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We exited the year with good operating momentum and expect cost of services and margins to return to historical levels in 2019. Strengthening customer payment terms and conditions, which includes increasing customer payment frequency from monthly to semi-monthly or weekly. To date, we have no successfully transitioned over 40% of our customers to an accelerated payment model and expect to further that trend in the year ahead. And finally, replenishing the management pipeline to ensure that we are well prepared for our continued growth and expansion in 2019 and beyond.

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We enter the new year having significantly grown that pipeline over the past few months and expect to continue our heightened focus on hiring and developing management candidates through at least the first half of '19. In the year ahead, we're very excited to continue to build upon the significant progress we've made on these priorities, which have laid the groundwork for a successful 2019 and beyond. So, with that abbreviated overview, I'll turn the call over to Matt for a more detailed discussion on the quarter.

Matt McKee -- Chief Communications Officer

Thanks, Ted. Good morning, everyone. Revenues for the fourth quarter were down about $10 million sequentially to $496 million. Housekeeping and laundry revenues were $240 million. And dining and nutrition came in at $256 million. The decrease in revenues was primarily related to the recently completed contract initiatives in restructuring, including housekeeping and laundry, which we finalized during the third quarter when we adjusted our contractual relationships with two regional customers and a number of independent facilities. And that impacted housekeeping and laundry revenues by about $10 million per quarter while favorably impacting margins.

In dining and nutrition, which we completed during the fourth quarter with several customers but primarily Genesis Healthcare. With Genesis now assuming responsibility for direct payment to food suppliers as of December of 2018. All other aspects of the relationship related to food procurement, oversight, and management, labor, and clinical services remain unchanged. We expect the fourth quarter contract modifications to decrease dining and nutrition segment revenues and related food purchases by about $20 million per quarter with around a third of that impact being reflected in the Q4 results. And ultimately, we do expect that these contract modifications will favorably impact margins. Net income for the quarter came in at $32 million and earnings per share was $0.42 per share.

The direct cost of services is reported at 85.7%, about 30 basis points below our target of 86% with housekeeping and laundry and dining and nutrition segment margins estimated at 9.5% and 5.4% respectively. Direct cost included a $15 million benefit primarily related to favorable workers' compensation lost development trends as we continue to successfully execute on our strategy of reducing claim frequency, scope, and severity. We expect to continue to realize operational and financial efficiencies related to our property and casualty programs in the years ahead. And direct costs for the quarter was also impacted by about $9 million of increase to accounts receivable reserves primarily related to the corporate restructurings of two privately held operators.

Although the timing and amounts of recovery are unknown at this point, we believe that we're well positioned to pursue all outstanding claims related to these matters. Direct costs for the quarter was also impacted by about $3 million of increased payroll cost related to management training ramp up. As we mentioned in the past couple of quarters, we expected to see additional management trainee related investment as we ramped up our recruiting and training efforts over the past few months. Now the majority of that investment was contained to the fourth quarter and fourth quarter specific but will continue to have a heightened focus on management development through at least the first half of the year and beyond that our expectation is that the management development function returns to its normal cadence without the stop-start dynamic that we've seen there out from 2017 through present.

Overall, our near-term goal remains to manage direct costs at or below 86% in the year ahead. And ultimately, to continue working our way closer to 85% direct cost of services. SGNA was reported at 6.4% for the quarter. There was about a $4.1 million impact from the change in the deferred compensation investment accounts that are held for and by our management people, so our actual SGNA was right around 7.3%. And that was impacted by about $1 million of costs related to the recent renewal of our line of credit, as well as increases in professional fees from technology investments related to the January 1st, 2019 transition from our legacy finance and accounting platform to the workday financial management model.

We expect SGNA to approximate 7% for the year with ongoing opportunities to garner additional efficiencies. Investment income for the quarter after making that adjustment for deferred comp was negligible. Our effective tax rate was 9.9% and 16.4% for the quarter and year respectively and was impacted by the timing and amount of WOTC state-specific tax credits and other discrete items. We expect our 2019 tax rate to be in the 21-23% range, including WOTC but excluding other discrete items that impacted the 2018 rate. Over to the balance sheet, at the end of the fourth quarter, we had $102 million of cash and marketable securities. The current ratio of three to one. Cash flow from operations for the quarter came in at $5 million and was impacted by the $21 million decrease in accrued payroll.

