Full Press Release Details
Director, Investor Relations
______________________________________________________________________________
AMN HEALTHCARE ANNOUNCES THIRD QUARTER 2018 RESULTS
Quarterly revenue of $527 million, up 7% over prior year;
GAAP EPS of $0.58 and adjusted EPS of $0.84
SAN DIEGO - (October 31, 2018) - AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in healthcare workforce solutions and staffing services, today announced its third quarter 2018 financial results. Financial highlights are as follows:
Dollars in millions, except per share amounts.
| Q3 2018 | % Change Q3 2017 | YTD Sept. 30, 2018 | % Change YTD September 30, 2017 | |
| Revenue | $526.8 | 7% | $1,607.4 | 9% |
| Gross profit | $175.1 | 10% | $523.9 | 9% |
| Net income | $27.9 | (1)% | $106.1 | 16% |
| Diluted EPS | $0.58 | 2% | $2.17 | 17% |
| Adj. diluted EPS* | $0.84 | 33% | $2.47 | 28% |
| Adjusted EBITDA* | $67.4 | 9% | $204.0 | 6% |
* 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.
"The industry-leading AMN team continues to serve our clients and healthcare professionals well, drive innovation within our businesses and deliver solid overall performance," said Susan R. Salka, Chief Executive Officer of AMN Healthcare. "Our strategy of evolving AMN's offerings to help healthcare organizations more effectively manage their workforce is resulting in stronger partnerships and the addition of new clients across the country. At the same time, we are also increasing our ability to provide a wide variety of opportunities to healthcare professionals throughout their careers.
"We are very pleased to see demand in our travel nursing business recently increasing. This provides us optimism for better volume growth. At the same time, there are challenges in a few other businesses, and our teams are working diligently and making progress on improving performance," Ms. Salka said.
Third Quarter 2018 Results
Consolidated revenue for the quarter was $527 million, a 7% increase over prior year and a 6% decrease compared with prior quarter. Revenue for the Nurse and Allied Solutions segment was $306 million, higher by 1% year over year and down 8% sequentially. The Travel Nurse division performed better than expected with revenue flat year over year, with higher volume offset by a lower average bill rate. Allied division revenue increased 8% year over year on higher volume.
The Locum Tenens Solutions segment reported revenue of $101 million, down by 9% year over year, with lower volumes offset in part by positive pricing. Other Workforce Solutions segment revenue was $119 million reflecting an increase of 49% year over year, driven primarily by the acquisitions made in April 2018. Organic growth of 2% year over year was led by the permanent placement and mid-revenue cycle businesses.
Gross margin was 33.2%, higher by 90 basis points year over year and higher by 80 basis points sequentially. The year-over-year variance was driven by higher-than-average gross margins from the recently acquired companies and a change in classification of certain recruiter expenses from cost of sales to SG&A in our physician permanent placement business.
SG&A expenses were $121 million, or 23.0% of revenue, compared with $101 million, or 20.3% of revenue, in the same quarter last year. SG&A was $116 million, or 20.7% of revenue, in the previous quarter. The year-over-year increase in expense margin stemmed mainly from the physician permanent placement cost change and a $12.1 million increase in legal reserves.
Income from operations was $42.6 million, or 8.1% of revenue, compared with $50.8 million, or 10.3% of revenue, in the same quarter last year. Adjusted EBITDA was $67 million, a year-over-year increase of 9%. Adjusted EBITDA margin was 12.8%, representing an increase of 30 basis points year over year and an increase of 20 basis points sequentially.
Net income was $28 million, or $0.58 per diluted share, compared with $28 million, or $0.57 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.84.
At September 30, 2018, cash and cash equivalents totaled $19 million. Cash flow from operations was $45 million for the quarter, and capital expenditures were $10 million. AMN repurchased 580,000 shares of stock for $32 million during the quarter. The Company ended the quarter with total debt outstanding of $475 million, with a leverage ratio as calculated in accordance with the Company's credit agreement of 1.7 to 1.
Fourth Quarter 2018 Outlook
| Metric | Guidance* |
| Consolidated revenue | $534 - $542 million |
| Gross margin | 32.5% - 33.0% |
| SG&A as percentage of revenue | 21.0% - 21.5% |
| Operating margin | 9.1% - 9.6% |
| Adjusted EBITDA margin | 12.0% - 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.
