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Investor Relations Investors news releases news release details AMN Healthcare Announces Second Quarter 2020 Results

AMN Healthcare Announces Second Quarter 2020 Results

August 6, 2020
Quarterly revenue of $608 million;
GAAP EPS of $0.47 and adjusted EPS of $0.83

DALLAS and SAN DIEGO, Aug. 6, 2020 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in total talent solutions for healthcare organizations across the United States, today announced its second quarter 2020 financial results. Financial highlights are as follows:

AMN

Dollars in millions, except per share amounts.

 

Q2 2020

% Change Q2 2019

YTD June 30, 2020

% Change YTD June 30, 2019

Revenue

$608.4

14%

$1,210.8

13%

Gross profit

$197.5

10%

$399.6

12%

Net income

$22.3

(23)%

$35.3

(44)%

GAAP diluted EPS

$0.47

(23)%

$0.74

(44)%

Adjusted diluted EPS*

$0.83

8%

$1.62

7%

Adjusted EBITDA*

$80.5

21%

$154.5

16%

 

*  See "Non-GAAP Measures" below for a discussion of our use of non-GAAP items and the table entitled "Non-GAAP Reconciliation Tables" for a reconciliation of non-GAAP items.

Business Highlights

  • AMN team members and our healthcare professionals have been instrumental in responding to our country's needs to care for COVID-19 patients.
  • We have increased diversity, inclusion, equity and equality actions and education to support our team members and communities in fighting social injustice and racism.
  • Second quarter financial results were ahead of guidance, led by strength in travel nurse staffing and the quick recovery of our language interpretation business, Stratus Video.
  • Revenue of $608 million was 14% above prior year, with organic revenue higher by 2%, and adjusted EBITDA was $81 million.
  • While many of our businesses saw demand disrupted by the COVID-19 pandemic, most business lines performed in line with or better than our expectations in the second quarter.
  • Operating cash flow in the quarter was $77 million, helping us to pay down $127 million of debt and reach a leverage ratio of 2.7 to 1.
  • With improving healthcare utilization and the continued impact of COVID-19, current travel nurse demand is significantly higher than prior-year levels.

"Our healthcare professionals and the entire AMN team are doing an exceptional job of pivoting and leaning in to help patients receive the compassionate care needed as our country navigates through this crisis, and we are prioritizing their health and well-being," said Susan R. Salka, Chief Executive Officer of AMN Healthcare. "AMN's long-standing commitment to diversity, equality, equity and inclusion has been a critical part of our culture and collaboration with stakeholders. Our dedication in fighting for social justice and against racism has been fortified over these last few months, and AMN is taking greater action to support our team members, healthcare professionals, clients and communities.

"In this unprecedented business environment, we have adapted our operations and cost structure to be more agile and responsive to the fast-changing needs of our healthcare professionals and clients. We are also continuing to make important investments in our people, processes and technology to further differentiate AMN and enable future growth opportunities," Ms. Salka said. "We believe these past few months have strengthened our relationship with our strategic clients and improved our competitive positioning as we have launched expanded and new solutions, demonstrating the value of having a total talent solutions partner."

Second Quarter  2020 Results

Consolidated revenue for the quarter was $608 million, a 14% increase over prior year and 1% higher than prior quarter. On an organic basis, consolidated revenue was up 2% over prior year.

Revenue for the Nurse and Allied Solutions segment was $444 million up 21% year over year, up 13% organic excluding the June 2019 acquisition of Advanced Medical, and up 5% sequentially. Travel Nurse revenue led the way with 41% year-over-year growth, including 35% organic. Allied division revenue increased 10% year over year due to the acquisition of Advanced Medical, with organic revenue down 13%.

The Physician and Leadership Solutions segment reported revenue of $109 million, down 24% year over year and down 21% sequentially. All business lines in the segment were negatively affected by the reductions in non-emergency care. Locum tenens revenue was $62 million, down 25% year over year and down sequentially by 22%. Interim leadership revenue fell 17% year over year, and our physician and leadership search businesses saw revenue decline 34% compared with a year ago.

