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Investor Relations Investors news releases news release details AMN Healthcare Announces Third Quarter 2014 Results

AMN Healthcare Announces Third Quarter 2014 Results

October 30, 2014
Quarterly revenue of $265 million, above the high end of guidance, EPS of $0.18

SAN DIEGO, Oct. 30, 2014 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AHS), healthcare's innovator in workforce solutions and staffing services, today announced third quarter 2014 financial results exceeded the Company's guidance for revenue. Third quarter financial highlights are as follows:

Dollars in millions, except per share amounts.

 

Q3 2014

% Change

Q3 2013

YTD
September 30,
2014

% Change YTD
September 30,
2013

Revenue

$264.6

3%

$756.4

(1%)

Gross profit

$80.3

6%

$231.4

4%

Net income

$8.5

(1%)

$23.3

(5%)

Diluted EPS

$0.18

0%

$0.49

(4%)

Adjusted Diluted EPS*

N/A

N/A

$0.53

2%

Adjusted EBITDA*

$21.8

1%

$66.2

3%

*  See "Non-GAAP Measures" below for a discussion of our use of non-GAAP items and the table entitled "Supplemental Financial and Operating Data" for a reconciliation of non-GAAP items.

  • Consolidated revenue exceeded expectations due to year-over-year and sequential growth across all business segments.
  • The travel nurse business (excluding EMR staffing) experienced revenue growth of 13% year-over-year,  driven by continued higher demand trends and solid execution.
  • Gross margin of 30.4% represented a year-over-year improvement of 100 basis points.

"All segments experienced stronger market trends, resulting in better than anticipated revenue growth in the third quarter. The continued strengthening in travel nurse and allied demand is expected to fuel volume growth in the future. These trends, combined with new MSP clients and  expansions, have bolstered our leadership position in workforce solutions and give us a positive outlook going into the new year," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "To ensure the delivery of a best-in-class client and clinician experience, we continue to make long-term strategic investments to innovate our workforce solution offerings and our recruitment and infrastructure technologies."   

Third Quarter 2014 Results

For the third quarter of 2014 consolidated revenue was $265 million, an increase of 3% from the same quarter last year and an increase of 5% sequentially. Third quarter revenue for the Nurse and Allied Healthcare Staffing segment was $174 million, up 2% from the same quarter last year and 5% sequentially. Locum Tenens Staffing segment revenue in the third quarter was $79 million, an increase of 5% from the same quarter last year and 6% sequentially. Third quarter Physician Permanent Placement Services segment revenue was $11 million, an increase of 5% from the same quarter last year and 7% sequentially.

Third quarter gross margin of 30.4% was 100 basis points higher than the same quarter last year and 40 basis points lower sequentially. The year-over-year increase was due to gross margin improvements in our Nurse and Allied Healthcare Staffing and Physician Permanent Placement Services segments. The sequential decrease was due primarily to an unfavorable workers' compensation actuarial adjustment recorded in the third quarter.

SG&A expenses for the third quarter were $60 million, representing 22.8% of revenue, compared to $56 million in both the same quarter last year and the prior quarter. The year-over-year increase in SG&A expenses was due to the inclusion of ShiftWise, which was acquired in November of last year, higher expenses associated with our information technology initiatives, and higher expenses to support our current demand and future growth initiatives. The sequential increase in SG&A expenses was due primarily to a favorable professional liability actuarial adjustment recorded in the second quarter, increased commission and bonus expenses associated with higher revenue, and other expenses to support growth.

Third quarter net income was $8 million and net income per diluted share was $0.18. Third quarter adjusted EBITDA was $22 million, compared to $22 million in the same quarter last year and $23 million in the prior quarter. Adjusted EBITDA margin of 8.2% was 20 basis points lower than the same quarter last year and 110 basis points lower sequentially. The year-over-year decrease was due primarily to the unfavorable workers' compensation actuarial adjustment recorded in the third quarter of 2014, and the sequential decrease was due primarily to that same adjustment as well as a favorable professional liability adjustment in the second quarter of 2014.

