Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Neil Berkman, Investor Relations, 310-477-3118, 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

 

 

February 3, 2011

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

TRANSCEND REPORTS EARNINGS PER SHARE OF $0.26 FOR

THE FOURTH QUARTER OF 2010 – HEARTLAND

INTEGRATION EXCEEDS EXPECTATIONS

Atlanta, Georgia. TRANSCEND SERVICES, INC. (NASDAQ: TRCR), a leading provider of clinical documentation solutions to the U.S. healthcare market, today announced its unaudited financial results for the fourth quarter and year ended December 31, 2010.

Fourth Quarter Results

Transcend recorded stronger than expected diluted earnings per share of $0.26 for the fourth quarter of 2010, including $(0.01) per diluted share of acquisition transaction costs, due in large part to the contribution from the October 21, 2010 acquisition of Spryance Inc. d/b/a Heartland (“Heartland”).

Revenue for the fourth quarter of 2010 increased 26% to $26,976,000 compared to $21,377,000 for the fourth quarter of 2009, including $3,722,000 of revenue contributed by Heartland. Excluding the Heartland business, which is now generating an annual revenue run rate of over $19 million, revenue increased 9%.

Gross profit for the fourth quarter of 2010 increased 43% to $10,445,000, or 39% of revenue, compared to $7,289,000, or 34% of revenue, for the fourth quarter of 2009.

Operating income for the fourth quarter of 2010 increased 85% to $5,062,000, or 19% of revenue, compared to $2,736,000, or 13% of revenue, for the fourth quarter of 2009 (2009 includes a $735,000 contingent consideration charge related to an acquisition). Excluding the contingent consideration charge for the fourth quarter of 2009, operating income increased 46%. Operating income for the fourth quarter of 2010 includes $182,000 of Heartland acquisition transaction costs.

The effective income tax rate for the fourth quarter of 2010 was 43% compared to 39% in the fourth quarter of 2009. Most of the rate increase can be attributed to non-recurring items including the impact of non-deductible Heartland acquisition transaction costs.

Net income for the fourth quarter of 2010 increased 80% to $2,857,000 compared to $1,590,000 for the fourth quarter of 2009 and diluted earnings per share increased to $0.26, including $(0.01) of acquisition-related transaction costs, compared to $0.17 for the fourth quarter of 2009 (the impact of the contingent consideration charge on diluted earnings per share in the fourth quarter of 2009 was approximately $0.05).

During the fourth quarter of 2010, the Company used cash of $6,492,000 to fund the acquisition of Heartland and $742,000 to fund capital expenditures, most of which related to development of the new Encore transcription platform. As of December 31, 2010, the Company had $26,899,000 of cash, cash equivalents and short-term investments on hand, $30,554,000 of net working capital and nominal debt outstanding.

2010 Results

Revenue increased 31% to $94,307,000 for 2010 compared to $71,764,000 in 2009. The gross profit margin was


The following information was filed by Transcend Services Inc (TRCR) on Thursday, February 3, 2011 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-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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