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US - On Assignment revenue rises 15%

October 24 2013

On Assignment Inc. (NYSE: ASGN) reported revenue rose 15.4 percent to $432.2 million in the third quarter ended Sept. 30.

The company’s IT businesses, Apex Systems and Oxford, drove the revenue growth. The divisions, which account for 80 percent of On Assignment’s operations, grew 19.1 percent year over year and 3.4 percent sequentially.

“In that sector of the market, we are the second largest provider of staffing services and we continue to grow faster than the overall market reflecting the benefit of our scale and operating models,” said President and CEO Peter Dameris. “We also continue to believe we are benefiting from a shift in spending toward IT staffing and away from other IT services delivery models, such as consulting and offshoring, as CIOs continue to focus sharply on project flexibility and accountability and cost control.”

Non-IT businesses — life sciences, physician and healthcare — comprise the remainder of the company’s operations and increased 2.5 percent year over year and 3.4 percent sequentially.

Third-quarter revenue for specific divisions, compared with the third quarter of 2012, include:

  • Apex: $246.4 million, +21.6 percent
  • Oxford: $100.0 million, +13.5 percent. Oxford provides IT and engineering staffing.
  • Life sciences: $44.1 million, +8.6 percent
  • Healthcare staffing: $15.4 million, -1.1 percent. The healthcare segment includes allied healthcare staffing.
  • Physician staffing: $26.2 million, -4.6 percent

On Assignment’s third-quarter gross margin fell to 30.2 percent from 30.9 percent in third quarter of 2012. The company attributed the year-over-year compression in gross margin to a lower mix of permanent placement revenue (1.7 percent of revenues for the quarter compared with 2.0 percent in the third quarter of 2012), a higher mix for revenue from Apex Systems, which has a lower gross margin than the other operating segments, and higher growth of lower-margin services.

Net income rose 30.0 percent to $20.2 million in the third quarter from $15.5 million in the year-ago quarter. Net income for the quarter included $500,000 in acquisition-related costs and strategic planning expenses and a $100,000 loss from discontinued operations. 

On Assignment estimates fourth-quarter revenue of $429 million to $433 million and gross margin of 29.8 percent to 30.1 percent.

On Assignment Inc. (NYSE: ASGN)
 For the quarter ended Sept. 30, 2013, compared with the year-ago quarter.
 Revenue: $432.2 million, +15.4 percent
 Net income: $20.2 million, +30.0 percent

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