SAN DIEGO, Feb. 14, 2019 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in healthcare workforce solutions and staffing services, today announced its fourth quarter and full year 2018 financial results. Financial highlights are as follows:
Dollars in millions, except per share amounts.
2018 & Recent Highlights
- Full year 2018 revenue grew 7%, GAAP EPS increased by 9%, and adjusted diluted EPS was up 29%.
- Operating cash flow of $227 million was up 41% over prior year.
- Fourth quarter earnings remained strong; revenue was below expectations due to lower placements in our Locum Tenens segment.
- Finished 2018 with new MSP contracts totaling $230 million in gross spend under management, with great diversity across service lines.
- In January, signed a three-year MSP agreement with Tenet Healthcare covering multiple service lines in California and Arizona with an estimated $100 million gross spend.
- Acquired Silversheet, an innovative, cloud-based clinical credentialing solution, in January.
"AMN surpassed $2.1 billion in consolidated revenue for 2018, more than two times where we were just five years ago," said Susan R. Salka, chief executive officer of AMN Healthcare. "More importantly, our team helped thousands of clients and healthcare professionals to make a positive impact in delivering quality patient care and increasing the value AMN brings to the healthcare community. We made strides in our strategy to be the most trusted and innovative workforce solutions partner for healthcare organizations and to enable clinicians to achieve their personal and professional goals. We have added several new clients across our businesses over the past year and are proud that in January, Tenet Healthcare chose AMN Healthcare as their MSP provider in California and Arizona. We are also very excited to recently add Silversheet to the AMN family as another innovative workforce solution that will support clients' patient care, compliance and efficiency goals.
"We remain optimistic about the long-term growth of our business and the strategic investments we are making to deliver differentiated value to our customers and healthcare professionals, which we believe will be more visible in our performance in the second half of 2019 and beyond. In the near term, restoring the performance of our Locum Tenens segment is our top priority. This business has been challenged by the business model and system transition last year. But with continuous improvements, aggressive hiring of new sales talent, and the resilience and fortitude of the locums team, we do expect to gain traction as we move through the year," Ms. Salka added.
Fourth Quarter 2018 Results
Consolidated revenue for the quarter was $529 million, a 4% increase over prior year and flat compared with prior quarter. Revenue for the Nurse and Allied Solutions segment was $329 million, higher by 2% year over year and 8% sequentially. Travel Nurse revenue increased 2% year over year, with higher volume offset by a lower average bill rate. Allied division revenue increased 8% year over year on higher volume.
The Locum Tenens Solutions segment reported revenue of $82 million, down by 24% year over year, with lower volumes offset in part by positive pricing. Other Workforce Solutions segment revenue was $117 million reflecting an increase of 48% year over year, driven primarily by the acquisitions made in April 2018. Excluding the additional revenue from acquisitions, revenue increased 1%.
Gross margin was 32.6%, higher by 80 basis points year over year and lower by 60 basis points sequentially. The year-over-year variance was driven by higher-than-average gross margins from the recently acquired companies and a change in classification of certain recruiter expenses from cost of sales to SG&A in our physician permanent placement business.
SG&A expenses were $111 million or 21.0% of revenue, compared with $100 million, or 19.7% of revenue, in the same quarter last year. SG&A was $121 million, or 23.0% of revenue, in the previous quarter. The year-over-year increase in expense margin stemmed mainly from the physician permanent placement cost change, higher SG&A expenses from our acquisitions, and higher acquisition and integration costs.
Income from operations was $50 million, or 9.5% of revenue, compared with $53 million, or 10.4% of revenue, in the same quarter last year. Adjusted EBITDA was $66 million, a year-over-year increase of 3%. Adjusted EBITDA margin was 12.6%, flat year over year and a decrease of 20 basis points sequentially.
Net income was $36 million, or $0.74 per diluted share, compared with $41 million, or $0.84 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.81.
During the fourth quarter of 2018, the Company repurchased 271,000 shares of our common stock for an aggregate purchase price of $14 million.
