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

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8-K - FORM 8-K - AMN HEALTHCARE SERVICES INC	d482375d8k.htm

Exhibit 99.1

Contact:

Randle Reece

Director, Investor Relations

866.861.3229

AMN HEALTHCARE ANNOUNCES THIRD QUARTER 2017 RESULTS

Quarterly revenue of $494 million;

GAAP EPS of $0.57 and adjusted EPS of $0.63

SAN DIEGO – (November 2, 2017) – AMN Healthcare Services, Inc. (NYSE: AMN), healthcare’s leader and innovator in workforce solutions and staffing services, today announced its third quarter 2017 financial results. Financial highlights are as follows:

Dollars in millions, except per share amounts.


	Q3 2017		% Change Q3 2016			YTD Sept. 30, 2017		% Change YTD Sept. 30, 2016
Revenue	$	494.4		5	%	$	1,479.4		5	%
Gross profit	$	159.5		3	%	$	482.3		5	%
Net income	$	28.1		3	%	$	91.4		15	%
Diluted EPS	$	0.57		4	%	$	1.85		15	%
Adj. diluted EPS*	$	0.63		2	%	$	1.93		6	%
Adjusted EBITDA*	$	61.7		6	%	$	192.0		9	%

*	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.

Highlights

•

AMN’s workforce solutions leadership position continues to grow, with significant new MSP relationships added.

•

Nurse and Allied grew revenue 6% year over year.

•

Locum Tenens returned to growth with revenue rising 3% year over year.

•

Operating cash flow of $26 million in the quarter and $96 million year to date.

•

Repurchased 177,143 shares in the quarter for $7 million, with an average price per share of $38.18.

“Superior service and a comprehensive suite of workforce solutions continue to differentiate AMN Healthcare and deliver incremental value for healthcare organizations during a time of significant transformation. Our healthcare clients benefit from AMN solutions for hiring great talent, maintaining greater flexibility, using analytics for insight, and ensuring quality patient care,” said Susan R. Salka, President and Chief Executive Officer of AMN Healthcare. “I am proud of our team’s execution in delivering another quarter of solid performance.”

“Market conditions support continued growth, which is bolstered by gains in MSP and other strategic offerings. Key long-term trends remain in our favor and are expected to increase clients’ need for innovative workforce solutions. These factors give us confidence that AMN Healthcare can maintain or improve revenue growth in 2018,” added Ms. Salka.

Third Quarter 2017 Results

Consolidated revenue for the quarter was $494 million, a 5% increase over prior year and 1% higher than the second quarter of 2017. We estimate that less than $2 million of revenue was lost in the quarter due to disruptions associated with the hurricanes.

Revenue for the Nurse and Allied Solutions segment was $303 million, higher by 6% year over year and up 1% sequentially. The Travel Nurse division continued to perform well, with revenue up 5% year over year and flat sequentially. Allied division revenue increased 6% year over year and was down slightly sequentially.

Locum Tenens Solutions segment revenue was $111 million, up 3% both year-over-year and on a sequential basis. Other Workforce Solutions segment revenue was $80 million, reflecting an increase of 4% year over year and down 1% sequentially, with year-over-year growth driven by the VMS and interim leadership businesses, partially offset by declines in the permanent placement businesses.

Gross margin was 32.3%, lower by 40 basis points year over year and 60 basis points sequentially. The year-over-year gross margin decline was due primarily to higher physician pay rates in Locum Tenens and and lower permanent placement fees. The sequential gross margin decline was driven primarily by higher health insurance costs and lower permanent placement fees.

SG&A expenses were $101 million, or 20.3% of revenue, compared to $100 million, or 21.2% of revenue, in the same quarter last year. Expenses as a percentage of revenue decreased year over year due to improved operating leverage. SG&A was $97 million, or 19.7% of revenue, in the previous quarter, including a $4 million favorable professional liability actuarial adjustment.

Net income was $28 million, or $0.57 per diluted share, compared to $27 million, or $0.55 per diluted share, in the same quarter last year. Excluding amortization of intangible assets, acquisition and integration costs, net of tax, adjusted net income per diluted share was $0.63. Adjusted EBITDA was $62 million, a year-over-year increase of 6%. Adjusted EBITDA margin was 12.5%, representing a 20 basis point increase year-over-year and 120 basis point decline on a sequential basis.

At September 30, 2017, cash and cash equivalents totaled $20 million. For the quarter ended September 30, 2017, cash flow from operations was $26 million and capital expenditures were $5 million. The Company ended the quarter with total debt outstanding of $325 million, with a leverage ratio as calculated in accordance with the Company’s credit agreement of 1.3 to 1.

