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Why Is AMN Healthcare (AMN) Down 0.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for AMN Healthcare Services (AMN - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AMN Healthcare due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

AMN Healthcare Q2 Earnings and Revenues Top Estimates

AMN Healthcare Services Inc reported second-quarter 2020 adjusted earnings per share of 83 cents, beating the Zacks Consensus Estimate of 63 cents by 31.8%. The bottom line increased 7.8% year over year.

Revenues of $608.4 million surpassed the Zacks Consensus Estimate by 8.7%. On a year-over-year basis, revenues increased 14%.

Segment Details

In the second quarter of 2020, the Nurse and Allied Solutions segment’s revenues totaled $444.5 million, up 21% year over year and 13% on anorganic basis. This was driven by41% year-over-year growth in the Travel Nurse division revenues and a 10% rise in the Allied division due to the Advanced Medical acquisition.

The Physician and Leadership Solutions segment’s revenues totaled $108.6 million, down24% year over year. All business lines in the segment were adversely affected by reductions in non-emergency care. The downside was owing to a 25% decline in Locum tenens revenues, 17% drop in Interim leadership revenues and a 34% fall in physician and leadership search businesses.

Technology and Workforce Solutions segment revenues came in at $55.3 million, up 123% year over year and 3% on an organic basis, primarily attributable to the company’s recent buyoutsof b4health and Stratus Video.

Margin

In the second quarter, gross profit totaled $197.5 million, up 10% year over year. As a percentage of revenues, gross margin was 32.5%, contracting 108 basis points (bps).

Adjusted operatingprofit in the quarter was $60.5 million, up 4.5%. As a percentage of revenues, adjusted operating margin was 9.9%, down 87 bps.

Guidance

For the third quarter of 2020, AMN Healthcare expects revenues in the range of $510-$525 million. The Zacks Consensus Estimate for the same stands at $517.8 million.

With respect to the Nurse and Allied Solutions segment, the company projects third-quarter revenue decline of almost 10% from the prior-year figure.

In the third quarter, Technology and Workforce Solutions segment revenues are expected to grow almost 140% from the prior-year figure.The company projects third-quarter revenues at the Physician and Leadership Solutions segment to decline almost 30% from the prior-year figure.

Operating margin is expected above 7%, while gross margin is estimated within 33-33.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 26.6% due to these changes.

VGM Scores

Currently, AMN Healthcare has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AMN Healthcare has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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