AMN Healthcare Investor Presentation May 2018 The Innovator in Healthcare Workforce Solutions and Staffing Services
Forward-Looking Statements This investor presentation contains forwardlooking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company bases these forward-looking statements on its current beliefs, expectations, estimates, forecasts and projections about future events and the industry in which it operates. Forward-looking statements are identified by words such as believe, anticipate, expect, intend, plan, will, should, would, project, may, variations of such words and other similar expressions. In addition, statements that refer to performance; plans, objectives and strategies for future operations; and other characterizations of future events or circumstances, are forward-looking statements. The Company s actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Factors that could cause actual results to differ from those discussed in or implied by the forwardlooking statements contained in this presentation are set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and its other periodic reports, its current reports and its other filings with the SEC. Developments subsequent to this presentation are likely to cause these statements to become outdated with the passage of time. 2
Our Mission Every day, we... Deliver the best talent and insights to help healthcare organizations optimize their workforce Give healthcare professionals opportunities to do their best work towards quality patient care Create a values-based culture of innovation where our team members can achieve their goals 3
A Recognized Leader 2011 2013 2015 2015 2016 Since 2011 AMN MSP (Managed Service Program) has been granted the "Peer Reviewed by HFMA " designation #1 RPO in Healthcare Based on Customer Satisfaction and Quality Corporate Governance Team of the Year Best Compliance & Ethics Program Exemplary Compensation Discussion & Analysis (CD&A) Award Winner 2016 2017 2017 2017 2017 Re-Certified through 2018 First Corporate Certification for Staffing Services by the Joint Commission Healthcare Leader Based on Customer Satisfaction and Quality The Top Healthcare Provider Based on Customer Satisfaction and Quality Named Largest Healthcare Staffing Company & MSP Provider in the U.S. Top three-year performer in revenue, profits, and stock returns.
AMN at a Glance The Innovator in Healthcare Workforce Solutions and Staffing Services AMN continues to evolve from a traditional healthcare staffing provider to a full-service comprehensive workforce solutions company. Staffing and Recruitment Workforce Solutions Executive Leadership Advisory Services 2008 Workforce Solutions Revenue Growth 2017* Workforce Solutions Staffing Workforce Solutions Staffing 5 Workforce Solutions: MSP, Leadership, Physician Perm, VMS, Mid-Revenue Cycle, Workforce Optimization and RPO * Pro forma to include the April 2018 acquisitions of MedPartners, Phillips DiPisa and Leaders For Today
Continued Evolution in Workforce Solutions 2018 Mid-Revenue Cycle, C-Suite Search and Expanded Interim Leadership MedPartners, Phillips DiPisa, Leaders For Today 2014-2015 2016 Interim Leadership and Executive Search, Rapid/Project Staffing, Medical Coding BE Smith, HealthSource Global, Peak Health Solutions Nurse, Physician, VMS, Leadership, Predictive Modeling Onward Healthcare, Locum Leaders, Medefis, The First String, MillicanSolutions, Avantas 2010-2013 Workforce Solutions: MSP, RPO and VMS MedFinders, ShiftWise 2000-2008 Physician, Allied, Nurse and Search Expansion Merritt Hawkins, StaffCare, MedTravelers, O Grady Peyton 1990s Nurse and Allied Expansion American Mobile Healthcare, MedicalExpress 6 1980s Travel Nurse American Mobile Nurses: A founding company
Recent Acquisitions Mid-Revenue Cycle Workforce Solutions Leading provider of mid-revenue cycle workforce solutions, enabling healthcare facilities to optimize revenue, improve patient care management, and support quality/outcomes reporting requirements Strengthening Executive Search and Interim Leadership Healthcare-focused executive search firm Fast-growing provider of interim and permanent leadership 7
MedPartners Acquisition Leading provider of mid-revenue cycle workforce solutions, enabling AMN to support clients with revenue and quality initiatives Workforce Solutions: Clinical Documentation Improvement Registry Case Management Medical Coding 2017 annual revenue $125 million Adjusted EBITDA margin: 16% Purchase price: $195 million - $25 million NPV tax benefit Immediately accretive 8
