Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Neil Berkman, Investor Relations, 310-826-5051, nberkman@berkmanassociates.com

Larry Gerdes, Chief Executive Officer, 678-808-0600, larry.gerdes@trcr.com

Lance Cornell, Chief Financial Officer, 678-808-0600, lance.cornell@trcr.com

 

 

October 28, 2010

(BW) (TRANSCEND SERVICES, INC.) (TRCR)

TRANSCEND REPORTS THIRD QUARTER 2010 RESULTS – DILUTED EARNINGS PER

SHARE INCREASES TO $0.24 ON 43% NET INCOME GROWTH

Atlanta, Georgia. TRANSCEND SERVICES, INC. (NASDAQ: TRCR), a leading provider of clinical documentation services to the U.S. healthcare market, today announced its unaudited financial results for the third quarter ended September 30, 2010.

Third Quarter Results

Revenue for the third quarter of 2010 increased 24% to $22,916,000 compared to $18,491,000 for the third quarter of 2009. Excluding revenue contributed by Transcend’s August 2009 acquisition of MDSI, revenue increased 10%.

Gross profit for the third quarter of 2010 increased 32% to $8,671,000, or 38% of revenue compared to $6,574,000, or 36% of revenue, for the third quarter of 2009.

Operating income for the third quarter of 2010 increased 43% to $4,270,000, or 19% of revenue, compared to $2,979,000, or 16% of revenue (including $144,000 of MDSI transaction-related costs) for the third quarter of 2009.

Net income for the third quarter of 2010 increased 43% to $2,615,000 compared to $1,835,000 for the third quarter of 2009 and diluted earnings per share increased to $0.24 compared to $0.20 for the third quarter of 2009.

The Company had $29,993,000 of cash, cash equivalents and short-term investments on hand, $33,135,000 of net working capital and nominal debt outstanding as of September 30, 2010. There were 38 days of revenue in accounts receivable as of September 30, 2010.

Nine Month Results

For the first nine months of 2010, revenue increased 34% to $67,331,000 compared to $50,387,000 for the first nine months of 2009. The gross profit margin was 36% for the first nine months of both 2010 and 2009. Operating income for the first nine months of this year was $9,406,000, including $1,337,000 of expenses related to acquisition costs and $676,000 related to pre-tax, non-cash cumulative stock compensation expense adjustments, compared to operating income of $8,347,000 for the first nine months of 2009. Net income for the first nine months of 2010 was $5,662,000, or $0.52 per diluted share. Excluding the $2,013,000 of costs mentioned above, non-GAAP net income for the first nine months of 2010 was $6,960,000, or $0.64 per diluted share (see reconciliation table below).

Operations Review and Outlook

Susan McGrogan, President and Chief Operating Officer, stated: “We were extremely pleased with our 43% net income growth this quarter, which we attribute primarily to improved gross profit margins on a higher revenue base. We have improved our gross profit margins by four points this year from 34% in the first quarter to 38% in the third quarter. This was the result of a tremendous team effort and reflects the full impact of the initiatives we discussed last quarter. We processed 54% of our total volume on our BeyondTXT platform in the third quarter, up


The following information was filed by Transcend Services Inc (TRCR) on Thursday, October 28, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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