AMN Healthcare Announces Fourth Quarter And Full Year 2018 Results
SAN DIEGO, Feb. 14, 2019 /PRNewswire/ -- AMN Healthcare Services, Inc. (NYSE: AMN), the leader and innovator in healthcare workforce solutions and staffing services, today announced its fourth quarter and full year 2018 financial results. Financial highlights are as follows:
Dollars in millions, except per share amounts.
Q4 2018
% Change Full Year
% Change
Q4 2017 2018
Full Year
2017
Revenue $528.6 4% $2,136.1 7%
---
Gross profit $172.5 6% $696.4 8%
---
Net income $35.6 (13)% $141.7 7%
---
Diluted EPS $0.74 (12)% $2.91 9%
---
Adj. diluted EPS* $0.81 29% $3.29 29%
---
Adjusted EBITDA* $66.4 3% $270.4 5%
---
* See "Non-GAAP Measures" below
for a discussion of our use of non-
GAAP items and the table entitled
"Supplemental Financial and
Operating Data" for a
reconciliation of non-GAAP items.
2018 & Recent Highlights
-- Full year 2018 revenue grew 7%, GAAP EPS increased by 9%, and adjusted
diluted EPS was up 29%.
-- Operating cash flow of $227 million was up 41% over prior year.
-- Fourth quarter earnings remained strong; revenue was below expectations
due to lower placements in our Locum Tenens segment.
-- Finished 2018 with new MSP contracts totaling $230 million in gross
spend under management, with great diversity across service lines.
-- In January, signed a three-year MSP agreement with Tenet Healthcare
covering multiple service lines in California and Arizona with an
estimated $100 million gross spend.
-- Acquired Silversheet, an innovative, cloud-based clinical credentialing
solution, in January.
"AMN surpassed $2.1 billion in consolidated revenue for 2018, more than two times where we were just five years ago," said Susan R. Salka, chief executive officer of AMN Healthcare. "More importantly, our team helped thousands of clients and healthcare professionals to make a positive impact in delivering quality patient care and increasing the value AMN brings to the healthcare community. We made strides in our strategy to be the most trusted and innovative workforce solutions partner for healthcare organizations and to enable clinicians to achieve their personal and professional goals. We have added several new clients across our businesses over the past year and are proud that in January, Tenet Healthcare chose AMN Healthcare as their MSP provider in California and Arizona. We are also very excited to recently add Silversheet to the AMN family as another innovative workforce solution that will support clients' patient care, compliance and efficiency goals.
"We remain optimistic about the long-term growth of our business and the strategic investments we are making to deliver differentiated value to our customers and healthcare professionals, which we believe will be more visible in our performance in the second half of 2019 and beyond. In the near term, restoring the performance of our Locum Tenens segment is our top priority. This business has been challenged by the business model and system transition last year. But with continuous improvements, aggressive hiring of new sales talent, and the resilience and fortitude of the locums team, we do expect to gain traction as we move through the year," Ms. Salka added.
Fourth Quarter 2018 Results
Consolidated revenue for the quarter was $529 million, a 4% increase over prior year and flat compared with prior quarter. Revenue for the Nurse and Allied Solutions segment was $329 million, higher by 2% year over year and 8% sequentially. Travel Nurse revenue increased 2% year over year, with higher volume offset by a lower average bill rate. Allied division revenue increased 8% year over year on higher volume.
The Locum Tenens Solutions segment reported revenue of $82 million, down by 24% year over year, with lower volumes offset in part by positive pricing. Other Workforce Solutions segment revenue was $117 million reflecting an increase of 48% year over year, driven primarily by the acquisitions made in April 2018. Excluding the additional revenue from acquisitions, revenue increased 1%.
Gross margin was 32.6%, higher by 80 basis points year over year and lower by 60 basis points sequentially. The year-over-year variance was driven by higher-than-average gross margins from the recently acquired companies and a change in classification of certain recruiter expenses from cost of sales to SG&A in our physician permanent placement business.
SG&A expenses were $111 million or 21.0% of revenue, compared with $100 million, or 19.7% of revenue, in the same quarter last year. SG&A was $121 million, or 23.0% of revenue, in the previous quarter. The year-over-year increase in expense margin stemmed mainly from the physician permanent placement cost change, higher SG&A expenses from our acquisitions, and higher acquisition and integration costs.
