SEC Filing | AMN Healthcare Services Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

amn-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 001-16753

AMN HEALTHCARE SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		06-1500476
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

8840 Cypress Waters Boulevard	Suite 300
Dallas	Texas	75019
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (866) 871-8519

____________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	AMN	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes ☐ No x

As of November 2, 2022, there were 43,335,911 shares of common stock, $0.01 par value, outstanding.

Auditor Name: KPMG LLP Auditor Location: San Diego, California Auditor Firm ID: 185

TABLE OF CONTENTS


Item		Page

	PART I - FINANCIAL INFORMATION

1.	Condensed Consolidated Financial Statements (unaudited):	1
	Condensed Consolidated Balance Sheets, As of September 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Comprehensive Income, For the Three and Nine Months Ended September 30, 2022 and 2021	2
	Condensed Consolidated Statements of Stockholders’ Equity, For the Nine Months Ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows, For the Nine Months Ended September 30, 2022 and 2021	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
3.	Quantitative and Qualitative Disclosures about Market Risk	27
4.	Controls and Procedures	28

	PART II - OTHER INFORMATION


1.	Legal Proceedings	29
1A.	Risk Factors	29
2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
3.	Defaults Upon Senior Securities	29
4.	Mine Safety Disclosures	29
5.	Other Information	30
6.	Exhibits	31
	Signatures	32

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except par value)


	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	155,723	$	180,928
Accounts receivable, net of allowances of $15,194 and $6,838 at September 30, 2022 and December 31, 2021, respectively	724,966		789,131
Accounts receivable, subcontractor	253,954		239,719
Prepaid expenses	17,019		72,460
Other current assets	54,504		66,830
Total current assets	1,206,166		1,349,068
Restricted cash, cash equivalents and investments	64,883		64,482
Fixed assets, net of accumulated depreciation of $212,702 and $189,954 at September 30, 2022 and December 31, 2021, respectively	140,995		127,114
Operating lease right-of-use assets	18,505		27,771
Other assets	152,970		156,670
Goodwill	935,675		892,341
Intangible assets, net of accumulated amortization of $339,092 and $278,249 at September 30, 2022 and December 31, 2021, respectively	499,067		514,460
Total assets	$	3,018,261	$	3,131,906
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	459,237	$	425,257
Accrued compensation and benefits	338,833		354,381


Current portion of operating lease liabilities	8,226		11,383
Deferred revenue	15,060		15,950
Other current liabilities	69,890		162,419
Total current liabilities	891,246		969,390

Notes payable, net of unamortized fees and premium	843,210		842,322
Deferred income taxes, net	42,159		47,814
Operating lease liabilities	10,785		13,364
Other long-term liabilities	98,228		96,989
Total liabilities	1,885,628		1,969,879
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000 shares authorized; none issued and outstanding at September 30, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value; 200,000 shares authorized; 50,087 issued and 43,327 outstanding at September 30, 2022 and 49,849 issued and 47,263 outstanding at December 31, 2021	501		498
Additional paid-in capital	497,744		486,709
Treasury stock, at cost; 6,760 and 2,586 shares at September 30, 2022 and December 31, 2021, respectively	(523,722)		(121,831)
Retained earnings	1,159,199		796,946
Accumulated other comprehensive loss	(1,089)		(295)
Total stockholders’ equity	1,132,633		1,162,027
Total liabilities and stockholders’ equity	$	3,018,261	$	3,131,906

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	1,138,586	$	877,800	$	4,117,731	$	2,621,190
Cost of revenue	753,560		571,935		2,776,300		1,745,914
Gross profit	385,026		305,865		1,341,431		875,276
Operating expenses:
Selling, general and administrative	215,419		173,932		717,428		491,773
Depreciation and amortization (exclusive of depreciation included in cost of revenue)	33,239		26,104		96,169		74,098
Total operating expenses	248,658		200,036		813,597		565,871
Income from operations	136,368		105,829		527,834		309,405
Interest expense, net, and other	8,961		5,223		28,630		24,278
Income before income taxes	127,407		100,606		499,204		285,127
Income tax expense	34,962		26,583		136,951		73,956
Net income	$	92,445	$	74,023	$	362,253	$	211,171

Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities, net, and other	(219)		11		(794)		(10)
Other comprehensive income (loss)	(219)		11		(794)		(10)

