Full Press Release Details
HEALTHCARE SERVICES GROUP, INC.
REPORTS RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 2007 AND DECLARES FIRST QUARTER 2007 CASH DIVIDEND
| Net income up 31% on an 18% increase in revenues | |||
| Quarterly cash dividend raised 7% over 2006 fourth quarter cash dividend and 36% over 2006 first quarter cash dividend |
Bensalem, PA April 17, 2007, Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that revenues
for the three months ended March 31, 2007 increased by over 18 % to $140,679,000 compared to
$118,918,000for the same 2006 period. Net income increased over 31% for the three months ended March
31, 2007 to $7,450,000 or $.27 per basic and $.26 per diluted common share, compared to the 2006
first quarter net income of $5,676,000 or $.21 per basic and $.20 per diluted common share.
Additionally, the Company s Board of Directors has declared a first quarter 2007 cash dividend
of $.15 per common share payable on May 11, 2007 to shareholders of record at the close of business
April 27, 2007. The first quarter 2007 cash dividend represents a 7% increase over the cash
dividend declared for the 2006 fourth quarter and is the sixteenth consecutive regular quarterly
cash dividend payment, as well as the fifteenth consecutive increase since our initiation of
regular quarterly cash dividend payments in 2003.
Cautionary Statement Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 2-IE 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 16% of revenues in the 2007 first quarter; risks associated with our
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
the risk factors described in our Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 2006 Part I thereof under
Government Regulation of Clients , Competition and Service Agreements/Collections , and under Part 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 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
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.
| Company Contacts: | ||
| Daniel P. McCartney | Thomas Cook | |
| Chairman and Chief Executive Officer | President and Chief Operating Officer | |
| 215-639-4274 | 215-639-4274 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31 , 2007 | December 31 , 2006 | |||||||
| Cash and cash equivalents | $ | 78,999,000 | $ | 72,997,000 | ||||
| Accounts receivable, net | 80,691,000 | 78,086,000 | ||||||
| Other current assets | 18,558,000 | 17,154,000 | ||||||
| Total current assets | 178,248,000 | 168,237,000 | ||||||
| Property and equipment, net | 4,748,000 | 4,875,000 | ||||||
| Notes receivable long term, net | 8,082,000 | 7,861,000 | ||||||
| Goodwill , net | 14,570,000 | 14,543,000 | ||||||
| Other Intangible Assets, net | 6,883,000 | 7,148,000 | ||||||
| Deferred compensation funding | 8,356,000 | 7,385,000 | ||||||
| Other assets | 5,844,000 | 5,507,000 | ||||||
| Total Assets | $ | 226,731,000 | $ | 215,556,000 | ||||
| Accrued insurance claims current | $ | 4,623,000 | $ | 4,647,000 | ||||
| Other current liabilities | 25,431,000 | 22,963,000 | ||||||
| Total current liabilities | 30,054,000 | 27,610,000 | ||||||
| Accrued insurance claims long term | 10,786,000 | 10,843,000 | ||||||
| Deferred compensation liability | 12,497,000 | 11,626,000 | ||||||
| Stockholders equity | 173,394,000 | 165,477,000 | ||||||
| Total Liabilities and Stockholders Equity | $ | 226,731,000 | $ | 215,556,000 |
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
| For the Three Months Ended | ||||||||
| March 31 , | ||||||||
| 2007 | 2006 | |||||||
| Revenues | $ | 140,679,000 | $ | 118,918,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 119,314,000 | 102,182,000 | ||||||
| Selling, general and administrative | 10,511,000 | 9,074,000 | ||||||
| Other income: | ||||||||
| Investment and interest | 1,261,000 | 1,347,000 | ||||||
| Income before income taxes | 12,115,000 | 9,009,000 | ||||||
| Income taxes | 4,665,000 | 3,333,000 | ||||||
| Net income | $ | 7,450,000 | $ | 5,676,000 | ||||
| Basic earnings per common share | $ | .27 | $ | .21 | ||||
| Diluted earnings per common share | $ | .26 | $ | .20 | ||||
| Cash dividends per common share | $ | .14 | $ | .10 | ||||
| Basic weighted average number of common shares outstanding | 27,771,000 | 27,320,000 | ||||||
| Diluted weighted average number of common shares outstanding | 29,108,000 | 28,620,000 |