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AMN Healthcare Reports Second Quarter 2007 Results and Updates Annual Guidance

August 6, 2007

SAN DIEGO, Aug. 6 /PRNewswire-FirstCall/ -- AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company, today reported revenue of $293.9 million and diluted earnings per share of $0.26 for the second quarter of 2007. Revenue for the second quarter increased 13% from the $261.2 million reported for the second quarter of last year and 4% from the $283.9 million reported last quarter. Second quarter 2007 diluted earnings per share compared to $0.21 for the second quarter of 2006 and $0.23 for the first quarter of 2007.

"We are pleased to report that second quarter revenue and EPS came in slightly above the upper end of our expectations," said Susan R. Nowakowski, President and Chief Executive Officer. "The company generated strong year over year revenue growth, with notable increases coming from our two largest segments of nurse and allied and locum tenens staffing. Although direct cost pressures continued to limit gross margin expansion, our teams did an excellent job of managing our operating expenses in order to achieve our overall earnings targets," added Nowakowski.

Gross profit for the second quarter of 2007 was $75.0 million, representing a 25.5% gross margin, as compared to $70.0 million, or 26.8% gross margin, for the second quarter of 2006 and $72.5 million, or 25.5% gross margin, for the first quarter of 2007. Gross margin declined on a year over year basis due mainly to higher housing and healthcare professional compensation costs. Gross margins by business segment for the second quarter of 2007 were 23.3% for nurse and allied healthcare staffing, 25.6% for locum tenens staffing and 60.0% for physician permanent placement services. Based on current indicators, the company expects gross margins to improve in the third quarter for all business segments.

Selling, general, and administrative ("SG&A") expenses for the second quarter of 2007 were $53.5 million, or 18.2% of revenue, as compared to $52.4 million, or 20.0% of revenue, for the second quarter of 2006 and $53.1 million, or 18.7% of revenue, for the first quarter of 2007. The reduction in SG&A as a percentage of revenue in part reflects management's continued efforts to further leverage the company's infrastructure in order to increase operating margins.

Income from operations for the second quarter of 2007 was $18.6 million, or 6.3% of revenue, as compared to $15.1 million, or 5.8% of revenue, for the second quarter of 2006, and $16.8 million, or 5.9% of revenue, for the first quarter of 2007. The increase in operating margin on a year over year and sequential basis was due to lower SG&A expenses as a percentage of revenue.

Net interest expense for the second quarter of 2007 was $3.1 million, compared to $4.3 million for the second quarter of 2006 and $3.3 million for the first quarter of 2007. The decrease in net interest expense from the same quarter last year and prior quarter was due primarily to a continued reduction in outstanding debt.

The company generated $16.3 million in cash flow from operations during the second quarter of 2007 which, in addition to cash on-hand, was used to reduce debt outstanding by $2.3 million and pay out $5.5 million of cash related to the acquisition of Rx Pro Health on May 21, 2007. Total debt outstanding at June 30, 2007 was $167.3 million, yielding a leverage ratio of 1.8 times. Weighted average diluted shares outstanding for the second quarter of 2007 were 35.3 million. Additionally, as previously announced, the Board of Directors approved a stock repurchase program for up to 1.0 million shares of common stock which will commence during the third quarter of 2007.

Revenue and Earnings Guidance for Third Quarter and Full Year 2007

Management expects revenue for the third quarter of 2007 to range from $295 million to $297 million and diluted earnings per share to range from $0.27 to $0.29.

"Within our largest segment of nurse and allied staffing, we are projecting continued favorable pricing trends and growth in revenue per traveler per day for the second half of the year," said Nowakowski. "However, due to lower client demand and utilization of travel nurses in certain key markets during the summer months, we are not expecting the previously anticipated growth in traveler volume on a sequential basis for the third quarter. We believe the lower demand in these regions is being driven primarily by softness in hospital admissions. Also contributing is the continued limited availability of visas for foreign nurses. While we are obviously disappointed in the lack of volume growth at this time, we do believe that the fundamentals of our travel nursing business remain solid and that our supply continues to show healthy trends, which should benefit us as demand increases."

Nowakowski added, "We expect our locum tenens staffing and physician permanent placement segments to grow in line with our original expectations, driven mainly by continued strong demand, excellent recruitment efforts and moderate growth in revenue per day filled. Looking forward, we will continue to focus our efforts on expanding gross margins and controlling our SG&A spending in order to grow earnings."

Due to the lack of anticipated volume growth within the nurse and allied staffing segment in the third quarter, the Company is also updating its full year guidance with revenue expected to range from $1.16 billion to $1.17 billion and diluted earnings per share expected to range from $1.02 to $1.04. While visibility on third quarter performance is clearer than the fourth quarter, management believes it is prudent to cautiously adjust full-year guidance projections until there are more favorable growth trends in client demand within our nurse and allied staffing business.

