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AMN Healthcare (AMN) Loses 9.4% Despite Q3 Earnings Beat

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Shares of AMN Healthcare Services Inc. (AMN - Free Report) declined 9.4% on Nov 5 following the company’s release of third-quarter 2020 results.

The company reported third-quarter 2020 adjusted earnings per share (EPS) of 82 cents, beating the Zacks Consensus Estimate of 69 cents by 18.8%. The bottom line increased 1.2% year over year.

Revenues of $551.6 million surpassed the Zacks Consensus Estimate by 6%. On a year-over-year basis, revenues fell 2.8%.

Segment Details

In the third quarter of 2020, the Nurse and Allied Solutions segment’s revenues totaled $383 million, down 4% year over year. Allied division revenues fell 28% year over year owing to consistent weakness in therapy demand. However, Travel nurse staffing revenues grew 12% year over year.

The Physician and Leadership Solutions segment’s revenues totaled $109 million, down 24% year over year. The downside was owing to a 19% decline in Locum tenens revenues, 31% drop in Interim leadership revenues and 32% fall in physician and leadership search businesses.

Technology and Workforce Solutions segment revenues totaled $60 million, up 136% year over year and down 8% on an organic basis, primarily attributable to the company’s buyouts of b4health and Stratus Video.

Margin

In the third quarter, gross profit totaled $184.6 million, down 2.8% year over year. As a percentage of revenues, gross margin was 33.5%, contracting 1 basis point (bps).

Adjusted operating profit in the quarter was $73.4 million, up 29.2%. As a percentage of revenues, adjusted operating margin was 13.3%, up 329 bps.

AMN Healthcare Services Inc Price, Consensus and EPS Surprise

 

AMN Healthcare Services Inc Price, Consensus and EPS Surprise

AMN Healthcare Services Inc price-consensus-eps-surprise-chart | AMN Healthcare Services Inc Quote

Cash Position

The company exited the third quarter with $58.4 million compared with $43.1 million at the end of the second quarter.

Cumulative net cash provided by operating activities came in at $216.9 million, up from $146.2 million a year ago.

Guidance

For the fourth quarter of 2020, AMN Healthcare expects revenues in the range of $575-$585 million. The Zacks Consensus Estimate for the same stands at $568.8 million.

With respect to the Nurse and Allied Solutions segment, the company expects revenues to be flat to slightly decline from the prior-year figure.

In the fourth quarter, Technology and Workforce Solutions segment revenues are expected to grow almost 150% from the prior-year figure.The company projects fourth-quarter revenues at the Physician and Leadership Solutions segment to decline almost 26-28% from the prior-year figure.

Operating margin is expected at 7.6-8.1%, while gross margin is estimated within 32.4-32.7%

Our Take

AMN Healthcare exited the third quarter on a strong note. The company gained from the Technology and Workforce Solutions segment in the quarter. Management is upbeat about the latest Stratus Video and Advanced Medical buyouts, which are expected to expand its travel as well as school therapy and travel nurse staffing capabilities. Despite demand getting disrupted by the pandemic, third-quarter results exceeded expectations on strength in nurse staffing. Expansion of adjusted operating margin is another plus.

However, revenue decline at the other two segments is concerning.The contraction in gross margin is also discouraging.

Zacks Rank and Key Picks

AMN Healthcare currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , Align Technology, Inc. (ALGN - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

AngioDynamics reported first-quarter fiscal 2021 adjusted EPS of 2 cents against the Zacks Consensus Estimate of a loss per share of 6 cents. Revenues of $70.2 million beat the consensus mark by 6.9%.

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