AMN Healthcare Announces Third Quarter 2022 Results

Business Highlights

“AMN’s ability to evolve, innovate and deliver critical workforce solutions has never been stronger. Our talented team is relentlessly focused on our clients, clinicians, communities and, ultimately, the patients we serve. This, coupled with significant investments we’ve been making in our people, processes, and technology, enables us to deliver these outstanding results,” said Susan R. Salka, Chief Executive Officer of AMN Healthcare. “AMN is collaborating with a broad spectrum of organizations and investing to create solutions to address the labor shortages that are expected to endure for years.”

Ms. Salka said, “With AMN in such a position of strength and a tremendous market need ahead, I am extremely excited about the next steps in the company’s evolution. As recently announced, I will be handing the CEO baton over to Cary Grace soon, and I am confident she and our experienced leadership team are superbly prepared to ensure that AMN will continue to evolve and make an exceptional impact for all our stakeholders.”

Consolidated revenue for the quarter was $1.139 billion, a 30% increase over prior year and 20% less than prior quarter. Net income was $92 million (8.1% of revenue), or $2.10 per diluted share, compared with $74 million (8.4% of revenue), or $1.54 per diluted share, in the third quarter of 2021. Adjusted diluted EPS in the third quarter was $2.57 compared with $1.73 in the same quarter a year ago.

Revenue for the Nurse and Allied Solutions segment was $828 million, up 32% year over year and down 25% from the prior quarter. Travel nurse staffing revenue grew 31% year over year and was down 25% sequentially. Allied division revenue grew by 39% year over year and was lower by 8% sequentially. Labor disruption revenue was $19 million in the third quarter compared with $83 million in the prior quarter and $23 million in the year-ago period.

The Physician and Leadership Solutions segment reported revenue of $175 million, growing 16% year over year and flat sequentially. Locum tenens revenue was $106 million, up 19% year over year and flat sequentially. Interim leadership revenue grew by 9% year over year and was unchanged sequentially. Our physician and leadership search businesses grew revenue 21% year over year, and the sequential comparison was down 3%.

Technology and Workforce Solutions segment revenue was $135 million, an increase of 35% year over year and down 10% sequentially. Language services revenue was $56 million in the quarter, 18% higher than the prior year and up 4% sequentially. Vendor management systems revenue was $60 million, growing 80% year over year and down 20% from the prior quarter.

Consolidated gross margin was 33.8%, 100 basis points lower year over year and up 150 basis points sequentially. Gross margin was lower year over year due primarily to higher clinician compensation and lower hours, partially offset by higher margins in our Technology and Workforce Solutions segment. On a sequential basis, the revenue mix change was favorable to gross margin, and the Nurse and Allied Solutions segment improved its gross margin by 130 basis points.

Consolidated SG&A expenses were $215 million, or 18.9% of revenue, compared with $174 million, or 19.8% of revenue, in the same quarter last year. SG&A was $244 million, or 17.1% of revenue, in the previous quarter. The year-over-year increase in SG&A costs was driven primarily by higher employee and related expenses. SG&A margin improved year over year due to operating leverage on higher revenue.

Income from operations was $136 million with an operating margin of 12.0%, compared with $106 million and 12.1%, respectively, in the same quarter last year. Adjusted EBITDA was $182 million, a year-over-year increase of 31%. Adjusted EBITDA margin was 16.0%, representing an increase of 20 basis points year over year.

At September 30, 2022, cash and cash equivalents totaled $156 million. Cash flow from operations was $114 million for the third quarter, and capital expenditures were $20 million. The Company ended the quarter with total debt outstanding of $850 million and a net leverage ratio of 0.8 to 1.

Fourth Quarter 2022 OutlookMetricGuidance*Consolidated revenue$1.050 - $1.080 billionGross margin33.3% - 33.8%SG&A as percentage of revenue19.5% - 20.0%Operating margin10.7% - 11.3%Adjusted EBITDA margin15.0% - 15.5%

*Note: Guidance percentage metrics are approximate. For a reconciliation of adjusted EBITDA margin, see the table entitled “Reconciliation of Guidance Operating Margin to Guidance Adjusted EBITDA Margin” below.

