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AMN Healthcare Reports Fourth Quarter and Year End 2007 Results; Provides Full Year 2008 Guidance

February 26, 2008
PRNewswire-FirstCall
SAN DIEGO

AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company, today reported revenue for the fourth quarter of 2007 of $285.9 million. This represents an increase of 0.8% from the $283.5 million reported for the same quarter last year, and a 4.8% decline from the $300.3 million in revenue reported in the third quarter. The sequential decline in revenue was due in part to the typical fourth quarter seasonality of fewer clinicians working over the holidays. Diluted earnings per share for the fourth quarter of 2007 were $0.26, a decrease of $0.03 compared to last year and last quarter. Fourth quarter 2006 diluted earnings per share included a benefit equating to $0.05 due to favorable actuarial adjustments to the professional liability insurance reserve.

Revenue for the full year 2007 was an industry record $1.16 billion, an increase of 7.6% from the $1.08 billion reported for 2006. While the company was able to produce operating efficiencies throughout the year, these were partially offset by direct cost pressures and lower demand levels in the nurse staffing business that caused diluted earnings per share to grow at a slower rate of 2.9% to $1.05.

"During the fourth quarter we continued to see the benefit of the diversified service strategy we have been implementing over the past three years. While economic and market conditions have impacted our nurse staffing business recently, our locum tenens staffing segment continued to experience strong year-over-year growth. We also saw the sustained benefit of initiatives implemented earlier in the year to improve gross margins and drive efficiencies across all business segments," said Susan R. Nowakowski, President and Chief Executive Officer. "In 2007, we continued to take steps towards expanding our service offerings by launching new clinical disciplines, selling into new client markets, and completing new acquisitions to further diversify AMN in high-growth, high-margin market niches within the industry. These are small, but important, seeds for us to plant for stronger future growth opportunities."

Gross profit for the fourth quarter of 2007 was $76.0 million, representing a 26.6% gross margin, as compared to $74.3 million, or a 26.2% gross margin, for the fourth quarter of 2006 and $79.7 million, or a 26.6% gross margin, for the third quarter of 2007. The 40 basis points improvement over the prior year was due primarily to an improved pay-to-bill spread in the nurse and allied staffing segment, while gross margin remained relatively stable compared to last quarter. Gross margins by business segment for the fourth quarter of 2007 were 24.4% for nurse and allied healthcare staffing, 26.1% for locum tenens staffing and 61.8% for physician permanent placement services. Consolidated gross margin for the full year 2007 was 26.0% as compared to 26.7% for 2006, a decline caused primarily by higher housing and healthcare insurance expense in the nurse and allied staffing segment.

Selling, general, and administrative ("SG&A") expenses for the fourth quarter of 2007 were $55.9 million, or 19.6% of revenue, as compared to $51.2 million, or 18.1% of revenue, for the fourth quarter of 2006 and $55.8 million, or 18.6% of revenue, for the third quarter of 2007. SG&A in the current quarter also included restructuring costs of $0.7 million associated with the company's O'Grady Peyton International nurse staffing division. The increase in SG&A as a percentage of revenue compared to the previous year was due primarily to a $2.9 million favorable adjustment to the professional liability insurance reserve recorded in the fourth quarter of 2006. SG&A for the full year 2007 was 18.7% as a percentage of revenue as compared to 19.0% for 2006.

Income from operations for the fourth quarter of 2007 was $16.8 million, or 5.9% of revenue, as compared to $20.4 million, or 7.2% of revenue, for the fourth quarter of 2006, and $21.0 million, or 7.0% of revenue, for the third quarter of 2007. The decrease in operating margin compared to the previous year was due mainly to the prior year including the previously noted $2.9 million favorable adjustment. Also contributing to the decrease in operating margin compared to the previous year and previous quarter was the $0.7 million of OGP restructuring costs recorded this quarter. Operating margin for the full year 2007 was 6.3% of revenue, as compared to 6.8% for 2006.

Net interest expense for the fourth quarter of 2007 was $2.9 million, compared to $4.0 million for the fourth quarter of 2006 and $3.1 million for the third quarter of 2007. The decrease in net interest expense from the previous year and previous quarter reflected the continued reduction in outstanding debt.

The effective tax rate for the fourth quarter of 2007 was 35.3% compared to 38.6% for the fourth quarter of 2006, with both quarters including adjustments required to finalize year-end federal and state tax provisions. The full year effective tax rate was 39.9%, which approximates the 40.2% rate we anticipate for 2008.

Strong cash flow continued with the company generating $25.3 million in cash flow from operations during the fourth quarter of 2007 and $79.6 for the full year 2007. Total debt outstanding at December 31, 2007 was $147.0 million, yielding a leverage ratio of 1.6. Weighted average diluted shares outstanding for the fourth quarter of 2007 were 34.2 million.