Comprehensive income	$	92,226	$	74,034	$	361,459	$	211,161

Net income per common share:
Basic	$	2.11	$	1.55	$	8.04	$	4.43
Diluted	$	2.10	$	1.54	$	7.99	$	4.40
Weighted average common shares outstanding:
Basic	43,785		47,737		45,056		47,666
Diluted	44,039		48,080		45,332		48,022

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands)


	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total
	Shares	Amount				Shares	Amount
Balance, December 31, 2020	49,614	$	496	$	468,726	(2,561)	$	(119,143)	$	469,558	$	40	$	819,677

Equity awards vested, net of shares withheld for taxes	132	1		(5,259)		—	—		—		—		(5,258)

Share-based compensation	—	—		9,287		—	—		—		—		9,287
Comprehensive income (loss)	—	—		—		—	—		70,378		(24)		70,354
Balance, March 31, 2021	49,746	$	497	$	472,754	(2,561)	$	(119,143)	$	539,936	$	16	$	894,060

Equity awards vested, net of shares withheld for taxes	78	1		(471)		—	—		—		—		(470)
Share-based compensation	—	—		6,019		—	—		—		—		6,019
Comprehensive income	—	—		—		—	—		66,770		3		66,773
Balance, June 30, 2021	49,824	$	498	$	478,302	(2,561)	$	(119,143)	$	606,706	$	19	$	966,382

Equity awards vested, net of shares withheld for taxes	12	—		(527)		—	—		—		—		(527)
Share-based compensation	—	—		2,589		—	—		—		—		2,589
Comprehensive income	—	—		—		—	—		74,023		11		74,034
Balance, September 30, 2021	49,836	$	498	$	480,364	(2,561)	$	(119,143)	$	680,729	$	30	$	1,042,478


	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount				Shares	Amount
Balance, December 31, 2021	49,849	$	498	$	486,709	(2,586)	$	(121,831)	$	796,946	$	(295)	$	1,162,027
Repurchase of common stock into treasury	—	—		—		(2,298)	(228,024)		—		—		(228,024)
Equity awards vested, net of shares withheld for taxes	164	2		(9,433)		—	—		—		—		(9,431)

Share-based compensation	—	—		11,259		—	—		—		—		11,259
Comprehensive income (loss)	—	—		—		—	—		146,008		(907)		145,101
Balance, March 31, 2022	50,013	$	500	$	488,535	(4,884)	$	(349,855)	$	942,954	$	(1,202)	$	1,080,932
Repurchase of common stock into treasury	—	—		—		(1,876)	(173,867)		—		—		(173,867)
Equity awards vested, net of shares withheld for taxes	19	—		(366)		—	—		—		—		(366)
Share-based compensation	—	—		8,513		—	—		—		—		8,513
Comprehensive income	—	—		—		—	—		123,800		332		124,132
Balance, June 30, 2022	50,032	$	500	$	496,682	(6,760)	$	(523,722)	$	1,066,754	$	(870)	$	1,039,344

Equity awards vested, net of shares withheld for taxes	55	1		(3,836)		—	—		—		—		(3,835)
Share-based compensation	—	—		4,898		—	—		—		—		4,898
Comprehensive income (loss)	—	—		—		—	—		92,445		(219)		92,226
Balance, September 30, 2022	50,087	$	501	$	497,744	(6,760)	$	(523,722)	$	1,159,199	$	(1,089)	$	1,132,633

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	362,253	$	211,171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (inclusive of depreciation included in cost of revenue)	99,087		75,871
Non-cash interest expense and other	1,427		(4,541)
Write-off of fees on credit facilities and senior notes	—		158
Change in fair value of contingent consideration	(1,190)		—
Increase in allowance for credit losses and sales credits	22,199		2,103
Provision for deferred income taxes	(5,364)		(4,328)
Share-based compensation	24,670		17,895
Loss on disposal or sale of fixed assets	571		386

Net loss (gain) on investments in available-for-sale securities	652		(41)
Net loss (gain) on deferred compensation balances	(1,324)		96
Non-cash lease expense	4,818		(257)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	44,532		(196,342)
Accounts receivable, subcontractor	(14,235)		(67,641)
Income taxes receivable	(1,426)		5,472
Prepaid expenses	55,495		(5,695)
Other current assets	12,399		3,411
Other assets	(608)		780

Accounts payable and accrued expenses	31,855		112,183
Accrued compensation and benefits	2,937		96,666
Other liabilities	(99,534)		(26,268)

Deferred revenue	(809)		6,276
Restricted investments balance	—		16
Net cash provided by operating activities	538,405		227,371