Technology and Workforce Solutions segment revenue was $55 million for an increase of 123% year over year (3% organic), driven in large part by our acquisitions of Stratus Video and b4health. Stratus Video contributed $28 million revenue in the quarter, significantly better than expected as this business quickly rebounded from a COVID-19-driven slowdown in March and April. Our vendor management systems, open marketplace and scheduling and predictive analytics businesses also performed better than expected.

Gross margin was 32.5%, lower by 100 basis points year over year and sequentially. The variance was driven primarily by a segment mix shift toward lower-margin Nurse and Allied staffing and a lower gross margin in the Nurse and Allied Solutions segment from a lower bill-pay spread.

SG&A expenses were $137 million, or 22.5% of revenue, compared with $122 million, or 22.7% of revenue, in the same quarter last year. SG&A was $146 million, or 24.3% of revenue, in the previous quarter. The year-over-year increase in SG&A costs included $10 million of additional SG&A from acquired companies. SG&A in the quarter also included $4 million of restructuring expenses associated with our cost reduction actions, $4 million of acquisition integration expenses, and a $5 million increase in the earn-out obligation associated with the b4health acquisition.

Income from operations was $38 million with an operating margin of 6.3%, compared with $45 million and 8.4%, respectively, in the same quarter last year. Adjusted EBITDA was $81 million, a year-over-year increase of 21%. Adjusted EBITDA margin was 13.2%, representing an increase of 70 basis points year over year.

Net income was $22 million, or $0.47 per diluted share, compared with $29 million, or $0.61 per diluted share, in the same quarter last year. Adjusted diluted EPS in the second quarter was $0.83. As noted in the tables of this press release, the difference between GAAP and adjusted net income and EPS is driven by higher amortization related to recent acquisitions, integration-related expenses, and an increase in the earn-out obligation for the b4health acquisition, offset in part by adjustments to normalize our tax rate.

At June 30, 2020, cash and cash equivalents totaled $43 million. Cash flow from operations was $77 million for the quarter, and capital expenditures were $6 million. The Company ended the quarter with total debt outstanding of $973 million and a leverage ratio of 2.7 to 1.

Third Quarter 2020 Outlook

The COVID-19 pandemic has been highly disruptive to economic activity and to healthcare infrastructure in the United States, making healthcare labor demand volatile, differing widely among client segments. COVID-19 patient volumes have been highly variable, with surges continuing across the country driving significantly higher demand for nurses; however, elective procedures and routine care are still below pre-crisis levels.  The trajectory of healthcare and economic recovery is uncertain, and we are anticipating continued surges in COVID-19 care coupled with a modest recovery of non-COVID-19 healthcare services.

In our Nurse and Allied Solutions segment, we expect third quarter revenue to be down approximately 10% from prior year.  For our largest business of travel nurse staffing, we expect revenue to be up 3-5% to prior year, with lower volumes offset by higher rates and hours worked. Allied revenue is expected to be lower than prior year by 27-29% as a result of reduced healthcare utilization, particularly impacting our physical therapy discipline.

Our Physician and Leadership Solutions segment saw a sharp sequential drop in April revenue as the national response to the pandemic resulted in an abrupt falloff of contingent and permanent labor demand. The revenue trend stabilized in June, and we expect the segment will remain at this level in the third quarter with revenue estimated at nearly 30% below prior year.

We project revenue for our Technology and Workforce Solutions segment to rise approximately 140% compared with prior year, including the recent acquisitions of Stratus Video and b4health.  Segment revenue dropped in April, but May and June rebounded. Our language interpretation business has experienced steady growth in billable minutes since May, which we expect will continue through the third quarter.

