Exhibit 99.1
Medical Staffing Network Holdings
Announces Third Quarter 2004 Operating Results; Return to
Profitability on Slight Revenue Increase - Continued Strong Cash Flow
BOCA RATON, Fla.--(BUSINESS WIRE)--Nov. 3, 2004--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 $106.2 million for the third
quarter of 2004, an increase of 0.2% from second quarter 2004 revenues
of $106.0 million and a decrease of 14.1% from third quarter 2003
revenues of $123.7 million. Income from continuing operations for the
third quarter of 2004 was $0.3 million, or $0.01 per diluted share,
compared with $1.1 million, or $0.04 per diluted share, for the third
quarter of 2003. Cash flow from operating activities was $8.6 million
for the third quarter of 2004 as compared with $17.5 million for the
same period of the prior year.
Commenting on the third quarter's results, Robert J. Adamson,
chief executive officer, stated, "We are very pleased to have returned
to profitability this quarter. With some of the country's large public
healthcare companies reporting disappointing admissions coupled with a
lingering aversion to the utilization of supplemental staffing, the
healthcare staffing market continues to be soft. The reports of
operating results for other national healthcare staffing companies
affirm our belief that our market continues to contract. In spite of
these difficult industry conditions, we have stabilized our revenues
in recent quarters and this quarter reported our first sequential
increase in revenues since early 2003. Our revenues and earnings
include the negative impact from the four successive hurricanes that
hit the Southeastern United States in recent months. Our results
appear to be in contrast to other large per diem healthcare staffing
companies who are not experiencing revenue stabilization or profit
improvement. We attribute this accomplishment to our success in
attaining a preferred provider relationship with many of our clients,
which allows us to be the first vendor they call and the last vendor
they cancel, coupled with our sophisticated operating platform."
Kevin S. Little, president and chief operating officer, added, "We
continue to capitalize on the growing trend toward vendor
consolidation. Our partnered staffing solution programs continue to
gain traction, and our sophisticated platform and national footprint
uniquely position us to capture these opportunities. We were recently
appointed as the vendor on premise for a large multi-facility
healthcare system in the New England area. We were also recently
appointed as the master service provider for certain facilities within
the Providence Health System in the state of Washington. However, the
sales cycle on these programs is quite lengthy, and the overall
consolidation process moves at a slow pace. We intend to continue to
be very aggressive in increasing our market share, and we are ideally
positioned and prepared for an increase in demand when it occurs. Our
focus on fiscal discipline is producing improved results, with a
return to profitability, strong cash flow and stable margins."
Gross profit was $23.0 million for the third quarter of 2004, a
13.2% decrease from third quarter of 2003 gross profit of $26.5
million, but an increase of 1.6% from second quarter of 2004 gross
profit of $22.7 million. The year-over-year decrease is primarily due
to the decline in revenues due to a decrease in the number of hours
worked by professionals. The gross margin of 21.7% for the third
quarter of 2004 remained consistent with the gross margins of 21.4%
for the second quarter of 2004 and 21.5% for the third quarter of
2003.
Selling, general and administrative expenses decreased to $16.1
million, or 15.2% of revenues, in the third quarter of 2004 compared
with $18.7 million, or 15.2% of revenues, for the third quarter of
2003. The year-over-year decrease is primarily due to a reduction in
bad debt expense and other cost saving measures. Corporate and
administrative expenses increased to $3.8 million, or 3.6% of
revenues, in the third quarter of 2004 compared with $3.1 million, or
2.5% of revenues, for the third quarter of 2003. The increase was
primarily due to higher professional fees including those associated
with Sarbanes-Oxley implementation.
Revenues were $318.6 million for the nine months ended September
26, 2004, a 21.4% decrease from revenues of $405.2 million for the
comparable prior year period. The loss from continuing operations for
the nine months ended September 26, 2004, was $1.2 million, or $0.04
per share, compared with income from continuing operations of $7.1
million, or $0.24 per diluted share, for the comparable prior year
period. Cash flow from operating activities was $24.9 million for the
nine months ended September 26, 2004, compared with $25.7 million for
the comparable prior year period.
Gross profit was $67.9 million for the nine months ended September
26, 2004, a 25.1% decrease from gross profit of $90.6 million for the
comparable prior year period. The decrease was primarily due to a
decline in revenues due to a decrease in the number of hours worked by
professionals and a lower average gross margin. Gross margin was 21.3%
for the nine months ended September 26, 2004, as compared with 22.4%
for the comparable prior year period. The year-over-year margin
decrease was primarily due to higher compensation and other direct
costs related to the Company's healthcare professionals.
