sec document
As filed with the Securities and Exchange Commission on September 29, 2006
Registration No. 333-
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
HEALTHCARE SERVICES GROUP, INC.
-------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 23-201836
------------ ---------
(State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization) Identification Number)
3220 Tillman Drive
Glenview Corporate Center, Suite 300
Bensalem, Pennsylvania 19020
(215) 639-4274
---------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Daniel P. McCartney
Chairman and Chief Executive Officer
Healthcare Services Group, Inc.
3220 Tillman Drive
Glenview Corporate Center, Suite 300
Bensalem, Pennsylvania 19020
(215) 639-4274
---------------------------------------
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
-----------------------------------
Copies to:
Victor M. Rosenzweig, Esq.
Kenneth A. Schlesinger, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
----------------------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. | |
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. | |
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. | |
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the
Securities Act, check the following box. | |
If this form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box. | |
CALCULATION OF REGISTRATION FEE
==========================================================================================================================
Proposed Maximum Proposed Maximum
Amount to be Offering Price Aggregate Offering Amount of Registration
Title of Shares to be Registered Registered(1) Per Share Price Fee
--------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value per 368,572 $24.46 (2) $9,015,271.12 $964.63
share
--------------------------------------------------------------------------------------------------------------------------
(1) In the event of a stock split, stock dividend and similar transactions
involving the Registrant's Common Stock, $0.01 par value per share, the
shares registered hereby shall automatically be increased or decreased
pursuant to Rule 416 of the Securities Act of 1933, as amended.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act, based on the average
of the high and low prices of the Registrant's Common Stock on the
Nasdaq Global Market on September 25, 2006.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2006
PROSPECTUS
368,572 SHARES OF COMMON STOCK
HEALTHCARE SERVICES GROUP, INC.
This prospectus relates to the offer and sale by the selling
stockholders identified in this prospectus of up to an aggregate 368,572 shares
of our common stock. We will not receive any proceeds from the sale of our
common stock under this prospectus.
The selling stockholders may sell the securities from time to time on
any stock exchange or automated interdealer quotation system on which the
securities are listed, in the over-the-counter market, in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at prices otherwise negotiated.
Our principal executive offices are located at the 3220 Tillman Drive,
Glenview Corporate Center, Suite 300, Bensalem, Pennsylvania 19020. Our
telephone number is (215) 639-4274.
Our common stock is listed on the Nasdaq Global Market under the symbol
"HCSG." The last reported sale price for our common stock on September 28, 2006
was $25.38 per share.
--------------------------------------------------------------------------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
The date of this prospectus is ________ ____, 2006.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary......................................................... 1
Summary of the Company..................................................... 1
Summary of the Offering.................................................... 1
Risk Factors............................................................... 2
Where You Can Find More Information........................................ 4
Special Note Regarding Forward-Looking Statements.......................... 5
Incorporation By Reference................................................. 6
Use of Proceeds............................................................ 7
Selling Stockholders....................................................... 7
Plan of Distribution....................................................... 8
Legal Matters.............................................................. 9
Experts.................................................................... 9
You should rely only on the information contained in this prospectus or
any accompanying supplemental prospectus and the information specifically
incorporated by reference. We have not authorized anyone to provide you with
different information or make any additional representations. This is not an
offer of these securities in any state or other jurisdiction where the offer is
not permitted. You should not assume that the information contained in or
incorporated by reference into this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of each of such
documents.
ii
PROSPECTUS SUMMARY
This summary represents a summary of all material terms of the offering
and only highlights the more detailed information that appears elsewhere, or
incorporated by reference, in this prospectus. This summary may not contain all
the information important to you as an investor. Accordingly, you should
carefully read this entire prospectus before deciding whether to invest in our
common stock.
Unless the context otherwise requires, all references to "we," "us," or
"the Company" in this prospectus refer collectively to Healthcare Services
Group, Inc., a Pennsylvania corporation, and its subsidiaries.
