Healthcare Services Group Inc. (NASDAQ:HCSG) Q4 2016 Earnings Conference Call - Final Transcript

Feb 08, 2017 • 08:30 am ET

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Healthcare Services Group Inc. (NASDAQ:HCSG) Q4 2016 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] And our first question comes from the line of Michael Gallo with CL King. Your line is now open.

Analyst
Michael Gallo

Hi. Good morning.

Executive
Theodore Wahl

Good morning, Mike.

Analyst
Michael Gallo

Ted, I wanted to delve into your opening comment on regulatory burden and the potential for that to perhaps lessen with the new administration. I was wondering if we could think about or if you could frame out what some of the bigger buckets of increased regulatory burden were over the last, call it, eight years. And where do you see some potential opportunities or talk perhaps of policy changes that might perhaps make that a little less burdensome? And again, if you have any buckets or specifics where sort of that you can give examples, just so we could understand how to frame that going forward, that would be helpful. Thanks.

Executive
Theodore Wahl

Yeah, Mike. I think as far the regulatory environment, it's not so much a change in the laws or even the rules that are on the books for us, but it's more a manner in which they're going to be, we believe, interpreted and enforced. And to your point, it's less of a quantifiable financial impact than it is opportunity cost of having really our best and brightest, our talent going down administrative rabbit holes, like Obamacare or the minimum salary threshold. That's where the opportunity is.

It's really more an allocation of resources towards managing the business rather than paperwork and compliance audits, which for us don't really drive our growth and drive our opportunity that we're creating for our employees. The two items I mentioned, Obamacare and the minimum salary threshold, best intentions aside, whether they were pure of heart or political in nature, they were not well received by our employees.

Executive
Matthew McKee

In terms of just -- as you sort of go forward, obviously, growth has been in the 9% area, which is, obviously, a very good organic growth rate, but given the potential to reallocate resources, do you see that returning to double digits or you expect us to kind of stay in that high single digit range. And I mentioned it in the opening remarks, but really the demand for the services is as strong as ever. And I would say, heading into the new year, really not so much as a tailwind from any allocation, reallocation of resources, but just from a management capacity perspective in the field, we feel comfortable that we're going to continue to be in that double-digit range that we target. But having said that, the rate limiting factor on our growth continues to be our ability to develop that next wave of management. And here we are, entering our 50th -- our fifth decade, our 41st year and we still haven't found a management development shortcut in our promotion-from-within model, which we're committed to.

Analyst
Michael Gallo

Thanks very much.

Executive
Theodore Wahl

Thank you, Mike.

Operator
Operator

And our next question comes from the line of A.J. Rice with UBS. Your line is now open.

Analyst
A.J. Rice

Yeah. Hello, everybody. Maybe