er_q3.htm

Peter Dameris, President and Chief Executive Officer of On Assignment, Inc. said, “We are very pleased that, for the first time since Q3 of 2007, all of our operating segments reported for the quarter both sequential and year-over-year revenue growth, with each segment contributing double-digit revenue increases as compared with the third quarter of 2010. While the economic environment remains difficult, our client diversification and focus on highly-skilled positions have served us well and permitted us to report record quarterly revenues.”

Commenting on the results for the third quarter, Dameris continued, “During the quarter, revenues at our IT & Engineering segment grew 48% year-over-year and Life Sciences segments grew 39%. Revenues in our Healthcare segment, which resumed growth in the first quarter after over two years of decline, grew 36% year-over-year and revenues in our Physician Staffing segment, which includes two months of contribution from the acquisition of HealthCare Partners, grew 24%.”

Jim Brill, Senior Vice President and Chief Financial Officer of On Assignment, Inc. stated, “Our third quarter gross margin of 33.6% was down 38 basis points from the second quarter of 2011 due in part to a reduction in direct hire and conversion revenue as a percent of revenue and the relative increase in lower margin Nurse Travel revenue. In the third quarter of 2011, gross margin in our IT and Engineering division was 35.8%, in Life Sciences it was 33.9%, Healthcare gross margin was 27.5% and Physician staffing gross margin was 33.3%.”

The IT and Engineering segment revenues were $70.1 million, up 47.7% year-over-year and 7.3% sequentially. Life Sciences segment revenues were $41.8 million, up 39.1% year-over-year and 5.5% from the second quarter of 2011. Healthcare segment revenues, which include the Nurse Travel and Allied Healthcare lines of business, were $27.1 million, up 36.4% year-over-year and 24.6% sequentially. Nurse Travel revenues (which included $3.9 million and $2.2 million in the third quarter of 2011 and 2010, respectively, and $0.9 million in the second quarter of 2011 in revenue generated from supporting customers that experienced labor disruptions) were $15.4 million, up 58.2% year-over-year and 41.9% sequentially. Allied Healthcare revenues were $11.7 million, up 15.5% year-over-year and 7.5% sequentially. Physician segment revenues which included two months of revenue related to the recent acquisition of HealthCare Partners were $23.4 million, up 24.5% year over year and 37.5% sequentially.

SG&A increased by $2.8 million over the second quarter of 2011 primarily due to the acquisition of HealthCare Partners, higher branch office expenses, mainly commissions on the higher revenue levels and headcount additions to support anticipated high growth in certain segments and a $1.3 million expense reduction in the second quarter from a favorable settlement of an acquisition earnout. Capital expenditures were $1.4 million, amortization of intangibles was $0.7 million and depreciation was $1.7 million.

·	Revenues of $157 million to $159 million

·	Gross Margin of approximately 33.2%

·	SG&A of approximately $41.5 million which includes $0.2 million in acquisition-related expenses, depreciation of approximately $1.6 million, amortization of approximately $0.7 million and approximately $1.8 million in equity-based compensation expense

·	Adjusted EBITDA of $15.0 million to $15.8 million

·	Net income of $5.8 million to $6.3 million

·	Earnings per diluted share of $0.15 to $0.16

The estimates above assume no deterioration in the staffing markets On Assignment serves, normal seasonal patterns, no weather related plant closures and no longer than normal holiday patterns for our clients. Excluding labor disruption revenue from the third quarter 2011, fourth quarter revenue is estimated to increase, on an average billable day basis, over the third quarter. This estimate is based on there being 64 billable days in the third quarter and 61 billable days in the fourth quarter. The estimates assume year-over-year revenue growth in the low 30% range for IT and Engineering and for Life Sciences, the low 20% range for Healthcare and the high 30% range for Physician Staffing.

On Assignment will hold its quarterly conference call to discuss its third quarter 2011 financial results this afternoon, Thursday, October 27, 2011 at 1:30 p.m. Pacific Time. Interested parties are invited to listen to the conference call by dialing (877) 805-4089 or (281) 913-8521 ten minutes before the call. The conference ID number is 15636206. A replay of the conference call can be accessed from approximately 5:30 p.m. Pacific Time Thursday, October 27, 2011 through Thursday, November 3, 2011 by dialing (855) 859-2056 or (404) 537-3406 with the conference ID number 15636206

On Assignment, Inc. (NASDAQ: ASGN), is a leading global provider of highly skilled, hard-to-find professionals in the growing life sciences, healthcare, and technology sectors, where quality people are the key to success. The Company goes beyond matching résumés with job descriptions to match people they know into positions they understand for temporary, contract-to-hire, and direct hire assignments. Clients recognize On Assignment for their quality candidates, quick response, and successful assignments. Professionals think of On Assignment as career-building partners with the depth and breadth of experience to help them reach their goals.

