Exhibit 99.1
Medical Staffing Network Holdings
Announces Third Quarter 2007 Operating Results
Record Quarterly Revenues of $154.7 Million, an Increase of 61.7%;
Adjusted EBITDA Increase of 144% to $8.3 Million
BOCA RATON, Fla.--(BUSINESS WIRE)--Nov. 6, 2007--Medical Staffing
Network Holdings, Inc. (NYSE: MRN), the third largest diversified
healthcare staffing company as measured by revenues, today reported
revenues of $154.7 million for the third quarter of 2007, an increase
of 64.6% from second quarter 2007 revenues of $94.0 million and an
increase of 61.7% from third quarter 2006 revenues of $95.6 million.
Net loss for the third quarter of 2007 was $1.7 million, or $0.06 per
diluted share, as compared with net income for the third quarter of
2006 of $1.1 million, or $0.04 per diluted share. Net loss for the
third quarter of 2007 included restructuring and other charges of $3.0
million, a $1.9 million non-cash goodwill impairment charge relating
to the third quarter integration plan for the July 2, 2007,
acquisition of InteliStaf Holdings, Inc. (InteliStaf) and a loss on
early extinguishment of debt of $0.3 million. Excluding these charges,
the Company's adjusted earnings before interest, taxes, depreciation
and amortization (AEBITDA) for the third quarter of 2007 increased
144% to $8.3 million as compared to $3.4 million for the third quarter
of 2006.
Commenting on the third quarter's results, Robert J. Adamson,
chairman and chief executive officer, stated, "The significant
improvement in our third quarter results was driven by the
contribution of revenues from the recent InteliStaf acquisition
coupled with continued organic volume growth and gross margin
expansion. Our focus on improving gross profit margins continues to
have a substantial impact on our results. Gross profit percentage
increased 120 basis points from the prior year quarter and would have
been an increase of 190 basis points over the prior year quarter
excluding the impact of the InteliStaf acquisition. We will continue
to be focused on margin improvement going into 2008 and bringing the
margins of business acquired from InteliStaf up to and in line with
our pre-existing business."
Mr. Adamson continued, "We are witnessing a blurring of the
historically bright line separating demand for travel nurse services
and per diem nurse services. A growing percentage of our business is
neither travel assignments nor single per diem shifts but rather
demand for local nurses working periods from a few weeks up to and
beyond the traditional 13 week contract period of travel assignments.
We believe that demand for this local contract service will continue
to grow as availability of travel nurses remains challenging and
clients look for greater continuity from local supplemental nurse
service providers. As a result, MSN has been developing local contract
services for clients over the past year and our experience suggests
that this hybrid option is a preferred supplemental staffing solution,
offering greater continuity and the access to the larger pool of local
based nurses."
Kevin S. Little, president and chief financial officer, commented,
"In September, we announced our second acquisition of the quarter, AMR
ProNurse. AMR has developed an industry leading process for the
delivery of vendor management services (VMS), which we believe will
represent a fast growing segment of the healthcare staffing market.
Being in a position to provide per diem staffing, local contract
services, travel nurse services and allied health staffing combined
with an industry leading VMS process gives MSN an unmatched arsenal of
healthcare staffing services to offer to client facilities."
Mr. Adamson concluded, "We are very pleased with the post
acquisition performance of both of our recent acquisitions and with
the continued success of our margin improvement initiatives. We remain
focused on margin improvement, now over a considerably larger
platform, and believe that our third quarter results show that we have
taken decisive steps towards accomplishing our stated intention of
significantly improving our profitability."
Gross profit was $37.0 million for the third quarter of 2007, an
increase of 70.3% from the third quarter of 2006 gross profit of $21.7
million and 60.7% from the second quarter of 2007 gross profit of
$23.0 million. Gross margin for the third quarter of 2007 was 23.9%,
an increase from the gross margin of 22.7% for the third quarter of
2006 and a decrease from 24.5% for the second quarter of 2007. The 120
basis point improvement from the prior year quarter was primarily due
to an increase in the bill-to-pay spread. The 60 basis point decrease
from the second quarter was due to the blending of the businesses
following the InteliStaf acquisition, as InteliStaf had a considerably
lower gross margin than the Company.
