Healthcare Services Group, Inc. Reports Results for the Three and Nine Months Ended September 30, 2016 & Increases Third Quar...
October 11 2016 - 4:16PM
Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that
revenues for the three months ended September 30, 2016 increased
approximately 9% to $392,734,000 compared to the same 2015 period.
Net income for the three months ended September 30, 2016 was
$19,711,000 or $0.27 per basic and per diluted common share,
compared to the three months ended September 30, 2015 net income
of $17,086,000 or $0.24 per basic and per
diluted common share.
Revenues for the nine months ended September 30,
2016 increased approximately 9% to $1,164,097,000 compared to
$1,070,767,000 for the same 2015 period. Net income for the nine
months ended September 30, 2016 was $57,097,000 or $0.79 per basic
and $0.78 per diluted common share, compared to the nine months
ended September 30, 2015 net income of $48,890,000 or $0.68 per
basic and diluted common share.
Additionally, our Board of Directors declared a
quarterly cash dividend of $0.1850 per common share, payable on
December 23, 2016, to shareholders of record at the close of
business on November 18, 2016. This represents the 54th
consecutive quarterly cash dividend payment, as well as the 53rd
consecutive increase since our initiation of quarterly cash
dividend payments in 2003.
The Company will host a conference call on
Wednesday, October 12, 2016 at 8:30 a.m. Eastern Time to
discuss its results for the three and nine months ended September
30, 2016. The call may be accessed via phone at 404-665-9534. 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, October 12, 2016.
The Company also announced that it will present
at the Stifel Healthcare Conference, which is scheduled to occur on
November 15-16, 2016 at the New York Palace Hotel in New York City,
as well as at the Jefferies London Healthcare Conference, scheduled
for November 16-17, 2016 at the Waldorf Hilton Hotel in London,
England.
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, 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; having several significant clients
who each individually contributed at least 3% with one as high as
9% of our total consolidated revenues for the three and nine months
ended September 30, 2016; 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 receipt of tax benefits arising from our corporate
reorganization and self-funded health insurance program transition;
risks associated with the reorganization of our corporate
structure; and the risk factors described in our Form 10-K filed
with the Securities and Exchange Commission for the year ended
December 31, 2015 in Part I thereof under ''Government
Regulation of Clients,” ''Competition'' and ''Service
Agreements/Collections," and under Item IA "Risk Factors."
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 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: |
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Daniel P.
McCartney |
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Theodore Wahl |
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Matthew J. McKee |
Chairman |
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President and Chief
Executive Officer |
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Vice President of
Strategy |
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215-639-4274 |
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investor-relations@hcsgcorp.com |
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HEALTHCARE SERVICES GROUP, INC. |
CONSOLIDATED STATEMENTS OF
INCOME |
(Unaudited) |
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, |
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September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
Revenues |
$ |
392,734,000 |
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$ |
360,165,000 |
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$ |
1,164,097,000 |
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$ |
1,070,767,000 |
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Operating costs and
expenses: |
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Cost of
services provided |
336,340,000 |
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308,645,000 |
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998,595,000 |
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916,798,000 |
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Selling,
general and administrative |
27,182,000 |
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23,445,000 |
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78,192,000 |
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75,332,000 |
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Income from
operations |
29,212,000 |
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28,075,000 |
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87,310,000 |
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78,637,000 |
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Other income (expense),
net: |
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Investment and interest |
1,359,000 |
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(1,334,000 |
) |
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2,548,000 |
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(585,000 |
) |
Income before income
taxes |
30,571,000 |
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26,741,000 |
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89,858,000 |
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78,052,000 |
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Income tax
provision |
10,860,000 |
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9,655,000 |
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32,761,000 |
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29,162,000 |
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Net income |
$ |
19,711,000 |
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$ |
17,086,000 |
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$ |
57,097,000 |
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$ |
48,890,000 |
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Basic earnings per
common share |
$ |
0.27 |
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$ |
0.24 |
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$ |
0.79 |
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$ |
0.68 |
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Diluted earnings per
common share |
$ |
0.27 |
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$ |
0.24 |
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$ |
0.78 |
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$ |
0.68 |
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Cash dividends per
common share |
$ |
0.19 |
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$ |
0.18 |
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$ |
0.55 |
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$ |
0.53 |
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Basic weighted average
number of common shares outstanding |
72,839,000 |
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72,009,000 |
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72,718,000 |
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71,714,000 |
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Diluted weighted
average number of common shares outstanding |
73,592,000 |
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72,691,000 |
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73,435,000 |
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72,381,000 |
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HEALTHCARE SERVICES GROUP, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
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September 30, 2016 |
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December 31, 2015 |
Cash and cash
equivalents |
$ |
24,327,000 |
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$ |
33,189,000 |
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Marketable securities,
at fair value |
80,623,000 |
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69,496,000 |
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Accounts and notes
receivable, net |
265,533,000 |
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214,854,000 |
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Other current
assets |
53,985,000 |
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47,803,000 |
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Total
current assets |
424,468,000 |
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365,342,000 |
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Property and equipment,
net |
13,275,000 |
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13,086,000 |
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Notes receivable - long
term |
4,048,000 |
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2,972,000 |
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Goodwill |
44,438,000 |
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44,438,000 |
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Other intangible
assets, net |
15,016,000 |
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17,108,000 |
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Deferred compensation
funding |
26,332,000 |
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25,391,000 |
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Other assets |
9,246,000 |
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12,612,000 |
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Total Assets |
$ |
536,823,000 |
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$ |
480,949,000 |
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Accrued insurance
claims - current |
$ |
23,907,000 |
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$ |
19,740,000 |
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Other current
liabilities |
91,762,000 |
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76,325,000 |
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Total
current liabilities |
115,669,000 |
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96,065,000 |
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Accrued insurance
claims - long term |
63,213,000 |
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62,510,000 |
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Deferred compensation
liability |
26,837,000 |
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25,918,000 |
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Stockholders'
equity |
331,104,000 |
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296,456,000 |
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Total Liabilities and
Stockholders' Equity |
$ |
536,823,000 |
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$ |
480,949,000 |
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