UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~September 30, 2017~~March 31, 2019
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File No.: 001-16753

AMN HEALTHCARE SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware		06-1500476
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

12400 High Bluff Drive, Suite 100 San Diego, California		92130
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (866) 871-8519

____________________

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	AMN	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o
Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes o No x

As of ~~November~~May 1, ~~2017~~2019, there were ~~47,772,333~~46,619,697 shares of common stock, $0.01 par value, outstanding.

TABLE OF CONTENTS


Item		Page		Page

	PART I - FINANCIAL INFORMATION		PART I - FINANCIAL INFORMATION

1.	Condensed Consolidated Financial Statements (unaudited):	1	Condensed Consolidated Financial Statements (unaudited):	1
			Condensed Consolidated Balance Sheets, As of March 31, 2019 and December 31, 2018	1
	Condensed Consolidated Balance Sheets, As of September 30, 2017 and December 31, 2016	1	Condensed Consolidated Statements of Comprehensive Income, For the Three Months Ended March 31, 2019 and 2018	2
	Condensed Consolidated Statements of Comprehensive Income, For the Three and Nine Months Ended September 30, 2017 and 2016	2	Condensed Consolidated Statements of Stockholders’ Equity, For the Three Months Ended March 31, 2019 and 2018	3
	Condensed Consolidated Statements of Cash Flows, For the Nine Months Ended September 30, 2017 and 2016	3	Condensed Consolidated Statements of Cash Flows, For the Three Months Ended March 31, 2019 and 2018	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5	Notes to Unaudited Condensed Consolidated Financial Statements	5
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
3.	Quantitative and Qualitative Disclosures about Market Risk	22	Quantitative and Qualitative Disclosures about Market Risk	23
4.	Controls and Procedures	23	Controls and Procedures	23

	PART II - OTHER INFORMATION		PART II - OTHER INFORMATION


1.	Legal Proceedings	24	Legal Proceedings	24
1A.	Risk Factors	24	Risk Factors	24
2.	Unregistered Sales of Equity Securities and Use of Proceeds	24	Unregistered Sales of Equity Securities and Use of Proceeds	24
3.	Defaults Upon Senior Securities	24	Defaults Upon Senior Securities	24
4.	Mine Safety Disclosures	24	Mine Safety Disclosures	24
5.	Other Information	24	Other Information	24
6.	Exhibits	25	Exhibits	25
	Signatures	26	Signatures	26

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except par value)


	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	19,625		$	10,622		$	19,116		$	13,856
Accounts receivable, net of allowances of $11,381 and $11,376 at September 30, 2017 and December 31, 2016, respectively	343,596			341,977
Accounts receivable, net of allowances of $11,716 and $10,560 at March 31, 2019 and December 31, 2018, respectively							365,231			365,871
Accounts receivable, subcontractor	37,200			49,233			55,607			50,143
Prepaid expenses	15,832			14,189			17,724			12,409
Other current assets	26,220			34,607			31,209			39,887
Total current assets	442,473			450,628			488,887			482,166
Restricted cash, cash equivalents and investments	34,380			31,287			61,279			59,331
Fixed assets, net of accumulated depreciation of $94,531 and $84,865 at September 30, 2017 and December 31, 2016, respectively	68,188			59,954
Fixed assets, net of accumulated depreciation of $119,489 and $114,413 at March 31, 2019 and December 31, 2018, respectively							93,625			90,419
Operating lease right-of-use assets							97,055			—
Other assets	73,962			57,534			105,590			96,152
Goodwill	340,596			341,754			464,923			438,506
Intangible assets, net of accumulated amortization of $85,990 and $72,057 at September 30, 2017 and December 31, 2016, respectively	231,791			245,724
Intangible assets, net of accumulated amortization of $121,575 and $114,924 at March 31, 2019 and December 31, 2018, respectively							326,466			326,147
Total assets	$	1,191,390		$	1,186,881		$	1,637,825		$	1,492,721
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	117,934		$	137,512		$	153,566		$	149,603
Accrued compensation and benefits	111,984			107,993			135,792			135,059
Current portion of notes payable, less unamortized fees	—			3,750
Current portion of operating lease liabilities							12,341			—
Deferred revenue	9,609			8,924			11,459			12,365
Other current liabilities	5,440			16,611			20,112			10,243
Total current liabilities	244,967			274,790			333,270			307,270

Revolving credit facility							150,000			120,000
Notes payable, less unamortized fees	319,652			359,192			320,798			320,607
Deferred income taxes, net	11,899			21,420			20,079			27,326
Operating lease liabilities							99,946			—
Other long-term liabilities	82,673			82,096			63,746			78,528
Total liabilities	659,191			737,498			987,839			853,731
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000 shares authorized; none issued and outstanding at September 30, 2017 and December 31, 2016	—			—
Common stock, $0.01 par value; 200,000 shares authorized; 48,402 issued and 47,772 outstanding, respectively, at September 30, 2017 and 48,055 issued and 47,612 outstanding, respectively, at December 31, 2016	484			481
Preferred stock, $0.01 par value; 10,000 shares authorized; none issued and outstanding at March 31, 2019 and December 31, 2018							—			—
Common stock, $0.01 par value; 200,000 shares authorized; 49,122 issued and 46,578 outstanding at March 31, 2019 and 48,809 issued and 46,643 outstanding at December 31, 2018							491			488
Additional paid-in capital	451,136			452,491			447,632			452,730
Treasury stock, at cost (630 and 443 shares at September 30, 2017 and December 31, 2016, respectively)	(20,358		)	(13,261		)
Treasury stock, at cost (2,544 and 2,166 shares at March 31, 2019 and December 31, 2018, respectively)							(118,368		)	(100,438		)
Retained earnings	101,062			9,671			320,181			286,059
Accumulated other comprehensive income (loss)	(125		)	1
Accumulated other comprehensive income							50			151
Total stockholders’ equity	532,199			449,383			649,986			638,990
Total liabilities and stockholders’ equity	$	1,191,390		$	1,186,881		$	1,637,825		$	1,492,721

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands, except per share amounts)


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016		2017			2016			2019			2018
Revenue	$	494,406		$	472,636	$	1,479,378		$	1,414,367		$	532,441		$	522,489
Cost of revenue	334,867			318,169		997,051			953,249			355,682			354,665
Gross profit	159,539			154,467		482,327			461,118			176,759			167,824
Operating expenses:
Selling, general and administrative	100,579			99,995		299,325			297,359			119,997			104,737
Depreciation and amortization	8,132			7,789		23,759			21,888			11,710			7,886
Total operating expenses	108,711			107,784		323,084			319,247			131,707			112,623
Income from operations	50,828			46,683		159,243			141,871			45,052			55,201
Interest expense, net, and other	4,837			3,016		14,895			9,065			5,673			5,335
Income before income taxes	45,991			43,667		144,348			132,806			39,379			49,866
Income tax expense	17,863			16,371		52,957			53,319			5,257			7,185
Net income	$	28,128		$	27,296	$	91,391		$	79,487		$	34,122		$	42,681

Other comprehensive income (loss):
Other comprehensive loss:
Foreign currency translation and other	(73		)	40		(111		)	165			(101		)	(19		)
Cash flow hedge, net of income taxes	—			231		(15		)	(343		)
Other comprehensive income (loss)	(73		)	271		(126		)	(178		)
Other comprehensive loss												(101		)	(19		)

Comprehensive income	$	28,055		$	27,567	$	91,265		$	79,309		$	34,021		$	42,662

Net income per common share:
Basic	$	0.59		$	0.57	$	1.91		$	1.66		$	0.73		$	0.89
Diluted	$	0.57		$	0.55	$	1.85		$	1.61		$	0.71		$	0.87
Weighted average common shares outstanding:
Basic	47,912			48,049		47,870			47,993			46,784			47,733
Diluted	49,445			49,410		49,480			49,287			47,772			49,116

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands)



	Common Stock			Additional Paid-in Capital			Treasury Stock					Retained Earnings		Accumulated Other Comprehensive Loss			Total
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Retained Earnings		Accumulated Other Comprehensive Loss			Total
Balance, December 31, 2017	48,411	$	484	$	453,351		(930	)	$	(33,425	)	$	142,229	$	(112	)	$	562,527
Equity awards vested and exercised, net of shares withheld for payroll taxes	349	4		(10,930		)	—		—			—		—			(10,926		)
Cumulative-effect adjustment from adoption of the new revenue recognition standard	—	—		—			—		—			2,089		—			2,089
Share-based compensation	—	—		2,864			—		—			—		—			2,864
Comprehensive income (loss)	—	—		—			—		—			42,681		(19		)	42,662
Balance, March 31, 2018	48,760	$	488	$	445,285		(930	)	$	(33,425	)	$	186,999	$	(131	)	$	599,216



	Common Stock			Additional Paid-in Capital			Treasury Stock					Retained Earnings		Accumulated Other Comprehensive Income			Total
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Retained Earnings		Accumulated Other Comprehensive Income			Total
Balance, December 31, 2018	48,809	$	488	$	452,730		(2,166	)	$	(100,438	)	$	286,059	$	151		$	638,990
Repurchase of common stock into treasury	—	—		—			(378	)	(17,930		)	—		—			(17,930		)
Equity awards vested and exercised, net of shares withheld for payroll taxes	313	3		(10,284		)	—		—			—		—			(10,281		)
Share-based compensation	—	—		5,186			—		—			—		—			5,186
Comprehensive income (loss)	—	—		—			—		—			34,122		(101		)	34,021
Balance, March 31, 2019	49,122	$	491	$	447,632		(2,544	)	$	(118,368	)	$	320,181	$	50		$	649,986

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2019			2018
Cash flows from operating activities:
Net income	$	91,391		$	79,487		$	34,122		$	42,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23,759			21,888			11,710			7,886
Non-cash interest expense and other	1,718			1,180			543			600
Write-off of fees on the prior credit facilities							—			574
Change in fair value of contingent consideration	66			(88		)	(700		)	—
Increase in allowances for doubtful accounts and sales credits	9,012			6,746			2,608			2,257
Provision for deferred income taxes	(9,512		)	(3,209		)	(9,036		)	(5,113		)
Share-based compensation	7,720			8,795			5,186			2,864
Excess tax benefits from share-based compensation	—			(2,764		)
Loss on disposal or sale of fixed assets	130			45			4			5
Amortization of discount on investments	(112		)	—			(120		)	(15		)
Non-cash lease expense							(92		)	—
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	(10,631		)	(42,594		)	(1,500		)	9,154
Accounts receivable, subcontractor	12,033			8,681			(5,465		)	1,985
Income taxes receivable	(1,854		)	6,160			799			9,881
Prepaid expenses	(1,643		)	(195		)	(5,387		)	(2,375		)
Other current assets	10,155			(10,109		)	(1,783		)	2,825
Other assets	(5,204		)	(4,295		)	(6,202		)	(89		)
Accounts payable and accrued expenses	(20,442		)	(791		)	2,949			(7,816		)
Accrued compensation and benefits	3,991			10,761			330			(4,007		)
Other liabilities	(5,112		)	5,736			9,630			(1,498		)
Deferred revenue	678			256			(1,418		)	(52		)
Restricted cash, cash equivalents and investments balance	(9,761		)	(870		)
Restricted investments balance							36			(12		)
Net cash provided by operating activities	96,382			84,820			36,214			59,735