Additionally, on February 15, 2008, as previously announced, the company acquired substantially all of the assets of Platinum Select, L.P. ("Platinum Select"), one of the nation's leading travel allied staffing firms. The purchase price of up to $50.3 million in cash consisted of an initial payment of $32.9 million and a potential additional earn-out payment based on Platinum Select's 2008 financial performance. The company financed the acquisition using both cash on hand and its revolving credit facility. "This addition to the AMN Healthcare family provides an additional channel for helping our clients obtain the scarce and valuable talents of allied professionals, and firmly places the company as the #1 provider in the attractive travel allied healthcare staffing segment of the industry," said Nowakowski.

Revenue and Earnings Guidance for First Quarter and Full Year 2008

Based on the current market conditions and an expectation for typical seasonal improvement in the demand and supply environment during the second half of the year, the company expects revenue for the full year 2008 to grow 7% to 12% over 2007 and diluted earnings per share to grow at a faster rate of 11% to 16%. Management expects revenue for the first quarter of 2008 to range from $290 million to $293 million, and diluted earnings per share to range from $0.24 to $0.26. These guidance estimates include the company's acquisition of Platinum Select which closed on February 15, 2008.

"Our 2008 guidance anticipates revenue and earnings growth in all of our segments. Our locum tenens staffing segment is expected to produce double digit growth and we expect that our physician permanent placement and allied staffing businesses will grow at faster rates than last year. Our outlook is tempered by caution that the level of growth in the demand environment for travel nurses continues to be at lower than optimal levels," said Nowakowski. "We remain very focused on delivering superior quality and service to our clients every day and are confident that AMN has the right long-term market strategy and the right team in place to advance our leadership position within the fastest growing, most profitable segments of the healthcare staffing industry. With that said, we must continue to make changes and innovate to remain agile in this dynamic and increasingly competitive market. We are excited about several of the new services we will be launching throughout the year," said Nowakowski.

Company Summary

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

Conference Call on February 26, 2008

AMN Healthcare Services, Inc.'s fourth quarter 2007 conference call will be held on Tuesday, February 26, 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 (888) 428-4479 in the U.S. or (612) 332-7488 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 7:30 p.m. Eastern Time on February 26, 2008, and can be accessed until March 12, 2008 at midnight Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 905754.

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 first quarter and full year of 2008, and Ms. Nowakowski's comments including those regarding continued future growth. 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; 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          Twelve Months Ended
                            December 31,                 December 31,

                                         %                               %
                        2007    2006    Chg      2007      2006         Chg

  Revenue            $285,899 $283,534  0.8% $1,164,022 $1,081,703      7.6%
  Cost of revenue     209,936  209,261  0.3%    860,857    792,415      8.6%
  Gross profit         75,963   74,273  2.3%    303,165    289,288      4.8%
                         26.6%    26.2%            26.0%      26.7%
  Expenses:
     Selling, general
      and
       administrative  55,910   51,183  9.2%    218,250    205,499      6.2%
                         19.6%    18.1%            18.7%      19.0%
     Depreciation and
      amortization      3,209    2,697 19.0%     11,674     10,325     13.1%

  Total expenses       59,119   53,880  9.7%    229,924    215,824      6.5%
  Income from
   operations          16,844   20,393 -17.4%    73,241     73,464     -0.3%
                          5.9%     7.2%             6.3%       6.8%

  Interest expense, net 2,928    4,032 -27.4%    12,457     16,698    -25.4%
  Income before income
   taxes               13,916   16,361 -14.9%    60,784     56,766      7.1%
  Income tax expense    4,912    6,314 -22.2%    24,252     21,675     11.9%
  Net income           $9,004  $10,047 -10.4%   $36,532    $35,091      4.1%
                          3.1%     3.5%             3.1%       3.2%
  Net income per common
   share:
    Basic               $0.27    $0.29  -6.9%       $1.06     $1.07    -0.9%
    Diluted             $0.26    $0.29 -10.3%       $1.05     $1.02     2.9%

  Weighted average common
   shares
    outstanding:
    Basic              33,828   34,193  -1.1%      34,377    32,662    5.3%
    Diluted            34,232   35,074  -2.4%      34,880    34,504    1.1%


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

                       Three Months Ended          Twelve Months Ended
                         December 31,                  December 31,
                         % of          % of             % of           % of
                 2007     Rev    2006   Rev      2007    Rev    2006    Rev

  Revenue
   Nurse and
    allied
    healthcare
    staffing   $196,654        $202,048        $802,034       $763,170
   Locum
    tenens
    staffing     76,179          68,139         310,525        268,131
  Physician
   permanent
   placement
   services      13,066          13,347          51,463         50,402
               $285,899        $283,534      $1,164,022     $1,081,703

