Healthcare Services Group Inc. (HCSG, Financial) filed Annual Report for the period ended 2011-12-31.
Healthcare Serv has a market cap of $1.36 billion; its shares were traded at around $20.43 with a P/E ratio of 35.1 and P/S ratio of 1.5. The dividend yield of Healthcare Serv stocks is 3.1%. Healthcare Serv had an annual average earning growth of 15.2% over the past 10 years. GuruFocus rated Healthcare Serv the business predictability rank of 4-star.
Although our growth in consolidated revenues was 14.9% for the year ended December 31, 2011, selling, general and administrative expenses excluding the change in market value of the deferred compensation fund increased 16.8% or $9,424,000 compared to the 2010 comparable period. Consequently, for the year ended December 31, 2011, selling, general and administrative expenses (excluding impact of deferred compensation fund), as a percentage of consolidated revenues, increased to 7.4% of consolidated revenues as compared to 7.2% in the 2010 comparable period. This percentage increase resulted primarily from an increase in our payroll and payroll related expenses, travel related costs and professional fees. The percentage increase in payroll and payroll related costs resulted from the development of additional regions, districts and overall management personnel in advance of the new business. The increase in travel costs is primarily due to the incremental costs associated with the travel related costs incurred to sign the business and start new facilities. For future periods, we expect to incur selling, general and administrative expenses as a percentage of consolidated revenues consistent with historical levels in 2012.
Although our growth in consolidated revenues was 11.7% for the year ended December 31, 2010, selling, general and administrative expenses excluding gain of deferred compensation fund increased 15.5% or $7,513,000 compared to the 2009 comparable period. Consequently for the year ended December 31, 2010, selling, general and administrative expenses (excluding impact of deferred compensation fund), as a percentage of consolidated revenues, increased to 7.2% of consolidated revenues as compared to 7.0% in the 2009 comparable period. This percentage increase resulted primarily from an increase in our payroll and payroll related expenses which grew in advance of the new business that was obtained during the course of the year. We expect to maintain selling, general and administrative expenses as a percentage of consolidated revenues consistent with historical levels in 2011.
At December 31, 2011, we had cash and cash equivalents, and marketable securities of $69,976,000 and working capital of $186,734,000 compared to December 31, 2010 cash, cash equivalents and marketable securities of $83,129,000 and working capital of $181,244,000. We view our cash and cash equivalents and marketable securities as our principal measure of liquidity. Our current ratio at December 31, 2011 decreased to 5.1 to 1 from 5.5 to 1 at December 31, 2010. This decrease resulted primarily from declines in our cash, cash equivalents and marketable securities and increases in accrued payroll, withheld payroll taxes expense primarily resulting from the timing of such payments at December 31, 2011 from December 31, 2010. Our cash, cash equivalents and marketable securities declined at December 31, 2011 from December 31, 2010, primarily due to the working capital investment required to support our 2011 revenue growth of 14.9% and the payment of dividends to shareholders. The decrease was positively impacted by the increase in accounts and notes receivable resulting from our increase in revenues. The growth in accounts and notes receivable, net, exceeded the annual growth in revenues based on the revenue growth experienced in the latter portion of the year. On an historical basis, our operations have generally produced consistent cash flow and have required limited capital resources. We believe our current and near term cash flow positions will enable us to fund our continued anticipated growth.
We have had varying collection experience with respect to our accounts and notes receivable. When contractual terms are not met, we generally encounter difficulty in collecting amounts due from certain of our clients. Therefore, we have sometimes been required to extend the period of payment for certain clients beyond contractual terms. These clients include those who 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, we have recorded bad debt provisions (in an Allowance for Doubtful Accounts) of $2,450,000, $2,200,000 and $2,404,000 in the years ended December 31, 2011, 2010 and 2009, respectively. These provisions represent approximately .3% as a percentage of total revenues for each respective period. In making our credit evaluations, in addition to analyzing and anticipating, where possible, the specific cases described above, we consider the general collection risk associated with trends in the long-term care industry. We also establish credit limits, perform ongoing credit evaluation and monitor accounts to minimize the risk of loss. Notwithstanding our efforts to minimize credit risk exposure, our clients could be adversely affected if future industry trends change in such a manner as to negatively impact their cash flows. If our clients experience a negative impact in their cash flows, it would have a material adverse effect on our results of operations and financial condition.
