AMN Healthcare (AMN) Q2 Earnings, Revenues Beat Estimates

AMN Healthcare Services Inc. AMN delivered adjusted earnings per share (EPS) of $3.31 in the second quarter of 2022, which surged 101.8% year over year. The figure surpassed the Zacks Consensus Estimate by 11.8%.

Our projection of adjusted EPS was $2.80.

GAAP EPS for the quarter was $2.77, reflecting a huge 99.3% surge from the year-earlier figure.

Revenues in Detail

AMN Healthcare registered revenues of $1.43 billion in the second quarter, up 66.4% year over year. The figure surpassed the Zacks Consensus Estimate by 4.8%.

The second-quarter revenue compares to our estimate of $1.34 billion.
Robust segmental performances significantly drove second-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 second quarter of 2022, the Nurse and Allied Solutions segment’s revenues totaled $1.10 billion, up 76.4% year over year. Travel nurse staffing revenues grew 70% year over year, whereas allied division revenues rose 54% year over year. Connetics, which was acquired by AMN Healthcare in mid-May, contributed $2 million of revenue in the reported quarter.

This figure compares to our Nurse and Allied Solutions segment’s Q2 projection of $1 billion.

The Physician and Leadership Solutions segment’s revenues totaled $175.7 million, up 26.3% year over year. This upside was on 36% growth in locum tenens revenues, which amounted to $106 million. Interim leadership revenues were up 8% year over year. Physician and leadership search businesses saw revenue growth of 28% year over year.

This figure compares to our Physician and Leadership Solutions segment’s Q2 projection of $167.9 million.

The Technology and Workforce Solutions segment’s revenues totaled $149.4 million, up 59.2% year over year. Language services business revenues came in at $53 million in the quarter (up 17% year over year), while the vendor management systems business saw 144% year-over-year revenue growth to reach $75 million.

This figure compares to our Technology and Workforce Solutions segment’s Q2 projection of $168.1 million.

AMN Healthcare Services Inc Price, Consensus and EPS Surprise

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

Margin Trend

In the quarter under review, AMN Healthcare’s gross profit rose 64.1% to $460.2 million. The gross margin contracted 46 basis points (bps) to 32.3%.

We projected 31.6% of gross margin for Q2.

Selling, general & administrative expenses rose 56.1% to $244.4 million.

Adjusted operating profit totaled $215.8 million, reflecting a 74.2% surge from the prior-year quarter. Adjusted operating margin in the second quarter expanded 68 bps to 15.1%.

Financial Position

AMN Healthcare exited the second quarter of 2022 with cash and cash equivalents of $79.4 million compared with $113.5 million at the end of the first quarter. Total debt at the end of the second quarter of 2022 was $850 million, which is flat compared with the end of the first quarter.

Cumulative net cash flow from operating activities at the end of the second quarter was $424.7 million compared with $210.6 million a year ago.

During the second quarter, AMN Healthcare used $174 million of cash to repurchase 1.9 million shares of its stock. As of Jun 30, 2022, $326 million remained under the company’s stock repurchase authorization.

Guidance

AMN Healthcare has provided its financial outlook for the third quarter of 2022.

For the third quarter, the company expects revenues to be $1.080-$1.110 billion, reflecting growth of 23-26% compared with the prior-year figure. The Zacks Consensus Estimate for the same stands at $1.07 billion.

With respect to the Nurse and Allied Solutions segment, the company expects revenues to grow around 24-28% from the prior-year figure, including labor disruption. The Technology and Workforce Solutions segment’s revenues are expected to grow 30% from the prior-year figure.

The company projects third-quarter revenues at the Physician and Leadership Solutions segment to improve 15% from the prior-year figure.

Our Take

AMN Healthcare exited the second quarter with better-than-expected results. The company recorded robust performance across each of its core segments, along with a surge in its top and bottom lines in the quarter. Per management, the company witnessed robust demand for staffing and other services, significantly higher than the pre-pandemic levels, raising our optimism. AMN Healthcare also acquired Connetics USA in May, which looks promising. Expansion of adjusted operating margin also bodes well for the stock.

However, gross margin contraction raises our apprehensions about the stock. The company’s reliance on third parties and operation in a stiff competitive space are discouraging.

Zacks Rank and Key Picks

AMN Healthcare currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Becton, Dickinson and Company BDX, popularly known as BD, and Alkermes plc ALKS.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.8%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

BD, having a Zacks Rank #2, reported third-quarter fiscal 2022 adjusted EPS of $2.66, which beat the Zacks Consensus Estimate by 6.8%. Revenues of $4.64 billion outpaced the consensus mark by 4%.

BD has an estimated long-term growth rate of 6.6%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average being 11.9%.

Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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