Exhibit 99.1
Medical Staffing Network Holdings Announces Third
Quarter 2006 Operating Results
140% Increase In Operating Income; EPS of $0.04
BOCA RATON, Fla.--(BUSINESS WIRE)--November 1, 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 $95.6 million for
the third quarter of 2006, a slight increase from second quarter 2006
revenues of $95.3 million and a decrease of 6.6% from third quarter
2005 revenues of $102.4 million, primarily resulting from the closure
of underperforming branches during the Company's previously announced
restructuring initiative in the first quarter of 2006. Net income for
the third quarter of 2006 was $1.1 million, or $0.04 per diluted
share, as compared with $0.2 million, or $0.01 per diluted share,
(including an after tax charge of $0.3 million, or $0.01 per diluted
share, associated with the expense of an acquisition which was not
completed) for the third quarter of 2005.
Commenting on the third quarter's results, Robert J. Adamson,
chairman and chief executive officer, stated, "We are pleased that we
have continued to fulfill our commitment to improve profitability in
2006. Various internal growth initiatives were implemented during the
quarter resulting in an increase in both sequential revenues and gross
margin. We have seen a modest increase in our bill-to-pay spread and
our efforts will remain focused on further expansion during the
remainder of 2006 and into 2007. Our gross margin has improved 80
basis points over the prior year quarter and 50 basis points
sequentially. We believe that this improvement will continue into the
fourth quarter."
Gross profit was $21.7 million for the third quarter of 2006, an
increase of 2.8% from the second quarter of 2006 gross profit of $21.2
million and a 3.2% decrease from the third quarter of 2005 gross
profit of $22.5 million. Gross margin for the third quarter of 2006
was 22.7%, an increase from the gross margin of 22.2% for the second
quarter of 2006 and 21.9% for the third quarter of 2005. The 80 basis
point increase from the prior year was primarily due to an increase in
the bill-to-pay spread, partially offset by higher travel and benefit
costs in the current year.
Selling, general and administrative expenses were $18.4 million,
or 19.2% of revenues, in the third quarter of 2006 as compared with
$17.5 million, or 18.4% of revenues, in the second quarter of 2006 and
$19.7 million, or 19.2% of revenues, for the same period of the prior
year. The increase from the second quarter was primarily attributable
to the Company reinvesting in various organic growth initiatives. The
decrease from the prior year was primarily due to cost reduction
measures and the closure of underperforming branches in the first
quarter 2006 restructuring initiative, partially offset by the
aforementioned third quarter reinvestment.
Revenues were $285.9 million for the nine months ended September
24, 2006, a decrease of 6.2% from revenues of $304.9 million for the
comparable prior year period. Net loss for the nine months ended
September 24, 2006, was $2.2 million, or $0.07 per share, compared to
a net loss of $0.5 million, or $0.02 per share, for the comparable
prior year period. The net loss for the nine months ended
September 24, 2006, is inclusive of an after tax charge of $3.8
million, or $0.12 per diluted share, for restructuring and related
goodwill impairment charge associated with the first quarter 2006
restructuring initiative. The net loss for nine months ended September
25, 2005, was inclusive of an after tax charge of $0.3 million, or
$0.01 per diluted share, associated with the expense of an acquisition
which was not completed.
Gross profit was $62.6 million for the nine months ended September
24, 2006, a decrease of 6.2% from the gross profit of $66.7 million
for the comparable prior year period. Gross margin for the nine months
ended September 24, 2006, was 21.9%, consistent with the comparable
prior year period. The increase in bill-to-pay spread was offset by
higher benefit, travel and housing costs.
Selling, general and administrative expenses were $55.0 million,
or 19.2% of revenues, for the nine months ended September 24, 2006, as
compared with $60.9 million, or 20.0% of revenues, for the comparable
prior year period. The decrease was primarily due to cost reduction
measures and the closure of underperforming branches in the first
quarter 2006 restructuring initiative.
Kevin S. Little, president and chief financial officer stated, "As
previously announced, we recently amended our senior credit facility.
The amendment reduces our cost of capital as we continue to focus on
improving our profitability. Additionally, the maturity date of the
facility was extended to September 2009, and the unused available
capacity gives us the flexibility to remain opportunistic with regards
to acquisitions."
Conference Call
The Company's management will host a conference call and webcast
to discuss the earnings release at 1:00 p.m. Eastern time on Thursday,
November 2, 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 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, maintain the reduction in the cost of capital resulting
from the amended credit facility, our ability to obtain additional
financing in future periods, 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 Nine Months Ended
----------------------- -----------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Service revenues $95,646 $102,408 $285,923 $304,856
Cost of services
rendered 73,904 79,936 223,309 238,116
----------- ----------- ----------- -----------
Gross profit 21,742 22,472 62,614 66,740
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and
administrative 18,358 19,696 55,024 60,945
Depreciation and
amortization 927 1,241 2,982 4,083
Restructuring and
other charges - 512 6,272 512
----------- ----------- ----------- -----------
Total operating
expenses 19,285 21,449 64,278 65,540
----------- ----------- ----------- -----------
Income (loss) from
operations 2,457 1,023 (1,664) 1,200
Interest expense, net 651 653 1,986 2,105
----------- ----------- ----------- -----------
Income (loss) before
provision for
(benefit from) income
taxes 1,806 370 (3,650) (905)
Provision for (benefit
from) income taxes 722 150 (1,460) (398)
----------- ----------- ----------- -----------
Net income (loss) $1,084 $220 $(2,190) $(507)
=========== =========== =========== ===========
Basic and diluted net
income (loss) per
share $0.04 $0.01 $(0.07) $(0.02)
=========== =========== =========== ===========
Weighted average
common shares
outstanding:
Basic 30,257 30,234 30,246 30,233
Diluted 30,300 30,292 30,246 30,233
Operating Statistics:
Hours worked 2,346 2,460 7,016 7,405
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(unaudited; in thousands)
Sept. 24, Dec. 25,
2006 2005
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $1,120 $42
Accounts receivable, net 58,216 55,863
Other current assets 5,997 6,542
----------- ----------
Total current assets 65,333 62,447
Furniture and equipment, net 7,762 8,427
Goodwill 127,667 130,589
Other assets, net 2,083 3,453
----------- ----------
Total assets $202,845 $204,916
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current
liabilities $19,983 $14,416
Accrued payroll and related liabilities 8,276 6,157
----------- ----------
Total current liabilities 28,259 20,573
Long-term debt 18,264 23,991
Deferred income taxes 8,096 9,790
Other long-term obligations 1,071 1,314
----------- ----------
Total liabilities 55,690 55,668
Commitments and contingencies
Total stockholders' equity 147,155 149,248
----------- ----------
Total liabilities and stockholders' equity $202,845 $204,916
=========== ==========
CONTACT: Medical Staffing Network Holdings, Inc.
Jeff Yesner, 561-322-1303
Vice President, Finance