AMN Healthcare Announces Second Quarter 2017 Results
Quarterly revenue of $490 million; GAAP EPS of $0.63 and adjusted EPS of $0.67

SAN DIEGO, Aug. 3, 2017 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AMN), healthcare's leader and innovator in workforce solutions and staffing services, today announced its second quarter 2017 financial results. Financial highlights are as follows:

Dollars in millions, except per share amounts.


Q2 2017

% Change

Q2 2016

YTD June
30, 2017

% Change
YTD June
30, 2016

Revenue

$489.8

3%

$985.0

5%

Gross profit

$161.0

4%

$322.8

5%

Net income

$31.3

19%

$63.3

21%

Diluted EPS

$0.63

19%

$1.28

21%

Adj. diluted EPS*

$0.67

10%

$1.30

8%

Adjusted EBITDA*

$67.2

13%

$130.3

11%


*  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.

Highlights

  • Consolidated revenue grew 3% year over year; revenue was 7% higher excluding the significant labor disruption revenue in the prior year quarter.
  • Travel Nurse Staffing, our largest division, grew revenue 9% year over year driven by both volume and pricing. 
  • Our Allied division reached a record high for revenue, growing 12% year over year. 
  • Adjusted EBITDA grew 13% year over year, representing a 13.7% margin.

"AMN Healthcare's ability to deliver superior service and a diversified suite of workforce solutions continues to differentiate us in the marketplace.  Every day, we are helping thousands of healthcare organizations access the best talent, control costs, and more effectively optimize their workforce to deliver the best patient care possible," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare.  "Listening and responding to our clients' evolving workforce needs is paramount and enables us to strategically position AMN to have the right solutions at the right time." 

"Although there continues to be debate regarding potential changes to healthcare policy, several key macro-trends remain very much in our favor and should continue to provide opportunity for growth as well as the need for innovation in workforce solutions. This environment, combined with the positive momentum in our MSP business and robust pipeline, provides us great confidence as we look toward 2018," added Ms. Salka.

Second Quarter 2017 Results

Consolidated revenue for the quarter was $490 million, a 3% increase over prior year and down 1% sequentially. Excluding labor disruption revenue from the prior year quarter, consolidated second quarter revenue was up 7% year over year.  There was no labor disruption revenue reported in this quarter, compared to approximately $18 million in the same quarter last year. 

Revenue for the Nurse and Allied Solutions segment was $301 million, which is 3% higher year-over-year and 4% lower sequentially. The Travel Nurse division continued its strong performance, with revenue up 9% year-over-year and seasonally down 5% sequentially. The Allied division revenue increased 12% year-over-year and 1% sequentially.

Locum Tenens Solutions segment revenue was $108 million, down 1% year-over-year and up 5% sequentially. The Other Workforce Solutions segment revenue was $81 million, reflecting an increase of 12% year-over-year and 3% sequentially, with the year-over-year growth driven by the Peak Health Solutions acquisition last June and growth in the VMS, interim leadership, and workforce optimization businesses, partially offset by declines in the permanent placement businesses.

Gross margin was 32.9%, which is 20 basis points higher both year-over-year and sequentially.

SG&A expenses were $97 million, or 19.7% of revenue, compared to $100 million, or 21.0% of revenue, in the same quarter last year and $102 million, or 20.6% of revenue, in the previous quarter. SG&A included a favorable professional liability actuarial adjustment of $4 million, compared to a favorable adjustment of $2 million in the same quarter last year. On a sequential basis, the lower SG&A percentage was primarily driven by the favorable professional liability actuarial adjustment in the second quarter.    

Net income was $31 million, or $0.63 per diluted share, compared to $26 million, or $0.53 per diluted share, in the same quarter last year. Excluding amortization of intangible assets, acquisition and integration costs, net of tax, and the excess tax benefits relating to a change in stock compensation accounting, adjusted net income per diluted share was $0.67. Adjusted EBITDA was $67 million, a year-over-year increase of 13%. Adjusted EBITDA margin was 13.7%, representing a 120 basis point increase year-over-year and 90 basis point increase sequentially.

At June 30, 2017, cash and cash equivalents totaled $23 million. For the quarter ended June 30, 2017, cash flow from operations was $18 million and capital expenditures were $6 million. The Company ended the quarter with total debt outstanding of $343 million, with a leverage ratio as calculated in accordance with the Company's credit agreement of 1.4 to 1.

Third-Quarter 2017 Outlook

Metric

Guidance*

Consolidated revenue

$490 - $496 M

Gross margin

32.5%

SG&A as percentage of revenue

20.5%

Adjusted EBITDA margin

12.5%


*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 projected year-over-year revenue increase of 4% to 5% is driven primarily by growth in our Nurse and Allied and Other Workforce Solutions segments. Travel Nurse Staffing, our largest business, is expected to grow approximately 7% year over year. There is no material labor disruption revenue included in the third quarter guidance.

