Kforce Inc. (NASD: KFRC) reported second-quarter revenue rose 15.4 percent to $327.4 million. Net income at the Tampa, Fla.-based professional staffing firm rose 54.0 percent to $10.7 million.

However, Kforce’s gross margin narrowed to 31.5 percent in the second quarter from 32.7 percent in the same quarter last year.

Demand for Kforce’s flexible-staffing services continues to be strong, Chairman and CEO David Dunkel told investors in a conference call.

“A perfect storm has developed wherein technology has become increasingly embedded across our clients' business platforms, while development cycles are shorter, skill obsolescence has accelerated and lack of immigration reform are contributing to further resource scarcity,” Dunkel said.

Revenue in Kforce’s largest division, technology staffing, rose 17.0 percent year over year in the second quarter to $211.2 million. Technology flexible staffing revenue rose 17.7 percent to $206.2 million, while technology search revenue fell 6.0 percent year over year to $5.0 million.

Finance and accounting revenue rose 11.1 percent in the second quarter to $67.6 million, and second-quarter government solutions revenue rose 2.8 percent to $23.9 million

Revenue in the firm’s just-divested health information management segment rose 30.0 percent to $24.7 million.

Quote
“I am very pleased to see another strong quarter from our team; particularly one with success as broad-based as this one, with double digit year-over-year revenue growth rates in our focus segments, Tech Flex and FA Flex,” said President Joseph Liberatore. “Our actions in this new era of Kforce are continuing to drive results and I am proud of the team's execution in meeting the needs of our clients, consultants and employees in our newly aligned and agile infrastructure.”

Share price and market cap
Shares in Kforce fell 10.04 percent to $18.00 in early afternoon trading today and Kforce has a market cap of approximately $593.91 million, according to Yahoo!

Guidance
Kforce expects third-quarter revenue from continuing operations in the $308 million to $314 million range and gross margin of approximately 31.1 percent to 31.4 percent. For comparative purposes, second-quarter revenue exclusive of HIM contribution would have been $302.8 million.

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Revenue by function and segment

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Gross margin by segment

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HIM business sold for $119 million

Kforce yesterday completed the sale of Kforce Healthcare Inc. to RCM Acquisition Inc., an affiliate of Beecken Petty O'Keefe & Company, a Chicago-based private equity management firm focused on the healthcare industry, for an aggregate purchase price of $119.0 million in cash. Kforce Healthcare Inc. is the operating subsidiary for Kforce’s health information management segment.

Kforce sold only the coding part of the business and retains any healthcare-technology work and finance-and-accounting work it is doing with the clients.

It expects to use the proceeds from the transaction to enhance shareholder value, which could include significant share repurchases and potential acquisitions aligned with its core business lines.

“As we look to simplify our business model and intensify the focus on our core businesses, it became clear to us that we could not sustain the level of investment needed to deliver exceptional service to our clients and equip our team with the tools they needed,” said Kforce Chairman and CEO David Dunkel in a conference call with investors. “In the new era, we are narrowing our focus, simplifying our business model and raising accountability. We believe that our Kforce stakeholders are better served by focusing on technology and finance and accounting to our commercial and government services.”

Kforce ranks No. 15 on Staffing Industry Analysts’ 2014 list of largest U.S. staffing firms.