View all news

AMN Healthcare Reports Third Quarter 2007 Results

October 30, 2007
San Diego, CA
NYSE:AHS

SAN DIEGO, Oct. 30 /PRNewswire-FirstCall/ -- AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company, today reported revenue of $300.3 million for the third quarter of 2007, an increase of 6% from the $282.7 million reported for the same quarter last year, and 2% higher than the $293.9 million in revenue reported last quarter. Diluted earnings per share for the third quarter of 2007 of $0.29 increased 4% compared to last year, and 12% compared to last quarter.

"Our success in executing well on both our short-term initiatives and our long-term strategy has driven growth in each of our business segments," said Susan R. Nowakowski, President and Chief Executive Officer. "While all businesses performed well this quarter, our locum tenens Staff Care team delivered exceptional results, which contributed to AMN Healthcare surpassing our expectations and guidance for revenue," said Nowakowski. She also noted that gross margins improved significantly over the prior quarter because of initiatives put in place over the past several months.

Gross profit for the third quarter of 2007 was $79.7 million, representing a 26.6% gross margin, as compared to $76.7 million, or 27.1% gross margin, for the third quarter of 2006 and $75.0 million, or 25.5% gross margin, for the second quarter of 2007. The decline in gross margin on a year over year basis was due mainly to higher housing and health insurance costs in the nurse and allied segment. The increase in gross margin compared to last quarter was due primarily to a widening pay-to-bill spread in both the nurse and allied and locum tenens staffing segments. Gross margins by business segment for the third quarter of 2007 were 24.2% for nurse and allied healthcare staffing, 27.0% for locum tenens staffing and 60.2% for physician permanent placement services.

Selling, general, and administrative ("SG&A") expenses for the third quarter of 2007 were $55.8 million, or 18.6% of revenue, as compared to $54.1 million, or 19.1% of revenue, for the third quarter of 2006 and $53.5 million, or 18.2% of revenue, for the second quarter of 2007. The reduction in SG&A as a percentage of revenue compared to the prior year period 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 third quarter of 2007 was $21.0 million, or 7.0% of revenue, as compared to $20.0 million, or 7.1% of revenue, for the third quarter of 2006, and $18.6 million, or 6.3% of revenue, for the second quarter of 2007. The decrease in operating margin compared to the prior year period was due to lower gross margin partially offset by lower SG&A expenses as a percentage of revenue. The increase in operating margin compared to last quarter was due mainly to higher gross margin.

Net interest expense for the third quarter of 2007 was $3.1 million, compared to $4.2 million for the third quarter of 2006 and $3.1 million for the second quarter of 2007. The decrease in net interest expense from the same quarter last year was due primarily to a continued reduction in outstanding debt.

Income tax expense as a percentage of pre-tax income for the third quarter of 2007 was 43.7%, compared to 40.1% for the third quarter of 2006 and 40.2% for the second quarter of 2007. The increase was due mainly to a $0.6 million adjustment to the company's income tax reserve which resulted in a $0.02 reduction to this quarter's diluted earnings per share.

The company generated $20.8 million in cash flow from operations during the third quarter of 2007 which, in addition to cash on-hand, was used to repurchase one million shares of the company's common stock in August of this year and pay down debt. Total debt outstanding at September 30, 2007 was $157.1 million, yielding a leverage ratio of 1.6 times. Weighted average diluted shares outstanding for the third quarter of 2007 were 34.7 million.

Revenue and Earnings Guidance for Fourth Quarter and Full Year 2007

Management expects revenue for the fourth quarter of 2007 to range from $286 million to $288 million and diluted earnings per share to range from $0.24 to $0.26. The moderate decrease in revenue and earnings expected during the fourth quarter is due to the normal year-end seasonal trends in our temporary healthcare staffing businesses. Management reaffirms 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.

"As we enter the fourth year executing our diversified service strategy, resulting in nearly doubling both our revenue and earnings from three years ago, we are pleased with the evolution of this strategy and the increased strength of our leading market position. As the largest provider in what we believe are the most attractive segments of the healthcare staffing industry, and with more clients in more locations than any other company, we are well positioned for long-term growth," said Nowakowski. "Looking forward to 2008 and beyond, we believe that our proven ability to execute along with our willingness to remain attuned to market changes and agile in our approach will deliver growth in all of our segments," added Nowakowski.

