AMN Healthcare Announces First Quarter 2020 Results

DALLAS and SAN DIEGO, May 11, 2020

Dollars in millions, except per share amounts.

	Q1 2020	% Change Q1 2019
Revenue	$602.5	13% ARIVA.DE Börsen-Geflüster Kurse AMN Healthcare Services 57,12 $ +1,55%
Gross profit	$202.1	14%
Net income	$13.0	(62)%
Diluted EPS	$0.27	(62)%
Adjusted diluted EPS*	$0.79	5%
Adjusted EBITDA*	$74.0	12%

Business Highlights

• First quarter financial results in line with guidance, with favorable trends and strong momentum across most business lines in the first two months of the year.
• Revenue of $602 million was 13% above prior year, with organic revenue higher by 3%, and adjusted EBITDA was $74 million.
• With the nationwide reduction in elective procedures and overall healthcare utilization starting in the second half of March due to COVID-19, all divisions except Travel Nurse and VMS were negatively impacted in the quarter.
• Stratus Video, the remote video interpretation business acquired in mid-February, contributed $14 million of revenue in the first quarter, just below expectations due to COVID-19.
• We have realigned our three reportable segments to better correlate with our business operations and organizational structure.

"I am immensely proud of the incredible AMN team, our clients, our industry and most importantly, our front-line healthcare professionals for the way they have risen to the challenge of this global pandemic," said Susan R. Salka, Chief Executive Officer of AMN Healthcare. "In March and April, we mobilized thousands of healthcare professionals to respond to the needs of our clients and the patients and communities they serve.  To handle this dramatic COVID-19 demand surge, our teams rallied with hundreds of team members shifting into new roles to support our clients and healthcare professionals.

"Under pressure from the pandemic and the urgent patient care needs across the country,  we were quickly able to deploy several new, innovative solutions," Ms. Salka added. "In April we expanded our scalable VMS solution, Open Talent Marketplace, allowing a multitude of healthcare facilities to quickly staff and manage their entire range of contingent talent. We saw a significant increase in utilization of our emerging Televate teletherapy platform by the school districts we serve. We added new functionality to our Stratus platform that enabled clients to utilize it for broader telehealth care.  AMN launched a new telehealth platform, AMN Cares, for care teams to interact with patients or employees at home.  We also accelerated the release of AMN Passport, the most comprehensive mobile app for healthcare professionals in the industry."

"As needs related to COVID-19 support decelerated in late April and healthcare utilization remained low across the country, demand for most of our service lines also declined. As a result, we have made adjustments to our cost structure to reflect this market environment. At the same time, we remain focused on our total talent strategy to ensure we emerge as an even stronger and more agile organization," Ms. Salka said.

First Quarter 2020 Results

Consolidated revenue for the quarter was $602 million, a 13% increase over prior year and 3% higher than prior quarter. On an organic basis, consolidated revenue was up 3% over prior year. Beginning this quarter, we are reporting with three realigned business segments. The Nurse and Allied Solutions segment now includes our revenue cycle solutions business. Physician and Leadership Solutions is a new segment that encompasses contingent and permanent leadership solutions, locum tenens, and physician permanent placement. Technology and Workforce Solutions, the third segment, includes remote video interpreting, vendor management solutions, predictive analytics, RPO and credentialing services.

Revenue for the Nurse and Allied Solutions segment was $424 million up 14% year over year (3% organic) and flat sequentially. Travel Nurse division revenue grew 12% year over year with 6% organic growth. Allied division revenue increased 41% year over year, 5% organic.

The Physician and Leadership Solutions segment reported revenue of $138 million, up 1% year over year and down 1% sequentially. Technology and Workforce Solutions segment revenue was $40 million for an increase of 84% year over year (13% organic), driven in large part by our recent acquisitions of b4health and Stratus Video.

Gross margin was 33.5%, higher by 30 basis points year over year and lower by 10 basis points sequentially. The year-over-year variance was driven primarily by a favorable segment mix shift.

SG&A expenses were $146 million, or 24.3% of revenue, compared with $120 million, or 22.5% of revenue, in the same quarter last year. SG&A was $133 million, or 22.7% of revenue, in the previous quarter. The year-over-year increase in SG&A costs included a $7 million increase in one-time costs related to recent acquisitions, as well as $9 million of SG&A from the acquired companies. The remainder of the SG&A increase from prior year was due mainly to higher employee-related expenses and an increase in bad debt reserves due largely to the COVID-19 crisis.

