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Here's Why You Should Retain AMN Healthcare (AMN) for Now
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AMN Healthcare (AMN - Free Report) is gaining traction on strength in its Healthcare Managed Services Program, prudent buyouts and a solid staffing services portfolio. However, tough competition and decline in Locum Tenens business revenues have been offsetting the positives to some extent.
The company, with a market capitalization of $2.72 billion, is a leading travel healthcare staffing company. The company anticipates earnings improvement of 8.8% over the next year. Also, this Zacks Rank #3 (Hold) company has a trailing four-quarter positive earnings surprise of 11.1%, on average.
In the past year, the stock has rallied 17.9% against the 30.8% decline of its industry.
Let’s delve deeper into the factors working in favor of the company
Healthcare Managed Services Program (“MSP”) : AMN Healthcare’s unique MSP is helping the company gain market traction. Notably, it 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.
It is encouraging to note that by the end of 2019, AMN Healthcare had won new MSPs and expanded several existing MSP relationships amounting above $150 million.Apart from this, the company’s pipeline looks promising with eight new clients, which will boost the company’s portfolio.
Acquisitions: AMN Healthcare has lately been gaining from a string of acquisitions.In recent past, the company announced the buyouts of MedPartners, a leading national mid-revenue cycle firm, and two related brands in healthcare leadership solutions — Phillips DiPisa and Leaders For Today.The MedPartners buyout proved accretive to AMN Healthcare’s Workforce Solutions unit in the fourth quarter of 2019.In June 2019, AMN Healthcare inked a deal to acquire Advanced Medical Personnel Services, Inc. for $200 million. The buyout will not only bolster the company’s inorganic portfolio but also enhance offerings in some of the fastest growing and important care settings.
Staffing Service Strength: AMN Healthcare’s staffing services have been instrumental in driving its top line. The Nurse and Allied Solutions and Other Workforce Solutions units offer services like travel nurse staffing, allied staffing, rapid response nurse staffing and others.
In the fourth quarter of 2019, Nurse and Allied Solutions revenues rose 18.1% year over year. Other Workforce Solutions revenues improved 2.3% year over year. This segment is expected to continue driving growth for the company in the long term.
However, there are a few factors deterring growth for the company.
Locum Tenens Business Down: In the fourth quarter of 2019, Locum Tenens business revenues amounted to $77.9 million, down 4.8% from the prior-year quarter due to a substantial mix of lower rate specialties and a negative sales adjustment. Consequently, first-quarter 2020 Locum Tenens revenues are expected to remain flat on a year-over-year basis.
Tough Competition: AMN Healthcare faces significant competition in the Medical Services industry. Notably, a large number of providers of healthcare recruitment solutions pose stiff competition for the company which might weigh significantly on margins.
Estimates Trend
The company is witnessing a positive estimate revision trend for fiscal 2020. Over the past 60 days, the Zacks Consensus Estimate for earnings has inched up 1.8% to $3.42 per share.
The Zacks Consensus Estimate for the company’s first-quarter 2020 revenues is pegged at $601.8 million, suggesting a 13% rise from the year-ago reported number.
DexCom’s long-term earnings growth rate is estimated at 36.7%. The company presently carries a Zacks Rank #2.
Integra’s long-term earnings growth rate is estimated at 11.9%. It currently carries a Zacks Rank #2.
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Here's Why You Should Retain AMN Healthcare (AMN) for Now
AMN Healthcare (AMN - Free Report) is gaining traction on strength in its Healthcare Managed Services Program, prudent buyouts and a solid staffing services portfolio. However, tough competition and decline in Locum Tenens business revenues have been offsetting the positives to some extent.
The company, with a market capitalization of $2.72 billion, is a leading travel healthcare staffing company. The company anticipates earnings improvement of 8.8% over the next year. Also, this Zacks Rank #3 (Hold) company has a trailing four-quarter positive earnings surprise of 11.1%, on average.
In the past year, the stock has rallied 17.9% against the 30.8% decline of its industry.
Let’s delve deeper into the factors working in favor of the company
Healthcare Managed Services Program (“MSP”) : AMN Healthcare’s unique MSP is helping the company gain market traction. Notably, it 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.
It is encouraging to note that by the end of 2019, AMN Healthcare had won new MSPs and expanded several existing MSP relationships amounting above $150 million.Apart from this, the company’s pipeline looks promising with eight new clients, which will boost the company’s portfolio.
Acquisitions: AMN Healthcare has lately been gaining from a string of acquisitions.In recent past, the company announced the buyouts of MedPartners, a leading national mid-revenue cycle firm, and two related brands in healthcare leadership solutions — Phillips DiPisa and Leaders For Today.The MedPartners buyout proved accretive to AMN Healthcare’s Workforce Solutions unit in the fourth quarter of 2019.In June 2019, AMN Healthcare inked a deal to acquire Advanced Medical Personnel Services, Inc. for $200 million. The buyout will not only bolster the company’s inorganic portfolio but also enhance offerings in some of the fastest growing and important care settings.
Staffing Service Strength: AMN Healthcare’s staffing services have been instrumental in driving its top line. The Nurse and Allied Solutions and Other Workforce Solutions units offer services like travel nurse staffing, allied staffing, rapid response nurse staffing and others.
In the fourth quarter of 2019, Nurse and Allied Solutions revenues rose 18.1% year over year. Other Workforce Solutions revenues improved 2.3% year over year. This segment is expected to continue driving growth for the company in the long term.
However, there are a few factors deterring growth for the company.
Locum Tenens Business Down: In the fourth quarter of 2019, Locum Tenens business revenues amounted to $77.9 million, down 4.8% from the prior-year quarter due to a substantial mix of lower rate specialties and a negative sales adjustment. Consequently, first-quarter 2020 Locum Tenens revenues are expected to remain flat on a year-over-year basis.
Tough Competition: AMN Healthcare faces significant competition in the Medical Services industry. Notably, a large number of providers of healthcare recruitment solutions pose stiff competition for the company which might weigh significantly on margins.
Estimates Trend
The company is witnessing a positive estimate revision trend for fiscal 2020. Over the past 60 days, the Zacks Consensus Estimate for earnings has inched up 1.8% to $3.42 per share.
The Zacks Consensus Estimate for the company’s first-quarter 2020 revenues is pegged at $601.8 million, suggesting a 13% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks from the broader medical space are ResMed Inc. (RMD - Free Report) , DexCom (DXCM - Free Report) and Integra LifeSciences Inc (IART - Free Report) .
ResMed has a projected long-term earnings growth rate of 12%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here.
DexCom’s long-term earnings growth rate is estimated at 36.7%. The company presently carries a Zacks Rank #2.
Integra’s long-term earnings growth rate is estimated at 11.9%. It currently carries a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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