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In the last reported quarter, AMN’s earnings of $2.57 per share surpassed the Zacks Consensus Estimate by 10.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average being 10.9%.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
Over the past few months, AMN Healthcare has been registering solid demand for healthcare staffing on the back of continued labor shortages. Although the demand continued to remain well above pre-pandemic levels, as confirmed by management in the third-quarter 2022 earnings call in November 2022, the demand for healthcare staffing has been gradually declining. The continued demand for the company’s comprehensive solutions to address the recruitment and staffing challenges is likely to have driven its overall top line in the to-be-reported quarter.
During the third-quarter 2022 earnings call, AMN Healthcare’s management confirmed that its Nurse and Allied Solutions segment had registered a year-over-year revenue surge but a sequential decline in revenues. The year-over-year uptick was driven by robust performances by its Travel Nurse Staffing and Allied Staffing businesses in the year-over-year period. Although the demand for travel nursing remains well above pre-pandemic levels with strength across all specialties, and AMN Healthcare’s supply of candidates (including new applicants) remain stronger than pre-pandemic levels, the segmental revenue is expected to decline in the to-be-reported quarter.
Management expects Nurse and Allied Solutions segment revenue to be down approximately 29% year over year and down 7% sequentially, primarily due to the reduction in vendor management systems (VMS) bill rates. This compares to our estimate of a 29.2% year-over-year decline for the segment.
AMN Healthcare Services, Inc. Price and EPS Surprise
In the third quarter of 2022, AMN Healthcare witnessed a solid year-over-year uptick in its Physician and Leadership Solutions segment. However, revenues were flat on a sequential basis. Management confirmed on the last earnings call that the demand for locum tenens and physician permanent placement continues to remain strong and well above pre-pandemic levels. However, some healthcare organizations have been streamlining leadership and non-clinical roles to reduce costs, which has affected short-term demand for interim and permanent leadership. This is likely to have continued in the fourth quarter, thereby impeding segmental growth. AMN Healthcare projects its segment’s revenues to remain flat year over year in the to-be-reported quarter. We also expect this segment’s revenues to be flat in the fourth quarter.
In the third quarter of 2022, AMN Healthcare also recorded a solid improvement in its Technology and Workforce Solutions segment on the back of strong VMS revenues. However, sequentially, the segment’s revenues and VMS revenues were both down. The sequential decline in VMS revenues was driven by lower volume and bill rate. However, the company expects revenues in the Technology and Workforce Solutions to grow approximately 10% year over year with similar increases in all major business lines on the back of continued investment in all of its offerings. Also, the increasing demand for healthcare services, led by a growing elderly population and the aftermath of the pandemic, has made the healthcare community face acute workforce shortages. This compares to our projection of a year-over-year improvement of 2.6%.
AMN Healthcare's continued strength in digital health capabilities with its AMN Passport and AMN Cares bodes well. The company has also been making significant investments in its digital platforms and tech-enabled solutions.
However, management’s expectations of a sequential and year-over-year fall in overall revenues in the fourth quarter do not look encouraging. Sequential revenue declines due to lower average travel nurse and VMS bill rates and hours worked are likely to be partially offset by an increase in healthcare professionals on assignment. This raises our apprehension about the stock. Excluding labor disruption revenues, AMN Healthcare expects fourth-quarter revenues to be down 16-18% year over year.
The Estimate Picture
For fourth-quarter 2022, the Zacks Consensus Estimate of $1.06 billion for total revenues indicates a decline of 21.9% from the prior-year reported figure.
This compares to our revenue estimate of $1.05 billion for the quarter, indicating a decline of 22.9% from the prior-year reported number.
The consensus estimate for adjusted earnings per share (EPS) is pegged at $2.17, reflecting a fall of 26.4% from the prior-year reported number.
We estimate the fourth-quarter adjusted EPS to be $2.03, reflecting a fall of 31.2% from the prior-year reported number.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: AMN Healthcare has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Alkermes plc (ALKS - Free Report) has an Earnings ESP of +49.57% and a Zacks Rank of 2. ALKS has an estimated long-term growth rate of 23.1%.
Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +13.21% and is a Zacks #2 Rank stock. EXAS has an estimated growth rate of 29.4% for 2023.
Exact Sciences’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, with the average surprise being 0.6%.
Penumbra, Inc. (PEN - Free Report) has an Earnings ESP of +11.11% and sports a Zacks Rank of 1 at present. PEN’s earnings yield of 0.4% compares favorably with the industry’s negative yield.
Penumbra’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 37.6%.
Image: Bigstock
AMN Healthcare (AMN) to Post Q4 Earnings: What's in the Cards?
AMN Healthcare Services, Inc. (AMN - Free Report) is scheduled to release fourth-quarter 2022 results on Feb 16, after market close.
