On Assignment Inc. Reports Operating Results (10-Q)
On Assignment Inc. has a market cap of $216.41 million; its shares were traded at around $5.95 with a P/E ratio of 85 and P/S ratio of 0.52. ASGN is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:Healthcare segment revenues (comprised of our Nurse Travel and Allied Healthcare lines of business) decreased $12.9 million, or 41.0 percent. Nurse Travel revenues decreased $12.3 million, or 57.7 percent, to $9.0 million primarily as a result of a 54.9 percent decrease in the average number of nurses on assignment and a 6.2 percent decrease in the average bill rate. Allied Healthcare revenues decreased $0.6 million, or 6.3 percent, to $9.6 million due to a 10.7 percent decrease in the average number of contract professionals on assignment and a $0.2 million decrease in direct hire and conversion fee revenues. These decreases were partially offset by a 5.3 percent
Physician segment gross profit decreased $0.6 million, or 8.5 percent. The decrease in gross profit was due to a $2.9 million, or 13.2 percent, decrease in the segment revenues, partially offset by a 165 basis point expansion in gross margin. The expansion in gross margin was primarily due to a $0.6 million decrease in medical malpractice expense as well as a $0.3 million increase in direct hire and conversion fee revenues. The expansion in gross margin was partially offset by a 7.3 percent decrease in bill/pay spread.
IT and Engineering segment gross profit decreased $1.5 million, or 10.4 percent, primarily due to a 6.2 percent decrease in revenues and a contraction in gross margin of 167 basis points. The contraction in gross margin was primarily due to a 12.2 percent decrease in the bill/pay spread and a $0.3 million decrease in conversion fee revenues. The decrease in gross margin was partially offset by a $0.5 million decrease in other employee expenses.
For the three months ended March 31, 2010, SG&A expenses decreased $3.3 million, or 10.0 percent, to $29.8 million from $33.1 million for the same period in 2009. The decrease in SG&A expenses was primarily due to a $1.9 million decrease in compensation and benefits as a result of decreased headcount as compared with the same period in 2009. The decrease in SG&A expenses was also due to a $0.9 million decrease in amortization expense as well as a $0.3 million decrease in bad debt expense. Total SG&A expenses as a percentage of revenues increased to 31.0 percent for the three months ended March 31, 2010 from 28.4 percent in the same period in 2009, primarily due to revenues decreasing more than SG&A expenses in the three months ended March 31, 2010.
Net cash used in investing activities was $1.2 million in the three months ended March 31, 2010 compared with $1.7 million in the same period in 2009. This decrease was primarily due to lower capital expenditures. Capital expenditures related to information technology projects, leasehold improvements and various property and equipment purchases for the three months ended March 31, 2010 totaled $1.3 million, compared with $1.6 million in the comparable 2009 period. We estimate capital expenditures to be approximately $5.0 million for calendar 2010.
The purchase of VISTA included a $4.1 million holdback for potential claims that are indemnifiable by the selling shareholders pursuant to the acquisition agreement. We released $3.6 million of the $4.1 million holdback for potential claims that are indemnifiable by the selling shareholders of VISTA as of March 31, 2010. We anticipate resolving the remaining indemnification claims, which total $0.5 million, in 2010 by the mutual agreement of the applicable parties. The Company has no additional earn-out payment obligations related to VISTA and Oxford.
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