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AMN Healthcare Reports First Quarter 2008 Results

May 7, 2008
PRNewswire-FirstCall
SAN DIEGO

AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company, today reported revenue for the first quarter of 2008 of $293.6 million. This represents an increase of 3% from both the $283.9 million in revenue reported for the same quarter last year and the $285.9 million reported in the fourth quarter of 2007. Diluted earnings per share for the first quarter of 2008 was $0.28, an increase of $0.05, or 22%, from last year and $0.02, or 8%, from last quarter.

"First quarter results were encouraging with year-over-year revenue growth in all three of our business segments: Nurse & Allied, Locum Tenens and Physician Permanent Placement. Our mix of business and improved direct cost and SG&A expense management enabled us to increase both gross profit margins and EBITDA margins over the prior year," said Susan R. Nowakowski, AMN Healthcare President and Chief Executive Officer. "Even more important was the significant increase we experienced in demand for travel nurse and allied professionals since the beginning of the year. These trends set us up to enter the second quarter on a solid base of placements to deliver growth and achieve our expectations for the year."

Gross profit for the first quarter of 2008 was $77.5 million, representing a 26.4% gross margin, as compared to $72.5 million, or a 25.5% gross margin, for the first quarter of 2007 and $76.0 million, or a 26.6% gross margin, for the fourth quarter of 2007. The 90 basis point improvement in gross margin over the prior year was due primarily to an improved pay-to-bill spread in the nurse and allied and locum tenens staffing segments. Compared to last quarter, gross margin declined slightly due to higher housing and subsidy costs in the nurse and allied staffing segment. This was partially offset by lower provider compensation in the locum tenens staffing segment in the first quarter where gross margin increased sequentially by 60 basis points. Gross margins by business segment for the first quarter were 24.0% for nurse and allied healthcare staffing, 26.7% for locum tenens staffing and 61.6% for physician permanent placement services.

Selling, general, and administrative ("SG&A") expenses for the first quarter of 2008 were $55.1 million, or 18.8% of revenue, as compared to $53.1 million, or 18.7% of revenue, for the first quarter of 2007 and $55.9 million, or 19.6% of revenue, for the fourth quarter of 2007. The decrease in SG&A compared to last quarter was due primarily to favorable insurance experience in the current quarter and a $0.7 million restructure charge recorded last quarter related to our international division. This was partially offset by additional SG&A expenses from Platinum Select, which we acquired on February 15, 2008.

Income from operations for the first quarter of 2008 was $19.0 million, or 6.5% of revenue, which increased from the $16.8 million, or 5.9% of revenue, for the first quarter of 2007, and $16.8 million, or 5.9% of revenue, for the fourth quarter of 2007. The increase in operating margin compared to last year was due mostly to higher gross margin, while the increase compared to last quarter was due primarily to lower SG&A as a percentage of revenue.

Net interest expense for the first quarter of 2008 was $2.8 million, compared to $3.3 million for the first quarter of 2007 and $2.9 million for the fourth quarter of 2007. The decrease in net interest expense primarily reflected continued reductions in outstanding debt.

Strong cash flow continued with the company generating $16.9 million in cash flow from operations during the first quarter of 2008. Total debt outstanding at March 31, 2008, was $146.5 million, yielding a leverage ratio of 1.5. Weighted average diluted shares outstanding for the first quarter of 2008 were 34.2 million.

AMN Healthcare also announced today that its Board of Directors authorized the repurchase of up to $38 million of its outstanding common stock in the open market. Under the repurchase program, share purchases may be made from time to time through March 31, 2009, depending on prevailing market conditions and other considerations. The company expects to use available cash on hand and its revolver to fund the purchase of shares.

"While the use of our strong cash flow for acquisitions will continue to be one of our highest priorities, the current market environment makes doing a moderate share repurchase an appropriate investment for the company at this time and underscores our commitment to enhancing stockholder value," Ms. Nowakowski said.

