<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, 1999 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)
3220 Tillman Drive, Suite 300, Bensalem PA 19020
--------------------------------------------------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 215-639-4274
---------------
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 October 29, 1999
is 11,059,982
Total of 15 Pages
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
Consolidated Balance Sheets as of September 30,
1999 and December 31, 1998 2
Consolidated Statements of Income for the Three
Months Ended September 30, 1999 and 1998 3
Consolidated Statements of Income for the Nine
Months Ended September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 1999 and 1998 5
Notes To Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of
Financial Condition and Results Of Operations 9 - 13
Part II. Other Information 14
-----------------
Signatures 15
-1-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
Sept 30, December 31,
1999 1998
------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $12,679,772 $17,201,408
Accounts and notes receivable, less allowance
for doubtful accounts of $3,949,000 in 1999 and
$3,449,000 in 1998 50,650,613 45,066,828
Prepaid income taxes (Note 5) 1,085,169
Inventories and supplies 8,556,210 7,803,437
Deferred income taxes (Note 5) 348,543 324,054
Prepaid expenses and other 2,088,170 2,318,285
----------- -----------
Total current assets 75,408,477 72,714,012
PROPERTY AND EQUIPMENT:
Laundry and linen equipment installations 7,666,153 8,985,945
Housekeeping equipment and office
furniture 9,312,184 8,482,207
Autos and trucks 51,110 51,110
----------- -----------
17,029,447 17,519,262
Less accumulated depreciation 10,895,085 11,416,214
----------- -----------
6,134,362 6,103,048
COST IN EXCESS OF FAIR VALUE OF NET
ASSETS ACQUIRED less accumulated
amortization of $1,501,002 in 1999 and
$1,420,284 in 1998 1,854,475 1,935,193
DEFERRED INCOME TAXES (Note 5) 466,529 2,131,535
OTHER NONCURRENT ASSETS 11,736,450 10,225,439
----------- -----------
$95,600,293 $93,109,227
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,210,303 $ 4,366,015
Accrued payroll, accrued and withheld payroll taxes 2,572,409 5,147,634
Other accrued expenses 278,802 319,333
Income taxes payable (Note 5) 283,980
Accrued insurance claims 597,076 588,040
----------- -----------
Total current liabilities 5,658,590 10,705,002
ACCRUED INSURANCE CLAIMS 2,246,144 2,212,151
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY: (Note 2)
Common stock, $.01 par value: 22,500,000
shares authorized, 11,059,982 shares issued
and outstanding in 1999 and 11,034,207 in 1998 110,600 110,342
Additional paid in capital 25,266,218 25,064,832
Retained earnings 62,318,741 55,016,900
----------- -----------
Total stockholders' equity 87,695,559 80,192,074
----------- -----------
$95,600,293 $93,109,227
=========== ===========
</TABLE>
See accompanying notes.
-2-
<PAGE>
Healthcare Services Group, Inc.
Consolidated Income Statements
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September
1999 1998
---------------------------------------------------
<S> <C> <C>
Revenues $59,620,142 $54,038,751
Operating costs and expenses:
Costs of services provided 51,110,966 46,582,281
Selling, general and administrative 4,779,988 4,554,448
Other Income:
Interest Income 176,139 372,872
----------- -----------
Income before income taxes 3,905,327 3,274,894
Income taxes (Note 5) 1,469,000 1,002,000
----------- -----------
Net Income $ 2,436,327 $ 2,272,894
=========== ===========
Earnings per share of common stock: (Note 2)
Basic earnings per common share $ 0.22 $ 0.20
=========== ===========
Diluted earnings per common share $ 0.22 $ 0.20
=========== ===========
Basic weighted average number
of common shares outstanding 11,052,307 11,262,386
=========== ===========
Diluted weighted average number
of common shares outstanding 11,270,979 11,648,193
=========== ===========
</TABLE>
See accompanying notes
-3-
<PAGE>
Healthcare Services Group, Inc.
