8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 16, 2018

HEALTHCARE SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 0-12015

Pennsylvania	23-2018365
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification number)
3220 Tillman Drive, Suite 300, Bensalem, Pennsylvania	19020
(Address of principal executive office)	(Zip code)

Registrant's telephone number, including area code: 215-639-4274

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

( )    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

( )    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)vi

( )    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

( )    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	o

Item 2.02 Results of Operations and Financial Condition.

On October 16, 2018, Healthcare Services Group, Inc. (the "Company") issued a press release (the "Press Release") announcing its earnings for the three and nine months endedSeptember 30, 2018. A copy of the Press Release is being furnished hereto as Exhibit 99.1 and is hereby incorporated by reference to this Current Report.

The information furnished herein, including Exhibit 99.1 shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act.

Item 8.01 Other Events.

The Press Release also announced the Company's third quarter 2018 quarterly cash dividend of $0.19500 per common share, payable on December 28, 2018 to shareholders of record at the close of business on November 23, 2018.

Item 9.01 Financial Statements and Exhibits.

( a )    Not applicable

( b )    Not applicable

( c )    Not applicable

( d )    Exhibits. The following exhibit is being furnished herewith:

99.1 Press Release and financial tables dated October 16, 2018, issued by Healthcare Services Group, Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		HEALTHCARE SERVICES GROUP, INC.
Date: October 16, 2018	By:	/s/ John C. Shea
		Name: John C. Shea Title: Chief Financial Officer

d

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release and financial tables dated October 16, 2018, issued by Healthcare Services Group, Inc.

EX-99.1

Exhibit 99.1

HEALTHCARE SERVICES GROUP, INC. REPORTS RESULTS

FOR THE THREE AND NINE MONTHS ENDEDSEPTEMBER 30, 2018 AND

ANNOUNCES INCREASED THIRD QUARTER 2018 CASH DIVIDEND

Bensalem, PA — October 16, 2018 —Healthcare Services Group, Inc. (NASDAQ:HCSG) (the “Company”) reported that revenues for the three months ended September 30, 2018 increased to $507 million compared to $491 million for the same period in 2017. During the quarter the Company adjusted its contractual relationships with two regional customers as well as a number of independent facilities. The Company expects the contract changes to impact housekeeping & laundry revenues by approximately $10 million per quarter (with half of the decrease reflected in the Q3 results), and favorably impact margins.

For the three months ended September 30, 2018, net income was $26.1 million, or $0.35 per basic and diluted common share, segment margins in housekeeping & laundry and dining & nutrition services are estimated at 11.3% and 6.2%, respectively and cash flow from operations was $47 million, inclusive of the $25 million change in accrued payroll. Selling, general and administrative (“SG&A”) was reported at 7.2% of revenues, but after adjusting for the $1.6 million change in deferred compensation, actual SG&A was 6.9% of revenues. During the quarter, SG&A was also impacted by a $3 million, state-specific sales tax settlement. The settlement related to certain of the Company’s historical client service billings, resolved the outstanding sales tax considerations and accordingly, will have no impact on future earnings per share. Going forward, the Company expects SG&A to approximate 6.75% of revenues, with the on-going opportunity to garner additional efficiencies.

In addition, our Board of Directors declared a quarterly cash dividend of $0.19500 per common share, payable on December 28, 2018 to shareholders of record at the close of business on November 23, 2018. This represents the 62nd consecutive quarterly cash dividend payment, as well as the 61st consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, October 17, 2018 at 8:30 a.m. Eastern Time to discuss its results for the three and nine months ended September 30, 2018. The call may be accessed via phone at 800-893-5360. The call will be simultaneously webcast under the “Events & Presentations” section of the investor relations page on our website, www.hcsg.com. A replay of the earnings call may be accessed through the phone number above through 10:00 p.m. Eastern Time on Wednesday, October 17, 2018. The webcast will also be available on our website for one year following the date of the earnings call.