Income from operations was $50 million, or 9.5% of revenue, compared with $53 million, or 10.4% of revenue, in the same quarter last year. Adjusted EBITDA was $66 million, a year-over-year increase of 3%. Adjusted EBITDA margin was 12.6%, flat year over year and a decrease of 20 basis points sequentially.
Net income was $36 million, or $0.74 per diluted share, compared with $41 million, or $0.84 per diluted share, in the same quarter last year. Adjusted diluted EPS was $0.81.
During the fourth quarter of 2018, the Company repurchased 271,000 shares of our common stock for an aggregate purchase price of $14 million.
Full Year 2018 Results
Full year 2018 consolidated revenue was $2,136 million a 7% increase from prior year. Nurse and Allied Solutions segment revenue was $1,307 million, a year-over-year increase of 5%. The Locum Tenens Solutions segment revenue was $393 million, down by 9% compared with the prior year. Other Workforce Solutions segment revenue was $436 million, an annual increase of 37% driven primarily by the acquisitions made in April 2018.
Full year gross margin was 32.6% compared with 32.4% for the prior year. The gross margin for the year ended December 31, 2018 was positively impacted by higher-than-average gross margins from the acquisitions made in 2018 and a change in our physician permanent placement business model that prompted a $9.9 million classification of certain recruiter compensation expenses to SG&A that was previously in cost of revenue. Net of these factors, the year-over-year gross margin declined primarily due to a lower margin in our Locum Tenens and Nurse and Allied Solutions segments.
Full year SG&A expenses were $452 million, representing 21.2% of revenue as compared to $400 million, representing 20.1% of revenue, for the prior year. The year-over-year increase in SG&A expenses was primarily due to additional expenses from the acquisitions, a $12.1 million increase in legal reserves, and a $9.9 million classification of certain recruiter compensation expenses to SG&A that was previously in cost of revenue.
Full year income from operations was $203 million, or 9.5% of revenue, compared with $212 million, or 10.7% of revenue, in the prior year. Adjusted EBITDA was $270 million, a year-over-year increase of 5%. Adjusted EBITDA margin was 12.7%, representing a decrease of 20 basis points year over year.
Full-year net income was $142 million, or $2.91 per diluted share, compared with $133 million, or $2.68 per diluted share, in the prior year. Adjusted diluted EPS was $3.29.
At December 31, 2018 cash and cash equivalents totaled $14 million. Cash flow from operations was $59 million for the quarter and $227 million for the full year. Capital expenditures were $11 million in the quarter and $35 million for the year. The Company ended the year with total debt outstanding of $445 million with a leverage ratio as calculated in accordance with the Company's credit agreement of 1.7 to 1.
Silversheet Acquisition
In January 2019, we acquired Silversheet, an emerging, cloud-based provider of credentialing and privileging software and services. "Credentialing is a pervasive pain point for healthcare organizations, and there has been little innovation in this area until recently," Ms. Salka said. "Silversheet enhances our workforce solutions offerings, adding an innovative platform that enables faster, more efficient and reliable credentialing for our clients. At the same time, Silversheet is a promising platform through which we can engage clinicians with an easy-to-use, digital method of storing and tracking their medical credentials."
First Quarter 2019 Outlook
Metric
Guidance*
---
Consolidated revenue
$520 - $528 Million
---
Gross margin 33.0%
---
SG&A as percentage of revenue 22.5%
---
Operating margin 8.3%
---
Adjusted EBITDA margin 12.0%
---
*Note: Guidance percentage metrics
are approximate. For a
reconciliation of adjusted EBITDA
margin, see the table entitled
"Reconciliation of Guidance
Adjusted EBITDA Margin to Guidance
Operating Margin" below.
Projected year-over-year revenue growth in the first quarter of 2019 is 0-1%. On an organic basis, revenue is projected to be down approximately 6% due primarily to lower revenue in the Locum Tenens business. Nurse and Allied segment revenue is expected to be down by about 1-2% compared with prior year, with growth in Allied offset by a slight decline in Nurse staffing due to lower nursing utilization from a large client. Excluding this impact, Nurse and Allied revenue growth would be estimated at about 5% year over year.