Phillips DiPisa and Leaders For Today Phillips DiPisa: Highly regarded healthcare executive search firm with strong C-suite expertise Leaders For Today: Growing interim and permanent leadership staffing firm 2017 annual revenue: $23 million Adjusted EBITDA margin: 20% Purchase price: $30 million - $4 million NPV tax benefit Immediately accretive 9
Financial Growth with Leverage Revenue Adjusted EBITDA $1,902 $1,988 $237 $256 $1,463 $165 $1,012 $1,036 $85 $91 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 10 ($ in Millions)
Business Overview
AMN Portfolio of Solutions Staffing and Recruitment Workforce Solutions Executive Leadership Advisory Services Travel nursing Allied staffing Locum tenens Local staffing Physician placement Rapid response EMR implementation Labor disruption Managed services programs (MSP) Vendor management systems (VMS) Recruitment process outsourcing (RPO) Mid-revenue cycle workforce solutions Scheduling and labor management Interim leadership Executive search Physician leadership search Nurse leadership search Leadership training and development Workforce analysis and optimization Predictive modeling and analytics Consulting Education services Float pool management 12 Value through leadership, innovation and strategic insight
Nurse and Allied Solutions 58% of AMN Pro Forma Revenue* Short- and long-term travel and local staffing Travel nurse assignments are typically 13 weeks Over 60% of segment revenue through exclusive MSP relationships AMN is the largest travel nurse and allied staffing company Includes: All nursing specialties Physical and occupational therapists Respiratory, imaging, lab Pharmacists, technicians Robust Demand: Key Drivers Shortage of nurses AMN Recruiting Brands Shift to MSP relationships Shift to flexible staffing models Aging U.S. and clinical population Favorable economy and low unemployment 13 * Pro forma to include the April 2018 acquisitions of MedPartners, Phillips DiPisa and Leaders For Today
Locum Tenens Solutions All physician and advanced practice specialties, including: Primary Care & Internal Medicine Psychiatry Hospitalists Surgery Emergency Medicine Radiology Dentistry Emergency Medicine 20% Typical assignments range from days to multiple months Robust Demand: Key Drivers AMN Brands Shortage of physicians Growing demand for healthcare services Specialty specific demand Aging physician population 14
Other Workforce Solutions Interim and permanent executive leadership and permanent physician placement across all healthcare settings Vendor Management Systems are proprietary SaaS-based technology solutions for managing contingent labor Mid-Revenue Cycle Solutions provide hard-to-find specialized talent for case management, clinical documentation, registry and medical coding Workforce Optimization Solutions include consulting, data analytics, predictive modeling and SaaS-based scheduling technology 22% Informed Decision Making Reduce Complexity Flexible Access to Skilled Talent Drive Optimal Workforce Mix Key Drivers Brands Workforce and leadership shortages Rising healthcare costs Increased administrative complexity Revenue integrity/capture, quality reporting Increased need for data-driven insights 15
Leader in Managed Services Programs (MSP) Outsourced partner to manage all supplemental workforce needs under one contract Recruitment, credentialing, clinical support, reporting, consolidated invoicing Client Perspective Higher fill rates Improved fulfillment time Staffing optimization Controlled spend Accountability Regulatory compliance AMN Perspective Cross-selling opportunities Recruitment advantages Less cyclicality Improved demand visibility Strong client relationships High client retention 500+ affiliates 16
MSP Gross Billings Under Management ($M) MSP Growth Adoption of MSP has gained substantial momentum in recent years $1,165 $1,018 MSP Direct Fill Revenue Filled by Affiliate Network $762 $504 $380 $406 $41 $25 $219 $291 $134 $185 $265 $296 $350 $454 $649 $786 2009 2010 2011 2012 2013 2014 2015 2016 2017 MSP direct fill revenue as a % of AMN staffing revenue has grown from 1% in 2008 to ~50% today (1) 17 (1) Staffing revenue consists of Nurse, Allied, and Locum Tenens revenue; on a consolidated basis, MSP is >45% of revenue
