BENSALEM, Pa., Oct. 19 /PRNewswire-FirstCall/ -- Healthcare Services Group, Inc. 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
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/