YE 07
Cautionary Statement Regarding Forward-Looking Statements
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This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, are not historical facts but rather based on
current expectations, estimates and projections about our business and industry, our beliefs and assumptions. Words such as
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“believes,” “anticipates,” “plans,” “expects,” “will,” “goal,” and similar expressions are intended to identify forward-looking
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statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans
will be achieved. 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 forward-looking information is also subject to various risks and uncertainties.
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
care industry primarily providers of long term care; credit and collection risks associated with this industry; one client
accounting for approximately 16% of revenues in 2007; risks associated with our acquisition of Summit Services Group, Inc.,
including integration risks and costs, or such business not achieving expected financial results or synergies or failure to
otherwise perform as expected; 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 the risk factors described in our Form 10-K filed with the Securities and Exchange
pertaining to the taxability of our services; and the risk factors described in our Form 10 K filed with the Securities and Exchange
Commission for the year ended December 31, 2006 Part I thereof under ‘‘Government Regulation of Clients’’, ‘‘Competition’’ and
‘‘Service Agreements/Collections’’, and under Item IA “Risk Factors”. Many of our clients’ revenues are highly contingent on
Medicare and Medicaid reimbursement funding rates, which Congress has affected through the enactment of a number of major
laws during the past decade. These laws have significantly altered, or threatened to alter, overall government reimbursement
funding rates and mechanisms. The overall effect of these laws and trends in the long-term care industry have affected and could
adversely affect the liquidity of our clients, resulting in their inability to make payments to us on agreed upon payment terms.
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 be adversely affected if unexpected increases in
the costs of labor and labor related costs, materials, supplies and equipment used in performing services could not be passed on
to our clients.
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In addition, we believe that to improve our 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.
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Healthcare Services Group, Inc. is the largest national provider of professional housekeeping, laundry and food services to long-
term care and related facilities.
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Industry Trends
• Legislation
• Cost Containment/Managed Care
Cost Containment/Managed Care
• The “Graying” of America
• DRGs
DRG
• Subacute Care
• Assisted Living
Prospective Pay System (PPS)
• Prospective Pay System (PPS)
HEALTHCARE SERVICES GROUP
Market Penetration
M k t P
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t
Number of Facilities
Total Expenditures
Housekeeping &
Laundry Costs
Contractual Management
Contractual Management
Food Service Cost
Contractual Management
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osp ta s
Hospitals
6,915
$611 Billion
Long-Term Care
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23,000
$121.9 Billion
$18.3 Billion (3%)
$7.3 Billion (6%)
24%
24%
$36.6 Billion (6%)
Less than 10%
Less than 10%
$14.6 Billion (12%)
28%
28%
Less than 4%
Less than 4%
Source: American Hospital Association, Dept. of Health and Human Services, Center for Medicare and
Medicaid Services, Modern Healthcare Survey
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
• Largest Independent Housekeeping and
Laundry Service for Long-Term Care
• Over 2,200 Facilities Under Management
• 90% Client Retention Rate - Base Business
• Long-Term Revenue Stream
R
S
T
Current Major Markets
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Total Long-Term Care Facilities
Approximately 17,400
VT
WA 20
OR 16
NV 7
CA 203
MT 1
ND
MN 38
ID 4
SD 12
SD 12
WY 4
WI 56
ONTARIO
CANADA
4
MI 27
NY 30
UT 5
CO 16
KS 40
NE 31
IA 6
PA 226
OH 93
V
WV
IL 41
IN
85
MO 66
KY 39
AZ 11
NM 26
OK 13
AR 35
TN 30
VA 56
VA 56
4
4
NC 123
SC 55
8
ME 12
NH 8
MA 139
RI 23
23
CT 30
NJ 90
DE 12
MD 24
DC 1
TX 66
LA 21 38
GA 61
GA 61
MS AL 38
FL
173
HEALTHCARE SERVICES GROUP INC.
