Healthcare Services Group, Inc. Reports Results for the Three and Six Months Ended June 30, 2012 and Declares Increased Second Quarter 2012 Cash Dividend

Tue Jul 10, 2012 4:15pm EDT

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

  BENSALEM, PA, Jul 10 (Marketwire) -- 
Healthcare Services Group, Inc. (NASDAQ: HCSG) reported that revenues for
the three months ended June 30, 2012 increased over 26% to $267,108,000
compared to $211,507,000 for the same 2011 period. Net income for the
three months ended June 30, 2012 increased 15% to $11,320,000 or $.17 per
basic and per diluted common share, compared to the 2011 second quarter
net income of $9,828,000 or $.15 per basic and per diluted common share. 

    Revenues for the six months ended June 30, 2012 increased over 25% to
$527,715,000 compared to $419,897,000 for the same 2011 period. Net
income for the six months ended June 30, 2012 increased 13% to
$19,899,000 or $.30 per basic and $.29 per diluted common share, compared
to the 2011 six month period net income of $17,595,000 or $.26 per basic
and per diluted common share. 

    Additionally, our Board of Directors declared a regular quarterly cash
dividend of $.16375 per common share, payable on August 24, 2012 to
shareholders of record at the close of business on July 27, 2012. This
represents the 37th consecutive regular quarterly cash dividend payment,
as well as the 36th consecutive increase since our initiation of regular
quarterly cash dividend payments in 2003.

    The Company will host a conference call on Wednesday, July 11, 2012 at
8:30 AM Eastern Time to discuss its results for the three and six month
period ended June 30, 2012. The call in number will be 888-378-4353.
Passcode #9677754.

    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; from having several significant clients who each individually
contributed at least 3% with one as high as 7% to our total consolidated
revenues in the three and six month period ended June 30, 2012; 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, 2011
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 significantly 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.
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)

                     For the Three Months Ended    For the Six Months Ended 
                              June 30,                     June 30,
                    ---------------------------- ---------------------------
                         2012           2011          2012          2011
                    -------------  ------------- ------------- -------------
Revenues            $ 267,108,000  $ 211,507,000 $ 527,715,000 $ 419,897,000
Operating costs and
 expenses:
  Cost of services
   provided           230,206,000    181,742,000   457,701,000   361,727,000
  Selling, general
   and
   administrative      18,524,000     15,511,000    39,506,000    32,291,000
                    -------------  ------------- ------------- -------------
Income from
 operations            18,378,000     14,254,000    30,508,000    25,879,000
Other income
 (loss):
  Investment and
   interest               (95,000)       463,000     1,558,000     1,177,000
                    -------------  ------------- ------------- -------------
Income before
 income taxes          18,283,000     14,717,000    32,066,000    27,056,000
Income taxes            6,963,000      4,889,000    12,167,000     9,461,000
                    -------------  ------------- ------------- -------------

Net income          $  11,320,000  $   9,828,000 $  19,899,000 $  17,595,000
                    =============  ============= ============= =============

Basic earnings per
 common share       $         .17  $         .15 $         .30 $         .26
                    =============  ============= ============= =============

Diluted earnings
 per common share   $         .17  $         .15 $         .29 $         .26
                    =============  ============= ============= =============

Cash dividends per
 common share       $         .16  $         .16 $         .32 $         .31
                    =============  ============= ============= =============

Basic weighted
 average number of
 common shares
 outstanding           67,296,000     66,517,000    67,189,000    66,459,000
                    =============  ============= ============= =============

Diluted weighted
 average number of
 common shares
 outstanding           68,228,000     67,545,000    68,155,000    67,499,000
                    =============  ============= ============= =============

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

                                           June 30, 2012   December 31, 2011
                                         ----------------- -----------------
Cash and cash equivalents                $      55,599,000 $      38,639,000
Marketable securities, at fair value            21,398,000        31,337,000
Accounts receivable, net                       135,795,000       130,744,000
Other current assets                            37,532,000        31,401,000
                                         ----------------- -----------------
  Total current assets                         250,324,000       232,121,000

Property and equipment, net                     10,132,000         9,763,000
Notes receivable- long term, net                 2,973,000         1,483,000
Goodwill, net                                   16,955,000        16,955,000
Other Intangible Assets, net                     6,288,000         7,372,000
Deferred compensation funding                   15,795,000        13,780,000
Other assets                                     9,957,000         8,221,000
                                         ----------------- -----------------

Total Assets                             $     312,424,000 $     289,695,000
                                         ================= =================

Accrued insurance claims- current        $       6,341,000 $       5,296,000
Other current liabilities                       53,097,000        40,091,000
                                         ----------------- -----------------
  Total current liabilities                     59,438,000        45,387,000

Accrued insurance claims- long term             14,797,000        12,358,000
Deferred compensation liability                 16,132,000        14,224,000
Stockholders' equity                           222,057,000       217,726,000
                                         ----------------- -----------------

Total Liabilities and Stockholders'
 Equity                                  $     312,424,000 $     289,695,000
                                         ================= =================


    


Company Contacts:

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

Theodore Wahl 
President and Chief Operating Officer 
215-639-4274 

Copyright 2012, Marketwire, All rights reserved.

-0-