Financial Reconciliations for the Quarter ending September 30, 2021(opens in new window)

Reconciliation of Non-GAAP Items (Unaudited)

				Three Months Ended					Nine Months Ended
		September 30,		June 30,			September 30,
(in thousands)		2021		2020			2021			2021		2020
Revenue	$	627,049	$	382,699		$	624,485	$	1,908,195	$	1,251,509
Nurse and allied solutions
Physician and leadership solutions		150,663		109,116			139,104			430,523		355,580
Technology and workforce solutions		100,088		59,816			93,856			282,472		155,354
	$	877,800	$	551,631		$	857,445	$	2,621,190	$	1,762,443
Segment operating income (1)
Nurse and allied solutions	$	92,564	$	52,923		$	89,674	$	283,768	$	173,706
Physician and leadership solutions		19,301		15,538			21,849			62,366		45,432
Technology and workforce solutions		47,210		25,680			42,653			131,952		62,814
		159,075		94,141			154,176			478,086		281,952
Unallocated corporate overhead (2)		20,724		17,281			20,628			65,271		50,573
Adjusted EBITDA (3)	$	138,351	$	76,860		$	133,548		$	412,815	$	231,379
Net income	$	74,023	$	26,067		$	66,770	$	211,171	$	61,357
Net income as a % of revenue		8.4 %		4.7 %			7.8 %			8.1 %		3.5 %
Income tax expense		26,583		7,831			22,293			73,956		24,188
Income before income taxes		100,606		33,898			89,063			285,127		85,545
Interest expense, net, and other (5)		5,223		12,564			10,111			24,278		35,061
Income from operations		105,829		46,462			99,174			309,405		120,606
Operating margin (6)		12.1 %		8.4 %			11.6 %			11.8 %		6.8 %
Depreciation and amortization		26,104		26,936			24,740			74,098		69,096
Depreciation (included in cost of revenue) (7)		686		481			616			1,773		981
Share-based compensation		2,589		3,772			6,019			17,895		15,046
Acquisition, integration, and other costs (8)		3,143		(791)			2,999			9,644		25,650
Adjusted EBITDA (3)	$	138,351	$	76,860		$	133,548		$	412,815	$	231,379
Adjusted EBITDA margin (4)		15.8 %		13.9 %			15.6 %			15.7 %		13.1 %

1

Reconciliation of Non-GAAP Items (Unaudited)

Continued from page 1

		Three Months Ended			Nine Months Ended
		September 30,			June 30,			September 30,
		2021		2020			2021			2021		2020
Net income	$	74,023	$	26,067	$	66,770	$	211,171	$	61,357
Adjustments:
Amortization of intangible assets		16,011		19,572			15,806			47,018		48,071
Acquisition, integration, and other costs (8)		3,143		(791)			2,999			9,644		25,650
Fair value changes of equity investments and instruments (5)		(5,412)		-			-			(6,683)		1,891
Debt financing related costs		-		1,773			-			158		1,773
Tax effect of above adjustments		(3,573)		(5,760)			(4,889)			(13,036)		(20,536)
Tax effect of COLI fair value changes (9)		(600)		(1,158)			(1,093)			(2,779)		(219)
Excess tax benefits related to equity awards (10)		(230)		(791)			(877)			(1,783)		(2,027)
Adjusted net income (11)	$	83,362	$	38,912		$	78,716		$	243,710	$	115,960
GAAP diluted net income per share (EPS)	$	1.54	$	0.55	$	1.39	$	4.40	$	1.29
Adjustments		0.19		0.27			0.25			0.67		1.14
Adjusted diluted EPS (12)	$	1.73	$	0.82	$	1.64	$	5.07	$	2.43

2

Reconciliation of Non-GAAP Items (Unaudited)

1. 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.
2. 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.
3. 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, extraordinary 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.
4. Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.
5. 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.
6. Operating margin represents income from operations divided by revenue.
7. A portion of depreciation expense for AMN Language Services (formerly known as Stratus Video, which was acquired in February 2020 and has since been rebranded) is included in cost of revenue. We exclude the impact of depreciation included in cost of revenue from the calculation of adjusted
   EBITDA.
8. Acquisition, integration, and other costs include acquisition and integration costs, net changes in the fair value of contingent consideration liabilities for recently acquired companies, extraordinary legal expenses, and restructuring 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. Acquisition, integration, and other costs for the three months ended September 30, 2020 of $7,510,000 were offset by a decrease in contingent consideration liabilities for recently acquired companies of $6,700,000 and a one-time insurance policy benefit of $1,601,000. Acquisition, integration, and other costs for the nine months ended September 30, 2020 of $28,951,000 were partially offset by a net decrease in contingent consideration liabilities for recently acquired companies of $1,700,000 and the aforementioned one-time insurance policy benefit.
9. 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.

3

Reconciliation of Non-GAAP Items (Unaudited)

Continued from page 3

1. The consolidated effective tax rate is affected by the recording of excess tax benefits and tax deficiencies relating to equity awards vested and exercised 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, the Company's future stock price on the date awards vest or exercise in relation to the fair value of the awards on the grant date or the exercise behavior of the Company's stock appreciation rights holders. 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.
2. Adjusted net income represents GAAP net income excluding the impact of the (A) amortization of intangible assets, (B) acquisition, integration, and other costs, (C) extraordinary 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.
3. 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.

4

Reconciliation of Guidance Operating Margin to Guidance Adjusted EBITDA Margin

	Three Months Ending
	December 31, 2021
	Low (1)		High (1)
Operating margin	11.8%	12.3%
Depreciation and amortization	2.3%		2.3%
EBITDA margin	14.1%	14.6%
Share-based compensation	0.6%	0.6%
Acquisition, integration, and other costs	0.6%		0.6%
Adjusted EBITDA margin	15.3%	15.8%

(1) Guidance percentage metrics are approximate.

5