<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number 0-12015
HEALTHCARE SERVICES GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2018365
- ------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) number)
2643 Huntingdon Pike, Huntingdon Valley, Pennsylvania 19006
----------------------------------------------------------------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 215-938-1661
----------------------
Indicate mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to
such filing requirements for past 90 days.
YES X NO
-------- -------
Number of shares of common stock, issued and outstanding as of November 10,
1995 is 8,165,963 shares
Total of 15 Pages
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
Balance Sheets as of September 30, 1995 and
December 31, 1994 2
Statements of Income for the Three Months
ended September 30, 1995 and 1994 3
Statements of Income for the Nine Months
ended September 30, 1995 and 1994 4
Statements of Cash Flows for the Nine Months
ended September 30, 1995 and 1994 5 to 6
Notes to Financial Statements 7 to 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11 to 13
PART II. OTHER INFORMATION 14
-----------------
SIGNATURES 15
- 1 -
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited) (Audited)
-------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $14,600,244 11,230,118
Accounts and notes receivable, less allowance
for doubtful accounts of $4,200,000
in 1995 and $4,500,000 in 1994 34,124,193 32,773,299
Prepaid income taxes 1,109,065
Inventories and supplies 7,066,192 6,298,370
Deferred income taxes 923,875 1,435,350
Prepaid expenses and other 2,085,213 2,791,376
-------------- -------------
Total current assets 59,908,782 54,528,513
PROPERTY AND EQUIPMENT:
Laundry and linen equipment 11,994,585 10,835,247
Housekeeping equipment and office
furniture 6,022,916 5,174,624
Autos and trucks 179,756 140,703
-------------- -------------
18,197,257 16,150,574
Less accumulated depreciation 11,897,247 10,207,941
-------------- -------------
6,300,010 5,942,633
INTANGIBLE ASSETS less accumulated
amortization of $398,565 in 1994 1,106,666
COST IN EXCESS OF FAIR VALUE OF NET
ASSETS ACQUIRED less accumulated
amortization of $1,070,507 in 1995 and
$1,008,455 in 1994 2,284,970 2,367,021
CERTIFICATES OF DEPOSIT PLEDGED FOR
LOAN GUARANTEES (Note 4) 1,500,000
DEFERRED INCOME TAXES 1,992,346 2,207,236
OTHER NONCURRENT ASSETS 9,824,799 8,163,134
-------------- -------------
$80,310,907 75,815,203
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,899,634 3,630,573
Accrued payroll 3,372,678 1,769,544
Accrued and withheld payroll taxes 342,611 176,545
Other accrued expenses 395,918 720,749
Income taxes payable 727,741
Accrued insurance claims 778,786 1,356,984
-------------- -------------
Total current liabilities 7,789,627 8,382,136
ACCRUED INSURANCE CLAIMS 2,929,720 2,883,591
LIABILITY FOR CONTINGENT LOSSES ON
PROMISSORY NOTES (Note 2) 300,000
LITIGATION SETTLEMENT LIABILITY (Note 3) 2,125,000
LIABILITY FOR ESTIMATED COST RELATED TO SEC
INQUIRY AND OTHER MATTERS (Note 5) 1,542,673
COMMITMENTS AND CONTINGENCIES (Notes 2,3,4, & 5)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value: 10,000,000
shares authorized, 8,160,963 shares
issued in 1995 and 7,935,874 in 1994 81,610 79,359
Additional paid in capital 35,188,067 32,621,034
Retained earnings 32,779,210 29,424,083
-------------- -------------
Total stockholders' equity 68,048,887 62,124,476
-------------- -------------
$80,310,907 75,815,203
============== =============
</TABLE>
See accompanying notes.