Income from operations was $36 million, or 5.9% of revenue, compared with $45 million, or 8.5% of revenue, in the same quarter last year. Adjusted EBITDA was $74 million, a year-over-year increase of 12%. Adjusted EBITDA margin was 12.3%, representing a decrease of 10 basis points year over year.

Net income was $13 million, or $0.27 per diluted share, compared with $34 million, or $0.71 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.79.

At March 31, 2020, cash and cash equivalents totaled $98 million. Cash flow from operations was $51 million for the quarter, and capital expenditures were $14 million. The Company ended the quarter with total debt outstanding of $1,100 million with a leverage ratio of 3.1 to 1. Subsequent to quarter end, the Company reduced total debt outstanding to $1,050 million and currently has more than $200 million available to draw under the revolving credit facility.

Second Quarter 2020 Outlook

The stay-at-home orders and suspension of elective procedures have caused a material decrease in healthcare utilization and delayed buying decisions from our clients. Travel nurse demand was remarkably strong in the second half of March and much of April. However, recent demand has fallen significantly, reflecting the decline in crisis assignments and healthcare utilization. Overall, for the second quarter, we expect Nurse and Allied Solutions segment revenue to be above prior year by 7-10%, with higher travel nurse revenue partly offset by lower revenue cycle solutions and labor disruption revenue. For this segment, the trajectory of volume and revenue is declining through the quarter, and we expect volumes for nurse, allied and revenue cycle to be below prior year in June.

For our Physician and Leadership Solutions and Technology and Workforce Solutions segments, April revenue for most service lines was below prior-year levels by about 10-30%. Revenue has stabilized, and we expect demand to grow from current levels for these businesses as elective procedures resume and overall healthcare utilization increases.

Based on the above trends, we are projecting second quarter revenue to be in a range of $550 million to $570 million. This wide range reflects the uncertainty and volatility of business activity. In response to the lower level of revenue, we have taken several steps to reduce spending across the enterprise. These actions, plus the variable nature of certain expenses, have decreased our SG&A by approximately 15% on an annualized basis from our pre-COVID-19 run rate. Second quarter operating margin is expected to be above 6%, and adjusted EBITDA margin is expected to be above 12%.

Second quarter estimates for certain financial items include depreciation of $7.5 million, non-cash amortization expense of $15.6 million, interest expense of $10.7 million, integration expenses of $4-5 million, and an adjusted tax rate of 32%.

Conference Call on May 11, 2020

AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in total talent solutions for healthcare, will host a conference call to discuss its first quarter 2020 financial results and outlook on Monday, May 11, 2020, at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare's website at http://amnhealthcare.investorroom.com/eventcalendar. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software. Interested parties may participate live via telephone by dialing (844) 721-7241 in the U.S. or (409) 207-6955 internationally and using participant code 4038932. Following the conclusion of the call, a replay of the webcast will be available at the Company's website. Alternatively, a telephonic replay of the call will be available starting at 7:30 p.m. Eastern Time on May 11, 2020, and can be accessed until 11:59 p.m. Eastern Time on May 25, 2020, by calling (800) 207-1041 in the U.S. or (402) 970-0847 internationally, with access code 1880818.

About AMN Healthcare

AMN Healthcare is the leader and innovator in total talent solutions for healthcare organizations across the nation. The Company provides access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. With insights and expertise, AMN Healthcare helps providers optimize their workforce to successfully reduce complexity, increase efficiency and improve patient outcomes. AMN total talent solutions include managed services programs, clinical and interim healthcare leaders, temporary staffing, executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, language interpretation services, revenue cycle solutions, credentialing, and other services. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, schools and many other healthcare settings. AMN Healthcare is committed to fostering and maintaining a diverse team that reflects the communities we serve. Our commitment to the inclusion of many different backgrounds, experiences and perspectives enables our innovation and leadership in the healthcare services industry.

The Company's common stock is listed on the New York Stock Exchange under the symbol "AMN." For more information about AMN Healthcare, visit www.amnhealthcare.com, where the Company posts news releases, investor presentations, webcasts, SEC filings and other material information. The Company also utilizes email alerts and Really Simple Syndication ("RSS") as routine channels to supplement distribution of this information. To register for email alerts and RSS, visit http://amnhealthcare.investorroom.com/emailalerts.

