SEC Filing | AMN Healthcare Services Inc.

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amn-20230630

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 June 30, 2023


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.)

2999 Olympus Boulevard	Suite 500
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 August 2, 2023, there were 37,988,128 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 June 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Comprehensive Income, For the Three and Six Months Ended June 30, 2023 and 2022	2
	Condensed Consolidated Statements of Stockholders’ Equity, For the Six Months Ended June 30, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows, For the Six Months Ended June 30, 2023 and 2022	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
3.	Quantitative and Qualitative Disclosures about Market Risk	26
4.	Controls and Procedures	27

	PART II - OTHER INFORMATION


1.	Legal Proceedings	28
1A.	Risk Factors	28
2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
3.	Defaults Upon Senior Securities	29
4.	Mine Safety Disclosures	29
5.	Other Information	29
6.	Exhibits	30
	Signatures	31

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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)


	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	7,013	$	64,524
Accounts receivable, net of allowances of $36,401 and $31,910 at June 30, 2023 and December 31, 2022, respectively	579,926		675,650
Accounts receivable, subcontractor	168,231		268,726
Prepaid expenses	17,965		18,708
Other current assets	34,101		66,037
Total current assets	807,236		1,093,645
Restricted cash, cash equivalents and investments	71,564		61,218
Fixed assets, net of accumulated depreciation of $250,150 and $227,617 at June 30, 2023 and December 31, 2022, respectively	177,417		149,276

Other assets	219,781		172,016
Goodwill	935,779		935,364
Intangible assets, net of accumulated amortization of $401,217 and $361,327 at June 30, 2023 and December 31, 2022, respectively	432,366		476,832
Total assets	$	2,644,143	$	2,888,351
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	327,538	$	476,452
Accrued compensation and benefits	261,629		333,244




Other current liabilities	84,548		48,237
Total current liabilities	673,715		857,933
Revolving credit facility	190,000		—
Notes payable, net of unamortized fees and premium	844,097		843,505
Deferred income taxes, net	6,986		22,713

Other long-term liabilities	163,048		120,566
Total liabilities	1,877,846		1,844,717
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000 shares authorized; none issued and outstanding at June 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 200,000 shares authorized; 50,339 issued and 37,987 outstanding at June 30, 2023 and 50,109 issued and 41,879 outstanding at December 31, 2022	503		501
Additional paid-in capital	467,387		501,674
Treasury stock, at cost; 12,352 and 8,230 shares at June 30, 2023 and December 31, 2022, respectively	(1,086,862)		(698,598)
Retained earnings	1,386,012		1,240,996
Accumulated other comprehensive loss	(743)		(939)
Total stockholders’ equity	766,297		1,043,634
Total liabilities and stockholders’ equity	$	2,644,143	$	2,888,351

See accompanying notes to unaudited condensed consolidated financial statements.

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AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue	$	991,299	$	1,426,607	$	2,117,522	$	2,979,145
Cost of revenue	661,018		966,370		1,418,395		2,022,740
Gross profit	330,281		460,237		699,127		956,405
Operating expenses:
Selling, general and administrative	201,771		244,430		407,370		502,009
Depreciation and amortization (exclusive of depreciation included in cost of revenue)	36,847		32,274		74,424		62,930
Total operating expenses	238,618		276,704		481,794		564,939
Income from operations	91,663		183,533		217,333		391,466
Interest expense, net, and other	12,175		10,080		22,434		19,669
Income before income taxes	79,488		173,453		194,899		371,797
Income tax expense	18,582		49,653		49,883		101,989
Net income	$	60,906	$	123,800	$	145,016	$	269,808

Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities, net, and other	50		332		196		(575)
Other comprehensive income (loss)	50		332		196		(575)

Comprehensive income	$	60,956	$	124,132	$	145,212	$	269,233

Net income per common share:
Basic	$	1.56	$	2.78	$	3.60	$	5.90
Diluted	$	1.55	$	2.77	$	3.58	$	5.87
Weighted average common shares outstanding:
Basic	39,151		44,504		40,258		45,702
Diluted	39,341		44,740		40,454		45,972

See accompanying notes to unaudited condensed consolidated financial statements.

