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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Healthcare Services Group Inc | NASDAQ:HCSG | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.155 | 1.34% | 11.695 | 11.69 | 11.70 | 11.745 | 11.51 | 11.56 | 115,572 | 16:53:35 |
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þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Pennsylvania
|
|
23-2018365
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S Employer Identification No.)
|
|
|
|
3220 Tillman Drive, Suite 300, Bensalem, PA
|
|
19020
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
||
|
|
|
|
||
|
||
|
||
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||
|
|
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|
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|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
13,155
|
|
|
$
|
9,557
|
|
Marketable securities, at fair value
|
74,928
|
|
|
73,221
|
|
||
Accounts and notes receivable, less allowance for doubtful accounts
of $49,709 an
d $11,985 as of June 30, 2018 and December 31, 2017, respectively
|
343,665
|
|
|
378,720
|
|
||
Inventories and supplies
|
41,424
|
|
|
42,393
|
|
||
Prepaid expenses and other assets
|
27,625
|
|
|
23,515
|
|
||
Total current assets
|
500,797
|
|
|
527,406
|
|
||
Property and equipment, net
|
13,254
|
|
|
13,509
|
|
||
Goodwill
|
51,084
|
|
|
51,084
|
|
||
Other intangible assets, less accumulated amortization of
$15,084 and $12,853 as of June 30, 2018 and December 31, 2017, resp
ectively
|
28,650
|
|
|
30,881
|
|
||
Notes receivable — long-term portion
|
37,386
|
|
|
15,476
|
|
||
Deferred compensation funding, at fair value
|
30,697
|
|
|
28,885
|
|
||
Deferred income taxes
|
7,753
|
|
|
7,498
|
|
||
Other noncurrent assets
|
1,257
|
|
|
1,264
|
|
||
Total assets
|
$
|
670,878
|
|
|
$
|
676,003
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY:
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
69,269
|
|
|
$
|
74,463
|
|
Accrued payroll, accrued and withheld payroll taxes
|
27,423
|
|
|
32,139
|
|
||
Other accrued expenses
|
3,495
|
|
|
4,561
|
|
||
Borrowings under line of credit
|
40,505
|
|
|
35,382
|
|
||
Income taxes payable
|
—
|
|
|
15,378
|
|
||
Accrued insurance claims
|
23,702
|
|
|
22,245
|
|
||
Total current liabilities
|
164,394
|
|
|
184,168
|
|
||
Accrued insurance claims — long-term portion
|
67,459
|
|
|
62,454
|
|
||
Deferred compensation liability
|
30,891
|
|
|
29,429
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Common stock, $.01 par value; 100,000 shares authorized; 75,200 and 74,960 shares issued, and 73,733 and 73,436 shares outstanding as of June 30, 2018 and December 31, 2017, respectively
|
752
|
|
|
750
|
|
||
Additional paid-in capital
|
255,894
|
|
|
244,363
|
|
||
Retained earnings
|
161,269
|
|
|
163,860
|
|
||
Accumulated other comprehensive (loss) income, net of taxes
|
(204
|
)
|
|
837
|
|
||
Common stock in treasury, at cost, 1,467 and 1,524 shares as of June 30, 2018 and December 31, 2017, respectively
|
(9,577
|
)
|
|
(9,858
|
)
|
||
Total stockholders’ equity
|
408,134
|
|
|
399,952
|
|
||
Total liabilities and stockholders’ equity
|
$
|
670,878
|
|
|
$
|
676,003
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
$
|
503,732
|
|
|
$
|
470,876
|
|
|
$
|
1,005,542
|
|
|
$
|
875,366
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Costs of services provided
|
437,618
|
|
|
407,322
|
|
|
907,522
|
|
|
752,892
|
|
||||
Selling, general and administrative expense
|
34,118
|
|
|
31,991
|
|
|
67,895
|
|
|
60,201
|
|
||||
Other income, net:
|
|
|
|
|
|
|
|
||||||||
Investment and interest, net
|
1,320
|
|
|
1,515
|
|
|
1,796
|
|
|
3,084
|
|
||||
Income before income taxes
|
33,316
|