-2-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 38,208,527 $ 35,005,523 $ 111,219,213 $ 99,523,806
Operating costs and expenses:
Cost of services provided 32,800,523 29,197,727 94,417,799 83,263,762
Selling, general and administrative 3,103,320 2,871,525 9,357,390 8,029,224
Recovery of contingent losses on promissory
notes sold (Note 2) (100,000) (75,000) (300,000) (200,000)
Other income (expense):
Provision for estimated cost related to SEC
Inquiry and other matters (Note 5) (2,400,000)
Interest income 187,311 42,917 621,103 266,413
------------- ------------- ------------- -------------
Income before income taxes 2,591,995 3,054,188 5,965,127 8,697,233
Income taxes 1,063,000 1,283,000 2,610,000 3,653,000
------------- ------------- ------------- -------------
Net income $ 1,528,995 $ 1,771,188 $ 3,355,127 $ 5,044,233
============= ============= ============= =============
Earnings per common share $ 0.19 $ 0.22 $ 0.41 $ 0.63
============= ============= ============= =============
Weighted average number of common
shares outstanding 8,215,348 8,203,390 8,243,414 8,180,648
============= ============= ============= =============
</TABLE>
See accompanying notes.
-3-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
--------------------------
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 3,355,127 $ 5,044,233
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,936,984 1,966,841
Bad debt provision 398,303 569,377
Recovery of contingent losses on
promissory notes sold (Note 2) (300,000) (200,000)
Deferred income taxes 726,365 57,961
Tax benefit of stock option transactions 62,000 23,487
Changes in operating assets and liabilities:
Accounts receivable (1,749,197) (2,372,636)
Prepaid income taxes (1,109,065)
Inventories and supplies (767,822) (635,944)
Changes to long term trade notes
receivable (1,680,609) (2,460,493)
Accounts payable and other accrued expenses (1,055,771) (1,790,888)
Accrued payroll, accrued and withheld payroll
taxes 1,769,200 1,546,100
Accrued insurance claims (532,069) 437,335
Liability for estimated cost related to SEC
inquiry and other matters (Note 5) 1,542,673
Income taxes payable (727,741) 866,351
Prepaid expenses and other assets 1,680,814 201,263
------------ ------------
Net cash provided by operating activities 3,549,192 3,252,987
------------ ------------
Cash flows from investing activities:
Disposals of fixed assets 267,095
Additions to property and equipment (2,061,350) (1,398,747)
Release of certificates of deposits pledged
for loan guarantees 1,500,000
------------ ------------
Net cash used in investing activities (561,350) (1,131,652)
------------ ------------
Cash flows from financing activities:
Purchase of treasury stock (51,875)
Proceeds from the exercise of stock options 434,159 403,790
------------ ------------
Net cash provided by financing activities 382,284 403,790
------------ ------------
Net increase in cash and cash equivalents 3,370,126 2,525,125
Cash and cash equivalents at beginning of the period 11,230,118 7,858,694
------------ ------------
Cash and cash equivalents at end of the period $ 14,600,244 $ 10,383,819
============ ============
</TABLE>
See accompanying notes.
-4-
<PAGE>
Healthcare Services Group, Inc.
Supplemental Disclosure of Noncash Financing Activity:
On August 1, 1995, the Company issued 180,851 shares of its common
stock representing its payment obligation under the 1993 settlement of the
lawsuits relating to the consolidated class action complaints filed against it
in 1991 and 1992. Accordingly, the September 30, 1995 Balance Sheet reflects
the payment of the previously recorded Litigation Liability of $2,125,000 by
increasing stockholders' equity in the same amount.
-5-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Reporting
The accompanying financial statements are unaudited and do not include
certain information and note disclosures required by generally accepted
accounting principles for complete financial statements. The balance sheet shown
in this report as of September 30, 1995 has been derived from, and does not
include, all the disclosures contained in the financial statements for the year
ended December 31, 1994. These statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994. However, in the opinion of
the Company, all adjustments considered necessary for a fair presentation have
been included. The results of operations for the three and nine months ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the full fiscal year.