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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 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	—	—		—		(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	—	—		—		(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


	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount				Shares	Amount
Balance, December 31, 2022	50,109	$	501	$	501,674	(8,230)	$	(698,598)	$	1,240,996	$	(939)	$	1,043,634
Repurchase of common stock	—	—		—		(1,768)	(176,300)		—		—		(176,300)
Equity awards vested, net of shares withheld for taxes	127	1		(6,135)		—	—		—		—		(6,134)

Share-based compensation	—	—		10,318		—	—		—		—		10,318
Comprehensive income	—	—		—		—	—		84,110		146		84,256
Balance, March 31, 2023	50,236	$	502	$	505,857	(9,998)	$	(874,898)	$	1,325,106	$	(793)	$	955,774
Repurchase of common stock	—	—		(40,000)		(2,354)	(211,964)		—		—		(251,964)
Equity awards vested, net of shares withheld for taxes	103	1		(3,288)		—	—		—		—		(3,287)
Share-based compensation	—	—		4,818		—	—		—		—		4,818
Comprehensive income	—	—		—		—	—		60,906		50		60,956
Balance, June 30, 2023	50,339	$	503	$	467,387	(12,352)	$	(1,086,862)	$	1,386,012	$	(743)	$	766,297

See accompanying notes to unaudited condensed consolidated financial statements.

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AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	145,016	$	269,808
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (inclusive of depreciation included in cost of revenue)	77,068		64,757
Non-cash interest expense and other	1,038		953

Change in fair value of contingent consideration liabilities	2,430		580
Increase in allowance for credit losses and sales credits	29,432		13,803
Provision for deferred income taxes	(15,780)		3,421
Share-based compensation	15,136		19,772
Loss on disposal or impairment of long-lived assets	1,933		479

Net loss on investments in available-for-sale securities	155		536
Net gain on deferred compensation balances	(577)		(39)
Non-cash lease expense	(240)		3,542
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	65,906		(3,535)
Accounts receivable, subcontractor	100,495		(7,988)
Income taxes receivable	8,875		(1,022)
Prepaid expenses	743		45,083
Other current assets	1,820		15,338
Other assets	894		1,002

Accounts payable and accrued expenses	(159,862)		29,461
Accrued compensation and benefits	(84,837)		73,349
Other liabilities	50,887		(104,729)

Deferred revenue	569		106

Net cash provided by operating activities	241,101		424,677

Cash flows from investing activities:
Purchase and development of fixed assets	(43,936)		(30,811)
Purchase of investments	—		(10,659)
Proceeds from sale and maturity of investments	6,987		9,085

Proceeds from sale of equity investment	—		68
Payments to fund deferred compensation plan	(17,910)		(12,584)

Cash paid for acquisitions, net of cash and restricted cash received	—		(69,801)
Cash paid for other intangibles	—		(1,060)

Net cash used in investing activities	(54,859)		(115,762)

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	Six Months Ended June 30,
	2023		2022
Cash flows from financing activities:



Payments on revolving credit facility	(220,000)		—
Proceeds from revolving credit facility	410,000		—


Repurchase of common stock (1)	(424,744)		(401,891)
Payment of financing costs	(3,579)		—

Cash paid for shares withheld for taxes	(9,421)		(9,797)
Net cash used in financing activities	(247,744)		(411,688)

Net decrease in cash, cash equivalents and restricted cash	(61,502)		(102,773)
Cash, cash equivalents and restricted cash at beginning of period	137,872		246,714
Cash, cash equivalents and restricted cash at end of period	$	76,370	$	143,941

Supplemental disclosures of cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,929	$	7,922
Cash paid for interest (net of $658 and $254 capitalized for the six months ended June 30, 2023 and 2022, respectively)	$	22,652	$	18,887
Cash paid for income taxes	$	9,736	$	120,660
Acquisitions:
Fair value of tangible assets acquired in acquisitions, net of cash and restricted cash received	$	—	$	2,731
Goodwill	—		43,301
Intangible assets	—		40,200
Liabilities assumed	—		(8,431)


Contingent consideration liabilities	—		(8,000)
Net cash paid for acquisitions	$	—	$	69,801
Supplemental disclosures of non-cash investing and financing activities:
Purchase of fixed assets recorded in accounts payable and accrued expenses	$	10,928	$	7,562
Excise tax payable on share repurchases	$	3,520	$	—
Right-of-use assets obtained in exchange for operating lease liabilities	$	26,214	$	3,590

(1) The difference between the amount reported for the six months ended June 30, 2023 and the corresponding amounts presented in the condensed consolidated statements of stockholders’ equity is due to accrued excise tax payable on share repurchases recorded within treasury stock.