Cash flow from operations for the year came in at $80 million including 52 million in the second half of the year. And because we've called out the timing of the payroll and the impact of the payroll accrual last year, we would point out that the 2019 payroll accrual will have a similar cadence to 2018 in that quarters one and three will be higher, and quarters two and four, a bit lower. But of course, that only relates to timing and essentially washes out through the full year. DSO came in at around 61 days. And as we announced yesterday, the board of directors approved an increase in the dividend to $0.19625 per share, payable on March 22nd.

Cash flows and cash balances support it and with the dividend tax rate in place for the foreseeable future, the cash dividend program continues to be the most tax efficient way to get the value and free cash flow back to our shareholders. This'll be the 63rd consecutive cash dividend payment since the program was instituted in 2003 after the change in tax law. It's the 62nd consecutive quarter that we've increased to dividend payment over the previous quarter. That's now a 16-year period that's included for three for two stock splits. So, with those opening remarks, we'd now like to open up the call for questions.

Questions and Answers:

Operator

Ladies and gentlemen, at this time, if you have a question, please press *1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press #. And to prevent any background noise, we ask that you please place your line on mute once your question has been stated. And our first question comes from Sean Dodge with Jefferies. Please proceed.

Sean Dodge -- Jefferies -- Analyst

Good morning. Thanks for taking the questions. Maybe starting with revenue in the outlook for the year. You guys mentioned elevated payroll costs as you reramp manager recruiting. Could you help frame for us how you see that converting to revenue? I guess -- how big is the pool of undeployed managers now versus where it was this time last year? And do you already have a good sense of where all those new managers are gonna end up or is this more of a kinda build it and hope the demand comes?

Ted Wahl -- President and Chief Executive Officer

I think, Sean, just in terms of growth and outlook for 2019 and beyond, I would say for the first half of this year. Certain geographies are well positioned for growth. From a total company perspective, though, and as we alluded to and will continue to focus on, the ramp-up of the management pipeline. There's still work to be done in terms of building the requisite management depth to support the growth expectations that we have going into the back half of the year and into 2020.

So, I would think of it as slower growth, although we will grow, it'll be more geography-specific. And then, normal course of business type growth sequentially between Q3 and Q4 and then Q4 into Q1 of 2020. Longer term beyond that, we continue to believe with the demand for the services and the opportunity that exists, we're gonna be in that double-digit type growth range. High single digits, maybe low double digits, depending on the quarter or the year with the biggest single variable being management development.

Sean Dodge -- Jefferies -- Analyst

Okay. And then staying on revenue. Is there any update you can provide on the 40 million of service revenue that was put back to your clients in the third quarter? Has any of that been reconstituted yet? Or when do you expect most of those full-service arrangements to be back up and running?

Ted Wahl -- President and Chief Executive Officer

Right now, we're still in a status quo as we were during those transitions. No near-term expectation that there would be a ramp-up back to full services, although as I've said before, that's more typical than not that after a period of time where we are in a reduced service mode, we're more likely to then increase to full service when both parties are ready to do so rather than exit out completely. But in the meantime, we're continuing to provide the management, the supplies, and on the housekeeping side some of the consumables as well.

Sean Dodge -- Jefferies -- Analyst

So, you'd only keep the managers remaining in place if you thought there was still an opportunity for those to go back to full service?

Ted Wahl -- President and Chief Executive Officer

It's customer specific. But generally speaking, yes, because our preference would be to redeploy those management resources to full-service arrangements or with customers that are committed to the relationship and value the services in a way that we believe is mutually beneficial to both.

Operator

Thank you. And our next question comes from Andrew Wittmann with Baird. Please proceed.