On Assignment was founded in 1985 and went public in 1992. The corporate headquarters are located in Calabasas, California, with a network of approximately 78 branch offices throughout the United States, Canada, United Kingdom, Netherlands, Ireland, Spain and Belgium. Additionally, physician placements are made in Australia and New Zealand. To learn more, visit http://www.onassignment.com.

Statements made in this release and the Supplemental Financial Information accompanying 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 GAAP, and is intended to enhance an overall understanding of our current financial performance. The Supplemental Financial Information sets forth financial measures reviewed by our management to evaluate our operating performance. Such measures also are used to determine a portion of the compensation for some of our executives and employees. 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 EBITDA (earnings before interest, taxes, depreciation, amortization of identifiable intangible assets), another term is Adjusted EBITDA (EBITDA plus equity-based compensation expense, impairment charges and acquisition related costs), which terms 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 tables that accompany this press release include reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

Certain statements made in this news release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk and uncertainty. Forward-looking statements include statements regarding the Company’s anticipated financial and operating performance in 2011. All statements in this release, other than those setting forth strictly historical information, are forward-looking statements. Forward-looking statements are not guarantees of future performance, and actual results might differ materially. In particular, the Company makes no assurances that the estimates of revenues, gross margin, SG&A, Adjusted EBITDA, net income, earnings per share or earnings per diluted share set forth above will be achieved. Factors that could cause or contribute to such differences include actual demand for our services, our ability to attract, train and retain qualified staffing consultants, our ability to remain competitive in obtaining and retaining temporary staffing clients, the availability of qualified temporary nurses and other qualified temporary professionals, management of our growth, continued performance of our enterprise-wide information systems, and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 16, 2011 and our quarterly reports on forms 10Q for the period ending March 31, 2011 and June 30, 2011 as filed with the SEC on May 10, 2011 and August 9, 2011 respectively. We specifically disclaim any intention or duty to update any forward-looking statements contained in this news release.

	Three Months Ended									Nine Months Ended
	September 30, 2011			September 30, 2010			June 30, 2011			September 30, 2011			September 30, 2010

Revenues	$	162,370		$	116,141		$	143,683		$	435,491		$	316,913
Cost of services		107,842			75,038			94,889			289,015			209,691
Gross profit		54,528			41,103			48,794			146,476			107,222
Selling, general and administrative expenses		40,792			33,661			37,999			115,546			95,456
Operating income		13,736			7,442			10,795			30,930			11,766
Interest expense		(750	)		(1,601	)		(784	)		(2,264	)		(4,768)
Interest income		18			7			4			39			71
Income before income taxes		13,004			5,848			10,015			28,705			7,069
Income tax provision		5,237			2,685			4,150			11,909			3,268
Net income	$	7,767		$	3,163		$	5,865		$	16,796		$	3,801
Earnings per share:
Basic	$	0.21		$	0.09		$	0.16		$	0.46		$	0.10
Diluted	$	0.21		$	0.09		$	0.16		$	0.44		$	0.10
Number of shares and share equivalents used to calculate earnings per share:
Basic		37,001			36,506			36,971			36,866			36,432
Diluted		37,769			36,974			37,718			37,756			37,020

	Three Months Ended						Nine Months Ended
	September 30, 2011		September 30, 2010		June 30, 2011		September 30, 2011		September 30, 2010
Revenues:
Life Sciences	$	41,820	$	30,060	$	39,626	$	114,403	$	78,621

Healthcare Staffing		27,091		19,863		21,736		68,671		57,739

Physician Staffing		23,385		18,789		17,002		56,905		56,077

IT and Engineering		70,074		47,429		65,319		195,512		124,476
Consolidated revenues	$	162,370	$	116,141	$	143,683	$	435,491	$	316,913

Gross profit:
Life Sciences	$	14,163	$	11,194	$	13,592	$	39,025	$	26,603

Healthcare Staffing		7,458		6,849		6,157		19,242		17,570

Physician Staffing		7,794		5,601		5,633		18,726		17,870

IT and Engineering		25,113		17,459		23,412		69,483		45,179
Consolidated gross profit	$	54,528	$	41,103	$	48,794	$	146,476	$	107,222