Projected year-over-year revenue growth in the fourth quarter of 2018 is 5-6%. On an organic basis, revenue is projected to be down 1-2% due primarily to lower revenue in the Locum Tenens business. Nurse and Allied segment revenue is expected to be up by about 1-2% over prior year. No significant labor disruption revenue is included in fourth quarter guidance.
Conference Call on October 31, 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 third quarter 2018 financial results on Wednesday, October 31, 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/eventcalendar. 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 October 31, 2018, and can be accessed until 11:59 p.m. Eastern Time on November 14, 2018, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 455277.
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.
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 fourth quarter 2018 revenue, gross margin, SG&A expenses as a percentage of revenue and adjusted EBITDA margin. 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.
Director, Investor Relations
AMN Healthcare Services, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||
| Revenue | $ | 526,842 | $ | 494,406 | $ | 558,108 | $ | 1,607,439 | $ | 1,479,378 | |||||||||
| Cost of revenue | 351,695 | 334,867 | 377,152 | 1,083,512 | 997,051 | ||||||||||||||
| Gross profit | 175,147 | 159,539 | 180,956 | 523,927 | 482,327 | ||||||||||||||
| Gross margin | 33.2% | 32.3% | 32.4% | 32.6% | 32.6% | ||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Selling, general and administrative (SG&A) | 121,216 | 100,579 | 115,535 | 341,488 | 299,325 | ||||||||||||||
| SG&A as a % of revenue | 23.0% | 20.3% | 20.7% | 21.2% | 20.2% | ||||||||||||||
| Depreciation and amortization | 11,296 | 8,132 | 10,606 | 29,788 | 23,759 | ||||||||||||||
| Total operating expenses | 132,512 | 108,711 | 126,141 | 371,276 | 323,084 | ||||||||||||||
| Income from operations | 42,635 | 50,828 | 54,815 | 152,651 | 159,243 | ||||||||||||||
| Operating margin (1) | 8.1% | 10.3% | 9.8% | 9.5% | 10.8% | ||||||||||||||
| Interest expense, net, and other | 4,649 | 4,837 | 6,376 | 16,360 | 14,895 | ||||||||||||||
| Income before income taxes | 37,986 | 45,991 | 48,439 | 136,291 | 144,348 | ||||||||||||||
| Income tax expense | 10,068 | 17,863 | 12,910 | 30,163 | 52,957 | ||||||||||||||
| Net income | $ | 27,918 | $ | 28,128 | $ | 35,529 | $ | 106,128 | $ | 91,391 | |||||||||
| Net income as a % of revenue | 5.3% | 5.7% | 6.4% | 6.6% | 6.2% | ||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||
| Foreign currency translation and other | 133 | (73 | ) | 91 | 205 | (111 | ) | ||||||||||||
| Cash flow hedge, net of income taxes | - | - | - | - | (15 | ) | |||||||||||||
| Other comprehensive income (loss) | 133 | (73 | ) | 91 | 205 | (126 | ) | ||||||||||||
| Comprehensive income | $ | 28,051 | $ | 28,055 | $ | 35,620 | $ | 106,333 | $ | 91,265 | |||||||||
| Net income per common share: | |||||||||||||||||||
| Basic | $ | 0.59 | $ | 0.59 | $ | 0.75 | $ | 2.23 | $ | 1.91 | |||||||||
| Diluted | $ | 0.58 | $ | 0.57 | $ | 0.73 | $ | 2.17 | $ | 1.85 | |||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 47,286 | 47,912 | 47,653 | 47,556 | 47,870 | ||||||||||||||
| Diluted | 48,529 | 49,445 | 48,936 | 48,859 | 49,480 |
AMN Healthcare Services, Inc.
