of such lease agreements. In such cases, our customers may lose their ability to continue conducting operations and as a result terminate their service agreements with us.
Congress has enacted a number of laws during the past decade that have significantly altered, and may continue to alter, overall government reimbursement for nursing home services and the long-term care industry.
We cannot predict what efforts, and to what extent, legislation and proposals to contain healthcare costs will ultimately impact our customers’ revenues through reimbursement rate modifications. Congress has enacted a number of laws during the past decade that have significantly altered, and may continue to alter, overall government reimbursement for nursing home services and the long-term care industry.
In such cases, our customers may lose their ability to continue conducting operations and as a result terminate their service agreements with us. 8 Table of Contents For the year ended December 31, 2024, one distributor distributed more than 50% of our food and non-food dining supplies, and if our relationship, or its business, were to be disrupted, we could experience disruptions to our operations and cost structure.
For the year ended December 31, 2025, one distributor distributed more than 50% of our food and non-food dining supplies, and if our relationship, or its business, were to be disrupted, we could experience disruptions to our operations and cost structure.
Our policies and procedures and compliance programs are subject to adjustments in response to these changing regulatory and enforcement environments, which could increase our costs of services provided.
Our inability to recruit, train and retain qualified employees on acceptable terms could adversely affect our operating performance, customer satisfaction and profitability. Our policies and procedures and compliance programs are subject to adjustments in response to these changing regulatory and enforcement environments, which could increase our costs of services provided.
Also, our cost of labor may be influenced by changes in the respective collective bargaining agreements to which we are a party. As collective bargaining agreements are renegotiated, we may need to increase the wages paid to bargaining unit employees covered by such collective bargaining agreements.
As collective bargaining agreements are renegotiated, we may need to increase the wages paid to bargaining unit employees covered by such collective bargaining agreements.
Any of these cyber incidents may result in a violation of applicable laws or regulations (including privacy and other laws), damage our reputation, cause a loss of customers and give rise to monetary fines and other penalties, each of which could have an adverse effect on our financial condition, results of operations and liquidity.
Any of these cyber incidents may result in a violation of applicable laws or regulations (including privacy and other laws), damage our reputation, cause a loss of customers and give rise to legal claims, litigation, monetary fines and other penalties, each of which could have an adverse effect on our financial condition, results of operations and/or cash flows. 13 Table of Contents While we maintain insurance coverage that may, subject to policy terms and conditions including deductibles, cover specific aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.
Our professional management personnel are the key personnel in maintaining current and selling additional services to existing customers and obtaining new customers. 9 Table of Contents Any perceived or real health risks related to the food industry could adversely affect our Dietary segment. We are subject to risks affecting the food industry generally including food spoilage and food contamination.
Any perceived or real health risks related to the food industry could adversely affect our Dietary segment. We are subject to risks affecting the food industry generally including food spoilage and food contamination.
Our business, results of operations, financial condition, and/or cash flows may be materially and adversely affected by any negative impact on the global economy, capital markets or commodity food prices resulting from these conflicts or any other geopolitical tensions.
Our business, results of operations, financial condition, and/or cash flows may be materially and adversely affected by any negative impact on the global economy, capital markets or commodity food prices resulting from these conflicts or any other geopolitical tensions. 7 Table of Contents Changes in interest rates and financial market conditions have resulted in and may continue to result in fluctuating and even negative returns in our investments and could increase the cost of the borrowings under our borrowing agreements.
Our customers are concentrated in the healthcare industry, which is subject to changes in government regulation. Many of our customers rely on reimbursement from Medicare, Medicaid and other third-party payers. Rates from such payers may be altered or reduced, thus affecting our customers’ results of operations and cash flows.
Many of our customers rely on reimbursement from Medicare, Medicaid and other third-party payers. Rates from such payers may be altered or reduced, thus affecting our customers’ results of operations and cash flows. We provide our services primarily to providers of long-term and post-acute care.
If we are unable to pass-through these charges to our customers to cover these expenses, such increases could adversely impact our operating costs and our consolidated results of operations. In addition, often new regulations result in additional reporting requirements for businesses.
Any requirements to provide additional benefits to our employees, or the payment of penalties if such benefits are not provided, would increase our expenses. If we are unable to pass-through these charges to our customers to cover these expenses, such increases could adversely impact our operating costs and our consolidated results of operations.
If we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused injury or illness could adversely affect our reputation. 10 Table of Contents If we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
Non-compliance with these emerging rules or standards or a failure to address regulator expectations may result in potential cost increases, litigation, fines, penalties, or otherwise adversely impact our business, results of operations, financial position and cash flows. 12 Table of Contents Risks Related to Technology, Cybersecurity and Data Privacy We have experienced a cyber-attack and breach, and may in the future experience cyber-attacks, breaches or other events which could cause operational disruptions, fraud or theft of sensitive information.
Non-compliance with these emerging rules or standards or a failure to address regulator expectations may result in potential cost increases, litigation, fines, penalties, or otherwise adversely impact our business, results of operations, financial position and cash flows.
We carry a high deductible auto, general liability and workers’ compensation program and therefore retain a substantial portion of the risk associated with the possible losses under such programs.
We carry high deductible general liability, workers’ compensation and other insurance programs and therefore retain a substantial portion of the risk associated with the possible losses under such programs. Under our insurance plans, predetermined loss limits are arranged with our insurance company to limit both our per occurrence cash outlay and annual insurance plan cost.
We review and assess the cybersecurity controls of our third-party service providers and vendors, as appropriate, and make changes to our business processes to manage these risks. Data breaches of such third parties could have an adverse effect on our financial condition, results of operations and liquidity.
Third parties to whom we outsource certain of our functions are also subject to the risks outlined above. We review and assess the cybersecurity controls of our third-party service providers and vendors, as appropriate, and make changes to our business processes to manage these risks.
Revenues generated from Genesis were included in both operating segments. Any extended discontinuance, or significant reduction, of revenues from this customer could, if not replaced, have a material impact on our operations.
Any extended discontinuance, or significant reduction, of revenues from this customer could, if not replaced, have a material impact on our operations. In addition, if Genesis fails to abide by current payment terms it could have a material adverse effect on our financial condition, results of operations and cash flows.
We seek to mitigate the impact of an unanticipated increase in such supplies’ costs through consolidation of vendors, which increases our ability to obtain more favorable pricing. A substantial number of our employees are hourly employees whose wage rates are affected by increases in the federal or state minimum wage rates, wage inflation or local job market adjustments.
We seek to mitigate the impact of an unanticipated increase in such supplies’ costs through consolidation of vendors and participation in group purchasing organizations, which increases our ability to obtain more favorable pricing.
These and other requirements could result in increased costs, expanded liability exposure and other changes in the way we provide healthcare insurance and other benefits to our employees. States in which our customers are located could experience significant budget deficits and such deficits may result in reduction of reimbursements to nursing homes.
In addition, often new regulations result in additional reporting requirements for businesses. These and other requirements could result in increased costs, expanded liability exposure and other changes in the way we provide healthcare insurance and other benefits to our employees.
Our evaluation is based primarily on current information derived from reviewing our claims experience and industry trends.
We regularly evaluate our claims payout experience and other factors related to the nature of specific claims in arriving at the basis for our accrued insurance claims estimate. Our evaluation is based primarily on current information derived from reviewing our claims experience and industry trends.
In addition, if Genesis fails to abide by current payment terms it could increase our accounts receivable balance and have a material adverse effect on our financial condition, results of operations, and cash flows. No other single customer or customer group represented more than 10% of consolidated revenues for the years ended December 31, 2024, 2023, and 2022.
No single customer or customer group represented more than 10% of consolidated revenues for the years ended December 31, 2025 and 2024, and no other single customer or customer group represented more than 10% of consolidated revenues for the year ended December 31, 2023.
