EX-99.1 2 a4757557ex991.txt MEDICAL STAFFING NETWORK HOLDINGS EXHIBIT 99.1 Exhibit 99.1 Medical Staffing Network Holdings Announces Third Quarter 2004 Operating Results; Return to Profitability on Slight Revenue Increase - Continued Strong Cash Flow BOCA RATON, Fla.--(BUSINESS WIRE)--Nov. 3, 2004--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 $106.2 million for the third quarter of 2004, an increase of 0.2% from second quarter 2004 revenues of $106.0 million and a decrease of 14.1% from third quarter 2003 revenues of $123.7 million. Income from continuing operations for the third quarter of 2004 was $0.3 million, or $0.01 per diluted share, compared with $1.1 million, or $0.04 per diluted share, for the third quarter of 2003. Cash flow from operating activities was $8.6 million for the third quarter of 2004 as compared with $17.5 million for the same period of the prior year. Commenting on the third quarter's results, Robert J. Adamson, chief executive officer, stated, "We are very pleased to have returned to profitability this quarter. With some of the country's large public healthcare companies reporting disappointing admissions coupled with a lingering aversion to the utilization of supplemental staffing, the healthcare staffing market continues to be soft. The reports of operating results for other national healthcare staffing companies affirm our belief that our market continues to contract. In spite of these difficult industry conditions, we have stabilized our revenues in recent quarters and this quarter reported our first sequential increase in revenues since early 2003. Our revenues and earnings include the negative impact from the four successive hurricanes that hit the Southeastern United States in recent months. Our results appear to be in contrast to other large per diem healthcare staffing companies who are not experiencing revenue stabilization or profit improvement. We attribute this accomplishment to our success in attaining a preferred provider relationship with many of our clients, which allows us to be the first vendor they call and the last vendor they cancel, coupled with our sophisticated operating platform." Kevin S. Little, president and chief operating officer, added, "We continue to capitalize on the growing trend toward vendor consolidation. Our partnered staffing solution programs continue to gain traction, and our sophisticated platform and national footprint uniquely position us to capture these opportunities. We were recently appointed as the vendor on premise for a large multi-facility healthcare system in the New England area. We were also recently appointed as the master service provider for certain facilities within the Providence Health System in the state of Washington. However, the sales cycle on these programs is quite lengthy, and the overall consolidation process moves at a slow pace. We intend to continue to be very aggressive in increasing our market share, and we are ideally positioned and prepared for an increase in demand when it occurs. Our focus on fiscal discipline is producing improved results, with a return to profitability, strong cash flow and stable margins." Gross profit was $23.0 million for the third quarter of 2004, a 13.2% decrease from third quarter of 2003 gross profit of $26.5 million, but an increase of 1.6% from second quarter of 2004 gross profit of $22.7 million. The year-over-year decrease is primarily due to the decline in revenues due to a decrease in the number of hours worked by professionals. The gross margin of 21.7% for the third quarter of 2004 remained consistent with the gross margins of 21.4% for the second quarter of 2004 and 21.5% for the third quarter of 2003. Selling, general and administrative expenses decreased to $16.1 million, or 15.2% of revenues, in the third quarter of 2004 compared with $18.7 million, or 15.2% of revenues, for the third quarter of 2003. The year-over-year decrease is primarily due to a reduction in bad debt expense and other cost saving measures. Corporate and administrative expenses increased to $3.8 million, or 3.6% of revenues, in the third quarter of 2004 compared with $3.1 million, or 2.5% of revenues, for the third quarter of 2003. The increase was primarily due to higher professional fees including those associated with Sarbanes-Oxley implementation. Revenues were $318.6 million for the nine months ended September 26, 2004, a 21.4% decrease from revenues of $405.2 million for the comparable prior year period. The loss from continuing operations for the nine months ended September 26, 2004, was $1.2 million, or $0.04 per share, compared with income from continuing operations of $7.1 million, or $0.24 per diluted share, for the comparable prior year period. Cash flow from operating activities was $24.9 million for the nine months ended September 26, 2004, compared with $25.7 million for the comparable prior year period. Gross profit was $67.9 million for the nine months ended September 26, 2004, a 25.1% decrease from gross profit of $90.6 million for the comparable prior year period. The decrease was primarily due to a decline in revenues due to a decrease in the number of hours worked by professionals and a lower average gross margin. Gross margin was 21.3% for the nine months ended September 26, 2004, as compared with 22.4% for the comparable prior year period. The year-over-year margin decrease was primarily due to higher compensation