Competitors ASGN and CCRN are moving up today-AHS is in the crosshairs of the ARBS. Perhaps another day or two of this before AHS joins its peers in moving higher reflecting stronger fundamentals.
I see no reason that the gap shouldn't close a little every week-the discount between the two (CCRN) is unwarrented. So, in picking a date, I'll say the "gap" will be gone a week after both report Sept #s or by the 1st or 2nd week of Nov-net/net two months.
With the new filing today that states the deal will be closed by 9-1-10...IMHO the key is looking at what is (or isn't) Nursefinders bringing to the table that can help AMN going into the 4th quarter? IMO thier MSP accounts. Why is this so valuable to make the current share price look SSSOOOO good? Typically the 4th quarter brings the highest volume of travel orders for the year. With a little research it is not difficult to find out Nursefinders arguably has the largest volume of diversfied exclusive agreement (or MSP/VMS)throughout the healthcare industry nationally.
Even if AMN was already the largest sub contract supplier to Nursefinders MSPs (which I am pretty sure I heard on the CC or read somewhere) now they will have full access to those orders and won't be competing with the other vendors Nursefinders was using. If my logic holds any water the timing is prefect for this deal going into the busiest travel season.
Even before synergies are realized just the additional exculsive access to the Nursefinders MSP clients could have this deal ahead of the game.
Why has the share price dropped in half? Fear of the debt and as has become all to commen the expected synergies not being realized in a timely manner which has been estimated at $10 million by the end of next year...what if they see an increase in revenue by $10 million in Q4 through the access to the large volume of exclusive accounts they have purchased? Add in the combined compay's ability to increase fills on per diem orders and the math starts adding up quickly. When you look at CCRN they have added CrossCountry Local in addition to thier MedStaff division I am not aware of any AMN local presence so it is safe to assume AMN subbing out 100% of thier PD orders?
Lets face it investors FLOCK these days to anyone who is beating the expectations that can be logically explained. The math seems pretty logical.
I concur with both of you gentlemen. What we have had here is that selling begets selling as those with less conviction assume they will be "late" to any potential "bad" news the the "market" knows. I don't think there is or will be any bad news and at any interest rate below 10% will be good news as it will make the deal more accretive. After falling of a cliff in 2009, nurse and allied demand has started to grow again as evidenced by AHS, CCRN and ASGN for the June Q conference calls-ASGN was very bullish for their nurse and allied division for 2011. As was stated by, beachhead, the time to use leverage is when demand is strengthening and interest rates are at record lows. As the fear of a double-dip recedes, AHS should move a lot higher and it should move higher anyway because pessimism is way over done.
I bought more today at $4.19. The "market" is pricing the stock like AHS is going out of business, yet 2Q numbers were better than expected with sequentially higher earnings expected for the Sept an Dec Q. Nursing and allied demand is not going to fall off, but only increase over time. With the deal, AHS get into home healthcare, which has higher gross margins, per diem and adds more VMS clients. These three service adds will make them more valuable to their clients and increase they market share and TAM. The lower AHS, the more the valuation becomes compelling.
Deal should close by the end of the month. Yes, if the deal blows up AHS will go higher. But, I'd rather the deal go through. Two positive indirect news points today for AHS.
1)Employment and workweek sub indexes in the Empire Index were up sharply in Aug vs July
2)RSCR getting a buyout bid at a 20+% premium
AHS is stupid cheap.