UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 3, 2018
AMN HEALTHCARE SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-16753 | 06-1500476 | |
| (Commission File Number) |
(I.R.S. Employer Identification No.) |
12400 High Bluff Drive, Suite 100
San Diego, California 92130
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code: (866) 871-8519
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2—Financial Information
| Item 2.02. | Results of Operations and Financial Condition. |
On May 3, 2018, AMN Healthcare Services, Inc. (the “Company”) reported its first quarter 2018 results. The Company’s first quarter 2018 results are discussed in detail in the press release (the “Press Release”), which is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
The information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent as shall be expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| 99.1 | Press Release issued by the Company on May 3, 2018 furnished pursuant to Item 2.02 of this Current Report on Form 8-K. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMN Healthcare Services, Inc. | ||||||
| Date: May 3, 2018 | By: | /s/ Susan R. Salka | ||||
| Susan R. Salka | ||||||
| President & Chief Executive Officer | ||||||
Exhibit 99.1
Contact:
Randle Reece
Director, Investor Relations
866.861.3229
AMN HEALTHCARE ANNOUNCES FIRST QUARTER 2018 RESULTS
Quarterly revenue of $522 million, up 6% over prior year;
GAAP EPS of $0.87 and adjusted EPS of $0.81
SAN DIEGO – (May 3, 2018) – AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in healthcare workforce solutions and staffing services, today announced its first quarter 2018 financial results. Financial highlights are as follows:
Dollars in millions, except per share amounts.
| Q1 2018 | % Change Q1 2017 |
|||||||
| Revenue |
$ | 522.5 | 6 | % | ||||
| Gross profit |
$ | 167.8 | 4 | % | ||||
| Net income |
$ | 42.7 | 33 | % | ||||
| Diluted EPS |
$ | 0.87 | 34 | % | ||||
| Adj. diluted EPS* |
$ | 0.81 | 29 | % | ||||
| Adjusted EBITDA* |
$ | 66.5 | 5 | % | ||||
| * | See “Non-GAAP Measures” below for a discussion of our use of non-GAAP items and the table entitled “Supplemental Financial and Operating Data” for a reconciliation of non-GAAP items. |
Highlights
| • | AMN Healthcare reached record highs for revenue and EPS in the quarter. |
| • | First quarter consolidated revenue of $522 million increased 6% year over year. |
| • | Growth was led by our Nurse and Allied Solutions segment with revenue up by 8%. |
| • | Adjusted EBITDA of $67 million grew 5% year over year and was 12.7% of revenue. |
| • | Operating cash flow in the first quarter was strong at $60 million. |
| • | In April we completed the acquisitions of MedPartners, Phillips DiPisa and Leaders For Today, which we expect to be immediately accretive. |
“AMN delivered a quarter of great performance and service delivery for our clients and healthcare professionals,” said Susan R. Salka, Chief Executive Officer of AMN Healthcare. “I am very proud of how our teams rallied to meet our clients’ higher-than-expected staffing needs. Demand continues to grow for strategic partners capable of providing comprehensive solutions to meet the evolving healthcare workforce challenges. AMN is uniquely positioned with its suite of innovative workforce solutions.”
Ms. Salka added, “We started the second quarter with the acquisition of three businesses that add valuable facets to our mid-revenue cycle, executive search and interim leadership solutions. MedPartners, Phillips DiPisa and Leaders For Today bring talented teams that are an excellent fit for AMN.”
First Quarter 2018 Results
Consolidated revenue for the quarter was $522 million, a 6% increase over prior year and 3% higher than prior quarter. Revenue for the Nurse and Allied Solutions segment was $338 million, higher by 8% year over year and 5% sequentially. The Travel Nurse division continued to perform well with revenue up 10% year over year and 8% sequentially. Allied division revenue increased 3% year over year and was flat sequentially.
The Locum Tenens Solutions segment performed at the high end of expectations with revenue of $103 million, up slightly year over year and down by 5% sequentially. Other Workforce Solutions segment revenue was $81 million reflecting an increase of 3% year over year and 2% sequentially, with year-over-year growth driven by the mid-revenue cycle and workforce optimization businesses.
Gross margin was 32.1%, lower by 60 basis points year over year and higher by 30 basis points sequentially. The year-over-year gross margin decline was due primarily to lower bill-to-pay spreads in our Locum Tenens Solutions segment and a revenue mix shift in the Other Workforce Solutions segment. The sequential gross margin increase was driven primarily by a higher Nurse and Allied Solutions gross margin.
