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Reasons to Add AMN Healthcare (AMN) Stock to Your Portfolio

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AMN Healthcare Services, Inc. AMN has been gaining on the back of its broad array of services. A solid performance in the fourth quarter of 2021 and its key buyouts also raise optimism about the stock. However, stiff competition and healthcare industry regulations are major downsides.

Over the past year, this Zacks Rank #1 (Strong Buy) stock has gained 34.5% versus 57.9% fall of the industry and 11.5% rise of the S&P 500.

The renowned player in the healthcare total talent services space has a market capitalization of $4.78 billion. The company projects 16.2% growth for the next five years and expects to witness continued improvements in its business. AMN Healthcare surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 20%, on average.

Zacks Investment Research
Zacks Investment Research


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Let’s delve deeper.

Acquisitions: AMN Healthcare has lately been strengthening its inorganic portfolio through a string of acquisitions, raising our optimism. In May 2021, the company forayed into the post-acute care market with the acquisition of telehealth company, Synzi, which offers virtual care and remote patient-monitoring platforms in the home health and outpatient markets. These solutions will help AMN Healthcare conduct virtual visits and use secure messaging, texts, and emails for clinician-to-patient and clinician-to-clinician communications.

The buyouts of Stratus Video (now known as AMN Language Services) and b4health are other top performance drivers for AMN Healthcare.

Broad Array of Services: We are upbeat about its business’ gradual evolution beyond traditional healthcare staffing. The company has become a strategic total talent solutions partner for its clients. AMN Healthcare has expanded its portfolio to serve a diverse and growing set of healthcare talent-related needs. The company’s suite of healthcare workforce solutions includes Managed Services Programs, vendor management systems (“VMS”), and medical language interpretation services, among others.

The company has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. The company also expanded its scalable VMS solution, enabling a wide array of health care facilities to quickly staff and manage their entire range of contingent talent.

Strong Q4 Results: AMN Healthcare’s better-than-expected results in fourth-quarter 2021 buoy our optimism. The company recorded robust performances across each of its core segments, and both earnings and revenues improved in the quarter under review. Expansion of operating margin bodes well for the stock. Its upbeat revenue guidance for the first quarter of 2022 is encouraging.

Downsides

Stiff Competition: In the nurse and allied healthcare staffing business, AMN Healthcare competes with a few national competitors together with numerous smaller, regional and local companies. Some of the leading competitors vary by segment. When recruiting for healthcare professionals, in addition to other executive search and staffing firms, AMN Healthcare also competes with hospital systems that have developed their recruitment departments.

Healthcare Industry Regulations: The healthcare industry is subject to extensive and complex federal and state laws and regulations. AMN Healthcare provides talent solutions and technologies on a contractual basis to its clients who pay the company directly. Although Medicare, Medicaid and insurance reimbursement policy changes generally do not directly impact the company, reimbursement changes in government programs, particularly Medicare and Medicaid, can and do indirectly affect the demand and prices paid for the company’s services.

Estimate Trend

AMN Healthcare has been witnessing an upward estimate revision trend for 2022. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 44.3% north to $9.25.

The Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $1.50 billion, suggesting a 69% rise from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks in the broader medical space include Henry Schein, Inc. HSIC, Allscripts Healthcare Solutions, Inc. MDRX and IDEXX Laboratories, Inc. IDXX.

Henry Schein, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average beat being 25.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein has gained 27.5% compared with the industry’s 7.6% growth over the past year.

Allscripts has an estimated long-term growth rate of 16.3%. MDRX’s earnings surpassed estimates in the trailing four quarters, the average beat being 64.8%. It currently has a Zacks Rank #2.

Allscripts has gained 42% against the industry’s 51% fall over the past year.

IDEXX has an estimated long-term growth rate of 13%. IDXX’s earnings surpassed estimates in the trailing four quarters, the average beat being 18.6%. It currently carries a Zacks Rank #2.

IDEXX has gained 7.4% against the industry’s 2.7% fall over the past year.


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