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Investor Relations Investors news releases news release details AMN Healthcare Announces Third Quarter 2017 Results

AMN Healthcare Announces Third Quarter 2017 Results

November 2, 2017
Quarterly revenue of $494 million; GAAP EPS of $0.57 and adjusted EPS of $0.63

SAN DIEGO, Nov. 2, 2017 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AMN), healthcare's leader and innovator in workforce solutions and staffing services, today announced its third quarter 2017 financial results. Financial highlights are as follows:

Dollars in millions, except per share amounts.

 

Q3 2017

% Change
Q3 2016

YTD Sept.
30, 2017

% Change
YTD Sept.
30, 2016

Revenue

$494.4

5%

$1,479.4

5%

Gross profit

$159.5

3%

$482.3

5%

Net income

$28.1

3%

$91.4

15%

Diluted EPS

$0.57

4%

$1.85

15%

Adj. diluted EPS*

$0.63

2%

$1.93

6%

Adjusted EBITDA*

$61.7

6%

$192.0

9%

 

*  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.

Highlights

  • AMN's workforce solutions leadership position continues to grow, with significant new MSP relationships added.
  • Nurse and Allied grew revenue 6% year over year.
  • Locum Tenens returned to growth with revenue rising 3% year over year.
  • Operating cash flow of $26 million in the quarter and $96 million year to date.
  • Repurchased 177,143 shares in the quarter for $7 million, with an average price per share of $38.18.

"Superior service and a comprehensive suite of workforce solutions continue to differentiate AMN Healthcare and deliver incremental value for healthcare organizations during a time of significant transformation.  Our healthcare clients benefit from AMN solutions for hiring great talent, maintaining greater flexibility, using analytics for insight, and ensuring quality patient care," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "I am proud of our team's execution in delivering another quarter of solid performance."

"Market conditions support continued growth, which is bolstered by gains in MSP and other strategic offerings. Key long-term trends remain in our favor and are expected to increase clients' need for innovative workforce solutions. These factors give us confidence that AMN Healthcare can maintain or improve revenue growth in 2018," added Ms. Salka.

Third Quarter 2017 Results

Consolidated revenue for the quarter was $494 million, a 5% increase over prior year and 1% higher than the second quarter of 2017.  We estimate that less than $2 million of revenue was lost in the quarter due to disruptions associated with the hurricanes.

Revenue for the Nurse and Allied Solutions segment was $303 million, higher by 6% year over year and up 1% sequentially. The Travel Nurse division continued to perform well, with revenue up 5% year over year and flat sequentially. Allied division revenue increased 6% year over year and was down slightly sequentially.

Locum Tenens Solutions segment revenue was $111 million, up 3% both year-over-year and on a sequential basis. Other Workforce Solutions segment revenue was $80 million, reflecting an increase of 4% year over year and down 1% sequentially, with year-over-year growth driven by the VMS and interim leadership businesses, partially offset by declines in the permanent placement businesses.

Gross margin was 32.3%, lower by 40 basis points year over year and 60 basis points sequentially. The year-over-year gross margin decline was due primarily to higher physician pay rates in Locum Tenens and and lower permanent placement fees. The sequential gross margin decline was driven primarily by higher health insurance costs and lower permanent placement fees.

SG&A expenses were $101 million, or 20.3% of revenue, compared to $100 million, or 21.2% of revenue, in the same quarter last year. Expenses as a percentage of revenue decreased year over year due to improved operating leverage. SG&A was $97 million, or 19.7% of revenue, in the previous quarter, including a $4 million favorable professional liability actuarial adjustment.

Net income was $28 million, or $0.57 per diluted share, compared to $27 million, or $0.55 per diluted share, in the same quarter last year. Excluding amortization of intangible assets, acquisition and integration costs, net of tax, adjusted net income per diluted share was $0.63. Adjusted EBITDA was $62 million, a year-over-year increase of 6%. Adjusted EBITDA margin was 12.5%, representing a 20 basis point increase year-over-year and 120 basis point decline on a sequential basis.

At September 30, 2017, cash and cash equivalents totaled $20 million. For the quarter ended September 30, 2017, cash flow from operations was $26 million and capital expenditures were $5 million. The Company ended the quarter with total debt outstanding of $325 million, with a leverage ratio as calculated in accordance with the Company's credit agreement of 1.3 to 1.

During the third quarter of 2017, the Company repurchased 177,143 shares of our common stock at an average price of $38.18 per share, resulting in an aggregate purchase price of $7 million.  Since the November 2016 inception of our $150 million share repurchase plan, a total of 629,896 shares have been repurchased at an average price of $32.29, with a total of purchase price of $20 million.