Revenue and Earnings Guidance for Second Quarter and Full Year 2008

Ms. Nowakowski added: "Based on our view of the market conditions and our expectation for seasonal improvement in demand and supply during the second half of the year, we are reaffirming our expectations for revenue growth for the full year 2008 of 7% to 12% over 2007. Diluted earnings per share is expected to grow at a faster rate of 11% to 16%. We expect revenue for the second quarter of 2008 to range from $313 million to $316 million, and diluted earnings per share to range from $0.26 to $0.28.

"We are encouraged by the industry trends and progress we are making in 2008 which will provide us with continued growth opportunities. Our sales and operations teams have made execution improvements which I believe set us up to capture more market share and further expand our leadership position. With that said, we are in a competitive industry and must continue to evolve our business model to meet the changing needs of our clients. In addition to delivering superior service to our clients today, we are also continuing to make investments in innovative solutions and enhancing our diversified strategy to build a stronger company for the future," said Ms. Nowakowski.

Company Summary

AMN Healthcare Services, Inc. is the largest healthcare staffing company in the United States and the largest nationwide provider in all four of its business lines: travel nurse staffing, locum tenens staffing (temporary physician staffing), physician permanent placement services and travel allied staffing. 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 settings throughout the United States. For more information, visit http://www.amnhealthcare.com/.

Conference Call on May 7, 2008

AMN Healthcare Services, Inc.'s first quarter 2008 conference call will be held on Wednesday, May 7, 2008, at 5:00 p.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) 288-8968 in the U.S. or (612) 332-1020 internationally. Following the conclusion of the call, a replay of the webcast will be available at the company's website. Alternatively, a telephonic replay of the call will be available at 7:30 p.m., Eastern Time, May 7, 2008, and can be accessed until May 21, 2008, at midnight, Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 918493.

This earnings release contains certain non-GAAP financial information. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP"), and may be different from non-GAAP measures reported by other companies. 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 second quarter and full year of 2008, and Ms. Nowakowski's comments including those regarding continued future growth, and revenue and earnings expectations. 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 it has 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 and utilization of services at hospital and healthcare facility clients' facilities, including the potential impact on such utilization caused by adoption of alternative modes of healthcare delivery, which utilization may influence demand for the company's services; 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 candidate and client databases and payroll and billing software systems; the company's ability to keep its 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, including regulations that may affect the company's clients and, in turn, affect demand for the company's services; 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 disruption or adverse impact to the company's business as a result of a terrorist attack or breach of security of our data systems; 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, 2007, 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.

  (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



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

                                              Three Months Ended
                                                   March 31,
                                               2008        2007       % Chg

  Revenue                                    $293,593    $283,944      3.4%
  Cost of revenue                             216,138     211,439      2.2%
    Gross profit                               77,455      72,505      6.8%
                                                 26.4%       25.5%
  Expenses:
    Selling, general and administrative        55,103      53,051      3.9%
                                                 18.8%       18.7%

    Depreciation and amortization               3,350       2,629     27.4%

        Total expenses                         58,453      55,680      5.0%
  Income from operations                       19,002      16,825     12.9%
                                                  6.5%        5.9%
  Interest expense, net                         2,811       3,334    -15.7%
  Income before income taxes                   16,191      13,491     20.0%
  Income tax expense                            6,675       5,297     26.0%
  Net income                                   $9,516      $8,194     16.1%
                                                  3.2%        2.9%
  Net income per common share:
      Basic                                     $0.28       $0.24     16.7%
      Diluted                                   $0.28       $0.23     21.7%

  Weighted average common shares outstanding:
      Basic                                    33,830      34,638     -2.3%
      Diluted                                  34,180      35,283     -3.1%



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

                                             Three Months Ended
                                                  March 31,

                                        2008    % of Rev    2007    % of Rev
  Revenue
    Nurse and allied healthcare
     staffing                         $203,985            $199,975
    Locum tenens staffing               76,353              71,405
    Physician permanent placement
     services                           13,255              12,564
                                      $293,593            $283,944