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SG&A expenses were $105 million, or 20.0% of revenue, compared with $102 million, or 20.6% of revenue, in the same quarter last year. Expenses as a percentage of revenue decreased year over year due to improved operating leverage. SG&A was $100 million, or 19.7% of revenue, in the previous quarter.
Net income was $43 million, or $0.87 per diluted share, compared with $32 million, or $0.65 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.81. Adjusted EBITDA was $67 million, a year-over-year increase of 5%. Adjusted EBITDA margin was 12.7%, representing a decrease of 10 basis points year over year and an increase of 10 basis points sequentially.
At March 31, 2018, cash and cash equivalents totaled $54 million. Cash flow from operations was strong at $60 million for the quarter. Capital expenditures were $6 million in the quarter. The Company ended the quarter with total debt outstanding of $325 million, with a leverage ratio as calculated in accordance with the Company’s credit agreement of 1.2 to 1.
April Acquisitions
In April, AMN completed the acquisition of MedPartners, a leading national mid-revenue cycle firm; and two related providers of healthcare leadership solutions, Phillips DiPisa and Leaders For Today. All of these businesses are included in the Company’s Other Workforce Solutions segment.
MedPartners’ solutions include case management, clinical documentation improvement, and medical registry, while also doubling our market share in medical coding. MedPartners generated 2017 revenue of approximately $125 million with an adjusted EBITDA margin of 16%. MedPartners is expected to be immediately accretive to AMN’s adjusted earnings per share.
Phillips DiPisa is an executive retained search firm, specifically focusing on C-suite positions in healthcare. Leaders For Today provides interim healthcare leaders and mid-level permanent placement. The combined companies generated 2017 revenue of approximately $23 million and an adjusted EBITDA margin of 20%. The acquisition is expected to be immediately accretive to AMN’s adjusted earnings per share.
3
Second Quarter 2018 Outlook
| Metric |
Guidance* | |
| Consolidated revenue |
$530 - $537 million | |
| Gross margin |
32.5-33.0% | |
| SG&A as percentage of revenue |
21.0% | |
| Adjusted EBITDA margin |
12.5-13.0% |
| * | Note: Guidance percentage metrics are approximate. For a reconciliation of adjusted EBITDA margin, see the table entitled “Reconciliation of Guidance Adjusted EBITDA Margin to Guidance Operating Margin” below. |
Projected year-over-year revenue growth in the second quarter of 2018 is approximately 8-10%. The acquisitions are expected to add $33-34 million of revenue in the second quarter. No significant labor disruption revenue is included in the second quarter guidance, nor was any in the prior-year quarter.
Conference Call on May 3, 2018
AMN Healthcare Services, Inc. (NYSE: AMN), healthcare’s leader and innovator in workforce solutions and staffing services, will host a conference call to discuss its first quarter 2018 financial results on Thursday, May 3, 2018, 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/presentations. 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 (800) 230-1074 in the U.S. or (612) 234-9960 internationally. 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 3, 2018, and can be accessed until 11:59 p.m. Eastern Time on May 17, 2018, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 447387.
4
About AMN Healthcare
AMN Healthcare is the leader and innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. The Company provides unparalleled 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 delivers managed services programs, healthcare executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, mid-revenue cycle solutions, and other services. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities 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 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 and adjusted diluted EPS serve as industry-wide financial measures. The Company uses adjusted EBITDA for making
5
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 “Supplemental Financial and Operating Data” 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 our guidance for second quarter 2018 revenue, gross margin, SG&A expenses as a percentage of revenue, adjusted EBITDA margin, the accretion from our recent acquisitions, market demand and our strategic positioning. 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,” “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. Factors that could cause actual results to differ from those implied by the forward-looking statements contained in this press release are set forth in our fillings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2017, 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
