Exhibit 99.1
Medical Staffing Network Holdings Announces Second Quarter 2006 Operating
Results; 151% Increase In Operating Income; EPS of $0.04
BOCA RATON, Fla.--(BUSINESS WIRE)--July 27, 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 $95.3 million for the second quarter of 2006, a slight
increase from first quarter 2006 revenues of $95.0 million and a decrease of
6.5% from second quarter 2005 revenues of $101.9 million. Net income for the
second quarter of 2006 was $1.2 million, or $0.04 per diluted share, as compared
with $0.01 per diluted share, for the second quarter of 2005.
Commenting on the second quarter's results, Robert J. Adamson, chairman and
chief executive officer, stated, "I am pleased to report that the Company is
achieving its stated goal of improving its profitability during 2006. Income
from operations in the second quarter was up 151% over the prior year quarter.
Despite closing approximately 10% of our branch locations in the first quarter,
the Company was able to marginally increase sequential revenues and
significantly improve profitability. We remain extremely focused on continuing
to increase profitability during the second half of 2006, and we have launched
several initiatives to build on our successes from the second quarter."
Adamson continued, "The first quarter restructuring has enabled the Company
to deliver on its commitment to improving profitability. With the considerable
increase in operating income and balance sheet strength, we plan to be
opportunistic with respect to investment in both internal growth opportunities
and growth through acquisition."
Gross profit was $21.2 million for the second quarter of 2006, an increase
of 7.3% from the first quarter of 2006 gross profit of $19.7 million and a 7.3%
decrease from the second quarter of 2005 gross profit of $22.8 million. Gross
margin for the second quarter of 2006 was 22.2%, an increase from the gross
margin of 20.8% for the first quarter of 2006 and a decrease from the gross
margin of 22.4% for the second quarter of 2005. The increase from the first
quarter of 2006 was primarily due to lower state and federal unemployment taxes,
which historically occurs after the first few months of the new calendar year.
The decrease from the prior year was primarily due to higher travel and benefit
costs in the current year.
Selling, general and administrative expenses were $17.5 million, or 18.4%
of revenues, in the second quarter of 2006 as compared with $20.4 million, or
20.0% of revenues, for the same period of the prior year and $19.1 million, or
20.1% of revenues, for the first quarter of 2006. The decrease from the prior
year and the first quarter of 2006 was primarily due to cost reduction measures
and closure of underperforming branches during the Company's previously
announced restructuring initiative in the first quarter of 2006.
Revenues were $190.3 million for the six months ended June 25, 2006, a
decrease of 6.0% from revenues of $202.4 million for the comparable prior year
period. Net loss for the six months ended June 25, 2006 was $3.3 million, or
$0.11 per share, compared to net loss of $0.7 million, or $0.02 per share, for
the comparable prior year period. The net loss for the six months ended June 25,
2006 is inclusive of a $0.13 per share charge for restructuring and related
goodwill impairment charge associated with the first quarter reorganization
initiative.
Gross profit was $40.9 million for the six months ended June 25, 2006, a
decrease of 7.7% from the gross profit of $44.3 million for the comparable prior
year period. Gross margin for the six months ended June 25, 2006 was 21.5%, a
decrease from the gross margin of 21.9% for the comparable prior year period.
The decrease over the prior year was primarily due to higher benefit, travel and
housing costs.
Selling, general and administrative expenses were $36.7 million, or 19.3%
of revenues, for the six months ended June 25, 2006 as compared to $41.2
million, or 20.4% of revenues, for the comparable prior year period. The
decrease was primarily due to cost reduction measures and closure of
underperforming branches.
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 Friday, July 28. 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 increase revenues or market share, our ability to
continue to generate significant amounts of cash flow from operations, our
ability to sustain the improved self insurance claims experience, 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, our ability to maintain the improvement in the spread between bill and
pay rates, 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 JCAHO accreditation, our clients' ability to pay us for our services,
our ability to successfully implement our acquisition and integration
strategies, 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.
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
Three Months Ended Six Months Ended
------------------ ------------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
-------- -------- -------- --------
Service revenues $95,268 $101,872 $190,277 $202,448
Cost of services rendered 74,110 79,048 149,405 158,180
-------- -------- -------- --------
Gross profit 21,158 22,824 40,872 44,268
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 17,544 20,392 36,666 41,249
Depreciation and amortization 954 1,374 2,055 2,842
Restructuring and
other charges -- -- 6,272 --
-------- -------- -------- --------
Total operating expenses 18,498 21,766 44,993 44,091
-------- -------- -------- --------
Income (loss) from operations 2,660 1,058 (4,121) 177
Interest expense, net 646 655 1,335 1,452
-------- -------- -------- --------
Income (loss) before
provision for (benefit from)
income taxes 2,014 403 (5,456) (1,275)
Provision for (benefit from)
income taxes 805 140 (2,182) (548)
-------- -------- -------- --------
Net income (loss) $1,209 $263 $(3,274) $(727)
======== ======== ======== ========
Basic and diluted net income
(loss) per share $0.04 $0.01 $(0.11) $(0.02)
======== ======== ======== ========
Weighted average common
shares outstanding:
Basic 30,244 30,233 30,240 30,232
Diluted 30,289 30,290 30,240 30,232
Operating Statistics:
Hours worked 2,347 2,476 4,670 4,945
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(unaudited; in thousands)
June 25, Dec. 25,
2006 2005
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $208 $42
Accounts receivable, net 56,763 55,863
Other current assets 6,323 6,542
-------- --------
Total current assets 63,294 62,447
Furniture and equipment, net 7,990 8,427
Goodwill, net 127,667 130,589
Other assets, net 2,463 3,453
-------- --------
Total assets $201,414 $204,916
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $17,259 $14,416
Accrued payroll and related liabilities 7,418 6,157
Current portion of long-term debt 21,754 --
-------- --------
Total current liabilities 46,431 20,573
Long-term debt -- 23,991
Deferred income taxes 7,735 9,790
Other long-term obligations 1,182 1,314
-------- --------
Total liabilities 55,348 55,668
Commitments and contingencies
Total stockholders' equity 146,066 149,248
-------- --------
Total liabilities and stockholders' equity $201,414 $204,916
======== ========
CONTACT: Medical Staffing Network Holdings, Inc., Boca Raton
Robert J. Adamson, 561-322-1303