Full Year 2018 Results
Full year 2018 consolidated revenue was $2,136 million a 7% increase from prior year. Nurse and Allied Solutions segment revenue was $1,307 million, a year-over-year increase of 5%. The Locum Tenens Solutions segment revenue was $393 million, down by 9% compared with the prior year. Other Workforce Solutions segment revenue was $436 million, an annual increase of 37% driven primarily by the acquisitions made in April 2018.
Full year gross margin was 32.6% compared with 32.4% for the prior year. The gross margin for the year ended December 31, 2018 was positively impacted by higher-than-average gross margins from the acquisitions made in 2018 and a change in our physician permanent placement business model that prompted a $9.9 million classification of certain recruiter compensation expenses to SG&A that was previously in cost of revenue. Net of these factors, the year-over-year gross margin declined primarily due to a lower margin in our Locum Tenens and Nurse and Allied Solutions segments.
Full year SG&A expenses were $452 million, representing 21.2% of revenue as compared to $400 million, representing 20.1% of revenue, for the prior year. The year-over-year increase in SG&A expenses was primarily due to additional expenses from the acquisitions, a $12.1 million increase in legal reserves, and a $9.9 million classification of certain recruiter compensation expenses to SG&A that was previously in cost of revenue.
Full year income from operations was $203 million, or 9.5% of revenue, compared with $212 million, or 10.7% of revenue, in the prior year. Adjusted EBITDA was $270 million, a year-over-year increase of 5%. Adjusted EBITDA margin was 12.7%, representing a decrease of 20 basis points year over year.
Full-year net income was $142 million, or $2.91 per diluted share, compared with $133 million, or $2.68 per diluted share, in the prior year. Adjusted diluted EPS was $3.29.
At December 31, 2018 cash and cash equivalents totaled $14 million. Cash flow from operations was $59 million for the quarter and $227 million for the full year. Capital expenditures were $11 million in the quarter and $35 million for the year. The Company ended the year with total debt outstanding of $445 million with a leverage ratio as calculated in accordance with the Company's credit agreement of 1.7 to 1.
In January 2019, we acquired Silversheet, an emerging, cloud-based provider of credentialing and privileging software and services. "Credentialing is a pervasive pain point for healthcare organizations, and there has been little innovation in this area until recently," Ms. Salka said. "Silversheet enhances our workforce solutions offerings, adding an innovative platform that enables faster, more efficient and reliable credentialing for our clients. At the same time, Silversheet is a promising platform through which we can engage clinicians with an easy-to-use, digital method of storing and tracking their medical credentials."
First Quarter 2019 Outlook
Projected year-over-year revenue growth in the first quarter of 2019 is 0-1%. On an organic basis, revenue is projected to be down approximately 6% due primarily to lower revenue in the Locum Tenens business. Nurse and Allied segment revenue is expected to be down by about 1-2% compared with prior year, with growth in Allied offset by a slight decline in Nurse staffing due to lower nursing utilization from a large client. Excluding this impact, Nurse and Allied revenue growth would be estimated at about 5% year over year.
Conference Call on February 14, 2019
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 fourth quarter and full year 2018 financial results and first quarter 2019 outlook on Thursday, February 14, 2019, 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 (800) 288-8960 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 February 14, 2019, and can be accessed until 11:59 p.m. Eastern Time on February 28, 2019, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 455277.
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 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, 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 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 .
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 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.
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, our views on the long-term growth and performance of our businesses, including Locum Tenens, and statements concerning our guidance for first quarter 2019 consolidated revenue, gross margin, SG&A expenses as a percentage of revenue, operating margin and adjusted EBITDA margin. 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.
The Company's ability to meet the targets and expectations noted in our first quarter 2019 outlook depends upon, among other factors, our ability to (i) manage the pricing impact that the consolidation of healthcare delivery organizations may have on our business, (ii) 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, (iii) implement new infrastructure and technology systems to optimize our operating results and manage our business effectively, (iv) develop and evolve our current technology offerings and capabilities, (v) recruit and retain sufficient quality healthcare professionals at reasonable costs, and (vi) 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 "Risk Factors" under Item 1A of 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.
Director, Investor Relations
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SOURCE AMN Healthcare Services, Inc.