Conference Call on August 3, 2017

AMN Healthcare Services, Inc. (NYSE: AMN), healthcare's leader and innovator in workforce solutions and staffing services, will host a conference call to discuss its second quarter 2017 financial results on Thursday, August 3, 2017 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) 234-9959 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 3, 2017, and can be accessed until 11:59 p.m. Eastern Time on August 17, 2017 by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 426696.

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 "AMN." 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 titled 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" 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. Forward-looking statements include, among others, statements concerning our future financial performance, our guidance for third quarter 2017 revenue, gross margin, SG&A expenses as a percentage of revenue, adjusted EBITDA margin and segment growth, the existence of favorable long-term macro drivers, our ability to grow and the positive momentum and robust pipeline with our managed service programs. The Company bases 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 our fillings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2016, our subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Contact:
Brian Scott
Chief Financial Officer & Chief Accounting Officer
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,


2017

2016


2017


2017

2016

Revenue

$  489,803

$  473,729


$  495,169


$  984,972

$  941,731

Cost of revenue

328,791

318,976


333,393


662,184

635,080

Gross profit

161,012

154,753


161,776


322,788

306,651

Gross margin

32.9%

32.7%


32.7%


32.8%

32.6%

Operating expenses:








Selling, general and administrative (SG&A)

96,673

99,541


102,073


198,746

197,364

SG&A as a % of revenue

19.7%

21.0%


20.6%


20.2%

21.0%









Depreciation and amortization

7,959

7,334


7,668


15,627

14,099

Total operating expenses

104,632

106,875


109,741


214,373

211,463

Income from operations

56,380

47,878


52,035


108,415

95,188

      Operating margin (1)

11.5%

10.1%


10.5%


11.0%

10.1%









Interest expense, net, and other

4,928

2,800


5,130


10,058

6,049

Income before income taxes

51,452

45,078


46,905


98,357

89,139

Income tax expense

20,197

18,756


14,897


35,094

36,948

Net income

$    31,255

$    26,322


$    32,008


$    63,263

$    52,191

Net income as a % of revenue

6.4%

5.6%


6.5%


6.4%

5.5%

Other comprehensive income (loss):








Foreign currency translation and other

(41)

86


3


(38)

125

Cash flow hedge, net of income taxes

(58)

(111)


43


(15)

(574)

Other comprehensive income (loss)

(99)

(25)


46


(53)

(449)

Comprehensive income

$         31,156

$       26,297


$     32,054


$       63,210

$    51,742

Net income per common share:








Basic

$         0.65

$         0.55


$         0.67


$         1.32

$         1.09

Diluted

$         0.63

$         0.53


$         0.65


$         1.28

$         1.06









Weighted average common shares outstanding:








Basic

47,916

48,034


47,782


47,849

47,964

Diluted

49,475

49,348


49,520


49,498

49,225


















 

AMN Healthcare Services, Inc.

Supplemental Financial and Operating Data

(dollars in thousands, except per share data and operating data)

(unaudited)



Three Months Ended

Six Months Ended


June  30,


March 31,


June 30,



2017


2016



2017



2017


2016

Revenue













  Nurse and allied solutions

$

300,727

$

292,663



313,523



614,250


590,387

  Locum tenens solutions


108,215


109,129



102,843



211,058


211,867

  Other workforce solutions


80,861


71,937



78,803



159,664


139,477


$

489,803

$

473,729



495,169



984,972


941,731














Reconciliation of Non-GAAP Items:


























Segment operating income (2)













  Nurse and allied solutions

$

47,851

$

39,503



45,980



93,831


81,121

  Locum tenens solutions


12,371


16,317



12,219



24,590


29,608

  Other workforce solutions


22,041


17,858



19,857



41,898


35,444



82,263


73,678



78,056



160,319


146,173

   Unallocated corporate overhead


15,080


14,420



14,891



29,971


28,225

Adjusted EBITDA (3)


67,183


59,258



63,165



130,348


117,948

Adjusted EBITDA margin (4)


13.7%


12.5%



12.8%



13.2%


12.5%














Depreciation and amortization


7,959


7,334



7,668



15,627


14,099

Share-based compensation


2,562


2,710



2,681



5,243


6,091

Acquisition and integration costs


282


1,336



781



1,063


2,570

Income from operations


56,380


47,878



52,035



108,415


95,188

Interest expense, net, and other


4,928


2,800



5,130



10,058


6,049

Income before income taxes


51,452


45,078



46,905



98,357


89,139

Income tax expense  


20,197


18,756



14,897



35,094


36,948

Net income

$

31,255

$

26,322



32,008



63,263


52,191



























GAAP diluted net income per share (EPS)

$

0.63

$

0.53



0.65



1.28


1.06

   Adjustments:













   Amortization of intangible assets


0.09


0.09



0.09



0.19


0.18

   Acquisition and integration costs


0.01


0.03



0.02



0.02


0.05

   Tax effect on above adjustments


(0.04)


(0.04)



(0.04)



(0.08)


(0.09)

   Excess tax benefits (5)


(0.02)


0.00



(0.09)



(0.11)


0.00

Adjusted diluted EPS (6)

$

0.67

$

0.61



0.63



1.30


1.20














 















