Healthcare Services Group, Inc. Reports Results for the Three and Six Months Ended June 30, 2011 and Declares Increased

Tue Jul 12, 2011 4:12pm EDT

* Reuters is not responsible for the content in this press release.

  BENSALEM, PA, Jul 12 (MARKET WIRE) -- 
Healthcare Services Group, Inc. (NASDAQ: HCSG) reported that revenues for
the three months ended June 30, 2011 increased approximately 10% to
$211,507,000 compared to $192,954,000 for the same 2010 period. Net
income for the three months ended June 30, 2011 increased approximately
13% to $9,828,000 or $.15 per basic and per diluted common share,
compared to the 2010 second quarter net income of $8,721,000 or $.13 per
basic and per diluted common share. 

    Revenues for the six months ended June 30, 2011 increased over 11% to
$419,897,000 compared to $376,755,000 for the same 2010 period. Net
income for the six months ended June 30, 2010 increased approximately 9%
to $17,595,000 or $.26 per basic and per diluted common share compared to
the 2010 six month period net income of $16,149,000 or $.25 per basic and
$.24 per diluted common share. 

    Additionally, our Board of Directors declared a regular quarterly cash
dividend of $.15875 per common share, payable on August 19, 2011 to
shareholders of record at the close of business July 29, 2011. This
represents an increase of 4% over the dividend declared for the same 2010
period payment. It is the 33rd consecutive regular quarterly cash
dividend payment, as well as the 32nd consecutive increase since our
initiation of regular quarterly cash dividend payments in 2003.

    The Company will host a conference call on Wednesday, July 13, 2011 at
8:30 AM Eastern Time to discuss its results for the three and six month
periods ended June 30, 2011. The call in number will be 888-221-3887.
Passcode # 6493204.

    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 9% of revenues in the
six month period ended June 30, 2011; 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, 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.

    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 health care facilities.

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

                                                For the Three Months Ended
                                                         June 30,
                                                    2011           2010
                                               -------------- ------------- 

Revenues                                       $  211,507,000 $ 192,954,000 
Operating costs and expenses:
  Cost of services provided                       181,742,000   165,240,000 
  Selling, general and administrative              15,511,000    13,150,000 
                                               -------------- ------------- 

Income from operations                             14,254,000    14,564,000 
Other income (loss):
  Investment and interest income (loss)               463,000      (383,000)
                                               -------------- ------------- 

Income before income taxes                         14,717,000    14,181,000 
Income taxes                                        4,889,000     5,460,000 
                                               -------------- ------------- 

Net income                                     $    9,828,000 $   8,721,000 
                                               ============== ============= 

Basic earnings per common share                $          .15 $         .13 
                                               ============== ============= 

Diluted earnings per common share              $          .15 $         .13 
                                               ============== ============= 

Cash dividends per common share                $          .16 $         .15 
                                               ============== ============= 

Basic weighted average number of common shares
 outstanding                                       66,517,000    65,948,000 
                                               ============== ============= 

Diluted weighted average number of common
 shares outstanding                                67,545,000    66,978,000 
                                               ============== ============= 

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

                                                  For the Six Months Ended
                                                          June 30,
                                                    2011           2010
                                               -------------- --------------

Revenues                                       $  419,897,000 $  376,755,000
Operating costs and expenses:
  Cost of services provided                       361,727,000    323,812,000
  Selling, general and administrative              32,291,000     27,051,000
                                               -------------- --------------

Income from operations                             25,879,000     25,892,000
Other income:
  Investment and interest income                    1,177,000        366,000
                                               -------------- --------------

Income before income taxes                         27,056,000     26,258,000
Income taxes                                        9,461,000     10,109,000
                                               -------------- --------------

Net income                                     $   17,595,000 $   16,149,000
                                               ============== ==============

Basic earnings per common share                $          .26 $          .25
                                               ============== ==============

Diluted earnings per common share              $          .26 $          .24
                                               ============== ==============

Cash dividends per common share                $          .31 $          .29
                                               ============== ==============

Basic weighted average number of common shares
 outstanding                                       66,459,000     65,898,000
                                               ============== ==============

Diluted weighted average number of common
 shares outstanding                                67,499,000     66,983,000
                                                =============  =============

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

                                          June 30, 2011    December 31, 2010
                                       ------------------ ------------------

Cash and cash equivalents              $       35,498,000 $       39,692,000
Marketable securities, net                     40,782,000         43,437,000
Accounts receivable, net                      117,204,000        108,426,000
Other current assets                           27,566,000         30,220,000
                                       ------------------ ------------------
  Total current assets                        221,050,000        221,775,000

Property and equipment, net                     8,178,000          6,656,000
Notes receivable- long term, net                3,793,000          5,055,000
Goodwill, net                                  16,955,000         16,955,000
Other Intangible Assets, net                    6,326,000          7,262,000
Deferred compensation funding                  13,462,000         12,080,000
Other assets                                    9,125,000          8,151,000
                                       ------------------ ------------------

Total Assets                           $      278,889,000 $      277,934,000
                                       ================== ==================

Accrued insurance claims- current      $        5,878,000 $        5,076,000
Other current liabilities                      31,326,000         35,455,000
                                       ------------------ ------------------
  Total current liabilities                    37,204,000         40,531,000

Accrued insurance claims- long term            13,715,000         11,845,000
Deferred compensation liability                13,728,000         12,479,000
Stockholders' equity                          214,242,000        213,079,000
                                       ------------------ ------------------

Total Liabilities and Stockholders'
 Equity                                $      278,889,000 $      277,934,000
                                       ================== ==================

    


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

Copyright 2011, Market Wire, All rights reserved.

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