Consolidated Income Statements
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September,
1999 1998
---------------------------------------------------
<S> <C> <C>
Revenues $172,125,372 $151,211,699
Operating costs and expenses:
Costs of services provided 147,271,486 129,042,608
Selling, general and administrative 13,660,479 12,795,997
Other Income:
Interest Income 583,435 1,091,301
------------ ------------
Income before income taxes 11,776,842 10,464,395
Income taxes (Note 5) 4,475,000 3,899,000
------------ ------------
Net Income $ 7,301,842 $ 6,565,395
============ ============
Earnings per share of common stock: (Note 2)
Basic earnings per common share $ 0.66 $ 0.59
============ ============
Diluted earnings per common share $ 0.64 $ 0.57
============ ============
Basic weighted average number
of common shares outstanding 11,049,863 11,203,919
============ ============
Diluted weighted average number
of common shares outstanding 11,324,843 11,554,287
============ ============
</TABLE>
See accompanying notes
-4-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------------------------------------
1999 1998
-------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 7,301,842 $ 6,565,395
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 1,312,875 1,512,199
Bad debt provision 2,250,000 1,840,000
Deferred income taxes (benefits) (Note 5) 1,640,517 (1,487,040)
Tax benefit of stock option transactions 45,588 309,667
Changes in operating assets and liabilities:
Accounts and notes receivable (7,833,785) (6,628,734)
Prepaid income taxes (Note 5) (1,085,169) 366,712
Inventories and supplies (752,773) (292,775)
Changes to long term notes receivable (1,382,544) 924,160
Accounts payable and other accrued expenses (2,196,242) (1,504,530)
Accrued payroll, accrued and withheld payroll
taxes (2,575,225) 3,035,809
Accrued insurance claims 43,029 67,596
Income taxes payable (Note 5) (283,980) 1,300,561
Prepaid expenses and other assets 101,646 (71,724)
----------- -----------
Net cash (used in) provided by operating activities (3,414,221) 5,937,296
----------- -----------
Cash flows from investing activities:
Disposals of fixed assets 783,305 122,659
Additions to property and equipment (2,046,775) (1,589,002)
----------- -----------
Net cash used in investing activities (1,263,470) (1,466,343)
----------- -----------
Cash flows from financing activities:
Purchase of treasury stock (183,750) (1,500,180)
Proceeds from the exercise of stock options 339,805 1,584,923
----------- -----------
Net cash provided by financing activities 156,055 84,743
----------- -----------
Net increase (decrease) in cash and cash equivalents (4,521,636) 4,555,696
Cash and cash equivalents at beginning of the year 17,201,408 17,774,219
----------- -----------
Cash and cash equivalents at end of the period $12,679,772 $22,329,915
=========== ===========
</TABLE>
See accompanying notes.
-5-
<PAGE>
NOTES TO CONSOLIDATED 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. However, in the opinion
of the Company, all adjustments considered necessary for a fair presentation
have been included. The balance sheet shown in this report as of December 31,
1998 has been derived from, and does not include, all the disclosures contained
in the financial statements for the year ended December 31, 1998. The financial
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, 1998. The results of operations for the three and nine month
periods ended September 30, 1999 and 1998 are not necessarily indicative of the
results that may be expected for the full fiscal year.
Note 2 - Three-For-Two Stock Split
On August 5, 1998, the Board of Directors declared a three-for-two
stock split of the Company's Common Stock effected in the form of a 50% stock
dividend payable on August 27, 1998 to Common Stock holders of record on August
17, 1998. An amount equal to the par value of the shares of Common Stock issued
was transferred from additional paid in capital to common stock in the December
31, 1998 balance sheet. All stock options, share and per share disclosures have
been adjusted to reflect the three-for-two stock split.
Note 3 - Other Contingencies
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, that expires on
December 31, 1999. The Company anticipates that this credit line will be
continued. Amounts drawn under the line are payable upon demand. At both
September 30, 1999 and December 31, 1998, there were no borrowings under the
line. However, at such dates, the line was fully utilized as a result of
contingent liabilities of the Company to the lender relating to letters of
credit issued for the Company, which relate to payment obligations under the
Company's insurance program.
The Company is also involved in miscellaneous claims and litigation
arising in the ordinary course of business. The Company believes that these
matters, taken individually or in the aggregate, would not have a material
adverse impact on the Company's financial position or results of operations.
-6-
<PAGE>
Legislation enacted in August 1997 changed Medicare and Medicaid policy
in a number of ways, most notably the phasing in, effective July 1, 1998, of a
Medicare Prospective Payment System ("PPS") for skilled nursing facilities which
significantly changed the manner and the amounts of reimbursements they receive.
The Company's clients have been adversely effected by PPS, as well as other
trends in the long-term care industry resulting in certain of the Company's
clients recently filing voluntary bankruptcy and others may follow. This, in
addition to delays in payments from clients could result in additional bad debts
in the near future.
Note 4 - Segment Information
The Company provides housekeeping, laundry, linen, facility maintenance
and food services to the healthcare industry. The Company considers its business
to consist of one reportable operating segment, based on the service business
categories, provided to a client facility, sharing similar economic
characteristics in the nature of the service provided, method of delivering
service and client base. Although the Company does provide services in Canada,
essentially all of its revenue and net income, approximately 99%, are earned in
one geographic area, the United States.
