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AMN Healthcare Reports Second Quarter 2008 Results

August 6, 2008
PRNewswire-FirstCall
SAN DIEGO

AMN Healthcare Services, Inc. (NYSE: AHS), the nation's largest healthcare staffing company and the market leader in all of its business segments today reported revenue of $313 million, a 6% increase from the same quarter last year and a 7% increase from last quarter. Additional highlights include:

-- All three business segments: Nurse & Allied, Locum Tenens and Physician Permanent Placement, experienced organic sequential revenue growth in the second quarter of 2008.

-- Gross margin for the quarter was 26.4%, up 90 basis points from the same quarter last year.

-- Net income for the quarter was $9.4 million, or $0.27 per share, a 4% increase over the $0.26 per share in the same quarter last year and within the Company's previously-announced guidance range of $0.26 to $0.28 per share.

Susan R. Nowakowski, President and Chief Executive Officer of AMN Healthcare, remarked, "All of our business lines experienced volume and revenue growth during the second quarter, reflecting the solid fundamentals of our industry and execution by our team. This success is further magnified by our ability to improve gross margins and gain modest pricing improvements, despite relatively flat hospital admissions and an overall soft economic environment. AMN's strategy to offer a diverse product line across a broad client base and our leadership position in the fastest-growing, most profitable segments of the healthcare staffing industry is proving its value to our shareholders."

For the second quarter of 2008, revenue for the Nurse and Allied healthcare staffing segment was $215.3 million, an increase of 7% from the same quarter last year. The Locum Tenens staffing segment generated revenue of $83.9 million, an increase of 5% from the same quarter last year and the Physician Permanent Placement segment provided revenue of $13.5 million, an increase of 7% from the same quarter last year.

Gross profit for the second quarter of 2008 was $82.5 million, an increase of 10% from the same quarter last year. Gross margin this quarter increased 90 basis points to 26.4% from 25.5% in the same quarter last year reflecting mainly an improved pay-to-bill spread in our nurse and allied staffing segment. Housing costs, which had been trending higher for several quarters, remained flat in the second quarter as a percentage of revenue compared to the same quarter last year.

Selling, general and administrative ("SG&A") expenses increased to 19.2% of revenue in the second quarter of 2008 from 18.2% in the same quarter last year. The increase was due mostly to higher insurance costs and bad debt expense associated with a client bankruptcy in our locum tenens staffing business as well as expenses in support of strategic initiatives to further diversify and augment our future growth. Despite the increase in SG&A this quarter, diluted earnings per share grew 4% to $0.27 compared to the same quarter last year due to the higher revenue and improvement in gross margin.

Revenue and Earnings Guidance for Third Quarter and Full Year 2008

Based on trends experienced in the first month of the third quarter and taking into account expected seasonal patterns for the third and fourth quarters, the Company reaffirmed its projected earnings per share growth of 11% to 16% over 2007 and revised its projected revenue growth for the full year 2008 to 6% to 8%. For the third quarter of 2008, the Company expects revenue to range from $320 million to $323 million and diluted earnings per share to range from $0.31 to $0.33.

Nowakowski added, "We expect all of our business segments to continue to drive both year-over-year and sequential quarterly revenue growth in the third quarter. Just as important, we also expect gross margins to remain relatively stable and, with continued improvements in operational efficiency, we expect to grow earnings at a stronger pace than revenue."

Stock Repurchase Program Update

The Company is authorized to purchase up to $38 million of its outstanding common stock in the open market through March 31, 2009. The Company initiated the share buyback during the second quarter of 2008 and purchased 368,000 shares of its common stock for approximately $6.4 million, or $17.49 per share. Diluted shares outstanding at June 30, 2008 were approximately 34.3 million.

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 August 6, 2008

AMN Healthcare Services, Inc.'s second quarter 2008 conference call will be held on Wednesday, August 6, 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) 428-4480 in the U.S. or (651) 291-5254 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 on August 6, 2008, and can be accessed until August 20, 2008 at midnight Eastern Time, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 931165.

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 third quarter and full year of 2008, and Ms. Nowakowski's comments, including those regarding future growth in revenue and earnings. 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 Income
             (dollars in thousands, except per share amounts)
                               (unaudited)

                   Three Months Ended          Six Months Ended
                        June 30,                   June 30,
                     2008      2007    % Chg    2008     2007    % Chg

  Revenue         $312,691  $293,912    6.4% $606,284  $577,856    4.9%
  Cost of revenue  230,153   218,953    5.1%  446,291   430,392    3.7%
    Gross profit    82,538    74,959   10.1%  159,993   147,464    8.5%
                     26.4%     25.5%            26.4%     25.5%
  Operating
   expenses:
    Selling,
     general and
     administrative 60,117    53,520   12.3%  115,220   106,571    8.1%
                     19.2%     18.2%            19.0%     18.4%

    Depreciation
     and
     amortization    3,738     2,857   30.8%    7,088     5,486   29.2%

      Total
       operating
       expenses     63,855    56,377   13.3%  122,308   112,057    9.1%
  Income from
   operations       18,683    18,582    0.5%   37,685    35,407    6.4%
                      6.0%      6.3%             6.2%      6.1%
  Interest expense,
   net               2,660     3,124  -14.9%    5,471     6,458  -15.3%
  Income before
   income taxes     16,023    15,458    3.7%   32,214    28,949   11.3%
  Income tax
   expense           6,656     6,212    7.1%   13,331    11,509   15.8%
  Net income        $9,367    $9,246    1.3%  $18,883   $17,440    8.3%
                      3.0%      3.1%             3.1%      3.0%
  Net income per
   common share:
    Basic            $0.28     $0.27    3.7%    $0.56     $0.50   12.0%
    Diluted          $0.27     $0.26    3.8%    $0.55     $0.49   12.2%

