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Shares of AMN Healthcare Services Inc (AMN - Free Report) scaled a new 52-week high of $118.08 on Oct 4, before closing the session marginally lower at $117.83.
Shares of the company have surged 100.6% in the past year compared with the 31.5% rally of the S&P 500 composite. The industry fell 48.3% during the said time frame.
AMN Healthcare is witnessing an upward trend in its stock price, prompted by the company’s broad array of services. The company’s solid performance in the second quarter of 2021 and the key buyouts buoy optimism. However, the consolidation of the healthcare delivery units and a stiff competitive landscape are major downsides.
Image Source: Zacks Investment Research
Let's delve deeper.
Key Growth Drivers
Acquisitions: AMN Healthcare has been strengthening its inorganic portfolio, of late, through a string of acquisitions, raising investors’ optimism. In May 2021, the company forayed into the post-acute care market with the acquisition of the telehealth company Synzi. Synzi offers virtual care and remote patient-monitoring platforms in the home health and outpatient markets. These solutions will help AMN Healthcare conduct virtual visits, and use secure messaging, texts and emails for clinician-to-patient and clinician-to-clinician communications.
The buyouts of Stratus Video (now known as AMN Language Services) and b4health are other top performance drivers for AMN Healthcare.
Broad Array of Services: Investors are upbeat about AMN Healthcare’s business’ gradual evolution beyond the traditional healthcare staffing. The company has become a strategic total talent solutions partner of its clients. AMN Healthcare has expanded its portfolio to serve a diverse and growing set of healthcare talent-related needs. In addition to its healthcare professional staffing and recruitment services, the company’s suite of healthcare workforce solutions includes Managed Services Program (“MSP”), vendor management systems (“VMS”), and medical language interpretation services, among others.
The company has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. The first one is the company’s mobile app for healthcare experts, while AMN Cares is a telehealth platform helping care teams interface with employees or patients at home. The company has also expanded its scalable VMS solution, enabling a wide array of health care facilities to quickly staff and manage their entire range of contingent talent.
Strong Q2 Results: AMN Healthcare’s better-than-expected results in second-quarter 2021 buoy optimism. The company recorded robust performance across each of its core segments, along with increases in its top and bottom lines in the quarter. Per management, increased healthcare utilization and a tight labor market are triggering record high demand in many areas of the company’s business, which is commendable. The strength in healthcare MSP also looks encouraging. The expansion of both margins also bodes well for the stock. An upbeat revenue guidance for the third quarter of 2021 raises optimism.
Downsides
Consolidation of Healthcare Delivery Units: The healthcare delivery organizations are consolidating, which is providing them greater leverage in negotiating the pricing for services. These consolidations might also result in AMN Healthcare losing its ability to work with certain clients because the party acquiring or consolidating with its client will have a previously-established service provider they choose to maintain. Additionally, the company’s clients are expected to increase their use of intermediaries, such as VMS companies and group purchasing organizations, which will likely enhance their bargaining power. These dynamics, individually or collectively, could affect pricing for the company’s services and its ability to keep certain clients.
Stiff Competition: AMN Healthcare faces significant competition in the Medical Services industry. The company competes in the national, regional and local markets for healthcare organization clients and healthcare professionals. Larger firms, such as AMN Healthcare, also generally have a deeper, more comprehensive infrastructure with a more established operating model and processes that provide the long-term stability and foundation for quality standards recognition, such as the Joint Commission staffing agency certification.
Zacks Rank & Other Key Picks
Currently, AMN Healthcare sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks from the broader medical space are DexCom, Inc. (DXCM - Free Report) , Omnicell, Inc. (OMCL - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Image: Bigstock
AMN Healthcare (AMN) Hits 52-Week High: What's Behind It?
Shares of AMN Healthcare Services Inc (AMN - Free Report) scaled a new 52-week high of $118.08 on Oct 4, before closing the session marginally lower at $117.83.
Shares of the company have surged 100.6% in the past year compared with the 31.5% rally of the S&P 500 composite. The industry fell 48.3% during the said time frame.
AMN Healthcare is witnessing an upward trend in its stock price, prompted by the company’s broad array of services. The company’s solid performance in the second quarter of 2021 and the key buyouts buoy optimism. However, the consolidation of the healthcare delivery units and a stiff competitive landscape are major downsides.
Let's delve deeper.
Key Growth Drivers
Acquisitions: AMN Healthcare has been strengthening its inorganic portfolio, of late, through a string of acquisitions, raising investors’ optimism. In May 2021, the company forayed into the post-acute care market with the acquisition of the telehealth company Synzi. Synzi offers virtual care and remote patient-monitoring platforms in the home health and outpatient markets. These solutions will help AMN Healthcare conduct virtual visits, and use secure messaging, texts and emails for clinician-to-patient and clinician-to-clinician communications.
The buyouts of Stratus Video (now known as AMN Language Services) and b4health are other top performance drivers for AMN Healthcare.
Broad Array of Services: Investors are upbeat about AMN Healthcare’s business’ gradual evolution beyond the traditional healthcare staffing. The company has become a strategic total talent solutions partner of its clients. AMN Healthcare has expanded its portfolio to serve a diverse and growing set of healthcare talent-related needs. In addition to its healthcare professional staffing and recruitment services, the company’s suite of healthcare workforce solutions includes Managed Services Program (“MSP”), vendor management systems (“VMS”), and medical language interpretation services, among others.
The company has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. The first one is the company’s mobile app for healthcare experts, while AMN Cares is a telehealth platform helping care teams interface with employees or patients at home. The company has also expanded its scalable VMS solution, enabling a wide array of health care facilities to quickly staff and manage their entire range of contingent talent.
Strong Q2 Results: AMN Healthcare’s better-than-expected results in second-quarter 2021 buoy optimism. The company recorded robust performance across each of its core segments, along with increases in its top and bottom lines in the quarter. Per management, increased healthcare utilization and a tight labor market are triggering record high demand in many areas of the company’s business, which is commendable. The strength in healthcare MSP also looks encouraging. The expansion of both margins also bodes well for the stock. An upbeat revenue guidance for the third quarter of 2021 raises optimism.
Downsides
Consolidation of Healthcare Delivery Units: The healthcare delivery organizations are consolidating, which is providing them greater leverage in negotiating the pricing for services. These consolidations might also result in AMN Healthcare losing its ability to work with certain clients because the party acquiring or consolidating with its client will have a previously-established service provider they choose to maintain. Additionally, the company’s clients are expected to increase their use of intermediaries, such as VMS companies and group purchasing organizations, which will likely enhance their bargaining power. These dynamics, individually or collectively, could affect pricing for the company’s services and its ability to keep certain clients.
Stiff Competition: AMN Healthcare faces significant competition in the Medical Services industry. The company competes in the national, regional and local markets for healthcare organization clients and healthcare professionals. Larger firms, such as AMN Healthcare, also generally have a deeper, more comprehensive infrastructure with a more established operating model and processes that provide the long-term stability and foundation for quality standards recognition, such as the Joint Commission staffing agency certification.
Zacks Rank & Other Key Picks
Currently, AMN Healthcare sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks from the broader medical space are DexCom, Inc. (DXCM - Free Report) , Omnicell, Inc. (OMCL - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
DexCom’s long-term earnings growth rate is estimated at 15.3%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Omnicell’s long-term earnings growth rate is estimated at 16%. It currently holds a Zacks Rank #2.
West Pharmaceutical’s long-term earnings growth rate is estimated at 27.3%. It currently carries a Zacks Rank #2.