SUMMARY OF THE COMPANY
The Company is a Pennsylvania corporation, incorporated on November 22,
1976. We provide housekeeping, laundry, linen, facility maintenance and food
services to the health care industry, including nursing homes, retirement
complexes, rehabilitation centers and hospitals located throughout the United
States. Based on the nature and similarities of the services provided, our
business operations consist of two business segments (Housekeeping segment and
Food segment). We believe that we are the largest provider of housekeeping and
laundry services to the long-term care industry in the United States, rendering
such services to approximately 1,700 facilities in 45 states as of December 31,
2005. 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 also have historically operated two wholly-owned subsidiaries, HCSG
Supply, Inc. ("Supply") and Huntingdon Holdings, Inc. ("Huntingdon"). Supply
purchases, warehouses and distributes essentially all of the supplies and
equipment used in providing our Housekeeping segment services. Additionally, it
warehouses and distributes a limited number of supply items used in providing
our Food segment services. Huntingdon invests our cash and cash equivalents. As
a result of our acquisition of Summit Services Group, Inc. as described under
"Summary of the Offering" below, we now have a third wholly-owned subsidiary
which operates the business of Summit Services Group, Inc. which provides
housekeeping, laundry, linen, facility maintenance and food services to the
health care industry, including nursing homes, retirement complexes,
rehabilitation centers and hospitals located throughout the United States.
Our principal executive offices are located at 3220 Tillman Drive,
Glenview Corporate Center, Suite 300, Bensalem, Pennsylvania 19020. Our
telephone number at such location is (215) 639-4274.
SUMMARY OF THE OFFERING
This prospectus relates to the offer and sale, from time to time, of up
to 368,572 shares of our common stock by the selling stockholders listed below.
The shares of common stock being offered under this prospectus were acquired
from us by the selling stockholders pursuant to our acquisition of Summit
Services Group, Inc., pursuant to an agreement and plan of merger, executed on
September 18, 2006, by and among us, HCSG, Inc., HCSG Merger, LLC, Summit
Services Group, Inc., Joseph S. Cuzzupoli, John A. Bullock, Lawrence G. Freni,
Wellfleet Capital Partners, Inc. and Navone Investments, LLC. In connection with
1
the closing, we agreed to register the resale of such common stock with the
Securities and Exchange Commission.
Our registration of the resale of our common stock does not necessarily
mean that all or any portion of such common stock will be offered for resale by
the selling stockholders. We will not receive any proceeds from the sale of our
common stock under this prospectus. We have agreed to bear the expenses of
registering the shares under all federal and state securities laws.
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. THE
RISK FACTORS LISTED BELOW ARE THOSE THAT WE CONSIDER TO BE MATERIAL TO AN
INVESTMENT IN OUR COMMON STOCK AND THOSE WHICH, IF REALIZED, COULD HAVE MATERIAL
ADVERSE EFFECTS ON OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS AS
SPECIFICALLY DISCUSSED BELOW. IF SUCH AN ADVERSE EVENT OCCURS , THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT. BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE YOU DECIDE WHETHER TO
PURCHASE OUR COMMON STOCK. THIS SECTION INCLUDES OR REFERS TO CERTAIN
FORWARD-LOOKING STATEMENTS. YOU SHOULD REFER TO THE EXPLANATION OF THE
QUALIFICATIONS AND LIMITATIONS ON SUCH FORWARD-LOOKING STATEMENTS DISCUSSED ON
PAGE 5.
WE HAVE ONE CLIENT, A NURSING HOME CHAIN, WHICH DUE TO ITS SIGNIFICANT
CONTRIBUTION TO OUR TOTAL REVENUES, WE CONSIDER A MAJOR CLIENT.
