AMN Healthcare Services(AMN) - 2019 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The unaudited statements show increased assets and liabilities from acquisitions and a new lease standard, with higher Q3 revenue but lower net income Condensed Consolidated Balance Sheets Total assets grew to $1.86 billion and liabilities to $1.16 billion, driven by acquisition-related goodwill and new operating lease liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total Assets | $1,861,074 | $1,492,721 | | Goodwill | $586,611 | $438,506 | | Intangible assets, net | $400,428 | $326,147 | | Total Liabilities | $1,155,970 | $853,731 | | Notes payable, less unamortized fees | $465,899 | $320,607 | | Operating lease liabilities | $107,537 | $0 | | Total Stockholders' Equity | $705,104 | $638,990 | Condensed Consolidated Statements of Comprehensive Income Q3 2019 revenue grew 7.7% to $567.6 million, while net income declined 15.8% to $23.5 million year-over-year Q3 and Nine Months Performance (in thousands, except per share amounts) | Metric | Q3 2019 | Q3 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $567,597 | $526,842 | $1,635,215 | $1,607,439 | | Gross Profit | $190,031 | $175,147 | $546,332 | $523,927 | | Income from Operations | $39,739 | $42,635 | $129,947 | $152,651 | | Net Income | $23,515 | $27,918 | $86,506 | $106,128 | | Diluted EPS | $0.49 | $0.58 | $1.82 | $2.17 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased to $705.1 million, driven by net income and partially offset by common stock repurchases - Retained earnings increased by $86.5 million from net income for the nine months ended September 30, 2019[10] - The company repurchased common stock for $17.9 million in the first quarter of 2019 and $0.8 million in the second quarter[10] Condensed Consolidated Statements of Cash Flows Operating cash flow decreased, while significant cash was used for acquisitions, funded primarily by new debt financing Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $146,205 | $168,046 | | Net cash used in investing activities | ($253,606) | ($271,648) | | Net cash provided by financing activities | $136,440 | $81,774 | | Net increase (decrease) in cash | $28,981 | ($21,623) | - The company paid $228.2 million for acquisitions in the first nine months of 2019, compared to $217.4 million in the same period of 2018[12] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the adoption of a new lease standard, acquisitions, segment data, debt changes, and a subsequent $300 million note issuance - The company adopted the new lease standard ASU 2016-02 on January 1, 2019, recognizing operating lease right-of-use assets of $99.5 million and lease liabilities of $114.8 million[20][21] - In 2019, the company acquired Advanced Medical Personnel Services for $211.8 million and Silversheet, Inc for $31.7 million[27][30] - Subsequent to the quarter end, on October 1, 2019, the company issued $300 million of 4.625% Senior Notes due 2027 and used the proceeds to repay existing debt[82][83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Q3 revenue rose 8% to $567.6 million, driven by acquisitions and the nurse segment, despite a decline in locum tenens solutions Q3 2019 Revenue by Segment (in millions) | Segment | Q3 2019 Revenue | Q3 2018 Revenue | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $362.5 | $306.3 | +18% | | Locum tenens solutions | $84.2 | $101.1 | -17% | | Other workforce solutions | $120.9 | $119.4 | +1% | | Total Revenue | $567.6 | $526.8 | +8% | - Recent trends indicate strong overall demand for healthcare staffing, but the company's nurse supply has not kept pace[93][95] - Demand for locum tenens hospitalists and emergency room physicians has significantly declined[96] - On October 1, 2019, the company issued $300 million of 4.625% Senior Notes due 2027 and used the proceeds to repay $149.1 million of its term loan and $146.0 million of its revolving credit facility[132][143] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuation on its variable-rate debt, with foreign currency risk deemed immaterial - The primary market risk is interest rate risk associated with variable interest debt[154] - Foreign currency risk is deemed immaterial as the company generates substantially all revenue in the U.S[154] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2019[155] - No material changes to internal control over financial reporting occurred during the quarter ended September 30, 2019[156] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reported no material legal proceedings for the period - None[156] Item 1A. Risk Factors No material changes were reported to the risk factors previously disclosed in the 2018 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2018 Annual Report[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 395,212 shares for $18.7 million, with $30.9 million remaining under the repurchase authorization Share Repurchases (Nine Months Ended Sep 30, 2019) | Metric | Value | | :--- | :--- | | Total Shares Repurchased | 395,212 | | Average Price Paid per Share | $47.30 | | Total Purchase Price | $18.7 million | | Remaining Authorization | $30.9 million | Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None[160] Item 4. Mine Safety Disclosures This item is not applicable to the company's business - Not applicable[161] Item 5. Other Information The company reported no other information required to be disclosed - None[161] Item 6. Exhibits This section lists filed exhibits, including the Indenture for new senior notes and Sarbanes-Oxley certifications - Key exhibits filed include the Indenture for the new 2027 Senior Notes and CEO/CFO certifications[163]