10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                    

Commission file number: 0-12015

HEALTHCARE SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	23-2018365
(State or other jurisdiction of incorporated or organization)	(IRS Employer Identification No.)
3220 Tillman Drive, Suite 300, Bensalem, PA	19020
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(215) 639-4274

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  þ    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES  þ    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	¨	Non-accelerated filer	¨	Smaller reporting company	¨
				(Do not check if a smaller  reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES  ¨    NO  þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value: 69,785,000 shares outstanding as of July 22, 2013.

1

Healthcare Services Group, Inc.

Quarterly Report on Form 10-Q

For the Period Ended June 30, 2013

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2013 and 2012	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012	6
	Consolidated Statement of Stockholders' Equity for the Six Months Ended June 30, 2013	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
Signatures		36

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report and documents incorporated by reference into this report may contain 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, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, our beliefs and assumptions. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “goal,” and similar expressions are intended to identify forward-looking 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; from having several significant clients who each individually contributed at least 3% to 5% of our total consolidated revenues for the three and six months ended June 30, 2013; risks associated with our acquisition of Platinum Health Services, LLC; 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, our workforce and services provided, including state and local regulations pertaining to the taxability of our services; and the risk factors described in Part I of our Form 10-K for the fiscal year ended December 31, 2012 under “Government Regulation of Clients,” “Competition” and “Service Agreements/Collections,” and under Item IA “Risk Factors” in our Form 10-K for the fiscal year ended December 31, 2012. Many of our clients’ revenues are highly contingent on Medicare, Medicaid and other payors’ reimbursement funding rates, which Congress and related agencies have affected through the enactment of a number of major laws and regulations during the past decade, including the March 2010 enactment of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. In July 2011, the United States Center for Medicare Services (“CMS”) issued final rulings which, among other things, reduced (effective October 1, 2011) Medicare payments to nursing centers by 11.1% and changed the reimbursement for the provision of group rehabilitation therapy services to Medicare beneficiaries. In January 2013, the U.S. Congress enacted the American Taxpayer Relief Act of 2012, which delayed automatic spending cuts of $1.2 trillion, including reduced Medicare payments to plans and providers up to 2%. These discretionary spending caps were originally enacted under provisions in the Budget Control Act of 2011, an initiative to reduce the federal deficit through the year 2021, also known as “sequestration.” The sequestration went into effect starting March 2013. Currently, the U.S. Congress is considering further changes or revising legislation relating to health care in the United States which, among other initiatives, may impose cost containment measures impacting our clients. These enacted laws, proposed laws and forthcoming regulations have significantly altered, or threaten to alter, overall government reimbursement funding rates and mechanisms. The overall effect of these laws and trends in the long-term care industry has 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.

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.

3

PART I — FINANCIAL INFORMATION.

Item 1. Financial Statements (Unaudited).

Healthcare Services Group, Inc.

Consolidated Balance Sheets

	(Unaudited)
	June 30, 2013			December 31, 2012
ASSETS:
Current assets:
Cash and cash equivalents	$	63,160,000		$	68,949,000
Marketable securities, at fair value	22,026,000			21,322,000
Accounts and notes receivable, less allowance for doubtful accounts of $3,671,000 in 2013 and $3,970,000 in 2012	165,700,000			140,218,000
Inventories and supplies	28,648,000			28,675,000
Prepaid expenses and other	9,767,000			8,682,000
Total current assets	289,301,000			267,846,000
Property and equipment:
Laundry and linen equipment installations	2,441,000			2,336,000
Housekeeping and office equipment and furniture	26,879,000			26,098,000
Autos and trucks	310,000			315,000
	29,630,000			28,749,000
Less accumulated depreciation	19,427,000			18,477,000
	10,203,000			10,272,000
Goodwill	16,955,000			16,955,000
Other intangible assets, less accumulated amortization of $11,162,000 in 2013 and $10,078,000 in 2012	4,119,000			5,203,000
Notes receivable — long term portion, net of discount	2,502,000			1,823,000
Deferred compensation funding, at fair value	19,757,000			17,831,000
Deferred income taxes — long term portion	12,535,000			11,215,000
Other noncurrent assets	38,000			38,000
Total Assets	$	355,410,000		$	331,183,000
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	31,238,000		$	22,810,000
Accrued payroll, accrued and withheld payroll taxes	28,823,000			31,997,000
Other accrued expenses	3,081,000			3,526,000
Income taxes payable	4,479,000			1,906,000
Deferred income taxes	537,000			575,000
Accrued insurance claims	7,110,000			6,850,000
Total current liabilities	75,268,000			67,664,000
Accrued insurance claims — long term portion	16,589,000			15,712,000
Deferred compensation liability	20,033,000			18,237,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value; 100,000,000 shares authorized; 70,407,000 shares issued and outstanding in 2013 and 70,036,000 shares in 2012	704,000			700,000
Additional paid-in capital	122,148,000			113,495,000
Retained earnings	131,998,000			127,042,000
Accumulated other comprehensive income, net of taxes	44,000			127,000
Common stock in treasury, at cost, 1,899,000 shares in 2013 and 1,983,000 shares in 2012	(11,374,000		)	(11,794,000		)
Total stockholders’ equity	243,520,000			229,570,000
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	355,410,000		$	331,183,000

See accompanying notes.

4

Healthcare Services Group, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2012			2013			2012
Revenues	$	273,604,000		$	267,108,000		$	547,508,000		$	527,715,000
Operating costs and expenses:
Costs of services provided	234,602,000			230,206,000			469,793,000			457,701,000
Selling, general and administrative	19,363,000			18,524,000			40,153,000			39,506,000
Other income:
Investment and interest	219,000			(95,000		)	1,253,000			1,558,000
Income before income taxes	19,858,000			18,283,000			38,815,000			32,066,000
Income taxes	6,925,000			6,963,000			10,928,000			12,167,000
Net income	$	12,933,000		$	11,320,000		$	27,887,000		$	19,899,000
Per share data:
Basic earnings per common share	$	0.19		$	0.17		$	0.41		$	0.30
Diluted earnings per common share	$	0.19		$	0.17		$	0.40		$	0.29
Weighted average number of common shares outstanding:
Basic	68,599,000			67,296,000			68,531,000			67,189,000
Diluted	69,370,000			68,228,000			69,366,000			68,155,000
Comprehensive income:
Net income	$	12,933,000		$	11,320,000		$	27,887,000		$	19,899,000
Other comprehensive income:
Unrealized loss on available for sale marketable securities, net of taxes	(106,000		)	(17,000		)	(83,000		)	(190,000		)
Total comprehensive income	$	12,827,000		$	11,303,000		$	27,804,000		$	19,709,000

See accompanying notes.

5

Healthcare Services Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months Ended June 30,
	2013			2012
Cash flows from operating activities:
Net income	$	27,887,000		$	19,899,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,707,000			2,528,000
Bad debt provision	650,000			1,350,000
Deferred income benefits	(1,305,000		)	(2,405,000		)
Stock-based compensation expense	1,196,000			1,144,000
Amortization of premium on marketable securities	303,000			346,000
Unrealized loss on marketable securities	—			82,000
Unrealized gain on deferred compensation fund investments	(759,000		)	(937,000		)
Changes in operating assets and liabilities:
Accounts and notes receivable	(26,812,000		)	(7,891,000		)
Prepaid income taxes	—			3,740,000
Inventories and supplies	27,000			(1,906,000		)
Deferred compensation funding	(1,926,000		)	(1,078,000		)
Accounts payable and other accrued expenses	8,454,000			10,759,000
Accrued payroll, accrued and withheld payroll taxes	(1,989,000		)	536,000
Accrued insurance claims	1,137,000			3,485,000
Deferred compensation liability	2,922,000			2,360,000
Income taxes payable	2,573,000			—
Prepaid expenses and other assets	(1,085,000		)	(4,630,000		)
Net cash provided by operating activities	13,980,000			27,382,000
Cash flows from investing activities:
Disposals of fixed assets	150,000			10,000
Additions to property and equipment	(1,702,000		)	(1,825,000		)
Purchases of marketable securities	(4,597,000		)	(6,362,000		)
Sales of marketable securities	3,450,000			15,784,000
Net cash (used in) provided by investing activities	(2,699,000		)	7,607,000
Cash flows from financing activities:
Dividends paid	(22,931,000		)	(21,803,000		)
Reissuance of treasury stock pursuant to Dividend Reinvestment Plan	53,000			59,000
Tax benefit from equity compensation plans	1,128,000			1,051,000
Proceeds from the exercise of stock options	4,680,000			2,664,000
Net cash used in financing activities	(17,070,000		)	(18,029,000		)
Net (decrease) increase in cash and cash equivalents	(5,789,000		)	16,960,000
Cash and cash equivalents at beginning of the period	68,949,000			38,639,000
Cash and cash equivalents at end of the period	$	63,160,000		$	55,599,000
Supplementary Cash Flow Information:
Income taxes cash payments, net of refunds	$	8,531,000		$	9,782,000
Issuance of Common Stock in 2013 and 2012, respectively, pursuant to Employee Stock Plans	$	1,842,000		$	1,250,000

See accompanying notes.

6

Healthcare Services Group, Inc.

Consolidated Statement of Stockholders’ Equity

(Unaudited)

	For the Six Months Ended June 30, 2013
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income, net of taxes			Retained Earnings			Treasury Stock			Stockholders’ Equity
	Shares	Amount
Balance — December 31, 2012	70,036,000	$	700,000	$	113,495,000	$	127,000		$	127,042,000		$	(11,794,000	)	$	229,570,000
Comprehensive income:
Net income for the period									27,887,000						27,887,000
Unrealized loss on available for sale marketable securities, net of taxes						(83,000		)							(83,000		)
Comprehensive income															27,804,000
Exercise of stock options and other stock-based compensation, net of shares tendered for payment	371,000	4,000		4,636,000								40,000			4,680,000
Tax benefit from equity compensation plans				1,128,000											1,128,000
Share-based compensation expense — stock options and restricted stock				1,011,000											1,011,000
Treasury shares issued for Deferred Compensation Plan funding and redemptions				352,000								11,000			363,000
Shares issued pursuant to Employee Stock Plans				1,370,000								472,000			1,842,000
Cash dividends									(22,931,000		)				(22,931,000		)
Shares issued pursuant to Dividend Reinvestment Plan				156,000								(103,000		)	53,000
Balance — June 30, 2013	70,407,000	$	704,000	$	122,148,000	$	44,000		$	131,998,000		$	(11,374,000	)	$	243,520,000

See accompanying notes.

7

Healthcare Services Group, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1— Description of Business and Significant Accounting Policies

Unaudited Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows. However, in our opinion, all adjustments which are of a normal recurring nature and necessary for a fair presentation have been reflected in these consolidated financial statements. The balance sheet shown in this report as of December 31, 2012 has been derived from, and does not include, all the disclosures contained in the financial statements for the year ended December 31, 2012. The financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future period.

Nature of Operations

We provide management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of the health care industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. Although we do not directly participate in any government reimbursement programs, our clients’ reimbursements are subject to government regulation. Therefore, they are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

We provide our services primarily pursuant to full service agreements with our clients. In such agreements, we are responsible for the day-to-day management of the managers and hourly employees located at our clients’ facilities. We also provide services on the basis of a management-only agreement for a very limited number of clients. Our agreements with clients typically provide for a one year service term, cancelable by either party upon 30 to 90 days’ notice after the initial 90-day period.

We are organized into two reportable segments; housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of the managing of the client’s housekeeping department which is principally responsible for the cleaning, disinfecting and sanitizing of patient rooms and common areas of a client’s facility, as well as the laundering and processing of the personal clothing belonging to the facility’s patients. Also within the scope of this segment’s service is the responsibility for laundering and processing of the bed linens, uniforms and other assorted linen items utilized by a client facility.

Dietary consists of managing the client’s dietary department which is principally responsible for food purchasing, meal preparation and providing dietitian consulting professional services, which includes the development of a menu that meets the patient’s dietary needs. We began Dietary operations in 1997.

As of June 30, 2013, we operate two wholly-owned subsidiaries, Huntingdon Holdings, Inc. (“Huntingdon”) and Healthcare Staff Leasing Solutions, LLC (“Staff Leasing”). Huntingdon invests our cash and cash equivalents and manages our portfolio of marketable securities. Staff Leasing is an entity formed in 2011 to offer professional employer organization (“PEO”) services to potential clients in the health care industry. As of June 30, 2013, we have PEO service contracts in two states. During the three and six months ended June 30, 2013 and 2012, operating results from our PEO service contracts were not material.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Healthcare Services Group, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

8

Cash and Cash Equivalents

Cash and cash equivalents are held in U.S. financial institutions or in custodial accounts with U.S. financial institutions. Cash and cash equivalents are defined as short-term, highly liquid investments with a maturity of three months or less at time of purchase that are readily convertible into cash and have insignificant interest rate risk.

Inventories and Supplies

Inventories and supplies include housekeeping, linen and laundry supplies, as well as food provisions and supplies. Inventories and supplies are stated at cost to approximate a first-in, first-out (FIFO) basis. Linen supplies are amortized on a straight-line basis over their estimated useful life of 24 months.

Revenue Recognition

Revenues from our service agreements with clients are recognized as services are performed.

As a distributor of laundry equipment, we occasionally sell laundry installations to certain clients. The sales in most cases represent the construction and installation of a turn-key operation and are for payment terms ranging from 24 to 60 months. Our accounting policy for these sales is to recognize the gross profit over the life of the payments associated with our financing of the transactions. During the three and six months ended June 30, 2013 and 2012, laundry installation sales were not material.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current period. We accrue for probable tax obligations as required by facts and circumstances in the various regulatory environments. In addition, deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. If appropriate, we would record a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not.

In accordance with U.S. GAAP, we account for uncertain income tax positions reflected within our financial statements based on a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Earnings per Common Share

Basic earnings per common share are computed by dividing income available to common shareholders by the weighted-average common shares outstanding for the period. Diluted earnings per common share reflect the weighted-average common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock options.

Share-Based Compensation

U.S. GAAP addresses the accounting for share-based compensation, specifically, the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors, including stock options and participation in the Company’s employee stock purchase plan. We estimate the fair value of share-based awards on the date of grant using the Black-Scholes option valuation model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the Company’s consolidated statements of income over the requisite service periods. We use the straight-line single option method of expensing share-based awards in our consolidated financial statements of income. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense will be reduced to account for estimated forfeitures. Forfeitures are to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

9

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used for, but not limited to, our allowance for doubtful accounts, accrued insurance claims, asset valuations and review for potential impairment, and deferred taxes. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information. We regularly evaluate this information to determine if it is necessary to update the basis for our estimates and to compensate for known changes.

Concentrations of Credit Risk

Financial instruments, as defined by U.S. GAAP, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents, marketable securities, deferred compensation funding and accounts and notes receivable. We define our marketable securities as fixed income investments which are highly liquid investments that can be readily purchased or sold using established markets. At June 30, 2013 and December 31, 2012, substantially all of our cash and cash equivalents, and marketable securities were held in one large financial institution located in the United States.

Our clients are concentrated in the health care industry, primarily providers of long-term care. Many of our clients’ revenues are highly contingent on Medicare, Medicaid and third party payors’ reimbursement funding rates. Congress has enacted a number of major laws during the past decade that have significantly altered, or threatened to alter, overall government reimbursement for nursing home services. These changes and lack of substantive reimbursement funding rate reform legislation, as well as other 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, could result in significant additional bad debts in the future.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires an entity to include additional disclosures about significant amounts reclassified out of accumulated other comprehensive income by component. An entity has the option to present this information, either on the face of the statement where net income is presented or in the accompanying notes. This ASU does not change current requirements for reporting net income or other comprehensive income under current accounting guidance. This ASU is effective for reporting periods beginning after December 15, 2012. The adoption of this standard in 2013 did not have a material impact on the Company's consolidated results of operations, cash flows, or financial position.

Note 2—Changes in Accumulated Other Comprehensive Income by Component

U.S. GAAP establishes standards for presenting information about significant items reclassified out of accumulated other comprehensive income by component. As of June 30, 2013 and December 31, 2012, respectively, we generated other comprehensive income from one component. This component relates to the unrealized gains and losses from our available for sale marketable securities during a given reporting period. Effective January 1, 2013, we elected to present this information in a separate disclosure.

10

The following table provides a summary of changes in accumulated other comprehensive income for the six months ended June 30, 2013:

	Unrealized Gains and Losses on Available for Sale Securities (1)
Accumulated other comprehensive income — December 31, 2012	$	127,000
Other comprehensive income before reclassifications	(72,000		)
Amounts reclassified from accumulated other comprehensive income (2)(3)	(11,000		)
Net current period change in other comprehensive income	(83,000		)
Accumulated other comprehensive income — June 30, 2013	$	44,000

(1) All amounts are net of tax.

(2) Realized gains and losses are recorded pre-tax in the other income - investment and interest caption on our consolidated statements of comprehensive income.

(3) For the six months ended June 30, 2013, the Company recorded $16,000 of realized gains from the sale of available for sale securities. Refer to Note 4 herein for further information.

Note 3—Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired of businesses and is not amortized. Goodwill is evaluated for impairment on an annual basis, or more frequently if impairment indicators arise, using a fair-value-based test that compares the fair value of the reporting unit to its carrying value.

Goodwill by reportable operating segment, as described in Note 9 herein, was approximately $14,894,000 and $2,061,000 for Housekeeping and Dietary as of June 30, 2013 and December 31, 2012, respectively.

The cost of intangible assets is based on fair values at the date of acquisition. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful life (between 7 and 8 years).

The following table sets forth the amounts of our identifiable intangible assets subject to amortization, which were acquired in acquisitions.

	June 30, 2013		December 31, 2012
Customer relationships	$	14,481,000	$	14,481,000
Non-compete agreements	800,000		800,000
Total other intangibles, gross	15,281,000		15,281,000
Less accumulated amortization	11,162,000		10,078,000
Other intangibles, net	$	4,119,000	$	5,203,000

The customer relationships have a weighted-average amortization period of seven years and the non-compete agreements have a weighted-average amortization period of eight years. The following table sets forth the estimated amortization expense for intangibles subject to amortization for the following five fiscal years:

Period/Year	Customer Relationships		Non-Compete Agreements		Total
July 1 to December 31, 2013	$	715,000	$	50,000	$	765,000
2014	1,112,000		67,000		1,179,000
2015	1,112,000		—		1,112,000
2016	569,000		—		569,000
2017	297,000		—		297,000
2018	197,000		—		197,000
Thereafter	—		—		—

Amortization expense for the three months ended June 30, 2013 and 2012 was $542,000 and $542,000, respectively. Amortization expense for the six months ended June 30, 2013 and 2012 was $1,084,000 and $1,084,000, respectively.