Cash flows from investing activities:
Purchase and development of fixed assets	(51,229)		(38,710)
Purchase of investments	(13,152)		(32,437)
Proceeds from sale and maturity of investments	12,549		40,000
Purchase of equity investment	—		(500)
Proceeds from sale of equity investment	68		78
Payments to fund deferred compensation plan	(21,411)		(6,094)

Cash paid for acquisitions, net of cash and restricted cash received	(69,801)		(41,264)
Cash paid for other intangibles	(5,091)		(90)

Net cash used in investing activities	(148,067)		(79,017)

Table of Contents


	Nine Months Ended September 30,
	2022		2021
Cash flows from financing activities:

Payments on term loans	—		(21,875)

Payments on revolving credit facility	—		(70,000)
Proceeds from revolving credit facility	—		70,000


Repurchase of common stock	(401,891)		—

Earn-out payments to settle contingent consideration liabilities for prior acquisitions	—		(3,100)
Cash paid for shares withheld for taxes	(13,632)		(6,255)
Net cash used in financing activities	(415,523)		(31,230)
Effect of exchange rate changes on cash	—		(10)
Net increase (decrease) in cash, cash equivalents and restricted cash	(25,185)		117,114
Cash, cash equivalents and restricted cash at beginning of period	246,714		83,990
Cash, cash equivalents and restricted cash at end of period	$	221,529	$	201,104

Supplemental disclosures of cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	10,700	$	35,066
Cash paid for interest (net of $452 and $248 capitalized for the nine months ended September 30, 2022 and 2021, respectively)	$	18,950	$	19,301
Cash paid for income taxes	$	164,757	$	72,863
Acquisitions:
Fair value of tangible assets acquired in acquisitions, net of cash and restricted cash received	$	2,731	$	1,906
Goodwill	43,301		28,135
Intangible assets	40,200		12,440
Liabilities assumed	(8,431)		(1,217)


Contingent consideration liabilities	(8,000)		—
Net cash paid for acquisitions	$	69,801	$	41,264
Supplemental disclosures of non-cash investing and financing activities:
Purchase of fixed assets recorded in accounts payable and accrued expenses	$	5,187	$	5,080

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AMN HEALTHCARE SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

1. BASIS OF PRESENTATION

The condensed consolidated balance sheets and related condensed consolidated statements of comprehensive income and cash flows contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”), which are unaudited, include the accounts of AMN Healthcare Services, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all entries necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. These entries consisted of all normal recurring items. The results of operations for the interim period are not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year or for any future period.

The unaudited condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Please refer to the Company’s audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2021, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on February 24, 2022 (the “2021 Annual Report”).

The preparation of financial statements in conformity with U.S. GAAP requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates, including those related to intangible assets purchased in a business combination, asset impairments, accruals for self-insurance, compensation and related benefits, accounts receivable, contingencies and litigation, contingent consideration liabilities associated with acquisitions, and income taxes. Actual results could differ from those estimates under different assumptions or conditions.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include currency on hand, deposits with financial institutions, money market funds, commercial paper and other highly liquid investments. Restricted cash and cash equivalents primarily includes cash, corporate bonds and commercial paper that serve as collateral for the Company’s captive insurance subsidiary claim payments. See Note (6), “Fair Value Measurement” for additional information.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed consolidated balance sheets and related notes to the amounts presented in the accompanying condensed consolidated statements of cash flows.


	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	155,723	$	180,928
Restricted cash and cash equivalents (included in other current assets)	27,764		29,262
Restricted cash, cash equivalents and investments	64,883		64,482
Total cash, cash equivalents and restricted cash and investments	248,370		274,672
Less restricted investments	(26,841)		(27,958)
Total cash, cash equivalents and restricted cash	$	221,529	$	246,714

Accounts Receivable

The Company records accounts receivable at the invoiced amount. Accounts receivable are non-interest bearing. The Company maintains an allowance for expected credit losses based on the Company’s historical write-off experience, an assessment of its customers’ financial conditions and available information that is relevant to assessing the collectability of cash flows, which includes current conditions and forecasts about future economic conditions.