At September 30, 2014, cash and cash equivalents totaled $10 million. Third quarter cash flow provided by operations was $15 million and capital expenditures were $4 million. The Company ended the quarter with total debt outstanding of $146 million, with a leverage ratio of 1.7 to 1.

Business Trends and Outlook

The Company expects consolidated fourth quarter 2014 revenue of $265 million to $269 million. Gross margin is expected to be seasonally lower at approximately 30.0%. SG&A expenses as a percentage of revenue are expected to be approximately 22.5%. Adjusted EBITDA margin is expected to be between 8.0% and 8.5%.

About AMN Healthcare

AMN Healthcare is the innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. AMN Healthcare's workforce solutions - including managed services programs, vendor management systems, and recruitment process outsourcing - enable providers to successfully reduce complexity, increase efficiency and improve patient outcomes within the rapidly evolving healthcare environment. The Company provides unparalleled access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, and many other healthcare settings. AMN Healthcare disseminates news and information about the Company through its website, which can be found at www.amnhealthcare.com.

Conference Call on October 30, 2014

AMN Healthcare Services, Inc.'s third quarter 2014 conference call will be held on Thursday, October 30, 2014, 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/presentations. 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 (800) 288-8975 in the U.S. or (612) 332-0228 internationally. Following the conclusion of the call, a replay of the webcast will be available at the Company's website. A telephonic replay of the call will be available at 7:30 p.m. Eastern Time on October 30, 2014, and can be accessed until 11:59 p.m. Eastern Time on November 13, 2014, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 338051.

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, and (3) adjusted diluted  EPS.  The Company provides such non-GAAP financial measures because management believes that they are useful both to management and investors as a supplement, and not as a substitute, when evaluating the Company's operating performance. Additionally, management believes that adjusted EBITDA and adjusted EBITDA margin serve as industry-wide financial measures, and it uses adjusted EBITDA for making financial decisions and allocating resources. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP measures, or may be calculated differently than other similarly title captioned 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 Supplemental Financial and Operating Data under the caption entitled "Reconciliation of Non-GAAP Items" 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. Such statements include expectations regarding future volume growth and 2014 fourth quarter revenue, gross margin, SG&A expenses and adjusted EBITDA margin. The Company based 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 identified by words such as "believe," "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. Factors that could cause actual results to differ from those implied by the forward-looking statements contained in this press release are set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and its other periodic reports as well as the Company's current and other reports filed from time to time with the Securities and Exchange Commission. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time.

Contact:
Amy C. Chang
Vice President, 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

 

Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

2014

2013

 

2014

 

2014

2013

Revenue

$     264,584

$     257,095

 

$     250,913

 

$     756,378

$     763,158

Cost of revenue

184,278

181,428

 

173,754

 

524,957

540,071

Gross profit

80,306

75,667

 

77,159

 

231,421

223,087

 

30.4%

29.4%

 

30.8%

 

30.6%

29.2%

Operating expenses:

             

Selling, general and administrative

60,319

55,605

 

55,567

 

170,553

163,763

 

22.8%

21.6%

 

22.1%

 

22.5%

21.5%

Depreciation and amortization

4,086

3,317

 

4,010

 

11,916

9,847

Total operating expenses

64,405

58,922

 

59,577

 

182,469

173,610

Income from operations

15,901

16,745

 

17,582

 

48,952

49,477

               

Interest expense, net, and other

1,433

1,840

 

4,629

 

7,908

7,829

 

Income before income taxes

 

14,468

 

14,905

 

 

12,953

 

 

41,044

 

41,648

 

Income tax expense

 

5,969

 

6,290

 

 

5,760

 

 

17,722

 

17,071

Net income

$         8,499

$         8,615

 

$         7,193

 

$       23,322

$       24,577

               

Other comprehensive income (loss)

75

(84)

 

(37)

 

29

(19)

               
               

Comprehensive income

$         8,574

$         8,531

 

$         7,156

 

$       23,351

$       24,558

Net income per common share:

 

             

Basic

$           0.18

$           0.19

 

$           0.15

 

$           0.50

$           0.53

Diluted

$           0.18

$           0.18

 

$           0.15

 

$           0.49

$           0.51

               

Weighted average common shares outstanding:

             

Basic

46,546

45,986

 

46,479

 

46,460

45,947

Diluted

48,122

47,810

 

47,836

 

47,959

47,776

                 

 

AMN Healthcare Services, Inc.  