Cash flows from investing activities:
Purchase and development of fixed assets	(17,168		)	(17,705		)	(7,388		)	(5,703		)
Purchase of investments	(11,021		)	—			(7,362		)	(2,086		)
Proceeds from maturity of investments	17,200			—			11,700			2,900
Change in restricted cash, cash equivalents and investments balance	601			—
Payments to fund deferred compensation plan	(10,056		)	(5,665		)	(3,583		)	(4,724		)
Equity investment	(2,000		)	—
Cash paid for acquisitions, net of cash received	—			(216,553		)	(29,525		)	—
Cash paid for working capital adjustments and holdback liability for prior year acquisitions	(1,000		)	(1,348		)
Cash paid for other intangibles							(90		)	—
Net cash used in investing activities	(23,444		)	(241,271		)	(36,248		)	(9,613		)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2019			2018
Cash flows from financing activities:
Capital lease repayments	—			(6		)
Payments on term loans	(44,063		)	(8,438		)
Proceeds from term loans	—			75,000
Payments on revolving credit facility	—			(24,000		)
Proceeds from revolving credit facility	—			124,000			30,000			—
Repurchase of common stock	(7,097		)	—			(17,930		)	—
Payment of financing costs	—			(448		)	—			(2,331		)
Earn-out payments for prior acquisitions	(3,677		)	(900		)	—			(1,713		)
Proceeds from termination of derivative contract	85			—
Cash paid for shares withheld for taxes	(9,072		)	(5,554		)	(10,280		)	(10,926		)
Excess tax benefits from equity awards vested and exercised	—			2,764
Net cash provided by (used in) financing activities	(63,824		)	162,418			1,790			(14,970		)
Effect of exchange rate changes on cash	(111		)	165			(101		)	(19		)
Net increase in cash and cash equivalents	9,003			6,132
Cash and cash equivalents at beginning of period	10,622			9,576
Cash and cash equivalents at end of period	$	19,625		$	15,708
Net increase in cash, cash equivalents and restricted cash							1,655			35,133
Cash, cash equivalents and restricted cash at beginning of period							84,324			98,894
Cash, cash equivalents and restricted cash at end of period							$	85,979		$	134,027

Supplemental disclosures of cash flow information:
Cash paid for interest (net of $113 and $158 capitalized for the nine months ended September 30, 2017 and 2016, respectively)	$	9,395		$	7,106
Cash paid for amounts included in the measurement of operating lease liabilities							$	4,338		$	—
Cash paid for interest (net of $102 and $104 capitalized for the three months ended March 31, 2019 and 2018, respectively)							$	1,524		$	201
Cash paid for income taxes	$	65,998		$	52,684		$	4,192		$	2,731
Acquisitions:
Fair value of tangible assets acquired in acquisitions, net of cash received	$	—		$	18,789		$	1,041		$	—
Goodwill	—			136,521			26,494			—
Intangible assets	—			89,064			6,880			—
Liabilities assumed	—			(21,921		)	(3,390		)	—
Holdback provision	—			(1,830		)
Earn-out liabilities	—			(4,070		)	(1,500		)	—
Net cash paid for acquisitions	$	—		$	216,553		$	29,525		$	—
Supplemental disclosures of non-cash investing and financing activities:
Purchase of fixed assets recorded in accounts payable and accrued expenses	$	3,156		$	1,370		$	2,566		$	2,860

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

1. BASIS OF PRESENTATION

The condensed consolidated balance sheets and related condensed consolidated statements of comprehensive income and cash flows contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”), which are unaudited, include the accounts of AMN Healthcare Services, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all entries necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. These entries consisted of all normal recurring items. The results of operations for the interim period are not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year or for any future period.

The unaudited condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United ~~States.~~States (“U.S. GAAP”). Please refer to the Company’s audited consolidated financial statements and the related notes for the fiscal year ended December 31, ~~2016,~~2018, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2018, filed with the Securities and Exchange Commission on February ~~17, 2017~~21, 2019 (“~~2016~~2018 Annual Report”).

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States~~U.S. GAAP requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates, including those related to asset impairments, accruals for self-insurance, compensation and related benefits, accounts receivable, contingencies and litigation, earn-out liabilities, and income taxes. Actual results could differ from those estimates under different assumptions or conditions.

Recently Adopted Accounting Pronouncements

In ~~March~~February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standards~~Standard Update (“ASU”) ~~2016-09, “Stock Compensation - Improvements~~2016-02, “Leases.” This standard requires organizations that lease assets to ~~Employee Share-Based Payment Accounting.”~~recognize the assets and liabilities created by those leases. The ~~guidance attempts~~standard also will require disclosures to ~~simplify~~help investors and other financial statement users better understand the accounting for share-based payment transactions in several areas, including the following: income tax consequences, classification of awards as either equity or liabilities, forfeitures, expected term,amount, timing, and ~~statement~~uncertainty of cash flows ~~classification.~~ arising from leases. A modified retrospective transition approach is required, applying the standard to all leases existing at the date of initial application. In addition, the FASB has also issued several amendments to the standard, which clarify certain aspects of the guidance, including an optional transition method for adoption of this standard, which allows organizations to initially apply the new requirements at the effective date, recognize a cumulative effect adjustment to the opening balance of retained earnings, and continue to apply the legacy guidance in Accounting Standards Codification (“ASC”) 840, Leases, including its disclosure requirements, in the comparative periods presented. The new standard provides a number of optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permits organizations not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect to use the hindsight practical expedient to determine the lease term or evaluate impairment for existing leases.

The Company adopted ~~this pronouncement prospectively beginning~~ASU 2016-02 effective January 1, ~~2017. Accordingly,~~2019, using the ~~prior period has not been adjusted and~~optional transition method described above. The Company recognized the ~~primary effects~~cumulative effect of adopting this guidance as an adjustment as of the ~~adoption for the current period are as follows:~~

~~The Company recorded $56 and $5,381 of tax benefits within income tax expense for the three and nine months ended September 30, 2017, respectively,~~effective date, primarily related to the ~~excess tax benefit on share-based compensation. Prior to adoption, this amount would have been recorded as additional paid-in capital;~~

recognition of lease liabilities of $114,807 and corresponding right-of-use assets of $99,525 for existing operating leases. The Company ~~continued to estimate the number~~also derecognized existing deferred rent liabilities of ~~awards expected~~$15,302. These adjustments had no effect on opening retained earnings and prior periods were not retrospectively adjusted and continue to be ~~forfeited~~reported in accordance with ~~its existing accounting policy, which is to estimate forfeitures when recording share-based compensation expense;~~

ASC 840. The new standard also provides practical expedients for an organization’s ongoing accounting. The Company ~~excluded~~elected the ~~excess tax benefits from~~short-term lease recognition exemption and the ~~assumed proceeds available~~practical expedient to ~~repurchase shares in~~not separate lease and non-lease components for all leases that qualify. The Company does not expect the ~~computation of its diluted earnings per share for the three and nine months ended September 30, 2017. The effect~~adoption of this ~~change on~~standard to impact its ~~diluted earnings per share was not significant; and~~

~~For the nine months ended September 30, 2017, cash flows related to excess tax benefits were classified as an operating activity.~~results of operations.

There ~~were~~was no other material ~~impacts~~impact to the ~~Company's~~Company’s condensed consolidated financial statements as a result of adopting this updated standard.

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include currency on hand, deposits with financial institutions and highly liquid

investments. Restricted cash and cash equivalents primarily represent cash and money market funds on deposit with financial institutions and investments represents commercial paper that serves as collateral for the Company’s outstanding letters of credit and captive insurance subsidiary claim payments. See Note (6), “New Credit Agreement” and Note (7), “Fair Value Measurement” for additional information.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed consolidated balance sheets and related notes to the amounts presented in the accompanying condensed consolidated statements of cash flows.



	March 31, 2019			December 31, 2018
Cash and cash equivalents	$	19,116		$	13,856
Restricted cash and cash equivalents (included in other current assets)	16,522			26,329
Restricted cash, cash equivalents and investments	61,279			59,331
Total cash, cash equivalents and restricted cash and investments	96,917			99,516
Less restricted investments	(10,938		)	(15,192		)
Total cash, cash equivalents and restricted cash	$	85,979		$	84,324

2. ~~BUSINESS COMBINATIONS~~ACQUISITIONS

As set forth below, the Company completed three acquisitions ~~during 2016.~~from January 1, 2018 through March 31, 2019. The Company accounted for each acquisition using the acquisition method of accounting. Accordingly, it recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the applicable date of acquisition. Since the applicable date of acquisition, the Company has revised the allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on analysis of information that has been made available through March 31, 2019. The allocation will continue to be updated through the measurement period, if necessary. For each acquisition, the Company did not incur any material acquisition-related costs.

~~Peak Provider Solutions~~Silversheet Acquisition

On ~~June 3, 2016,~~January 30, 2019, the Company completed its acquisition of ~~Peak Provider Solutions~~Silversheet, Inc. (“~~Peak”~~Silversheet”), which provides ~~remote medical coding~~innovative software and ~~consulting solutions~~services to ~~hospitals~~reduce the complexities and ~~physician medical groups nationwide. The addition~~challenges of ~~Peak has expanded~~ the ~~Company’s workforce solutions~~credentialing process for clinicians and ~~enables the Company to offer services in coding diagnosis and procedure codes, which is critical to clinical quality reporting and the financial health of~~ healthcare organizations. The initial purchase price of ~~$52,125~~$31,676 included (1) ~~$51,645~~$30,176 cash consideration paid upon acquisition, funded primarily through ~~cash-on-hand, net of cash received, and~~ borrowings under the Company’s $400,000 secured revolving credit facility (the “Senior Credit Facility”), provided for under a credit agreement (the “New Credit Agreement”), dated as of February 9, 2018, by and among the Company and several lenders, and (2) a contingent earn-out payment of up to ~~$3,000~~$25,000 with an estimated fair value of ~~$480~~$1,500 as of the acquisition date. The contingent earn-out payment ~~was~~is based on (A) up to $6,000 based on the operating results of ~~Peak~~Silversheet for the ~~year~~twelve months ending December 31, ~~2016,~~2019, and (B) up to $19,000 based on the operating results of Silversheet for the twelve months ending December 31, 2020. The results of Silversheet have been included in the Company’s other workforce solutions segment since the date of acquisition. The New Credit Agreement is more fully described in Note (6), “New Credit Agreement.”

The preliminary allocation of the $31,676 purchase price consisted of (1) $1,692 of fair value of tangible assets acquired, which included $651 cash received, (2) $3,390 of liabilities assumed, (3) $6,880 of identified intangible assets, and (4) $26,494 of goodwill, none of which is deductible for tax purposes. The fair value of intangible assets primarily includes $5,300 of developed technology and $1,500 of trademarks with a weighted average useful life of approximately eight years.

MedPartners Acquisition

On April 9, 2018, the Company completed its acquisition of MedPartners HIM (“MedPartners”), which provides case management, clinical documentation improvement, medical coding and registry services to hospitals and physician medical groups nationwide. The initial purchase price of $200,711 included (1) $196,533 cash consideration paid upon acquisition, funded primarily through borrowings under the Senior Credit Facility, and (2) a contingent earn-out payment of up to $20,000 with an estimated fair value of $4,400 as of the acquisition date. The contingent earn-out payment is based on (A) up to $10,000 based on the operating results of MedPartners for the twelve months ending December 31, 2018, which resulted in no earn-out ~~payment. As~~payment, and (B) up to $10,000 based on the ~~acquisition was not considered significant, pro forma information has not been provided.~~operating results of MedPartners for the six months ending June 30, 2019. The results of ~~Peak~~MedPartners have been included in the Company’s other workforce solutions segment since the date of acquisition. During the third quarter of ~~2016, an additional $275 of cash consideration was paid to the selling shareholders for the final working capital settlement.~~

The allocation of the $52,400 purchase price, which included the additional cash consideration paid for the final working capital settlement, consisted of (1) $5,658 of fair value of tangible assets acquired, (2) $9,346 of liabilities assumed, (3) $19,220 of identified intangible assets, and (4) $36,868 of goodwill, none of which is deductible for tax purposes. The fair value of intangible assets primarily includes $7,600 of trademarks and $11,500 of customer relationships with a weighted average useful life of approximately thirteen years.

~~HealthSource Global Staffing Acquisition~~

On January 11, 2016, the Company completed its acquisition of HealthSource Global Staffing (“HSG”), which provides labor disruption and rapid response staffing. The acquisition helps the Company expand its service lines and provide clients with rapid response staffing services. The initial purchase price of $8,511 included (1) $2,799 cash consideration paid upon acquisition, funded through cash-on-hand, net of cash received, and settlement of the pre-existing relationship between AMN and HSG, (2) $2,122 cash holdback for potential indemnification claims, and (3) a tiered contingent earn-out payment of up to $4,000 with an estimated fair value of $3,590 as of the acquisition date. The contingent earn-out payment is comprised of (A) up to $2,000 based on the operating results of HSG for the year ending December 31, 2016, of which, $1,930 was paid in March 2017, and (B) up to $2,000 based on the operating results of HSG for the year ending December 31, 2017. As the acquisition was not considered significant, pro forma information has not been provided. The results of HSG have been included in the Company’s nurse and allied solutions segment since the date of acquisition. During the third quarter of 2016, the final working capital settlement resulted in $292 due from the selling shareholders to the Company, which was settled through a reduction to a cash holdback.

