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AMN Healthcare Announces Third Quarter 2014 Results

October 30, 2014
Quarterly revenue of $265 million, above the high end of guidance, EPS of $0.18

SAN DIEGO, Oct. 30, 2014 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AHS), healthcare's innovator in workforce solutions and staffing services, today announced third quarter 2014 financial results exceeded the Company's guidance for revenue. Third quarter financial highlights are as follows:

Dollars in millions, except per share amounts.


Q3 2014

% Change

Q3 2013

YTD
September 30,
2014

% Change YTD
September 30,
2013

Revenue

$264.6

3%

$756.4

(1%)

Gross profit

$80.3

6%

$231.4

4%

Net income

$8.5

(1%)

$23.3

(5%)

Diluted EPS

$0.18

0%

$0.49

(4%)

Adjusted Diluted EPS*

N/A

N/A

$0.53

2%

Adjusted EBITDA*

$21.8

1%

$66.2

3%

*  See "Non-GAAP Measures" below for a discussion of our use of non-GAAP items and the table entitled "Supplemental Financial and Operating Data" for a reconciliation of non-GAAP items.

  • Consolidated revenue exceeded expectations due to year-over-year and sequential growth across all business segments.
  • The travel nurse business (excluding EMR staffing) experienced revenue growth of 13% year-over-year,  driven by continued higher demand trends and solid execution.
  • Gross margin of 30.4% represented a year-over-year improvement of 100 basis points.

"All segments experienced stronger market trends, resulting in better than anticipated revenue growth in the third quarter. The continued strengthening in travel nurse and allied demand is expected to fuel volume growth in the future. These trends, combined with new MSP clients and  expansions, have bolstered our leadership position in workforce solutions and give us a positive outlook going into the new year," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "To ensure the delivery of a best-in-class client and clinician experience, we continue to make long-term strategic investments to innovate our workforce solution offerings and our recruitment and infrastructure technologies."   

Third Quarter 2014 Results

For the third quarter of 2014 consolidated revenue was $265 million, an increase of 3% from the same quarter last year and an increase of 5% sequentially. Third quarter revenue for the Nurse and Allied Healthcare Staffing segment was $174 million, up 2% from the same quarter last year and 5% sequentially. Locum Tenens Staffing segment revenue in the third quarter was $79 million, an increase of 5% from the same quarter last year and 6% sequentially. Third quarter Physician Permanent Placement Services segment revenue was $11 million, an increase of 5% from the same quarter last year and 7% sequentially.

Third quarter gross margin of 30.4% was 100 basis points higher than the same quarter last year and 40 basis points lower sequentially. The year-over-year increase was due to gross margin improvements in our Nurse and Allied Healthcare Staffing and Physician Permanent Placement Services segments. The sequential decrease was due primarily to an unfavorable workers' compensation actuarial adjustment recorded in the third quarter.

SG&A expenses for the third quarter were $60 million, representing 22.8% of revenue, compared to $56 million in both the same quarter last year and the prior quarter. The year-over-year increase in SG&A expenses was due to the inclusion of ShiftWise, which was acquired in November of last year, higher expenses associated with our information technology initiatives, and higher expenses to support our current demand and future growth initiatives. The sequential increase in SG&A expenses was due primarily to a favorable professional liability actuarial adjustment recorded in the second quarter, increased commission and bonus expenses associated with higher revenue, and other expenses to support growth.

Third quarter net income was $8 million and net income per diluted share was $0.18. Third quarter adjusted EBITDA was $22 million, compared to $22 million in the same quarter last year and $23 million in the prior quarter. Adjusted EBITDA margin of 8.2% was 20 basis points lower than the same quarter last year and 110 basis points lower sequentially. The year-over-year decrease was due primarily to the unfavorable workers' compensation actuarial adjustment recorded in the third quarter of 2014, and the sequential decrease was due primarily to that same adjustment as well as a favorable professional liability adjustment in the second quarter of 2014.

At September 30, 2014, cash and cash equivalents totaled $10 million. Third quarter cash flow provided by operations was $15 million and capital expenditures were $4 million. The Company ended the quarter with total debt outstanding of $146 million, with a leverage ratio of 1.7 to 1.

Business Trends and Outlook

The Company expects consolidated fourth quarter 2014 revenue of $265 million to $269 million. Gross margin is expected to be seasonally lower at approximately 30.0%. SG&A expenses as a percentage of revenue are expected to be approximately 22.5%. Adjusted EBITDA margin is expected to be between 8.0% and 8.5%.

About AMN Healthcare

AMN Healthcare is the innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. AMN Healthcare's workforce solutions - including managed services programs, vendor management systems, and recruitment process outsourcing - enable providers to successfully reduce complexity, increase efficiency and improve patient outcomes within the rapidly evolving healthcare environment. The Company provides unparalleled access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, and many other healthcare settings. AMN Healthcare disseminates news and information about the Company through its website, which can be found at www.amnhealthcare.com.