Andrew Wittmann -- Baird -- Analyst

Hey, guys, thanks for taking my question. Good morning, hey. I'm just kinda curious on the initiatives that you put in place here to collect your cash a little bit faster. I think you said 40% or something of your clients are paying faster under new terms. Healthcare Services Group's strategy has had many benefits to their customers over the years. You save them money, you make it easier on them, so they can focus on the patients.

But one of those things has always been, hey, we'll float you a little payroll, that'll make it a little bit easier for you. What has the customer response been when you're coming in saying, hey, you need to pay me at least once a month, maybe twice a month and maybe every week? That is one of the things of the value prop. It was valuable to them presumably. And I wanted to understand how that's being received in the marketplace.

Ted Wahl -- President and Chief Executive Officer

I would start with the fact that every conversation, every one of these migrations is done in a collaborative type of way. Now, in some situations, there's a catalyst or a triggering event that forces the conversation. But the ideal approach is that it's a collaborative conversation and it's not about reducing that float or that initial credit term that you alluded to. Andy, that's not the strategy. The strategy is really to increase the frequency intra-month. So, if someone is paying for January services at the end of February, it's not to remove that embedded 28 days. It's to even out the payments over four separate payments within February, which does not have the impact of either reducing RDSO or increasing their payables outstanding.

But what it does do -- and this is getting back to the customer viewpoint -- it often times aligns better with their reimbursement. And it's certainly aligned more consistently with their payroll outflow. I think the customer response because it's done collaboratively and in a way that we try to craft it where it works for both parties has been positive. It's not inconsistent with other providers in the industry. I would use the food broad liners, US Foods or Cisco being the two largest, as primary examples. Where they are time tested models of weekly payments. It's not like it's a foreign concept to the provider community. But again, I think overall positive response and it's something we're deeply committed to as the default model that we think not only will better serve the overall customer experience but also help make sure our cash collections are more representative of our cash outflows.

Andrew Wittmann -- Baird -- Analyst

Okay, great. Thank you for that. I guess the other thing that would be helpful here is some context from you guys. You talked about in the script a little bit but can be confusing around the workers' compensation adjustment for $15 million. Could you just talk about how that affected the quarter, what that actually represents, in maybe more laymen's terms for everybody so that we can understand what that reflects and what that means?

Matt McKee -- Chief Communications Officer

As far as the workers' comp goes, Andy, it really -- you have to look back a number of years to really see the origins of the benefit that is now ultimately running through our financials. It was no more than five years ago that we started restructuring the program prior to even going to that captive model in 2014. It's really that program restructuring that's driving the benefits that we see there out today. And that started with engaging a new broker, partnering with a nurse case management firm, and alongside that bringing a revamped return to work program. Then ultimately unbundling the program engaging a third-party administrator, leveraging their national physician panel and medical bill repricing structure. So that was all of the programmatic groundwork and foundation that we laid.

The final component, as you'd recall, was just dropping into the wholly owned captive. And the goal of all of those initiatives was not necessary to reduce the number of claims but to shift the mix of claims from what was at that time a one-third, two-third indemnity to medical only split. And the indemnity claims are the claims that include not only medical costs but also some component of lost time, lost time from work. To today, now having only 15% of our claims as indemnity with 85% being medical only and a reminder that the delta between the two claim types on a fully developed basis is about $33,000 per claim.

That difference between an indemnity and a medical only claim. So, on thousands of claims per year, over five years, the numbers start to add up and the full run rate of the results are now running through our payment experience. We're not expecting this type of adjustment going forward but reserves and adjustments are based on the annual actuarial assessment and recommended ranges. So, either way, we're gonna continue to seek operational improvements in this area and we'll continue to manage the process conservatively.

Andrew Wittmann -- Baird -- Analyst

Okay so, as it relates to 2018, what was the end year for that year benefit specific to '18 to recognizing that the $15 million covers multiple years of accounting adjustment?

Ted Wahl -- President and Chief Executive Officer

I'd say, maybe answer it a different way. We anticipate about $1.5 million, maybe $2 million of efficiencies in 2019. You would've applied that now newer -- new actuarial experience to the future to 2018. You would've been in and around that range. Annually, not quarterly, annually.