11

Note 4—Fair Value Measurements

We, in accordance with U.S. GAAP, define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Effective January 1, 2008, we elected the fair value option for certain of our marketable securities purchased since such adoption. Management initially elected the fair value option for certain of our marketable securities because it views such investment securities as highly liquid and available to be drawn upon for working capital purposes making them similar to cash and cash equivalents. Accordingly, we recorded the net unrealized gain or loss in the other income, investment and interest caption in our consolidated income statements. We have not elected the fair value option for marketable securities acquired after December 31, 2009. Although these assets continue to be highly liquid and available, we believe these assets are more representative of our investing activities, and they will be available for future needs of the Company to support its projected growth.

The carrying value of certain assets and liabilities is considered to be representative of their fair value, due to the short term nature of these instruments. Such assets and liabilities include cash and cash equivalents, marketable securities, accounts and notes receivable, prepaid expenses and other, and accounts payable (including income taxes payable and accrued expenses).

The following tables provide fair value measurement information for our marketable securities and deferred compensation fund investment assets as of June 30, 2013 and December 31, 2012:

	As of June 30, 2013
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds	$	22,026,000	$	22,026,000	$	—	$	22,026,000	$	—
Deferred compensation fund
Money Market	$	3,808,000	$	3,808,000	$	—	$	3,808,000	$	—
Balanced and Lifestyle	3,324,000		3,324,000		3,324,000		—		—
Large Cap Growth	1,706,000		1,706,000		1,706,000		—		—
Small Cap Value	2,172,000		2,172,000		2,172,000		—		—
Fixed Income	7,126,000		7,126,000		7,126,000		—		—
International	887,000		887,000		887,000		—		—
Mid Cap Growth	734,000		734,000		734,000		—		—
Deferred compensation fund	$	19,757,000	$	19,757,000	$	15,949,000	$	3,808,000	$	—

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	As of December 31, 2012
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds	$	21,322,000	$	21,322,000	$	—	$	21,322,000	$	—
Deferred compensation fund
Money Market	$	4,114,000	$	4,114,000	$	—	$	4,114,000	$	—
Balanced and Lifestyle	6,311,000		6,311,000		6,311,000		—		—
Large Cap Growth	2,724,000		2,724,000		2,724,000		—		—
Small Cap Value	1,936,000		1,936,000		1,936,000		—		—
Fixed Income	1,461,000		1,461,000		1,461,000		—		—
International	785,000		785,000		785,000		—		—
Mid Cap Growth	500,000		500,000		500,000		—		—
Deferred compensation fund	$	17,831,000	$	17,831,000	$	13,717,000	$	4,114,000	$	—

The fair value of the municipal bonds is measured using pricing service data using third party pricing data. The fair value of equity investments in the funded deferred compensation plan are valued (Level 1) based on quoted market prices. The money market fund in the funded deferred compensation plan is valued (Level 2) at the net asset value (“NAV”) of the shares held by the plan at the end of the period. As a practical expedient, fair value of our money market fund is valued at the NAV as determined by the custodian of the fund. The money market fund includes short-term United States dollar denominated money-market instruments. The money market fund can be redeemed at its NAV at its measurement date as there are no significant restrictions on the ability of participants to sell this investment. These assets will be redeemed by the plan participants on an as needed basis.

Unrealized gains and losses from marketable securities for investments recorded under the fair value option are recorded in the other income – investment and interest caption on our consolidated statements of comprehensive income. For the three and six months ended June 30, 2013, there were no unrealized gains or losses recorded. For the three and six months ended June 30, 2012, we recorded unrealized losses from marketable securities of $26,000 and $82,000, respectively.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other-than-temporary Impairments
June 30, 2013
Type of security:
Municipal bonds — available for sale	21,953,000		130,000		(57,000		)	22,026,000		—
Total debt securities	$	21,953,000	$	130,000	$	(57,000	)	$	22,026,000	$	—
December 31, 2012
Type of security:
Municipal bonds — available for sale	21,111,000		220,000		(9,000		)	21,322,000		—
Total debt securities	$	21,111,000	$	220,000	$	(9,000	)	$	21,322,000	$	—

For the three and six months ended June 30, 2013, we received total proceeds of $3,000,000 and $3,000,000 respectively, from sales of available for sale municipal bonds. These sales resulted in realized gains of $16,000 and $16,000 recorded in other income – investment and interest caption on our statement of comprehensive income for the three and six months ended June 30, 2013, respectively. The basis for the sale of these securities was a specific identification of each bond sold during this period.

For the three and six months ended June 30, 2012, we received total proceeds of $4,274,000 and $14,871,000 respectively, from sales of available for sale municipal bonds. These sales resulted in realized gains of $41,000 and $224,000 recorded in other income – investment and interest caption on our statement of comprehensive income for the three and six months ended June 30, 2012, respectively. The basis for the sale of these securities was a specific identification of each bond sold during this period.

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The following tables include contractual maturities of debt securities held at June 30, 2013 and December 31, 2012, which are classified as marketable securities in the consolidated Balance Sheet.

	Municipal Bonds — Available for Sale
Contractual maturity:	June 30, 2013		December 31, 2012
Maturing in one year or less	$	7,284,000	$	5,164,000
Maturing after one year through three years	8,000,000		12,134,000
Maturing after three years	6,742,000		4,024,000
Total debt securities	$	22,026,000	$	21,322,000

Note 5— Share-Based Compensation

2012 Equity Incentive Plan

On May 29, 2012, the Company's shareholders adopted and approved the 2012 Equity Incentive Plan (the "2012 Plan"), under which current or prospective officers, employees, non-employee directors and advisors can receive share-based awards such as stock options, restricted stock and other stock awards. The 2012 Plan seeks to promote the highest level of performance by providing an economic interest in the long-term success of the Company. As of this date, no further grants were permitted under any previously existing stock plans (the "Pre-existing Plans"). Additionally, all remaining shares available for future grants under the Pre-existing Plans became available for issuance under the 2012 Plan.

The Nominating, Compensation and Stock Option Committee of the Board of Directors is responsible for determining the individuals who will be granted stock awards, the number of stock awards each individual will receive, the price per share (in accordance with the terms of our 2012 Plan), and the exercise period of each stock award.

A summary of stock-based compensation expense for the six months ended June 30, 2013 and 2012 is as follows:

	For the Six Months Ended June 30,
	2013		2012
Stock Options	$	997,000	$	949,000
Restricted Stock	14,000		—
Employee Stock Purchase Plan (ESPP)	185,000		195,000
Total pre-tax stock-based compensation expense charged against income (1)	$	1,196,000	$	1,144,000

(1) Stock-based compensation expense is recorded in the selling, general and administrative caption in our consolidated statements of comprehensive income.

We have outstanding stock awards that were granted under the Pre-existing Plans to non-employee directors, officers and employees of the Company and other specified groups, depending on the Pre-existing Plan. No further grants are allowed under the Pre-existing Plans. As of June 30, 2013, 5,550,000 shares of common stock were reserved for issuance under our 2012 Plan, including 2,781,000 shares which are available for future grant. The stock price will not be less than the fair market value of the common stock on the date the award is granted. No stock grant will have a term in excess of ten years. Since 2008, all awards granted become vested and exercisable ratably over a five year period on each yearly anniversary date of the option grant.

A summary of our stock option activity is as follows:

	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price
December 31, 2012	2,632,000		$	13.18
Granted	564,000		23.50
Cancelled	(49,000	)	18.21
Exercised	(378,000	)	12.46
June 30, 2013	2,769,000		$	15.29

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The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2013 and 2012 was $6.81 and $4.74 per common share, respectively.

During the six months ended June 30, 2013, the Company granted 6,000 shares of restricted stock with a weighted average grant date fair value of $23.50.

The following table summarizes other information about stock options at June 30, 2013.

	Stock Options
Range of exercise prices	$3.68 - 23.50
Outstanding:
Weighted average remaining contractual life (years)	6.60
Aggregate intrinsic value	$	25,566,000
Exercisable:
Number of shares	1,174,000
Weighted average remaining contractual life (years)	4.50
Aggregate intrinsic value	$	15,846,000

Fair Value Estimates

The fair value of stock awards granted in 2013 and 2012 was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:

	June 30, 2013	June 30, 2012
Risk-free interest rate	1.5%	1.3%
Weighted average expected life in years	6.0 years	6.8 years
Expected volatility	38.9%	39.2%
Dividend yield	2.8%	3.6%

Other Information

Other information pertaining to activity of our stock awards during the six months ended June 30, 2013 and 2012 was as follows:

	June 30, 2013		June 30, 2012
Total grant-date fair value of stock awards granted	$	3,412,000	$	2,438,000
Total fair value of stock awards vested during period	$	1,897,000	$	1,870,000
Total unrecognized compensation expense related to non-vested stock awards	$	5,982,000	$	4,948,000

At June 30, 2013, the unrecognized compensation cost related to stock awards granted but not yet vested, as reported above, was expected to be recognized through the fourth quarter of 2017 for the 2013 grants and the fourth quarter of 2016 for the 2012 grants.

Employee Stock Purchase Plan

Since January 1, 2000, we have had an ESPP for all eligible employees. All full-time and certain part-time employees who have completed two years of continuous service with us are eligible to participate. The ESPP was implemented through five annual offerings. On January 1, 2000, the first annual offering commenced. On February 12, 2004 (effective January 1, 2004), our Board of Directors extended the ESPP for an additional eight annual offerings. On April 12, 2011, the Board of Directors extended the ESPP for an additional five offerings through 2016. Annual offerings commence and terminate on the respective year’s first and last calendar day.

Under the ESPP, we are authorized to issue up to 4,050,000 shares of our common stock to our employees. Pursuant to such authorization, we have 2,541,000 shares available for future grant at June 30, 2013.

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The stock-based compensation expense associated with our ESPP was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:

	June 30, 2013	June 30, 2012
Risk-free interest rate	0.24%	0.19%
Weighted average expected life in years	1.0 year	1.0 year
Expected volatility	27.6%	36.5%
Dividend yield	2.8%	3.6%

Note 6— Dividends

During the six months ended June 30, 2013, we paid regular quarterly cash dividends approximating $22,931,000 as follows:

	Quarter Ended
	March 31, 2013		June 30, 2013
Cash dividend per common share	$	0.16625	$	0.16750
Total cash dividends paid	$	11,415,000	$	11,516,000
Record date	February 22, 2013		May 10, 2013
Payment date	March 15, 2013		June 14, 2013

Additionally, on July 9, 2013, our Board of Directors declared a regular quarterly cash dividend of $0.16875 per common share, which will be paid on September 20, 2013, to shareholders of record as of the close of business on August 16, 2013.

Cash dividends on our outstanding weighted average number of basic common shares for the three and six months ended June 30, 2013 and 2012 was as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Cash dividends per common share	$	0.17	$	0.16	$	0.33	$	0.32

Our Board of Directors reviews our dividend policy on a quarterly basis. Although there can be no assurance that we will continue to pay dividends or the amount of the dividend, we expect to continue to pay a regular quarterly cash dividend. In connection with the establishment of our dividend policy, we adopted a Dividend Reinvestment Plan in 2003.

Note 7— Income Taxes

For the six months ended June 30, 2013, our effective tax rate was approximately 28%, a decrease from the 38% effective tax rate for the comparable 2012 period. Such differences between the effective tax rates and the applicable U.S. federal statutory rate arise primarily from the effect of state and local income taxes and tax credits available to the Company. The decrease in the effective tax rate is primarily due to an increase in expected tax credits realized in 2013 for 2012 and 2013 as compared to previous fiscal periods. The Company receives credits related to the Work Opportunity Tax Credit (“WOTC”) program but this program initially expired at December 31, 2011. The WOTC was subsequently renewed, but not until January 2, 2013, as part of The American Taxpayer Relief Act of 2012. Since the WOTC was renewed during the three month period ended March 31, 2013, the total tax effect of additional expected credits for 2012 was included in this period. As such, the effective tax rate is expected to increase in subsequent periods during 2013 and currently is expected to be approximately 32% for the entire year if there are no significant changes.

We account for income taxes using the asset and liability method, which results in recognizing income tax expense based on the amount of income taxes payable or refundable for the current year. Additionally, we evaluate regularly the tax positions taken or expected to be taken resulting from financial statement recognition of certain items. Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax years ended December 31, 2009 through 2012 (with regard to U.S. federal income tax returns) and December 31, 2008 through 2012 (with regard to various state and local income tax returns), the tax years which remain subject to examination by major tax jurisdictions as of June 30, 2013.

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We may from time to time be assessed interest or penalties by taxing jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. When we have received an assessment for interest and/or penalties, it has been classified in the financial statements as selling, general and administrative expense.

Note 8—Related Party Transactions

A director is a member of a law firm which was retained by us. In each of the six months ended June 30, 2013 and 2012, fees received from us by such firm did not exceed $120,000 in any period. Additionally, such fees did not exceed, in either period, 5% of such firm’s revenues.

Note 9—Segment Information

Reportable Operating Segments

U.S. GAAP establishes standards for reporting information regarding operating segments in annual financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group in making decisions on how to allocate resources and assess performance.

We manage and evaluate our operations in two reportable segments: Housekeeping (housekeeping, laundry, linen and other services), and Dietary (dietary department services). Although both segments serve the same client base and share many operational similarities, they are managed separately due to distinct differences in the type of service provided, as well as the specialized expertise required of the professional management personnel responsible for delivering the respective segment’s services. We consider the various services provided within each reportable segment to comprise an identifiable reportable operating segment since such services are rendered pursuant to a single service agreement, specific to that reportable segment, as well as the fact that the delivery of the respective reportable segment’s services are managed by the same management personnel of the particular reportable segment.

The Company’s accounting policies for the segments are generally the same as the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and our consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level which use methods other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized for the consolidated financial statements. As discussed, most corporate expense is not allocated to the operating segments, and such expenses include corporate salary and benefit costs, bad debt expense, certain legal costs, information technology costs, depreciation, amortization of finite lived intangibles, share based compensation costs and other corporate specific costs. Additionally, there are allocations for workers' compensation and general liability expense within the operating segments that differ from our actual expense recorded for U.S. GAAP. Additionally, included in the differences between the reportable segments’ operating results and other disclosed data are amounts attributable to Huntingdon, our investment holding company subsidiary. Huntingdon does not transact any business with the reportable segments. Segment amounts disclosed are prior to any elimination entries made in consolidation.

Housekeeping provides services in Canada, although essentially all of its revenues and net income, 99% in both categories, are earned in one geographic area, the United States. Dietary provides services solely in the United States.

	Housekeeping Services		Dietary Services		Corporate and Eliminations				Total
Three Months Ended June 30, 2013
Revenues	$	183,754,000	$	89,850,000	$	—			$	273,604,000
Income before income taxes	17,632,000		5,341,000		(3,115,000		)	(1)	19,858,000
Three Months Ended June 30, 2012
Revenues	$	183,215,000	$	83,891,000	$	2,000		(1)	$	267,108,000
Income before income taxes	17,671,000		4,620,000		(4,008,000		)	(1)	18,283,000

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	Housekeeping Services		Dietary Services		Corporate and Eliminations				Total
Six Months Ended June 30, 2013
Revenues	$	371,384,000	$	176,124,000	$	—			$	547,508,000
Income before income taxes	36,438,000		10,465,000		(8,088,000		)	(1)	38,815,000
Six Months Ended June 30, 2012
Revenues	$	364,397,000	$	163,281,000	$	37,000		(1)	$	527,715,000
Income before income taxes	35,127,000		8,674,000		(11,735,000		)	(1)	32,066,000

(1) Represents primarily corporate office cost and related overhead, recording of transactions at the reportable segment level which use methods other than U.S. GAAP, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.

Total Revenues from Clients

The following revenues earned from clients differ from segment revenues reported above due to the inclusion of adjustments used for segment reporting purposes by management. We earned total revenues from clients in the following service categories:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Housekeeping services	$	123,351,000	$	121,897,000	$	248,944,000	$	243,550,000
Laundry and linen services	59,404,000		60,245,000		120,302,000		118,775,000
Dietary services	89,850,000		83,816,000		176,124,000		163,206,000
Maintenance services and other	999,000		1,150,000		2,138,000		2,184,000
	$	273,604,000	$	267,108,000	$	547,508,000	$	527,715,000

Note 10— Earnings Per Common Share

Basic net earnings per share are computed using the weighted-average number of common shares outstanding. The dilutive effect of potential common shares outstanding is included in diluted net earnings per share. The computations of basic net earnings per share and diluted net earnings per share are as follows:

	Three Months Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	12,933,000
Basic earnings per common share	$	12,933,000	68,599,000	$	0.19
Effect of dilutive securities:
Stock options and restricted stock			771,000	—
Diluted earnings per common share	$	12,933,000	69,370,000	$	0.19
	Three Months Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	11,320,000
Basic earnings per common share	$	11,320,000	67,296,000	$	0.17
Effect of dilutive securities:
Stock options and restricted stock			932,000	—
Diluted earnings per common share	$	11,320,000	68,228,000	$	0.17

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	Six Months Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	27,887,000
Basic earnings per common share	$	27,887,000	68,531,000	$	0.41
Effect of dilutive securities:
Stock options and restricted stock			835,000	(0.01		)
Diluted earnings per common share	$	27,887,000	69,366,000	$	0.40
	Six Months Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	19,899,000
Basic earnings per common share	$	19,899,000	67,189,000	$	0.30
Effect of dilutive securities:
Stock options and restricted stock			966,000	(0.01		)
Diluted earnings per common share	$	19,899,000	68,155,000	$	0.29

Stock awards to purchase 552,000 and 548,000 shares of common stock having an average exercise price of $23.50 per common share were outstanding during the three and six months ended June 30, 2013 but not included in the computation of diluted earnings per common share because the exercise prices of the options were greater than the average market price of the common shares, and therefore, would be antidilutive.

Stock awards to purchase 596,000 and 585,000 shares of common stock having an average exercise price of $17.50 per common share were outstanding during the three and six months ended June 30, 2012 but not included in the computation of diluted earnings per common share because the exercise prices of the options were greater than the average market price of the common shares, and therefore, would be antidilutive.

Note 11—Other Contingencies

We have a $57,000,000 bank line of credit on which we may draw to meet short-term liquidity requirements in excess of internally generated cash flow. Amounts drawn under the line of credit are payable upon demand. At June 30, 2013, there were no borrowings under the line of credit. However, at such date, we had outstanding a $43,520,000  irrevocable standby letter of credit which relates to payment obligations under our insurance programs. As a result of the letter of credit issued, the amount available under the line of credit was reduced by $43,520,000 at June 30, 2013. The line of credit requires us to satisfy two financial covenants. We are in compliance with the financial covenants at June 30, 2013 and expect to continue to remain in compliance with such financial covenants. This line of credit expires on June 30, 2014.

