Healthcare Services Group, Inc. Reports Results for the Three Months and Year Ended December 31, 2014

February 3, 2015

BENSALEM, Pa., Feb. 3, 2015 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (Nasdaq:HCSG) reported that revenues for the three months ended December 31, 2014 increased over 12% to $341,624,000 compared to $303,833,000 for the same 2013 period. Net income for the three months ended December 31, 2014 was $15,472,000 or $0.22 per basic and per diluted common share, compared to the three months ended December 31, 2013 net income of $5,452,000 or $0.08 per basic and per diluted common share.

Revenues for the year ended December 31, 2014 increased over 12% to $1,293,183,000 compared to $1,149,890,000 for the same 2013 period. Inclusive of the non-recurring charges announced as part of the third quarter results, net income for the year ended December 31, 2014 was $21,850,000 or $0.31 per basic and per diluted common share, compared to the year ended December 31, 2013 net income of $47,129,000 or $0.68 per basic and $0.67 per diluted common share.

As previously announced, on January 27th our Board of Directors declared a quarterly cash dividend of $0.17625 per common share, payable on March 27, 2015 to shareholders of record at the close of business on February 20, 2015. This represents the 47th consecutive quarterly cash dividend payment, as well as the 46th consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, February 4, 2015 at 8:30 a.m. Eastern Time to discuss its results for the three months and year ended December 31, 2014. 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, A replay of the webcast will also be available on our website through approximately 10:00 p.m. Eastern Time on Wednesday, February 4th.

The Company also announced that it will present at several upcoming conferences, including the RBC Capital Markets Global Healthcare Conference on February 24th at the New York Palace Hotel in New York City, the Sidoti & Company, LLC 19th Annual Small-Cap Equity Conference on March 16th at the Grand Hyatt Hotel in New York City and the UBS Global Healthcare Conference on May 19th at the Sheraton New York Times Square Hotel 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 (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 two as high as 6% of our total consolidated revenues for the year ended December 31, 2014; risks associated with our acquisition of Platinum Health Services, LLC; 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; 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, 2013 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.

  For the Three Months Ended For the Year Ended
  December 31, December 31,
  2014 2013 2014 2013
Revenues $ 341,624,000 $ 303,833,000 $ 1,293,183,000 $ 1,149,890,000
Operating costs and expenses:        
Cost of services provided 296,350,000 269,347,000 1,155,293,000 995,104,000
Selling, general and administrative 24,149,000 29,269,000 107,810,000 91,998,000
Income from operations 21,125,000 5,217,000 30,080,000 62,788,000
Other income:        
Investment and interest 494,000 1,264,000 1,628,000 3,701,000
Income before income taxes 21,619,000 6,481,000 31,708,000 66,489,000
Income taxes 6,147,000 1,029,000 9,858,000 19,360,000
Net income $ 15,472,000 $ 5,452,000 $ 21,850,000 $ 47,129,000
Basic earnings per common share $ 0.22 $ 0.08 $ 0.31 $ 0.68
Diluted earnings per common share $ 0.22 $ 0.08 $ 0.31 $ 0.67
Cash dividends per common share $ 0.18 $ 0.17 $ 0.69 $ 0.67
Basic weighted average number of common shares outstanding 71,023,000 70,037,000 70,616,000 69,206,000
Diluted weighted average number of common shares outstanding 71,722,000 70,898,000 71,341,000 70,045,000
  December 31, 2014 December 31, 2013
Cash and cash equivalents $ 75,280,000 $ 64,155,000
Marketable securities, at fair value 11,799,000 11,445,000
Accounts and notes receivable, net 198,128,000 189,107,000
Other current assets 49,621,000 44,485,000
Total current assets 334,828,000 309,192,000
Property and equipment, net 12,772,000 11,304,000
Notes receivable - long term, net 5,179,000 5,779,000
Goodwill 44,438,000 40,183,000
Other intangible assets, net 20,349,000 23,372,000
Deferred compensation funding 24,742,000 22,200,000
Other assets 27,271,000 13,312,000
Total Assets $ 469,579,000 $ 425,342,000
Accrued insurance claims - current $ 17,748,000 $ 7,853,000
Other current liabilities 100,211,000 91,250,000
Total current liabilities 117,959,000 99,103,000
Accrued insurance claims - long term 50,514,000 18,325,000
Deferred compensation liability 25,276,000 22,771,000
Stockholders' equity 275,830,000 285,143,000
Total Liabilities and Stockholders' Equity $ 469,579,000 $ 425,342,000
CONTACT: Company Contacts:

         Daniel P. McCartney

         Chairman and Chief Executive Officer

         Theodore Wahl

         President and Chief Operating Officer

         Matthew J. McKee

         Vice President of Strategy


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Healthcare Services Group, Inc.

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