Conference Call on February 14, 2019
AMN Healthcare Services, Inc. (NYSE: AMN), healthcare's leader and innovator in workforce solutions and staffing services, will host a conference call to discuss its fourth quarter and full year 2018 financial results and first quarter 2019 outlook on Thursday, February 14, 2019, at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare's website at http://amnhealthcare.investorroom.com/eventcalendar. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software. Interested parties may participate live via telephone by dialing (800) 288-8960 in the U.S. or (612) 234-9960 internationally. Following the conclusion of the call, a replay of the webcast will be available at the Company's website. Alternatively, a telephonic replay of the call will be available starting at 7:30 p.m. Eastern Time on February 14, 2019, and can be accessed until 11:59 p.m. Eastern Time on February 28, 2019, by calling (800) 475-6701 in the U.S. or (320) 365-3844 internationally, with access code 455277.
About AMN Healthcare
AMN Healthcare is the leader and innovator in healthcare workforce solutions and staffing services to healthcare facilities across the nation. The Company provides access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. With insights and expertise, AMN Healthcare helps providers optimize their workforce to successfully reduce complexity, increase efficiency and improve patient outcomes. AMN delivers managed services programs, healthcare executive search solutions, vendor management systems, recruitment process outsourcing, predictive modeling, mid-revenue cycle solutions, credentialing and other services. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities and many other healthcare settings. AMN Healthcare is committed to fostering and maintaining a diverse team that reflects the communities we serve. Our commitment to the inclusion of many different backgrounds, experiences and perspectives enables our innovation and leadership in the healthcare services industry.
The Company's common stock is listed on the New York Stock Exchange under the symbol "AMN." For more information about AMN Healthcare, visit www.amnhealthcare.com, where the Company posts news releases, investor presentations, webcasts, SEC filings and other material information. The Company also utilizes email alerts and Really Simple Syndication ("RSS") as routine channels to supplement distribution of this information. To register for email alerts and RSS, visit http://amnhealthcare.investorroom.com/emailalerts.
Non-GAAP Measures
This earnings release contains certain non-GAAP financial information, which the Company provides as additional information, and not as an alternative, to the Company's condensed consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures include (1) adjusted EBITDA, (2) adjusted EBITDA margin and (3) adjusted diluted EPS. The Company provides such non-GAAP financial measures because management believes that they are useful both to management and investors as a supplement, and not as a substitute, when evaluating the Company's operating performance. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin and adjusted diluted EPS serve as industry-wide financial measures. The Company uses adjusted EBITDA for making financial decisions and allocating resources. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP measures and may be different from non-GAAP measures, or may be calculated differently than other similarly titled non-GAAP measures, reported by other companies. They should not be used in isolation to evaluate the Company's performance. A reconciliation of non-GAAP measures identified in this release, along with further detail about the use and limitations of certain of these non-GAAP measures, may be found below in the table entitled "Supplemental Financial and Operating Data" under the caption entitled "Reconciliation of Non-GAAP Items" and the footnotes thereto or on the Company's website at http://amnhealthcare.investorroom.com/financialreports. Additionally, from time to time, additional information regarding non-GAAP financial measures, including pro forma measures, may be made available on the Company's website.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, our views on the long-term growth and performance of our businesses, including Locum Tenens, and statements concerning our guidance for first quarter 2019 consolidated revenue, gross margin, SG&A expenses as a percentage of revenue, operating margin and adjusted EBITDA margin. The Company bases these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may," "estimates," variations of such words and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.
The Company's ability to meet the targets and expectations noted in our first quarter 2019 outlook depends upon, among other factors, our ability to (i) manage the pricing impact that the consolidation of healthcare delivery organizations may have on our business, (ii) comply with extensive and complex federal and state laws and regulations related to the conduct of our operations, costs and payment for services and payment for referrals as well as laws regarding employment practices, (iii) implement new infrastructure and technology systems to optimize our operating results and manage our business effectively, (iv) develop and evolve our current technology offerings and capabilities, (v) recruit and retain sufficient quality healthcare professionals at reasonable costs, and (vi) consummate and effectively incorporate acquisitions into our business.