Supplemental Financial and Operating Data
(dollars in thousands, except per share data and operating data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||
| Revenue | |||||||||||||||||||
| Nurse and allied solutions | $ | 306,292 | $ | 302,933 | $ | 332,728 | $ | 977,199 | $ | 917,183 | |||||||||
| Locum tenens solutions | 101,102 | 111,415 | 107,297 | 311,516 | 322,473 | ||||||||||||||
| Other workforce solutions | 119,448 | 80,058 | 118,083 | 318,724 | 239,722 | ||||||||||||||
| $ | 526,842 | $ | 494,406 | $ | 558,108 | $ | 1,607,439 | $ | 1,479,378 | ||||||||||
| Reconciliation of Non-GAAP Items: | |||||||||||||||||||
| Segment operating income (2) | |||||||||||||||||||
| Nurse and allied solutions | $ | 42,165 | $ | 40,807 | $ | 43,936 | $ | 137,906 | $ | 134,638 | |||||||||
| Locum tenens solutions | 10,992 | 14,438 | 13,371 | 34,321 | 39,028 | ||||||||||||||
| Other workforce solutions | 29,010 | 19,890 | 28,576 | 77,437 | 61,788 | ||||||||||||||
| 82,167 | 75,135 | 85,883 | 249,664 | 235,454 | |||||||||||||||
| Unallocated corporate overhead | 14,739 | 13,438 | 15,823 | 45,657 | 43,409 | ||||||||||||||
| Adjusted EBITDA (3) | 67,428 | 61,697 | 70,060 | 204,007 | 192,045 | ||||||||||||||
| Adjusted EBITDA margin (4) | 12.8% | 12.5% | 12.6% | 12.7% | 13.0% | ||||||||||||||
| Depreciation and amortization | 11,296 | 8,132 | 10,606 | 29,788 | 23,759 | ||||||||||||||
| Share-based compensation (5) | 1,809 | 2,477 | 3,281 | 7,954 | 7,720 | ||||||||||||||
| Acquisition and integration costs (6) | (452 | ) | 260 | 1,358 | 1,474 | 1,323 | |||||||||||||
| Legal settlement accrual increases (7) | 12,140 | - | - | 12,140 | - | ||||||||||||||
| Income from operations | 42,635 | 50,828 | 54,815 | 152,651 | 159,243 | ||||||||||||||
| Interest expense, net, and other | 4,649 | 4,837 | 6,376 | 16,360 | 14,895 | ||||||||||||||
| Income before income taxes | 37,986 | 45,991 | 48,439 | 136,291 | 144,348 | ||||||||||||||
| Income tax expense | 10,068 | 17,863 | 12,910 | 30,163 | 52,957 | ||||||||||||||
| Net Income | $ | 27,918 | $ | 28,128 | $ | 35,529 | $ | 106,128 | $ | 91,391 | |||||||||
| GAAP diluted net income per share (EPS) | $ | 0.58 | $ | 0.57 | $ | 0.73 | $ | 2.17 | $ | 1.85 | |||||||||
| Adjustments: | |||||||||||||||||||
| Amortization of intangible assets | 0.14 | 0.09 | 0.13 | 0.36 | 0.28 | ||||||||||||||
| Acquisition and integration costs (6) | (0.01 | ) | 0.01 | 0.02 | 0.03 | 0.03 | |||||||||||||
| Legal settlement accrual increases (7) | 0.25 | - | - | 0.25 | - | ||||||||||||||
| Equity investment fair value changes (8) | (0.03 | ) | - | - | (0.03 | ) | - | ||||||||||||
| Debit financing related costs | - | - | - | 0.01 | - | ||||||||||||||
| Tax effect on above adjustments | (0.09 | ) | (0.04 | ) | (0.04 | ) | (0.16 | ) | (0.12 | ) | |||||||||
| Tax correction related to prior periods (9) | - | - | - | (0.05 | ) | - | |||||||||||||
| Excess tax benefits (10) | - | - | (0.01 | ) | (0.11 | ) | (0.11 | ) | |||||||||||
| Adjusted diluted EPS (11) | $ | 0.84 | $ | 0.63 | $ | 0.83 | $ | 2.47 | $ | 1.93 |
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||
| Gross Margin | |||||||||||||||||||
| Nurse and allied solutions | 27.4 | % | 27.3 | % | 26.3 | % | 27.2 | % | 27.6 | % | |||||||||
| Locum tenens solutions | 28.4 | % | 30.1 | % | 29.8 | % | 29.0 | % | 30.2 | % | |||||||||
| Other workforce solutions | 52.4 | % | 54.1 | % | 52.2 | % | 52.6 | % | 54.9 | % | |||||||||
| Operating Data: | |||||||||||||||||||
| Nurse and allied solutions | |||||||||||||||||||
| Average healthcare professionals on assignment (12) | 8,979 | 8,817 | 9,095 | 9,214 | 8,881 | ||||||||||||||
