UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)............April 19, 2005
HEALTHCARE SERVICES GROUP, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-120152 23-2018365
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(State or other jurisdiction of (Commission (IRS Employer
Incorporation or organization) File Number) Identification
number)
3220 Tillman Drive-Suite 300, Bensalem, Pennsylvania 19020
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 215-639-4274
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Item 2.02 Results of Operations and Financial Condition.
On April 19, 2005 Healthcare Services Group, Inc. issued a press release
announcing its earnings for the three month period ended March 31, 2005, as well
as three-for-two stock split and first quarter cash dividend payment. A copy of
the press release is attached hereto as Exhibit (99) and hereby incorporated by
reference.
The information in this Current Report is being furnished pursuant to Item 2.02,
"Results of Operations and Financial Condition" and shall not be deemed "filed"
for the purposes of Section 18 of the Securities and Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of that Section. The
information in this Current Report shall not be incorporated by reference into
any registration statement or other document filed pursuant to the Securities
Act of 1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTHCARE SERVICES GROUP, INC.
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April 19, 2005 /S/ Richard W. Hudson
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Date Vice President- Finance and
Secretary
HEALTHCARE SERVICES GROUP, INC.
REPORTS RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 2005 AND ANNOUNCES A THREE-FOR-TWO STOCK SPLIT AND
FIRST QUARTER 2005 CASH DIVIDEND
o NET INCOME UP 28% ON AN 8% INCREASE IN REVENUES
o 7TH CONSECUTIVE QUARTERLY CASH DIVIDEND INCREASE REPRESENTING A 17%
INCREASE OVER 2004 FOURTH QUARTER PAYMENT AND 75% OVER 2004 FIRST QUARTER
PAYMENT
o DECLARES 50% STOCK DIVIDEND
Bensalem, PA - April 19, 2005, Healthcare Services Group, Inc. (NASDAQ-HCSG)
reported that revenues for the three months ended March 31, 2005 increased by 8%
to $114,695,000 compared to $106,622,000 for the same 2004 period. Net income
increased 28% for the three months ended March 31, 2005 to $4,263,000 or $.24
per basic and $.23 per diluted common share, compared to the 2004 first quarter
net income of $3,318,000 or $.19 per basic and $.18 per diluted common share.
The Board of Directors has declared a three-for-two stock split in the
form of a 50% stock dividend payable on May 2, 2005 to the holders of record of
its Common Stock at the close of business April 29, 2005. All fractional share
interests will be rounded up to the nearest whole number. The effect of this
action will be to increase common shares outstanding by approximately 8,874,000
shares to approximately 26,622,000 shares.
Additionally, the Company's Board of Directors has declared a first
quarter 2005 cash dividend of $.07 per common share payable on May 16, 2005 to
shareholders of record at the close of business May 4, 2005. The first quarter
2005 cash dividend represents a 17% increase over the cash dividend declared for
the 2004 fourth quarter and is the eighth consecutive quarterly dividend
payment, as well as the seventh consecutive increase since our initiation of
quarterly cash dividend payments in 2003. The cash dividend payment data is
after giving effect to the three-for-two stock split.
Earnings Release April 19, 2005
Page 2
In conjunction with the Company's share repurchase program, the Board
of Directors has authorized the repurchase of up to 1,000,000 shares of its
common shares.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This report includes forward-looking statements that are subject to risks and
uncertainties that could cause actual results or objectives to differ materially
from those projected. 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 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; one client accounting for approximately 19% of
revenues in the three month period ended March 31, 2005; 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,
including state and local regulations pertaining to the taxability of our
services; and risk factors described in our Form 10-K filed with the Securities
and Exchange Commission for the year ended December 31, 2004 in Part I thereof
under "Government Regulation of Clients", "Competition" and "Service
Agreements/Collections". Many of our clients' revenues are highly contingent on
Medicare and Medicaid reimbursement funding rates, which have been and continue
to be adversely affected by the change in Medicare payments under the 1997
enactment of Medicare Prospective Payment System. That change, and the lack of
substantive reimbursement funding rate reform legislation, as well as other
trends in the long-term care industry have resulted in certain of our clients
filing for bankruptcy protection. Others may follow. Any decisions by the
government to discontinue or
Earnings Release April 19, 2005
Page 3
adversely modify legislation related to reimbursement funding rates will have a
material adverse affect on our clients. 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 its services could not be passed on to 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 successfully executing projected growth
strategies.
Company Contacts:
Daniel P. McCartney Thomas Cook
Chairman and Chief Executive Officer President and Chief Operating Officer
215-639-4274 215-639-4274
HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2005 December 31, 2004
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Cash and cash equivalents $ 85,912,000 $ 74,847,000
Accounts receivable, net 55,932,000 55,725,000
Other current assets 15,983,000 14,699,000
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Total current assets 157,827,000 145,271,000
Property and equipment, net 4,782,000 4,804,000
Notes receivable- long term, net 5,005,000 5,557,000
Deferred compensation funding 4,198,000 4,062,000
Other assets 7,508,000 7,270,000
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$179,320,000 $166,964,000
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Accrued insurance claims- current $ 4,533,000 $ 4,169,000
Other current liabilities 22,240,000 16,090,000
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Total current liabilities 26,773,000 20,259,000
Accrued insurance claims- long term 10,577,000 10,227,000
Deferred compensation liability 5,330,000 5,018,000
Stockholders' equity 136,640,000 131,460,000
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$179,320,000 $166,964,000
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HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
March 31,
2005 2004
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Revenues $114,695,000 $106,622,000
Operating costs and expenses:
Cost of services provided 99,770,000 93,397,000
Selling, general and administrative 8,429,000 8,015,000
Other income:
Investment and interest income 380,000 142,000
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Income before income taxes 6,876,000 5,352,000
Income taxes 2,613,000 2,034,000
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Net income $ 4,263,000 $ 3,318,000
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Basic earnings per common share $ .24 $ .19
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Diluted earnings per common share $ .23 $ .18
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Cash dividends per common share $ .09 $ .05
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Basic weighted average number of
common shares outstanding 17,748,000 17,476,000
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Diluted weighted average number of
common shares outstanding 18,691,000 18,429,000
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