Continued changes to the health insurance industry and its obligations on employers could impact our operating costs. Any requirements to provide additional benefits to our employees, or the payment of penalties if such benefits are not provided, would increase our expenses.
Risks Related to Governmental and Regulatory Changes Changes to federal healthcare legislation may adversely affect our operating costs and results of operations. Continued changes to the health insurance industry and its obligations on employers could impact our operating costs.
At the same time, if we fail to keep pace with the rapid evolution of Gen AI technologies, such delays could adversely impact our business. In addition, the evolving regulatory landscape for Gen AI technologies requires continuous monitoring and adaptation to ensure compliance and to mitigate potential legal risks.
Additionally, failure to keep pace with the rapid evolution of Gen AI technologies or the evolving regulatory landscape could result in operational or compliance risks that could adversely affect our business, financial condition, results of operations and cash flows. Item 1B. Unresolved Staff Comments. None.
Additionally, we rely on a certain limited number of vendors for a substantial portion of Housekeeping and Dietary supplies. The prices we pay for the principal items we consume in performing our services are dependent primarily on current market prices. We have consolidated certain supply purchases with national vendors through agreements containing negotiated prospective pricing.
Any delay in, or inability to, pass increased costs through to customers could have a material adverse effect on our business, results of operations, financial condition and cash flows. The prices we pay for the principal items we consume in performing our services are dependent primarily on current market prices.
Removed
Changes in interest rates and financial market conditions have resulted in and may continue to result in fluctuating and even negative returns in our investments and could increase the cost of the borrowings under our borrowing agreements.
Added
Additionally, we rely on a certain limited number of vendors for a substantial portion of EVS and Dietary supplies. Macroeconomic factors, including uncertainty surrounding global geopolitical instability, inflationary pressures, changes in interest rates and evolving government fiscal, monetary, trade and tax policies continue to contribute to an ever-changing operating environment.
Removed
Genesis contributed 8.7%, 10.9% and 10.0% of our total consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, the Genesis outstanding accounts receivable and notes receivable were $46.1 million and $21.9 million, respectively. Although we expect to continue the relationship with Genesis, there can be no assurance thereof.
Added
The United States has recently implemented changes to its trade policy, including increased tariffs on certain imported goods, pursuant to executive orders and related administrative actions. These measures may increase input costs, contribute to inflationary pressures, and heighten volatility in global supply chains.
Removed
We provide our services primarily to providers of long-term and post-acute care. We cannot predict what efforts, and to what extent, legislation and proposals to contain healthcare costs will ultimately impact our customers’ revenues through reimbursement rate modifications.
Added
Recent tariffs on certain imported goods have increased, and may continue to increase, the cost of some supplies and food products used in delivering our services. While these cost increases have not materially impacted our business to-date, sustained or expanded tariffs could adversely affect our business, results of operations, financial condition and/or cash flows in future periods.
Removed
Under our insurance plans for general liability and workers’ compensation, predetermined loss limits are arranged with our insurance company to limit both our per occurrence cash outlay and annual insurance plan cost. We regularly evaluate our claims payout experience and other factors related to the nature of specific claims in arriving at the basis for our accrued insurance claims estimate.
Added
In addition, uncertainty surrounding future changes in U.S. trade policy may further contribute to volatility in supply costs and availability. Although we continue to pursue mitigating actions, including sourcing strategies, vendor negotiations and pricing adjustments where contractually permitted, there can be no assurance that such actions will fully offset the impact of higher tariffs.
Removed
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused injury or illness could adversely affect our reputation.
Added
A substantial number of our employees are hourly employees whose wage rates are affected by increases in the federal or state minimum wage rates, wage inflation or local job market adjustments. Also, at certain facilities that we service, our cost of labor may be influenced by changes in the respective collective bargaining agreements to which we are a party.
Removed
During 2023, we identified a material weakness related to the design and operation of internal controls over financial reporting related to accrued payroll liabilities from employee vested vacation. Our controls over accrued payroll liabilities were not sufficiently designed to consider all accounting and disclosure ramifications of such accrued payroll liabilities.
Added
On July 9, 2025, Genesis Healthcare, Inc. (“Genesis”) filed for Chapter 11 bankruptcy protection in the Northern District of Texas. Genesis contributed 7.3%, 8.7% and 10.9% of our total consolidated revenues for the years ended December 31, 2025, 2024 and 2023, respectively. Revenues generated from Genesis were included in both operating segments.
Removed
To address our material weakness, we have made changes to our controls as previously described in our periodic reports with the SEC.
Added
Any future bankruptcies or financial instability among our key customers could result in increased credit losses, reduced revenues, disruptions to service delivery, and material adverse effects on our business, results of operations and financial condition.
Removed
Although that material weakness was subsequently remediated, there is a possibility that there will be material weaknesses in the future and that material misstatements to the Company’s future annual or interim financial statements will not be prevented or detected in a timely basis.
Added
Our ability to mitigate these risks depends on ongoing credit evaluations, monitoring customer financial health, and enforcing contractual payment terms, but even these measures may not fully protect against losses from future customer bankruptcies. Our customers are primarily concentrated in the healthcare industry, which is subject to changes in government regulation.
Removed
While we maintain insurance coverage that may, subject to policy terms and conditions including deductibles, cover specific aspects of cyber risks, such insurance coverage may be insufficient to cover all losses. Third parties to whom we outsource certain of our functions are also subject to the risks outlined above.
Added
As a result of these and other adverse economic factors, state Medicaid programs have and may revise reimbursement structures for nursing home services.
Removed
We are evaluating use cases to implement generative artificial intelligence (“Gen AI”) technologies into our business processes, which may present additional risks to our business. We are currently evaluating the potential use of Gen AI technology across departments within our business.
Added
We continue to experience a highly competitive labor market, particularly for frontline hourly employees. Ongoing labor shortages, increased competition for workers, employee turnover, wage inflation and changes in immigration or workforce policies could further increase labor costs and impact service quality.
Removed
Failure to properly manage Gen AI technology could impact services provided, which could adversely impact our business, financial condition, results of operations and cash flows. Implementing Gen AI solutions could also lead to unauthorized access to sensitive information and could adversely impact our business.
Added
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, extending and modifying various federal tax laws, including provisions of the Tax Cuts and Jobs Act of 2017, tax credits and deductions. The OBBBA contains a wide variety of provisions with different effective dates, and many require interpretation and regulatory guidance.
Added
Changes in interpretation, implementation, or future amendments could increase tax liabilities, reduce available credits or deductions, increase compliance costs, or otherwise adversely affect our business, financial condition, results of operations and cash flows.
Added
In addition, the Work Opportunity Tax Credit (“WOTC”), a federal tax credit available for hiring and employing individuals from certain targeted groups facing barriers to employment and for which the Company has in the past, and expects to receive, reductions in federal income taxes paid was not extended as part of the OBBBA and expired on December 31, 2025.
Added
We seek to pass through to our customers such tax increases.
Added
Risks Related to Technology, Cybersecurity, Data Privacy and Artificial Intelligence We have experienced a cyber-attack and breach, and may in the future experience cyber-attacks, breaches or other events which could cause operational disruptions, fraud or theft of sensitive information.
Added
Data breaches of such third parties could have an adverse effect on our financial condition, results of operations and liquidity. We have implemented, and continue to evaluate additional use cases for, generative artificial intelligence (“Gen AI”) and other automation technologies in certain business processes.
Added
The use of these technologies may involve risks related to system reliability, data integrity, cybersecurity, regulatory compliance, ethical considerations, workforce adoption, and the need for significant ongoing investment and oversight. Applicable laws, regulations, and standards governing artificial intelligence and automation are evolving and may be subject to differing interpretations.
Added
Failure to appropriately govern, monitor, and manage the development and use of automation and artificial intelligence technologies could result in operational disruptions, data privacy or security incidents, reputational harm, regulatory scrutiny, litigation, or other legal exposure, any of which could adversely affect our business, financial condition, results of operations, and cash flows.
