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AMN Healthcare Reports Fourth Quarter and Year End 2006 Results; Provides Full Year 2007 Guidance

March 1, 2007
San Diego, cA
NYSE:AHS

SAN DIEGO, March 1 /PRNewswire-FirstCall/ -- AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company, today reported revenue of $283.5 million and diluted earnings per share of $0.29 for the fourth quarter of 2006. Revenue for the fourth quarter increased slightly from the $282.7 million reported for the third quarter of 2006 and 28% from the $221.4 million reported for the fourth quarter of 2005. Fourth quarter 2006 diluted earnings per share of $0.29 included a benefit of $0.05 due to favorable adjustments to the professional liability insurance reserve, and compared to $0.28 reported for the third quarter of 2006 and $0.21 reported for the fourth quarter of 2005.

Full year 2006 revenue increased 53% to a record $1.08 billion from $705.8 million reported in 2005. Diluted earnings per share for the year ended December 31, 2006 was $1.02, including favorable adjustments aggregating to approximately $0.10 per diluted share. In addition to the insurance reserve adjustments during the fourth quarter of 2006, a favorable workers compensation insurance reserve adjustment of $0.03 and a favorable deferred state income tax adjustment of $0.02 were recorded earlier in the year.

"We are pleased that we were able to exceed our goal of being the first company in the healthcare staffing industry to reach $1 billion in revenue," said Susan R. Nowakowski, President and Chief Executive Officer. "Achievement of this goal is a milestone for AMN, as well as the industry, and reflects our market leadership in the healthcare staffing industry and the value our clients place on the services we provide. All of our business lines performed well in 2006, and we were particularly encouraged by the success of our marketing and recruiting efforts to increase our network of available healthcare professionals," added Nowakowski.

Gross profit for the fourth quarter of 2006 was $74.3 million, representing a 26.2% gross margin. This was down from the $76.7 million, or 27.1% gross margin, reported for the third quarter of 2006, and up from the $57.8 million, or 26.1% gross margin, reported for the fourth quarter of 2005. The decrease in gross margin as compared to the third quarter of 2006 was due in part to higher housing costs and health insurance claims in the nurse and allied healthcare staffing business during the fourth quarter of 2006. Gross margins by business segment for the fourth quarter of 2006 were 23.5% for nurse and allied healthcare staffing, 26.7% for locum tenens staffing and 63.9% for physician permanent placement services.

Selling, general, and administrative ("SG&A") expenses for the fourth quarter of 2006 were $51.2 million, including stock compensation expense of $1.8 million resulting from the adoption of FAS 123R, as compared to $54.1 million for the third quarter of 2006 and $39.1 million for the fourth quarter of 2005. The decrease in SG&A expenses as compared to the third quarter of 2006 was due mainly to favorable adjustments to the professional liability insurance reserve of $2.9 million, primarily relating to the locum tenens staffing segment. The increase in SG&A expenses compared to the fourth quarter of 2005 resulted primarily from the addition of The MHA Group Inc., which was acquired in November 2005, increased employee expenses to support growth in the nurse and allied healthcare staffing segment, and stock compensation expense resulting from the adoption of FAS 123R. As a percentage of revenue, SG&A expenses were 18.1% for the fourth quarter, as compared to 19.1% for the prior quarter and 17.7% for the fourth quarter of 2005.

Income from operations for the fourth quarter of 2006 was $20.4 million, representing 7.2% of revenue, compared to $20.0 million, or 7.1% of revenue, reported in the third quarter of 2006, and $16.5 million, or 7.5% of revenue, reported in the fourth quarter of 2005. The slight increase in operating margin compared to third quarter of 2006 was due primarily to lower SG&A expenses as a percentage of revenue in the fourth quarter, partially offset by a lower gross margin.

Net interest expense for the fourth quarter of 2006 was $4.0 million, compared to $4.2 million in the third quarter of 2006 and $4.6 million in the fourth quarter of 2005. The decrease in net interest expense from the prior quarter and the same quarter in 2005 was mainly due to the company's continued aggressive debt reduction using excess cash flow.

