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AMN Healthcare Reports Second Quarter 2006 Results and Updates Annual Guidance

August 7, 2006
San Diego, CA
NYSE:AHS

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 
 

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