The allocation of the $8,219 purchase price, which was reduced by the final working capital settlement, consisted of (1) $1,025 of fair value of tangible assets acquired, (2) $3,698 of liabilities assumed, (3) $3,944 of identified intangible assets, and (4) $6,948 of goodwill, none of which is deductible for tax purposes. The intangible assets include the fair value of trademarks, customer relationships, staffing databases, and covenants not to compete with a weighted average useful life of approximately eight years.

~~B.E. Smith Acquisition~~

On January 4, 2016, the Company completed its acquisition of B.E. Smith (“BES”), a full-service healthcare interim leadership placement and executive search firm, for $162,232 in cash, net of cash received, and settlement of the pre-existing relationship between AMN and BES. BES places interim leaders and executives across all healthcare settings, including acute care hospitals, academic medical and children’s hospitals, physician practices, and post-acute care providers. The acquisition provides the Company additional access to healthcare executives and enhances its integrated services to hospitals, health systems, and other healthcare facilities across the nation. To help finance the acquisition, the Company entered into the First Amendment to the Credit Agreement (the “First Amendment”), which provided $125,000 of additional available borrowings to the Company. The First Amendment was more fully described in “Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of our 2016 Annual Report. The results of BES have been included in the Company’s other workforce solutions segment since the date of acquisition. During the second quarter of 2016, $5242018, $222 was returned to the Company for the final working capital settlement.

The preliminary allocation of the ~~$161,708~~$200,711 purchase price ~~which was reduced by the final working capital settlement,~~ consisted of (1) ~~$11,953~~$28,510 of fair value of tangible assets acquired, which included $8,403 cash received, (2) ~~$7,272~~$11,848 of liabilities assumed, (3) ~~$65,900~~$103,000 of identified intangible assets, and (4) ~~$91,127~~$81,049 of goodwill, ~~most~~all of which is deductible for tax purposes. The intangible assets acquired have a weighted average useful life of approximately ~~fifteen~~sixteen years. The following table summarizes the fair value and useful life of each intangible asset acquired:

Fair Value Useful Life
(in years)
Identifiable intangible assets
Tradenames and Trademarks $ 26,300
20
Customer Relationships 25,700
12
Staffing Database 13,000
10
Non-Compete Agreements 900
5
$ 65,900



		Fair Value		Useful Life
				(in years)
Identifiable intangible assets
	Tradenames and Trademarks	$	46,000	20
	Customer Relationships	57,000		12
		$	103,000

Phillips DiPisa and Leaders For Today Acquisition

On April 6, 2018, the Company completed its acquisition of two related entities, Phillips DiPisa and Leaders For Today (“PDA and LFT”), which offer a range of leadership staffing and permanent placement solutions for the healthcare industry. The initial purchase price of $35,503 included (1) $30,268 cash consideration paid upon acquisition, funded through cash on hand, and (2) a contingent earn-out payment of up to $7,000 with an estimated fair value of $5,700 as of the acquisition date. The contingent earn-out payment is based on the operating results of PDA and LFT for the twelve months ending December 31, 2018, which resulted in the full earn-out payment made in April 2019. The results of PDA and LFT have been included in the Company’s other workforce solutions segment since the date of acquisition. During the third quarter of 2018, $465 was returned to the Company for the final working capital settlement.

The preliminary allocation of the $35,503 purchase price consisted of (1) $4,373 of fair value of tangible assets acquired, which included $351 cash received, (2) $4,764 of liabilities assumed, (3) $19,110 of identified intangible assets, and (4) $16,784 of goodwill, all of which is deductible for tax purposes. The fair value of intangible assets includes $5,400 of trademarks, $8,000 of customer relationships and $5,710 of staffing databases with a weighted average useful life of approximately twelve years.

3. REVENUE RECOGNITION

Revenue primarily consists of fees earned from the temporary and permanent placement of healthcare professionals and executives as well as from the Company’s SaaS-based technology, including its vendor management systems and its scheduling software. Revenue is recognized when control of these services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenue from temporary staffing services is recognized as the services are rendered by ~~the~~clinical and non-clinical healthcare ~~professional or executive.~~professionals. Under the Company’s managed services program arrangements, the Company manages all or a part of a customer’s supplemental workforce needs utilizing its own ~~pool~~network of healthcare professionals along with those of third-party subcontractors. Revenue and the related direct costs under MSP arrangements are recorded in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent. When the Company uses subcontractors and acts as an agent, revenue is recorded net of the related subcontractor’s expense. ~~Payables to subcontractors of $38,167 and~~ ~~$51,973~~ ~~were included in accounts payable and accrued expenses in the unaudited condensed consolidated balance sheet as of~~ ~~September 30, 2017~~ ~~and the consolidated balance sheet as of~~ ~~December 31, 2016, respectively.~~ Revenue from ~~recruitment and~~executive search, physician permanent placement, and recruitment process outsourcing services is recognized as the services are ~~provided and upon successful placements.~~rendered. The Company’s SaaS-based revenue is recognized ratably over the applicable arrangement’s service period. ~~Fees~~

The Company’s customers are primarily billed as services are rendered. Any fees billed in advance of being earned are recorded as deferred revenue. During the three months ended March 31, 2019, the amount recognized as revenue that was previously deferred was not material.

The Company has elected to apply the following practical expedients and optional exemptions related to contract costs and revenue recognition:

Recognize incremental costs of obtaining a contract with amortization periods of one year or less as expense when incurred. These costs are recorded within selling, general and administrative expenses.

Recognize revenue in the amount of consideration to which the Company has a right to invoice the customer if that amount corresponds directly with the value to the customer of the Company’s services completed to date.

Exemptions from disclosing the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts for which revenue is recognized in the amount of consideration to which the Company has a right to invoice for services performed and (iii) contracts for which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation.

See Note (5), “Segment Information” for additional information.

4. NET INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. The following table sets forth the computation of basic and diluted net income per common share for the three ~~months~~ and ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018, respectively:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2019		2018
Net income	$	28,128	$	27,296	$	91,391	$	79,487	$	34,122	$	42,681

Net income per common share - basic	$	0.59	$	0.57	$	1.91	$	1.66	$	0.73	$	0.89
Net income per common share - diluted	$	0.57	$	0.55	$	1.85	$	1.61	$	0.71	$	0.87

Weighted average common shares outstanding - basic	47,912		48,049		47,870		47,993		46,784		47,733
Plus dilutive effect of potential common shares	1,533		1,361		1,610		1,294		988		1,383
Weighted average common shares outstanding - diluted	49,445		49,410		49,480		49,287		47,772		49,116

Share-based awards to purchase 1066 and 149 shares of common stock were not included in the above calculation of diluted net income per common share for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019 and 2018, respectively, because the effect of these instruments was anti-dilutive. Share-based awards to purchase 11 and 18 shares of common stock were not included in the above calculation of diluted net income per common share for the three and nine months ended September 30, 2016 because the effect of these instruments was anti-dilutive.

5. SEGMENT INFORMATION

The Company has three reportable segments: nurse and allied solutions, locum tenens solutions, and other workforce solutions.

The Company’s chief operating decision maker relies on internal management reporting processes that provide revenue and operating income by reportable segment for making financial decisions and allocating resources. Segment operating income represents income before income taxes plus depreciation, amortization of intangible assets, share-based compensation, interest expense, net, and other, and unallocated corporate overhead. The Company’s management does not evaluate, manage or measure performance of segments using asset information; accordingly, asset information by segment is not prepared or disclosed.

The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results and was derived from each segment’s internal financial information as used for corporate management purposes:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2019		2018
Revenue
Nurse and allied solutions	$	302,933	$	286,810	$	917,183	$	877,197	$	337,029	$	338,179
Locum tenens solutions	111,415		108,553		322,473		320,420		80,490		103,117
Other workforce solutions	80,058		77,273		239,722		216,750		114,922		81,193
	$	494,406	$	472,636	$	1,479,378	$	1,414,367	$	532,441	$	522,489
Segment operating income
Nurse and allied solutions	$	40,807	$	37,396	$	134,638	$	118,517	$	47,922	$	51,805
Locum tenens solutions	14,438		14,026		39,028		43,634		5,701		9,958
Other workforce solutions	19,890		20,867		61,788		56,311		26,188		19,851
	75,135		72,289		235,454		218,462		79,811		81,614
Unallocated corporate overhead	13,698		15,113		44,732		45,908		17,863		15,663
Depreciation and amortization	8,132		7,789		23,759		21,888		11,710		7,886
Share-based compensation	2,477		2,704		7,720		8,795		5,186		2,864
Interest expense, net, and other	4,837		3,016		14,895		9,065		5,673		5,335
Income before income taxes	$	45,991	$	43,667	$	144,348	$	132,806	$	39,379	$	49,866

The Company offers a comprehensive managed services program, in which the Company manages all or a portion of a client’s contingent staffing needs. This service includes both the placement of the Company’s own healthcare professionals and the utilization of other staffing agencies to fulfill the client’s staffing needs. See additional information in Note (3), “Revenue Recognition.” For the three months ended March 31, 2019 and 2018, revenue under the Company’s managed services program arrangements comprised approximately 67% and 63% for nurse and allied solutions revenue, 24% and 14% for locum tenens solutions revenue and 7% and 9% for other workforce solutions revenue, respectively.

The following table summarizes the activity related to the carrying value of goodwill by reportable segment:

Nurse and Allied Solutions Locum Tenens Solutions Other Workforce Solutions Total
Balance, January 1, 2017 $ 104,306
$ 19,743
$ 217,705
$ 341,754
Goodwill adjustment for HSG acquisition (1,199 ) —
—
(1,199 )
Goodwill adjustment for Peak acquisition —
—
41
41
Balance, September 30, 2017 $ 103,107
$ 19,743
$ 217,746
$ 340,596
Accumulated impairment loss as of December 31, 2016 and September 30, 2017 $ 154,444
$ 53,940
$ 6,555
$ 214,939



	Nurse and Allied Solutions		Locum Tenens Solutions		Other Workforce Solutions			Total
Balance, January 1, 2019	$	103,107	$	19,743	$	315,656		$	438,506
Goodwill adjustment for MedPartners acquisition	—		—		(64		)	(64		)
Goodwill adjustment for PDA and LFT acquisition	—		—		(13		)	(13		)
Goodwill from Silversheet acquisition	—		—		26,494			26,494
Balance, March 31, 2019	$	103,107	$	19,743	$	342,073		$	464,923
Accumulated impairment loss as of December 31, 2018 and March 31, 2019	$	154,444	$	53,940	$	6,555		$	214,939

6. NEW CREDIT AGREEMENT

On February 9, 2018, the Company entered into the New Credit Agreement with several lenders to provide for the $400,000 Senior Credit Facility to replace its then-existing credit facilities. The Senior Credit Facility includes a $50,000 sublimit for the issuance of letters of credit and a $50,000 sublimit for swingline loans. The obligations of the Company under the New Credit Agreement and the Senior Credit Facility are secured by substantially all of the assets of the Company. Borrowings under the Senior Credit Facility bear interest at floating rates, at the Company’s option, based upon either LIBOR plus a spread of 1.00% to 2.00% or a base rate plus a spread of 0.00% to 1.00%. The applicable spread is determined quarterly based upon the Company’s consolidated net leverage ratio. The Senior Credit Facility is available for working capital, capital expenditures, permitted acquisitions and general corporate purposes. The maturity date of the Senior Credit Facility is February 9, 2023.

In connection with obtaining the New Credit Agreement, the Company incurred $2,331 in fees paid to lenders and other third parties, which were capitalized and are amortized to interest expense over the term of the New Credit Facility. In addition, the Company wrote off $574 of unamortized financing fees during 2018 relating to the prior credit facilities.

7. FAIR VALUE MEASUREMENT

The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 4—3—Fair Value Measurement” of the ~~2016~~2018 Annual Report. The Company has not changed the valuation techniques or inputs it uses for its fair value measurement during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019.

