Exhibit 99.1
Exhibit 99.1
HEALTHCARE SERVICES GROUP, INC. REPORTS
RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010
AND DECLARES INCREASED SECOND QUARTER 2010 CASH DIVIDEND
Bensalem, PA July 13, 2010, Healthcare Services Group, Inc. (NASDAQ-HCSG) reported that revenues
for the three months ended June 30, 2010 increased 13% to $192,954,000 compared to $170,896,000 for
the same 2009 period. Net income for the three months ended June 30, 2010 increased 12% to
$8,721,000 or $.20 per basic and per diluted common share, compared to the 2009 second quarter net
income of $7,815,000 or $.18 per basic and per diluted common share.
Revenues for the six months ended June 30, 2010 increased 14% to $376,755,000 compared to
$331,305,000 for the same 2009 period. Net income for the six months ended June 30, 2010 increased
4% to $16,149,000 or $.37 per basic and $.36 per diluted common share compared to the 2009 six
month period net income of $15,551,000 or $.36 per basic and $.35 per diluted common share.
The Board of Directors has declared a second quarter 2010 regular quarterly cash dividend of
$.23 per common share, payable on August 6, 2010 to shareholders of record at the close of business
July 23, 2010. This represents a 5% increase over the dividend declared for the 2010 first quarter
and a 21% increase over the 2009 same period payment. It is the 29th consecutive regular quarterly
cash dividend payment, as well as the 28th consecutive increase since our initiation of regular
quarterly cash dividend payments in 2003.
The Company will host a conference call on July 14, 2010 at 8:30 AM Eastern Time to discuss
its results for the three and six month periods ended June 30, 2010. The call in numbers are
800-401-3551 and 913-312-0688 (passcode # 2084962).
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2nd Quarter 2010 Earnings Release
Page 2
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July 13, 2010 |
Cautionary Statement Regarding Forward-Looking Statements
This release and any schedules incorporated by reference into this report 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 (the Exchange Act), as amended, are not historical
facts but rather based on current expectations, estimates and projections about our business and
industry, 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 health care industry, primarily providers of long-term care; credit and
collection risks associated with this industry; one client accounting for approximately 11% of
revenues in the six month period ended June 30, 2010; risks associated with our acquisition of
Contract Environmental Services, Inc. including integration risks and costs, or such business not
achieving expected financial results or synergies or failure to otherwise perform as expected; our
claims experience related to workers compensation and general liability insurance; the effects of
changes in, or interpretations of laws and regulations governing
the industry, our workforce and services provided, including state and local regulations pertaining
to the taxability of our services; and the risk factors described in our Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 2009 in Part I thereof under
Government Regulation of Clients,
Competition
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2010 Second Quarter Earnings Release
Page 3
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July 13, 2010 |
and
Service Agreements/Collections, and under Item IA Risk Factors. Many of our
clients revenues are highly contingent on Medicare and Medicaid reimbursement funding rates, which
Congress has affected through the enactment of a number of major laws during the past decade, most
recently the March 2010 enactment of the Patient Protection and Affordable Care Act and the Health
Care and Education Reconciliation Act of 2010. Currently, the U.S. Congress is considering changes
or revising legislation to reform health care in the United States which, among other initiatives,
may impose cost containment measures impacting our clients. These laws and proposed laws have
significantly altered, or threatened to alter, overall government reimbursement funding rates and
mechanisms. The overall effect of these laws and trends in the long-term care industry have
affected and could adversely affect the liquidity of our clients, resulting in their inability to
make payments to us on agreed upon payment terms. 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 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 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 successfully executing projected growth strategies.
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2010 Second Quarter Earnings Release
Page 4
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July 13, 2010 |
Healthcare Services Group, Inc. is the largest national provider of professional housekeeping,
laundry and dietary services to long-term care and related facilities.