6
AMN Healthcare Services, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Revenue |
$ | 522,489 | $ | 495,169 | $ | 509,076 | ||||||
| Cost of revenue |
354,665 | 333,393 | 346,984 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross profit |
167,824 | 161,776 | 162,092 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross margin |
32.1 | % | 32.7 | % | 31.8 | % | ||||||
| Operating expenses: |
||||||||||||
| Selling, general and administrative (SG&A) |
104,737 | 102,073 | 100,375 | |||||||||
| SG&A as a % of revenue |
20.0 | % | 20.6 | % | 19.7 | % | ||||||
| Depreciation and amortization |
7,886 | 7,668 | 8,520 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
112,623 | 109,741 | 108,895 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income from operations |
55,201 | 52,035 | 53,197 | |||||||||
| Operating margin (1) |
10.6 | % | 10.5 | % | 10.4 | % | ||||||
| Interest expense, net, and other |
5,335 | 5,130 | 4,782 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income before income taxes |
49,866 | 46,905 | 48,415 | |||||||||
| Income tax expense |
7,185 | 14,897 | 7,248 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net income |
$ | 42,681 | $ | 32,008 | $ | 41,167 | ||||||
|
|
|
|
|
|
|
|||||||
| Net income as a % of revenue |
8.2 | % | 6.5 | % | 8.1 | % | ||||||
| Other comprehensive income (loss): |
||||||||||||
| Foreign currency translation and other |
(19 | ) | 3 | 13 | ||||||||
| Cash flow hedge, net of income taxes |
— | 43 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Other comprehensive income (loss) |
(19 | ) | 46 | 13 | ||||||||
| Comprehensive income |
$ | 42,662 | $ | 32,054 | $ | 41,180 | ||||||
|
|
|
|
|
|
|
|||||||
| Net income per common share: |
||||||||||||
| Basic |
$ | 0.89 | $ | 0.67 | $ | 0.86 | ||||||
|
|
|
|
|
|
|
|||||||
| Diluted |
$ | 0.87 | $ | 0.65 | $ | 0.84 | ||||||
|
|
|
|
|
|
|
|||||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
47,733 | 47,782 | 47,618 | |||||||||
|
|
|
|
|
|
|
|||||||
| Diluted |
49,116 | 49,520 | 49,281 | |||||||||
|
|
|
|
|
|
|
|||||||
7
AMN Healthcare Services, Inc.
Supplemental Financial and Operating Data
(dollars in thousands, except per share data and operating data)
(unaudited)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Revenue |
||||||||||||
| Nurse and allied solutions |
$ | 338,179 | $ | 313,523 | $ | 321,360 | ||||||
| Locum tenens solutions |
103,117 | 102,843 | 108,142 | |||||||||
| Other workforce solutions |
81,193 | 78,803 | 79,574 | |||||||||
|
|
|
|
|
|
|
|||||||
| $ | 522,489 | $ | 495,169 | $ | 509,076 | |||||||
|
|
|
|
|
|
|
|||||||
| Reconciliation of Non-GAAP Items: |
||||||||||||
| Segment operating income (2) |
||||||||||||
| Nurse and allied solutions |
$ | 51,805 | $ | 45,980 | $ | 48,154 | ||||||
| Locum tenens solutions |
9,958 | 12,219 | 12,394 | |||||||||
| Other workforce solutions |
19,851 | 19,857 | 19,366 | |||||||||
|
|
|
|
|
|
|
|||||||
| 81,614 | 78,056 | 79,914 | ||||||||||
| Unallocated corporate overhead |
15,095 | 14,891 | 15,545 | |||||||||
|
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|
|
|
|
|
|||||||
| Adjusted EBITDA (3) |
66,519 | 63,165 | 64,369 | |||||||||
| Adjusted EBITDA margin (4) |
12.7 | % | 12.8 | % | 12.6 | % | ||||||
| Depreciation and amortization |
7,886 | 7,668 | 8,520 | |||||||||
| Share-based compensation |
2,864 | 2,681 | 2,517 | |||||||||
| Acquisition and integration costs |
568 | 781 | 135 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income from operations |
55,201 | 52,035 | 53,197 | |||||||||
| Interest expense, net, and other |
5,335 | 5,130 | 4,782 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income before income taxes |
49,866 | 46,905 | 48,415 | |||||||||
| Income tax expense |
7,185 | 14,897 | 7,248 | |||||||||
|
|
|
|
|
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|
|||||||
| Net income |
$ | 42,681 | $ | 32,008 | $ | 41,167 | ||||||
|
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|
|
|
|
|||||||
| GAAP diluted net income per share (EPS) |
$ | 0.87 | $ | 0.65 | $ | 0.84 | ||||||
| Adjustments: |
||||||||||||
| Amortization of intangible assets |
