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Valens Research

AMN - Embedded Expectations Analysis - 2020 12 22

AMN Healthcare Services, Inc. (AMN:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and although management may have concerns about gross margins, 2021 demand, and new clinicians, market expectations are too bearish, and long-term equity outperformance is likely

Specifically, management may lack confidence in their ability to mitigate gross margin declines, execute on the businesses' growth trajectories, and continue refinancing debt. Moreover, they may have concerns about rising SG&A costs. Furthermore, management may lack confidence in their ability to fill the rising health care staffing demand and attract new travel clinicians. Additionally, they may lack confidence in their ability to continue to innovate. Finally, they may be exaggerating 2021 demand and the potential of their Managed Services Program (MSP) pipeline

Although management may have concerns about gross margins, 2021 demand, and new clinicians, market expectations are too bearish given the firm's secular growth trends, and long-term equity outperformance is likely for AMN
Underlying
AMN Healthcare Services Inc.

AMN Healthcare Services provides talent solutions for the healthcare sector. The company's talent solutions provides management, staffing, recruitment, technology, analytics, and related services to manage healthcare workforce needs. The company provides its healthcare personnel, from nurses, doctors, and allied health personnel to healthcare leaders and executives. The company's workforce solutions and staffing services include: travel nurse staffing; rapid response nurse staffing and labor disruption services; local, or per diem, staffing; locum tenens staffing; allied staffing; physician permanent placement services; interim leadership staffing and executive search services; and recruitment process outsourcing.

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