Healthcare Services Group, Inc. Reports Results for the Three and
Nine Months Ended September 30, 2004 and Dividend Increase
-- Quarterly net income up 33% over 2003 quarter on 17% increase in revenues
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
DATASOURCE: Healthcare Services Group, Inc.
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 Web site: http://www.hcsgcorp.com/
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