Added
While we have implemented Gen AI and automation solutions in certain areas of our business, no Gen AI technologies are used for financial reporting purposes or for functions related to our internal controls over financial reporting. Implementing additional Gen AI solutions could lead to unauthorized access to sensitive information and could adversely impact our business.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−0 removed10 unchanged
Biggest changeWe continue to monitor the situation and take appropriate actions consistent with our response protocols. As of the date of this filing, the incident has not caused, and is not expected to cause, disruption of the Company’s business operations.
Biggest changeThe Company is subject to class action litigation arising from this incident. We continue to monitor the situation and take appropriate actions consistent with our response protocols. As of the date of this filing, the incident has not caused, and is not expected to cause, disruption of the Company’s business operations.
And although there can be no assurance, we do not believe the identified cybersecurity incident will have a material effect on our business, financial condition, results of operations or cash flows. Management’s Role in Assessing and Managing Material Risks from Cybersecurity Threats The Company’s day-to-day risk management is under the direction of Jason J.
And although there can be no assurance, we do not believe the identified cybersecurity incident will have a material effect on our business, financial condition, results of operations or cash flows. 14 Table of Contents Management’s Role in Assessing and Managing Material Risks from Cybersecurity Threats The Company’s day-to-day risk management is under the direction of Jason J.
Item 1C. Cybersecurity. Cybersecurity Risk Management and Strategy The Company adopted an Information Security Policy which governs the Company’s management of information technology ( “ IT”) systems, network, information, data and assets. HCSG’s Information Security Policy is periodically reviewed based on the National Institute of Standards and Technology Cybersecurity Framework.
Item 1C. Cybersecurity. Cybersecurity Risk Management and Strategy The Company adopted an Information Security Policy which governs the Company’s management of information technology (“IT”) systems, network, information, data and assets. HCSG’s Information Security Policy is periodically reviewed based on the National Institute of Standards and Technology Cybersecurity Framework.
Please refer to the risk factor titled “We have experienced cyber attacks and breaches, and may in the future experience cyber attacks and breaches which could cause operational disruptions, fraud or theft of sensitive information.” in “Risk Factors” in Part I, Item 1A of this Form 10-K for more information on risks posed by cybersecurity threats to the Company.
Please refer to the risk factor titled “We have experienced a cyber-attack and breach, and may in the future experience cyber-attacks, breaches or other events which could cause operational disruptions, fraud or theft of sensitive information.” in “Risk Factors” in Part I, Item 1A of this Form 10-K for more information on risks posed by cybersecurity threats to the Company.
The Audit Committee reports to the full Board as appropriate, including when a matter rises to the level of a material risk. 14 Table of Contents
The Audit Committee reports to the full Board as appropriate, including when a matter rises to the level of a material risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We lease our corporate offices, located at 3220 Tillman Drive, Suite 300, Bensalem, Pennsylvania 19020. We also lease office space at other locations in Connecticut, Florida, New Jersey, Texas and Virginia.
Biggest changeItem 2. Properties. We lease our corporate offices, located at 3220 Tillman Drive, Suite 300, Bensalem, Pennsylvania 19020. The Pennsylvania office is the headquarters of Healthcare Services Group, Inc., ELuminate, LLC and Platinum Cleaning Services of Indianapolis, LLC. We also lease office space at other locations in Connecticut, Florida, New Jersey, Texas and Virginia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShares repurchased pursuant to the Repurchase Plan during the three months ended December 31, 2024, were as follows: Quarter Ended December 31, 2024 Total number of shares of Common Stock repurchased Average price paid per share of Common Stock Aggregate purchase price of Common Stock repurchases 1 Number of remaining shares authorized for repurchase (in thousands) October 1, 2024 - October 31, 2024 90,100 $ 11.10 $ 997 6,030 November 1, 2024 - November 30, 2024 — $ — $ — 6,030 December 1, 2024 - December 31, 2024 — $ — $ — 6,030 Fourth quarter 90,100 $ 11.10 $ 997 6,030 1.
Biggest changeShares repurchased pursuant to the 2023 Repurchase Plan during the three months ended December 31, 2025, were as follows: Quarter Ended December 31, 2025 Total number of shares of Common Stock repurchased Average price paid per share of Common Stock Aggregate purchase price of Common Stock repurchases 1 Number of remaining shares authorized for repurchase (in thousands, except per share amounts) October 1, 2025 - October 31, 2025 366 $ 17.06 $ 6,251 2,745 November 1, 2025 - November 30, 2025 356 $ 17.76 $ 6,329 2,389 December 1, 2025 - December 31, 2025 356 $ 19.11 $ 6,798 2,033 Fourth quarter 1,078 $ 17.98 $ 19,378 2,033 1.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth the Company’s equity compensation plans, on an aggregated basis, the number of shares of our Common Stock subject to outstanding stock awards, the weighted-average exercise price of stock awards, and the number of shares remaining available for future award grants as of December 31, 2024.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth the Company’s equity compensation plans, on an aggregated basis, the number of shares of our Common Stock subject to outstanding stock awards, the weighted-average exercise price of stock awards, and the number of shares remaining available for future award grants as of December 31, 2025.
Treasury shares may be issued under the 1999 Plan and the Deferred Compensation Plan. 16 Table of Contents Performance Graph The following graph matches the Company’s cumulative five-year total shareholder return on Common Stock with the cumulative total returns of the Nasdaq Composite Index, S&P Midcap 400 Index and the Russell 2000 Index.
Treasury shares may be issued under the 1999 Plan and the Deferred Compensation Plan. 16 Table of Contents Performance Graph The following graph matches the Company’s cumulative five-year total shareholder return on Common Stock with the cumulative total returns of the S&P Midcap 400 Index and the Russell 2000 Index.
The graph tracks the performance of a $100 investment in our Common Stock and in each index (with the reinvestment of all dividends) from December 31, 2019 to December 31, 2024. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
The graph tracks the performance of a $100 investment in our Common Stock and in each index (with the reinvestment of all dividends) from December 31, 2020 to December 31, 2025. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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 (the “Repurchase Plan”). We remain authorized to purchase 6.0 million shares of common stock under the Repurchase Plan.
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 (the “2023 Repurchase Plan”). We remain authorized to purchase 2.0 million shares of common stock under the 2023 Repurchase Plan.
Includes 2.4 million shares available for future grant under the Amended 2020 Plan, 1.7 million shares available for issuance under the Company’s 1999 Employee Stock Purchase Plan as amended (the “1999 Plan”) and 0.2 million shares available for issuance under the Company’s Amended and Restated Deferred Compensation Plan (the “Deferred Compensation Plan”).
Includes 1.6 million shares available for future grant under the Amended 2020 Plan, 1.6 million shares available for issuance under the Company’s 1999 Employee Stock Purchase Plan, as amended (the “1999 Plan”) and 0.1 million shares available for issuance under the Company’s Amended and Restated Deferred Compensation Plan (the “Deferred Compensation Plan”).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information The Company’s Common Stock is traded under the symbol “HCSG” on the Nasdaq Global Select Market. As of February 12, 2025, there were approximately 73.5 million shares of our Common Stock outstanding.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information The Company’s Common Stock is traded under the symbol “HCSG” on the Nasdaq Global Select Market. As of February 11, 2026, there were approximately 70.3 million shares of our Common Stock outstanding.
Holders As of February 12, 2025, we had approximately 400 holders of record of our Common Stock. This does not include persons who hold our Common Stock in nominee or “street name” accounts through brokers or banks.
