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On Assignment, Inc - Results Q1

On Assignment, Inc - Results Q1
 
On Assignment, Inc. a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Laboratory/Scientific, Healthcare/Nursing, Physicians, Medical Financial, Information Technology and Engineering, today reported results for the quarter ended March 31, 2010.
 
First Quarter 2010 Financial Highlights:
-- IT and Engineering Revenues grew over the fourth quarter of 2009.
-- Life Sciences Revenue grew over the fourth quarter of 2009.
-- Consolidated Gross Margin was 32.0% up from 31.7% in the first quarter of 2009.
 
For the first quarter of 2010, consolidated revenues were $96.3 million compared with $99.9 million in the fourth quarter of 2009. The Company had a net loss of $0.3 million compared with net income of $1.0 million in the fourth quarter of 2009. The Life Sciences segment revenues were $23.1 million, up from $22.9 million in the fourth quarter of 2009. The Healthcare segment revenues, which include Nurse Travel and Allied Healthcare lines of business, were $18.6 million, down 13.0%, compared with $21.4 million in the fourth quarter of 2009. Nurse Travel revenues were $9.0 million, down 5.6%, from $9.6 million in the fourth quarter 2009, Allied Healthcare revenues were $9.6 million, down 19.0% due in part to the drop off in flu vaccination services, from $11.8 million in the fourth quarter of 2009. The Physician segment revenues were $18.9 million, down 5.9%, from $20.1 million in the fourth quarter of 2009, and the IT and Engineering segment revenues were $35.8 million, up from $35.6 million in the fourth quarter of 2009.
 
Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, "Demand for Information Technology, Engineering and Life Science professionals improved during the first quarter. Although demand for contract healthcare professionals remained weak during the quarter, we are beginning to see early signs of a recovery in demand for healthcare professionals." Dameris concluded, "Because of our focus on the provisioning of math and science skills and improving secular trends for staffing, our growth opportunities are significant in the next 3 to 5 years."
 
Jim Brill, Senior Vice President and Chief Financial Officer of On Assignment, Inc., stated, "Our first quarter consolidated gross margin remained strong and expanded over the first quarter of 2009 as the revenue mix shifted to higher margin segments. In the first quarter of 2010 gross margin in Life Sciences was 31.6%, Healthcare gross margin was 26.7%, while Physician staffing gross margin was 31.7% and IT and Engineering gross margin was 35.1%.
 
"Our SG&A expenses were up slightly from the fourth quarter due in part to the timing of the incurrence of audit expenses and expenses related to the Company's strategic planning. These increases were partially offset by a decrease in amortization of intangibles. Capital expenditures were $1.3 million, amortization of intangibles was $0.6 million, depreciation was $1.4 million and equity-based compensation expense was $1.3 million."
 
Second Quarter 2010 Financial Estimates
Based on revenues in the first six weeks of the second quarter of 2010 and taking into account the Company's normal seasonal operating patterns, the Company's financial estimates for the quarter ending June 30, 2010 are as follows:
-- Revenues of $103 to $107 million
-- Gross Margin of 33.4% to 33.6%
-- SG&A of $31.8 to $32.4 million, including depreciation of approximately $1.6 million, amortization of approximately $0.5 million and approximately $1.8 million in equity-based compensation expense
-- Adjusted EBITDA of $6.5 to $7.5 million
-- Net income of $0.5 to $1.0 million
-- Earnings per diluted share of $0.01 to $0.03
The estimates above assume no deterioration in the staffing markets which On Assignment serves, mid 20% year over year revenue growth in IT and Engineering, mid teens year over year revenue growth in Life Sciences, single digit declines in year over year revenue in Physician and Allied and a 40% year over year decline in Nurse Travel. The estimates also include approximately $2.1 million in revenue and $0.8 million in SG&A expenses related to the Cambridge Group, acquired by the Company in April.

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