Investor Alert

Feb. 7, 2012, 5:44 p.m. EST

Healthcare Services profit up 16% as revenue rises

By Nathalie Tadena

Healthcare Services Group Inc.'s (NAS:HCSG) fourth-quarter earnings rose 16% as the nursing-home housekeeping and food-service provider reported better-than-expected revenue growth.

The company has reported top- and bottom-line growth for nearly two years. 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.

Ahead of the results, Morgan Keegan said in a research note that it expects nursing homes to continue to outsource housekeeping, laundry and dietary services to Healthcare Services Group due to nursing home operators' concerns about Medicaid and Medicare reimbursement as well as an increased focus on complex clinical programs.

Healthcare Services reported a profit of $10.6 million, or 16 cents a share, up from $9.1 million, or 14 cents a share, a year earlier. Revenue increased 24% to $250.2 million.

Analysts polled by Thomson Reuters most recently forecast a profit of 16 cents a share on revenue of $225 million.

Operating margin narrowed to 5.7% from 6.6%.

Shares closed at $19 Tuesday and were unchanged after hours. Through the close, the stock is up 11% in the past 12 months.

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