Holders As of February 11, 2026, we had approximately 300 holders of record of our Common Stock. This does not include persons who hold our Common Stock in nominee or “street name” accounts through brokers or banks.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights 1 Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Issued and not Exercised) 2 (in thousands, except per share amounts) Equity compensation plans approved by security holders 4,302 $ 28.23 4,268 Total 4,302 $ 28.23 4,268 1.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights) 1 Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Issued and not Exercised) 2 (a) (b) (c) (in thousands, except per share amounts) Equity compensation plans approved by security holders 4,581 $ 25.99 3,347 Total 4,581 $ 25.99 3,347 1.
Excludes commissions and other costs of less than $0.1 million. Item 6. Reserved.
Excludes commissions and other costs of $0.2 million. Item 6. Reserved.
The Company has also included the S&P Midcap 400 Index due to certain equity awards granted by the Company being benchmarked against this index.
The Company has also included the S&P Midcap 400 Index due to certain equity awards granted by the Company being benchmarked against this index. Comparison of 5 Year Cumulative Total Return* Among Healthcare Services Group, Inc., the Russell 2000 Index, and the S&P Midcap 400 Index.
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The Company plans to discontinue the use of the Nasdaq Composite Index in the Performance Graph going forward as the Company is not required to include such index pursuant to Regulation S-K Item 201(e)(1)(ii).
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December 31, Company / Index 2020 2021 2022 2023 2024 2025 Healthcare Services Group, Inc. $ 100.00 $ 65.46 $ 46.69 $ 40.35 $ 45.19 $ 74.40 S&P Midcap 400 $ 100.00 $ 124.76 $ 108.47 $ 126.29 $ 143.88 $ 154.68 Russell 2000 $ 100.00 $ 114.82 $ 91.35 $ 106.82 $ 119.14 $ 134.40 This performance graph shall not be deemed ‘soliciting material’ or ‘filed’ with the SEC, nor shall it be subject to Regulation 14A or 14C or the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
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Comparison of 5 Year Cumulative Total Return* Among Healthcare Services Group, Inc., the Russell 2000 Index, the S&P Midcap 400 Index and the Nasdaq Composite Index. *$100 invested on December 31, 2019 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2025 Standard & Poor's, a division of S&P Global. All rights reserved.
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The comparisons in the performance graph are based on historical data and are not indicative of, or intended to forecast, the possible future performance of Healthcare Services Group, Inc.’s common stock. 17 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds None.
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Copyright© 2025 Russell Investment Group. All rights reserved.
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December 31, Company / Index 2019 2020 2021 2022 2023 2024 Healthcare Services Group, Inc. $ 100.00 $ 119.55 $ 78.25 $ 55.82 $ 48.24 $ 54.03 Russell 2000 $ 100.00 $ 119.96 $ 137.74 $ 109.59 $ 128.14 $ 142.93 Nasdaq Composite $ 100.00 $ 144.92 $ 177.06 $ 119.45 $ 172.77 $ 223.87 S&P Midcap 400 $ 100.00 $ 113.66 $ 141.80 $ 123.28 $ 143.54 $ 163.54 17 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table below summarizes those metrics for 2024, 2023 and 2022: Relation to Consolidated Revenues Year Ended December 31, 2024 2023 2022 Revenues 100.0 % 100.0 % 100.0 % Operating costs and expenses: Costs of services provided 86.7 % 87.2 % 88.6 % Selling, general and administrative expense excluding change in deferred compensation liability 10.2 % 9.6 % 8.8 % Gain on deferred compensation plan 0.5 % 0.4 % (0.5) % Selling, general and administrative expense 10.7 % 10.0 % 8.3 % Other income (expense): Investment and other income (loss), net 0.8 % 0.8 % (0.3) % Interest expense (0.3) % (0.5) % (0.2) % Income before income taxes 3.1 % 3.1 % 2.6 % Income tax 0.8 % 0.9 % 0.6 % Net income 2.3 % 2.2 % 2.0 % Our expenses can vary and may impact our operating performance.
Biggest changeNot relevant. 21 Table of Contents The following table sets forth the ratio of certain items to consolidated revenues for the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 2024 Revenues 100.0 % 100.0 % Operating costs and expenses: Costs of services provided 87.0 % 86.7 % Selling, general and administrative expenses 10.4 % 10.7 % Other income (expense): Investment and other income, net 1.2 % 0.8 % Interest expense (0.1) % (0.3) % Income before income taxes 3.7 % 3.1 % Income tax 0.5 % 0.8 % Net income 3.2 % 2.3 % Revenues Consolidated Consolidated revenues increased 7.1% to $1,837.2 million for the year ended December 31, 2025 compared to the corresponding period in 2024 as a result of the factors discussed below under Reportable Segments.
In addition, although there can be no assurance, we seek to pass through, by means of service billing increases, increases in our cost of providing the services, while also aiming to obtain modest annual revenue increases from our existing customers to attain desired profit margins at the facility level.
In addition, although there can be no assurance, we seek to pass through, by means of service billing increases, increases in our cost of providing the services, while also aiming to obtain modest revenue increases from our existing customers to attain desired profit margins at the facility level.
Housekeeping services consist 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.
EVS services consist 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.
Accounts and Notes Receivable Decisions to grant or to extend credit to customers are made on a case-by-case basis and based on a number of qualitative and quantitative factors related to the particular customer as well as the general risks associated with operating within the healthcare industry.
Accounts and Notes Receivable, Net Decisions to grant or to extend credit to customers are made on a case-by-case basis and based on a number of qualitative and quantitative factors related to the particular customer as well as the general risks associated with operating within the healthcare industry.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
The primary uses of cash for financing activities are repayments of outstanding line of credit balances and repurchases of common stock. On February 14, 2023, our Board of Directors authorized the repurchase of up to 7.5 million outstanding shares of common stock (the “Repurchase Plan”).
The primary uses of cash for financing activities are repayments of outstanding line of credit balances and repurchases of common stock. On February 14, 2023, our Board of Directors authorized the repurchase of up to 7.5 million outstanding shares of common stock (the “2023 Repurchase Plan”).
Inclusive of certain expenses reported within selling, general and administrative expense that are segment-specific.
Inclusive of certain expenses reported within selling, general and administrative expenses that are segment-specific.
Inclusive of certain expenses reported within selling, general and administrative expense that are segment-specific. 22 Table of Contents Variations within these key indicators relate to the provision of services at new facilities, changes in the mix of customers for whom we provide supplies or do not provide supplies and changes in bad debt expense.
Inclusive of certain expenses reported within selling, general and administrative expenses that are segment-specific. Variations within these key indicators relate to the provision of services at new facilities, changes in the mix of customers for whom we provide supplies or do not provide supplies and changes in bad debt expense.
As noted above, we were in compliance with our financial covenants at December 31, 2024 and we expect to remain in compliance. The line of credit expires on November 22, 2027.
As noted above, we were in compliance with our financial covenants at December 31, 2025 and we expect to remain in compliance. The line of credit expires on November 22, 2027.
Under our insurance plans for general liability and workers’ compensation, predetermined loss limits are arranged with our insurance company to limit both our per occurrence cash outlay and annual insurance plan cost.
Under our insurance plans for general liability, workers’ compensation and other programs, predetermined loss limits are arranged with our insurance company to limit both our per occurrence cash outlay and annual insurance plan cost.
Although we have no specific material commitments for capital expenditures through the end of calendar year 2025, we estimate that for 2025 we will have capital expenditures of approximately $5.0 million to $7.0 million.
Although we have no specific material commitments for capital expenditures through the end of calendar year 2026, we estimate that for 2026 we will have capital expenditures of approximately $5.0 million to $7.0 million.
Our agreements with customers typically provide for a renewable 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”).
Our agreements with customers typically provide for a renewable 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 (“Environmental Services” or “EVS”), and dietary department services (“Dietary”).
Allowance for Doubtful Accounts The allowance for doubtful accounts (the “Allowance”) is established at the origination of an account or note receivable in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) subtopic 326 Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”).
