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Healthcare staffing is hot. Just take a look at the year-to-date stock performance of AMN Healthcare (AMN 3.00%). Shares of the healthcare staffing company are up a whopping 47% so far in 2016.
AMN Healthcare announced its second-quarter results after the markets closed on Thursday. Is the momentum likely to continue? Here's what investors need to know about the company's second-quarter performance.
AMN Healthcare results: The raw numbers
| Metric |
Q2 2016 Actuals |
Q2 2015 Actuals |
Growth (YOY) |
|---|---|---|---|
|
Revenue |
$473.7 million |
$350.1 million |
35.3% |
|
Net income from continuing operations |
$26.3 million |
$15.9 million |
65.4% |
|
Earnings per diluted share |
$0.53 |
$0.32 |
65.6% |
YOY: YEAR OVER YEAR. DATA SOURCE: AMN HEALTHCARE SERVICES.
What happened with AMN Healthcare this quarter
AMN grew revenue on two fronts. The company reported organic growth of 19%, and acquisition-related growth of 16%. Those acquisitions over the past year include First String Healthcare, MillicanSolutions, B. E. Smith, and Peak Health Solutions.
The company's nurse and allied solutions segment contributed the most revenue during the second quarter -- $293 million. That figure reflects a year-over-year increase of 29%. AMN reported second-quarter revenue for its locum tenens solutions segment of $109 million, up 12% from the prior-year period.
The fastest growth came from the other workforce solutions segment, which saw sales increase by 174% year over year, to $72 million, thanks largely to acquisitions. AMN's other workforce solutions segment also helped improve the company's overall gross margin by 130 basis points from the second quarter of 2015.
AMN ended the second quarter with cash and cash equivalents totaling $21 million, and total debt outstanding of $413 million. While the company's debt increased from $377 million at the end of the first quarter, AMN's leverage ratio remains at 1.9 to 1.
While the company's stock slipped during the day on Thursday, investors liked what they saw in AMN's second-quarter results. Shares increased enough in after-hours trading to more than make up for the price drop from earlier in the day.
What management had to say
Susan R. Salka, AMN Healthcare president and CEO, liked what she saw in the second quarter. Salka said:
The AMN Healthcare team delivered another record quarter of revenue and earnings due to a strong market environment and tremendous execution to address our clients' critical and evolving workforce needs. In addition to the strong demand for staffing and placement services, we continue to increase the penetration of our workforce solutions, in particular MSP, VMS, and workforce optimization services. The desire to build strategic partnerships and rising level of sophistication within healthcare creates great opportunity for AMN to partner with our clients to deliver cost effective, quality patient care.
Looking forward
AMN expects third-quarter revenue to be between $466 million and $472 million. Investors had anticipated revenue on the low end of that range. The company anticipates continued strong gross margins during the third quarter of 32.5% to 33%. AMN also projects adjusted EBITDA margin in the third quarter of 11.5% to 12%.
The company is counting on sustained strong demand for healthcare professionals. That seems like a pretty safe bet. AMN's Merritt Hawkins physician search firm recently released a report that showed physician salaries increasing year over year for 19 of 20 specialties, with salaries for at least eight specialties jumping by double-digit percentages.
Multiple factors are driving this demand, including expansion of health-insurance coverage, population growth, population aging, and increased prevalence of urgent-care centers. AMN Healthcare appears poised to benefit from these trends for quite a while.