Note 2 - Sale of Promissory Notes Receivable and Provision for Contingent
Losses on Promissory Notes Sold
In 1991 and 1990, the Company sold to its bank, with recourse,
promissory notes receivable at face value of approximately $3,800,000 and
$2,500,000, respectively. As of September 30, 1995 the 1991 and 1990 promissory
notes sold have been paid in full. As of December 31, 1994 approximately
$300,000 and $800,000, respectively, of the aggregate amount of such promissory
notes sold in each year remained outstanding. On July 15, 1992, a client paid in
full to the Company's bank one of the promissory notes in the amount of
$910,000. In addition, the client paid $100,000 in each quarter of 1993 (in the
aggregate $400,000), as well as $50,000 in the first quarter of 1994 and
$75,000 in each of the second and third quarters of 1994 and $100,000 in the
fourth quarter of 1994 (in the aggregate $300,000), and payments of $150,000,
$50,000 and $100,000 in the first, second and third quarters of 1995,
respectively, as partial payment on another note (see discussion below
regarding these promissory notes). Therefore, the Company reversed the
provision recorded as of December 31, 1991 and recognized the $910,000,
$400,000, $300,000 and $300,000 payments as income in 1992, 1993, 1994 and the
nine month period ending September 30, 1995, respectively. All of the promissory
notes sold during 1990 and all but one of the promissory notes sold during 1991
represent accounts receivable due to the Company for services rendered. These
accounts receivable had been converted to promissory notes prior to their sale
to the bank. The Company converted the accounts receivable to interest bearing
promissory notes receivable in order to further evidence the amounts owed and to
enhance its collection efforts. All of the promissory notes (except the one
mentioned in the following paragraph) provided for monthly payments of
principal and interest and some were secured by certain assets of the issuers.
Pursuant to agreements with its bank, the Company would have been required to
post substitute collateral if its line of credit from its bank expired or was
terminated prior to the promissory notes being paid in full.
- 6 -
<PAGE>
In 1991, the Company made arrangements with its bank to provide
financing of $1,000,000 to one of its clients for which the Company agreed to
guarantee payment. In order for the Company to negotiate maximum security for
its guarantee, the Company made the loan directly to the client and
simultaneously sold the promissory note receivable to the bank. In addition,
among the notes sold during 1991, is a promissory note in the amount of $910,000
which was issued in 1990 by an entity related to this client and subsequently
paid in full to the bank on July 15, 1992. On April 22, 1992 a director of the
Company, who is not an officer, agreed to purchase these promissory notes (for
the full principal amount thereof plus accrued interest) without recourse to the
Company, upon a request by the bank that the Company post substitute collateral.
Any such purchase would include the assignment of the collateral pledged as
security. The Company entered into this agreement (which was approved by the
Board of Directors) with the director in order to protect its interests with
respect to these promissory notes. The director is engaged in the operation of
nursing homes. Although the Company believed that it would not have incurred any
financial loss as a result of these promissory notes, it had, as of December 31,
1994 established a reserve for contingent losses in the amount of $300,000. The
borrower of the $1,000,000 financing used the proceeds to fully fund the
purchase price for its acquisition of the client. The equity method of
accounting had been used to value the collateral held as security for these
promissory notes, which, as a consequence of losses incurred by the client after
the closing date of the transaction, had resulted in the Company providing a
reserve for the total unpaid amount of the promissory notes as of December 31,
1994.
Note 3 - Settlement of Class Action Litigation
In the fourth quarter of 1993 the Company and its insurer consummated
an agreement to settle the consolidated class action complaints filed against it
in Federal District Court in 1991 and 1992. The settlement was approved by court
order dated September 8, 1994 and became effective on October 10, 1994. The
settlement provided for the payment of $2,625,000 by the Company's insurer and
the issuance of common shares by the Company having a value of $2,125,000. The
settlement and related estimated legal costs have been recorded as an
extraordinary item in 1993. Such extraordinary item reduced 1993 net income by
approximately $1,437,000, net of income tax benefit of $844,000.
On August 1, 1995, the Company issued 180,851 shares of its common
stock representing its payment obligation under the 1993 settlement relating to
the consolidated class action complaints. Accordingly, the effect of issuing
these shares is reflected in the per share amounts reported for the three and
nine month periods ended September 30, 1995 and 1994. The September 30, 1995
Balance Sheet also reflects the payment of the previously recorded Litigation
Liability of $2,125,000 by increasing stockholders' equity in the same amount.
