Full Press Release Details
HEALTHCARE SERVICES GROUP, INC.
REPORTS RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 2008 AND DECLARES INCREASED FIRST QUARTER 2008 CASH DIVIDEND
Bensalem, PA April 15, 2008, Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that
revenues increased to $147,259,000 for the three months ended March 31, 2008 compared to
$141,166,000 for the same 2007 period. Net income for the three months ended March 31, 2008 was
$6,857,000 or $.16 per basic and per diluted common share, compared to the 2007 first quarter net
income of $7,450,000 or $.18 per basic and $.17 per diluted common share.
Additionally, the Company s Board of Directors has declared an increased first quarter 2008
cash dividend of $.14 per common share payable on May 12, 2008 to shareholders of record at the
close of business April 25, 2008. The first quarter 2008 cash dividend represents a 8% increase
over the cash dividend declared for the 2007 fourth quarter and is the 20th consecutive regular
quarterly cash dividend payment, as well as the 19th 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 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
15% of revenues in the 2008 first quarter; risks associated with our acquisition of Summit Services
Group, Inc.; our claims experience related to workers compensation and general liability
| Earnings Release | April 15, 2008 | |
| Page 3 |
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, 2007, including 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 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.
| Earnings Release | April 15, 2008 | |
| Page 4 |
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, 2008 | December 31, 2007 | |||||||
| Cash and cash equivalents | $ | 96,957,000 | $ | 92,461,000 | ||||
| Accounts receivable, net | 84,556,000 | 82,951,000 | ||||||
| Other current assets | 22,415,000 | 19,686,000 | ||||||
| Total current assets | 203,928,000 | 195,098,000 | ||||||
| Property and equipment, net | 4,095,000 | 4,303,000 | ||||||
| Notes receivable- long term, net | 7,209,000 | 6,058,000 | ||||||
| Goodwill , net | 15,020,000 | 15,020,000 | ||||||
| Other Intangible Assets, net | 5,826,000 | 6,090,000 | ||||||
| Deferred compensation funding | 9,659,000 | 10,361,000 | ||||||
| Other assets | 5,971,000 | 6,438,000 | ||||||
| Total Assets | $ | 251,708,000 | $ | 243,368,000 | ||||
| Accrued insurance claims- current | $ | 3,880,000 | $ | 4,302,000 | ||||
| Other current liabilities | 27,873,000 | 23,579,000 | ||||||
| Total current liabilities | 31,753,000 | 27,881,000 | ||||||
| Accrued insurance claims- long term | 9,054,000 | 10,037,000 | ||||||
| Deferred compensation liability | 9,759,000 | 10,732,000 | ||||||
| Stockholders equity | 201,142,000 | 194,718,000 | ||||||
| Total Liabilities and Stockholders Equity | $ | 251,708,000 | $ | 243,368,000 |
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2008 | 2007 | |||||||
| Revenues | $ | 147,259,000 | $ | 141,166,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 125,854,000 | 119,801,000 | ||||||
| Selling, general and administrative | 10,579,000 | 10,511,000 | ||||||
| Income from operations | 10,826,000 | 10,854,000 | ||||||
| Other income: | ||||||||
| Investment and interest | 324,000 | 1,261,000 | ||||||
| Income before income taxes | 11,150,000 | 12,115,000 | ||||||
| Income taxes | 4,293,000 | 4,665,000 | ||||||
| Net income | $ | 6,857,000 | $ | 7,450,000 | ||||
| Basic earnings per common share | $ | .16 | $ | .18 | ||||
| Diluted earnings per common share | $ | .16 | $ | .17 | ||||
| Cash dividends per common share | $ | .13 | $ | .09 | ||||
| Basic weighted average number of common shares outstanding | 43,016,000 | 41,657,000 | ||||||
| Diluted weighted average number of common shares outstanding | 44,213,000 | 43,662,000 |