Selling, general and administrative expenses were $28.7 million,
or 18.5% of revenues, in the third quarter of 2007 as compared with
$18.4 million, or 19.2% of revenues, for the comparable prior year
quarter and $19.3 million, or 20.5% of revenues, for the second
quarter of 2007. The increase from both the second quarter of 2007 and
the prior year quarter was primarily due to increased overhead costs
associated with the acquisition of InteliStaf.
Revenues were $339.2 million for the nine months ended September
30, 2007, an increase of 18.6% from revenues of $285.9 million for the
comparable prior-year period. The Company essentially broke even for
the nine months ended September 30, 2007, as compared with net loss of
$2.2 million, or $0.07 per diluted share, for the comparable prior
year period. Net loss for the nine months ended September 30, 2007,
included restructuring and other charges of $3.0 million, a $1.9
million non-cash goodwill impairment charge relating to the third
quarter integration plan for the acquisition of InteliStaf, and a loss
on early extinguishment of debt of $0.3 million, and the net loss for
the comparable prior year period included restructuring and other
charges of $3.1 million and a $3.2 million non-cash goodwill
impairment charge relating to a February 2006 initiative. Excluding
these charges, the Company's AEBITDA for the nine months ended
September 30, 2007, was $13.2 million as compared to $7.6 million for
the comparable prior year period.
Gross profit was $81.1 million for the nine months ended September
30, 2007, an increase of 29.5% from the gross profit of $62.6 million
for the comparable prior year period. Gross margin for the nine months
ended September 30, 2007, was 23.9%, an increase from the gross margin
of 21.9% for the comparable prior year period. The 200 basis point
improvement over the prior year was primarily due to an increase in
the bill-to-pay spread partially offset by the lower margin business
acquired in the InteliStaf acquisition.
Selling, general and administrative expenses were $67.8 million,
or 20.0% of revenues, for the nine months ended September 30, 2007, as
compared with $55.0 million, or 19.2% of revenues, for the comparable
prior year period. The increase from the prior year period was
primarily due to increased overhead costs associated with the
acquisition of InteliStaf.
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, November 7, 2007. 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 third largest
diversified healthcare staffing company in the United States as
measured by revenues. The Company is the leading provider of per diem
nurse staffing services and is also a leading provider of travel,
allied health and vendor managed services.
Reasons for Presentation of Non-GAAP Financial Measures
Statements made in this release include non-GAAP financial
measures. Such information is provided as additional information, not
as an alternative to our consolidated financial statements presented
in accordance with generally accepted accounting principles (GAAP),
and is intended to enhance an overall understanding of our current
financial performance. We believe the non-GAAP financial measures
provide useful information to management, investors and prospective
investors by excluding certain charges and other amounts that we
believe are not indicative of our core operating results. These
non-GAAP measures are included to provide management, our investors
and prospective investors with an alternative method for assessing our
operating results in a manner that is focused on the performance of
our ongoing operations and to provide a more consistent basis for
comparison between quarters. One of the non-GAAP financial measures
presented is AEBITDA which consists of net income (loss) before income
taxes, interest, loss on early extinguishment of debt, depreciation
and amortization, restructuring and other charges, and non-cash
impairment of goodwill, which might not be calculated in the same
manner as, and thus might not be comparable to, similarly titled
measures reported by other companies. The financial statement table
included within the condensed consolidated statements of operations
includes a reconciliation of the non-GAAP financial measure to the
most directly comparable GAAP financial measure.
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include all statements other than those made
solely with respect to historical fact, including statements regarding
the registrant's expected restructuring and acquisition-related
integration costs and related charges. These statements involve known
and unknown risks, uncertainties and other factors that may cause the
registrant's 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; our ability to maintain the revenue
run-rate experienced in the first few months following the InteliStaf
merger; our ability to maintain the level of success achieved to date
with regards to the InteliStaf integration plan; our ability to
maintain and increase market share and/or profitability; 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 healthcare professionals; our ability to enter
into and maintain 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; risks associated
with our debt obligations; our ability to obtain additional financing,
if required, in future periods; 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 Joint Commission certification; our clients' ability to pay
us for our services; our ability to successfully implement our
acquisition and integration strategies; our ability to successfully
integrate completed acquisitions into our current operations; the
effect of liabilities and other claims asserted against us; the effect
of competition in the markets we serve; our ability to carry out our
business strategy; the departure of key officers and management
personnel; and the effect of our recognition of an impairment to
goodwill, if any. Additional information concerning these and other
important factors can be found within the registrant's filings with
the Securities and Exchange Commission. Forward-looking statements in
this press release should be evaluated in light of these important
factors. Although the registrant believes that these statements are
based upon reasonable assumptions, the registrant cannot provide any
assurances regarding future results. The registrant undertakes no
obligation to revise or update any forward-looking statements, or to
make any other forward-looking statements, whether as a result of new
information, future events or otherwise.
