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AMN Healthcare (AMN) Hits 52-Week High: What's Behind It?

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Shares of AMN Healthcare Services Inc (AMN - Free Report) reached a new 52-week high of $114.91 on Sep 1, before closing the session marginally lower at $113.25.

Shares of the company have gained 107% in the past year compared with 32.5% rise of the S&P 500 composite. The industry fell 34.6% in the said time frame.

AMN Healthcare is witnessing an upward trend in its stock price, prompted by its broad array of services. The company’s solid performance in the second quarter of 2021 and its key buyouts buoy optimism. Consolidation of healthcare delivery units and healthcare industry regulations are major downsides.

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Let's delve deeper.

Key Growth Drivers

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 a surge in its top and bottom lines in the quarter. Per management, increased healthcare utilization and a tight labor market have created record high demand in many areas of the company’s business, which is encouraging. Strength in the healthcare Managed Services Program (“MSP”) also looks encouraging. Expansion of both margins also bodes well for the stock. An upbeat revenue guidance for the third quarter of 2021 is encouraging.

Acquisitions: AMN Healthcare has lately been strengthening its inorganic portfolio 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. The latter 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 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 MSPs, 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 to interface with employees or patients at home. The company 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.

Downsides

Consolidation of Healthcare Delivery Units: Healthcare delivery organizations are consolidating, which is providing them with greater leverage in negotiating pricing for services. Consolidations may also result in AMN Healthcare losing its ability to work with certain clients because the party acquiring or consolidating with its client may have a previously established service provider they choose to maintain. Additionally, the company’s clients may increase their use of intermediaries, such as VMS companies and group purchasing organizations, which may enhance their bargaining power. These dynamics, individually or collectively, could negatively affect pricing for the company’s services and its ability to maintain certain clients.

Healthcare Industry Regulations: The healthcare industry is subject to extensive and complex federal and state laws and regulations. AMN Healthcare provides talent solutions and technologies on a contractual basis to its clients, who pay the company directly. Accordingly, Medicare, Medicaid and insurance reimbursement policy changes generally do not directly impact the company. Nevertheless, reimbursement changes in government programs, particularly Medicare and Medicaid, can and do indirectly affect the demand and prices paid for the company’s services.

Zacks Rank & Key Picks

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

Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and HealthEquity, Inc. (HQY - Free Report) .

Henry Schein’s long-term earnings growth rate is estimated at 13.9%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDEXX’s long-term earnings growth rate is estimated at 19.9%. It currently has a Zacks Rank #2.

HealthEquity’s long-term earnings growth rate is estimated at 14.5%. It currently carries a Zacks Rank #2.