AMN Healthcare Services(AMN) - 2024 Q2 - Quarterly Results

AMN Healthcare Second Quarter 2024 Results Financial & Business Highlights The company reported Q2 2024 revenue of $741 million and exceeded earnings expectations through expense management while advancing strategic initiatives and reducing debt Q2 2024 Financial Highlights (vs. Q2 2023) | Metric | Q2 2024 | % Change YoY | | :--- | :--- | :--- | | Revenue | $740.7M | (25%) | | Gross profit | $229.8M | (30%) | | Net income | $16.2M | (73%) | | GAAP diluted EPS | $0.42 | (73%) | | Adjusted diluted EPS | $0.98 | (59%) | | Adjusted EBITDA | $94.1M | (42%) | - Q2 revenue met expectations, while earnings were better than expected, primarily driven by expense management and beneficial discrete items[4] - Operational and strategic highlights for the quarter include: - The ShiftWise Flex platform rollout surpassed 50% of vendor-neutral client spend, with the first MSP client migrations completed - Technology and Workforce Solutions contributed 41% of operating income from the three segments - Language services revenue grew 18% year-over-year[4] - The company generated strong cash flow from operations of $100 million, enabling an $80 million debt reduction in Q2, with a net leverage ratio of 2.6:1[4][11] - CEO Cary Grace noted that while large clients continue to reduce contingent labor spend, there are promising signs of improvement in the travel nurse market[5] Detailed Financial Results (Q2 2024) Consolidated revenue fell 25% YoY to $741 million, driven by a decline in the Nurse and Allied segment, while gross margin contracted due to a business mix shift Consolidated Performance Q2 consolidated revenue decreased 25% YoY to $741 million, with declines in net income and key margins, though SG&A expenses improved as a percentage of revenue Q2 2024 Consolidated Results | Metric | Q2 2024 | Q2 2023 | % Change YoY | | :--- | :--- | :--- | :--- | | Revenue | $741M | $991M | (25%) | | Net Income | $16M | $61M | (73%) | | Gross Margin | 31.0% | 33.3% | (230 bps) | | Operating Margin | 5.1% | 9.2% | (410 bps) | | Adjusted EBITDA Margin | 12.7% | 16.3% | (360 bps) | - The year-over-year decrease in SG&A costs was primarily driven by lower employee compensation amid reduced placement volumes[10] Segment Performance Segment results were mixed, with a sharp 36% decline in Nurse and Allied Solutions revenue contrasting with 6% growth in Physician and Leadership Solutions Q2 2024 Revenue by Segment (YoY) | Segment | Q2 2024 Revenue | % Change YoY | | :--- | :--- | :--- | | Nurse and Allied Solutions | $442M | (36%) | | Physician and Leadership Solutions | $186M | +6% | | Technology and Workforce Solutions | $112M | (11%) | - Within the Nurse and Allied segment, travel nurse staffing revenue dropped 42% year over year and 17% sequentially[6] - Within the Physician and Leadership segment, locum tenens revenue grew 17% year over year, largely due to the MSDR acquisition[7] - Within the Technology and Workforce segment, language services revenue grew 18% year over year, while vendor management systems revenue fell 41%[9] Financial Position and Cash Flow The company generated $100 million in operating cash flow, ending the quarter with $48 million in cash and a net leverage ratio of 2.6 to 1 - Cash and cash equivalents totaled $48 million at the end of Q2 2024[11] - Cash flow from operations was $100 million for the second quarter, while capital expenditures were $27 million[11] - The company ended the quarter with total debt of $1.195 billion and a net leverage ratio of 2.6 to 1[11] Business Outlook (Q3 2024) Q3 2024 revenue is projected at $660-$680 million, a 20-23% YoY decline, with an adjusted EBITDA margin forecast of 10.6% to 11.1% Q3 2024 Guidance | Metric | Guidance | | :--- | :--- | | Consolidated revenue | $660 - $680 million | | Gross margin | 30.7% - 31.2% | | SG&A as % of revenue | 22.0% - 22.5% | | Operating margin | 2.1% - 2.9% | | Adjusted EBITDA margin | 10.6% - 11.1% | - Q3 2024 Segment Revenue Outlook (YoY): - Nurse and Allied Solutions: Expected to be down 32-34% - Physician and Leadership Solutions: Expected to grow 12-14% - Technology and Workforce Solutions: Projected to be 10-12% lower[12] - Other Q3 2024 financial estimates include depreciation of $20 million, non-cash amortization of $22 million, interest expense of $15 million, and an adjusted tax rate of 27%[13] Financial Statements The unaudited