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Feb 06, 2018

Healthcare Services Group, Inc. Reports Results for the Three Months and Year Ended December 31, 2017

BENSALEM, Pa., Feb. 06, 2018 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that revenues for the three months ended December 31, 2017 increased to $499.4 million compared to $398.6 million for the same period in 2016. Net income for the three months ended December 31, 2017 was $20.2 million, or $0.27 per basic and diluted common share.

Revenues for the year ended December 31, 2017 increased to $1.87 billion compared to $1.56 billion for the same period in 2016. Net income for the year ended December 31, 2017 was $88.2 million, or $1.20 per basic and $1.19 per diluted common share.

As previously announced, on January 30, 2018 our Board of Directors declared a quarterly cash dividend of $0.19125 per common share, payable on March 23, 2018 to shareholders of record at the close of business on February 16, 2018. This represents the 59th consecutive quarterly cash dividend payment, as well as the 58th consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, February 7, 2018 at 8:30 a.m. Eastern Time to discuss its results for the three months and year ended December 31, 2017. The call may be accessed via phone at 800-893-5360. The call will be simultaneously webcast under the "Events & Presentations" section of the investor relations page on our website, www.hcsg.com. A replay of the webcast will also be available on our website through approximately 10:00 p.m. Eastern Time on Wednesday, February 7, 2018. The webcast will also be available on our website for one year following the date of the earnings call.

The Company also announced that it will present at Oppenheimer's 28th Annual Healthcare Conference on March 20, 2018 at the Westin New York Grand Central in New York City, New York.

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, as amended, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and 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; having several significant clients which, both individually and in the aggregate,  accounted for a significant portion of our total consolidated revenues for the year ended December 31, 2017; credit and collection risks associated with this industry; 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 other labor related matters such as minimum wage increases; continued realization of tax benefits arising from our corporate reorganization and self-funded health insurance program; risks associated with the reorganization of our corporate structure; realization of our expectations regarding the impact of the Tax Cuts and Jobs Act on our financial results; and the risk factors described in Part I of our Form 10-K for the fiscal year ended December 31, 2016 under "Government Regulation of Clients," "Competition'' and "Service Agreements and Collections," and under Item IA "Risk Factors" in such  Form 10-K.

These factors, in addition to delays in payments from clients and/or clients in bankruptcy or clients with which we are in litigation to collect payment, 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, retain and 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 the successful execution of our 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 Contacts:
  
Theodore WahlMatthew J. McKee
President and Chief Executive OfficerSenior Vice President of Strategy
  
215-639-4274
investor-relations@hcsgcorp.com 


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

(in thousands, except per share data)
 
 For the Three Months Ended For the Year Ended
 December 31, December 31,
 2017  2016 2017 2016
            
Revenues$499,410  $398,565  $1,866,131  $1,562,662 
Operating costs and expenses:       
Cost of services provided432,694  340,897  1,612,510  1,339,492 
Selling, general and administrative33,591  27,225  126,732  105,417 
Income from operations33,125  30,443  126,889  117,753 
Other income:       
Investment and interest1,553  86  6,076  2,634 
Income before income taxes34,678  30,529  132,965  120,387 
Income taxes14,492  10,230  44,739  42,991 
        
Net income$20,186  $20,299  $88,226  $77,396 
        
Basic earnings per common share$0.27  $0.28  $1.20  $1.06 
        
Diluted earnings per common share$0.27  $0.28  $1.19  $1.05 
        
Cash dividends declared per common share$0.19125  $0.18625  $0.75750  $0.73750 
        
Basic weighted average number of common shares outstanding73,601  72,861   73,355  72,754 
        
Diluted weighted average number of common shares outstanding74,631  73,590  74,348  73,474 
            


HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
 
 December 31, 2017 December 31, 2016
Cash and cash equivalents$9,557  $23,853 
Marketable securities, at fair value73,221  67,730  
Accounts and notes receivable, net378,720  271,276 
Other current assets65,908  51,765 
Total current assets527,406  414,624 
    
Property and equipment, net13,509   13,455 
Notes receivable - long term15,476  7,531 
Goodwill51,084  44,438 
Other intangible assets, net30,881  14,409 
Deferred compensation funding28,885  24,119 
Other assets8,762  9,870 
Total Assets$676,003  $528,446 
    
Accrued insurance claims - current$22,245  $23,573 
Other current liabilities161,923  77,298 
Total current liabilities184,168  100,871 
    
Accrued insurance claims - long term62,454  64,080 
Deferred compensation liability29,429  24,653 
Stockholders' equity399,952  338,842 
Total Liabilities and Stockholders' Equity$676,003  $528,446 
        

 

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Source: Healthcare Services Group, Inc.

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