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AMN Healthcare (AMN) to Post Q1 Earnings: What's in the Cards?

AMN Healthcare Services, Inc. AMN is scheduled to release first-quarter 2023 results on May 4, after market close.

In the last reported quarter, AMN’s earnings of $2.48 per share surpassed the Zacks Consensus Estimate by 14.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average being 10.9%.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Over the past few months, AMN Healthcare has been registering solid demand for healthcare staffing on the back of continued labor shortages. Although the demand continued to remain well above pre-pandemic levels, as confirmed by management on the fourth-quarter 2022 earnings call in February, the demand for healthcare staffing has been gradually declining.

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Per management, it has been observed that while demand was still above pre-pandemic levels, some clients have pursued near-term cost savings and reduced utilization of contingent staff. The labor market conditions also remain very tight, with high vacancies and attrition. This is likely to have weighed on the company’s performance, thereby lowering the Nurse and Allied Solutions segment’s revenues in the first quarter of 2023.

However, the continued demand for AMN Healthcare’s comprehensive solutions to address the recruitment and staffing challenges raises our optimism about its performance in the first quarter.

On the fourth-quarter 2022 earnings call, AMN Healthcare’s management confirmed that its Nurse and Allied Solutions segment had registered a year-over-year revenue decline and remained flat on a sequential basis. The year-over-year fall was due to the lesser availability of nurses.

AMN Healthcare Services, Inc. Price and EPS Surprise

AMN Healthcare Services, Inc. Price and EPS Surprise
AMN Healthcare Services, Inc. Price and EPS Surprise

AMN Healthcare Services, Inc. price-eps-surprise | AMN Healthcare Services, Inc. Quote

However, the Allied business registered revenue growth both year over year and on a sequential basis. The mismatch in demand and supply of nurses is likely to have continued in the first quarter of 2023 on the back of the accelerated retirement of some healthcare professionals and clinicians leaving and taking less stressful jobs in health care and elsewhere. Although the demand for travel nursing remains well above pre-pandemic levels with strength across all specialties, the segmental revenues are expected to decline in the to-be-reported quarter.

Management expects Nurse and Allied Solutions segment revenues to be down approximately 32-34% year over year and flat sequentially, primarily due to continued labor disruptions and a difficult comparable prior-year period. This compares to our estimate of a 33.5% year-over-year decline for the segment.

Management’s confirmation of its continued investment in Digital First initiatives, such as AMN Passport, looks promising for the company.

In the fourth quarter of 2022, AMN Healthcare witnessed a solid year-over-year uptick in its Physician and Leadership Solutions segment. However, revenues declined on a sequential basis. Management confirmed on the last earnings call that the demand for locum tenens continues to remain strong, whereas Interim Leadership and Search revenues were robust. However, some clients have been focusing on short-term cost savings, which has affected the demand for Interim Leadership and Search. This is likely to have continued in the first quarter, thereby impeding segmental growth.

AMN Healthcare projects its segment’s revenues to fall 10-12% year over year in the to-be-reported quarter. We also expect this segment’s revenues to decline by 11.9% in the first quarter.

In the fourth quarter of 2022, AMN Healthcare recorded a solid improvement in its Technology and Workforce Solutions segment from strong Language Services and vendor management systems (VMS) revenues. However, sequentially, the segment’s revenues and VMS revenues were both down. The sequential decline in VMS revenues reflected the normalizing trend in staffing demand and bill rates, which the company expects to have continued to witness in the first quarter of 2023.

AMN Healthcare expects revenues in the Technology and Workforce Solutions to decline approximately 10-12% year over year due to lower VMS revenues. This compares to our projection of a year-over-year improvement of 12%.

Management’s expectations of a year-over-year fall in overall revenues in the first quarter due to record-high revenues of the year-ago period do not look encouraging. This raises our apprehension about the stock. However, the continued strong demand for healthcare staffing, although moderated down from the emergency demand levels, looks promising for the stock. AMN Healthcare expects first-quarter revenues to be down 27-29% year over year.

The Estimate Picture

For first-quarter 2023, the Zacks Consensus Estimate of $1.11 billion for total revenues calls for a decline of 28.6% from the prior-year reported figure.

This compares to our revenue estimate of $1.10 billion for the quarter, indicating a decline of 29% from the prior-year reported number.

The consensus estimate for adjusted earnings per share (EPS) is pegged at $2.36, reflecting a fall of 32.4% from the prior-year reported number.

We estimate the first-quarter adjusted EPS to be $2.35, reflecting a fall of 32.7% from the prior-year reported number.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has higher chances of beating estimates. This is not the case here.

Earnings ESP: AMN Healthcare has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Cardinal Health, Inc. CAH has an Earnings ESP of +5.17% and a Zacks Rank of 2. CAH has an estimated long-term growth rate of 11.6%.

Cardinal Health’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 6.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Elevance Health, Inc. ELV has an Earnings ESP of +0.33% and is a Zacks #2 Rank stock. ELV has an estimated long-term growth rate of 12.1%.

Elevance Health’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.2%.

Henry Schein, Inc. HSIC has an Earnings ESP of +0.99% and carries a Zacks Rank of 2 at present. HSIC has an estimated long-term growth rate of 8.1%.

Henry Schein’s earnings surpassed estimates in three of the trailing four quarters and broke even in the other, with the average surprise being 2.9%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Henry Schein, Inc. (HSIC) : Free Stock Analysis Report

AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report

Elevance Health, Inc. (ELV) : Free Stock Analysis Report

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