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AMN Healthcare Announces Third Quarter 2009 Results

October 29, 2009
PRNewswire
SAN DIEGO
(NYSE:AHS)

SAN DIEGO, Oct. 29 /PRNewswire-FirstCall/ -- AMN Healthcare Services, Inc. (NYSE: AHS) today announced operating results for the third quarter 2009. Financial highlights for the three months ended September 30, 2009 include:

                                   Q3 2009
                                (In millions,
                               except per share    % Chg       % Chg
                                   amounts)        Q3 2008     Q2 2009
                              -----------------    -------     -------
    Revenue                         $166.4          (47%)         (16%)
    -------                         ------          ----          ----
    Gross Profit                     $45.6          (44%)         (15%)
    ------------                     -----          ----          ----
    Net Loss                          $2.0           NM            NM
    --------                          ----          ---            --
    Loss per Share                   $0.06           NM            NM
    --------------                   -----          ---            --
    Cash Flow from Operations        $19.2           (9%)         (47%)
    -------------------------        -----          ---           ----
    Adjusted EBITDA*                 $10.6          (54%)         (41%)
    ---------------                  -----         ----           ----
    Adjusted Diluted EPS*            $0.05          (82%)         (71%)
    --------------------             -----         ----           ----

    * Excludes restructuring and stock based compensation costs. See
      "Supplemental Financial and Operating Data" for a reconciliation of non-
      GAAP items.

    NM - Not meaningful

"The unprecedented market contraction experienced by the healthcare staffing industry over the past year is a direct reflection of the rapid rise to historically high levels of general unemployment. The decline in volumes we experienced during the first nine months of 2009 have certainly highlighted the importance of our ability to remain agile and disciplined in our execution. We continue to de-lever our balance sheet, maintain strong gross margins, and reduce SG&A through tight cost management and further improvements to our cost structure," said Susan R. Nowakowski, President and Chief Executive Officer of AMN Healthcare. "This environment has also created opportunities for AMN to further differentiate our service capabilities and strengthen our client relationships. This has been demonstrated by our three-fold increase in preferred provider arrangements and winning key managed services contracts, which will benefit us in 2010 and beyond."

Key business highlights for the third quarter are as follows:

  • Stable pricing and gross margins across service lines;
  • Nursing order increases for six consecutive months;
  • Increased demand for Physician Permanent Placement retained searches;
  • Decline in demand for Locum Tenens, particularly in anesthesia staffing;
  • Continued strong cash flow and reduction of debt;
  • Additional streamlining of cost and operational structure.

Revenue for the third quarter of 2009 was $166 million, a decrease of 47% from prior year and 16% from prior quarter. Third quarter revenue for the Nurse and Allied staffing segment was $82 million, a decrease of 62% from the same quarter last year and down 26% sequentially. The Locum Tenens staffing segment generated revenue of $75 million, a decrease of 12% from prior year and down 5% sequentially. Third quarter Physician Permanent Placement revenue was $9 million, a decrease of 31% from prior year and 2% from prior quarter.

Gross margin in the third quarter of 2009 was 27.4%, an increase of 170 bps from prior year and an increase of 40 bps compared to the previous quarter. The increase was due to the Locum Tenens and Physician Permanent Placement segments representing a greater portion of our business mix.

Selling, general and administrative ("SG&A") expenses (excluding restructuring costs) for the third quarter of 2009 were 22.2% as a percentage of revenue compared to 19.1% in the same quarter last year. SG&A declined by $23 million, or 39%, over the same period in the prior year, and sequentially by $1 million, or 2%, due largely to cost-saving initiatives taking hold.

As a result of continued streamlining of our cost and operational structure, the company recorded $6 million of restructuring charges in the third quarter, consisting mainly of lease-related charges associated with facility consolidations and severance payments.

For the third quarter, the company recorded a GAAP net loss per share of $0.06 which includes a $0.11 negative impact from restructuring charges. Earnings per diluted share were $0.28 in the prior year and $0.13 in the prior quarter.

As of September 30, 2009, cash and cash equivalents totaled $23 million, compared to $11 million as of December 31, 2008. Total debt outstanding was $77 million as of September 30, 2009, reflecting a reduction in debt of $13 million since prior quarter and $69 million since December 31, 2008. Average shares outstanding for the third quarter of 2009 were 32.6 million. Average diluted shares outstanding for the third quarter used in the calculation of adjusted diluted earnings per share were 33.1 million.