Revenue in the fourth quarter of 2022 is expected to be 21-23% lower than prior year and 6-8% lower sequentially. Excluding labor disruption revenue, we expect fourth quarter revenue to be down 16-18% year over year, due to lower average travel nurse and VMS bill rates. This is slightly better than our prior projections. The quarter-over-quarter revenue decline is driven primarily by the continued decline in average travel nurse and VMS bill rates and hours worked, partially offset by an increase in healthcare professionals on assignment. Nurse and Allied Solutions segment revenue is expected to be down approximately 29% year over year. Physician and Leadership Solutions segment revenue is expected to be flat year over year. For the Technology and Workforce Solutions segment, we expect revenue to grow by approximately 10% year over year.

Fourth quarter estimates for certain other financial items include depreciation of $13.5 million, non-cash amortization expense of $22 million, share-based compensation expense of $5 million, interest expense of $9 million, integration and other expenses of $5 million, and an adjusted tax rate of 27%.

Conference Call on November 3, 2022

AMN Healthcare Services, Inc. (NYSE: AMN) will host a conference call to discuss its third quarter 2022 financial results and fourth quarter 2022 outlook on Thursday, November 3, 2022 at 5:00 p.m. Eastern Time. A live webcast of the call can be accessed through AMN Healthcare’s website at http://ir.amnhealthcare.com. Interested parties may participate live via telephone by registering at this link. Registrants will receive confirmation and dial-in details. Following the conclusion of the call, a replay of the webcast will be available at the Company’s IR website.

About AMN Healthcare

AMN Healthcare is the leader and innovator in total talent solutions for healthcare organizations across the nation. The Company provides access to the most comprehensive network of quality healthcare professionals through its innovative recruitment strategies and breadth of career opportunities. With insights and expertise, AMN Healthcare helps providers optimize their workforce to successfully reduce complexity, increase efficiency and improve patient outcomes. AMN total talent solutions include managed services programs, clinical and interim healthcare leaders, temporary staffing, permanent placement, executive search, vendor management systems, recruitment process outsourcing, predictive modeling, language services, revenue cycle solutions, credentialing, and other services. Clients include acute-care hospitals, community health centers and clinics, physician practice groups, retail and urgent care centers, home health facilities, schools and many other healthcare settings. AMN Healthcare is committed to fostering and maintaining a diverse team that reflects the communities we serve. Our commitment to the inclusion of many different backgrounds, experiences and perspectives enables our innovation and leadership in the healthcare services industry.

The Company’s common stock is listed on the New York Stock Exchange under the symbol “AMN.” For more information about AMN Healthcare, visit www.amnhealthcare.com, where the Company posts news releases, investor presentations, webcasts, SEC filings and other material information. The Company also utilizes email alerts and Really Simple Syndication (“RSS”) as routine channels to supplement distribution of this information. To register for email alerts and RSS, visit http://ir.amnhealthcare.com.

Non-GAAP Measures

This earnings release and the non-GAAP reconciliation tables included with the earnings release contain certain non-GAAP financial information, which the Company provides as additional information, and not as an alternative, to the Company’s condensed consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures include (1) adjusted EBITDA, (2) adjusted EBITDA margin, (3) adjusted net income and (4) adjusted diluted EPS. The Company provides such non-GAAP financial measures because management believes that they are useful to both management and investors as a supplement, and not as a substitute, when evaluating the Company’s operating performance. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted diluted EPS serve as industry-wide financial measures. The Company uses adjusted EBITDA for making financial decisions, allocating resources and for determining certain incentive compensation objectives. The non-GAAP measures in this release are not in accordance with, or an alternative to, GAAP measures and may be different from non-GAAP measures, or may be calculated differently than other similarly titled non-GAAP measures, reported by other companies. They should not be used in isolation to evaluate the Company’s performance. A reconciliation of non-GAAP measures identified in this release, along with further detail about the use and limitations of certain of these non-GAAP measures, may be found below in the table entitled “Non-GAAP Reconciliation Tables” under the caption entitled “Reconciliation of Non-GAAP Items” and the footnotes thereto or on the Company’s website at https://ir.amnhealthcare.com/financials/quarterly-results. Additionally, from time to time, additional information regarding non-GAAP financial measures, including pro forma measures, may be made available on the Company’s website.