and other direct costs related to the Company's healthcare professionals. Selling, general and administrative expenses decreased to $50.4 million, or 15.8% of revenues, for the nine months ended September 26, 2004, compared with $61.6 million, or 15.2% of revenues, for the comparable prior year period. The decrease is primarily due to the closing of locations and other cost reduction programs implemented as a part of the restructuring initiative and the pretax restructuring charge of $0.8 million recorded in the second quarter of 2003. Corporate and administrative expenses increased to $11.4 million, or 3.6% of revenues, for the nine months ended September 26, 2004, compared with $8.5 million, or 2.1 % of revenues, for the comparable prior year period. The increase was primarily due to higher professional fees including those associated with Sarbanes-Oxley implementation and a charge recorded in the second quarter of 2004 associated with executive severance and search costs. Earnings Guidance As previously announced, the Company has adopted a policy not to provide forward-looking financial guidance since such estimates involve a high degree of uncertainty. Accordingly, the Company has made the decision to no longer provide forward-looking guidance with respect to the Company's anticipated quarterly financial results. 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 November 4, 2004. 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.fulldisclosure.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 maintain the recent stabilization in revenues and gross margins, our ability to increase revenues or market share, our ability to continue to generate significant amounts of cash flow from operations, 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, 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 JHACO accreditation, our clients' ability to pay us for our services, 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. -0- MEDICAL STAFFING NETWORK HOLDINGS, INC. Condensed Consolidated Statements of Operations (unaudited; in thousands, except per share data) Three Months Ended Nine Months Ended ------------------- ------------------ Sept. 26, Sept. 28, Sept. 26 Sept. 28, 2004 2003 2004 2003 -------- --------- ------- -------- Service revenues $106,204 $123,686 $318,599 $405,154 Cost of services rendered 83,167 97,147 250,715 314,552 -------- -------- -------- -------- Gross profit 23,037 26,539 67,884 90,602 -------- -------- -------- -------- Operating expenses: Selling, general and administrative 16,115 18,733 50,409 61,604 Corporate and administrative 3,829 3,112 11,414 8,500 Depreciation and amortization 1,615 1,757 4,912 5,082 -------- -------- -------- -------- Total operating expenses 21,559 23,602 66,735 75,186 -------- -------- -------- -------- Income from operations 1,478 2,937 1,149 15,416 Interest expense, net 780 1,147 2,751 3,549 -------- -------- -------- -------- Income (loss) from continuing operations before provision for (benefit from) income taxes 698 1,790 (1,602) 11,867 Provision for (benefit from) income taxes 410 693 (354) 4,723 -------- -------- -------- -------- Income (loss) from continuing operations 288 1,097 (1,248) 7,144 Loss from discontinued operations, net of taxes -- -- -- (506) -------- -------- -------- -------- Net income (loss) $288 $1,097 $(1,248) $6,638 ======== ======== ========= ======== Basic income (loss) from continuing operations $0.01 $0.04 $(0.04) $0.24 Discontinued operations, net of taxes -- -- -- (0.02) -------- -------- -------- -------- Basic net income (loss) per share $0.01 $0.04 $(0.04) $0.22 ======== ======== ======== ======== Diluted income (loss) from continuing operations $0.01 $0.04 $(0.04) $0.24 Discontinued operations, net of taxes -- -- -- (0.02) -------- -------- -------- -------- Diluted net income (loss) per share $0.01 $0.04 $(0.04) $0.22 ======== ======== ======== ======== Weighted average common shares outstanding: Basic 30,231 30,199 30,227 30,184 Diluted 30,326 30,618 30,227 30,816 Operating Statistics: Hours worked By healthcare professionals 2,489 2,857 7,508 9,636 By discontinued operations -- -- -- 1 -------- -------- -------- -------- Total hours worked 2,489 2,857 7,508 9,637 ======== ======== ======== ======== MEDICAL STAFFING NETWORK HOLDINGS, INC. Condensed Consolidated Balance Sheets (in thousands) Sept. 26, Dec. 28, 2004 2003 -------- -------- (unaudited) ASSETS Current assets: Cash and cash equivalents $397 $825 Accounts receivable, net 60,850 68,602 Other current assets 11,607 13,785 -------- -------- Total current assets 72,854 83,212 Furniture and equipment, net 8,966 11,377 Goodwill, net 125,052 125,028 Other assets, net 8,444 9,253 -------- -------- Total assets $215,316 $228,870 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and other current liabilities $13,585 $8,138 Accrued payroll and related liabilities 9,356 6,616 Current portion of long-term debt 12,000 -- -------- -------- Total current liabilities 34,941 14,754 Long-term debt, net of current portion 20,469 54,978 Deferred income taxes 9,492 7,115 Other long-term obligations 310 736 -------- -------- Total liabilities 65,212 77,583 Commitments and contingencies Total stockholders' equity 150,104 151,287 -------- -------- Total liabilities and stockholders' equity $215,316 $228,870 ======== ======== CONTACT: Medical Staffing Network Holdings, Inc., Boca Raton Robert J. Adamson, 561-322-1303