Healthcare Services Group, Inc. Reports Results for the Three Months Ended March 31, 2018 and Announces Increased First Quarter 2018 Cash Dividend


BENSALEM, Pa., April 17, 2018 (GLOBE NEWSWIRE) -- Healthcare Services Group, Inc. (NASDAQ:HCSG) (the “Company”)  reported that revenues for the three months ended March 31, 2018 increased to $501.8 million compared to $404.5 million for the same period in 2017. 

Net income for the three months ended March 31, 2018 was $0.1 million, or $0.00 per basic and diluted common share. The decline from the prior three month period ended March 31, 2017 related to the Company’s first quarter 2018 increase in its accounts receivable allowance, primarily related to corporate restructurings of two privately-held, multi-state operators, as discussed in the Company’s press release on April 16, 2018.

In addition, our Board of Directors declared a quarterly cash dividend of $0.19250 per common share, payable on June 29, 2018 to shareholders of record at the close of business on May 25, 2018. This represents the 60th consecutive quarterly cash dividend payment, as well as the 59th consecutive increase since our initiation of quarterly cash dividend payments in 2003.

The Company will host a conference call on Wednesday, April 18, 2018 at 8:30 a.m. Eastern Time to discuss its results for the three months ended March 31, 2018. 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 earnings call may be accessed through the phone number above through 10:00 p.m. Eastern Time on Wednesday, April 18, 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 be attending the Bank of America Merrill Lynch Healthcare Conference on May 15, 2018, at Encore at the Wynn, Las Vegas, the UBS Global Healthcare Conference on May 23, 2018, the Baird 2018 Global Consumer, Technology & Services Conference on June 5, 2018, as well as the Jefferies Healthcare Conference on June 6, 2018, at the Grand Hyatt New York, 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 healthcare industry, primarily providers of long-term care; having a significant portion of our consolidated revenues contributed by one customer during the three months ended March 31, 2018; 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, 2017 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 Chief Communications Officer
   
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 March 31,
 2018 2017
Revenues$501,810  $404,490 
Operating costs and expenses:   
Cost of services provided469,904  345,570 
Selling, general and administrative33,777  28,210 
(Loss) income from operations(1,871) 30,710 
Other income:   
Investment and interest476  1,569 
(Loss) income before income taxes(1,395) 32,279 
Income tax (benefit) expense(1,467) 10,262 
    
Net income$72  $22,017 
    
Basic earnings per common share$0.00  $0.30 
    
Diluted earnings per common share$0.00  $0.30 
    
Cash dividends declared per common share$0.19250  $0.18750 
    
Basic weighted average number of common shares outstanding73,913  73,074 
    
Diluted weighted average number of common shares outstanding74,725  73,946 
      


HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
 
 March 31, 2018 December 31, 2017
Cash and cash equivalents$10,489  $9,557 
Marketable securities, at fair value74,372  73,221 
Accounts and notes receivable, net335,014  378,720 
Other current assets69,278  65,908 
Total current assets489,153  527,406 
    
Property and equipment, net13,487  13,509 
Notes receivable - long-term38,814  15,476 
Goodwill51,084  51,084 
Other intangible assets, net29,766  30,881 
Deferred compensation funding29,443  28,885 
Other assets9,060  8,762 
Total Assets$660,807  $676,003 
    
Accrued insurance claims - current$22,917  $22,245 
Other current liabilities148,726  161,923 
Total current liabilities171,643  184,168 
    
Accrued insurance claims - long term65,225  62,454 
Deferred compensation liability29,595  29,429 
Stockholders' equity394,344  399,952 
Total Liabilities and Stockholders' Equity$660,807  $676,003