Our major client accounted for 19% of our total consolidated revenues
for each of the six months ended June 30, 2006 and the year ended December 31,
2005 and accounted for 17% and 27% of our Housekeeping segment and Food segment
revenues, respectively, for the six months ended June 30, 2006 and for 18% and
27% of our Housekeeping segment and Food segment revenues, respectively, for the
year ended December 31, 2005. At December 31, 2005, amounts due from such client
represented less than 1% of our accounts receivable balance. This client
completed its previously announced merger on March 14, 2006. Our relationship
with the successor entity remains under the same terms and conditions as
established prior to the merger. Although we expect to continue the relationship
with this client's successor, there can be no assurance thereof, and the loss of
such client would have a material adverse effect on the results of operations of
our two operating segments. In addition, if such client's successor changes its
payment terms, it would increase our accounts receivable balance and have a
material adverse effect on our cash flows and cash equivalents.
OUR CLIENTS ARE CONCENTRATED IN THE HEALTH CARE INDUSTRY.
We provide our services primarily to providers of long-term care. The
Balance Budget Act of 1997 changed Medicare policy in a number of ways, most
notably the phasing in, effective July 1, 1998 of a Medicare Prospective Payment
System for skilled nursing facilities which significantly changed the manner and
the amounts of reimbursement they receive. Many of our clients' revenues are
highly contingent on Medicare and Medicaid reimbursement funding rates.
Therefore, they have been and continue to be adversely affected by changes in
applicable laws and regulations, as well as other trends in the long-term care
industry. This has resulted in certain of our clients filing for bankruptcy
2
protection. Others may follow. 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. In addition, the prospects for
legislative relief are uncertain. We are unable to predict or to estimate the
ultimate impact of any further changes in reimbursement programs affecting our
clients' future results of operations and/or their impact on our cash flows and
operations.
WE HAVE A PAID LOSS RETROSPECTIVE INSURANCE PLAN FOR GENERAL LIABILITY
AND WORKERS' COMPENSATION INSURANCE.
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. 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 results of
operations and financial condition.
WE PROVIDE SERVICES IN 45 STATES AND ARE SUBJECT TO NUMEROUS LOCAL
TAXING JURISDICTIONS WITHIN THOSE STATES.
The taxability of our services is subject to various interpretations
within the taxing jurisdictions of our markets. 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 which we may not be able to pass on to our clients or
could negatively impact our competitive position in the respective location.
WE PRIMARILY PROVIDE OUR SERVICES PURSUANT TO AGREEMENTS WHICH HAVE A
ONE YEAR TERM, CANCELABLE BY EITHER PARTY UPON 30 TO 90 DAYS' NOTICE AFTER THE
INITIAL 90-DAY SERVICE AGREEMENT PERIOD.
We do not enter into long-term contractual agreements with our clients
for the rendering or our services. Consequently, our clients have the ability to
unilaterally decrease the amount of services we provide or terminate all
services pursuant to the terms of our service agreements. Any loss of clients
during the first year of providing services, for which we have incurred
significant start-up costs or invested in an equipment installation, could in
the aggregate materially adversely affect our consolidated results of operations
and financial position.
WE ARE DEPENDENT ON THE MANAGEMENT EXPERIENCE OF OUR KEY PERSONNEL.
We manage and provide our services through a network of management
personnel, from the on-site facility manager up to the executive officers of the
company. Therefore, we believe that our ability to recruit and sustain the
internal development of managerial personnel is an important factor impacting
future operating results and our ability to successfully execute projected
growth strategies. Our professional management personnel are the key personnel
in maintaining and selling additional services to current clients and obtaining
new clients.
3
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE THE OPERATIONS OF SUMMIT
SERVICES GROUP, INC. WITH OUR
OPERATIONS.
We acquired Summit Services Group, Inc. pursuant to an agreement and
plan of merger dated September 18, 2006. Integration of the operations of Summit
Services Group, Inc. with our operations involve, among others, the following
risks:
o substantial retention of Summit Services Group, Inc.'s
existing clients;
o unanticipated or excessive diversion of management's
resources;
o integration of new operations and personnel; and
o failure to achieve expected financial results.
