BENSALEM, Pa., April 22 /PRNewswire-FirstCall/ --
Healthcare Services Group, Inc. (Nasdaq: HCSG) reported that revenues for the
three months ended March 31, 2003 increased by over 13% to $89,531,000
compared to $78,932,000 for the same 2002 period. Net income increased over
25% for the three months ended March 31, 2003 to $2,546,000 or $.23 per basic
and $.22 per diluted common share, compared to the 2002 first quarter net
income of $2,031,000 or $.18 per basic and diluted common share.
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. 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
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 22% of first
quarter 2003 revenues; the Company's 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, 2002 in Part I thereof including those described 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 ("PPS"). 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 the
Company's 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, materials,
supplies and equipment used in performing our services could not be passed on
to 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.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
March 31,
2003 2002
Revenues $89,531,000 $78,932,000
Operating costs and expenses:
Cost of services provided 78,691,000 69,723,000
Selling, general and
administrative 6,796,000 6,039,000
Other income:
Interest income 199,000 187,000
- -
Income before income taxes 4,243,000 3,357,000
Income taxes 1,697,000 1,326,000
- -
Net income $2,546,000 $2,031,000
Basic earnings per common share $.23 $.18
Diluted earnings per common share $.22 $.18
Basic weighted average number of
common shares outstanding 11,245,247 11,169,039
Diluted weighted average number of
common shares outstanding 11,787,080 11,572,145
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Unaudited)
March 31, December 31,
2003 2002
Cash and cash equivalents $48,102,000 $48,320,000
Accounts receivable, net 52,078,000 51,750,000
Prepaid income taxes 203,000 883,000
Deferred income taxes 2,007,000 3,022,000
Other current assets 13,031,000 10,803,000
Property and equipment 4,446,000 4,438,000
Cost in excess of fair value of net
assets acquired 1,612,000 1,612,000
Deferred income taxes 2,164,000 1,955,000
Other assets 11,653,000 11,513,000
$135,296,000 $134,296,000
Accrued insurance claims current $2,150,000 $1,953,000
Other current liabilities 15,881,000 18,602,000
Accrued insurance claims 6,450,000 5,860,000
Stockholders' equity 110,815,000 107,881,000
$135,296,000 $134,296,000
SOURCE Healthcare Services Group, Inc.
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Related links:
http://www.hcsgcorp.com
CONTACT:
Daniel P. McCartney, Chairman and Chief
Executive Officer, or Thomas Cook, President and Chief Operating
Officer, both of Healthcare Services Group, +1-215-639-4274
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