During the third quarter of 2017, the Company repurchased 177,143 shares of our common stock at an average price of $38.18 per share, resulting in an aggregate purchase price of $7 million. Since the November 2016 inception of our $150 million share repurchase plan, a total of 629,896 shares have been repurchased at an average price of $32.29, with a total of purchase price of $20 million.

Fourth-Quarter 2017 Outlook


Metric		Guidance*
Consolidated revenue		$498 - $504 M
Gross margin		32.0%
SG&A as percentage of revenue		20.0%
Adjusted EBITDA margin		12.0-12.5%

*	Note: Guidance percentage metrics are approximate. For a reconciliation of adjusted EBITDA margin, see the table entitled “Reconciliation of Guidance Adjusted EBITDA Margin to Guidance Operating Margin” below.

On an as-reported basis, the projected year-over-year growth rate is 2-3%. Excluding any labor disruption revenue, the fourth quarter is expected to reflect year-over-year growth of approximately 5%. The hurricanes are expected to have a negative revenue impact of less than $2 million. The expected sequential decrease in gross margin reflects the normal seasonal margin decline in the Nurse and Allied segment and an unfavorable segment mix shift. Travel Nurse Staffing, our largest business, is expected to grow revenue 6-7% year over year with strong sequential growth of 4-5%.

Conference Call on November 2, 2017

AMN Healthcare Services, Inc. (NYSE: AMN), healthcare’s leader and innovator in workforce solutions and staffing services, will host a conference call to discuss its third quarter 2017 financial results on Thursday, November 2, 2017 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 (800) 230-1059 in the U.S. or (612) 234-9959 internationally. Following the conclusion of the call, a replay of the webcast will be available at the Company’s website. Alternatively, a telephonic replay of the call will be available starting at 7:30 p.m. Eastern Time on November 2, 2017, and can be accessed until 11:59 p.m. Eastern Time on November 16, 2017 by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 431402.

About AMN Healthcare

AMN Healthcare is the leader and innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. The Company provides unparalleled access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. With insights and expertise, AMN Healthcare helps providers optimize their workforce to successfully reduce complexity, increase efficiency and improve patient outcomes. AMN delivers managed services programs, healthcare executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, medical coding and consulting, and other services. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities and many other healthcare settings.

The Company’s common stock is listed on the New York Stock Exchange under the symbol “AMN.” For more information about AMN Healthcare, visit www.amnhealthcare.com, where the Company posts news releases, investor presentations, webcasts, SEC filings and other material information. The Company also utilizes email alerts and Really Simple Syndication (“RSS”) as routine channels to supplement distribution of this information. To register for email alerts and RSS, visit http://amnhealthcare.investorroom.com/emailalerts.

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, (2) adjusted EBITDA margin and (3) adjusted diluted EPS. 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, adjusted EBITDA margin and adjusted diluted EPS serve as industry-wide financial measures. The Company 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 measures and may be different from non-GAAP measures, or may be calculated differently than other similarly titled 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” and the footnotes thereto 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. Forward-looking statements include, among others, statements concerning our future financial performance, our guidance for fourth quarter 2017 revenue, gross margin, SG&A expenses as a percentage of revenue, adjusted EBITDA margin, increases in clients’ need for innovative workforce solutions and our ability to maintain or improve revenue growth in 2018. The Company bases 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 our fillings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2016, our subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Contact:

Randle Reece

Director, Investor Relations

866.861.3229

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,
	2017			2016			2017			2017			2016
Revenue	$	494,406		$	472,636		$	489,803		$	1,479,378		$	1,414,367
Cost of revenue		334,867			318,169			328,791			997,051			953,249

Gross profit		159,539			154,467			161,012			482,327			461,118

Gross margin		32.3	%		32.7	%		32.9	%		32.6	%		32.6	%
Operating expenses:
Selling, general and administrative (SG&A)		100,579			99,995			96,673			299,325			297,359
SG&A as a % of revenue		20.3	%		21.2	%		19.7	%		20.2	%		21.0	%

Depreciation and amortization		8,132			7,789			7,959			23,759			21,888

Total operating expenses		108,711			107,784			104,632			323,084			319,247

Income from operations		50,828			46,683			56,380			159,243			141,871
Operating margin ⁽¹⁾		10.3	%		9.9	%		11.5	%		10.8	%		10.0	%

