AMN Healthcare Services, Inc. announced its first quarter 2018 financial 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.
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SOURCE AMN Healthcare Services, Inc.