Andrew Wittmann -- Baird -- Analyst

Annually, right. Okay. That's helpful and all my questions for now. Thank you.

Operator

Thank you. And our next question comes from Michael Gallo with CL King. Please proceed.

Michael Gallo -- CL King -- Analyst

Hi, good morning. Ted, you guys have been through a number of these industry credit cycles over the history of the company. And what inning would you say you're in? As I recall, in some of the prior cycles, you kinda hit that point where not only bad debts starts going -- stops going up, but you start to actually resolve the other bankruptcies and start to actually collect relative to what you reserved for.

Do you start to see that happen in 2019? It seems like either one of the cases from last year just resolves with some recovery. And kind of as we sorta look at a year, two years, do you think this will play out with similar cycles, where you kinda hit a point where bad debt reserve reaches sort of the max and then kinda starts to abate again?

Ted Wahl -- President and Chief Executive Officer

Yeah. I think in terms of the industry overall, I do think we're in the back half of the game or back half of the cycle. To piggyback off of your inning reference, maybe we're in the seventh inning stretch, Mike, if I had to put a finger on it. Because we are starting to see industrywide, and certainly within our customer base, more anecdotally, signs of the demographic trends -- improving demographic trends take hold census levels troughing. And that is, I think, far and away even outside of reimbursement methodology, which PDPM, the new reimbursement methodology kicks in October of '19, which I think to a person in the industry believes that will be a net positive.

Now there will be some implementation I'm sure, a work to do around that. But from an overall perspective, the general consensus is that that's going to be a net positive for most of the provider community. But we are starting to see signs of the demographic trends improving and maybe more specific to us, Mike, I think a lot of the hard work around the debt restructuring and much needed rental rate relief has happened. But looking out over the next 6-12 months, there's still more work to be done by some operators. So, it wouldn't be beyond the realm that we could see, let's say, some of the fruits of that labor manifests itself in a similar way to what it did this quarter.

But there's nothing that we anticipate as we sit here today. But again, I think we're still working through the back half of the cycle. But overall, from our perspective, we're very well positioned heading into the year. As I mentioned at the outset, we have very good operating momentum. We have good growth in expansion opportunities. And for us, we've also well positioned the company to mitigate these events, when they do -- mitigate the amount and mitigate the exposure when these events happen. And I think a lot of that -- I think the two customer groups that we increased the AR reserves for this past quarter are good examples of that.

Both were proactively identified months before as potential risks. Both were migrated onto a weekly payment cadence. And both had much less exposure than what they otherwise would have if they took -- if they made -- if they moved forward with these strategic alternatives 12 months ago. So, I think, again, we're well positioned, although we're not completely immune to it. We're well positioned, and I think stronger today to deal with an event here or there than we were a year ago at this time.

Michael Gallo -- CL King -- Analyst

Okay, great. and then just a sort of a follow-up to that. You guys obviously, significantly increased the size of the credit facility and also the allowable leverage that you could take on onto that facility. Obviously, you have no net debt today. Is there a point where you think about as you get to the resolution of some of these problems that you think about broader, capital return as free cash flow starts to mirror net income, and you start to kinda clean up the old problems? Obviously, at this point, dividend payout ratio as a percentage of earnings is probably the lowest it's been in many years.

Ted Wahl -- President and Chief Executive Officer

Yes, it's interesting. We had our board meeting yesterday and had a pretty robust conversation about the dividend. And I will tell you, Mike, we continue to come back to rather than a payout ratio, the board's guidepost for the dividend, in particular, is consistency and sustainability. We want the dividend to be consistent over a period of time and sustainable in perpetuity. And that won't preclude us from increasing the dividend above and beyond a level that it is today. But I think cash flow, cash generation, if it continues to be where it was in '18 and we expect further strength in that area and the year ahead, then we'll be in a position to reassess. Just to give you a window into the board's thinking, it's all about consistency and sustainability.

Michael Gallo -- CL King -- Analyst

Right. In terms of just -- is buyback something that's also been discussed? I know this company -- you used to buyback stock a ways back. But it's been quite a few years, I think since you bought any.

