AMN Healthcare Announces Its Q3 Results
AMN Healthcare Announces Its Q3 Results
"The unprecedented market contraction experienced by the healthcare staffing industry over the past year is a direct reflection of the rapid rise to historically high levels of general unemployment. The decline in volumes we experienced during the first nine months of 2009 have certainly highlighted the importance of our ability to remain agile and disciplined in our execution. We continue to de-lever our balance sheet, maintain strong gross margins, and reduce SG&A through tight cost management and further improvements to our cost structure," said Susan R. Nowakowski, President and Chief Executive Officer of AMN Healthcare. "This environment has also created opportunities for AMN to further differentiate our service capabilities and strengthen our client relationships. This has been demonstrated by our three-fold increase in preferred provider arrangements and winning key managed services contracts, which will benefit us in 2010 and beyond."
Key business highlights for the third quarter are as follows:
Stable pricing and gross margins across service lines
Nursing order increases for six consecutive months
Increased demand for Physician Permanent Placement retained searches
Decline in demand for Locum Tenens, particularly in anesthesia staffing
Continued strong cash flow and reduction of debt
Additional streamlining of cost and operational structure.
Revenue for the third quarter of 2009 was $166 million, a decrease of 47% from prior year and 16% from prior quarter. Third quarter revenue for the Nurse and Allied staffing segment was $82 million, a decrease of 62% from the same quarter last year and down 26% sequentially. The Locum Tenens staffing segment generated revenue of $75 million, a decrease of 12% from prior year and down 5% sequentially. Third quarter Physician Permanent Placement revenue was $9 million, a decrease of 31% from prior year and 2% from prior quarter.
Gross margin in the third quarter of 2009 was 27.4%, an increase of 170 bps from prior year and an increase of 40 bps compared to the previous quarter. The increase was due to the Locum Tenens and Physician Permanent Placement segments representing a greater portion of our business mix.
Selling, general and administrative ("SG&A") expenses (excluding restructuring costs) for the third quarter of 2009 were 22.2% as a percentage of revenue compared to 19.1% in the same quarter last year. SG&A declined by $23 million, or 39%, over the same period in the prior year, and sequentially by $1 million, or 2%, due largely to cost-saving initiatives taking hold.
As a result of continued streamlining of our cost and operational structure, the company recorded $6 million of restructuring charges in the third quarter, consisting mainly of lease-related charges associated with facility consolidations and severance payments.
For the third quarter, the company recorded a GAAP net loss per share of $0.06 which includes a $0.11 negative impact from restructuring charges. Earnings per diluted share were $0.28 in the prior year and $0.13 in the prior quarter.
As of September 30, 2009, cash and cash equivalents totaled $23 million, compared to $11 million as of December 31, 2008. Total debt outstanding was $77 million as of September 30, 2009, reflecting a reduction in debt of $13 million since prior quarter and $69 million since December 31, 2008. Average shares outstanding for the third quarter of 2009 were 32.6 million. Average diluted shares outstanding for the third quarter used in the calculation of adjusted diluted earnings per share were 33.1 million.
Business Trends and Outlook
Nursing orders continue to show signs of improvement, with increased momentum occurring in September and October. However, orders still remain at levels lower than prior year due to high general unemployment and uncertain economic conditions. In Locum Tenens, we experienced lower sequential demand (days available) in the third quarter, primarily due to market weakness in anesthesia staffing. This trend is likely to continue into the fourth quarter. The increase in new retained searches in the Physician Permanent Placement business experienced during the third quarter is expected to result in improved placements over the coming months. Overall, pricing and gross margins are expected to remain consistent. Based on these trends and the normal holiday seasonal decline, fourth quarter consolidated revenue is expected to decline sequentially by 10-15%.
"The improving order trends in Nurse staffing are encouraging for AMN and our industry. While it is difficult to predict the trajectory of resulting volume growth, we believe that our unique breadth of service offerings and success in securing more preferred provider and managed services clients positions AMN extremely well to build market share as the trends continue to improve," added Nowakowski. "Our solid balance sheet enables us to focus on our long-term strategy, invest in our newer service lines, and assess new synergistic opportunities to expand and diversify our business."