AMN Healthcare Announces First Quarter 2018 Results
Quarterly revenue of $522 million, up 6% over prior year;
GAAP EPS of $0.87 and adjusted EPS of $0.81

SAN DIEGO, May 3, 2018 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in healthcare workforce solutions and staffing services, today announced its first quarter 2018 financial results. Financial highlights are as follows:

Dollars in millions, except per share amounts.


Q1 2018

% Change

Q1 2017

Revenue

$522.5

6%

Gross profit

$167.8

4%

Net income

$42.7

33%

Diluted EPS

$0.87

34%

Adj. diluted EPS*

$0.81

29%

Adjusted EBITDA*

$66.5

5%


*  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

  • AMN Healthcare reached record highs for revenue and EPS in the quarter.
  • First quarter consolidated revenue of $522 million increased 6% year over year.
  • Growth was led by our Nurse and Allied Solutions segment with revenue up by 8%.
  • Adjusted EBITDA of $67 million grew 5% year over year and was 12.7% of revenue.
  • Operating cash flow in the first quarter was strong at $60 million.
  • In April we completed the acquisitions of MedPartners, Phillips DiPisa and Leaders For Today, which we expect to be immediately accretive.

"AMN delivered a quarter of great performance and service delivery for our clients and healthcare professionals," said Susan R. Salka, Chief Executive Officer of AMN Healthcare. "I am very proud of how our teams rallied to meet our clients' higher-than-expected staffing needs. Demand continues to grow for strategic partners capable of providing comprehensive solutions to meet the evolving healthcare workforce challenges. AMN is uniquely positioned with its suite of innovative workforce solutions."

Ms. Salka added, "We started the second quarter with the acquisition of three businesses that add valuable facets to our mid-revenue cycle, executive search and interim leadership solutions. MedPartners, Phillips DiPisa and Leaders For Today bring talented teams that are an excellent fit for AMN." 

First Quarter 2018 Results

Consolidated revenue for the quarter was $522 million, a 6% increase over prior year and 3% higher than prior quarter. Revenue for the Nurse and Allied Solutions segment was $338 million, higher by 8% year over year and 5% sequentially. The Travel Nurse division continued to perform well with revenue up 10% year over year and 8% sequentially. Allied division revenue increased 3% year over year and was flat sequentially.

The Locum Tenens Solutions segment performed at the high end of expectations with revenue of $103 million, up slightly year over year and down by 5% sequentially. Other Workforce Solutions segment revenue was $81 million reflecting an increase of 3% year over year and 2% sequentially, with year-over-year growth driven by the mid-revenue cycle and workforce optimization businesses.

Gross margin was 32.1%, lower by 60 basis points year over year and higher by 30 basis points sequentially. The year-over-year gross margin decline was due primarily to lower bill-to-pay spreads in our Locum Tenens Solutions segment and a revenue mix shift in the Other Workforce Solutions segment. The sequential gross margin increase was driven primarily by a higher Nurse and Allied Solutions gross margin.

SG&A expenses were $105 million, or 20.0% of revenue, compared with $102 million, or 20.6% of revenue, in the same quarter last year. Expenses as a percentage of revenue decreased year over year due to improved operating leverage. SG&A was $100 million, or 19.7% of revenue, in the previous quarter.

Net income was $43 million, or $0.87 per diluted share, compared with $32 million, or $0.65 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.81. Adjusted EBITDA was $67 million, a year-over-year increase of 5%. Adjusted EBITDA margin was 12.7%, representing a decrease of 10 basis points year over year and an increase of 10 basis points sequentially.

At March 31, 2018, cash and cash equivalents totaled $54 million. Cash flow from operations was strong at $60 million for the quarter. Capital expenditures were $6 million in the quarter. The Company ended the quarter with total debt outstanding of $325 million, with a leverage ratio as calculated in accordance with the Company's credit agreement of 1.2 to 1.

April Acquisitions

In April, AMN completed the acquisition of MedPartners, a leading national mid-revenue cycle firm; and two related providers of healthcare leadership solutions, Phillips DiPisa and Leaders For Today. All of these businesses are included in the Company's Other Workforce Solutions segment.

MedPartners workforce solutions include case management, clinical documentation improvement, and medical registry, while also doubling our market share in medical coding. MedPartners generated 2017 revenue of approximately $125 million with an adjusted EBITDA margin of 16%. MedPartners is expected to be immediately accretive to AMN's adjusted earnings per share.

Phillips DiPisa is an executive retained search firm, specifically focusing on C-suite positions in healthcare. Leaders For Today provides interim healthcare leaders and mid-level permanent placement. The combined companies generated 2017 revenue of approximately $23 million and an adjusted EBITDA margin of 20%. The acquisition is expected to be immediately accretive to AMN's adjusted earnings per share.

Second Quarter 2018 Outlook

Metric

Guidance*

Consolidated revenue

$530 - $537 million

Gross margin

32.5-33.0%

SG&A as percentage of revenue

21.0%

Adjusted EBITDA margin

12.5-13.0%


*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.