Interest expense, net, and other		4,837			3,016			4,928			14,895			9,065

Income before income taxes		45,991			43,667			51,452			144,348			132,806

Income tax expense		17,863			16,371			20,197			52,957			53,319

Net income	$	28,128		$	27,296		$	31,255		$	91,391		$	79,487

Net income as a % of revenue		5.7	%		5.8	%		6.4	%		6.2	%		5.6	%

Other comprehensive income (loss):
Foreign currency translation and other		(73	)		40			(41	)		(111	)		165
Cash flow hedge, net of income taxes		—			231			(58	)		(15	)		(343	)

Other comprehensive income (loss)		(73	)		271			(99	)		(126	)		(178	)

Comprehensive income	$	28,055		$	27,567		$	31,156		$	91,265		$	79,309

Net income per common share:

Basic	$	0.59		$	0.57		$	0.65		$	1.91		$	1.66

Diluted	$	0.57		$	0.55		$	0.63		$	1.85		$	1.61

Weighted average common shares outstanding:
Basic		47,912			48,049			47,916			47,870			47,993

Diluted		49,445			49,410			49,475			49,480			49,287

AMN Healthcare Services, Inc.

Supplemental Financial and Operating Data

(dollars in thousands, except per share data and operating data)

(unaudited)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
Revenue
Nurse and allied solutions	$	302,933		$	286,810			300,727			917,183			877,197
Locum tenens solutions		111,415			108,553			108,215			322,473			320,420
Other workforce solutions		80,058			77,273			80,861			239,722			216,750

	$	494,406		$	472,636			489,803			1,479,378			1,414,367

Reconciliation of Non-GAAP Items:

Segment operating income ⁽²⁾
Nurse and allied solutions	$	40,807		$	37,396			47,851			134,638			118,517
Locum tenens solutions		14,438			14,026			12,371			39,028			43,634
Other workforce solutions		19,890			20,867			22,041			61,788			56,311

		75,135			72,289			82,263			235,454			218,462
Unallocated corporate overhead		13,438			14,235			15,080			43,409			42,460

Adjusted EBITDA ⁽³⁾		61,697			58,054			67,183			192,045			176,002
Adjusted EBITDA margin ⁽⁴⁾		12.5	%		12.3	%		13.7	%		13.0	%		12.4	%

Depreciation and amortization		8,132			7,789			7,959			23,759			21,888
Share-based compensation		2,477			2,704			2,562			7,720			8,795
Acquisition and integration costs		260			878			282			1,323			3,448

Income from operations		50,828			46,683			56,380			159,243			141,871
Interest expense, net, and other		4,837			3,016			4,928			14,895			9,065

Income before income taxes		45,991			43,667			51,452			144,348			132,806
Income tax expense		17,863			16,371			20,197			52,957			53,319

Net income	$	28,128		$	27,296			31,255			91,391			79,487

GAAP diluted net income per share (EPS)	$	0.57		$	0.55			0.63			1.85			1.61
Adjustments:
Amortization of intangible assets		0.09			0.09			0.09			0.28			0.28
Acquisition and integration costs		0.01			0.02			0.01			0.03			0.07
Tax effect on above adjustments		(0.04	)		(0.04	)		(0.04	)		(0.12	)		(0.14	)
Excess tax benefits ⁽⁵⁾		0.00			0.00			(0.02	)		(0.11	)		0.00

Adjusted diluted EPS ⁽⁶⁾	$	0.63		$	0.62			0.67			1.93			1.82


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
Gross Margin
Nurse and allied solutions		27.3	%		26.7	%		27.8	%		27.6	%		26.7	%
Locum tenens solutions		30.1	%		31.2	%		30.0	%		30.2	%		31.2	%
Other workforce solutions		54.1	%		56.7	%		55.7	%		54.9	%		58.6	%

Operating Data:
Nurse and allied solutions

Average healthcare professionals on assignment ⁽⁷⁾		8,817			8,458			8,776			8,881			8,423

Locum tenens solutions
Days filled ⁽⁸⁾		58,881			59,612			58,660			172,784			178,846
Revenue per day filled ⁽⁹⁾	$	1,892		$	1,821		$	1,845		$	1,866		$	1,792



	As of September 30,				As of June 30,
	2017		2016		2017
Leverage ratio ⁽¹⁰⁾		1.3		1.7	1.4

AMN Healthcare Services, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)


	September 30,		June 30,		December 31,
	2017		2017		2016
Assets
Current assets:
Cash and cash equivalents	$	19,625	$	22,878	$	10,622
Accounts receivable, net		343,596		334,597		341,977
Accounts receivable, subcontractor		37,200		36,631		49,233
Prepaid and other current assets		42,052		46,938		48,796