Fourth-Quarter 2017 Outlook

Metric

Guidance*

Consolidated revenue

$498 - $504 M

Gross margin

32.0%

SG&A as percentage of revenue

20.0%

Adjusted EBITDA margin

12.0-12.5%

 

*Note: Guidance percentage metrics are approximate.  For a reconciliation of adjusted EBITDA margin, see the table entitled "Reconciliation of Guidance Adjusted EBITDA Margin to Guidance Operating Margin" below.

On an as-reported basis, the projected year-over-year growth rate is 2-3%.  Excluding any labor disruption revenue, the fourth quarter is expected to reflect year-over-year growth of  approximately 5%.  The hurricanes are expected to have a negative revenue impact of less than $2 million. The expected sequential decrease in gross margin reflects the normal seasonal margin decline in the Nurse and Allied segment and an unfavorable segment mix shift.  Travel Nurse Staffing, our largest business, is expected to grow revenue 6-7% year over year with strong sequential growth of 4-5%. 

Conference Call on November 2, 2017

AMN Healthcare Services, Inc. (NYSE: AMN), healthcare's leader and innovator in workforce solutions and staffing services, will host a conference call to discuss its third quarter 2017 financial results on Thursday, November 2, 2017 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) 230-1059 in the U.S. or (612) 234-9959 internationally. 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 7:30 p.m. Eastern Time on November 2, 2017, and can be accessed until 11:59 p.m. Eastern Time on November 16, 2017 by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 431402.

About AMN Healthcare

AMN Healthcare is the leader and innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. The Company provides unparalleled 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 delivers managed services programs, healthcare executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, medical coding and consulting, and other services. 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.

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 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, adjusted EBITDA margin and adjusted diluted EPS serve as industry-wide financial measures. The Company 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 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 "Supplemental Financial and Operating Data" 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 our future financial performance, our guidance for fourth quarter 2017 revenue, gross margin, SG&A expenses as a percentage of revenue, adjusted EBITDA margin, increases in clients' need for innovative workforce solutions and our ability to maintain or improve revenue growth in 2018. 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 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 our fillings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2016, 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

   

Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

2017

2016

 

2017

 

2017

2016

Revenue

$  494,406

$  472,636

 

$  489,803

 

$ 1,479,378

$ 1,414,367

Cost of revenue

334,867

318,169

 

328,791

 

997,051

953,249

Gross profit

159,539

154,467

 

161,012

 

482,327

461,118

Gross margin

32.3%

32.7%

 

32.9%

 

32.6%

32.6%

Operating expenses:

             

Selling, general and administrative (SG&A)

100,579

99,995

 

96,673

 

299,325

297,359

SG&A as a % of revenue

20.3%

21.2%

 

19.7%

 

20.2%

21.0%

               

Depreciation and amortization

8,132

7,789

 

7,959

 

23,759

21,888

Total operating expenses

108,711

107,784

 

104,632

 

323,084

319,247

Income from operations

50,828

46,683

 

56,380

 

159,243

141,871

      Operating margin (1)

10.3%

9.9%

 

11.5%

 

10.8%

10.0%

               

Interest expense, net, and other

4,837

3,016

 

4,928

 

14,895

9,065

Income before income taxes

45,991

43,667

 

51,452

 

144,348

132,806

Income tax expense

17,863

16,371

 

20,197

 

52,957

53,319

Net income

$    28,128

$    27,296

 

$    31,255

 

$    91,391

$    79,487

Net income as a % of revenue

5.7%

5.8%

 

6.4%

 

6.2%

5.6%

               

Other comprehensive income (loss):

             

Foreign currency translation and other

(73)

40

 

(41)

 

(111)

165

Cash flow hedge, net of income taxes

   ‒‒

231

 

(58)

 

(15)

(343)

Other comprehensive income (loss)

(73)

271

 

(99)

 

(126)

(178)

Comprehensive income

$      28,055

$       27,567

 

$     31,156

 

$      91,265

$    79,309

Net income per common share:

             

Basic

$         0.59

$         0.57

 

$         0.65

 

$         1.91

$         1.66

Diluted

$         0.57

$         0.55

 

$         0.63

 

$         1.85

$         1.61

               

Weighted average common shares outstanding:

             

Basic

47,912

48,049

 

47,916

 

47,870

47,993

Diluted

49,445

49,410

 

49,475

 

49,480

49,287

               
                 

 

AMN Healthcare Services, Inc.

