July 11, 2017

Healthcare Services Group, Inc. Reports Results for the Three and Six Months Ended June 30, 2017 and Announces Increased Second Quarter 2017 Cash Dividend

BENSALEM, Pa., July 11, 2017 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that revenues for the three months ended June 30, 2017 increased approximately 22% to $470.9 million. Net income for the three months ended June 30, 2017 was $22.6 million, or $0.31 per basic and $0.30 per diluted common share, compared to the three months ended June 30, 2016 net income of $18.8 million, or $0.26 per basic and diluted common share.

Revenues for the six months ended June 30, 2017 increased approximately 13% to $875.4 million. Net income for the six months ended June 30, 2017 was $44.6 million, or $0.61 per basic and $0.60 per diluted common share, compared to the six months ended June 30, 2016 net income of $37.4 million, or $0.52 per basic and $0.51 per diluted common share.

In addition, our Board of Directors declared a quarterly cash dividend of $0.18875 per common share, payable on September 22, 2017 to shareholders of record at the close of business on August 18, 2017. This represents the 57th consecutive quarterly cash dividend payment, as well as the 56th consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, July 12, 2017 at 8:30 a.m. Eastern Time to discuss its results for the three and six months ended June 30, 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 earnings call may be accessed through the phone number above through approximately 10:00 p.m. Eastern Time on Wednesday, July 12, 2017. The webcast will also be available on our website for one year following the date of the earnings call.

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, 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 one client which accounted for 12.9% of our total consolidated revenues for the six months ended June 30, 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; tax benefits arising from our corporate reorganization and self-funded health insurance program transition; risks associated with the reorganization of our corporate structure; perceived or real risks related to the food industry; and the risk factors described in our Form 10-K  filed with the Securities and Exchange Commission for the year ended December 31, 2016 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, 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.

HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)
 
  For the Three Months Ended For the Six Months Ended
  June 30, June 30,
  2017 2016 2017 2016
Revenues  $470,876  $386,556  $875,366  $771,363  
Operating costs and expenses:        
  Cost of services provided 407,322   332,211  752,892  662,255 
  Selling, general and administrative 31,991  25,664  60,201  51,010 
Income from operations 31,563   28,681  62,273  58,098 
Other income:        
 Investment and interest 1,515  1,002  3,084  1,189 
Income before income taxes 33,078  29,683  65,357  59,287 
Income taxes 10,527  10,923  20,789  21,901 
         
Net income $22,551  $18,760  $44,568   $37,386 
         
Basic earnings per common share $0.31  $0.26  $0.61  $0.52 
         
Diluted earnings per common share $0.30  $0.26  $0.60  $0.51 
         
Cash dividends declared per common share $0.18875  $0.18375  $0.37625  $0.36625 
         
Basic weighted average number of common shares outstanding 73,276  72,568  73,176  72,466 
         
Diluted weighted average number of common shares outstanding 74,269  73,316  74,108  73,165 



HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  June 30, 2017 December 31, 2016
  (Unaudited)  
Cash and cash equivalents $7,058  $23,853 
Marketable securities, at fair value 70,082  67,730 
Accounts and notes receivable, net 338,368  271,276 
Other current assets 60,675  51,765 
  Total current assets 476,183  414,624 
     
Property and equipment, net 13,399  13,455  
Notes receivable - long term 7,526  7,531 
Goodwill 50,473  44,438 
Other intangible assets, net 31,330  14,409 
Deferred compensation funding 26,326  24,119  
Other assets 10,509  9,870 
Total Assets $615,746  $528,446 
     
Accrued insurance claims - current $ 23,975  $23,573 
Other current liabilities 122,960  77,298 
  Total current liabilities 146,935  100,871 
     
Accrued insurance claims - long term 66,077  64,080 
Deferred compensation liability 26,657  24,653 
Stockholders' equity 376,077  338,842 
Total Liabilities and Stockholders' Equity $615,746  $528,446 

 

Company Contacts:



Theodore Wahl

President and Chief Executive Officer



Matthew J. McKee

Senior Vice President of Strategy



215-639-4274

investor-relations@hcsgcorp.com

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Source: Healthcare Services Group, Inc.

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