We provide our services in 48 states and are subject to numerous local taxing jurisdictions within those states. Consequently, in the ordinary course of business, a jurisdiction may contest our reporting positions with respect to the application of its tax code to our services. A jurisdiction’s conflicting position on the taxability of our services could result in additional tax liabilities.

We have tax matters with various taxing authorities. Because of the uncertainties related to both the probable outcome and amount of probable assessment due, we are unable to make a reasonable estimate of a liability. We do not expect the resolution of any of these matters, taken individually or in the aggregate, to have a material adverse effect on our consolidated financial position or results of operations based on our best estimate of the outcomes of such matters.

We are also subject to various claims and legal actions in the ordinary course of business. Some of these matters include payroll and employee-related matters and examinations by governmental agencies. As we become aware of such claims and legal actions, we provide accruals if the exposures are probable and estimable. If an adverse outcome of such claims and legal actions is reasonably possible, we assess materiality and provide such financial disclosure, as appropriate.

Many states have significant budget deficits. State Medicaid programs are experiencing increased demand, and with lower revenues than projected, they have fewer resources to support their Medicaid programs. In addition, comprehensive health care legislation under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (together,

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the “Act”) was signed into law in March 2010. The Act will significantly impact the governmental healthcare programs in which our clients participate, and reimbursements received thereunder from governmental or third-party payors. In July 2011, Centers for Medicare and Medicaid Services (“CMS”) issued a final rule that reduced Medicare payments to nursing centers by 11.1% and changed the reimbursement for the provision of group rehabilitation therapy services to Medicare beneficiaries. This rule was effective as of October 1, 2011. Furthermore, in the coming year, new proposals or additional changes in existing regulations could be made to the Act and/or CMS could propose additional reimbursement reductions which could directly impact the governmental reimbursement programs in which our clients participate. As a result, some state Medicaid programs are reconsidering previously approved increases in nursing home reimbursement or are considering delaying or foregoing those increases. A few states have indicated it is possible they will run out of cash to pay Medicaid providers, including nursing homes. In addition, certain state governors have recently stated that they will reject Federal Medicaid assistance under the Act. Any negative changes in our clients’ reimbursements may negatively impact our results of operations. Although we are currently evaluating the Act’s effect on our client base, we may not know the full effect until such time as these laws are fully implemented and CMS and other agencies issue applicable regulations or guidance.

In January 2013, the U.S. Congress enacted the American Taxpayer Relief Act of 2012, which delayed automatic spending cuts, including reduced Medicare payments to plans and providers up to 2%. These discretionary spending caps were originally enacted under provisions in the Budget Control Act of 2011, an initiative to reduce the federal deficit through the year 2021, also known as “sequestration.” The sequestration went into effect March 2013.

Note 12—Subsequent Events

On July 12, 2013, the Company acquired substantially all of the operating assets of Platinum Health Services, LLC, a Delaware limited liability company and Platinum Health Services PEO, LLC, a Delaware limited liability company (collectively “Platinum”) pursuant to an Asset Purchase Agreement dated July 11, 2013. Platinum is a privately-held provider of professional housekeeping, laundry and maintenance services to long-term and post-acute care facilities and operates solely within the United States. The purchase price consisted of a cash payment of approximately $3,800,000, assumed debt of approximately $1,200,000 and the issuance of approximately 1,200,000 shares of the Company's common stock, $0.01 par value per share. Additionally, upon the achievement of certain financial and retention targets, the selling stockholders will be eligible for contingent consideration paid by the future issuance of the Company's common stock, $0.01 par value per share.  The number of shares that have been issued to the selling stockholders is based on $24.75 per share or that could be issued to the selling stockholders as part of a future issuance is based on the 10-day average closing price of our common stock $24.81 per share as reported on the Nasdaq Global Select Market from June 25, 2013 through July 9, 2013.

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Item 2.  Management’s Discussion and Analysisof Financial Condition and Results ofOperations.

Results of Operations

The following discussion is intended to provide the reader with information that will be helpful in understanding our financial statements including the changes in certain key items in comparing financial statements period to period. We also intend to provide the primary factors that accounted for those changes, as well as a summary of how certain accounting principles affect our financial statements. In addition, we are providing information about the financial results of our two operating segments to further assist in understanding how these segments and their results affect our consolidated results of operations. This discussion should be read in conjunction with our financial statements as of June 30, 2013 and December 31, 2012 and the periods then ended and the notes accompanying those financial statements.

Overview

We provide management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of the health care industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. We believe that we are the largest provider of housekeeping and laundry management services to the long-term care industry in the United States, rendering such services to over 3,000 facilities in 48 states as of June 30, 2013. Although we do not directly participate in any government reimbursement programs, our clients’ reimbursements are subject to government regulation. Therefore, our clients are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

We provide our services primarily pursuant to full service agreements with our clients. In such agreements, we are responsible for the day to day management of the department managers and hourly employees located at our clients’ facilities. We also provide services on the basis of a management-only agreement for a very limited number of clients. Our agreements with clients typically provide for renewable one year service terms, cancelable by either party upon 30 to 90 days’ notice after the initial 90-day period.

We are organized into two reportable segments; housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”). At June 30, 2013, Housekeeping is provided at essentially all of our 3,000 client facilities, generating approximating 68% or $371,384,000 of the total revenues for the six months ended June 30, 2013. Dietary is provided to approximately 700 client facilities at June 30, 2013 and contributed approximately 32% or $176,124,000 of total revenues for the six months ended June 30, 2013.

Housekeeping consists of managing the client’s housekeeping department which is principally responsible for the cleaning, disinfecting and sanitizing of patient rooms and common areas of a client’s facility, as well as laundering and processing of the personal clothing belonging to the facility’s patients. Also within the scope of this segment’s service is the responsibility for laundering and processing the bed linens, uniforms and other assorted linen items utilized by a client facility.

Dietary consists of managing the client’s dietary department which is principally responsible for food purchasing, meal preparation and providing dietitian consulting professional services, which includes the development of a menu that meets the patient’s dietary needs.

We currently operate two wholly-owned subsidiaries, Huntingdon Holdings, Inc. (“Huntingdon”) and Healthcare Staff Leasing Solutions, LLC (“Staff Leasing”). Huntingdon invests our cash and cash equivalents, and manages our portfolio of available-for-sale marketable securities. Staff Leasing is an entity formed in 2011 to offer professional employer organization (“PEO”) services to potential clients in the health care industry. As of June 30, 2013, we have PEO service contracts in two states. During the six months ended June 30, 2013 and 2012, operating results from our PEO service contracts were not material.

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Consolidated Operations

The following table sets forth, for the periods indicated, the percentage which certain items bear to consolidated revenues:

	Relation to Consolidated Revenues				Relation to Consolidated Revenues
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Operating costs and expenses:
Costs of services provided	85.7	%	86.2	%	85.8	%	86.7	%
Selling, general and administrative	7.1	%	6.9	%	7.3	%	7.5	%
Investment and interest income	0.1	%	0.0	%	0.2	%	0.3	%
Income before income taxes	7.3	%	6.9	%	7.1	%	6.1	%
Income taxes	2.5	%	2.6	%	2.0	%	2.3	%
Net income	4.8	%	4.3	%	5.1	%	3.8	%

Housekeeping is our largest and core reportable segment, representing approximately 67% of consolidated revenues for the second quarter 2013. Dietary revenues represented approximately 33% of consolidated revenues for the second quarter 2013.

Although there can be no assurance thereof, we believe that for the remainder of 2013, Dietary’s revenues, as a percentage of consolidated revenues, may increase from its respective percentages previously noted. Furthermore, we expect the sources of organic growth for the remainder of 2013 for the respective operating segments will be primarily the same as historically experienced. Accordingly, although there can be no assurance thereof, the growth in Dietary is expected to come from our current Housekeeping client base, while growth in Housekeeping will primarily come from obtaining new clients.

Three Months Ended June 30, 2013 and 2012

The following table sets forth the second quarter 2013 income statement key components that we use to evaluate our financial performance on a consolidated and reportable segment basis compared to second quarter 2012 amounts. The differences between the reportable segments’ operating results and other disclosed data and our consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level which use methods other than generally accepted accounting principles.

	Reportable Segments — For the Three Months Ended June 30, 2013
								Housekeeping				Dietary
	Consolidated		% Change		Corporate and Eliminations			Amount		% Change		Amount		% Change
Revenues	$	273,604,000	2.4	%	$	—		$	183,754,000	0.3	%	$	89,850,000	7.1	%
Cost of services provided	234,602,000		1.9		(16,029,000		)	166,122,000		0.3		84,509,000		6.6
Selling, general and administrative	19,363,000		4.5		19,363,000			—		—		—		—
Investment and interest income	219,000		330.5		219,000			—		—		—		—
Income before income taxes	$	19,858,000	8.6	%	$	(3,115,000	)	$	17,632,000	(0.2	)%	$	5,341,000	15.6	%

Revenues

Consolidated

Consolidated revenues increased 2.4% to $273,604,000 in the second quarter 2013 compared to $267,108,000 in the second quarter 2012 as a result of the factors discussed below under Reportable Segments.

Reportable Segments

Housekeeping’s 0.3% net growth in reportable segment revenues resulted primarily from an increase in revenues attributable to service agreements entered into with new clients.

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Dietary’s 7.1% net growth in reportable segment revenues is primarily a result of providing this service to a greater number of existing Housekeeping clients.

Costs of services provided

Consolidated

As a percentage of consolidated revenues, cost of services decreasedto 85.7% in the second quarter 2013 from 86.2% in the second quarter 2012. The following table provides a comparison of the primary cost of services provided-key indicators that we manage on a consolidated basis in evaluating our financial performance.

	For the Three Months Ended June 30,
Cost of Services Provided-Key Indicators as % of Revenue	2013 %	2012 %	% Change
Bad debt provision	0.1	0.2	(0.1)
Workers’ compensation and general liability insurance	3.2	3.5	(0.3)

The bad debt provision decreased primarily due to our assessment of the collectability of our receivables.

The workers’ compensation and general liability insurance expense decreased primarily due to more favorable claims' experience during the three months ended June 30, 2013 compared to the corresponding 2012 period.

Reportable Segments

Cost of services provided for Housekeeping, as a percentage of Housekeeping revenues for the second quarter 2013, remained constant at 90.4% compared to the second quarter 2012. Cost of services provided for Dietary, as a percentage of Dietary revenues for the second quarter 2013, decreased to 94.1% from 94.5% in the second quarter 2012.

The following table provides a comparison of the primary cost of services provided-key indicators, as a percentage of the respective segment’s revenues that we manage on a reportable segment basis in evaluating our financial performance:

	For the Three Months Ended June 30,
Cost of Services Provided-Key Indicators as % of Revenue	2013 %	2012 %	% Change
Housekeeping labor and other labor costs	79.9	80.1	(0.2)
Housekeeping supplies	7.9	7.7	0.2
Dietary labor and other labor costs	52.0	52.4	(0.4)
Dietary supplies	38.9	39.1	(0.2)

Housekeeping labor and other labor costs, as a percentage of Housekeeping revenues, decreased due to increased efficiencies in managing these costs at the facility level. The increase in Housekeeping supplies, as a percentage of Housekeeping revenues, resulted primarily from an increase in linen supplies due to the growth in laundry and linen revenue compared to overall Housekeeping revenues. Additionally, we have added more clients where we provide a greater amount of supplies under the terms of our service agreements compared to what we have historically provided to our client base.

Dietary labor and other labor costs, as a percentage of Dietary revenues, decreased due to increased efficiencies in managing these costs at the facility level. The decrease in Dietary supplies, as a percentage of Dietary revenues, is a result of the efficient management of these costs and more favorable vendor pricing programs obtained through further consolidation of dietary supply vendors.

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Consolidated Selling, General and Administrative Expense

	For the Three Months Ended June 30,
	2013			2012			$ Change	% Change
Selling, general and administrative expense w/o deferred compensation change (a)	$	19,405,000		$	18,884,000		521,000	2.8	%
Deferred compensation fund loss	(42,000		)	(360,000		)	318,000	88.3	%
Consolidated selling, general and administrative expense (b)	$	19,363,000		$	18,524,000		839,000	4.5	%

(a) Selling, general and administrative expense excluding the change in the market value of the deferred compensation fund.

(b) Consolidated selling, general and administrative expense reported for the period presented.

Although our growth in consolidated revenues was 2.4% for the second quarter 2013, selling, general and administrative expenses excluding the change in market value of the deferred compensation fund increased 2.8% or $521,000 compared to the second quarter 2012. Consequently, for the second quarter 2013, selling, general and administrative expenses (excluding the impact of deferred compensation fund), as a percentage of consolidated revenues, remained constant at 7.1% compared to the second quarter 2012.

Consolidated Investment and Interest Income

Investment and interest income, as a percentage of consolidated revenues, increased to 0.1% for the second quarter 2013 compared to 0.0% for the second quarter 2012. We recognized an increase in the market value of the investments held in our deferred compensation fund compared to a loss in market value in the prior year.

Income before Income Taxes

Consolidated

As a result of the discussion above related to revenues and expenses, consolidated income before income taxes for the second quarter 2013 increased to 7.3%, as a percentage of consolidated revenues, compared to 6.9% for the second quarter 2012.

Reportable Segments

Housekeeping’s increase in income before income taxes is primarily attributable to the key indicators discussed above, specifically the increase in reportable segment revenues, as well as the decrease in labor and labor related costs as a percentage of revenue, partially offset by the increased cost of housekeeping supplies.

Dietary’s increase in income before income taxes is primarily attributable to the key indicators discussed above, specifically the increase in reportable segment revenues, as well as the decrease in labor and labor related costs as a percentage of revenue, and the decrease in the cost of dietary supplies.

Consolidated Income Taxes

For the second quarter 2013, our effective tax rate was approximately 35%, a decrease from the approximately 38% effective tax rate for the comparable 2012 period. Such differences between the effective tax rates and the applicable U.S. federal statutory rate arise primarily from the effect of state and local income taxes and tax credits available to the Company. The decrease in the effective tax rate is primarily due to an increase in expected tax credits realized in 2013 as compared to previous fiscal periods.

Consolidated Net Income

As a result of the matters discussed above, consolidated net income as a percentage of revenue for the second quarter 2013 increased to 4.8% compared to 4.3% in second quarter 2012.

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Six Months Ended June 30, 2013 and 2012

The following table sets forth the income statement key components for the six months ended June 30, 2013 that we use to evaluate our financial performance on a consolidated and reportable segment basis compared to the corresponding 2012 amounts. The differences between the reportable segments’ operating results and other disclosed data and our consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level which use methods other than generally accepted accounting principles.

	Reportable Segments — For the Six Months Ended June 30, 2013
								Housekeeping				Dietary
	Consolidated		% Change		Corporate and Eliminations			Amount		% Change		Amount		% Change
Revenues	$	547,508,000	3.8	%	$	—		$	371,384,000	1.9	%	$	176,124,000	7.9	%
Cost of services provided	469,793,000		2.6		(30,812,000		)	334,946,000		1.7		165,659,000		7.1
Selling, general and administrative	40,153,000		1.6		40,153,000			—		—		—		—
Investment and interest income	1,253,000		(19.6	)	1,253,000			—		—		—		—
Income before income taxes	$	38,815,000	21.0	%	$	(8,088,000	)	$	36,438,000	3.7	%	$	10,465,000	20.6	%

Revenues

Consolidated

Consolidated revenues increased 3.8% to $547,508,000 in the six months ended June 30, 2013 compared to $527,715,000 in the corresponding period in 2012 as a result of the factors discussed below under Reportable Segments.

Reportable Segments

Housekeeping’s 1.9% net growth in reportable segment revenues resulted primarily from an increase in revenues attributable to service agreements entered into with new clients.

Dietary’s 7.9% net growth in reportable segment revenues is primarily a result of providing this service to a greater number of existing Housekeeping clients.

Costs of services provided

Consolidated

As a percentage of consolidated revenues, cost of services decreasedto 85.8% in the six months ended June 30, 2013 from 86.7% in the corresponding period in 2012. The following table provides a comparison of the primary cost of services provided-key indicators that we manage on a consolidated basis in evaluating our financial performance.

	For the Six Months Ended June 30,
Cost of Services Provided-Key Indicators as % of Revenue	2013 %	2012 %	% Change
Bad debt provision	0.1	0.3	(0.2)
Workers’ compensation and general liability insurance	3.2	3.5	(0.3)

The bad debt provision decreased primarily due to our assessment of the collectability of our receivables.

The workers’ compensation and general liability insurance expense decreased primarily due to more favorable claims' experience during the six months ended June 30, 2013 compared to the corresponding period in 2012.

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Reportable Segments

Cost of services provided for Housekeeping, as a percentage of Housekeeping revenues for the six months ended June 30, 2013, decreased slightly to 90.2% from 90.4% compared to the corresponding period in 2012. Cost of services provided for Dietary, as a percentage of Dietary revenues for the six months ended June 30, 2013, decreased to 94.1% from 94.7% compared to the corresponding period in 2012.

The following table provides a comparison of the primary cost of services provided-key indicators, as a percentage of the respective segment’s revenues that we manage on a reportable segment basis in evaluating our financial performance:

	For the Six Months Ended June 30,
Cost of Services Provided-Key Indicators as % of Revenue	2013 %	2012 %	% Change
Housekeeping labor and other labor costs	79.6	80.2	(0.6)
Housekeeping supplies	8.0	7.6	0.4
Dietary labor and other labor costs	51.7	52.5	(0.8)
Dietary supplies	39.2	39.2	—

Housekeeping labor and other labor costs, as a percentage of Housekeeping revenues, decreased due to increased efficiencies in managing these costs at the facility level. The increase in Housekeeping supplies, as a percentage of Housekeeping revenues, resulted primarily from an increase in linen supplies due to the growth in laundry and linen revenue compared to overall Housekeeping revenues. Additionally, we added more clients where we provide a greater amount of supplies under the terms of our service agreements compared to what we historically provided to our client base.

Dietary labor and other labor costs, as a percentage of Dietary revenues, decreased due to increased efficiencies in managing these costs at the facility level. Dietary supplies, as a percentage of Dietary revenues, remained constant compared to the prior year.

Consolidated Selling, General and Administrative Expense

	For the Six Months Ended June 30,
	2013		2012		$ Change		% Change
Selling, general and administrative expense w/o deferred compensation change (a)	$	39,297,000	$	38,569,000	728,000		1.9	%
Deferred compensation fund gain	856,000		937,000		(81,000	)	(8.6	)%
Consolidated selling, general and administrative expense (b)	$	40,153,000	$	39,506,000	647,000		1.6	%

(a) Selling, general and administrative expense excluding the change in the market value of the deferred compensation fund.