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 24, Sept. 30, Sept. 24,
2007 2006 2007 2006
--------- --------- --------- ---------
Service revenues $154,690 $95,646 $339,161 $285,923
Cost of services rendered 117,671 73,904 258,077 223,309
--------- --------- --------- ---------
Gross profit 37,019 21,742 81,084 62,614
--------- --------- --------- ---------
Operating expenses:
Selling, general and
administrative 28,671 18,358 67,810 55,024
Depreciation and
amortization 1,662 927 3,453 2,982
Restructuring and other
charges 2,978 - 2,978 3,089
Impairment of goodwill 1,925 - 1,925 3,183
--------- --------- --------- ---------
Total operating expenses 35,236 19,285 76,166 64,278
--------- --------- --------- ---------
Income (loss) from operations 1,783 2,457 4,918 (1,664)
Loss on early extinguishment
of debt 278 - 278 -
Minority interest 83 - 83 -
Interest expense, net 3,346 651 4,065 1,986
--------- --------- --------- ---------
Income (loss) before provision
for (benefit from) income
taxes (1,924) 1,806 492 (3,650)
Provision for (benefit from)
income taxes (180) 722 586 (1,460)
--------- --------- --------- ---------
Net income (loss) $ (1,744) $ 1,084 $ (94) $ (2,190)
========= ========= ========= =========
Basic and diluted net income
(loss) per share $ (0.06) $ 0.04 $ - $ (0.07)
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 30,262 30,257 30,262 30,246
Diluted 30,262 30,300 30,262 30,246
Reconciliation to AEBITDA:
Net income (loss) $ (1,744) $ 1,084 $ (94) $ (2,190)
Provision for (benefit from)
income taxes (180) 722 586 (1,460)
Interest expense 3,346 651 4,065 1,986
Loss on early extinguishment
of debt 278 - 278 -
Depreciation and amortizations 1,662 927 3,453 2,982
Restructuring and other
charges 2,978 - 2,978 3,089
Impairment of goodwill 1,925 - 1,925 3,183
--------- --------- --------- ---------
AEBITDA $ 8,265 $ 3,384 $ 13,191 $ 7,590
========= ========= ========= =========
Summary cash flow information:
Cash flow (used in) provided
by operating activities $ (5,627) $ 4,951 $ (2,566) $ 8,937
Operating Statistics:
Hours worked 3,657 2,346 8,158 7,016
MEDICAL STAFFING NETWORK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(unaudited; in thousands)
Sept. 30, Dec. 31,
2007 2006
--------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 451 $ 527
Accounts receivable, net 100,651 56,717
Other current assets 8,331 4,082
--------- --------
Total current assets 109,433 61,326
Furniture and equipment, net 9,623 7,691
Goodwill 183,894 99,097
Intangible assets, net 15,304 1,454
Other assets, net 6,122 1,583
--------- --------
Total assets $324,376 $171,151
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 48,690 $ 17,244
Accrued payroll and other current liabilities 13,926 7,863
Current portion of long-term debt 5,595 -
--------- --------
Total current liabilities 68,211 25,107
Long-term debt 124,000 17,036
Deferred income taxes 5,598 4,745
Other long-term obligations 3,282 1,936
--------- --------
Total liabilities 201,091 48,824
Minority interest 402 -
Commitments and contingencies
Total stockholders' equity 122,883 122,327
--------- --------
Total liabilities and stockholders' equity $324,376 $171,151
========= ========
CONTACT: Medical Staffing Network Holdings, Inc.
Jeff Yesner, Vice President, Finance, 561-322-1303