Assets and Liabilities Measured on a Recurring Basis

The Company’s restricted cash equivalents that serve as collateral for the Company’s outstanding letters of credit

typically consist of money market funds that are measured at fair value based on quoted prices, which are Level 1 inputs.

The Company’s restricted cash equivalents and investments that serve as collateral for the Company’s captive insurance company primarily consist of commercial paper that is measured at observable market prices for identical securities that are traded in less active markets, which are Level 2 inputs. Of the ~~$28,538~~$61,786 commercial paper issued and outstanding as of ~~September 30, 2017, $5,076~~March 31, 2019, $10,938 had original maturities greater than three months, which were considered available-for-sale securities. As of December 31, ~~2016,~~2018, the Company had ~~$25,610~~$63,243 commercial paper issued and outstanding, of which ~~$11,152~~$15,192 had original maturities greater than three months and were considered available-for-sale securities.

The Company’s interest rate swap was measured at fair value using a discounted cash flow analysis that includes the contractual terms, including the period to maturity, and Level 2 observable market-based inputs, including interest rate curves. The fair value of the swap was determined by netting the discounted future fixed cash receipts payments and the discounted expected variable cash receipts. The variable cash receipts were based on an expectation of future interest rates (forward curves) derived from observable market interest rate yield curves. The valuation also considered credit risk adjustments that were necessary to reflect the probability of default by the counterparty or the Company, which were considered Level 3 inputs. On May 3, 2017, the Company terminated the remaining interest rate swap.

~~The Company’s~~ contingent consideration liabilities are measured at fair value using a probability-weighted discounted cash flow analysis or a simulation-based methodology for the acquired companies, which are Level 3 inputs. The Company recognizes changes to the fair value of its contingent consideration liabilities in selling, general and administrative expenses in the condensed consolidated statements of comprehensive income.

The following tables present information about the above-referenced assets and liabilities and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:


	Fair Value Measurements as of September 30, 2017										Fair Value Measurements as of March 31, 2019
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	4,026		$	4,026	$	—	$	—		$	2,473		$	2,473	$	—	$	—
Commercial paper	28,538			—		28,538		—			61,786			—		61,786		—
Acquisition contingent consideration earn-out liabilities	(1,952		)	—		—		(1,952		)
Acquisition contingent consideration liabilities											(8,500		)	—		—		(8,500		)


	Fair Value Measurements as of December 31, 2016										Fair Value Measurements as of December 31, 2018
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	4,627		$	4,627	$	—	$	—		$	2,461		$	2,461	$	—	$	—
Commercial paper	25,610			—		25,610		—			63,243			—		63,243		—
Interest rate swap asset	24			—		24		—
Acquisition contingent consideration earn-out liabilities	(6,816		)	—		—		(6,816		)
Acquisition contingent consideration liabilities											(7,700		)	—		—		(7,700		)

Level 3 Information

The following ~~table sets~~tables set forth a reconciliation of changes in the fair value of contingent consideration liabilities classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30,
2017 2016
Balance as of July 1, $ (1,932 )
$ (7,054 )
Change in fair value of contingent consideration earn-out liability from Peak acquisition —
480
Change in fair value of contingent consideration earn-out liability from TFS acquisition —
(94 )
Change in fair value of contingent consideration earn-out liability from HSG acquisition (20 ) (84 )
Balance as of September 30, $ (1,952 ) $ (6,752 )

Nine Months Ended September 30,
2017 2016
Balance as of January 1, $ (6,816 ) $ (3,770 )
Settlement of TFS earn-out for year ended December 31, 2015 —
1,000
Contingent consideration earn-out liability from HSG acquisition on January 11, 2016 —
(3,590 )
Contingent consideration earn-out liability from Peak acquisition on June 3, 2016 —
(480 )
Change in fair value of contingent consideration earn-out liability from Avantas acquisition —
660
Change in fair value of contingent consideration earn-out liability from TFS acquisition —
(859 )
Change in fair value of contingent consideration earn-out liability from HSG acquisition (66 ) (193 )
Change in fair value of contingent consideration earn-out liability from Peak acquisition —
480
Settlement of TFS earn-out for year ended December 31, 2016 3,000
—
Settlement of HSG earn-out for year ended December 31, 2016 1,930
—
Balance as of September 30, $ (1,952 ) $ (6,752 )



	Three Months Ended March 31,
	2019			2018
Balance as of January 1,	$	(7,700	)	$	(2,070	)
Settlement of HSG contingent consideration liability for year ended December 31, 2016	—			70
Settlement of HSG contingent consideration liability for year ended December 31, 2017	—			2,000
Change in fair value of contingent consideration liability from Medpartners acquisition	700			—
Contingent consideration liability from Silversheet acquisition on January 30, 2019	(1,500		)	—
Balance as of March 31,	$	(8,500	)	$	—

Assets Measured on a Non-Recurring Basis

The Company applies fair value techniques on a non-recurring basis associated with valuing potential impairment losses related to its goodwill, indefinite-lived intangible assets, long-lived assets, and equity investments.

The Company evaluates goodwill and indefinite-lived intangible assets annually for impairment and whenever circumstances occur indicating that goodwill might be impaired. The Company determines the fair value of its reporting units based on a combination of inputs, including the market capitalization of the Company, as well as Level 3 inputs such as discounted cash flows, which are not observable from the market, directly or indirectly. The Company determines the fair value of its indefinite-lived intangible assets using the income approach (relief-from-royalty method) based on Level 3 inputs.

The Company’s equity investment represents an investment in a non-controlled corporation without a readily determinable market value. The Company has elected to measure the investment at cost minus impairment, if any, plus or minus changes resulting from observable price changes. The fair value is determined by using quoted prices for identical or similar investments of the same issuer, which are Level 2 inputs. The Company recognizes changes to the fair value of its equity investment in interest expense, net, and other in the condensed consolidated statements of comprehensive income.

The balance of the equity investment classified as Level 2 in the fair value hierarchy was $15,449 as of both March 31, 2019 and December 31, 2018. There were no changes to the fair value of the equity investment recognized during the three months ended March 31, 2019.

There were no triggering events identified, ~~and~~ no indication of impairment of the Company’s goodwill, indefinite-lived intangible assets, long-lived assets, or equity investments, and no impairment charges recorded during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~

2018.

Fair Value of Financial Instruments

The ~~carrying amount~~Company is required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. As of March 31, 2019, the Company’s senior notes ~~approximate their~~have a carrying amount of $325,000 and an estimated fair ~~values.~~value of $320,531. As of December 31, 2018, the senior notes had a carrying amount of $325,000 and an estimated fair value of $310,375. Quoted market prices in active markets for identical liabilities based inputs (Level 1) were used to estimate fair value. The senior notes were issued in October 2016 and have a fixed rate of 5.125%. ~~There have been no changes in available rates for similar debt since the date of issuance.~~ See additional information in “Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note ~~(8)~~(7), Notes Payable and Credit Agreement” of our ~~2016~~2018 Annual Report.

The fair value of the Company’s long-term self-insurance accruals cannot be estimated as the Company cannot reasonably determine the timing of future payments.

7.8. LEASES

The Company leases certain office facilities, data centers, and equipment under various operating leases. Leases with an initial term of 12 months or less (primarily related to housing arrangements for healthcare professionals on assignment) are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 10 years. Certain leases also include options to terminate the leases within 3 years.

The components of lease expense were as follows:



	Three Months Ended March 31,
	2019
Lease Cost
Operating lease cost	$	4,536
Short-term lease cost	5,922
Variable and other lease cost	717
Net lease cost	$	11,175

The maturity of lease liabilities as of March 31, 2019 were as follows:



	Operating Leases
Years ending December 31,
2019 (excluding the three months ended March 31, 2019)	$	13,091
2020	17,698
2021	18,183
2022	18,057
2023	17,795
Thereafter	50,318
Total lease payments	$	135,142
Less imputed interest	(22,855		)
Present value of lease liabilities	$	112,287

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31,
	2019
Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows)	$	4,338
Operating lease right-of-use assets obtained in exchange for lease obligations	$	—



Weighted average remaining lease term	7 years
Weighted average discount rate	4.8	%

Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2018 were as follows:



	Operating Leases
Years ending December 31,
2019	$	18,218
2020	18,149
2021	18,349
2022	18,144
2023	17,990
Thereafter	50,436
Total minimum lease payments	$	141,286

Rent expense under operating leases (with initial lease terms in excess of one year) was $21,402 for the year ended December 31, 2018.

9. INCOME TAXES

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, as of ~~September 30, 2017,~~March 31, 2019, the Company is no longer subject to state, local or foreign examinations by tax authorities for tax years before ~~2006,~~2009 and the Company is no longer subject to U.S. federal income or payroll tax examinations for tax years before ~~2011.~~2015. The IRS conducted, completed, and settled audits of the Company’s 2011-2012 and 2013 tax years ~~2007, 2008, 2009~~related to income and ~~2010 had been under audit by the Internal Revenue Service (“IRS”)~~employment tax issues for several years and in 2014, the IRS issued the Company its Revenue Agent Report (“RAR”) and an Employment Tax Examination Report (“ETER”). The RAR proposed adjustments to the Company’s taxable income for 2007-2010 and net operating loss carryforwards for 2005 and 2006, resulting from the proposed disallowance of certain per diems paid to the Company’s healthcare professionals, and the ETER proposed assessments for additional payroll tax liabilities and penalties for tax years 2009 and 2010 related to the Company’s treatment of certain non-taxable per diem allowances and travel ~~benefits. The positions~~benefits in ~~the RAR~~November 2017 and ETER were mutually exclusive, and contained multiple tax positions, some of which were contrary to each other. The Company filed a Protest Letter for both the RAR and ETER positions in 2014 and the Company received a final determination from the IRS in July 2015 on both the RAR adjustments and ETER assessments, effectively settling these audits with the IRS for $7,200 (including interest) during the third quarter of 2015. As a result of the settlement, the Company recorded federal income tax benefits of approximately $12,200 during the quarter ended September 30, 2015, state income tax benefits (net of federal tax impact) of $568 for the year ended December 31, 2016, and expects to record state income tax benefits (net of federal tax impact) of approximately $1,200 by fiscal year 2019, when the various state statutes are projected to lapse.May 2018, respectively.

The IRS conducted and completed a separate audit of the Company’s 2011 and 2012 tax years that focused on income and employment tax issues similar to those raised in the 2007 through 2010 examination. The IRS completed its audit during the quarter ended March 31, 2015, and issued its RAR and ETER to the Company with proposed adjustments to the Company’s taxable income for 2011 and 2012 and net operating loss carryforwards from 2010 and assessments for additional payroll tax liabilities and penalties for 2011 and 2012 related to the Company’s treatment of certain non-taxable per diem allowances and travel benefits. The positions in the RAR and ETER for the 2011 and 2012 years are mutually exclusive and contain multiple tax positions, some of which are contrary to each other. The Company filed a Protest Letter for both the RAR and ETER in April 2015 and the matter is currently at IRS Appeals. The Company has been meeting and working with the IRS Appeals office and anticipates a resolution within the next twelve months. The IRS began an audit of the Company’s 2013 tax year during the quarter ended June 30, 2015. The Company believes its reserve for unrecognized tax benefits and contingent tax issues is adequate with respect to all open years. Notwithstanding the foregoing, the Company could adjust its provision for income taxes and contingent tax liability based on future developments.

