SOURCE: Healthcare Services Group, Inc.
BENSALEM, PA–(Marketwire – October 12, 2010) – Healthcare Services Group, Inc. (
reported that revenues for the three months ended September 30, 2010
increased over 9% to $195,114,000 compared to $178,829,000 for the same
2009 period. Net income for the three months ended September 30, 2010
increased approximately 12% to $9,169,000 or $.21 per basic and per diluted
common share, compared to the 2009 third quarter net income of $8,225,000
or $.19 per basic and per diluted common share.
Revenues for the nine months ended September 30, 2010 increased over 12% to
$571,868,000 compared to $510,134,000 for the same 2009 period. Net income
for the nine months ended September 30, 2010 increased approximately 7% to
$25,318,000 or $.58 per basic and $.57 per diluted common share compared to
the 2009 nine month period net income of $23,776,000 or $.55 per basic and
$.54 per diluted common share.
The Board of Directors has declared a third quarter 2010 regular quarterly
cash dividend of $.2325 per common share, payable on November 5, 2010 to
shareholders of record at the close of business October 22, 2010. This
represents an increase over the dividend declared for the 2010 second
quarter, as well as an increase of 16% over the 2009 same period payment.
It is the 30th consecutive regular quarterly cash dividend payment, as well
as the 29th consecutive increase since our initiation of regular quarterly
cash dividend payments in 2003.
Additionally, our Board of Directors has declared a three-for-two stock
split in the form of a 50% stock dividend payable on November 12, 2010 to
holders of record of its Common Stock at the close of business November 8,
2010. All fractional share interests will be rounded up to the nearest
whole number. The effect of this action will be to increase Common Shares
outstanding by approximately 22,000,000 shares.
The Company will host a conference call on October 13, 2010 at 8:30 AM
Eastern Time to discuss its results for the three and nine month periods
ended September 30, 2010. The call in numbers are 888-259-8552 and
913-312-1406 (passcode # 8945410).
Cautionary Statement Regarding Forward-Looking Statements
This release and any schedules incorporated by reference into this report
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 nine month period ended September
30, 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 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, 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 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 dietary services to long-term care
and related facilities.
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
September 30,
2010 2009
------------- -------------
Revenues $ 195,114,000 $ 178,829,000
Operating costs and expenses:
Cost of services provided 168,384,000 155,228,000
Selling, general and administrative 14,488,000 11,936,000
------------- -------------
Income from operations 12,242,000 11,665,000
Other income:
Investment and interest income 1,182,000 1,709,000
------------- -------------
Income before income taxes 13,424,000 13,374,000
Income taxes 4,255,000 5,149,000
------------- -------------
Net income $ 9,169,000 $ 8,225,000
============= =============
Basic earnings per common share $ .21 $ .19
============= =============
Diluted earnings per common share $ .21 $ .19
============= =============
Cash dividends per common share $ .23 $ .19
============= =============
Basic weighted average number of
common shares outstanding 44,026,000 43,626,000
============= =============
Diluted weighted average number of
common shares outstanding 44,719,000 44,334,000
============= =============
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
For the Nine Months Ended
September 30,
2010 2009
------------- -------------
Revenues $ 571,868,000 $ 510,134,000
Operating costs and expenses:
Cost of services provided 492,196,000 438,950,000
Selling, general and administrative 41,539,000 36,328,000
------------- -------------
Income from operations 38,133,000 34,856,000
Other income:
Investment and interest income 1,549,000 3,803,000
------------- -------------
Income before income taxes 39,682,000 38,659,000
Income taxes 14,364,000 14,883,000
------------- -------------
Net income $ 25,318,000 $ 23,776,000
============= =============
Basic earnings per common share $ .58 $ .55
============= =============
Diluted earnings per common share $ .57 $ .54
============= =============
Cash dividends per common share $ .66 $ .54
============= =============
Basic weighted average number of common shares
outstanding 43,964,000 43,540,000
============= =============
Diluted weighted average number of common
shares outstanding 44,677,000 44,224,000
============= =============
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2010 2009
------------- -------------
Cash and cash equivalents $ 26,109,000 $ 31,301,000
Marketable securities, net 44,498,000 52,648,000
Accounts receivable, net 108,363,000 104,356,000
Other current assets 24,350,000 23,865,000
------------- -------------
Total current assets 203,320,000 212,170,000
Property and equipment, net 5,591,000 4,391,000
Notes receivable- long term, net 6,084,000 4,623,000
Goodwill, net 16,955,000 17,087,000
Other Intangible Assets, net 7,730,000 8,862,000
Deferred compensation funding 12,510,000 10,783,000
Other assets 10,082,000 7,976,000
------------- -------------
Total Assets $ 262,272,000 $ 265,892,000
============= =============
Accrued insurance claims- current $ 6,032,000 $ 4,844,000
Other current liabilities 18,186,000 29,873,000
------------- -------------
Total current liabilities 24,218,000 34,717,000
Accrued insurance claims- long term 14,074,000 11,302,000
Deferred compensation liability 12,837,000 11,099,000
Stockholders' equity 211,143,000 208,774,000
------------- -------------
Total Liabilities and Stockholders' Equity $ 262,272,000 $ 265,892,000
============= =============