Medical Staffing Network Holdings Announces
Record Revenues for the First Quarter Of 2003
Revenue Growth of 40% Over Prior Year
BOCA RATON, Fla., May 12 /PRNewswire-FirstCall/ -- Medical Staffing
Network Holdings, Inc. (NYSE: MRN), a leading healthcare staffing company and
the largest provider of per diem nurse staffing services in the nation, today
reported record revenues of $144.4 million for the first quarter of 2003,
which is an increase of 39.9% over revenues of $103.2 million for the first
quarter of 2002. Net income increased to $5.2 million, or $0.17 per diluted
share, for the first quarter of 2003 compared with $2.8 million, or $0.13 per
diluted share, for the prior year first quarter.
Gross profit increased to $34.5 million, or 31.1%, for the first quarter
of 2003 from $26.3 million during the same period in 2002 as a result of the
growth in revenues. The gross margin of 23.9% for the first quarter of 2003
decreased from the gross margin of 25.5% for the first quarter of 2002. The
decrease is attributable to the impact of higher compensation and other direct
costs related to our healthcare professionals.
Selling, general and administrative expenses decreased to 14.4% of
revenues in the first quarter of 2003 from 14.6% for the first quarter of
2002, due, in part, to the maturation of the Company's 2002 de novo branches.
Corporate and administrative expenses remained flat at 1.6% of revenues for
the first quarter of 2003 and 2002.
Commenting on the first quarter's record results, Robert J. Adamson,
president and chief executive officer of Medical Staffing Network Holdings,
Inc., stated, "Our record revenue for the quarter is reflective of the
strength of the MSN brand, the quality of the services we provide to our
clients, the superior employment opportunities and benefit programs offered to
our healthcare staff and, of course, our diversified growth initiatives. Our
ability to post materially higher revenue growth rates than our competitors is
partially a function of the better operating dynamics of the per diem staffing
sector and the fact that we are also benefiting from the continued maturation
of our de novo and branch-in-branch (BiB) programs. We remain confident that,
over time, our significant investment in and the near-term dilutive effect of
our growth initiatives will be offset by our ability to grow our market share
even during difficult market conditions.
"Demand for temporary nurses is currently going through a period of
contraction as hospitals are experiencing flat to declining admission rates
and are placing greater reliance on full-time staff overtime and increased
nurse patient loads. We believe that the underlying factors that contribute
to the growing national shortage of qualified healthcare professionals,
particularly registered nurses, will result in sustainable long-term growth
for our industry. However, as we work through this softer market, we do have
the benefit of being a well diversified healthcare staffing company and,
perhaps most importantly, MSN continues to gain market share in its core
business, the estimated $7 billion per diem nurse staffing segment.
"I am pleased to announce that we have completed our full target of BiB
sites for 2003 during the first four months of the year. We achieved the
opening of 44 BiB sites by redirecting resources from our nurse de novo
management team. There is a great deal of upside potential in further
expansion of our de novo activity, but we have decided to put new office
openings on hold until we see market conditions strengthen. In an effort to
provide our services more cost effectively, the Company has enhanced its IT
platform to network together client and employee databases in contiguous
markets. Additionally, we recently launched our MSN/Visa Direct Pay Debit
Card that enables our per diem healthcare professionals to have their earnings
electronically transferred on to a Visa label debit card on a daily basis,
eliminating the requirement of visiting the local office to collect a
paycheck. These enhancements enable us to expand the geographical coverage
areas of our per diem offices. As a result, we will be able to service
current markets with fewer brick and mortar sites. The Company will take a
charge in the second quarter for this restructuring. We have not yet
finalized our restructuring plan, so the exact amount of the charge is
uncertain. We expect that it will be material to net income for the second
quarter, but we do not expect it to result in a loss for the quarter or to
adversely impact the operating results of any subsequent quarter. We further
expect this restructuring to improve the operating results that would
otherwise have been generated in the second half of 2003 and beyond.
"While we are confident that the long-term fundamentals for the healthcare
staffing industry remain intact, market factors have reduced visibility for
future earnings. Due to this reduced visibility, we are withdrawing our prior
annual guidance for the year ending December 28, 2003. We plan to have our
restructuring plan finalized by the end of May and will provide further
information as to the charges related to the plan and our earnings guidance
for the second quarter and full year 2003 at that time."