See accompanying notes to unaudited condensed consolidated financial statements.

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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, stockholders’ equity 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, 2022, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on February 22, 2023 (the “2022 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.

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The new guidance requires companies to apply the definition of a performance obligation under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities, such as deferred revenue, relating to contracts with customers that are acquired in a business combination. Under prior guidance, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at their acquisition-date fair values in accordance with ASC Subtopic 820-10, Fair Value Measurements—Overall. Generally, this new guidance will result in the acquirer recognizing acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree prior to the acquisition under ASC Topic 606. The Company adopted this standard effective January 1, 2023 on a prospective basis, and the adoption did not have a material effect on the Company’s consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments and restricted investments with an original maturity of three months or less to be cash equivalents and restricted cash equivalents, respectively. Cash and cash equivalents include currency on hand, deposits with financial institutions, money market funds 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 (7), “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.

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	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	7,013	$	64,524
Restricted cash and cash equivalents (included in other current assets)	15,992		37,225
Restricted cash, cash equivalents and investments	71,564		61,218
Total cash, cash equivalents and restricted cash and investments	94,569		162,967
Less restricted investments	(18,199)		(25,095)
Total cash, cash equivalents and restricted cash	$	76,370	$	137,872

The Company maintains its cash and restricted cash in bank deposit accounts primarily at large, national financial institutions, which typically exceed federally insured limits. The Company has not experienced any losses in such accounts.

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:


	2023		2022
Balance as of January 1,	$	31,910	$	6,838

Provision for expected credit losses	7,007		1,280
Amounts written off charged against the allowance	(2,516)		(596)

Balance as of June 30,	$	36,401	$	7,522

The increase in the provision for expected credit losses for the six months ended June 30, 2023 was primarily the result of concern with a specific customer’s ability to meet its financial obligations, and uncertainty regarding the collectability of cash flows from customers due primarily to the current macroeconomic outlook.

Reclassifications

To conform to the current year presentation, certain reclassifications have been made to prior year balances in the condensed consolidated balance sheets and accompanying Note (10), “Balance Sheet Details.”

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2. ACQUISITIONS

The Company accounted for the acquisition set forth below 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 date of acquisition. Since the 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 June 30, 2023. The goodwill recognized for the acquisition 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. 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 and expected to be paid in the third quarter of 2023. The results of Connetics have been included in the Company’s nurse and allied solutions segment since the date of acquisition. During the fourth quarter of 2022, $231 was returned to the Company in respect of the final working capital settlement.

The allocation of the $78,533 purchase price, which was reduced by the final working capital settlement and was finalized during the second quarter of 2023, consisted of (1) $3,172 of fair value of tangible assets acquired, which included $963 cash received, (2) $8,244 of liabilities assumed, (3) $40,200 of identified intangible assets, and (4) $43,405 of goodwill, of which $35,405 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

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3. REVENUE RECOGNITION

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.

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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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	60,906	$	123,800	$	145,016	$	269,808

Net income per common share - basic	$	1.56	$	2.78	$	3.60	$	5.90
Net income per common share - diluted	$	1.55	$	2.77	$	3.58	$	5.87

Weighted average common shares outstanding - basic	39,151		44,504		40,258		45,702
Plus dilutive effect of potential common shares	190		236		196		270
Weighted average common shares outstanding - diluted	39,341		44,740		40,454		45,972

Share-based awards to purchase 78 and 227 shares of common stock were not included in the above calculation of diluted net income per common share for the three and six months ended June 30, 2023, respectively, because the effect of these instruments was anti-dilutive. Share-based awards to purchase 60 and 48 shares of common stock were not included in the above calculation of diluted net income per common share for the three and six months ended June 30, 2022, respectively, because the effect of these instruments was anti-dilutive.

