My analysis of AMN Healthcare Services will liberally use cut-and-paste from other sources, including SEC filings. Even though these portions are not my digested thoughts, it will save the reader the time of browsing the web for the original documents, so my guilt is assuaged. As background of the company, here is a portion of a widipedia article (citation follows).
In 1985, Steven Francis and his wife Gayle, a registered nurse, founded AMN Healthcare, a nurse staffing business. In 1987 after completing his legislative service in Nevada, they relocated AMN Healthcare to San Diego. As AMN Healthcare grew in its early years, Steven and Gayle oversaw the company’s development. From 1990 to 2005, Francis served as AMN’s Chief Executive Officer and from 2005 to 2008 as Chairman of the Board.
During the 22 years of AMN’s history, the company transitioned from a private enterprise to a national public company with over 2,000 corporate employees, with over 8,000 nurse and allied healthcare professionals providing staffing services to over 2,000 healthcare facility clients. Today, AMN (NYSE:AMN) is the nation’s largest healthcare staffing firm and is traded on the New York Stock Exchange.
https://en.wikipedia.org/wiki/Steve_Francis_(businessman)
AMN Health Care was purchased by AMN Healthcare Services in 1997. I don’t know if this was more than just a name change. Then in 2001, AMN Healthcare Services made an IPO. Steven Francis retained about 49% ownership. At the time of the prospectus, AMN Healthcare Services (hereinafter AHS) had $67 million of accumulated deficits.
In 2008, Steven Francis stepped down as chairman of the board of AHS in order to run for mayor of San Diego. He lost. Then, in 2009, he sued AHS in a fight over removing three AHS board members, the issue being conflict of interest of one William Miller III who was a partner in Highlander Partners, a competitor of AHS. Mr. Miller was in charge of investment opportunities. Mr. Miller is no longer a board member of AHS although the other two targeted directors still are board members.
The current CEO is Susan Salka (Nowakowski). She has been with AHS since 1990 and became president in 2003 and CEO in 2005. So this 13 years in leadership long predates the profitability surge which, as we will see, began about a year and a half ago.
So, what does AHS do? From the latest annual report:
Overview of Our Business. We provide healthcare workforce solutions and staffing services to healthcare facilities across the nation. As an innovative workforce solutions partner, our managed services programs, or “MSP,” vendor management systems, or “VMS,” recruitment process outsourcing, or “RPO,” workforce optimization services, and the placement of physicians, nurses, allied healthcare professionals, and healthcare executives into temporary and permanent positions enable our clients to successfully reduce staffing complexity, increase efficiency and lead their organizations within the rapidly evolving healthcare environment. Our clients include acute and sub-acute care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, and several other healthcare settings. Our clients utilize our workforce solutions and healthcare staffing services to meet their workforce needs, both temporary and permanent, in an economically beneficial manner. Our managed services program and vendor management systems enable healthcare organizations to increase their efficiency by managing all of their supplemental workforce needs through one company or technology. For the three months ended March 31, 2016 , we recorded revenue of $468.0 million , as compared to $327.5 million for the same period last year. For the three months ended March 31, 2016 , we recorded net income of $25.9 million , as compared to $12.2 million for the same period last year. Nurse and allied solutions segment revenue comprised 64% and 66% of total consolidated revenue for the three months ended March 31, 2016 and 2015 , respectively. Through our nurse and allied solutions segment, we provide hospitals and other healthcare facilities with a comprehensive managed services solution in which we manage and staff all of the temporary nursing and allied staffing needs of a client and traditional clinical staffing solutions of variable assignment lengths.
Locum tenens solutions revenue comprised 22% and 27% of total consolidated revenue for the three months ended March 31, 2016 and 2015 , respectively. Through our locum tenens solutions segment, we provide a comprehensive managed services solution in which we manage all of the locum tenens needs of a client and place physicians of all specialties, as well as dentists and other advanced practice providers, with clients on a temporary basis as independent contractors. These locum tenens providers are used by our healthcare facility and physician practice group clients to fill temporary vacancies created by vacation and leave schedules and to bridge the gap while they seek permanent candidates or explore expansion. Our locum tenens clients represent a diverse group of healthcare organizations throughout the United States, including hospitals, health systems, medical groups, occupational medical clinics, psychiatric facilities, government institutions, and insurance entities. The professionals we place are recruited nationwide and are typically placed on contracts with assignment lengths ranging from a few days up to one year.
Other workforce solutions segment revenue comprised 14% and 7% of total consolidated revenue for the three months ended March 31, 2016 and 2015, respectively. Through our other workforce solutions segment, we provide hospitals and other healthcare facilities with a range of workforce solutions, including: (1) identifying and recruiting physicians for permanent placement, (2) placing interim leaders and executives across all healthcare settings, (3) a SaaS VMS through which our clients can manage all of their temporary staffing needs, (4) RPO services that leverage our expertise and support systems to replace or complement a client’s existing internal recruitment function for permanent placement needs, (5) an education program that provides custom healthcare education, research, professional practice tools, and professional development services, and (6) workforce optimization services that include consulting, data analytics, predictive modeling, and SaaS-based scheduling technology.
