SOURCE: Healthcare Services Group, Inc.
BENSALEM, PA–(Marketwire – July 13, 2010) – Healthcare Services Group, Inc. (
reported that revenues for the three months ended June 30, 2010 increased
13% to $192,954,000 compared to $170,896,000 for the same 2009 period. Net
income for the three months ended June 30, 2010 increased 12% to $8,721,000
or $.20 per basic and per diluted common share, compared to the 2009 second
quarter net income of $7,815,000 or $.18 per basic and per diluted common
share.
Revenues for the six months ended June 30, 2010 increased 14% to
$376,755,000 compared to $331,305,000 for the same 2009 period. Net income
for the six months ended June 30, 2010 increased 4% to $16,149,000 or $.37
per basic and $.36 per diluted common share compared to the 2009 six month
period net income of $15,551,000 or $.36 per basic and $.35 per diluted
common share.
The Board of Directors has declared a second quarter 2010 regular quarterly
cash dividend of $.23 per common share, payable on August 6, 2010 to
shareholders of record at the close of business July 23, 2010. This
represents a 5% increase over the dividend declared for the 2010 first
quarter and a 21% increase over the 2009 same period payment. It is the
29th consecutive regular quarterly cash dividend payment, as well as the
28th consecutive increase since our initiation of regular quarterly cash
dividend payments in 2003.
The Company will host a conference call on July 14, 2010 at 8:30 AM Eastern
Time to discuss its results for the three and six month periods ended June
30, 2010. The call in numbers are 800-401-3551 and 913-312-0688 (passcode #
2084962).
Cautionary Statement Regarding Forward-Looking Statements
This release and any schedules incorporated by reference into this report
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, 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 11% of revenues in the six month period ended June 30, 2010;
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, 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 changes or
revising 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 dietary services to long-term care
and related facilities.
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
June 30,
2010 2009
------------- --------------
Revenues $ 192,954,000 $ 170,896,000
Operating costs and expenses:
Cost of services provided 165,240,000 145,830,000
Selling, general and administrative 13,150,000 13,516,000
------------- --------------
Income from operations 14,564,000 11,550,000
Other income (loss):
Investment and interest income (loss) (383,000) 1,157,000
------------- --------------
Income before income taxes 14,181,000 12,707,000
Income taxes 5,460,000 4,892,000
------------- --------------
Net income $ 8,721,000 $ 7,815,000
============= ==============
Basic earnings per common share $ .20 $ .18
============= ==============
Diluted earnings per common share $ .20 $ .18
============= ==============
Cash dividends per common share $ .22 $ .18
============= ==============
Basic weighted average number of common shares
outstanding 43,965,000 43,537,000
============= ==============
Diluted weighted average number of common
shares outstanding 44,652,000 44,262,000
============= ==============
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Six Months Ended
June 30,
2010 2009
------------- -------------
Revenues $ 376,755,000 $ 331,305,000
Operating costs and expenses:
Cost of services provided 323,812,000 283,722,000
Selling, general and administrative 27,051,000 24,392,000
------------- -------------
Income from operations 25,892,000 23,191,000
Other income:
Investment and interest income 366,000 2,094,000
------------- -------------
Income before income taxes 26,258,000 25,285,000
Income taxes 10,109,000 9,734,000
------------- -------------
Net income $ 16,149,000 $ 15,551,000
============= =============
Basic earnings per common share $ .37 $ .36
============= =============
Diluted earnings per common share $ .36 $ .35
============= =============
Cash dividends per common share $ .43 $ .35
============= =============
Basic weighted average number of common shares
outstanding 43,932,000 43,497,000
============= =============
Diluted weighted average number of common shares
outstanding 44,655,000 44,168,000
============= =============
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
June 30, 2010 2009
------------- -------------
Cash and cash equivalents $ 34,968,000 $ 31,301,000
Marketable securities, net 44,099,000 52,648,000
Accounts receivable, net 107,253,000 104,356,000
Other current assets 23,715,000 23,865,000
------------- -------------
Total current assets 210,035,000 212,170,000
Property and equipment, net 4,931,000 4,391,000
Notes receivable- long term, net 6,165,000 4,623,000
Goodwill , net 16,955,000 17,087,000
Other Intangible Assets, net 8,198,000 8,862,000
Deferred compensation funding 11,238,000 10,783,000
Other assets 9,032,000 7,976,000
------------- -------------
Total Assets $ 266,554,000 $ 265,892,000
============= =============
Accrued insurance claims- current $ 5,305,000 $ 4,844,000
Other current liabilities 27,237,000 29,873,000
------------- -------------
Total current liabilities 32,542,000 34,717,000
Accrued insurance claims- long term 12,377,000 11,302,000
Deferred compensation liability 11,479,000 11,099,000
Stockholders' equity 210,156,000 208,774,000
------------- -------------
Total Liabilities and Stockholders' Equity $ 266,554,000 $ 265,892,000
============= =============
Daniel P. McCartney
Chairman and Chief Executive Officer
215-639-4274
Thomas Cook
President
215-639-4274