  Weighted average
   common shares
   outstanding:
    Basic           33,833    34,723   -2.6%   33,832    34,681   -2.4%
    Diluted         34,308    35,273   -2.7%   34,244    35,278   -2.9%




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

                         Three Months Ended            Six Months Ended
                              June 30,                     June 30,
                          % of           % of            % of           % of
                  2008    Rev   2007     Rev     2008    Rev    2007    Rev
  Revenue
   Nurse and
    allied
    healthcare
    staffing    $215,342       $201,322        $419,327       $401,297
   Locum tenens
    staffing      83,857         79,937         160,210        151,342
   Physician
    permanent
    placement
    services      13,492         12,653          26,747         25,217
                $312,691       $293,912        $606,284       $577,856

  Adjusted
   EBITDA(1)
    Nurse and
     allied
     healthcare
     staffing    $16,692  7.8%  $13,635   6.8%  $32,173  7.7%  $27,366  6.8%
   Locum tenens
    staffing       4,247  5.1%    7,040   8.8%    9,902  6.2%   11,058  7.3%
   Physician
    permanent
    placement
    services       3,864 28.6%    2,923  23.1%    7,203 26.9%    6,423 25.5%
                  24,803  7.9%   23,598   8.0%   49,278  8.1%   44,847  7.8%

  Depreciation
   and
   amortization    3,738          2,857           7,088          5,486
  Stock-based
   compensation    2,382          2,159           4,505          3,954
  Interest
   expense, net    2,660          3,124           5,471          6,458
  Income before
   income taxes   16,023         15,458          32,214         28,949
  Income tax
   expense         6,656          6,212          13,331         11,509
  Net income      $9,367         $9,246         $18,883        $17,440


                   Three Months Ended             Six Months Ended
                        June 30,                      June 30,
                     2008      2007      % Chg     2008      2007  % Chg
  Gross Margin
    Nurse and
     allied
     healthcare
     staffing       24.5%     23.3%               24.3%     23.3%
    Locum tenens
     staffing       25.8%     25.6%               26.3%     25.4%
    Physician
     permanent
     placement
     services       59.7%     60.0%               60.6%     61.6%

  Operating Data:
  Nurse and
   allied
   healthcare
   staffing
    Average
     travelers on
     assignment(2)  7,207     7,017    2.7%       7,047     7,024  0.3%
    Revenue per
     traveler
     per day(3)   $328.35   $315.28    4.1%     $326.95   $315.65  3.6%
    Gross profit
     per traveler
     per day(3)    $80.52    $73.49    9.6%      $79.30    $73.52  7.9%

  Locum tenens
   staffing
    Days
     filled(4)     57,859    57,602    0.4%     110,558   109,901  0.6%
    Revenue per
     day
     filled(4)  $1,449.33 $1,387.75    4.4%   $1,449.10 $1,377.08  5.2%
    Gross profit
     per day
     filled(4)    $374.62   $355.01    5.5%     $380.50   $350.02  8.7%


                      As of June 30,
                     2008       2007
  Leverage
   Ratio(5)           1.6       1.8



  (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)

                                 June 30,       March 31,   December 31,
                                   2008            2008          2007
  Assets
  Current assets:
    Cash and cash equivalents      $8,356          $7,835       $18,495
    Accounts receivable, net      198,201         199,091       184,741
    Income taxes receivable         1,049              --            --
    Deferred income taxes, net     28,081          28,081        28,084
    Other current assets           15,584          14,938        11,631
      Total current assets        251,271         249,945       242,951

  Fixed assets, net                25,326          25,246        24,600
  Goodwill, net                   252,823         252,823       241,266
  Intangible assets, net          125,254         126,418       113,535
  Other assets                     12,048          11,198        11,274

      Total assets               $666,722        $665,630      $633,626

  Liabilities and
   stockholders' equity
  Current liabilities:
    Bank overdraft                 $2,786          $6,617           $--
    Accounts payable and
     accrued expenses              28,987          28,624        22,231
    Accrued compensation and
     benefits                      48,855          47,328        43,446
    Income taxes payable               --           3,159         2,925
    Revolving credit facility      24,500          13,500            --
    Current portion of notes
     payable                       15,427          15,339        26,616
    Deferred revenue                8,006           8,322         7,647
    Other current liabilities      17,109          25,652        25,691
      Total current liabilities   145,670         148,541       128,556

  Notes payable, less current
   portion                        113,771         117,628       120,352
  Deferred income taxes, net       69,706          70,637        71,092
  Other long-term liabilities      41,201          41,806        37,498
      Total liabilities           370,348         378,612       357,498

  Stockholders' equity            296,374         287,018       276,128

      Total liabilities and
       stockholders' equity      $666,722        $665,630      $633,626



                      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,
                          2008         2007         2008         2007

  Net cash provided by
   operating activities  $11,883      $16,251      $28,756      $33,493

  Net cash used in
   investing activities  (11,064)      (7,983)     (44,465)     (10,114)

  Net cash provided by
   (used in) financing
   activities               (345)        (984)       5,589      (10,288)

  Effect of exchange
   rates on cash              47           22          (19)          14

    Net increase
     (decrease) in cash
     and cash equivalents    521        7,306      (10,139)      13,105

    Cash and cash
     equivalents at
     beginning of period   7,835       10,221       18,495        4,422

    Cash and cash
     equivalents at end
     of period            $8,356      $17,527       $8,356      $17,527

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,
1-866-861-3229, both of AMN Healthcare Services, Inc.

Web site: http://www.amnhealthcare.com/

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