- 7 -
<PAGE>
Note 4 - Other Contingencies
In 1988, the Company acquired a 19.5% interest in T.L.C. St Petersburg,
Inc. ("TLC"), a corporation which owned and operated a long-term care facility
in Florida and which was a client of the Company. The Company had guaranteed
$1,500,000 of working capital loans of TLC at both December 31, 1994 and
December 31, 1993 and had pledged equal amounts of certificates of deposit as
collateral for the guarantee (which are listed as Certificates of Deposit
Pledged for Loan Guarantees in the accompanying balance sheet at December 31,
1994). In addition, the Company had guaranteed TLC notes payable of
approximately $1,700,000. TLC made all required principal and interest payments
due under the terms of these loans through December 31, 1994.Total guarantees
for TLC aggregated $3,200,000 at both December 31, 1994 and December 31, 1993.
During 1993, one of the Company's clients, which owns and operates a
significant number of long-term care facilities throughout the country,
purchased from a third party the balance of the issued and outstanding shares of
TLC and that client now holds 90.1% of the issued and outstanding shares of TLC.
During the fourth quarter of 1993, TLC entered into an agreement to sell
substantially all of its assets to an unrelated third party. The sale closed on
March 28, 1995 and all loans guaranteed by the Company have been paid in full
and the Certificates of Deposit pledged for the loan guarantees have been
released to the Company.
As of January 1, 1994, TLC entered into a twenty year agreement to
lease the operations of the facility to an entity controlled by TLC's majority
shareholder. The purchaser of TLC's assets assumed such operating lease.
By reason of TLC's uncertain financial condition, the Company, until
the time TLC entered into an agreement to sell its assets, fully reserved
advances to and receivables from TLC which amounted to approximately $2,000,000
at both December 31, 1994 and 1993 and $1,200,000 at December 31, 1992.
Subsequent to the sales agreement, the Company advanced approximately $2,900,000
to TLC. All obligations due the Company have been assumed by the entity that
began operating the facility on January 1, 1994. The obligations are being
repaid in accordance with the terms of a promissory note issued to the Company.
The Company has a $13,000,000 bank line of credit on which it may draw
to meet short-term liquidity requirements or for other purposes. This line
expires on June 30, 1996. Amounts drawn under the line are payable upon demand.
At both September 30, 1995 and December 31, 1994, there were no borrowings under
the line. However, during 1991 and 1990, the Company sold promissory notes
receivable of approximately $3,800,000 and $2,500,000, respectively, to its
bank, with recourse. As of September 30, 1995 the 1991 and 1990 promissory notes
sold have been paid in full. At December 31, 1994, the unpaid balance of the
promissory notes receivable sold was approximately $1,100,000 (see Note 6 of
Notes to Financial Statements at December 31, 1994).
- 8 -
<PAGE>
At both September 30, 1995 and December 31, 1994 the Company had outstanding
approximately $8,200,000 of irrevocable standby letters of credit, which
primarily relate to payment obligations under the Company's insurance program.
As a result of the promissory notes receivable sold (see Note 2 above) and
letters of credits issued, the amount available under the line was reduced by
approximately $8,200,000 at September 30, 1995 and $9,300,000 at December 31,
1994.
Note 5 - Provision for Estimated Cost Related to SEC Inquiry and Other Matters
The Securities and Exchange Commission (SEC) has been conducting a
non-public investigation since 1990 with respect to certain matters, including
the Company's financial statements, financial condition and results of
operations. The Company has been cooperating fully with such inquiry on a
voluntary basis. The Staff of the SEC has recently advised the Company that it
is considering recommendations to the Commission about certain allegations of
violations of the Federal securities laws by the Company and certain of its
officers with respect to periods ended on or before December 31, 1991. However,
the Staff has advised the Company that it will not make any recommendations to
the Commission until the Company has the opportunity to address the issues
raised by the Staff, which it is still in the process of doing.
In addition, the United States Attorney for the Eastern District of
Pennsylvania is investigating certain payments (approximately $84,000 in 1988,
$54,000 in 1989, $110,000 in 1990, $125,000 in 1991 and $34,000 in 1992) made
by the Company between June 1988 and January 1992 to certain vendors that were
not in accordance with Company policy. This matter was previously investigated
and reported upon by the Company in its Form 10-K for the year ended December
31, 1991. The information regarding this matter was voluntarily furnished to the
U.S. Attorney's office in New Jersey in May 1992 and such payments were
recovered by the Company in 1992.