In the last reported quarter, AMN’s earnings of $2.57 per share surpassed the Zacks Consensus Estimate by 10.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average being 10.9%.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
Over the past few months, AMN Healthcare has been registering solid demand for healthcare staffing on the back of continued labor shortages. Although the demand continued to remain well above pre-pandemic levels, as confirmed by management in the third-quarter 2022 earnings call in November 2022, the demand for healthcare staffing has been gradually declining. The continued demand for the company’s comprehensive solutions to address the recruitment and staffing challenges is likely to have driven its overall top line in the to-be-reported quarter.
During the third-quarter 2022 earnings call, AMN Healthcare’s management confirmed that its Nurse and Allied Solutions segment had registered a year-over-year revenue surge but a sequential decline in revenues. The year-over-year uptick was driven by robust performances by its Travel Nurse Staffing and Allied Staffing businesses in the year-over-year period. Although the demand for travel nursing remains well above pre-pandemic levels with strength across all specialties, and AMN Healthcare’s supply of candidates (including new applicants) remain stronger than pre-pandemic levels, the segmental revenue is expected to decline in the to-be-reported quarter.
Management expects Nurse and Allied Solutions segment revenue to be down approximately 29% year over year and down 7% sequentially, primarily due to the reduction in vendor management systems (VMS) bill rates. This compares to our estimate of a 29.2% year-over-year decline for the segment.
AMN Healthcare Services, Inc. Price and EPS Surprise
AMN Healthcare Services, Inc. price-eps-surprise | AAMN Healthcare Services, Inc. Quote
In the third quarter of 2022, AMN Healthcare witnessed a solid year-over-year uptick in its Physician and Leadership Solutions segment. However, revenues were flat on a sequential basis. Management confirmed on the last earnings call that the demand for locum tenens and physician permanent placement continues to remain strong and well above pre-pandemic levels. However, some healthcare organizations have been streamlining leadership and non-clinical roles to reduce costs, which has affected short-term demand for interim and permanent leadership. This is likely to have continued in the fourth quarter, thereby impeding segmental growth. AMN Healthcare projects its segment’s revenues to remain flat year over year in the to-be-reported quarter. We also expect this segment’s revenues to be flat in the fourth quarter.
In the third quarter of 2022, AMN Healthcare also recorded a solid improvement in its Technology and Workforce Solutions segment on the back of strong VMS revenues. However, sequentially, the segment’s revenues and VMS revenues were both down. The sequential decline in VMS revenues was driven by lower volume and bill rate. However, the company expects revenues in the Technology and Workforce Solutions to grow approximately 10% year over year with similar increases in all major business lines on the back of continued investment in all of its offerings. Also, the increasing demand for healthcare services, led by a growing elderly population and the aftermath of the pandemic, has made the healthcare community face acute workforce shortages. This compares to our projection of a year-over-year improvement of 2.6%.
AMN Healthcare's continued strength in digital health capabilities with its AMN Passport and AMN Cares bodes well. The company has also been making significant investments in its digital platforms and tech-enabled solutions.
However, management’s expectations of a sequential and year-over-year fall in overall revenues in the fourth quarter do not look encouraging. Sequential revenue declines due to lower average travel nurse and VMS bill rates and hours worked are likely to be partially offset by an increase in healthcare professionals on assignment. This raises our apprehension about the stock. Excluding labor disruption revenues, AMN Healthcare expects fourth-quarter revenues to be down 16-18% year over year.
The Estimate Picture
For fourth-quarter 2022, the Zacks Consensus Estimate of $1.06 billion for total revenues indicates a decline of 21.9% from the prior-year reported figure.
This compares to our revenue estimate of $1.05 billion for the quarter, indicating a decline of 22.9% from the prior-year reported number.
The consensus estimate for adjusted earnings per share (EPS) is pegged at $2.17, reflecting a fall of 26.4% from the prior-year reported number.
We estimate the fourth-quarter adjusted EPS to be $2.03, reflecting a fall of 31.2% from the prior-year reported number.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: AMN Healthcare has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Alkermes plc (ALKS - Free Report) has an Earnings ESP of +49.57% and a Zacks Rank of 2. ALKS has an estimated long-term growth rate of 23.1%.
Alkermes’ earnings surpassed estimates in three of the trailing four quarters and broke even in one, with the average surprise being 306.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +13.21% and is a Zacks #2 Rank stock. EXAS has an estimated growth rate of 29.4% for 2023.
Exact Sciences’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, with the average surprise being 0.6%.
Penumbra, Inc. (PEN - Free Report) has an Earnings ESP of +11.11% and sports a Zacks Rank of 1 at present. PEN’s earnings yield of 0.4% compares favorably with the industry’s negative yield.
Penumbra’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 37.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.