Ms. Nowakowski added, "Last week, our corporate office in San Diego was closed for two days as a precautionary measure due to wildfires in the area. We are thankful to report that all of our team members are safe, and nearly everyone is back in their homes. While a short period of time, this was a real life test of our disaster recovery and business continuity plans, which I'm pleased to say, worked beautifully. During this time, our teams were able to continue to serve our healthcare professionals and client facilities with minimal sales or service interruption. This success, in the face of such environmental difficulty, is a testament to the incredible dedication and skill of the AMN team in San Diego and at our regional offices who quickly stepped up to execute AMN's business continuity plan and provide immediate and near seamless coverage."

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 October 30, 2007

AMN Healthcare Services, Inc.'s third quarter 2007 conference call will be held on Tuesday, October 30, 2007, at 5:00 p.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- 1092 in the U.S. or (612) 332-0107 internationally. Following the conclusion of the call, a replay of the webcast will be available on the company's web site within four hours. Alternatively, a telephonic replay of the call will be available at 10:15 p.m. Eastern Time on October 30, 2007, and can be accessed until November 13, 2007 at midnight Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 890496.

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 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 fourth quarter and full year 2007, and Ms. Nowakowski's comments including those regarding revenue growth, gross margin, the company's market position, and the impact of the Southern California wildfires at the company's business operations. 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 Reports 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          Nine Months Ended
                              September 30,               September 30,
                         2007      2006     % Chg     2007      2006    % Chg

    Revenue            $300,267  $282,728    6.2%   $878,123  $798,169   10.0%
    Cost of revenue     220,529   206,036    7.0%    650,921   583,154   11.6%
    Gross profit         79,738    76,692    4.0%    227,202   215,015    5.7%
                          26.6%     27.1%              25.9%     26.9%
    Operating expenses:
     Selling, general
      and administrative 55,769    54,071    3.1%    162,340   154,316    5.2%
                          18.6%     19.1%              18.5%     19.3%

     Depreciation and
      amortization        2,979     2,638   12.9%      8,465     7,628   11.0%

    Total operating
     expenses            58,748    56,709    3.6%    170,805   161,944    5.5%
    Income from
     operations          20,990    19,983    5.0%     56,397    53,071    6.3%
                           7.0%      7.1%               6.4%      6.6%
    Interest expense,
     net                  3,071     4,174  -26.4%      9,529    12,666  -24.8%
    Income before income
     taxes               17,919    15,809   13.3%     46,868    40,405   16.0%
    Income tax expense    7,831     6,337   23.6%     19,340    15,361   25.9%
    Net income          $10,088    $9,472    6.5%    $27,528   $25,044    9.9%
                           3.4%      3.4%               3.1%      3.1%
    Net income per
     common share:
      Basic               $0.29     $0.29    0.0%      $0.80     $0.78    2.6%
      Diluted             $0.29     $0.28    3.6%      $0.78     $0.73    6.8%

    Weighted average
     common shares
     outstanding:
      Basic              34,328    32,453    5.8%     34,562    32,146    7.5%
      Diluted            34,745    33,995    2.2%     35,098    34,313    2.3%

 

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

                      Three Months Ended              Nine Months Ended
                        September 30,                   September 30,
                         % of           % of             % of            % of
                   2007   Rev     2006   Rev     2007     Rev    2006     Rev
    Revenue
      Nurse and
      allied
      healthcare
      staffing  $204,083        $201,925       $605,380        $561,122
     Locum
      tenens
      staffing    83,004          68,491        234,346         199,992
     Physician
      permanent
      placement
      services    13,180          12,312         38,397          37,055
                $300,267        $282,728       $878,123        $798,169

    Adjusted
     EBITDA(1)
      Nurse and
       allied
       healthcare
       staffing  $15,674   7.7%  $16,104  8.0%  $43,040   7.1%  $42,228  7.5%
      Locum
       tenens
       staffing    7,555   9.1%    4,800  7.0%   18,613   7.9%   14,418  7.2%
      Physician
       permanent
       placement
       services    3,006  22.8%    3,574  29.0%   9,429  24.6%    9,068  24.5%
                  26,235   8.7%   24,478   8.7%  71,082   8.1%   65,714   8.2%

    Depreciation
     and
     amortization  2,979           2,638          8,465           7,628
    Non-cash
     stock-based
     compensation  2,266           1,857          6,220           5,015
    Interest
     expense, net  3,071           4,174          9,529          12,666
    Income
     before
     income
     taxes        17,919          15,809         46,868          40,405
    Income tax
     expense       7,831           6,337         19,340          15,361
    Net income   $10,088          $9,472        $27,528         $25,044