Ted Wahl -- President and Chief Executive Officer

It's talked about, but I think there's a deep commitment as we sit here today to the dividend. It wouldn't preclude us from considering a buyback, but right now the focus and the board's belief of the highest and best use of free cash flow and returning value to the shareholders continues to be the dividend.

Operator

Thank you. And our next question comes from AJ Rice with Credit Suisse. Please proceed.

AJ Rice -- Credit Suisse -- Analyst

Yeah, a couple of quick questions, if I could. So, any background on the restructuring of the Genesis contract? Is that driven by Healthcare Services Group, by Genesis? Does it affect your exposure to Genesis in any way in terms of the nominal liability you carry for with them?

Ted Wahl -- President and Chief Executive Officer

I would say it was done collaboratively with both parties and had absolutely nothing to do with exposure or increasing or decreasing exposure because the relationship, I think sitting here today, is stronger than ever. And a deep commitment on both parties part to the value of the relationship and continuing to make the relationship forward. I think AJ, specifically, maybe to take a step back and then get back to Genesis for a moment. Really, the contract initiatives in general, Matt mentioned earlier, housekeeping and laundry in Q3 and then dining and nutrition in Q4 were really the result of the focus that we had on our near-term priorities around margins, cash flow, and management development.

For the purposes of putting the company, putting us in the strongest position possible with positive momentum heading into the new year. And I think we've absolutely accomplished that heading into the new year. The change with Genesis, specifically, is really more administrative. In that other than Genesis paying the food invoices directly, the other aspects of the relationship, Matt alluded to these earlier, food procurement, management, labor, clinical services, are the same as they were before. And I think for us, we're able to now maintain the combined purchasing scale benefits really to the benefit of Genesis, to the benefit of HCSG and to the benefit of non-Genesis HCSG customers. So, it's like a win-win-win scenario as well as positively impact margins moving forward. So, I think that's really how we think about the change specifically with Genesis and that partnership more than anything else.

Matt McKee -- Chief Communications Officer

And I would just piggyback what Ted said there, AJ. If you go back to the outset of the Genesis dining relationship back at the beginning, the primary food purchasing procurement and synergy opportunity was around volumes and scale that both Genesis and Healthcare Services Group -- not to mention our other customers -- would benefit from that combined scale that the two companies purchasing would bring to the market. The other purchasing opportunity, which we recognize was a bit of a longer play, was for us to understand their systems, their purchasing systems, and processes around menu management, sourcing, product requirements.

We were very clear in calling that out again at the outset of the relationship. Part of that evaluation was us owning that entire process, including the supply chain so that we could assess and enhance along the way. And that's now been accomplished through the full integration into our overall dining processes. Again, to the benefit of both Healthcare, Genesis, and our other customers. So, going forward, as Ted alluded to, we can continue to meet our purchasing and procurement objectives for Genesis and overall, and while Genesis administratively makes those supplier payments directly.

AJ Rice -- Credit Suisse -- Analyst

Okay. My other question was that you talked about elevated payroll costs as the company's investing in management training and ramp up of the new talent. Have you quantified how much of that was in the fourth quarter and is that gonna continue into '19, at least the first half, or not really?

Ted Wahl -- President and Chief Executive Officer

There was about 3 million, AJ, that related to the management training ramp up. The majority of that was Q4 specific. There's gonna be some continued investment in that area but there was a moment in time ramp up just related to increased hiring and development activities. Stuffing the funnel, if you will, to increase the throughput as we move toward the second half of the year where we're looking to again return back to the normal course of business type growth. But we will continue to have that be a high focus area and invest in management development perpetually and in perpetuity as we always have but certainly a heightened focus in the first half of the year.

Operator

Thank you. And our next question comes from Ryan Daniels with William Blair. Please proceed.

Ryan Daniels -- William Blair -- Analyst

Yeah, good morning, guys. Just a few more nuanced questions at this point. In regard to your recontracting to more favorable terms, you mentioned 40% of your clients. What percentage of your revenue or AR is that? Is it a similar 40% or are those kinda bigger clients? Or any different way to look at that?