|
|
33,078
|
|
|
31,921
|
|
|
65,357
|
|
||||
Income tax provision
|
7,502
|
|
|
10,527
|
|
|
6,035
|
|
|
20,789
|
|
||||
Net income
|
$
|
25,814
|
|
|
$
|
22,551
|
|
|
$
|
25,886
|
|
|
$
|
44,568
|
|
|
|
|
|
|
|
|
|
||||||||
Per share data:
|
|
|
|
|
|
|
|
||||||||
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
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
73,982
|
|
|
73,276
|
|
|
73,947
|
|
|
73,176
|
|
||||
Diluted
|
74,487
|
|
|
74,269
|
|
|
74,606
|
|
|
74,108
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
25,814
|
|
|
$
|
22,551
|
|
|
$
|
25,886
|
|
|
$
|
44,568
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on available-for-sale marketable securities, net of taxes
|
97
|
|
|
602
|
|
|
(1,041
|
)
|
|
1,081
|
|
||||
Total comprehensive income
|
$
|
25,911
|
|
|
$
|
23,153
|
|
|
$
|
24,845
|
|
|
$
|
45,649
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
25,886
|
|
|
$
|
44,568
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,836
|
|
|
4,239
|
|
||
Bad debt provision
|
39,387
|
|
|
2,100
|
|
||
Stock-based compensation expense, net of tax benefit from equity compensation plans
|
2,026
|
|
|
315
|
|
||
Amortization of premium on marketable securities
|
653
|
|
|
569
|
|
||
Unrealized gain on deferred compensation fund investments
|
(1,259
|
)
|
|
(2,304
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts and notes receivable
|
(26,242
|
)
|
|
(69,187
|
)
|
||
Inventories and supplies
|
969
|
|
|
(238
|
)
|
||
Prepaid expenses and other assets
|
(2,458
|
)
|
|
(6,089
|
)
|
||
Deferred compensation funding
|
(531
|
)
|
|
98
|
|
||
Accounts payable and other accrued expenses
|
(6,628
|
)
|
|
5,550
|
|
||
Accrued payroll, accrued and withheld payroll taxes
|
(1,690
|
)
|
|
1,572
|
|
||
Income taxes payable
|
(15,955
|
)
|
|
7,343
|
|
||
Accrued insurance claims
|
6,461
|
|
|
2,399
|
|
||
Deferred compensation liability
|
1,940
|
|
|
2,504
|
|
||
Net cash provided by (used in) operating activities
|
27,395
|
|
|
(6,561
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Disposals of fixed assets
|
222
|
|
|
169
|
|
||
Additions to property and equipment
|
(2,572
|
)
|
|
(2,674
|
)
|
||
Purchases of marketable securities
|
(9,453
|
)
|
|
(15,939
|
)
|
||
Sales of marketable securities
|
5,775
|
|
|
14,681
|
|
||
Cash paid for acquisitions
|
—
|
|
|
(2,584
|
)
|
||
Net cash used in investing activities
|
(6,028
|
)
|
|
(6,347
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Dividends paid
|
(28,398
|
)
|
|
(27,374
|
)
|
||
Reissuance of treasury stock pursuant to Dividend Reinvestment Plan
|
46
|
|
|
48
|
|
||
Proceeds from the exercise of stock options
|
5,460
|
|
|
7,257
|
|
||
Net proceeds from short-term borrowings
|
5,123
|
|
|
16,182
|
|
||
Net cash used in financing activities
|
(17,769
|
)
|
|
(3,887
|
)
|
||
Net change in cash and cash equivalents
|
3,598
|
|
|
(16,795
|
)
|
||
Cash and cash equivalents at beginning of the period
|
9,557
|
|
|
23,853
|
|
||
Cash and cash equivalents at end of the period
|
$
|
13,155
|
|
|
$
|
7,058
|
|
|
For the six months ended June 30, 2018
|
|||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss), net of taxes
|
|
Treasury Stock
|
|
Stockholders’ Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance — December 31, 2017
|
74,960
|
|
|
$
|
750
|
|
|
$
|
244,363
|
|
|
$
|
163,860
|
|
|
$
|
837
|
|
|
$
|
(9,858
|
)
|
|
$
|
399,952
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
25,886
|
|
|
—
|
|
|
—
|
|
|
25,886
|
|
||||||
Unrealized loss on available-for-sale marketable securities, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,041
|
)
|
|
—
|
|
|
(1,041
|
)
|
||||||
Comprehensive income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,845
|
|
||||||