Accelerated Share Repurchase

On May 8, 2023, the Company entered into an accelerated share repurchase (“ASR”) agreement with a counterparty whereupon the Company prepaid $200,000 and received an initial delivery of 1,760 shares of its common stock, which was 80% of the prepayment amount based on a price of $90.89 per share. Under the terms of the ASR, the total number of shares delivered and average price per share will be determined upon settlement based on the volume weighted average price over the term of the ASR agreement, less an agreed upon discount and subject to customary acceleration adjustments. At settlement, the Company may receive additional shares of its common stock or, under certain circumstances, the Company may be required to make a cash payment or deliver shares of its common stock to the counterparty, with the method of settlement at the Company’s election. The final settlement of the ASR will be completed no later than the fourth quarter of 2023, subject to acceleration at the counterparty’s discretion, which could be completed as early as the third quarter of 2023.

During the three months ended June 30, 2023, the prepayment was recognized as a reduction to stockholders’ equity, consisting of (1) an increase in treasury stock, which reflects the fair value of the shares received upon initial delivery, and (2) a reduction in additional paid-in capital, which reflects the pending settlement of the ASR agreement. The effect of the potential share settlement of the ASR agreement was not included in the calculation of diluted net income per common share for the three and six months ended June 30, 2023 because the effect was anti-dilutive.

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, 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.

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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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue
Nurse and allied solutions	$	689,015	$	1,101,478	$	1,513,495	$	2,329,517
Physician and leadership solutions	176,229		175,697		341,986		355,203
Technology and workforce solutions	126,055		149,432		262,041		294,425
	$	991,299	$	1,426,607	$	2,117,522	$	2,979,145
Segment operating income
Nurse and allied solutions	$	102,993	$	160,870	$	216,438	$	355,959
Physician and leadership solutions	26,456		19,995		51,556		40,376
Technology and workforce solutions	55,623		82,501		122,633		161,381
	185,072		263,366		390,627		557,716
Unallocated corporate overhead	50,357		38,073		81,090		81,721
Depreciation and amortization	36,847		32,274		74,424		62,930
Depreciation (included in cost of revenue)	1,387		973		2,644		1,827
Share-based compensation	4,818		8,513		15,136		19,772
Interest expense, net, and other	12,175		10,080		22,434		19,669
Income before income taxes	$	79,488	$	173,453	$	194,899	$	371,797

The following table summarizes the activity related to the carrying value of goodwill by reportable segment:


	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Balance, January 1, 2023	$	382,005	$	152,800	$	400,559	$	935,364


Goodwill adjustment for Connetics acquisition	415		—		—		415

Balance, June 30, 2023	$	382,420	$	152,800	$	400,559	$	935,779
Accumulated impairment loss as of December 31, 2022 and June 30, 2023	$	154,444	$	60,495	$	—	$	214,939

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Disaggregation of Revenue

The following tables present the Company’s revenue disaggregated by service type:


	Three Months Ended June 30, 2023
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	477,209	$	—	$	—	$	477,209
Labor disruption services	5,036		—		—		5,036
Local staffing	18,775		—		—		18,775
Allied staffing	182,212		—		—		182,212
Locum tenens staffing	—		121,912		—		121,912
Interim leadership staffing	—		36,401		—		36,401
Temporary staffing	683,232		158,313		—		841,545
Permanent placement	5,783		17,916		—		23,699
Language services	—		—		63,650		63,650
Vendor management systems	—		—		46,554		46,554
Other technologies	—		—		5,792		5,792
Technology-enabled services	—		—		115,996		115,996
Talent planning and acquisition	—		—		10,059		10,059
Total revenue	$	689,015	$	176,229	$	126,055	$	991,299


	Three Months Ended June 30, 2022
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	775,668	$	—	$	—	$	775,668
Labor disruption services	83,070		—		—		83,070
Local staffing	33,394		—		—		33,394
Allied staffing	207,309		—		—		207,309
Locum tenens staffing	—		105,936		—		105,936
Interim leadership staffing	—		47,606		—		47,606
Temporary staffing	1,099,441		153,542		—		1,252,983
Permanent placement	2,037		22,155		—		24,192
Language services	—		—		53,291		53,291
Vendor management systems	—		—		75,144		75,144
Other technologies	—		—		6,839		6,839
Technology-enabled services	—		—		135,274		135,274
Talent planning and acquisition	—		—		14,158		14,158
Total revenue	$	1,101,478	$	175,697	$	149,432	$	1,426,607

