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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950116-06-000566.txt : 20060215
<SEC-HEADER>0000950116-06-000566.hdr.sgml : 20060215
<ACCEPTANCE-DATETIME>20060215090432
ACCESSION NUMBER:		0000950116-06-000566
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20060214
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060215
DATE AS OF CHANGE:		20060215

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HEALTHCARE SERVICES GROUP INC
		CENTRAL INDEX KEY:			0000731012
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-TO DWELLINGS & OTHER BUILDINGS [7340]
		IRS NUMBER:				232018365
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-12015
		FILM NUMBER:		06619781

	BUSINESS ADDRESS:	
		STREET 1:		2643 HUNTINGDON PIKE
		CITY:			HUNTINGDON VALLEY
		STATE:			PA
		ZIP:			19006
		BUSINESS PHONE:		2159381661

	MAIL ADDRESS:	
		STREET 1:		2643 HUNTINGDON PIKEE
		CITY:			HUNTINGDON VALLEY
		STATE:			PA
		ZIP:			19006
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>eight-k.txt
<DESCRIPTION>FORM 8-K
<TEXT>
<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)............February 14, 2006

                         HEALTHCARE SERVICES GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         Pennsylvania                      0-120152               23-2018365
- -------------------------------          ------------          ----------------
(State or other jurisdiction of          (Commission            (IRS Employer
 Incorporation or organization)          File Number)           Identification
                                                                    number)

           3220 Tillman Drive-Suite 300, Bensalem, Pennsylvania 19020
           ----------------------------------------------------------
               (Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: 215-639-4274
                                                    ------------

                                 Not Applicable
          -------------------------------------------------------------
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions ( see General Instruction A.2. below):

      (  )  Written communications pursuant to Rule 425 under the Securities Act
            (17 CFR 230.425)
      (  )  Soliciting material pursuant to Rule 14a-12 under the Exchange Act
            (17 CFR 240.14a-12)
      (  )  Pre-commencement communications pursuant to Rule 14d-2(b) under the
            Exchange Act (17 CFR 240.14d-2(b) )
      (  )  Pre-commencement communications pursuant to Rule 13e-4( c) under the
            Exchange Act (17 CFR 240.13e-4( c) )


<PAGE>

Item 2.02         Results of Operations and Financial Condition.

On February 14, 2006 Healthcare Services Group, Inc. issued a press release
announcing its earnings for the three month period and year ended December 31,
2005. A copy of the press release is attached hereto as Exhibit 99.1 and is
hereby incorporated by reference.

The information in contained herein shall not be deemed "filed" for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended or the Exchange Act.

Item 9.01         Financial Statements and Exhibits

          (c)     Exhibits

         99.1     Press Release, dated February 14, 2006


                                   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.
                                         ------------------------------------


February 14, 2006                        /s/ Richard W. Hudson
- -----------------                        ------------------------------------
Date                                     Vice President-Finance and
                                            Secretary

<PAGE>

                                  EXHIBIT INDEX

Exhibit:

99.1     Press Release and financial tables dated February 14, 2006 issued by
         Healthcare Services Group, Inc.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>

                         HEALTHCARE SERVICES GROUP, INC.
           REPORTS RECORD RESULTS FOR THE THREE MONTHS AND YEAR ENDED
                                DECEMBER 31, 2005

     o    QUARTERLY NET INCOME UP 33% OVER 2004 QUARTER ON 4% INCREASE IN
          REVENUES

     o    ANNUAL NET INCOME UP 30% ON A 5% INCREASE IN REVENUES

     o    QUARTERLY CASH DIVIDEND RAISED 11% OVER 2005 THIRD QUARTER CASH
          DIVIDEND AND 67% OVER 2004 FOURTH QUARTER CASH DIVIDEND


Bensalem, PA - February 14, 2006, Healthcare Services Group, Inc. (NASDAQ-HCSG)
reported that revenues for the three months ended December 31, 2005 increased
over 4% to $117,864,000 compared to $113,133,000 for the same 2004 period. Net
income for the three months ended December 31, 2005 increased 33% to $5,475,000
or $.20 per basic and $.19 per diluted common share, compared to 2004 fourth
quarter net income of $4,127,000 or $.16 per basic and $.15 per diluted common
share, representing increases of 25% and 27%, respectively, in basic and diluted
earnings per common share .

         The Company also reported that revenues for the year ended December 31,
2005 increased by over 5% to $466,291,000 compared to $442,568,000 for the 2004
year. Net income increased 30% for the year ended December 31, 2005 to
$19,096,000 or $.71 per basic and $.67 per diluted common share compared to the
year ended December 31, 2004 net income of $14,699,000 or $.56 per basic and
$.53 per diluted common share, representing increases of 27% and 26%,
respectively, in basic and diluted earnings per common share.

         On January 24, 2006, the Company's Board of Directors announced a 2005
fourth quarter cash dividend of $.10 per common share which was paid on February
13, 2006 to shareholders of record at the close of business February 3, 2006.
This dividend represents an 11% increase over the dividend declared for the 2005
third quarter and is the eleventh consecutive quarterly dividend payment, as
well as the tenth consecutive increase since our initiation of quarterly cash
dividend payments in 2003.

