AMN Healthcare Announces Second-Quarter 2016 Results
Quarterly revenue a record high at $474 million; reports GAAP EPS of $0.53 and adjusted EPS of $0.61

SAN DIEGO, Aug. 4, 2016 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AHS), healthcare's leader and innovator in workforce solutions and staffing services, today announced its second-quarter 2016 financial results, which exceeded the Company's guidance. Financial highlights are as follows:

Dollars in millions, except per share amounts.


Q2 2016

% Change

Q2 2015

YTD June 30,
2016

% change
YTD June 30,
2015

Revenue

$473.7

35%

$941.7

39%

Gross profit

$154.8

41%

$306.7

45%

Net income

$26.3

66%

$52.2

86%

Diluted EPS

$0.53

66%

$1.06

83%

Adjusted diluted EPS*

$0.61

61%

$1.20

74%

Adjusted EBITDA*

$59.3

50%

$117.9

62%

*  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.

Second-Quarter 2016 Highlights

  • Revenue grew 35% year-over-year driven by 19% organic growth and the remainder from acquisitions.
  • Solid demand and operating metrics continued throughout the quarter, with the strongest growth in the Nurse and Allied Solutions segment.
  • Net income of $26.3 million was 66% higher year-over-year and adjusted EBITDA margin was 12.5%, reflecting a 130 basis point increase year-over-year, driven by gross margin expansion. 
  • Diluted EPS of $0.53 grew 66% and adjusted diluted EPS of $0.61 grew 61% year-over-year.
  • The acquisition of Peak Health Solutions, completed in June 2016, expands AMN's service offerings into medical coding and consulting.

"The AMN Healthcare team delivered another record quarter of revenue and earnings due to a strong market environment and tremendous execution to address our client's critical and evolving workforce needs. In addition to the strong demand for staffing and placement services, we continue to increase the penetration of our workforce solutions, in particular MSP, VMS and workforce optimization services," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "The desire to build strategic partnerships and rising level of sophistication within healthcare creates great opportunity for AMN to partner with our clients to deliver cost effective, quality patient care."

Second-Quarter 2016 Results

Consolidated revenue was $474 million, an increase of 35% from the same quarter last year, driven by 19% organic growth; revenue increased 1% sequentially. Revenue for the Nurse and Allied Solutions segment was $293 million, an increase of 29% from the same quarter last year and down 2% sequentially. Locum Tenens Solutions revenue was $109 million, an increase of 12% from the same quarter last year and 6% sequentially. Other Workforce Solutions segment revenue was $72 million, an increase of 174% from the same quarter last year and 7% sequentially. The Other Workforce Solutions segment revenue grew 32% organically from the prior year with the remainder from recent acquisitions.

Gross margin was 32.7%, which is 130 basis points higher than the same quarter last year and 20 basis points higher sequentially. The year-over-year gross margin improvement continues to be primarily driven by growth in the higher-margin Other Workforce Solutions segment, along with a gross margin increase in the Locum Tenens Solution segment.

SG&A expenses were $100 million, or 21.0% of revenue, compared to $75 million, or 21.3% of revenue, in the same quarter last year and $98 million, or 20.9% of revenue, in the previous quarter. The 30 basis point decline in percentage of revenue year-over-year was driven by operating leverage.

Net income was $26 million, or $0.53 per diluted share. Excluding amortization of intangible assets and acquisition and integration costs, net of tax, adjusted net income per diluted share was $0.61. Adjusted EBITDA was $59 million, a year-over-year increase of 50%. Adjusted EBITDA margin was 12.5%, representing a 130 basis point increase year-over-year and flat sequentially. 

At June 30, 2016, cash and cash equivalents totaled $21 million. Cash flow from operations was $20 million and capital expenditures were $6 million. The Company ended the quarter with total debt outstanding of $413 million, with a leverage ratio as calculated in accordance with our credit agreement of 1.9 to 1.

