BENSALEM, Pa., July 22 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. (Nasdaq: HCSG) reported that revenues for the three months ended
June 30, 2003 increased by over 13% to $92,806,000 compared to $82,067,000 for
the same 2002 period. Net income for the three months ended June 30, 2003
increased over 21% to $2,661,000 or $.24 per basic and $.23 per diluted common
share, compared to the 2002 second quarter net income of $2,195,000 or $.20
per basic and $.19 per basic and diluted common share.
Revenues for the six months ended June 30, 2003 increased by over 13% to
$182,337,000 compared to $160,999,000 for the same 2002 period. Net income for
the six months ended June 30, 2003 increased over 23% to $5,206,000 or $.46
per basic and $.45 per diluted common share compared to the 2002 six month
period net income of $4,225,000 or $.38 per basic and $.36 per 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 23% of revenues in
2003; 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 most recent
Form 10-K filed with the Securities and Exchange Commission for the year ended
December 31, 2002 in Part I thereof under "Government Regulation of Clients,"
"Competition" and "Service Agreements/Collections." Many of the Company's
clients 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 the Prospective Payment System
("PPS"). 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 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 the Company's 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, the Company's 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 its services could not be passed on
to clients.
In addition, the Company believes that to improve its future 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)
December 31,
June 30, 2003 2002
------------- ------------
Cash and cash equivalents $58,387,000 $48,320,000
Accounts receivable, net 50,913,000 51,555,000
Prepaid income taxes 883,000
Deferred income taxes 2,115,000 3,022,000
Other current assets 13,100,000 10,998,000
Property and equipment 4,422,000 4,438,000
Cost in excess of fair value of net
assets acquired 1,612,000 1,612,000
Deferred income taxes 2,479,000 1,955,000
Other assets 11,435,000 11,513,000
$144,463,000 $134,296,000
Accrued insurance claims current $2,339,000 $1,953,000
Other current liabilities 20,655,000 18,602,000
Accrued insurance claims 7,016,000 5,860,000
Stockholders' equity 114,453,000 107,881,000
$144,463,000 $134,296,000
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
June 30,
2003 2002
----------- -----------
Revenues $92,806,000 $82,067,000
Operating costs and expenses:
Cost of services provided 81,636,000 72,574,000
Selling, general and
administrative 7,076,000 6,060,000
Other income:
Interest income 191,000 196,000
----------- -----------
Income before income taxes 4,285,000 3,629,000
Income taxes 1,624,000 1,434,000
----------- -----------
Net income $2,661,000 $2,195,000
=========== ===========
Basic earnings per common share $.24 $.20
=========== ===========
Diluted earnings per common share $.23 $.19
=========== ===========
Basic weighted average number of
common shares outstanding 11,304,606 11,224,347
=========== ===========
Diluted weighted average number of
common shares outstanding 11,718,407 11,818,807
=========== ===========
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Six Months Ended
June 30,
2003 2002
----------- ------------
Revenues $182,337,000 $160,999,000
Operating costs and expenses:
Cost of services provided 160,327,000 142,297,000
Selling, general and
administrative 13,873,000 12,100,000
Other income:
Interest income 390,000 383,000
----------- -----------
Income before income taxes 8,527,000 6,985,000
Income taxes 3,321,000 2,760,000
----------- -----------
Net income $5,206,000 $4,225,000
=========== ===========
Basic earnings per common share $.46 $.38
=========== ===========
Diluted earnings per common share $.45 $.36
=========== ===========
Basic weighted average number of
common shares outstanding 11,275,091 11,196,845
=========== ===========
Diluted weighted average number of
common shares outstanding 11,696,562 11,695,874
=========== ===========
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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