AMN Healthcare Announces Third Quarter 2011 Results
AMN Healthcare Announces Third Quarter 2011 Results
AMN Healthcare Services, Inc. has announced operating results for the third quarter of 2011. Financial highlights are as follows:
(Dollars in millions, except per share amounts)
Q3 2011 % Chg Q3 2010 % ChgQ2 2011
Revenue $242.3 37%
Gross Profit $68.7 42%
Net Loss ($26.9) (48%)
Key business highlights for the third quarter are as follows:
• Third quarter consolidated revenues were up 3% sequentially. Year-over-year consolidated revenues were up 37% as reported and 11% pro forma.
• Revenues for our largest segment, Nurse and Allied Healthcare Staffing, were up 6% sequentially and 24% year-over-year pro forma due primarily to continued growth in travel nurse volume.
• Third quarter consolidated gross margin improved sequentially and year-over-year due to improved bill rates on stable direct costs, as well as positive workers' compensation adjustments.
• EPS was impacted by $31.2 million in non-cash goodwill and other intangible asset impairment charges associated with the Home Healthcare Services segment.
"We continue to experience a steady market recovery, with sequential revenue growth across our largest business segments of Nursing and Allied Healthcare Staffing and Locum Tenens," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "We have been successful in adding new managed services program (MSP) clients and expanding our leadership position in this important service offering, which is increasingly preferred by clients. Since July of this year, we have executed new MSP contracts with an expected annualized gross revenue opportunity of over $35 million in 2012 and beyond."
Third Quarter 2011 Results
For the third quarter of 2011, consolidated revenue was $242 million, an increase of 3% sequentially and 37% from the same quarter last year. Third quarter revenue for the Nurse and Allied Healthcare Staffing segment was $148 million, an increase of 6% sequentially and 59% from the same quarter last year. The Locum Tenens Staffing segment generated revenue in the third quarter of $72 million, an increase of 1% sequentially and 4% from the same quarter last year. Third quarter Physician Permanent Placement Services segment revenue was $9 million, a decrease of 3% sequentially and an increase of 6% from the same quarter last year. This sequential decline was due to the adoption of a new revenue recognition standard on January 1, 2011, which had a larger positive impact in the second quarter. Third quarter revenue for the Home Healthcare Services segment, which was added in the third quarter of 2010 through the Medfinders acquisition, was $13 million, a decrease of 5% from the prior quarter.
"The Nurse and Allied Healthcare Staffing results exceeded our expectations, and we are encouraged by the steady improvement in the underlying gross margins and continued opportunity for market share gains through our MSP clients. While the Locum Tenens segment showed sequential growth, the results were below our previous expectations. This shortfall was driven primarily by lower fill rates, which we believe can be improved upon in the coming months," added Salka.
Gross margin in the third quarter of 2011 was 28.4%, an increase of 70 basis points compared to the previous quarter and an increase of 100 basis points from the same quarter last year. The sequential increase was due primarily to $1.1 million of positive workers' compensation adjustments along with an improvement in bill-pay spreads in our temporary staffing segments. Without the workers' compensation adjustments, gross margin was up 20 basis points sequentially and 50 basis points year-over-year.
SG&A expenses as a percentage of revenue for the third quarter were 22.2%, compared to 22.4% in the prior quarter and 26.5% in the same quarter last year. The decrease compared to both periods was due primarily to lower integration-related expenses associated with the Medfinders acquisition, with $0.2 million in the third quarter, compared to $1.2 million last quarter and $6.3 million of acquisition-related costs in the third quarter of last year. Excluding integration costs, SG&A expenses as a percentage of revenues were 22.1%, which was up 20 basis points from the prior quarter and down 90 basis points from the same quarter last year.
Third quarter 2011 GAAP net loss per diluted share was ($0.67), which included $31.2 million of non-cash goodwill and intangible asset impairment charges associated with the Home Healthcare Services segment. Adjusted earnings per share was $0.05, excluding impairment costs, integration-related costs, and credit agreement amendment fees of $1.1 million charged to interest expense. The impairment was driven by the future outlook of the home healthcare industry, which is being impacted primarily by adverse federal and state reimbursement rate and funding pressures.
In October, the Company signed a non-binding letter of intent with a strategic buyer to acquire our 19 home healthcare offices. Although not assured, we intend to execute a purchase agreement with this buyer during the fourth quarter, with a target close date during the first quarter of 2012.
As of September 30, 2011, cash and cash equivalents totaled $5 million, and total debt outstanding, net of discount, was $210 million.
Business Trends and Outlook
Going into the fourth quarter of 2011, most of our business segments will experience typical seasonal declines, with the exception of the Nurse and Allied Healthcare Staffing segment, which is expected to be flat sequentially. On a consolidated basis, fourth quarter revenues are expected to be between $232 million and $236 million. Gross margin is anticipated to be between 27.5% and 28.0%. SG&A expenses are expected to be approximately 22.5% of revenues. Adjusted EBITDA margin is expected to be approximately 6.0%. The anticipated year-over-year improvement in consolidated adjusted EBITDA margin reflects our ability to gain operating leverage as the business grows. Based on these expectations, full year consolidated revenues are projected to be approximately $940 million, an increase over 2010 of approximately 36% and 9% as reported and pro forma, respectively.