0.09 | 0.09 | 0.10 | |||||||||
| Acquisition and integration costs |
0.01 | 0.02 | 0.00 | |||||||||
| Debt financing related costs |
0.01 | 0.00 | 0.00 | |||||||||
| Tax effect on above adjustments |
(0.03 | ) | (0.04 | ) | (0.04 | ) | ||||||
| Tax correction related to prior periods(5) |
(0.05 | ) | 0.00 | 0.00 | ||||||||
| Tax law effect on deferred taxes (6) |
0.00 | 0.00 | (0.27 | ) | ||||||||
| Excess tax benefits (6) |
(0.09 | ) | (0.09 | ) | 0.00 | |||||||
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|
|
|
|
|
|||||||
| Adjusted diluted EPS (7) |
$ | 0.81 | $ | 0.63 | $ | 0.63 | ||||||
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|
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|
|||||||
8
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Gross Margin |
||||||||||||
| Nurse and allied solutions |
28.0 | % | 27.7 | % | 27.4 | % | ||||||
| Locum tenens solutions |
28.7 | % | 30.7 | % | 29.3 | % | ||||||
| Other workforce solutions |
53.6 | % | 55.0 | % | 53.1 | % | ||||||
| Operating Data: |
||||||||||||
| Nurse and allied solutions |
||||||||||||
| Average healthcare professionals on assignment (8) |
9,567 | 9,051 | 9,234 | |||||||||
| Locum tenens solutions |
||||||||||||
| Days filled (9) |
52,794 | 55,243 | 56,591 | |||||||||
| Revenue per day filled (10) |
$ | 1,953 | $ | 1,862 | $ | 1,911 | ||||||
| As of March 31, | As of December 31, | |||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Leverage ratio (11) |
1.2 | 1.6 | 1.3 | |||||||||
9
AMN Healthcare Services, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
| March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
||||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 54,499 | $ | 15,147 | $ | 37,711 | ||||||
| Accounts receivable, net |
338,600 | 350,496 | 334,782 | |||||||||
| Accounts receivable, subcontractor |
39,027 | 41,012 | 48,838 | |||||||||
| Prepaid and other current assets |
57,244 | 67,498 | 50,893 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
489,370 | 474,153 | 472,224 | |||||||||
| Restricted cash, cash equivalents and investments |
60,236 | 64,315 | 29,141 | |||||||||
| Fixed assets, net |
75,530 | 73,431 | 62,620 | |||||||||
| Other assets |
84,112 | 74,366 | 65,368 | |||||||||
| Goodwill |
340,596 | 340,596 | 340,564 | |||||||||
| Intangible assets, net |
222,708 | 227,096 | 241,130 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
$ | 1,272,552 | $ | 1,253,957 | $ | 1,211,047 | ||||||
|
|
|
|
|
|
|
|||||||
| Liabilities and stockholders’ equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable and accrued expenses |
$ | 122,402 | $ | 130,319 | $ | 136,028 | ||||||
| Accrued compensation and benefits |
117,415 | 121,423 | 99,642 | |||||||||
| Current portion of notes payable |
— | — | 3,750 | |||||||||
| Deferred revenue |
8,746 | 8,384 | 8,840 | |||||||||
| Other current liabilities |
2,616 | 5,146 | 29,428 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
251,179 | 265,272 | 277,688 | |||||||||
| Notes payable, less unamortized fees |
320,034 | 319,843 | 358,512 | |||||||||
| Deferred income taxes, net |
21,922 | 27,036 | 16,548 | |||||||||
| Other long-term liabilities |
80,201 | 79,279 | 81,494 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities |
673,336 | 691,430 | 734,242 | |||||||||
| Commitments and contingencies |
||||||||||||
| Stockholders’ equity |
599,216 | 562,527 | 476,805 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities and stockholders’ equity |
$ | 1,272,552 | $ | 1,253,957 | $ | 1,211,047 | ||||||
|
|
|
|
|
|
|
|||||||
10
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2018 | 2017(12) | 2017(12) | ||||||||||
| Net cash provided by operating activities |
$ | 59,735 | $ | 44,684 | $ | 58,422 | ||||||
| Net cash used in investing activities |
(9,613 | ) | (13,300 | ) | (11,316 | ) | ||||||
| Net cash used in financing activities |
(14,970 | ) | (11,928 | ) | (13,369 | ) | ||||||
| Effect of exchange rates on cash |
(19 | ) | 4 | 13 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net increase in cash, cash equivalents and restricted cash and cash equivalents |
35,133 | 19,460 | 33,750 | |||||||||
| Cash, cash equivalents and restricted cash and cash equivalents at beginning of period |
98,894 | 51,028 | 65,144 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash, cash equivalents and restricted cash and cash equivalents at end of period |
$ | 134,027 | $ | 70,488 | $ | 98,894 | ||||||
|
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|||||||
AMN Healthcare Services, Inc.