This press release 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. Forward-looking statements include, among others, statements concerning the labor market conditions, demand for staffing and other services, the length of time and level of workforce shortages, bill rate trends, our ability to develop new approaches to develop new and existing talent and grow and retain our workforce, current trends and revenue and earnings outlook, opportunities for and our ability to execute mergers, acquisitions or share repurchases, market needs, the transition of our chief executive officer from Susan Salka to Cary Grace, fourth quarter 2022 financial projections for consolidated and segment revenue, revenue from labor disruption activities, consolidated gross margin, operating margin, SG&A as a percent of revenue, adjusted EBITDA margin, depreciation expense, non-cash amortization expense, share-based compensation expense, interest expense, integration and other expenses, adjusted tax rate, and number of diluted shares outstanding. The Company bases these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are also identified by words such as “believe,” "project," “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimates,” variations of such words and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

Forward-Looking Statements

For a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above that could cause actual results to differ from those implied by the forward-looking statements contained in this press release, please refer to our most recent Annual Report on Form 10-K for the year ended December 31, 2021. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Contact:
Randle Reece
Senior Director, Investor Relations
866.861.3229

AMN Healthcare Services, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
(unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, 2022 2021 2022 2022 2021 Revenue$1,138,586 $877,800 $1,426,607 $4,117,731 $2,621,190 Cost of revenue 753,560 571,935 966,370 2,776,300 1,745,914 Gross profit 385,026 305,865 460,237 1,341,431 875,276 Gross margin 33.8% 34.8% 32.3% 32.6% 33.4%Operating expenses: Selling, general and administrative (SG&A) 215,419 173,932 244,430 717,428 491,773 SG&A as a % of revenue 18.9% 19.8% 17.1% 17.4% 18.8% Depreciation and amortization (exclusive of depreciation included in cost of revenue) 33,239 26,104 32,274 96,169 74,098 Total operating expenses 248,658 200,036 276,704 813,597 565,871 Income from operations 136,368 105,829 183,533 527,834 309,405 Operating margin(1) 12.0% 12.1% 12.9% 12.8% 11.8% Interest expense, net, and other(2) 8,961 5,223 10,080 28,630 24,278 Income before income taxes 127,407 100,606 173,453 499,204 285,127 Income tax expense 34,962 26,583 49,653 136,951 73,956 Net income$92,445 $74,023 $123,800 $362,253 $211,171 Net income as a % of revenue 8.1% 8.4% 8.7% 8.8% 8.1% Other comprehensive income (loss): Unrealized gains (losses) on available-for-sale securities, net, and other (219) 11 332 (794) (10)Other comprehensive income (loss) (219) 11 332 (794) (10) Comprehensive income$92,226 $74,034 $124,132 $361,459 $211,161 Net income per common share: Basic$2.11 $1.55 $2.78 $8.04 $4.43 Diluted$2.10 $1.54 $2.77 $7.99 $4.40 Weighted average common shares outstanding: Basic 43,785 47,737 44,504 45,056 47,666 Diluted 44,039 48,080 44,740 45,332 48,022           