Because of these and other risks, our acquisition of Summit Services
Group, Inc. could have a material adverse effect on our business, financial
condition and results of operations. If we are unable to successfully address
any of these risks, our overall business could be harmed.
WE MAY IN GENERAL BE ADVERSELY AFFECTED BY INFLATIONARY OR MARKET
FLUCTUATIONS IN THE COST OF PRODUCTS CONSUMED IN PROVIDING OUR SERVICES OR OUR
COST OF LABOR.
The prices we pay for the principal items we consume in performing our
services are dependent primarily on current market price. Additionally, our cost
of labor may be influenced by unanticipated factors in certain market areas or
increases in collective bargaining agreements of our clients, to which we
assent. Although we endeavor to pass on, as price increases, such increased
costs, any inability or delay in passing on such increases in costs could
negatively impact our profitability.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission for the resale of the common stock being offered under
this prospectus. This prospectus does not contain all the information set forth
in the registration statement. You should refer to the registration statement
and its exhibits for additional information. Whenever we make references in this
prospectus to any of our contracts, agreements or other documents, the
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for the copies of the actual contract,
agreement or other document.
You should rely only on the information and representations provided or
incorporated by reference in this prospectus or any related supplement. We have
not authorized anyone else to provide you with different information. The
selling stockholders will not make an offer to sell these shares in any state
where the offer is not permitted. You should not assume that the information in
this prospectus or any supplement is accurate as of any date other than the date
on the front of each such document.
4
The Securities and Exchange Commission maintains an Internet site at
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding us. You may also read and copy any document we
file with the Securities and Exchange Commission at its Public Reference Room,
100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus 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, as amended, that 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", "intends", "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 risks and uncertainties include,
but are not limited to, risks arising from our providing services exclusively to
the health care industry, primarily providers of long-term care; credit and
collection risks associated with this industry; one client accounting for
approximately 19% of 2006 six month period revenues (the client completed its
previously announced merger on March 14, 2006); risks associated with our
acquisition of Summit Services Group, Inc., including integration risks and
costs, or such business not achieving expected financial results or synergies or
failure to otherwise perform as expected; our claims' experience related to
workers' compensation and general liability insurance; the effects of changes
in, or interpretations of laws and regulations governing the industry, including
state and local regulations pertaining to the taxability of our services; and
risk factors described in our Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 2005 in Part I thereof under
"Government Regulation of Clients", "Competition" and "Service
Agreements/Collections" and "Risk Factors". Many of our clients' revenues are
highly contingent on Medicare and Medicaid reimbursement funding rates, which
have been and continue to be adversely affected by the change in Medicare
payments created by the Medicare Prospective Payment System enacted pursuant to
the Balanced Budget Act of 1997.
That change, and the lack of substantive reimbursement funding rate
reform legislation, as well as other trends in the long-term care industry have
resulted in certain of our clients filing for bankruptcy protection. Others may
follow. Any decisions by the government to discontinue or adversely modify
legislation related to reimbursement funding rates will have a material adverse
affect on our clients. 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 future. Additionally, our operating results would also be
adversely affected if unexpected increases in the costs of labor and labor
related costs, materials, supplies and equipment used in performing our services
could not be passed on to 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
5
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.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring to those documents. The information we
incorporate by reference is considered to be a part of this prospectus and
information that we file later with the Securities and Exchange Commission will
automatically update and replace this information. We incorporate by reference
the documents listed below and any future filings we make with the Securities
and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended prior to the termination of this
offering:
(1) Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2006;
(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2006;
(3) Our Annual Report on Form 10-K for the fiscal year ended December 31,
2005;
(4) Our Current Report on Form 8-K filed on September 21, 2006;
(5) Our Current Report on Form 8-K filed on July 19, 2006;
(6) Our Current Report on Form 8-K filed on April 19, 2006;
(7) Our Current Report on Form 8-K filed on February 15, 2006;
(8) Our Current Report on Form 8-K filed on January 25, 2006;
(9) The description of our common stock contained in our registration
statement on Form 8-A filed on April 30, 1984, including any amendments
or reports filed for the purpose of updating such descriptions.