Business Trends and Outlook

Nursing orders continue to show signs of improvement, with increased momentum occurring in September and October. However, orders still remain at levels lower than prior year due to high general unemployment and uncertain economic conditions. In Locum Tenens, we experienced lower sequential demand (days available) in the third quarter, primarily due to market weakness in anesthesia staffing. This trend is likely to continue into the fourth quarter. The increase in new retained searches in the Physician Permanent Placement business experienced during the third quarter is expected to result in improved placements over the coming months. Overall, pricing and gross margins are expected to remain consistent. Based on these trends and the normal holiday seasonal decline, fourth quarter consolidated revenue is expected to decline sequentially by 10-15%.

"The improving order trends in Nurse staffing are encouraging for AMN and our industry. While it is difficult to predict the trajectory of resulting volume growth, we believe that our unique breadth of service offerings and success in securing more preferred provider and managed services clients positions AMN extremely well to build market share as the trends continue to improve," added Nowakowski. "Our solid balance sheet enables us to focus on our long-term strategy, invest in our newer service lines, and assess new synergistic opportunities to expand and diversify our business."

About AMN Healthcare Services

AMN Healthcare Services, Inc. is the nation's leading provider of comprehensive healthcare staffing and management services. As a leading provider of travel nurse and allied staffing services, locum tenens (temporary physician staffing) and physician permanent placement services, AMN Healthcare recruits and places healthcare professionals on assignments of variable lengths and in permanent positions with clients throughout the United States, who range from acute-care hospitals and physician practice groups to other healthcare settings, including rehabilitation centers, dialysis clinics, pharmacies, home health service providers and ambulatory surgery centers. For more information, visit http://www.amnhealthcare.com.

Conference Call on October 29, 2009

AMN Healthcare Services, Inc.'s third quarter 2009 conference call will be held on Thursday, October 29, 2009, 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) 230-1059 in the U.S. or (612) 332-0335 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 October 29, 2009, and can be accessed until 11:59 p.m. Eastern Time on November 12, 2009, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 116563.

Non-GAAP Measures

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 press 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 expectations regarding consistent pricing and gross margins, improvement in physician permanent placements, fourth quarter revenue expectations, and Ms. Nowakowski's comments concerning the company's future opportunities and plans. 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. Factors that could cause actual results to differ from those implied by the forward-looking statements contained in this press release are set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2008 and its other quarterly and periodic reports filed with the SEC. These statements reflect the company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time.

                             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,        %
                       2009      2008      Chg      2009      2008       Chg
                       ----      ----      ---      ----      ----       ---

    Revenue          $166,357  $315,014  (47.2%)  $615,092  $921,298   (33.2%)
    Cost of
     revenue          120,749   233,954  (48.4%)   451,824   680,245   (33.6%)
                      -------   -------            -------   -------
    Gross profit       45,608    81,060  (43.7%)   163,268   241,053   (32.3%)
                       ------    ------            -------   -------
                        27.4%     25.7%              26.5%     26.2%
    Operating
     expenses:
       Selling,
        general and
        administrative 36,933    60,260  (38.7%)   124,853   175,480   (28.9%)
                        22.2%     19.1%              20.3%     19.0%

       Restructuring
        Charges         6,200         -     100%    11,270         -      100%
       Impairment
        Charges             -         -       0%   175,707         -      100%
       Depreciation
        and
        amortization    3,495     3,770   (7.3%)    10,404    10,858    (4.2%)
                        -----     -----             ------    ------

        Total
         operating
         expenses      46,628    64,030  (27.2%)   322,234   186,338     72.9%
                       ------    ------            -------   -------
    Income
     (loss) from
     operations        (1,020)   17,030     NM    (158,966)   54,715      NM
                        (0.6%)     5.4%             (25.8%)     5.9%
    Interest
     expense,
     net                2,063     2,550  (19.1%)     6,582     8,021   (17.9%)
                        -----     -----              -----     -----
    Income
     (loss)
     before
     income
     taxes             (3,083)   14,480     NM    (165,548)   46,694      NM
    Income tax
     expense           (1,088)    4,985     NM     (46,093)   19,961      NM
                      -------     -----           --------    ------
    Net income
     (loss)           $(1,995)   $9,495     NM   $(119,455)  $26,733      NM
                      =======    ======          =========   =======
                        (1.2%)     3.0%             (19.4%)     2.9%
    Net income
     (loss) per
     common
     share:
      Basic            $(0.06)    $0.29     NM      $(3.66)    $0.79
                       ======     =====             ======     =====      NM
      Diluted          $(0.06)    $0.28     NM      $(3.66)    $0.78
                       ======     =====             ======     =====      NM

    Weighted
     average
     common
     shares
     outstanding:
          Basic        32,630    33,269   (1.9%)    32,609    33,642    (3.1%)
                       ======    ======             ======    ======
          Diluted      32,630    33,894   (3.7%)    32,609    34,126    (4.4%)
                       ======    ======             ======    ======

