Seeking Alpha
Long/short equity, healthcare
Profile| Send Message|
( followers)  

Summary

  • AMN Healthcare Services Reports Strong Earnings.
  • Bull thesis reaffirmed as margins rise and portfolio of services grows.
  • Travel Nurse demand rising as anticipated.

Shares of AMN Healthcare Services (NYSE:AHS) traded drastically to the upside on Friday morning following the company's second quarter report after the market close on Thursday. If you are not yet familiar with AMN, the company provides healthcare workforce solutions and staffing services to healthcare facilities in the United States. AMN offers investors exposure to a broad spectrum of healthcare service offerings including direct hire placement services, temporary staffing, and strategic consulting services.

AMN reported second quarter revenue of $251 million and adjusted EBITDA margin of 9.3%. These strong results exceeded the high-end of the guidance provided by management. The company's recent focus on margins has started to pay off. Gross margins came in at 30.8% for the second quarter, a record high and year-over-year improvement of 150 basis points. AMN has three main revenue segments: Nurse and Allied Healthcare Staffing, Locum Tenens Staffing, and Physician Permanent Placement Services. Second quarter revenue for the Nurse and Allied Healthcare Staffing segment was $166 million, down 2% from the same quarter last year and up 1% sequentially. Locum Tenens Staffing segment revenue in the second quarter was $74 million, an increase of 2% from the same quarter last year and 11% sequentially. Physician Permanent Placement Services segment revenue was $11 million, a decrease of 3% from the same quarter last year and an increase of 1% sequentially.

While shares of AMN have been pretty stagnant so far this year, this second quarter report could be the kicker the stock needs to get back up to the $15+ per share level. AMN continues to provide great exposure to the healthcare services space and in particular healthcare staffing. In my original, AMN Healthcare Service: A Small-Cap Industry Leader article I touted AMN as a good vehicle in which to play the nursing shortage. I still own and like the position a lot. Demand for nursing staff continues to look strong, the company saw an 80% year over year increase in travel nurse orders. As the population here is the U.S. ages and ages, nursing demand is a likely to climb. Margins rising, nursing demand increasing, and great management will most assuredly take AMN higher in the quarters to come. Looking ahead, AMN expects consolidated third quarter revenue of $254 million to $258 million, with sequential growth expected in all business segments.

Source: Update: AMN Healthcare Services Earnings