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

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Presents unaudited condensed consolidated financial statements for Q2 and H1 2024, including key financial statements and notes Condensed Consolidated Balance Sheets Total assets and liabilities decreased, while stockholders' equity increased as of June 30, 2024, compared to year-end 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $704,757 | $841,685 | | Total assets | $2,771,327 | $2,924,394 | | Total current liabilities | $573,890 | $656,121 | | Total liabilities | $1,894,468 | $2,093,138 | | Total stockholders' equity | $876,859 | $831,256 | Condensed Consolidated Statements of Comprehensive Income The company experienced a significant year-over-year decline in revenue and net income for both Q2 and the first half of 2024 Statement of Comprehensive Income Summary (in thousands, except per share amounts) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $740,685 | $991,299 | $1,561,563 | $2,117,522 | | Gross Profit | $229,827 | $330,281 | $487,333 | $699,127 | | Income from Operations | $37,682 | $91,663 | $77,627 | $217,333 | | Net Income | $16,237 | $60,906 | $33,565 | $145,016 | | Diluted EPS | $0.42 | $1.55 | $0.88 | $3.58 | Condensed Consolidated Statements of Cash Flows Net cash from operations decreased in H1 2024 due to lower net income, while cash used in financing fell without share repurchases Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by 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) | | Net increase (decrease) in cash | $18,089 | ($61,502) | Notes to Unaudited Condensed Consolidated Financial Statements Provides critical context on accounting policies, acquisitions, segment revenue, and a significant legal settlement - On November 30, 2023, the Company acquired MSDR (MSI Systems Corp and DrWantedcom LLC), two healthcare staffing companies specializing in locum tenens, for an initial cash price of $292.8 million[37] Revenue by Segment for Q2 2024 vs Q2 2023 (in thousands) | Segment | Q2 2024 Revenue | Q2 2023 Revenue | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $442,399 | $689,015 | -35.8% | | Physician and leadership solutions | $186,065 | $176,229 | +5.6% | | Technology and workforce solutions | $112,221 | $126,055 | -11.0% | | Total Revenue | $740,685 | $991,299 | -25.3% | - The company reached a settlement in the Clarke Matter, a wage and hour lawsuit, and recorded an accrual of $62.0 million[75] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant business downturn, segment performance, operating trends, and the company's liquidity position Recent Trends Demand for travel nurse business has fallen below pre-pandemic levels, while allied staffing and locum tenens also see declines - Demand in the travel nurse business has declined significantly to below pre-pandemic levels due to healthcare organizations' focus on hiring permanent staff and cost containment[88] - In Q2, average travelers on assignment were down sequentially due to seasonality and visa retrogression impacting international nurse staffing[89] Results of Operations Q2 2024 revenue decreased 25% year-over-year, driven by a 36% drop in the nurse and allied segment and contracting gross margins Q2 2024 vs. Q2 2023 Revenue Change by Segment | Segment | Q2 2024 Revenue | Change from Q2 2023 | Key Drivers | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $442.4M | -36% | 24% decrease in travelers on assignment, 12% decrease in average bill rate | | Physician and leadership solutions | $186.1M | +6% | 17% growth in locum tenens (including MSDR acquisition), offset by declines in interim leadership and permanent placement | | Technology and workforce solutions | $112.2M | -11% | 41% decline in VMS business, offset by 18% growth in language services | - Consolidated gross margin for Q2 2024 fell to 31.0% from 33.3% in Q2 2023, driven by a less favorable sales mix and compression in clinician pay packages[98] - SG&A expenses decreased to $149.0 million in Q2 2024 from $201.8 million in Q2 2023, primarily due to lower employee compensation and benefits ($24.6M) and a decrease in professional and legal services ($20.1M)[99] Liquidity and Capital Resources The company maintains a solid liquidity position with sufficient cash from operations and available credit for near-term needs - As of June 30, 2024, the company had $345.0 million drawn on its $750.0 million secured revolving credit facility, with $384.6 million of available credit[114] - Net cash provided by operating activities decreased to $180.9 million for the first six months of 2024, compared to $241.1 million for the same period in 2023, mainly due to a decrease in net income[116] - Days Sales Outstanding (DSO) was 63 days at June 30, 2024, an improvement from 70 days at December 31, 2023, but higher than 53 days at June 30, 2023[116] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk from variable-rate debt is considered immaterial, as is foreign currency risk - The company's main market risk exposure is interest rate risk from variable interest debt instruments, and a 100 basis point change in interest rates is not expected to have a material effect on the financial statements[126] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[128] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[129] PART II - OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 9 for details on legal proceedings, including the settlement of the significant Clarke Matter wage and hour lawsuit - Information regarding legal proceedings is detailed in Note (9), "Commitments and Contingencies," of the financial statements[131] Item 1A. Risk Factors The company reports no material changes to the risk factors previously disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2023 Annual Report[132] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's stock repurchase program has $226.7 million remaining, with no shares repurchased in the first half of 2024 - The company's share repurchase program has a total authorization of $1,350.0 million, with $226.7 million remaining available as of June 30, 2024[133] - No shares of common stock were repurchased during the six months ended June 30, 2024[134]