Three Months Ended



Six Months Ended



June 30,



March 31,



June 30,



2017


2016



2017



2017


2016

Gross Margin













   Nurse and allied solutions


27.8%


26.7%



27.7%



27.7%


26.7%

   Locum tenens solutions


30.0%


31.3%



30.7%



30.3%


31.1%

   Other workforce solutions


55.7%


58.9%



55.0%



55.3%


59.6%














Operating Data:













Nurse and allied solutions













Average healthcare professionals on assignment (7)


8,776


8,337



9,051



8,913


8,406

Locum tenens solutions













    Days filled (8)


58,660


61,068



55,243



113,903


119,234

    Revenue per day filled (9)


$1,845


$1,787



$1,862



$1,853


$1,777



























As of June 30,


As of March 31,






2017


2016




2017




Leverage ratio (10)


1.4


1.9




1.6































 


AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)



June 30,


March 31,


December 31,



2017


2017


2016


Assets







Current assets:







Cash and cash equivalents

$    22,878


$    37,711


$    10,622


Accounts receivable, net

334,597


334,782


341,977


Accounts receivable, subcontractor

36,631


48,838


49,233


Prepaid and other current assets

46,938


50,893


48,796


Total current assets

441,044


472,224


450,628


Restricted cash, cash equivalents

and investments

33,882


29,141


31,287


Fixed assets, net

65,368


62,620


59,954


Other assets

71,594


65,368


57,534


Goodwill

340,596


340,564


341,754


Intangible assets, net

236,486


241,130


245,724









Total assets

$ 1,188,970


$ 1,211,047


$ 1,186,881









Liabilities and stockholders' equity







Current liabilities:







Accounts payable and accrued expenses

$ 118,943


$ 136,028


$ 137,512


Accrued compensation and benefits

107,283


99,642


107,993


Current portion of notes payable, less unamortized fees

18,071


3,750


3,750


Deferred revenue

9,644


8,840


8,924


Other current liabilities

12,387


29,428


16,611


Total current liabilities

266,328


277,688


274,790
















Notes payable, less unamortized fees

319,462


358,512


359,192


Deferred income taxes, net

12,387


16,548


21,420


Other long-term liabilities

82,301


81,494


82,096


Total liabilities

680,478


734,242


737,498









Commitments and contingencies














Stockholders' equity

508,492


476,805


449,383









Total liabilities and stockholders' equity

$ 1,188,970


$ 1,211,047


$ 1,186,881










 

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,


2017

2016


2017


2017

2016









Net cash provided by operating activities

$     18,474

$     20,053


$     52,314


$     70,788

$     55,280









Net cash  used in investing activities

(6,320)

(58,451)


(13,301)


(19,621)

(233,154)









Net cash provided by (used in) financing activities

(26,945)

36,268


(11,928)


(38,873)

189,235









Effect of exchange rates on cash

(42)

86


4


(38)

125









Net increase (decrease) in cash and cash equivalents

(14,833)

(2,044)


27,089


12,256

11,486

Cash and cash equivalents at beginning of period

37,711

23,106


10,622


10,622

9,576









Cash and cash equivalents at end of period

$     22,878

$     21,062


$     37,711


$     22,878

$     21,062

 

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, 2017





Adjusted EBITDA margin


12.5%(11)



Deduct:




Share-based compensation


0.5%


EBITDA margin


12.0%


Depreciation and amortization


1.6%


Operating margin


10.4%









 

(1)

Operating margin represents income from operations divided by revenue.

(2)

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.

(3)

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 the Company's credit agreement and the indenture governing our 5.125% Senior Notes due 2024. 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.

(4)

Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

(5)

The consolidated effective tax rate for the three and six months ended June 30, 2017 was favorably affected by the recording of excess tax benefits relating to equity awards vested and exercised during the period. As a result of the adoption of a new accounting pronouncement on January 1, 2017, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense, which amounted to $1,028,000 and $5,325,000 for the three and six months ended June 30, 2017, respectively. Since the majority of our equity awards vest during the first quarter of the year, we do not anticipate the recording of additional excess tax benefits of this magnitude for the reminder of the year. The magnitude of the impact of excess tax benefits generated in the future, which may be favorable or unfavorable, is dependent upon the Company's future grants of share-based compensation, the Company's future stock price on the date awards vest or exercise in relation to the fair value of the awards on the grant date or the exercise behavior of the Company's stock appreciation rights holders. Since these favorable tax benefits are largely unrelated to our current year's income before taxes and is unrepresentative of our normal effective tax rate, we excluded their impact on adjusted diluted EPS for the three and six months ended June 30, 2017.

(6)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of (A) amortization of intangible assets, (B) acquisition and integration costs, (C) tax effect, if any, of the foregoing adjustments, and (D) excess tax benefits relating to equity awards vested and exercised since January 1, 2017. 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)

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

(9)

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

(10)

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 ended at the end of the subject period.

(11)

Guidance percentage metrics are approximate. No significant labor disruption revenues are projected for this quarter.

 

SOURCE AMN Healthcare Services, Inc.


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