You may request a copy of these filings (excluding the exhibits to such
filings which we have not specifically incorporated by reference in such
filings) at no cost, by writing or telephoning us at:
Healthcare Services Group, Inc.
Richard W. Hudson, Secretary
3220 Tillman Drive
Glenview Corporate Center, Suite 300
Bensalem, Pennsylvania 19020
(215) 639-4274
6
USE OF PROCEEDS
The selling stockholders will receive all the proceeds from the sale of
our common stock under this prospectus. Accordingly, we will not receive any
part of the proceeds from the sale of our common stock under this prospectus.
SELLING STOCKHOLDERS
The following table sets forth the name of each of the selling
stockholders, the number of shares beneficially owned by each of the selling
stockholders, the number of shares that may be offered under this prospectus and
the number of shares of common stock owned by each of the selling stockholders
after the offering is completed. None of the selling stockholders has been an
officer, director or had any material relationship with us within the past three
years.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities.
Number of
Common
Number of Shares/Percentage
Common Number of of Class to Be
Shares Owned Common Owned After
Prior to the Shares to Completion of
Name Offering be Offered the Offering
---- -------- ---------- ------------
Joseph S. Cuzzupoli 135,110 135,110 0/0.0%
John A. Bullock 110,545 110,545 0/0.0%
Lawrence G. Freni 15,000 15,000 0/0.0%
Wellfleet Capital Partners,
Inc. (1) 9,354 9,354 0/0.0%
Navone Investments, LLC (2) 98,563 98,563 0/0.0%
TOTAL: 368,572 368,572
(1) P.H. Benjamin Chang, an officer of Wellfleet Capital Partners,
Inc., has voting and dispositive power over the shares of common stock
held by Wellfleet Capital Partners.
(2) S. Keith Pritchard, a member of Navone Investments, LLC, has voting and
dispositive power over the shares of common stock held by Navone
Investments, LLC
Our registration of the shares included in this prospectus does not
necessarily mean that each of the selling stockholders will opt to sell any of
the shares offered hereby. The shares covered by this prospectus may be sold
from time to time by the selling stockholders so long as this prospectus remains
in effect.
Each of the selling stockholders acquired shares of our common stock
pursuant to our acquisition of Summit Services Group, Inc., and, at the time of
their receipt of our common stock, none of the selling stockholders had any
agreements or understandings directly or indirectly with any person to
distribute our common stock.
7
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, donees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. Subject to compliance with applicable law, the
selling stockholders may use any one or more of the following methods when
selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
Upon our being notified in writing by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
common stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
8
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act of 1933, disclosing (i) the name of each such selling stockholder
and of the participating broker-dealer(s), (ii) the number of shares involved,
(iii) the price at which such shares of common stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction.
The selling stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933. Each selling
stockholder has represented and warranted to us that he or she does not have any
agreement or understanding, directly or indirectly, with any person to
distribute the common stock.
We are required to pay all fees and expenses incident to the
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act of 1933.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Shares
offered hereby have been passed upon for the Company by Olshan Grundman Frome
Rosenzweig & Wolosky LLP, 65 East 55th Street, New York, New York 10022. Robert
L. Frome, a member of Olshan Grundman Frome Rosenzweig & Wolosky LLP, is a
director of the registrant and beneficially owns 6,750 shares and holds options
to purchase 53,501 shares of Common Stock of the Company. Another partner of
such Firm owns 14,011 shares and holds options to purchase 12,475 shares of
Common Stock of the Company. The shares underlying the options held by Mr. Frome
and the other partner of such Firm were previously registered.