8.10. COMMITMENTS AND CONTINGENCIES: LEGAL PROCEEDINGS

From time to time, the Company is involved in various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. These matters typically relate to professional liability, tax, ~~payroll,~~compensation, contract, competitor disputes and employee-related matters and include individual and ~~collective~~class action lawsuits, as well as inquiries and investigations by governmental agencies regarding the Company’s employment and compensation practices. Additionally, some of the Company’s clients may also become subject to claims, governmental inquiries and investigations, and legal actions relating to services provided by the Company’s healthcare professionals. Depending upon the particular facts and circumstances, the Company may also be subject to indemnification obligations under its contracts with such clients relating to these matters. The Company records a liability when management believes an adverse outcome from a loss contingency is both probable and the amount, or a range, can be reasonably estimated. Significant judgment is required to determine both probability of loss and the estimated amount. The Company reviews its loss contingencies at least quarterly and adjusts its accruals and/or disclosures to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, or other new information, as deemed necessary. The most significant

matters for which the Company has established loss contingencies are class actions related to wage and hour ~~claims. Management currently~~claims under California and Federal law. Specifically, among other claims in these lawsuits, it is alleged that employees were not afforded required breaks or compensated for all time worked, employees’ wage statements are not sufficiently clear, and certain expense reimbursements should be included in the regular rate of pay for purposes of calculating overtime rates. The Company believes ~~the probable loss related to these~~that its wage and hour ~~claims~~practices conform with law in all material respects, but litigation is ~~not material and the amount accrued by~~always subject to inherent uncertainty. As a result, the Company ~~for such~~entered into settlement agreements relating to claims in two wage and hour class actions during September and October 2018. The settlement agreements are subject to court approval, which is ~~not material as~~considered probable. The Company recorded increases to its accruals established in connection with these matters amounting to $12,140 during the third quarter of ~~September 30, 2017. However, losses ultimately incurred for such claims could materially differ from amounts already accrued by the Company.~~2018.

With ~~regards~~regard to outstanding loss contingencies as of ~~September 30, 2017,~~March 31, 2019, which are included in accounts payable and accrued expenses in the condensed consolidated balance sheet, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows.

9.11. BALANCE SHEET DETAILS

The consolidated balance sheets detail is as follows as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016:~~2018:



	March 31, 2019			December 31, 2018
Other current assets:
Restricted cash and cash equivalents	$	16,522		$	26,329
Income tax receivable	—			799
Other	14,687			12,759
Other current assets	$	31,209		$	39,887

Fixed assets:
Furniture and equipment	$	36,313		$	34,211
Software	168,030			162,006
Leasehold improvements	8,771			8,615
	213,114			204,832
Accumulated depreciation	(119,489		)	(114,413		)
Fixed assets, net	$	93,625		$	90,419

Other assets:
Life insurance cash surrender value	$	64,500		$	55,028
Other	41,090			41,124
Other assets	$	105,590		$	96,152

Accounts payable and accrued expenses:
Trade accounts payable	$	23,203		$	31,537
Subcontractor payable	55,575			50,892
Accrued expenses	37,831			30,236
Loss contingencies	24,578			24,549
Professional liability reserve	7,961			8,633
Other	4,418			3,756
Accounts payable and accrued expenses	$	153,566		$	149,603

Accrued compensation and benefits:
Accrued payroll	$	39,933		$	42,571
Accrued bonuses	13,546			18,021
Accrued travel expense	2,684			3,417
Health insurance reserve	3,582			3,559
Workers compensation reserve	8,378			7,817
Deferred compensation	65,820			55,720
Other	1,849			3,954
Accrued compensation and benefits	$	135,792		$	135,059

Other current liabilities:
Acquisition related liabilities	$	7,668		$	7,918
Other	12,444			2,325
Other current liabilities	$	20,112		$	10,243

Other long-term liabilities:
Workers compensation reserve	$	18,953		$	19,454
Professional liability reserve	38,058			38,324
Deferred rent	—			15,012
Unrecognized tax benefits	4,916			4,862
Deferred revenue	769			865
Other	1,050			11
Other long-term liabilities	$	63,746		$	78,528

September 30, 2017 December 31, 2016
Other current assets:
Restricted cash and cash equivalents $ 16,215
$ 20,271
Other 10,005
14,336
Other current assets $ 26,220
$ 34,607

Fixed assets:
Furniture and equipment $ 28,202
$ 25,582
Software 126,492
112,405
Leasehold improvements 8,025
6,832
162,719
144,819
Accumulated depreciation (94,531 ) (84,865 )
Fixed assets, net $ 68,188
$ 59,954

Other assets:
Life insurance cash surrender value $ 45,835
$ 32,190
Other 28,127
25,344
Other assets $ 73,962
$ 57,534

Accounts payable and accrued expenses:
Trade accounts payable $ 24,166
$ 33,392
Subcontractor payable 38,167
51,973
Accrued expenses 45,690
37,251
Professional liability reserve 7,048
10,254
Other 2,863
4,642
Accounts payable and accrued expenses $ 117,934
$ 137,512

Accrued compensation and benefits:
Accrued payroll $ 31,840
$ 30,917
Accrued bonuses 16,755
26,992
Accrued travel expense 3,488
2,972
Accrued health insurance reserve 3,708
3,189
Accrued workers compensation reserve 8,301
8,406
Deferred compensation 45,771
32,690
Other 2,121
2,827
Accrued compensation and benefits $ 111,984
$ 107,993

Other current liabilities:
Acquisition related liabilities $ 2,981
$ 6,921
Other 2,459
9,690
Other current liabilities $ 5,440
$ 16,611

Other long-term liabilities:
Workers’ compensation reserve $ 18,475
$ 18,708
Professional liability reserve 40,033
37,338
Deferred rent 14,602
13,274
Unrecognized tax benefits 7,240
8,464
Other 2,323
4,312
Other long-term liabilities $ 82,673
$ 82,096
12. SUBSEQUENT EVENTS

On April 29, 2019, the Company entered into an agreement to acquire Advanced Medical Personnel Services, Inc. (“Advanced”) for $200,000 in cash and tiered contingent consideration of up to $20,000. Advanced is a national healthcare staffing company that specializes in placing therapists and nurses across multiple settings, including hospitals, schools, clinics, skilled nursing facilities, and home health. The closing of the acquisition is contingent upon satisfaction of certain conditions and, upon consummation, Advanced will become a wholly owned subsidiary of the Company.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results

of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto and other financial information included elsewhere herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2018, filed with the Securities and Exchange Commission (“SEC”) on February ~~17, 2017~~21, 2019 (“~~2016~~2018 Annual Report”). Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements.” See “Special Note Regarding Forward-Looking Statements.” We undertake no obligation to update the forward-looking statements in this Quarterly Report. References in this Quarterly Report to “AMN Healthcare,” the “Company,” “we,” “us” and “our” refer to AMN Healthcare Services, Inc. and its wholly owned subsidiaries.

Overview of Our Business

We provide healthcare workforce solutions and staffing services to healthcare facilities across the nation. As an innovative workforce solutions partner, our managed services programs, or “MSP,” vendor management systems, or “VMS,” ~~recruitment process outsourcing, or “RPO,”~~ workforce ~~optimization services, medical coding and~~ consulting services, predictive modeling, staff scheduling, mid-revenue cycle solutions and the placement of physicians, nurses, allied healthcare professionals and healthcare ~~executives~~leaders into temporary and permanent positions enable our clients to successfully reduce staffing complexity, increase efficiency and lead their organizations within the rapidly evolving healthcare environment. Our clients include acute and sub-acute care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, and many other healthcare settings. Our clients utilize our workforce solutions and healthcare staffing services to strategically plan for and meet their workforce needs in an economically beneficial manner. Our managed services program and vendor management systems enable healthcare organizations to increase their efficiency by managing all of their supplemental workforce needs through one company or technology.

We conduct business through three reportable segments: (1) nurse and allied solutions, (2) locum tenens solutions, and (3) other workforce solutions. For the three months ended ~~September 30, 2017,~~March 31, 2019, we recorded revenue of ~~$494.4~~$532.4 million, as compared to $472.6 million for the same period last year. For the three months ended September 30, 2017, we recorded net income of $28.1 million, as compared to $27.3 million for the same period last year. For the nine months ended September 30, 2017, we recorded revenue of $1,479.4 million, as compared to $1,414.4 million for the same period last year. For the nine months ended September 30, 2017, we recorded net income of $91.4 million, as compared to $79.5$522.5 million for the same period last year.

Nurse and allied solutions segment revenue comprised ~~62%~~63% and 65% of total consolidated revenue for ~~both~~ the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018, respectively. Through our nurse and allied solutions segment, we provide hospitals and other healthcare facilities with a comprehensive managed services solution in which we manage and staff all of the temporary nursing and allied staffing needs of a client and traditional clinical staffing solutions of variable assignment lengths.

Locum tenens solutions segment revenue comprised ~~22%~~15% and ~~23%~~20% of total consolidated revenue for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. Through our locum tenens solutions segment, we provide a comprehensive managed services solution in which we manage all of the locum tenens needs of a client and place physicians of all specialties, as well as dentists and ~~other~~ advanced practice providers, with clients on a temporary basis as independent contractors. These locum tenens providers are used by our ~~healthcare facility and physician practice group~~ clients to fill temporary vacancies created by vacation and leave schedules and to bridge the gap while they seek permanent candidates or explore expansion. Our locum tenens clients represent a diverse group of healthcare organizations throughout the United States, including hospitals, health systems, medical groups, occupational medical clinics, psychiatric facilities, government institutions, and insurance entities. The professionals we place are recruited nationwide and are typically placed on contracts with assignment lengths ranging from a few days up to one year.

Other workforce solutions segment revenue comprised ~~16%~~22% and 15% of total consolidated revenue for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. Through our other workforce solutions segment, we provide hospitals and other healthcare facilities with a range of workforce solutions, including: (1) identifying and recruiting physicians and healthcare leaders for permanent placement, (2) placing interim leaders and executives across all healthcare settings, (3) a software-as-a-service (“SaaS”) VMS through which our clients can manage all of their temporary staffing needs, (4) RPO services that leverage our expertise and support systems to replace or complement a client’s existing internal recruitment function for permanent placement needs, (5) an education program that provides custom healthcare education, research, professional practice tools, and professional development services, (6) ~~medical coding~~mid-revenue cycle management and related consulting services, ~~and~~ (7) workforce optimization services that include consulting, data analytics, predictive modeling, and SaaS-based scheduling ~~technology.~~technology, and (8) credentialing services.

As part of our long-term growth strategy to add value for our clients, healthcare professionals, and shareholders, on January 30, 2019, April 6, 2018 and April 9, 2018, we acquired Silversheet, Phillips DiPisa and Leaders For Today (“PDA” and “LFT”) and MedPartners HIM (“MedPartners”), respectively. Silversheet provides innovative credentialing software solutions to clinicians and healthcare enterprises. PDA and LFT offer a range of leadership staffing and permanent placement solutions for the healthcare industry. MedPartners provides mid-revenue cycle management solutions, including case management, clinical documentation improvement, medical coding and registry services to hospitals and physician medical groups nationwide. See additional information in the accompanying Note (2), “Acquisitions.”

Recent Trends

Demand for our temporary and permanent placement staffing services is driven in part by U.S. economic and labor trends. The U.S. Bureau of Labor Statistics’ survey data ~~reflect~~reflects near record levels of healthcare job openings and ~~quits, which we~~quits. We view this data, along with a nearly 20-year-low unemployment rate and continued economic growth as positive trends for the healthcare staffing industry. AtThe low unemployment rate has led to some wage growth to attract healthcare professionals.

The increasing consolidation within the ~~same time, the entire~~ healthcare industry ~~continues~~is creating larger, more sophisticated and complex health systems that we believe has elevated the need for strategic workforce solutions capable of partnering to ~~face uncertainty related to~~solve their recruiting, staffing and workforce optimization requirements. Given the ~~potential dismantling, or significant change to certain aspects~~increasing need for partners capable of ~~the Affordable Care Act, which could impact the reimbursements upon which our clients depend. The uncertainty has impacted the utilization of healthcare services and demand for our services.~~

Weoffering a comprehensive workforce solution, we continue to see the benefits of our workforce solutions strategy, particularly with our ~~managed services programs.~~MSPs. As a result of our ongoing focus on these strategic MSP relationships, ~~we continue to increase~~ the percentage of our ~~nurse and allied~~staffing revenue derived from our ~~managed services program clients.~~MSP clients continues to increase, and we believe these strategic, longer-term relationships will continue to comprise a greater proportion of revenue in our staffing operating segments.

In our nurse and allied solutions segment, overall demand is strong, although our financial results have been impacted by fewer contingent nurse staffing needs from a large client. Our allied staffing business continues its steady growth, with favorable trends across most modalities.