Exercise of stock options and other stock-based compensation, net of shares tendered for payment
|
236
|
|
|
2
|
|
|
5,458
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,460
|
|
||||||
Share-based compensation expense — stock options, restricted stock
|
—
|
|
|
—
|
|
|
2,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,806
|
|
||||||
Treasury shares issued for Deferred Compensation Plan funding and redemptions
|
—
|
|
|
—
|
|
|
549
|
|
|
—
|
|
|
—
|
|
|
(72
|
)
|
|
477
|
|
||||||
Shares issued pursuant to Employee Stock Plan
|
—
|
|
|
—
|
|
|
2,474
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
2,820
|
|
||||||
Dividends paid and accrued
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,477
|
)
|
|
—
|
|
|
—
|
|
|
(28,477
|
)
|
||||||
Shares issued pursuant to Dividend Reinvestment Plan
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
46
|
|
||||||
Other
|
4
|
|
|
—
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205
|
|
||||||
Balance — June 30, 2018
|
75,200
|
|
|
$
|
752
|
|
|
$
|
255,894
|
|
|
$
|
161,269
|
|
|
$
|
(204
|
)
|
|
$
|
(9,577
|
)
|
|
$
|
408,134
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Short-term
|
|
|
|
||||
Accounts and notes receivable
|
$
|
393,374
|
|
|
$
|
390,705
|
|
Allowance for doubtful accounts
|
(49,709
|
)
|
|
(11,985
|
)
|
||
|
$
|
343,665
|
|
|
$
|
378,720
|
|
Long-term
|
|
|
|
||||
Notes receivable
|
$
|
37,386
|
|
|
$
|
15,476
|
|
Total accounts and notes receivable
|
$
|
381,051
|
|
|
$
|
394,196
|
|
|
Unrealized Gains and Losses on Available-for-Sale Securities
(1)
|
||||||
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Accumulated other comprehensive income (loss) — beginning balance
|
$
|
837
|
|
|
$
|
(319
|
)
|
Other comprehensive (loss) income before reclassifications
|
(1,167
|
)
|
|
963
|
|
||
Losses reclassified from other comprehensive income
(2)
|
126
|
|
|
118
|
|
||
Net current period other comprehensive (loss) income
(3)
|
(1,041
|
)
|
|
1,081
|
|
||
Accumulated other comprehensive (loss) income — ending balance
|
$
|
(204
|
)
|
|
$
|
762
|
|
(1)
|
All amounts are net of tax.
|
(2)
|
Realized losses were recorded pre-tax under “Other income, net - Investment and interest” in our Consolidated Statements of Comprehensive Income. For the
six months ended June 30, 2018
and
2017
, the Company recorded
$0.2 million
of realized losses from the sale of available-for-sale securities. Refer to
Note 8—Fair Value Measurements
herein for further information.
|
(3)
|
For the
six months ended June 30, 2018
and
2017
, the changes in other comprehensive income were net of a tax
benefit
of
$0.3 million
and an expense of
$0.6 million
, respectively.
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Three Months Ended June 30,
|
|
|
|
||||
Losses from the sale of available-for-sale securities
|
$
|
(67
|
)
|
|
$
|
(125
|
)
|
Tax benefit
|
11
|
|
|
40
|
|
||
Net loss reclassified from accumulated other comprehensive income
|
$
|
(56
|
)
|
|
$
|
(85
|
)
|
Six Months Ended June 30,
|
|
|
|
||||
Losses from the sale of available-for-sale securities
|
$
|
(156
|
)
|
|
$
|
(173
|
)
|
Tax benefit
|
30
|
|
|
55
|
|
||
Net loss reclassified from accumulated other comprehensive income
|
$
|
(126
|
)
|
|
$
|
(118
|
)
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Housekeeping and Dietary equipment
|
$
|
22,753
|
|
|
$
|
22,349
|
|
Computer hardware and software
|
12,570
|
|
|
12,665
|
|
||
Other
(1)
|
988
|
|
|
990
|
|
||
Total property and equipment, at cost
|
36,311
|
|
|
36,004
|
|
||
Less accumulated depreciation
|
23,057
|
|
|
22,495
|
|
||
Total property and equipment, net
|
$
|
13,254
|
|
|
$
|
13,509
|
|
(1)
|
Includes furniture and fixtures, leasehold improvements and autos and trucks.