EXPERTS
The financial statements as of December 31, 2005 and 2004 and for each
of the years in the three year period ended December 31, 2005 as well as
management's assessment of the effectiveness of internal control over financial
reporting as of December 31, 2005, incorporated in this prospectus and in the
registration statements by reference to the Annual Report on Form 10-K of
Healthcare Services Group, Inc. for the year ended December 31, 2005, have been
audited by Grant Thornton LLP, an independent registered public accounting firm,
as stated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of Grant Thornton LLP as experts
in accounting and auditing.
9
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses which will be paid
by the Company in connection with the securities being registered. With the
exception of the Securities and Exchange Commission registration fee, all
amounts shown are estimates.
SEC registration fee.............................................. $ 964.63
Legal fees and expenses........................................... $ 25,000.00
Accounting Fees and Expenses...................................... $ 25,000.00
Miscellaneous..................................................... $ 1,035.37
-------------
Total.................................................... $ 52,000.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 1741 through 1750 of Subchapter C of Chapter 17 of the
Pennsylvania Business Corporation Law (the "BCL") contain, among other things,
provisions for mandatory and discretionary indemnification of a corporation's
directors, officers and other personnel.
Under Section 1741, unless otherwise limited by its by-laws, a
corporation has the power to indemnify directors and officers under certain
prescribed circumstances against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with a threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative, to which any of them
is a party or threatened to be made a party by reason of his being a
representative, director or officer of the corporation or serving at the request
of the corporation as a representative of another corporation, partnership,
joint venture, trust or other enterprise, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action or
proceeding by judgment, order, settlement or conviction or upon a plea of nolo
contendere or its equivalent does not of itself create a presumption that the
person did not act in good faith and in a manner that he reasonably believed to
be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 1742 provides for indemnification with respect to derivative
actions similar to that provided by Section 1741. However, indemnification is
not provided under Section 1742 with respect to any claim, issue or matter as to
which a director or officer has been adjudged to be liable to the corporation
unless and only to the extent that the court of common pleas of the judicial
district embracing the county in which the registered office of the corporation
is located or the court in which the action was brought determines upon
application that, despite the adjudication of liability but in view of all of
the circumstances of the case, a director or officer is fairly and reasonably
entitled to indemnity for the expenses that the court deems proper.
II-1
Section 1743 provides that indemnification against expenses is
mandatory to the extent that the director or officer has been successful on the
merits or otherwise in defense of any such action or proceeding referred to in
Section 1741 or 1742.
Section 1744 provides that unless ordered by a court, any
indemnification under Section 1741 or 1742 shall be made by the corporation as
authorized in the specific case upon a determination that indemnification of
directors and officers is proper because the director or officer met the
applicable standard of conduct, and such determination will be made by the Board
of Directors by a majority vote of a quorum of directors not parties to the
action or proceeding; if a quorum is not obtainable or if obtainable and a
majority of disinterested directors so directs, by independent legal counsel; or
by the shareholders.
Section 1745 provides that expenses incurred by a director or officer
in defending any action or proceeding referred to in the Subchapter may be paid
by the corporation in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined by a court
having jurisdiction that he is not entitled to be indemnified by the
corporation.
Section 1746 provides generally that except in any case where the act
or failure to act giving rise to the claim for indemnification is determined by
a court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by the Subchapter shall not
be deemed exclusive of any other rights to which a director or officer seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding that office.
Section 1747 also grants a corporation the power to purchase and
maintain insurance on behalf of any director or officer against any liability
incurred by him in his capacity as officer or director, whether or not the
corporation would have the power to indemnify him against the liability under
this Subchapter of the BCL.
Sections 1748 and 1749 apply the indemnification and advancement of
expenses provisions contained in the Subchapter to successor corporations
resulting from consolidation, merger or division and to service as a
representative of a corporation or an employee benefit plan.
The foregoing provisions substantially overlap the provisions of the
Pennsylvania Directors' Liability Act, 42 Pa. C.S. ss. 8365, which are also
applicable to the Company.
Article XI of the Company's By-laws provides, in part, that the Company
shall indemnify its directors, officers, employees and agents to the fullest
extent permitted by the BCL.