The Company earned revenue in the following service business
categories:
For the three month period ended September 30,
----------------------------------------------
1999 1998
---- ----
Housekeeping services $37,613,000 $33,379,000
Laundry & linen services 17,118,000 14,447,000
Food services 3,031,000 4,462,000
Maintenance services &
Other 1,858,000 1,750,000
----------- -----------
$59,620,000 $54,039,000
=========== ===========
For the nine month period ended September 30,
---------------------------------------------
1999 1998
---- ----
Housekeeping services $108,263,000 $96,432,000
Laundry & linen services 49,693,000 38,355,000
Food services 8,478,000 11,224,000
Maintenance services &
Other 5,691,000 5,201,000
------------ ------------
$172,125,000 $151,212,000
============ ============
Note 5 - Income Taxes
The Internal Revenue Service has concluded its examination of the tax
years ended December 31, 1997 and December 31, 1996. Previously established
reserves are no longer required. Accordingly, the effective tax rate for the
three and nine months periods ended September 30, 1999 has been reduced to
reflect the reversal of these reserves.
The effective tax rate for the third quarter 1998, as well as the nine
month period ended September 30, 1998 was positively impacted by the reversal
of prior years' over accruals for income taxes.
-7-
<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. All share and per share data
has been adjusted for the three-for-two stock split declared by the Board of
Directors on August 5, 1998.
RESULTS OF OPERATIONS
Revenues for the third quarter of 1999 increased by 10.3% over revenues
in the corresponding 1998 quarter. Revenues for the nine months ended September
30, 1999 increased by 13.8% over the corresponding 1998 period. The following
factors contributed to the increase in 1999 third quarter and nine month period
revenues as compared to the corresponding 1998 periods: service agreements with
new clients increased revenues by 26.9% for the third quarter and 32.6% for the
nine month period; new services to existing clients increased revenues 2.5% for
the third quarter and 2.3% for the nine month period; and client cancellations
and other minor changes decreased revenues 19.1% for the third quarter and 21.1%
for the nine month period.
Cost of services provided as a percentage of revenues decreased to
85.7% for the third quarter of 1999 from 86.2 % in the corresponding 1998
quarter. Furthermore, cost of services as a percentage of revenue increased
slightly to 85.6% for the nine month period ended September 30, 1999 from 85.3%
in the same 1998 period. The primary factors affecting specific variations in
the 1999 third quarter and nine month period's cost of services provided as a
percentage of revenue and their effects on the respective .5% decrease and .3%
increase are as follows: in the third quarter an increase of 1.8% in labor costs
and payroll related taxes; offsetting this increase was a decrease of 1.4% in
the cost of supplies consumed in performing services, a decrease of .3% in the
allowance for doubtful accounts; in the nine month period an increase of 2.2% in
labor costs and payroll related taxes; offsetting this increase were decreases
of 1.3% and .6% in the cost of supplies consumed in performing services, and in
workers' compensation, general liability and other insurance expense,
respectively.
Selling, general and administrative expenses as a percentage of revenue
decreased in the third quarter of 1999 to 8.0% as compared to 8.4% in the
corresponding 1998 three month period. Additionally, during the nine month
period ended September 30, 1999, selling, general and administrative expenses as
a percentage of revenue decreased to 7.9% as compared to 8.5% in the
corresponding 1998 period. The three and nine month period decreases are
primarily attributable to the Company's ability to control certain selling,
general and administrative expenses while comparing them to a greater revenue
base.
-8-
<PAGE>
Interest income decreased in the three and nine month periods ended
September 30, 1999 as compared to the same 1998 periods principally due to the
Company's shift from investing excess funds in taxable securities to tax exempt
securities, as well as lower average cash balances.
The effective income tax rate for the three and nine month periods
ended September 30, 1999, decreased as a result of the reversal of previously
established income tax reserves no longer required as a result of the conclusion
of an Internal Revenue Service examiniation for the tax years ended December 31,
1997 and 1996. Additionally, the effective tax rate for the third quarter 1998,
as well as the nine month period ended September 30, 1998 was positively
impacted by the reversal of prior years' over accruals for income taxes.
Liquidity and Capital Resources
At September 30, 1999 the Company had working capital and cash and cash
equivalents of $69,749,887 and $12,679,772, respectively, which represents an
increase of 12% in working capital and a decrease in cash and cash equivalents
of 26% as compared to December 31, 1998 working capital and cash and cash
equivalents of $62,009,010 and $17,201,408, respectively.
