Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of AMN Healthcare Services (NYSE:AMN), a health care staffing solutions company, jumped as much as 11% after reporting its third-quarter earnings results.
So what: For the quarter, AMN Healthcare reported a 5% increase in revenue to $257 million led by an 11% increase in Locum Tenens staffing, which helped boost gross margin by 90 basis points to 29.4%. Profit for the quarter improved 50% on an adjusted basis to $0.18 per share from the year-ago period. By comparison, the Street had been forecasting just $0.16 in EPS on $255 million in revenue. Looking ahead, AMN Healthcare anticipates reporting $246 million to $250 million in revenue in the fourth quarter, which is typically a seasonally weak quarter to begin with. This compares unfavorably to the $254 million the Street was expecting.
Now what: AMN Healthcare's results are certainly a bit of a mixed bag with the disappointing revenue outlook for the fourth quarter, but the key point there is that gross margin should stay consistent from the third quarter (in the 29%-29.5% range), thus not affecting its bottom line much. Health staffing solution companies should be in high demand given the rollout of Obamacare and the potential preventative care surge it could cause within the health care industry. I wouldn't dive headfirst into AMN Healthcare at these levels, but it is a company I'd consider adding to my watchlist considering the need for trained health care professionals within the industry over the coming decade.