Article XII of the Company's By-laws provides, in part, that:
"A Director shall not be liable for monetary damages as such
for any action taken, or any failure to take action, unless (1): the
director has breached or failed to perform the duties of his office
under Section 8363 of the Pennsylvania Consolidated Statutes and the
breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness; provided, however, that the foregoing
provision shall not relieve a director of responsibility or liability
of a director pursuant to any criminal statute or for the payment of
taxes pursuant to local, state or Federal law."
II-2
The Company has purchased director and officer liability insurance for
its directors and officers.
ITEM 16. EXHIBITS.
Exhibit No. Description
5.1* Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP
with respect to legality of the Common Stock.
23.1* Consent of Grant Thornton LLP, an independent registered public
accounting firm.
23.2* Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
included in Exhibit No. 5.1.
24.1* Power of Attorney, included on the signature page to this
Registration Statement.
------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
II-3
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser:
If the registrant is relying on Rule 430B:
(a) Each prospectus filed by the registrant
pursuant to Rule 424(b)(3) shall be deemed to be part
of the registration statement as of the date the
filed prospectus was deemed part of and included in
the registration statement; and
(b) Each prospectus required to be filed
pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part
of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a)
of the Securities Act of 1933 shall be deemed to be
part of and included in the registration statement as
of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the
first contract of sale of securities in the offering
described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the
registration statement relating to the securities in
the registration statement to which that prospectus
relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no
statement made in a registration statement or
prospectus that is part of the registration statement
or made in a document incorporated or deemed
incorporated by reference into the registration
statement or prospectus that is part of the
registration statement will, as to a purchaser with a
time of contract of sale prior to such effective
date, supersede or modify any statement that was made
in the registration statement or prospectus that was
part of the registration statement or made in any
such document immediately prior to such effective
date; or
II-4
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities: The undersigned registrant undertakes that in a
primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
registration will be a seller to the purchaser and will be considered to offer
or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the
offering prepared by or on behalf of the undersigned
registrant or used or referred to by the undersigned
registrant;
(iii) The portion of any other free writing
prospectus relating to the offering containing material
information about the undersigned registrant or its securities
provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-5
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Bensalem, Commonwealth of Pennsylvania, on this
29th day of September, 2006.
HEALTHCARE SERVICES GROUP, INC.
(Registrant)
/s/ Daniel P. McCartney
--------------------------------------------
Daniel P. McCartney, Chief Executive Officer
and Chairman
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each of the undersigned officers and
directors of Healthcare Services Group, Inc. hereby constitutes and appoints
Daniel P. McCartney, Thomas A Cook and Richard W. Hudson and each of them
singly, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him in his name in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and to prepare any and all exhibits thereto, and other documents in
connection therewith, and to make any applicable state securities law or blue
sky filings, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done to enable Healthcare Services Group, Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Daniel P. McCartney
---------------------------
Daniel P. McCartney Chief Executive Officer and Chairman September 29, 2006
/s/ Thomas A. Cook
---------------------------
Thomas A. Cook Director, President and Chief Operating Officer September 29, 2006
/s/ Barton D. Weisman
---------------------------
Barton D. Weisman Director September 29, 2006
II-7
/s/ Robert L. Frome
---------------------------
Robert L. Frome Director September 29, 2006
/s/ John M. Briggs
---------------------------
John M. Briggs Director September 29, 2006
/s/ Robert J. Moss
---------------------------
Robert J. Moss Director September 29, 2006
/s/ Joseph F. McCartney
---------------------------
Joseph F. McCartney Director and Divisional Vice President September 29, 2006
/s/ James L. DiStefano
---------------------------
James L. DiStefano Chief Financial Officer and Treasurer September 29, 2006
/s/ Richard W. Hudson
---------------------------
Richard W. Hudson Vice President - Finance
and Secretary (Principal Accounting Officer) September 29, 2006
II-8