Based on the above trends, we are projecting consolidated third quarter revenue to be in a range of $510 million to $525 million. Third quarter gross margin is expected to be 33.0-33.5%, operating margin is expected to be above 7%, and adjusted EBITDA margin is expected to be greater than 13%.

Third quarter estimates for certain financial items include depreciation of $7 million, non-cash amortization expense of $15 million, stock-based compensation expense of $4 million, interest expense of $10 million, integration expenses of $6 million, and an adjusted tax rate of 30%.

Conference Call on August 6, 2020

AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in total talent solutions for healthcare, will host a conference call to discuss its second quarter 2020 financial results and outlook on Thursday, August 6, 2020, at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare's website at http://amnhealthcare.investorroom.com/eventcalendar. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software. Interested parties may participate live via telephone by dialing (833) 968-2219 in the U.S. or +1 778-560-2894 internationally and using passcode 5756627. Following the conclusion of the call, a replay of the webcast will be available at the Company's website. Alternatively, a telephonic replay of the call will be available starting at 8:00 p.m. Eastern Time on August 6, 2020, and can be accessed until 11:59 p.m. Eastern Time on August 20, 2020, by calling (800) 585-8367 in the U.S. or +1 416-621-4642 internationally, with access code 5756627.

About AMN Healthcare

AMN Healthcare is the leader and innovator in total talent solutions for healthcare organizations across the nation. The Company provides access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. With insights and expertise, AMN Healthcare helps providers optimize their workforce to successfully reduce complexity, increase efficiency and improve patient outcomes. AMN total talent solutions include managed services programs, clinical and interim healthcare leaders, temporary staffing, executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, language interpretation services, revenue cycle solutions, credentialing, and other services. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, schools and many other healthcare settings. AMN Healthcare is committed to fostering and maintaining a diverse team that reflects the communities we serve. Our commitment to the inclusion of many different backgrounds, experiences and perspectives enables our innovation and leadership in the healthcare services industry.

The Company's common stock is listed on the New York Stock Exchange under the symbol "AMN." For more information about AMN Healthcare, visit www.amnhealthcare.com, where the Company posts news releases, investor presentations, webcasts, SEC filings and other material information. The Company also utilizes email alerts and Really Simple Syndication ("RSS") as routine channels to supplement distribution of this information. To register for email alerts and RSS, visit http://amnhealthcare.investorroom.com/emailalerts.

Non-GAAP Measures

This earnings release contains certain non-GAAP financial information, which the Company provides as additional information, and not as an alternative, to the Company's condensed consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures include (1) adjusted EBITDA, (2) adjusted EBITDA margin, (3) adjusted net income, and (4) adjusted diluted EPS.  The Company provides such non-GAAP financial measures because management believes that they are useful to both management and investors as a supplement, and not as a substitute, when evaluating the Company's operating performance. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted EPS serve as industry-wide financial measures. The Company uses adjusted EBITDA for making financial decisions, allocating resources and for determining certain incentive compensation objectives. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP measures and may be different from non-GAAP measures, or may be calculated differently than other similarly titled non-GAAP measures, reported by other companies. They should not be used in isolation to evaluate the Company's performance.  A reconciliation of non-GAAP measures identified in this release, along with further detail about the use and limitations of certain of these non-GAAP measures, may be found below in the table entitled "Non-GAAP Reconciliation Tables" under the caption entitled "Reconciliation of Non-GAAP Items" and the footnotes thereto or on the Company's website at http://amnhealthcare.investorroom.com/financialreports. Additionally, from time to time, additional information regarding non-GAAP financial measures, including pro forma measures, may be made available on the Company's website.