Supplemental Financial and Operating Data

(dollars in thousands, except per share data and operating data)

(unaudited)

     
 

Three Months Ended

 

Nine Months Ended

 

September  30,

 

June 30,

 

September 30,

   

2017

 

2016

   

2017

   

2017

 

2016

Revenue

                       

  Nurse and allied solutions

$

302,933

$

286,810

   

300,727

   

917,183

 

877,197

  Locum tenens solutions

 

111,415

 

108,553

   

108,215

   

322,473

 

320,420

  Other workforce solutions

 

80,058

 

77,273

   

80,861

   

239,722

 

216,750

 

$

494,406

$

472,636

   

489,803

   

1,479,378

 

1,414,367

                         

Reconciliation of Non-GAAP Items:

                       
                         

Segment operating income (2)

                       

  Nurse and allied solutions

$

40,807

$

37,396

   

47,851

   

134,638

 

118,517

  Locum tenens solutions

 

14,438

 

14,026

   

12,371

   

39,028

 

43,634

  Other workforce solutions

 

19,890

 

20,867

   

22,041

   

61,788

 

56,311

   

75,135

 

72,289

   

82,263

   

235,454

 

218,462

   Unallocated corporate overhead

 

13,438

 

14,235

   

15,080

   

43,409

 

42,460

Adjusted EBITDA (3)

 

61,697

 

58,054

   

67,183

   

192,045

 

176,002

Adjusted EBITDA margin (4)

 

12.5%

 

12.3%

   

13.7%

   

13.0%

 

12.4%

                         

Depreciation and amortization

 

8,132

 

7,789

   

7,959

   

23,759

 

21,888

Share-based compensation

 

2,477

 

2,704

   

2,562

   

7,720

 

8,795

Acquisition and integration costs

 

260

 

878

   

282

   

1,323

 

3,448

Income from operations

 

50,828

 

46,683

   

56,380

   

159,243

 

141,871

Interest expense, net, and other

 

4,837

 

3,016

   

4,928

   

14,895

 

9,065

Income before income taxes

 

45,991

 

43,667

   

51,452

   

144,348

 

132,806

Income tax expense  

 

17,863

 

16,371

   

20,197

   

52,957

 

53,319

Net income

$

28,128

$

27,296

   

31,255

   

91,391

 

79,487

                         
                         

GAAP diluted net income per share (EPS)

$

0.57

$

0.55

   

0.63

   

1.85

 

1.61

   Adjustments:

                       

   Amortization of intangible assets

 

0.09

 

0.09

   

0.09

   

0.28

 

0.28

   Acquisition and integration costs

 

0.01

 

0.02

   

0.01

   

0.03

 

0.07

   Tax effect on above adjustments

 

(0.04)

 

(0.04)

   

(0.04)

   

(0.12)

 

(0.14)

   Excess tax benefits (5)

 

0.00

 

0.00

   

(0.02)

   

(0.11)

 

0.00

Adjusted diluted EPS (6)

$

0.63

$

0.62

   

0.67

   

1.93

 

1.82

                         

 

                         
 

Three Months Ended

   

Nine Months Ended

   

September 30,

   

June 30,

   

September 30,

   

2017

 

2016

   

2017

   

2017

 

2016

Gross Margin

                       

   Nurse and allied solutions

 

27.3%

 

26.7%

   

27.8%

   

27.6%

 

26.7%

   Locum tenens solutions

 

30.1%

 

31.2%

   

30.0%

   

30.2%

 

31.2%

   Other workforce solutions

 

54.1%

 

56.7%

   

55.7%

   

54.9%

 

58.6%

                         

Operating Data:

                       

Nurse and allied solutions

                       

Average healthcare professionals on assignment (7)

 

8,817

 

8,458

   

8,776

   

8,881

 

8,423

Locum tenens solutions

                       

    Days filled (8)

 

58,881

 

59,612

   

58,660

   

172,784

 

178,846

    Revenue per day filled (9)

 

$1,892

 

$1,821

   

$1,845

   

$1,866

 

$1,792

                         
                       
 

As of September 30,

 

As of June 30,

     
   

2017

 

2016

     

2017

     

Leverage ratio (10)

 

1.3

 

1.7

     

1.4

     
                       
                             

 

 

AMN Healthcare Services, Inc.