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Healthcare Serv has a market cap of $1.36 billion; its shares were traded at around $20.43 with a P/E ratio of 35.1 and P/S ratio of 1.5. The dividend yield of Healthcare Serv stocks is 3.1%. Healthcare Serv had an annual average earning growth of 15.2% over the past 10 years. GuruFocus rated Healthcare Serv the business predictability rank of 4-star.
Highlight of Business Operations:
Cost of services provided for Housekeeping, as a percentage of Housekeeping revenues, for 2011 decreased slightly to 90.3% compared to 90.6% in 2010. Cost of services provided for Dietary, as a percentage of Dietary revenues for 2011, decreased slightly to 95.0% from 95.7% in 2010.Although our growth in consolidated revenues was 14.9% for the year ended December 31, 2011, selling, general and administrative expenses excluding the change in market value of the deferred compensation fund increased 16.8% or $9,424,000 compared to the 2010 comparable period. Consequently, for the year ended December 31, 2011, selling, general and administrative expenses (excluding impact of deferred compensation fund), as a percentage of consolidated revenues, increased to 7.4% of consolidated revenues as compared to 7.2% in the 2010 comparable period. This percentage increase resulted primarily from an increase in our payroll and payroll related expenses, travel related costs and professional fees. The percentage increase in payroll and payroll related costs resulted from the development of additional regions, districts and overall management personnel in advance of the new business. The increase in travel costs is primarily due to the incremental costs associated with the travel related costs incurred to sign the business and start new facilities. For future periods, we expect to incur selling, general and administrative expenses as a percentage of consolidated revenues consistent with historical levels in 2012.
Although our growth in consolidated revenues was 11.7% for the year ended December 31, 2010, selling, general and administrative expenses excluding gain of deferred compensation fund increased 15.5% or $7,513,000 compared to the 2009 comparable period. Consequently for the year ended December 31, 2010, selling, general and administrative expenses (excluding impact of deferred compensation fund), as a percentage of consolidated revenues, increased to 7.2% of consolidated revenues as compared to 7.0% in the 2009 comparable period. This percentage increase resulted primarily from an increase in our payroll and payroll related expenses which grew in advance of the new business that was obtained during the course of the year. We expect to maintain selling, general and administrative expenses as a percentage of consolidated revenues consistent with historical levels in 2011.
At December 31, 2011, we had cash and cash equivalents, and marketable securities of $69,976,000 and working capital of $186,734,000 compared to December 31, 2010 cash, cash equivalents and marketable securities of $83,129,000 and working capital of $181,244,000. We view our cash and cash equivalents and marketable securities as our principal measure of liquidity. Our current ratio at December 31, 2011 decreased to 5.1 to 1 from 5.5 to 1 at December 31, 2010. This decrease resulted primarily from declines in our cash, cash equivalents and marketable securities and increases in accrued payroll, withheld payroll taxes expense primarily resulting from the timing of such payments at December 31, 2011 from December 31, 2010. Our cash, cash equivalents and marketable securities declined at December 31, 2011 from December 31, 2010, primarily due to the working capital investment required to support our 2011 revenue growth of 14.9% and the payment of dividends to shareholders. The decrease was positively impacted by the increase in accounts and notes receivable resulting from our increase in revenues. The growth in accounts and notes receivable, net, exceeded the annual growth in revenues based on the revenue growth experienced in the latter portion of the year. On an historical basis, our operations have generally produced consistent cash flow and have required limited capital resources. We believe our current and near term cash flow positions will enable us to fund our continued anticipated growth.
We have had varying collection experience with respect to our accounts and notes receivable. When contractual terms are not met, we generally encounter difficulty in collecting amounts due from certain of our clients. Therefore, we have sometimes been required to extend the period of payment for certain clients beyond contractual terms. These clients include those who 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, we have recorded bad debt provisions (in an Allowance for Doubtful Accounts) of $2,450,000, $2,200,000 and $2,404,000 in the years ended December 31, 2011, 2010 and 2009, respectively. These provisions represent approximately .3% as a percentage of total revenues for each respective period. In making our credit evaluations, in addition to analyzing and anticipating, where possible, the specific cases described above, we consider the general collection risk associated with trends in the long-term care industry. We also establish credit limits, perform ongoing credit evaluation and monitor accounts to minimize the risk of loss. Notwithstanding our efforts to minimize credit risk exposure, our clients could be adversely affected if future industry trends change in such a manner as to negatively impact their cash flows. If our clients experience a negative impact in their cash flows, it would have a material adverse effect on our results of operations and financial condition.
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