Company Reports

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the coronavirus pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare through our explicit forecast period. While the firm continues to navigate near-term demand declines as providers return to normalized non-pandemic utilization, we believe long-term demand will remain robust for the firm's core service—providing temporary and permanent labor for healthcare providers—as projected utilization continues to outpace the net number of nurses the US produces.

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the coronavirus pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare through our explicit forecast period. While the firm continues to navigate near-term demand declines as providers return to normalized non-pandemic utilization, we believe long-term demand will remain robust for the firm's core service—providing temporary and permanent labor for healthcare providers—as projected utilization continues to outpace the net number of nurses the U.S. produces.

Narrow-moat AMN Healthcare's fourth-quarter results came in line with our expectations. However, we are lowering our fair value estimate to $95 per share from $115 mainly due to the firm's lower margin outlook. We think AMN's performance is under substantial pressure as healthcare organizations make efforts to reduce contract labor costs and cater to normalized medical utilization trends with permanent hires. However, AMN still benefits from its network effect with the company continuing to enhance its locum tenens and technology offerings.

Narrow-moat AMN Healthcare’s third-quarter results showed continuous pressure on its profitability as clients continue to adjust their postpandemic labor needs. Despite revenue close to the higher end of previous guidance, we are maintaining our $115 fair value estimate.

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.

We are raising our fair value estimate on narrow-moat AMN to $115 per share, up from its previous $102. This comes as we roll our model and incorporate slightly higher travelers on assignment, revenue per day, and non-staffing revenue than forecasted previously.

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the coronavirus pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare over the next several years. We believe baseline demand will remain elevated over prepandemic levels for the firm's core service —providing temporary and permanent labor for healthcare providers—over an extended period following the near-term decline in demand as the urgent need for staff eases.

Narrow-moat AMN Healthcare posted solid first-quarter results, as the healthcare staffing shortage continues. Temporary staffing demand continues to decline from its pandemic peak in the first quarter of 2022, so this quarter’s flat sequential top line performance was a positive result, though we think demand has yet to bottom out. We are maintaining our fair value estimate of $102 per share.

Narrow-moat AMN Healthcare posted relatively mild fourth-quarter results as temporary staffing volume begins to decline behind the scenes. In 2022, the healthcare staffing industry saw bill rates fall from a pandemic peak that was unmaintainable for healthcare facilities. In 2023, we expect a decline in volume to catch up with the drop in bill rate as hospitals streamline costs. Though the quarter was slightly less negative than we expected, management expects headwinds that are consistent with what we’ve modeled, so we maintain our fair value estimate of $102 per share.

We have revamped our model to better incorporate AMN’s elasticity of labor supply, whose importance has been revealed over the pandemic. In addition, we have changed the timing and magnitude of our simulated economic slowdown period to reflect Morningstar's current macro forecasts and our own insights on past recessions. We are increasing our fair value estimate to $102 per share, up from $97.

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the coronavirus pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare over the next several years. We believe baseline demand will remain elevated over prepandemic levels for the firm's core service —providing temporary and permanent labor for healthcare providers—over an extended period following the near-term decline in demand as the urgent need for staff eases.

AMN posted solid third-quarter results with operating income roughly in line with our estimates. Total revenue fell by 20% sequentially, though it is still 30% higher year over year as the healthcare labor shortage has deepened. We are planning to moderately raise our fair value estimate as we adjust our model to reflect the importance of healthcare labor dynamics over the coming decade.

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the coronavirus pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare over the next several years. We believe baseline demand will steadily rise for the firm's core service—providing temporary and permanent labor for healthcare providers—over an extended period following the near-term decline in demand as the urgent need for staff eases. Growth in healthcare services has historically remained relatively strong, even during economic downturns, and we expect this dynamic to continue over the foreseeable future. Given AMN Healthcare's major presence in this industry, its opportunity to leverage this dynamic is robust.

AMN Healthcare Services posted solid second-quarter results driven by the deepening shortage of healthcare workers and offset by employer budget limitations. Though revenue rose by 66% year over year, we’re more focused on the sequential 8% decline as staffing revenue begins to descend from its peak in the first quarter. Over the second half of this year, we expect that staffing demand will fall sharply, then decelerate over 2023 toward a new baseline. Despite the significant downturn ahead, we are maintaining our fair value estimate of $85 per share as the firm is tracking along with our full-year projections. Due to the widening nurse shortage and national bottlenecks in nurse training capacity, we expect AMN’s new baseline staffing demand should persist above its prepandemic level well into the decade.

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the coronavirus pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare over the next several years. We believe baseline demand will steadily rise for the firm's core service—providing temporary and permanent labor for healthcare providers—over an extended period. Growth in healthcare services has historically remained relatively strong, even during economic downturns, and we expect this dynamic to continue over the foreseeable future. Given AMN Healthcare's major presence in this industry, its opportunity to leverage this dynamic is robust.

Narrow-moat AMN posted strong first-quarter revenue growth of 75% year over year, which topped the high end of previously provided guidance, but we anticipate demand and billing rates to decline through the year and are leaving our fair value estimate at $85 per share. We think the omicron surge drove growth in all three business segments and believe acute demand for temporary staffing may have peaked in the quarter. We expect demand to decrease over the coming quarters, provided there is not another major COVID-19 wave. However, considering the pace of healthcare workers leaving their jobs and the tight labor market, which makes it challenging to secure new staff, we anticipate demand through the midterm will settle in at a higher level than we’ve seen historically.

AMN posted extremely strong fourth-quarter results, finishing the year at roughly $4 billion annual revenue, which is 66% higher than 2020 revenue. However, healthcare staffing hit its peak between fourth-quarter 2021 and first-quarter 2022, and we expect bill rates will fall slowly to a more efficient level, barring any future COVID-19 variant outbreaks. We’re holding steady on our fair value estimate of $85 per share, which reflects the firm’s recent performance as well as our revised U.S. corporate tax rate outlook.

Healthcare utilization is expected to increase at a solid clip over the coming decades, and the pipeline of healthcare professionals is not expected to keep pace, especially in light of the COVID-19 pandemic. This combination of factors should serve as a strong foundation for AMN Healthcare over the next several years. We believe baseline demand will steadily rise for the firm's core service--providing temporary and permanent labor for healthcare providers--over an extended period. Growth in healthcare services has historically remained relatively strong, even during economic downturns, and we expect this dynamic to continue over the foreseeable future. Given AMN Healthcare's major presence in this industry, its opportunity to leverage this dynamic is robust.

As seen recently, narrow-moat AMN Healthcare posted strong third-quarter results driven by the growing labor shortage, and we're maintaining our fair value estimate of $71 per share. The surge in labor activism across the nation was pronounced in healthcare, where burnout has been developing over the pandemic. We anticipate strong performance through 2022, but we are less optimistic about proposed long-term structural changes in temporary staffing demand.

AMN reported strong second-quarter performance that echoed its record-breaking first quarter, though we do not believe recent performance represents a new normal. We are raising our fair value estimate on narrow-moat AMN to $71 per share, up from $55 previously. Labor shortages and resumed healthcare utilization kept revenue up this quarter. Management’s third-quarter guidance provides some clarity for 2021 results, suggesting a sharper decline in the third quarter, which we expect to stabilize in the fourth quarter.