Non-GAAP Measures

This earnings release contains certain non-GAAP financial information, which the Company provides as additional information, and not as an alternative, to the Company's condensed consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures include (1) adjusted EBITDA, (2) adjusted EBITDA margin and (3) adjusted net income, and (4) adjusted diluted EPS.  The Company provides such non-GAAP financial measures because management believes that they are useful both to management and investors as a supplement, and not as a substitute, when evaluating the Company's operating performance. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted EPS serve as industry-wide financial measures. The Company uses adjusted EBITDA for making financial decisions and allocating resources. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP measures and may be different from non-GAAP measures, or may be calculated differently than other similarly titled non-GAAP measures, reported by other companies. They should not be used in isolation to evaluate the Company's performance.  A reconciliation of non-GAAP measures identified in this release, along with further detail about the use and limitations of certain of these non-GAAP measures, may be found below in the table entitled "Non-GAAP Reconciliation Tables" under the caption entitled "Reconciliation of Non-GAAP Items" and the footnotes thereto or on the Company's website at http://amnhealthcare.investorroom.com/financialreports. Additionally, from time to time, additional information regarding non-GAAP financial measures, including pro forma measures, may be made available on the Company's website.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning future demand projections, projected healthcare utilization rates, projections regarding the trajectory of travel nurse volume and revenue, revenue projections for our Physician and Leadership Solutions and Technology and Workforce Solutions segments, the Company's projected annualized SG&A performance and our guidance for second quarter 2020 Nurse and Allied Solutions segment revenue, allied and revenue cycle solutions revenue, consolidated revenue, travel nurse revenue, operating margin, adjusted EBITDA margin, depreciation expense, non-cash amortization expense, interest expense, integration expenses, and adjusted tax rate. The Company bases these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe," "project," "anticipate," "expect," "intend," "plan," "will," "may," "estimates," variations of such words and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

The Company's ability to meet the targets and expectations noted in our second quarter 2020 outlook depends upon, among other factors, (i) the magnitude and duration of the effects of the COVID-19 pandemic on our business, financial condition and results of operations, (ii) the duration of the period that hospitals and other healthcare entities decrease their utilization of temporary employees, physicians, leaders and other workforce technology applications as a result of the suspension or restrictions placed on non-essential and elective healthcare as a result of the COVID-19 pandemic, (iii) the duration of the period that individuals may continue to forgo non-essential and elective healthcare once "safer at home" restrictions and recommendations are lifted, (iv) the extent and duration of the period that a significant spike in unemployment that has resulted from the COVID-19 pandemic will cause an increase in under- and uninsured patients and a corresponding reduction in overall healthcare utilization and demand for our services, (v) the extent to which the COVID-19 pandemic may disrupt our operations due to the unavailability of our employees or healthcare professionals due to illness, risk of illness, quarantines, travel restrictions or other factors that limit our existing or potential workforce and pool of candidates, (vi) the severity and duration of the impact the COVID-19 pandemic has on the financial condition and cash flow of many hospitals and healthcare systems such that it impairs their ability to make payments to us, timely or otherwise, for services rendered, (vii) our ability to anticipate and quickly respond to changing marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, or client needs, (viii) our ability to manage the pricing impact that the COVID-19 pandemic and consolidation of healthcare delivery organizations may have on our business, (ix) our ability to develop and evolve our current technology offerings and capabilities and implement new infrastructure and technology systems to optimize our operating results and manage our business effectively, (x) our ability to comply with extensive and complex federal and state laws and regulations related to the conduct of our operations, costs and payment for services and payment for referrals as well as laws regarding employment practices, (xi) our ability to recruit and retain sufficient quality healthcare professionals at reasonable costs, and (xii) our ability to consummate and effectively incorporate acquisitions into our business.

For a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above that could cause actual results to differ from those implied by the forward-looking statements contained in this press release, please refer to our most recent Annual Report on Form 10-K for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Contact:
Randle Reece
Director, Investor Relations
866.861.3229

AMN Healthcare Services, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended
	March 31,								December 31,
	2020				2019				2019
Revenue	$	602,461			$	532,441			$	586,892
Cost of revenue	400,395				355,682				389,759
Gross profit	202,066				176,759				197,133
Gross margin	33.5		%		33.2		%		33.6		%
Operating expenses:
Selling, general and administrative (SG&A)	146,234				119,997				133,158
SG&A as a % of revenue	24.3		%		22.5		%		22.7		%
Depreciation and amortization	20,089				11,710				17,007
Total operating expenses	166,323				131,707				150,165
Income from operations	35,743				45,052				46,968
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