|
Period/Year
|
|
Total Amortization Expense
|
|
||
|
|
(in thousands)
|
|
||
July 1 to December 31, 2018
|
|
$
|
2,133
|
|
|
2019
|
|
$
|
4,165
|
|
|
2020
|
|
$
|
4,165
|
|
|
2021
|
|
$
|
4,165
|
|
|
2022
|
|
$
|
4,165
|
|
|
2023
|
|
$
|
3,168
|
|
|
Thereafter
|
|
$
|
6,689
|
|
|
|
As of June 30, 2018
|
||||||||||||||||||
|
|
|
|
|
Fair Value Measurement Using:
|
||||||||||||||
|
Carrying Amount
|
|
Total Fair Value
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketable securities
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available-for-sale
|
$
|
74,928
|
|
|
$
|
74,928
|
|
|
$
|
—
|
|
|
$
|
74,928
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred compensation fund
|
|
|
|
|
|
|
|
|
|
||||||||||
Money Market
(1)
|
$
|
2,347
|
|
|
$
|
2,347
|
|
|
$
|
—
|
|
|
$
|
2,347
|
|
|
$
|
—
|
|
Balanced and Lifestyle
|
8,681
|
|
|
8,681
|
|
|
8,681
|
|
|
—
|
|
|
—
|
|
|||||
Large Cap Growth
|
8,898
|
|
|
8,898
|
|
|
8,898
|
|
|
—
|
|
|
—
|
|
|||||
Small Cap Growth
|
3,667
|
|
|
3,667
|
|
|
3,667
|
|
|
—
|
|
|
—
|
|
|||||
Fixed Income
|
3,345
|
|
|
3,345
|
|
|
3,345
|
|
|
—
|
|
|
—
|
|
|||||
International
|
1,644
|
|
|
1,644
|
|
|
1,644
|
|
|
—
|
|
|
—
|
|
|||||
Mid Cap Growth
|
2,115
|
|
|
2,115
|
|
|
2,115
|
|
|
—
|
|
|
—
|
|
|||||
Deferred compensation fund
|
$
|
30,697
|
|
|
$
|
30,697
|
|
|
$
|
28,350
|
|
|
$
|
2,347
|
|
|
$
|
—
|
|
|
As of December 31, 2017
|
||||||||||||||||||
|
|
|
|
|
Fair Value Measurement Using:
|
||||||||||||||
|
Carrying
Amount |
|
Total Fair
Value |
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketable securities
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available-for-sale
|
$
|
73,221
|
|
|
$
|
73,221
|
|
|
$
|
—
|
|
|
$
|
73,221
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred compensation fund
|
|
|
|
|
|
|
|
|
|
||||||||||
Money Market
(1)
|
$
|
2,720
|
|
|
$
|
2,720
|
|
|
$
|
—
|
|
|
$
|
2,720
|
|
|
$
|
—
|
|
Balanced and Lifestyle
|
8,523
|
|
|
8,523
|
|
|
8,523
|
|
|
—
|
|
|
—
|
|
|||||
Large Cap Growth
|
7,802
|
|
|
7,802
|
|
|
7,802
|
|
|
—
|
|
|
—
|
|
|||||
Small Cap Growth
|
3,442
|
|
|
3,442
|
|
|
3,442
|
|
|
—
|
|
|
—
|
|
|||||
Fixed Income
|
3,050
|
|
|
3,050
|
|
|
3,050
|
|
|
—
|
|
|
—
|
|
|||||
International
|
1,531
|
|
|
1,531
|
|
|
1,531
|
|
|
—
|
|
|
—
|
|
|||||
Mid Cap Growth
|
1,817
|
|
|
1,817
|
|
|
1,817
|
|
|
—
|
|
|
—
|
|
|||||
Deferred compensation fund
|
$
|
28,885
|
|
|
$
|
28,885
|
|
|
$
|
26,165
|
|
|
$
|
2,720
|
|
|
$
|
—
|
|
(1)
|
The fair value of the money market fund is based on the net asset value (“NAV”) of the shares held by the plan at the end of the period. The money market fund includes short-term United States dollar denominated money market instruments and the NAV is determined by the custodian of the fund. The money market fund can be redeemed at its NAV at the measurement date as there are no significant restrictions on the ability to sell this investment.