For a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above that could cause actual results to differ from those implied by the forward-looking statements contained in this press release, please refer to "Risk Factors" under Item 1A of our most recent Annual Report on Form 10-K for the year ended December 31, 2017, our subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
Contact:
Randle Reece
Director, Investor Relations
866.861.3229
AMN Healthcare Services, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31, September 30,
December 31,
2018 2017 2018 2018 2017
---
Revenue $
528,635 $
509,076 $
526,842 $
2,136,074 $
1,988,454
Cost of revenue 356,179 346,984 351,695 1,439,691 1,344,035
Gross profit 172,456 162,092 175,147 696,383 644,419
Gross margin 32.6% 31.8% 33.2% 32.6% 32.4%
Operating expenses:
Selling, general and
administrative (SG&A) 110,830 100,375 121,216 452,318 399,700
SG&A as a % of revenue 21.0% 19.7% 23.0% 21.2% 20.1%
Depreciation and
amortization 11,449 8,520 11,296 41,237 32,279
Total operating
expenses 122,279 108,895 132,512 493,555 431,979
Income from operations 50,177 53,197 42,635 202,828 212,440
Operating margin (1) 9.5% 10.4% 8.1% 9.5% 10.7%
Interest expense, net,
and other (8) (217) 4,782 4,649 16,143 19,677
Income before income
taxes 50,394 48,415 37,986 186,685 192,763
Income tax expense 14,781 7,248 10,068 44,944 60,205
Net income $
35,613 $
41,167 $
27,918 $
141,741 $
132,558
Net income as a % of
revenue 6.7% 8.1% 5.3% 6.6% 6.7%
Other comprehensive income (loss):
Foreign currency
translation and other 58 13 133 263 (98)
Cash flow hedge, net of
income taxes - (15)
Other comprehensive
income (loss) 58 13 133 263 (113)
Comprehensive income $
35,671 $
41,180 $
28,051 $
142,004 $
132,445
Net income per common share
Basic $
0.76 $
0.86 $
0.59 $
2.99 $
2.77
Diluted $
0.74 $
0.84 $
0.58 $
2.91 $
2.68
Weighted average common shares outstanding:
Basic 46,825 47,618 47,286 47,371 47,807
Diluted 48,102 49,281 48,529 48,668 49,430
AMN Healthcare Services, Inc.
Supplemental Financial and Operating Data
(dollars in thousands, except per share data and operating data)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31, September 30,
December 31,
2018 2017 2018 2018 2017
---
Revenue
Nurse and allied
solutions $
329,317 $
321,360 $
306,292 $
1,306,516 $
1,238,543
Locum tenens solutions 81,850 108,142 101,102 393,366 430,615
Other workforce
solutions 117,468 79,574 119,448 436,192 319,296
$
528,635 $
509,076 $
526,842 $
2,136,074 $
1,988,454
Reconciliation of Non-GAAP Items:
Segment operating income (2)
Nurse and allied
solutions $
45,521 $
48,154 $
42,165 $
183,427 $
182,792
Locum tenens solutions 7,027 12,394 10,992 41,348 51,422
Other workforce
solutions 27,104 19,366 29,010 104,541 81,154
79,652 79,914 82,167 329,316 315,368
Unallocated corporate
overhead 13,281 15,545 14,739 58,938 58,954
Adjusted EBITDA (3) 66,371 64,369 67,428 270,378 256,414
Adjusted EBITDA margin
(4) 12.6% 12.6% 12.8% 12.7% 12.9%
Depreciation and
amortization 11,449 8,520 11,296 41,237 32,279
Share-based
compensation (5) 2,861 2,517 1,809 10,815 10,237
Acquisition and
integration costs (6) 1,884 135 (452) 3,358 1,458
Legal settlement
accrual increases (7) - 12,140 12,140
Income from operations 50,177 53,197 42,635 202,828 212,440
Interest expense, net,
and other (8) (217) 4,782 4,649 16,143 19,677
Income before income
taxes 50,394 48,415 37,986 186,685 192,763
Income tax expense 14,781 7,248 10,068 44,944 60,205
Net Income $
35,613 $
41,167 $
27,918 $
141,741 $