	As of
	September 30, 2011		September 30, 2010		June 30, 2011
Cash and cash equivalents	$	13,245	$	30,278	$	19,183
Accounts receivable, net		96,485		60,546		80,831
Goodwill and Intangible assets, net		261,053		240,056		246,766
Total assets		406,729		362,537		383,673
Current portion of long-term debt		5,000		—		5,000
Current liabilities		64,985		40,755		60,246
Long-term debt		83,000		77,913		72,250
Other long-term liabilities		20,076		10,359		18,249
Stockholders’ equity		238,668		233,510		232,928

	Three Months Ended
	September 30, 2011 (1)				September 30, 2010 (1)				June 30, 2011 (1)
Net income	$	7,767	$	0.21	$	3,163	$	0.09	$	5,865	$	0.16
Interest expense, net		732		0.02		1,594		0.04		780		0.02
Income tax provision		5,237		0.14		2,685		0.07		4,150		0.11
Depreciation		1,677		0.04		1,501		0.04		1,686		0.04
Amortization of intangibles		663		0.02		522		0.01		554		0.01
EBITDA		16,076		0.43		9,465		0.26		13,035		0.35
Equity-based compensation		1,838		0.05		2,099		0.06		1,621		0.04
Acquisition costs expensed		265		0.01		130		―		175		―
Adjusted EBITDA	$	18,179	$	0.48	$	11,694	$	0.32	$	14,831	$	0.39

	Nine Months Ended
	September 30, 2011				September 30, 2010
Net income	$	16,796	$	0.44	$	3,801	$	0.10
Interest expense, net		2,225		0.06		4,697		0.13
Income tax provision		11,909		0.32		3,268		0.09
Depreciation		4,911		0.13		4,403		0.12
Amortization of intangibles		1,633		0.04		1,595		0.04
EBITDA		37,474		0.99		17,764		0.48
Equity-based compensation		5,084		0.13		5,318		0.14
Acquisition costs expensed		992		0.03		273		0.01
Adjusted EBITDA	$	43,550	$	1.15	$	23,355	$	0.63

		Healthcare
	Life Sciences		Allied Healthcare	Nurse Travel	Total Healthcare	Physician Staffing	IT and Engineering	Consolidated
Revenues:
Q3 2011	$ 41,820		$ 11,735	$ 15,356	$ 27,091	$ 23,385	$ 70,074	$ 162,370
Q2 2011	$ 39,626		$ 10,915	$ 10,821	$ 21,736	$ 17,002	$ 65,319	$ 143,683
% Sequential change	5.5%		7.5%	41.9%	24.6%	37.5%	7.3%	13.0%
Q3 2010	$ 30,060		$ 10,157	$ 9,706	$ 19,863	$ 18,789	$ 47,429	$ 116,141
% Year-over-year change	39.1%		15.5%	58.2%	36.4%	24.5%	47.7%	39.8%

Gross margins:
Q3 2011	33.9%		31.7%	24.3%	27.5%	33.3%	35.8%	33.6%
Q2 2011	34.3%		32.5%	24.2%	28.3%	33.1%	35.8%	34.0%
Q3 2010	37.2%		34.2%	34.8%	34.5%	29.8%	36.8%	35.4%

	Three Months Ended
	September 30, 2011		June 30, 2011
Percentage of revenues:
Top ten clients		7.5%		7.8%
Direct hire/conversion		3.0%		3.1%

Bill rate:
% Sequential change		1.8%		(0.4%)
% Year-over-year change		5.5%		4.6%

Bill/Pay spread:
% Sequential change		0.8%		0.9%
% Year-over-year change		6.0%		6.1%

Average headcount:
Contract professionals (CP)		4,765		4,421
Staffing consultants (SC)		816		776

Productivity:
Gross profit per SC		$ 67,000		$ 63,000

	Three Months Ended						Nine Months Ended
	September 30, 2011		September 30, 2010		June 30, 2011		September 30, 2011		September 30, 2010
Cash provided by operations	$	2,109	$	5,929	$	7,167	$	15,054	$	20,402
Capital expenditures		1,374		1,358		2,022		6,046		4,194

	Estimated Range of Results
	Quarter Ending
	December 31, 2011
Net income	$	5,800	$	6,300
Interest expense		800		800
Income tax provision		4,100		4,400
Depreciation and amortization		2,300		2,300
EBITDA		13,000		13,800
Equity-based compensation		1,800		1,800
Acquisition expenses		200		200
Adjusted EBITDA	$	15,000	$	15,800