 

Supplemental Financial and Operating Data

 

(dollars in thousands, except per share data)

 

(unaudited)

 
                         
 

Three Months Ended

 

Nine Months Ended

 
 

September  30,

 

June 30,

 

September 30,

 
   

2014

 

2013

   

2014

   

2014

 

2013

 

Revenue

                         

  Nurse and allied healthcare staffing

$

174,292

$

170,955

 

$

165,894

 

$

503,636

$

517,858

 

  Locum tenens staffing

 

78,816

 

75,253

   

74,309

   

219,996

 

213,417

 

  Physician permanent placement services

 

11,476

 

10,887

   

10,710

   

32,746

 

31,883

 
 

$

264,584

$

257,095

 

$

250,913

 

$

756,378

$

763,158

 
                           

Reconciliation of Non-GAAP Items:

                         
                           

Segment operating income (1)

                         

  Nurse and allied healthcare staffing

$

21,279

$

20,392

 

$

22,032

 

$

63,283

$

62,994

 

  Locum tenens staffing

 

8,139

 

7,547

   

7,818

   

22,830

 

17,347

 

  Physician permanent placement services

 

2,756

 

2,205

   

2,187

   

7,074

 

6,735

 
   

32,174

 

30,144

   

32,037

   

93,187

 

87,076

 

   Unallocated corporate overhead

 

10,396

 

8,595

   

8,694

   

26,958

 

23,085

 

Adjusted EBITDA (2)

 

21,778

 

21,549

   

23,343

   

66,229

 

63,991

 

Adjusted EBITDA margin (3)

 

8.2%

 

8.4%

   

9.3%

   

8.8%

 

8.4%

 
                           

Depreciation and amortization

 

4,086

 

3,317

   

4,010

   

11,916

 

9,847

 

Share-based compensation

 

1,791

 

1,487

   

1,751

   

5,361

 

4,667

 

Interest expense, net, and other

 

1,433

 

1,840

   

4,629

   

7,908

 

7,829

 

Income before income taxes

 

14,468

 

14,905

   

12,953

   

41,044

 

41,648

 

Income tax expense  

 

5,969

 

6,290

   

5,760

   

17,722

 

17,071

 

Net income

$

8,499

$

8,615

 

$

7,193

 

$

23,322

$

24,577

 
                           
                           

GAAP based diluted net income per share (EPS)

$

0.18

$

0.18

 

$

0.15

 

$

0.49

$

0.51

 

   Adjustments:

                         

   Loss on debt extinguishment

 

0.00

 

0.00

   

0.04

   

0.04

 

0.01

 

Adjusted diluted EPS (4)

 

    N/A

 

    N/A

 

$

0.19

 

$

0.53

$

0.52

 
                           
                                               

 

 

Three Months Ended

         

Nine Months Ended

   

September 30,

   

June 30,

   

September 30,

   

2014

 

2013

   

2014

   

2014

 

2013

Gross Margin

                       

   Nurse and allied healthcare staffing

 

28.7%

 

27.4%

   

29.1%

   

28.9%

 

27.4%

   Locum tenens staffing

 

29.0%

 

29.3%

   

29.8%

   

29.5%

 

28.8%

   Physician permanent placement services

 

64.9%

 

62.6%

   

63.5%

   

63.8%

 

62.6%

                         

Operating Data:

                       

Nurse and allied healthcare staffing

                       

    Average clinicians on assignment (5)

 

5,632

 

5,771

   

5,565

   

5,610

 

5,970

Locum tenens staffing

                       

    Days filled (6)

 

49,982

 

50,993

   

49,049

   

143,780

 

146,477

                     
     
 

As of September 30,

 

As of June 30,

     
   

2014

 

2013

   

2014

       

Leverage Ratio (7)

 

1.7

 