Ted Wahl -- President and Chief Executive Officer

It's really 40% of billings is how we're thinking about it. So, customers -- think about 40% of facilities, would be the best way to think about it.

Ryan Daniels -- William Blair -- Analyst

How should we think about that going forward? I know you're constantly assessing the risk of your customers. Do you think the majority of that recontracting is done or are you continuing to do that, and you expect another sizable chunk as we look forward?

Ted Wahl -- President and Chief Executive Officer

It'll be done in a methodical and I think case-by-case type of way. I think it is our default model moving forward, though, Ryan. So, with existing customers, right, that's one type of strategy, that's one type of conversation when everything is working in a way that is in line with the original expectations of the agreement. When there's a triggering event, like a missed payment or some other matter, that's a different type of conversation with the customer to try to set up the relationship for success moving forward.

And then with new opportunities, it's yet a different conversation. So, there's no one-size-fits-all but I will say this is our approach moving forward. And we're committed to it without putting a, "Hey, we're gonna be at 75-85% next year." I wouldn't be comfortable putting a target number out there because I think it is a more bottoms-up approach at least with the existing customers. But we're gonna continue to move forward with this as a high priority for the company.

Ryan Daniels -- William Blair -- Analyst

Okay. That's very helpful color. And then last one for me. I know you don't want to give you quarterly guidance. You did talk about a resumption to more normalized growth in the back half of the year. But if we look at, take Q1, you've got a really tough year ago growth comp at mid-20% range. You've got the Q3 restructuring and now the Q4 20 million headwinds a quarter with Genesis. Should we actually be thinking about negative sales performance in the first quarter on a year-over-year basis where you'll see a drop-in sale before rebounding into the back half of the year?

Ted Wahl -- President and Chief Executive Officer

Yeah. I would think of it more -- I think of it more sequentially than I would year-over-year. But if you're looking at where we were in the first quarter of 2018 and where we'll be in the first quarter of 2019, I think based on the full run rate of the contract initiatives being reflected, that's what I would expect, Ryan.

Ryan Daniels -- William Blair -- Analyst

Okay, I just wanted to be certain about that. Thanks, guys.

Operator

Thank you. And our next question comes from Jacob Johnson with Stephens. Please proceed.

Jacob Johnson -- Stephens -- Analyst

Hey, thanks. Just one quick follow-up on the Genesis business and the contract adjustment. Is there other potential for you to bring those revenues back online like the third quarter contractual adjustment? Or is this something different?

Ted Wahl -- President and Chief Executive Officer

I think the relationship with Genesis, with any customer, is always evolving, right? Like any relationship. So, I would never say never. At this point in time for both parties, this is what made sense in a collaborative type of way, but who knows

Jacob Johnson -- Stephens -- Analyst

Got it. And then on the gross margins, the 14%+ target in 2019, does that assume a return to more normal bad debt trends in 2019? Or does it include something for some of these operators who could have some work to do this year?

Ted Wahl -- President and Chief Executive Officer

I think it's just dependent, right? Obviously, we're recognizing a certain portion of bad debt each and every quarter, each and every year based on the best estimates at the time. And if there's a triggering event or something that's unanticipated, then it's reserved for and accounted for appropriately. So, I think it just depends on the situation, the customer, and the environment. As I talked about earlier, as we work through the back half of this cycle.

But we feel like going into the year, we're in a very good position. That we've significantly mitigated some of the future risks that existed through either boosting revenues over the past year or accelerating the payments or reworking the agreements that we had in some cases. But again, as I said earlier, we're not completely immune from a customer or a provider that decides to seek out a strategic alternative or enter into restructuring conversations. And never have been, by the way.

Operator

Thank you. And our next question comes from Bill Sutherland with Benchmark Company. Please proceed.

Bill Sutherland -- Benchmark Company -- Analyst

Thanks, good morning, Ted and Matt. I wanted to just look at the dietary, the recontracting there. It's not just with Genesis, correct?

Ted Wahl -- President and Chief Executive Officer

Correct. There was a few other -- it was more independent and really smaller state-based groups that were part of that as well. But Genesis made up well over 80% of the adjustment.

