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Buys boost On Assignment revenue, profit

November 02 2007

Net income and revenue rose at On Assignment Inc. The company posted a 20.6% increase in third-quarter profit to $3.3 million from $2.7 million in the third quarter of 2006. Revenue rose 96.4% to $148.7 million from $75.7 million a year ago.

The Calabasas CA-based staffing company said third-quarter revenue increased 8.4% on a pro-forma basis taking into account acquisitions earlier this year. The acquisitions included Vista Staffing Solutions in January, which provides physician staffing, and Oxford Global Resources Inc. in February, an information technology staffing firm.

Third-quarter gross margin rose to 32.0% compared with 27.5% in the same period last year.

On Assignment had third-quarter life science staffing revenue of $34.4 million, up 12.6% year-over-year.

The company reported $19.1 million in physician staffing revenue, which it gained with the purchase of Vista. The revenue is up 15.5% over Vista's 2006 third-quarter revenue.

On Assignment reported revenue of $50.6 million in IT staffing. The company gained an IT segment with its purchase of Oxford. And revenue is up 12.8% over Oxford's third-quarter 2006 revenue, the company said.

However, the company's third-quarter healthcare staffing revenue fell 1.3% to $44.5 million from $45.1 million.

"The slower growth rate is due to slower progress in replacing revenues from the loss of a previously disclosed major customer and less-than-acceptable internal execution in our allied healthcare group," said President and CEO Peter Dameris. "We believe we are and have taken the necessary steps to return this segment's revenue performance to industry growth rates in 2008."

Dameris said the company's focus for the rest of 2007 includes improving the performance of its healthcare segment, maintaining gross margins, and containing costs. "Although the nurse travel market continues to be challenging, we view the remainder of the markets we serve, which make up approximately 80% of our total consolidated revenues, as healthy and productive," he said

The company forecast revenue of $146.5 million to $148.0 million for the fourth quarter.

On Assignment Inc. (NASD: ASGN)

For the third quarter ended Sept. 30, 2007, compared with the same period in 2006.

Revenue: $148.7 million, +96.4%

Net income: $3.3 million, +20.6%

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