Leader in Vendor Management Systems (VMS) Fill rates Clinician quality Efficiency Staffing optimization Controlled spend Cloud based technology that automates temporary and float pool staffing through online order and fulfillment, scheduling, credential tracking, time keeping, invoicing and reporting ~ $1.3 Billion Annualized Spend Under Management 18
Leader in Workforce Optimization: Predictive Analytics & Forecasting Labor spend is approximately 50% of hospital budget Typical savings: 4% to 7% of nurse labor spend Workforce predictive analytics Optimization and advisory services Scheduling technology & tools Business intelligence Centralized resource management 19
Evolving AMN s Workforce Solutions Strategy Top Workforce Pain Points 1 Fill Clinical Positions 2 Forecast / Predict Need Talent Supply Mix Perm Trusted Workforce Solutions Partner 3 4 Talent Engagement / Reduce Turnover Measure / Manage Performance Float Contingent 5 Education, Training Leadership Development Recruit Develop Retain Optimize Workforce Solutions 20 Source: Top Tier Consulting and AMN Analytics Survey and interviews of health system executives across the US
Diverse Client Base As the market leader, AMN has over 100 MSP clients, including many blue chip healthcare systems AMN knows the national landscape. They know what s out there and what the trends are. They bring that valuable information to us so that we can better plan as partners. - Chief Nursing Officer, Large Integrated Health System & AMN MSP Client 21
Industry Overview
Healthcare Staffing Market Overview U.S. Temporary Healthcare Staffing ($ in billions) Demand Drivers $20 $15 $13.0 $14.9 $15.9 $16.9 $17.8 Stable or improving economy Low unemployment Shortage of clinician & physicians $10 Increased healthcare utilization $5 Adoption of outsourced solutions Aging population & medical advances $0 New emerging clinical roles Other Addressable Markets: Greater Than $5 Billion (Perm, RPO, Mid-Revenue Cycle, Workforce Consulting, VMS) 23 Sources: US Healthcare Staffing Forecast, Staffing Industry Analysts, April 2018; AMN internal estimates of other markets
Healthcare Job Openings and Hires Job openings are 1.9x monthly hires 1,200 1,000 800 600 400 200-2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Openings Hires 24 Full-year averages except for 2018, w hich is a year-to-date average. Numbers in thousands. Source: Job Openings and Labor Turnover Survey, Bureau of Labor Statistics, U.S. Department of Labor
Growth in Healthcare Employment +4 Million More Healthcare Jobs 2016: 19 million Healthcare will add more jobs than any other industry 2026: 23 million Fast-Growing Healthcare Jobs 37% 36% 25% 15% 15% Physician Assistants Nurse Practitioners Physical Therapists Registered Nurses Physicians Source: Bureau of Labor Statistics Employment Projections, 2016-2026 25
Drivers of Healthcare Employment Growth Annual Growth in Healthcare Spend Aging Population and Healthcare Utilization 5.8% 4.8% 5.6% 40 U.S. population aged 65+ in millions 72 Over 65-3x more hospital days Over 75-4x more healthcare days 2015 2016 2016 2025 2010 2015 2020 2025 2030 Source: U.S. Department of Health and Human Services Aging Healthcare Professionals Projected Healthcare Labor Shortage in 2025 ~ 50% of RNs and physicians are age 50+ 55% of RNs who plan to retire will do so by 2020 ~38% of active physicians are age 56 & older 94,700 physician shortage Regional & specialty nurse shortages Sources: National Council of State Boards of Nursing and The Forum of State Nursing Workforce Centers 2013 data and Association of American Medical Colleges April 5, 2016; AMN Healthcare survey, November 2017; AMA Physician Master File and 2012 Physicians Foundation Survey conducted by Merritt Hawkins 2012 data; National Health Expenditure Projections CMS, February 2017; AMN Healthcare 2013 Clinical Workforce Survey of Hospital Leaders; Association of American Medical Colleges, April 5, 2016; Future of the Nursing Workforce, Health Resources and Services Administration, December 2014. 26
Financial Overview
Long-term Adjusted EBITDA Margin Target 40-100 bp 60-120 bp $2.3-2.5B Revenue 40-80 bp $1.5 B Revenue 30-70 bp 14% AEBITDA Margin $0.9 B Revenue 11.3% AEBITDA Margin 7.2% AEBITDA Margin 2011 2015 Gross Margin Improvement WFS Growth Operating Leverage SG&A Efficiency By 2020 28 Note: The information set forth herein are based on our current belief of how we may be able to achieve our long-term goal. Please refer to page 2 of this presentation titled Forw ard-looking Statements.
