AMN Healthcare Announces Second Quarter 2014 Results Quarterly revenue of $251 million above the high end of guidance, adjusted EPS of $0.19

SAN DIEGO, July 31, 2014 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AHS), healthcare's innovator in workforce solutions and staffing services, today announced second quarter 2014 financial results exceeded the Company's guidance for revenue and adjusted EBITDA.  Second quarter financial highlights are as follows:

Dollars in millions, except per share amounts.


Q2 2014

% Change

Q2 2013

YTD June 30, 2014

% Change YTD June 30, 2013

Revenue

$250.9

(1%)

$491.8

(3%)

Gross profit

$77.2

4%

$151.1

3%

Net income

$7.2

(14%)

$14.8

(7%)

Diluted EPS

$0.15

(17%)

$0.31

(6%)

Adjusted Diluted EPS*

$0.19

6%

$0.35

3%

Adjusted EBITDA*

$23.3

9%

$44.5

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.

  • Second quarter consolidated revenue exceeded expectations due primarily to strong performance in the Nurse and Allied Healthcare Staffing segment driven by improving market trends and execution.
  • The quarterly sequential revenue growth of 4% was driven by 11% growth in the Locum Tenens segment and 1% growth in the Nurse and Allied Healthcare Staffing segment.
  • Gross margin of 30.8% for the second quarter represented a record high and year-over-year improvement of 150 basis points.
  • Second quarter adjusted EBITDA margin of 9.3% improved 90 basis points over prior year.
  • In April, the Company refinanced its then-existing credit facilities with a new credit agreement and initial rate reduction of approximately 175 basis points.

"Market trends strengthened across all of our segments as we progressed through the second quarter, contributing to a stronger than expected performance and a brighter outlook for the remainder of the year.  The improved market dynamics coupled with the solid execution of  our team delivered sequential increases in revenue, gross margin, adjusted EBITDA margin, and adjusted EPS.  It is clear that our leadership position in providing MSP, VMS, and other workforce solutions continues to enable AMN to deliver differentiated value to our clients," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "We also continue to make progress in our long-term strategic initiatives, such as expansion of our workforce solution offerings and investments in our recruitment and infrastructure technologies, to deliver a best-in-class, differentiated client and clinician experience."   

Second Quarter 2014 Results

For the second quarter of 2014 consolidated revenue was $251 million, a decrease of 1% from the same quarter last year and an increase of 4% sequentially. Second quarter revenue for the Nurse and Allied Healthcare Staffing segment was $166 million, down 2% from the same quarter last year and up 1% sequentially. Locum Tenens Staffing segment revenue in the second quarter was $74 million, an increase of 2% from the same quarter last year and 11% sequentially. Second quarter Physician Permanent Placement Services segment revenue was $11 million, a decrease of 3% from the same quarter last year and an increase of 1% sequentially.

Second quarter gross margin of 30.8% was 150 basis points higher than the same quarter last year and 10 basis points higher sequentially. The year-over-year increase was due to gross margin improvement across all business segments, as well as the addition of the higher-margin ShiftWise business.

SG&A expenses for the second quarter were $56 million, representing 22.1% of revenue, compared to $55 million in both the same quarter last year and the prior quarter. The year-over-year increase in SG&A expenses was due primarily to the additional SG&A expenses from the ShiftWise business.

Second quarter net income was $7 million and net income per diluted share was $0.15. Excluding non-cash charges to interest expense associated with execution of a new credit agreement, adjusted net income per diluted share was $0.19. Second quarter adjusted EBITDA was $23 million, compared to $21 million in both the same quarter last year and the prior quarter. Adjusted EBITDA margin of 9.3% reflected a 90 basis point increase over prior year and was driven by the improvement in gross margin. The 50 basis point sequential improvement was due mainly to a favorable professional liability adjustment.