(b) Consolidated selling, general and administrative expense reported for the period presented.

Although our growth in consolidated revenues was 3.8% for the six months ended June 30, 2013, selling, general and administrative expenses excluding the change in market value of the deferred compensation fund increased 1.9% or 728,000 compared to the corresponding period in 2012. Consequently, for the six months ended June 30, 2013, selling, general and administrative expenses (excluding the impact of deferred compensation fund), as a percentage of consolidated revenues, decreased to 7.2% compared to 7.3% in the corresponding 2012 period.

Consolidated Investment and Interest Income

Investment and interest income, as a percentage of consolidated revenues, decreased to 0.2% for the six months ended June 30, 2013 compared to 0.3% for the corresponding 2012 period. We recognized a smaller increase in the market value of the investments held in our deferred compensation fund compared to a larger increase in the market value in the prior year.

Income before Income Taxes

Consolidated

As a result of the discussion above related to revenues and expenses, consolidated income before income taxes for the six months ended June 30, 2013 increased to 7.1%, as a percentage of consolidated revenues, compared to 6.1% for the corresponding 2012 period.

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Reportable Segments

Housekeeping’s increase in income before income taxes is primarily attributable to the key indicators discussed above, specifically the increase in reportable segment revenues, as well as the decrease in labor and labor related costs as a percentage of revenue, partially offset by the increased cost of housekeeping supplies.

Dietary’s increase in income before income taxes is primarily attributable to the key indicators discussed above, specifically the increase in reportable segment revenues, as well as the decrease in labor and labor related costs as a percentage of revenue.

Consolidated Income Taxes

For the six months ended June 30, 2013, our effective tax rate was approximately 28%, a decrease from the approximately 38% effective tax rate for the comparable 2012 period. Such differences between the effective tax rates and the applicable U.S. federal statutory rate arise primarily from the effect of state and local income taxes and tax credits available to the Company. The decrease in the effective tax rate is primarily due to an increase in expected tax credits realized in 2013 for 2012 and 2013 as compared to previous fiscal periods. The Company receives credits related to the Work Opportunity Tax Credit (“WOTC”) program but this program expired at December 31, 2011. The WOTC was subsequently renewed, but not until January 2, 2013, as part of The American Taxpayer Relief Act of 2012. Since the WOTC was renewed during the three month period ended March 31, 2013, the total tax effect of additional expected credits for 2012 was included in this period. As such, the effective tax rate is expected to increase in subsequent periods during 2013 and currently is expected to be approximately 32% for the entire year if there are no significant changes.

Consolidated Net Income

As a result of the matters discussed above, consolidated net income as a percentage of revenue for the six months ended June 30, 2013 increased to 5.1% compared to 3.8% in the corresponding 2012 period.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

We consider the policies discussed below to be critical to an understanding of our financial statements because their application places the most significant demands on our judgment. Therefore, it should be noted that financial reporting results rely on estimating the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies and estimates are described in the following paragraphs. For these estimates, we caution that future events rarely develop as forecasted, and the best estimates routinely require adjustment. Any such adjustments or revisions to estimates could result in material differences to previously reported amounts.

The policies discussed are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting standards generally accepted in the United States, with no need for our judgment in their application. There are also areas in which our judgment in selecting another available alternative would not produce a materially different result. See our audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2012, which contain accounting policies and other disclosures required by accounting principles generally accepted in the United States.

Allowance for Doubtful Accounts

The Allowance for Doubtful Accounts (the “Allowance”) is established as losses are estimated to have occurred through a provision for bad debts charged to earnings. The Allowance is evaluated based on our periodic review of accounts and notes receivable and is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

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 making credit evaluations, in addition to analyzing and anticipating, where possible, the specific cases described above, we consider the general collection risks associated with trends

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in the long-term care industry. We also establish credit limits, perform ongoing credit evaluations, and monitor accounts to minimize the risk of loss.

In accordance with the risk of extending credit, we regularly evaluate our accounts and notes receivable for impairment or loss of value and when appropriate, will provide in our Allowance for such receivables. We generally follow a policy of reserving for receivables due from clients in bankruptcy, clients with which we are in litigation for collection and other slow paying clients. The reserve is based upon our estimates of ultimate collectability. Correspondingly, once our recovery of a receivable is determined through litigation, bankruptcy proceedings or negotiation to be less than the recorded amount on our balance sheet, we will charge-off the applicable amount to the Allowance.

Our methodology for the Allowance is based upon a risk-based evaluation of accounts and notes receivable associated with a client’s ability to make payments. Such Allowance generally consists of an initial amount established based upon criteria generally applied if and when a client account files bankruptcy, is placed for collection/litigation and/or is considered to be pending collection/litigation. The initial Allowance is adjusted either higher or lower when additional information is available to permit a more accurate estimate of the collectability of an account.

Summarized below for the six months ended June 30, 2013 and year ended December 31, 2012 are the aggregate account balances for the three Allowance criteria noted above, net write-offs of client accounts, bad debt provision and allowance for doubtful accounts.

Period Ended	Aggregate Account Balances of Clients in Bankruptcy or in/or Pending Collection/Litigation		Net Write-offs of Client Accounts		Bad Debt Provision		Allowance for Doubtful Accounts
June 30, 2013	$	7,157,000	$	949,000	$	650,000	$	3,671,000
December 31, 2012	$	6,273,000	$	2,697,000	$	2,160,000	$	3,970,000

At June 30, 2013, we identified accounts totaling $7,157,000 that require an Allowance based on potential impairment or loss of value. An Allowance totaling $3,671,000 was provided for these accounts at such date. Actual collections of these accounts could differ from that which we currently estimate. If our actual collection experience is 5% less than our estimate, the related increase to our Allowance would decrease net income by approximately $91,000.

Notwithstanding our efforts to minimize credit risk exposure, our clients could be adversely affected if future industry trends, as more fully discussed under Liquidity and Capital Resources below, and as further described in our Annual Report on Form 10-K for the year ended December 31, 2012 in Part I, Item 1A under “Risk Factors”, and Part I, Item 1 “Government Regulation of Clients” and “Service Agreements/Collections”, change in such a manner as to negatively impact the cash flows of our clients. 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.

Accrued Insurance Claims

We currently have a Paid Loss Retrospective Insurance Plan for general liability and workers’ compensation insurance, which comprise approximately 21% of our liabilities at June 30, 2013. Under our insurance plans for general liability and workers' compensation, predetermined loss limits are arranged with our insurance company to limit both our per occurrence cash outlay and annual insurance plan cost. Our accounting for this plan is affected by various uncertainties because we must make assumptions and apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of the balance sheet date. We address these uncertainties by regularly evaluating our claims’ pay-out experience, present value factor and other factors related to the nature of specific claims in arriving at the basis for our accrued insurance claims estimate. Our evaluations are based primarily on current information derived from reviewing our claims experience and industry trends. In the event that our claims experience and/or industry trends result in an unfavorable change resulting from, among other factors, the severity levels of reported claims and medical cost inflation, as compared to historical claim trends, it would have an adverse effect on our results of operations and financial condition. Under these plans, predetermined loss limits are arranged with an insurance company to limit both our per-occurrence cash outlay and annual insurance plan cost.

For workers’ compensation, we record a reserve based on the present value of estimated future cost of claims and related expenses that have been reported but not settled, including an estimate of claims incurred but not reported that are developed as a result of a review of our historical data and open claims. The present value of the payout is determined by applying an 8% discount factor

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against the estimated value of the claims over the estimated remaining pay-out period. Reducing the discount factor by 1% would reduce net income by approximately $55,000. Additionally, reducing the estimated payout period by six months would result in an approximate $125,000 reduction in net income.

For general liability, we record a reserve for the estimated ultimate amounts to be paid for known claims. The estimated ultimate reserve amount recorded is derived from the estimated claim reserves provided by our insurance carrier reduced by an historical experience factor.

Asset Valuations and Review for Potential Impairment

We review our fixed assets, deferred income taxes, goodwill and other intangible assets at least annually or whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. This review requires that we make assumptions regarding the value of these assets and the changes in circumstances that would affect the carrying value of these assets. If such analysis indicates that a possible impairment may exist, we are then required to estimate the fair value of the asset and, as deemed appropriate, expense all or a portion of the asset. The determination of fair value includes numerous uncertainties, such as the impact of competition on future value. We believe that we have made reasonable estimates and judgments in determining whether our long-term assets have been impaired; however, if there is a material change in the assumptions used in our determination of fair value or if there is a material change in economic conditions or circumstances influencing fair value, we could be required to recognize certain impairment charges in the future. As a result of our most recent reviews, no changes in asset values were required.

Income Taxes

Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is established when necessary based on the weight of available evidence, if it is considered more likely than not that all or some portion of the deferred tax assets will not be realized. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities.

We are subject to Federal income taxes and numerous state and local income taxes. The determination of the income tax provision is an inherently complex process, requiring management to interpret continually changing regulations and to make certain significant judgments. Our assumptions, judgments and estimates relative to the amount of deferred income taxes take into account scheduled reversals of deferred tax liabilities, recent financial operations, estimates of the amount of future taxable income and available tax planning strategies. Actual operating results in future years could render our current assumptions, judgments and estimates inaccurate. No assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in the Company’s historical income tax provisions and accruals. The Company adjusts these items in light of changing facts and circumstances. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences could have a material effect on the income tax provisions or benefits in the periods in which such determinations are made.

Liquidity and Capital Resources

At June 30, 2013, we had cash and cash equivalents and marketable securities of $85,186,000 and working capital of $214,033,000 compared to December 31, 2012 cash, cash equivalents and marketable securities of $90,271,000 and working capital of $200,182,000. We view our cash and cash equivalents and marketable securities as our principal measure of liquidity. Our current ratio at June 30, 2013 decreased to 3.8 to 1 from 4.0 to 1 at December 31, 2012. The increase in working capital resulted primarily from increases in our marketable securities, accounts and notes receivables, prepaid expenses and other, and decreases in our accrued payroll and other accrued expense balances, primarily resulting from the timing of such payments at June 30, 2013 as compared with December 31, 2012. This increase was partially negatively impacted by the decrease in our cash and cash equivalents, inventories and supplies, and increases in our accounts payable and income taxes payable. 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 anticipated growth.

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Operating Activities

The net cash provided by our operating activities was $13,980,000 for the six months ended June 30, 2013. The principal sources of net cash flows from operating activities for the six months ended June 30, 2013 was net income, adjusted for non-cash charges to operations for bad debt provisions, stock-based compensation, depreciation and amortization, which totaled $30,679,000. Additionally, operating activities' cash flows decreased by $31,812,000 as a result of the increases in accounts and notes receivable, prepaid expenses and other assets, deferred compensation funding and the decreases in accrued payroll. These operating cash outflows were partially offset by the cash inflows of $15,113,000 related to the decrease in inventories and supplies and the increases in accounts payable and other accruals, accrued insurance claims, deferred compensation liability and income taxes payable.

Investing Activities

The net cash used in our investing activities for the six months ended June 30, 2013 was $2,699,000. The principal use of net cash flows from investing activities was $1,147,000 of net purchases of marketable securities. Additionally, we expended $1,702,000 for the purchase of housekeeping equipment, computer software and equipment, and laundry equipment installations. See “Capital Expenditures” below.

Financing Activities

During the six months ended June 30, 2013, we paid regular quarterly cash dividends approximating $22,931,000 as follows:

	Quarter Ended
	March 31, 2013		June 30, 2013
Cash dividend per common share	$	0.16625	$	0.16750
Total cash dividends paid	$	11,415,000	$	11,516,000
Record date	February 22, 2013		May 10, 2013
Payment date	March 15, 2013		June 14, 2013

Additionally, on July 9, 2013, our Board of Directors declared a regular quarterly cash dividend of $0.16875 per common share, which will be paid on September 20, 2013, to shareholders of record as of the close of business on August 16, 2013.

The dividends paid to shareholders during the six months ended June 30, 2013 were in excess of cash flows during the given period, and therefore, were funded by the existing cash, cash equivalents and marketable securities held by the Company. At June 30, 2013 and December 31, 2012, we had $85,186,000 and $90,271,000, respectively, in cash, cash equivalents and marketable securities. Our Board of Directors reviews our dividend policy on a quarterly basis. Although there can be no assurance that we will continue to pay dividends or the amount of the dividend, we expect to continue to pay a regular quarterly cash dividend. In connection with the establishment of our dividend policy, we adopted a Dividend Reinvestment Plan in 2003.

During the six months ended June 30, 2013, we received proceeds of $4,680,000 from the exercise of stock options by employees and directors. Additionally, as a result of deductions derived from the stock option exercises, we recognized an income tax benefit of $1,128,000.

Line of Credit

We have a $57,000,000 bank line of credit on which we may draw to meet short-term liquidity requirements in excess of internally generated cash flow. Amounts drawn under the line of credit are payable upon demand. At June 30, 2013, there were no borrowings under the line of credit. However, at such date, we had outstanding a $43,520,000 irrevocable standby letter of credit which relates to payment obligations under our insurance programs. As a result of the letter of credit issued, the amount available under the line of credit was reduced by $43,520,000 at June 30, 2013.

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The line of credit requires us to satisfy two financial covenants. Such covenants and their respective status at June 30, 2013 were as follows:

Covenant Description and Requirement	Status at June 30, 2013
Commitment coverage ratio: cash and cash equivalents plus marketable securities must equal or exceed outstanding obligations under the line by a multiple of 1.00	1.96
Tangible net worth: must exceed $181,185,000	$	222,446,000

As noted above, we complied with both financial covenants at June 30, 2013 and expect to continue to remain in compliance with such financial covenants. This line of credit expires on June 30, 2014. We believe the line of credit will be renewed at that time.

Accounts and Notes Receivable

We expend considerable effort to collect the amounts due for our services on the terms agreed upon with our clients. Many of our clients participate in programs funded by federal and state governmental agencies which historically have encountered delays in making payments to its program participants. Congress has enacted a number of laws during the past decade that have significantly altered, or may alter, overall government reimbursement for nursing home services. Because our clients’ revenues are generally dependent on Medicare and Medicaid 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. Whenever possible, when a client falls behind in making agreed-upon payments, we convert the unpaid accounts receivable to interest bearing promissory notes. The promissory notes receivable provide a means by which to further evidence the amounts owed and provide a definitive repayment plan and therefore may ultimately enhance our ability to collect the amounts due. At June 30, 2013 and December 31, 2012, we had $12,848,000 and $10,730,000, net of reserves, respectively, of such promissory notes outstanding. Additionally, we consider restructuring service agreements from full service to management-only service in the case of certain clients experiencing financial difficulties. We believe that such restructurings may provide us with a means to maintain a relationship with the client while at the same time minimizing collection exposure.

Many states have significant budget deficits. State Medicaid programs are experiencing increased demand, and with lower revenues than projected, they have fewer resources to support their Medicaid programs. In addition, comprehensive health care legislation under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (together, the “Act”) was signed into law in March 2010. The Act will significantly impact the governmental healthcare programs in which our clients participate, and reimbursements received thereunder from governmental or third-party payors. In July 2011, Centers for Medicare and Medicaid Services (“CMS”) issued a final rule that reduced Medicare payments to nursing centers by 11.1% and changed the reimbursement for the provision of group rehabilitation therapy services to Medicare beneficiaries. This new rule was effective as of October 1, 2011. Furthermore, in the coming year and beyond, new proposals or additional changes in existing regulations could be made to the Act which could directly impact the governmental reimbursement programs in which our clients participate. As a result, some state Medicaid programs are reconsidering previously approved increases in nursing home reimbursement or are considering delaying or foregoing those increases. A few states have indicated it is possible they will run out of cash to pay Medicaid providers, including nursing homes. Any negative changes in our clients’ reimbursements may negatively impact our results of operations. Although we are currently evaluating the Act’s effect on our client base, we may not know the full effect until such time as these laws are fully implemented and CMS and other agencies issue applicable regulations or guidance. Additionally, even if federal or state legislation is enacted that provides additional funding to Medicaid providers, given the volatility of the economic environment, it is difficult to predict the impact of this legislation on our clients’ liquidity and their ability to make payments to us as agreed.

In January 2013, the U.S. Congress enacted the American Taxpayer Relief Act of 2012, which delayed automatic spending cuts of $1.2 trillion, including reduced Medicare payments to plans and providers up to 2%. These discretionary spending caps were originally enacted under provisions in the Budget Control Act of 2011, an initiative to reduce the federal deficit through the year 2021, also known as “sequestration.” The sequestration went into effect starting March 2013.

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 $650,000 and $1,350,000 for the six months ended June 30, 2013 and 2012, respectively. As a percentage of total

31

revenues, these provisions represent approximately 0.1% and 0.3% for such respective periods. 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.

Insurance Programs

We self-insure or carry a high deductible, and therefore retain a substantial portion of the risk associated with the expected losses under our general liability and workers compensation programs. Under our insurance plans for general liability and workers’ compensation, predetermined loss limits are arranged with our insurance company to limit both our per occurrence cash outlay and annual insurance plan cost.

For workers’ compensation, we record a reserve based on the present value of future payments, including an estimate of claims incurred but not reported, that are developed as a result of a review of our historical data and open claims. The present value of the payout is determined by applying an 8% discount factor against the estimated value of the claims over the estimated remaining pay-out period.

For general liability, we record a reserve for the estimated ultimate amounts to be paid for known claims. The estimated ultimate reserve amount recorded is derived from the estimated claim reserves provided by our insurance carrier reduced by an historical experience factor.

We regularly evaluate our claims’ pay-out experience, present value factor and other factors related to the nature of specific claims in arriving at the basis for our accrued insurance claims’ estimate. Our evaluation is based primarily on current information derived from reviewing our claims experience and industry trends. In the event that our claims experience and/or industry trends result in an unfavorable change, it would have an adverse effect on our consolidated results of operations, financial condition and cash flows.

Capital Expenditures

The level of capital expenditures is generally dependent on the number of new clients obtained. Such capital expenditures primarily consist of housekeeping equipment purchases, laundry and linen equipment installations, and computer hardware and software. Although we have no specific material commitments for capital expenditures through the end of calendar year 2013, we estimate that for the remainder of 2013 we will have capital expenditures of approximately $1,500,000 to $2,500,000 in connection with housekeeping equipment purchases and laundry and linen equipment installations in our clients’ facilities, as well as expenditures relating to internal data processing hardware and software requirements. We believe that our cash from operations, existing cash and cash equivalents balance and credit line will be adequate for the foreseeable future to satisfy the needs of our operations and to fund our anticipated growth. However, should these sources not be sufficient, we would, if necessary, seek to obtain necessary working capital from such sources as long-term debt or equity financing.