AMN Healthcare Services, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited) September 30, 2022 December 31, 2021 September 30, 2021Assets Current assets: Cash and cash equivalents$155,723 $180,928 $137,041 Accounts receivable, net 724,966 789,131 570,101 Accounts receivable, subcontractor 253,954 239,719 141,626 Prepaid and other current assets 71,523 139,290 50,763 Total current assets 1,206,166 1,349,068 899,531 Restricted cash, cash equivalents and investments 64,883 64,482 63,603 Fixed assets, net 140,995 127,114 127,762 Operating lease right-of-use assets 18,505 27,771 36,487 Other assets 152,970 156,670 157,909 Goodwill 935,675 892,341 893,283 Intangible assets, net 499,067 514,460 530,422 Total assets$3,018,261 $3,131,906 $2,708,997 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued expenses$459,237 $425,257 $284,094 Accrued compensation and benefits 338,833 354,381 321,938 Current portion of operating lease liabilities 8,226 11,383 14,396 Deferred revenue 15,060 15,950 17,904 Other current liabilities 69,890 162,419 2,854 Total current liabilities 891,246 969,390 641,186 Notes payable, net of unamortized fees and premium 843,210 842,322 842,027 Deferred income taxes, net 42,159 47,814 61,187 Operating lease liabilities 10,785 13,364 15,004 Other long-term liabilities 98,228 96,989 107,115 Total liabilities 1,885,628 1,969,879 1,666,519 Commitments and contingencies Stockholders’ equity: 1,132,633 1,162,027 1,042,478 Total liabilities and stockholders’ equity$3,018,261 $3,131,906 $2,708,997       

AMN Healthcare Services, Inc.
Summary Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, 2022 2021 2022 2022 2021 Net cash provided by operating activities$113,728 $16,746 $224,462 $538,405 $227,371 Net cash used in investing activities (32,305) (25,408) (92,523) (148,067) (79,017)Net cash used in financing activities (3,835) (527) (174,233) (415,523) (31,230)Effect of exchange rates on cash — 11 183 — (10)Net increase (decrease) in cash, cash equivalents and restricted cash 77,588 (9,178) (42,111) (25,185) 117,114 Cash, cash equivalents and restricted cash at beginning of period 143,941 210,282 186,052 246,714 83,990 Cash, cash equivalents and restricted cash at end of period$221,529 $201,104 $143,941 $221,529 $201,104 

AMN Healthcare Services, Inc.
Non-GAAP Reconciliation Tables
(dollars in thousands, except per share data)
(unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, 2022 2021 2022 2022 2021 Reconciliation of Non-GAAP Items: Net income$92,445 $74,023 $123,800 $362,253 $211,171 Income tax expense 34,962 26,583 49,653 136,951 73,956 Income before income taxes 127,407 100,606 173,453 499,204 285,127 Interest expense, net, and other(2) 8,961 5,223 10,080 28,630 24,278 Income from operations 136,368 105,829 183,533 527,834 309,405 Depreciation and amortization 33,239 26,104 32,274 96,169 74,098 Depreciation (included in cost of revenue)(3) 1,091 686 973 2,918 1,773 Share-based compensation 4,898 2,589 8,513 24,670 17,895 Acquisition, integration, and other costs(4) 6,237 3,143 7,377 20,532 9,644 Adjusted EBITDA(5)$181,833 $138,351 $232,670 $672,123 $412,815 Adjusted EBITDA margin(6) 16.0% 15.8% 16.3% 16.3% 15.7% Net income$92,445 $74,023 $123,800 $362,253 $211,171 Adjustments: Amortization of intangible assets 20,884 16,011 20,312 60,843 47,018 Acquisition, integration, and other costs(4) 6,237 3,143 7,377 20,532 9,644 Fair value changes of equity investments and instruments(2) — (5,412) — — (6,683)Debt financing related costs — — — — 158 Tax effect on above adjustments (7,051) (3,573) (7,199) (21,157) (13,036)Tax effect of COLI fair value changes(7) 1,507 (600) 4,105 6,488 (2,779)Excess tax benefits related to equity awards(8) (727) (230) (176) (2,832) (1,783)Adjusted net income(9)$113,295 $83,362 $148,219 $426,127 $243,710 GAAP diluted net income per share (EPS)$2.10 $1.54 $2.77 $7.99 $4.40 Adjustments 0.47 0.19 0.54 1.41 0.67 Adjusted diluted EPS(10)$2.57 $1.73 $3.31 $9.40 $5.07 

