THE HEDGEYE EDGE
The Hedgeye Healthcare team at Hedgeye has sourced and maintains a wealth of proprietary data in order to support our LONG position for AMN Healthcare Services (AMN). We maintain a variety of NEW indicators that support our thesis in the following data series:
- ADP Employment and forecast
- BLS Health Care Employment
- Current Population Survey for Registered Nurse Employment status
- Current Population Survey for Registered Nurse Age
- BLS JOLTS Job Openings for Health Care
- Hedgeye Health Care Labor Demand Index
- Insured Medical Consumer Model
- NCLEX test takers
- Hedgeye AMN Tracker for volume and hourly rate
These data series give us confidence that our thesis will play out successfully following AMN’s positive inflection in 1H 19.
Health Care labor trends continue to run tight in 2019 which should bode well for AMN into 3Q19 earnings. The Healthcare team liked AMN as a long in 2018, and initially the stock did very well, but AMN guided lower on a contract loss heading into 1Q19 and the team has been on their back foot ever since. When the company guided lower, AMN was setting up to comp the premium placement headwinds the company experienced in early 2018 and unfortunately the contract loss put the Healthcare team's thesis on hold.
But the data and the anecdotes have held up. Heading into 3Q19 results, we continue to see much of what we anticipated with our original thesis with some additional positives emerging as well. For example, the Kaiser strike scheduled to begin October 1 could be an isolated event, but it could be a sign that worker frustration is boiling over. Healthcare worker average weekly hours continue to climb to multi-year highs putting stress on the system. Also, our tracker data continues to point to accelerating activity well above prior readings.
Given our team’s long-term investment horizon, we continue to be bullish past the near-term quarters. Important themes we will continue to follow include: Evidence of accelerating healthcare demand on top of existing tightness, scarcity among unemployed registered nurses, acceleration according to our tracker data, increased nurse supply as a result of NCLEX Pass Rates and the Current Population Survey, and the positive tailwinds brought about in the Hedgeye Macro team's 2H19 Quads.
ONE-YEAR TRAILING CHART
