BENSALEM, Pa., Oct. 21 /PRNewswire-FirstCall/ -- Healthcare Services
Group, Inc. (Nasdaq: HCSG) reported that revenues for the three months ended
September 30, 2003 increased by over 15% to $95,878,000 compared to
$83,045,000 for the same 2002 period. Net income for the three months ended
September 30, 2003 increased 27% to $2,803,000 or $.25 per basic and $.24 per
diluted common share, compared to the 2002 third quarter net income of
$2,211,000 or $.20 per basic and $.19 per basic and diluted common share.
Revenues for the nine months ended September 30, 2003 increased by 14% to
$278,215,000 compared to $244,043,000 for the same 2002 period. Net income
for the nine months ended September 30, 2003 increased over 24% to $8,010,000
or $.71 per basic and $.68 per diluted common share compared to the 2002 nine
month period net income of $6,436,000 or $.57 per basic and $.55 per diluted
common share.
In accordance with the Company's previous announcement of declaring
quarterly dividends, our Board of Directors has declared a third quarter
dividend of $.07 per common share, payable to shareholders of record at the
close of business October 31, which represents a 17% increase over the
dividend declared for the second quarter. The payment date for the dividend
is November 14, 2003. Additionally, the Company has a Dividend Reinvestment
Plan or DRIP available for shareholders to apply their dividends to the
purchase of the Company's common stock.
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)
September 30, December 31,
2003 2002
------------ ------------
Cash and cash equivalents $58,673,000 $48,320,000
Accounts receivable, net 52,100,000 51,555,000
Deferred income taxes, current 2,311,000 3,022,000
Other current assets 13,144,000 11,881,000
------------ -----------
Total current assets 126,228,000 114,778,000
Property and equipment 4,411,000 4,438,000
Cost in excess of fair value of net
assets acquired 1,612,000 1,612,000
Deferred income taxes, non-current 2,773,000 1,955,000
Other non-current assets 10,814,000 11,513,000
------------ -----------
$145,838,000 $134,296,000
============ ===========
Accrued insurance claims current $2,542,000 $1,953,000
Other current liabilities 17,888,000 18,602,000
------------ -----------
Total current liabilities 20,430,000 20,555,000
Accrued insurance claims 7,627,000 5,860,000
Stockholders' equity 117,781,000 107,881,000
------------ -----------
$145,838,000 $134,296,000
============ ============
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
September 30,
2003 2002
------------ -----------
Revenues $95,878,000 $83,045,000
Operating costs and expenses:
Cost of services provided 84,348,000 73,013,000
Selling, general and
administrative 7,413,000 6,494,000
Other income:
Interest income 369,000 117,000
--------- ---------
Income before income taxes 4,486,000 3,655,000
Income taxes 1,683,000 1,444,000
--------- ---------
Net income $2,803,000 $2,211,000
========== ==========
Basic earnings per common share $.25 $.20
========== ==========
Diluted earnings per common share $.24 $.19
========== ==========
Dividends paid per common share $.06 $--
========== ==========
Basic weighted average number of
common shares outstanding 11,406,417 11,317,662
========== ==========
Diluted weighted average number of
common shares outstanding 11,929,427 11,845,894
========== ==========
HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Nine Months Ended
September 30,
2003 2002
------------ ------------
Revenues $278,215,000 $244,043,000
Operating costs and expenses:
Cost of services provided 244,675,000 215,310,000
Selling, general and
administrative 21,285,000 18,593,000
Other income:
Interest income 759,000 500,000
----------- -----------
Income before income taxes 13,014,000 10,640,000
Income taxes 5,004,000 4,204,000
----------- -----------
Net income $8,010,000 $6,436,000
=========== ===========
Basic earnings per common share $.71 $.57
=========== ===========
Diluted earnings per common share $.68 $.55
=========== ===========
Dividends paid per common share $.06 $--
=========== ===========
Basic weighted average number of
common shares outstanding 11,319,027 11,237,560
=========== ===========
Diluted weighted average number of
common shares outstanding 11,774,344 11,746,323
=========== ===========
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, Inc.
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