Material Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements, other than our irrevocable standby letter of credit previously discussed.

Effects of Inflation

Although there can be no assurance thereof, we believe that in most instances we will be able to recover increases in costs attributable to inflation by passing through such cost increases to our clients.

32

Item 3.  Quantitative and QualitativeDisclosures About Market Risk.

At June 30, 2013, we had $85,186,000 in cash, cash equivalents and marketable securities. In accordance with U.S. GAAP, the fair value of all of our cash equivalents and marketable securities is determined based on "Level 1" or “Level 2” inputs, which consist of quoted prices whose value is based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. We place our cash investments in instruments that meet credit quality standards, as specified in our investment policy guidelines.

Investments in both fixed rate and floating rate investments carry a degree of interest rate risk. Fixed rate securities may have their market value adversely impacted due to an increase in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or if there is a decline in the fair value of our investments.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”), such as this Form 10-Q, is reported in accordance with Securities and Exchange Commission (“SEC”) rules. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on their evaluation as of June 30, 2013, pursuant to Exchange Act Rule 13a-15(b), our management, including our Chief Executive Officer and Chief Financial Officer, believe our disclosure controls and procedures (as defined in Exchange Act 13a-15(e) are effective.

In connection with the evaluation pursuant to Exchange Act Rule 13a-15(d) of our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) by our management, including our Chief Executive Officer and Chief Financial Officer, no changes during the quarter ended June 30, 2013, were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Certifications

Certifications of the Principal Executive Officer and Principal Financial Officer regarding, among other items, disclosure controls and procedures are included as exhibits to this Form 10-Q.

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PART II — OTHER INFORMATION.

Item 1. Legal Proceedings.

In the normal course of business, the Company is involved in various administrative and legal proceedings, including labor and employment, contracts, personal injury, and insurance matters. The Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding or governmental examination that would have a material adverse effect on the Company's consolidated financial condition or liquidity.

Item 1A. Risk Factors.

There has been no material change in the risk factors set forth in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2012, except as follows:

We may be unable to successfully integrate the operations of Platinum Health Services, LLC with our operations.

We acquired the assets of Platinum Health Services, LLC on July 11, 2013. We will be required to devote significant management attention and resources to integrating the operations and business practices of Platinum Health Services, LLC with our existing operating and business practices. Potential difficulties we may encounter as part of the integration process include the following:

• the ability to retain a substantial number of Platinum Health Services, LLC's existing clients;

• the unanticipated or excessive diversion of management's resources;

• the integration of new operations and personnel and the disruption of, or the loss of momentum in, going operations;

• the failure to achieve expected financial results;

• the inability to implement effective internal controls, procedures and policies for Platinum Health Services, LLC as required by the Sarbanes-Oxley Act of 2002 within the time periods prescribed thereby;

• the inability to successfully integrate Platinum Health Services, LLC in a manner that permits us to achieve the full revenue and other benefits anticipated to result from our acquisition of its assets; and

• the potential unknown liabilities and unforeseen incurred expenses or delays associated with the acquisition.

These and other risks could affect our ability to achieve the anticipated benefits of our acquisition of Platinum Health Services, LLC. In addition, these and other risks related to our acquisition of Platinum Health Services, LLC could adversely affect our ability to maintain relationships with customers and employees and have a material adverse effect on our business, financial condition and results of operations. If we were unable to successfully address any of these risks, our overall business could be harmed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On July 11, 2013, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Platinum Health Services, LLC, a Delaware limited liability company and Platinum Health Services PEO, LLC, a Delaware limited liability company (collectively “Platinum”) to acquire substantially all of its operating assets. Platinum is a privately-held provider of professional housekeeping, laundry and maintenance services to long-term and post-acute care facilities and operates solely within the United States. On July 12, 2013, the Company completed the acquisition contemplated by the Purchase Agreement.

34

Item 6. Exhibits.

The following exhibits are filed as part of this Report:

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
EX-101	XBRL Instance Document*
EX-101	XBRL Taxonomy Extension Schema Document*
EX-101	XBRL Taxonomy Calculation Linkbase Document*
EX-101	XBRL Taxonomy Extension Definition Linkbase Document*
EX-101	XBRL Taxonomy Labels Linkbase Document*
EX-101	XBRL Taxonomy Presentation Linkbase Document*

* Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

35

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.
Date:	July 25, 2013	/s/ Daniel P. McCartney
		Daniel P. McCartney
		Chief Executive Officer
		(Principal Executive Officer)
Date:	July 25, 2013	/s/ John C. Shea
		John C. Shea
		Chief Financial Officer and Secretary
		(Principal Financial Officer)

36

EX-31.1

Exhibit 31.1

Certification of the Chief Executive Officer

Pursuant to Rules 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act, as Amended

I, Daniel P. McCartney, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Services Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures ( as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date:	July 25, 2013	/s/ Daniel P. McCartney
		Daniel P. McCartney
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of the Chief Financial Officer

Pursuant to Rules 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act, as Amended

I, John C. Shea, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Services Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures ( as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date:	July 25, 2013	/s/ John C. Shea
		John C. Shea
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CertificationPursuant to

18 U.S.C. Section 1350,

As AdoptedPursuant to

Section 906 ofthe Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Healthcare Services Group, Inc. (the “Company”) for the quarter ended June 30, 2013 as filed with the Securities and Exchange commission on the date hereof (the “Form 10-Q”), Daniel P. McCartney, the Chief Executive Officer of the Company, and John C. Shea, the Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d), of the Securities Exchange Act of 1934, as amended; and

(2) That information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel P. McCartney	/s/ John C. Shea
Daniel P. McCartney	John C. Shea
Chief Executive Officer	Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)
July 25, 2013	July 25, 2013

XML

Other Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Other Contingencies

Other Contingencies

We have a $57,000,000 bank line of credit on which we may draw to meet short-term liquidity requirements in excess of internally generated cash flow. Amounts drawn under the line of credit are payable upon demand. At June 30, 2013, there were no borrowings under the line of credit. However, at such date, we had outstanding a $43,520,000  irrevocable standby letter of credit which relates to payment obligations under our insurance programs. As a result of the letter of credit issued, the amount available under the line of credit was reduced by $43,520,000 at June 30, 2013. The line of credit requires us to satisfy two financial covenants. We are in compliance with the financial covenants at June 30, 2013 and expect to continue to remain in compliance with such financial covenants. This line of credit expires on June 30, 2014.

We provide our services in 48 states and are subject to numerous local taxing jurisdictions within those states. Consequently, in the ordinary course of business, a jurisdiction may contest our reporting positions with respect to the application of its tax code to our services. A jurisdiction’s conflicting position on the taxability of our services could result in additional tax liabilities.

We have tax matters with various taxing authorities. Because of the uncertainties related to both the probable outcome and amount of probable assessment due, we are unable to make a reasonable estimate of a liability. We do not expect the resolution of any of these matters, taken individually or in the aggregate, to have a material adverse effect on our consolidated financial position or results of operations based on our best estimate of the outcomes of such matters.

We are also subject to various claims and legal actions in the ordinary course of business. Some of these matters include payroll and employee-related matters and examinations by governmental agencies. As we become aware of such claims and legal actions, we provide accruals if the exposures are probable and estimable. If an adverse outcome of such claims and legal actions is reasonably possible, we assess materiality and provide such financial disclosure, as appropriate.

Many states have significant budget deficits. State Medicaid programs are experiencing increased demand, and with lower revenues than projected, they have fewer resources to support their Medicaid programs. In addition, comprehensive health care legislation under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (together, the “Act”) was signed into law in March 2010. The Act will significantly impact the governmental healthcare programs in which our clients participate, and reimbursements received thereunder from governmental or third-party payors. In July 2011, Centers for Medicare and Medicaid Services (“CMS”) issued a final rule that reduced Medicare payments to nursing centers by 11.1% and changed the reimbursement for the provision of group rehabilitation therapy services to Medicare beneficiaries. This rule was effective as of October 1, 2011. Furthermore, in the coming year, new proposals or additional changes in existing regulations could be made to the Act and/or CMS could propose additional reimbursement reductions which could directly impact the governmental reimbursement programs in which our clients participate. As a result, some state Medicaid programs are reconsidering previously approved increases in nursing home reimbursement or are considering delaying or foregoing those increases. A few states have indicated it is possible they will run out of cash to pay Medicaid providers, including nursing homes. In addition, certain state governors have recently stated that they will reject Federal Medicaid assistance under the Act. Any negative changes in our clients’ reimbursements may negatively impact our results of operations. Although we are currently evaluating the Act’s effect on our client base, we may not know the full effect until such time as these laws are fully implemented and CMS and other agencies issue applicable regulations or guidance.

In January 2013, the U.S. Congress enacted the American Taxpayer Relief Act of 2012, which delayed automatic spending cuts, including reduced Medicare payments to plans and providers up to 2%. These discretionary spending caps were originally enacted under provisions in the Budget Control Act of 2011, an initiative to reduce the federal deficit through the year 2021, also known as “sequestration.” The sequestration went into effect March 2013.

XML

Consolidated Statements Of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013		Jun. 30, 2012
Income Statement [Abstract]
Revenues	$ 273,604	$ 267,108	$ 547,508		$ 527,715
Operating costs and expenses:
Costs of services provided	234,602	230,206	469,793		457,701
Selling, general and administrative	19,363	18,524	40,153		39,506
Other income:
Investment and interest	219	(95)	1,253		1,558
Income before income taxes	19,858	18,283	38,815		32,066
Income taxes	6,925	6,963	10,928		12,167
Net income	12,933	11,320	27,887		19,899
Per share data:
Basic earnings per common share (dollars per share)	$ 0.19	$ 0.17	$ 0.41		$ 0.30
Diluted earnings per common share (dollars per share)	$ 0.19	$ 0.17	$ 0.40		$ 0.29
Weighted average number of common shares outstanding:
Basic (shares)	68,599	67,296	68,531		67,189
Diluted (shares)	69,370	68,228	69,366		68,155
Comprehensive income:
Net income	12,933	11,320	27,887		19,899
Other comprehensive income:
Unrealized loss on available for sale marketable securities, net of taxes	(106)	(17)	(83)	[1]	(190)
Total comprehensive income	$ 12,827	$ 11,303	$ 27,804		$ 19,709

[1] All amounts are net of tax.

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We, in accordance with U.S. GAAP, define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Effective January 1, 2008, we elected the fair value option for certain of our marketable securities purchased since such adoption. Management initially elected the fair value option for certain of our marketable securities because it views such investment securities as highly liquid and available to be drawn upon for working capital purposes making them similar to cash and cash equivalents. Accordingly, we recorded the net unrealized gain or loss in the other income, investment and interest caption in our consolidated income statements. We have not elected the fair value option for marketable securities acquired after December 31, 2009. Although these assets continue to be highly liquid and available, we believe these assets are more representative of our investing activities, and they will be available for future needs of the Company to support its projected growth.

The carrying value of certain assets and liabilities is considered to be representative of their fair value, due to the short term nature of these instruments. Such assets and liabilities include cash and cash equivalents, marketable securities, accounts and notes receivable, prepaid expenses and other, and accounts payable (including income taxes payable and accrued expenses).

The following tables provide fair value measurement information for our marketable securities and deferred compensation fund investment assets as of June 30, 2013 and December 31, 2012:

	As of June 30, 2013
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds	$	22,026,000	$	22,026,000	$	—	$	22,026,000	$	—
Deferred compensation fund
Money Market	$	3,808,000	$	3,808,000	$	—	$	3,808,000	$	—
Balanced and Lifestyle	3,324,000		3,324,000		3,324,000		—		—
Large Cap Growth	1,706,000		1,706,000		1,706,000		—		—
Small Cap Value	2,172,000		2,172,000		2,172,000		—		—
Fixed Income	7,126,000		7,126,000		7,126,000		—		—
International	887,000		887,000		887,000		—		—
Mid Cap Growth	734,000		734,000		734,000		—		—
Deferred compensation fund	$	19,757,000	$	19,757,000	$	15,949,000	$	3,808,000	$	—

	As of December 31, 2012
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds	$	21,322,000	$	21,322,000	$	—	$	21,322,000	$	—
Deferred compensation fund
Money Market	$	4,114,000	$	4,114,000	$	—	$	4,114,000	$	—
Balanced and Lifestyle	6,311,000		6,311,000		6,311,000		—		—
Large Cap Growth	2,724,000		2,724,000		2,724,000		—		—
Small Cap Value	1,936,000		1,936,000		1,936,000		—		—
Fixed Income	1,461,000		1,461,000		1,461,000		—		—
International	785,000		785,000		785,000		—		—
Mid Cap Growth	500,000		500,000		500,000		—		—
Deferred compensation fund	$	17,831,000	$	17,831,000	$	13,717,000	$	4,114,000	$	—

The fair value of the municipal bonds is measured using pricing service data using third party pricing data. The fair value of equity investments in the funded deferred compensation plan are valued (Level 1) based on quoted market prices. The money market fund in the funded deferred compensation plan is valued (Level 2) at the net asset value (“NAV”) of the shares held by the plan at the end of the period. As a practical expedient, fair value of our money market fund is valued at the NAV as determined by the custodian of the fund. The money market fund includes short-term United States dollar denominated money-market instruments. The money market fund can be redeemed at its NAV at its measurement date as there are no significant restrictions on the ability of participants to sell this investment. These assets will be redeemed by the plan participants on an as needed basis.

Unrealized gains and losses from marketable securities for investments recorded under the fair value option are recorded in the other income – investment and interest caption on our consolidated statements of comprehensive income. For the three and six months ended June 30, 2013, there were no unrealized gains or losses recorded. For the three and six months ended June 30, 2012, we recorded unrealized losses from marketable securities of $26,000 and $82,000, respectively.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other-than-temporary Impairments
June 30, 2013
Type of security:
Municipal bonds — available for sale	21,953,000		130,000		(57,000		)	22,026,000		—
Total debt securities	$	21,953,000	$	130,000	$	(57,000	)	$	22,026,000	$	—
December 31, 2012
Type of security:
Municipal bonds — available for sale	21,111,000		220,000		(9,000		)	21,322,000		—
Total debt securities	$	21,111,000	$	220,000	$	(9,000	)	$	21,322,000	$	—

For the three and six months ended June 30, 2013, we received total proceeds of $3,000,000 and $3,000,000 respectively, from sales of available for sale municipal bonds. These sales resulted in realized gains of $16,000 and $16,000 recorded in other income – investment and interest caption on our statement of comprehensive income for the three and six months ended June 30, 2013, respectively. The basis for the sale of these securities was a specific identification of each bond sold during this period.

For the three and six months ended June 30, 2012, we received total proceeds of $4,274,000 and $14,871,000 respectively, from sales of available for sale municipal bonds. These sales resulted in realized gains of $41,000 and $224,000 recorded in other income – investment and interest caption on our statement of comprehensive income for the three and six months ended June 30, 2012, respectively. The basis for the sale of these securities was a specific identification of each bond sold during this period.

The following tables include contractual maturities of debt securities held at June 30, 2013 and December 31, 2012, which are classified as marketable securities in the consolidated Balance Sheet.

	Municipal Bonds — Available for Sale
Contractual maturity:	June 30, 2013		December 31, 2012
Maturing in one year or less	$	7,284,000	$	5,164,000
Maturing after one year through three years	8,000,000		12,134,000
Maturing after three years	6,742,000		4,024,000
Total debt securities	$	22,026,000	$	21,322,000

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Dividends (Tables)

6 Months Ended

Jun. 30, 2013

Dividends [Abstract]

Dividends Paid

During the six months ended June 30, 2013, we paid regular quarterly cash dividends approximating $22,931,000 as follows:

	Quarter Ended
	March 31, 2013		June 30, 2013
Cash dividend per common share	$	0.16625	$	0.16750
Total cash dividends paid	$	11,415,000	$	11,516,000
Record date	February 22, 2013		May 10, 2013
Payment date	March 15, 2013		June 14, 2013

Dividends Paid on outstanding weighted average number of basic common shares

Cash dividends on our outstanding weighted average number of basic common shares for the three and six months ended June 30, 2013 and 2012 was as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Cash dividends per common share	$	0.17	$	0.16	$	0.33	$	0.32

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 12, 2013, the Company acquired substantially all of the operating assets of Platinum Health Services, LLC, a Delaware limited liability company and Platinum Health Services PEO, LLC, a Delaware limited liability company (collectively “Platinum”) pursuant to an Asset Purchase Agreement dated July 11, 2013. Platinum is a privately-held provider of professional housekeeping, laundry and maintenance services to long-term and post-acute care facilities and operates solely within the United States. The purchase price consisted of a cash payment of approximately $3,800,000, assumed debt of approximately $1,200,000 and the issuance of approximately 1,200,000 shares of the Company's common stock, $0.01 par value per share. Additionally, upon the achievement of certain financial and retention targets, the selling stockholders will be eligible for contingent consideration paid by the future issuance of the Company's common stock, $0.01 par value per share.  The number of shares that have been issued to the selling stockholders is based on $24.75 per share or that could be issued to the selling stockholders as part of a future issuance is based on the 10-day average closing price of our common stock $24.81 per share as reported on the Nasdaq Global Select Market from June 25, 2013 through July 9, 2013.

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Segment Information (Schedule Of Information Of Reportable Segments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013 segment		Jun. 30, 2012
Segment Reporting Information [Line Items]
Number of reportable segments					2
Percentage of revenue and income earned in one geographic segment					99.00%
Revenues	$ 273,604		$ 267,108		$ 547,508		$ 527,715
Income before income taxes	19,858		18,283		38,815		32,066
Housekeeping Services [Member]
Segment Reporting Information [Line Items]
Revenues	183,754		183,215		371,384		364,397
Income before income taxes	17,632		17,671		36,438		35,127
Dietary Services [Member]
Segment Reporting Information [Line Items]
Revenues	89,850		83,891		176,124		163,281
Income before income taxes	5,341		4,620		10,465		8,674
Corporate And Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	0	[1]	2	[1]	0	[1]	37	[1]
Income before income taxes	$ (3,115)	[1]	$ (4,008)	[1]	$ (8,088)	[1]	$ (11,735)	[1]

[1] Represents primarily corporate office cost and related overhead, recording of transactions at the reportable segment level which use methods other than U.S. GAAP, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.

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Stock-Based Compensation (Summary Of Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012
Total pre-tax stock-based compensation expense charged against income	$ 1,196	[1]	$ 1,144	[1]
Stock Options [Member]
Total pre-tax stock-based compensation expense charged against income	997		949
Restricted Stock [Member]
Total pre-tax stock-based compensation expense charged against income	14		0
Employee Stock Purchase Plan (ESPP) [Member]
Total pre-tax stock-based compensation expense charged against income	$ 185		$ 195

[1] Stock-based compensation expense is recorded in the selling, general and administrative caption in our consolidated statements of comprehensive income.