At June 30, 2014, cash and cash equivalents totaled $6 million. Second quarter cash flow provided by operations was $6.2 million and capital expenditures were $4 million. The Company ended the quarter with total debt outstanding of $155 million, with a leverage ratio of 1.9 to 1.

Business Trends and Outlook

The Company expects consolidated third quarter 2014 revenue of $254 million to $258 million, with sequential growth expected in all business segments. Gross margin is expected to be approximately 30.5%. SG&A expenses as a percentage of revenue are expected to be between 22.5% and 23.0%. Adjusted EBITDA margin is expected to be approximately 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 largest network of quality clinicians and physicians through its innovative recruitment strategies and breadth of career opportunities. Clients include acute-care hospitals, government facilities, community health centers and clinics, physician practice groups 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 July 31, 2014

AMN Healthcare Services, Inc.'s second quarter 2014 conference call will be held on Thursday, July 31, 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) 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. A telephonic replay of the call will be available at 7:30 p.m. Eastern Time on July 31, 2014, and can be accessed until 11:59 p.m. Eastern Time on August 14, 2014, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 330576.

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 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 2014 third 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


Six Months Ended


June 30,


March 31,


June 30,


2014

2013


2014


2014

2013

Revenue

$     250,913

$     253,943


$     240,881


$     491,794

$     506,063

Cost of revenue

173,754

179,530


166,925


340,679

358,643

Gross profit

77,159

74,413


73,956


151,115

147,420


30.8%

29.3%


30.7%


30.7%

29.1%

Operating expenses:








Selling, general and administrative

55,567

54,551


54,667


110,234

108,158


22.1%

21.5%


22.7%


22.4%

21.4%

Depreciation and amortization

4,010

3,240


3,820


7,830

6,530

Total operating expenses

59,577

57,791


58,487


118,064

114,688

Income from operations

17,582

16,622


15,469


33,051

32,732









Interest expense, net and other

4,629

3,130


1,846


6,475

5,989

 

Income before income taxes

 

12,953

 

13,492


 

13,623


 

26,576

 

26,743

 

Income tax expense

 

5,760

 

5,093


 

5,993


 

11,753

 

10,781

Net income

$         7,193

$         8,399


$         7,630


$       14,823

$       15,962









Other comprehensive income (loss)

(37)

(28)


(9)


(46)

65

















Comprehensive income

$          7,156

$          8,371


$          7,621


$        14,777

$        16,027

Net income per common share:

 








Basic

$            0.15

$            0.18


$            0.16


$            0.32

$            0.35

Diluted

$            0.15

$            0.18


$            0.16


$            0.31

$            0.33









Weighted average common shares outstanding:








Basic

46,479

46,039


46,354


46,416

45,927

Diluted

47,836

47,837


47,917


47,876

47,759









 




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,



2014


2013



2014



2014


2013

Revenue













  Nurse and allied healthcare staffing

$

165,894

$

170,138


$

163,450


$

329,344

$

346,903

  Locum tenens staffing


74,309


72,708



66,871



141,180


138,164

  Physician permanent placement services


10,710


11,097



10,560



21,270


20,996


$

250,913

$

253,943


$

240,881


$

491,794

$

506,063














Reconciliation of Non-GAAP Items:


























Segment operating income(1)













  Nurse and allied healthcare staffing

$

22,032

$

20,128


$

19,972


$

42,004

$

42,602

  Locum tenens staffing


7,818


4,908



6,873



14,691


9,800

  Physician permanent placement services


2,187


2,289



2,131



4,318


4,530



32,037


27,325



28,976



61,013


56,932

   Unallocated corporate overhead


8,694


5,985



7,868



16,562


14,490

Adjusted EBITDA(2)


23,343


21,340



21,108



44,451


42,442

Adjusted EBITDA margin(3)