The Company also announced that it will be attending and presenting at the 2018 Stephens New York Investment Conference on November 7, 2018 at the Lotte New York Palace Hotel in New York and the Credit Suisse 27th Annual Healthcare Conference on November 14, 2018 at The Phoenician in Scottsdale, Arizona.

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Cautionary Statement Regarding Forward-Looking Statements

This release and any schedules incorporated by reference into it may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “goal,” and similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans will be achieved. 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 forward-looking information is also subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks arising from our providing services exclusively to the healthcare industry, primarily providers of long-term care; having a significant portion of our consolidated revenues contributed by one customer during the nine months ended September 30, 2018; credit and collection risks associated with the healthcare industry; our claims experience related to workers’ compensation and general liability insurance; the effects of changes in, or interpretations of laws and regulations governing the healthcare industry, our workforce and services provided, including state and local regulations pertaining to the taxability of our services and other labor-related matters such as minimum wage increases; the Company's expectations with respect to selling, general, and administrative expense;continued realization of tax benefits arising from our corporate reorganization and self-funded health insurance program; risks associated with the reorganization of our corporate structure; realization of our expectations regarding the impact of the Tax Cuts and Jobs Act on our financial results; and the risk factors described in Part I of our Form 10-K for the fiscal year ended December 31, 2017 under “Government Regulation of Clients,” “Competition” and “Service Agreements and Collections,” and under Item IA. “Risk Factors” in such Form 10-K.

These factors, in addition to delays in payments from clients and/or clients in bankruptcy or clients with which we are in litigation to collect payment, 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 (including the impact of potential tariffs) 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, retain and provide new services to existing clients, achieve modest price increases on current service agreements with existing clients and maintain internal cost reduction strategies at our various operational levels. Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies.

Healthcare Services Group, Inc. is the largest national provider of professional housekeeping, laundry and dietary services to long-term care and related health care facilities.

Company Contacts:
Theodore Wahl	Matthew J. McKee
President and Chief Executive Officer	Chief Communications Officer
215-639-4274
investor-relations@hcsgcorp.com

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HEALTHCARE SERVICES GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share data)

	For the Three Months Ended				For the Nine Months Ended
	2018		2017		2018		2017
Revenues	$	506,871	$	491,355	$	1,512,413	$	1,366,721
Operating costs and expenses:
Cost of services provided	439,203		426,924		1,346,725		1,179,816
Selling, general and administrative	36,713		32,940		104,608		93,141
Income from operations	30,955		31,491		61,080		93,764
Other income:
Investment and interest	2,027		1,439		3,823		4,523
Income before income taxes	32,982		32,930		64,903		98,287
Income tax expense	6,896		9,458		12,931		30,247
Net income	$	26,086	$	23,472	$	51,972	$	68,040
Basic earnings per common share	$	0.35	$	0.32	$	0.70	$	0.93
Diluted earnings per common share	$	0.35	$	0.31	$	0.70	$	0.92
Cash dividends declared per common share	$	0.19500	$	0.19000	$	0.58125	$	0.56625
Basic weighted average number of common shares outstanding	74,019		73,461		73,972		73,272
Diluted weighted average number of common shares outstanding	74,579		74,538		74,598		74,252

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HEALTHCARE SERVICES GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	15,197	$	9,557
Marketable securities, at fair value	74,704		73,221
Accounts and notes receivable, net	353,484		378,720
Other current assets	64,793		65,908
Total current assets	508,178		527,406
Property and equipment, net	13,067		13,509
Notes receivable - long-term	45,906		15,476
Goodwill	51,084		51,084
Other intangible assets, net	27,559		30,881
Deferred compensation funding	32,946		28,885
Other assets	9,232		8,762
Total Assets	$	687,972	$	676,003
Accrued insurance claims - current	$	24,167	$	22,245
Other current liabilities	142,205		161,923
Total current liabilities	166,372		184,168
Accrued insurance claims - long term	68,782		62,454
Deferred compensation liability	33,238		29,429
Stockholders' equity	419,580		399,952
Total Liabilities and Stockholders' Equity	$	687,972	$	676,003

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