| Locum tenens solutions | |||||||||||||||||||
| Days filled (13) | 50,069 | 58,881 | 55,225 | 158,089 | 172,784 | ||||||||||||||
| Revenue per day filled (14) | $ | 2,019 | $ | 1,892 | $ | 1,943 | $ | 1,971 | $ | 1,866 |
| As of September 30, | As of June 30, | ||||
| 2018 | 2017 | 2018 | |||
| Leverage ratio (15) | 1.7 | 1.3 | 1.7 |
AMN Healthcare Services, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
| September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 18,614 | $ | 15,147 | $ | 19,625 | |||||
| Accounts receivable, net | 366,436 | 350,496 | 343,596 | ||||||||
| Accounts receivable, subcontractor | 44,891 | 41,012 | 37,200 | ||||||||
| Prepaid and other current assets | 49,898 | 67,498 | 42,052 | ||||||||
| Total current assets | 479,839 | 474,153 | 442,473 | ||||||||
| Restricted cash, cash equivalents and investments | 59,453 | 64,315 | 34,380 | ||||||||
| Fixed assets, net | 86,817 | 73,431 | 68,188 | ||||||||
| Other assets | 93,206 | 74,366 | 73,962 | ||||||||
| Goodwill | 438,299 | 340,596 | 340,596 | ||||||||
| Intangible assets, net | 332,788 | 227,096 | 231,791 | ||||||||
| Total assets | $ | 1,490,402 | $ | 1,253,957 | $ | 1,191,390 | |||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | 142,543 | $ | 130,319 | $ | 117,934 | |||||
| Accrued compensation and benefits | 135,632 | 121,423 | 111,984 | ||||||||
| Deferred revenue | 13,107 | 8,384 | 9,609 | ||||||||
| Other current liabilities | 11,806 | 5,146 | 5,440 | ||||||||
| Total current liabilities | 303,088 | 265,272 | 244,967 | ||||||||
| Revolving credit facility | 150,000 | - | - | ||||||||
| Notes payable, less unamortized fees | 320,416 | 319,843 | 319,652 | ||||||||
| Deferred income taxes, net | 24,651 | 27,036 | 11,899 | ||||||||
| Other long-term liabilities | 77,527 | 79,279 | 82,673 | ||||||||
| Total liabilities | 875,682 | 691,430 | 659,191 | ||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | 614,720 | 562,527 | 532,199 | ||||||||
| Total liabilities and stockholders' equity | $ | 1,490,402 | $ | 1,253,957 | $ | 1,191,390 |
AMN Healthcare Services, Inc.
Summary Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2018 | 2017 (16) | 2018 | 2018 | 2017 (16) | |||||||||||||||
| Net cash provided by operating activities | $ | 44,811 | $ | 32,053 | $ | 66,203 | $ | 170,749 | $ | 102,096 | |||||||||
| Net cash used in investing activities | (35,401 | ) | (4,429 | ) | (229,337 | ) | (274,351 | ) | (24,045 | ) | |||||||||
| Net cash provided by (used in) financing activities | (36,883 | ) | (24,951 | ) | 133,627 | 81,774 | (63,824 | ) | |||||||||||
| Effect of exchange rates on cash | 133 | (73 | ) | 91 | 205 | (111 | ) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (27,340 | ) | 2,600 | (29,416 | ) | (21,623 | ) | 14,116 | |||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 104,611 | 62,544 | 134,027 | 98,894 | 51,028 | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 77,271 | $ | 65,144 | $ | 104,611 | $ | 77,271 | $ | 65,144 |
AMN Healthcare Services, Inc.
Additional Supplemental Non-GAAP Disclosures
Reconciliation of Guidance Adjusted EBITDA Margin to
Guidance Operating Margin
| Three Months Ended | |||
| December 31, 2018 | |||
| Low (17) | High (17) | ||
| Adjusted EBITDA margin | 12.0% | 12.5% | |
| Deduct: | |||
| Share-based compensation | 0.6% | ||
| Acquisition and integration costs | 0.2% | ||
| EBITDA margin | 11.2% | 11.7% | |
| Depreciation and amortization | 2.1% | ||
| Operating margin | 9.1% | 9.6% |
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.