In our locum tenens solutions segment, we implemented operating model changes together with new front and back office technologies over the last 18 months. Although these changes are expected to have ~~seen~~ a ~~decline~~long-term positive impact on our growth and profitability, they have been significantly more disruptive than anticipated to our current sales productivity and revenue. Although demand for hospitalists and emergency room physicians has significantly declined over the past 12 months, the overall demand environment for locum tenens has been relatively stable and client interest in ~~demand in certain specialties such as hospitalists that has negatively impacted~~managed service programs is increasing. Approximately 20% of our ~~volumes and, as a result,~~ revenue in this segment. In addition, we made organizational and leadership changes in this business and are making operational changes to improve performance. We are beginning to see the positive impact of these changes and improving demand in most specialties.segment is now derived through managed service programs.

In our other workforce solutions segment, our acquisitions in the mid-revenue cycle, interim leadership and ~~vendor management systems~~executive search businesses continue to contribute to the segment’s growth. Our businesses in these markets are ~~growing. We are experiencing declines~~expected to comprise a bigger portion of our organic profitability growth in ~~our permanent placement businesses that we believe are primarily related to operational execution and are making organizational changes designed to improve our performance.~~2019.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to asset impairments, accruals for self-insurance, compensation and related benefits, accounts receivable, contingencies and litigation, earn-out liabilities, and income taxes. We base these estimates on the information that is currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary from these estimates under different assumptions or conditions. If these estimates differ significantly from actual results, our consolidated financial statements and future results of operations may be materially impacted. There have been no material changes in our critical accounting policies and estimates, other than the adoption of the Accounting Standards Update (“ASU”) ~~2016-09~~2016-02 described in Item 1. Condensed Consolidated Financial Statements—Note 1, “Basis of Presentation,” as compared to the critical accounting policies and estimates described in our ~~2016~~2018 Annual Report.

Results of Operations

The following table sets forth, for the periods indicated, selected unaudited condensed consolidated statements of operations data as a percentage of revenue. Our results of operations include three reportable segments: (1) nurse and allied solutions, (2) locum tenens solutions, and (3) other workforce solutions. The ~~Peak acquisition impacts~~PDA, LFT, MedPartners and Silversheet acquisitions impact the comparability of the results between the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018 depending on the timing of the applicable acquisition. Our historical results are not necessarily indicative of our future results of operations.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2019		2018
Unaudited Condensed Consolidated Statements of Operations:
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	67.7		67.3		67.4		67.4		66.8		67.9
Gross profit	32.3		32.7		32.6		32.6		33.2		32.1
Selling, general and administrative	20.3		21.2		20.2		21.0		22.5		20.0
Depreciation and amortization	1.7		1.6		1.6		1.6		2.2		1.5
Income from operations	10.3		9.9		10.8		10.0		8.5		10.6
Interest expense, net, and other	1.0		0.6		1.0		0.6		1.1		1.1
Income before income taxes	9.3		9.3		9.8		9.4		7.4		9.5
Income tax expense	3.6		3.5		3.6		3.8		1.0		1.3
Net income	5.7	%	5.8	%	6.2	%	5.6	%	6.4	%	8.2	%

Comparison of Results for the Three Months Ended ~~September 30, 2017~~March 31, 2019 to the Three Months Ended ~~September 30, 2016~~March 31, 2018

Revenue. Revenue increased 5%2% to ~~$494.4~~$532.4 million for the three months ended ~~September 30, 2017~~March 31, 2019 from ~~$472.6~~$522.5 million for the same period in ~~2016, all~~2018, primarily attributable to additional revenue of ~~which was organic growth.~~$34.3 million from our PDA, LFT, MedPartners and Silversheet acquisitions. Excluding the additional revenue from acquisitions, revenue decreased 5%.

Nurse and allied solutions segment revenue ~~increased 6%~~decreased less than 1% to ~~$302.9~~$337.0 million for the three months ended ~~September 30, 2017~~March 31, 2019 from ~~$286.8~~$338.2 million for the same period in ~~2016.~~2018. The ~~$16.1~~$1.2 million ~~increase~~decrease was primarily attributable to a 4%1% decrease in the average bill rate, partially offset by a slight increase in the average number of healthcare professionals on assignment ~~and a 2% increase in the average bill rate~~ during the three months ended ~~September 30, 2017~~March 31, 2019.

Locum tenens solutions segment revenue ~~increased 3%~~decreased 22% to ~~$111.4~~$80.5 million for the three months ended ~~September 30, 2017~~March 31, 2019 from $~~108.6~~103.1 million for the same period in ~~2016.~~2018. The ~~$2.8~~$22.6 million ~~increase~~decrease was primarily attributable to a ~~4% increase~~23% decrease in the ~~revenue per day~~number of days filled during the three months ended ~~September 30, 2017,~~March 31, 2019, partially offset by a ~~1% decrease~~2% increase in the ~~number of days~~revenue per day filled.

Other workforce solutions segment revenue increased 4%42% to ~~$80.1~~$114.9 million for the three months ended ~~September 30, 2017~~March 31, 2019 from $~~77.3~~81.2 million for the same period in ~~2016. The $2.8~~2018. Of the $33.7 million increase, $34.3 million was ~~primarily~~ attributable to ~~growth~~additional revenue in ~~our VMS~~connection with the PDA, LFT, MedPartners and ~~interim leadership businesses,~~Silversheet acquisitions, partially offset by ~~declines~~a decline in our ~~permanent placement~~interim leadership and mid-revenue cycle management businesses during the three months ended ~~September 30, 2017.~~March 31, 2019.

Gross Profit. Gross profit increased 3%5% to ~~$159.5~~$176.8 million for the three months ended ~~September 30, 2017~~March 31, 2019 from ~~$154.5~~$167.8 million for the same period in ~~2016,~~2018, representing gross margins of ~~32.3%~~33.2% and ~~32.7%~~32.1%, respectively. The ~~decrease in consolidated~~ gross margin was due to an unfavorable change in sales mix, higher insurance costs in our other workforce solutions segment and lower bill-pay spreads in the locum tenens solutions segment, partially offset by a higher gross margin in the nurse and allied solutions segment driven primarily by lower direct costs duringfor the three months ended ~~September 30, 2017.~~March 31, 2019 was positively impacted by higher-than-average gross margins from PDA, LFT, MedPartners and Silversheet and a change in our physician permanent placement business model that prompted a $4.3 million classification of certain recruiter compensation expenses to SG&A (as defined below) that was previously in cost of revenue. Net of these factors, our year-over-year gross margin declined slightly primarily due to a lower margin in our locum tenens solutions segment. Gross margin by reportable segment for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 was ~~27.3%~~27.9% and ~~26.7%~~28.0% for nurse and allied solutions, ~~30.1%~~27.7% and ~~31.2%~~28.7% for locum tenens solutions, and ~~54.1%~~52.6% and ~~56.7%~~53.6% for other workforce solutions, respectively. The year-over-year gross margin decline in the locum tenens solutions segment was driven by lower perm conversion fees and lower bill-to-pay spreads. The other workforce solutions segment decrease during the three months ended March 31, 2019 was primarily due to the change in sales mix resulting from the additions of PDA, LFT and MedPartners.

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses were ~~$100.6~~$120.0 million, representing ~~20.3%~~22.5% of revenue, for the three months ended ~~September 30, 2017,~~March 31, 2019, as compared to ~~$100.0~~$104.7 million, representing ~~21.2%~~20.0% of revenue, for the same period in ~~2016.~~2018. The increase in SG&A expenses was primarily due to ~~higher bad debt expense partially offset by operating leverage on~~$8.7 million of additional SG&A expenses from the ~~higher~~PDA, LFT, MedPartners and Silversheet acquisitions, the above-mentioned $4.3 million classification of certain recruiter compensation expenses to SG&A that was previously in cost of revenue, a $3.5 million increase in acquisition, integration and ~~lower acquisition~~extraordinary legal expenses, and ~~integration costs as compared to the same period last year. The decrease in unallocated corporate overhead was primarily attributable to lower~~

~~acquisition and integration costs and employee compensation expenses.~~other expenses associated with our revenue growth. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:


	(In Thousands) Three Months Ended September 30,				(In Thousands) Three Months Ended March 31,
	2017		2016		2019		2018
Nurse and allied solutions	$	41,884	$	39,312	$	46,181	$	42,985
Locum tenens solutions	19,075		19,881		16,562		19,591
Other workforce solutions	23,445		22,985		34,205		23,634
Unallocated corporate overhead	13,698		15,113		17,863		15,663
Share-based compensation	2,477		2,704		5,186		2,864
	$	100,579	$	99,995	$	119,997	$	104,737

Depreciation and Amortization Expenses. Amortization expense ~~decreased slightly~~increased 52% to ~~$4.7~~$6.7 million for the three months ended ~~September 30, 2017~~March 31, 2019 from ~~$4.8~~$4.4 million for the same period in ~~2016.~~2018, with the increase attributable to additional amortization expenses related to the intangible assets acquired in the PDA, LFT, MedPartners and Silversheet acquisitions. Depreciation expense increased ~~13%~~46% to ~~$3.4~~$5.1 million for the three months ended ~~September 30, 2017~~March 31, 2019 from ~~$3.0~~$3.5 million for the same period in ~~2016,~~2018, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing front and back office information technology initiatives.

Interest Expense, Net, and Other. Interest expense, net, and other, was ~~$4.8~~$5.7 million during the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$3.0~~$5.3 million for the same period in ~~2016.~~2018. The increase is primarily due to higher ~~interest bearing Notes (as defined below)~~average debt outstanding balance for the three months ended ~~September 30, 2017, as compared~~March 31, 2019, which resulted from borrowings used to finance the ~~term loans~~MedPartners and ~~revolver in the same period last year.~~Silversheet acquisitions.

Income Tax Expense. Income tax expense was ~~$17.9~~$5.3 million for the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~income tax expense of $16.4~~$7.2 million for the same period in ~~2016,~~2018, reflecting effective income tax rates of ~~39%~~13% and ~~37%~~14% for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. The ~~difference~~decrease in the effective income tax rate was primarily attributable to the ~~relationship~~Company’s discrete tax benefits of ~~pre-tax~~$6.4 million and $7.1 million in relation to income ~~to permanent differences related to unrecognized tax benefits.~~before income taxes of $39.4 million and $49.9 million for the three months ended March 31, 2019 and 2018, respectively. We currently estimate our annual effective ~~income~~ tax rate to be approximately ~~38%~~26% for ~~2017.~~

~~Comparison of Results~~2019. The 13% effective tax rate for the ~~Nine Months Ended September 30, 2017 to the Nine Months Ended September 30, 2016~~

~~Revenue~~. ~~Revenue increased 5% to $1,479.4 million for the nine~~three months ended ~~September 30, 2017 from $1,414.4 million for the same period in 2016, due to additional revenue of $12.4 million resulting~~March 31, 2019 differs from our ~~Peak acquisition in June 2016 with the remainder~~estimated annual effective tax rate of ~~the increase driven by 4% organic growth.~~

Nurse and allied solutions segment revenue increased 5% to $917.2 million for the nine months ended September 30, 2017 from $877.2 million for the same period in 2016. The $40.0 million increase was primarily attributable to a 5% increase in the average number of healthcare professionals on assignment and a 3% increase in the average bill rate during the nine months ended September 30, 2017. The increase was partially offset by an approximately $28.0 million decrease in labor disruption revenue and the impact of one less calendar day due to last year being a leap year.

Locum tenens solutions segment revenue was $322.5 million for the nine months ended September 30, 2017, as compared to $320.4 million for the same period in 2016. The $2.1 million increase was primarily attributable to a 4% increase in the revenue per day filled during the nine months ended September 30, 2017, partially offset by a 3% decrease in the number of days filled.

Other workforce solutions segment revenue increased 11% to $239.7 million for the nine months ended September 30, 2017 from $216.8 million for the same period in 2016. Of the $22.9 million increase, $12.4 million was attributable to the additional revenue in connection with the Peak acquisition in June 2016 with the remainder primarily attributable to growth in our VMS, interim leadership, and workforce optimization businesses, partially offset by declines in our permanent placement and recruitment process outsourcing businesses during the nine months ended September 30, 2017.