  Adjusted
   EBITDA(1)
   Nurse and
    allied
    healthcare
    staffing    $14,557   7.4%  $14,419   7.1%  $57,597  7.2%  $56,647  7.4%
   Locum tenens
    staffing      4,254   5.6%    6,518   9.6%   22,867  7.4%   20,936  7.8%
   Physician
    permanent
    placement
    Services      3,414  26.1%    3,941  29.5%   12,843 25.0%   13,009 25.8%
                 22,225   7.8%   24,878   8.8%   93,307  8.0%   90,592  8.4%
  Depreciation
   and
   amortization   3,209           2,697          11,674         10,325
  Non-cash
   stock-based
   compensation   2,172           1,788           8,392          6,803
  Interest
   expense, net   2,928           4,032          12,457         16,698
  Income before
   income taxes  13,916          16,361          60,784         56,766
  Income tax
   expense        4,912           6,314          24,252         21,675
  Net income     $9,004         $10,047         $36,532        $35,091


                       Three Months Ended          Twelve Months Ended
                         December 31,                  December 31,

                                            %                             %
                  2007             2006    Chg     2007           2006   Chg

  Gross Margin
   Nurse and
    allied
    healthcare
    staffing      24.4%            23.5%           23.8%          24.6%
   Locum tenens
    staffing      26.1%            26.7%           26.0%          26.5%
   Physician
    permanent
    placement
    services      61.8%            63.9%           61.3%          61.4%

  Operating Data:
  Nurse and
   allied
   healthcare
   staffing
    Average
     travelers on
     assignment
     (2)         6,645            7,106 -6.5%     6,897          6,825  1.1%
    Revenue per
     traveler
     per
     day(3)    $321.68          $309.06  4.1%   $318.60        $306.36  4.0%
    Gross
     profit per
     traveler
     per
     day(3)     $78.47           $72.77  7.8%    $75.80         $75.21  0.8%

  Locum tenens
   staffing
    Days
     filled (4) 51,639           49,651  4.0%   218,576        199,641  9.5%
    Revenue
     per day
     filled
     (4)     $1,475.22        $1,372.36  7.5% $1,420.67      $1,343.07  5.8%
    Gross
     profit
     per day
     filled
     (4)       $385.62          $365.91  5.4%   $369.73        $355.53  4.0%


  (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)

                                   December 31, September 30, December 31,
                                      2007          2007          2006
  Assets
  Current assets:
    Cash and cash equivalents       $18,495        $6,170        $4,422
    Accounts receivable, net        184,741       194,694       192,716
    Deferred income taxes, net       28,084        24,763        26,275
    Other current assets             11,631        12,679        12,442
      Total current assets          242,951       238,306       235,855

  Fixed assets, net                  24,600        24,159        23,236
  Goodwill, net                     241,266       243,680       240,719
  Intangible assets, net            113,535       114,484       112,116
  Deposits and other assets          11,274        11,441        10,255

       Total assets                $633,626      $632,070      $622,181

  Liabilities and stockholders'
   equity
  Current liabilities:
     Bank overdraft                      $-            $-       $10,353
    Accounts payable and accrued
     expenses                        22,231        21,930        20,273
    Accrued compensation and
     benefits                        43,446        44,881        42,585
    Income tax payable                2,925         6,294         2,727
    Current portion of notes
     payable                         16,560        17,217        12,901
    Deferred revenue                  7,647         7,364         6,397
    Other current liabilities        25,691        26,007        25,731
      Total current liabilities     118,500       123,693       120,967

  Notes payable, less current
   portion                          130,408       139,890       160,479
  Deferred income taxes, net         71,092        67,723        69,365
  Other long-term liabilities        37,498        35,700        26,824
      Total liabilities             357,498       367,006       377,635

  Stockholders' equity              276,128       265,064       244,546

   Total liabilities and
    stockholders' equity           $633,626      $632,070      $622,181


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

                                   Three Months Ended    Twelve Months Ended
                                  December    December   December  December
                                     31,         31,        31,       31,
                                    2007        2006       2007      2006

  Net cash provided by operating
   activities                      $25,326     $8,590    $79,636   $54,538

  Net cash used in investing
   activities                       (2,656)    (2,997)   (14,629)  (45,677)

  Net cash used in financing
   activities                      (10,316)    (4,752)   (50,923)  (23,536)

  Effect of exchange rates on cash     (29)        70        (11)      (13)

    Net increase (decrease) in cash
     and cash equivalents           12,325        911     14,073   (14,688)

    Cash and cash equivalents at
     beginning of period             6,170      3,511      4,422    19,110

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



  (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

First Call Analyst:
FCMN Contact: chris.schwartz@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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