BENSALEM, Pa., April 19 /PRNewswire-FirstCall/ -- Healthcare Services Group, Inc. reported that revenues for the three months ended March 31, 2005 increased by 8% to $114,695,000 compared to $106,622,000 for the same 2004 period. Net income increased 28% for the three months ended March 31, 2005 to $4,263,000 or $.24 per basic and $.23 per diluted common share, compared to the 2004 first quarter net income of $3,318,000 or $.19 per basic and $.18 per diluted common share.
The Board of Directors has declared a three-for-two stock split in the form of a 50% stock dividend payable on May 2, 2005 to the holders of record of its Common Stock at the close of business April 29, 2005. All fractional share interests will be rounded up to the nearest whole number. The effect of this action will be to increase common shares outstanding by approximately 8,874,000 shares to approximately 26,622,000 shares.
Additionally, the Company’s Board of Directors has declared a first quarter 2005 cash dividend of $.07 per common share payable on May 16, 2005 to shareholders of record at the close of business May 4, 2005. The first quarter 2005 cash dividend represents a 17% increase over the cash dividend declared for the 2004 fourth quarter and is the eighth consecutive quarterly dividend payment, as well as the seventh consecutive increase since our initiation of quarterly cash dividend payments in 2003. The cash dividend payment data is after giving effect to the three-for-two stock split.
In conjunction with the Company’s share repurchase program, the Board of Directors has authorized the repurchase of up to 1,000,000 shares of its common shares.
Cautionary Statement Regarding Forward-Looking Statements
This report includes 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 19% of revenues in the three month period ended March 31, 2005; 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, including state and local regulations pertaining to the taxability of our services; and risk factors described in our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2004 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 Medicare 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 effect 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 be adversely affected if unexpected increases in the 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, 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.
HEALTHCARE SERVICES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, 2005 December 31, 2004 Cash and cash equivalents $85,912,000 $74,847,000 Accounts receivable, net 55,932,000 55,725,000 Other current assets 15,983,000 14,699,000 Total current assets 157,827,000 145,271,000 Property and equipment, net 4,782,000 4,804,000 Notes receivable- long term, net 5,005,000 5,557,000 Deferred compensation funding 4,198,000 4,062,000 Other assets 7,508,000 7,270,000 $179,320,000 $166,964,000 Accrued insurance claims - current $4,533,000 $4,169,000 Other current liabilities 22,240,000 16,090,000 Total current liabilities 26,773,000 20,259,000 Accrued insurance claims - long term 10,577,000 10,227,000 Deferred compensation liability 5,330,000 5,018,000 Stockholders’ equity 136,640,000 131,460,000 $179,320,000 $166,964,000 HEALTHCARE SERVICES GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the Three Months Ended March 31, 2005 2004 Revenues $114,695,000 $106,622,000 Operating costs and expenses: Cost of services provided 99,770,000 93,397,000 Selling, general and administrative 8,429,000 8,015,000 Other income: Investment and interest income 380,000 142,000 Income before income taxes 6,876,000 5,352,000 Income taxes 2,613,000 2,034,000 Net income $4,263,000 $3,318,000 Basic earnings per common share $.24 $.19 Diluted earnings per common share $.23 $.18 Cash dividends per common share $.09 $.05 Basic weighted average number of common shares outstanding 17,748,000 17,476,000 Diluted weighted average number of common shares outstanding 18,691,000 18,429,000
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/