The company generated $8.6 million in cash flow from operations during the fourth quarter of 2006 which, in addition to $8.8 million in cash proceeds from the exercise of stock options and cash on-hand, was used to reduce debt by $25.7 million. For the full year 2006, the company generated $54.5 million in operating cash flow, as compared to $44.1 million in 2005. Total debt outstanding at December 31, 2006 was $173.4 million, yielding a leverage ratio below 2.0. Weighted average diluted shares outstanding for the fourth quarter of 2006 were 35.1 million.

Revenue and Earnings Guidance for First Quarter and Full Year 2007

Management expects revenue for the first quarter of 2007 to range from $282 million to $284 million and diluted earnings per share to range from $0.21 to $0.23, which reflects the impact of two fewer billing days in the quarter as compared to the fourth quarter of 2006. Revenue for the full year 2007 is expected to range from $1.18 billion to $1.20 billion and diluted earnings per share is expected to range from $1.10 to $1.14.

"We believe the current market conditions provide opportunity for growth in all of our business segments," said Nowakowski. "Our 2007 guidance reflects a healthy balance of volume growth and increases in our revenue per healthcare professional working. This combined with our continued focus on operational efficiency, innovations in marketing and recruitment, and superior client service should provide a solid foundation for continued future growth," added Nowakowski.

Company Summary

AMN Healthcare Services, Inc. is the largest temporary healthcare staffing company in the United States. The company is the largest nationwide provider of travel nurse staffing services, locum tenens staffing services (temporary physician staffing) and physician permanent placement services and also a leading nationwide provider of allied healthcare staffing services. AMN Healthcare recruits healthcare professionals both 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 March 2, 2007

AMN Healthcare Services, Inc.'s fourth quarter 2006 conference call will be held on Friday, March 2, 2007, 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) 288-8960 in the U.S. or (612) 332-1210 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 4:15 p.m. Eastern Time, and can be accessed until March 16, 2007 at midnight Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 862507.

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 "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The company based these forward-looking statements on its current expectations and projections about future events. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. The following factors could cause the company's actual results to differ materially from those implied by the forward-looking statements in this press release: the company's ability to continue to recruit qualified temporary and permanent healthcare professionals at reasonable costs; the company's ability to retain qualified temporary healthcare professionals for multiple assignments 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 hospital and healthcare facility clients' facilities; the overall level of demand for services offered by temporary and permanent healthcare staffing providers; the ability of 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; access to and undisrupted performance of the company's management information and communication systems; the effect of existing or future government legislation and regulation; the company's ability to grow and operate its business in compliance with legislation and regulations; the challenge to the 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 its 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 Reports on Form 10-Q, 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
Vice President, Investor Relations
866.861.3229

 

                        AMN Healthcare Services, Inc.
                 Condensed Consolidated Statements of Income
               (dollars in thousands, except per share amounts)
                                 (unaudited)

                     Three Months Ended         Twelve Months Ended
                        December 31,                December 31,
                       2006     2005  % Chg      2006      2005     % Chg

    Revenue         $283,534 $221,429  28.0% $1,081,703  $705,843   53.2%
    Cost of revenue  209,261  163,623  27.9%    792,415   535,608   47.9%
      Gross profit    74,273   57,806  28.5%    289,288   170,235   69.9%
                        26.2%    26.1%             26.7%     24.1%
    Expenses:
      Selling,
       general and
       administrative 51,183   39,127  30.8%    205,499   117,326   75.2%
                        18.1%    17.7%             19.0%     16.6%
      Depreciation
       and
       amortization    2,697    2,162  24.7%     10,325     6,179   67.1%

