Full Press Release Details
HEALTHCARE SERVICES GROUP, INC. REPORTS
RESULTS FOR THE THREE MONTHS AND YEAR ENDED
Bensalem, PA February 7, 2011 Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that
revenues for the three months ended December 31, 2010 increased 11% to $202,087,000 compared to
$182,561,000 for the same 2009 period. Net income for the three months ended December 31, 2010
increased 39% to $9,123,000 or $.14 per basic and per diluted common share, compared to the 2009
fourth quarter net income of $6,566,000 or $.10 per basic and per diluted common share.
The Company also reported that revenues for the year ended December 31, 2010 increased 12% to
$773,956,000 compared to $692,695,000 for the same 2009 period. Net income for the year ended
December 31, 2010 increased 14% to $34,441,000 or $.52 per basic and $.51 per diluted common share
compared to the year ended December 31, 2009 net income of $30,342,000 or $.46 per basic and per
diluted common share.
Additionally, on January 25, 2011, our Board of Directors declared a regular
quarterly cash dividend of $.15625 per common share, payable on March 4, 2011 to shareholders of
record at the close of business February 11, 2011. This dividend payment represents a 12% increase
over the 2009 same period payment. It is the 31st consecutive regular quarterly cash dividend
payment, as well as the 30th consecutive increase since our initiation of regular quarterly cash
dividend payments in 2003.
The Company also announced that it will make a presentation on February 8, 2011 regarding the
Company at the UBS Warburg Global Healthcare Services Conference at the Grand Hyatt in New York
City. This presentation will also be audio webcast at www.ibb.ubs.com.
The Company will host a conference call today at 4:30 PM Eastern Time to discuss its results
for the three month and twelve month periods ended December 31, 2010. The call in numbers will be
800-406-5345 and 913-312-9312, passcode 3960086.
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
11% of revenues in the year ended December 31, 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 the industry, our workforce
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 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 facilities.
Chairman and Chief Executive Officer
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2010 | December 31, 2009 | |||||||
| Cash and cash equivalents | $ | 39,692,000 | $ | 31,301,000 | ||||
| Marketable securities, net | 43,437,000 | 52,648,000 | ||||||
| Accounts receivable, net | 108,426,000 | 104,356,000 | ||||||
| Other current assets | 30,220,000 | 23,865,000 | ||||||
| Total current assets | 221,775,000 | 212,170,000 | ||||||
| Property and equipment, net | 6,656,000 | 4,391,000 | ||||||
| Notes receivable- long term, net | 5,055,000 | 4,623,000 | ||||||
| Goodwill, net | 16,955,000 | 17,087,000 | ||||||
| Other Intangible Assets, net | 7,262,000 | 8,862,000 | ||||||
| Deferred compensation funding | 12,080,000 | 10,783,000 | ||||||
| Other assets | 8,151,000 | 7,976,000 | ||||||
| Total Assets | $ | 277,934,000 | $ | 265,892,000 | ||||
| Accrued insurance claims- current | $ | 5,076,000 | $ | 4,844,000 | ||||
| Other current liabilities | 35,455,000 | 29,873,000 | ||||||
| Total current liabilities | 40,531,000 | 34,717,000 | ||||||
| Accrued insurance claims- long term | 11,845,000 | 11,302,000 | ||||||
| Deferred compensation liability | 12,479,000 | 11,099,000 | ||||||
| Stockholders equity | 213,079,000 | 208,774,000 | ||||||
| Total Liabilities and Stockholders Equity | $ | 277,934,000 | $ | 265,892,000 |
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
| For the Three Months Ended | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Revenues | $ | 202,087,000 | $ | 182,561,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 172,952,000 | 158,765,000 | ||||||
| Selling, general and administrative | 15,771,000 | 13,941,000 | ||||||
| Income from operations | 13,364,000 | 9,855,000 | ||||||
| Other income: | ||||||||
| Investment and interest income | 1,073,000 | 821,000 | ||||||
| Income before income taxes | 14,437,000 | 10,676,000 | ||||||
| Income taxes | 5,314,000 | 4,110,000 | ||||||
| Net income | $ | 9,123,000 | $ | 6,566,000 | ||||
| Basic earnings per common share | $ | .14 | $ | .10 | ||||
| Diluted earnings per common share | $ | .14 | $ | .10 | ||||
| Cash dividends per common share | $ | .155 | $ | .13 | ||||
| Basic weighted average number of common shares outstanding | 66,074,000 | 65,572,000 | ||||||
| Diluted weighted average number of common shares outstanding | 67,232,000 | 66,705,000 |
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Revenues | $ | 773,956,000 | $ | 692,695,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 665,149,000 | 597,715,000 | ||||||
| Selling, general and administrative | 57,310,000 | 50,269,000 | ||||||
| 51,497,000 | 44,711,000 | |||||||
| Other income: | ||||||||
| Investment and interest income | 2,622,000 | 4,624,000 | ||||||
| Income before income taxes | 54,119,000 | 49,335,000 | ||||||
| Income taxes | 19,678,000 | 18,993,000 | ||||||
| Net income | $ | 34,441,000 | $ | 30,342,000 | ||||
| Basic earnings per Common Share | $ | .52 | $ | .46 | ||||
| Diluted earnings per Common Share | $ | .51 | $ | .46 | ||||
| Cash dividends per common share | $ | .60 | $ | .49 | ||||
| Basic weighted average number of common shares outstanding | 65,917,000 | 65,376,000 | ||||||
| Diluted weighted average number of common shares outstanding | 67,008,000 | 66,429,000 |