AMN Healthcare Services(AMN) - 2021 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for the period ended June 30, 2021, reflect significant growth in assets, revenue, and net income, driven by strong performance and strategic acquisitions Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $790,103 | $533,735 | | Cash and cash equivalents | $139,494 | $29,213 | | Accounts receivable, net | $468,299 | $376,099 | | Total Assets | $2,632,443 | $2,353,507 | | Total Current Liabilities | $582,563 | $422,957 | | Total Liabilities | $1,666,061 | $1,533,830 | | Total Stockholders' Equity | $966,382 | $819,677 | - The balance sheet reflects significant growth in liquidity and overall financial position, with cash and cash equivalents increasing nearly fivefold and total assets growing by approximately 11.8% in the first six months of 2021[7] Condensed Consolidated Statements of Comprehensive Income Statement of Comprehensive Income Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $857,445 | $608,351 | $1,743,390 | $1,210,812 | | Gross Profit | $280,543 | $197,540 | $569,411 | $399,606 | | Income from Operations | $99,174 | $38,401 | $203,576 | $74,144 | | Net Income | $66,770 | $22,325 | $137,148 | $35,290 | | Diluted EPS | $1.39 | $0.47 | $2.86 | $0.74 | - The company experienced substantial year-over-year growth, with revenue increasing by 44%, income from operations by 175%, and net income by 289% for the six months ended June 30, 2021[10] Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $210,625 | $128,271 | | Net cash used in investing activities | $(53,609) | $(513,262) | | Net cash provided by (used in) financing activities | $(30,703) | $328,994 | | Net increase (decrease) in cash | $126,292 | $(56,102) | - Operating cash flow increased by 64% year-over-year, while investing activities in 2021 were significantly lower due to reduced acquisition spending compared to 2020[17][19] Notes to Unaudited Condensed Consolidated Financial Statements - On April 7, 2021, the company acquired Synzi Holdings, Inc. and its subsidiary SnapMD, LLC, a virtual care communication platform, for an initial purchase price of $42.2 million in cash[33] - The company operates through three reportable segments: Nurse and allied solutions, Physician and leadership solutions, and Technology and workforce solutions, generating revenues of $1.28 billion, $279.9 million, and $182.4 million respectively for the six months ended June 30, 2021[47][49] - The company is involved in class action lawsuits regarding wage and hour claims, with a potential additional loss estimated at up to $15 million beyond existing accruals[74][78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes strong H1 2021 performance to high demand for healthcare professionals, with revenue up 44% to $1.74 billion and improved liquidity Overview of Our Business & Recent Trends - The company provides healthcare workforce solutions through three segments: Nurse and allied solutions (74% of H1 2021 revenue), Physician and leadership solutions (16%), and Technology and workforce solutions (10%)[84][85][86] - Historically high demand for nurses and allied healthcare professionals is driven by the COVID-19 pandemic, professional burnout, attrition, and retirements[90][91] - Demand in the physician and leadership segment has returned to pre-pandemic levels, with strong growth in VMS and language services due to elevated healthcare utilization[93][94] Results of Operations Revenue by Segment - Q2 Comparison (in millions) | Segment | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $624.5 | $444.5 | +41% | | Physician and leadership solutions | $139.1 | $108.6 | +28% | | Technology and workforce solutions | $93.9 | $55.3 | +70% | | Total Revenue | $857.4 | $608.4 | +41% | Revenue by Segment - Six Months Comparison (in millions) | Segment | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $1,281.1 | $868.8 | +48% | | Physician and leadership solutions | $279.9 | $246.5 | +14% | | Technology and workforce solutions | $182.4 | $95.5 | +91% | | Total Revenue | $1,743.4 | $1,210.8 | +44% | - Gross margin for Q2 2021 slightly increased to 32.7% due to a favorable sales mix, while the six-month gross margin slightly decreased to 32.7% due to lower bill-to-pay spreads in the nurse and allied segment[102][110] - SG&A expenses as a percentage of revenue decreased to 18.3% in Q2 2021 and 18.2% for H1 2021, reflecting improved operating leverage despite higher absolute spending[103][111] Liquidity and Capital Resources Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $210.6 | $128.3 | | Net cash used in investing activities | $(53.6) | $(513.3) | | Net cash provided by (used in) financing activities | $(30.7) | $329.0 | - The company paid off its $250.0 million Additional Term Loan in Q1 2021 and had $378.1 million available under its revolving credit facility as of June 30, 2021[116] - Days Sales Outstanding (DSO) improved to 50 days at June 30, 2021, from 55 days at year-end 2020, indicating enhanced collection efficiency[119] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuations on variable debt, with foreign currency risk deemed immaterial due to U.S.-centric revenue - The primary market risk is interest rate risk from variable rate debt, but a 100 basis point increase is considered immaterial[129] - Foreign currency risk is deemed immaterial as the company generates substantially all of its revenue in the U.S.[129] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[130] - No material changes to the internal control over financial reporting occurred during the quarter ended June 30, 2021[131] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company faces class action lawsuits regarding wage and hour claims, with a potential additional loss of up to $15 million estimated beyond current accruals - The company is party to significant class action lawsuits concerning whether per diem payments should be included in the regular rate of pay for overtime calculations[74][75][77] - Following an adverse ruling, the company estimates a potential loss of up to $15 million, excluding interest and penalties, in excess of amounts currently accrued for these legal matters[76][78] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for 2020 - There have been no material changes to the risk factors disclosed in the company's 2020 Annual Report[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common stock during H1 2021, but a $150.0 million stock repurchase program remains authorized - No shares of common stock were repurchased during the six months ended June 30, 2021[136] - The company has a board-authorized repurchase program for up to $150.0 million of its common stock, established in November 2016 with no expiration date[135] Other Part II Items This section confirms no defaults on senior securities, inapplicability of mine safety disclosures, and lists exhibits filed with the report - Item 3, Defaults Upon Senior Securities: None[137] - Item 4, Mine Safety Disclosures: Not applicable[137] - Item 6, Exhibits: Lists the certifications and XBRL data files submitted with the 10-Q filing[139]