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Healthcare Services Group, Inc. Reports Results for the Three and Six Months Ended June 30, 2016 & Increases Second Quarter 2016 Cash Dividend


BENSALEM, Pa., July 12, 2016 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that revenues for the three months ended June 30, 2016 increased approximately 9% to $386,556,000 compared to the same 2015 period. Net income for the three months ended June 30, 2016 was $18,760,000 or $0.26 per basic and per diluted common share, compared to the three months ended June 30, 2015 net income of $16,288,000 or $0.23 per basic and per diluted common share.

Revenues for the six months ended June 30, 2016 increased approximately 9% to $771,363,000 compared to $710,602,000 for the same 2015 period. Net income for the six months ended June 30, 2016 was $37,386,000 or $0.52 per basic and $0.51 per diluted common share, compared to the six months ended June 30, 2015 net income of $31,804,000 or $0.44 per basic and diluted common share.

Additionally, our Board of Directors declared a quarterly cash dividend of $0.18375 per common share, payable on September 23, 2016, to shareholders of record at the close of business on August 19, 2016. This represents the 53rd consecutive quarterly cash dividend payment, as well as the 52nd consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, July 13, 2016 at 8:30 a.m. Eastern Time to discuss its results for the three and six months ended June 30, 2016. The call may be accessed via phone at 404-665-9534. 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, July 13, 2016.

The Company also announced that it will present at C.L. King's Best Ideas Conference 2016 on September 13, 2016 at the Omni Berkshire Place 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, 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 and six months ended June 30, 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 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:    
Daniel P. McCartney Theodore Wahl Matthew J. McKee
Chairman President and Chief Executive Officer Vice President of Strategy

 For the Three Months Ended For the Six Months Ended
 June 30, June 30,
 2016 2015 2016 2015
Revenues$386,556,000  $355,356,000  $771,363,000  $710,602,000 
Operating costs and expenses:       
  Cost of services provided332,211,000  304,217,000  662,255,000  608,153,000 
  Selling, general and administrative25,664,000  25,124,000  51,010,000  51,887,000 
Income from operations28,681,000  26,015,000  58,098,000  50,562,000 
Other income, net:       
  Investment and interest1,002,000  242,000  1,189,000  749,000 
Income before income taxes29,683,000   26,257,000  59,287,000  51,311,000 
Income tax provision10,923,000  9,969,000  21,901,000  19,507,000 
Net income$18,760,000  $16,288,000  $37,386,000  $31,804,000 
Basic earnings per common share$0.26  $0.23  $0.52  $0.44 
Diluted earnings per common share$0.26  $0.23  $0.51  $0.44 
Cash dividends per common share$0.18  $0.18  $0.36  $0.36 
Basic weighted average number of common shares outstanding72,568,000  71,657,000  72,466,000  71,563,000 
Diluted weighted average number of common shares outstanding73,316,000  72,286,000  73,165,000  72,223,000 


 June 30, 2016 December 31, 2015
Cash and cash equivalents$21,719,000   $33,189,000 
Marketable securities, at fair value78,919,000  69,496,000 
Accounts and notes receivable, net255,776,000  214,854,000 
Other current assets53,887,000  47,803,000 
  Total current assets410,301,000   365,342,000 
Property and equipment, net13,485,000  13,086,000 
Notes receivable - long term3,090,000  2,972,000 
Goodwill44,438,000  44,438,000 
Other intangible assets, net15,623,000   17,108,000 
Deferred compensation funding26,362,000  25,391,000 
Other assets9,250,000  12,612,000 
Total Assets$522,549,000  $480,949,000 
Accrued insurance claims - current$22,541,000  $19,740,000 
Other current liabilities86,322,000  76,325,000 
  Total current liabilities108,863,000  96,065,000 
Accrued insurance claims - long term64,156,000  62,510,000 
Deferred compensation liability26,796,000   25,918,000 
Stockholders' equity322,734,000  296,456,000 
Total Liabilities and Stockholders' Equity$522,549,000  $480,949,000 


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