AMN 2017 Annual Report

23 Revenue. Revenue increased 5% to $1,988.5 million for 2017 from $1,902.2 million for 2016, driven by 4% organic growth along with $12.4 million of additional revenue resulting from our Peak acquisition in June 2016. Nurse and allied solutions segment revenue increased 5% to $1,238.5 million for 2017 from $1,185.1 million for 2016. The $53.4 million increase was primarily attributable to a 5% increase in the average number of healthcare professionals on assignment and a 2% increase in the average bill rate during the year ended December 31, 2017. The increase was partially offset by an approximately $37.0 million decrease in labor disruption revenue and the impact of one less calendar day due to 2016 being a leap year. Locum tenens solutions segment revenue increased 2% to $430.6 million for 2017 from $424.2 million for 2016. The $6.4 million increase was primarily attributable to a 4% increase in the revenue per day filled during the year ended December 31, 2017, partially offset by a 3% decrease in the number of days filled. Other workforce solutions segment revenue increased 9% to $319.3 million for 2017 from $292.9 million for 2016. Of the $26.4 million increase, $12.4 million was attributable to the additional revenue in connection with the Peak acquisition in June 2016, along with growth in our VMS, interim leadership, and workforce optimization businesses, partially offset by declines in our permanent placement business during the year ended December 31, 2017. Gross Profit. Gross profit increased 4% to $644.4 million for 2017 from $619.7 million for 2016, representing gross margins of 32.4% and 32.6%, respectively. The decrease in consolidated gross margin was due to lower bill-to-pay spreads in the locum tenens solutions segment and an unfavorable change in business mix in our other workforce solutions segment, offset by a higher gross margin in the nurse and allied solutions segment driven primarily by lower direct costs during the year ended December 31, 2017. Gross margin by reportable segment for 2017 and 2016 was 27.6% and 26.9% for nurse and allied solutions, 30.0% and 31.1% for locum tenens solutions, and 54.5% and 57.8% for other workforce solutions, respectively. Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses were $399.7 million, representing 20.1% of revenue, for 2017, as compared to $398.5 million, representing 20.9% of revenue, for 2016. The increase in SG&A expenses was primarily due to $1.9 million of additional SG&A expenses from the Peak acquisition, $1.7 million lower favorable actuarial-based decreases in our professional liability reserves, and other expenses associated with our revenue growth, offset by a $2.8 million decrease in acquisition and integration costs as compared to 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) Years Ended December 31, 2017 2016 Nurse and allied solutions $ 158,480 $ 156,676 Locum tenens solutions 77,778 73,126 Other workforce solutions 92,793 91,936 Unallocated corporate overhead 60,412 65,335 Share-based compensation 10,237 11,399 $ 399,700 $ 398,472 Depreciation and Amortization Expenses. Amortization expense increased 2% to $18.6 million for 2017 from $18.3 million for 2016, primarily attributable to a full year of amortization expense related to the intangible assets acquired in the Peak acquisition. Depreciation expense increased 21% to $13.7 million for 2017 from $11.3 million for 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 in large part from our ongoing front and back office information technology initiatives. Interest Expense, Net, and Other . Interest expense, net, and other, was $19.7 million for 2017 as compared to $15.5 million for 2016. The increase is primarily due to higher interest bearing Notes (as defined below in this Item 7) for the year ended December 31, 2017, as compared to the term loans and revolver in 2016. Income Tax Expense . Income tax expense was $60.2 million for 2017 as compared to $70.3 million for 2016, reflecting effective income tax rates of 31.2% and 39.9% for these periods, respectively. The difference in the effective income tax rate was primarily attributable to (1) recording a discrete net tax benefit of $14.0 million for the year ended December 31, 2017 resulting from our initial analysis of the impact of the Tax Cuts and Jobs Act, and (2) 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