        Total
         expenses     53,880   41,289  30.5%    215,824   123,505   74.7%
    Income from
     operations       20,393   16,517  23.5%     73,464    46,730   57.2%
                         7.2%     7.5%              6.8%      6.6%
    Interest
     expense, net      4,032    4,567 -11.7%     16,698     9,565   74.6%
    Income before
     income taxes     16,361   11,950  36.9%     56,766    37,165   52.7%
    Income tax
     expense           6,314    4,973  27.0%     21,675    14,931   45.2%
    Net income       $10,047   $6,977  44.0%    $35,091   $22,234   57.8%
                         3.5%     3.2%              3.2%      3.1%
    Basic and
     diluted net
     income per
     common share:
      Basic net
       income per
       common share    $0.29    $0.23  26.1%      $1.07     $0.76   40.8%
      Diluted net
       income per
       common share    $0.29    $0.21  38.1%      $1.02     $0.69   47.8%

    Weighted average
     common shares
     outstanding -
     basic            34,193   30,641  11.6%     32,662    29,130   12.1%
    Weighted average
     common shares
     outstanding -
     diluted          35,074   33,744   3.9%     34,504    32,118    7.4%

 

                        AMN Healthcare Services, Inc.
                  Supplemental Financial and Operating Data
                (dollars in thousands, except operating data)
                                 (unaudited)

                                         Three Months Ended
                                            December 31,
                            2006        % of Rev       2005        % of Rev
    Revenue
      Nurse and allied
       healthcare
       staffing           $202,048                  $174,429
      Locum tenens
       staffing             68,139                    39,524
      Physician permanent
       placement services   13,347                     7,476
                          $283,534                  $221,429

    Adjusted EBITDA(1)
      Nurse and allied
       healthcare
       staffing            $14,419         7.1%      $13,905         8.0%
      Locum tenens
       staffing              6,518         9.6%        2,782         7.0%
      Physician permanent
       placement services    3,941        29.5%        2,013        26.9%
                            24,878         8.8%       18,700         8.4%
    Depreciation
     and amortization        2,697                     2,162
    Non-cash stock-based
     compensation            1,788                        21
    Interest expense, net    4,032                     4,567
    Income before
     income taxes           16,361                    11,950
    Income tax expense       6,314                     4,973
    Net income             $10,047                    $6,977


                                    Three Months Ended
                                       December 31,
                             2006                       2005         % Chg
    Gross Margin
      Nurse and allied
       healthcare staffing   23.5%                     24.5%
    Locum tenens staffing    26.7%                     26.8%
      Physician permanent
       placement services    63.9%                     61.1%

    Operating Data:
    Nurse and allied
     healthcare staffing
      Average travelers
       on assignment(2)      7,106                     6,517         9.0%
      Revenue per traveler
       per day(3)          $309.06                   $290.93         6.2%
      Gross profit per
       traveler per day(3)  $72.77                    $71.14         2.3%

    Locum tenens staffing
      Days filled(4)        49,651                    29,570
      Revenue per
       day filled(4)     $1,372.36                 $1,336.62
      Gross profit
       per day filled(4)   $365.91                   $357.86


                                          Twelve Months Ended
                                             December 31,
                            2006         % of Rev      2005        % of Rev
    Revenue
      Nurse and allied
       healthcare
       staffing           $763,170                  $658,843
      Locum tenens
       staffing            268,131                    39,524
      Physician
       permanent
       placement
       services             50,402                     7,476
                        $1,081,703                  $705,843

    Adjusted EBITDA(1)
      Nurse and allied
       healthcare
       staffing            $56,647         7.4%      $48,256         7.3%
      Locum tenens
       staffing             20,936         7.8%        2,782         7.0%
      Physician permanent
       placement services   13,009        25.8%        2,013        26.9%
                            90,592         8.4%       53,051         7.5%
    Depreciation and
     amortization           10,325                     6,179
    Non-cash stock-based
     compensation            6,803                       142
    Interest expense, net   16,698                     9,565
    Income before
     income taxes           56,766                    37,165
    Income tax expense      21,675                    14,931
    Net income             $35,091                   $22,234


                                     Twelve Months Ended
                                        December 31,
                             2006                       2005         % Chg
    Gross Margin
      Nurse and allied
       healthcare staffing   24.6%                     23.5%
      Locum tenens staffing  26.5%                     26.8%
      Physician permanent
       placement services    61.4%                     61.1%