statements show significant YoY declines in revenue and net income, with total assets of $2.77 billion and six-month operating cash flow of $180.9 million Condensed Consolidated Statements of Comprehensive Income For the three and six months ended June 30, 2024, both revenue and net income experienced significant year-over-year declines Income Statement Highlights (Three Months Ended June 30) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $740,685 | $991,299 | | Gross Profit | $229,827 | $330,281 | | Income from Operations | $37,682 | $91,663 | | Net Income | $16,237 | $60,906 | Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $2.77 billion and total liabilities were $1.89 billion, both decreasing from year-end 2023 Balance Sheet Summary (as of June 30, 2024) | Account (in thousands) | Amount | | :--- | :--- | | Assets | | | Cash and cash equivalents | $48,038 | | Total current assets | $704,757 | | Goodwill | $1,116,307 | | Total Assets | $2,771,327 | | Liabilities & Equity | | | Total current liabilities | $573,890 | | Revolving credit facility | $345,000 | | Total Liabilities | $1,894,468 | | Total Stockholders' Equity | $876,859 | Condensed Consolidated Statements of Cash Flows Net cash from operations was $180.9 million for the first six months of 2024, with cash primarily used for investing activities and debt repayment Cash Flow Summary (Six Months Ended June 30) | Activity (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $180,901 | $241,101 | | Net cash used in investing activities | $(43,731) | $(54,859) | | Net cash used in financing activities | $(119,081) | $(247,744) | Supplemental and Non-GAAP Information This section reconciles GAAP to non-GAAP measures like Adjusted EBITDA and provides supplemental segment data and key operating metrics Non-GAAP Reconciliation Q2 2024 GAAP Net Income of $16.2 million is reconciled to Adjusted EBITDA of $94.1 million and Adjusted Diluted EPS of $0.98 Q2 2024 GAAP to Non-GAAP Reconciliation | Metric (in thousands) | Amount | | :--- | :--- | | Net Income (GAAP) | $16,237 | | Adjustments (Interest, Taxes, D&A, etc.) | +$77,850 | | Adjusted EBITDA | $94,087 | | | | | Net Income (GAAP) | $16,237 | | Adjustments (Amortization, other costs, tax effects) | +$21,095 | | Adjusted Net Income | $37,332 | Supplemental Segment Data Q2 2024 supplemental data details segment gross margins and key operating metrics, such as average travelers and physician days filled Q2 2024 Segment Gross Margins | Segment | Gross Margin | | :--- | :--- | | Nurse and allied solutions | 23.8% | | Physician and leadership solutions | 30.5% | | Technology and workforce solutions | 60.2% | - Key operating metrics for Q2 2024 include: - Average travelers on assignment: 10,302 (down from 13,597 in Q2 2023) - Physician days filled: 56,244 (up from 49,976 in Q2 2023)[38] Guidance Reconciliation The Q3 2024 guidance reconciles the forecasted GAAP Operating Margin of 2.1%-2.9% to the non-GAAP Adjusted EBITDA Margin of 10.6%-11.1% Q3 2024 Guidance Reconciliation (Operating Margin to Adj. EBITDA Margin) | Metric | Low End | High End | | :--- | :--- | :--- | | Operating margin | 2.1% | 2.9% | | Depreciation and amortization | 6.6% | 6.4% | | Share-based compensation | 0.9% | 0.9% | | Acquisition, integration, and other costs | 0.9% | 0.9% | | Adjusted EBITDA margin | 10.6% | 11.1% | Other Information This section includes the company overview, forward-looking statements, and key risk disclosures About AMN Healthcare AMN Healthcare is a leader in total talent solutions for U.S. healthcare organizations, offering a comprehensive suite of staffing and workforce services - AMN Healthcare provides total talent solutions including direct staffing, managed services programs, temporary staffing, permanent placement, vendor management systems, and language services[16] Forward-Looking Statements This section outlines forward-looking projections and cautions that actual results may differ due to numerous risk factors - Forward-looking statements in the release cover topics such as future demand, wage rates, expense management, and the Q3 2024 financial projections[20][22] - Key risk factors that could affect future results include clients increasing their own staffing efficiency, adjustments in the utilization of temporary professionals, economic downturns, pricing pressures, and the ability to recruit and retain quality healthcare professionals[23][25]