Third-Quarter 2016 Outlook

Metric

Guidance*

Consolidated revenue

$466 - $472 MM

Gross margin

32.5% - 33.0%

SG&A as percentage of revenue

21.5%

Adjusted EBITDA margin

11.5% - 12.0%

*Note: Guidance percentage metrics are approximate. For a reconciliation of Adjusted EBITDA margin, see the table entitled "Reconciliation of Guidance Adjusted EBITDA Margin to Guidance Operating Margin" below.

The Company's revenue guidance is based on the expectation of a continued strong demand environment, representing year-over-year growth of approximately 22%.

Conference Call on August 4, 2016

AMN Healthcare Services, Inc. (NYSE: AHS), healthcare's leader and innovator in workforce solutions and staffing services, will host a conference call to discuss its second-quarter 2016 financial results on Thursday, August 4, 2016 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) 230-1059 in the U.S. or (612) 234-9960 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 starting at 7:30 p.m. Eastern Time on August 4, 2016, and can be accessed until 11:59 p.m. Eastern Time on August 18, 2016 by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 397211.

About AMN Healthcare

AMN Healthcare is the leader and innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. The Company provides unparalleled access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. With insights and expertise, AMN Healthcare helps providers optimize their workforce to successfully reduce complexity, increase efficiency and improve patient outcomes. AMN delivers managed services programs, healthcare executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, medical coding and consulting, and other services. 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.

The Company's common stock is listed on the New York Stock Exchange under the symbol "AHS." For more information about AMN Healthcare, visit www.amnhealthcare.com, where the Company posts news releases, investor presentations, webcasts, SEC filings and other material information. The Company also utilizes email alerts and Really Simple Syndication ("RSS") as routine channels to supplement distribution of this information. To register for email alerts and RSS, visit http://amnhealthcare.investorroom.com/emailalerts.

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, adjusted EBITDA margin and adjusted diluted EPS serve as industry-wide financial measures. The Company 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 measures 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," the table entitled, "Reconciliation of Guidance Adjusted EBITDA Margin to Guidance Operating Margin," and the footnotes thereto 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 the outlook for 2016, the favorable demand environment, third-quarter 2016 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, 2015 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.

Contact:
David Erdman
Director, 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

Six Months Ended



June 30,


March 31,


June 30,


2016

2015


2016


2016

2015

Revenue

$     473,729

$     350,144


$     468,002


$     941,731

$     677,654

Cost of revenue

318,976

240,026


316,104


635,080

466,104

Gross profit

154,753

110,118


151,898


306,651

211,550

      Gross margin

32.7%

31.4%


32.5%


32.6%

31.2%

Operating expenses:








Selling, general and administrative (SG&A)

99,541

74,727


97,823


197,364

146,279

SG&A as a % of revenue

21.0%

21.3%


20.9%


21.0%

21.6%









Depreciation and amortization

7,334

5,232


6,765


14,099

10,327

Total operating expenses

106,875

79,959


104,588


211,463

156,606

Income from operations

47,878

30,159


47,310


95,188

54,944

Operating margin (1)

10.2%

8.6%


10.2%


10.1%

8.1%









Interest expense, net, and other

2,800

1,977


3,249


6,049

3,784

Income before income taxes

45,078

28,182


44,061


89,139

51,160

Income tax expense

18,756

12,312


18,192


36,948

23,081

Net income

$       26,322

$       15,870


$       25,869


$       52,191

$       28,079

Net income as a % of revenue

5.6%

4.5%


5.6%


5.6%

4.1%









Other comprehensive income (loss):








Foreign currency translation

86

(80)


39


125

(12)

Unrealized gain (loss) on cash flow hedge, net of income taxes

(111)

36


(463)


(574)

36

Other comprehensive income (loss)

(25)

(44)


(424)


(449)

24

Comprehensive income

$       26,297

$         15,826


$       25,445


$      51,742

$       28,103

Net income per common share:








Basic

$           0.55

$           0.33


$           0.54


$           1.09

$           0.59

Diluted

$           0.53

$           0.32


$           0.53


$           1.06

$           0.58









Weighted average common shares outstanding:








Basic

48,034

47,573


47,894


47,964

47,361

Diluted

49,348

48,863


49,103


49,225

48,615



















 



AMN Healthcare Services, Inc.