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Description of Business and Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2013 segment subsidiary state
Property, Plant and Equipment [Line Items]
Terms of service agreement	Our agreements with clients typically provide for a one year service term, cancelable by either party upon 30 to 90 days’ notice after the initial 90-day period.
Service term	1 year
Initial period of service term	90 days
Number of reportable segments	2
Number of subsidiaries	2
Number of states subsidiary operates	2
Amortization period of inventories and supplies	24 months
Minimum [Member]
Property, Plant and Equipment [Line Items]
Days to notify cancellation of service	30 days
Property and equipment payment terms	24 months
Maximum [Member]
Property, Plant and Equipment [Line Items]
Days to notify cancellation of service	90 days
Property and equipment payment terms	60 months

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Computation Of Basic And Diluted Net Earnings Per Share

The computations of basic net earnings per share and diluted net earnings per share are as follows:

	Three Months Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	12,933,000
Basic earnings per common share	$	12,933,000	68,599,000	$	0.19
Effect of dilutive securities:
Stock options and restricted stock			771,000	—
Diluted earnings per common share	$	12,933,000	69,370,000	$	0.19
	Three Months Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	11,320,000
Basic earnings per common share	$	11,320,000	67,296,000	$	0.17
Effect of dilutive securities:
Stock options and restricted stock			932,000	—
Diluted earnings per common share	$	11,320,000	68,228,000	$	0.17

	Six Months Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	27,887,000
Basic earnings per common share	$	27,887,000	68,531,000	$	0.41
Effect of dilutive securities:
Stock options and restricted stock			835,000	(0.01		)
Diluted earnings per common share	$	27,887,000	69,366,000	$	0.40
	Six Months Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	19,899,000
Basic earnings per common share	$	19,899,000	67,189,000	$	0.30
Effect of dilutive securities:
Stock options and restricted stock			966,000	(0.01		)
Diluted earnings per common share	$	19,899,000	68,155,000	$	0.29

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Income Taxes (Details)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Income Tax [Line Items]
Effective tax rate	28.00%	38.00%
Forecast [Member]
Income Tax [Line Items]
Effective tax rate	32.00%

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Fair Value Measurements (Fair Value Measurements) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities - Municipal bonds	$ 22,026	$ 21,322
Equity securities - Deferred compensation fund	19,757	17,831
Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	15,949	13,717
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,808	4,114
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	19,757	17,831
Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	19,757	17,831
Municipal bonds [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities - Municipal bonds	0	0
Municipal bonds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities - Municipal bonds	22,026	21,322
Municipal bonds [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities - Municipal bonds	0	0
Municipal bonds [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities - Municipal bonds	22,026	21,322
Municipal bonds [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities - Municipal bonds	22,026	21,322
Money Market [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Money Market [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,808	4,114
Money Market [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Money Market [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,808	4,114
Money Market [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,808	4,114
Balanced and Lifestyle [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,324	6,311
Balanced and Lifestyle [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Balanced and Lifestyle [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Balanced and Lifestyle [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,324	6,311
Balanced and Lifestyle [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	3,324	6,311
Large Cap Growth [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	1,706	2,724
Large Cap Growth [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Large Cap Growth [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Large Cap Growth [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	1,706	2,724
Large Cap Growth [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	1,706	2,724
Small Cap Value [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	2,172	1,936
Small Cap Value [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Small Cap Value [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Small Cap Value [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	2,172	1,936
Small Cap Value [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	2,172	1,936
Fixed Income [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	7,126	1,461
Fixed Income [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Fixed Income [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Fixed Income [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	7,126	1,461
Fixed Income [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	7,126	1,461
International [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	887	785
International [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
International [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
International [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	887	785
International [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	887	785
Mid Cap Growth [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	734	500
Mid Cap Growth [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Mid Cap Growth [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	0	0
Mid Cap Growth [Member] | Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	734	500
Mid Cap Growth [Member] | Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - Deferred compensation fund	$ 734	$ 500

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Share-Based Compensation (Summarized Information About Stock Awards) (Details) ($3.68 - $23.50 [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
$3.68 - $23.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price Range, Lower Limit	$ 3.68
Exercise Price Range, Upper Limit	$ 23.50
Weighted average remaining contractual life of stock options outstanding	6 years 7 months 6 days
Aggregate intrinsic value of outstanding stock options	$ 25,566
Number of stock options exercisable	1,174
Weighted average remaining contractual life of stock options exercisable	4 years 6 months
Aggregate intrinsic value of stock options exercisable	$ 15,846

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Segment Information (Revenues By Client Services) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue from External Customer [Line Items]
Revenues	$ 273,604	$ 267,108	$ 547,508	$ 527,715
Housekeeping Services [Member]
Revenue from External Customer [Line Items]
Revenues	123,351	121,897	248,944	243,550
Laundry and Linen Services [Member]
Revenue from External Customer [Line Items]
Revenues	59,404	60,245	120,302	118,775
Dietary Services [Member]
Revenue from External Customer [Line Items]
Revenues	89,850	83,816	176,124	163,206
Maintenance Services and Other [Member]
Revenue from External Customer [Line Items]
Revenues	$ 999	$ 1,150	$ 2,138	$ 2,184

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Goodwill And Other Intangible Assets (Identifiable Intangible Assets Subject To Amortization) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Total other intangibles, gross	$ 15,281	$ 15,281
Less accumulated amortization	11,162	10,078
Other intangibles, net	4,119	5,203
Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Total other intangibles, gross	14,481	14,481
Non-compete agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Total other intangibles, gross	$ 800	$ 800

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Share-Based Compensation (Assumptions For Employee Stock Purchase Plan) (Details)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.50%	1.30%
Weighted average expected life	6 years	6 years 9 months 17 days
Expected volatility	38.90%	39.20%
Dividend yield	2.80%	3.60%
Employee Stock Purchase Plan (ESPP) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.24%	0.19%
Weighted average expected life	1 year	1 year
Expected volatility	27.60%	36.50%
Dividend yield	2.80%	3.60%

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Schedule Of Information Of Reportable Segments

Housekeeping provides services in Canada, although essentially all of its revenues and net income, 99% in both categories, are earned in one geographic area, the United States. Dietary provides services solely in the United States.

	Housekeeping Services		Dietary Services		Corporate and Eliminations				Total
Three Months Ended June 30, 2013
Revenues	$	183,754,000	$	89,850,000	$	—			$	273,604,000
Income before income taxes	17,632,000		5,341,000		(3,115,000		)	(1)	19,858,000
Three Months Ended June 30, 2012
Revenues	$	183,215,000	$	83,891,000	$	2,000		(1)	$	267,108,000
Income before income taxes	17,671,000		4,620,000		(4,008,000		)	(1)	18,283,000

	Housekeeping Services		Dietary Services		Corporate and Eliminations				Total
Six Months Ended June 30, 2013
Revenues	$	371,384,000	$	176,124,000	$	—			$	547,508,000
Income before income taxes	36,438,000		10,465,000		(8,088,000		)	(1)	38,815,000
Six Months Ended June 30, 2012
Revenues	$	364,397,000	$	163,281,000	$	37,000		(1)	$	527,715,000
Income before income taxes	35,127,000		8,674,000		(11,735,000		)	(1)	32,066,000

(1) Represents primarily corporate office cost and related overhead, recording of transactions at the reportable segment level which use methods other than U.S. GAAP, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.

Revenues By Client Services

The following revenues earned from clients differ from segment revenues reported above due to the inclusion of adjustments used for segment reporting purposes by management. We earned total revenues from clients in the following service categories:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Housekeeping services	$	123,351,000	$	121,897,000	$	248,944,000	$	243,550,000
Laundry and linen services	59,404,000		60,245,000		120,302,000		118,775,000
Dietary services	89,850,000		83,816,000		176,124,000		163,206,000
Maintenance services and other	999,000		1,150,000		2,138,000		2,184,000
	$	273,604,000	$	267,108,000	$	547,508,000	$	527,715,000

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Consolidated Statements Of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total		Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income, net of taxes [Member]	Retained Earnings [Member]	Treasury Stock [Member]
Balance at Dec. 31, 2012	$ 229,570		$ 700	$ 113,495	$ 127	$ 127,042	$ (11,794)
Balance, Shares at Dec. 31, 2012			70,036,000
Comprehensive income:
Net income for the period	27,887					27,887
Unrealized loss on available for sale marketable securities, net of taxes	(83)	[1]			(83)
Comprehensive income	27,804
Exercise of stock options and other stock-based compensation, net of shares tendered for payment	4,680		4	4,636			40
Exercise of stock options and other stock-based compensation, net of shares tendered for payment, Shares			371,000
Tax benefit from equity compensation plans	1,128			1,128
Share-based compensation expense — stock options and restricted stock	1,011			1,011
Treasury shares issued for Deferred Compensation Plan funding and redemptions	363			352			11
Shares issued pursuant to Employee Stock Plans	1,842			1,370			472
Cash dividends	(22,931)					(22,931)
Shares issued pursuant to Dividend Reinvestment Plan	53			156			(103)
Balance at Jun. 30, 2013	$ 243,520		$ 704	$ 122,148	$ 44	$ 131,998	$ (11,374)
Balance, Shares at Jun. 30, 2013			70,407,000

[1] All amounts are net of tax.

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Changes in Accumulated Other Comprehensive Income by Component

6 Months Ended

Jun. 30, 2013

Changes in Accumulated Other Comprehensive (Loss) by Component [Abstract]

Changes in Accumulated Other Comprehensive Income by Component

Changes in Accumulated Other Comprehensive Income by Component

U.S. GAAP establishes standards for presenting information about significant items reclassified out of accumulated other comprehensive income by component. As of June 30, 2013 and December 31, 2012, respectively, we generated other comprehensive income from one component. This component relates to the unrealized gains and losses from our available for sale marketable securities during a given reporting period. Effective January 1, 2013, we elected to present this information in a separate disclosure.

The following table provides a summary of changes in accumulated other comprehensive income for the six months ended June 30, 2013:

	Unrealized Gains and Losses on Available for Sale Securities (1)
Accumulated other comprehensive income — December 31, 2012	$	127,000
Other comprehensive income before reclassifications	(72,000		)
Amounts reclassified from accumulated other comprehensive income (2)(3)	(11,000		)
Net current period change in other comprehensive income	(83,000		)
Accumulated other comprehensive income — June 30, 2013	$	44,000

(1) All amounts are net of tax.

(2) Realized gains and losses are recorded pre-tax in the other income - investment and interest caption on our consolidated statements of comprehensive income.

(3) For the six months ended June 30, 2013, the Company recorded $16,000 of realized gains from the sale of available for sale securities. Refer to Note 4 herein for further information.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

2012 Equity Incentive Plan

On May 29, 2012, the Company's shareholders adopted and approved the 2012 Equity Incentive Plan (the "2012 Plan"), under which current or prospective officers, employees, non-employee directors and advisors can receive share-based awards such as stock options, restricted stock and other stock awards. The 2012 Plan seeks to promote the highest level of performance by providing an economic interest in the long-term success of the Company. As of this date, no further grants were permitted under any previously existing stock plans (the "Pre-existing Plans"). Additionally, all remaining shares available for future grants under the Pre-existing Plans became available for issuance under the 2012 Plan.

The Nominating, Compensation and Stock Option Committee of the Board of Directors is responsible for determining the individuals who will be granted stock awards, the number of stock awards each individual will receive, the price per share (in accordance with the terms of our 2012 Plan), and the exercise period of each stock award.

A summary of stock-based compensation expense for the six months ended June 30, 2013 and 2012 is as follows:

	For the Six Months Ended June 30,
	2013		2012
Stock Options	$	997,000	$	949,000
Restricted Stock	14,000		—
Employee Stock Purchase Plan (ESPP)	185,000		195,000
Total pre-tax stock-based compensation expense charged against income (1)	$	1,196,000	$	1,144,000

(1) Stock-based compensation expense is recorded in the selling, general and administrative caption in our consolidated statements of comprehensive income.

We have outstanding stock awards that were granted under the Pre-existing Plans to non-employee directors, officers and employees of the Company and other specified groups, depending on the Pre-existing Plan. No further grants are allowed under the Pre-existing Plans. As of June 30, 2013, 5,550,000 shares of common stock were reserved for issuance under our 2012 Plan, including 2,781,000 shares which are available for future grant. The stock price will not be less than the fair market value of the common stock on the date the award is granted. No stock grant will have a term in excess of ten years. Since 2008, all awards granted become vested and exercisable ratably over a five year period on each yearly anniversary date of the option grant.

A summary of our stock option activity is as follows:

	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price
December 31, 2012	2,632,000		$	13.18
Granted	564,000		23.50
Cancelled	(49,000	)	18.21
Exercised	(378,000	)	12.46
June 30, 2013	2,769,000		$	15.29

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2013 and 2012 was $6.81 and $4.74 per common share, respectively.

During the six months ended June 30, 2013, the Company granted 6,000 shares of restricted stock with a weighted average grant date fair value of $23.50.

The following table summarizes other information about stock options at June 30, 2013.

	Stock Options
Range of exercise prices	$3.68 - 23.50
Outstanding:
Weighted average remaining contractual life (years)	6.60
Aggregate intrinsic value	$	25,566,000
Exercisable:
Number of shares	1,174,000
Weighted average remaining contractual life (years)	4.50
Aggregate intrinsic value	$	15,846,000

Fair Value Estimates

The fair value of stock awards granted in 2013 and 2012 was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:

	June 30, 2013	June 30, 2012
Risk-free interest rate	1.5%	1.3%
Weighted average expected life in years	6.0 years	6.8 years
Expected volatility	38.9%	39.2%
Dividend yield	2.8%	3.6%

Other Information

Other information pertaining to activity of our stock awards during the six months ended June 30, 2013 and 2012 was as follows:

	June 30, 2013		June 30, 2012
Total grant-date fair value of stock awards granted	$	3,412,000	$	2,438,000
Total fair value of stock awards vested during period	$	1,897,000	$	1,870,000
Total unrecognized compensation expense related to non-vested stock awards	$	5,982,000	$	4,948,000

At June 30, 2013, the unrecognized compensation cost related to stock awards granted but not yet vested, as reported above, was expected to be recognized through the fourth quarter of 2017 for the 2013 grants and the fourth quarter of 2016 for the 2012 grants.

Employee Stock Purchase Plan

Since January 1, 2000, we have had an ESPP for all eligible employees. All full-time and certain part-time employees who have completed two years of continuous service with us are eligible to participate. The ESPP was implemented through five annual offerings. On January 1, 2000, the first annual offering commenced. On February 12, 2004 (effective January 1, 2004), our Board of Directors extended the ESPP for an additional eight annual offerings. On April 12, 2011, the Board of Directors extended the ESPP for an additional five offerings through 2016. Annual offerings commence and terminate on the respective year’s first and last calendar day.

Under the ESPP, we are authorized to issue up to 4,050,000 shares of our common stock to our employees. Pursuant to such authorization, we have 2,541,000 shares available for future grant at June 30, 2013.

The stock-based compensation expense associated with our ESPP was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:

	June 30, 2013	June 30, 2012
Risk-free interest rate	0.24%	0.19%
Weighted average expected life in years	1.0 year	1.0 year
Expected volatility	27.6%	36.5%
Dividend yield	2.8%	3.6%

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Goodwill And Other Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired of businesses and is not amortized. Goodwill is evaluated for impairment on an annual basis, or more frequently if impairment indicators arise, using a fair-value-based test that compares the fair value of the reporting unit to its carrying value.

Goodwill by reportable operating segment, as described in Note 9 herein, was approximately $14,894,000 and $2,061,000 for Housekeeping and Dietary as of June 30, 2013 and December 31, 2012, respectively.

The cost of intangible assets is based on fair values at the date of acquisition. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful life (between 7 and 8 years).

The following table sets forth the amounts of our identifiable intangible assets subject to amortization, which were acquired in acquisitions.

	June 30, 2013		December 31, 2012
Customer relationships	$	14,481,000	$	14,481,000
Non-compete agreements	800,000		800,000
Total other intangibles, gross	15,281,000		15,281,000
Less accumulated amortization	11,162,000		10,078,000
Other intangibles, net	$	4,119,000	$	5,203,000

The customer relationships have a weighted-average amortization period of seven years and the non-compete agreements have a weighted-average amortization period of eight years. The following table sets forth the estimated amortization expense for intangibles subject to amortization for the following five fiscal years:

Period/Year	Customer Relationships		Non-Compete Agreements		Total
July 1 to December 31, 2013	$	715,000	$	50,000	$	765,000
2014	1,112,000		67,000		1,179,000
2015	1,112,000		—		1,112,000
2016	569,000		—		569,000
2017	297,000		—		297,000
2018	197,000		—		197,000
Thereafter	—		—		—

Amortization expense for the three months ended June 30, 2013 and 2012 was $542,000 and $542,000, respectively. Amortization expense for the six months ended June 30, 2013 and 2012 was $1,084,000 and $1,084,000, respectively.

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Share-Based Compensation (Assumption For Fair Value Of Options Granted) (Details)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Risk-free interest rate	1.50%	1.30%
Weighted average expected life	6 years	6 years 9 months 17 days
Expected volatility	38.90%	39.20%
Dividend yield	2.80%	3.60%

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Changes in Accumulated Other Comprehensive Income by Component (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012	Jun. 30, 2013		Jun. 30, 2012
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Accumulated other comprehensive income — December 31, 2012				$ 127	[1]
Other comprehensive income before reclassifications				(72)	[1]
Amounts reclassified from accumulated other comprehensive income				(11)	[1],[2],[3]
Net current period change in other comprehensive income	(106)		(17)	(83)	[1]	(190)
Accumulated other comprehensive income — June 30, 2013	$ 44	[1]		$ 44	[1]

[1] All amounts are net of tax.

[2] Realized gains and losses are recorded pre-tax in the other income - investment and interest caption on our consolidated statements of comprehensive income.

[3] For the six months ended June 30, 2013, the Company recorded $16,000 of realized gains from the sale of available for sale securities. Refer to Note 4 herein for further information.