~~Gross Profit~~. Gross profit increased 5% to $482.3 million for the nine months ended September 30, 2017 from $461.1 million for the same period in 2016, representing gross margins of 32.6% for both periods. Consolidated gross margin was consistent with the prior year26% primarily due to a higher gross margin in the nurse and allied solutions segment driven primarily by lower direct costs, offset by lower bill-pay spreads in the locum tenens solutions segment and an unfavorable change in sales mix in our other workforce solutions segment during the nine months ended September 30, 2017. Gross margin by reportable segment for the nine months ended September 30, 2017 and 2016 was 27.6% and 26.7% for nurse and allied soluti

~~ons, 30.2% and 31.2% for locum tenens solutions, and 54.9% and 58.6% for other workforce solutions, respectively.~~

~~Selling, General and Administrative Expenses~~. ~~SG&A expenses were $299.3 million, representing 20.2%~~discrete tax benefit of revenue, for the nine months ended September 30, 2017, as compared to $297.4 million, representing 21.0% of revenue, for the same period in 2016. The increase in SG&A expenses was primarily due to $1.9 million of additional SG&A expenses from the Peak acquisition and other expenses associated with our revenue growth, offset by an additional $2.0 million favorable actuarial-based decrease in our professional liability reserves and $2.1 million decrease in acquisition and integration costs as compared to the same period last year. The decrease in unallocated corporate overhead was primarily attributable to lower acquisition and integration costs. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:

(In Thousands)
Nine Months Ended September 30,
2017 2016
Nurse and allied solutions $ 118,464
$ 115,755
Locum tenens solutions 58,507
56,247
Other workforce solutions 69,902
70,654
Unallocated corporate overhead 44,732
45,908
Share-based compensation 7,720
8,795
$ 299,325
$ 297,359

~~Depreciation and Amortization Expenses~~. Amortization expense increased 2% to $13.9 million for the nine months ended September 30, 2017 from $13.6 million for the same period in 2016, primarily attributable to additional amortization expense related to the intangible assets acquired in the Peak acquisition. Depreciation expense increased 18% to $9.8 million for the nine months ended September 30, 2017 from $8.3 million for the same period in 2016, primarily attributable to fixed assets acquired as part of the Peak acquisition and an increase in purchased and developed hardware and software placed in service for our ongoing front and back office information technology initiatives.

~~Interest Expense, Net, and Other~~. ~~Interest expense, net, and other, was $14.9~~$4.6 million during the ~~nine~~three months ended ~~September 30, 2017 as compared~~March 31, 2019 relating to ~~$9.1~~equity awards vested and exercised and a tax benefit of $1.5 million ~~for~~recorded by the ~~same period in 2016. The increase is primarily due to higher interest bearing Notes (as defined below) for~~Company during the ~~nine~~three months ended ~~September 30, 2017, as compared~~March 31, 2019 relating to ~~the term loans and revolver~~fair value changes in the ~~same period last year.~~

~~Income Tax Expense~~. ~~Income tax expense was $53.0 million for the nine months ended September 30, 2017 as compared to income tax expense~~cash surrender value of $53.3 million for the same period in 2016, reflecting effective income tax rates of 37% and 40% for the nine months ended September 30, 2017 and 2016, respectively. The difference in the effective income tax rate was primarily attributable to the relationship of pre-tax income to permanent differences related to unrecognized tax benefits and excess tax benefit from the adoption of ASU 2016-09, “Stock Compensation - Improvements to Employee Share-Based Payment Accounting” in the first quarter of 2017, which resulted in recording a $5.4 million reduction in income tax expense for the nine months ended September 30, 2017. Prior to adoption, this amount would have been recorded as additional paid-in capital. Since the majority of our equity awards vest during the first quarter of the year, we do not anticipate the recording of additional excess tax benefits of this magnitude for the remainder of the year. This change could create future volatility in our effective tax rate depending upon the amount of exercise or vesting activity from our share-based awards. See additional information in Item 1. Condensed Consolidated Financial Statements—Note 1 “Basis of Presentation.” Including the impact of the adoption of ASU 2016-09, we currently estimate our annual effective income tax rate to be approximately 38% for 2017.its Company Owned Life Insurance.

Liquidity and Capital Resources

In summary, our cash flows were:


	(In Thousands) Nine Months Ended September 30,						(In Thousands) Three Months Ended March 31,
	2017			2016			2019			2018

Net cash provided by operating activities	$	96,382		$	84,820		$	36,214		$	59,735
Net cash used in investing activities	(23,444		)	(241,271		)	(36,248		)	(9,613		)
Net cash provided by (used in) financing activities	(63,824		)	162,418			1,790			(14,970		)

Historically, our primary liquidity requirements have been for acquisitions, working capital requirements, and debt service under our credit facilities and the Notes. We have funded these requirements through internally generated cash flow and funds borrowed under our credit facilities. ~~During the third quarter of 2017,~~On February 9, 2018, we ~~paid off the remaining balance of~~replaced our ~~term debt.~~then-existing credit agreement with our New Credit Agreement (as defined below). As of ~~September 30, 2017~~March 31, 2019, ~~zero~~$150 million was drawn ~~from $258.8~~with $234.7 million of available credit under the ~~revolving credit facility (the “Revolver”)~~Senior Credit Facility (as defined below) and the aggregate principal amount of our 5.125% Senior Notes due 2024 (the “Notes”) outstanding equaled $325.0 million. We describe in further detail our ~~amended credit agreement,~~New Credit Agreement, under which our ~~term loan and Revolver are~~Senior Credit Facility is governed, and the Notes in “Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note ~~(8)~~(7), Notes Payable and Credit Agreement” of our ~~2016~~2018 Annual Report on Form 10-K.

In April 2015, we entered into an interest rate swap agreement to minimize our exposure to interest rate fluctuations on $100 million of our outstanding variable rate debt under one of our term loans for which we pay a fixed rate of 0.983% per annum and receive a variable rate equal to floating one-month LIBOR. This agreement expires on March 30, 2018, and no initial investment was made to enter into this agreement. On October 3, 2016, we reduced the interest rate swap notional amount to $40 million. On May 3, 2017, we terminated the remaining interest rate swap.

We believe that cash generated from operations and available borrowings under ~~the Revolver~~our Senior Credit Facility will be sufficient to fund our operations, including expected capital expenditures, for ~~at least~~ the next ~~year.~~12 months and beyond. We intend to finance potential future acquisitions ~~either~~ with cash provided from operations, borrowings under ~~the Revolver,~~our Senior Credit Facility or other borrowings under our New Credit Agreement, bank loans, debt or equity offerings, or some combination of the foregoing. The following discussion provides further details of our liquidity and capital resources.

Operating Activities

Net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 was ~~$96.4~~$36.2 million, compared to ~~$84.8~~$59.7 million for the same period in ~~2016.~~2018. The ~~increase~~decrease in net cash provided by operating activities was primarily attributable to (1) ~~improved~~declined operating results, (2) ~~a decrease~~increases in accounts receivable and subcontractor receivables, and (3) increases in income tax receivable, prepaid expenses and other current assets. The overall decrease was partially offset by increases in accounts payable and accrued expenses, accrued compensation and benefits and other liabilities between periods due to timing of collections, and (3) excess tax benefits on the vesting of employee equity awards resulting from the adoption of a new accounting pronouncement discussed in Item 1. Condensed Consolidated Financial Statements—Note (1), “Basis of Presentation.” The overall increase was partially offset by (1) a decrease in accounts payable and accrued expenses between periods due to timing of payments, (2) additional cash paid for income taxes during the nine months ended September 30, 2017 as compared to the same period last year, and (3) an increase in the cash, cash equivalents and investments attributable to cash payments made to our captive insurance entity, which are restricted for use by the captive for future claim payments and, to a lesser extent, its working capital needs.payments. Our Days Sales Outstanding (“DSO”) was 62 days at March 31, 2019, 64 days at ~~each of September 30, 2017,~~ December 31, ~~2016,~~2018, and ~~September 30, 2016.~~58 days at March 31, 2018.

Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 was ~~$23.4~~$36.2 million, compared to $~~241.3~~9.6 million for the same period in ~~2016.~~2018. The ~~decrease~~increase was primarily due to ~~(1)~~$29.5 million used for acquisitions during the three months ended March 31, 2019, as compared to no cash paid for acquisitions during the ~~nine~~three months ended ~~September 30, 2017 as compared to $216.6 million used for acquisitions during the nine months ended September 30, 2016 and (2)~~March 31, 2018. The increase was partially offset by net ~~$6.2 million~~proceeds of restricted ~~investment proceeds~~investments related to our captive insurance ~~entity~~company of $4.3 million during the ~~nine~~three months ended September 30, 2017. The overall decrease was partially offset by (1) a $2.0 million equity investment and (2) $10.1 million of payments to fund the deferred compensation plan during the nine months ended September 30, 2017March 31, 2019, as compared to ~~$5.7~~$0.8 million ~~of payments~~ during the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2018. See additional information in the accompanying Note (2), “Acquisitions.” Capital expenditures were ~~$17.2~~$7.4 million and ~~$17.7~~$5.7 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively.

Financing Activities

Net cash ~~used in~~provided by financing activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 was ~~$63.8~~$1.8 million, primarily due to ~~(1) the repayment~~borrowings of ~~$44.1~~$30.0 million under ~~our term loans, (2) $3.7 million for acquisition contingent consideration earn-out payments, (3) $7.1~~the Senior Credit Facility (as defined below), partially offset by (1) $17.9 million paid in connection with the repurchase of our common stock and ~~(4) $9.1~~(2) $10.3 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards. Net cash ~~provided by~~used in financing activities during the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2018 was ~~$162.4~~$15.0 million,~~, primarily~~ due to ~~borrowings~~(1) $2.3 million payment of ~~$124.0 million under~~financing costs in connection with the ~~Revolver and $75.0 million of borrowings under a~~ new ~~term loan under our amended~~ credit agreement, ~~to fund our BES~~(2) $1.7 million for acquisition contingent consideration earn-out payments, and ~~HSG acquisitions, partially offset by (1) the repayment of $8.4~~(3) $10.9 million ~~under our term loans and $24.0 million under the Revolver, and (2) $5.6 million~~in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards.

New Credit Agreement

On February 9, 2018, we entered into a credit agreement (the “New Credit Agreement”) with several lenders to provide for a $400 million secured revolving credit facility (the “Senior Credit Facility”) to replace our then-existing Credit Agreement. The Senior Credit Facility includes a $50 million sublimit for the issuance of letters of credit and a $50 million sublimit for swingline loans. Our obligations under the New Credit Agreement and the Senior Credit Facility are secured by substantially all of our assets. Borrowings under the Senior Credit Facility bear interest at floating rates, at our option, based upon either LIBOR plus a spread of 1.00% to 2.00% or a base rate plus a spread of 0.00% to 1.00%. The applicable spread is determined quarterly based upon our consolidated net leverage ratio. The Senior Credit Facility is available for working capital, capital expenditures, permitted acquisitions and general corporate purposes. The maturity date of the Senior Credit Facility is February 9, 2023.

In connection with obtaining the New Credit Agreement, we incurred $2.3 million in fees paid to lenders and other third parties, which were capitalized and are amortized to interest expense over the term of the Senior Credit Facility. In addition, we wrote off $0.6 million of unamortized financing fees during the three months ended March 31, 2019 related to our prior credit facilities. To help finance the MedPartners acquisition, we borrowed $195.0 million from the Senior Credit Facility in April 2018. We paid down $45 million during 2018. The acquisition is more fully described in Note (2) to the accompanying Condensed Consolidated Financial Statements, “Acquisitions.”

Letters of Credit

At ~~September 30, 2017~~March 31, 2019, we maintained outstanding standby letters of credit totaling ~~$20.2~~$17.6 million as collateral in relation to our ~~professional liability insurance agreements,~~ workers’ compensation insurance agreements and a corporate office lease agreement. Of the ~~$20.2~~$17.6 million of outstanding letters of credit, we have collateralized ~~$4.0~~$2.4 million in cash and cash equivalents and the remaining amounts are collateralized by the ~~Revolver.~~Senior Credit Facility. Outstanding standby letters of credit at December 31, ~~2016~~2018 totaled ~~$15.4~~$17.6 million.

