HEALTHCARE SERVICES GROUP, INC. DECLARES FOURTH QUARTER 2006 CASH DIVIDEND Bensalem, PA

HEALTHCARE SERVICES GROUP, INC.

DECLARES FOURTH QUARTER 2006 CASH DIVIDEND

Bensalem, PA January 23, 2007- Healthcare Services Group, Inc. (NASDAQ-HCSG)

Our Board of Directors has declared a regular quarterly cash dividend of $.14 per common

share, payable on February 14, 2007 to shareholders of record at the close of business February 5,

2007. This dividend represents an 8% increase over the dividend declared for the 2006 third quarter

and a 40% increase over the 2005 same period payment. It is the fifteenth consecutive regular

quarterly cash dividend payment, as well as the fourteenth consecutive increase since our

initiation of regular quarterly cash dividend payments in 2003.

We have a Dividend Reinvestment Plan available for shareholders to apply their dividends to

the purchase of the Company s common stock.

We intend to release our results for the three months (unaudited) and year ended (audited)

December 31, 2006 during the week of February 16, 2007.

The Company announced that it will make a presentation on February 14, 2007 regarding the

Company at the UBS Warburg Global Healthcare Services Conference at the Grand Hyatt in New York

City. Additionally, this presentation will be audio webcast at www.ibb.ubs.com.

Forward Looking Statements/Risk Factors

This press release may include forward-looking statements within the meaning of Section 27A of the

Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as

amended, that are not historical facts but rather are based on current expectations, estimates and

projections about our business and industry, our beliefs and assumptions. Words such as believes ,

anticipates , plans , expects , intends , will , goal , and similar expressions are intended

to identify forward-looking statements. The inclusion of forward-looking statements should not be

regarded as a representation by us that any of our plans will be achieved. We undertake no

obligation to publicly update or revise any forward-looking statements, whether as a result of new

information, future events or otherwise. Such forward looking information is also subject to

various risks and uncertainties. Such risks and uncertainties include, but are not limited to,

risks arising from our providing services exclusively to the health care industry, primarily

providers of long-term care; credit and collection risks associated with this industry; one client

accounting for approximately 18% of 2006 annual revenues ( the client completed its previously

announced merger on March 14, 2006); risks associated with our recent acquisition of Summit

Services Group, Inc., including integration risks and costs, or such business not achieving

expected financial results or synergies or failure to otherwise perform as expected; our claims

experience related to workers compensation and general liability insurance; the effects of changes

in, or interpretations of laws and regulations governing the industry, including state and local

regulations pertaining to the taxability of our services; and risk factors described in our Form

10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005 in Part

I thereof under Government Regulation of Clients , Competition and Service

Agreements/Collections and Risk Factors . Many of our

clients revenues are highly contingent on Medicare and Medicaid reimbursement funding rates, which

have been and continue to be adversely affected by the change in Medicare payments under the 1997

enactment of Medicare Prospective Payment System. That change, and the lack of substantive

reimbursement funding rate reform legislation, as well as other trends in the long-term care

industry have resulted in certain of our clients filing for bankruptcy protection. Others may

follow. Any decisions by the government to discontinue or adversely modify legislation related to

reimbursement funding rates will have a material adverse affect on our clients. These factors, in

addition to delays in payments from clients, have resulted in and could continue to result in

significant additional bad debts in the future. Additionally, our operating results would also be

adversely affected if unexpected increases in the costs of labor and labor related costs,

materials, supplies and equipment used in performing our services could not be passed on to

In addition, we believe that to improve our financial performance we must continue to obtain

service agreements with new clients, provide new services to existing clients, achieve modest price

increases on current service agreements with existing clients and maintain internal cost reduction

strategies at our various operational levels. Furthermore, we believe that our ability to sustain

the internal development of managerial personnel is an important factor impacting future operating

results and successfully executing projected growth strategies.

Healthcare Services Group, Inc. is the largest national provider of professional housekeeping,

laundry and food services to long-term care and related facilities.