AMN Healthcare Services(AMN) - 2020 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows, along with detailed notes Item 1. Condensed Consolidated Financial Statements The company presents its unaudited financial position as of June 30, 2020, showing an increase in total assets and liabilities primarily due to recent acquisitions, notably Stratus Video, with revenue increasing 13.6% year-over-year for Q2 but net income decreasing 22.7% due to higher expenses Condensed Consolidated Balance Sheets This section details the company's financial position, highlighting significant changes in assets and liabilities driven by recent acquisitions Balance Sheet Items (in millions) | Balance Sheet Items (in millions) | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Assets | $2,364.8 | $1,931.6 | | Total Current Assets | $518.6 | $560.5 | | Goodwill | $870.1 | $595.6 | | Total Liabilities | $1,587.4 | $1,194.9 | | Total Current Liabilities | $384.5 | $378.1 | | Notes payable, less unamortized fees | $856.1 | $617.2 | | Total Stockholders' Equity | $777.4 | $736.7 | - Goodwill increased significantly from $595.6 million at year-end 2019 to $870.1 million as of June 30, 2020, primarily due to the acquisition of Stratus Video[7][62] Condensed Consolidated Statements of Comprehensive Income This section outlines the company's revenue, gross profit, operating income, and net income for the three and six months ended June 30, 2020 and 2019 Income Statement (in millions, except EPS) | Income Statement (in millions, except EPS) | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $608.4 | $535.2 | $1,210.8 | $1,067.6 | | Gross Profit | $197.5 | $179.5 | $399.6 | $356.3 | | Income from Operations | $38.4 | $45.2 | $74.1 | $90.2 | | Net Income | $22.3 | $28.9 | $35.3 | $63.0 | | Diluted EPS | $0.47 | $0.61 | $0.74 | $1.32 | Condensed Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Activity (in millions) | Cash Flow Activity (in millions) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $128.3 | $65.3 | | Net cash used in investing activities | ($513.3) | ($240.7) | | Net cash provided by financing activities | $329.0 | $189.3 | | Net (decrease) increase in cash | ($56.1) | $13.7 | - Cash used in investing activities more than doubled year-over-year, driven by $476.5 million paid for acquisitions in the first half of 2020 compared to $228.1 million in the same period of 2019[14] Notes to Financial Statements This section provides additional details and explanations regarding the financial statements, including the impact of COVID-19, recent acquisitions, and segment reorganization - The company is closely monitoring the impact of the COVID-19 pandemic, which could affect estimates for accounts receivable collectability and asset valuations, though no material effect was recorded as of June 30, 2020[22][23] - On February 14, 2020, the company acquired Stratus Video for an initial purchase price of $485.6 million, funded through borrowings under its credit facilities[34][35] - Effective March 8, 2020, the company reorganized its reportable segments into: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions, with prior period data reclassified to conform to this new structure[52] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant impact of the COVID-19 pandemic, which created volatile demand across its business segments, leading to varied segment performance and the implementation of cost-reduction measures, while maintaining liquidity through debt and credit facilities Overview and Recent Trends This section provides an overview of the company's performance and key trends, particularly the impact of the COVID-19 pandemic on demand and operational responses - The COVID-19 pandemic caused significant fluctuations in demand, with nursing services surging for COVID-related needs while locum tenens and other services sharply declined due to the suspension of elective procedures and non-essential healthcare[97][98][101] - The language interpretation business (Stratus Video) saw utilization decline in March but recover and exceed pre-COVID levels by mid-June as healthcare activities resumed[105] - In response to reduced demand from COVID-19, the company took actions in Q2 to reduce annualized SG&A expenses by approximately $120 million, including suspending 401(k) contributions, reducing workforce, and cutting variable compensation[107] Results of Operations - Three Months Ended June 30, 2020 vs 2019 This section analyzes the company's financial performance for the second quarter, comparing revenue and gross margin across segments year-over-year Revenue by Segment (in millions) | Revenue by Segment (in millions) | Q2 2020 | Q2 2019 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $444.5 | $368.0 | +21% | | Physician and leadership solutions | $108.6 | $142.4 | -24% | | Technology and workforce solutions | $55.3 | $24.7 | +123% | | Total Revenue | $608.4 | $535.2 | +14% | - Consolidated gross margin decreased to 32.5% from 33.5% in the prior-year quarter, primarily due to lower bill-to-pay spreads in the nurse and allied solutions segment[116][117] Results of Operations - Six Months Ended June 30, 2020 vs 2019 This section analyzes the company's financial performance for the first half of the year, comparing revenue and gross profit across segments year-over-year Revenue by Segment (in millions) | Revenue by Segment (in millions) | H1 2020 | H1 2019 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $868.8 | $741.5 | +17% | | Physician and leadership solutions | $246.5 | $279.5 | -12% | | Technology and workforce solutions | $95.5 | $46.6 | +105% | | Total Revenue | $1,210.8 | $1,067.6 | +13% | - Gross profit for the six-month period increased 12% to $399.6 million, with a slight gross margin decline to 33.0% from 33.4% year-over-year[128] Liquidity and Capital Resources This section discusses the company's cash flow, debt, and available credit, highlighting how acquisitions were funded and liquidity maintained - Net cash from operating activities nearly doubled to $128.3 million for H1 2020 from $65.3 million in H1 2019, largely due to the deferral of income tax and employer payroll tax payments under the CARES Act[134][136] - The company used $476.5 million for acquisitions in H1 2020, funded primarily by drawing $225.0 million from its revolving credit facility and securing a new $250.0 million term loan[138][139][140] - As of June 30, 2020, the company had $282.6 million of available credit under its Senior Credit Facility[134] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk exposure stems from interest rate fluctuations on its variable-rate debt instruments, with foreign currency risk considered immaterial - The company's main market risk is interest rate risk associated with its variable interest debt, where a 100 basis point increase in rates would not have a material effect on the financial statements for the period[152] Item 4. Controls and Procedures Based on an evaluation led by the CEO and CFO, the company concluded that its disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the second quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2020[153] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[154] PART II - OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, unregistered sales of equity securities, and general information Item 1. Legal Proceedings The company reports no material legal proceedings for the period - The company reported "None" for this item[156] Item 1A. Risk Factors The company adds a significant risk factor related to the COVID-19 pandemic, highlighting potential negative impacts on demand, operations, and client payment abilities - A new risk factor was added concerning the adverse effects of a widespread public health crisis, specifically the COVID-19 pandemic[158] - Key risks from the pandemic include decreased demand for services due to suspension of elective healthcare, disruption to operations from employee unavailability, and impaired ability of clients to make payments due to their own financial distress[160][162][163] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company has a Board-authorized share repurchase program of up to $150.0 million, but no shares of common stock were repurchased under this program during the six months ended June 30, 2020 - The company did not repurchase any shares of its common stock during the six months ended June 30, 2020[166] Other Items and Signatures The report indicates no defaults upon senior securities, no mine safety disclosures, and no other material information to report for the period, concluding with a list of exhibits and signatures - Items 3 (Defaults Upon Senior Securities), 4 (Mine Safety Disclosures), and 5 (Other Information) were reported as "None" or "Not applicable"[166][167] - Item 6 provides a list of exhibits filed with the report, including officer certifications and XBRL data files[169]