AMN Healthcare Reports Second Quarter 2006 Results and Updates Annual Guidance
SAN DIEGO, Aug. 7 /PRNewswire-FirstCall/ -- AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company, today reported financial results for the second quarter of 2006, with revenue of $261.2 million and diluted earnings per share of $0.21. Second quarter revenue increased 3% from the $254.3 million reported for the first quarter of this year and 63% from the $160.7 million reported for the second quarter of last year. The sequential quarterly increase in revenue reflected growth across all of the company's business lines as well as one additional day in the second quarter. The increase in revenue compared to the same quarter last year was due primarily to the company's acquisition of The MHA Group, Inc. ("MHA") in November 2005 and growth in the company's nurse and allied healthcare staffing business.
Diluted earnings per share for the second quarter of 2006 of $0.21 compared to $0.24 reported for the first quarter. The decrease was due to a benefit from a workers' compensation insurance reserve reduction recorded in the first quarter, as well as increased SG&A expenses in the second quarter. Also contributing to the sequential decrease in diluted earnings per share was a $0.04 charge for stock compensation expense recognized in the second quarter in connection with the Company's adoption of Statement of Financial Accounting Standards 123R ("FAS 123R") on January 1, 2006, compared to a $0.02 charge for stock compensation expense in the first quarter. Partially offsetting the sequential quarterly decrease in diluted earnings per share was a $0.02 tax benefit recorded in the second quarter of 2006 for an adjustment to deferred income taxes.
"We are very pleased with both the sequential and year-over-year growth of our business," said Susan R. Nowakowski, President and Chief Executive Officer. "We continue to benefit from our leading market position and a continued strength in demand for quality healthcare professionals. All of our business lines are performing well, and we are particularly encouraged by the increase in new nurse candidates who are applying with our brands," added Nowakowski.
Gross profit for the second quarter of 2006 was $70.0 million, representing a 26.8% gross margin, up from the $68.3 million, or 26.9% gross margin, reported in the first quarter of 2006, and the $37.2 million, or 23.1% gross margin, reported in the second quarter of 2005. The increase in second quarter gross profit compared to the prior quarter was due largely to growth in the company's physician staffing businesses. The increase in gross profit compared to the same quarter last year was due primarily to the company's acquisition of MHA. Second quarter gross margins by business line were 24.5% for nurse and allied healthcare staffing, 26.5% for locum tenens staffing and 61.2% for physician permanent placement services.
Selling, general and administrative ("SG&A") expenses for the second quarter of 2006 were $52.4 million, including stock compensation expense of $1.8 million resulting from our adoption of FAS 123R, as compared to $47.9 million last quarter and $26.7 million in the second quarter last year. The increase in SG&A expenses in the second quarter as compared to the first quarter of this year was due mainly to focused spending on marketing and recruiting initiatives aimed at expanding nurse supply and placements along with increased spending to support growth in the physician staffing businesses. The increase in SG&A expenses compared to the same quarter last year reflected mainly the addition of MHA. As a percentage of revenue, SG&A expenses excluding stock compensation expense were 19.4%, for the second quarter, compared to 18.3% for last quarter and 16.6% for the same quarter last year.
Income from operations was $15.1 million for the second quarter of 2006 compared to $17.9 million for the first quarter of 2006 and $9.0 million for the second quarter of 2005. Income from operations margin for the second quarter of 2006 was 5.8%, compared to 7.1% for the first quarter of 2006 and 5.6% for the second quarter of 2005.
Net interest expense for the second quarter of this year was $4.3 million, compared to $4.1 million in the first quarter and $1.7 million in the second quarter of 2005. The increase in net interest expense from last quarter was attributable to additional interest expense from increased debt used to fund the repurchase of approximately 1.9 million shares of the company's common stock on May 15, 2006. The increase in net interest expense compared to the same quarter last year was primarily attributable to interest expense from additional debt used to fund the company's acquisition of MHA.
AMN Healthcare generated $24.1 million in cash flow from operations during the second quarter of 2006 which, in addition to cash on hand and borrowings, was used to repurchase $37.5 million of the company's common stock in May of this year and pay down debt. Total debt outstanding at June 30, 2006 was $209.6 million. Weighted average diluted shares outstanding for the second quarter of 2006 were 34.2 million.
Revenue and Earnings Guidance for Third Quarter and Full Year 2006
Revenue for the third quarter of 2006 is expected to range from $275 million to $278 million and diluted earnings per share is expected to range from $0.21 to $0.23, which includes an estimated charge of $0.03 for stock compensation expense related to the adoption of FAS 123R.
Based on strong year to date results and better visibility into the second half of 2006, management increased its guidance for full year revenue and diluted earnings per share previously issued in May of this year. Management expects full year 2006 revenue to range from $1.060 billion to $1.070 billion and full year diluted earnings per share to range from $0.86 to $0.89, which includes an estimated charge of $0.12 for stock compensation expense. Excluding stock compensation expense, full year 2006 adjusted diluted earnings per share is expected to range from $0.98 to $1.01.