Projected year-over-year revenue growth in the second quarter of 2018 is approximately 8-10%. The acquisitions are expected to add $33-34 million of revenue in the second quarter. No significant labor disruption revenue is included in the second quarter guidance, nor was any in the prior-year quarter.

Conference Call on May 3, 2018

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 first quarter 2018 financial results on Thursday, May 3, 2018, 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) 230-1074 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 May 3, 2018, and can be accessed until 11:59 p.m. Eastern Time on May 17, 2018, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 447387.

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, mid-revenue cycle solutions, 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. AMN Healthcare is committed to fostering and maintaining a diverse team that reflects the communities we serve. Our commitment to the inclusion of many different backgrounds, experiences and perspectives enables our innovation and leadership in the healthcare services industry.

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 guidance for second quarter 2018 revenue, gross margin, SG&A expenses as a percentage of revenue, adjusted EBITDA margin, the accretion from our recent acquisitions, market demand and our strategic positioning. 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, 2017, 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:
Randle Reece
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


March 31,


December 31,


2018


2017


2017

Revenue

$  522,489


$  495,169


$  509,076

Cost of revenue

354,665


333,393


346,984

Gross profit

167,824


161,776


162,092

Gross margin

32.1%


32.7%


31.8%

Operating expenses:






Selling, general and administrative (SG&A)

104,737


102,073


100,375

SG&A as a % of revenue

20.0%


20.6%


19.7%







Depreciation and amortization

7,886


7,668


8,520

Total operating expenses

112,623


109,741


108,895

Income from operations

55,201


52,035


53,197

      Operating margin (1)

10.6%


10.5%


10.4%







Interest expense, net, and other

5,335


5,130


4,782

Income before income taxes

49,866


46,905


48,415

Income tax expense

7,185


14,897


7,248

Net income

$    42,681


$    32,008


$    41,167

Net income as a % of revenue

8.2%


6.5%


8.1%







Other comprehensive income (loss):






Foreign currency translation and other

(19)


3


13

Cash flow hedge, net of income taxes

           ‒‒ 


43


           ‒‒ 

Other comprehensive income (loss)

(19)


46


13







Comprehensive income

$      42,662


$     32,054


$      41,180







Net income per common share:






Basic

$         0.89


$         0.67


$         0.86

Diluted

$         0.87


$         0.65


$         0.84







Weighted average common shares outstanding:






Basic

47,733


47,782


47,618

Diluted

49,116


49,520


49,281







 

AMN Healthcare Services, Inc.

Supplemental Financial and Operating Data

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

(unaudited)



Three Months Ended



March 31,


December 31,




2018


2017



2017


Revenue









  Nurse and allied solutions

$

338,179

$

313,523


$

321,360


  Locum tenens solutions


103,117


102,843



108,142


  Other workforce solutions


81,193


78,803



79,574



$

522,489

$

495,169


$

509,076











Reconciliation of Non-GAAP Items:


















Segment operating income (2)









  Nurse and allied solutions

$

51,805

$

45,980


$

48,154


  Locum tenens solutions


9,958


12,219



12,394


  Other workforce solutions


19,851


19,857



19,366




81,614


78,056



79,914


   Unallocated corporate overhead


15,095


14,891



15,545


Adjusted EBITDA (3)


66,519


63,165



64,369


Adjusted EBITDA margin (4)


12.7%


12.8%



12.6%











Depreciation and amortization


7,886


7,668



8,520


Share-based compensation


2,864


2,681



2,517


Acquisition and integration costs


568


781



135


Income from operations


55,201


52,035



53,197


Interest expense, net, and other


5,335


5,130



4,782


Income before income taxes


49,866


46,905



48,415


Income tax expense  


7,185


14,897



7,248


Net income

$

42,681

$

32,008


$

41,167




















GAAP diluted net income per share (EPS)

$

0.87

$

0.65


$

0.84


   Adjustments:









   Amortization of intangible assets


0.09


0.09



0.10


   Acquisition and integration costs


0.01


0.02



0.00


   Debt financing related costs


0.01


0.00



0.00


   Tax effect on above adjustments


(0.03)


(0.04)



(0.04)


   Tax correction related to prior periods(5)


(0.05)


0.00



0.00


   Tax law effect on deferred taxes (6)


0.00


0.00



(0.27)


   Excess tax benefits (6)


(0.09)


(0.09)



0.00


Adjusted diluted EPS (7)

$

0.81

$

0.63


$

0.63











 



Three Months Ended



March 31,



December 31,



2018


2017



2017

Gross Margin








   Nurse and allied solutions


28.0%


27.7%



27.4%

   Locum tenens solutions


28.7%


30.7%



29.3%

   Other workforce solutions


53.6%


55.0%



53.1%









Operating Data:








Nurse and allied solutions








Average healthcare professionals on assignment (8)


9,567


9,051



9,234









Locum tenens solutions








    Days filled (9)


52,794


55,243



56,591

    Revenue per day filled (10)


