The inventory value of AMN Healthcare (NYSE:AMN), a healthcare workforce options and staffing companies supplier, plunged round 30% on Friday, November 8. Though the corporate reported an upbeat Q3, its margins contracted, which didn’t sit nicely with the traders. The corporate reported gross sales of $687.5 million and earnings of $0.61 per share in Q3, in comparison with the consensus estimates of $670 million and $0.57, respectively. AMN Healthcare goes by powerful instances, given the general hospital staffing business is experiencing a big fall in demand after the Covid-19 pandemic.
AMN Healthcare revenue surged over 2x from $2.2 billion in 2019 to $5.2 billion in 2022, as a consequence of labor scarcity and an elevated demand for nurses and healthcare professionals throughout the pandemic. Nonetheless, the hospital staffing has seen a cyclical decline since then and the corporate’s gross sales plunged to $3.8 billion in 2023, and additional to $3.1 billion for the final twelve months. Taking a look at Q3, gross sales of $687.5 million mirrored a 19% y-o-y decline. The corporate studies its gross sales underneath three segments – nurse and allied options, doctor and management options, and know-how and workforce options. The doctor & management options gross sales have been up 13% y-o-y, led by increased locum tenens (non permanent place) and contribution from the MSDR acquisition. The know-how and workflow options enterprise noticed an 11% fall in gross sales, whereas the nurse and allied options gross sales have been down 30% y-o-y, as a consequence of decrease demand.
Not solely did the corporate see a big decline in gross sales, its adjusted EBITDA margin plunged 500 bps y-o-y to 10.7% in Q3. Decrease revenues and a margin contraction resulted within the backside line of $0.61 on an adjusted foundation, in comparison with $1.97 within the prior-year quarter. Trying ahead, the corporate expects round a 15% y-o-y decline in This fall revenues and its EBITDA margin of round 9.5%, reflecting round 300 bps y-o-y decline.
AMN inventory has had a tough 12 months up to now. It’s now down over 60% year-to-date, versus 25% positive aspects for the broader S&P 500 index. The modifications in AMN inventory over the current years have been removed from constant, with annual returns being significantly extra unstable than the S&P 500. Returns for the inventory have been 79% in 2021, -16% in 2022, and -27% in 2023. In distinction, the Trefis High Quality (HQ) Portfolio, with a group of 30 shares, is significantly much less unstable. And it has outperformed the S&P 500 every year over the identical interval. Why is that? As a gaggle, HQ Portfolio shares offered higher returns with much less threat versus the benchmark index; much less of a roller-coaster experience, as evident in HQ Portfolio efficiency metrics.
Given the present unsure macroeconomic atmosphere and the cyclical decline in hospital staffing, may AMN face the same state of affairs because it did in 2023 and underperform the S&P over the subsequent 12 months — or will it see a restoration? At ranges of underneath $30, AMN inventory does look low-cost from a valuation perspective. It’s now buying and selling at 0.3x trailing revenues, versus the inventory’s common P/S ratio of 1.0x during the last 5 years. Nonetheless, a decline in valuation a number of appears justified given the numerous fall in gross sales. Moreover, it seems to be just like the hospital staffing demand goes to stay weak within the close to time period, and it might proceed to strain margins. We expect traders keen to select AMN inventory will possible be higher off ready for the revenues to stabilize.
| Returns | Nov 2024 MTD [1] |
2024 YTD [1] |
2017-24 Whole [2] |
| AMN Return | -24% | -61% | -25% |
| S&P 500 Return | 5% | 25% | 167% |
| Trefis Strengthened Worth Portfolio | 9% | 25% | 832% |
[1] Returns as of 11/11/2024
[2] Cumulative complete returns for the reason that finish of 2016
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
