AMN HEALTHCARE SERVICES INC - FORM 8-K - EX-99.1

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8-K - 8-K - AMN HEALTHCARE SERVICES INC	d621445d8k.htm

EXHIBIT 99.1

Contact:

Amy C. Chang

Vice President, Investor Relations

866.861.3229

AMN HEALTHCARE ANNOUNCES THIRD QUARTER 2013 RESULTS

Reports quarterly revenue of $257 million, up 5% year-over-year

Diluted EPS of $0.18 vs. $0.12 in prior year

SAN DIEGO – (October 31, 2013) – AMN Healthcare Services, Inc. (NYSE: AHS), healthcare’s innovator in workforce solutions and staffing services, today announced third quarter 2013 financial results, which were at the high end of the Company’s guidance for revenue and adjusted EBITDA. Financial highlights are as follows:

Dollars in millions, except per share amounts.


	Q3 2013	% Change Q3 2012	YTD September 30, 2013	% Change YTD September 30, 2012*
Revenue	$257.1	5%	$763.2	8%
Gross profit	$75.7	9%	$223.1	12%
Net income	$8.6	47%	$24.6	166%
Diluted EPS	$0.18	50%	$0.51	155%
Adjusted EBITDA**	$21.5	15%	$64.0	17%

* Percentage change in this column excludes the impact of the discontinued operations associated with the disposal of the Home Healthcare Services segment in January 2012.

** 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.

•

Third quarter net income increased 47% and adjusted EBITDA increased 15% year-over-year

•

On a segment basis, third quarter revenue was up year-over-year by 3% in Nurse and Allied Healthcare Staffing, 11% in Locum Tenens Staffing, and 9% in Physician Permanent Placement Services

•

Third quarter consolidated gross margin of 29.4% was higher year-over-year by 90 basis points

•

Adjusted EBITDA margin in the third quarter of 8.4% reflected a year-over-year improvement of 70 basis points

•

Cash flow from operations in the third quarter was $27 million, reflecting solid earnings performance and a two day reduction in days sales outstanding.

“AMN’s solid execution in the third quarter resulted in year-over-year revenue growth across all business segments, as well as improved gross and adjusted EBITDA margins. The Locum Tenens and Physician Permanent Placement businesses have been executing and performing very well in a strong demand environment. In the Nurse and Allied Staffing businesses, the demand environment has been more moderate due to census, client reaction to reimbursement cuts and uncertainty of the impact of the Affordable Care Act,” said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. “We continue to build our leadership position as the innovator in healthcare workforce solutions through winning new MSP clients, expanding our workforce solutions offerings, and improving our operating model. These strategies will enable us to maximize our growth opportunity by serving our clients in an even more differentiated and efficient way.”

Third Quarter 2013 Results

For the third quarter of 2013, consolidated revenue was $257 million, an increase of 5% from the same quarter last year and 1% sequentially. Third quarter revenue for the Nurse and Allied Healthcare Staffing segment was $171 million, up 3% from the same quarter last year and 1% sequentially. Locum Tenens Staffing segment revenue in the third quarter was $75 million, an increase of 11% from the same quarter last year and 4% sequentially. Third quarter Physician Permanent Placement Services segment revenue was $11 million, an increase of 9% from the same quarter last year and down 2% sequentially.

Third quarter gross margin of 29.4% was higher by 90 basis points than the same quarter last year and higher by 10 basis points sequentially. The year-over-year increase was due to gross margin improvement in the Nurse and Allied Healthcare Staffing and Locum Tenens Staffing segments. The sequential increase was due primarily to gross margin improvement in the Locum Tenens Staffing segment.

SG&A expenses for the third quarter were $56 million, representing 21.6% of revenue, compared to 21.5% of revenue in both the prior year and prior quarter.

Third quarter adjusted EBITDA grew 15% year-over-year to $22 million. Adjusted EBITDA margin of 8.4% represented a 70 basis point increase over prior year and was driven by the improvement in gross margin. Third quarter net income was $9 million and net income per diluted share was $0.18.