AMN Healthcare Services, Inc.
Supplemental Segment Financial and Operating Data
(dollars in thousands, except operating data)
(unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, 2022 2021 2022 2022 2021 Revenue Nurse and allied solutions$828,317 $627,049 $1,101,478 $3,157,834 $1,908,195 Physician and leadership solutions 175,152 150,663 175,697 530,355 430,523 Technology and workforce solutions 135,117 100,088 149,432 429,542 282,472 $1,138,586 $877,800 $1,426,607 $4,117,731 $2,621,190 Segment operating income(11) Nurse and allied solutions$115,182 $92,564 $160,870 $471,141 $283,768 Physician and leadership solutions 23,904 19,301 19,995 64,280 62,366 Technology and workforce solutions 71,145 47,210 82,501 232,526 131,952 210,231 159,075 263,366 767,947 478,086 Unallocated corporate overhead(12) 28,398 20,724 30,696 95,824 65,271 Adjusted EBITDA(5)$181,833 $138,351 $232,670 $672,123 $412,815 Gross Margin Nurse and allied solutions 27.0% 29.3% 25.7% 26.2% 27.6%Physician and leadership solutions 34.0% 34.8% 34.2% 34.4% 36.1%Technology and workforce solutions 75.6% 69.4% 78.3% 76.9% 68.3% Operating Data: Nurse and allied solutions Average travelers on assignment(13) 14,722 11,972 16,462 16,085 12,206 Physician and leadership solutions Days filled(14) 49,694 44,147 49,361 150,550 123,619 Revenue per day filled(15)$2,134 $2,016 $2,146 $2,157 $2,048 As of September 30, As of December 31, 2022 2021 2021Leverage ratio (16)0.8 1.5 1.1      