The next section covers revenue and profitability. AHS recently changed its reportable segments. Locum tenens means a temporary position for a doctor or member of the clergy. You can read this if you care, or you can skip to the table of revenue and earnings which follows.
The Company previously utilized three reportable segments, which it identified as follows: (1) nurse and allied healthcare staffing, (2) locum tenens staffing, and (3) physician permanent placement services. In light of the Company’s acquisitions over the past several years as well as its transition to a healthcare workforce solutions company, the Company’s management renamed the Company’s three reportable segments and also placed several of the Company’s business lines that were in the nurse and allied healthcare staffing segment into a different segment to better reflect how the business is evaluated by the chief operating decision maker. As of January 1, 2016, the Company began to disclose the following three reportable segments: (1) nurse and allied solutions, (2) locum tenens solutions, and (3) other workforce solutions. The nurse and allied solutions segment includes the Company’s travel nurse, allied, and local staffing businesses. The locum tenens solutions segment includes its locum tenens staffing business. The other workforce solutions segment includes its healthcare interim leadership staffing and executive search services business, physician permanent placement services business, recruitment process outsourcing business, vendor management systems business, workforce optimization services business, and its education business.
Well, before the table, the following is a discussion of revenue for Q1 2016. From this you see that AHS is growing both organically and via acquisitions. The business was quite fragmented and AHS has grown to national scale. In addition, related business have been tacked on to provide more services to large, national-scale medical customers.
Revenue
Revenue increased 43% to $468.0 million for the three months ended March 31, 2016 from $327.5 million for the same period in 2015 , due to additional revenue of approximately $49 million resulting from our HSG, BES, Millican, TFS and OH acquisitions with the remainder of the increase driven by 28% organic growth. Nurse and allied solutions segment revenue increased 37% to $297.7 million for the three months ended March 31, 2016 from $217.0 million for the same period in 2015 . Of the $80.7 million increase, approximately $12.6 million was attributable to the additional revenue in connection with the HSG acquisition and $2.0 million was attributable to the prior year having one less week of revenue from the OH acquisition as it was consummated on January 7, 2015 (the “OH Stub Period”), with the remainder primarily attributable to a 17% increase in the average number of healthcare professionals on assignment and a 9% increase in the average bill rate during the three months ended March 31, 2016 . Locum tenens solutions segment revenue increased 19% to $102.7 million for the three months ended March 31, 2016 from $86.7 million for the same period in 2015 . Of the $16.0 million increase, $0.6 million was attributable to the additional revenue of Locum Leaders over the OH Stub Period with the remainder primarily attributable to a 7% increase in the number of days filled and a 10% increase in the average bill rate during the three months ended March 31, 2016 . Other workforce solutions segment revenue increased 183% to $67.5 million for the three months ended March 31, 2016 from $23.8 million for the same period in 2015 . Of the $43.7 million increase, $33.4 million was attributable to the additional revenue in connection with the BES, Millican and TFS acquisitions and the additional revenue over the OH Stub Period, with the remainder primarily attributable to an increase in billable active searches and the average placement value in the physician permanent placement business and growth in our VMS and recruitment process outsourcing services revenue during the three months ended March 31, 2016.
O.k., here is where I let you down. I have a 21 column Xcel spreadsheet for revenue, net income, eps, etc. that I am not up to converting into a table here. (Humiliation). I do agree that the 1 year PEG is about 0.17. Let’s see, what can I do.
Revenue EPS
240.9 0.16
264.4 0.19
279.6 0.18
327.5 0.21
350.0 0.38
382.9 0.48
402.6 0.47
468.0 0.60
You’re on your own.
Recent Trends
AHS says that the market remains strong with demand still at near all-time highs with robust demand for our MSP offerings. By focusing on the fulfillment of our MSP client orders, MSP revenue continues to increase faster than our traditional staffing revenue and represented approximately 50% of the nurse and allied solutions segment revenue for the three months ended March 31, 2016. AHS is seeing certain larger health systems representing a greater portion of its revenue as these clients purchase several different business solutions from our suite of services. Higher billing rates have been negotiated due to the high demand for nurse and allied solutions segment. The high levels of demand within locum tenens solutions segment and other workforce solutions segment with their higher profitability are positively effecting consolidated gross and operating margins.
My view of the company is that it has 13 or 14 years of mediocre performance and maybe two years of strong growth of revenue and profits. The management team is consistent through these periods. Glass door ratings for the company, not so good, 57% would recommend it to a friend. However, the CEO has and 84% approval rating. It is a somewhat demanding workplace.
AHS is benefiting from the growth and growing pains of the medical system in the U.S. I feel that hospitals have a certain skill level in providing health care but are less capable of running the business of providing health care. Increased complexity in medical treatment, medical insurance reimbursement, increasing patient load due to aging population and increased insurance coverage, aging nurse population and pressure to reduce and manage cost are all providing tailwinds for AHS. The initiatives in management services and SaaS business seem to be paying off. As to whether management has just fallen into a good situation or have created and are executing an innovative business plan, I have not formed an opinion.
Sorry, I have not analyzed the cash flow or balance sheet. I’m kind of tired right now. Worked hard repairing fences today, and sat through our People’s Organization meeting on mangrove reforestation, so I’m just going to press with what I have.
KC