AMN Healthcare Services Inc. ( AHS - Snapshot Report ) delivered a 20% earnings surprise in the third quarter, sending shares of this staffing solutions company for the healthcare industry to a 52-week high shortly after the announcement. Earnings estimates have been trending higher for AHS, which made it a Zacks #1 Rank (Strong Buy) stock on November 15, 2012.

Solid Third Quarter

On November 1, AMN Healthcare Services reported adjusted earnings per share of 12 cents for the third quarter, beating the Zacks Consensus Estimate of 10 cents. This marked the fourth earnings surprise in the past five quarters. Net income from continuing operations increased 483% year over year to $5.9 million.

Revenue increased 7% to $243.9 million, surpassing the Zacks Consensus Estimate by 2.2%. On a segment basis, sales from the larger Nurse and Alllied Healthcare Staffing unit rose 13% year over year to $166 million, primarily due to a 19% increase in volumes for travel nurse operations. Sales were $68 million at the Locum Tenens Staffing segment, down 6%. Revenues were up 9% to $10 million at the Physician Permanent Placement Services segment.

Gross margin was 28.5% in the reported quarter, up 70 basis points (bps) year over year, mainly due to a 240 bps enhancement in the Locum Tenens Staffing operation. SG&A expense was 21.5% as a percentage of revenues, compared with 21.6%. Adjusted EBITDA margin was 7.7%, higher by 7% from a year ago.

For the fourth quarter, the company expects revenues between $240 million and $244 million, up 8% to 10%. Gross margin is forecasted between 28% and 28.5%. SG&A, as a proportion of sales, is projected at 21.5%, including about $1 million for special projects. Adjusted EBITDA is expected to be about 7.5%.

Earnings Momentum on the Rise

The past 30 days have seen 5 of 6 estimates move higher for 2012, boosting the Zacks Consensus Estimate by 7.7% to 42 cents. This represents an estimated year-over-year growth of 196.4%.

Four out of 6 estimates have been revised higher for 2013 over the same time frame, lifting the Zacks Consensus Estimate by 10.2% to 54 cents. This represents an implied growth of 29.3%.

A Look at the Chart

The stock has been trading above its 50-day and 200-day moving averages since August. AMN Healthcare has rallied as much as 137.9% since the start of the year, compared with a 7.6% return from the benchmark S&P 500.

Based in San Diego, AMN Healthcare is a provider of staffing and workforce solutions for the healthcare industry. Its clients include physician practice groups, hospitals and other healthcare entities. The company has a market cap of $431.2 million.

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