AMN Healthcare Services, Inc. (AMN Quick QuoteAMN - Free Report) is well-poised for growth in the coming quarters, courtesy of its broad array of services. The optimism led by a solid third-quarter 2023 performance and its healthcare Managed Services Program (MSP) are expected to contribute further. However, healthcare industry regulations and stiff competition are major downsides.

Over the past year, this Zacks Rank #3 (Hold) stock has lost 40.8% compared with the 12.3% decline of the industry. The S&P 500 has witnessed 16.5% growth in the said time frame.

The renowned player in the healthcare total talent services space has a market capitalization of $2.66 billion. The company’s earnings yield of 11.5% compares favorably with the industry’s negative yield. AMN Healthcare surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 12.7%, on average.

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Let’s delve deeper.

Broad Array of Services: We are upbeat about AMN Healthcare’s business’ gradual evolution beyond traditional healthcare staffing. The company has become a strategic total talent solutions partner for its clients. Its suite of healthcare workforce solutions includes MSPs, vendor management systems and medical language interpretation services.

In November, AMN Healthcare announced the launch of ShiftWise Flex, a next-generation vendor management system that leverages advanced features and automation to empower healthcare organizations with the ability to create a financially sustainable and agile workforce.

Healthcare MSP: AMN Healthcare’s unique MSP is helping the company gain market traction. Notably, the program helps streamline the entire workforce planning process, which facilitates the delivery of improved patient care. This has resulted in a large network of improved patient care and efficiency.

In 2022, AMN Healthcare had approximately $5.3 billion in spend under management through its MSPs, and approximately 64% of its consolidated revenues flowed through MSP relationships.

Strong Q3 Results: AMN Healthcare’s third-quarter 2023 performance raises our optimism. It witnessed an uptick in locum tenens revenues and Language interpretation services revenues. The gross margin expansion bodes well for the stock.

Downsides

Healthcare Industry 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 the prices paid for AMN’s services.

Stiff Competition: AMN Healthcare faces significant competition in the Medical Services industry. The company competes in national, regional and local markets for healthcare organization clients and healthcare professionals. In the nurse and allied healthcare staffing business, it competes with a few national competitors, along with numerous smaller, regional and local companies.

Estimate Trend

AMN Healthcare has been witnessing a positive estimate revision trend for 2023. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 0.2% north to $8.09.

The Zacks Consensus Estimate for fourth-quarter 2023 revenues is pegged at $795.8 million, suggesting a 29.3% decline from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA Quick QuoteDVA - Free Report) , DexCom, Inc. (DXCM Quick QuoteDXCM - Free Report) and Integer Holdings Corporation (ITGR Quick QuoteITGR - Free Report) .

DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in all the trailing four quarters, with an average surprise of 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita’s shares have gained 39.8% compared with the industry’s 4.6% rise in the past year.

DexCom, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, with an average of 36.4%.

DexCom’s shares have lost 0.6% compared with the industry’s 4.9% decline in the past year.

Integer Holdings, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.

Integer Holdings’ shares have rallied 22% against the industry’s 4.9% decline in the past year.