On Assignment Inc. (ASGN, Financial) filed Quarterly Report for the period ended 2010-11-08.
On Assignment Inc. has a market cap of $250.19 million; its shares were traded at around $6.86 with a P/E ratio of 49 and P/S ratio of 0.6. ASGN is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Healthcare segment revenues (comprised of our Nurse Travel and Allied Healthcare lines of business) decreased $1.2 million, or 5.5 percent. Nurse Travel revenues decreased $1.0 million, or 9.6 percent, to $9.7 million, which included $2.2 million of revenue generated from supporting a customer that experienced a labor disruption. The decrease was due primarily to a 28.4 percent decrease in the average number of nurses on assignment and a 2.7 percent decrease in the average bill rate. Allied Healthcare revenues decreased $0.1 million, or 1.3 percent, to $10.2 million due to a 9.5 percent decrease in the average number of contract professionals on assignment and $0.1 million decrease in direct hire and conversion fee revenues. These decreases were slightly offset by a 2.5 percent increase in the average bill rate. Based on our research and client feedback, the decrease in revenues was attributable to continued adverse economic trends in the healthcare sector, which contributed to the decrease in number of travelers on assignment, open orders, and average bill rates. While the Allied Healthcare operating environment continued to demonstrate signs of improvement, growth was constrained by a continued reduction in demand for elective procedures, a greater number of patients choosing more cost effective forms of treatment such as self-medication, hospitals reduced usage of contract professionals in response to declining cash balances and patient admissions, and reduced demand for less critical allied skill modalities and a dramatic decline in demand for flu vaccine as compared to the H1N1 pandemic we faced the prior year.
Physician segment gross profit decreased $1.9 million, or 25.7 percent. The decrease in gross profit was due to a $3.8 million, or 16.8 percent, decrease in the segment revenues, as well as a 355 basis point contraction in gross margin. The contraction in gross margin was primarily due to a $0.5 million increase in medical malpractice expense, which included $0.4 million related to reduced indemnification claims from Vista s shareholders based on improved medical malpractice settlements, as well as a 2.3 percent decrease in bill/pay spread. The contraction in gross margin was partially offset by $0.3 million increase in direct hire and conversion fee revenues.
IT and Engineering segment gross profit increased $6.1 million, or 53.7 percent, primarily due to a $15.6 million, or 48.9 percent increase in revenues as well as a 114 basis point expansion in gross margin. The expansion in gross margin was primarily due to a $0.6 million increase in direct hire and conversion fee revenues, partially offset by a $1.6 million increase in other employee expenses.
For the three months ended September 30, 2010, SG&A expenses increased $5.2 million, or 18.3 percent, to $33.7 million from $28.5 million for the same period in 2009. The increase in SG&A expenses was primarily due to a $5.0 million increase in compensation and benefits. The increase in compensation and benefits was due to a $3.3 million increase in bonuses, commissions and stock-based compensation as a result of increased revenue and the attainment of incentive compensation targets as well as a $1.1 million increase in compensation expenses as a result of increased headcount related to the Cambridge and Sharpstream acquisitions. The increase in SG&A expenses was also due to a $0.3 million increase in travel expenses primarily for acquisition-related activities, a $0.3 million increase in bad debt expenses and a $0.3 million increase in other expenses. The increase in SG&A expenses was partially offset by a $1.0 million decrease in amortization expense as certain intangible assets became fully amortized in the first quarter of 2010. Total SG&A expenses as a percentage of revenues were 29.0 percent for the three months ended September 30, 2010 and September 30, 2009.
Healthcare segment revenues (comprised of our Nurse Travel and Allied Healthcare lines of business) decreased $18.0 million, or 23.8 percent. Nurse Travel revenues decreased $17.8 million, or 38.7 percent, to $28.3 million, which included $2.2 million of revenue generated from supporting a customer that experienced a labor disruption. The decrease was primarily due to a 45.2 percent decrease in the average number of nurses on assignment and a 4.5 percent decrease in the average bill rate. Allied Healthcare revenues decreased $0.2 million, or 0.7 percent, to $29.5 million due to a 6.7 percent decrease in the average number of contract professionals on assignment and a $0.4 million decrease in direct hire and conversion fee revenues. These decreases were partially offset by a 4.4 percent increase in the average bill rate. Based on our research and client feedback, we believe the decrease in revenues was attributable to continued adverse economic trends in the healthcare sector, which contributed to the decrease in number of travelers on assignment, open orders, and average bill rates. While the Allied Healthcare operating environment continued to demonstrate signs of improvement, growth was constrained by a continued reduction in demand for elective procedures, a greater number of patients choosing more cost effective forms of treatment such as self-medication, hospitals reduced usage of contract professionals in response to declining cash balances and patient admissions, and reduced demand for less critical allied skill modalities and a dramatic decline in demand for flu vaccine as compared to the H1N1 pandemic we faced the prior year.
