HEALTHCARE SERVICES GROUP, INC. REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND DECLARES INCREASED THIRD QUARTER 2009 CASH DIVIDEND Bensalem, PA

HEALTHCARE SERVICES GROUP, INC. REPORTS RESULTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009

AND DECLARES INCREASED THIRD QUARTER 2009 CASH DIVIDEND

Bensalem, PA October 13, 2009, Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that

revenues for the three months ended September 30, 2009 increased 17% to $178,829,000 compared to

$152,978,000 for the same 2008 period. Net income for the three months ended September 30, 2009

increased 49% to $8,225,000 or $.19 per basic and per diluted common share, compared to the 2008

third quarter net income of $5,522,000 or $.13 per basic and per diluted common share.

Revenues for the nine months ended September 30, 2009 increased 14% to $510,134,000 compared

to $448,155,000 for the same 2008 period. Net income for the nine months ended September 30, 2009

increased 23% to $23,776,000 or $.55 per basic and $.54 per diluted common share compared to the

2008 nine month period net income of $19,331,000 or $.45 per basic and $.44 per diluted common

The Board of Directors has declared a third quarter 2009 regular quarterly cash dividend of

$.20 per common share, payable on November 6, 2009 to shareholders of record at the close of

business October 23, 2009. This represents over a 5% increase over the dividend declared for the

2009 second quarter and a 25% increase over the 2008 same period payment. It is the 26th

consecutive regular quarterly cash dividend payment, as well as the 25th consecutive increase since

our initiation of regular quarterly cash dividend payments in 2003.

The Company will host a conference call on October 14, 2009 at 8:30 AM Eastern Time to discuss

its results for the three and nine month periods ended September 30, 2009. The call in numbers are

888-208-1625 and 913-312-0865 (passcode #6074013).

Cautionary Statement Regarding Forward-Looking Statements

This release and any schedules incorporated by reference into this report contain 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 (the Exchange Act ), as amended, are not historical

facts but rather based on current expectations, estimates and projections about our business and

industry, our beliefs and assumptions. Words such as believes , anticipates , plans , expects ,

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 13% of

revenues in the nine month period ended September 30, 2009; risks associated with our acquisition

of Contract Environmental Services, 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, our workforce and

services provided, including state and local regulations pertaining to the taxability of our

services; and the risk factors described in our Form 10-K filed with the Securities and Exchange

Commission for the year ended December 31, 2008 in Part I

under Government Regulation of Clients , Competition , Service Agreements/Collections , and

under Item IA Risk Factors . Many of our clients

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

has affected through the enactment of a number of major laws during the past decade. These laws

have significantly altered, or threatened to alter, overall government reimbursement funding rates

and mechanisms. The overall effect of these laws and trends in the long-term care industry have

affected and could adversely affect the liquidity of our clients, resulting in their inability to

make payments to us on agreed upon payment terms. These factors, in addition to delays in payments

resulted in, and could continue to result in, significant additional bad debts in the near

future. Additionally, our operating results would be adversely affected if unexpected increases in

the costs of labor and labor related costs, materials, supplies and equipment used in performing

services could not be passed on to our clients.

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.

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF INCOME