-- Quarterly net income up 33% over 2003 quarter on 17% increase in
revenues
-- Nine month period net income up 32% on an 18% increase in revenues
-- Quarterly cash dividend raised 14% over 2004 second quarter payment
and 60% over 2003 third quarter payment
BENSALEM, Pa., Oct. 19 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. (Nasdaq: HCSG) reported that revenues for the three months ended
September 30, 2004 increased by over 17% to $112,324,000 compared to
$95,878,000 for the same 2003 period. Net income increased 33% for the three
months ended September 30, 2004 to $3,724,000 or $.21 per basic and $.20 per
diluted common share, compared to the 2003 third quarter net income of
$2,803,000 or $.16 per basic and diluted common share. The earnings per
common 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.
Revenues for the nine months ended September 30, 2004 increased by over
18% to $329,435,000 compared to $278,215,000 for the same 2003 period. Net
income for the nine months ended September 30, 2004 increased by 32% to
$10,572,000 or $.61 per basic and $.57 per diluted common share compared to
the 2003 nine month period net income of $8,010,000 or $.47 per basic and $.45
per diluted common share.
Our Board of Directors has declared a quarterly dividend of $.08 per
common share, payable on November 12, 2004 to shareholders of record at the
close of business October 29, 2004. This represents a 14% increase over the
dividend declared for the 2004 second quarter and is the sixth consecutive
quarterly dividend payment, as well as the fifth consecutive increase since
the Company initiated a quarterly dividend payment on September 29, 2003.
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. 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 20% of 2004 nine month
period 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 our 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 the 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 our 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 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
September 30,
2004 2003
Revenues $112,324,000 $95,878,000
Operating costs and expenses:
Cost of services provided 98,644,000 84,348,000
Selling, general and
administrative 7,967,000 7,413,000
Other income:
Investment and interest income 293,000 369,000
Income before income taxes 6,006,000 4,486,000
Income taxes 2,282,000 1,683,000
Net income $3,724,000 $2,803,000
Basic earnings per common share $.21 $.16
Diluted earnings per common share $.20 $.16
Cash dividends per common share $.07 $.04
Basic weighted average number of
common shares outstanding 17,393,200 17,109,626
Diluted weighted average number of
common shares outstanding 18,346,738 17,894,141
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.
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Nine Months Ended
September 30,
2004 2003
Revenues $329,435,000 $278,215,000
Operating costs and expenses:
Cost of services provided 289,432,000 244,675,000
Selling, general and
administrative 23,743,000 21,285,000
Other income:
Investment and interest income 792,000 759,000
Income before income taxes 17,052,000 13,014,000
Income taxes 6,480,000 5,004,000
Net income $10,572,000 $8,010,000
Basic earnings per common share $.61 $.47
Diluted earnings per common share $.57 $.45
Cash dividends per common share $.18 $.04
Basic weighted average number of
common shares outstanding 17,453,185 16,978,541
Diluted weighted average number of
common shares outstanding 18,416,779 17,661,516
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
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2004 2003
Cash and cash equivalents $71,190,000 $64,181,000
Accounts receivable, net 57,293,000 58,145,000
Other current assets 16,878,000 15,785,000
Total current assets 145,361,000 138,111,000
Property and equipment, net 4,836,000 4,612,000
Notes receivable- long term, net 4,683,000 7,904,000
Deferred compensation funding 3,550,000 2,847,000
Other assets 6,185,000 4,854,000
$164,615,000 $158,328,000
Accrued insurance claims- current $3,982,000 $2,979,000
Other current liabilities 18,836,000 21,717,000
Total current liabilities 22,818,000 24,696,000
Accrued insurance claims- long term 9,335,000 8,937,000
Deferred compensation liability 4,531,000 3,497,000
Stockholders' equity 127,931,000 121,198,000
$164,615,000 $158,328,000
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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