Full Press Release Details
HEALTHCARE SERVICES GROUP, INC. REPORTS
RESULTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2011 AND DECLARES INCREASED THIRD
QUARTER 2011 CASH DIVIDEND
Bensalem, PA October 11, 2011 Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that
revenues for the three months ended September 30, 2011 increased over 12% to $218,929,000 compared
to $195,114,000 for the same 2010 period. Net income for the three months ended September 30, 2011
increased 9% to $9,996,000 or $.15 per basic and per diluted common share, compared to the 2010
third quarter net income of $9,169,000 or $.14 per basic and per diluted common share.
Revenues for the nine months ended September 30, 2011 increased approximately 12% to
$638,826,000 compared to $571,868,000 for the same 2010 period. Net income for the nine months
ended September 30, 2011 increased 9% to $27,591,000 or $.41 per basic and per diluted common
share compared to the 2010 nine month period net income of $25,318,000 or $.38 per basic and per
diluted common share.
Additionally, our Board of Directors declared a regular quarterly cash dividend of $.16 per
common share, payable on November18, 2011 to shareholders of record at the close of business on
October 28, 2011. This represents the 34th consecutive regular quarterly cash dividend payment, as
well as the 33rd consecutive increase since our initiation of regular quarterly cash dividend
The Company will host a conference call on Wednesday, October 12, 2011 at 8:30 AM Eastern Time
to discuss its results for the three and nine month periods ended September 30, 2011. The call in
number will be 888-329-8889. Passcode #5435900 .
Cautionary Statement Regarding Forward-Looking Statements
This release and any schedules incorporated by reference into it 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
9% of revenues in the nine month period ended September 30, 2011; 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,
2010 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 and related
agencies have affected through the enactment of a number of major laws and regulations during the
past decade, including the March 2010 enactment of the Patient Protection and Affordable Care Act
and the Health Care and Education Reconciliation Act of 2010. Most recently, on July 29, 2011, the
United States Center for Medicare Services issued final rulings which, among other things, will
reduce Medicare payments to nursing centers by 11.1% and change the reimbursement for the provision
of group rehabilitation therapy services to Medicare beneficiaries. 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 has 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.
Healthcare Services Group, Inc. is the largest national provider of professional housekeeping,
laundry and dietary services to long-term care and related health care facilities.
Chairman and Chief Executive Officer
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2011 | December 31, 2010 | |||||||
| Cash and cash equivalents | $ | 27,128,000 | $ | 39,692,000 | ||||
| Marketable securities, net | 41,174,000 | 43,437,000 | ||||||
| Accounts receivable, net | 117,247,000 | 108,426,000 | ||||||
| Other current assets | 30,138,000 | 30,220,000 | ||||||
| Total current assets | 215,687,000 | 221,775,000 | ||||||
| Property and equipment, net | 9,373,000 | 6,656,000 | ||||||
| Notes receivable- long term, net | 2,488,000 | 5,055,000 | ||||||
| Goodwill , net | 16,955,000 | 16,955,000 | ||||||
| Other Intangible Assets, net | 7,914,000 | 7,262,000 | ||||||
| Deferred compensation funding | 12,387,000 | 12,080,000 | ||||||
| Other assets | 8,511,000 | 8,151,000 | ||||||
| Total Assets | $ | 273,315,000 | $ | 277,934,000 | ||||
| Accrued insurance claims- current | $ | 5,863,000 | $ | 5,076,000 | ||||
| Other current liabilities | 23,889,000 | 35,455,000 | ||||||
| Total current liabilities | 29,752,000 | 40,531,000 | ||||||
| Accrued insurance claims- long term | 13,681,000 | 11,845,000 | ||||||
| Deferred compensation liability | 12,786,000 | 12,479,000 | ||||||
| Stockholders equity | 217,096,000 | 213,079,000 | ||||||
| Total Liabilities and Stockholders Equity | $ | 273,315,000 | $ | 277,934,000 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| Revenues | $ | 218,929,000 | $ | 195,114,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 188,041,000 | 168,384,000 | ||||||
| Selling, general and administrative | 14,344,000 | 14,488,000 | ||||||
| Income from operations | 16,544,000 | 12,242,000 | ||||||
| Other income (loss): | ||||||||
| Investment and interest income (loss) | (1,355,000 | ) | 1,182,000 | |||||
| Income before income taxes | 15,189,000 | 13,424,000 | ||||||
| Income taxes | 5,193,000 | 4,255,000 | ||||||
| Net income | $ | 9,996,000 | $ | 9,169,000 | ||||
| Basic earnings per common share | $ | .15 | $ | .14 | ||||
| Diluted earnings per common share | $ | .15 | $ | .14 | ||||
| Cash dividends per common share | $ | .16 | $ | .15 | ||||
| Basic weighted average number of common shares outstanding | 66,710,000 | 66,039,000 | ||||||
| Diluted weighted average number of common shares outstanding | 67,530,000 | 67,079,000 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| Revenues | $ | 638,826,000 | $ | 571,868,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 549,768,000 | 492,196,000 | ||||||
| Selling, general and administrative | 46,635,000 | 41,539,000 | ||||||
| Income from operations | 42,423,000 | 38,133,000 | ||||||
| Other income: | ||||||||
| Investment and interest income | (178,000 | ) | 1,549,000 | |||||
| Income before income taxes | 42,245,000 | 39,682,000 | ||||||
| Income taxes | 14,654,000 | 14,364,000 | ||||||
| Net income | $ | 27,591,000 | $ | 25,318,000 | ||||
| Basic earnings per common share | $ | .41 | $ | .38 | ||||
| Diluted earnings per common share | $ | .41 | $ | .38 | ||||
| Cash dividends per common share | $ | .47 | $ | .44 | ||||
| Basic weighted average number of common shares outstanding | 66,544,000 | 65,946,000 | ||||||
| Diluted weighted average number of common shares outstanding | 67,510,000 | 67,016,000 |