Forward-Looking Statements

This press release contains "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. Forward-looking statements include, among others, statements concerning the trajectory of the healthcare industry and economic recovery, the magnitude and extent to which the COVID-19 pandemic will result in a recovery for certain healthcare services, future demand and pay rates, hours worked and volume projections, overall healthcare utilization rates, third quarter 2020 revenue projections for each of our Nurse and Allied Solutions, Physician and Leadership Solutions and Technology and Workforce Solutions segments, travel nurse staffing and allied businesses, billable minute projections for our language interpretation business, third quarter year-over-year performance of our VMS business, and our third quarter guidance for consolidated revenue, gross margin, operating margin, adjusted EBITDA margin, depreciation expense, non-cash amortization expense, stock-based compensation expense, interest expense, integration expenses, and adjusted tax rate. The Company bases these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are also identified by words such as "believe," "project," "anticipate," "expect," "intend," "plan," "will," "may," "estimates," variations of such words and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

The Company's ability to meet the targets and expectations noted in our third quarter 2020 outlook depends upon, among other factors, (i) the magnitude and duration of the effects of the COVID-19 pandemic on demand trends, our business, its financial condition and our results of operations, (ii) the duration of the period that hospitals and other healthcare entities decrease their utilization of temporary employees, physicians, leaders and other workforce technology applications as a result of the suspension of or restrictions placed on non-essential and elective healthcare as a result of the COVID-19 pandemic, (iii) the duration of the period that individuals may continue to forego non-essential and elective healthcare as "safer at home" restrictions and recommendations start to lift, (iv) the extent and duration of the period that a significant spike in unemployment that has resulted from the COVID-19 pandemic will cause an increase in under- and uninsured patients and a corresponding reduction in overall healthcare utilization and demand for our services, (v) our ability to anticipate and quickly respond to changing marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, or client needs, (vi) our ability to manage the pricing impact that the COVID-19 pandemic and consolidation of healthcare delivery organizations may have on our business, (vii) the extent to which the COVID-19 pandemic may disrupt our operations due to the unavailability of our employees or healthcare professionals due to illness, risk of illness, quarantines, travel restrictions or other factors that limit our existing or potential workforce and pool of candidates, (viii) the severity and duration of the impact the COVID-19 pandemic has on the financial condition and cash flow of many hospitals and healthcare systems such that it impairs their ability to make payments to us, timely or otherwise, for services rendered, (ix) our ability to recruit and retain sufficient quality healthcare professionals at reasonable costs (x) our ability to develop and evolve our current technology offerings and capabilities and implement new infrastructure and technology systems to optimize our operating results and manage our business effectively, (xi) our ability to comply with extensive and complex federal and state laws and regulations related to the conduct of our operations, costs and payment for services and payment for referrals as well as laws regarding employment practices, and (xii) our ability to consummate and effectively incorporate acquisitions into our business.

For a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above that could cause actual results to differ from those implied by the forward-looking statements contained in this press release, please refer to our most recent Annual Report on Form 10-K for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Contact:
Randle Reece
Director, Investor Relations
866.861.3229

AMN Healthcare Services, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

(unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2019

 

2020

 

2020

 

2019

Revenue

$

608,351

   

$

535,177

   

$

602,461

   

$

1,210,812

   

$

1,067,618

 

Cost of revenue

410,811

   

355,635

   

400,395

   

811,206

   

711,317

 

Gross profit

197,540

   

179,542

   

202,066

   

399,606

   

356,301

 

Gross margin

32.5

%

 

33.5

%

 

33.5

%

 

33.0

%

 

33.4

%

Operating expenses:

                 

Selling, general and administrative (SG&A)

137,068

   

121,668

   

146,234

   

283,302

   

241,665

 

SG&A as a % of revenue

22.5

%

 

22.7

%

 

24.3

%

 

23.4

%

 

22.6

%

                   

Depreciation and amortization

22,071

   

12,718

   

20,089

   

42,160

   

24,428

 

Total operating expenses

159,139

   

134,386

   

166,323

   

325,462

   

266,093

 

Income from operations

38,401

   

45,156

   

35,743

   

74,144

   

90,208

 

Operating margin (1)

6.3

%

 

8.4

%

 

5.9

%

 

6.1

%

 

8.4

%

                   

