Healthcare Services Group, Inc. (NASDAQ:HCSG) Q2 2023 Earnings Call Transcript

Andy Wittmann: Yes, good morning, guys. And thanks for taking my question. I guess, Ted, I wanted to ask about the new business pipeline. Here’s what you know over the years, the challenge for you has been keeping facility managers in your training program. And having those people ready to go when you’re ready to launch new facilities. I guess in the last couple of years, I haven’t been asking you about the strength and the performance, and the amount of people you’ve got in this training program. But given that you’re talking more constantly about growth now I thought it’d be worth talking to you and having you talk about how you’re able to hire for those positions, the fullness of that training pipeline. And if you’re ready to go, should some of your customers decide to turn on the switch for Healthcare Services Group?

Matt McKee: Yes, Andy, I’ll address that, this is Matt. I’m glad you asked about this. And I think we touched on this component of our growth trajectory a bit last quarter. But to dive in a little bit deeper, you’re exactly right. One of the major contingencies of our ability to grow historically has always been overall our management capacity, but more specifically, having the appropriate number of managers working through the Q in our management training program. And our compelling pitch, if you will, or the employee based value proposition historically has been that one is able to grow one’s career with Healthcare Services Group that as the company grows, one has the opportunity to develop one’s own career and promotional trajectory.

In light of not having put up much top line growth over the course of the past few years, that’s created a different challenge for the organization. And it’s one that we were certainly mindful of, if not outright concerned about what that required of us was to sort of be overly communicative and transparent with our managers, both our existing managers who’ve committed at least a significant portion of their careers to the organization, and folks to whom we were having, with whom we were having discussions from a recruiting perspective. And we’ve been very transparent about the rationale as to why it didn’t make sense for us to be onboarding new business and in growth mode, over the course of the past few years, that’s enabled us quite honestly, Andy, to be a bit more selective and judicious not only in our hiring, but in replacing managers who perhaps were underperforming and what have clearly been significantly challenging operational times and an overall challenging operating environment.

You think back to the clinical challenges and limitations that COVID presented on the heels of that the labor challenges and the overall US struggles that we faced with respect to the availability of labor and managing our payroll related costs. So we needed top notch managers through all of those conditions. So that’s been a bit of a carrot that we’ve been able to hold out for folks to keep them motivated and engaged within the organization. Ted alluded to in his opening remarks, this sort of palpable enthusiasm that’s running through the organization as we pivot to growth mode, and that has massive effects and reverberations in that not only is everyone excited to see our results and putting up top line growth, but from a more personal career developmental perspective, what does that mean by way of growth opportunity?