Bill Sutherland -- Benchmark Company -- Analyst

And should we think about the revenue attached to purchasing as largely -- I mean, is there a margin on that?

Ted Wahl -- President and Chief Executive Officer

I would think of it more as a pass-through design. Again, Matt mentioned it earlier. But the real benefits of the relationship was around scale, volumes, and then specifically on the purchasing side; scale, volumes, and then the systems and around menu management sourcing. And I think Matt mentioned the product requirements or product sourcing. So that's where the benefits lied. It looked and felt more like a pass-through arrangement. So, I think the cleanest way to think about it is a dollar-for-dollar type of change.

Bill Sutherland -- Benchmark Company -- Analyst

So, you -- I'm just -- I'm grappling with your rationale. It makes sense because revenue that's largely profitless as well as reducing your dollar exposure on a credit basis. But I'm wondering about -- I'm just thinking about the gross margin that you targeted 14% prior to this restructuring. And you're maintaining that, but I would think of the upside now to your --

Matt McKee -- Chief Communications Officer

There could be. There could be, Bill. But I mean, for us, it's -- let's -- it's difficult with the transition taking place in December and some of the transitory related, the transitory related cost and what not, maybe. It was difficult to put a finger exactly on what that margin increase would be. But I think we'll have a better view of that certainly first of the year, if not by the first end of the quarter. But as we've said, we expect it to be directionally favorable and we will be in a position first quarter to see where we're at. We'd like to get to the 86% direct cost of services, 14% margins, first before we start talking about and earmarking a better performance than that.

Bill Sutherland -- Benchmark Company -- Analyst

Okay. And then last. Your indications on revenue sequentially gained back to more normal trend. Was it in the second half or not until a little -- really third quarter into fourth quarter? And to that point, is the management training also affecting the pipeline of management? Is that also affecting your dietary cross-sells? Or is that maybe moving at a quicker pace? Thanks.

Matt McKee -- Chief Communications Officer

Yeah, really for us, Bill, the virtuous cycle, if you will, is management development first and foremost as has always been the case, right? We can't do what we do without the requisite number of quality managers. And that includes managing the base business. There's certainly an emphasis on the management development function in service of adding new business but we also are very much focused on delivering a high-quality product and service and experience to our customers. And oftentimes, that means replacing existing managers whoa re not performing. So, there's absolutely a component of that management development function that goes into replacing underperforming managers within the existing structure and add existing customers of ours.

But certainly, the greater focus in the management development function is in service of adding new business. So, for us, it is management development leading to that sort of assessment of management capacity in servicing the existing customers and in adding to that book of business with new facilities and then sort of rinse and repeat, as we've talked about previously. So, without a doubt, that whole component of management development does impact not only greenfield sales opportunities and acquiring new housekeeping customers but likewise, enabling the dining cross-sell. It does come down to management. Do we have the requisite number of managers at the facility level to add new facilities?

Certainly, and especially more pronounced in certain geographies, we have the middle management capacity in dining, but you still need to have a manager on site at the facility level. Those folks are almost exclusively developed through that training program. So, it all does work together, Bill. So as Ted alluded to, it's very much sort of geographically oriented in that, that recruiting, the training, the development, does happen locally within the districts. So, there are absolutely some geographies that are going to be adding new facilities, new business, whether that's housekeeping or dining, here in both the first and second quarters.

There's no doubt about that. But if you look at sort of total company -- someone had called out sorta the -- I think Ryan called out the more challenging first quarter year-over-year comps from a revenue perspective. We think about it very much as a sequential build of developing the managers and then being able to layer on the business. So, I think, ultimately, you'll see new business added in first and second quarters but they'll ultimately kinda total company move the needle you're looking at a back half of the year dynamic.

Operator

Thank you. And our next question comes from Mitra Ramgopal with Sidoti. Please proceed.

Mitra Ramgopal -- Sidoti -- Analyst

Yes, hi, good morning. I was just wondering; as we look into 2019 and beyond, any potential for further contractual adjustments with some of your customers?

