Healthcare Services Group, Inc. Reports Results for the Three Months and Year Ended December 31, 2017
February 06 2018 - 4:10PM
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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