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AMN Healthcare (AMN) Loses 13.1% Despite Q3 Earnings Beat

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Shares of AMN Healthcare Services Inc. AMN declined 13.1% on Nov 5, following the company's third-quarter 2021 results.

The company reported adjusted earnings per share (“EPS”) of $1.73 in the third quarter of 2021 which soared 112% year over year. The figure surpassed the Zacks Consensus Estimate by 29.1%.

GAAP EPS for the quarter was $1.54, reflecting a significant improvement of 182% from the year-ago figure.

Revenues in Detail

AMN Healthcare’s third-quarter revenues were $877.8 million, up 59.1% year over year. The top line outpaced the Zacks Consensus Estimate by 12.3%.

Robust segmental performances significantly drove the third-quarter revenues.

Segment Details

AMN Healthcare conducts its business via three reportable segments — Nurse and Allied solutions, Physician and Leadership solutions, and Technology and Workforce Solutions.
In the third quarter of 2021, the Nurse and Allied Solutions segment’s revenues totaled $627 million, up 64% year over year. Travel nurse staffing revenues grew 56% year over year, while allied division revenues rose 62% year over year.

AMN Healthcare Services Inc Price, Consensus and EPS Surprise

AMN Healthcare Services Inc Price, Consensus and EPS Surprise
AMN Healthcare Services Inc Price, Consensus and EPS Surprise

AMN Healthcare Services Inc price-consensus-eps-surprise-chart | AMN Healthcare Services Inc Quote

The Physician and Leadership Solutions segment’s revenues totaled $151 million, up 38% year over year. This upside can be attributed to 31% growth in Locum tenens revenues. Interim leadership revenues were up 59% year over year. Physician and leadership search businesses witnessed a revenue growth of 33% year over year.

The Technology and Workforce Solutions segment’s revenues totaled $100 million, up 67% year over year. Language services business revenues amounted to $47 million in the quarter (up 33% year over year), while the vendor management systems business improved a whopping 113% year over year to reach $33 million.

Margin Trend

In the quarter under review, AMN Healthcare’s gross profit surged 65.7% to $305.9 million. Gross margin expanded 130 basis points (bps) to 34.8%.

Selling, general & administrative expenses rose 56.4% to $173.93 million.

Operating profit totaled $105.8 million, reflecting a 127.8% surge from the prior-year quarter. Adjusted operating margin in the third quarter expanded 370 bps to 12.1%.

Financial Position

AMN Healthcare exited the third quarter of 2021 with cash and cash equivalents of $137 million compared with $139.5 million at the end of the second quarter.

Cumulative net cash flow from operating activities at the end of the third quarter was $227.4 million compared with $216.9 million a year ago.

Guidance

AMN Healthcare has provided its financial outlook for the fourth quarter of 2021.

For the fourth quarter, the company expects revenues to be $1.13-$1.15 billion, reflecting growth of around 80% from the prior-year figure. The Zacks Consensus Estimate for the same stands at $718.5 million.

With respect to the Nurse and Allied Solutions segment, the company expects revenues to grow 96-100% higher from the prior-year figure. The Technology and Workforce Solutions segment’s revenues are anticipated to improve around 50% from the prior-year figure.

The company projects fourth-quarter revenues at the Physician and Leadership Solutions segment to surge about 35% from the prior-year figure.

Our Take

AMN Healthcare exited the third quarter with better-than-expected results. The company recorded robust performance across each of its core segments, and both earnings and revenues improved in the quarter under review. Per management, increased healthcare utilization and a tight labor market have led to record high demand in several areas of the company’s business. This, in turn, bodes well for AMN Healthcare’s collaborations and innovations, which are intended to provide greater access to patient care, thus fueling further confidence. Expansion of both margins bodes well for the stock. An upbeat revenue guidance for the fourth quarter of 2021 is encouraging.

However, the company’s reliance on third parties and operation in a stiff competitive space remain headwinds.

Zacks Rank

AMN Healthcare currently carries a Zacks Rank #2 (Buy).

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, West Pharmaceutical Services, Inc. WST, and AngioDynamics, Inc. ANGO. While both Thermo Fisher and West Pharmaceutical carry a Zacks Rank of 2 (Buy), AngioDynamics sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%.

West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%.

AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%.


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