BENSALEM, Pa., Aug. 13 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. August 13, 2003 (Nasdaq: HCSG) announced today that its Board of
Directors has approved two important shareholder-related initiatives. The
Board of Directors declared a dividend of $.06 per share of common stock,
payable to shareholders of record at the close of business on September 15,
2003. The payment date for the dividend is September 29, 2003.
The Company intends to declare regular quarterly dividends in the future.
The Company also announced the adoption of a Dividend Reinvestment Plan,
commonly referred to as a "DRIP." The DRIP will allow holders of Healthcare
Services Group, Inc. common stock to apply their dividends to the purchase of
the Company's common stock. The Company expects to file a Registration
Statement under the Securities Act of 1933, as amended, on or about August 25,
2003, with the Securities and Exchange Commission to register 1,000,000 shares
to meet the dividend reinvestment elections.
Daniel P. McCartney, Chairman and Chief Executive Officer of the Company
stated, "Declaring a dividend demonstrates the Board's confidence in the
financial strength and future growth opportunity of the Company. Given that
we have the financial resources to fund our operating and growth needs, we are
glad to be able to return profits to our shareholders. We are also pleased to
announce the adoption of our dividend reinvestment plan, which provides
shareholders with a convenient and inexpensive procedure for investing
dividends in the common stock of the Company. By taking these actions, the
Board is making every effort not only to increase the value of each
shareholder's shares, but also to increase the convenience of being a
Healthcare Services Group, Inc. shareholder."
The Board of Directors also reaffirmed the Company's "Stock Buy-back"
program currently in effect since 1997. During this period, the Company has
expended approximately $18,500,000 to repurchase approximately 2,300,000
shares. The Company remains authorized to purchase an additional 589,500
shares pursuant to prior Board of Directors' authorizations.
Healthcare Services Group, Inc. is the largest national provider of
professional housekeeping, laundry and food services to long-term care and
related facilities, including nursing homes, retirement complexes,
rehabilitation centers and hospitals.
Cautionary Statements Regarding Forward Looking Statements
Certain matters discussed in the foregoing announcement 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,
continued availability of funds to pay future dividends; 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 23% of revenues in the six
month period ended June 30, 2003; 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 our 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 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 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 be adversely affected if unexpected increases in the
costs of labor and labor related costs, materials, supplies and equipment used
in performing 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 the various operational levels of the Company. 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.
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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