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AMN Healthcare (AMN) Q4 Earnings Top, Revenues Lag Estimates

Zacks Equity Research

AMN Healthcare Services Inc. AMN reported fourth-quarter 2018 adjusted earnings per share (EPS) of 81 cents, which beat the Zacks Consensus Estimate by a penny. EPS also rose 28.6% year over year.

The Zacks Rank #5 (Strong Sell) company posted revenues worth $528.6 million, which fell short of the Zacks Consensus Estimate of $539 million. On a year-over-year basis, revenues rose 3.8%.

2018 at a Glance

On a full-year basis, AMN Healthcare’s revenues totaled $2.14 billion, up 7.4% from 2017. 2018 adjusted EPS totaled $3.29, up 28.5% from 2017.

The company reports through three segments — Nurse and Allied Solutions, Locum Tenens Solutions and Other Workforce Solutions.

Nurse and Allied Solutions’ 2018 revenues totaled $1.31 billion (61.2% of net sales), Locum Tenens Solutions’ revenues were $393.4 million (18.4%) and Other Workforce Solutions’ revenues grossed $436.2 million (20.4%).

AMN Healthcare Services Inc Price, Consensus and EPS Surprise

 

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

Segment Details

Nurse and Allied Solutions

In the fourth quarter of 2018, the segment’s revenues totaled $329.3 million, up 2.5% year over year.

Locum Tenens Solutions

The segment saw revenues worth $81.9 million, down 24.3% from the prior-year quarter.

Other Workforce Solutions

In the quarter under review, the segment’s revenues came in at $117.5 million, up 47.6% year over year.

Margin

In the fourth quarter, gross profit totaled $172.5 million, up 6.4% year over year. As a percentage of revenues, gross margin was 32.6% which expanded 80 basis points (bps).

Adjusted operating expenses in the quarter were $61.6 million, down a slight 0.2% year over year. As a percentage of revenues, adjusted operating margin was 11.7%, down 40 bps.

Guidance

AMN Healthcare has provided guidance for the first quarter of 2019.

Notably, first-quarter revenues are expected within $520-$528 million. The mid-point of $524 million lies slightly below the Zacks Consensus Estimate of $524.8 million.

The company expects adjusted EBITDA margin of 12% for the first quarter.

Our Take

AMN Healthcare exited the fourth quarter on a mixed note. The company continues to gain from its core Nurse and Allied Solutions and Locum Tenens Solutions units which put up a strong show in the quarter. Additionally, acquisitions made last year have proven to be accretive in the quarter. Management is upbeat about the latest Silversheet buyout, which is expected to enhance the company’s workforce solution offerings. Expansion in gross margin is also encouraging.

However, lackluster performance by the company’s Locum Tenens Solutions is worrisome. In fact, management expects the company’s first-quarter revenues to drop organically due to lower contributions from Locum Tenens business. In fact, management foresees a dismal first quarter by its core Nurse and Allied segment as well due to lower nursing utilization from a large client. Contraction in operating margin adds to the woes.

Earnings of MedTech Majors at a Glance

Some better-ranked MedTech stocks that delivered solid quarterly results are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD. Notably, each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Varian reported first-quarter fiscal 2019 adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million.

AngioDynamics’ second-quarter fiscal 2019 adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%.

CONMED delivered fourth-quarter 2018 adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million outshined the Zacks Consensus Estimate of $229.2 million.

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