As of September 30, 2013, cash and cash equivalents totaled $32 million and total debt outstanding, net of discount, was $149 million, with a leverage ratio of 1.9 to 1. Third quarter cash flow from operations was $27 million and capital expenditures were $1 million.

Business Trends and Outlook

The Company expects the typical fourth quarter seasonal decline, combined with the moderate demand environment in Nurse and Allied Staffing, to result in consolidated revenue of $246 million to $250 million. Gross margin is expected to be relatively steady between 29.0% to 29.5%. SG&A expenses as a percentage of revenue are expected to be approximately 22.0%. Adjusted EBITDA margin is expected to be approximately 8.0%.

About AMN Healthcare

AMN Healthcare is the innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. AMN Healthcare’s workforce solutions - including managed services programs and recruitment process outsourcing - enable providers to successfully reduce complexity, increase efficiency and improve patient outcomes within the rapidly evolving healthcare environment. The Company provides unparalleled access to the largest network of quality clinicians and physicians through its innovative recruitment strategies and breadth of career opportunities. Clients include acute-care hospitals, government facilities, community health centers and clinics, physician practice groups and many other healthcare settings. For more information, visit www.amnhealthcare.com.

Conference Call on October 31, 2013

AMN Healthcare Services, Inc.’s third quarter 2013 conference call will be held on Thursday, October 31, 2013, at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare’s website at http://amnhealthcare.investorroom.com/presentations. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software. Interested parties may

participate live via telephone by dialing (888) 423-3273 in the U.S. or (612) 332-0923 internationally. Following the conclusion of the call, a replay of the webcast will be available at the Company’s website. A telephonic replay of the call will also be available at 7:30 p.m. Eastern Time on October 31, 2013, and can be accessed until 11:59 p.m. Eastern Time on November 15, 2013, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 304355.

Non-GAAP Measures

This earnings release contains certain non-GAAP financial information, which the Company provides as additional information, and not as an alternative, to the Company’s condensed consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures include (1) adjusted EBITDA, and (2) adjusted EBITDA margin. The Company provides such non-GAAP financial measures because management believes that they are useful both to management and investors as a supplement, and not as a substitute, when evaluating the Company’s operating performance. Additionally, management believes that adjusted EBITDA and adjusted EBITDA margin serve as industry-wide financial measures, and it uses adjusted EBITDA for making financial decisions and allocating resources. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP measures, or may be calculated differently than other similarly title captioned non-GAAP measures, reported by other companies. They should not be used in isolation to evaluate the Company’s performance. A reconciliation of non-GAAP measures identified in this release, along with further detail about the use and limitations of certain of these non-GAAP measures, may be found below in the table entitled Supplemental Financial and Operating Data under the caption entitled “Reconciliation of Non-GAAP Items” or on the Company’s website at http://amnhealthcare.investorroom.com/financialreports. Additionally, from time to time, additional information regarding non-GAAP financial measures, including pro forma measures, may be made available on the Company’s website.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include expectations regarding 2013 fourth quarter revenue, gross margin, SG&A expenses and adjusted EBITDA margin, as well as seasonality and the demand environment. The Company based these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimates,” variations of such words and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Factors that could cause actual results to differ from those implied

by the forward-looking statements contained in this press release are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and its other periodic reports as well as the Company’s current and other reports filed from time to time with the Securities and Exchange Commission. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time.

