When the minimum wage is raised... This company will effectively have zero earnings. They will have about 3000 contracts that lose money.
I've heard this company doesn't even give it's account managers computers or faxes. Very low to no tech. Looking at their balance sheet... I have a hard time trying to understand if this company owns anything. The only thing I think they have are contracts with nursing homes.... most of the states want to shut down half their nursing homes to reduce medicare costs. It appears the only way this company is making money is by not paying employees or constantly cutting wages on janitors.
Also changing your general counsel in the face of Class Action lawsuit... by your managers. Then asking the investor to trust that your expertise is managing people? No something is not right.
So I pretty much don't get what I would be investing in in this company. I would punt this thing out of bounds and walk away.
They will not lose money they will ask for increases and get them. That is how business works. They have been in business for 30 plus years and minimum wage has increased from $2.30 in 1977 to 7.25 now.
The boomers are on the verge of flooding the available beds...The demand will grow enormously. As that happens , arrangements will be renegotiated.
Us old folks vote. States may want to cut down on nursing homes but they don't dare do it........Not of the pols want to be re-elected.
The competition will also have to pay any increase in Min wage.
It doesn't appear as if the Federal minimum wage will go up anytime soon. Anyhow, I agree with your analysis. We have to put all those aging baby boomers somewhere. HCSG should be able to capitalize on this for many years to come. This may be one stock that an investor can hold for years. I've been and will be adding shares on any dips.