Supplemental Financial and Operating Data


(dollars in thousands, except per share data)


(unaudited)
















Three Months Ended

Six Months Ended



June  30,


March 31,


June 30,




2016


2015 (2)



2016



2016


2015 (2)


Revenue














  Nurse and allied solutions

$

292,663

$

226,494


$

297,724


$

590,387

$

443,486


  Locum tenens solutions


109,129


97,388



102,738



211,867


184,080


  Other workforce solutions


71,937


26,262



67,540



139,477


50,088



$

473,729

$

350,144


$

468,002


$

941,731

$

677,654
















Reconciliation of Non-GAAP Items:




























Segment operating income (3)














  Nurse and allied solutions

$

39,503

$

31,159


$

41,618


$

81,121

$

58,521


  Locum tenens solutions


16,317


11,711



13,291



29,608


20,821


  Other workforce solutions


17,858


7,513



17,586



35,444


15,323




73,678


50,383



72,495



146,173


94,665


   Unallocated corporate overhead


14,420


11,006



13,805



28,225


21,966


Adjusted EBITDA (4)


59,258


39,377



58,690



117,948


72,699


Adjusted EBITDA margin (5)


12.5%


11.2%



12.5%



12.5%


10.7%
















Depreciation and amortization


7,334


5,232



6,765



14,099


10,327


Share-based compensation


2,710


2,153



3,381



6,091


4,530


Acquisition and integration costs


1,336


1,833



1,234



2,570


2,898


Income from operations


47,878


30,159



47,310



95,188


54,944


Interest expense, net, and other


2,800


1,977



3,249



6,049


3,784


Income before income taxes


45,078


28,182



44,061



89,139


51,160


Income tax expense  


18,756


12,312



18,192



36,948


23,081


Net income

$

26,322

$

15,870


$

25,869


$

52,191

$

28,079






























GAAP diluted net income per share (EPS)

$

0.53

$

0.32


$

0.53


$

1.06

$

0.58


   Adjustments:














   Amortization of intangible assets


0.09


0.06



0.09



0.18


0.12


   Acquisition and integration costs


0.03


0.04



0.03



0.05


0.06


   Tax effect of adjustments


(0.04)


(0.04)



(0.05)



(0.09)


(0.07)


Adjusted diluted EPS (6)

$

0.61

$

0.38


$

0.60


$

1.20

$

0.69
















 















Three Months Ended



Six Months Ended



June 30,



March 31,



June 30,



2016


2015



2016



2016


2015

Gross Margin













   Nurse and allied solutions


26.7%


27.2%



26.6%



26.7%


26.9%

   Locum tenens solutions


31.3%


29.2%



31.0%



31.1%


29.3%

   Other workforce solutions


58.9%


76.0%



60.3%



59.6%


76.3%














Operating Data:













Nurse and allied solutions













Average healthcare professionals on assignment (7)


8,337


7,227



8,474



8,406


7,225

Revenue per healthcare professional per day (8)


$386


$344



$386



$386


$339

Locum tenens solutions













    Days filled (9)


61,068


59,844



58,166



119,234


114,104

    Revenue per day filled (10)


$1,787


$1,627



$1,766



$1,777


$1,613



























As of June 30,


As of March 31,






2016


2015



2016





Leverage ratio (11)


1.9


1.9



1.9
































 

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)








June 30,


March 31,


December 31,


2016


2016


2015

Assets






Current assets:






Cash and cash equivalents

$       21,062


$       23,106


$         9,576

Accounts receivable, net

330,853


302,342


277,996

Accounts receivable, subcontractor

46,326


49,858


50,807

Prepaid and other current assets

44,332


37,656


37,249

Total current assets

442,573


412,962


375,628

Restricted cash and cash equivalents

28,490


27,176


27,352

Fixed assets, net

56,575


53,731


50,134

Other assets

54,759


52,993


47,569

Goodwill

342,827


307,161


204,779

Intangible assets, net

255,214


240,478


174,970







Total assets

$ 1,180,438


$ 1,094,501


$    880,432







Liabilities and stockholders' equity






Current liabilities:






Accounts payable and accrued expenses

$   131,965


$   109,121


$    118,822

Accrued compensation and benefits

102,516


98,049


83,701

Current portion of revolving credit facility

40,000


40,000


30,000

Current portion of notes payable

11,250


11,250


7,500

Deferred revenue

6,145


8,436


5,620

Other current liabilities

9,728


23,998


5,374

Total current liabilities

301,604


290,854


251,017













Revolving credit facility

166,500


127,500


52,500

Notes payable, less unamortized fees

194,019


196,746


128,490

Deferred income taxes, net

30,921


22,514


22,431

Other long-term liabilities

84,495


83,076


78,134

Total liabilities

777,539


720,690


532,572







Commitments and contingencies












Stockholders' equity

402,899


373,811


347,860







Total liabilities and stockholders' equity

$ 1,180,438


$ 1,094,501


$    880,432







 

AMN Healthcare Services, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)










Three Months Ended


Six Months Ended


June 30,


March 31,


June 30,


2016

2015


2016


2016

2015









Net cash provided by operating activities

$     20,053

$     25,000


$     35,227


$     55,280

$     33,687









Net cash  used in investing activities

(58,451)

(9,516)


(174,703)


(233,154)

(94,866)









Net cash provided by (used in) financing activities

36,268

(12,563)


152,967


189,235

62,592









Effect of exchange rates on cash

86

(80)


39


125

(12)









Net increase (decrease) in cash and cash equivalents

(2,044)

2,841


13,530


11,486

1,401

Cash and cash equivalents at beginning of period

23,106

11,633


9,576


9,576

13,073









Cash and cash equivalents at end of period

$     21,062

$     14,474


$     23,106


$     21,062

$     14,474

 

AMN Healthcare Services, Inc.

Additional Supplemental Non-GAAP Disclosures

Reconciliation of Guidance Adjusted EBITDA Margin to

Guidance Operating Margin

(unaudited)






Three Months Ending


September 30, 2016


Low


High

Adjusted EBITDA margin

11.5%


12.0%

Deduct:




Share-based compensation


0.6%


Acquisition and integration costs


0.2%


EBITDA margin

10.7%


11.2%

Depreciation and amortization


1.7%


Operating margin

9.0%


9.5%

 












(1)

Operating margin represents income from operations divided by revenue.



(2)

Effective as of January 1, 2016, we modified our reportable segments. We previously utilized three reportable segments, which we identified as follows: (a) nurse and allied healthcare staffing, (b) locum tenens staffing, and (c) physician permanent placement services. In light of our acquisitions over the past several years as well as our transition to a healthcare workforce solutions company, our management renamed our three reportable segments and also placed several of our business lines that were in our nurse and allied healthcare staffing segment into a different segment to better reflect how the business is evaluated by our chief operating decision maker. As of January 1, 2016, we began to disclose the following three reportable segments: (a) nurse and allied solutions, (b) locum tenens solutions, and (c) other workforce solutions. The nurse and allied solutions segment includes our nurse, allied, and local staffing businesses. The locum tenens solutions segment includes our locum tenens staffing business. The other workforce solutions segment includes our healthcare interim leadership staffing and executive search services business, physician permanent placement services business, recruitment process outsourcing business, vendor management systems business, workforce optimization services business, medical coding and consulting business, and education business. Prior period data has been reclassified to conform to the new segment reporting structure.



(3)

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



(4)

Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, acquisition and integration costs and share-based compensation. 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 is a measure 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.



(5)

Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.



(6)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of 1) amortization of intangible assets, 2) acquisition and integration costs, and 3) tax effect net of adjustments. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company's operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective 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 diluted EPS). Although management believes the items excluded from adjusted diluted EPS are not indicative of the Company's operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted diluted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP diluted EPS.



(7)

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



(8)

Revenue per healthcare professional per day represents the revenue of the Company's nurse and allied solutions segment divided by average healthcare professionals on assignment, divided by the number of days in the period presented.



(9)

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



(10)

Revenue per day filled represents revenue of the Company's locum tenens solutions segment divided by days filled for the period presented.



(11)

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

 

 

SOURCE AMN Healthcare Services, Inc.


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