Healthcare Services Group, Inc. Reports Results for the Three and Six Months Ended June 30, 2018 and Announces Increased Seco...
July 17 2018 - 4:05PM
Healthcare Services Group, Inc. (NASDAQ:HCSG) (the “Company”)
reported that revenues for the three months ended June 30, 2018
increased to $503.7 million compared to $470.9 million for the same
period in 2017. Net income for the three months ended June 30, 2018
was $25.8 million, or $0.35 per basic and diluted common share.
Revenues for the six months ended June 30, 2018
increased to $1.0 billion compared to $875.4 million for the same
period in 2017. Net income for the six months ended June 30, 2018
was $25.9 million, or $0.35 per basic and diluted common share.
In addition, our Board of Directors declared a
quarterly cash dividend of $0.19375 per common share, payable on
September 28, 2018 to shareholders of record at the close of
business on August 24, 2018. This represents the 61st
consecutive quarterly cash dividend payment, as well as the 60th
consecutive increase since our initiation of quarterly cash
dividend payments in 2003.
The Company will host a conference call on
Wednesday, July 18, 2018 at 8:30 a.m. Eastern Time to discuss
its results for the three and six months ended June 30, 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, July 18, 2018. The webcast will also be available
on our website for one year following the date of the earnings
call.
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 six months ended June 30, 2018; credit and
collection risks associated with the healthcare 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 healthcare 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 |
|
For the Six Months Ended |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
$ |
503,732 |
|
|
$ |
470,876 |
|
|
$ |
1,005,542 |
|
|
$ |
875,366 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of
services provided |
437,618 |
|
|
407,322 |
|
|
907,522 |
|
|
752,892 |
|
Selling,
general and administrative |
34,118 |
|
|
31,991 |
|
|
67,895 |
|
|
60,201 |
|
Income from
operations |
31,996 |
|
|
31,563 |
|
|
30,125 |
|
|
62,273 |
|
Other income: |
|
|
|
|
|
|
|
Investment and interest |
1,320 |
|
|
1,515 |
|
|
1,796 |
|
|
3,084 |
|
Income before income
taxes |
33,316 |
|
|
33,078 |
|
|
31,921 |
|
|
65,357 |
|
Income tax expense |
7,502 |
|
|
10,527 |
|
|
6,035 |
|
|
20,789 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
25,814 |
|
|
$ |
22,551 |
|
|
$ |
25,886 |
|
|
$ |
44,568 |
|
|
|
|
|
|
|
|
|
Basic earnings per
common share |
$ |
0.35 |
|
|
$ |
0.31 |
|
|
$ |
0.35 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.35 |
|
|
$ |
0.30 |
|
|
$ |
0.35 |
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
Cash dividends declared
per common share |
$ |
0.19375 |
|
|
$ |
0.18875 |
|
|
$ |
0.38625 |
|
|
$ |
0.37625 |
|
|
|
|
|
|
|
|
|
Basic weighted average
number of common shares outstanding |
73,982 |
|
|
73,276 |
|
|
73,947 |
|
|
73,176 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average number of common shares outstanding |
74,487 |
|
|
74,269 |
|
|
74,606 |
|
|
74,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTHCARE SERVICES GROUP, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(in thousands) |
|
|
June 30, 2018 |
|
December 31, 2017 |
Cash and cash
equivalents |
$
|
13,155 |
|
|
$ |
9,557 |
|
Marketable securities,
at fair value |
74,928 |
|
|
73,221 |
|
Accounts and notes
receivable, net |
343,665 |
|
|
378,720 |
|
Other current
assets |
69,049 |
|
|
65,908 |
|
Total
current assets |
500,797 |
|
|
527,406 |
|
|
|
|
|
Property and equipment,
net |
13,254 |
|
|
13,509 |
|
Notes receivable -
long-term |
37,386 |
|
|
15,476 |
|
Goodwill |
51,084 |
|
|
51,084 |
|
Other intangible
assets, net |
28,650 |
|
|
30,881 |
|
Deferred compensation
funding |
30,697 |
|
|
28,885 |
|
Other assets |
9,010 |
|
|
8,762 |
|
Total Assets |
$ |
670,878 |
|
|
$ |
676,003 |
|
|
|
|
|
Accrued insurance
claims - current |
$ |
23,702 |
|
|
$ |
22,245 |
|
Other current
liabilities |
140,692 |
|
|
161,923 |
|
Total
current liabilities |
164,394 |
|
|
184,168 |
|
|
|
|
|
Accrued insurance
claims - long term |
67,459 |
|
|
62,454 |
|
Deferred compensation
liability |
30,891 |
|
|
29,429 |
|
Stockholders'
equity |
408,134 |
|
|
399,952 |
|
Total Liabilities and
Stockholders' Equity |
$ |
670,878 |
|
|
$ |
676,003 |
|
|
|
|
|
|
|
|
|
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