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 August 7, 2007

AMN Healthcare Services, Inc.'s second quarter 2007 conference call will be held on Tuesday, August 7, 2007, at 11:00 a.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare's website at http://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) 230-1092 in the U.S. or (612) 288-0337 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 August 21, 2007 at midnight Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 876819.

From time to time, additional information regarding non-GAAP financial measures may be made available on the company's website at http://www.amnhealthcare.com/investors.

Forward-Looking Statements

This earnings 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. Such statements include the revenue and earnings guidance for the third quarter and full year 2007, and Ms. Nowakowski's comments including those regarding overall demand, pricing trends, revenue growth, nurse traveler volume, and demand, growth and gross margin in our physician segments. 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 earnings 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; the company's ability to maintain and enhance the brand identities we have developed, at reasonable costs; 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 design its strategic growth, acquisition and integration strategies and to implement those strategies, including integration of acquired companies' accounting, management information, human resource and other administrative systems, and implementation or remediation of controls, procedures and policies at acquired companies; the company's ability to leverage its cost structure; access to and undisrupted performance of the company's management information and communication systems, including use of the Internet, and our candidate and client databases and payroll and billing software systems; our ability to keep our web sites operational at a reasonable cost and without service interruptions; 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 earnings release are set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2006, its Quarterly Report on Form 10-Q, and its Current Reports on Form 8-K. These statements reflect the company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this earnings 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.

 


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

                             Three Months Ended          Six Months Ended
                                  June 30,                   June 30,
                           2007     2006    % Chg     2007      2006    % Chg

    Revenue             $293,912 $261,176   12.5 % $577,856  $515,441   12.1 %
    Cost of revenue      218,953  191,154   14.5 %  430,392   377,118   14.1 %
      Gross profit        74,959   70,022    7.1 %  147,464   138,323    6.6 %
                            25.5 %   26.8 %            25.5 %    26.8 %
    Operating expenses:
      Selling, general
       and administrative 53,520   52,353    2.2 %  106,571   100,245    6.3 %
                            18.2 %   20.0 %            18.4 %    19.4 %

      Depreciation and
       amortization        2,857    2,524   13.2 %    5,486     4,990    9.9 %

        Total operating
         expenses         56,377   54,877    2.7 %  112,057   105,235    6.5 %
    Income from
     operations           18,582   15,145   22.7 %   35,407    33,088    7.0 %
                             6.3 %    5.8 %             6.1 %     6.4 %
    Interest expense,
     net                   3,124    4,345  -28.1 %    6,458     8,492  -24.0 %
    Income before
     income taxes          15,458   10,800  43.1 %   28,949    24,596   17.7 %
    Income tax expense     6,212    3,529   76.0 %   11,509     9,024   27.5 %
    Net income            $9,246   $7,271   27.2 %  $17,440   $15,572   12.0 %
                             3.1 %    2.8 %             3.0 %     3.0 %
    Net income per
     common share:
      Basic                $0.27    $0.23   17.4 %    $0.50     $0.49    2.0 %
      Diluted              $0.26    $0.21   23.8 %    $0.49     $0.45    8.9 %

    Weighted average
     common shares
     outstanding:
      Basic               34,723   31,887    8.9 %   34,681    31,990    8.4 %
      Diluted             35,273   34,170    3.2 %   35,278    34,467    2.4 %

 

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

                                             Three Months Ended
                                                 June 30,
                                   2007    % of Rev         2006   % of Rev
    Revenue
      Nurse and allied
       healthcare staffing     $ 201,322                $ 181,473
      Locum tenens staffing       79,937                   66,954
      Physician permanent
       placement services         12,653                   12,749
                               $ 293,912                $ 261,176

    Adjusted EBITDA(1)
      Nurse and allied
       healthcare staffing     $  13,635     6.8 %      $  11,174    6.2 %
      Locum tenens staffing        7,040     8.8 %          4,957    7.4 %
      Physician permanent
       placement services          2,923    23.1 %          3,329   26.1 %
                                  23,598     8.0 %         19,460    7.5 %

    Depreciation and
     amortization                  2,857                    2,524
    Non-cash stock-based
     compensation                  2,159                    1,791
    Interest expense, net          3,124                    4,345
    Income before income taxes    15,458                   10,800
    Income tax expense             6,212                    3,529
    Net income                 $   9,246                $   7,271


                                      Three Months Ended
                                           June 30,
                                    2007            2006    % Chg
    Gross Margin
      Nurse and allied
       healthcare staffing          23.3 %         24.5 %
      Locum tenens staffing         25.6 %         26.7 %
      Physician permanent
       placement services           60.0 %         60.6 %

    Operating Data:
    Nurse and allied
     healthcare staffing
      Average travelers on
       assignment(2)               7,017          6,572     6.8 %
      Revenue per traveler
       per day(3)              $  315.28     $   303.44     3.9 %
      Gross profit per
       traveler per day(3)     $   73.49     $    74.32    -1.1 %