Interest expense, net, and other (2)

11,443

   

6,065

   

11,054

   

22,497

   

11,738

 
                   

Income before income taxes

26,958

   

39,091

   

24,689

   

51,647

   

78,470

 
                   

Income tax expense

4,633

   

10,222

   

11,724

   

16,357

   

15,479

 

Net income

$

22,325

   

$

28,869

   

$

12,965

   

$

35,290

   

$

62,991

 

Net income as a % of revenue

3.7

%

 

5.4

%

 

2.2

%

 

2.9

%

 

5.9

%

                   

Other comprehensive loss:

                 

Foreign currency translation and other

(58)

   

(89)

   

(47)

   

(105)

   

(190)

 

Other comprehensive loss

(58)

   

(89)

   

(47)

   

(105)

   

(190)

 
                   

Comprehensive income

$

22,267

   

$

28,780

   

$

12,918

   

$

35,185

   

$

62,801

 
                   

Net income per common share:

                 

Basic

$

0.47

   

$

0.62

   

$

0.27

   

$

0.74

   

$

1.35

 

Diluted

$

0.47

   

$

0.61

   

$

0.27

   

$

0.74

   

$

1.32

 

Weighted average common shares outstanding:

                 

Basic

47,383

   

46,644

   

47,359

   

47,371

   

46,713

 

Diluted

47,562

   

47,424

   

47,641

   

47,623

   

47,597

 
                   

 

AMN Healthcare Services, Inc.

Non-GAAP Reconciliation Tables

(dollars in thousands, except per share data)

(unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2019

 

2020

 

2020

 

2019

Reconciliation of Non-GAAP Items:

                 
                   

Net income

$

22,325

   

$

28,869

   

$

12,965

   

$

35,290

   

$

62,991

 

Income tax expense

4,633

   

10,222

   

11,724

   

16,357

   

15,479

 

Income before income taxes

26,958

   

39,091

   

24,689

   

51,647

   

78,470

 

Interest expense, net, and other (2)

11,443

   

6,065

   

11,054

   

22,497

   

11,738

 

Income from operations

38,401

   

45,156

   

35,743

   

74,144

   

90,208

 

Depreciation and amortization

22,071

   

12,718

   

20,089

   

42,160

   

24,428

 

Depreciation (included in cost of revenue) (3)

355

   

   

145

   

500

   

 

Share-based compensation

6,347

   

3,702

   

4,927

   

11,274

   

8,888

 

Acquisition, integration, and other costs (4)

13,364

   

5,156

   

13,077

   

26,441

   

9,185

 

Adjusted EBITDA (5)

$

80,538

   

$

66,732

   

$

73,981

   

$

154,519

   

$

132,709

 
                   

Adjusted EBITDA margin (6)

13.2

%

 

12.5

%

 

12.3

%

 

12.8

%

 

12.4

%

                   

Net income

$

22,325

   

$

28,869

   

$

12,965

   

$

35,290

   

$

62,991

 

Adjustments:

                 

Amortization of intangible assets

15,068

   

7,357

   

13,431

   

28,499

   

14,008

 

Acquisition, integration, and other costs (4)

13,364

   

5,156

   

13,077

   

26,441

   

9,185

 

Equity instrument fair value changes (2)

593

   

   

1,298

   

1,891

   

 

Tax effect on above adjustments

(7,546)

   

(3,253)

   

(7,230)

   

(14,776)

   

(6,030)

 

Tax effect of COLI fair value changes (7)

(4,316)

   

(575)

   

5,255

   

939

   

(2,102)

 

Excess tax deficiencies (benefits) related to equity awards (8)

(15)

   

(973)

   

(1,221)

   

(1,236)

   

(5,542)

 

Adjusted net income (9)

$

39,473

   

$

36,581

   

$

37,575

   

$

77,048

   

$

72,510

 
                   

GAAP diluted net income per share (EPS)

$

0.47

   

$

0.61

   

$

0.27

   

$

0.74

   

$

1.32

 

Adjustments

0.36

   

0.16

   

0.52

   

0.88

   

0.20

 

Adjusted diluted EPS (10)

$

0.83

   

$

0.77

   

$

0.79

   

$

1.62

   

$

1.52

 

 

AMN Healthcare Services, Inc.