132,558
GAAP diluted net income
per share (EPS) $
0.74 $
0.84 $
0.58 $
2.91 $
2.68
Adjustments:
Amortization of
intangible assets 0.14 0.10 0.14 0.50 0.38
Acquisition and
integration costs (6) 0.04 (0.01) 0.07 0.03
Legal settlement
accrual increases (7) - 0.25 0.25
Equity investment fair
value changes (8) (0.13) (0.03) (0.15)
Debt financing related
costs - 0.01
Tax effect on above
adjustments (0.01) (0.04) (0.09) (0.18) (0.16)
Tax correction related
to prior periods (9) - (0.05)
Tax effect of COLI fair
value changes(10) 0.04 0.04
Tax law effect on
deferred taxes (11) - (0.27) (0.26)
Excess tax benefits
(11) (0.01) (0.11) (0.11)
Adjusted diluted EPS
(12) $
0.81 $
0.63 $
0.84 $
3.29 $
2.56
Three Months Ended
Twelve Months Ended
December 31, September 30,
December 31,
2018 2017 2018 2018 2017
---
Gross Margin
Nurse and allied
solutions 27.2% 27.4% 27.4% 27.2% 27.6%
Locum tenens solutions 27.2% 29.3% 28.4% 28.6% 30.0%
Other workforce
solutions 51.7% 53.1% 52.4% 52.4% 54.5%
Operating Data:
---
Nurse and allied solutions
Average healthcare
professionals on
assignment (13) 9,404 9,234 8,979 9,261 8,969
Locum tenens solutions
Days filled (14) 41,000 56,591 50,069 199,089 229,375
Revenue per day filled
(15) $
1,996 $
1,911 $
2,019 $
1,976 $
1,877
As of December 31,
As of September 30,
2018 2017 2018
Leverage ratio (16) 1.7 1.3 1.7
AMN Healthcare Services, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
December 31, September 30, December 31,
2018 2018 2017
---
Assets
Current assets:
Cash and cash equivalents $
13,856 $
18,614 $
15,147
Accounts receivable, net 365,870 366,436 350,496
Accounts receivable,
subcontractor 50,143 44,891 41,012
Prepaid and other current
assets 52,297 49,898 67,498
Total current assets 482,166 479,839 474,153
Restricted cash, cash
equivalents and investments 59,331 59,453 64,315
Fixed assets, net 90,419 86,817 73,431
Other assets 96,152 93,206 74,366
Goodwill 438,506 438,299 340,596
Intangible assets, net 326,147 332,788 227,096
Total assets $
1,492,721 $
1,490,402 $
1,253,957
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
expenses $
149,603 $
142,543 $
130,319
Accrued compensation and
benefits 135,059 135,632 121,423
Deferred revenue 12,365 13,107 8,384
Other current liabilities 10,243 11,806 5,146
Total current liabilities 307,270 303,088 265,272
Revolving credit facility 120,000 150,000
Notes payable, less
unamortized fees 320,607 320,416 319,843
Deferred income taxes, net 27,326 24,651 27,036
Other long-term liabilities 78,528 77,527 79,279
Total liabilities 853,731 875,682 691,430
Commitments and contingencies
Stockholders' equity: 638,990 614,720 562,527
Total liabilities and
stockholders' equity $
1,492,721 $
1,490,402 $
1,253,957
AMN Healthcare Services, Inc.
Summary Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30,
December 31,
2018 2017(17) 2018 2018 2017(17)
---
Net cash
provided by
operating
activities $
58,947 $
58,422 $
42,108 $
226,993 $
160,518
Net cash used
in investing
activities (7,689) (11,316) (32,698) (279,337) (35,361)
Net cash
provided by
(used in)
financing
activities (44,263) (13,369) (36,883) 37,511 (77,193)
Effect of
exchange
rates on cash 58 13 133 263 (98)
Net increase
(decrease) in
cash, cash
equivalents
and
restricted
cash 7,053 33,750 (27,340) (14,570) 47,866
Cash, cash
equivalents
and
restricted
cash at
beginning of
period 77,271 65,144 104,611 98,894 51,028
Cash, cash
equivalents
and
restricted
cash at end
of period $
84,324 $
98,894 $
77,271 $
84,324 $
98,894
AMN Healthcare Services, Inc.
