SOURCE: Healthcare Services Group, Inc.

February 09, 2010 16:15 ET

Healthcare Services Group, Inc. Reports Results for the Three Months and Year Ended December 31, 2009

BENSALEM, PA--(Marketwire - February 9, 2010) - Healthcare Services Group, Inc. (NASDAQ: HCSG) reported that revenues for the three months ended December 31, 2009 increased 18% to $182,561,000 compared to $154,563,000 for the same 2008 period. Net income for the three months ended December 31, 2009 was $6,566,000 or $.15 per basic and per diluted common share, compared to the 2008 fourth quarter net income of $7,283,000 or $.17 per basic and per diluted common share.

The Company also reported that revenues for the year ended December 31, 2009 increased 15% to $692,695,000 compared to $602,718,000 for the same 2008 period. In addition, net income for the year ended December 31, 2009 increased over 14% to $30,342,000 or $.70 per basic and $.69 per diluted common share compared to the year ended December 31, 2008 net income of $26,614,000 or $.62 per basic and $.60 per diluted common share.

Additionally, on January 26, 2010, our Board of Directors declared a regular quarterly cash dividend of $.21 per common share, payable on March 5, 2010 to shareholders of record at the close of business February 12, 2010. This represents a 5% increase over the dividend declared for the 2009 third quarter and a 24% increase over the 2008 same period payment. It is the 27th consecutive regular quarterly cash dividend payment, as well as the 26th 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 10, 2010 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, 2009. The call in numbers will be 800-769-8320 and 416-695-6616.

Cautionary Statement Regarding Forward-Looking Statements

This release 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 12% of revenues in the year ended December 31, 2009; risks associated with our acquisition of Contract Environmental Services, 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, 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, 2008 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. Currently, the U.S. Congress is considering legislation to reform health care in the United States which, among other initiatives, may impose cost containment measures impacting our clients. These laws and proposed 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.

Healthcare Services Group, Inc. is the largest national provider of professional housekeeping, laundry and food services to long-term care and related facilities.

                      HEALTHCARE SERVICES GROUP, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                (Unaudited)

                                                  December 31, December 31,
                                                      2009         2008
                                                  ------------ ------------
Cash and cash equivalents                         $ 31,301,000 $ 37,501,000
Marketable securities, net                          52,648,000   49,413,000
Accounts receivable, net                           104,356,000   96,558,000
Other current assets                                23,865,000   23,143,000
  Total current assets                             212,170,000  206,615,000

Property and equipment, net                          4,391,000    3,929,000
Notes receivable- long term, net                     4,623,000    3,201,000
Goodwill, net                                       17,087,000   15,020,000
Other Intangible Assets, net                         8,862,000    5,033,000
Deferred compensation funding                       10,783,000    8,287,000
Other assets                                         7,976,000    6,476,000
                                                  ------------ ------------

Total Assets                                      $265,892,000 $248,561,000
                                                  ============ ============


Accrued insurance claims- current                 $  4,844,000 $  3,943,000
Other current liabilities                           29,873,000   25,099,000
                                                  ------------ ------------
  Total current liabilities                         34,717,000   29,042,000

Accrued insurance claims- long term                 11,302,000    9,201,000
Deferred compensation liability                     11,099,000    8,636,000
Stockholders' equity                               208,774,000  201,682,000
                                                  ------------ ------------

Total Liabilities and Stockholders' Equity        $265,892,000 $248,561,000
                                                  ============ ============




                      HEALTHCARE SERVICES GROUP, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                                (Unaudited)

                                                 For the Three Months Ended
                                                        December 31,
                                                      2009         2008
                                                  ------------ ------------
Revenues                                          $182,561,000 $154,563,000
Operating costs and expenses:
   Cost of services provided                       158,765,000  134,113,000
   Selling, general and administrative              13,941,000    9,204,000
                                                  ------------ ------------
Income from operations                               9,855,000   11,246,000

Other income:
   Investment and interest income                      821,000      596,000
                                                  ------------ ------------
Income before income taxes                          10,676,000   11,842,000
Income taxes                                         4,110,000    4,559,000
                                                  ------------ ------------
Net income                                        $  6,566,000 $  7,283,000
                                                  ============ ============

Basic earnings per common share                   $        .15 $        .17
                                                  ============ ============

Diluted earnings per common share                 $        .15 $        .17
                                                  ============ ============

Cash dividends per common share                   $        .20 $        .16
                                                  ============ ============
Basic weighted average number of common shares
 outstanding                                        43,715,000   43,290,000
                                                  ============ ============

Diluted weighted average number of common shares
 outstanding                                        44,470,000   43,948,000
                                                  ============ ============




                      HEALTHCARE SERVICES GROUP, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                                (Unaudited)

                                                     For the Year Ended
                                                        December 31,
                                                      2009         2008
                                                  ------------ ------------
Revenues                                          $692,695,000 $602,718,000
Operating costs and expenses:
   Cost of services provided                       597,715,000  521,269,000
   Selling, general and administrative              50,269,000   39,523,000
                                                  ------------ ------------
                                                    44,711,000   41,926,000

Other income:
   Investment and interest income                    4,624,000    1,349,000
                                                  ------------ ------------
Income before income taxes                          49,335,000   43,275,000
Income taxes                                        18,993,000   16,661,000
                                                  ------------ ------------
Net income                                        $ 30,342,000 $ 26,614,000
                                                  ============ ============

Basic earnings per Common Share                   $        .70 $        .62
                                                  ============ ============

Diluted earnings per Common Share                 $        .69 $        .60
                                                  ============ ============

Cash dividends per common share                   $        .74 $        .58
                                                  ============ ============
Basic weighted average number of common shares
 outstanding                                        43,584,000   43,131,000
                                                  ============ ============

Diluted weighted average number of common shares
 outstanding                                        44,286,000   44,025,000
                                                  ============ ============

Contact Information

  • Company Contacts:
    Daniel P. McCartney
    Chairman and Chief Executive Officer
    215-639-4274

    Thomas Cook
    President
    215-639-4274