-- Net income up 28% on an 8% increase in revenues
-- 7th consecutive quarterly cash dividend increase representing a 17%
increase over 2004 fourth quarter payment and 75% over 2004 first
quarter payment
-- Declares 50% Stock Dividend
BENSALEM, Pa., April 19 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. (Nasdaq: HCSG) reported that revenues for the three months ended
March 31, 2005 increased by 8% to $114,695,000 compared to $106,622,000 for
the same 2004 period. Net income increased 28% for the three months ended
March 31, 2005 to $4,263,000 or $.24 per basic and $.23 per diluted common
share, compared to the 2004 first quarter net income of $3,318,000 or $.19 per
basic and $.18 per diluted common share.
The Board of Directors has declared a three-for-two stock split in the
form of a 50% stock dividend payable on May 2, 2005 to the holders of record
of its Common Stock at the close of business April 29, 2005. All fractional
share interests will be rounded up to the nearest whole number. The effect of
this action will be to increase common shares outstanding by approximately
8,874,000 shares to approximately 26,622,000 shares.
Additionally, the Company's Board of Directors has declared a first
quarter 2005 cash dividend of $.07 per common share payable on May 16, 2005 to
shareholders of record at the close of business May 4, 2005. The first
quarter 2005 cash dividend represents a 17% increase over the cash dividend
declared for the 2004 fourth quarter and is the eighth consecutive quarterly
dividend payment, as well as the seventh consecutive increase since our
initiation of quarterly cash dividend payments in 2003. The cash dividend
payment data is after giving effect to the three-for-two stock split.
In conjunction with the Company's share repurchase program, the Board of
Directors has authorized the repurchase of up to 1,000,000 shares of its
common shares.
Cautionary Statement Regarding Forward-Looking Statements
This report includes 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 our providing 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 19% of revenues in the three month period ended
March 31, 2005; 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 Form 10-K filed with the Securities and Exchange Commission
for the year ended December 31, 2004 in Part I thereof under "Government
Regulation of Clients," "Competition" and "Service Agreements/Collections."
Many of our clients' revenues are highly contingent 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
Medicare Prospective Payment System. That change, and the 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 effect 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 be adversely affected if unexpected
increases in the costs of labor and labor related costs, materials, supplies
and equipment used in performing its services could not be passed on to
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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2005 December 31, 2004
Cash and cash equivalents $85,912,000 $74,847,000
Accounts receivable, net 55,932,000 55,725,000
Other current assets 15,983,000 14,699,000
Total current assets 157,827,000 145,271,000
Property and equipment, net 4,782,000 4,804,000
Notes receivable- long term, net 5,005,000 5,557,000
Deferred compensation funding 4,198,000 4,062,000
Other assets 7,508,000 7,270,000
$179,320,000 $166,964,000
Accrued insurance claims - current $4,533,000 $4,169,000
Other current liabilities 22,240,000 16,090,000
Total current liabilities 26,773,000 20,259,000
Accrued insurance claims - long term 10,577,000 10,227,000
Deferred compensation liability 5,330,000 5,018,000
Stockholders' equity 136,640,000 131,460,000
$179,320,000 $166,964,000
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
March 31,
2005 2004
Revenues $114,695,000 $106,622,000
Operating costs and expenses:
Cost of services provided 99,770,000 93,397,000
Selling, general and
administrative 8,429,000 8,015,000
Other income:
Investment and interest income 380,000 142,000
Income before income taxes 6,876,000 5,352,000
Income taxes 2,613,000 2,034,000
Net income $4,263,000 $3,318,000
Basic earnings per common share $.24 $.19
Diluted earnings per common share $.23 $.18
Cash dividends per common share $.09 $.05
Basic weighted average number of
common shares outstanding 17,748,000 17,476,000
Diluted weighted average number of
common shares outstanding 18,691,000 18,429,000
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
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