    Operating Data:
    Nurse and allied
     healthcare staffing
      Average travelers
       on assignment(2)      6,825                     6,410         6.5%
      Revenue per traveler
       per day(3)          $306.36                   $281.59         8.8%
      Gross profit per
       traveler per day(3)  $75.21                    $66.28        13.5%

    Locum tenens staffing
      Days filled(4)       199,641                    29,570
      Revenue per
       day filled(4)     $1,343.07                 $1,336.62
      Gross profit
       per day filled(4)   $355.53                   $357.86
(1) Adjusted EBITDA represents net income plus interest expense (net of interest income), income taxes, depreciation and amortization and non-cash stock-based compensation expense. Management presents adjusted EBITDA because it believes that adjusted EBITDA is a useful supplement to net income as an indicator of operating performance. Management believes that adjusted EBITDA is an industry-wide financial measure that is useful both to management and investors when evaluating the company's performance. Management also uses adjusted EBITDA for planning purposes. Management uses adjusted EBITDA to evaluate the company's performance because it believes that adjusted EBITDA more accurately reflects the company's results, as it excludes certain items, in particular non-cash stock-based compensation charges, that management believes are not indicative of the company's operating performance. However, adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to operating or net income as an indicator of operating performance, and it should not be considered in isolation or as a substitute for measures of performance prepared in accordance with United States generally accepted accounting principles (GAAP). As defined, adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. While management believes that some of the items excluded from adjusted EBITDA are not indicative of the company's operating performance, these items do impact the income statement, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.

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

(3) 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.

(4) 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 revenue and gross profit of the company's locum tenens staffing segment divided by days filled for the period presented.


                        AMN Healthcare Services, Inc.
                  Supplemental Financial and Operating Data
                            (dollar in thousands)
                                 (unaudited)

                                       Quarter Ended
                          March 31,                  June 30,
                            2006        % of Rev      2006        % of Rev
    Revenue
      Nurse and allied
       healthcare
       staffing           $177,724                  $181,473
      Locum tenens
       staffing             64,547                    66,954
      Physician permanent
       placement services   11,994                    12,749
                          $254,265                  $261,176

    Adjusted EBITDA(1)
      Nurse and allied
       healthcare
       staffing            $14,950         8.4%      $11,174         6.2%
      Locum tenens
       staffing              4,293         6.7%        5,325         8.0%
      Physician permanent
       placement
       services              2,533        21.1%        2,961        23.2%
                            21,776         8.6%       19,460         7.5%
    Depreciation
     and amortization        2,466                     2,524
    Non-cash stock-based
     compensation            1,367                     1,791
    Interest expense, net    4,147                     4,345
    Income before
     income taxes           13,796                    10,800
    Income tax expense       5,495                     3,529
    Net income              $8,301                    $7,271


                                      Quarter Ended

                  September 30, % of  December 31, % of    Total     % of
                     2006        Rev     2006       Rev    Year       Rev
    Revenue
      Nurse and
       allied
       healthcare
      staffing      $201,925          $202,048           $763,170
      Locum tenens
       staffing       68,491            68,139            268,131
      Physician
       permanent
       placement
       services       12,312            13,347             50,402
                    $282,728          $283,534         $1,081,703

