AMN Healthcare (AMN) Q1 Earnings and Revenues Beat Estimates

Zacks Equity Research

May 10, 2024 at 11:17 a.m.·5 min read

AMN Healthcare Services, Inc. AMN delivered adjusted earnings per share (EPS) of 97 cents in the first quarter of 2024, which declined 61% year over year. However, the figure surpassed the Zacks Consensus Estimate by 4.3%.

GAAP EPS for the quarter was 45 cents, reflecting a 77.7% plunge from the year-ago figure.

Revenues in Detail

AMN Healthcare registered revenues of $820.9 million in the first quarter, down 27.1% year over year. However, the figure surpassed the Zacks Consensus Estimate by 0.7%.

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 first quarter of 2024, the Nurse and Allied Solutions segment’s revenues totaled $519.3 million, down 37% year over year. Travel nurse staffing revenues were down 44% year over year, whereas Allied revenues declined 13% year over year. This figure compares to our Nurse and Allied Solutions segment’s first-quarter projection of $516.2 million.

The Physician and Leadership Solutions segment’s revenues totaled $188.8 million, up 13.9% year over year on the back of a 36% uptick in locum tenens revenues, which amounted to $145 million (with growth coming primarily from the MSDR acquisition). Interim leadership revenues were down 25% year over year. Physician and leadership search businesses saw revenue decline by 29% year over year. This figure compares to our Physician and Leadership Solutions segment’s first-quarter projection of $185.1 million.

The Technology and Workforce Solutions segment’s revenues totaled $112.8 million, down 17.1% year over year. Language interpretation services business revenues came in at $71 million in the quarter (up 16% year over year), while the vendor management systems business saw a 46% year-over-year revenue decline to reach $29 million. This figure compares to our Technology and Workforce Solutions segment’s first-quarter projection of $111.3 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 fell 30.2% to $257.5 million. The gross margin contracted 138 basis points (bps) to 31.4%. We had projected 31% of gross margin for the first quarter.

Selling, general & administrative expenses fell 14.9% to $174.8 million.

Adjusted operating profit totaled $82.7 million, reflecting a 49.4% decline from the prior-year quarter. The adjusted operating margin in the first quarter contracted 442 bps to 10.1%.

Financial Position

AMN Healthcare exited first-quarter 2024 with cash and cash equivalents of $50.6 million compared with $32.9 million at the end of 2023. Total debt at the end of first-quarter 2024 was $1.275 billion compared with $1,310 million at the end of 2023.

Net cash provided by operating activities at the end of first-quarter 2024 was $81.4 million compared with $43.4 million a year ago.

Guidance

AMN Healthcare has provided its financial outlook for the second quarter of 2024.

For the second quarter, the company expects revenues in the range of $730 million-$750 million, reflecting a decline of 24-26% compared with the prior-year figure. The Zacks Consensus Estimate stands at $777.5 million.

With respect to the Nurse and Allied Solutions segment, the company expects revenues to decline 36-38% from the prior-year figure. The Technology and Workforce Solutions segment’s revenues are expected to decline 12% from the prior-year figure.

The company projects second-quarter revenues at the Physician and Leadership Solutions segment to increase 10% from the prior-year figure.

Our Take

AMN Healthcare’s dismal top-line and bottom-line performances were disappointing. The decline in the majority of its segmental revenues during the reported quarter was worrying. The contraction of both margins raises our apprehension about the stock. AMN Healthcare expects to register a decline in its overall top line and the majority of its segments in the second quarter of 2024, which is concerning. Weaker demand and a continued competitive environment in AMN Healthcare’s largest business, nurse staffing, do not look promising.

However, AMN Healthcare exited the first quarter of 2024 with better-than-expected results. The uptick in the Physician and Leadership Solutions segment’s revenues, locum tenens revenues and Language interpretation services revenues was impressive.

On the earnings call, management confirmed witnessing strong year-over-year growth in volume and net week's book for therapy and imaging. AMN Healthcare’s school's business also grew on assignment headcount year over year. Robust adoption of the company’s Smart Square mobile app was also seen during the reported quarter. These look promising for the stock.

Zacks Rank and Stocks to Consider

AMN Healthcare currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. ALGN, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.

ResMed reported third-quarter fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently sports a Zacks Rank #1.

ResMed has a long-term estimated growth rate of 10.7%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.

Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.

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