                   Three Months Ended              Nine Months Ended
                      September 30,                  September 30,
                   2007           2006  % Chg       2007          2006  % Chg
    Gross Margin
     Nurse and
      allied
      healthcare
      staffing    24.2%           25.4%             23.6%         24.9%
     Locum tenens
      staffing    27.0%           26.2%             26.0%         26.4%
     Physician
      permanent
      placement
      services    60.2%           60.7%             61.1%         60.5%

    Operating Data:
    Nurse and allied
     healthcare
     staffing
     Average
      travelers
      on
      assignment
      (2)         6,895           7,015  -1.7%      6,981         6,731   3.7%
     Revenue per
      traveler
      per
      day(3)    $321.72         $312.88   2.8%    $317.65       $305.36   4.0%
     Gross
      profit
      per
      traveler
      per
      day(3)     $77.84          $79.44  -2.0%     $74.95        $76.07  -1.5%

    Locum tenens
     staffing
     Days
      filled(4)  57,036          51,205  11.4%    166,937       149,990  11.3%
     Revenue per
      day
      filled
      (4)     $1,455.29       $1,337.58   8.8%  $1,403.80     $1,333.37   5.3%
     Gross
      profit
      per
      day
      filled
      (4)       $393.33         $350.55  12.2%    $364.82       $352.09   3.6%


    (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)


                                      September 30,   June 30,    December 31,
                                          2007          2007          2006
    Assets
    Current assets:
      Cash and cash equivalents           $6,170       $17,527        $4,422
      Accounts receivable, net           194,694       195,213       192,716
      Deferred income taxes, net          24,763        24,985        26,275
      Other current assets                12,679        13,192        12,442
        Total current assets             238,306       250,917       235,855

    Fixed assets, net                     24,159        24,303        23,236
    Goodwill, net                        243,680       243,680       240,719
    Intangible assets, net               114,484       115,443       112,116
    Deposits and other assets             11,441        11,644        10,255

         Total assets                   $632,070      $645,987      $622,181

    Liabilities and stockholders'
     equity
    Current liabilities:
      Bank overdraft
                                             $--        $1,736       $10,353
      Accounts payable and accrued
       expenses                           21,930        21,632        20,273
      Accrued compensation and benefits   44,881        43,116        42,585
      Income taxes payable                 6,294         6,455         2,727
      Current portion of notes payable    17,217        15,822        12,901
      Deferred revenue                     7,364         6,705         6,397
      Other current liabilities           26,007        26,015        25,731
        Total current liabilities        123,693       121,481       120,967

    Notes payable, less current portion  139,890       151,437       160,479
    Deferred income taxes, net            67,723        67,645        69,365
    Other long-term liabilities           35,700        33,863        26,824
        Total liabilities                367,006       374,426       377,635

    Stockholders' equity                 265,064       271,561       244,546

     Total liabilities and
      stockholders' equity              $632,070      $645,987      $622,181

 


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

                         Three Months Ended           Nine Months Ended
                    September 30,  September 30,  September 30,  September 30,
                        2007           2006           2007           2006

    Net cash provided
     by operating
     activities      $20,817          $3,799         $54,310       $45,948

    Net cash used in
     investing
     activities       (1,859)         (2,290)        (11,973)      (42,680)

    Net cash used in
     financing
     activities      (30,319)         (2,817)        (40,607)      (18,784)

    Effect of exchange
     rates on cash         4             (69)             18           (83)

      Net increase
       (decrease) in
       cash and cash
       equivalents   (11,357)         (1,377)          1,748       (15,599)

      Cash and cash
       equivalents at
       beginning of
       period         17,527           4,888           4,422        19,110

      Cash and cash
       equivalents at
       end of period  $6,170          $3,511          $6,170        $3,511

 

     (Logo:  http://www.newscom.com/cgi-bin/prnh/20060718/LATU121LOGO)

     Contact:
     David C. Dreyer
     Chief Financial Officer
     Christopher Schwartz
     Vice President, Financial Reporting and Investor Relations
     866.861.3229

SOURCE AMN Healthcare Services, Inc. - 10/30/2007

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
http://www.amnhealthcare.com/investors 
 
 

Multimedia Files:

View all news