AMN Healthcare Earnings: Demand for Temporary Workforce Is Holding Up Better Than Expected

Narrow-moat AMN Healthcare reported mixed second-quarter results, with the top line on track to exceed our full-year expectations, but this was offset by lower-than-expected margins. As a result, we are leaving our fair value estimate unchanged. AMN's Nurse and Allied Solutions business fared better than our projections, even as market demand for the temporary workforce softened as the pandemic receded. Nurse and Allied Solutions' quarterly revenue dropped 37% year over year to $689 million amid clients' transition to more durable (and less costly) staffing plans. Even as hospitals take a holistic approach to reviewing total labor costs, we believe AMN will still benefit. We think it is unlikely that clients will be able to fully meet all their staffing needs through internal methods alone, and AMN still offers access to a deep network of healthcare professionals. Additionally, AMN's innovative solutions, such as vendor-neutral managed service provider contracts, should play a crucial role in filling clients' talent needs.