AMN Healthcare Services, Inc.
Additional Supplemental Non-GAAP Disclosure
Reconciliation of Guidance Operating Margin to Guidance
Adjusted EBITDA Margin
(unaudited) Three Months Ended December 31, 2022 Low(17) High(17) Operating margin10.7% 11.3%Depreciation and amortization3.4% 3.3%EBITDA margin14.1% 14.6%Share-based compensation0.5% 0.5%Acquisition, integration, and other costs0.4% 0.4%Adjusted EBITDA margin15.0% 15.5%(1)Operating margin represents income from operations divided by revenue.(2)Changes in the fair value of equity investments and instruments are recognized in interest expense, net, and other. Since the changes in fair value are unrelated to the Company’s operating performance, we exclude the impact from the calculation of adjusted net income and adjusted diluted EPS.(3)A portion of depreciation expense for AMN Language Services is included in cost of revenue. We exclude the impact of depreciation included in cost of revenue from the calculation of adjusted EBITDA.(4)Acquisition, integration, and other costs include acquisition and integration costs, net changes in the fair value of contingent consideration liabilities for recently acquired companies, certain legal expenses, restructuring expenses, and certain nonrecurring expenses, which we exclude from the calculation of adjusted EBITDA, adjusted net income, and adjusted diluted EPS because we believe that these expenses are not indicative of the Company’s operating performance. For the three and nine months ended September 30, 2022, acquisition and integration costs were approximately $1.1 million and $3.1 million, respectively, expenses related to the closures of certain office leases were approximately $1.7 million and $12.6 million, respectively, certain legal expenses were approximately $4.8 million, and other nonrecurring expenses were approximately $0.4 million and $1.2 million, respectively. Additionally, the aforementioned costs for the three and nine months ended September 30, 2022 were partially offset by net decreases in contingent consideration liabilities for recently acquired companies of approximately $1.8 million and $1.2 million, respectively.(5)Adjusted EBITDA represents net income plus interest expense (net of interest income) and other, income tax expense (benefit), depreciation and amortization, depreciation (included in cost of revenue), acquisition, integration, and other costs, restructuring expenses, certain legal expenses, and share-based compensation. Management believes that adjusted EBITDA provides an effective measure of the Company’s results, as it excludes certain items that management believes are not indicative of the Company’s operating performance. Adjusted EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to income from operations or net income as an indicator of operating performance. Although management believes that some of the items excluded from adjusted EBITDA are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.(6)Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.(7)The Company records net tax expense (benefit) related to the income tax treatment of the fair value changes in the cash surrender value of its company owned life insurance. Since this change in fair value is unrelated to the Company’s operating performance, we excluded the impact on adjusted net income and adjusted diluted EPS.(8)The consolidated effective tax rate is affected by the recording of excess tax benefits and tax deficiencies relating to equity awards vested during the period. As a result of the adoption of a new accounting pronouncement on January 1, 2017, the Company no longer records excess tax benefits and tax deficiencies to additional paid-in capital, but such excess tax benefits and tax deficiencies are now recognized in income tax expense. The magnitude of the impact of excess tax benefits and tax deficiencies generated in the future, which may be favorable or unfavorable, is dependent upon the Company’s future grants of share-based compensation and the Company’s future stock price on the date awards vest in relation to the fair value of the awards on the grant date. Since these excess tax benefits and tax deficiencies are largely unrelated to our income before taxes and are unrepresentative of our normal effective tax rate, we excluded their impact in the calculation of adjusted net income and adjusted diluted EPS.(9)Adjusted net income represents GAAP net income excluding the impact of the (A) amortization of intangible assets, (B) acquisition, integration, and other costs, (C) certain legal expenses, (D) changes in fair value of equity investments and instruments, (E) deferred financing related costs, (F) tax effect, if any, of the foregoing adjustments, (G) excess tax benefits and tax deficiencies relating to equity awards vested and exercised since January 1, 2017, and (H) net tax expense (benefit) related to the income tax treatment of fair value changes in the cash surrender value of its company owned life insurance, and (I) restructuring tax benefits. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company’s operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded in the calculation of adjusted net income). Although management believes the items in the calculation of adjusted net income are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted net income as an operating performance measure in conjunction with GAAP measures such as GAAP net income.(10)Adjusted diluted EPS represents adjusted net income divided by diluted weighted average common shares outstanding. Management included this non-GAAP measure to provide investors and prospective investors with an alternative method for assessing the Company’s operating results in a manner that is focused on its operating performance and to provide a more consistent basis for comparison between periods. However, investors and prospective investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded in the calculation of adjusted net income). Although management believes the items in the calculation of adjusted net income are not indicative of the Company’s operating performance, these items do impact the statement of comprehensive income, and management therefore utilizes adjusted diluted EPS as an operating performance measure in conjunction with GAAP measures such as GAAP diluted EPS.(11)Segment operating income represents net income plus interest expense (net of interest income) and other, income tax expense (benefit), depreciation and amortization, depreciation (included in cost of revenue), unallocated corporate overhead, acquisition, integration, and other costs, and share-based compensation.(12)Unallocated corporate overhead (as presented in the tables above) consists of unallocated corporate overhead (as reflected in our quarterly and annual financial statements filed with the SEC) less acquisition, integration, and other costs.(13)Average travelers on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period presented.(14)Days filled is calculated by dividing the locum tenens hours filled during the period by eight hours.(15)Revenue per day filled represents revenue of the Company’s locum tenens business divided by days filled for the period presented.(16)Leverage ratio represents the ratio of the Company’s debt outstanding (including the outstanding letters of credit collateralized by the senior credit facility) minus cash and cash equivalents at the end of the subject period to adjusted EBITDA for the twelve-month period ended at the end of the subject period.(17)Guidance percentage metrics are approximate.