AMN Healthcare Services, Inc has announced its operating results
AMN Healthcare Services, Inc has announced operating results for the third quarter of 2010.
Third Quarter 2010 Results
For the third quarter of 2010 (which includes one month of financial results from the Medfinders acquisition), combined revenue was $176 million, an increase of 6% from prior year and up 18% from prior quarter. Revenue from one month performance of the acquisition contributed $21 million to the quarter. Third quarter revenue for the Nurse and Allied staffing segment was $93 million, an increase of 13% from the same quarter last year and up 23% sequentially. Excluding the impact of the acquisition for the month of September, the Nurse and Allied segment third quarter revenue was $79 million reflecting a 5% sequential increase. The Locum Tenens staffing segment generated revenue of $70 million, a decrease of 8% from prior year but up 6% sequentially. Third quarter Physician Permanent Placement revenue was $9 million, a decrease of 1% from prior year and up 4% sequentially. Excluding the acquisition, the Locum Tenens and the Physician Permanent Placement segments reflected sequential increases of 3%. Through the acquisition, the company introduced the new segment of Home Healthcare services in the third quarter, which generated revenue of $5 million in the month of September.
Gross margin in the third quarter of 2010 was 27.4%, consistent with prior year and a decrease of 20 bps compared to the previous quarter. The decrease as compared to prior quarter was mainly attributable to a decrease in Locum Tenens staffing gross margin offset by a higher gross margin from the acquired businesses which contributed 50 bps gross margin improvement in the quarter.
Selling, general and administrative ("SG&A") expenses for the third quarter of 2010 were 26.5% as a percentage of revenue compared to 22.2% in the same quarter last year. Third quarter SG&A increased by $10 million over the same period in the prior year and increased by $12 million as compared to the prior quarter, due primarily to additional acquisition and integration related costs totaling $6 million and the SG&A costs of the acquired business for the month of September which also totaled $6 million. Acquisition and integration related costs for the quarter include charges consisting mainly of severance payments related to workforce reductions and professional services fees incurred to assist with due diligence, accounting, tax, legal and other advisory services associated with the acquisition and the related integration efforts.
In connection with the acquisition and the associated additional financing, the company incurred additional financing costs of which $5 million were charged directly to interest expense in the period.
Unrelated to the transaction, in accordance with accounting guidance on goodwill and other intangible assets, the company incurred $49.8 million in non-cash impairment charges relating to goodwill and certain other intangible assets resulting from prior acquisitions. These impairment charges are non-cash expenses and will not have any impact on the company's cash position, future cash flows or debt covenants.
Third quarter GAAP net loss per diluted common share was ($1.48) and included the negative impacts of ($1.25) of non-cash goodwill and other intangible asset impairment charges, ($0.13) of acquisition related charges and ($0.09) for the write off of financing costs. Third quarter GAAP net loss per diluted common share for the quarter also includes the impact of assumed accumulated dividends on the preferred securities issued in connection with the acquisition having an impact of ($0.01) per common share.
As of September 30, 2010, cash and cash equivalents totaled $2 million, compared to $27 million as of December 31, 2009. Total term debt outstanding, net of discount, as of September 30, 2010 was $217 million, with no borrowings on the revolver portion of the credit facility.
Business Trends and Outlook
Going into the fourth quarter, the Nursing and Allied staffing business continues to experience positive momentum overall. The strength of our Managed Services business is expected to help deliver slight sequential growth in the fourth quarter, overcoming the typical seasonal declines. The Physician businesses are expected to decline sequentially, in line with the typical seasonal trends. The Home Healthcare business is expected to experience a slight sequential decrease compared to historic levels. Consolidated revenues in the fourth quarter are expected to be between $215 million and $220 million, which is essentially flat on a pro forma basis compared with the third quarter. Gross margin is anticipated to increase nominally due to the inclusion of Medfinders for a full quarter.