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	Six Months Ended June 30, 2023
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	1,069,886	$	—	$	—	$	1,069,886
Labor disruption services	10,738		—		—		10,738
Local staffing	44,047		—		—		44,047
Allied staffing	378,337		—		—		378,337
Locum tenens staffing	—		228,615		—		228,615
Interim leadership staffing	—		76,643		—		76,643
Temporary staffing	1,503,008		305,258		—		1,808,266
Permanent placement	10,487		36,728		—		47,215
Language services	—		—		125,326		125,326
Vendor management systems	—		—		100,727		100,727
Other technologies	—		—		13,139		13,139
Technology-enabled services	—		—		239,192		239,192
Talent planning and acquisition	—		—		22,849		22,849
Total revenue	$	1,513,495	$	341,986	$	262,041	$	2,117,522


	Six Months Ended June 30, 2022
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	1,745,777	$	—	$	—	$	1,745,777
Labor disruption services	83,070		—		—		83,070
Local staffing	77,451		—		—		77,451
Allied staffing	421,182		—		—		421,182
Locum tenens staffing	—		218,608		—		218,608
Interim leadership staffing	—		91,960		—		91,960
Temporary staffing	2,327,480		310,568		—		2,638,048
Permanent placement	2,037		44,635		—		46,672
Language services	—		—		102,529		102,529
Vendor management systems	—		—		150,166		150,166
Other technologies	—		—		14,497		14,497
Technology-enabled services	—		—		267,192		267,192
Talent planning and acquisition	—		—		27,233		27,233
Total revenue	$	2,329,517	$	355,203	$	294,425	$	2,979,145

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6. NOTES PAYABLE AND CREDIT AGREEMENT

On February 10, 2023, the Company entered into the third amendment to its credit agreement (the “Third Amendment”). The Third Amendment provides for, among other things, the following: (i) an extension of the maturity date of the secured revolving credit facility (the “Senior Credit Facility”) to February 10, 2028, (ii) an increase of the revolving commitments to $750,000, and (iii) a transition from LIBOR to a SOFR-based interest rate. The obligations of the Company under the amended credit agreement are secured by substantially all of the assets of the Company. Additional information regarding the credit agreement, Senior Credit Facility and Third Amendment is disclosed in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of the 2022 Annual Report.

7. FAIR VALUE MEASUREMENT

The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (3), Fair Value Measurement” of the 2022 Annual Report. The Company has not changed the valuation techniques or inputs it uses for its fair value measurement during the six months ended June 30, 2023.

Assets and Liabilities Measured on a Recurring Basis

The Company invests a portion of its cash and cash equivalents in non-federally insured money market funds that are measured at fair value based on quoted prices, which are Level 1 inputs.

The Company has a deferred compensation plan for certain executives and employees, which is composed of deferred compensation and all related income and losses attributable thereto. The Company’s obligation under its deferred compensation plan is measured at fair value based on quoted market prices of the participants’ elected investments, which are Level 1 inputs.

The Company’s restricted cash equivalents and investments that serve as collateral for the Company’s captive insurance company include commercial paper and corporate bonds. The commercial paper is measured at observable market prices for identical securities that are traded in less active markets, which are Level 2 inputs. The corporate bonds are measured using readily available pricing sources that utilize observable market data, including the current interest rate for comparable instruments, which are Level 2 inputs. The following table presents the fair value of commercial paper and corporate bonds issued and outstanding:


	As of June 30, 2023		As of December 31, 2022
Commercial paper	$	40,495	$	31,536
Corporate bonds	—		—
Total classified as restricted cash equivalents	$	40,495	$	31,536
Commercial paper	$	—	$	—
Corporate bonds	18,199		25,095
Total classified as restricted investments	$	18,199	$	25,095

The Company’s contingent consideration liabilities associated with acquisitions are measured at fair value using a probability-weighted discounted cash flow analysis or a simulation-based methodology for the acquired companies, which are Level 3 inputs. The Company recognizes changes to the fair value of its contingent consideration liabilities in selling, general and administrative expenses in the condensed consolidated statements of comprehensive income.

