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HEALTHCARE SERVICES GROUP, INC. REPORTS RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995

HUNTINGDON VALLEY, Pa., Aug. 4 /PRNewswire/ -- Healthcare Services Group, Inc. (Nasdaq-NNM: HCSG) reported revenues for the three months ended June 30, 1995, of $36,625,000 compared to $32,923,000 for the same 1994 quarter, representing over an 11% increase. Net income for the three months ended June 30, 1994, was $17,000 compared to 1994 second quarter net income of $1,689,000 or $.21 per common share. The 1995 second quarter net income was reduced by approximately $1,594,000 or $.20 per common share to reflect the effect of recording a provision for the estimated costs related to a Securities and Exchange Commission (SEC) non-public investigation and other matters previously reported on in the Company's financial statements. The Company has been cooperating fully with the SEC inquiry on a voluntary basis. Although the Company and its officers deny any wrongdoing in connection with certain allegations of violations of Federal securities laws being considered by the SEC Staff with respect to periods ended on or before December 31, 1991, it anticipates that it will incur a significant amount of legal and related costs in connection with these matters.

Revenues for the six months ended June 30, 1995, were $73,011,000 compared to $64,518,000 for the same 1994 period representing over a 13% increase. Net income for the six months ended June 30, 1995, was $1,826,000 or $.22 per common share, compared to the 1994 six-month period net income of $3,273,000 or $.41 per common share. The effect of the Company's recording of a provision for estimated cost related to SEC inquiry and other matters reduced six-month net income by approximately $1,594,000 or $.20 per common share.

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 filed against it in 1991 and 1992. Accordingly, the effect of issuing these shares is reflected in the per-share amounts reported for the three- and six-month periods ended June 30, 1995. The June 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.

The Company's Board of Directors has again authorized the purchase of its common stock. The shares will be purchased from time to time on the open market. Although the Company has not determined how many shares may be purchased, it is not expected that purchases in the aggregate would exceed 5% of the Company's outstanding shares of common stock.

Healthcare Services Group, Inc. is the largest national provider of professional housekeeping and laundry services to long-term care facilities.
 HEALTHCARE SERVICES GROUP, INC.
 Statements of Income
 (Unaudited)
 For the Three Months Ended June 30
 1995 1994
 Revenues $36,625,000 $32,923,000


Operating costs and expenses:
 Cost of services provided 30,851,000 27,462,000


Selling, general and
 administrative 3,327,000 2,765,000


Recovery of contingent losses on
 promissory notes sold (50,000) (75,000)


Other income (expense):

Provision for estimated cost

related to SEC inquiry and
 other matters (2,400,000) ---
 Interest income 234,000 141,000
 Income before income taxes 331,000 2,912,000
 Income taxes 314,000 1,223,000
 Net income $17,000 $1,689,000
 Earnings per common share $.00 $.21


Weighted average number of
 common shares outstanding 8,212,021 8,187,756
 For the Six Months Ended June 30
 1995 1994
 Revenues $73,011,000 $64,518,000


Operating costs and expenses:
 Cost of services provided 61,617,000 54,066,000


Selling, general and
 administrative 6,254,000 5,157,000


Recovery of contingent losses on
 promissory notes sold (200,000) (125,000)


Other income (expense):

Provision for estimated cost

related to SEC inquiry and
 other matters (2,400,000) ---
 Interest income 433,000 223,000
 Income before income taxes 3,373,000 5,643,000
 Income taxes 1,547,000 2,370,000
 Net income $1,826,000 $3,273,000
 Earnings per common share $.22 .41


Weighted average number of
 common shares outstanding 8,261,678 8,169,432
 Condensed Balance Sheets
 June 30, Dec. 31,
 1995 1994
 Cash and cash equivalents $14,002,000 $11,230,000
 Accounts receivable, net 33,111,000 32,773,000
 Deferred income taxes 1,146,000 1,435,000
 Other current assets 8,819,000 9,090,000
 Property and equipment 6,308,000 5,943,000
 Intangible assets 396,000 1,107,000


Cost in excess of fair value of
 net assets acquired 2,312,000 2,367,000


Certificates of deposit pledged for
 loan guarantees --- 1,500,000
 Deferred income taxes 2,345,000 2,207,000
 Other assets 8,836,000 8,163,000
 Total $77,275,000 $75,815,000
 Accrued insurance claims current $900,000 $1,357,000
 Other current liabilities 4,538,228 7,025,000
 Accrued insurance claims 3,387,000 2,884,000


Reserve for contingent losses on
 promissory notes 100,000 300,000
 Litigation settlement liability --- 2,125,000


Reserve for estimated cost related
 to SEC inquiry and other matters 1,991,000 ---
 Stockholders' equity 66,358,772 62,124,000
 Total $77,275,000 $75,815,000


/delval/
 -0- 8/4/95


/CONTACT: Daniel P. McCartney, Chairman and Chief Executive Officer, or Thomas Cook, President and Chief Operating Officer, of Healthcare Services Group, 215-938-1661/

(HCSG)

CO: Healthcare Services Group, Inc. ST: Pennsylvania IN: SU: ERN

MK-MP -- PH001 -- 1761 08/04/95 08:20 EDT
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Publication:PR Newswire
Date:Aug 4, 1995
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