On August 6, 2019 AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in healthcare workforce solutions and staffing services, reported its second quarter 2019 financial results (Press release, AMN Healthcare Services, AUG 6, 2019, View Source [SID1234538226]). Financial highlights are as follows:
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Dollars in millions, except per share amounts.
* 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
Second quarter revenue and earnings above Company guidance due primarily to higher performance in the Nurse and Allied segment
Allied division continued strong organic revenue growth of 9% over prior year
Closed and began integration of Advanced Medical, enhancing MSP fulfillment and expanding our clinical staffing in school settings
New and expanded MSP contracts signed year to date, valued at nearly $200 million annualized gross spend at maturity
"The AMN team is performing exceptionally well during this time of increasing need for workforce solutions and severe talent shortages within healthcare," said Susan R. Salka, Chief Executive Officer of AMN Healthcare. "Demand for contingent labor and our solutions continues to rise, with requests for nursing and allied professionals more than 20% above prior-year levels. This reflects the difficulties of an extremely tight labor market and growing demand for healthcare services. AMN is partnering with our clients to deliver innovative solutions and analytics to improve efficiency and the clinician and patient experience."
Second Quarter 2019 Results
Consolidated revenue for the quarter was $535 million, a 4% decrease over prior year but 1% higher than prior quarter. Revenue for the Nurse and Allied Solutions segment was $332 million, flat year over year and down 2% sequentially. Advanced Medical, which was acquired in June, contributed $5 million of revenue in the quarter. Travel Nurse division revenue increased 3% year over year, and Allied division revenue increased 14% year over year, 9% organic. The quarter included revenue from labor disruption activity, but this revenue was lower than prior year due to a large strike last year.
In line with expectations, the Locum Tenens Solutions segment reported revenue of $82 million, down by 24% year over year but up 2% sequentially. Other Workforce Solutions segment revenue was higher than anticipated at $121 million for an increase of 3% year over year, driven by growth in our interim leadership, physician permanent placement and VMS businesses.
Gross margin was 33.5%, higher by 110 basis points year over year and higher by 30 basis points sequentially. The year-over-year variance was driven in part by higher gross margins on labor disruption revenue and a favorable segment revenue mix.
SG&A expenses were $122 million, or 22.7% of revenue, compared with $116 million, or 20.7% of revenue, in the same quarter last year. SG&A was $120 million, or 22.5% of revenue, in the previous quarter. The year-over-year increase was mainly from the recent acquisitions and increased employee-related costs, partially offset by a more favorable professional liability insurance actuarial adjustment.
Income from operations was $45 million, or 8.4% of revenue, compared with $55 million, or 9.8% of revenue, in the same quarter last year. Adjusted EBITDA was $67 million, a year-over-year decrease of 5%. Adjusted EBITDA margin was 12.5%, representing a decrease of 10 basis points year over year and up 10 basis points from prior quarter.
Net income was $29 million, or $0.61 per diluted share, compared with $36 million, or $0.73 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.77.
At June 30, 2019, cash and cash equivalents totaled $21 million. Cash flow from operations was $29 million for the quarter, and capital expenditures were $8 million. The Company ended the quarter with total debt outstanding of $671 million, with a leverage ratio as calculated in accordance with the Company’s credit agreement of 2.4 to 1.
Third Quarter 2019 Outlook
*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.
Revenue in the third quarter of 2019 is expected to be approximately 7% higher year over year, including a full-quarter contribution from the Advanced acquisition. Organic consolidated revenue would be expected to be flat to up 1%.
Conference Call on August 6, 2019
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 second quarter 2019 financial results on Tuesday, August 6, 2019, at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare’s website at View Source 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) 230-1092 in the U.S. or (612) 288-0329 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 August 6, 2019, and can be accessed until 11:59 p.m. Eastern Time on August 20, 2019, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 469775.