  Adjusted EBITDA(1)
    Nurse and allied healthcare
     staffing                          $15,481     7.6%    $13,731     6.9%
    Locum tenens staffing                5,655     7.4%      4,018     5.6%
    Physician permanent placement
     services                            3,339    25.2%      3,500    27.9%
                                        24,475     8.3%     21,249     7.5%

  Depreciation and amortization          3,350               2,629
  Stock-based compensation               2,123               1,795
  Interest expense, net                  2,811               3,334
  Income before income taxes            16,191              13,491
  Income tax expense                     6,675               5,297
  Net income                            $9,516              $8,194


                                             Three Months Ended
                                                  March 31,
                                          2008               2007      % Chg
  Gross Margin
    Nurse and allied healthcare
     staffing                              24.0%              23.3%
    Locum tenens staffing                  26.7%              25.2%
    Physician permanent placement
     services                              61.6%              63.2%

  Operating Data:
  Nurse and allied healthcare staffing
    Average travelers on assignment (2)   6,887              7,031     -2.0%
    Revenue per traveler per day (3)    $325.48            $316.02      3.0%
    Gross profit per traveler
     per day (3)                         $78.02             $73.56      6.1%

  Locum tenens staffing
    Days filled (4)                      52,699             52,299      0.8%
    Revenue per day filled (4)        $1,448.85          $1,365.32      6.1%
    Gross profit per day filled (4)     $386.95            $344.54     12.3%


                                                As of March 31,
                                           2008                2007
  Leverage Ratio (5)                        1.5                 1.9

  (1) Adjusted EBITDA represents net income plus interest expense (net of
      interest income), income taxes, depreciation and amortization and
      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 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 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.
  (5) Leverage ratio represents the ratio of the total debt outstanding at
      the end of the period to the Adjusted EBITDA for the past twelve
      months.



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

                                                     March 31,  December 31,
                                                        2008        2007
  Assets
  Current assets:
    Cash and cash equivalents                           $7,835     $18,495
    Accounts receivable, net                           199,091     184,741
    Deferred income taxes, net                          28,081      28,084
    Other current assets                                14,938      11,631
      Total current assets                             249,945     242,951

  Fixed assets, net                                     25,246      24,600
  Goodwill, net                                        252,823     241,266
  Intangible assets, net                               126,418     113,535
  Other assets                                          11,198      11,274

          Total assets                                $665,630    $633,626

  Liabilities and stockholders' equity
  Current liabilities:
    Bank overdraft                                      $6,617         $ -
    Accounts payable and accrued expenses               28,624      22,231
    Accrued compensation and benefits                   47,328      43,446
    Income taxes payable                                 3,159       2,925
    Revolving credit facility                           13,500           -
    Current portion of notes payable                    15,339      26,616
    Deferred revenue                                     8,322       7,647
    Other current liabilities                           25,652      25,691
      Total current liabilities                        148,541     128,556

  Notes payable, less current portion                  117,628     120,352
  Deferred income taxes, net                            70,637      71,092
  Other long-term liabilities                           41,806      37,498
          Total liabilities                            378,612     357,498

  Stockholders' equity                                 287,018     276,128

          Total liabilities and stockholders' equity  $665,630    $633,626



                      AMN Healthcare Services, Inc.
             Condensed Consolidated Statements of Cash Flows
                              (in thousands)
                               (unaudited)

                                                         Three Months Ended
                                                        March 31,  March 31,
                                                          2008       2007

  Net cash provided by operating activities              $16,873    $17,242

  Net cash used in investing activities                  (33,401)    (2,131)

  Net cash provided (used in) by financing activities      5,934     (9,304)

  Effect of exchange rates on cash                           (66)        (8)

    Net (decrease) increase in cash and cash equivalents (10,660)     5,799

    Cash and cash equivalents at beginning of period      18,495      4,422

    Cash and cash equivalents at end of period            $7,835    $10,221

First Call Analyst:
FCMN Contact: anne-celine.woelk@amnhealthcare.com

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SOURCE: AMN Healthcare Services, Inc.

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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