Exhibit 99.1
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Contact: Robert J. Adamson
Chairman and Chief Executive Officer
(561) 322-1303
MEDICAL STAFFING NETWORK HOLDINGS ANNOUNCES
FOURTH QUARTER 2005 OPERATING RESULTS - PRIMARY FOCUS
FOR 2006 WILL BE IMPROVED PROFITABILITY
Boca Raton, Fla. (February 28, 2006) - 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 revenues of $97.7
million for the fourth quarter of 2005, a decrease of 4.6% from third quarter
2005 revenues of $102.4 million and a decrease of less than $1.0 million from
fourth quarter 2004 revenues of $98.5 million. The Company experienced a net
loss for the fourth quarter of 2005 of $0.3 million, or $0.01 per share,
compared with net income of $0.2 million for the third quarter of 2005, or $0.01
per diluted share, and, essentially, a break-even position for the fourth
quarter of 2004.
Commenting on the fourth quarter's results, Robert J. Adamson, chief executive
officer, stated, "Our travel and allied divisions performed well this quarter
while our per diem division continued to experience softness. The soft market
conditions for per diem nurse staffing has lasted much longer than we had hoped.
As a result of the prolonged difficult market conditions, we recently made the
decision to restructure our per diem nursing division to drive higher
profitability. As previously announced, we have closed a number of per diem
branch locations that had nominal or negative contribution, allowing us to focus
on those markets where there are better near-term opportunities. We are also
scaling back our investments in growth initiatives and infrastructure within the
nurse per diem business. As a result, we expect this initiative to reduce
expenses by approximately $6.0 million, with the full benefit being realized by
the third quarter of 2006. We will continue our investments in growth
initiatives within Allied and Travel, where market conditions are more
favorable. Improved profitability will be our primary focus in 2006."
Gross profit was $21.4 million for the fourth quarter of 2005, a 4.7% decrease
from third quarter of 2005 gross profit of $22.5 million and a decrease of 3.0%
from fourth quarter of 2004 gross profit of $22.1 million. The year-over-year
decrease was due to a reduction in revenue coupled with a decrease in gross
margin. Gross margin for the fourth quarter of 2005 was 21.9%, which was
consistent with the gross margin for the third quarter of 2005, but a decrease
from the 22.4% gross margin during the fourth quarter of 2004. The decrease from
the prior year is primarily related to the impact of changes in self insurance
reserves at year end.
Selling, general and administrative expenses for the fourth quarter of 2005
decreased slightly to $20.1 million, or 20.6% of revenues, compared with $20.2
million, or 20.6% of revenues, for the same period of the prior year.
Revenues were $402.5 million for the year ended December 25, 2005, a 3.5%
decrease from revenues of $417.1 million for the prior year. The decrease was
primarily due to continued softness in demand for supplemental healthcare
staffing services.
MRN Announces Fourth Quarter Results
Page 4
February 28, 2006
Gross profit was $88.2 million for the year ended December 25, 2005, a 2.0%
decrease from gross profit of $90.0 million for the prior year. The decrease was
due to a reduction in revenue offset, in part, by a slight improvement in gross
margin. Gross margin was 21.9% for the year ended December 25, 2005, as compared
with 21.6% for the comparable prior year period. The year-over-year margin
increase was primarily due to favorable claims experience under the Company's
self insurance programs. Bill-to-pay rate spreads have remained relatively
consistent.
Selling, general and administrative expenses were $81.1 million, or 20.1% of
revenues, for the year ended December 25, 2005, compared with $82.1 million, or
19.7% of revenues, for the prior year. The decrease was primarily due to a
reduction in bad debt expense due to favorable collection history and other cost
reduction measures. The net loss for the year ended December 25, 2005, was $0.8
million, or $0.03 per share, compared with a loss of $1.3 million, or $0.4 per
share, for the prior year.
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 Wednesday, March 1, 2006. 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.earnings.com.
Company Summary
Medical Staffing Network Holdings, Inc. is the largest provider of per diem
nurse staffing services in the United 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
achieve the cost savings recently announced, our ability to successfully
complete the reorganization of our per diem branch operations without
significant interruption to client service, our ability to increase revenues or
market share, our ability to continue to generate significant amounts of cash
flow from operations, our ability to attract and retain qualified nurses and
other healthcare personnel, the overall level of demand for services provided by
temporary nurses, our ability to enter into contracts with hospital and
healthcare facility clients on terms attractive to us, the willingness of
hospital and healthcare facility clients to utilize temporary healthcare
staffing services, the general level of patient occupancy at our hospital and
healthcare facility clients, 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 ability to continue
to achieve the JHACO gold seal of approval, 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 and our ability to carry out
our business strategy. Additional information concerning these and other
important factors can be found within our 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.
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MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
Three Months Ended Twelve Months Ended
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Dec. 25, Dec. 26, Dec. 25, Dec. 26,
2005 2004 2005 2004
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Service revenues $ 97,651 $ 98,459 $ 402,507 $ 417,058
Cost of services rendered 76,225 76,360 314,341 327,075
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Gross profit 21,426 22,099 88,166 89,983
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Operating expenses:
Selling, general and administrative 20,141 20,244 81,087 82,067
Depreciation and amortization 1,177 1,404 5,259 6,316
Other - - 512 -
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Total operating expenses 21,318 21,648 86,858 88,383
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Income from operations 108 451 1,308 1,600
Interest expense, net 662 790 2,767 3,541
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Loss from operations before benefit from income taxes
(554) (339) (1,459) (1,941)
Benefit from income taxes (262) (261) (660) (615)
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Net loss $ (292) $ (78) $ (799) $ (1,326)
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Basic net loss per share $ (0.01) $ - $ (0.03) $ (0.04)
========= ========= ========= =========
Diluted net loss per share $ (0.01) $ - $ (0.03) $ (0.04)
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Weighted average common shares outstanding:
Basic 30,235 30,231 30,233 30,228
Diluted 30,235 30,231 30,233 30,228
Operating Statistics:
Hours worked 2,375 2,329 9,794 9,837
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MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(unaudited; in thousands)
Dec. 25, Dec. 26,
2005 2004
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ASSETS
Current assets:
Cash and cash equivalents $ 42 $ 345
Accounts receivable, net 55,863 57,478
Other current assets 6,542 11,164
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Total current assets 62,447 68,987
Furniture and equipment, net 8,427 8,481
Goodwill, net 130,589 129,474
Other assets, net 3,453 3,961
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Total assets $ 204,916 $ 210,903
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 14,416 $ 12,457
Accrued payroll and related liabilities 6,157 6,597
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Total current liabilities 20,573 19,054
Long-term debt 23,991 31,760
Deferred income taxes 9,790 9,808
Other long-term obligations 1,314 255
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Total liabilities 55,668 60,877
Total stockholders' equity 149,248 150,026
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Total liabilities and stockholders' equity $ 204,916 $ 210,903
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END