On Assignment Reports Second Quarter 2011 Results
On Assignment Reports Second Quarter 2011 Results
On Assignment, Inc a leading global provider of diversified professional staffing solutions has reported results for the quarter ended June 30, 2011.
Second Quarter 2011 Highlights
Revenues for the second quarter of 2011 were $143.7 million, up 38% year-over-year and 11% from the preceding quarter.
Gross Margin was 34.0% compared with 33.8% in the second quarter of 2010.
Adjusted EBITDA (a non-GAAP measurement defined below) was $14.8 million, up 104% year-over-year.
Adjusted EBITDA margin (Adjusted EBITDA as a % of revenues) for the quarter was 10.3% compared with 7.0% in the second quarter of 2010.
Net Income was $5.9 million, or $0.16 per diluted share for the quarter compared with $0.9 million, or $0.03 per diluted share, in the second quarter of 2010.
Subsequent to the end of the quarter, completed the acquisition of HealthCare Partners, a physician staffing firm based in Atlanta, and announced the appointment of Christian Rutherford as President, Vista Staffing Solutions.
Peter Dameris, President and Chief Executive Officer of On Assignment, Inc. said, "We are very pleased with our operating results for the quarter and the first half of the year driven by high double digit growth in our IT & Engineering and Life Sciences units. Last year, we reported that we had developed a five year strategic plan to get to $1 billion in revenue and at least $100 million in Adjusted EBITDA. Based on the growth in our business segments and acquisitions completed to date in 2011, we believe we are comfortably ahead of where we need to be at this point in time to achieve this plan. We believe that we have the leadership, infrastructure and client relationships to continue generating strong growth and operating leverage."
Commenting on the results for the second quarter, Dameris continued, "During the quarter, revenues at both our IT & Engineering and Life Sciences segments grew by more than 55%. While revenue in our Healthcare segment, which resumed growth in the first quarter after over two years of decline, accelerated to double digits, our Physician Staffing segment saw a modest year-over-year decline for the quarter. Exiting the quarter, revenues in our Physician Staffing segment grew year-over-year in June for the first time in 22 months. We anticipate a continued resumption of growth in our Physician Staffing segment in the third quarter based on the trends we experienced subsequent to June. Overall, as evidenced by our second quarter results, our revenue growth carries significant operating leverage, such that our Adjusted EBITDA increased three times faster than our year over year revenue growth."
Dameris concluded, "We are also excited to have completed the recently announced acquisition of HealthCare Partners, a leading locum tenens and permanent placement healthcare staffing firm. With this acquisition, Vista Staffing Solutions now generates more than $100 million in annual revenue."
Jim Brill, Senior Vice President and Chief Financial Officer of On Assignment, Inc. stated, "Our gross margin of 34.0% was the highest second quarter gross margin ever achieved by the company, up 17 basis points from the second quarter of 2010 and 62 basis points from last quarter. In the second quarter of 2011, gross margin in our IT and Engineering division was 35.8%, in Life Sciences it was 34.3%, Healthcare gross margin was 28.3% and Physician staffing gross margin was 33.1%."
Second Quarter 2011 Results
For the second quarter of 2011, consolidated revenues were $143.7 million, up 37.5% on a year-over-year and up 11.0% on a sequential basis. The company had net income of $5.9 million, or $0.16 per diluted share, compared with a net income of $0.9 million, or $0.03 per diluted share in the second quarter of 2010.
The IT and Engineering segment revenues were $65.3 million, up 58.4% year over year and 8.6% from the first quarter of 2011. Life Sciences segment revenues were $39.6 million, up 55.3% year over year and 20.2% from the first quarter of 2011. Healthcare segment revenues, which include the Nurse Travel and Allied Healthcare lines of business, were $21.7 million, up 12.6% year over year and up 9.5% from the first quarter of 2011. Nurse Travel revenues were $10.8 million, which includes $0.9 million of revenue generated from supporting a customer that experienced labor disruption during the quarter, up 13.4% from $9.5 million in the second quarter of 2010. The second quarter of 2010 included $2.1 million of revenue related to supporting a customer that experienced labor disruption in that quarter. Revenues in Nurse Travel were up 11.5% from $9.7 million in the first quarter of 2011. Allied Healthcare revenues were $10.9 million, up 11.8% year over year and up 7.6% from the first quarter of 2011. Physician segment revenues were $17.0 million, down 7.7% year over year but up 2.9% from the first quarter of 2011.
SG&A increased by $1.2 million over the first quarter primarily due to higher branch office expenses, mainly commissions on the higher revenue levels and headcount additions to support anticipated high growth in certain segments and the inclusion of Valesta operating results for a full quarter. This increase was partially offset by a $1.3 million positive income effect of the settlement of an earn-out related to a prior acquisition. Capital expenditures were $2.0 million, amortization of intangibles was $0.6 million and depreciation was $1.7 million.
Third Quarter 2011 Financial Estimates
Based on revenues in the first four weeks of the third quarter of 2011 and taking into account the Company's normal seasonal operating patterns, the Company's financial estimates for the quarter ending September 30, 2011 are as follows:
Revenues of $155 million to $158 million
Gross Margin of approximately 34.1%
SG&A of approximately $41.0 million which includes $150,000 in acquisition-related expenses, depreciation of approximately $1.7 million, amortization of approximately $650,000 and approximately $1.7 million in equity-based compensation expense
Adjusted EBITDA of $16 million to $17 million
Net income of $6.4 million to $7.0 million
Earnings per diluted share of $0.17 to $0.19
The estimates above assume no deterioration in the staffing markets On Assignment serves. The estimates assume year-over-year revenue growth in the mid 40% range for IT and Engineering, the low 40% range for Life Sciences, low double digits for Healthcare and a mid 20% range in Physician Staffing which includes approximately $3.8 million in revenue from the recently completed HealthCare Partners acquisition.