AMN Healthcare Services (NYSE:AMN) Surprises With Q2 Sales But Stock Drops

Healthcare staffing company AMN Healthcare Services (NYSE:AMN) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 11.1% year on year to $658.2 million. On the other hand, next quarter’s revenue guidance of $617.5 million was less impressive, coming in 3.7% below analysts’ estimates. Its non-GAAP profit of $0.30 per share was 60.9% above analysts’ consensus estimates.

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“Our second quarter financial performance was solid, and we continue to make progress on our ability to serve all market channels and align with clients as their preferred workforce partner,” said Cary Grace, President and Chief Executive Officer of AMN Healthcare.

Company Overview

With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE:AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, AMN Healthcare Services grew its sales at a tepid 3.2% compounded annual growth rate. This was below our standard for the healthcare sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. AMN Healthcare Services’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 20.5% annually.

We can dig further into the company’s revenue dynamics by analyzing its number of travelers on assignment, which reached 8,700 in the latest quarter. Over the last two years, AMN Healthcare Services’s travelers on assignment averaged 21.5% year-on-year declines. Because this number is in line with its revenue growth, we can see the company kept its prices fairly consistent.

This quarter, AMN Healthcare Services’s revenue fell by 11.1% year on year to $658.2 million but beat Wall Street’s estimates by 0.8%. Company management is currently guiding for a 10.2% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 12.4% over the next 12 months. While this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.

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Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

AMN Healthcare Services was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 9.9% was weak for a healthcare business.

Analyzing the trend in its profitability, AMN Healthcare Services’s adjusted operating margin decreased by 12.9 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 13.8 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q2, AMN Healthcare Services generated an adjusted operating margin profit margin of negative 18.8%, down 25.5 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for AMN Healthcare Services, its EPS declined by 8.4% annually over the last five years while its revenue grew by 3.2%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into AMN Healthcare Services’s earnings to better understand the drivers of its performance. As we mentioned earlier, AMN Healthcare Services’s adjusted operating margin declined by 12.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, AMN Healthcare Services reported adjusted EPS at $0.30, down from $0.98 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects AMN Healthcare Services’s full-year EPS of $2.11 to shrink by 50.9%.

Key Takeaways from AMN Healthcare Services’s Q2 Results

We were impressed by how significantly AMN Healthcare Services blew past analysts’ EPS expectations this quarter. We were also glad its revenue guidance for next quarter slightly exceeded Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. Investors were likely hoping for more, and shares traded down 6.5% to $15.80 immediately following the results.

Is AMN Healthcare Services an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.