Investor Alert

Oct. 11, 2011, 4:49 p.m. EDT

Healthcare Services net rises 9%

By Nathalie Tadena

Healthcare Services Group Inc.'s (NAS:HCSG) third-quarter earnings rose 9% as the nursing-home housekeeping and food-service provider posted double-digit percentage growth in revenue.

The company has reported higher earnings on revenue growth over the past year. Nursing homes were generally resilient during the recession, though they trimmed costs by cutting payrolls. The industry has a rosy long-term outlook as the aging U.S. population will boost the need for elder care.

In August, Duncan-Williams upgraded its stock-investment rating on Healthcare Services, saying it believes the company is a core holding for investors wanting to participate in the outsourcing trend among health-care providers due to its high customer retention, strong balance sheet and history of raising dividends.

For the latest quarter, Healthcare Services reported a profit of $10 million, or 15 cents a share, up from $9.2 million, or 14 cents a share, a year earlier. Revenue increased 12% to $218.9 million.

Analysts polled by Thomson Reuters most recently predicted a profit of 15 cents a share on revenue of $216 million.

Operating margin widened to 7.6% from 6.3%.

Shares were unchanged at $17.52 in after-hours trading. Through the close, the stock is up 8.4% over the past 12 months.

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