GAAP. 24 Table of Contents Allowance for Doubtful Accounts The allowance for doubtful accounts (the “Allowance”) is established at the origination of an account or note receivable in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) subtopic 326 Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”).
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 provide such services to approximately 2,600 facilities throughout the continental United States as of December 31, 2024.
Overview We provide management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of primarily healthcare facilities, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. We provide such services to approximately 2,800 facilities throughout the continental United States as of December 31, 2025.
Changes in wage rates as a result of legislative or collective bargaining actions, market factors, adjustments to staffing levels and other variations in our use of labor or managing labor costs can result in variability of these costs. Housekeeping supplies, including linen products, accounted for approximately 7.4% of Housekeeping revenues in 2024.
Changes in wage rates as a result of legislative or collective bargaining actions, market factors, adjustments to staffing levels and other variations in our use of labor or managing labor costs can result in variability of these costs. Housekeeping supplies, including linen products, accounted for approximately 7.2% of EVS revenues in 2025.
As a percentage of total revenues, these provisions represented approximately 2.7%, 2.1% and 1.9% for the years ended December 31, 2024, 2023 and 2022, respectively. Insurance Programs We self-insure or carry high deductible insurance plans and therefore retain a substantial portion of the risk associated with the expected losses under our general liability, workers’ compensation and auto insurance programs.
As a percentage of total revenues, these provisions represented approximately 4.5%, 2.7% and 2.1% for the years ended December 31, 2025, 2024 and 2023, respectively. Insurance Programs We self-insure or carry high deductible insurance plans and therefore retain a substantial portion of the risk associated with the expected losses under our general liability, workers’ compensation and other insurance programs.
We repurchased 0.4 million shares of our common stock for $5.0 million during the year ended December 31, 2024. We remain authorized to repurchase 6.0 million shares of our Common Stock pursuant to the Repurchase Plan.
We repurchased 4.0 million shares of our common stock for $61.6 million during the year ended December 31, 2025. We repurchased 0.4 million shares of our common stock for $5.0 million during the year ended December 31, 2024. We remain authorized to repurchase 2.0 million shares of our Common Stock pursuant to the 2023 Repurchase Plan.
In order to provide for collections issues and the general risk associated with the granting of credit terms, we recorded a bad debt provision (in an Allowance for Doubtful Accounts) of $46.8 million, $35.6 million and $32.0 million in the years ended December 31, 2024, 2023 and 2022, respectively.
In order to provide for collections issues and the general risk associated with the granting of credit terms, we recorded a bad debt provision (in an Allowance for Doubtful Accounts) of $83.1 million, $46.8 million and $35.6 million in the years ended December 31, 2025, 2024 and 2023, respectively.
The variability of these costs may impact each segment differently, as Housekeeping’s percentage of revenue is more significantly impacted by costs of labor than that of Dietary, while Dietary’s percentage of revenue is is more significantly impacted by costs of supplies than Housekeeping.
The variability of these costs may impact each segment differently, as EVS’s percentage of revenue is more significantly impacted by costs of labor than that of Dietary, while Dietary’s percentage of revenue is more significantly impacted by costs of supplies than EVS.
This discussion should be read in conjunction with our consolidated financial statements as of December 31, 2024 and for the year then ended and the notes accompanying those financial statements.
This discussion should be read in conjunction with our consolidated financial statements as of and for the years ended December 31, 2025 and 2024 and the notes accompanying those financial statements.
Dietary services were provided to approximately 1,600 customer facilities at December 31, 2024 and contributed approximately 55.4% or $950.3 million of our consolidated revenues for the year ended December 31, 2024. Our ability to acquire new customers, retain existing customers and increase revenues are affected by many factors.
Dietary services were provided to approximately 1,600 customer facilities at December 31, 2025 and contributed approximately 55.1% or $1,012.5 million of our consolidated revenues for the year ended December 31, 2025. Our ability to acquire new customers, retain existing customers and increase revenues are affected by many factors.
Year Ended December 31, Key Indicators as a % of Segment Revenue - Dietary 2024 2023 Change Labor and other labor-related costs 1 56.6% 57.7% (1.1)% Supplies 32.5% 32.6% (0.1)% Bad debt expense 3.4% 2.0% 1.4% Depreciation and amortization 0.3% 0.4% (0.1)% Other costs 1 2.4% 2.4% —% Total segment expenses 95.2% 95.1% 0.1% 1.
Year Ended December 31, Key Indicators as a % of Segment Revenue - Dietary 2025 2024 Change Labor and other labor-related costs 1 58.8% 56.6% 2.2% Supplies 30.9% 32.5% (1.6)% Bad debt expense 5.3% 3.4% 1.9% Depreciation and amortization 0.4% 0.3% 0.1% Other costs 1 2.1% 2.4% (0.3)% Total segment expenses 97.5% 95.2% 2.3% 1.
Such uses of cash are offset by proceeds from sales of marketable securities. Our investments in marketable securities and restricted marketable securities are primarily comprised of municipal bonds, treasury notes, corporate bonds, and other government bonds and are intended to achieve our goal of preserving principal, maintaining adequate liquidity and maximizing returns subject to our investment guidelines.
Our investments in marketable securities and restricted marketable securities are primarily comprised of municipal bonds, treasury notes, corporate bonds, and other government bonds and are intended to achieve our goal of preserving principal, maintaining adequate liquidity and maximizing returns subject to our investment guidelines.
We are on a calendar year end, and except where otherwise indicated, “2024” refers to the year ended December 31, 2024, and “2023 ” refers to the year ended December 31, 2023.
We are on a calendar year end, and except where otherwise indicated, “2025” refers to the year ended December 31, 2025, and “2024 ” refers to the year ended December 31, 2024.
Such management personnel also oversee the execution of various cost and quality control procedures including continuous training and employee evaluation. Housekeeping services were provided to approximately 2,200 customer facilities at December 31, 2024 and contributed approximately 44.6% or $765.4 million of our consolidated revenues for the year ended December 31, 2024.
Such management personnel also oversee the execution of various cost and quality control procedures including continuous training and employee evaluation. EVS services were provided to approximately 2,300 customer facilities at December 31, 2025 and contributed approximately 44.9% or $824.7 million of our consolidated revenues for the year ended December 31, 2025.
For general liability, workers’ compensation and auto, we record a reserve for the estimated future cost of claims and related expenses that have been reported but not settled, including an estimate of claims incurred but not reported that are developed as a result of a review of our historical data and open claims, which is based on estimates provided by a third-party actuary. 27 Table of Contents Capital Expenditures The level of capital expenditures is generally dependent on the number of new customers obtained.
For general liability, workers’ compensation and other insurance programs, we record a reserve for the estimated future cost of claims and related expenses that have been reported but not settled, including an estimate of claims incurred but not reported that are developed as a result of a review of our historical data and open claims, which is based on estimates provided by a third-party actuary.
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. Financing Activities The primary source of cash from financing activities is the net borrowings under our bank line of credit. We borrow for general corporate purposes as needed throughout the year.
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. 26 Table of Contents Financing Activities The primary source of cash from financing activities is the net borrowings under our bank line of credit.
Costs of services provided Consolidated Consolidated costs of services provided increased 2.1% to $1.5 billion for the year ended December 31, 2024 compared to the corresponding period in 2023 as a result of the factors discussed below under Reportable Segments.
Costs of services provided Consolidated Consolidated costs of services provided increased 7.4% to $1,597.8 million for the year ended December 31, 2025 compared to the corresponding period in 2024 as a result of the factors discussed below under Reportable Segments.
The following tables provide a comparison of the key indicators we consider when managing segment expenses as a percentage of the respective segment’s revenues: Year Ended December 31, Key Indicators as a % of Segment Revenue - Housekeeping 2024 2023 Change Labor and other labor-related costs 1 78.4% 78.2% 0.2% Supplies 7.4% 7.6% (0.2)% Bad debt expense 1.9% 2.3% (0.4)% Depreciation and amortization 0.5% 0.5% —% Other costs 1 1.9% 2.0% (0.1)% Total segment expenses 90.1% 90.6% (0.5)% 1.