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|
Other-than-temporary Impairments
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Type of security:
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available-for-sale
|
$
|
75,273
|
|
|
$
|
347
|
|
|
$
|
(692
|
)
|
|
$
|
74,928
|
|
|
$
|
—
|
|
Total debt securities
|
$
|
75,273
|
|
|
$
|
347
|
|
|
$
|
(692
|
)
|
|
$
|
74,928
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Type of security:
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available-for-sale
|
$
|
72,249
|
|
|
$
|
1,169
|
|
|
$
|
(197
|
)
|
|
$
|
73,221
|
|
|
$
|
—
|
|
Total debt securities
|
$
|
72,249
|
|
|
$
|
1,169
|
|
|
$
|
(197
|
)
|
|
$
|
73,221
|
|
|
$
|
—
|
|
|
|
Municipal Bonds — Available-for-Sale
|
||||||
Contractual maturity:
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
(in thousands)
|
||||||
Maturing in one year or less
|
|
$
|
1,412
|
|
|
$
|
916
|
|
Maturing in second year through fifth year
|
|
19,067
|
|
|
15,948
|
|
||
Maturing in sixth year through tenth year
|
|
18,737
|
|
|
22,851
|
|
||
Maturing after ten years
|
|
35,712
|
|
|
33,506
|
|
||
Total debt securities
|
|
$
|
74,928
|
|
|
$
|
73,221
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Stock options
|
$
|
1,514
|
|
|
$
|
2,040
|
|
Restricted stock and restricted stock units
|
1,292
|
|
|
584
|
|
||
Employee Stock Purchase Plan
|
289
|
|
|
249
|
|
||
Total pre-tax stock-based compensation expense charged against income
(1)
|
$
|
3,095
|
|
|
$
|
2,873
|
|
(1)
|
Stock-based compensation expense is recorded in selling, general and administrative expense in the Company’s Consolidated Statements of Comprehensive Income.
|
|
Stock Options Outstanding
|
|||||
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|||
|
(in thousands)
|
|
|
|||
December 31, 2017
|
2,374
|
|
|
$
|
29.22
|
|
Granted
|
169
|
|
|
$
|
52.06
|
|
Exercised
|
(208
|
)
|
|
$
|
27.62
|
|
Forfeited
|
(46
|
)
|
|
$
|
35.41
|
|
Expired
|
(1
|
)
|
|
$
|
36.49
|
|
June 30, 2018
|
2,289
|
|
|
$
|
30.92
|
|
|
Six Months Ended June 30,
|
||||
|
2018
|
|
2017
|
||
Risk-free interest rate
|
2.1
|
%
|
|
2.0
|
%
|
Weighted average expected life
|
5.8 years
|
|
|
5.8 years
|
|
Expected volatility
|
21.4
|
%
|
|
25.1
|
%
|
Dividend yield
|
1.5
|
%
|
|
1.9
|
%
|
|
June 30, 2018
|
||
|
(amounts in thousands, except per share data)
|
||
Outstanding:
|
|
||
Aggregate intrinsic value
|
$
|
29,557
|
|
Weighted average remaining contractual life
|
6.3 years
|
|
|
Exercisable:
|
|
||
Number of options
|
1,199
|
|
|
Weighted average exercise price
|
$
|
24.76
|
|
Aggregate intrinsic value
|
$
|
22,103
|
|
Weighted average remaining contractual life
|
4.9 years
|
|
|
Restricted Stock Units and Restricted Stock
|
|||||
|
Number
|
|
Weighted Average Grant Date Fair Value
|
|||
|
(in thousands)
|
|
|
|||
December 31, 2017
|
145
|
|
|
$
|
37.07
|
|
Granted
|
139
|
|
|
$
|
52.06
|
|
Vested
|
(34
|
)
|
|
$
|
35.16
|
|
Forfeited
|
(4
|
)
|
|
$
|
52.06
|
|
June 30, 2018
|
246
|
|
|
$
|
45.58
|
|
|
Six Months Ended June 30,
|
||
|
2018
|
|
2017
|
Risk-free interest rate
|
1.89%
|
|
1.05%
|
Weighted average expected life (years)
|
1.0
|
|
1.0
|
Expected volatility
|
20.8%
|
|
21.2%
|
Dividend yield
|
1.4%
|
|
1.9%
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
SERP expense
(1)
|
$
|
328
|
|
|
$
|
308
|
|
Unrealized gain recorded in SERP liability account
|
$
|
1,118
|
|
|
$
|
2,313
|
|
(1)
|
Both the SERP match and the deferrals are included in the selling, general and administrative caption in the Consolidated Statements of Comprehensive Income.