AMN Healthcare Services, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2013			2012			2013			2013			2012

Revenue	$	257,095		$	243,912		$	253,943		$	763,158		$	706,110
Cost of revenue		181,428			174,329			179,530			540,071			506,340

Gross profit		75,667			69,583			74,413			223,087			199,770

		29.4%			28.5%			29.3%			29.2%			28.3%
Operating expenses:
Selling, general and administrative		55,605			52,375			54,551			163,763			149,855
		21.6%			21.5%			21.5%			21.5%			21.2%
Depreciation and amortization		3,317			3,435			3,240			9,847			10,682

Total operating expenses		58,922			55,810			57,791			173,610			160,537

Income from operations		16,745			13,773			16,622			49,477			39,233

Interest expense, net		1,840			3,688			3,130			7,829			22,811

Income from continuing operations before income taxes		14,905			10,085			13,492			41,648			16,422
Income tax expense		6,290			4,227			5,093			17,071			7,192

Income from continuing operations		8,615			5,858			8,399			24,577			9,230

Income from discontinued operations, net of tax		0			0			0			0			823

Net income	$	8,615		$	5,858		$	8,399		$	24,577		$	10,053


Basic income per common share from:
Continuing operations	$	0.19		$	0.13		$	0.18		$	0.53		$	0.20
Discontinued operations		0.00			0.00			0.00			0.00			0.02

Net income	$	0.19		$	0.13		$	0.18		$	0.53		$	0.22


Diluted income per common share from:
Continuing operations	$	0.18		$	0.12		$	0.18		$	0.51		$	0.20
Discontinued operations		0.00			0.00			0.00			0.00			0.02

Net income	$	0.18		$	0.12		$	0.18		$	0.51		$	0.22


Weighted average common shares outstanding:
Basic		45,986			40,850			46,039			45,947			40,747

Diluted		47,810			46,897			47,837			47,776			46,512


Other comprehensive loss – foreign currency translation		(84	)		(55	)		(28	)		(19	)		(65	)

Comprehensive income	$	8,531		$	5,803		$	8,371		$	24,558		$	9,988

AMN Healthcare Services, Inc.

Supplemental Financial and Operating Data

(dollars in thousands, except operating data)

(unaudited)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
		2013			2012			2013			2013			2012
Revenue
Nurse and allied healthcare staffing	$		170,955	$		166,331	$		170,138	$		517,858	$		478,832
Locum tenens staffing			75,253			67,591			72,708			213,417			198,692
Physician permanent placement services			10,887			9,990			11,097			31,883			28,586

	$		257,095	$		243,912	$		253,943	$		763,158	$		706,110


Reconciliation of Non-GAAP Items:

Segment operating income(1)
Nurse and allied healthcare staffing	$		20,392	$		18,785	$		20,128	$		62,994	$		54,306
Locum tenens staffing			7,547			6,298			4,908			17,347			16,805
Physician permanent placement services			2,205			2,201			2,289			6,735			5,797

			30,144			27,284			27,325			87,076			76,908
Unallocated corporate overhead			8,595			8,507			5,985			23,085			22,418

Adjusted EBITDA(2)			21,549			18,777			21,340			63,991			54,490
Adjusted EBITDA margin(3)			8.4%			7.7%			8.4%			8.4%			7.7%

Depreciation and amortization			3,317			3,435			3,240			9,847			10,682
Share-based compensation			1,487			1,569			1,478			4,667			4,575
Interest expense, net			1,840			3,688			3,130			7,829			22,811

Income from continuing operations before income taxes			14,905			10,085			13,492			41,648			16,422
Income tax expense			6,290			4,227			5,093			17,071			7,192

Net income from continuing operations			8,615			5,858			8,399			24,577			9,230

Net income from discontinued operations			0			0			0			0			823

Net income	$		8,615	$		5,858	$		8,399	$		24,577	$		10,053


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
		2013			2012			2013			2013			2012
Gross Margin
Nurse and allied healthcare staffing			27.4%			26.5%			27.2%			27.4%			26.5%
Locum tenens staffing			29.3%			28.4%			29.0%			28.8%			27.8%
Physician permanent placement services			62.6%			64.1%			62.7%			62.6%			61.2%

Operating Data:
Nurse and allied healthcare staffing
Average clinicians on assignment (4)			5,771			5,884			5,924			5,970			5,640
Revenue per clinician per day(5)		$	321.99		$	307.26		$	315.61		$	317.74		$	309.85
Gross profit per clinician per day(5)		$	88.12		$	81.27		$	85.96		$	86.93		$	82.18