Segment expenses for Dietary, as a percentage of Dietary revenues, increased to 97.5% for the year ended December 31, 2025 from 95.2% in the corresponding period in 2024. 22 Table of Contents The following tables provide a comparison of the key indicators we consider when managing segment expenses as a percentage of the respective segment’s revenues: Year Ended December 31, Key Indicators as a % of Segment Revenue - EVS 2025 2024 Change Labor and other labor-related costs 1 78.3% 78.4% (0.1)% Supplies 7.2% 7.4% (0.2)% Bad debt expense 3.5% 1.9% 1.6% Depreciation and amortization 0.5% 0.5% —% Other costs 1 1.7% 1.9% (0.2)% Total segment expenses 91.2% 90.1% 1.1% 1.
Such activities are the primary drivers of the period-over-period changes in net cash provided by operating activities. Investing Activities Our principal uses of cash for investing activities are capital expenditures such as housekeeping and food service equipment, computer software and equipment, furniture and fixtures (see “Capital Expenditures” below for additional information), and purchases of marketable securities and restricted marketable securities.
Investing Activities Our principal uses of cash for investing activities are capital expenditures such as housekeeping and food service equipment, computer software and equipment, furniture and fixtures (see “Capital Expenditures” below for additional information), and purchases of marketable securities and restricted marketable securities. Such uses of cash are offset by proceeds from sales of marketable securities.
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.
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 and to change the benchmark rate from the London Interbank Offered Rate (“LIBOR”) to SOFR. At December 31, 2025, we had no borrowings under the line of credit.
Reportable Segments We include certain expenses classified as selling, general and administrative expenses within segment expenses. Segment expenses for Housekeeping, as a percentage of Housekeeping revenues, decreased to 90.1% for the year ended December 31, 2024 from 90.6% in the corresponding period in 2023.
Reportable Segments We include certain expenses classified as selling, general and administrative expenses within segment expenses and exclude the benefit from ERC credits from segment performance. Segment expenses for EVS, as a percentage of EVS revenues, increased to 91.2% for the year ended December 31, 2025 from 90.1% in the corresponding period in 2024.
There are also areas in which our judgment in selecting another available alternative would not produce a materially different result. See our audited consolidated financial statements and notes thereto which are included in this Annual Report on Form 10-K, which contain a discussion of our accounting policies and other disclosures required by U.S. GAAP.
See our audited consolidated financial statements and notes thereto which are included in this Annual Report on Form 10-K, which contain a discussion of our accounting policies and other disclosures required by U.S.
The covenants and their respective status at December 31, 2024 were as follows: Covenant Descriptions and Requirements As of December 31, 2024 Funded debt 1 to EBITDA 2 ratio: less than 3.50 to 1.00 0.21 EBITDA 2 to Interest Expense ratio: not less than 3.00 to 1.00 11.71 1.
The line of credit requires us to satisfy two financial covenants. The covenants and their respective status at December 31, 2025 were as follows: Covenant Descriptions and Requirements As of December 31, 2025 Funded debt 1 to EBITDA 2 ratio: less than 3.50 to 1.00 0.15 EBITDA 2 to Interest Expense ratio: not less than 3.00 to 1.00 59.44 1.
In connection with the issuance of the letters of credit, the amounts available under the line of credit was reduced by $50.8 million to $249.2 million at December 31, 2024 and by $85.9 million to $189.1 million at December 31, 2023.
In connection with the issuance of the letters of credit, the amount available under the line of credit was reduced by $47.7 million to $252.3 million at December 31, 2025 and by $50.8 million to $249.2 million at December 31, 2024.
For the years ended December 31, 2024, 2023 and 2022 our cash flows were as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 30,802 $ 43,498 $ (8,167) Net cash provided by (used in) investing activities $ 6,047 $ (3,293) $ 2,580 Net cash used in financing activities $ (31,048) $ (12,154) $ (38,928) 25 Table of Contents Operating Activities Our primary sources of cash from operating activities are the revenues generated from our Housekeeping and Dietary services.
For the years ended December 31, 2025, 2024 and 2023 our cash flows were as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Net cash from operating activities $ 144,968 $ 30,802 $ 43,498 Net cash from investing activities $ (11,003) $ 6,047 $ (3,293) Net cash from financing activities $ (63,330) $ (31,048) $ (12,154) Operating Activities Our primary sources of cash from operating activities are the revenues generated from our Environmental Services and Dietary services.
For the year ended December 31, 2024 cash flow from operations included $39.5 million in net income, an increase of $1.1 million compared to 2023, non-cash add-backs to net income of $61.5 million, and a $70.2 million decrease in cash flows from changes in operating assets and liabilities, driven primarily by increased outstanding accounts and notes receivable.
For the year ended December 31, 2025 cash flow from operations included $59.1 million in net income, an increase of $19.6 million compared to 2024, non-cash add-backs to net income of $126.5 million (primarily driven by bad debt expense), and a $40.5 million decrease in cash flows from changes in operating assets and liabilities.
Costs of services provided, as a percentage of revenues, improved to 86.7% for the year ended December 31, 2024 compared to 87.2% in the corresponding period in 2023. The Company’s goal is to manage consolidated costs of services provided as a percentage of revenues in the 86% range.
Costs of services provided, as a percentage of revenues, was 87.0% for the year ended December 31, 2025 compared to 86.7% in the corresponding period in 2024.
Housekeeping and Dietary supplies are principally commodity products and are affected by market conditions specific to the respective products. 20 Table of Contents Our customers are concentrated in the healthcare industry and are primarily providers of long-term care. Many of our customers’ revenues are highly reliant on Medicare, Medicaid and third-party payers’ reimbursement funding.
Our customers are concentrated in the healthcare industry and are primarily providers of long-term care. Many of our customers’ revenues are highly reliant on Medicare, Medicaid and third-party payers’ reimbursement funding.
On December 24, 2024, January 16, 2025 and January 22, 2025, the letters of credit were renewed, and they all expire during the first quarter of 2026.
On January 8, 2025, October 6, 2025, and January 20, 2026, the letters of credit were renewed, and they all expire during the first quarter of 2027.
In contrast, supplies consumed in performing our Dietary services accounted for approximately 32.5% of Dietary revenues. Generally, fluctuations in these expenses are influenced by factors outside of our control and are unpredictable.
In contrast, food supplies consumed in performing our Dietary services accounted for approximately 30.9% of Dietary revenues. Generally, fluctuations in these expenses are influenced by factors outside of our control and are unpredictable. EVS and Dietary supplies are principally commodity products and are affected by market conditions specific to the respective products.
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. Our capital expenditures totaled $6.3 million in 2024.
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. Our capital expenditures totaled $5.8 million in 2025.
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 their ability to make timely payments, could have material adverse effect on the Company’s results of operations and financial condition.
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 their ability to make timely payments, could have a material adverse effect on the Company’s results of operations and financial condition. 20 Table of Contents Years Ended December 31, 2025 and 2024 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 years ended December 31, 2025 and 2024.
Excluding the change in the deferred compensation plan described above, consolidated selling, general and administrative expense increased $14.7 million or 9.2% for the year ended December 31, 2024 compared to the corresponding period in 2023. The increase was driven by increases in payroll, legal, travel and fleet-related expenses, all of which were impacted by inflationary measures.
Excluding the change in the deferred compensation plan described above, consolidated selling, general and administrative expenses increased $8.8 million or 5.0% for the year ended December 31, 2025 compared to the corresponding period in 2024, driven by increased payroll and payroll-related expenses.
