Full Press Release Details
HEALTHCARE SERVICES GROUP, INC. REPORTS
RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 2011 AND DECLARES INCREASED FIRST
QUARTER 2011 CASH DIVIDEND
Bensalem, PA April 12, 2011 Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that revenues
for the three months ended March 31, 2011 increased over 13% to $208,390,000 compared to
$183,801,000 for the same 2010 period. Net income for the three months ended March 31, 2011
increased to $7,767,000 or $.12 per basic and per diluted common share, compared to the 2010 first
quarter net income of $7,428,000 or $.11 per basic and per diluted common share.
Additionally, our Board of Directors declared a regular quarterly cash dividend of $.1575 per
common share, payable on May 13, 2011 to shareholders of record at the close of business April 22,
2011. This represents an increase of 7% over the dividend declared for the same 2010 period
payment. It is the 32nd consecutive regular quarterly cash dividend payment, as well as the 31st
consecutive increase since our initiation of regular quarterly cash dividend payments in 2003.
The Company will host a conference call on Wednesday, April 13, 2011 at 8:30 AM Eastern Time
to discuss its results for the three month period ended March 31, 2011. The call in numbers will be
800-580-5706 and 913-981-5575. Passcode # 6685660.
| 2011 First Quarter Earnings Release | April 12, 2011 | |
| Page 2 |
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
10% of revenues in the three month period ended March 31, 2011; our claims experience related to
workers compensation and general liability insurance; the effects of changes in, or
interpretations of laws and
| 2011 First Quarter Earnings Release | April 12, 2011 | |
| Page 3 |
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 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.
| 2011 First Quarter Earnings Release | April 12, 2011 | |
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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
| March 31, 2011 | December 31, 2010 | |||||||
| Cash and cash equivalents | $ | 36,692,000 | $ | 39,692,000 | ||||
| Marketable securities, net | 41,199,000 | 43,437,000 | ||||||
| Accounts receivable, net | 111,364,000 | 108,426,000 | ||||||
| Other current assets | 27,369,000 | 30,220,000 | ||||||
| Total current assets | 216,624,000 | 221,775,000 | ||||||
| Property and equipment, net | 7,592,000 | 6,656,000 | ||||||
| Notes receivable- long term, net | 4,931,000 | 5,055,000 | ||||||
| Goodwill, net | 16,955,000 | 16,955,000 | ||||||
| Other Intangible Assets, net | 6,794,000 | 7,262,000 | ||||||
| Deferred compensation funding | 12,948,000 | 12,080,000 | ||||||
| Other assets | 8,467,000 | 8,151,000 | ||||||
| Total Assets | $ | 274,311,000 | $ | 277,934,000 | ||||
| Accrued insurance claims- current | $ | 5,634,000 | $ | 5,076,000 | ||||
| Other current liabilities | 28,819,000 | 35,455,000 | ||||||
| Total current liabilities | 34,453,000 | 40,531,000 | ||||||
| Accrued insurance claims- long term | 13,147,000 | 11,845,000 | ||||||
| Deferred compensation liability | 13,094,000 | 12,479,000 | ||||||
| Stockholders equity | 213,617,000 | 213,079,000 | ||||||
| Total Liabilities and Stockholders Equity | $ | 274,311,000 | $ | 277,934,000 |
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Revenues | $ | 208,390,000 | $ | 183,801,000 | ||||
| Operating costs and expenses: | ||||||||
| Cost of services provided | 179,985,000 | 158,573,000 | ||||||
| Selling, general and administrative | 16,780,000 | 13,901,000 | ||||||
| Income from operations | 11,625,000 | 11,327,000 | ||||||
| Other income: | ||||||||
| Investment and interest | 714,000 | 750,000 | ||||||
| Income before income taxes | 12,339,000 | 12,077,000 | ||||||
| Income taxes | 4,572,000 | 4,649,000 | ||||||
| Net income | $ | 7,767,000 | $ | 7,428,000 | ||||
| Basic earnings per common share | $ | .12 | $ | .11 | ||||
| Diluted earnings per common share | $ | .12 | $ | .11 | ||||
| Cash dividends per common share | $ | .16 | $ | .14 | ||||
| Basic weighted average number of common shares outstanding | 66,401,000 | 65,849,000 | ||||||
| Diluted weighted average number of common shares outstanding | 67,454,000 | 66,989,000 |