AMN Healthcare Services(AMN) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements Unaudited Q1 2021 consolidated financial statements reflect 47% revenue growth to $885.9 million, net income of $70.4 million, total assets of $2.64 billion, and operating cash flow at $39.1 million Condensed Consolidated Balance Sheets Total assets increased to $2.64 billion as of March 31, 2021, driven by current assets, while total liabilities rose to $1.75 billion and equity to $894.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $830,357 | $533,735 | | Total assets | $2,643,122 | $2,353,507 | | Total current liabilities | $598,994 | $422,957 | | Total liabilities | $1,749,062 | $1,533,830 | | Total stockholders' equity | $894,060 | $819,677 | Condensed Consolidated Statements of Comprehensive Income Q1 2021 saw revenue increase 47% to $885.9 million, gross profit grow 43% to $288.9 million, and net income surge to $70.4 million, with diluted EPS at $1.47 Q1 2021 vs. Q1 2020 Performance (in thousands, except per share amounts) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenue | $885,945 | $602,461 | | Gross Profit | $288,868 | $202,066 | | Income from operations | $104,402 | $35,743 | | Net income | $70,378 | $12,965 | | Diluted EPS | $1.47 | $0.27 | Condensed Consolidated Statements of Cash Flows Q1 2021 operating cash flow was $39.1 million, a decrease from prior year, while investing activities provided $2.8 million, a significant shift from Q1 2020's $492.1 million use Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $39,131 | $51,365 | | Net cash provided by (used in) investing activities | $2,794 | $(492,137) | | Net cash provided by financing activities | $24,767 | $456,126 | - The significant use of cash in investing activities in Q1 2020 was due to $476.4 million paid for acquisitions, primarily Stratus Video[17][112] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail financial impacts of the Stratus Video acquisition, strong segment revenue growth in Nurse and Allied Solutions (55%) and Technology and Workforce Solutions (120%), the Synzi/SnapMD acquisition, and ongoing wage and hour legal proceedings - On February 14, 2020, the company acquired Stratus Video for an initial purchase price of $485.6 million, with its results included in the technology and workforce solutions segment[36][37] - On April 7, 2021, the company acquired Synzi Holdings, Inc. and its subsidiary SnapMD, LLC, for $42.5 million in cash to expand its virtual care communication platforms[80] Segment Revenue (in thousands) | Segment | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $656,661 | $424,346 | +55% | | Physician and leadership solutions | $140,756 | $137,842 | +2% | | Technology and workforce solutions | $88,528 | $40,273 | +120% | | Total Revenue | $885,945 | $602,461 | +47% | - The company is involved in class action lawsuits regarding wage and hour claims (Clarke Matter), alleging per diem benefits should be included in overtime calculations, with an adverse Ninth Circuit ruling on February 8, 2021, leading to a $20 million accrual increase in Q4 2020 and a possible additional loss of up to $15 million[73][74][76] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 47% revenue growth to organic expansion and the Stratus Video acquisition, noting COVID-19's impact on demand, a slight gross margin decline, and strong liquidity with the Additional Term Loan paid off - The COVID-19 pandemic led to historically high demand for nurses and certain allied healthcare professionals in late 2020 and early 2021, which has continued at elevated levels[88] - Revenue increased 47% to $885.9 million in Q1 2021, primarily due to a 55% increase in Nurse and allied solutions revenue and a 120% increase in Technology and workforce solutions revenue[99][100][101] - Gross margin declined to 32.6% from 33.5% in the prior year, mainly due to lower bill-to-pay spreads in the nurse and allied solutions segment, which experienced significant revenue growth[102] - The company paid off the remaining balance of its $250.0 million Additional Term Loan during the first quarter of 2021[109] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuations on variable-rate debt, with a 100 basis point increase deemed immaterial, and foreign currency risk considered negligible - The company's primary market risk is interest rate risk from variable-rate debt, while foreign currency risk is deemed immaterial[122] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[123] - No material changes were made to the company's internal control over financial reporting during the quarter[124] PART II - OTHER INFORMATION Legal Proceedings This section refers to Note (9) of the financial statements, detailing ongoing legal matters, primarily class action lawsuits concerning wage and hour claims like the 'Clarke Matter' - Information regarding legal proceedings is detailed in Note (9) of the financial statements[126] Risk Factors No material changes occurred to the risk factors disclosed in the 2020 Annual Report, with key risks including COVID-19 impacts, talent retention, and legal challenges - There have been no material changes to the risk factors previously disclosed in the 2020 Annual Report[127] Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares of its common stock under its authorized program during the three months ended March 31, 2021 - The company did not repurchase any shares of its common stock during the first quarter of 2021[129] Exhibits This section lists exhibits filed with the Form 10-Q, including management compensation agreements, CEO/CFO certifications, and XBRL data files - Exhibits filed with the report include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and various equity plan agreements[132]