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Healthcare Services Group, Inc. Reports Results For The Three Months Ended March 31, 2013 & Increases First Quarter 2013 Cash Dividend

BENSALEM, Pa., April 9, 2013 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (Nasdaq:HCSG) reported that revenues for the three months ended March 31, 2013 increased over 5% to $273,904,000 compared to $260,607,000 for the same 2012 period. Net income for the three months ended March 31, 2013 increased over 74% to $14,954,000 or $0.22 per basic and per diluted common share, compared to the three months ended March 31, 2012 net income of $8,578,000 or $0.13 per basic and per diluted common share.

Additionally, our Board of Directors declared a quarterly cash dividend of $0.16750 per common share, payable on June 14, 2013 to shareholders of record at the close of business on May 10, 2013. This represents the 40th consecutive quarterly cash dividend payment, as well as the 39th consecutive increase since our initiation of quarterly cash dividends in 2003.

The Company will host a conference call on Wednesday, April 10, 2013 at 8:30 a.m. Eastern Time to discuss its results for the three months ended March 31, 2013. 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 webcast will also be available on our website through approximately 10:00 p.m. Eastern Time on Wednesday, April 10, 2013.

The Company intends to file its Proxy Statement for the annual meeting of shareholders during the week of April 15 th. The Company also announced that it will present at the UBS Global Healthcare Conference to be held May 20 th – May 22 nd at the Sheraton New York Hotel in New York City. Additionally, the Company will participate in the Benchmark Company One-on-One Investor Conference on May 30 th at The Pfister Hotel in Milwaukee, WI.

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 (the "Exchange Act"), as amended, which are not historical facts but rather are 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; from having several significant clients who each individually contributed at least 3% with one as high as 6% to our total consolidated revenues in the three months ended March 31, 2013; 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, 2012 in Part I thereof under ''Government Regulation of Clients," ''Competition'' 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 and related agencies have affected through the enactment of a number of major laws and regulations during the past decade, including the March 2010 enactment of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. On July 29, 2011, the United States Center for Medicare Services issued final rulings which, among other things, reduced Medicare payments to nursing centers by 11.1% and changed the reimbursement for the provision of group rehabilitation therapy services to Medicare beneficiaries. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which also addressed the provisions of the Budget Control Act of 2011. Under these provisions, the Act reduced federal spending, which began in March 2013. This initiative acts as a means to reduce the national deficit by $1.2 trillion split evenly between domestic and defense spending. Currently, the U.S. Congress is considering further changes or revising legislation relating to health care in the United States which, among other initiatives, may impose cost containment measures impacting our clients. These laws and proposed laws and forthcoming regulations have significantly altered, or threaten to significantly alter, overall government reimbursement funding rates and mechanisms. The overall effect of these laws and trends in the long-term care industry has 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.              

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.

HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
     
  For the Three Months Ended
  March 31,
  2013 2012
Revenues  $ 273,904,000  $ 260,607,000
Operating costs and expenses:    
Cost of services provided 235,191,000 227,496,000
Selling, general and administrative 20,790,000 20,982,000
Income from operations 17,923,000 12,129,000
Other income:    
Investment and interest 1,034,000 1,653,000
Income before income taxes 18,957,000 13,782,000
Income taxes 4,003,000 5,204,000
     
Net income  $ 14,954,000  $ 8,578,000
     
Basic earnings per common share  $ 0.22  $ 0.13
     
Diluted earnings per common share  $ 0.22  $ 0.13
     
Cash dividends per common share  $ 0.17  $ 0.16
     
Basic weighted average number of common shares outstanding 68,463,000 67,084,000
     
Diluted weighted average number of common shares outstanding 69,361,000 68,085,000
 
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
     
  March 31, 2013 December 31, 2012
Cash and cash equivalents  $ 54,727,000  $ 68,949,000
Marketable securities, at fair value 22,559,000 21,322,000
Accounts and notes receivable, net 149,146,000 140,218,000
Other current assets 40,088,000 37,357,000
Total current assets 266,520,000 267,846,000
     
Property and equipment, net 10,269,000 10,272,000
Notes receivable - long term, net 3,140,000 1,823,000
Goodwill 16,955,000 16,955,000
Other intangible assets, net 4,661,000 5,203,000
Deferred compensation funding 19,254,000 17,831,000
Other assets 11,577,000 11,253,000
     
Total Assets  $ 332,376,000  $ 331,183,000
     
Accrued insurance claims - current  $ 6,774,000  $ 6,850,000
Other current liabilities 50,194,000 60,814,000
Total current liabilities 56,968,000 67,664,000
     
Accrued insurance claims - long term 15,807,000 15,712,000
Deferred compensation liability 19,393,000 18,237,000
Stockholders' equity 240,208,000 229,570,000
     
Total Liabilities and Stockholders' Equity  $ 332,376,000  $ 331,183,000
CONTACT: Company Contacts:
         
         Daniel P. McCartney
         Chairman and Chief Executive Officer
         215-639-4274
         
         Theodore Wahl
         President and Chief Operating Officer
         215-639-4274

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