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On Assignment Q4 revenue up, completes sale of physician staffing business

February 19, 2015

On Assignment Inc. (NYSE: ASGN) reported revenue rose 12.5% in the fourth quarter, above the top end of guidance. The increase was 8.3% on a pro forma basis, which assumes its acquisitions of Whitaker Medical LLC and CyberCoders Holdings Inc. in December 2013 had taken place at the start of that year.

The Calabasas, Calif.-based professional staffing provider also reported it completed the sale of its physician staffing segment on Feb. 1 for $123.0 million. In addition the company reported it closed its European retained search unit in December; revenue from the unit of $2.0 million in 2014 and $1.3 million in 2013 are now reported in discontinued operations.

Gross margin improved in the fourth quarter, but net income slipped.

(US$ thousands) Q4 2014 Q4 2013 % growth pro forma % growth*
Revenue $475,808 $422,906 12.5% 8.3%
Gross profit   $153,534 $129,094 18.9% 9.7%
Gross margin   32.3% 30.5%    
Net income $20,473 $32,410 -36.8%  
         
*Assumes acquisitions of Whitaker Medical LLC and CyberCoders Holdings Inc. in December 2013 occurred at the beginning of 2013

Quote

“Operating performance of our operating units was in line with or above expectations,” said President and CEO Peter Dameris. “Furthermore, we believe the actions that we took in 2014 of divesting our remaining healthcare assets, the repurchase of $100 million of our common stock, completing the realignment of our operating unit and our accelerated hiring of additional sales consultants and recruiters have positioned us to perform well, both operationally and financially, in 2015 and beyond.”

Revenue by segment

(US$ thousands) Q4 2014 Q4 2013 % growth
Apex $307,724 $281,032 9.5%
Oxford $123,872 $104,416 18.6%
Physician $34,785 $26,836 29.6%
Life Sciences Europe $9,427 $10,622 -11.3%

Direct hire and conversion revenue

(US$ thousands) Q4 2014 Q4 2013 % growth
Apex $4,146 $3,221 28.7%
Oxford $15,782 $3,892 305.5%
Physician $959 $746 28.6%
Life Sciences Europe $226 $193 17.1%
Consolidated $21,113 $8,052 162.2%

Gross margin by segment

  Q4 2014 Q4 2013
Apex 28.5% 28.1%
Oxford 41.7% 37.0%
Physician 31.6% 30.2%
Life Sciences Europe 32.0% 33.3%

Average bill rates

  Q4 2014 Q4 2013
Apex $54.59 $53.41
Oxford $114.35 $113.75
Physician $176.75 $186.44
Life Sciences Europe $51.01 $51.91
Consolidated $65.67 $64.11

Full-year results

(US$ thousands) Q4 2014 Q4 2013 % growth
Revenue $1,859,922 $1,628,927 14.2%
Gross profit   $597,912 $485,489 23.2%
Gross margin   32.1% 29.8%  
Net income $77,184 $84,512 -8.7%

Guidance

On Assignment forecast first-quarter revenue of between $431.0 million to $439.0 million.

Share price and market cap

Shares in On Assignment rose 0.55% in early afternoon trading today to $38.10. The company had a market cap of $1.99 billion, according to Yahoo!