The following table presents information about the above-referenced assets and liabilities and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

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	Fair Value Measurements as of June 30, 2023								Fair Value Measurements as of December 31, 2022
Assets (Liabilities)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds	$	649	$	—	$	—	$	649	$	36,895	$	—	$	—	$	36,895
Deferred compensation	(150,339)		—		—		(150,339)		(128,465)		—		—		(128,465)
Corporate bonds	—		18,199		—		18,199		—		25,095		—		25,095
Commercial paper	—		40,495		—		40,495		—		31,536		—		31,536
Acquisition contingent consideration liabilities	—		—		(7,500)		(7,500)		—		—		(5,070)		(5,070)

Assets Measured on a Non-Recurring Basis

The Company applies fair value techniques on a non-recurring basis associated with valuing potential impairment losses related to its goodwill, long-lived assets, and equity investments.

The Company evaluates goodwill and indefinite-lived intangible assets annually for impairment and whenever events or changes in circumstances indicate that it is more likely than not that an impairment exists. The Company determines the fair value of its reporting units based on a combination of inputs, including the market capitalization of the Company, as well as Level 3 inputs such as discounted cash flows, which are not observable from the market, directly or indirectly. The Company determines the fair value of its indefinite-lived intangible assets using the income approach (relief-from-royalty method) based on Level 3 inputs.

The Company’s equity investment represents an investment in a non-controlled corporation without a readily determinable market value. The Company has elected to measure the investment at cost minus impairment, if any, plus or minus changes resulting from observable price changes. The fair value is determined by using quoted prices for identical or similar investments of the same issuer, which are Level 2 inputs, and other information available to the Company such as the rights and obligations of the securities. The Company recognizes changes to the fair value of its equity investment in interest expense, net, and other in the condensed consolidated statements of comprehensive income. The balance of the equity investment was $19,204 as of both June 30, 2023 and December 31, 2022.

There were no material impairment charges recorded during the six months ended June 30, 2023 and 2022.

Fair Value of Financial Instruments

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. The fair value of the Company’s 4.625% senior notes due 2027 (the “2027 Notes”) and 4.000% senior notes due 2029 (the “2029 Notes”) was estimated using quoted market prices in active markets for identical liabilities, which are Level 1 inputs. The carrying amounts and estimated fair value of the 2027 Notes and the 2029 Notes are presented in the following table. See additional information regarding the 2027 Notes and the 2029 Notes in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of the 2022 Annual Report.


	As of June 30, 2023				As of December 31, 2022
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
2027 Notes	$	500,000	$	461,250	$	500,000	$	460,000
2029 Notes	350,000		305,375		350,000		300,125

The fair value of the Company’s long-term self-insurance accruals cannot be estimated as the Company cannot reasonably determine the timing of future payments.

8. INCOME TAXES

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, as of June 30, 2023, the Company is no longer subject to state, local or foreign examinations by tax authorities for tax years before 2011, and the Company is no longer subject to U.S. federal income or payroll tax examinations for tax years before 2019.

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The Company believes its liability for unrecognized tax benefits and contingent tax issues is adequate with respect to all open years. Notwithstanding the foregoing, the Company could adjust its provision for income taxes and contingent tax liability based on future developments.

9. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company is involved in various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. These matters typically relate to professional liability, tax, compensation, contract, competitor disputes and employee-related matters and include individual and class action lawsuits, as well as inquiries and investigations by governmental agencies regarding the Company’s employment and compensation practices. Additionally, some of the Company’s clients may also become subject to claims, governmental inquiries and investigations, and legal actions relating to services provided by the Company’s healthcare professionals. Depending upon the particular facts and circumstances, the Company may also be subject to indemnification obligations under its contracts with such clients relating to these matters. The Company accrues for contingencies and records a liability when management believes an adverse outcome from a loss contingency is both probable and the amount, or a range, can be reasonably estimated. Significant judgment is required to determine both probability of loss and the estimated amount. The Company reviews its loss contingencies at least quarterly and adjusts its accruals and/or disclosures to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, or other new information, as deemed necessary. The most significant matters for which the Company has established loss contingencies are class actions related to wage and hour claims under California and Federal law. Specifically, among other claims in these lawsuits, it is alleged that certain expense reimbursements should be considered wages and included in the regular rate of pay for purposes of calculating overtime rates.

