AMN Healthcare Services (NYSE: AMN) reported revenue rose 1.9% in the first quarter, with growth coming from its “other workforce solutions” business.

Gross margin improved, driven by higher-than-average gross margins from three firms acquired in April 2018 and a change in classification of certain recruiter expenses in AMN’s physician permanent placement business.

Revenue edged down 0.3% year over year in AMN’s nurse and allied solutions segment, with allied growth of 10% offset by lower revenue from one client and a lighter flu season headwind in nursing. Excluding the one client, travel nurse staffing revenue rose about 5% year over year in the first quarter, CEO Susan Salka said in a conference call with investors.

“Other workforce solutions” revenue — which includes VMS, RPO and physician permanent placement — rose 41.5%, driven by the April 2018 acquisitions. Organic growth was flat.

Revenue by segment

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“Despite a tough year-over-year comparison in travel nursing, our team persevered and every segment met or beat our expectations in the quarter,” said CEO Susan Salka. “Demand has strengthened across most service lines, with the most significant increases in travel nursing, allied and interim leadership. We also continue to make progress in our Locum Tenens segment.”

The San Diego-based company, which Staffing Industry Analysts ranks as the largest US healthcare staffing firm, this week announced the $200 million acquisition of Advanced Medical Personnel Services Inc.

“Advanced Medical will expand the AMN portfolio of services and enhance our offerings in some of the faster growing care settings,” said Salka. “In addition to the attractive nature of their growing footprint in schools, we are excited about the potential of the recently launched telehealth platform for delivery of therapeutic services to children across the country.”

Combining Advanced into AMN is expected to reduce AMN’s consolidated gross margin by about 30 basis points but should be slightly accretive to its adjusted EBITDA margin, CFO Brian Scott noted in the conference call.

Guidance

AMN expects second-quarter consolidated revenue to be down 6% to 7% year over year, due primarily to a prior-year $25 million labor disruption event in the nurse and allied segment and a decline in the locum tenens segment; excluding the impact of the prior-year labor disruption event, consolidated revenue would be down about 2% due to the lower locums revenue. The company stated the second-quarter guidance reflects the normal seasonal sequential decline in its nursing business, and no significant labor disruption revenue is included.

Share price and market cap

AMN shares were up 3.23% to $53.11 at 11:19 a.m. Eastern time; the company had a market cap of $2.41 billion, according to FT.com.