Forward Looking Statements/Risk Factors

2. 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.

3. HEALTHCARE SERVICES GROUPIndustry Trends • Legislation • Cost Containment/Managed Care • The “Graying” of America • DRGs • Subacute Care • Assisted Living • Prospective Pay System (PPS)

4. Number of Facilities Total Expenditures Housekeeping & Laundry Costs Contractual Management Food Service Cost Contractual Management Long-Term Care 23,000 $110.8 Billion $6.6 Billion (6%) Less than 8% $13.3 Billion (12%) Less than 4% HEALTHCARE SERVICES GROUPMarket Penetration 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

5. 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

6. Current Major Markets Total Long-Term Care Facilities Approximately 17,400 VT 6 WA 17 ONTARIO CANADA 1 MT ND ME 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.

7. Services (% of Sales) Facilities, Maintenance and Supplies - 1% Linen and Laundry - 24% Food Service - 19% Housekeeping - 56% HEALTHCARE SERVICES GROUP

8. 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

9. 5 Divisions 45 Regions 185 Districts HEALTHCARE SERVICES GROUPOperational Management Structure Over 1,750 Facilities

10. Corporate Divisional Vice Presidents Divisional Regional Vice Presidents / Managers Regional Directors Regional District Managers District HEALTHCARE SERVICES GROUPMarketing and Sales Structure President Vice President - Marketing Director of Corporate Sales

11. 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

12. 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

13. Revenues (000) 6 Months Ended, June 30th HEALTHCARE SERVICES GROUP

14. Net Income (000) 6 Months Ended, June 30th HEALTHCARE SERVICES GROUP

15. HEALTHCARE SERVICES GROUPInvestment Considerations2nd Quarter 6/30/06 • Cash - $92.3 million • Current Assets - $173.3 million • Current Ratio - 7:1 • Stockholder Equity - $156.8 million • Dividend - $.48 p/share – annually (post 3:2 split) • Book Value - $5.58

16. HEALTHCARE SERVICES GROUPGrowth Objectives • Expand Established Regions Locally • Local Operators • National Chains • Expand Food Service to Client Base • 90% Client Retention Rate

17. Growth Objectives 25% Growth Rate in Existing Base VT 6 WA 17 ONTARIO CANADA 1 MT ND ME 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.

18. HEALTHCARE SERVICES GROUPOpportunity • “Graying” of America/Cost Containment • Growing Market with Little Competition • Organization in Place for Growth