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Goodwill And Other Intangible Assets (Estimated Amortization Expense For Intangibles Subject To Amortization) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
July 1 to December 31, 2013	$ 765
2014	1,179
2015	1,112
2016	569
2017	297
2018	197
Thereafter	0
Customer relationships [Member]
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
July 1 to December 31, 2013	715
2014	1,112
2015	1,112
2016	569
2017	297
2018	197
Thereafter	0
Non-compete agreements [Member]
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
July 1 to December 31, 2013	50
2014	67
2015	0
2016	0
2017	0
2018	0
Thereafter	$ 0

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Share-Based Compensation (Narrative) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Stock Option Plans [Member]	Jun. 30, 2012 Stock Option Plans [Member]	Jun. 30, 2013 Restricted Stock [Member]	Jun. 30, 2013 Employee Stock Purchase Plan (ESPP) [Member]	Apr. 12, 2011 Employee Stock Purchase Plan (ESPP) [Member] offering	Feb. 12, 2004 Employee Stock Purchase Plan (ESPP) [Member] offering	Jan. 01, 2000 Employee Stock Purchase Plan (ESPP) [Member] offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance	5,550
Shares available for future grant		2,781			2,541
Maximum term of grants		10 years
Options vested and exercisable, period		5 years
Weighted average grant-date fair value of stock options granted		$ 6.81	$ 4.74
Restricted stock granted				6
Weighted average grant date fair value of restricted stock granted				$ 23.50
Number of initial offerings								5
Number of additional offerings						5	8
Stock options authorized to issue to employees					4,050

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Earnings Per Common Share (Computation Of Basic And Diluted Net Earnings Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Net income	$ 12,933	$ 11,320	$ 27,887	$ 19,899
Basic earnings per common share, Income (Numerator)	12,933	11,320	27,887	19,899
Basic earnings per common share, Shares (Denominator)	68,599	67,296	68,531	67,189
Basic earnings per common share (dollars per share)	$ 0.19	$ 0.17	$ 0.41	$ 0.30
Effect of dilutive securities, Options, Shares	771	932	835	966
Effect of dilutive securities, Options, (dollars per share)	$ 0.00	$ 0.00	$ (0.01)	$ (0.01)
Diluted earnings per common share, Income (Numerator)	$ 12,933	$ 11,320	$ 27,887	$ 19,899
Diluted earnings per common share, Shares (Denominator)	69,370	68,228	69,366	68,155
Diluted earnings per common share (dollars per share)	$ 0.19	$ 0.17	$ 0.40	$ 0.29
Options outstanding to purchase common stock excluded from computation of diluted earnings per common share	552	596	548	585
Antidilutive securities excluded from earnings per share, average exercise price	$ 23.50	$ 17.50	$ 23.50	$ 17.50

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Dividends (Dividends Paid) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Dividends [Abstract]
Cash dividend per common share	$ 0.16750	$ 0.16625
Cash dividend per common share based on weighted average number of shares	$ 0.17		$ 0.16	$ 0.33	$ 0.32
Total cash dividends paid	$ 11,516	$ 11,415		$ 22,931	$ 21,803
Record date	May 10, 2013	Feb. 22, 2013
Payment date	Jun. 14, 2013	Mar. 15, 2013

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Allowance for doubtful accounts	$ 3,671	$ 3,970
Accumulated amortization of other intangible assets	$ 11,162	$ 10,078
STOCKHOLDERS’ EQUITY:
Common stock, par value (dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	70,407,000	70,036,000
Common stock, shares outstanding	70,407,000	70,036,000
Common stock in treasury, shares	1,899,000	1,983,000

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Related Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transaction, Due from (to) Related Party [Abstract]

Related Party Transactions

Related Party Transactions

A director is a member of a law firm which was retained by us. In each of the six months ended June 30, 2013 and 2012, fees received from us by such firm did not exceed $120,000 in any period. Additionally, such fees did not exceed, in either period, 5% of such firm’s revenues.

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 27,887	$ 19,899
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,707	2,528
Bad debt provision	650	1,350
Deferred income benefits	(1,305)	(2,405)
Stock-based compensation expense	1,196	1,144
Amortization of premium on marketable securities	303	346
Unrealized loss on marketable securities	0	82
Unrealized gain on deferred compensation fund investments	(759)	(937)
Changes in operating assets and liabilities:
Accounts and notes receivable	(26,812)	(7,891)
Prepaid income taxes	0	3,740
Inventories and supplies	27	(1,906)
Deferred compensation funding	(1,926)	(1,078)
Accounts payable and other accrued expenses	8,454	10,759
Accrued payroll, accrued and withheld payroll taxes	(1,989)	536
Accrued insurance claims	1,137	3,485
Deferred compensation liability	2,922	2,360
Income taxes payable	2,573	0
Prepaid expenses and other assets	(1,085)	(4,630)
Net cash provided by operating activities	13,980	27,382
Cash flows from investing activities:
Disposals of fixed assets	150	10
Additions to property and equipment	(1,702)	(1,825)
Purchases of marketable securities	(4,597)	(6,362)
Sales of marketable securities	3,450	15,784
Net cash (used in) provided by investing activities	(2,699)	7,607
Cash flows from financing activities:
Dividends paid	(22,931)	(21,803)
Reissuance of treasury stock pursuant to Dividend Reinvestment Plan	53	59
Tax benefit from equity compensation plans	1,128	1,051
Proceeds from the exercise of stock options	4,680	2,664
Net cash used in financing activities	(17,070)	(18,029)
Net (decrease) increase in cash and cash equivalents	(5,789)	16,960
Cash and cash equivalents at beginning of the period	68,949	38,639
Cash and cash equivalents at end of the period	63,160	55,599
Supplementary Cash Flow Information:
Income taxes cash payments, net of refunds	8,531	9,782
Issuance of Common Stock in 2013 and 2012, respectively, pursuant to Employee Stock Plans	$ 1,842	$ 1,250

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 63,160		$ 68,949
Marketable securities, at fair value	22,026		21,322
Accounts and notes receivable, less allowance for doubtful accounts of $3,671,000 in 2013 and $3,970,000 in 2012	165,700		140,218
Inventories and supplies	28,648		28,675
Prepaid expenses and other	9,767		8,682
Total current assets	289,301		267,846
Property and equipment:
Laundry and linen equipment installations	2,441		2,336
Housekeeping and office equipment and furniture	26,879		26,098
Autos and trucks	310		315
Property and equipment, gross	29,630		28,749
Less accumulated depreciation	19,427		18,477
Property and equipment, net	10,203		10,272
Goodwill	16,955		16,955
Other intangible assets, less accumulated amortization of $11,162,000 in 2013 and $10,078,000 in 2012	4,119		5,203
Notes receivable — long term portion, net of discount	2,502		1,823
Deferred compensation funding, at fair value	19,757		17,831
Deferred income taxes — long term portion	12,535		11,215
Other noncurrent assets	38		38
Total Assets	355,410		331,183
Current liabilities:
Accounts payable	31,238		22,810
Accrued payroll, accrued and withheld payroll taxes	28,823		31,997
Other accrued expenses	3,081		3,526
Income taxes payable	4,479		1,906
Deferred income taxes	537		575
Accrued insurance claims	7,110		6,850
Total current liabilities	75,268		67,664
Accrued insurance claims — long term portion	16,589		15,712
Deferred compensation liability	20,033		18,237
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value; 100,000,000 shares authorized; 70,407,000 shares issued and outstanding in 2013 and 70,036,000 shares in 2012	704		700
Additional paid-in capital	122,148		113,495
Retained earnings	131,998		127,042
Accumulated other comprehensive income, net of taxes	44	[1]	127	[1]
Common stock in treasury, at cost, 1,899,000 shares in 2013 and 1,983,000 shares in 2012	(11,374)		(11,794)
Total stockholders’ equity	243,520		229,570
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 355,410		$ 331,183

[1] All amounts are net of tax.

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Other Contingencies (Details) (USD $)	1 Months Ended	6 Months Ended		1 Months Ended
	Jul. 31, 2011	Jun. 30, 2013 financial_covenant state	Jun. 30, 2013 Standby Letter Of Credit [Member]	Jan. 31, 2013 Maximum [Member]
Short-term Debt [Line Items]
Bank line of credit		$ 57,000,000
Borrowings under line of credit		0
Irrevocable standby letter of credit, outstanding			43,520,000
Reduction of bank line of credit		$ (43,520,000)
Number of financial covenants		2
Line of credit expiration date		Jun. 30, 2014
Number of states in which entity operates		48
Percentage of reduction to Medicare payments to nursing centers	11.10%
Percentage of reduction of Medicare payments to plans and providers				2.00%

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Changes in Accumulated Other Comprehensive Income by Component (Narrative) (Details) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Changes in Accumulated Other Comprehensive Income (Loss) by Component [Abstract]
Realized gains from the sale of available for sale securities	$ 16

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock-based Compensation Expense

A summary of stock-based compensation expense for the six months ended June 30, 2013 and 2012 is as follows:

	For the Six Months Ended June 30,
	2013		2012
Stock Options	$	997,000	$	949,000
Restricted Stock	14,000		—
Employee Stock Purchase Plan (ESPP)	185,000		195,000
Total pre-tax stock-based compensation expense charged against income (1)	$	1,196,000	$	1,144,000

(1) Stock-based compensation expense is recorded in the selling, general and administrative caption in our consolidated statements of comprehensive income.

Summary Of Other Information Of Stock Option Plans

Other information pertaining to activity of our stock awards during the six months ended June 30, 2013 and 2012 was as follows:

	June 30, 2013		June 30, 2012
Total grant-date fair value of stock awards granted	$	3,412,000	$	2,438,000
Total fair value of stock awards vested during period	$	1,897,000	$	1,870,000
Total unrecognized compensation expense related to non-vested stock awards	$	5,982,000	$	4,948,000

A summary of our stock option activity is as follows:

	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price
December 31, 2012	2,632,000		$	13.18
Granted	564,000		23.50
Cancelled	(49,000	)	18.21
Exercised	(378,000	)	12.46
June 30, 2013	2,769,000		$	15.29

Summarized Information Of Stock Options Outstanding

The following table summarizes other information about stock options at June 30, 2013.

	Stock Options
Range of exercise prices	$3.68 - 23.50
Outstanding:
Weighted average remaining contractual life (years)	6.60
Aggregate intrinsic value	$	25,566,000
Exercisable:
Number of shares	1,174,000
Weighted average remaining contractual life (years)	4.50
Aggregate intrinsic value	$	15,846,000

Assumption For Fair Value Of Options Granted

The fair value of stock awards granted in 2013 and 2012 was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:

	June 30, 2013	June 30, 2012
Risk-free interest rate	1.5%	1.3%
Weighted average expected life in years	6.0 years	6.8 years
Expected volatility	38.9%	39.2%
Dividend yield	2.8%	3.6%

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

The stock-based compensation expense associated with our ESPP was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:

	June 30, 2013	June 30, 2012
Risk-free interest rate	0.24%	0.19%
Weighted average expected life in years	1.0 year	1.0 year
Expected volatility	27.6%	36.5%
Dividend yield	2.8%	3.6%

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Dividends (Narrative) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		0 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2013	Jun. 30, 2012	Jul. 09, 2013 Subsequent Event [Member]
Subsequent Event [Line Items]
Total cash dividends paid	$ 11,516	$ 11,415	$ 22,931	$ 21,803
Dividend declared date					Jul. 09, 2013
Dividend per common share to be paid					$ 0.16875
Dividend payable date	Jun. 14, 2013	Mar. 15, 2013			Sep. 20, 2013
Dividend record date	May 10, 2013	Feb. 22, 2013			Aug. 16, 2013

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Share-Based Compensation (Summary Of Stock Award Activity) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Shares, December 31, 2012	2,632
Granted, Number of Shares	564
Cancelled, Number of Shares	(49)
Exercised, Number of Shares	(378)
Number of Shares, June 30, 2013	2,769
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted Average price, December 31, 2012	$ 13.18
Granted, Weighted Average price	$ 23.50
Cancelled, Weighted Average price	$ 18.21
Exercised, Weighted Average price	$ 12.46
Weighted Average price, June 30, 2013	$ 15.29

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Fair Value Measurements (Marketable Debt Securities) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Amortized Cost	$ 21,953	$ 21,111
Gross Unrealized Gains	130	220
Gross Unrealized Losses	(57)	(9)
Estimated Fair Value	22,026	21,322
Other-than-temporary Impairments	0	0
Municipal bonds - available for sale [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Amortized Cost	21,953	21,111
Gross Unrealized Gains	130	220
Gross Unrealized Losses	(57)	(9)
Estimated Fair Value	22,026	21,322
Other-than-temporary Impairments	$ 0	$ 0

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Fair Value Measurements (Contractual Maturities Of Available For Sale Investments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Maturing in one year or less	$ 7,284	$ 5,164
Maturing after one year through three years	8,000	12,134
Maturing after three years	6,742	4,024
Total debt securities	$ 22,026	$ 21,322

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the six months ended June 30, 2013, our effective tax rate was approximately 28%, a decrease from the 38% effective tax rate for the comparable 2012 period. Such differences between the effective tax rates and the applicable U.S. federal statutory rate arise primarily from the effect of state and local income taxes and tax credits available to the Company. The decrease in the effective tax rate is primarily due to an increase in expected tax credits realized in 2013 for 2012 and 2013 as compared to previous fiscal periods. The Company receives credits related to the Work Opportunity Tax Credit (“WOTC”) program but this program initially expired at December 31, 2011. The WOTC was subsequently renewed, but not until January 2, 2013, as part of The American Taxpayer Relief Act of 2012. Since the WOTC was renewed during the three month period ended March 31, 2013, the total tax effect of additional expected credits for 2012 was included in this period. As such, the effective tax rate is expected to increase in subsequent periods during 2013 and currently is expected to be approximately 32% for the entire year if there are no significant changes.

We account for income taxes using the asset and liability method, which results in recognizing income tax expense based on the amount of income taxes payable or refundable for the current year. Additionally, we evaluate regularly the tax positions taken or expected to be taken resulting from financial statement recognition of certain items. Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax years ended December 31, 2009 through 2012 (with regard to U.S. federal income tax returns) and December 31, 2008 through 2012 (with regard to various state and local income tax returns), the tax years which remain subject to examination by major tax jurisdictions as of June 30, 2013.

We may from time to time be assessed interest or penalties by taxing jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. When we have received an assessment for interest and/or penalties, it has been classified in the financial statements as selling, general and administrative expense.

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Goodwill And Other Intangible Assets (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Goodwill [Line Items]
Goodwill by reportable operating segment	$ 16,955		$ 16,955		$ 16,955
Amortization expense	542	542	1,084	1,084
Customer relationships [Member]
Goodwill [Line Items]
Weighted average amortization period			7 years
Non-compete agreements [Member]
Goodwill [Line Items]
Weighted average amortization period			8 years
Minimum [Member]
Goodwill [Line Items]
Estimated useful life of intangible assets			7 years
Maximum [Member]
Goodwill [Line Items]
Estimated useful life of intangible assets			8 years
Housekeeping Segment [Member]
Goodwill [Line Items]
Goodwill by reportable operating segment	14,894		14,894		14,894
Dietary Segment [Member]
Goodwill [Line Items]
Goodwill by reportable operating segment	$ 2,061		$ 2,061		$ 2,061

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Share-Based Compensation (Summary Of Other Information Of Stock Awards) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Total grant-date fair value of stock options granted	$ 3,412	$ 2,438
Total fair value of options vested during period	1,897	1,870
Total unrecognized compensation expense related to non-vested stock awards	$ 5,982	$ 4,948

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Basic net earnings per share are computed using the weighted-average number of common shares outstanding. The dilutive effect of potential common shares outstanding is included in diluted net earnings per share. The computations of basic net earnings per share and diluted net earnings per share are as follows:

	Three Months Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	12,933,000
Basic earnings per common share	$	12,933,000	68,599,000	$	0.19
Effect of dilutive securities:
Stock options and restricted stock			771,000	—
Diluted earnings per common share	$	12,933,000	69,370,000	$	0.19
	Three Months Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	11,320,000
Basic earnings per common share	$	11,320,000	67,296,000	$	0.17
Effect of dilutive securities:
Stock options and restricted stock			932,000	—
Diluted earnings per common share	$	11,320,000	68,228,000	$	0.17

	Six Months Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	27,887,000
Basic earnings per common share	$	27,887,000	68,531,000	$	0.41
Effect of dilutive securities:
Stock options and restricted stock			835,000	(0.01		)
Diluted earnings per common share	$	27,887,000	69,366,000	$	0.40
	Six Months Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)	Per-share Amount
Net income	$	19,899,000
Basic earnings per common share	$	19,899,000	67,189,000	$	0.30
Effect of dilutive securities:
Stock options and restricted stock			966,000	(0.01		)
Diluted earnings per common share	$	19,899,000	68,155,000	$	0.29

Stock awards to purchase 552,000 and 548,000 shares of common stock having an average exercise price of $23.50 per common share were outstanding during the three and six months ended June 30, 2013 but not included in the computation of diluted earnings per common share because the exercise prices of the options were greater than the average market price of the common shares, and therefore, would be antidilutive.

Stock awards to purchase 596,000 and 585,000 shares of common stock having an average exercise price of $17.50 per common share were outstanding during the three and six months ended June 30, 2012 but not included in the computation of diluted earnings per common share because the exercise prices of the options were greater than the average market price of the common shares, and therefore, would be antidilutive.

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Dividends

6 Months Ended

Jun. 30, 2013

Dividends [Abstract]

Dividends

Dividends

During the six months ended June 30, 2013, we paid regular quarterly cash dividends approximating $22,931,000 as follows:

	Quarter Ended
	March 31, 2013		June 30, 2013
Cash dividend per common share	$	0.16625	$	0.16750
Total cash dividends paid	$	11,415,000	$	11,516,000
Record date	February 22, 2013		May 10, 2013
Payment date	March 15, 2013		June 14, 2013

Additionally, on July 9, 2013, our Board of Directors declared a regular quarterly cash dividend of $0.16875 per common share, which will be paid on September 20, 2013, to shareholders of record as of the close of business on August 16, 2013.

Cash dividends on our outstanding weighted average number of basic common shares for the three and six months ended June 30, 2013 and 2012 was as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Cash dividends per common share	$	0.17	$	0.16	$	0.33	$	0.32

Our Board of Directors reviews our dividend policy on a quarterly basis. Although there can be no assurance that we will continue to pay dividends or the amount of the dividend, we expect to continue to pay a regular quarterly cash dividend. In connection with the establishment of our dividend policy, we adopted a Dividend Reinvestment Plan in 2003.

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Description of Business and Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Description of Business and Significant Accounting Policies

Description of Business and Significant Accounting Policies

Unaudited Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows. However, in our opinion, all adjustments which are of a normal recurring nature and necessary for a fair presentation have been reflected in these consolidated financial statements. The balance sheet shown in this report as of December 31, 2012 has been derived from, and does not include, all the disclosures contained in the financial statements for the year ended December 31, 2012. The financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future period.