An understanding of the policies discussed below is critical to the understanding of our financial statements because the application of these policies requires judgment. Specific risks for these critical accounting policies and estimates are described in the following paragraphs. For these estimates, we caution that future events do not always occur as forecasted, and the best estimates routinely require adjustment.
Financial reporting results rely on estimating the effects of matters that are inherently uncertain. An understanding of the policies discussed below is critical to the understanding of our financial statements because the application of these policies requires judgment. Specific risks for these critical accounting policies and estimates are described in the following paragraphs.
If our customers experience a negative impact in their cash flows, it could have a material adverse effect on our consolidated results of operations and financial condition. 24 Table of Contents Accrued Insurance Claims We self-insure or carry high deductible insurance policies and therefore retain a substantial portion of the risk associated with expected losses under our general liability, workers’ compensation and auto insurance programs, which comprise approximately 25.4% of our liabilities at December 31, 2024.
Accrued Insurance Claims We self-insure or carry high deductible insurance policies and therefore retain a substantial portion of the risk associated with expected losses under our general liability, workers’ compensation and other insurance programs, which comprise approximately 24.8% of our liabilities at December 31, 2025.
These investments represent the amounts held on behalf of the participating employees as changes in the value of these investments affect the amount of our deferred compensation liability. Gains on the plan investments during the years ended December 31, 2024 and 2023 increased our total selling, general and administrative expense.
Also included in consolidated selling, general and administrative expenses are corporate expenses and gains and losses associated with changes in the value of investments comprising our deferred compensation liability. These investments represent the amounts held on behalf of the participating employees as changes in the value of these investments affect the amount of our deferred compensation liability.
A summary of the changes in our total self-insurance liability is as follows: 2024 2023 2022 (in thousands) Accrued insurance claims - January 1, $ 84,378 $ 88,707 $ 89,394 Claim payments (24,751) (24,488) (25,175) Reserve accruals: Current year accruals 29,015 32,693 34,293 Changes to the provision for prior year claims (11,625) (12,534) (9,805) Change in accrued insurance claims (7,361) (4,329) (687) Accrued insurance claims - December 31, $ 77,017 $ 84,378 $ 88,707 Liquidity and Capital Resources Our primary sources of liquidity are available cash and cash equivalents, available lines of credit under our revolving credit facility and cash flows from operating activities.
A summary of the changes in our total self-insurance liability is as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Accrued insurance claims - January 1, $ 77,017 $ 84,378 $ 88,707 Claim payments (24,120) (24,751) (24,488) Claim expense 17,616 17,390 20,159 Accrued insurance claims - December 31, $ 70,513 $ 77,017 $ 84,378 25 Table of Contents Liquidity and Capital Resources Our primary sources of liquidity are available cash and cash equivalents, our revolving credit facility and cash flows from operating activities.
We believe that our existing capacity under the line of credit and our history of favorable operating cash flows provide adequate liquidity to fund our operations for the next twelve months following the date of this report.
We believe that our existing capacity under the line of credit and our history of favorable operating cash flows provide adequate liquidity to fund our operations for the next twelve months following the date of this report. 27 Table of Contents At December 31, 2025 and 2024, we had outstanding $47.7 million and $50.8 million, respectively, in irrevocable standby letters of credit, which relate to payment obligations under our insurance programs.
Year Ended December 31, 2024 2023 1 % Change (in thousands) Revenues Housekeeping $ 765,368 $ 766,651 (0.2) % Dietary 950,314 904,738 5.0 % Consolidated $ 1,715,682 $ 1,671,389 2.7 % Costs of services provided Housekeeping $ 642,873 $ 648,710 (0.9) % Dietary 844,719 807,933 4.6 % Consolidated $ 1,487,592 $ 1,456,643 2.1 % Selling, general & administrative expense Housekeeping $ 47,085 $ 45,752 2.9 % Dietary 59,574 52,254 14.0 % Corporate 2 68,160 62,082 9.8 % Gain on deferred compensation plan investments 8,241 6,684 23.3 % Consolidated $ 183,060 $ 166,772 9.8 % Other income (expense) 3 Investment and other income, net $ 14,349 $ 12,938 10.9 % Interest expense (6,438) (7,856) (18.0) % Income before taxes $ 52,941 $ 53,056 (0.2) % Income tax provision 3 13,470 14,670 (8.2) % Net income $ 39,471 $ 38,386 2.8 % 1.
Year Ended December 31, 2025 2024 % Change (in thousands) Revenues Environmental Services $ 824,681 $ 765,368 7.7 % Dietary 1,012,492 950,314 6.5 % Consolidated $ 1,837,173 $ 1,715,682 7.1 % Costs of services provided Environmental Services $ 704,282 $ 642,873 9.6 % Dietary 927,725 844,719 9.8 % ERC Credits 1 (34,239) — NR 4 Consolidated $ 1,597,768 $ 1,487,592 7.4 % Selling, general & administrative expenses Environmental Services $ 48,153 $ 47,085 2.3 % Dietary 59,711 59,574 0.2 % Corporate 2 75,741 68,160 11.1 % Gain on deferred compensation plan investments 7,261 8,241 (11.9) % Consolidated $ 190,866 $ 183,060 4.3 % Other income (expense) 3 Investment and other income, net $ 20,907 $ 14,349 45.7 % Interest expense (1,580) (6,438) (75.5) % Income before taxes 67,866 52,941 28.2 % Income tax provision 3 8,807 13,470 (34.6) % Net income $ 59,059 $ 39,471 49.6 % 1.
The table below summarizes the changes in these components of selling, general and administrative expense: Year Ended December 31, 2024 2023 $ Change % Change (dollar amounts in thousands) Selling, general and administrative expense excluding change in deferred compensation liability $ 174,819 $ 160,088 $ 14,731 9.2 % Gain on deferred compensation plan investments 8,241 6,684 1,557 23.3 % Selling, general and administrative expense $ 183,060 $ 166,772 $ 16,288 9.8 % Consolidated Investment and Interest Income, net Investment and other income was a gain of $14.3 million for the year ended December 31, 2024 compared to a gain of $12.9 million for the corresponding 2023 period, primarily due to market fluctuations in the value of our trading security investments representing the funding for our deferred compensation plan and increased interest income on notes receivable.
The table below summarizes the changes in these components of selling, general and administrative expenses: Year Ended December 31, 2025 2024 $ Change % Change (in thousands) Selling, general and administrative expenses excluding change in deferred compensation liability $ 183,605 $ 174,819 $ 8,786 5.0 % Gain on deferred compensation plan investments 7,261 8,241 (980) (11.9) % Selling, general and administrative expenses $ 190,866 $ 183,060 $ 7,806 4.3 % 23 Table of Contents Consolidated Investment and Interest Income, net Investment and other income, net was a gain of $20.9 million for the year ended December 31, 2025 compared to a gain of $14.3 million for the corresponding 2024 period.
In addition, we must be able to assure new customers that we can improve the quality of service that they are providing to their residents.
In addition, we must be able to assure new customers that we can improve the quality of service that they are providing to their residents. We believe the factors discussed above are equally applicable to each of our segments with respect to acquiring new customers and increasing revenues. Our expenses vary and may impact our operating performance.
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.
However, should these sources not be sufficient, we would seek to obtain necessary capital from such sources as long-term debt or equity financing.
GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Financial reporting results rely on estimating the effects of matters that are inherently uncertain.
Critical Accounting Policies and Estimates The preparation of consolidated financial statements in accordance with United States generally accepted accounting standards (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Year Ended December 31, 2024 2023 $ Change % Change (dollar amounts in thousands) Investment and other income, net excluding change in deferred compensation plan assets $ 6,056 $ 6,293 $ (237) (3.8) % Increase in deferred compensation plan assets 8,293 6,645 1,648 24.8 % Investment and other income, net $ 14,349 $ 12,938 $ 1,411 10.9 % Consolidated Interest Expense Consolidated interest expense decreased to $6.4 million for the year ended December 31, 2024 compared to $7.9 million for the corresponding 2023 period due to decreased short-term borrowings on our line of credit during 2024 compared to 2023. 23 Table of Contents Consolidated Income Taxes Our effective tax rate was 25.4% for the year ended December 31, 2024 compared to 27.7% in 2023.
