AMN Healthcare Services Inc. (NYSE: AHS) and Cross Country Healthcare Inc. (NASD: CCRN) reported stronger-than-expected earnings in 3Q15, reflecting high demand driven by continued tailwinds from the improving economy and broad-based talent shortages.
AMN’s third-quarter revenue rose 45% year-over-year to $383 million, a record high, driven by 29% organic growth. Its gross margin improved 250 basis points during the same period, which was attributed to “an increased mix of our higher margin workforce solutions businesses, along with a gross margin increase in the locum tenens staffing segment.” Revenue and gross margin grew in all three of its reportable segments – nurse and allied healthcare staffing, locum tenens, and physician permanent placement.
Cross Country’s revenue increased 5% year-over-year on a pro forma basis to $195.7 million, while its total gross margin improved by 130 basis points. On a year-over-year basis, Cross Country grew its nurse and allied healthcare division while both its physician staffing and other workforce solutions divisions declined. The company also hit its “goal” of exceeding a 5% adjusted EBITDA margin, due to an anticipated favorable pricing movement and cost-saving measures taking effect earlier than expected.
AMN and Cross Country’s third-quarter results demonstrate the demand environment for healthcare staff remains strong, and will likely continue to be healthy in the short-to-medium term. Commenting on 2016, Susan Salka of AMN noted that “None of [the] factors driving demand are expected to change significantly in the foreseeable future. In fact, some of them will only become more intense as we move forward. Considering these factors, AMN's leadership position, and the current strong demand environment, we have a very positive outlook for 2016.” Bill Grubbs of Cross Country, commenting on his company’s third quarter financial performance, intimated that, though there could be variation by quarter, he generally considered the quarter’s strong results a new baseline.
The third quarter results are the latest in a series of strong quarterly earnings for the two companies, and the results and commentary are generally consistent with our bullish US healthcare staffing industry revenue projections made in our recently released US Healthcare Staffing Growth Assessment. Corporate members interested in learning more about recent growth trends and projections as well as longer term changes in the US temporary healthcare staffing industry can access the full report here.