Selling, general and administrative expenses decreased to $50.4
million, or 15.8% of revenues, for the nine months ended September 26,
2004, compared with $61.6 million, or 15.2% of revenues, for the
comparable prior year period. The decrease is primarily due to the
closing of locations and other cost reduction programs implemented as
a part of the restructuring initiative and the pretax restructuring
charge of $0.8 million recorded in the second quarter of 2003.
Corporate and administrative expenses increased to $11.4 million, or
3.6% of revenues, for the nine months ended September 26, 2004,
compared with $8.5 million, or 2.1 % of revenues, for the comparable
prior year period. The increase was primarily due to higher
professional fees including those associated with Sarbanes-Oxley
implementation and a charge recorded in the second quarter of 2004
associated with executive severance and search costs.
Earnings Guidance
As previously announced, the Company has adopted a policy not to
provide forward-looking financial guidance since such estimates
involve a high degree of uncertainty. Accordingly, the Company has
made the decision to no longer provide forward-looking guidance with
respect to the Company's anticipated quarterly financial results.
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 November
4, 2004. 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.fulldisclosure.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 maintain the recent stabilization in
revenues and gross margins, 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 including
JHACO accreditation, 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 Nine Months Ended
------------------- ------------------
Sept. 26, Sept. 28, Sept. 26 Sept. 28,
2004 2003 2004 2003
-------- --------- ------- --------
Service revenues $106,204 $123,686 $318,599 $405,154
Cost of services rendered 83,167 97,147 250,715 314,552
-------- -------- -------- --------
Gross profit 23,037 26,539 67,884 90,602
-------- -------- -------- --------
Operating expenses:
Selling, general
and administrative 16,115 18,733 50,409 61,604
Corporate and
administrative 3,829 3,112 11,414 8,500
Depreciation and
amortization 1,615 1,757 4,912 5,082
-------- -------- -------- --------
Total operating expenses 21,559 23,602 66,735 75,186
-------- -------- -------- --------
Income from operations 1,478 2,937 1,149 15,416
Interest expense, net 780 1,147 2,751 3,549
-------- -------- -------- --------
Income (loss) from
continuing operations
before provision for
(benefit from) income taxes 698 1,790 (1,602) 11,867
Provision for (benefit
from) income taxes 410 693 (354) 4,723
-------- -------- -------- --------
Income (loss) from
continuing operations 288 1,097 (1,248) 7,144
Loss from discontinued
operations, net of taxes -- -- -- (506)
-------- -------- -------- --------
Net income (loss) $288 $1,097 $(1,248) $6,638
======== ======== ========= ========
Basic income (loss) from
continuing operations $0.01 $0.04 $(0.04) $0.24
Discontinued operations,
net of taxes -- -- -- (0.02)
-------- -------- -------- --------
Basic net income (loss)
per share $0.01 $0.04 $(0.04) $0.22
======== ======== ======== ========
Diluted income (loss)
from continuing operations $0.01 $0.04 $(0.04) $0.24
Discontinued operations,
net of taxes -- -- -- (0.02)
-------- -------- -------- --------
Diluted net income (loss)
per share $0.01 $0.04 $(0.04) $0.22
======== ======== ======== ========
Weighted average common
shares outstanding:
Basic 30,231 30,199 30,227 30,184
Diluted 30,326 30,618 30,227 30,816
Operating Statistics:
Hours worked
By healthcare professionals 2,489 2,857 7,508 9,636
By discontinued operations -- -- -- 1
-------- -------- -------- --------
Total hours worked 2,489 2,857 7,508 9,637
======== ======== ======== ========
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
Sept. 26, Dec. 28,
2004 2003
-------- --------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $397 $825
Accounts receivable, net 60,850 68,602
Other current assets 11,607 13,785
-------- --------
Total current assets 72,854 83,212
Furniture and equipment, net 8,966 11,377
Goodwill, net 125,052 125,028
Other assets, net 8,444 9,253
-------- --------
Total assets $215,316 $228,870
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $13,585 $8,138
Accrued payroll and related liabilities 9,356 6,616
Current portion of long-term debt 12,000 --
-------- --------
Total current liabilities 34,941 14,754
Long-term debt, net of current portion 20,469 54,978
Deferred income taxes 9,492 7,115
Other long-term obligations 310 736
-------- --------
Total liabilities 65,212 77,583
Commitments and contingencies
Total stockholders' equity 150,104 151,287
-------- --------
Total liabilities and stockholders' equity $215,316 $228,870
======== ========
CONTACT: Medical Staffing Network Holdings, Inc., Boca Raton
Robert J. Adamson, 561-322-1303