"Our estimates for the remainder of the year reflect continued strength in demand as well as an improving candidate supply environment in our nurse staffing business. We believe that the strategic investments in marketing and recruiting we initiated at the beginning of the year are beginning to bear results and create positive momentum," said Nowakowski. "Our team members are doing an outstanding job of delivering competitively superior service to our providers and healthcare facility clients every day," added Nowakowski.
Company Summary
AMN Healthcare Services, Inc. is the largest temporary healthcare staffing company in the United States. As the largest nationwide provider of travel nurse staffing, locum tenens (temporary physician staffing) and physician permanent placement services, the company recruits physicians, nurses and allied healthcare professionals nationally and internationally and places them on variable lengths of assignments and in permanent positions at acute-care hospitals, physician practice groups and other healthcare facilities throughout the United States.
Conference Call on August 8, 2006
AMN Healthcare Services, Inc.'s second quarter 2006 conference call will be held on Tuesday, August 8, 2006, at 11:00 a.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare's website at www.amnhealthcare.com/investors. 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) 230-1085 in the U.S. or (612) 234-9960 internationally. Following the conclusion of the call, a replay of the webcast will be available at the company's web site within four hours. Alternatively, a telephonic replay of the call will be available at 5:15 p.m. Eastern Time, and can be accessed until August 22, 2006 at midnight Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 829385.
From time to time, additional information regarding non-GAAP financial measures may be made available on the company's website at www.amnhealthcare.com/investors.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company has tried, whenever possible, to identify these forward-looking statements using words such as "anticipates," "believes," "estimates," "projects," "expects," "plans," "intends" and similar expressions. Similarly, statements herein that describe the company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the company's actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks and uncertainties may include, but are not limited to: the company's ability to continue to recruit and retain qualified temporary and permanent healthcare professionals at reasonable costs; the company's ability to attract and retain sales and operational personnel; the company's ability to enter into contracts with hospitals, healthcare facility clients, affiliated healthcare networks and physician practice groups on terms attractive to the company and to secure orders related to those contracts; the company's ability to demonstrate the value of its services to its healthcare and facility clients; changes in the timing of hospital, healthcare facility and physician practice group clients' orders for temporary healthcare professionals; the general level of patient occupancy at the company's hospital and healthcare facility clients' facilities; the overall level of demand for services offered by temporary and permanent healthcare staffing providers; the ability of the company's hospital, healthcare facility and physician practice group clients to retain and increase the productivity of their permanent staff; the variation in pricing of the healthcare facility contracts under which the company places temporary healthcare professionals; the company's ability to successfully implement its strategic growth, acquisition and integration strategies; the company's ability to leverage its cost structure; the performance of the company's management information and communication systems; the effect of existing or future government legislation and regulations; the company's ability to grow and operate its business in compliance with legislation and regulations; the challenge to classification of certain of the company's healthcare professionals as independent contractors; the impact of medical malpractice and other claims asserted against the company; the impact on the company's earnings related to share-based payment awards due to changes in accounting rules; the disruption or adverse impact to the company's business as a result of a terrorist attack; the company's ability to carry out its business strategy and maintain sufficient cash flow and capital structure to support the company's business; the loss of key officers and management personnel that could adversely affect the company's ability to remain competitive; the effect of recognition by the company of an impairment to goodwill; and the effect of adjustments by the company to accruals for self-insured retentions. Other 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, 2005, its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, its Current Reports on Form 8-K, and Registration Statement on Form S-3. These statements reflect the company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time. The company does not intend, however, to update the guidance provided today prior to its next earnings release.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060718/LATU121LOGO )
Contact:
David C. Dreyer
Chief Financial Officer
Christopher Schwartz
Sr. Director, Investor Relations
866.861.3229
Tables Follow:
AMN Healthcare Services, Inc.
Condensed Consolidated Statements of Income
(dollars in thousands, except per share)
(unaudited)
Three Months Ended % Chg Six Months Ended % Chg
June 30, June 30,
2006 2005 2006 2005
Revenue $261,176 $160,689 62.5% $515,441 $317,531 62.3%
Cost of
revenue 191,154 123,521 54.8% 377,118 244,646 54.1%
Gross profit 70,022 37,168 88.4% 138,323 72,885 89.8%
26.8% 23.1% 26.8% 23.0%
Expenses:
Selling,
general and
administrative 52,353 26,715 96.0% 100,245 53,001 89.1%
20.0% 16.6% 19.4% 16.7%
Depreciation
and
amortization 2,524 1,457 73.2% 4,990 2,536 96.8%
Total
expenses 54,877 28,172 94.8% 105,235 55,537 89.5%
Income from
operations 15,145 8,996 68.4% 33,088 17,348 90.7%
5.8% 5.6% 6.4% 5.5%
Interest expense,
net 4,345 1,733 150.7% 8,492 3,489 143.4%
Income before
income taxes 10,800 7,263 48.7% 24,596 13,859 77.5%
Income tax expense 3,529 2,847 24.0% 9,024 5,450 65.6%
Net income $7,271 $4,416 64.7% $15,572 $8,409 85.2%
2.8% 2.7% 3.0% 2.6%
Basic and diluted
net income per
common share:
Basic net
income
per common
share $0.23 $0.15 53.3% $0.49 $0.29 69.0%
Diluted net
income
per common
share $0.21 $0.14 50.0% $0.45 $0.27 66.7%
Weighted average
common shares
outstanding -
basic 31,887 28,720 11.0% 31,990 28,549 12.1%
Weighted average
common shares
outstanding -
diluted 34,170 31,576 8.2% 34,467 31,519 9.4%
AMN Healthcare Services, Inc.