The Company anticipates that it will incur a significant amount of
legal and related costs in connection with these matters. As of September 30,
1995, the Company has incurred approximately $900,000 of costs and estimates
that the additional costs which may be incurred in connection with these matters
will be in a range of approximately $1,500,000 to $3,500,000 and accordingly has
set up a provision for the estimated low range of this liability. The result of
this $2,400,000 provision was to reduce the nine month net income by
approximately $1,594,000 or $.20 per common share.
- 9 -
<PAGE>
PART I.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto.
RESULTS OF OPERATIONS
Revenues for the third quarter of 1995 increased by 9.2% over revenues
in the corresponding 1994 quarter. Revenues for the nine months ending September
30, 1995 increased by 11.8% over the same 1994 period. The following factors
contributed to the increase in revenues: service agreements with new clients in
existing geographic areas increased 17.8% for the third quarter and 19.9% for
the nine month period; geographic expansion increased revenues 2.4% for the
third quarter and 2.8 % for the nine month period; and cancellations and other
minor changes decreased revenues 11.0 % for the third quarter and 10.9% for the
nine month period.
Cost of services provided as a percentage of revenues increased to
85.9% for the third quarter of 1995 from 83.4% in the corresponding 1994
quarter. In addition, cost of services provided as a percentage of revenue
increased to 84.9% for the nine month period ending September 30, 1995 from
83.7% in the same 1994 period. The primary factors affecting the variations in
comparing the 1995 three and nine month periods, respectively, in cost of
services provided as a percentage of revenue and their effects on the respective
2.5% and 1.2% increases are as follows: in the third quarter, an increase of .8%
in amortization of service agreements and costs associated with service
agreements cancelled (see Note 1- Intangible Assets in Notes to Financial
Statements at December 31, 1994); a .7% increase in the cost of laundry and
housekeeping supplies, and an increase of .6% in health insurance and employee
benefits; and offsetting these increases was a decrease in service equipment
depreciation of .3%; as well as a .3% decrease in the allowance for bad debts;
in the nine month period, an increase of 1.0% in labor cost; and a .9% increase
in amortization of service agreements and costs associated with service
agreements cancelled (see Note 1- Intangible Assets in Notes to Financial
Statements at December 31, 1994); and offsetting these increases was a decrease
of .3% in depreciation and a .3% decrease in workers' compensation, general
liability and other insurance costs.
Selling, general and administrative expenses as a percentage of revenue
decreased to 8.1% for the third quarter of 1995 as compared to 8.2% in the
corresponding 1994 period. The nine month period ending September 30, 1995
recognized an increase in SG & A expenses to 8.4% as a percentage of revenue as
compared to 8.1% in the corresponding 1994 period. The nine month period
increase of .3% is primarily attributable to additional costs, recognized in
prior 1995 periods associated with the expansion of the divisional and regional
staffs.
- 10 -
<PAGE>
The Company presently anticipates that it will incur a significant
amount of additional legal and related costs in connection with the pending
governmental investigations and accordingly has established a provision for this
purpose (see Note 5 - Provision for Estimated Cost Related to SEC Inquiry and
Other Matters).
Liquidity and Capital Resources
At September 30, 1995 the Company had working capital of $52,119,155
compared to $46,146,376 at December 31, 1994.
The Company's current ratio at September 30, 1995 is 7.7 to 1 as
compared to 6.5 to 1 at December 31, 1994.
The net cash provided by the Company's operating activities was
$3,549,192 for the nine month period ended September 30, 1995. The components of
working capital that required the largest amount of cash were: increases in
accounts receivable and long term trade notes receivable of $1,749,197 and
$1,680,609, respectively, and a $1,109,065 increase in prepaid income taxes. The
increase in accounts receivable and long term trade notes receivable resulted
primarily from the continued growth in the Company's revenues which increased by
11.8% in the nine month period ended September 30, 1995. The increased use of
cash associated with prepaid income taxes resulted from the timing of estimated
tax liability payments.
