Full Press Release Details
HEALTHCARE SERVICES GROUP, INC. REPORTS RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010
AND DECLARES INCREASED THIRD QUARTER 2010 CASH DIVIDEND AND
ANNOUNCES A THREE-FOR-TWO STOCK SPLIT
Bensalem, PA October 12, 2010, Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that
revenues for the three months ended September 30, 2010 increased over 9% to $195,114,000 compared
to $178,829,000 for the same 2009 period. Net income for the three months ended September 30, 2010
increased approximately 12% to $9,169,000 or $.21 per basic and per diluted common share, compared
to the 2009 third quarter net income of $8,225,000 or $.19 per basic and per diluted common share.
Revenues for the nine months ended September 30, 2010 increased over 12% to $571,868,000
compared to $510,134,000 for the same 2009 period. Net income for the nine months ended September
30, 2010 increased approximately 7% to $25,318,000 or $.58 per basic and $.57 per diluted common
share compared to the 2009 nine month period net income of $23,776,000 or $.55 per basic and $.54
per diluted common share.
The Board of Directors has declared a third quarter 2010 regular quarterly cash dividend of
$.2325 per common share, payable on November 5, 2010 to shareholders of record at the close of
business October 22, 2010. This represents an increase over the dividend declared for the 2010
second quarter, as well as an increase of 16% over the 2009 same period payment. It is the 30th
consecutive regular quarterly cash dividend payment, as well as the 29th consecutive increase since
our initiation of regular quarterly cash dividend payments in 2003.
Additionally, our Board of Directors has declared a three-for-two stock split in the form of a
50% stock dividend payable on November 12, 2010 to holders of record of its Common Stock at the
close of business November 8, 2010. All fractional share interests will be rounded up to the
nearest whole number. The effect of this action will be to increase Common Shares outstanding by
approximately 22,000,000 shares.
| 3rd Quarter 2010 Earnings Release | October 12, 2010 | |
| Page 2 |
The Company will host a conference call on October 13, 2010 at 8:30 AM Eastern Time to discuss
its results for the three and nine month periods ended September 30, 2010. The call in numbers are
888-259-8552 and 913-312-1406 (passcode # 8945410).
Cautionary Statement Regarding Forward-Looking Statements
This release and any schedules incorporated by reference into this report may 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,
which 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,
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 11% of
revenues in the nine month period ended September 30, 2010; risks associated with our acquisition
of Contract Environmental Services, Inc., including integration risks or 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
| 3rd Quarter 2010 Earnings Release | October 12, 2010 | |
| Page 3 |
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,
2009 in Part I thereof under ''Government Regulation of Clients , ''Competition and ''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, most recently the March
2010 enactment of the Patient Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010. Currently, the U.S. Congress is considering further changes or revising
legislation relating to health care in the United States which, among other initiatives, may impose
cost containment measures impacting our clients. These laws and proposed laws and forthcoming
regulations have significantly altered, or threaten 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 from clients, have 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.
| 3rd Quarter 2010 Earnings Release | October 12, 2010 | |
| Page 4 |
Healthcare Services Group, Inc. is the largest national provider of professional housekeeping,
laundry and dietary services to long-term care and related facilities.
| Company Contacts: | ||
| Daniel P. McCartney | ||
| Chairman and Chief Executive Officer | ||
| 215-639-4274 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2010 | December 31, 2009 | |||||||
| Cash and cash equivalents | $ | 26,109,000 | $ | 31,301,000 | ||||
| Marketable securities, net | 44,498,000 | 52,648,000 | ||||||
| Accounts receivable, net | 108,363,000 | 104,356,000 | ||||||
| Other current assets | 24,350,000 | 23,865,000 | ||||||
| Total current assets | 203,320,000 | 212,170,000 | ||||||
| Property and equipment, net | 5,591,000 | 4,391,000 | ||||||
| Notes receivable- long term, net | 6,084,000 | 4,623,000 | ||||||
| Goodwill, net | 16,955,000 | 17,087,000 | ||||||
| Other Intangible Assets, net | 7,730,000 | 8,862,000 | ||||||
| Deferred compensation funding | 12,510,000 | 10,783,000 | ||||||
| Other assets | 10,082,000 | 7,976,000 | ||||||
| Total Assets | $ | 262,272,000 | $ | 265,892,000 | ||||
| Accrued insurance claims- current | $ | 6,032,000 | $ | 4,844,000 | ||||
| Other current liabilities | 18,186,000 | 29,873,000 | ||||||
| Total current liabilities | 24,218,000 | 34,717,000 | ||||||
| Accrued insurance claims- long term | 14,074,000 | 11,302,000 | ||||||
| Deferred compensation liability | 12,837,000 | 11,099,000 | ||||||
| Stockholders equity | 211,143,000 | 208,774,000 | ||||||
| Total Liabilities and Stockholders Equity | $ | 262,272,000 | $ | 265,892,000 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Revenues | $ | 195,114,000 | $ | 178,829,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 168,384,000 | 155,228,000 | ||||||
| Selling, general and administrative | 14,488,000 | 11,936,000 | ||||||
| Income from operations | 12,242,000 | 11,665,000 | ||||||
| Other income: | ||||||||
| Investment and interest income | 1,182,000 | 1,709,000 | ||||||
| Income before income taxes | 13,424,000 | 13,374,000 | ||||||
| Income taxes | 4,255,000 | 5,149,000 | ||||||
| Net income | $ | 9,169,000 | $ | 8,225,000 | ||||
| Basic earnings per common share | $ | .21 | $ | .19 | ||||
| Diluted earnings per common share | $ | .21 | $ | .19 | ||||
| Cash dividends per common share | $ | .23 | $ | .19 | ||||
| Basic weighted average number of common shares outstanding | 44,026,000 | 43,626,000 | ||||||
| Diluted weighted average number of common shares outstanding | 44,719,000 | 44,334,000 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Revenues | $ | 571,868,000 | $ | 510,134,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 492,196,000 | 438,950,000 | ||||||
| Selling, general and administrative | 41,539,000 | 36,328,000 | ||||||
| Income from operations | 38,133,000 | 34,856,000 | ||||||
| Other income: | ||||||||
| Investment and interest income | 1,549,000 | 3,803,000 | ||||||
| Income before income taxes | 39,682,000 | 38,659,000 | ||||||
| Income taxes | 14,364,000 | 14,883,000 | ||||||
| Net income | $ | 25,318,000 | $ | 23,776,000 | ||||
| Basic earnings per common share | $ | .58 | $ | .55 | ||||
| Diluted earnings per common share | $ | .57 | $ | .54 | ||||
| Cash dividends per common share | $ | .66 | $ | .54 | ||||
| Basic weighted average number of common shares outstanding | 43,964,000 | 43,540,000 | ||||||
| Diluted weighted average number of common shares outstanding | 44,677,000 | 44,224,000 |