On May 26, 2016, former travel nurse Verna Maxwell Clarke filed a complaint against AMN Services, LLC, in California Superior Court in Los Angeles County. The Company removed the case to the United States District Court for the Central District of California (Case No. 2:16-cv-04132-DSF-KS) (the “Clarke Matter”). The complaint asserts that, due to the Company’s per diem adjustment practices, traveling nurses’ per diem benefits should be included in their regular rate of pay for the purposes of calculating their overtime compensation. On June 26, 2018, the district court denied the plaintiffs’ Motion for Summary Judgment in its entirety, and granted the Company’s Motion for Summary Judgment with respect to the plaintiffs’ per diem and overtime claims. The plaintiffs filed an appeal of the judgment relating to the per diem claims with the Ninth Circuit Court of Appeals (the “Ninth Circuit”). On February 8, 2021, the Ninth Circuit issued an opinion that reversed the district court’s granting of the Company’s Motion for Summary Judgment and remanded the matter to the district court instructing the district to enter partial summary judgment in favor of the plaintiffs. On August 26, 2021, the Company filed a Petition for Writ of Certiorari in the United States Supreme Court seeking review of the Ninth Circuit’s decision, which was denied on December 13, 2021. The Company has reached an agreement to settle this matter in its entirety and is awaiting court approval. Accordingly, the Company has recorded an accrual for this matter amounting to $62,000.

On May 2, 2019, former travel nurse Sara Woehrle filed a complaint against AMN Services, LLC, and Providence Health System – Southern California in California Superior Court in Los Angeles County. The Company removed the case to the United States District Court for the Central District of California (Case No. 2:19-cv-05282 DSF-KS). The complaint asserts that, due to the Company’s per diem adjustment practices, traveling nurses’ per diem benefits should be included in their regular rate of pay for the purposes of calculating their overtime compensation. The complaint also alleges that the putative class members were denied required meal periods, denied proper overtime compensation, were not compensated for all time worked, including reporting time and training time, and received non-compliant wage statements. The Company reached an agreement to settle this matter in its entirety and received court approval of the settlement. Payment was made in the second quarter of 2023.

Loss contingencies accrued as of both June 30, 2023 and December 31, 2022 are included in accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets.

Operating Leases

In the first quarter of 2022, the Company entered into a lease agreement for an office building located in Dallas, Texas, with future undiscounted lease payments of approximately $29,514, excluding lease incentives. The lease commenced upon substantial completion of the construction of the office building in June 2023. The initial term of the lease is approximately eleven years with options to renew during the lease term. The Company recognized a right-of-use asset and operating lease liability of $15,782 and $22,713, respectively, at lease commencement, which reflects the utilization of a tenant improvement allowance of $6,931 accounted for as a lease incentive.

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10. BALANCE SHEET DETAILS

The consolidated balance sheets detail is as follows:


	June 30, 2023		December 31, 2022
Other current assets:
Restricted cash and cash equivalents	$	15,992	$	37,225
Income taxes receivable	—		8,875
Other	18,109		19,937
Other current assets	$	34,101	$	66,037






Fixed assets:
Furniture and equipment	$	61,042	$	51,408
Software	353,379		323,418
Leasehold improvements	13,146		2,067
	427,567		376,893
Accumulated depreciation	(250,150)		(227,617)
Fixed assets, net	$	177,417	$	149,276

Other assets:
Life insurance cash surrender value	$	148,089	$	117,139
Operating lease right-of-use assets	30,080		16,266
Other	41,612		38,611
Other assets	$	219,781	$	172,016

Accounts payable and accrued expenses:
Trade accounts payable	$	54,531	$	78,057
Subcontractor payable	168,090		295,259
Accrued expenses	78,332		73,885
Loss contingencies	10,976		14,638
Professional liability reserve	7,652		7,756
Other	7,957		6,857
Accounts payable and accrued expenses	$	327,538	$	476,452

Accrued compensation and benefits:
Accrued payroll	$	55,662	$	63,857
Accrued bonuses and commissions	28,113		96,760


Workers compensation reserve	12,294		12,113
Deferred compensation	150,339		128,465
Other	15,221		32,049
Accrued compensation and benefits	$	261,629	$	333,244

Other current liabilities:
Acquisition related liabilities	$	7,500	$	5,070
Income taxes payable