Supplemental Segment Financial and Operating Data

(dollars in thousands, except operating data)

(unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2019

 

2020

 

2020

 

2019

Revenue

                 

Nurse and allied solutions

$

444,464

   

$

367,994

   

$

424,346

   

$

868,810

   

$

741,466

 

Physician and leadership solutions

108,622

   

142,449

   

137,842

   

246,464

   

279,526

 

Technology and workforce solutions

55,265

   

24,734

   

40,273

   

95,538

   

46,626

 
 

$

608,351

   

$

535,177

   

$

602,461

   

$

1,210,812

   

$

1,067,618

 
                   

Segment operating income (11)

                 

Nurse and allied solutions

$

61,175

   

$

52,752

   

$

59,608

   

$

120,783

   

$

106,308

 

Physician and leadership solutions

15,325

   

18,861

   

14,569

   

29,894

   

34,733

 

Technology and workforce solutions

21,839

   

11,336

   

15,295

   

37,134

   

21,719

 
 

98,339

   

82,949

   

89,472

   

187,811

   

162,760

 

Unallocated corporate overhead

17,801

   

16,217

   

15,491

   

33,292

   

30,051

 

Adjusted EBITDA (5)

$

80,538

   

$

66,732

   

$

73,981

   

$

154,519

   

$

132,709

 
                   

Gross Margin

                 

Nurse and allied solutions

27.0

%

 

28.1

%

 

28.5

%

 

27.7

%

 

28.3

%

Physician and leadership solutions

36.4

%

 

37.2

%

 

36.7

%

 

36.6

%

 

36.9

%

Technology and workforce solutions

68.7

%

 

93.4

%

 

75.7

%

 

71.7

%

 

93.0

%

                   
                   

Operating Data:

                 

Nurse and allied solutions

                 

Average healthcare professionals on assignment (12)

9,815

   

10,258

   

11,411

   

10,613

   

10,352

 
                   

Physician and leadership solutions

                 

Days filled (13)

32,615

   

41,563

   

40,284

   

72,899

   

82,059

 

Revenue per day filled (14)

$

1,899

   

$

1,975

   

$

1,968

   

$

1,937

   

$

1,981

 
                   

 

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except leverage ratio)

(unaudited)

 
 

June 30, 2020

 

December 31, 2019

 

June 30, 2019

Assets

         

Current assets:

         

Cash and cash equivalents

$

43,067

   

$

82,985

   

$

20,937

 

Accounts receivable, net

366,574

   

352,685

   

369,372

 

Accounts receivable, subcontractor

58,469

   

72,714

   

50,058

 

Prepaid and other current assets

50,529

   

52,115

   

49,501

 

Total current assets

518,639

   

560,499

   

489,868

 

Restricted cash, cash equivalents and investments

56,362

   

62,170

   

65,919

 

Fixed assets, net

113,975

   

104,832

   

97,249

 

Operating lease right-of-use assets

85,119

   

89,866

   

95,247

 

Other assets

120,910

   

120,254

   

109,909

 

Goodwill

876,314

   

595,551

   

588,457

 

Intangible assets, net

599,737

   

398,474

   

409,439

 

Total assets

$

2,371,056

   

$

1,931,646

   

$

1,856,088

 
           

Liabilities and stockholders' equity

         

Current liabilities:

         

Accounts payable and accrued expenses

$

144,824

   

$

156,140

   

124,672

 

Accrued compensation and benefits

171,007

   

170,932

   

149,937

 

Current portion of notes payable

7,813

   

   

3,750

 

Current portion of operating lease liabilities

15,480

   