    Locum tenens staffing
      Days filled(4)              57,602         49,534    16.3 %
      Revenue per day
       filled(4)               $1,387.75     $ 1,351.68     2.7 %
      Gross profit per day
       filled(4)               $  355.01     $   358.76    -1.0 %


                                           Six Months Ended
                                               June 30,
                                   2007    % of Rev         2006   % of Rev
    Revenue
      Nurse and allied
       healthcare staffing    $  401,297               $  359,197
      Locum tenens staffing      151,342                  131,501
      Physician permanent
       placement services         25,217                   24,743
                              $  577,856               $  515,441

    Adjusted EBITDA(1)
      Nurse and allied
       healthcare staffing    $   27,366     6.8 %     $   26,124    7.3 %
      Locum tenens staffing       11,058     7.3 %          9,618    7.3 %
      Physician permanent
       placement services          6,423    25.5 %          5,494   22.2 %
                                  44,847     7.8 %         41,236    8.0 %

    Depreciation and
     amortization                  5,486                    4,990
    Non-cash stock-based
     compensation                  3,954                    3,158
    Interest expense, net          6,458                    8,492
    Income before income
     taxes                        28,949                   24,596
    Income tax expense            11,509                    9,024
    Net income                $   17,440               $   15,572


                                       Six Months Ended
                                           June 30,
                                      2007         2006      % Chg
    Gross Margin
      Nurse and allied
       healthcare staffing           23.3 %        24.6 %
      Locum tenens staffing          25.4 %        26.5 %
       Physician permanent
        placement services           61.6 %        60.4 %

    Operating Data:
    Nurse and allied
     healthcare staffing
      Average travelers on
       assignment(2)                7,024         6,590      6.6 %
      Revenue per traveler
       per day(3)               $  315.65      $ 301.14      4.8 %
      Gross profit per
       traveler per day(3)      $   73.52      $  74.22     -0.9 %

    Locum tenens staffing
      Days filled(4)              109,901        98,785     11.3 %
      Revenue per day filled(4) $1,377.08     $1,331.18      3.4 %
      Gross profit per day
       filled(4)                $  350.02     $  352.89     -0.8 %


    (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.
                    Condensed Consolidated Balance Sheets
                                (in thousands)
                                 (unaudited)


                                        June 30,      March 31,   December 31,
                                          2007          2007           2006
    Assets
    Current assets:
      Cash and cash equivalents         $17,527       $10,221         $4,422
      Accounts receivable, net          195,213       187,925        192,716
      Deferred income taxes, net         24,985        23,289         26,275
      Other current assets               13,192        13,831         12,442
        Total current assets            250,917       235,266        235,855

    Fixed assets, net                    24,303        23,532         23,236
    Goodwill, net                       243,680       240,939        240,719
    Intangible assets, net              115,443       111,356        112,116
    Deposits and other assets            11,644        10,801         10,255

         Total assets                  $645,987      $621,894       $622,181

    Liabilities and
     stockholders' equity
    Current liabilities:
      Bank overdraft                     $1,736          $868        $10,353
      Accounts payable and
       accrued expenses                  21,632        21,954         20,273
      Accrued compensation and
       benefits                          43,116        41,363         42,585
      Income taxes payable                6,455         2,354          2,727
      Current portion of notes
       payable                           15,822        13,562         12,901
      Deferred revenue                    6,705         6,023          6,397
      Other current liabilities          26,015        26,143         25,731
        Total current
         liabilities                    121,481       112,267        120,967

    Notes payable, less current
     portion                            151,437       155,958        160,479
    Deferred income taxes, net           67,645        64,495         69,365
    Other long-term liabilities          33,863        29,655         26,824
          Total liabilities             374,426       362,375        377,635

    Stockholders' equity                271,561       259,519        244,546

          Total liabilities and
           stockholders' equity        $645,987      $621,894       $622,181

 

                        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,
                                        2007       2006      2007      2006

    Net cash provided by operating
     activities                       $16,251    $24,124   $33,493   $42,149

    Net cash used in investing
     activities                        (7,983)    (2,886)  (10,114)  (40,390)

    Net cash used in financing
     activities                          (984)   (26,670)  (10,288)  (15,967)

    Effect of exchange rates on cash       22         --        14       (14)

      Net increase (decrease) in
       cash and cash equivalents        7,306     (5,432)   13,105   (14,222)

      Cash and cash equivalents at
       beginning of period             10,221     10,320     4,422    19,110

      Cash and cash equivalents at
       end of period                  $17,527     $4,888   $17,527    $4,888

SOURCE AMN Healthcare Services, Inc. - 08/06/2007

CONTACT:
David C. Dreyer, Chief Financial Officer, or
Christopher Schwartz, Vice President, Financial Reporting and
Investor Relations, both of AMN Healthcare Services, Inc., 1-866-861-3229
Web site: http://www.amnhealthcare.com 
 
 

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