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AMN Healthcare Announces Fourth Quarter 2010 Results

AMN Healthcare Announces Fourth Quarter 2010 Results

SAN DIEGO, AMN Healthcare Services, Inc. has today announced operating results for the fourth quarter and full year 2010. Financial highlights are as follows:

(Dollars in millions, except per share amounts)

Q4
2010

% Chg
Q4 2009

% Chg
Q3 2010

Full
Year
2010

% Chg
2009

Revenue

$220.3

52%

25%

$689.2

(9%)

Gross Profit

$62.0

51%

28%

$191.5

(6%)

Net Loss

($1.6)

41%

97%

($52.0)

57%

Net Loss per Share

($0.03)

63%

98%

($1.49)

60%

Adjusted EBITDA*

$11.2

4%

14%

$41.1

(28%)

Adjusted EPS*

($0.01)

50%

NM

$0.03

(91%)

* See notes (2) and (4) under "Supplemental Financial and Operating Data" for a reconciliation of non-GAAP items.

NM Not meaningful

Key business highlights for the fourth quarter are as follows:

Consolidated revenues were up 25% sequentially and 52% year-over-year, meeting the upper range of guidance.

On an organic, same-store basis, consolidated revenues were up 1% sequentially and 9% year-over-year.
Revenues for the largest segment, Nurse and Allied staffing, were up 9% sequentially and 17% year-over-year, on an organic, same-store basis.

The company is on track to achieve the projected $10 million in annualized incremental EBITDA by the fourth quarter of 2011 from revenue and cost synergies associated with the Medfinders acquisition.
Demand is rising in our temporary staffing segments.

GAAP net loss and EPS includes $2 million during the quarter for integration costs related to the Medfinders acquisition.

"Faced with the approaching challenges of the new world of healthcare, increased patient access coupled with the need to gain cost efficiency without sacrificing quality of care, healthcare organizations are increasingly seeking comprehensive solutions to manage their temporary and permanent staffing needs in a more streamlined way through one supply chain manager and workforce expert. This noticeable change in the needs and buying behavior of our clients has highlighted the value delivered through an MSP arrangement," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "Clients are recognizing the value and differentiation of our comprehensive MSP offering, and since announcing the acquisition, AMN has been awarded 20 new MSP contracts of varying sizes with estimated annual gross spend under management of over $45 million. This positive reaction from our existing and new clients is evidence that we are indeed better together.

"We continue to experience positive signs of market recovery in our largest service line, Travel Nurse Staffing, which delivered organic, same-store revenue increases of 11% sequentially and 25% over prior year," added Salka. "This represents four consecutive quarters of organic, same-store sequential revenue growth, and the second consecutive quarter of year-over-year growth. We are also encouraged by the improving trends we are seeing in our Locum Tenens business."

Fourth Quarter and Full Year 2010 Results

For the fourth quarter of 2010, consolidated revenue was $220 million, which represented an increase of 52% from prior year and 25% from prior quarter. Fourth quarter revenue for the Nurse and Allied Healthcare Staffing segment was $127 million, an increase of 72% from the same quarter last year and 37% sequentially. The Locum Tenens Staffing segment generated revenue of $69 million, an increase of 11% from prior year but a slight decrease sequentially. Fourth quarter Physician Permanent Placement Services revenue was $9 million, an increase of 13% from prior year and 7% sequentially. Through the acquisition, the company introduced the new Home Healthcare Services segment in the third quarter. Fourth quarter revenue for Home Healthcare Services was $14 million, which reflected the first full quarter performance since the acquisition.

For the full year 2010, revenue was $689 million, a decrease of 9% from prior year. Nurse and Allied Healthcare Staffing segment revenue was $371 million, a decrease of 14% from prior year, Locum Tenens Staffing segment revenue was $265 million, a decrease of 9% from prior year, and Physician Permanent Placement Services segment revenue was $34 million, a decrease of 8% from prior year. Home Healthcare Services segment revenue was $19 million, representing four months of revenue for this segment for 2010.

Gross margin in the fourth quarter of 2010 was 28.1%, a decrease of 30 bps from prior year and an increase of 70 bps compared to the previous quarter. Full year gross margin was 27.8%, as compared to 26.9% for prior year. The increase in gross margin was due to an improvement in gross margin within the Nurse and Allied Healthcare Staffing segment, as well as the addition of the higher-margin Medfinders business.

Selling, general and administrative ("SG&A") expenses as a percentage of revenue for the fourth quarter were 24.9%, compared to 22.4% in the same quarter last year and 26.5% in the prior quarter. SG&A expenses included a $1.2 million bad debt expense related to a locum tenens client in the fourth quarter, as well as acquisition and integration costs of $2 million and $6 million for the fourth and third quarters, respectively. For the full year, SG&A expenses were 24.4% as a percentage of revenue compared to 20.7% for prior year. Full year SG&A expenses increased by $11 million due primarily to acquisition and integration related costs which totaled approximately $9 million.

During the fourth quarter, the company recorded a charge of $1.1 million associated with the finalization of the goodwill impairment analysis that was initiated in the prior quarter. This charge, along with that taken in the prior quarter, relate to pre-acquisition goodwill.

Fourth quarter GAAP net loss per diluted common share was ($0.03) and included the negative impacts of ($0.01) for the non-cash goodwill asset impairment and the ($0.02) impact of acquisition-related costs, along with a $0.01 benefit from forgiving accumulated dividends as a result of the stockholder approval of certain provisions on the preferred securities issued in connection with the acquisition. Full year GAAP net loss per diluted common share was ($1.49) and included the negative impacts of ($1.26) of non-cash goodwill and other intangible asset impairment charges, ($0.17) of acquisition-related charges and ($0.09) for the write off of financing costs.

As of December 31, 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 December 31, 2010 was $215 million, with no borrowings on the revolver portion of the credit facility.

Business Trends and Outlook

Going into the first quarter of 2011, the Nursing and Allied Healthcare Staffing segment continues to experience positive momentum overall with 2% to 4% sequential revenue growth anticipated. This is being led by an expected increase in travel nurse volumes of at least 40% above prior year levels in March. The Physician businesses are expected to show a slight sequential improvement in first quarter revenues, and the Home Healthcare Services segment is expected to experience a slight sequential decline. On a consolidated basis, first quarter revenues are expected to be between $223 million and $227 million. Gross margin is anticipated to remain steady with the prior quarter.

While the Company does not intend to provide annual guidance on revenue and EPS, on the earnings call today the management team will be providing full year estimates for depreciation and amortization, interest expense, share count and capital expenditures.

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