13,943

   

13,068

 

Deferred revenue

11,759

   

11,788

   

11,053

 

Other current liabilities

33,653

   

25,302

   

14,344

 

Total current liabilities

384,536

   

378,105

   

316,824

 

Revolving credit facility

100,000

   

   

196,000

 

Notes payable, less unamortized fees

856,106

   

617,159

   

466,610

 

Deferred income taxes, net

93,889

   

46,618

   

39,273

 

Operating lease liabilities

85,504

   

91,209

   

97,355

 

Other long-term liabilities

73,615

   

61,813

   

59,586

 

Total liabilities

1,593,650

   

1,194,904

   

1,175,648

 
           

Commitments and contingencies

         
           

Stockholders' equity:

777,406

   

736,742

   

680,440

 
           

Total liabilities and stockholders' equity

$

2,371,056

   

$

1,931,646

   

$

1,856,088

 
           

Leverage ratio (15)

2.7

   

2.0

   

2.4

 

 

AMN Healthcare Services, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2019

 

2020

 

2020

 

2019

                   

Net cash provided by operating activities

$

76,906

   

$

29,077

   

$

51,365

   

$

128,271

   

$

65,291

 

Net cash used in investing activities

(21,125)

   

(204,443)

   

(492,137)

   

(513,262)

   

(240,691)

 

Net cash provided by (used in) financing activities

(127,132)

   

187,495

   

456,126

   

328,994

   

189,285

 

Effect of exchange rates on cash

(58)

   

(89)

   

(47)

   

(105)

   

(190)

 

Net increase (decrease) in cash, cash equivalents and restricted cash

(71,409)

   

12,040

   

15,307

   

(56,102)

   

13,695

 

Cash, cash equivalents and restricted cash at beginning of period

169,269

   

85,979

   

153,962

   

153,962

   

84,324

 

Cash, cash equivalents and restricted cash at end of period

$

97,860

   

$

98,019

   

$

169,269

   

$

97,860

   

$

98,019

 

 

AMN Healthcare Services, Inc.

Additional Supplemental Non-GAAP Disclosure

Reconciling Operating Margin Guidance to

Adjusted EBITDA Margin Guidance

   

Adjusted EBITDA margin represents operating margin excluding the impact of (A) depreciation and amortization expense, (B) share-based compensation and (C) acquisition, integration, and other costs. Due to the impact that the  COVID-19 pandemic has had on the healthcare industry and the resulting uncertainty the pandemic is having on our future financial performance, we are unable to provide a quantitative reconciliation of our projected third quarter 2020 adjusted EBITDA margin to our projected operating margin without undertaking unreasonable efforts.

 

(1)

Operating margin represents income from operations divided by revenue.

(2)

Interest expense, net, and other for the three and six months ended June 30, 2020 includes $593,000 and $1,891,000 related to changes in the fair value of equity instruments, respectively. Since the changes in fair value is unrelated to the Company's operating performance, we excluded the impact from the calculation of adjusted net income and adjusted diluted EPS for the three and six months ended June 30, 2020.

(3)

A portion of depreciation expense for Stratus Video, which was acquired in February 2020, is included in cost of revenue for the three and six months ended June 30, 2020. Beginning in 2020, we exclude the impact of depreciation included in cost of revenue from the calculation of adjusted EBITDA.

(4)

Acquisition, integration, and other costs for the three and six months ended June 30, 2020 include $3,568,000 of restructuring expenses associated with cost reduction actions that were initiated during the three months ended June 30, 2020, acquisition-related costs of the Stratus Video acquisition of $1,713,000 and $9,525,000, respectively, and increases in contingent consideration liabilities for recently acquired companies of $4,800,000 and $5,000,000, respectively. Acquisition, integration, and other costs for the three and six months ended June 30, 2019 included extraordinary legal expenses of approximately $2,500,000 and $4,600,000, respectively, which were partially offset by decreases in contingent consideration liabilities for recently acquired companies of $1,458,000 and $2,158,000 for the three and six months ended June 30, 2019, respectively. We exclude the impact of extraordinary legal expenses from the calculation of adjusted EBITDA because we believe that these expenses are not indicative of the Company's operating performance.