Conference Call on October 30, 2014

AMN Healthcare Services, Inc.'s third quarter 2014 conference call will be held on Thursday, October 30, 2014, at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare's website at http://amnhealthcare.investorroom.com/presentations. 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) 288-8975 in the U.S. or (612) 332-0228 internationally. Following the conclusion of the call, a replay of the webcast will be available at the Company's website. A telephonic replay of the call will be available at 7:30 p.m. Eastern Time on October 30, 2014, and can be accessed until 11:59 p.m. Eastern Time on November 13, 2014, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 338051.

Non-GAAP Measures

This earnings release contains certain non-GAAP financial information, which the Company provides as additional information, and not as an alternative, to the Company's condensed consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures include (1) adjusted EBITDA, (2) adjusted EBITDA margin, and (3) adjusted diluted  EPS.  The Company provides such non-GAAP financial measures because management believes that they are useful both to management and investors as a supplement, and not as a substitute, when evaluating the Company's operating performance. Additionally, management believes that adjusted EBITDA and adjusted EBITDA margin serve as industry-wide financial measures, and it uses adjusted EBITDA for making financial decisions and allocating resources. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP measures, or may be calculated differently than other similarly title captioned non-GAAP measures, reported by other companies. They should not be used in isolation to evaluate the Company's performance.  A reconciliation of non-GAAP measures identified in this release, along with further detail about the use and limitations of certain of these non-GAAP measures, may be found below in the table entitled Supplemental Financial and Operating Data under the caption entitled "Reconciliation of Non-GAAP Items" or on the Company's website at http://amnhealthcare.investorroom.com/financialreports. Additionally, from time to time, additional information regarding non-GAAP financial measures, including pro forma measures, may be made available on the Company's website.

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 future volume growth and 2014 fourth quarter revenue, gross margin, SG&A expenses and adjusted EBITDA margin. The Company based these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. 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," "estimates," variations of such words 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, 2013 and its other periodic reports as well as the Company's current and other reports filed from time to time with the Securities and Exchange Commission. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time.

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

 

AMN Healthcare Services, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

(unaudited)











Three Months Ended


Nine Months Ended


September 30,


June 30,


September 30,


2014

2013


2014


2014

2013

Revenue

$     264,584

$     257,095


$     250,913


$     756,378

$     763,158

Cost of revenue

184,278

181,428


173,754


524,957

540,071

Gross profit

80,306

75,667


77,159


231,421

223,087


30.4%

29.4%


30.8%


30.6%

29.2%

Operating expenses:








Selling, general and administrative

60,319

55,605


55,567


170,553

163,763


22.8%

21.6%


22.1%


22.5%

21.5%

Depreciation and amortization

4,086

3,317


4,010


11,916

9,847

Total operating expenses

64,405

58,922


59,577


182,469

173,610

Income from operations

15,901

16,745


17,582


48,952

49,477









Interest expense, net, and other

1,433

1,840


4,629


7,908

7,829

 

Income before income taxes

 

14,468

 

14,905


 

12,953


 

41,044

 

41,648

 

Income tax expense

 

5,969

 

6,290


 

5,760


 

17,722

 

17,071

Net income

$         8,499

$         8,615


$         7,193


$       23,322

$       24,577









Other comprehensive income (loss)

75

(84)


(37)


29

(19)

















Comprehensive income

$         8,574

$         8,531


$         7,156


$       23,351

$       24,558

Net income per common share:

 








Basic

$           0.18

$           0.19


$           0.15


$           0.50

$           0.53

Diluted

$           0.18

$           0.18


$           0.15


$           0.49

$           0.51









Weighted average common shares outstanding:








Basic

46,546

45,986


46,479


46,460

45,947

Diluted

48,122

47,810


47,836


47,959

47,776










 

AMN Healthcare Services, Inc.  


Supplemental Financial and Operating Data


(dollars in thousands, except per share data)


(unaudited)
















Three Months Ended


Nine Months Ended



September  30,


June 30,


September 30,




2014


2013



2014



2014


2013


Revenue














  Nurse and allied healthcare staffing

$

174,292

$

170,955


$

165,894


$

503,636

$

517,858


  Locum tenens staffing


78,816


75,253



74,309



219,996


213,417


  Physician permanent placement services


11,476


10,887



10,710



32,746


31,883



$

264,584

$

257,095


$

250,913


$

756,378

$

763,158
















Reconciliation of Non-GAAP Items:




























Segment operating income (1)














  Nurse and allied healthcare staffing

$

21,279

$

20,392


$

22,032


$

63,283

$

62,994


  Locum tenens staffing


8,139


7,547



7,818



22,830


17,347


  Physician permanent placement services


2,756


2,205



2,187



7,074


6,735




32,174


30,144



32,037



93,187


87,076


   Unallocated corporate overhead


10,396


8,595



8,694



26,958


23,085


Adjusted EBITDA (2)


21,778


21,549



23,343



66,229


63,991


Adjusted EBITDA margin (3)


