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AMN Healthcare announces positive Q2 2014 results

AMN Healthcare Services has announced second quarter 2014 financial results exceeded the Company's guidance for revenue and adjusted EBITDA.  Second quarter financial highlights are as follows:

Dollars in millions, except per share amounts.

Q2 2014

% Change

Q2 2013

YTD June 30, 2014

% Change YTD June 30, 2013

Revenue

$250.9

(1%)

$491.8

(3%)

Gross profit

$77.2

4%

$151.1

3%

Net income

$7.2

(14%)

$14.8

(7%)

Diluted EPS

$0.15

(17%)

$0.31

(6%)

Adjusted Diluted EPS*

$0.19

6%

$0.35

3%

Adjusted EBITDA*

$23.3

9%

$44.5

5%

*  See "Non-GAAP Measures" below for a discussion of our use of non-GAAP items and the table entitled "Supplemental Financial and Operating Data" for a reconciliation of non-GAAP items.

Second quarter consolidated revenue exceeded expectations due primarily to strong performance in the Nurse and Allied Healthcare Staffing segment driven by improving market trends and execution.

The quarterly sequential revenue growth of 4% was driven by 11% growth in the Locum Tenens segment and 1% growth in the Nurse and Allied Healthcare Staffing segment.

Gross margin of 30.8% for the second quarter represented a record high and year-over-year improvement of 150 basis points.

Second quarter adjusted EBITDA margin of 9.3% improved 90 basis points over prior year.

In April, the Company refinanced its then-existing credit facilities with a new credit agreement and initial rate reduction of approximately 175 basis points.

"Market trends strengthened across all of our segments as we progressed through the second quarter, contributing to a stronger than expected performance and a brighter outlook for the remainder of the year.  The improved market dynamics coupled with the solid execution of  our team delivered sequential increases in revenue, gross margin, adjusted EBITDA margin, and adjusted EPS.  It is clear that our leadership position in providing MSP, VMS, and other workforce solutions continues to enable AMN to deliver differentiated value to our clients," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "We also continue to make progress in our long-term strategic initiatives, such as expansion of our workforce solution offerings and investments in our recruitment and infrastructure technologies, to deliver a best-in-class, differentiated client and clinician experience."  

Second Quarter 2014 Results

For the second quarter of 2014 consolidated revenue was $251 million, a decrease of 1% from the same quarter last year and an increase of 4% sequentially. Second quarter revenue for the Nurse and Allied Healthcare Staffing segment was $166 million, down 2% from the same quarter last year and up 1% sequentially. Locum Tenens Staffing segment revenue in the second quarter was $74 million, an increase of 2% from the same quarter last year and 11% sequentially. Second quarter Physician Permanent Placement Services segment revenue was $11 million, a decrease of 3% from the same quarter last year and an increase of 1% sequentially.

Second quarter gross margin of 30.8% was 150 basis points higher than the same quarter last year and 10 basis points higher sequentially. The year-over-year increase was due to gross margin improvement across all business segments, as well as the addition of the higher-margin ShiftWise business.

SG&A expenses for the second quarter were $56 million, representing 22.1% of revenue, compared to $55 million in both the same quarter last year and the prior quarter. The year-over-year increase in SG&A expenses was due primarily to the additional SG&A expenses from the ShiftWise business.

Second quarter net income was $7 million and net income per diluted share was $0.15. Excluding non-cash charges to interest expense associated with execution of a new credit agreement, adjusted net income per diluted share was $0.19. Second quarter adjusted EBITDA was $23 million, compared to $21 million in both the same quarter last year and the prior quarter. Adjusted EBITDA margin of 9.3% reflected a 90 basis point increase over prior year and was driven by the improvement in gross margin. The 50 basis point sequential improvement was due mainly to a favorable professional liability adjustment.

At June 30, 2014, cash and cash equivalents totaled $6 million. Second quarter cash flow provided by operations was $6.2 million and capital expenditures were $4 million. The Company ended the quarter with total debt outstanding of $155 million, with a leverage ratio of 1.9 to 1.

Business Trends and Outlook

The Company expects consolidated third quarter 2014 revenue of $254 million to $258 million, with sequential growth expected in all business segments. Gross margin is expected to be approximately 30.5%. SG&A expenses as a percentage of revenue are expected to be between 22.5% and 23.0%. Adjusted EBITDA margin is expected to be approximately 8.5%.

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