HEALTHCARE SERVICES GROUP Market Penetration

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Forward Looking Statements/Risk Factors This
report includes forward-looking statements that
are subject to risks and uncertainties that could
cause actual results or objectives to differ
materially from those projected. 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 has
completed its previously announced merger on
March 14, 2006) 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 under the 1997 enactment of Medicare
Prospective Payment System. 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 near 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 at our various operational
levels. Furthermore, we believe that our ability
to sustain the internal development of managerial
personnel is an important factor impacting future
operating results and successfully executing
projected growth strategies.
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HEALTHCARE SERVICES GROUPIndustry Trends

• Legislation
• Cost Containment/Managed Care
• The Graying of America
• DRGs
• Subacute Care
• Assisted Living
• Prospective Pay System (PPS)

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HEALTHCARE SERVICES GROUPMarket Penetration

• Long-Term Care
• 23,000
• 110.8 Billion
• 6.6 Billion (6)
• Less than 8
• 13.3 Billion (12)
• Less than 4

• Number of Facilities
• Total Expenditures
• Housekeeping
• Laundry Costs
• Contractual Management
• Food Service Cost
• Contractual Management

Hospitals 6,915 515 Billion 15.4 Billion
(3) 21 30.9 Billion (6) 24
Source American Hospital Association, Dept. of
Health and Human Services, Center for Medicare
and Medicaid Services, Modern Healthcare Survey
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HEALTHCARE SERVICES GROUP

• Largest Independent Housekeeping and Laundry
  Service for Long-Term Care
• Over 1,750 Facilities Under Management
• 90 Client Retention Rate - Base Business
• Long-Term Revenue Stream

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Current Major Markets
Total Long-Term Care Facilities Approximately
17,400
VT 6
WA 17
ONTARIO CANADA 1
ME
MT
ND
MN 28
NH 8
OR 14
MA 79
WI 33
SD 7
RI 20
ID
NY 17
WY 2
MI 21
CT 27
NJ 88
PA 192
IA
NE 31
NV
OH 60
IL 40
DE 4
UT 5
CO 25
IN 68
V WV 4
VA 55
KS 33
MD 24
MO 62
CA 203
KY 20
NC 109
DC 1
TN 26
AZ 8
OK 5
NM
AR 35
SC 36
MS 37
AL 38
GA 61
TX 37
LA 7
FL 150
HEALTHCARE SERVICES GROUP INC.
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Services ( of Sales)
Facilities, Maintenance and Supplies - 1
Linen and Laundry - 24
Food Service - 19
Housekeeping - 56
HEALTHCARE SERVICES GROUP
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HEALTHCARE SERVICES GROUP
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
DISTRICT MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
FACILITY MANAGEMENT
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HEALTHCARE SERVICES GROUPOperational Management
Structure
Over 1,750 Facilities
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HEALTHCARE SERVICES GROUPMarketing and Sales
Structure
President Vice President - Marketing Director of
Corporate Sales
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HEALTHCARE SERVICES GROUPSources of Growth

• Geographic Expansion of Regional and Local
  Clients
• National Chains
• New Facilities of Existing Clients
• Sale of Linen Services to New and Existing
  Clients
• Sale of Food Services to New and Existing Clients

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HEALTHCARE SERVICES GROUPThe Advantage

• Demonstrated Cost Savings to Long-Term Care
  Facilities
• Superior Professional Management System
• National Network to Service Local, Regional and
  National Accounts
• Substantial Capacity to Generate Incremental
  Business with Existing Infrastructure

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Revenues (000)
6 Months Ended, June 30th

HEALTHCARE SERVICES GROUP
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Net Income (000)

6 Months Ended, June 30th
HEALTHCARE SERVICES GROUP
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HEALTHCARE SERVICES GROUPInvestment
Considerations2nd Quarter 6/30/06

• Cash - 92.3 million
• Current Assets - 173.3 million
• Current Ratio - 71
• Stockholder Equity - 156.8 million
• Dividend - .48 p/share annually (post 32
  split)
• Book Value - 5.58

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HEALTHCARE SERVICES GROUPGrowth Objectives

• Expand Established Regions Locally
• Local Operators
• National Chains
• Expand Food Service to Client Base
• 90 Client Retention Rate

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Growth Objectives
25 Growth Rate in Existing Base
VT 6
WA 17
ONTARIO CANADA 1
ME
MT
ND
MN 28
NH 8
OR 14
MA 79
WI 33
SD 7
RI 20
ID
NY 17
WY 2
MI 21
CT 27
NJ 88
PA 192
IA
NE 31
NV
OH 60
IL 40
DE 4
UT 5
CO 25
IN 68
V WV 4
VA 55
KS 33
MD 24
MO 62
CA 203
KY 20
NC 109
DC 1
TN 26
AZ 8
OK 5
NM
AR 35
SC 36
MS 37
AL 38
GA 61
TX 37
LA 7
FL 150
HEALTHCARE SERVICES GROUP INC.
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HEALTHCARE SERVICES GROUPOpportunity

• Graying of America/Cost Containment
• Growing Market with Little Competition
• Organization in Place for Growth