The following table provides a reconciliation of activity in the allowance for credit losses for accounts receivable:

Table of Contents


	2022		2021
Balance as of January 1,	$	6,838	$	7,043

Provision for expected credit losses	10,129		325
Amounts written off charged against the allowance	(1,773)		(1,220)

Balance as of September 30,	$	15,194	$	6,148

Table of Contents

2. ACQUISITIONS

As set forth below, the Company completed two acquisitions during the period of January 1, 2021 through September 30, 2022, which were accounted for using the acquisition method of accounting. Accordingly, the Company recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the applicable date of acquisition. Since the applicable date of acquisition, the Company has revised the allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on analysis of information that has been made available through September 30, 2022. The allocations will continue to be updated through the measurement period, if necessary. The goodwill recognized for these acquisitions is attributable to expected growth as the Company leverages its brand and diversifies its services offered to clients, including potential revenue growth and margin expansion. For each acquisition, the Company did not incur any material acquisition-related costs.

Connetics Acquisition

On May 13, 2022, the Company completed its acquisition of Connetics Communications, LLC (“Connetics”), which specializes in the direct hire recruitment and permanent placement of international nurse and allied health professionals with healthcare facilities in the United States. The initial purchase price of $78,764 included (1) $70,764 cash consideration paid upon acquisition, funded through cash on hand, and (2) contingent consideration (earn-out payment) of up to $12,500 with an estimated fair value of $8,000 as of the acquisition date. The contingent earn-out payment is based on the operating results of Connetics for the twelve months ending May 31, 2023. The results of Connetics have been included in the Company’s nurse and allied solutions segment since the date of acquisition.

The preliminary allocation of the $78,764 consisted of (1) $3,694 of fair value of tangible assets acquired, which included $963 cash received, (2) $8,431 of liabilities assumed, (3) $40,200 of identified intangible assets, and (4) $43,301 of goodwill, of which $35,317 is deductible for tax purposes. The intangible assets acquired have a weighted average useful life of approximately thirteen years. The following table summarizes the fair value and useful life of each intangible asset acquired as of the acquisition date:


		Fair Value		Useful Life
				(in years)
Identifiable intangible assets
	Customer relationships	$	32,800	15
	Staffing database	4,200		5
	Tradenames and trademarks	3,200		5
		$	40,200

Synzi and SnapMD Acquisition

On April 7, 2021, the Company completed its acquisition of Synzi Holdings, Inc. (“Synzi”) and its wholly-owned subsidiary, SnapMD, LLC (“SnapMD”). Synzi is a virtual care communication platform that enables organizations to conduct virtual visits and use secure messaging, text, and email for clinician-to-patient and clinician-to-clinician communications. SnapMD is a full-service virtual care management company, specializing in providing software to enable healthcare providers to better engage with their patients. The initial purchase price of $42,240 consisted entirely of cash consideration paid upon acquisition. The acquisition was funded primarily through borrowings under the Company’s $400,000 senior secured revolving credit facility (the “Senior Credit Facility”). See additional information regarding the Senior Credit Facility in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of the 2021 Annual Report. The results of Synzi and SnapMD have been included in the Company’s technology and workforce solutions segment since the date of acquisition. During the second quarter of 2021, $92 was returned to the Company in respect of the final working capital settlement.

The allocation of the $42,148 purchase price, which was reduced by the final working capital settlement and was finalized during the second quarter of 2022, consisted of (1) $2,757 of fair value of tangible assets acquired, which included $884 cash received, (2) $275 of liabilities assumed, (3) $12,440 of identified intangible assets, and (4) $27,226 of goodwill, of which $6,044 is deductible for tax purposes. The fair value of intangible assets primarily includes $10,890 of developed technology and $1,220 of trademarks with a weighted average useful life of approximately seven years.

3. REVENUE RECOGNITION

Table of Contents

Revenue primarily consists of fees earned from the temporary staffing and permanent placement of healthcare professionals, executives, and leaders (clinical and operational). The Company also generates revenue from technology-enabled services, including language interpretation and vendor management systems, and talent planning and acquisition services, including recruitment process outsourcing. The Company recognizes revenue when control of its services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. Revenue from temporary staffing services is recognized as the services are rendered by clinical and non-clinical healthcare professionals. Under the Company’s managed services program (“MSP”) arrangements, the Company manages all or a part of a customer’s supplemental workforce needs utilizing its own network of healthcare professionals along with those of third-party subcontractors. Revenue and the related direct costs under MSP arrangements are recorded in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent. When the Company uses subcontractors and acts as an agent, revenue is recorded net of the related subcontractor’s expense. Revenue from permanent placement and recruitment process outsourcing services is recognized as the services are rendered. Depending on the arrangement, the Company’s technology-enabled service revenue is recognized either as the services are rendered or ratably over the applicable arrangement’s service period.

