AMN Q4 2025 Results Show Tentative Revenue Growth but Persistent Earnings Weakness

What happened

AMN Healthcare reported Q4 2025 revenue of $748 million, with a GAAP loss of ($0.20) per share and an adjusted EPS of $0.22, indicating a sequential revenue increase from Q3's $634.5 million. This aligns with the DeepValue report's expectation of low-single-digit Nurse & Allied growth, suggesting volume stabilization after post-COVID declines. However, the adjusted EPS remains depressed compared to historical levels, highlighting ongoing margin compression despite management's cost-cutting and the sale of non-core assets like Smart Square. The GAAP loss, likely driven by impairments or one-time charges, underscores the fragility of the earnings recovery and masks underlying operational challenges. Critical analysis reveals that while the revenue uptick supports the stabilization narrative, profitability remains weak, keeping leverage and credit risks elevated as noted in the report's downside boundaries.

Implication

The revenue growth in Q4 2025 provides some validation for the DeepValue thesis that nurse volumes are bottoming, potentially supporting the base case implied value of $22 if sustained through 2026. However, the adjusted EPS of $0.22, coupled with a GAAP loss, signals that profitability improvements are lagging, reinforcing concerns about gross margin floors and the pace of EBITDA recovery needed to reduce leverage from distressed levels. This outcome necessitates close monitoring of the 90-day checkpoints, such as nurse volume trends and revolver usage, to confirm that stabilization is not merely strike-driven or temporary. Investors should position sizing conservatively, acknowledging the bear case risk of $12 if margin compression persists or credit agencies implement further downgrades due to leverage exceeding 4x. In the medium term, the stock's re-rating depends on clearer evidence of mix shift into higher-margin segments like international nurses and VMS, as highlighted in the bull scenario.

Thesis delta

The Q4 results partially confirm the volume stabilization aspect of the investment thesis, suggesting that the cyclical trough may be transitioning toward slow normalization as guided. However, the weak adjusted EPS and GAAP loss indicate that margin recovery is slower than anticipated, emphasizing the need for vigilance on gross margin sustainability and leverage metrics. This does not fundamentally alter the thesis but reinforces the base case probability while highlighting that upside toward $28 requires faster profitability improvements and successful execution of the mix-shift strategy.