 

 

Condensed Consolidated Balance Sheets

 

 

(dollars in thousands)

 

 

(unaudited)

 
               
 

September 30,

 

June 30,

 

December 31,

 
 

2017

 

2017

 

2016

 

Assets

           

Current assets:

           

Cash and cash equivalents

$    19,625

 

$    22,878

 

$    10,622

 

Accounts receivable, net

343,596

 

334,597

 

341,977

 

Accounts receivable, subcontractor

37,200

 

36,631

 

49,233

 

Prepaid and other current assets

42,052

 

46,938

 

48,796

 

Total current assets

442,473

 

441,044

 

450,628

 

Restricted cash, cash equivalents

and investments

34,380

 

33,882

 

31,287

 

Fixed assets, net

68,188

 

65,368

 

59,954

 

Other assets

73,962

 

71,594

 

57,534

 

Goodwill

340,596

 

340,596

 

341,754

 

Intangible assets, net

231,791

 

236,486

 

245,724

 
             

Total assets

$ 1,191,390

 

$ 1,188,970

 

$ 1,186,881

 
             

Liabilities and stockholders' equity

           

Current liabilities:

           

Accounts payable and accrued expenses

$ 117,934

 

$ 118,943

 

$ 137,512

 

Accrued compensation and benefits

111,984

 

107,283

 

107,993

 

Current portion of notes payable, less unamortized fees

              ‒‒

 

18,071

 

3,750

 

Deferred revenue

9,609

 

9,644

 

8,924

 

Other current liabilities

5,440

 

12,387

 

16,611

 

Total current liabilities

244,967

 

266,328

 

274,790

 
             
             

Notes payable, less unamortized fees

319,652

 

319,462

 

359,192

 

Deferred income taxes, net

11,899

 

12,387

 

21,420

 

Other long-term liabilities

82,673

 

82,301

 

82,096

 

Total liabilities

659,191

 

680,478

 

737,498

 
             

Commitments and contingencies

           
             

Stockholders' equity

532,199

 

508,492

 

449,383

 
             

Total liabilities and stockholders' equity

$ 1,191,390

 

$ 1,188,970

 

$ 1,186,881

 
               
                               

 

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,

 

2017

2016

 

2017

 

2017

2016

               

Net cash provided by operating activities

$     25,594

$     29,540

 

$     18,474

 

$     96,382

$     84,820

               

Net cash  used in investing activities

(3,823)

(8,117)

 

(6,320)

 

(23,444)

(241,271)

               

Net cash provided by (used in) financing activities

(24,951)

(26,817)

 

(26,945)

 

(63,824)

162,418

               

Effect of exchange rates on cash

(73)

40

 

(42)

 

(111)

165

               

Net increase (decrease) in cash and cash equivalents

(3,253)

(5,354)

 

(14,833)

 

9,003

6,132

Cash and cash equivalents at beginning of period

22,878

21,062

 

37,711

 

10,622

9,576

               

Cash and cash equivalents at end of period

$     19,625

$     15,708

 

$     22,878

 

$     19,625

$     15,708

 

AMN Healthcare Services, Inc.

Additional Supplemental Non-GAAP Disclosures

Reconciliation of Guidance Adjusted EBITDA Margin to

Guidance Operating Margin

(unaudited)

       
 

Three Months Ending

 

December 31, 2017

 

Low(11)

 

High(11)

Adjusted EBITDA margin

12.0%

 

12.5%

Deduct:

     

Share-based compensation

 

0.5%

 

EBITDA margin

11.5%

 

12.0%

Depreciation and amortization

 

1.7%

 

Operating margin

9.8%

 

10.3%

         

 

(1)

Operating margin represents income from operations divided by revenue.

(2)

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

(3)

Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, acquisition and integration costs 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 and is a measure used in the Company's credit agreement and the indenture governing our 5.125% Senior Notes due 2024. 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.

(4)

Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

(5)

The consolidated effective tax rate for the three and nine months ended September 30, 2017 was favorably affected by the recording of excess tax benefits 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, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense, which amounted to $56,000 and $5,381,000 for the three and nine months ended September 30, 2017, respectively. Since the majority of our equity awards vest during the first quarter of the year, we do not anticipate the recording of additional excess tax benefits of this magnitude for the reminder of the year. The magnitude of the impact of excess tax benefits 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 favorable tax benefits are largely unrelated to our current year's income before taxes and is unrepresentative of our normal effective tax rate, we excluded their impact on adjusted diluted EPS for the three and nine months ended September 30, 2017.

(6)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of (A) amortization of intangible assets, (B) acquisition and integration costs, (C) tax effect, if any, of the foregoing adjustments, and (D) excess tax benefits relating to equity awards vested and exercised since January 1, 2017. 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 from adjusted diluted EPS). Although management believes the items excluded from adjusted diluted EPS 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.

(7)

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

(8)

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

(9)

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

(10)

 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.

(11)

Guidance percentage metrics are approximate.

 

 

 

SOURCE AMN Healthcare Services, Inc.