AMN shares Trumped — Washington activity puts shares of AMN Healthcare under pressure
After Thursday’s market close, healthcare workforce solutions company AMN Healthcare (AMN) reported better than expected March quarter results and guided 2Q 2017 a tad shy of existing expectations. EPS came in at $0.63, $0.03 per share better than consensus expectations and compares to the $0.60 earned the year-ago quarter. Revenue rose to $495.1 million for the reported quarter, edging out expectations of $493 million, and was up roughly 6 percent year over year. Despite those results and the continued pain point that is fueling its business, better known as our Aging of the Population investing theme, AMN shares have come under pressure in the last 24 hours.
We attribute this to the TrumpCare passing the House and heading to the Senate for a vote. We’ll be digging into this to determine what if any potential negatives are for AMN’s business over the coming days. We’ll also examine the March JOLTs report that is released next week, as we repeatedly double check our underlying thesis on the shares.
- For now, our price target on AMN shares remains $47, which offers sufficient upside to keep our Buy rating in play.
Getting back to the company’s 1Q 2017 results, from a mix perspective AMN’s Nurse and Allied Solutions business (63% of revenue) rose 5 percent year over year due primarily to a near 7% increase in the average number of healthcare professionals on assignment compared to the year-ago quarter. That performance was bittersweet given its the company’s largest business, and even though gross margins rose to just under 28 percent vs. just under 27 percent in the year go quarter, those margins remained the lowest of among its three businesses.
The Locum Tenens solutions business (21% of revenue) delivered flat revenue as the revenue per day filled (up 5.4%) was offset by a lower number of days filled (down 5% year over year). Both the increase in revenue per day as well as lower number of days fill speak to the widening disconnect we keep seeing in the monthly JOLTS report when it comes to healthcare workers. Lastly, the Other Workforce Solutions business (16% of revenue) delivered a 22% increase in revenue, with a large part of that reflected last June’s acquisition of Peak Health Solutions as well as growth in the VMS and interim leadership businesses.
To sum it up, the quarter was another solid one for AMN and given the demographics, we continue to see the company benefiting from both the aging of the population that will spur demand for healthcare workers as well as be benefitting from the continued nursing shortage.