The Company expends considerable effort to collect the amounts due for
its services on the terms agreed upon with its clients. Many of the Company's
clients participate in programs funded by federal and state governmental
agencies which historically have encountered delays in making payments to its
program participants. Whenever possible, when a client falls behind in making
agreed-upon payments, the Company converts the unpaid accounts receivable to
interest bearing promissory notes receivable. The promissory notes receivable
provide a definitive repayment plan and therefore may enhance the ultimate
collectibility of the amounts due. In some instances the Company obtains a
security interest in certain of the debtors' assets. Certain of the Company's
promissory notes receivable were previously sold to its bank (see Note 2 of
Notes to Financial Statements).
The Company has a $13,000,000 bank line of credit on which it may draw
to meet short-term liquidity requirements in excess of internally generated cash
flow. This line expires on June 30, 1996. Amounts drawn under the line are
payable on demand. At September 30, 1995, there were no borrowings under the
line. However, at such date, the amount available under the line had been
reduced by approximately $8,200,000 as a result of contingent liabilities of the
Company to the lender relating to letters of credit issued for the Company.
- 11 -
<PAGE>
At September 30, 1995, the Company had $14,600,244 of cash and cash
equivalents, which it views as its principal measure of liquidity.
In the fourth quarter of 1993, the Company and its insurer reached an
agreement in principle to settle the consolidated class action complaints filed
against it in Federal District Court. The Order approving the settlement was
approved by the court on September 8, 1994 and became effective on October 10,
1994. The settlement provided for the payment of $2,625,000 by the Company's
insurer and common shares having a value of $2,125,000 to be issued by the
Company (see Note 8 of Notes to Financial Statements at December 31, 1994.).
On August 1, 1995, the Company issued 180,851 shares of its common stock
representing its payment obligation under the 1993 settlement of the
consolidated class action complaints. Accordingly, the September 30, 1995
Balance Sheet reflects the payment of the previously recorded Litigation
Liability of $2,125,000 by increasing stockholders' equity in the same amount.
The Company has no specific material commitments for capital
expenditures and believes that its cash from operations, existing balances and
available credit line will be adequate for the foreseeable future to satisfy the
needs of its operations and to fund its continued growth. However, if the need
arose, the Company would seek to obtain capital from such sources as long-term
debt or equity financing.
- 12 -
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults under Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security
Holders. Not Applicable.
Item 5. Other Information.
a) None.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits - None.
b) Reports on Form 8-K - None
- 13 -
<PAGE>
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.
-------------------------------
November 10, 1995 /s/ Daniel P. McCartney
- -------------------------- -----------------------------------
Date DANIEL P. McCARTNEY, Director and
Chief Executive Officer
November 10, 1995 /s/ Thoams A. Cook
- -------------------------- -----------------------------------
Date THOMAS A. COOK, Director, President
and Chief Operating Officer
November 10, 1995 /s/ James L. DiStefano
- -------------------------- -----------------------------------
Date JAMES L. DiSTEFANO, Chief Financial
Officer and Treasurer
November 10, 1995 /s/ Richard W. Hudson
- -------------------------- -----------------------------------
Date RICHARD W. HUDSON, Vice President-
Finance, Secretary and Chief Accounting
Officer
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 14,600,244
<SECURITIES> 0
<RECEIVABLES> 38,324,193
<ALLOWANCES> 4,200,000
<INVENTORY> 7,066,192
<CURRENT-ASSETS> 59,908,782
<PP&E> 18,197,257
<DEPRECIATION> 11,897,247
<TOTAL-ASSETS> 80,310,907
<CURRENT-LIABILITIES> 7,789,627
<BONDS> 0
<COMMON> 81,610
0
0
<OTHER-SE> 67,967,277
<TOTAL-LIABILITY-AND-EQUITY> 80,310,907
<SALES> 0
<TOTAL-REVENUES> 111,219,213
<CGS> 105,127,591
<TOTAL-COSTS> 115,410,168
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,400,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,816,627
<INCOME-TAX> 2,921,096
<INCOME-CONTINUING> 3,895,531
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,895,531
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
