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3 Reasons to Add AMN Healthcare (AMN) Stock to Your Portfolio
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AMN Healthcare Services, Inc. (AMN - Free Report) has been gaining on the back of its broad array of services. A solid performance in the second quarter of 2022 and its key buyouts also raise optimism regarding the stock. However, healthcare industry regulations and the consolidation of healthcare delivery units are major downsides.
Over the past year, this Zacks Rank #1 (Strong Buy) stock has lost 5.2% compared with a 31.8% fall of the industry and an 8.6% decline of the S&P 500.
The renowned player in the healthcare total talent services space has a market capitalization of $4.43 billion. The company projects 3.2% growth for the next five years and expects to witness continued improvements in its business. AMN Healthcare surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 15.7%, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Acquisitions: AMN Healthcare has lately been strengthening its inorganic portfolio through a string of acquisitions, raising our optimism. In May, the company acquired Connetics USA, which expanded its international nurse business beyond contract staffing.
The buyouts of Synzi, Stratus Video (now known as AMN Language Services) and b4health are other notable acquisitions of AMN Healthcare.
Broad Array of Services: We are upbeat about its business’ gradual evolution beyond traditional healthcare staffing. The company has become a strategic total talent solutions partner for its clients. The company’s suite of healthcare workforce solutions includes Managed Services Programs, vendor management systems (VMS) and medical language interpretation services.
AMN Healthcare has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. The company has expanded its scalable VMS solution, enabling a wide array of healthcare facilities to quickly staff and manage their entire range of contingent talent.
Strong Q2 Results: AMN Healthcare’s better-than-expected results in second-quarter 2022 buoy our optimism. The company recorded robust performance across each of its core segments, along with a surge in its top and bottom lines in the quarter. Per management, the company witnessed robust demand for staffing and other services, significantly higher than the pre-pandemic levels, raising our optimism. Expansion of adjusted operating margin also bodes well for the stock.
Downsides
Healthcare Industry Regulations: The healthcare industry is subject to extensive and complex federal and state laws and regulations. AMN Healthcare provides talent solutions and technologies on a contractual basis to its clients, who pay the company directly. Accordingly, Medicare, Medicaid and insurance reimbursement policy changes generally do not directly impact the company. Nevertheless, reimbursement changes in government programs, particularly Medicare and Medicaid, can and do indirectly affect the demand and the prices paid for the company’s services.
Consolidation of Healthcare Delivery Units: Healthcare delivery organizations are consolidating, providing them with greater leverage in negotiating pricing for services. Consolidations may also result in AMN Healthcare losing its ability to work with certain clients because the party acquiring or consolidating with its client may have a previously established service provider they opt to maintain.
Estimate Trend
AMN Healthcare has been witnessing an upward estimate revision trend for 2022. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 7.2% north to $11.16.
The Zacks Consensus Estimate for third-quarter 2022 revenues is pegged at $1.10 billion, suggesting a 25.1% rise from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are Patterson Companies, Inc. (PDCO - Free Report) , McKesson Corporation (MCK - Free Report) and ShockWave Medical, Inc. .
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.9%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has lost 3% compared with the industry’s 9.3% fall over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 83.8% against the industry’s 9.3% fall over the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average being 180.1%.
ShockWave Medical has gained 45.4% against the industry’s 27.3% fall over the past year.
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3 Reasons to Add AMN Healthcare (AMN) Stock to Your Portfolio
AMN Healthcare Services, Inc. (AMN - Free Report) has been gaining on the back of its broad array of services. A solid performance in the second quarter of 2022 and its key buyouts also raise optimism regarding the stock. However, healthcare industry regulations and the consolidation of healthcare delivery units are major downsides.
Over the past year, this Zacks Rank #1 (Strong Buy) stock has lost 5.2% compared with a 31.8% fall of the industry and an 8.6% decline of the S&P 500.
The renowned player in the healthcare total talent services space has a market capitalization of $4.43 billion. The company projects 3.2% growth for the next five years and expects to witness continued improvements in its business. AMN Healthcare surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 15.7%, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Acquisitions: AMN Healthcare has lately been strengthening its inorganic portfolio through a string of acquisitions, raising our optimism. In May, the company acquired Connetics USA, which expanded its international nurse business beyond contract staffing.
The buyouts of Synzi, Stratus Video (now known as AMN Language Services) and b4health are other notable acquisitions of AMN Healthcare.
Broad Array of Services: We are upbeat about its business’ gradual evolution beyond traditional healthcare staffing. The company has become a strategic total talent solutions partner for its clients. The company’s suite of healthcare workforce solutions includes Managed Services Programs, vendor management systems (VMS) and medical language interpretation services.
AMN Healthcare has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. The company has expanded its scalable VMS solution, enabling a wide array of healthcare facilities to quickly staff and manage their entire range of contingent talent.
Strong Q2 Results: AMN Healthcare’s better-than-expected results in second-quarter 2022 buoy our optimism. The company recorded robust performance across each of its core segments, along with a surge in its top and bottom lines in the quarter. Per management, the company witnessed robust demand for staffing and other services, significantly higher than the pre-pandemic levels, raising our optimism. Expansion of adjusted operating margin also bodes well for the stock.
Downsides
Healthcare Industry Regulations: The healthcare industry is subject to extensive and complex federal and state laws and regulations. AMN Healthcare provides talent solutions and technologies on a contractual basis to its clients, who pay the company directly. Accordingly, Medicare, Medicaid and insurance reimbursement policy changes generally do not directly impact the company. Nevertheless, reimbursement changes in government programs, particularly Medicare and Medicaid, can and do indirectly affect the demand and the prices paid for the company’s services.
Consolidation of Healthcare Delivery Units: Healthcare delivery organizations are consolidating, providing them with greater leverage in negotiating pricing for services. Consolidations may also result in AMN Healthcare losing its ability to work with certain clients because the party acquiring or consolidating with its client may have a previously established service provider they opt to maintain.
Estimate Trend
AMN Healthcare has been witnessing an upward estimate revision trend for 2022. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 7.2% north to $11.16.
The Zacks Consensus Estimate for third-quarter 2022 revenues is pegged at $1.10 billion, suggesting a 25.1% rise from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are Patterson Companies, Inc. (PDCO - Free Report) , McKesson Corporation (MCK - Free Report) and ShockWave Medical, Inc. .
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.9%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Patterson Companies has lost 3% compared with the industry’s 9.3% fall over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 83.8% against the industry’s 9.3% fall over the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average being 180.1%.
ShockWave Medical has gained 45.4% against the industry’s 27.3% fall over the past year.