1.9

   

1.9

       
                       

 

 

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

           
 

September 30,

 

June 30,

 

December 31,

 

2014

 

2014

 

2013 (8)

Assets

         

Current assets:

         

Cash and cash equivalents

$         9,663

 

$         5,501

 

$       15,580

Accounts receivable, net

164,078

 

151,505

 

147,477

Accounts receivable, subcontractor

21,569

 

22,512

 

18,271

Deferred income taxes, net

24,970

 

27,983

 

24,938

Prepaid and other current assets

28,844

 

27,662

 

26,631

Total current assets

249,124

 

235,163

 

232,897

Restricted cash, cash equivalents and investments

21,012

 

20,606

 

23,115

Fixed assets, net

29,202

 

27,066

 

21,158

Other assets

40,045

 

37,502

 

32,279

Goodwill

144,937

 

144,937

 

144,642

Intangible assets, net

144,498

 

146,418

 

150,197

           

Total assets

$    628,818

 

$    611,692

 

$    604,288

           

Liabilities and stockholders' equity

         

Current liabilities:

         

Accounts payable and accrued expenses

$     66,949

 

$       65,130

 

$     71,081

Accrued compensation and benefits

64,574

 

56,046

 

55,949

Revolving credit facility

0

 

6,500

 

10,000

Current portion of notes payable

7,500

 

7,500

 

0

Other current liabilities

8,746

 

4,097

 

6,060

Total current liabilities

147,769

 

139,273

 

143,090

           

Notes payable, net of discount

138,750

 

140,625

 

148,672

Other long-term liabilities

96,881

 

98,188

 

94,784

Total liabilities

383,400

 

378,086

 

386,546

           

Commitments and contingencies

         
           

Stockholders' equity

245,418

 

233,606

 

217,742

           

Total liabilities and stockholders' equity

$    628,818

 

$    611,692

 

$    604,288

 

 

AMN Healthcare Services, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

                 
 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

June 30,

 

September 30,

 
 

2014

2013 (8)

 

2014

 

2014

2013 (8)

 
                 

Net cash provided by operating activities

$     15,489

$     27,092

 

$       6,159

 

$     22,639

$     44,349

 
                 

Net cash used in investing activities

(4,511)

(1,018)

 

(1,100)

 

(10,320)

(7,050)

 
                 

Net cash used in financing activities

(6,891)

(4,856)

 

(8,790)

 

(18,265)

(11,308)

 
                 

Effect of exchange rates on cash

75

(84)

 

(37)

 

29

(19)

 
                 

Net increase (decrease) in cash and cash equivalents

4,162

21,134

 

(3,768)

 

(5,917)

25,972

 
                 

Cash and cash equivalents at beginning of period

 

5,501

 

10,519

 

 

9,269

 

 

15,580

 

5,681

 
                 

Cash and cash equivalents at end of period

 

$       9,663

 

$     31,653

 

 

$       5,501

 

 

$       9,663

 

$     31,653

 
                 

 

 

(1)

Segment operating income represents net income plus interest expense (net of interest income) and other, income taxes, depreciation and amortization, unallocated corporate overhead and share-based compensation expense.

(2)

Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income taxes, depreciation and amortization and share-based compensation expense. 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 and considers measures used in credit facilities. 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.

(3)

Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

(4)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of loss on debt extinguishment of $3,113 and $434 for the nine months ended September 30, 2014 and 2013, respectively, and $3,113 for the three months ended June 30, 2014. Management believes such a measure provides a picture of the Company's results that is more comparable among periods since it excludes the impact of items that may recur occasionally, but tend to be irregular as to timing, thereby distorting comparisons between periods. However, 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 from adjusted EPS). Although management believes the item excluded from adjusted EPS is not indicative of the Company's operating performance, this item does impact the statement of comprehensive income, and management therefore utilizes adjusted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP EPS.

(5)

Average clinicians on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period presented.

(6)

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

(7)

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

(8)

Certain reclassifications have been made to the prior periods' consolidated financial statements to conform to the current year presentation.

 

SOURCE AMN Healthcare Services, Inc.