8.2%


8.4%



9.3%



8.8%


8.4%
















Depreciation and amortization


4,086


3,317



4,010



11,916


9,847


Share-based compensation


1,791


1,487



1,751



5,361


4,667


Interest expense, net, and other


1,433


1,840



4,629



7,908


7,829


Income before income taxes


14,468


14,905



12,953



41,044


41,648


Income tax expense  


5,969


6,290



5,760



17,722


17,071


Net income

$

8,499

$

8,615


$

7,193


$

23,322

$

24,577






























GAAP based diluted net income per share (EPS)

$

0.18

$

0.18


$

0.15


$

0.49

$

0.51


   Adjustments:














   Loss on debt extinguishment


0.00


0.00



0.04



0.04


0.01


Adjusted diluted EPS (4)


    N/A


    N/A


$

0.19


$

0.53

$

0.52








































 


Three Months Ended






Nine Months Ended



September 30,



June 30,



September 30,



2014


2013



2014



2014


2013

Gross Margin













   Nurse and allied healthcare staffing


28.7%


27.4%



29.1%



28.9%


27.4%

   Locum tenens staffing


29.0%


29.3%



29.8%



29.5%


28.8%

   Physician permanent placement services


64.9%


62.6%



63.5%



63.8%


62.6%














Operating Data:













Nurse and allied healthcare staffing













    Average clinicians on assignment (5)


5,632


5,771



5,565



5,610


5,970

Locum tenens staffing













    Days filled (6)


49,982


50,993



49,049



143,780


146,477
















As of September 30,


As of June 30,






2014


2013



2014





Leverage Ratio (7)


1.7


1.9



1.9

















 

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)








September 30,


June 30,


December 31,


2014


2014


2013 (8)

Assets






Current assets:






Cash and cash equivalents

$         9,663


$         5,501


$       15,580

Accounts receivable, net

164,078


151,505


147,477

Accounts receivable, subcontractor

21,569


22,512


18,271

Deferred income taxes, net

24,970


27,983


24,938

Prepaid and other current assets

28,844


27,662


26,631

Total current assets

249,124


235,163


232,897

Restricted cash, cash equivalents and investments

21,012


20,606


23,115

Fixed assets, net

29,202


27,066


21,158

Other assets

40,045


37,502


32,279

Goodwill

144,937


144,937


144,642

Intangible assets, net

144,498


146,418


150,197







Total assets

$    628,818


$    611,692


$    604,288







Liabilities and stockholders' equity






Current liabilities:






Accounts payable and accrued expenses

$     66,949


$       65,130


$     71,081

Accrued compensation and benefits

64,574


56,046


55,949

Revolving credit facility

0


6,500


10,000

Current portion of notes payable

7,500


7,500


0

Other current liabilities

8,746


4,097


6,060

Total current liabilities

147,769


139,273


143,090







Notes payable, net of discount

138,750


140,625


148,672

Other long-term liabilities

96,881


98,188


94,784

Total liabilities

383,400


378,086


386,546







Commitments and contingencies












Stockholders' equity

245,418


233,606


217,742







Total liabilities and stockholders' equity

$    628,818


$    611,692


$    604,288

 

AMN Healthcare Services, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)











Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,



2014

2013 (8)


2014


2014

2013 (8)











Net cash provided by operating activities

$     15,489

$     27,092


$       6,159


$     22,639

$     44,349











Net cash used in investing activities

(4,511)

(1,018)


(1,100)


(10,320)

(7,050)











Net cash used in financing activities

(6,891)

(4,856)


(8,790)


(18,265)

(11,308)











Effect of exchange rates on cash

75

(84)


(37)


29

(19)











Net increase (decrease) in cash and cash equivalents

4,162

21,134


(3,768)


(5,917)

25,972











Cash and cash equivalents at beginning of period

 

5,501

 

10,519


 

9,269


 

15,580

 

5,681











Cash and cash equivalents at end of period

 

$       9,663

 

$     31,653


 

$       5,501


 

$       9,663

 

$     31,653











 

(1)

Segment operating income represents net income plus interest expense (net of interest income) and other, income taxes, depreciation and amortization, unallocated corporate overhead and share-based compensation expense.

(2)

Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income taxes, depreciation and amortization and share-based compensation expense. Management 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. Adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to income from operations or net income as an indicator of operating performance. Although 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 statement of comprehensive income, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.

(3)

Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

(4)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of loss on debt extinguishment of $3,113 and $434 for the nine months ended September 30, 2014 and 2013, respectively, and $3,113 for the three months ended June 30, 2014. 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). Although management believes the item excluded from adjusted EPS is not indicative of the Company's operating performance, this item does impact the statement of comprehensive income, and management therefore utilizes adjusted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP EPS.

(5)

Average clinicians on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period presented.

(6)

Days filled is calculated by dividing the locum tenens hours filled during the period by eight hours.

(7)

Leverage ratio represents the ratio of the consolidated funded indebtedness (as calculated per the Company's credit agreement) at the end of the period to the consolidated adjusted EBITDA (as calculated per the Company's credit agreement) for the last twelve months.

(8)

Certain reclassifications have been made to the prior periods' consolidated financial statements to conform to the current year presentation.

 

SOURCE AMN Healthcare Services, Inc.

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