Additional Supplemental Non-GAAP Disclosures
Reconciliation of Guidance Adjusted EBITDA Margin to
Guidance Operating Margin
(unaudited)
Three Months Ended
March 31, 2019
Adjusted EBITDA
margin (18) 12.0%
Deduct:
Share-based
compensation 1.1%
Acquisition and
integration
costs 0.4%
EBITDA margin 10.5%
Depreciation and
amortization 2.2%
Operating margin 8.3%
(1) Operating margin represents income from
operations divided by revenue.
(2) Segment operating income represents net
income plus interest expense (net of
interest income) and other, income tax
expense, depreciation and amortization,
unallocated corporate overhead,
acquisition and integration costs,
legal settlement accrual increases and
share-based compensation.
(3) Adjusted EBITDA represents net income
plus interest expense (net of interest
income) and other, income tax expense,
depreciation and amortization,
acquisition and integration costs,
legal settlement accrual increases and
share-based compensation. Management
believes that adjusted EBITDA provides
an effective measure of the Company's
results, as it excludes certain items
that management believes are not
indicative of the Company's operating
performance and is a measure used in
the Company's credit agreement and the
indenture governing our 5.125% Senior
Notes due 2024. Adjusted EBITDA is not
intended to represent cash flows for
the period, nor has it been presented
as an alternative to income from
operations or net income as an
indicator of operating performance.
Although management believes that some
of the items excluded in the
calculation of adjusted EBITDA are not
indicative of the Company's operating
performance, these items do impact the
statement of comprehensive income, and
management therefore utilizes adjusted
EBITDA as an operating performance
measure in conjunction with GAAP
measures such as net income.
(4) Adjusted EBITDA margin represents
adjusted EBITDA divided by revenue.
(5) Share-based compensation for the three
months ended September 30, 2018 was
partially offset by a $1,610,000
reduction related to performance equity
awards.
(6) Acquisition and integration costs of
$874,000 for the three months ended
September 30, 2018 were partially
offset by a decrease in contingent
consideration liabilities for recently
acquired companies of $1,326,000.
(7) During the third quarter of 2018, the
Company recorded increases to its legal
accruals established in connection with
settlement agreements entered into
during September and October 2018 in
two class actions related to wage and
hour claims, both of which are
considered probable. For the three
months ended September 30, 2018, the
increases amounted to $12,140,000.
Since the settlements are largely
unrelated to the Company's operating
performance, we excluded their impact
in the calculation of adjusted EBITDA
and adjusted diluted EPS for the three
months ended September 30, 2018 and the
twelve months ended December 31, 2018.
Amounts recorded in prior quarters in
these two class actions and legal
accruals related to other matters are
immaterial and their impact was not
excluded in the calculation of adjusted
EBITDA or adjusted diluted EPS in those
prior quarters. Beginning in 2019, we
expect to exclude the impact of our
accrued legal fees and expenses
associated with an antitrust legal
matter from the calculation of adjusted
EBITDA because we believe that the
expense associated with this matter is
largely unrelated to the Company's
operating performance.
(8) As a result of the adoption of a new
accounting pronouncement on January 1,
2018, the Company now measures equity
investments, except those accounted for
using the equity method of accounting,
at fair value with changes in fair
value recognized through net income.
For the three and twelve months ended
December 31, 2018, changes in fair
value of equity investments recognized
in interest expense, net, and other
were $5,990,000 and $7,349,000,
respectively. Since these favorable
changes in fair value are unrelated to
the Company's operating performance, we
excluded their impact from the
calculation of adjusted diluted EPS for
the three and twelve months ended
December 31, 2018.
(9) During the first quarter of 2018, the
Company recorded a net tax benefit of
$2,501,000 to adjust for an immaterial
out-of-period error identified in
that quarter related to the income tax
treatment of fair value changes in the
cash surrender value of its company
owned life insurance for years ended
December 31, 2015 through December 31,
2017. These fair value changes had not
previously been included as a benefit
in the tax provision of the related
years.
(10) The Company recorded a net tax expense
of $1,676,000 related to the income tax
treatment of the fair value changes in
the cash surrender value of its company
owned life insurance for the quarter
ended December 31, 2018. Since this
change in fair value is unrelated to
the Company's operating performance, we
excluded the impact on adjusted diluted
EPS for the three and twelve months
ended December 31, 2018.
(11) The consolidated effective tax rate for
the three and twelve months ended
December 31, 2018 was favorably
affected by the recording of excess tax
benefits relating to equity awards
vested and exercised during the period.