    NM - Not meaningful

                              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,
                 ------------------------------ ------------------------------
                            %              %               %              %
                  2009   of Rev   2008   of Rev   2009   of Rev  2008   of Rev

    Revenue
      Nurse and
       allied
       healthcare
       staffing  $82,140        $217,107        $357,127        $636,434
      Locum
       tenens
       staffing   75,488          85,331         229,375         245,541
      Physician
       permanent
       placement
       services    8,729          12,576          28,590          39,323

                $166,357        $315,014        $615,092        $921,298


    Reconciliation
     of
     Non-GAAP
     Items:
    Segment
     Operating
     Income (1)
      Nurse and
       allied
       healthcare
       staffing   $4,592   5.6%  $20,501  9.4%   $30,390   8.5%  $65,968 10.4%
      Locum
       tenens
       staffing    7,548  10.0%    7,474  8.8%    22,355   9.7%   19,068  7.8%
      Physician
       permanent
       placement
       services    2,215  25.4%    3,441 27.4%     7,877  27.6%   11,842 30.1%

                  14,355   8.6%   31,416 10.0%    60,622   9.9%   96,878 10.5%
    Unallocated
     corporate
     overhead      3,749           8,190          14,562          24,374

    Adjusted
     EBITDA (2)   10,606   6.4%   23,226  7.4%    46,060   7.5%   72,504  7.9%

    Depreciation
     and
     amortization  3,495           3,770          10,404          10,858
    Stock-based
    compensation   1,931           2,426           6,761           6,931
    Restructuring
     Charges       6,200               -          11,270               -
    Impairment
     Charges           -               -         175,707               -
    Unallocated
    Non-Recurring
     Legal
     Expenses          -               -             884               -
    Interest
     expense,
     net           2,063           2,550           6,582           8,021

    Income
     (loss)
     before
     income
     taxes        (3,083)         14,480        (165,548)         46,694
    Income tax
     expense      (1,088)          4,985         (46,093)         19,961

    Net income
     (loss)      $(1,995)         $9,495       $(119,455)        $26,733

    GAAP based
     diluted
     net income
     (loss)
     per share
     (EPS)        $(0.06)                         $(3.66)
      Adjustments:     -
      Restructuring
       charges      0.11                            0.20
      Non-recurring
       legal
       expenses        -                            0.02
      Impairment
       charges         -                            3.77

    Adjusted
     diluted
     earnings
     per share
     (3)           $0.05                           $0.33



                   Three Months Ended            Nine Months Ended
                      September  30,                September 30,
                  --------------------------     --------------------------
                     2009       2008   % Chg       2009       2008   % Chg

    Gross Margin
      Nurse and
       allied
       healthcare
       staffing      24.4%      23.6%              23.9%      24.0%
      Locum
       tenens
       staffing      27.2%      26.6%              26.5%      26.4%
      Physician
       permanent
       placement
       services      57.7%      57.5%              59.5%      59.6%

    Operating
     Data:
    ---------
    Nurse and
     allied
     healthcare
     staffing

      Average
       travelers
       on
       assignment
       (4)           2,704      7,185  (62.4%)     3,951      7,093   (44.3%)

      Revenue
       per
       traveler
       per day
       (5)         $330.19    $328.44    0.5%    $331.10    $327.47     1.1%

      Gross
       profit
       per
       traveler
       per day
       (5)          $80.50     $77.39    4.0%     $79.21     $78.65     0.7%

    Locum
     tenens
     staffing

      Days
       filled
       (6)          53,032     58,638   (9.6%)   160,137    169,196    (5.4%)

      Revenue
       per day
       filled
       (6)       $1,423.44  $1,455.22   (2.2%) $1,432.37  $1,451.22    (1.3%)

      Gross
       profit
       per day
       filled
       (6)         $387.47    $386.73    0.2%    $379.76    $382.66    (0.8%)



                   As of September 30,
                  --------------------
                    2009        2008
    Leverage
     Ratio (7)      1.1         1.6

