-- Quarterly net income up 45% over 2003 quarter on 12% increase in
revenues
-- Annual net income up 35% on a 17% increase in revenues
-- Quarterly cash dividend raised 13% over 2004 third quarter payment
and 80% over 2003 fourth quarter payment
BENSALEM, Pa., Feb. 15 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. (Nasdaq: HCSG) reported that revenues for the three months ended
December 31, 2004 increased 12% to $113,133,000 compared to $101,503,000 for
the same 2003 period. Net income for the three months ended December 31, 2004
increased 45% to $4,127,000 or $.24 per basic and $.22 per diluted common
share, compared to 2003 fourth quarter net income of $2,850,000 or $.17 per
basic and $.16 per diluted common share, representing increases of 41% and
38%, respectively, in basic and diluted earnings per common share.
The Company also reported that revenues for the year ended December 31,
2004 increased by 17% to $442,568,000 compared to $379,718,000 for the same
2003 period. Net income increased over 35% for the year ended December 31,
2004 to $14,699,000 or $.84 per basic and $.80 per diluted common share
compared to the year ended December 31, 2003 net income of $10,860,000 or $.64
per basic and $.61 per diluted common share, representing increases of 31% in
both basic and diluted earnings per common share.
On January 19, 2005, the Company announced a 2004 fourth quarter cash
dividend of $.09 per common share payable on February 11, 2005 to shareholders
of record at the close of business January 28, 2005. This dividend represents
a 13% increase over the dividend declared for the third quarter and is the
seventh consecutive quarterly dividend payment, as well as the sixth
consecutive increase since we initiated a quarterly cash dividend in 2003.
Forward-Looking Statements/Risk Factors
Certain matters discussed may include forward-looking statements that are
subject to risks and uncertainties that could cause actual results or
objectives to differ materially from those projected. 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
risks and uncertainties include, but are not limited to, risks arising from
the Company providing its 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 20% of revenues in
2004; 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 risk factors described in
our most recent Form 10-K filed with the Securities and Exchange Commission
in Part I thereof under "Government Regulation of Clients," "Competition" and
"Service Agreements/Collections." Many of our clients' revenues are highly
reliant on Medicare and Medicaid reimbursement funding rates, which have been
and continue to be adversely affected by the change in Medicare payments under
the 1997 enactment of the Prospective Payment System. That change, and lack
of substantive reimbursement funding rate reform legislation, as well as other
trends in the long-term care industry have resulted in certain of our clients
filing for bankruptcy protection. Others may follow. Any decisions by the
government to discontinue or adversely modify legislation related to
reimbursement funding rates will have a material adverse affect on our
clients.
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 also be
adversely affected if unexpected increases in costs of labor and labor-related
costs, materials, supplies and equipment used in performing our services could
not be passed on to our clients.
In addition, we believe that to further improve our future 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, December 31,
2004 2003
Cash and cash equivalents $74,847,000 $64,181,000
Accounts receivable, net 55,725,000 58,145,000
Other current assets 14,699,000 14,443,000
Total current assets 145,271,000 136,769,000
Property and equipment, net 4,804,000 4,612,000
Notes receivable- long term, net 5,557,000 7,904,000
Deferred compensation funding 4,062,000 2,848,000
Other assets 7,270,000 6,195,000
$166,964,000 $158,328,000
Accrued insurance claims - current $4,169,000 $2,979,000
Other current liabilities 16,090,000 21,717,000
Total current liabilities 20,259,000 24,696,000
Accrued insurance claims - long term 10,227,000 8,937,000
Deferred compensation liability 5,018,000 3,497,000
Stockholders' equity 131,460,000 121,198,000
$166,964,000 $158,328,000
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
December 31,
2004 2003
Revenues $113,133,000 $101,503,000
Operating costs and expenses:
Cost of services provided 99,287,000 89,935,000
Selling, general and
administrative 7,780,000 7,759,000
Other income:
Interest income 588,000 692,000
Income before income taxes 6,654,000 4,501,000
Income taxes 2,527,000 1,651,000
Net income $4,127,000 $2,850,000
Basic earnings per common share $.24 $.17
Diluted earnings per common share $.22 $.16
Cash dividends per common share $.08 $.05
Basic weighted average number of
common shares outstanding 17,560,000 17,258,000
Diluted weighted average number of
common shares outstanding 18,505,000 18,168,000
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Year Ended
December 31,
2004 2003
Revenues $442,568,000 $379,718,000
Operating costs and expenses:
Cost of services provided 388,719,000 334,609,000
Selling, general and
administrative 31,523,000 29,045,000
Other income:
Interest income 1,380,000 1,451,000
Income before income taxes 23,706,000 17,515,000
Income taxes 9,007,000 6,655,000
Net income $14,699,000 $10,860,000
Basic earnings per common share $.84 $.64
Diluted earnings per common share $.80 $.61
Cash dividends per common share $.26 $.09
Weighted average number of common
shares outstanding for basic EPS 17,481,000 17,049,000
Weighted average number of common
shares outstanding for diluted EPS 18,440,000 17,788,000
Company Contacts:
Daniel P. McCartney Thomas Cook
Chairman and Chief Executive President and Chief Operating
Officer Officer
215-639-4274 215-639-4274
SOURCE Healthcare Services Group, Inc.
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Related links:
http://www.hcsgcorp.com
CONTACT:
Daniel P. McCartney, Chairman and Chief
Executive Officer, +1-215-639-4274, or Thomas Cook, President and
Chief Operating Officer, +1-215-639-4274, both of Healthcare
Services Group, Inc.
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