$1,953


$1,862



$1,911

















As of March 31,



As of December 31,



2018


2017



2017

Leverage ratio (11)


1.2


1.6



1.3


 

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)









March 31,


December 31,


March 31,


2018


2017


2017

Assets






Current assets:






Cash and cash equivalents

$    54,499


$    15,147


$    37,711

Accounts receivable, net

338,600


350,496


334,782

Accounts receivable, subcontractor

39,027


41,012


48,838

Prepaid and other current assets

57,244


67,498


50,893

Total current assets

489,370


474,153


472,224

Restricted cash, cash equivalents

and investments

 

60,236


 

64,315


 

29,141

Fixed assets, net

75,530


73,431


62,620

Other assets

84,112


74,366


65,368

Goodwill

340,596


340,596


340,564

Intangible assets, net

222,708


227,096


241,130







Total assets

$ 1,272,552


$ 1,253,957


$ 1,211,047







Liabilities and stockholders' equity






Current liabilities:






Accounts payable and accrued expenses

$ 122,402


$ 130,319


$ 136,028

Accrued compensation and benefits

117,415


121,423


99,642

Current portion of notes payable

              ‒‒


              ‒‒


3,750

Deferred revenue

8,746


8,384


8,840

Other current liabilities

2,616


5,146


29,428

Total current liabilities

251,179


265,272


277,688













Notes payable, less unamortized fees

320,034


319,843


358,512

Deferred income taxes, net

21,922


27,036


16,548

Other long-term liabilities

80,201


79,279


81,494

Total liabilities

673,336


691,430


734,242







Commitments and contingencies












Stockholders' equity

599,216


562,527


476,805







Total liabilities and stockholders' equity

$ 1,272,552


$ 1,253,957


$ 1,211,047

 



Three Months Ended


March 31,


December 31,


2018


2017(12)


2017(12)







Net cash provided by operating activities

$     59,735


$     44,684


$     58,422







Net cash  used in investing activities

(9,613)


(13,300)


(11,316)







Net cash used in financing activities

(14,970)


(11,928)


(13,369)







Effect of exchange rates on cash

(19)


4


13







Net increase in cash, cash equivalents and restricted cash and cash equivalents

35,133


19,460


33,750

 

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period

 

98,894


 

51,028


 

65,144







 

Cash, cash equivalents and restricted cash and cash equivalents at end of period

 

$  134,027


 

$     70,488


 

$     98,894

 

AMN Healthcare Services, Inc.

Additional Supplemental Non-GAAP Disclosures

Reconciliation of Guidance Adjusted EBITDA Margin to

Guidance Operating Margin






Three Months Ending


June 30, 2018


Low(13)


High(13)

Adjusted EBITDA margin

12.5%


13.0%

Deduct:




Share-based compensation


0.6%


Acquisition and integration costs


0.2%


EBITDA margin

11.7%


12.2%

Depreciation and amortization


1.9%


Operating margin

9.8%


10.3%






 

(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)

During the first quarter of 2018, the Company recorded a net tax benefit of $2,501,000 in the three months ended March 31, 2018 to adjust for an immaterial error related to the income tax treatment of fair value changes in the cash surrender value of its Company Owned Life Insurance for years ended December 31, 2015 through December 31, 2017. These fair value changes had not previously been included as a benefit in the tax provisions of the related years.

(6)

The consolidated effective tax rate for the three months ended March 31, 2018 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 $4,518,000 and $4,297,000 for the three months ended March 31, 2018 and March 31, 2017, respectively. 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 months ended March 31, 2018 and March 31, 2017. In addition, during the quarter ended December 31, 2017, we recorded a discrete net tax benefit of $14,039,000 and a discrete tax expense of $1,000,000 from a remeasurement of our deferred tax assets and liabilities related to the impact of the Tax Cuts and Jobs Act and prior period share-based awards, respectively. We excluded these non-cash items from adjusted diluted EPS for the three months ended December 31, 2017 as they were unrelated to our fiscal year 2017's income before taxes.

(7)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of the (A) amortization of intangible assets, (B) acquisition and integration costs, (C) deferred financing costs, (D) tax effect, if any, of the foregoing adjustments, (E) excess tax benefits relating to equity awards vested and exercised since January 1, 2017, (F) correction of prior periods error, and (G) discrete tax benefit from the Tax Cuts and Jobs Act's corporate rate reduction on the Company's deferred tax assets and liabilities and discrete tax expense from prior period share-based awards. 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.

(8)

Average healthcare professionals on assignment represents the average number of nurse and allied healthcare professionals on assignment during 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 ended at the end of the subject period.

(12)

As a result of the adoption of ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" on January 1, 2018, we are required to present in the statement of cash flows the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We adjusted certain restricted cash amounts for the three months ended March 31, 2017 and December 31, 2017 in the cash flow table presented above. These adjustments had no effect on previously reported results of operations or retained earnings.

(13)

Guidance percentage metrics are approximate.

 

SOURCE AMN Healthcare Services, Inc.