Business Development Initiatives
In the first quarter of 2003, the Company completed the acquisition of
Saber-Salisbury Group (SSG), a leading provider of per diem certified
registered nurse anesthetists (CRNA). The acquisition of SSG is consistent
with the Company's strategy to expand its product offerings and market share.
SSG is expected to contribute revenues of over $10 million in 2003. The
Company believes that, with the acquisition of SSG, it is the largest provider
of CRNA staffing services in the country.
Medical Staffing Network opened four de novo offices during the first
quarter of 2003 and 35 BiB locations.
Conference Call
The Company's management will host a conference call and webcast to
discuss the earnings release at 11:00 a.m. Eastern time on Tuesday,
May 13, 2003. A live webcast, as well as a 30-day replay, of the
conference call will be available online at the Company's website at
www.msnhealth.com or at www.companyboardroom.com.
Company Summary
Medical Staffing Network Holdings, Inc. is the largest provider of per
diem nurse staffing services in the United States. The Company owns and
operates the country's most extensive network of healthcare staffing branches
consisting of over 180 offices in 44 states. The Company also provides travel
nurse staffing services and is a leading provider of allied health
professionals, including radiology specialists, diagnostic imaging technicians
and clinical laboratory technicians.
This release contains statements that are forward-looking in nature.
Statements that are predictive in nature, that depend upon or refer to future
events or conditions or that include words such as "expects," "anticipates,"
"intends," "plans," "believes," "estimates," and similar expressions are
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results and
performance to be materially different from any future results or performance
expressed or implied by these forward-looking statements. These factors
include the following: our ability to attract and retain qualified nurses and
other healthcare personnel, the company's ability to enter into contracts with
healthcare facility clients on terms attractive to the company, the
functioning of our information systems, the effect of existing or future
government regulation and federal and state legislative and enforcement
initiatives on our business, our clients' ability to pay us for our services,
the effect of liabilities and other claims asserted against us, the effect of
competition in the markets we serve, the company's ability to carry out its
business strategy and the demand for temporary nurses. Additional information
concerning these and other important factors can be found within the company's
filings with the Securities and Exchange Commission. Statements in this
release should be evaluated in light of these important factors. Although we
believe that these statements are based upon reasonable assumptions, we cannot
guarantee future results. Given these uncertainties, the forward-looking
statements discussed in this press release might not occur.
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 30, March 31,
2003 2002
(unaudited)
Service revenues $144,419 $103,228
Cost of services rendered 109,892 76,883
Gross profit 34,527 26,345
Operating expenses:
Selling, general
and administrative 20,769 15,044
Corporate and administrative 2,299 1,666
Depreciation and amortization 1,624 852
Total operating expenses 24,692 17,562
Income from operations 9,835 8,783
Interest expense, net 1,159 4,040
Income before provision
for income taxes 8,676 4,743
Provision for income taxes 3,470 1,946
Net income 5,206 2,797
Dividends on convertible
preferred stock -- 2,458
Income available to
common stockholders $5,206 $339
Net income per share:
Basic $0.17 $12.78
Diluted $0.17 $0.13
Weighted average number of
common shares outstanding:
Basic 30,161 27
Diluted 31,162 21,970
Operating Statistics:
Hours worked by
healthcare professionals 3,551 2,897
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
March 30, Dec. 29,
2003 2002
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $3,995 $4,595
Accounts receivable, net 97,462 93,780
Other current assets 9,402 10,221
Total current assets 110,859 108,596
Furniture, fixtures and office equipment, net 13,781 12,643
Goodwill, net 124,792 114,437
Other assets, net 12,338 12,407
Total assets $261,770 $248,083
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,620 $5,149
Accrued payroll and related liabilities 8,330 9,366
Current portion of long-term debt 10,395 8,775
Other current liabilities 4,313 4,160
Total current liabilities 27,658 27,450
Long-term debt, net of current portion 76,605 69,225
Other long-term obligations 6,329 5,740
Total liabilities 110,592 102,415
Total stockholders' equity 151,178 145,668
Total liabilities and stockholders' equity $261,770 $248,083