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On Assignment Inc. has a market cap of $250.19 million; its shares were traded at around $6.86 with a P/E ratio of 49 and P/S ratio of 0.6. ASGN is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Life Sciences segment revenues increased $7.5 million, or 33.1 percent. The increase in revenues was due to a $5.4 million increase in assignment revenue as a result of a 21.7 percent increase in the average number of contract professionals on assignment and a $1.9 million, or 226.5 percent increase in direct hire and conversion fees. The year-over-year increase in revenues was primarily attributable to increased demand for our service offerings as our clients end markets have improved in the third quarter of 2010 with the economic recovery and the Cambridge and Sharpstream acquisitions. Life Sciences revenues for the three months ended September 30, 2010 include $1.8 million and $1.6 million related to our Cambridge and Sharpstream acquisitions, respectively.Healthcare segment revenues (comprised of our Nurse Travel and Allied Healthcare lines of business) decreased $1.2 million, or 5.5 percent. Nurse Travel revenues decreased $1.0 million, or 9.6 percent, to $9.7 million, which included $2.2 million of revenue generated from supporting a customer that experienced a labor disruption. The decrease was due primarily to a 28.4 percent decrease in the average number of nurses on assignment and a 2.7 percent decrease in the average bill rate. Allied Healthcare revenues decreased $0.1 million, or 1.3 percent, to $10.2 million due to a 9.5 percent decrease in the average number of contract professionals on assignment and $0.1 million decrease in direct hire and conversion fee revenues. These decreases were slightly offset by a 2.5 percent increase in the average bill rate. Based on our research and client feedback, the decrease in revenues was attributable to continued adverse economic trends in the healthcare sector, which contributed to the decrease in number of travelers on assignment, open orders, and average bill rates. While the Allied Healthcare operating environment continued to demonstrate signs of improvement, growth was constrained by a continued reduction in demand for elective procedures, a greater number of patients choosing more cost effective forms of treatment such as self-medication, hospitals reduced usage of contract professionals in response to declining cash balances and patient admissions, and reduced demand for less critical allied skill modalities and a dramatic decline in demand for flu vaccine as compared to the H1N1 pandemic we faced the prior year.
Physician segment gross profit decreased $1.9 million, or 25.7 percent. The decrease in gross profit was due to a $3.8 million, or 16.8 percent, decrease in the segment revenues, as well as a 355 basis point contraction in gross margin. The contraction in gross margin was primarily due to a $0.5 million increase in medical malpractice expense, which included $0.4 million related to reduced indemnification claims from Vista s shareholders based on improved medical malpractice settlements, as well as a 2.3 percent decrease in bill/pay spread. The contraction in gross margin was partially offset by $0.3 million increase in direct hire and conversion fee revenues.
IT and Engineering segment gross profit increased $6.1 million, or 53.7 percent, primarily due to a $15.6 million, or 48.9 percent increase in revenues as well as a 114 basis point expansion in gross margin. The expansion in gross margin was primarily due to a $0.6 million increase in direct hire and conversion fee revenues, partially offset by a $1.6 million increase in other employee expenses.
For the three months ended September 30, 2010, SG&A expenses increased $5.2 million, or 18.3 percent, to $33.7 million from $28.5 million for the same period in 2009. The increase in SG&A expenses was primarily due to a $5.0 million increase in compensation and benefits. The increase in compensation and benefits was due to a $3.3 million increase in bonuses, commissions and stock-based compensation as a result of increased revenue and the attainment of incentive compensation targets as well as a $1.1 million increase in compensation expenses as a result of increased headcount related to the Cambridge and Sharpstream acquisitions. The increase in SG&A expenses was also due to a $0.3 million increase in travel expenses primarily for acquisition-related activities, a $0.3 million increase in bad debt expenses and a $0.3 million increase in other expenses. The increase in SG&A expenses was partially offset by a $1.0 million decrease in amortization expense as certain intangible assets became fully amortized in the first quarter of 2010. Total SG&A expenses as a percentage of revenues were 29.0 percent for the three months ended September 30, 2010 and September 30, 2009.
Healthcare segment revenues (comprised of our Nurse Travel and Allied Healthcare lines of business) decreased $18.0 million, or 23.8 percent. Nurse Travel revenues decreased $17.8 million, or 38.7 percent, to $28.3 million, which included $2.2 million of revenue generated from supporting a customer that experienced a labor disruption. The decrease was primarily due to a 45.2 percent decrease in the average number of nurses on assignment and a 4.5 percent decrease in the average bill rate. Allied Healthcare revenues decreased $0.2 million, or 0.7 percent, to $29.5 million due to a 6.7 percent decrease in the average number of contract professionals on assignment and a $0.4 million decrease in direct hire and conversion fee revenues. These decreases were partially offset by a 4.4 percent increase in the average bill rate. Based on our research and client feedback, we believe the decrease in revenues was attributable to continued adverse economic trends in the healthcare sector, which contributed to the decrease in number of travelers on assignment, open orders, and average bill rates. While the Allied Healthcare operating environment continued to demonstrate signs of improvement, growth was constrained by a continued reduction in demand for elective procedures, a greater number of patients choosing more cost effective forms of treatment such as self-medication, hospitals reduced usage of contract professionals in response to declining cash balances and patient admissions, and reduced demand for less critical allied skill modalities and a dramatic decline in demand for flu vaccine as compared to the H1N1 pandemic we faced the prior year.
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