Services (% of Sales)
Facilities, Maintenance and Supplies - 1%
Linen and Laundry - 24%
Food Service - 19%
Housekeeping - 56%
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
CENTRAL OFFICE
NORTHEAST
DIVISION
MID-ATLANTIC
DIVISION
MIDWEST/
NO. CENTRAL
DIVISION
DIVISION
MIDWEST/
SOUTH
DIVISION
DIVISION
SOUTHEST/
SOUTHWEST
DIVISION
DIVISION
FAR WEST
DIVISION
NEW
ENGLAND
REGIONS
NEW
YORK
REGIONS
MID-ATL
REGIONS
REGIONS
MID-ATL
REGIONS
REGIONS
MID-
WEST
REGIONS
NO.
CENTRAL
REGIONS
MID-
WEST - S
REGIONS
MID-
SOUTH
REGIONS
S.E.
REGIONS
REGIONS
S.W.
REGIONS
REGIONS
FAR WEST
REGIONS
REGIONS
CALIF
REGIONS
REGIONS
DISTRICT
MGT.
DISTRICT DISTRICT DISTRICT
MGT.
MGT.
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
DISTRICT
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY
FACILITY
MGT.
FACILITY FACILITY
FACILITY FACILITY
MGT MGT
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Operational Management Structure
Vice President -
Operations
Divisional
Vice President
6 Divisions
Regional Vice
President / Manager
President / Manager
55 Regions
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District
Manager
220 Districts
Training
Training
Manager
Facility Manager and
Assistant Facility Manager
Over 2,200 Facilities
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Marketing and Sales Structure
President
Vice President - Marketing
Director of Corporate Sales
Divisional
Vice Presidents
Corporate
Divisional
Divisional
Regional
Vice Presidents / Managers
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Regional
Regional
Directors
Regional
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l
District
District
Managers
District
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Sources of Growth
• Geographic Expansion of Regional and Local Clients
• National Chains
• New Facilities of Existing Clients
• Sale of Linen Services to New and Existing Clients
• Sale of Food Services to New and Existing Clients
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
The Advantage
• Demonstrated Cost Savings to Long-Term
Care Facilities
• Superior Professional Management System
• National Network to Service Local, Regional
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,
and National Accounts
• Substantial Capacity to Generate Incremental
p
y
Business with Existing Infrastructure
Revenues (000)
Revenues (000)
, 9
$442,494
$
$466,291
$511,631
$577,721
$379,718
$328,499
$800,000
$800 000
$700,000
$600,000
$500,000
$400,000
$300,000
$300 000
$200,000
$100,000
$0
2002
2003
2004
2005
2006
2007
Year End
HEALTHCARE SERVICES GROUP
Net Income (000)
Net Income (000)
,
$35,000
$30,000
$25,000
$25,000
$20,000
$15,000
$15 000
$10,000
$5,000
$5 000
$29,578
$29 578
$25,452
$19,096
$14,694
$10,860
$10 860
$8,630
2002
2003
2004
2005
2006
2007
Year End
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Investment Considerations
Year End 12/31/07
• Cash - $92.4 million
• Current Assets - $195.0 million
• Current Ratio – 7:1
• Stockholder Equity - $194.7 million
• Dividend - $.52 p/share – annually (post 3:2
Dividend $ 52 p/share annually (post 3:2
split)
• Book Value - $4.60
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Growth Objectives
Expand Established Regions Locally
• Expand Established Regions Locally
• Local Operators
• National Chains
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• Expand Food Service to Client Base
• 90% Client Retention Rate
Growth Objectives
Growth Objectives
25% Growth Rate in Existing Base
WA 20
OR 16
NV 7
CA 203
MT 1
ND
MN 38
ID 4
SD 12
SD 12
WY 4
WI 56
ONTARIO
CANADA
4
MI 27
NY 30
UT 5
CO 16
KS 40
NE 31
IA 6
PA 226
OH 93
V
WV
IL 41
IN
85
MO 66
KY 39
AZ 11
NM 26
OK 13
AR 35
TN 30
VA 56
VA 56
4
4
NC 123
SC 55
VT
8
ME 12
NH 8
MA 139
RI 23
23
CT 30
NJ 90
DE 12
MD 24
DC 1
TX 66
LA 21 38
GA 61
GA 61
MS AL 38
FL
173
HEALTHCARE SERVICES GROUP INC.
HEALTHCARE SERVICES GROUP
HEALTHCARE SERVICES GROUP
Opportunity
• “Graying” of America/Cost Containment
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• Growing Market with Little Competition
• Growing Market with Little Competition
• Organization in Place for Growth