Supplemental Financial and Operating Data
(dollar in thousands, except traveler data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 % Chg 2006 2005 % Chg
Supplemental
Financial Data:
Revenue
Nurse and
allied
healthcare
staffing $181,473 $160,689 12.9% $359,197 $317,531 13.1%
Locum tenens
staffing 66,954 -- NA 131,501 NA
Physician
permanent
placement
services 12,749 -- NA 24,743 -- NA
$261,176 $160,689 62.5% $515,441 $317,531 62.3%
Gross Profit
Nurse and
allied
healthcare
staffing $44,447 $37,168 19.6% $88,524 $72,885 21.5%
Locum tenens
staffing 17,771 -- NA 34,860 -- NA
Physician
permanent
placement
services 7,804 -- NA 14,939 NA
$70,022 $37,168 88.4% $138,323 $72,885 89.8%
Gross Margin
Nurse and
allied
healthcare
staffing 24.5% 23.1% 24.6% 23.0%
Locum tenens
staffing 26.5% -- 26.5% --
Physician
permanent
placement
services 61.2% -- 60.4% --
Supplemental
Operating Data:
Nurse and allied
healthcare
staffing
Average
travelers on
assignment(1) 6,572 6,388 2.9% 6,590 6,369 3.5%
Revenue per
traveler
per day(2) $303.44 $276.43 9.8% $301.14 $275.45 9.3%
Gross profit
per traveler
per day(2) $74.32 $63.94 16.2% $74.22 $63.22 17.4%
Locum tenens
staffing
Days filled(3) 49,534 -- NA 98,785 NA
Revenue per
day
filled(3) $1,351.68 $-- NA $1,331.18 $-- NA
Gross profit
per day
filled(3) $358.76 $-- NA $352.89 $-- NA
(1) Average travelers on assignment represents the average number of
nurse and allied healthcare professionals on assignment during the
period presented.
(2) Revenue per traveler per day and gross profit per traveler per day
represent the revenue and gross profit of the company's nurse and
allied healthcare staffing segment divided by average travelers on
assignment, divided by the number of days in the period presented.
(3) Days filled is calculated by dividing the locum tenens hours filled
during the period by 8 hours. Revenue per day filled and gross
profit per day filled represent locum tenens revenue and gross profit
divided by days filled for the period presented.
AMN Healthcare Services, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, March 31, December 31,
2006 2006 2005
Assets
Current assets:
Cash and cash equivalents $4,888 $10,320 $19,110
Accounts receivable, net 156,936 152,917 154,926
Deferred income taxes, net 25,638 27,917 31,305
Other current assets 21,821 26,298 22,922
Total current assets 209,283 217,452 228,263
Fixed assets, net 21,876 20,082 20,164
Goodwill, net 241,307 241,132 240,844
Intangible and other assets 125,649 130,192 129,116
Total assets $598,115 $608,858 $618,387
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable and
accrued expenses $22,799 $20,498 $19,092
Accrued compensation and
benefits 35,696 32,183 32,208
Current portion of notes
payable 10,750 12,813 10,250
Deferred revenue 8,000 7,889 7,610
Other current liabilities 31,770 31,699 59,018
Total current liabilities 109,015 105,082 128,178
Notes payable, less current
portion 198,875 192,187 194,750
Deferred income taxes, net 64,700 67,014 65,132
Other long-term liabilities 27,290 25,705 37,127
Total liabilities 399,880 389,988 425,187
Stockholders' equity 198,235 218,870 193,200
Total liabilities and
stockholders' equity $598,115 $608,858 $618,387
AMN Healthcare Services, Inc.
Condensed Consolidated Cash Flow Statement
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
Net cash provided by
operating activities $24,124 $9,234 $42,149 $26,168
Net cash used in
investing activities (2,886) (1,591) (40,390) (2,362)
Net cash used in financing
activities (26,670) (3,299) (15,967) (12,862)
Effect of exchange
rates on cash -- (24) (14) (14)
Net (decrease) increase in
cash and cash equivalents (5,432) 4,320 (14,222) 10,930
Cash and cash equivalents
at beginning of period 10,320 10,518 19,110 3,908
Cash and cash equivalents
at end of period $4,888 $14,838 $4,888 $14,838
SOURCE
AMN Healthcare Services, Inc.
08/07/2006
CONTACT:
David C. Dreyer,
Chief Financial Officer,
or
Christopher Schwartz,
Sr. Director, Investor Relations,
both of AMN Healthcare Services, Inc.,
1-866-861-3229