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Article Excerpt
PARTICIPANTS
. Christopher Powell, AMN Healthcare Services, Inc., VP IR . Susan Nowakowski, AMN Healthcare Services, Inc., President, CEO . David Dreyer, AMN Healthcare Services, Inc., CFO . Tobey Sommer, SunTrust Robinson Humphrey, Analyst . Jim Janesky, Stifel Nicolaus, Analyst . David Bachman, Longbow Research, Analyst . Jeff Silber, BMO Capital Markets, Analyst . A.J. Rice, Soleil Securities, Analyst
OVERVIEW
AHS reported 2008 revenues of $1.22b and fully diluted EPS of $1.02. 4Q08 consolidated revenues were $296m and fully diluted EPS was $0.23.
FINANCIAL DATA
A. Key Data From Call 1. 2008 revenue = $1.22b. 2. 4Q08 consolidated revenue = $296m. 3. 2008 fully diluted EPS = $1.02. 4. 2008 pro forma diluted EPS (without certain charges) = $1.06. 5. 4Q08 fully diluted EPS = $0.23. 6. 4Q08 consolidated GM = 25.7%. 7. 4Q08-end DSO = 57. 8. Co. did not repurchase any shares during 4Q08.
PRESENTATION SUMMARY
S1. Business Review (S.N.) 1. 2008 Highlights: 1. Record revenue, $1.22b. 2. Adjusted EBITDA, $96m. 3. Pro forma diluted EPS, $1.06. 2. Nurse and Allied: 1. Experienced single-digit growth that moderated throughout the year. 1. Specifically, short-term nurse staffing experienced consistent YoverY revenue growth of 2-3% over the past three quarters. 2. Based on comments and reports from competitors and Co.'s clients, AHS has been expanding market share over the last year. 3. Broad and diversified client base enables Co. to better weather this market relative to competition. 2. In 2008, top 10 clients in Nurse and Allied staffing accounted for only 9% of revenues in that segment. 1. As hospitals reduced the number of staffing companies they use, Co. is well positioned to retain its slot as one of their providers and to gain market share. 2. While orders are significantly down, believes Co. still has about twice as many assignments to offer than closest competitors. 3. Despite lower levels, there is still an overall consistent need from hospitals for clinical staff to serve healthcare needs of general population. 4. Larger selection of assignments helps Co. to retain existing working travelers. 1. This strength was best reflected in 4Q08 where short-term nurse travel account was flat with prior year, as many competitors experienced declines. 2. Decline in overall nursing volume was due primarily to international nursing, which was down about 200 nurses, as Co. continues to feel the effects of visa retrogression. 3. Pricing environment remains relatively stable in nursing. 1. During 2008, avg. revenue per traveler per day increased by 3% with 4Q08 rising similarly over the prior year. 2. Seen continued improvements in housing and insurance costs, allowing short-term nursing business to achieve GM improvement of 60 BP in 2008 over prior year. 4. In Allied division, Co. is positioned well in long-term to serve staffing discipline that are projected to be fastest growing, such as rehab therapy, laboratory and pharmacy. 1. During 2008, rehab facilities experienced 9% growth. 2. Allied industry continues to be impacted by declines in imaging specialties. 3. In 4Q08, began to experience a drop in overall allied orders, although less significant than drop in nursing. 3. Locum Tenens: 1. Continues to lead Locum Tenens industry with revenues of $322m or 4% higher than prior year. 1. Revenue results were combination of strong double-digit volume growth in behavioral health and dentistry, and largest specialty of primary care. 1. Offset by continued decline in radiology, and some softness in surgery and anesthesia in 2H08. 2. Aggregate days filled volume improved 2% YoverY. 3. Revenue per day filled contributed other 2%. 2. Several of physician divisions experienced stronger pricing growth. 1. Offset by pricing declines and relatively lower mix of radiology placements, which typically have highest daily bill rates. 3. 2008 GM improved slightly at 26.3%. 1. Up 30 BP over 2007. 2. Driven by improved bill-to-pay spreads. 1. Partially offset by lower temp-to-perm placement fees. 4. In 2008, top 10 clients accounted for only 6% of revenues. 1. Indicating low client concentration. 5. Continues to see strong but moderating growth in primary care, behavioral health and dentistry. 1. There are some external trends, such as: 1. Fewer physician vacation days. 2. Some physicians who are delaying their retirement. 3. Pressure on state and county budgets that could affect the growth rates. 4. Physician Permanent Placement: 1. 2008 revenues, $51m. 1. Flat with prior year. 2. Consistent need for quality physicians to drive revenue and margin at healthcare facilities helps provide a more sustainable demand environment than experienced by permanent placement companies in other industries. 3. While long-term drivers of business remain well intact and potentially more compelling than ever, must deal with realities of short term and proactively adjust Co.'s infrastructure to expected lower revenue and volumes. 1. Taken a number of steps to ensure Co. achieves operational efficiencies, and is the right size to accommodate the decline in travel nursing and allied orders. 2. Looked first externally to eliminate costs through lower spending with third-party vendors. 1. Those efforts have been fruitful. 2. Will continue to pursue more external opportunities throughout the year. 3. Largest cost center is employee expense. 4. Over the past three months, implemented a variety of measures, including: 1. Minimal replacement for attrition. 2. Reduction in workforce. 5. This week, announced the consolidation of three of smaller nursing recruitment brands, which will result in lower future OpEx, including: 1. Further reduction in workforce. 2. Closing of Huntersville, North Carolina office. 6. These initiatives to streamline travel-nursing operations by consolidating physical locations and rationalizing eight travel nurse brands down to five were decided in conjunction with long-term strategic brand study that Co. launched in 2008. 1. As part of the study, surveyed over 3,200 current, former and prospective clients and healthcare professionals. 2. Results confirmed that AHS has significantly higher overall brand ratings than competitors. 1. Specifically, Co. was rated particularly high as having an excellent reputation, being easy to work with, being innovative, and filling assignments quickly. 3. Although Co. is adjusting infrastructure and redeploying resources to reflect current market conditions, has been careful to continue supporting initiatives that diversify product lines and broaden client base for future. 7. During 2008, launched three important new service offerings, including recruitment process outsourcing and staffing services in home health market and ambulatory surgery centers. 1. Recently announced economic stimulus package and proposed federal budget includes...
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