Off-Balance Sheet Arrangements

At ~~September 30, 2017~~March 31, 2019, we did not have any off-balance sheet arrangement that has or is reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Contractual Obligations

There have been no material changes during the three months ended March 31, 2019, other than the borrowings under the New Credit Agreement described in the accompanying Note (2), “Acquisitions,” to the table entitled “Contractual Obligations” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our ~~2016~~2018 Annual ~~Report that occurred during the nine months ended September 30, 2017.~~Report.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In July 2015, the FASB voted to amend the guidance by approving a one-year delay in the effective date of the new standard to 2018. In addition, the FASB has also issued several amendments to the standard which clarify certain aspects of the guidance, including principal versus agent consideration and identifying performance obligations. We expect to complete our evaluation of the impact of the accounting and disclosure requirements on our consolidated financial statements, business processes, controls and systems during the fourth quarter of 2017. This includes reviewing current accounting policies and practices to identify potential impact of the accounting and disclosure requirements on our business processes, controls and system. The extent of the impact of the adoption of this new standard is subject to the completion of our assessment by the end of 2017. We will adopt this standard in the first quarter of 2018, and apply the modified retrospective approach.

~~In February~~June 2016, the FASB issued ASU ~~2016-02, “Leases.~~2016-13, “Measurement of Credit Losses on Financial Instruments.” ~~This standard requires organizations that lease assets to recognize the assets and liabilities created by those leases.~~ The standard ~~also will require disclosures to help investors~~introduces new accounting models for determining and ~~other~~recognizing credit losses on certain financial ~~statement users better understand the amount, timing,~~instruments based on an estimate of current expected credit losses and ~~uncertainty of cash flows arising from leases. The ASU becomes~~is effective ~~for public companies~~ for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2018.~~2019. We ~~are required to~~will adopt this standard in the ~~guidance on a modified retrospective basis~~first quarter of 2020 and ~~can elect to apply optional practical expedients. We~~ are currently evaluating the ~~approach we will take and the~~ impact ~~of adopting this new standard~~ on our consolidated financial ~~statements and related disclosures.~~

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows. For public entities, ASU 2016-15 is effective for fiscal years beginning

after December 15, 2017, and interim periods within those annual periods, and requires a retrospective approach. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the timing of this new standard’s adoption and the effect that adopting it will have on our financial statements and related disclosures.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. The amendment will be adopted retrospectively. We are currently evaluating the timing of this new standard’s adoption and the effect that adopting it will have on our financial statements and related disclosures.statements.

In January 2017, the FASB issued ASU 2017-04, ~~“Intangibles – Goodwill and Other (Topic 350): Simplifying~~“Simplifying the Test for Goodwill Impairment.” The standard simplifies the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This standard is effective for annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019, with early adoption permitted for impairment tests performed after January 1, 2017. While we continue to assess the ~~potential impact~~timing of adopting this standard, we do not expect the adoption ~~of this standard~~ to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The standard modifies the current disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We will adopt this standard in the first quarter of 2020 and are currently evaluating the effect that adopting it will have on our disclosures.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The standard aligns the requirements for capitalizing implementation

costs incurred in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard is effective on a prospective or retrospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We will adopt this standard in the first quarter of 2020 and are currently evaluating the effect that adopting it will have on our consolidated financial statements.

There have been no other new accounting pronouncements issued but not yet adopted that are expected to materially affect our consolidated financial condition or results of operations.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We base these forward-looking statements on our expectations, estimates, forecasts, and projections about future events and about the industry in which we operate. Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “should,” “would,” “project,” “may,” variations of such words, and other similar expressions. In addition, any statements that refer to projections of financial items, anticipated growth, future growth and revenues, future economic conditions and performance, plans, objectives and strategies for future operations, expectations, or other characterizations of future events or circumstances are forward-looking statements. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Factors that could cause actual results to differ materially from those implied by the forward-looking statements in this Quarterly Report are set forth in our ~~2016~~2018 Annual Report and include but are not limited to:

the effects of economic downturns or slow recoveries, which could result in less demand for our services and pricing pressures;

any inability on our part to anticipate and quickly respond to changing marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, or client needs;

the negative effects that intermediary organizations may have on our ability to secure new and profitable contracts with our clients;

the level of consolidation and concentration of buyers of healthcare workforce solutions and staffing services, which could affect the pricing of our services and our ability to mitigate concentration risk;

~~any inability on our part to anticipate and quickly respond to changing marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, or client needs;~~

the ability of our clients ~~to retain and increase the productivity of their permanent staff, or their ability~~ to increase the efficiency and effectiveness of their ~~internal~~staffing management and recruiting efforts, through predictive analytics, online recruiting or otherwise, which may negatively affect our revenue, results of operations, and cash flows;

the ~~uncertainty regarding the dismantling of certain aspects~~repeal or significant erosion of the Patient Protection and Affordable Care Act ~~that may significantly reduce the number of individuals who maintain health insurance or reduce the subsidies and reimbursements to our clients, which, in turn,~~without a corresponding replacement may negatively affect the demand for our services;

any inability on our part to grow and operate our business profitably in compliance with federal and state healthcare industry regulation, including conduct of operations, costs and payment for services and payment for referrals as well as laws regarding employment and compensation practices and government contracting;

any challenge to the classification of certain of our healthcare professionals as independent contractors, which could adversely affect our profitability;

the effect of investigations, claims, and legal proceedings alleging medical malpractice, ~~violation~~violations of employment, privacy and wage regulations and other legal theories of liability asserted against us, which could subject us to substantial liabilities;

~~security breaches and other~~any technology disruptions ~~that could compromise~~or our ~~information and expose us to liability, which could cause our business and reputation to suffer and could subject us to substantial liabilities;~~

~~any~~ inability ~~on our part~~ to implement new infrastructure and technology systems effectively ~~or technology disruptions, either of which~~ may adversely affect our operating results and ~~our~~ ability to manage our business effectively;

any failure to further develop and evolve our current workforce solutions technology offerings and capabilities, which may harm our business;

disruption to or failures of our SaaS-based technology ~~within certain of our service offerings~~ or our inability to adequately protect our intellectual property rights with respect to such technology, which could reduce client satisfaction, harm our reputation and negatively affect our business;

security breaches and cybersecurity incidents that could compromise our ~~dependence on third parties for the execution of certain critical functions;~~

~~cybersecurity risks~~information and ~~cyber incidents,~~systems, which could adversely affect our business ~~or disrupt our operations;~~operations and reputation and could subject us to substantial liabilities;

any inability on our part to recruit and retain sufficient quality healthcare professionals at reasonable ~~costs;~~costs, which could increase our operating costs and negatively affect our business and profitability;

any inability on our part to quickly and properly ~~screen~~credential and match quality healthcare professionals with suitable ~~placements;~~placements, which may adversely affect demand for our services;

any inability on our part to ~~successfully~~continue to attract, develop and retain ~~a sufficient number of quality~~our sales and operations ~~personnel;~~team members, which may deteriorate our operations;

our increasing dependence on third parties for the execution of certain critical functions;

the loss of our key officers and management personnel, which could adversely affect our business and operating results;

any inability to consummate and effectively incorporate acquisitions into our business operations, which may adversely affect our long-term growth and our results of operations;

businesses we acquire may have liabilities or adverse operating issues, which could harm our operating results;

any increase to our business and operating risks as we develop new services and clients, enter new lines of business, and focus more of our business on providing a full range of client solutions;

any inability on our part to maintain our positive brand awareness and ~~identity;~~identity, which may adversely affect our results of operation;

~~any inability on~~the expansion of social media platforms presents new risks and challenges, which could cause damage to our ~~part to consummate and effectively incorporate acquisitions into our business operations;~~brand reputation;

any recognition ~~by us~~ of an impairment to the substantial amount of goodwill or indefinite-lived ~~intangibles;~~intangibles on our balance sheet;

our indebtedness, which could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the ~~effect of significant adverse adjustments by~~economy or our industry, and expose us to ~~our insurance-related accruals, which could decrease our earnings or increase our losses, as~~interest rate risk to the ~~case may be;~~

~~our significant indebtedness and~~extent of any ~~inability on our part to generate sufficient cash flow to service our~~variable rate debt; ~~and~~

the terms of our debt instruments that impose restrictions on us that may affect our ability to successfully operate our ~~business.~~business; and

the effect of significant adverse adjustments to our insurance-related accruals on our balance sheet, which could decrease our earnings or increase our losses and negatively impact our cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, and commodity prices. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, our primary exposure to market risk was interest rate risk associated with our variable interest debt instruments. In April 2015, we entered into an interest rate swap agreement to minimize our exposure to interest rate fluctuations on $100 million of our outstanding variable rate debt under one of our term loans for which we pay a fixed rate of 0.983% per annum and receive a variable rate equal to floating one-month LIBOR. In connection with the issuance and sale of the Notes and repayment of a portion of the Term Loans, we reduced the interest rate swap notional amount to $40 million in the fourth quarter of 2016. On May 3, 2017, we terminated the remaining interest rate swap after further repayment of the Term Loans. During the third quarter of 2017, we paid off the remaining balance of the Term Loans. A 100 basis point increase in interest rates on our variable rate debt would

not have resulted in a material effect on our unaudited condensed consolidated financial statements for the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2019. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, we generated substantially all of our revenue in the United States. Accordingly, we believe that our foreign currency risk is immaterial.

Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of ~~September 30, 2017~~March 31, 2019 were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2017~~March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

We do not believe that there have been any material changes to the risk factors disclosed in Part I, Item 1A of our ~~2016~~2018 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~

From time to time, we may repurchase our common stock in the open market pursuant to programs approved by our Board. We may repurchase our common stock for a variety of reasons, such as acquiring shares to offset dilution related to equity-based incentives and optimizing our capital structure. On November 1, 2016, our Board authorized us to repurchase up to $150.0 million of our outstanding common stock in the open market. Under the repurchase program announced on November 1, 2016 (the “Company Repurchase Program”), share purchases may be made from time to time beginning in the fourth quarter of 2016, depending on prevailing market conditions and other considerations. The Company Repurchase Program has no expiration date and may be discontinued or suspended at any time.

During the first quarter of 2019, we purchased 378,317 shares of common stock at an average price of $47.37 per share, resulting in an aggregate purchase price of $17.9 million. The following table presents the detail of shares repurchased for the first quarter of 2019. All share repurchases reflected in the table below were made under the Company Repurchase Program, which is the sole repurchase program of the Company currently in effect.




Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Program	Maximum Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Program
February 1 - 28, 2019	22,900	$50.50	22,900	$48,405,129
March 1 - 31, 2019	355,417	$47.16	355,417	$31,631,647

Total	378,317	$47.37	378,317	$31,631,647

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number		Description

31.1		Certification by Susan R. Salka pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*

31.2		Certification by Brian M. Scott pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*

32.1		Certification by Susan R. Salka pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2		Certification by Brian M. Scott pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

10.1		Form of AMN Healthcare Equity Plan Performance Restricted Stock Unit Agreement - Executive (Adjusted EBITDA Margin) (Management Contract or Compensatory Plan or Arrangement).*
10.2		Form of AMN Healthcare Equity Plan Performance Restricted Stock Unit Agreement - Executive (TSR) (Management Contract or Compensatory Plan or Arrangement).*
10.3		Form of AMN Healthcare Equity Plan Performance Restricted Stock Unit Agreement - Non-Executive (Adjusted EBITDA Margin) (Management Contract or Compensatory Plan or Arrangement).*
10.4		Form of AMN Healthcare Equity Plan Performance Restricted Stock Unit Agreement - Non-Executive (TSR) (Management Contract or Compensatory Plan or Arrangement).*
10.5		Form of AMN Healthcare 2017 Equity Plan Restricted Stock Unit Agreement - Non-Executive (Management Contract or Compensatory Plan or Arrangement).*
101.INS		XBRL Instance Document.*

101.SCH		XBRL Taxonomy Extension Schema Document.*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.*



*		Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~November~~May 3, ~~2017~~2019



AMN HEALTHCARE SERVICES, INC.

/S/ SUSAN R. SALKA
Susan R. Salka President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November~~May 3, ~~2017~~2019

/S/ BRIAN M. SCOTT

Brian M. Scott

Chief Accounting Officer,

Chief Financial Officer and Treasurer

(Principal Accounting and Financial Officer)