(5)

Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, depreciation (included in cost of revenue), acquisition, integration, and other costs, restructuring expenses, extraordinary legal expenses, and share-based compensation. Management believes that adjusted EBITDA provides an effective measure of the Company's results, as it excludes certain items that management believes are not indicative of the Company's operating performance. Adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to income from operations or net income as an indicator of operating performance. Although management believes that some of the items excluded from adjusted EBITDA are not indicative of the Company's operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.

(6)

Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

(7)

The Company records net tax expense (benefit) related to the income tax treatment of the fair value changes in the cash surrender value of its company owned life insurance. Since this change in fair value is unrelated to the Company's operating performance, we excluded the impact on adjusted net income and adjusted diluted EPS.

(8)

The consolidated effective tax rate is affected by the recording of excess tax benefits and tax deficiencies relating to equity awards vested and exercised during the period. As a result of the adoption of a new accounting pronouncement on January 1, 2017, the Company no longer records excess tax benefits and tax deficiencies to additional paid-in capital, but such excess tax benefits and tax deficiencies are now recognized in income tax expense. The magnitude of the impact of excess tax benefits and tax deficiencies generated in the future, which may be favorable or unfavorable, is dependent upon the Company's future grants of share-based compensation, the Company's future stock price on the date awards vest or exercise in relation to the fair value of the awards on the grant date or the exercise behavior of the Company's stock appreciation rights holders. Since these excess tax benefits and tax deficiencies are largely unrelated to our income before taxes and are unrepresentative of our normal effective tax rate, we excluded their impact in the calculation of adjusted net income and adjusted diluted EPS.

(9)

Adjusted net income represents GAAP net income excluding the impact of the (A) amortization of intangible assets, (B) acquisition, integration, and other costs, (C) extraordinary legal expenses, (D) changes in fair value of equity instruments, (E) write offs of deferred financing costs, (F) tax effect, if any, of the foregoing adjustments, (G) excess tax benefits and tax deficiencies relating to equity awards vested and exercised since January 1, 2017, and (H) net tax expense related to the income tax treatment of fair value changes in the cash surrender value of its company owned life insurance. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company's operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded in the calculation of adjusted net income). Although management believes the items in the calculation of adjusted net income are not indicative of the Company's operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted net income as an operating performance measure in conjunction with GAAP measures such as GAAP net income.

(10)

Adjusted diluted EPS represents adjusted net income divided by diluted weighted average common shares outstanding. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company's operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded in the calculation of adjusted net income). Although management believes the items in the calculation of adjusted net income are not indicative of the Company's operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted diluted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP diluted EPS.

(11)

Segment operating income represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, depreciation (included in cost of revenue), unallocated corporate overhead, acquisition, integration, and other costs, and share-based compensation.

(12)

Average healthcare professionals on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period presented. Excluding Advanced Medical, which was acquired during the second quarter of 2019, the average healthcare professionals on assignment was 8,796 and 10,079 for the three months ended June 30, 2020 and 2019, respectively, and 9,442 and 10,263 for the six months ended June 30, 2020 and 2019, respectively.

(13)

Days filled is calculated by dividing the locum tenens hours filled during the period by eight hours.

(14)

Revenue per day filled represents revenue of the Company's locum tenens business divided by days filled for the period presented.

(15)

Leverage ratio represents the ratio of the consolidated funded indebtedness (as calculated per the Company's credit agreement) at the end of the subject period to the consolidated adjusted EBITDA (as calculated per the Company's credit agreement) for the twelve-month period ended at the end of the subject period.

 

 

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SOURCE AMN Healthcare Services, Inc.