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Apr 15, 2008

Healthcare Services Group, Inc. Reports Results for the Three Months Ended March 31, 2008 and Declares Increased First Quarter 2008 Cash Dividend

Healthcare Services Group, Inc. Reports Results for the Three Months Ended March 31, 2008 and Declares Increased First Quarter 2008 Cash DividendBENSALEM, PA, Apr 15, 2008 (MARKET WIRE via COMTEX News Network) -- Healthcare Services Group, Inc. (NASDAQ: HCSG) reported that revenues increased to $147,259,000 for the three months ended March 31, 2008 compared to $141,166,000 for the same 2007 period. Net income for the three months ended March 31, 2008 was $6,857,000 or $.16 per basic and per diluted common share, compared to the 2007 first quarter net income of $7,450,000 or $.18 per basic and $.17 per diluted common share.

Additionally, the Company's Board of Directors has declared an increased first quarter 2008 cash dividend of $.14 per common share payable on May 12, 2008 to shareholders of record at the close of business April 25, 2008. The first quarter 2008 cash dividend represents an 8% increase over the cash dividend declared for the 2007 fourth quarter and is the twentieth consecutive regular quarterly cash dividend payment, as well as the nineteenth consecutive increase since our initiation of regular quarterly cash dividend payments in 2003.

Cautionary Statement Regarding Forward-Looking Statements

This report contains 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 15% of revenues in the 2008 first quarter; risks associated with our acquisition of Summit Services Group, Inc.; 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, 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, 2007, including Part I thereof under "Government Regulation of Clients," "Competition" and "Service Agreements/Collections," and under Part 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. These 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 food services to long-term care and related facilities.

                      HEALTHCARE SERVICES GROUP, INC.
                                                For the Three Months Ended
                                                        March 31,
                                                    2008          2007
                                                ------------- -------------
Revenues                                        $ 147,259,000 $ 141,166,000
Operating costs and expenses:
   Cost of services provided                      125,854,000   119,801,000
   Selling, general and administrative             10,579,000    10,511,000
                                                ------------- -------------
Income from operations                             10,826,000    10,854,000
Other income:
   Investment and interest                            324,000     1,261,000
                                                ------------- -------------
Income before income taxes                         11,150,000    12,115,000
Income taxes                                        4,293,000     4,665,000
                                                ------------- -------------
Net income                                      $   6,857,000 $   7,450,000
                                                ============= =============
Basic earnings per common share                 $         .16 $         .18
                                                ============= =============
Diluted earnings per common share               $         .16 $         .17
                                                ============= =============
Cash dividends per common share                 $         .13 $         .09
                                                ============= =============
Basic weighted average number of common shares
 outstanding                                       43,016,000    41,657,000
                                                ============= =============
Diluted weighted average number of common shares
 outstanding                                       44,213,000    43,662,000
                                                ============= =============
                      HEALTHCARE SERVICES GROUP, INC.
                                                  March 31,   December 31,
                                                    2008          2007
                                                ------------- -------------
Cash and cash equivalents                       $  96,957,000 $  92,461,000
Accounts receivable, net                           84,556,000    82,951,000
Other current assets                               22,415,000    19,686,000
   Total current assets                           203,928,000   195,098,000
Property and equipment, net                         4,095,000     4,303,000
Notes receivable- long term, net                    7,209,000     6,058,000
Goodwill, net                                      15,020,000    15,020,000
Other Intangible Assets, net                        5,826,000     6,090,000
Deferred compensation funding                       9,659,000    10,361,000
Other assets                                        5,971,000     6,438,000
                                                ------------- -------------
Total Assets                                    $ 251,708,000 $ 243,368,000
                                                ============= =============
Accrued insurance claims- current               $   3,880,000 $   4,302,000
Other current liabilities                          27,873,000    23,579,000
                                                ------------- -------------
   Total current liabilities                       31,753,000    27,881,000
Accrued insurance claims- long term                 9,054,000    10,037,000
Deferred compensation liability                     9,759,000    10,732,000
Stockholders' equity                              201,142,000   194,718,000
                                                ------------- -------------
Total Liabilities and Stockholders' Equity      $ 251,708,000 $ 243,368,000
                                                ============= =============

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

Thomas Cook
President and Chief Operating Officer

SOURCE: Healthcare Services Group, Inc.