Nature of Operations

We provide management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of the health care industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. Although we do not directly participate in any government reimbursement programs, our clients’ reimbursements are subject to government regulation. Therefore, they are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

We provide our services primarily pursuant to full service agreements with our clients. In such agreements, we are responsible for the day-to-day management of the managers and hourly employees located at our clients’ facilities. We also provide services on the basis of a management-only agreement for a very limited number of clients. Our agreements with clients typically provide for a one year service term, cancelable by either party upon 30 to 90 days’ notice after the initial 90-day period.

We are organized into two reportable segments; housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of the managing of the client’s housekeeping department which is principally responsible for the cleaning, disinfecting and sanitizing of patient rooms and common areas of a client’s facility, as well as the laundering and processing of the personal clothing belonging to the facility’s patients. Also within the scope of this segment’s service is the responsibility for laundering and processing of the bed linens, uniforms and other assorted linen items utilized by a client facility.

Dietary consists of managing the client’s dietary department which is principally responsible for food purchasing, meal preparation and providing dietitian consulting professional services, which includes the development of a menu that meets the patient’s dietary needs. We began Dietary operations in 1997.

As of June 30, 2013, we operate two wholly-owned subsidiaries, Huntingdon Holdings, Inc. (“Huntingdon”) and Healthcare Staff Leasing Solutions, LLC (“Staff Leasing”). Huntingdon invests our cash and cash equivalents and manages our portfolio of marketable securities. Staff Leasing is an entity formed in 2011 to offer professional employer organization (“PEO”) services to potential clients in the health care industry. As of June 30, 2013, we have PEO service contracts in two states. During the three and six months ended June 30, 2013 and 2012, operating results from our PEO service contracts were not material.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Healthcare Services Group, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents are held in U.S. financial institutions or in custodial accounts with U.S. financial institutions. Cash and cash equivalents are defined as short-term, highly liquid investments with a maturity of three months or less at time of purchase that are readily convertible into cash and have insignificant interest rate risk.

Inventories and Supplies

Inventories and supplies include housekeeping, linen and laundry supplies, as well as food provisions and supplies. Inventories and supplies are stated at cost to approximate a first-in, first-out (FIFO) basis. Linen supplies are amortized on a straight-line basis over their estimated useful life of 24 months.

Revenue Recognition

Revenues from our service agreements with clients are recognized as services are performed.

As a distributor of laundry equipment, we occasionally sell laundry installations to certain clients. The sales in most cases represent the construction and installation of a turn-key operation and are for payment terms ranging from 24 to 60 months. Our accounting policy for these sales is to recognize the gross profit over the life of the payments associated with our financing of the transactions. During the three and six months ended June 30, 2013 and 2012, laundry installation sales were not material.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current period. We accrue for probable tax obligations as required by facts and circumstances in the various regulatory environments. In addition, deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. If appropriate, we would record a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not.

In accordance with U.S. GAAP, we account for uncertain income tax positions reflected within our financial statements based on a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Earnings per Common Share

Basic earnings per common share are computed by dividing income available to common shareholders by the weighted-average common shares outstanding for the period. Diluted earnings per common share reflect the weighted-average common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock options.

Share-Based Compensation

U.S. GAAP addresses the accounting for share-based compensation, specifically, the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors, including stock options and participation in the Company’s employee stock purchase plan. We estimate the fair value of share-based awards on the date of grant using the Black-Scholes option valuation model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the Company’s consolidated statements of income over the requisite service periods. We use the straight-line single option method of expensing share-based awards in our consolidated financial statements of income. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense will be reduced to account for estimated forfeitures. Forfeitures are to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used for, but not limited to, our allowance for doubtful accounts, accrued insurance claims, asset valuations and review for potential impairment, and deferred taxes. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information. We regularly evaluate this information to determine if it is necessary to update the basis for our estimates and to compensate for known changes.

Concentrations of Credit Risk

Financial instruments, as defined by U.S. GAAP, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents, marketable securities, deferred compensation funding and accounts and notes receivable. We define our marketable securities as fixed income investments which are highly liquid investments that can be readily purchased or sold using established markets. At June 30, 2013 and December 31, 2012, substantially all of our cash and cash equivalents, and marketable securities were held in one large financial institution located in the United States.

Our clients are concentrated in the health care industry, primarily providers of long-term care. Many of our clients’ revenues are highly contingent on Medicare, Medicaid and third party payors’ reimbursement funding rates. Congress has enacted a number of major laws during the past decade that have significantly altered, or threatened to alter, overall government reimbursement for nursing home services. These changes and lack of substantive reimbursement funding rate reform legislation, as well as other 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, could result in significant additional bad debts in the future.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires an entity to include additional disclosures about significant amounts reclassified out of accumulated other comprehensive income by component. An entity has the option to present this information, either on the face of the statement where net income is presented or in the accompanying notes. This ASU does not change current requirements for reporting net income or other comprehensive income under current accounting guidance. This ASU is effective for reporting periods beginning after December 15, 2012. The adoption of this standard in 2013 did not have a material impact on the Company's consolidated results of operations, cash flows, or financial position.

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Subsequent Events (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified			0 Months Ended		0 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jul. 09, 2013 Subsequent Event [Member]	Jul. 12, 2013 Subsequent Event [Member]	Jul. 12, 2013 Platinum Health Services, LLC [Member] Subsequent Event [Member]
Subsequent Event [Line Items]
Cash payments to acquire business, gross					$ 3,800
Assumed debt in conjunction with acquisition					$ 1,200
Number of shares issued or issuable to acquiree					1,200
Company's common stock par value (dollars per share)	$ 0.01	$ 0.01		$ 0.01
Acquisition price paid per share (dollars per share)					$ 24.75
Period used to calculate average price of Company's shares			10 days
Average closing price of Company's shares (dollars per share)			$ 24.81

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Related Party Transactions (Details) (Maximum [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Maximum [Member]
Related Party Transaction [Line Items]
Fees paid to related party firm, maximum	$ 120	$ 120
Percentage of fee paid to related party in relation to related party's total revenue, maximum	5.00%	5.00%

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Fair Value Measurements (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value Disclosures [Abstract]
Unrealized gains/ (losses) from marketable securities	$ 0	$ (26,000)	$ 0	$ (82,000)
Proceeds from available for sale municipal bonds	3,000,000	4,274,000	3,000,000	14,871,000
Realized gain on other income, investment and interest	$ 16,000	$ 41,000	$ 16,000	$ 224,000

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Description of Business and Significant Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Unaudited Interim Financial Data

Unaudited Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows. However, in our opinion, all adjustments which are of a normal recurring nature and necessary for a fair presentation have been reflected in these consolidated financial statements. The balance sheet shown in this report as of December 31, 2012 has been derived from, and does not include, all the disclosures contained in the financial statements for the year ended December 31, 2012. The financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future period.

Nature Of Operations

Nature of Operations

We provide management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of the health care industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. Although we do not directly participate in any government reimbursement programs, our clients’ reimbursements are subject to government regulation. Therefore, they are directly affected by any legislation relating to Medicare and Medicaid reimbursement programs.

We provide our services primarily pursuant to full service agreements with our clients. In such agreements, we are responsible for the day-to-day management of the managers and hourly employees located at our clients’ facilities. We also provide services on the basis of a management-only agreement for a very limited number of clients. Our agreements with clients typically provide for a one year service term, cancelable by either party upon 30 to 90 days’ notice after the initial 90-day period.

We are organized into two reportable segments; housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”).

Housekeeping consists of the managing of the client’s housekeeping department which is principally responsible for the cleaning, disinfecting and sanitizing of patient rooms and common areas of a client’s facility, as well as the laundering and processing of the personal clothing belonging to the facility’s patients. Also within the scope of this segment’s service is the responsibility for laundering and processing of the bed linens, uniforms and other assorted linen items utilized by a client facility.

Dietary consists of managing the client’s dietary department which is principally responsible for food purchasing, meal preparation and providing dietitian consulting professional services, which includes the development of a menu that meets the patient’s dietary needs. We began Dietary operations in 1997.

As of June 30, 2013, we operate two wholly-owned subsidiaries, Huntingdon Holdings, Inc. (“Huntingdon”) and Healthcare Staff Leasing Solutions, LLC (“Staff Leasing”). Huntingdon invests our cash and cash equivalents and manages our portfolio of marketable securities. Staff Leasing is an entity formed in 2011 to offer professional employer organization (“PEO”) services to potential clients in the health care industry. As of June 30, 2013, we have PEO service contracts in two states.

Principles Of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Healthcare Services Group, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents are held in U.S. financial institutions or in custodial accounts with U.S. financial institutions. Cash and cash equivalents are defined as short-term, highly liquid investments with a maturity of three months or less at time of purchase that are readily convertible into cash and have insignificant interest rate risk.

Inventories and Supplies

Inventories and Supplies

Inventories and supplies include housekeeping, linen and laundry supplies, as well as food provisions and supplies. Inventories and supplies are stated at cost to approximate a first-in, first-out (FIFO) basis. Linen supplies are amortized on a straight-line basis over their estimated useful life of 24 months.

Revenue Recognition

Revenue Recognition

Revenues from our service agreements with clients are recognized as services are performed.

As a distributor of laundry equipment, we occasionally sell laundry installations to certain clients. The sales in most cases represent the construction and installation of a turn-key operation and are for payment terms ranging from 24 to 60 months. Our accounting policy for these sales is to recognize the gross profit over the life of the payments associated with our financing of the transactions.

Income Taxes

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current period. We accrue for probable tax obligations as required by facts and circumstances in the various regulatory environments. In addition, deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. If appropriate, we would record a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not.

In accordance with U.S. GAAP, we account for uncertain income tax positions reflected within our financial statements based on a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Earnings per Common Share

Earnings per Common Share

Basic earnings per common share are computed by dividing income available to common shareholders by the weighted-average common shares outstanding for the period. Diluted earnings per common share reflect the weighted-average common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock options.

Share-Based Compensation

Share-Based Compensation

U.S. GAAP addresses the accounting for share-based compensation, specifically, the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors, including stock options and participation in the Company’s employee stock purchase plan. We estimate the fair value of share-based awards on the date of grant using the Black-Scholes option valuation model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the Company’s consolidated statements of income over the requisite service periods. We use the straight-line single option method of expensing share-based awards in our consolidated financial statements of income. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense will be reduced to account for estimated forfeitures. Forfeitures are to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Use of Estimates in Financial Statements

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used for, but not limited to, our allowance for doubtful accounts, accrued insurance claims, asset valuations and review for potential impairment, and deferred taxes. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information. We regularly evaluate this information to determine if it is necessary to update the basis for our estimates and to compensate for known changes.

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

Reportable Operating Segments

U.S. GAAP establishes standards for reporting information regarding operating segments in annual financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group in making decisions on how to allocate resources and assess performance.

We manage and evaluate our operations in two reportable segments: Housekeeping (housekeeping, laundry, linen and other services), and Dietary (dietary department services). Although both segments serve the same client base and share many operational similarities, they are managed separately due to distinct differences in the type of service provided, as well as the specialized expertise required of the professional management personnel responsible for delivering the respective segment’s services. We consider the various services provided within each reportable segment to comprise an identifiable reportable operating segment since such services are rendered pursuant to a single service agreement, specific to that reportable segment, as well as the fact that the delivery of the respective reportable segment’s services are managed by the same management personnel of the particular reportable segment.

The Company’s accounting policies for the segments are generally the same as the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and our consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level which use methods other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized for the consolidated financial statements. As discussed, most corporate expense is not allocated to the operating segments, and such expenses include corporate salary and benefit costs, bad debt expense, certain legal costs, information technology costs, depreciation, amortization of finite lived intangibles, share based compensation costs and other corporate specific costs. Additionally, there are allocations for workers' compensation and general liability expense within the operating segments that differ from our actual expense recorded for U.S. GAAP. Additionally, included in the differences between the reportable segments’ operating results and other disclosed data are amounts attributable to Huntingdon, our investment holding company subsidiary. Huntingdon does not transact any business with the reportable segments. Segment amounts disclosed are prior to any elimination entries made in consolidation.

Housekeeping provides services in Canada, although essentially all of its revenues and net income, 99% in both categories, are earned in one geographic area, the United States. Dietary provides services solely in the United States.

	Housekeeping Services		Dietary Services		Corporate and Eliminations				Total
Three Months Ended June 30, 2013
Revenues	$	183,754,000	$	89,850,000	$	—			$	273,604,000
Income before income taxes	17,632,000		5,341,000		(3,115,000		)	(1)	19,858,000
Three Months Ended June 30, 2012
Revenues	$	183,215,000	$	83,891,000	$	2,000		(1)	$	267,108,000
Income before income taxes	17,671,000		4,620,000		(4,008,000		)	(1)	18,283,000

	Housekeeping Services		Dietary Services		Corporate and Eliminations				Total
Six Months Ended June 30, 2013
Revenues	$	371,384,000	$	176,124,000	$	—			$	547,508,000
Income before income taxes	36,438,000		10,465,000		(8,088,000		)	(1)	38,815,000
Six Months Ended June 30, 2012
Revenues	$	364,397,000	$	163,281,000	$	37,000		(1)	$	527,715,000
Income before income taxes	35,127,000		8,674,000		(11,735,000		)	(1)	32,066,000

(1) Represents primarily corporate office cost and related overhead, recording of transactions at the reportable segment level which use methods other than U.S. GAAP, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.

Total Revenues from Clients

The following revenues earned from clients differ from segment revenues reported above due to the inclusion of adjustments used for segment reporting purposes by management. We earned total revenues from clients in the following service categories:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Housekeeping services	$	123,351,000	$	121,897,000	$	248,944,000	$	243,550,000
Laundry and linen services	59,404,000		60,245,000		120,302,000		118,775,000
Dietary services	89,850,000		83,816,000		176,124,000		163,206,000
Maintenance services and other	999,000		1,150,000		2,138,000		2,184,000
	$	273,604,000	$	267,108,000	$	547,508,000	$	527,715,000

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following tables provide fair value measurement information for our marketable securities and deferred compensation fund investment assets as of June 30, 2013 and December 31, 2012:

	As of June 30, 2013
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds	$	22,026,000	$	22,026,000	$	—	$	22,026,000	$	—
Deferred compensation fund
Money Market	$	3,808,000	$	3,808,000	$	—	$	3,808,000	$	—
Balanced and Lifestyle	3,324,000		3,324,000		3,324,000		—		—
Large Cap Growth	1,706,000		1,706,000		1,706,000		—		—
Small Cap Value	2,172,000		2,172,000		2,172,000		—		—
Fixed Income	7,126,000		7,126,000		7,126,000		—		—
International	887,000		887,000		887,000		—		—
Mid Cap Growth	734,000		734,000		734,000		—		—
Deferred compensation fund	$	19,757,000	$	19,757,000	$	15,949,000	$	3,808,000	$	—

	As of December 31, 2012
					Fair Value Measurement Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Marketable securities
Municipal bonds	$	21,322,000	$	21,322,000	$	—	$	21,322,000	$	—
Deferred compensation fund
Money Market	$	4,114,000	$	4,114,000	$	—	$	4,114,000	$	—
Balanced and Lifestyle	6,311,000		6,311,000		6,311,000		—		—
Large Cap Growth	2,724,000		2,724,000		2,724,000		—		—
Small Cap Value	1,936,000		1,936,000		1,936,000		—		—
Fixed Income	1,461,000		1,461,000		1,461,000		—		—
International	785,000		785,000		785,000		—		—
Mid Cap Growth	500,000		500,000		500,000		—		—
Deferred compensation fund	$	17,831,000	$	17,831,000	$	13,717,000	$	4,114,000	$	—

Marketable Debt Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other-than-temporary Impairments
June 30, 2013
Type of security:
Municipal bonds — available for sale	21,953,000		130,000		(57,000		)	22,026,000		—
Total debt securities	$	21,953,000	$	130,000	$	(57,000	)	$	22,026,000	$	—
December 31, 2012
Type of security:
Municipal bonds — available for sale	21,111,000		220,000		(9,000		)	21,322,000		—
Total debt securities	$	21,111,000	$	220,000	$	(9,000	)	$	21,322,000	$	—

Contractual Maturities Of Available For Sale Investments

The following tables include contractual maturities of debt securities held at June 30, 2013 and December 31, 2012, which are classified as marketable securities in the consolidated Balance Sheet.

	Municipal Bonds — Available for Sale
Contractual maturity:	June 30, 2013		December 31, 2012
Maturing in one year or less	$	7,284,000	$	5,164,000
Maturing after one year through three years	8,000,000		12,134,000
Maturing after three years	6,742,000		4,024,000
Total debt securities	$	22,026,000	$	21,322,000

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Changes in Accumulated Other Comprehensive Income by Component (Tables)

6 Months Ended

Jun. 30, 2013

Changes in Accumulated Other Comprehensive Income (Loss) by Component [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table provides a summary of changes in accumulated other comprehensive income for the six months ended June 30, 2013:

	Unrealized Gains and Losses on Available for Sale Securities (1)
Accumulated other comprehensive income — December 31, 2012	$	127,000
Other comprehensive income before reclassifications	(72,000		)
Amounts reclassified from accumulated other comprehensive income (2)(3)	(11,000		)
Net current period change in other comprehensive income	(83,000		)
Accumulated other comprehensive income — June 30, 2013	$	44,000

(1) All amounts are net of tax.

(2) Realized gains and losses are recorded pre-tax in the other income - investment and interest caption on our consolidated statements of comprehensive income.

(3) For the six months ended June 30, 2013, the Company recorded $16,000 of realized gains from the sale of available for sale securities. Refer to Note 4 herein for further information.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 22, 2013
Document And Entity Information [Abstract]
Entity Registrant Name	HEALTHCARE SERVICES GROUP INC
Entity Central Index Key	0000731012
Document Type	10-Q
Document Fiscal Year Focus	2013
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		69,785,000

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Goodwill And Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Identifiable Intangible Assets Subject To Amortization

The following table sets forth the amounts of our identifiable intangible assets subject to amortization, which were acquired in acquisitions.

	June 30, 2013		December 31, 2012
Customer relationships	$	14,481,000	$	14,481,000
Non-compete agreements	800,000		800,000
Total other intangibles, gross	15,281,000		15,281,000
Less accumulated amortization	11,162,000		10,078,000
Other intangibles, net	$	4,119,000	$	5,203,000

Estimated Amortization Expense For Intangibles Subject To Amortization

The following table sets forth the estimated amortization expense for intangibles subject to amortization for the following five fiscal years:

Period/Year	Customer Relationships		Non-Compete Agreements		Total
July 1 to December 31, 2013	$	715,000	$	50,000	$	765,000
2014	1,112,000		67,000		1,179,000
2015	1,112,000		—		1,112,000
2016	569,000		—		569,000
2017	297,000		—		297,000
2018	197,000		—		197,000
Thereafter	—		—		—