- Net income up 30% on a 19% increase in revenues
- Quarterly cash dividend raised 13% over prior quarter payment
BENSALEM, Pa., April 20 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. (Nasdaq: HCSG) reported that revenues for the three months ended
March 31, 2004 increased by 19% to $106,622,000 compared to $89,531,000 for
the same 2003 period. Net income increased 30% for the three months ended
March 31, 2004 to $3,318,000 or $.19 per basic and $.18 per diluted common
share, compared to the 2003 first quarter net income of $2,546,000 or $.15 per
basic and diluted common share. The per share data has been adjusted to
reflect the three-for-two stock split paid in the form of a 50% stock dividend
on March 1, 2004.
In accordance with the Company's previous announcement of declaring
quarterly dividends, our Board of Directors has declared a quarterly dividend
of $.06 per common share, payable to shareholders of record at the close of
business April 30, 2004. This represents a 13% increase over the dividend
declared for the 2003 fourth quarter and is the fourth consecutive quarterly
dividend increase since the Company initiated a quarterly dividend payment on
September 29, 2003. The payment date for the dividend is May 14, 2004.
Forward-Looking Statements/Risk Factors
Certain matters discussed include forward-looking statements that are
subject to risks and uncertainties that could cause actual results or
objectives to differ materially from those projected. The Company undertakes
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 21% of first quarter 2004
revenues; our claims' experience related to workers' compensation and general
liability insurance; the effects of changes in laws and regulations governing
the industry and risk factors described in the Company's Form 10-K filed with
the Securities and Exchange Commission for the year ended December 31, 2003 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 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 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 the costs of labor and labor-
related costs, materials, supplies and equipment used in performing our
services could not be passed on to its clients.
In addition, the Company believes that to improve its financial
performance it 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 the various operational levels of the Company.
Furthermore, the Company believes that its 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)
March 31, 2004 December 31, 2003
--------------- -----------------
Cash and cash equivalents $67,344,000 $64,181,000
Accounts receivable, net 55,053,000 58,145,000
Deferred income taxes 2,269,000 2,017,000
Other current assets 14,533,000 13,768,000
Total current assets 139,199,000 138,111,000
Property and equipment, net 4,724,000 4,612,000
Notes receivable - long term, net 7,931,000 7,904,000
Deferred compensation funding 3,093,000 2,847,000
Deferred income taxes - long term 3,088,000 3,135,000
Other assets 1,719,000 1,719,000
$159,754,000 $158,328,000
Accrued insurance claims - current $3,061,000 $2,979,000
Other current liabilities 18,371,000 21,717,000
Total current liabilities 21,432,000 24,696,000
Accrued insurance claims - long term 9,182,000 8,937,000
Deferred compensation liability 3,806,000 3,497,000
Stockholders' equity 125,334,000 121,198,000
$159,754,000 $158,328,000
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
March 31,
2004 2003
------------ ------------
Revenues $106,622,000 $89,531,000
Operating costs and expenses:
Cost of services provided 93,397,000 78,691,000
Selling, general and
administrative 8,015,000 6,796,000
Other income:
Investment and interest income 142,000 199,000
Income before income taxes 5,352,000 4,243,000
Income taxes 2,034,000 1,697,000
Net income $3,318,000 $2,546,000
Basic earnings per common share $.19 $.15
Diluted earnings per common share $.18 $.15
Cash dividends per common share $.053 $--
Basic weighted average number of
common shares outstanding 17,476,278 16,867,871
Diluted weighted average number of
common shares outstanding 18,429,590 17,511,581
Common shares and per share data adjusted to reflect the three-for-two
stock split paid in the form of a 50% stock dividend on March 1, 2004.
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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