<PAGE>

2005 Earnings Release                                                Page 2 of 6
February 14, 2006



FORWARD LOOKING STATEMENTS/RISK FACTORS

This earnings release includes forward-looking statements that are subject to
risks and uncertainties that could cause actual results or objectives to differ
materially from those projected. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Such risks and uncertainties include,
but are not limited to, risks arising from our providing services exclusively to
the health care industry, primarily providers of long-term care; credit and
collection risks associated with this industry; one client accounting for
approximately 19% of revenues in 2005 (such client's Board of Directors have
reached terms for a sale of its company, which sale could be completed in the
first quarter of 2006); our claims' experience related to workers' compensation
and general liability insurance; the effects of changes in, or interpretations
of laws and regulations governing the industry, including state and local
regulations pertaining to the taxability of our services; and risk factors
described in our most recent Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 2004 and in Part I thereof under
"Government Regulation of Clients", "Competition" and "Service
Agreements/Collections". Many of our clients' revenues are highly reliant on
Medicare and Medicaid reimbursement funding rates, which have been and continue
to be adversely affected by the change in Medicare payments under the 1997
enactment of the Medicare Prospective Payment System. That change, and the lack
of substantive reimbursement funding rate reform legislation, as well as other
trends in the long-term care industry have resulted in certain of our clients
filing for bankruptcy protection. Others may follow. Any decisions by the
government to discontinue or adversely modify legislation related to


<PAGE>

Earnings Release                                                     Page 3 of 6
February 15, 2005


reimbursement funding rates will have a material adverse affect on our clients.
These factors, in addition to delays in payments from clients, have resulted in
and could continue to result in significant additional bad debts in the near
future. Additionally, our operating results would also be adversely affected if
unexpected increases in costs of labor and labor related costs, materials,
supplies and equipment used in performing our services could not be passed on to
our clients.

         In addition, we believe that to further improve our future financial
performance we must continue to obtain service agreements with new clients,
provide new services to existing clients, achieve modest price increases on
current service agreements with existing clients and maintain internal cost
reduction strategies at our various operational levels. Furthermore, we believe
that our ability to sustain the internal development of managerial personnel is
an important factor impacting future operating results and successfully
executing projected growth strategies.

         Healthcare Services Group, Inc. is the largest national provider of
professional housekeeping, laundry and food services to long-term care and
related facilities.

Company  Contacts:
Daniel P. McCartney                        Thomas Cook
Chairman and Chief Executive Officer       President and Chief Operating Officer
215-639-4274                               215-639-4274

<PAGE>

                         HEALTHCARE SERVICES GROUP, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

                                      December 31, 2005      December 31, 2004
                                      -----------------      -----------------
Cash and cash equivalents                $ 91,005,000          $ 74,847,000
Accounts receivable, net                   59,197,000            55,725,000
Other current assets                       15,414,000            14,699,000
                                         ------------          ------------
  Total current assets                    165,616,000           145,271,000

Property and equipment, net                 4,744,000             4,804,000
Notes receivable- long term, net            4,555,000             5,557,000
Deferred compensation funding               5,626,000             4,062,000
Other assets                                7,889,000             7,270,000
                                         ------------          ------------
                                         $188,430,000          $166,964,000
                                         ============          ============




Accrued insurance claims- current        $  4,405,000          $  4,169,000
Other current liabilities                  18,676,000            16,090,000
                                         ------------          ------------
  Total current liabilities                23,081,000            20,259,000

Accrued insurance claims- long term        10,277,000            10,227,000
Deferred compensation liability             6,909,000             5,018,000
Stockholders' equity                      148,163,000           131,460,000
                                         ------------          ------------
                                         $188,430,000          $166,964,000
                                         ============          ============



<PAGE>

                         HEALTHCARE SERVICES GROUP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                     For the Three Months Ended
                                                           December 31,
                                                   -----------------------------
                                                        2005             2004
                                                   ------------     ------------
Revenues                                           $117,864,000     $113,133,000
Operating costs and expenses:
   Cost of services provided                        102,075,000       99,287,000
   Selling, general and administrative                8,014,000        7,780,000
Other income:
   Investment and interest                            1,056,000          588,000
                                                   ------------     ------------
Income before income taxes                            8,831,000        6,654,000
Income taxes                                          3,356,000        2,527,000
                                                   ------------     ------------
Net income                                         $  5,475,000     $  4,127,000
                                                   ============     ============
Basic earnings per common share                    $        .20     $        .16
                                                   ============     ============
Diluted earnings per common share                  $        .19     $        .15
                                                   ============     ============
Cash dividends per common share                    $        .09     $        .05
                                                   ============     ============
Basic weighted average number of
   common shares outstanding                         27,098,000       26,340,000
                                                   ============     ============
Diluted weighted average number of
   common shares outstanding                         28,418,000       27,757,000
                                                   ============     ============

<PAGE>

                         HEALTHCARE SERVICES GROUP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                        For the Year Ended
                                                            December 31,
                                                   -----------------------------
                                                        2005           2004
                                                   ------------     ------------
Revenues                                           $466,291,000     $442,568,000

Operating costs and expenses:
   Cost of services provided                        406,114,000      388,668,000
   Selling, general and administrative               32,576,000       31,523,000
Other income:
   Investment and interest                            3,198,000        1,329,000
                                                   ------------     ------------
Income before income taxes                           30,799,000       23,706,000
Income taxes                                         11,703,000        9,007,000
                                                   ------------     ------------
Net income                                         $ 19,096,000     $ 14,699,000
                                                   ============     ============
Basic earnings per common share                    $        .71     $        .56
                                                   ============     ============
Diluted earnings per common share                  $        .67     $        .53
                                                   ============     ============
Cash dividends per common share                    $        .30     $        .17
                                                   ============     ============
Weighted average number of common
   shares outstanding for basic EPS                  26,921,000       26,220,000
                                                   ============     ============
Weighted average number of common
   shares outstanding for diluted EPS                28,320,000       27,659,000
                                                   ============     ============
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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