Historical Financial Summary Total Revenue Gross Profit $2,500 $2,000 $1,902 $1,988 $2,016 $600 $620 $644 $651 40% $1,500 $1,000 $500 $1,036 $1,463 $400 $200 $316 30.5% $469 32.1% 32.6% 32.4% 32.3% 35% 30% $- FY 2014 FY 2015 FY 2016 FY 2017 LTM $0 FY 2014 FY 2015 FY 2016 FY 2017 LTM 25% Adjusted EBITDA Return on Invested Capital $250 $237 $256 $260 25% 15% 20% $200 $165 15% $150 12.5% 12.9% 12.9% $91 11.3% $100 10% 8.8% $50 5% $0 0% FY 2014 FY 2015 FY 2016 FY 2017 LTM 29 ($ in Millions) 10% 5% 0% 16% 16% 17% 14% 9% FY 2014 FY 2015 FY 2016 FY 2017 LTM
Historical Credit Statistics Capital Expenditures Free Cash Flow $30 $20 $19 $27 $22 $27 $27 $120 $80 $110 $89 $96 $10 $40 $29 $9 $0 FY 2014 FY 2015 FY 2016 FY 2017 LTM $0 FY 2014 FY 2015 FY 2016 FY 2017 LTM Total Leverage Ratio* Debt and Credit Facilities 2.0x 1.8x 1.6x 1.4x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x 1.8x 1.9x 1.6x 1.4x 1.3x FY 2014 FY 2015 FY 2016 FY 2017 Apr 2018 Interest Rate Maturity Date Debt Outstanding Available Borrowing Senior Unsecured Notes 5.125% Oct 2024 $ 325.0 - Revolving Credit Facility 3.090% Feb 2023 $ 195.0 $ 194.8 AMN has a $400M revolving credit facility. Available borrow ing is reduced by the $195 million paid in April 2018 for the MedPartners acquisition and $10.2 million of letters of credit collateralized by the revolver. 30 ($ in millions) * As defined by AMN s credit agreement
Financial Highlights Balance Sheet Items 3/31/18 Cash and cash equivalents $54 Accounts receivable, net $339 Net working capital $238 Total assets $1,273 Total debt outstanding $325 Stockholders equity $599 Balance Sheet Metrics 3/31/18 Days sales outstanding 58 Working capital ratio 1.9x Leverage ratio 1.2x Cash Flow Metrics Q1 2018 Operating cash flow $60 Capex $6 31 ($ in Millions)
Key Investor Highlights Market leader and trusted partner in healthcare staffing services - nurse, allied, locums, physician and executive search, interim leadership Innovator in healthcare workforce solutions: MSP, VMS, RPO, medical coding, workforce optimization; expanding solutions to support clients Strong demand environment supported by aging population and clinical labor shortages Positive macro and secular trends support growth Investment in technology differentiates AMN services, enhances recruiting capabilities, and reduces costs Scalable operating model with leverage Stable with strong cash flow & balance sheet 32