|
|
Quarter Ended
|
||||||
|
March 31, 2018
|
|
June 30, 2018
|
||||
|
(in thousands, except per share data)
|
||||||
Cash dividend paid per common share
|
$
|
0.19125
|
|
|
$
|
0.19250
|
|
Total cash dividends paid
|
$
|
14,149
|
|
|
$
|
14,249
|
|
Record date
|
February 16, 2018
|
|
|
May 25, 2018
|
|
||
Payment date
|
March 23, 2018
|
|
|
June 29, 2018
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cash dividends declared per common share
|
$
|
0.19375
|
|
|
$
|
0.18875
|
|
|
$
|
0.38625
|
|
|
$
|
0.37625
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Housekeeping
|
$
|
245,547
|
|
|
$
|
242,919
|
|
|
$
|
491,956
|
|
|
$
|
486,342
|
|
Dietary
|
258,185
|
|
|
227,957
|
|
|
513,586
|
|
|
389,024
|
|
||||
Total
|
$
|
503,732
|
|
|
$
|
470,876
|
|
|
$
|
1,005,542
|
|
|
$
|
875,366
|
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
|
|
|
|
|
|
|
||||||||
Housekeeping
|
$
|
29,078
|
|
|
$
|
21,474
|
|
|
$
|
58,015
|
|
|
$
|
44,676
|
|
Dietary
|
15,571
|
|
|
13,142
|
|
|
30,301
|
|
|
23,367
|
|
||||
Corporate and eliminations
(1)
|
(11,333
|
)
|
|
(1,538
|
)
|
|
(56,395
|
)
|
|
(2,686
|
)
|
||||
Total
|
$
|
33,316
|
|
|
$
|
33,078
|
|
|
$
|
31,921
|
|
|
$
|
65,357
|
|
(1)
|
Primarily represents corporate office costs and related overhead, recording of certain inventories and supplies and workers compensation costs at the reportable segment level which use accounting methods that differ from those used at the corporate level, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income. It is also inclusive of charges recorded to provision to bad debt during the first quarter of
2018
as a result of restructuring events primarily from two customers that occurred during the
six months ended June 30, 2018
. No such charges were recorded for the
three months ended June 30, 2018
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||||||
Weighted average number of common shares outstanding - basic
|
73,982
|
|
|
73,276
|
|
|
73,947
|
|
|
73,176
|
|
Effect of dilutive securities
(1)
|
505
|
|
|
993
|
|
|
659
|
|
|
932
|
|
Weighted average number of common shares outstanding - diluted
|
74,487
|
|
|
74,269
|
|
|
74,606
|
|
|
74,108
|
|
(1)
|
Certain outstanding stock option awards are anti-dilutive and were therefore excluded from the calculation of the weighted average number of diluted common shares outstanding. During the
three and six
months ended
June 30, 2018
, options to purchase
0.7 million
and
0.6 million
shares having a weighted average exercise price of
$42.16
and
$42.66
per share were excluded. During the
three and six
months ended
June 30, 2017
, options to purchase
0.5 million
shares having a weighted average exercise price of
$39.38
per share were excluded.
|
|
Three Months Ended June 30,
|
|||||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
(in thousands)
|
|
|
|||||||
Revenues
|
|
|
|
|
|
|||||
Housekeeping
|
$
|
245,547
|
|
|
$
|
242,919
|
|
|
1.1
|
%
|
Dietary
|
258,185
|
|
|
227,957
|
|
|
13.3
|
%
|
||
Consolidated
|
$
|
503,732
|
|
|
$
|
470,876
|
|
|
7.0
|
%
|
|
|
|
|
|
|
|||||
Costs of services provided
|
|
|
|
|
|
|||||
Housekeeping
|
$
|
216,469
|
|
|
$
|
221,445
|
|
|
(2.2
|
)%
|
Dietary
|
242,614
|
|
|
214,815
|
|
|
12.9
|
%
|
||
Corporate and eliminations
|
(21,465
|
)
|
|
(28,938
|
)
|
|
(25.8
|
)%
|
||
Consolidated
|
$
|
437,618
|
|
|
$
|
407,322
|
|
|
7.4
|
%
|
|
|
|
|
|
|
|||||
Selling, general and administrative expense