As a result of the adoption of a new
accounting pronouncement on January 1,
2017, we no longer record excess tax
benefits as an increase to additional
paid-in capital, but record such
excess tax benefits on a prospective
basis as a reduction of income tax
expense, which amounted to $302,000 and
$68,000 for the three months ended
December 31, 2018 and 2017,
respectively. For the twelve months
ended December 31, 2018 and 2017,
excess tax benefits recorded as a
reduction of income tax expense were
$5,401,000 and $5,449,000,
respectively. The magnitude of the
impact of excess tax benefits generated
in the future, which may be favorable
or unfavorable, is dependent upon the
Company's future grants of share-based
compensation, the Company's future
stock price on the date awards vest or
exercise in relation to the fair value
of the awards on the grant date or the
exercise behavior of the Company's
stock appreciation rights holders.
Since these favorable tax benefits are
largely unrelated to our current year's
income before taxes and are
unrepresentative of our normal
effective tax rate, we excluded their
impact in the calculation of adjusted
diluted EPS for the three and twelve
months ended December 31, 2018 and
2017. In addition, during the quarter
ended December 31, 2017, we recorded a
discrete net tax benefit of $14,039,000
and a discrete tax expense of
$1,000,000 from a remeasurement of our
deferred tax assets and liabilities
related to the impact of the Tax Cuts
and Jobs Act and prior period share
based awards, respectively. We excluded
these non-cash items in the
calculation of adjusted diluted EPS for
the three and twelve months ended
December 31, 2017 as they were
unrelated to our prior year's income
before taxes.
(12) Adjusted diluted EPS represents GAAP
diluted EPS excluding the impact of the
(A) amortization of intangible assets,
(B) acquisition and integration costs,
(C) legal settlement accrual increases,
(D) changes in fair value of equity
investments since January 1, 2018, (E)
write offs of deferred financing costs
related to debt extinguishment, (F) tax
effect, if any, of the foregoing
adjustments, (G) excess tax benefits
relating to equity awards vested and
exercised since January 1, 2017, (H)
correction of prior periods error, and
(I) net tax expense related to the
income tax treatment of fair value
changes in the cash surrender value of
its company owned life insurance.
Management included this non-GAAP
measure to provide investors and
prospective investors with an
alternative method for assessing the
Company's operating results in a manner
that is focused on its operating
performance and to provide a more
consistent basis for comparison between
periods. However, investors and
prospective investors should note that
this non-GAAP measure involves
judgment by management (in particular,
judgment as to what is classified as a
special item to be excluded in the
calculation of adjusted diluted EPS).
Although management believes the items
in the calculation of from adjusted
diluted EPS are not indicative of the
Company's operating performance, these
items do impact the statement of
comprehensive income, and management
therefore utilizes adjusted diluted EPS
as an operating performance measure in
conjunction with GAAP measures such as
GAAP diluted EPS.
(13) Average healthcare professionals on
assignment represents the average
number of nurse and allied healthcare
professionals on assignment during the
period presented.
(14) Days filled is calculated by dividing
the locum tenens hours filled during
the period by eight hours.
(15) Revenue per day filled represents
revenue of the Company's locum tenens
solutions segment divided by days
filled for the period presented.
(16) Leverage ratio represents the ratio of
the consolidated funded indebtedness
(as calculated per the Company's credit
agreement) at the end of the subject
period to the consolidated adjusted
EBITDA (as calculated per the Company's
credit agreement) for the twelve-month
period ended at the end of the subject
period.
(17) As a result of the adoption of ASU
2016-18, "Statement of Cash Flows
(Topic 230): Restricted Cash" on
January 1, 2018, we are required to
present in the statement of cash flows
the change during the period in the
total of cash, cash equivalents, and
amounts generally described as
restricted cash or restricted cash
equivalents. We adjusted certain
restricted cash amounts for the three
and twelve months ended December 31,
2018 in the cash flow table presented
above. These adjustments had no effect
on previously reported results of
operations or retained earnings.
(18) Guidance percentage metrics are
approximate.
View original content:http://www.prnewswire.com/news-releases/amn-healthcare-announces-fourth-quarter-and-full-year-2018-results-300796336.html
SOURCE AMN Healthcare Services, Inc.