Locum tenens staffing
Days filled (6)			50,993			45,868			50,127			146,477			138,610
Revenue per day filled(6)		$	1,475.75		$	1,473.60		$	1,450.48		$	1,457.00		$	1,433.46
Gross profit per day filled(6)		$	432.73		$	418.33		$	421.35		$	419.51		$	398.70


	As of September 30		As of June 30,
	2013	2012	2013
Leverage ratio (7)	1.9	2.6	2.1

(1)	Segment operating income represents net income plus interest expense (net of interest income), income taxes, depreciation and amortization, unallocated corporate overhead, share-based compensation expense, and net income from discontinued operations, net of tax.

(2)

Adjusted EBITDA represents net income plus interest expense (net of interest income), income taxes, depreciation and amortization, share-based compensation expense and net income from discontinued operations, net of tax. Management believes that adjusted EBITDA provides an effective measure of the Company’s results, as it excludes certain items that management believes are not indicative of the Company’s operating performance and considers measures used in credit facilities. Adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to income from operations or net income as an indicator of operating performance. Although management believes that some of the items excluded from adjusted EBITDA are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.

(3)	Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

(4)	Average clinicians on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period presented.

(5)	Revenue per clinician per day and gross profit per clinician per day represent the revenue and gross profit of the Company’s nurse and allied healthcare staffing segment divided by average clinicians on assignment, divided by the number of days in the period presented.

(6)	Days filled is calculated by dividing the locum tenens hours filled during the period by eight hours. Revenue per day filled and gross profit per day filled represent revenue and gross profit of the Company’s locum tenens staffing segment divided by days filled for the period presented.

(7)	Leverage ratio represents the ratio of the consolidated funded indebtedness (as calculated per the Company’s credit agreement) at the end of the period to the consolidated adjusted EBITDA for the last twelve months.

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)


	September 30, 2013		June 30, 2013		December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	31,653	$	10,519	$	5,681
Accounts receivable, net		144,933		149,798		142,510
Accounts receivable, subcontractor		18,869		15,728		18,467
Deferred income taxes, net		17,642		18,683		18,123
Prepaid and other current assets		13,183		15,502		18,963

Total current assets		226,280		210,230		203,744
Restricted cash, cash equivalents and investments		22,039		20,960		18,861
Fixed assets, net		17,405		16,826		14,815
Other assets		23,002		22,536		19,732
Goodwill		123,324		123,324		123,324
Intangible assets, net		132,127		133,708		136,910


Total assets	$	544,177	$	527,584	$	517,386


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses		54,842		52,374		52,619
Accrued compensation and benefits		54,220		46,871		49,443
Current portion of notes payable		0		5,000		0
Other current liabilities		6,251		6,924		7,463

Total current liabilities		115,313		111,169		109,525

Notes payable, net of discount		148,616		148,524		158,178
Other long-term liabilities		71,976		69,967		67,572

Total liabilities		335,905		329,660		335,275

Commitments and contingencies

Stockholders’ equity		208,272		197,924		182,111


Total liabilities and stockholders’ equity	$	544,177	$	527,584	$	517,386

AMN Healthcare Services, Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)


	Three Months Ended									Nine Months Ended
	September 30,						June 30			September 30,
	2013			2012			2013			2013			2012

Net cash provided by operating activities	$	26,577		$	11,512		$	19,221		$	43,099		$	42,062

Net cash (used in) provided by investing activities		(503	)		(2,103	)		(3,142	)		(5,800	)		4,218

Net cash used in financing activities		(4,856	)		(21,029	)		(7,471	)		(11,308	)		(46,354	)

Effect of exchange rates on cash		(84	)		(55	)		(28	)		(19	)		(65	)


Net increase (decrease) in cash and cash equivalents		21,134			(11,675	)		8,580			25,972			(139	)

Cash and cash equivalents at beginning of period		10,519			15,498			1,939			5,681			3,962


Cash and cash equivalents at end of period	$	31,653		$	3,823		$	10,519		$	31,653		$	3,823

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