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AMN Healthcare Q2 gross profit up 43%

Dollars in millions, except per share amounts.

Q2 2015

% Change

Q2 2014

YTD June 30,
2015

% Change YTD
June 30, 2014

Revenue

$350.1

40%

$677.7

38%

Gross profit

$110.1

43%

$211.6

40%

Net income

$15.9

121%

$28.1

89%

Diluted EPS

$0.32

113%

$0.58

87%

Adjusted diluted EPS*

$0.38

81%

$0.69

73%

Adjusted EBITDA*

$39.4

69%

$72.7

64%

Consolidated revenue increased 40% year-over-year, driven by organic growth of 24% and the remainder from acquisitions.

Gross margin of 31.4% represented an improvement of 60 basis points year-over-year and 40 basis points from the prior quarter.

Adjusted EBITDA margin of 11.2% reflected a 190 basis point year-over-year improvement, driven primarily by the gross margin improvement and operating leverage.

Adjusted diluted EPS of $0.38 grew 81% year-over-year.

AMN Healthcare's differentiated strategy of serving healthcare providers through a diverse portfolio of innovative workforce solutions and staffing services continues to drive industry leading performance.

"All business segments are executing very strongly amid continued robust market conditions, which drove better than anticipated revenue and profitability growth in the second quarter," said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. "Our recently acquired Avantas, Onward Healthcare, Locum Leaders and Medefis companies are also performing very well and the majority of our integration activities have been successfully completed. With the continuing favorable market environment, our outlook remains optimistic as we stay focused on delivering superior service to our clients and healthcare professionals, improving the efficiency of our operations, and developing or acquiring additional innovative workforce solutions and recruitment strategies."  

Second Quarter 2015 Results

For the second quarter of 2015, consolidated revenue was $350 million, an increase of 40% from the same quarter last year and 7% sequentially. Second quarter revenue for the Nurse and Allied Healthcare Staffing segment was $240 million, up 45% (27% excluding acquisitions) from the same quarter last year and 5% sequentially. Locum Tenens Staffing segment revenue in the second quarter was $97 million, an increase of 31% (19% excluding acquisitions) from the same quarter last year and up 12% sequentially. Second quarter Physician Permanent Placement Services segment revenue was $13 million, an increase of 19% from the same quarter last year and up 8% sequentially.

Second quarter gross margin of 31.4% was higher by 60 basis points than the same quarter last year and higher by 40 basis points sequentially. The year-over-year gross margin improvement was driven by an increased revenue mix of our higher-margin workforce solutions businesses.

SG&A expenses for the second quarter were $75 million, representing 21.3% of revenue, compared to 22.1% in the same quarter last year and 21.8% in the prior quarter. The year-over-year improvement in SG&A expenses as a percentage of revenue was due primarily to operating leverage and a favorable professional liability actuarial adjustment. The favorable professional liability adjustment in the second quarter was $3.3 million, compared to a favorable adjustment of $1.6 million in the same quarter last year. On a sequential basis, the lower SG&A percentage was driven by the favorable professional liability actuarial adjustment, which more than offset the growth in employee expenses to support the revenue growth.

Second quarter net income was $16 million and net income per diluted share was $0.32. Excluding amortization of intangible assets of $3 million and acquisition and integration costs of $2 million, adjusted net income per diluted share was $0.38. Second quarter adjusted EBITDA was $39.4 million, a year-over-year increase of 69% and sequential increase of 18%. Second quarter adjusted EBITDA margin of 11.2% represented a 190 basis point increase year-over-year and 100 basis point increase sequentially. 

At June 30, 2015, cash and cash equivalents totaled $14 million. Second quarter cash flow from operations was $25 million and capital expenditures were $8 million. The Company ended the second quarter with total debt outstanding of $226 million, with a leverage ratio of 1.9 to 1.

Business Trends and Outlook

The Company expects consolidated third quarter 2015 revenue of $360 to $365 million. Gross margin is expected to be 31.0% to 31.5%. SG&A expenses as a percentage of revenue are expected to be approximately 22.0%, which includes integration-related expenses of approximately $0.7 million. Adjusted EBITDA margin is expected to be approximately 10.0% to 10.5%.  

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