AMN Healthcare Services(US:AMN)2022-08-04 16:00PART I Item 1. Condensed Consolidated Financial Statements Unaudited H1 2022 consolidated financial statements reflect significant revenue and net income growth, with assets and equity impacted by share repurchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $3,008,780 | $3,131,906 | | Total Current Assets | $1,190,222 | $1,349,068 | | Goodwill | $935,675 | $892,341 | | Total Liabilities | $1,969,436 | $1,969,879 | | Total Current Liabilities | $957,379 | $969,390 | | Total Stockholders' Equity | $1,039,344 | $1,162,027 | Condensed Consolidated Statements of Comprehensive Income (in thousands, except per share) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,426,607 | $857,445 | $2,979,145 | $1,743,390 | | Gross Profit | $460,237 | $280,543 | $956,405 | $569,411 | | Income from Operations | $183,533 | $99,174 | $391,466 | $203,576 | | Net Income | $123,800 | $66,770 | $269,808 | $137,148 | | Diluted EPS | $2.77 | $1.39 | $5.87 | $2.86 | Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $424,677 | $210,625 | | Net cash used in investing activities | ($115,762) | ($53,609) | | Net cash used in financing activities | ($411,688) | ($30,703) | | Net (decrease) increase in cash | ($102,773) | $126,292 | - During the six months ended June 30, 2022, the company repurchased common stock for $401.9 million, significantly impacting financing cash flows and stockholders' equity1521 Note 2. Acquisitions On May 13, 2022, the company acquired Connetics Communications, LLC, enhancing international nurse placement capabilities and adding goodwill - On May 13, 2022, the Company acquired Connetics Communications, LLC, specializing in international nurse and allied health professional placement33 Connetics Acquisition Details (in thousands) | Component | Amount | | :--- | :--- | | Initial Purchase Price | $78,764 | | Cash Consideration | $70,764 | | Contingent Earn-out (Fair Value) | $8,000 | | Identified Intangible Assets | $40,200 | | Goodwill | $43,301 | Note 5. Segment Information The company operates three reportable segments, with Nurse and Allied Solutions being the largest and all segments showing significant revenue growth Revenue by Segment (Six Months Ended June 30, in thousands) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Nurse and allied solutions | $2,329,517 | $1,281,146 | | Physician and leadership solutions | $355,203 | $279,860 | | Technology and workforce solutions | $294,425 | $182,384 | | Total Revenue | $2,979,145 | $1,743,390 | Segment Operating Income (Six Months Ended June 30, in thousands) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Nurse and allied solutions | $355,959 | $191,204 | | Physician and leadership solutions | $40,376 | $43,065 | | Technology and workforce solutions | $161,381 | $84,742 | | Total Segment Operating Income | $557,716 | $319,011 | - Goodwill increased in the Nurse and Allied Solutions segment by $43.3 million due to the Connetics acquisition, bringing total company goodwill to $935.7 million as of June 30, 202254 Note 8. Commitments and Contingencies The company faces accruals for wage and hour class-action lawsuits and entered a new 11-year office lease in Dallas - The company has accrued $37.2 million for loss contingencies related to wage and hour class-action lawsuits, particularly the Clarke Matter and Woehrle Matter, concerning per diem adjustments and overtime pay737476 - In Q1 2022, the company entered into a new lease for an office in Dallas, Texas, with an initial term of approximately eleven years and future undiscounted lease payments of about $29.5 million. The lease is expected to commence in Q1 202377 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q2 2022 revenue growth to high demand across all segments, achieving operating leverage and strong cash flow - Demand for temporary and permanent staffing remains historically high, driven by the COVID-19 pandemic and broader labor trends like the "Great Resignation" Bill rates for nurses peaked in Q1 2022 and began to decline in Q2, but remain well above pre-pandemic levels9192 Revenue Growth by Segment (Q2 2022 vs Q2 2021) | Segment | Q2 2022 Revenue (M) | Q2 2021 Revenue (M) | YoY Growth | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $1,101.5 | $624.5 | 76% | | Physician and leadership solutions | $175.7 | $139.1 | 26% | | Technology and workforce solutions | $149.4 | $93.9 | 59% | | Total Revenue | $1,426.6 | $857.4 | 66% | - Consolidated gross margin for Q2 2022 declined slightly to 32.3% from 32.7% in Q2 2021, primarily due to higher clinician compensation in the Nurse and Allied and Physician and Leadership segments101 - Net cash from operating activities more than doubled to $424.7 million for the first six months of 2022, compared to $210.6 million in the prior-year period, driven by higher net income and favorable changes in working capital115117 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 - The company's main market risk is interest rate risk from variable rate debt, but a 100 basis point increase would not have a material effect on financial statements for the six months ended June 30, 2022125 - Foreign currency risk is considered immaterial as the company generates substantially all of its revenue in the United States125 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2022126 - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2022127 PART II - OTHER INFORMATION Item 1. Legal Proceedings Information on legal proceedings, primarily wage and hour class-action lawsuits, is incorporated by reference from Note 8 - Information regarding legal proceedings is incorporated by reference from Note (8), "Commitments and Contingencies," of the financial statements129 Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in the company's 2021 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2021 Annual Report130 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details common stock repurchase activity, including shares repurchased and remaining authorization under the program - The Board of Directors authorized increases to the share repurchase program by $300.0 million on February 17, 2022, and by $250.0 million on June 15, 2022131 Share Repurchase Activity (Six Months Ended June 30, 2022) | Metric | Value | | :--- | :--- | | Total Shares Repurchased | 4,173,757 | | Average Price Paid per Share | $96.26 | | Total Purchase Price | $401.9 million | | Amount Remaining Under Program (as of June 30, 2022) | $326,278,235 | Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes exhibits such as CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and XBRL interactive data files135