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Company Contacts: |
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Daniel P. McCartney
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Thomas Cook |
Chairman and Chief Executive Officer
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President |
215-639-4274
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215-639-4274 |
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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June 30, 2010 |
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December 31, 2009 |
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Cash and cash equivalents |
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$ |
34,968,000 |
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$ |
31,301,000 |
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Marketable securities, net |
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44,099,000 |
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52,648,000 |
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Accounts receivable, net |
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107,253,000 |
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104,356,000 |
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Other current assets |
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23,715,000 |
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23,865,000 |
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Total current assets |
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210,035,000 |
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212,170,000 |
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Property and equipment, net |
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4,931,000 |
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4,391,000 |
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Notes receivable- long term, net |
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6,165,000 |
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4,623,000 |
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Goodwill, net |
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16,955,000 |
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17,087,000 |
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Other Intangible Assets, net |
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8,198,000 |
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8,862,000 |
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Deferred compensation funding |
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11,238,000 |
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10,783,000 |
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Other assets |
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9,032,000 |
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7,976,000 |
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Total Assets |
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$ |
266,554,000 |
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$ |
265,892,000 |
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Accrued insurance claims- current |
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$ |
5,305,000 |
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$ |
4,844,000 |
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Other current liabilities |
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27,237,000 |
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29,873,000 |
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Total current liabilities |
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32,542,000 |
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34,717,000 |
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Accrued insurance claims- long term |
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12,377,000 |
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11,302,000 |
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Deferred compensation liability |
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11,479,000 |
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11,099,000 |
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Stockholders equity |
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210,156,000 |
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208,774,000 |
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Total Liabilities and Stockholders Equity |
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$ |
266,554,000 |
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$ |
265,892,000 |
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HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
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For the Three Months Ended |
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June 30, |
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2010 |
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2009 |
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Revenues |
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$ |
192,954,000 |
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$ |
170,896,000 |
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Operating costs and expenses: |
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Cost of services provided |
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165,240,000 |
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145,830,000 |
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Selling, general and administrative |
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13,150,000 |
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13,516,000 |
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Income from operations |
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14,564,000 |
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11,550,000 |
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Other income (loss): |
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Investment and interest income (loss) |
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(383,000 |
) |
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1,157,000 |
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Income before income taxes |
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14,181,000 |
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12,707,000 |
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Income taxes |
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5,460,000 |
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4,892,000 |
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Net income |
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$ |
8,721,000 |
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$ |
7,815,000 |
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Basic earnings per common share |
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$ |
.20 |
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$ |
.18 |
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Diluted earnings per common share |
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$ |
.20 |
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$ |
.18 |
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Cash dividends per common share |
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$ |
.22 |
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$ |
.18 |
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Basic weighted average number of
common shares outstanding |
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43,965,000 |
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43,537,000 |
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Diluted weighted average number of
common shares outstanding |
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44,652,000 |
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44,262,000 |
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HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
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For the Six Months Ended |
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June 30, |
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2010 |
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2009 |
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Revenues |
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$ |
376,755,000 |
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$ |
331,305,000 |
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Operating costs and expenses: |
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Cost of services provided |
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323,812,000 |
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283,722,000 |
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Selling, general and administrative |
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27,051,000 |
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24,392,000 |
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Income from operations |
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25,892,000 |
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23,191,000 |
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Other income: |
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Investment and interest income |
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366,000 |
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2,094,000 |
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Income before income taxes |
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26,258,000 |
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25,285,000 |
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Income taxes |
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10,109,000 |
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9,734,000 |
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Net income |
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$ |
16,149,000 |
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$ |
15,551,000 |
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Basic earnings per common share |
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$ |
.37 |
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$ |
.36 |
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Diluted earnings per common share |
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$ |
.36 |
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$ |
.35 |
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Cash dividends per common share |
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$ |
.43 |
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$ |
.35 |
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Basic weighted average number of
common shares outstanding |
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43,932,000 |
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43,497,000 |
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Diluted weighted average number of
common shares outstanding |
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44,655,000 |
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44,168,000 |
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