Year Ended December 31, 2025 2024 $ Change % Change (in thousands) Investment and other income, net excluding change in deferred compensation plan assets $ 13,581 $ 6,056 $ 7,525 124.3 % Gain on deferred compensation plan investments 7,326 8,293 (967) (11.7) % Investment and other income, net $ 20,907 $ 14,349 $ 6,558 45.7 % Consolidated Interest Expense Consolidated interest expense was $1.6 million for the year ended December 31, 2025 compared to $6.4 million for the corresponding 2024 period as we incurred lower average borrowings on our line of credit during 2025 compared to 2024.
Material Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements other than our irrevocable standby letters of credit previously discussed. 28 Table of Contents
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. 28 Table of Contents Material Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements other than our irrevocable standby letters of credit previously discussed.
ASC 326 requires the Company to estimate the lifetime expected credit losses on such instruments and to record an allowance to offset the receivables. The Allowance is evaluated quarterly based upon our financial models which consider historical collections experience, current market conditions, government funding of Medicare and Medicaid and reasonable and supportable economic forecasts to estimate lifetime expected credit losses.
ASC 326 requires the Company to estimate the lifetime expected credit losses on such instruments and to record an allowance to offset the receivables. The Allowance is evaluated quarterly in accordance with ASC 326 and is determined using financial models designed to estimate lifetime expected credit losses.
Reportable Segments Housekeeping revenues decreased 0.2% while Dietary revenues increased 5.0% during the year ended December 31, 2024 compared to the corresponding period in 2023. Housekeeping revenues decreased due to a decline in facilities serviced, offset by increases to costs which were passed on to customers.
Reportable Segments EVS revenues increased 7.7% while Dietary revenues increased 6.5% during the year ended December 31, 2025 compared to the corresponding period in 2024. EVS revenue increases were driven by an increase in facilities serviced and increases in contractual pricing.
Line of Credit At December 31, 2024, we had a $300 million bank line of credit on which to draw for general corporate purposes.
As of December 31, 2025, the Company had no other material minimum purchase or capital expenditure commitments pertaining to our daily operations or existing financing arrangements. Line of Credit At December 31, 2025, we had a $300 million bank line of credit on which to draw for general corporate purposes.
Such securities are held by HCSG Insurance to satisfy capital requirements of the state regulator related to captive insurance companies.
Marketable securities and restricted 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 HCSG Insurance to satisfy capital requirements of the state regulator related to captive insurance companies.
Any such adjustments or revisions to estimates could result in material differences from previously reported amounts. The policies discussed below are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP, with no need for our judgment in their application.
For these estimates, we caution that future events do not always occur as forecasted, and the best estimates routinely require adjustment. Any such adjustments or revisions to estimates could result in material differences from previously reported amounts. The policies discussed below are not intended to be a comprehensive list of all of our accounting policies.
Portions of the Allowance are inherently more sensitive to fluctuations in management’s assumptions than others, particularly any adjustments made to reflect reasonable and supportable economic forecasts. Such qualitative assessments would be expected to have a greater effect on aged accounts receivable and notes receivable as compared to current receivables.
Such qualitative assessments would be expected to have a greater effect on aged accounts receivable and notes receivable as compared to current receivables.
Contractual Obligations Our future contractual obligations and commitments at December 31, 2024 primarily consist of minimum lease payments on our operating lease agreements as discussed within Note 7 — Leases. As of December 31, 2024, the Company had no other material minimum purchase or capital expenditure commitments pertaining to our daily operations or existing financing arrangements.
Includes amounts for commissions and taxes. Contractual Obligations Our future contractual obligations and commitments at December 31, 2025 primarily consist of minimum lease payments on our operating lease agreements as discussed within Note 8 — Leases.
Represents a recast of prior period numbers to conform with current period presentation. 2. Represents selling, general and administrative expense less amounts allocated to segments for labor and labor-related and other segment items. 3.
Represents selling, general and administrative expenses less amounts allocated to segments for labor and labor-related and other segment items. 3. These line items represent corporate costs not allocated to segments. 4.
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. In 2024, LaVie Care Centers, LLC and certain affiliated entities (“LaVie”), several of which are customers of the Company, filed for Chapter 11 bankruptcy protection in the U.S.
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. Consolidated Selling, General and Administrative Expenses Selling, general and administrative expenses incurred at a segment-level are discussed in the Reportable Segments section above.
Removed
We believe the factors discussed above are equally applicable to each of our segments with respect to acquiring new customers and increasing revenues. 19 Table of Contents When evaluating financial performance, we consider the ratio of certain financial items to consolidated revenues.
Added
Bad debt expense impacts costs of services provided for each segment periodically depending on specific customer matters for each segment. 19 Table of Contents EVS labor costs accounted for approximately 78.3% of EVS revenues in 2025 while Dietary labor costs accounted for approximately 58.8% of Dietary revenues in 2025.
Removed
Bad debt expense impacts costs of services provided for each segment periodically depending on specific customer matters for each segment. In 2024, we adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.
Added
Segment costs of services provided excludes the impact of ERC refunds received by the Company and recorded within income during the year ended December 31, 2025 as the credits relate to payroll tax credits related to 2020 and 2021 payroll. 2.
Removed
As part of our adoption of ASU 2023-07 and the Chief Operating Decision Maker’s evaluation of segment performance for the year ended December 31, 2024, we updated certain segment information in 2024 and recast certain prior period segment information from 2022 and 2023 in order to conform with our current period segment presentation.
Added
Dietary revenue increases were driven by organic growth via expanding services performed for existing customers, increased pass-through costs to customers and increases in contractual pricing.
Removed
Housekeeping labor costs accounted for approximately 78.4% of Housekeeping revenues in 2024 while Dietary labor costs accounted for approximately 56.6% of Dietary revenues in 2024.
Added
During the year ended December 31, 2025, we recognized $34.2 million of income, recorded as a reduction to costs of services provided, related to the receipt of ERC refunds for periods from the second quarter of 2020 through the second quarter of 2021, and we additionally recognized $63.9 million of bad debt expense within costs of services provided associated with the Genesis bankruptcy.
Removed
Years Ended December 31, 2024 and 2023 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 years ended December 31, 2024 and 2023.
Added
Gains on the plan investments during the years ended December 31, 2025 and 2024 increased our total selling, general and administrative expenses.
Removed
These line items represent corporate costs not allocated to segments. 21 Table of Contents Revenues Consolidated Consolidated revenues increased 2.7% to $1.7 billion for the year ended December 31, 2024 compared to the corresponding period in 2023 as a result of the factors discussed below under Reportable Segments.
Added
Included in investment and other income, net was $5.3 million of interest income recognized on ERC refunds received during the year ended December 31, 2025.
Removed
Dietary revenues increased resulting from increases to contractual pass-throughs of labor and food costs, which have increased due to inflation and market factors.
Added
Excluding the impact of the ERC refund, investment and other income, net increased due to increased interest income from cash, notes, and marketable securities, partially offset by a decline in income from deferred compensation plan investments.
Removed
Segment expenses for Dietary, as a percentage of Dietary revenues, increased to 95.2% for the year ended December 31, 2024 from 95.1% in the corresponding period in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. At December 31, 2024, we had $135.8 million in cash, cash equivalents, restricted cash equivalents, marketable securities and restricted marketable securities.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. At December 31, 2025, we had $203.9 million in cash, cash equivalents, restricted cash equivalents, marketable securities and restricted 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.
The fair value of all of our cash equivalents and marketable securities is 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.

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