    Adjusted
     EBITDA(1)
      Nurse and
       allied
       healthcare
       staffing      $16,104     8.0%  $14,419     7.1%   $56,647    7.4%
      Locum tenens
       staffing        4,800     7.0%    6,518     9.6%    20,936    7.8%
      Physician
       permanent
       placement
       services        3,574    29.0%    3,941    29.5%    13,009   25.8%
                      24,478     8.7%   24,878     8.8%    90,592    8.4%
    Depreciation and
     amortization      2,638             2,697             10,325
    Non-cash
     stock-based
     compensation      1,857             1,788              6,803
    Interest
     expense, net      4,174             4,032             16,698
    Income before
     income taxes     15,809            16,361             56,766
    Income tax expense 6,337             6,314             21,675
    Net income        $9,472           $10,047            $35,091
(1) Adjusted EBITDA represents net income plus interest expense (net of interest income), income taxes, depreciation and amortization and non-cash stock-based compensation expense. Management presents adjusted EBITDA because it believes that adjusted EBITDA is a useful supplement to net income as an indicator of operating performance. Management believes that adjusted EBITDA is an industry-wide financial measure that is useful both to management and investors when evaluating the company's performance. Management also uses adjusted EBITDA for planning purposes. Management uses adjusted EBITDA to evaluate the company's performance because it believes that adjusted EBITDA more accurately reflects the company's results, as it excludes certain items, in particular non-cash stock-based compensation charges, that management believes are not indicative of the company's operating performance. However, adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to operating or net income as an indicator of operating performance, and it should not be considered in isolation or as a substitute for measures of performance prepared in accordance with United States generally accepted accounting principles (GAAP). As defined, adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. While management believes that some of the items excluded from adjusted EBITDA are not indicative of the company's operating performance, these items do impact the income statement, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.


                        AMN Healthcare Services, Inc.
                    Condensed Consolidated Balance Sheets
                                (in thousands)
                                 (unaudited)

                                   December 31,   September 30,  December 31,
                                      2006           2006           2005
    Assets
    Current assets:
      Cash and cash equivalents      $4,422          $3,511       $19,110
      Accounts receivable, net      192,716         180,410       154,926
      Deferred income taxes, net     26,275          18,369        31,305
      Other current assets           12,442          18,896        22,922
        Total current assets        235,855         221,186       228,263

    Fixed assets, net                23,236          22,286        20,164
    Goodwill, net                   240,719         240,324       240,844
    Intangible assets, net          116,389         117,788       121,152
    Other assets                      5,982           5,033         7,964

        Total assets               $622,181        $606,617      $618,387

    Liabilities and
     stockholders' equity
    Current liabilities:
      Bank overdraft                $10,353            $692           $--
      Accounts payable and
       accrued expenses              20,273          22,582        19,092
      Accrued compensation
       and benefits                  42,585          43,167        32,208
      Current portion of
       notes payable                 12,901          10,340        10,250
      Deferred revenue                6,397           7,533         7,610
      Other current liabilities      28,458          25,891        59,018
        Total current liabilities   120,967         110,205       128,178

    Notes payable, less
     current portion                160,479         188,700       194,750
    Deferred income taxes, net       69,365          55,343        65,132
    Other long-term liabilities      26,824          27,908        37,127
        Total liabilities           377,635         382,156       425,187

    Stockholders' equity            244,546         224,461       193,200

        Total liabilities and
         stockholders' equity      $622,181        $606,617      $618,387

 

                        AMN Healthcare Services, Inc.
                  Condensed Consolidated Cash Flow Statement
                                (in thousands)
                                 (unaudited)

                            Three Months Ended       Twelve Months Ended
                        December 31,  December 31,  December 31, December 31,
                            2006        2005           2006         2005

    Net cash provided by
     operating activities   $8,590      $15,894      $54,538      $44,090

    Net cash used in
     investing activities   (2,997)    (111,859)     (45,677)    (115,326)

    Net cash provided
     by (used in)
     financing activities   (4,752)     100,417      (23,536)      86,520

    Effect of exchange
     rates on cash              70          (81)         (13)         (82)

      Net increase
       (decrease) in cash
       and cash equivalents    911        4,371      (14,688)      15,202

      Cash and cash
       equivalents at
       beginning of period   3,511       14,739       19,110        3,908

      Cash and cash
       equivalents at
       end of period        $4,422      $19,110       $4,422      $19,110

SOURCE AMN Healthcare Services, Inc.
03/01/2007
CONTACT: David C. Dreyer, Chief Financial Officer, or Christopher Schwartz, Vice President, Investor Relations, both of AMN Healthcare Services, Inc., +1-866-861-3229
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20060718/LATU121LOGO
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PRN Photo Desk, photodesk@prnewswire.com
Web site: http://www.amnhealthcare.com/investors
(AHS)
 
 

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