April 12, 2016

Healthcare Services Group, Inc. Reports Results for the Three Months Ended March 31, 2016 & Increases First Quarter 2016 Cash Dividend

BENSALEM, Pa., April 12, 2016 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that revenues for the three months ended March 31, 2016 increased approximately 8% to $384,807,000 compared to the same 2015 period. Net income for the three months ended March 31, 2016 was $18,626,000 or $0.26 per basic and per diluted common share, compared to the three months ended March 31, 2015 net income of $15,516,000 or $0.22 per basic and per diluted common share.

Additionally, our Board of Directors declared a quarterly cash dividend of $0.18250 per common share, payable on June 24, 2016 to shareholders of record at the close of business on May 20, 2016. This represents the 52nd consecutive quarterly cash dividend payment, as well as the 51st consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, April 13, 2016 at 8:30 a.m. Eastern Time to discuss its results for the three months ended March 31, 2016. 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, April 13th.

The Company also announced that it will present at several upcoming conferences, including the UBS Global Healthcare Conference on May 24th at the Grand Hyatt New York in New York City, the Jefferies 2016 Global Healthcare Conference on June 7th at the Grand Hyatt New York in New York City, and the Citi 2016 Small & Mid Cap Conference on June 9th at the Lotte New York Palace in New York City.

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, 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; having several significant clients who each individually contributed at least 3% with one as high as 9% of our total consolidated revenues for the three months ended March 31, 2016; 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 receipt of tax benefits arising from our corporate reorganization and self-funded health insurance program transition; risks associated with the reorganization of our corporate structure; and the risk factors described in our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2015 in Part I thereof under ''Government Regulation of Clients," ''Competition'' and ''Service Agreements/Collections," and under Item IA "Risk Factors".

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 Contacts:        
         
Daniel P. McCartney   Theodore Wahl   Matthew J. McKee
Chairman   President and Chief Executive Officer   Vice President of Strategy
         
215-639-4274        
investor-relations@hcsgcorp.com         


HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
   
  For the Three Months Ended
  March 31,
  2016 2015
Revenues $384,807,000  $355,246,000 
Operating costs and expenses:    
Cost of services provided 330,044,000  303,936,000 
Selling, general and administrative 25,346,000  26,763,000 
Income from operations 29,417,000  24,547,000 
Other income, net:    
Investment and interest 187,000  507,000 
Income before income taxes 29,604,000  25,054,000 
Income tax provision 10,978,000  9,538,000 
     
Net income $18,626,000  $15,516,000 
     
Basic earnings per common share $0.26  $0.22 
     
Diluted earnings per common share $0.26  $0.22 
     
Cash dividends per common share $0.18  $0.18 
     
Basic weighted average number of common shares outstanding 72,364,000  71,469,000 
     
Diluted weighted average number of common shares outstanding 73,014,000  72,159,000 


HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
     
   March 31, 2016 December 31, 2015
Cash and cash equivalents $29,120,000  $33,189,000 
Marketable securities, at fair value 72,358,000  69,496,000 
Accounts and notes receivable, net 236,412,000  214,854,000 
Other current assets 53,615,000  47,803,000 
Total current assets 391,505,000  365,342,000  
     
Property and equipment, net 13,275,000  13,086,000 
Notes receivable - long term 3,213,000  2,972,000 
Goodwill 44,438,000  44,438,000 
Other intangible assets, net 16,297,000  17,108,000 
Deferred compensation funding 25,659,000  25,391,000 
Other assets 8,708,000  12,612,000 
     
Total Assets $503,095,000  $480,949,000 
     
Accrued insurance claims - current $21,475,000  $19,740,000 
Other current liabilities 81,121,000  76,325,000 
Total current liabilities 102,596,000  96,065,000 
     
Accrued insurance claims - long term 61,783,000  62,510,000 
Deferred compensation liability 25,761,000  25,918,000 
Stockholders' equity  312,955,000  296,456,000 
     
Total Liabilities and Stockholders' Equity $503,095,000  $480,949,000 

 

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Source: Healthcare Services Group, Inc.

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