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On Assignment revenue surges, profit drops

February 22 2008

Fourth-quarter revenue surged at On Assignment Inc. (NASD: ASGN) with the help of two major acquisitions in the past year, and gross margins also improved. Fourth-quarter net income, however, fell at the Calabasas CA-based staffing firm.

Gross margin rose to 31.8% from 27.2% in the fourth quarter of 2006. Full-year 2007 gross margin rose to 31.7% from 27.1% in the previous year.

The company posted fourth-quarter revenue of $152.0 million, up 98.7% from $76.5 million in the same period in the previous year. That was above analysts' estimate of $146.63 million

On Assignment's revenue got a boost from two acquisitions in 2007; in January 2007 it bought Vista Staffing Solutions, which provides physician staffing, and in February 2007 it acquired Oxford Global Resources Inc., an information technology staffing firm. As a result, it had fourth-quarter 2007 physician staffing revenue of $19.4 million and IT and engineering staffing revenue of $53.3 million.

On Assignment's life sciences segment reported a 12.1% year-over-year increase in fourth-quarter revenue to $35.1 million. Its fourth-quarter healthcare revenue fell 2.1% to $44.3 million.

Fourth-quarter net income dropped 63.8% to $2.2 million from $6.1 million in the fourth quarter of 2006. On Assignment said profit was hit by a tax rate increase to 53.1% in the fourth quarter, a $722,000 non-cash expense involving an interest rate swap, $268,000 in software costs, and $531,000 in executive severance over the departure of the president of its healthcare staffing division.

The company reported full-year 2007 net income of $9.3 million, down 15.6% from $11.0 million in 2006. Revenue rose 97.2% to $567.2 million in 2007 from $287.6 million in the previous year.

On Assignment gave first-quarter revenue guidance of $146.5 million to $149.5 million, analysts estimated $140.0 million. The company forecast first-quarter net income of $2 million to $3.4 million.

On Assignment Inc. (NASD: ASGN)
For the fourth quarter ended Dec. 31, 2007, compared with the same period in 2006.
Revenue: $152.0 million, +98.7%
Net income: $2.2 million, -63.8%

For full-year 2007 ended Dec. 31, 2007, compared with the previous year.
Revenue: $567.2 million, +97.2%
Net income: $9.3 million, -15.6%

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