Total current assets		442,473		441,044		450,628

Restricted cash, cash equivalents and investments		34,380		33,882		31,287
Fixed assets, net		68,188		65,368		59,954
Other assets		73,962		71,594		57,534
Goodwill		340,596		340,596		341,754
Intangible assets, net		231,791		236,486		245,724

Total assets	$	1,191,390	$	1,188,970	$	1,186,881

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	117,934	$	118,943	$	137,512
Accrued compensation and benefits		111,984		107,283		107,993
Current portion of notes payable, less unamortized fees		—		18,071		3,750
Deferred revenue		9,609		9,644		8,924
Other current liabilities		5,440		12,387		16,611

Total current liabilities		244,967		266,328		274,790

Notes payable, less unamortized fees		319,652		319,462		359,192
Deferred income taxes, net		11,899		12,387		21,420
Other long-term liabilities		82,673		82,301		82,096

Total liabilities		659,191		680,478		737,498

Commitments and contingencies

Stockholders’ equity		532,199		508,492		449,383

Total liabilities and stockholders’ equity	$	1,191,390	$	1,188,970	$	1,186,881

AMN Healthcare Services, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
Net cash provided by operating activities	$	25,594		$	29,540		$	18,474		$	96,382		$	84,820
Net cash used in investing activities		(3,823	)		(8,117	)		(6,320	)		(23,444	)		(241,271	)
Net cash provided by (used in) financing activities		(24,951	)		(26,817	)		(26,945	)		(63,824	)		162,418
Effect of exchange rates on cash		(73	)		40			(42	)		(111	)		165

Net increase (decrease) in cash and cash equivalents		(3,253	)		(5,354	)		(14,833	)		9,003			6,132
Cash and cash equivalents at beginning of period		22,878			21,062			37,711			10,622			9,576

Cash and cash equivalents at end of period	$	19,625		$	15,708		$	22,878		$	19,625		$	15,708

AMN Healthcare Services, Inc.

Additional Supplemental Non-GAAP Disclosures

Reconciliation of Guidance Adjusted EBITDA Margin to

Guidance Operating Margin

(unaudited)


	Three Months Ending
	December 31, 2017
	Low⁽¹¹⁾					High⁽¹¹⁾
Adjusted EBITDA margin		12.0	%				12.5	%
Deduct:
Share-based compensation				0.5	%
EBITDA margin		11.5	%				12.0	%

Depreciation and amortization				1.7	%

Operating margin		9.8	%				10.3	%

(1)	Operating margin represents income from operations divided by revenue.

(2)	Segment operating income represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, unallocated corporate overhead, acquisition and integration costs and share-based compensation.

(3)

Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, acquisition and integration costs and share-based compensation. 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 is a measure used in the Company’s credit agreement and the indenture governing our 5.125% Senior Notes due 2024. 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.

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

(5)

The consolidated effective tax rate for the three and nine months ended September 30, 2017 was favorably affected by the recording of excess tax benefits relating to equity awards vested and exercised during the period. As a result of the adoption of a new accounting pronouncement on January 1, 2017, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense, which amounted to $56,000 and $5,381,000 for the three and nine months ended September 30, 2017, respectively. Since the majority of our equity awards vest during the first quarter of the year, we do not anticipate the recording of additional excess tax benefits of this magnitude for the reminder of the year. The magnitude of the impact of excess tax benefits generated in the future, which may be favorable or unfavorable, is dependent upon the Company’s future grants of share-based compensation, the Company’s future stock price on the date awards vest or exercise in relation to the fair value of the awards on the grant date or the exercise behavior of the Company’s stock appreciation rights holders. Since these favorable tax benefits are largely unrelated to our current year’s income before taxes and is unrepresentative of our normal effective tax rate, we excluded their impact on adjusted diluted EPS for the three and nine months ended September 30, 2017.

(6)

Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of (A) amortization of intangible assets, (B) acquisition and integration costs, (C) tax effect, if any, of the foregoing adjustments, and (D) excess tax benefits relating to equity awards vested and exercised since January 1, 2017. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company’s operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded from adjusted diluted EPS). Although management believes the items excluded from adjusted diluted EPS are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted diluted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP diluted EPS.

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

(8)	Days filled is calculated by dividing the locum tenens hours filled during the period by eight hours.

(9)	Revenue per day filled represents revenue of the Company’s locum tenens solutions segment divided by days filled for the period presented.

(10)

Leverage ratio represents the ratio of the consolidated funded indebtedness (as calculated per the Company’s credit agreement) at the end of the subject period to the consolidated adjusted EBITDA (as calculated per the Company’s credit agreement) for the twelve-month period ended at the end of the subject period.

(11)	Guidance percentage metrics are approximate.

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