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On Assignment revenue slips, low point seen

May 01 2009

First-quarter revenue at On Assignment Inc. (NASD: ASGN) fell 23.4% year-over-year to $116.8 million. The company reported a drop in demand for staffing services during the quarter, but said the situation could be turning around.

"Although we anticipate demand to be weak in the near term, we are beginning to see signs that demand may be improving and that revenues for the second quarter could be the low water mark for the year," said President and CEO Peter Dameris.

On Assignment's physician staffing revenue rose 5.7% year-over-year to $21.7 million in the first quarter. However revenue fell in other segments on a year-over-year basis:
'Life sciences revenue, down 22.1% to $25.4 million
'Allied healthcare revenue, down 23.2% to $10.2 million
'Nurse travel revenue, down 31.8% to $21.3 million
'Information technology and engineering revenue, down 30.3% to $38.2 million

In a conference call with analysts, Dameris said revenues are starting to stabilize in all divisions, except nursing.

"The nursing division is currently seeing a severe constraint in purchasing from hospitals," Dameris said. "The reduction in demand is not so much due to lower needs, although patient censuses are down, but rather hospitals' current mindset to conserve cash until the credit crisis eases. Hospitals have been severely impacted by the shutdown of the bond markets, and their endowment income has been reduced by the losses in the debt and equity markets."

The Calabasas CA-based company's first-quarter gross margin improved to 31.7% from 31.1% in the year-ago quarter.

First-quarter net income fell 31.4% to $1.6 million.

On Assignment estimated second-quarter revenue of between $105.0 million to $108.0 million, a decrease of 30.8% to 32.7%, according to the conference call.

On Assignment Inc. (NASD: ASGN)
For the first quarter ended March 31, 2009, compared with the same period in 2008.
Revenue: $116.8 million, -23.4%
Net income: $1.6 million, -31.4%

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