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
34,118
|
|
|
$
|
31,991
|
|
|
6.6
|
%
|
|
|
|
|
|
|
|||||
Investment and interest income
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
1,320
|
|
|
$
|
1,515
|
|
|
(12.9
|
)%
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes
|
|
|
|
|
|
|||||
Housekeeping
|
$
|
29,078
|
|
|
$
|
21,474
|
|
|
35.4
|
%
|
Dietary
|
15,571
|
|
|
13,142
|
|
|
18.5
|
%
|
||
Corporate and eliminations
|
(11,333
|
)
|
|
(1,538
|
)
|
|
636.9
|
%
|
||
Consolidated
|
$
|
33,316
|
|
|
$
|
33,078
|
|
|
0.7
|
%
|
|
Three Months Ended June 30,
|
||||
|
2018
|
|
2017
|
||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
Operating costs and expenses:
|
|
|
|
||
Costs of services provided
|
86.9
|
%
|
|
86.5
|
%
|
Selling, general and administrative expense
|
6.8
|
%
|
|
6.8
|
%
|
Investment and interest income
|
0.3
|
%
|
|
0.3
|
%
|
Income before income taxes
|
6.6
|
%
|
|
7.0
|
%
|
Income taxes
|
1.5
|
%
|
|
2.2
|
%
|
Net income
|
5.1
|
%
|
|
4.8
|
%
|
|
|
Three Months Ended June 30,
|
||||
Costs of Services Provided - Key Indicators as a % of Segment Revenue
|
|
2018
|
|
2017
|
|
Change
|
Housekeeping labor and other labor-related costs
|
|
78.2%
|
|
80.5%
|
|
(2.3)%
|
Housekeeping supplies
|
|
7.9%
|
|
8.1%
|
|
(0.2)%
|
Dietary labor and other labor-related costs
|
|
57.8%
|
|
54.8%
|
|
3.0%
|
Dietary supplies
|
|
33.9%
|
|
37.6%
|
|
(3.7)%
|
|
Three Months Ended June 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Selling, general and administrative expense excluding change in deferred compensation liability
|
$
|
33,231
|
|
|
$
|
30,840
|
|
|
$
|
2,391
|
|
|
7.8
|
%
|
Gain on deferred compensation plan investments
|
887
|
|
|
1,151
|
|
|
(264
|
)
|
|
(22.9
|
)%
|
|||
Selling, general and administrative expense
|
$
|
34,118
|
|
|
$
|
31,991
|
|
|
$
|
2,127
|
|
|
6.6
|
%
|
|
Six Months Ended June 30,
|
|||||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
(in thousands)
|
|
|
|||||||
Revenues
|
|
|
|
|
|
|||||
Housekeeping
|
$
|
491,956
|
|
|
$
|
486,342
|
|
|
1.2
|
%
|
Dietary
|
513,586
|
|
|
389,024
|
|
|
32.0
|
%
|
||
Consolidated
|
$
|
1,005,542
|
|
|
$
|
875,366
|
|
|
14.9
|
%
|
|
|
|
|
|
|
|||||
Costs of services provided
|
|
|
|
|
|
|||||
Housekeeping
|
$
|
433,941
|
|
|
$
|
441,666
|
|
|
(1.7
|
)%
|
Dietary
|
483,285
|
|
|
365,657
|
|
|
32.2
|
%
|
||
Corporate and eliminations
|
(9,704
|
)
|
|
(54,431
|
)
|
|
(82.2
|
)%
|
||
Consolidated
|
$
|
907,522
|
|
|
$
|
752,892
|
|
|
20.5
|
%
|
|
|
|
|
|
|
|||||
Selling, general and administrative expense
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
67,895
|
|
|
$
|
60,201
|
|
|
12.8
|
%
|
|
|
|
|
|
|
|||||
Investment and interest income
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
1,796
|
|
|
$
|
3,084
|
|
|
(41.8
|
)%
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes
|
|
|
|
|
|
|||||
Housekeeping
|
$
|
58,015
|
|
|
$
|
44,676
|
|
|
29.9
|
%
|
Dietary
|
30,301
|
|
|
23,367
|
|
|
29.7
|
%
|
||
Corporate and eliminations
|
(56,395
|
)
|
|
(2,686
|
)
|
|
1,999.6
|
%
|
||
Consolidated
|
$
|
31,921
|
|
|
$
|
65,357
|
|
|
(51.2
|
)%
|
|
Six Months Ended June 30,
|
||||
|
2018
|
|
2017
|
||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
Operating costs and expenses:
|
|
|
|
||
Costs of services provided
|
90.3
|
%
|
|
86.0
|
%
|
Selling, general and administrative expense
|
6.8
|
%
|
|
6.9
|
%
|
Investment and interest income
|
0.2
|
%
|
|
0.4
|
%
|
Income before income taxes