The net cash used in the Company's operating activities was $3,414,221
for the nine month period ended September 30, 1999 as compared to net cash
provided of $5,937,296 in the same 1998 period. The principle sources of cash
flows from operating activities were: for the nine month period ended September
30, 1999 net income, charges to operations for bad debt provisions and
depreciation and amortization; in the nine month period ended September 30, 1998
net income, the timing of payments for payroll and payroll related taxes,
charges to operations for bad debt provisions and depreciation and amortization.
The operating activity that used the largest amount of cash was a $9,216,329 and
$5,704,574 net increase in accounts and long term notes receivable at September
30, 1999 and 1998, respectively. The increases in these amounts resulted
primarily from the growth in the Company's revenues and the timing of
collections. Additionally, operating activities' cash flows for the nine month
periods ended September 30, 1999 and 1998 were decreased by $2,196,242 and
$1,504,530, respectively, as a result of the timing of payments to vendors,
Furthermore, the nine month period ending September 30, 1999 operating
activities' cash flow was decreased by $2,575,225 as a result of payments for
payroll and payroll related taxes.
The Company's principal use of cash in investing activities in each of
the three month periods ended September 30, 1999 and 1998 was the purchase of
housekeeping equipment and laundry equipment installations.
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. Additionally, legislation enacted in August 1997 changed
Medicare and Medicaid policy in a number of ways, most notably the phasing in,
effective July 1, 1998 of a Medicare Prospective Payment System ("PPS") for
-9-
<PAGE>
skilled nursing facilities which significantly changed the manner and the
amounts of reimbursements they receive. The Company's clients have been
adversely effected by PPS, as well as other trends in the long-term care
industry resulting in certain of the Company's clients recently filing voluntary
bankruptcy and others may follow. This, in addition to delays in payments from
clients could result in additional bad debts in the near future. Whenever
possible, when a client falls behind in making agreed-upon payments, the Company
converts the unpaid accounts receivable to interest bearing promissory notes.
The promissory notes receivable provide a means by which to further evidence the
amounts owed, 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.
The Company encounters difficulty in collecting amounts due from
certain of its clients, including those in bankruptcy, those which have
terminated service agreements and slow payers experiencing financial
difficulties. In order to provide for these collection problems and the general
risk associated with the granting of credit terms, the Company has recorded a
bad debt provision of $2,250,000 in the nine month period ended September 30,
1999. In making its evaluation, in addition to analyzing and anticipating, where
possible, the specific cases described above, management considers the general
collection risk associated with trends in the long-term care industry.
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, that expires on December 31, 1999. The Company anticipates that this
credit line will be continued. Amounts drawn under the line are payable on
demand. At September 30, 1999, there were no borrowings under the line. However,
at such date, the line was fully utilized as result of contingent liabilities of
the Company to the lender relating to letters of credit issued for the Company
(see Note 3 of Notes to Financial Statements).
At September 30, 1999, the Company had $12,679,772 of cash and cash
equivalents, which it views as its principal measure of liquidity.
The level of capital expenditures by the Company is generally dependent
on the number of new clients obtained. Such capital expenditures primarily
consist of housekeeping equipment and laundry and linen equipment installations.
Although the Company has no specific material commitments for capital
expenditures during calendar year 1999, it estimates that it will incur capital
expenditures of approximately $2,500,000 during 1999 in connection with
housekeeping equipment and laundry and linen equipment installations in its
clients' facilities, as well as hardware and software expenditures relating to
the implementation of a new computerized financial reporting system. The Company
believes that its cash from operations, existing cash balances and 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.
-10-
<PAGE>
In accordance with the Company's previously announced authorizations to
purchase its outstanding common stock, the Company expended $183,750 to purchase
21,000 shares of its common stock in May 1999 at an average price of $8.75 per
common share and $3,496,000 during 1998 to purchase 369,000 shares of its common
stock at an average price of $9.47 per common share. The Company remains
authorized to purchase 448,950 shares pursuant to previous Board of Directors'
action.
Other Matters -
Year 2000 Compliance
The Company has implemented new operating and application software
which became become fully operational during 1998. The Company has been notified
by its software manufacturer, as well as the firm providing installation
support, that the new applications have functionality for the year 2000. The
Company does not believe it will incur any material expense, beyond the new
systems installation costs, with respect to year 2000 issues. Additionally, the
Company utilizes an independent service bureau for the processing and payment of
payroll and payroll related taxes. The Company has been notified by its payroll
processing company that all of its systems will be fully compliant with year
2000 requirements. Many of the Company's clients participate in programs funded
by federal and state governmental agencies which may be affected by the year
2000 issue. Any failure by the Company, its outside processing company, its
clients or the federal and state governmental agencies to effectively monitor,
implement or improve the above referenced operational, financial, management and
technical support systems could have a material adverse effect on the Company's
business and consolidated results of operations.