The Company’s customers are primarily billed as services are rendered. Any fees billed in advance of being earned are recorded as deferred revenue. While payment terms vary by the type of customer and the services rendered, the term between invoicing and when payment is due is not significant.

The Company has elected to apply the following practical expedients and optional exemptions related to contract costs and revenue recognition:

•Recognize incremental costs of obtaining a contract with amortization periods of one year or less as expense when incurred. These costs are recorded within selling, general and administrative expenses.

•Recognize revenue in the amount of consideration that the Company has a right to invoice the customer if that amount corresponds directly with the value to the customer of the Company’s services completed to date.

•Exemptions from disclosing the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts for which revenue is recognized in the amount of consideration that the Company has a right to invoice for services performed and (iii) contracts for which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation.

See Note (5), “Segment Information,” for additional information regarding the Company’s revenue disaggregated by service type.

4. NET INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. The following table sets forth the computation of basic and diluted net income per common share:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	92,445	$	74,023	$	362,253	$	211,171

Net income per common share - basic	$	2.11	$	1.55	$	8.04	$	4.43
Net income per common share - diluted	$	2.10	$	1.54	$	7.99	$	4.40

Weighted average common shares outstanding - basic	43,785		47,737		45,056		47,666
Plus dilutive effect of potential common shares	254		343		276		356
Weighted average common shares outstanding - diluted	44,039		48,080		45,332		48,022

Share-based awards to purchase 14 and 15 shares of common stock were not included in the above calculation of diluted net income per common share for the three and nine months ended September 30, 2022, respectively, because the effect of these instruments was anti-dilutive. Share-based awards to purchase 21 and 26 shares of common stock were not included in the above calculation of diluted net income per common share for the three and nine months ended September 30, 2021, respectively, because the effect of these instruments was anti-dilutive.

Table of Contents

5. SEGMENT INFORMATION

The Company’s operating segments are identified in the same manner as they are reported internally and used by the Company’s chief operating decision maker for the purpose of evaluating performance and allocating resources. The Company has three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The nurse and allied solutions segment includes the Company’s travel nurse staffing (including international nurse staffing and rapid response nurse staffing), labor disruption staffing, local staffing, international nurse and allied permanent placement, allied staffing and revenue cycle solutions businesses. The physician and leadership solutions segment includes the Company’s locum tenens staffing, healthcare interim leadership staffing, executive search, and physician permanent placement businesses. The technology and workforce solutions segment includes the Company’s language services, vendor management systems, workforce optimization, virtual care, credentialing solutions, and outsourced solutions businesses.

The Company’s chief operating decision maker relies on internal management reporting processes that provide revenue and operating income by reportable segment for making financial decisions and allocating resources. Segment operating income represents income before income taxes plus depreciation, amortization of intangible assets, share-based compensation, interest expense, net, and other, and unallocated corporate overhead. The Company’s management does not evaluate, manage or measure performance of segments using asset information; accordingly, asset information by segment is not prepared or disclosed.

The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results and was derived from each segment’s internal financial information as used for corporate management purposes:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue
Nurse and allied solutions	$	828,317	$	627,049	$	3,157,834	$	1,908,195
Physician and leadership solutions	175,152		150,663		530,355		430,523
Technology and workforce solutions	135,117		100,088		429,542		282,472
	$	1,138,586	$	877,800	$	4,117,731	$	2,621,190
Segment operating income
Nurse and allied solutions	$	115,182	$	92,564	$	471,141	$	283,768
Physician and leadership solutions	23,904		19,301		64,280		62,366
Technology and workforce solutions	71,145		47,210		232,526		131,952
	210,231		159,075		767,947		478,086
Unallocated corporate overhead	34,635		23,867		116,356		74,915
Depreciation and amortization	33,239		26,104		96,169		74,098
Depreciation (included in cost of revenue)	1,091		686		2,918		1,773
Share-based compensation	4,898		2,589		24,670		17,895
Interest expense, net, and other	8,961		5,223		28,630		24,278
Income before income taxes	$	127,407	$	100,606	$	499,204	$	285,127

Table of Contents

The following tables present the Company’s revenue disaggregated by service type. Prior period amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue by reportable segment.


	Three Months Ended September 30, 2022
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	583,463	$	—	$	—	$	583,463
Labor disruption services	19,479		—		—		19,479
Local staffing	31,814		—		—