9.3%


8.4%



8.8%



9.0%


8.4%














Depreciation and amortization


4,010


3,240



3,820



7,830


6,530

Share-based compensation


1,751


1,478



1,819



3,570


3,180

Interest expense, net and other


4,629


3,130



1,846



6,475


5,989

Income before income taxes


12,953


13,492



13,623



26,576


26,743

Income tax expense  


5,760


5,093



5,993



11,753


10,781

Net income

$

7,193

$

8,399


$

7,630


$

14,823

$

15,962



























GAAP based diluted net income per share (EPS)

$

0.15

$

0.18


$

0.16


$

0.31

$

0.33

   Adjustments:













   Loss on debt extinguishment


0.04


0.00



0.00



0.04


0.01

Adjusted diluted EPS (4)

$

0.19

$

0.18


$

0.16


$

0.35

$

0.34





























Three Months Ended



Six Months Ended



June 30,



March 31,



June 30,



2014


2013



2014



2014


2013

Gross Margin













   Nurse and allied healthcare staffing


29.1%


27.2%



29.0%



29.0%


27.4%

   Locum tenens staffing


29.8%


29.0%



29.9%



29.8%


28.5%

   Physician permanent placement services


63.5%


62.7%



63.0%



63.3%


62.6%














Operating Data:













Nurse and allied healthcare staffing













    Average clinicians on assignment (5)


5,565


5,924



5,633



5,599


6,070

Locum tenens  staffing













    Days filled (6)


49,049


50,127



44,749



93,798


95,484





























As of June 30



As of March 31,








2014


2013



2014






Leverage ratio (7)


1.9


2.1



2.0
































   

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)








June 30,


March 31,


December 31,


2014


2014 (8)


2013 (8)

Assets






Current assets:






Cash and cash equivalents

$         5,501


$         9,269


$       15,580

Accounts receivable, net

151,505


150,840


147,477

Accounts receivable, subcontractor

22,512


18,680


18,271

Deferred income taxes, net

27,983


24,867


24,938

Prepaid and other current assets

27,662


27,616


26,631

Total current assets

235,163


231,272


232,897

Restricted cash, cash equivalents and investments

20,606


21,641


23,115

Fixed assets, net

27,066


24,400


21,158

Deposits and other assets

37,502


35,922


32,279

Goodwill

144,937


144,937


144,642

Intangible assets, net

146,418


148,317


150,197







Total assets

$    611,692


$    606,489


$    604,288







Liabilities and stockholders' equity






Current liabilities:






Accounts payable and accrued expenses

$     65,130


$       64,358


$     71,081

Accrued compensation and benefits

56,046


56,958


55,949

Revolving credit facility

6,500


10,000


10,000

Current portion of notes payable

7,500


7,500


0

Other current liabilities

4,097


5,212


6,060

Total current liabilities

139,273


144,028


143,090







Notes payable, less current portion and discount

140,625


141,227


148,672

Other long-term liabilities

98,188


96,353


94,784

Total liabilities

378,086


381,608


386,546







Commitments and contingencies












Stockholders' equity

233,606


224,881


217,742







Total liabilities and stockholders' equity

$    611,692


$    606,489


$    604,288







 

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,



2014

2013 (8)


2014


2014

2013 (8)











Net cash provided by operating activities

$       6,159

$     19,475


$          991


$       7,150

$     17,257











Net cash used in investing activities

(1,100)

(3,396)


(4,709)


(5,809)

(6,032)











Net cash used in financing activities

(8,790)

(7,471)


(2,584)


(11,374)

(6,452)











Effect of exchange rates on cash

(37)

(28)


(9)


(46)

65











Net increase (decrease) in cash and cash equivalents

(3,768)

8,580


(6,311)


(10,079)

4,838











Cash and cash equivalents at beginning of period

9,269

1,939


15,580


15,580

5,681











Cash and cash equivalents at end of period

$       5,501

$     10,519


$       9,269


$       5,501

$     10,519













(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 EPS represents GAAP EPS excluding the impact of loss on debt extinguishment of $3,113 and $434 for both the three and six months ended June 30, 2014 and 2013, respectively. 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 items 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 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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