|
3.1
|
%
|
|
7.5
|
%
|
Income taxes
|
0.6
|
%
|
|
2.4
|
%
|
Net income
|
2.5
|
%
|
|
5.1
|
%
|
|
|
Six
Months Ended June 30,
|
||||
Costs of Services Provided - Key Indicators as a % of Segment Revenue
|
|
201
8
|
|
201
7
|
|
Change
|
Housekeeping labor and other labor-related costs
|
|
78.3%
|
|
80.3%
|
|
(2.0)%
|
Housekeeping supplies
|
|
7.9%
|
|
8.1%
|
|
(0.2)%
|
Dietary labor and other labor-related costs
|
|
57.1%
|
|
54.6%
|
|
2.5%
|
Dietary supplies
|
|
34.9%
|
|
37.4%
|
|
(2.5)%
|
|
Six Months Ended June 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Selling, general and administrative expense excluding change in deferred compensation liability
|
$
|
66,777
|
|
|
$
|
57,888
|
|
|
$
|
8,889
|
|
|
15.4
|
%
|
Gain on deferred compensation plan investments
|
1,118
|
|
|
2,313
|
|
|
(1,195
|
)
|
|
(51.7
|
)%
|
|||
Selling, general and administrative expense
|
$
|
67,895
|
|
|
$
|
60,201
|
|
|
$
|
7,694
|
|
|
12.8
|
%
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Net cash provided by (used in) operating activities
|
$
|
27,395
|
|
|
$
|
(6,561
|
)
|
Net cash used in investing activities
|
$
|
(6,028
|
)
|
|
$
|
(6,347
|
)
|
Net cash used in financing activities
|
$
|
(17,769
|
)
|
|
$
|
(3,887
|
)
|
|
Quarter Ended
|
||||||
|
March 31, 2018
|
|
June 30, 2018
|
||||
|
(amounts in thousands, except per share data)
|
||||||
Cash dividend paid per common share
|
$
|
0.19125
|
|
|
$
|
0.19250
|
|
Total cash dividends paid
|
$
|
14,149
|
|
|
$
|
14,249
|
|
Record date
|
February 16, 2018
|
|
|
May 25, 2018
|
|
||
Payment date
|
March 23, 2018
|
|
|
June 29, 2018
|
|
Covenant Description and Requirement
|
|
As of June 30, 2018
|
|
Funded debt
(1)
to EBITDA
(2)
ratio: less than 3.00 to 1.00
|
|
0.96
|
|
(1)
|
All indebtedness for borrowed money including, but not limited to, reimbursement obligations in respect of letters of credit and guaranties of any such indebtedness.
|
(2)
|
Net income plus interest expense, income tax expense, depreciation, amortization.
|
|
Allowance for Doubtful Accounts
|
||
|
(in thousands)
|
||
Balance December 31, 2017
|
$
|
11,984
|
|
Provision for bad debts
|
37,137
|
|
|
Net write-offs of client accounts receivable
|
(216
|
)
|
|
Balance March 31, 2018
|
48,905
|
|
|
Provision for bad debts
|
2,250
|
|
|
Net write-offs of client accounts receivable
|
(1,446
|
)
|
|
Balance June 30, 2018
|
$
|
49,709
|
|
|
Balance
December 31, 2017 |
|
Additions
|
|
Deductions
|
|
Balance
June 30, 2018 |
||||||||
|
(in thousands)
|
||||||||||||||
Impaired Notes Receivable
|
$
|
6,854
|
|
|
$
|
582
|
|
|
$
|
(1,255
|
)
|
|
$
|
6,181
|
|
Reserve for Impaired Notes Receivable
|
$
|
2,884
|
|
|
$
|
2,233
|
|
|
$
|
(627
|
)
|
|
$
|
4,490
|
|
Exhibit Number
|
|
Description
|
10.1*
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101
|
|
The following financial information from the Company’s Form 10-Q for the quarterly period ended June 30, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statement of Stockholders’ Equity, and (v) Notes to Consolidated Financial Statements
|
|
|
|
HEALTHCARE SERVICES GROUP, INC.
|
|
|
|
|
Date:
|
July 27, 2018
|
|
/s/ Theodore Wahl
|
|
|
|
Theodore Wahl
|
|
|
|
President & Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
July 27, 2018
|
|
/s/ John C. Shea
|
|
|
|
John C. Shea
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
1 Year Healthcare Services Chart |
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