Shares of the healthcare staffing and workforce solutions company AMN Healthcare Services (NYSE:AMN) fell by as much as 26.7% on sky-high volume today. What's driving this move lower?
AMN appears to be a victim of its own success. After continually posting outstanding top-line growth in years past, the company's revenue growth fell to just 6% year over year in the first quarter of 2018. Worse still, AMN is forecasting top-line growth to continue on this trajectory for at least another quarter. The company released its first-quarter results, along with a second-quarter forecast, after the closing bell yesterday.
AMN's shares have rebounded to some degree since plunging right out of the gate, but the company's stock is still down by 18.6% as of 11:47 a.m. EDT Friday.
Prior to this quarter, AMN's top line had been rising at a compound annual growth rate of 18% for the past five years in a row. As things stand now, the company's revenue growth is tracking to grow at more like 10% year over year. So, investors are clearly worried that AMN's period of hyper-growth is starting to fade.
The good news is that AMN has taken steps toward reinvigorating its growth engine. Last month, the company acquired the leading mid-revenue cycle firm MedPartners, as well as two related providers of healthcare leadership solutions, Phillips DiPisa and Leaders For Today. Even so, AMN still expects its top line to miss analysts' estimates in the second quarter of the year by between 1.8% to 3.1%.
Is this double-digit drop warranted? As AMN wasn't trading at much of a premium before this move lower, this drop comes across as a gift to investors willing to take long-term outlook. Decelerating growth isn't the end of the world, and AMN has solid underlying fundamentals. Therefore, bargain hunters may want to take advantage of this sell-off.