    (1) Segment Operating Income represents net income (loss) plus interest
        expense (net of interest income), income taxes, depreciation and
        amortization, restructuring charges, impairment charges, non-recurring
        legal expenses, unallocated corporate expenses, and stock-based
        compensation expense. Management believes that Segment Operating
        Income is an industry wide financial measure that is useful both to
        management and investors when evaluating the company's performance.
        Management also uses Segment Operating Income for planning purposes.
        Segment Operating Income is not necessarily comparable to other
        similarly titled captions of other companies due to potential
        inconsistencies in the method of calculation and allocation of costs.
    (2) Adjusted EBITDA represents net income (loss) plus interest expense
        (net of interest income), income taxes, depreciation and
        amortization, restructuring charges, impairment charges, non-recurring
        legal expenses, 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 provides an effective measure of the company's
        results, as it excludes certain items that management believes are not
        indicative of the company's operating performance and considers
        measures used in credit facilities. However, adjusted EBITDA is not
        intended to represent cash flows for the period, nor has it been
        presented as an alternative to income (loss) from operations or net
        income (loss) 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.
    (3) Adjusted diluted earnings per share represents GAAP EPS plus
        restructuring and impairment charges and non-recurring legal expenses.
        Management presents adjusted EPS because it believes that adjusted EPS
        is a useful supplement to diluted net loss per share as an indicator
        of operating performance. Management believes such a measure provides
        a picture of the company's results that is more comparable among
        periods since it excludes the impact of items that may recur
        occasionally, but tend to be irregular as to timing, thereby
        distorting comparisons between periods. However, investors should note
        that this non-GAAP measure involves judgment by management (in
        particular, judgment as to what is classified as a special item to be
        excluded from adjusted EPS). As defined, adjusted EPS 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 EPS are not indicative of the company's operating
        performance, these items do impact the income statement, and
        management therefore utilizes adjusted EPS as an operating performance
        measure in conjunction with GAAP measures such as GAAP EPS.
    (4) Average travelers on assignment represents the average number of nurse
        and allied healthcare professionals on assignment during the period
        presented.
    (5) 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.
    (6) 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.
    (7) 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)

                                 September 30,    June 30,  December 31,
                                     2009           2009        2008
                                     ----           ----        ----
    Assets
    Current assets:
      Cash and cash equivalents     $22,621        $23,488     $11,316
      Accounts receivable, net       96,410        114,542     182,562
      Prepaid expenses                6,748          8,867       9,523
      Income taxes receivable         2,108          1,425       3,440
      Deferred income taxes, net     17,805         18,085      18,085
      Other current assets            2,782          2,911       4,901
                                      -----          -----       -----
        Total current assets        148,474        169,318     229,827

    Fixed assets, net                21,581         24,034      24,018
    Deposits and other assets        12,488         12,056      13,252
    Goodwill                         79,868         79,868     252,875
    Intangible assets, net          116,537        117,738     122,845
                                    -------        -------     -------

         Total assets              $378,948       $403,014    $642,817
                                   ========       ========    ========

    Liabilities and stockholders'
     equity
    Current liabilities:
      Bank overdraft                      -         $3,274      $3,995
      Accounts payable
       and accrued expenses          18,929         20,837      24,420
      Accrued compensation
       and benefits                  29,431         31,941      44,871
      Revolving credit facility           -              -      31,500
      Current portion of notes
       payable                       10,845         12,201      14,580
      Deferred revenue                5,404          5,699       7,184
      Other current liabilities      14,502         15,892      14,722
                                     ------         ------      ------
        Total current liabilities    79,111         89,844     141,272

    Notes payable, less current
     portion                         66,425         77,781     100,236
    Deferred income taxes, net        4,615          7,382      58,466
    Other long-term liabilities      57,277         56,592      58,710
                                     ------         ------      ------
        Total liabilities           207,428        231,599     358,684
                                    -------        -------     -------

        Stockholders'
         equity                     171,520        171,415     284,133
                                    -------        -------     -------

     Total liabilities and
      stockholders' equity         $378,948       $403,014    $642,817
                                   ========       ========    ========

                             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,
                          2009           2008          2009          2008
                          ----           ----          ----          ----

    Net cash provided
     by operating
     activities          $19,205        $21,136       $93,150       $49,892

    Net cash used in
     investing
     activities           (3,924)        (1,963)       (6,358)      (46,428)

    Net cash used in
     financing
     activities          (16,157)       (19,627)      (75,531)      (14,038)

    Effect of exchange
     rates on cash             9            (97)           44          (116)
                             ---           ----           ---         -----

      Net increase
       (decrease) in cash
       and cash
       equivalents          (867)          (551)       11,305       (10,690)

      Cash and cash
       equivalents at
       beginning of
       period             23,488          8,356        11,316        18,495
                          ------          -----        ------        ------

      Cash and cash
       equivalents at
       end
       of period         $22,621         $7,805       $22,621        $7,805
                         =======         ======       =======        ======

    Contact:
    Amy C. Chang
    Vice President, Investor Relations
    866.861.3229

SOURCE: AMN Healthcare Services, Inc.

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

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