Healthcare Services Group, Inc. Declares Increased Fourth Quarter 2011 Cash Dividend

Tue Jan 24, 2012 4:18pm EST

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

Healthcare Services Group, Inc.'s (NASDAQ: HCSG) Board of Directors has
declared a regular quarterly cash dividend of $.16125 per common share,
payable on March 16, 2012 to shareholders of record at the close of
business February 24, 2012. This represents the 35th consecutive regular
quarterly cash dividend payment, as well as the 34th consecutive increase
since our initiation of regular quarterly cash dividend payments in 2003.

    They intend to release their results for the year ended December 31, 2011
during the week of February 6, 2012. Following the release, they will
hold a conference call to discuss their results. 

    The Company also announces that it will make a presentation on February
8, 2012 regarding the Company at the "UBS Annual Global Healthcare
Services Conference" at the Grand Hyatt in New York City. Additionally,
this presentation will be audio webcast at

    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
year ended December 31, 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 and related agencies have
affected through the enactment of a number of major laws and regulations
during the past decade, including the March 2010 enactment of the Patient
Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010. Most recently, on July 29, 2011, the United
States Center for Medicare Services issued final rulings which, among
other things, will reduce Medicare payments to nursing centers by 11.1%
and change the reimbursement for the provision of group rehabilitation
therapy services to Medicare beneficiaries. 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.


Company Contact:
Daniel P. McCartney
Chairman and Chief Executive Officer

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