Ted Wahl -- President and Chief Executive Officer

We don't anticipate any as we sit here today, Mitra. In fact, we really -- again, in line with the near-term priorities we laid out in the middle of 2018, that really initiated our thinking and the strategies around housekeeping and laundry in Q3, and then dining and nutrition in Q4. We don't anticipate any standing here today. We think we have a good foundation moving into the new year.

Mitra Ramgopal -- Sidoti -- Analyst

Right, OK. Thanks. And just back on the management hiring side. I'm just curious if you think you are on track or you're a little behind given the tight labor market? Are you seeing any headwinds there as it relates to ramping up that pipeline?

Matt McKee -- Chief Communications Officer

I'd say in total, Mitra, if you're looking kind of in a top-down type of way, we're pleased with where with are. The labor market's been fairly stable of late. And as we've discussed previously, that impact is really more pronounced within the local markets. There's generally a greater impact at the facility level with our line staff employees as compared to kind of the management type candidate that we're recruiting and hiring and funneling into the training program. So, labor market, again, it has an impact on certain geographies and in certain markets.

And that tends to be timing related more so that kind of an ongoing issue that we need to address or in any way alter the recruiting or training program. Yeah, we feel total company. We feel good about where we're at. But there are when you drill it down to the local level within the districts, there are some districts that are certainly ahead of where we anticipated that they would be. And maybe able to grow sooner and add more business than what we would've anticipated.

But the flip side of that, is, of course, other districts that are either turning over more candidate through the program than what we would've anticipated or struggling to get bodies into the appropriate facilities through the training program. So very much a district geographically based assessment. But in total, if you roll it all up, Mitra, we're feeling really good about where we're at total company.

Mitra Ramgopal -- Sidoti -- Analyst

Okay, no, that's great. And then finally, just back on the investments you've made on a technology side. Is that pretty much behind you as you enter '19?

Matt McKee -- Chief Communications Officer

We'll always continue to identify opportunities to make appropriate investments in technology if it's for the benefit of the company. If it's aiding in furthering our current efficiencies or if it's better positioning us for scalable growth. Specifically, we talked about the conversion of our antiquated is probably a fair word, finance and accounting platform. It was a legacy system that's decades old. So, we out moved and made that transition to a workday financial module.

So specifically, that was kinda the most significant kind of technological transition that we've undertaken. Well, as I've said, that's behind us. That transition has been undertaken successfully as of Jan 1. But we will always endeavor to identify potential opportunities to further the business by making investments in technology. But as we sit here currently Mitra, that investment is behind us. And nothing significant on the imminent horizon.

Operator

Thank you. And that concludes our Q&A session today. I'd like to turn the call back over to Ted Wahl for closing remarks.

Ted Wahl -- President and Chief Executive Officer

Great, thank you, Tiffany. As we enter 2019 in what is our 43rd year of business, the company's underlying fundamentals are as strong as ever. Our leadership and management team, our business model and the visibility we had into our business model, learning platforms, key operating trends around systems implementation, customer experience, employee engagement and margins, a rock-solid balance sheet, the strong demand for our services, and the growth opportunity that lies ahead for the company, our employees, and all of our stakeholders.

It's very exciting to imagine all of the future possibilities and know that our future begins with our great people going beyond in living out our purpose, exemplifying our values, and fulfilling our company's vision. Purpose, vision, and values is the company's touchstone and is our pathway to delivering sustainable, profitable growth over the long-term. So, on behalf of Matt and all of us at Healthcare Services Group, thank you, Tiffany, for hosting the call today and thank you to everyone for participating.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.

Duration: 47 minutes

Call participants:

Ted Wahl -- President and Chief Executive Officer

Matt McKee -- Chief Communications Officer

Sean Dodge -- Jefferies -- Analyst

Andrew Wittmann -- Baird -- Analyst

Michael Gallo -- CL King -- Analyst

AJ Rice -- Credit Suisse -- Analyst

Ryan Daniels -- William Blair -- Analyst

Jacob Johnson -- Stephens -- Analyst

Bill Sutherland -- Benchmark Company -- Analyst

Mitra Ramgopal -- Sidoti -- Analyst

More HCSG analysis

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