Healthcare Services Group, Inc. Reports Results for the Three Months Ended March 31, 2017 and Announces Increased First Q...
April 11 2017 - 4:18PM
Healthcare Services Group, Inc. (NASDAQ:HCSG) reported that
revenues for the three months ended March 31, 2017 increased
approximately 5% to $404.5 million. Net income for the three months
ended March 31, 2017 was $22.0 million, or $0.30 per basic and
diluted common share, compared to the three months ended
March 31, 2016 net income of $18.6
million, or $0.26 per basic and diluted common
share. The Company also announced that it has entered into new
service agreements with expected annualized revenues of over $160
million, to begin during the second quarter of 2017. The Company
expects the full run rate of this most recent expansion effort to
be reflected in the third quarter 2017 results.
In addition, our Board of Directors declared a
quarterly cash dividend of $0.18750 per common share, payable on
June 23, 2017 to shareholders of record at the close of
business on May 19, 2017. This represents the 56th consecutive
quarterly cash dividend payment, as well as the 55th consecutive
increase since our initiation of quarterly cash dividend payments
in 2003.
The Company will host a conference call on
Wednesday, April 12, 2017 at 8:30 a.m. Eastern Time to discuss
its results for the three months ended March 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 earnings call may be accessed through
the phone number above through approximately 10:00 p.m. Eastern
Time on Wednesday, April 12, 2017. 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
presenting at the Mizuho Global SMID-Cap Opportunities Conference
on May 18, 2017 at the Langham Hotel in Boston, as well as at the
UBS Global Healthcare Conference on May 23, 2017 at the Grand Hyatt
New York. During the week of June 6, 2017, the Company will also be
presenting at the Jefferies Global Healthcare Conference at the
Grand Hyatt New York and at the Baird Global Consumer, Technology
& Services Conference at the InterContinental New York Barclay
Hotel.
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, 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;
credit and collection risks associated with this industry; having
several clients who individually contributed over 4%, with one as
high as 9.9%, of our total consolidated revenues for the three
months ended March 31, 2017; 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; tax
benefits arising from our corporate reorganization and self-funded
health insurance program transition; risks associated with the
reorganization of our corporate structure; perceived or real risks
related to the food industry; and the risk factors described in our
Form 10-K filed with the Securities and Exchange Commission
for the year ended December 31, 2016 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, 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.
|
HEALTHCARE SERVICES GROUP, INC. |
CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
(in thousands, except per share
data) |
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Revenues |
$ |
404,490 |
|
|
$ |
384,807 |
|
Operating costs and
expenses: |
|
|
|
Cost of
services provided |
345,570 |
|
|
330,044 |
|
Selling,
general and administrative |
28,210 |
|
|
25,346 |
|
Income from
operations |
30,710 |
|
|
29,417 |
|
Other income: |
|
|
|
Investment and interest |
1,569 |
|
|
187 |
|
Income before income
taxes |
32,279 |
|
|
29,604 |
|
Income taxes |
10,262 |
|
|
10,978 |
|
|
|
|
|
Net income |
$ |
22,017 |
|
|
$ |
18,626 |
|
|
|
|
|
Basic earnings per
common share |
$ |
0.30 |
|
|
$ |
0.26 |
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.30 |
|
|
$ |
0.26 |
|
|
|
|
|
Cash dividends declared
per common share |
$ |
0.18750 |
|
|
$ |
0.18250 |
|
|
|
|
|
Basic weighted average
number of common shares outstanding |
73,074 |
|
|
72,364 |
|
|
|
|
|
Diluted weighted
average number of common shares outstanding |
73,946 |
|
|
73,014 |
|
HEALTHCARE SERVICES GROUP, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands) |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
(Unaudited) |
|
|
Cash and cash
equivalents |
$ |
48,230 |
|
|
$ |
23,853 |
|
Marketable securities,
at fair value |
68,260 |
|
|
67,730 |
|
Accounts and notes
receivable, net |
281,113 |
|
|
271,276 |
|
Other current
assets |
54,118 |
|
|
51,765 |
|
Total
current assets |
451,721 |
|
|
414,624 |
|
|
|
|
|
Property and equipment,
net |
13,397 |
|
|
13,455 |
|
Notes receivable - long
term |
7,056 |
|
|
7,531 |
|
Goodwill |
44,438 |
|
|
44,438 |
|
Other intangible
assets, net |
13,802 |
|
|
14,409 |
|
Deferred compensation
funding |
25,082 |
|
|
24,119 |
|
Other assets |
9,612 |
|
|
9,870 |
|
Total Assets |
$ |
565,108 |
|
|
$ |
528,446 |
|
|
|
|
|
Accrued insurance
claims - current |
$ |
23,857 |
|
|
$ |
23,573 |
|
Other current
liabilities |
93,807 |
|
|
77,298 |
|
Total
current liabilities |
117,664 |
|
|
100,871 |
|
|
|
|
|
Accrued insurance
claims - long term |
64,581 |
|
|
64,080 |
|
Deferred compensation
liability |
26,386 |
|
|
24,653 |
|
Stockholders'
equity |
356,477 |
|
|
338,842 |
|
Total Liabilities and
Stockholders' Equity |
$ |
565,108 |
|
|
$ |
528,446 |
|
Company Contacts:
Daniel P. McCartney
Chairman
Theodore Wahl
President and Chief Executive Officer
Matthew J. McKee
Senior Vice President of Strategy
215-639-4274
investor-relations@hcsgcorp.com
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