Government Regulation of Clients
The Company's clients are subject to governmental regulation. In August
1997, the President signed into law the Balanced Budget Act of 1997. The
legislation changed Medicare and Medicaid policy in a number of ways including
the phasing in of a Medicare PPS for skilled nursing facilities effective July
1, 1998. PPS has significantly changed the manner and the amounts in which
skilled nursing facilities are reimbursed for inpatient services provided to
Medicare beneficiaries. Unlike the old system, which relied solely on cost
reports submitted, PPS rates are based entirely on the federally-acuity-adjusted
rate. Although PPS directly effects how clients are paid for certain services,
the Company itself does not participate in any government reimbursement
programs. Therefore, all of the Company's contractual relationships with its
clients continue to determine the clients' payment obligations to the Company.
Certain clients, at this time, have been adversely effected by PPS, as well as
other trends in the long-term care industry resulting in certain clients
recently filing voluntary bankruptcy petitions. See "Liquidity and Capital
Resources".
-11-
<PAGE>
Cautionary Statements Regarding Forward Looking Statements/Risk Factors
Certain matters discussed in this report may include forward-looking
statements that are subject to risks and uncertainties that could cause actual
results or objectives to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, risks arising from the Company
providing its services exclusively to the health care industry, primarily
providers of long-term care; credit and collection risks associated with this
industry; the effects of changes in regulations governing the industry and risk
factors described in the Company's Form 10-K for the year ended December 31,
1998 in Part I thereof under "Government Regulation of Clients", "Competition"
and "Service Agreements". The Company's clients have been adversely affected by
the change in Medicare payments under the recently enacted Prospective Payment
System and other trends in the long-term care industry resulting in certain of
the Company's clients recently filing voluntary bankruptcy petitions, as well as
delays in payments which could result in additional bad debts in the near
future. Additionally, the Company's operating results would be adversely
effected if unexpected increases in the costs of labor, materials, supplies and
equipment used in performing its services could not be passed on to clients.
In addition, the Company believes that in order to improve its
financial performance it 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 the various operational levels of the
Company. Furthermore, the Company believes that its ability to sustain the
internal development of managerial personnel is an important factor impacting
future operating results and successfully executing projected growth strategies.
Effects of Inflation
All of the Company's service agreements allow it to pass through to its
clients increases in the cost of labor resulting from new wage agreements.
Although there can be no assurance thereof, the Company believes that it will be
able to recover increases in costs attributable to inflation by continuing to
pass through cost increases to its clients.
-12-
<PAGE>
PART II. Other Information
-----------------
Item 1. Legal Proceedings. Not Applicable
Item 2. Changes in Securities. Not Applicable
Item 3. Defaults under Senior Securities. Not Applicable
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 -
27- Financial Data Schedule
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.
-------------------------------
October 29, 1999 /s/ Daniel P. McCartney
- ------------------------------- -------------------------------------
Date DANIEL P. McCARTNEY, Chief
Executive Officer
October 29, 1999 /s/ Thomas A. Cook
- ------------------------------- -------------------------------------
Date THOMAS A. COOK, President and
Chief Operating Officer
October 29, 1999 /s/ James L. DiStefano
- ------------------------------- -------------------------------------
Date JAMES L. DiSTEFANO, Chief Financial
Officer and Treasurer
October 29, 1999 /s/ Richard W. Hudson
- ------------------------------- -------------------------------------
Date RICHARD W. HUDSON, Vice
President-Finance, Secretary and
Chief Accounting Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,679,772
<SECURITIES> 0
<RECEIVABLES> 54,599,613
<ALLOWANCES> 3,949,000
<INVENTORY> 8,556,210
<CURRENT-ASSETS> 75,408,477
<PP&E> 17,029,447
<DEPRECIATION> 10,895,085
<TOTAL-ASSETS> 95,600,293
<CURRENT-LIABILITIES> 5,658,590
<BONDS> 0
0
0
<COMMON> 110,600
<OTHER-SE> 87,584,959
<TOTAL-LIABILITY-AND-EQUITY> 95,600,293
<SALES> 0
<TOTAL-REVENUES> 172,125,372
<CGS> 147,271,486
<TOTAL-COSTS> 160,931,965
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,776,842
<INCOME-TAX> 4,475,000
<INCOME-CONTINUING> 7,301,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,301,842
<EPS-BASIC> .66
<EPS-DILUTED> .64
</TABLE>
