Healthcare Services Group, Inc. Reports Results For The Three Months And Year Ended December 31, 2017

BENSALEM, Pa., Feb. 06, 2018 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that revenues for the three months ended December 31, 2017 increased to $499.4 million compared to $398.6 million for the same period in 2016. Net income for the three months ended December 31, 2017 was $20.2 million, or $0.27 per basic and diluted common share.

Revenues for the year ended December 31, 2017 increased to $1.87 billion compared to $1.56 billion for the same period in 2016. Net income for the year ended December 31, 2017 was $88.2 million, or $1.20 per basic and $1.19 per diluted common share.

As previously announced, on January 30, 2018 our Board of Directors declared a quarterly cash dividend of $0.19125 per common share, payable on March 23, 2018 to shareholders of record at the close of business on February 16, 2018. This represents the 59th consecutive quarterly cash dividend payment, as well as the 58th consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, February 7, 2018 at 8:30 a.m. Eastern Time to discuss its results for the three months and year ended December 31, 2017. 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, February 7, 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 present at Oppenheimer's 28th Annual Healthcare Conference on March 20, 2018 at the Westin New York Grand Central in New York City, New York.

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 health care industry, primarily providers of long-term care; having several significant clients which, both individually and in the aggregate,  accounted for a significant portion of our total consolidated revenues for the year ended December 31, 2017; credit and collection risks associated with this 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 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; 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, 2016 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 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 Senior Vice President of Strategy
   
215-639-4274
investor-relations@hcsgcorp.com 

HEALTHCARE SERVICES GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME(Unaudited) (in thousands, except per share data)
 
  For the Three Months Ended   For the Year Ended
  December 31,   December 31,
  2017   2016   2017   2016
                       
Revenues $ 499,410     $ 398,565     $ 1,866,131     $ 1,562,662  
Operating costs and expenses:              
Cost of services provided 432,694     340,897     1,612,510     1,339,492  
Selling, general and administrative 33,591     27,225     126,732     105,417  
Income from operations 33,125     30,443     126,889     117,753  
Other income:              
Investment and interest 1,553     86     6,076     2,634  
Income before income taxes 34,678     30,529     132,965     120,387  
Income taxes 14,492     10,230     44,739     42,991  
               
Net income $ 20,186     $ 20,299     $ 88,226     $ 77,396  
               
Basic earnings per common share $ 0.27     $ 0.28     $ 1.20     $ 1.06  
               
Diluted earnings per common share $ 0.27     $ 0.28     $ 1.19     $ 1.05  
               
Cash dividends declared per common share $ 0.19125     $ 0.18625     $ 0.75750     $ 0.73750  
               
Basic weighted average number of common shares outstanding 73,601     72,861     73,355     72,754  
               
Diluted weighted average number of common shares outstanding 74,631     73,590     74,348     73,474  
                       

HEALTHCARE SERVICES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (in thousands)
 
  December 31, 2017   December 31, 2016
Cash and cash equivalents $ 9,557     $ 23,853  
Marketable securities, at fair value 73,221     67,730  
Accounts and notes receivable, net 378,720     271,276  
Other current assets 65,908     51,765  
Total current assets 527,406     414,624  
       
Property and equipment, net 13,509     13,455  
Notes receivable - long term 15,476     7,531  
Goodwill 51,084     44,438  
Other intangible assets, net 30,881     14,409  
Deferred compensation funding 28,885     24,119  
Other assets 8,762     9,870  
Total Assets $ 676,003     $ 528,446  
       
Accrued insurance claims - current $ 22,245     $ 23,573  
Other current liabilities 161,923     77,298  
Total current liabilities 184,168     100,871  
       
Accrued insurance claims - long term 62,454     64,080  
Deferred compensation liability 29,429     24,653  
Stockholders' equity 399,952     338,842  
Total Liabilities and Stockholders' Equity $ 676,003     $ 528,446  
               

 

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