Additional Supplemental Non-GAAP Disclosures
Reconciliation of Guidance Adjusted EBITDA Margin to
Guidance Operating Margin
| Three Months Ending | ||||||||||||
| June 30, 2018 | ||||||||||||
| Low(13) | High(13) | |||||||||||
| Adjusted EBITDA margin |
12.5 | % | 13.0 | % | ||||||||
| Deduct: |
||||||||||||
| Share-based compensation |
0.6 | % | ||||||||||
| Acquisition and integration costs |
0.2 | % | ||||||||||
| EBITDA margin |
11.7 | % | 12.2 | % | ||||||||
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| Depreciation and amortization |
1.9 | % | ||||||||||
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| Operating margin |
9.8 | % | 10.3 | % | ||||||||
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| (1) | Operating margin represents income from operations divided by revenue. |
| (2) | Segment operating income represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, unallocated corporate overhead, acquisition and integration costs and share-based compensation. |
| (3) | Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income tax expense, depreciation and amortization, acquisition and integration costs and share-based compensation. Management believes that adjusted EBITDA provides an effective measure of the Company’s results, as it excludes certain items that management believes are not indicative of the Company’s operating performance and is a measure used in the Company’s credit agreement and the indenture governing our 5.125% Senior Notes due 2024. Adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to income from operations or net income as an indicator of operating performance. Although management believes that some of the items excluded from adjusted EBITDA are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income. |
| (4) | Adjusted EBITDA margin represents adjusted EBITDA divided by revenue. |
| (5) | During the first quarter of 2018, the Company recorded a net tax benefit of $2,501,000 in the three months ended March 31, 2018 to adjust for an immaterial out-of-period error identified this quarter related to the income tax treatment of fair value changes in the cash surrender value of its Company Owned Life Insurance for years ended December 31, 2015 through December 31, 2017. These fair value changes had not previously been included as a benefit in the tax provision of the related years. |
| (6) | The consolidated effective tax rate for the three months ended March 31, 2018 was favorably affected by the recording of excess tax benefits relating to equity awards vested and exercised during the period. As a result of the adoption of a new accounting pronouncement on January 1, 2017, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense, which amounted to $4,518,000 and $4,297,000 for the three months ended March 31, 2018 and March 31, 2017, respectively. The magnitude of the impact of excess tax benefits generated in the future, which may be favorable or unfavorable, is dependent upon the Company’s future grants of share-based compensation, the Company’s future stock price on the date awards vest or exercise in relation to the fair value of the awards on the grant date or the exercise behavior of the Company’s stock appreciation rights holders. Since these favorable tax benefits are largely unrelated to our current year’s income before taxes and is unrepresentative of our normal effective tax rate, we excluded their impact on adjusted diluted EPS for the three months ended March 31, 2018 and March 31, 2017. In addition, during the quarter ended December 31, 2017, we recorded a discrete net tax benefit of $14,039,000 and a discrete tax expense of $1,000,000 from a remeasurement of our deferred tax assets and liabilities related to the impact of the Tax Cuts and Jobs Act and prior period share-based awards, respectively. We excluded these non-cash items from adjusted diluted EPS for the three months ended December 31, 2017 as they were unrelated to our fiscal year 2017’s income before taxes. |
| (7) | Adjusted diluted EPS represents GAAP diluted EPS excluding the impact of the (A) amortization of intangible assets, (B) acquisition and integration costs, (C) deferred financing costs, (D) tax effect, if any, of the foregoing adjustments, (E) excess tax benefits relating to equity awards vested and exercised since January 1, 2017, (F) correction of prior periods error, and (G) discrete tax benefit from the Tax Cuts and Jobs Act’s corporate rate reduction on the Company’s deferred tax assets and liabilities and discrete tax expense from prior period share-based awards. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company’s operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded from adjusted diluted EPS). Although management believes the items excluded from adjusted diluted EPS are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted diluted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP diluted EPS. |
| (8) | Average healthcare professionals on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period presented. |
| (9) | Days filled is calculated by dividing the locum tenens hours filled during the period by eight hours. |
| (10) | Revenue per day filled represents revenue of the Company’s locum tenens solutions segment divided by days filled for the period presented. |
| (11) | Leverage ratio represents the ratio of the consolidated funded indebtedness (as calculated per the Company’s credit agreement) at the end of the subject period to the consolidated adjusted EBITDA (as calculated per the Company’s credit agreement) for the twelve-month period ended at the end of the subject period. |
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| (12) | As a result of the adoption of ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” on January 1, 2018, we are required to present in the statement of cash flows the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We adjusted certain restricted cash amounts for the three months ended March 31, 2017 and December 31, 2017 in the cash flow table presented above. These adjustments had no effect on previously reported results of operations or retained earnings. |
| (13) | Guidance percentage metrics are approximate. |
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