Q4 2020 AMN Healthcare Services Inc Earnings Call

February 18, 2021

Ladies and gentlemen, thank you for standing by and welcome Katie and.

Healthcare fourth quarter 2020 earnings conference call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

To your question during the session you will need to press star one on your telephone.

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I'd now like to hand, the conference over to your speaker for today, Mr. Randy Reece director of Investor Relations. Thank you Sir Please go ahead.

Good afternoon, everyone.

Welcome to a and then healthcare fourth quarter and full year 2020 earnings call and.

A replay of this webcast will be available at IR dot a M and healthcare dot com following the conclusion of this call.

<unk> for the audio replay of the conference call or in our earnings release issued this afternoon.

Various remarks, we make during this call about future expectations projections trends plans events or circumstances.

Constitute forward looking statements.

Statements reflect the company's current beliefs based upon information currently available to it.

Our actual results may differ materially from those indicated by these forward looking statements as a result of various factors and cautionary statements, including those identified in our most recently filed forms 10-K and 10-Q, our earnings release and subsequent filings with the SEC.

The company does not intend to update guidance or any forward looking statements provided today prior to its next earnings release.

This call contains certain non-GAAP financial information informs.

Information regarding and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and on our financial ports page at IR day, AAM and healthcare Dot com on.

On the call today are Susan <unk>, Chief Executive Officer, Brian Scott, Chief Financial Officer, Kelly, Rakowski Group, President and C O and strategic talent solutions Landry seating group, President and C O olive nursing and Allied solutions and Marine Huber President of workforce technology solutions.

I will now turn the call over to Susan.

Thank you so much Randy and welcome everyone and.

We have all been affected by the events of 'twenty and 'twenty, but none more so than the people afflicted with COVID-19, and their families and caregivers and healthcare.

Healthcare providers once you astonishing links putting themselves at risk and save lives.

Millions of Americans fundamentally change the way they live each day and sacrificing to contain the pandemic.

We must never forget it sounds long.

But it is also essential that our efforts are focused on the future and Dewey.

And all we can and should help to bring in and to this crisis.

While our nation was rocked by the pandemic, we also faced the turmoil and ratios and social and justice and political unrest and.

So great pride and the way our aim and team responded to a year of dramatic swings and didn't.

And then for healthcare labor, while also making great progress on our commitment to social responsibility diversity and equity no matter how intense the storm we never lost sight of all of our stakeholders. We didn't just respond to the crisis, we transformed our company with agility.

And innovation, when our clients and healthcare professionals needed us most.

And then began 2020 by taking bold steps acquiring stratus video the leader and virtual language services for healthcare and launching mobile and other digital capabilities and enhanced how we support our healthcare professionals.

These and other investments and gave us the ability to deploy new solutions.

Leading our pace of innovation and collaboration and creating lasting benefits.

To provide you with more insights on how stratus video and other technology investments have enabled us to respond and we've invited Maureen Huber to join us on this call.

In addition to her role as president of Stratus Marine has taken on broader responsibilities as the president of Amazons workforce technology solutions. We are so fortunate to have her leading these teams and creating a vision for how and then will create greater volume two novel technology.

Based solution with that introduction I will hand, the call over to my colleague Murray.

Thank you Susan just try and his team was thrilled to join the nation's leader and healthcare total talent solutions last February and as we celebrated our one year anniversary last week, we've recognized the successful melding of our purpose driven culture processes and technology.

I am pleased to say that this union has exceeded our high expectations.

<unk> a M on telehealth platforms, including strata for language interpretation became even more essential and through the last year and language interpretation volumes grew about 30% year over here and 2020 that momentum continues with first quarter volume expected to be up at least 35% year over and.

Here.

And we help our clients deliver meaningful access to language services provided by more than 3300 amazing medical interpreters and 208 languages.

Additionally, we've integrated our language services into the a M on television and school platform should provide interpretations for students and clinicians we've added language services to several existing MSP clients and we are differentiating and then and the market to engage additional strategic clients, who are seeking a more integrated.

Weighted full service total talent solutions partner.

Our technology enabled solutions are a critical part of am and long term strategy and you have seen how the company has been steadily investing in these capabilities.

Over the last year, we've made advancements to respond to the urgent market needs.

We quickly deployed enhance capabilities and reinforced our a M and team with additional technology.

This allowed us to do extraordinary things beyond clinical staffing, including the planning and ramp up of field Hospital.

Appointment of and open talent marketplace returned to work and contact tracing solutions and now integrating many of our technologies and services to support mass vaccine administration.

We proved our unique ability to offer a total payment solution to rapidly respond to these emerging needs at scale, we will further integrate and re imagine our technology and staffing capabilities to more efficiently and effectively deliver total talent solutions across the acute post acute and virtual setting we believe these advancements will.

Bush and aim and well for the changing market needs and I look forward to sharing more with you and our Q&A session and now I'll turn the call back over to you Susan.

Thank you so much marine and now we will share more about what occurred throughout the fourth quarter and the outlook as we begin 2021.

Unfortunately, our country continued to experience higher and higher levels of COVID-19 infections during November and December after peaking in January we began to see some more positive trends with vaccination efforts underway, we appear to be moving into the next phase of this pandemic.

And there is a light at the end of the tunnel.

The M and team is working hard to continue to fill critical positions across all of our staffing businesses and adapting our services to partner with organizations to vaccinate our communities now, let's turn to the financial results and outlook that we announced today.

In the fourth quarter, and then produced record high consolidated revenue of $631 million and adjusted EBITDA of $89 million. The revenue increase was unusually strong as our team leaned in like never before to serve the most extraordinary level of demand we've ever seen.

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Our nurse and Allied solutions segment came in with revenue of 448 million, 6% higher year over year.

This segment returned to growth ahead of schedule and led by our largest business travel nurse staffing, which put up a 23% increase I can't emphasize enough. How impressive. This team's performance was sourcing and recruiting credentialing and placing an on boarding more health.

Care professionals, and one quarter than ever before we would have normally said that this type of growth was on repeatable. However, we've already seen the first quarter eclipse the historic high fourth quarter delivery.

And we reached our highest ever number of assignment starts in January and in February we now have the most nurses on assignment in company history.

Allied staffing revenue was 13% lower year over year in the fourth quarter and all major allied disciplines grew on a sequential basis.

Our revenue cycle solutions business is still down year over year, though it's fourth quarter grew 8% over prior quarter with better trends heading into 'twenty and 'twenty one.

For the first quarter, we expect nurse and Allied solutions revenue to grow approximately 40% year over year, we projected travel nurse staffing revenue to grow approximately 40% sequentially and at least 50% over prior year on.

Our forecast assumes allied staffing revenue will grow sequentially by about 30% and returned to year over year growth and the low double digits.

Before discussing our physician and leadership solutions segment I'd like to extend a welcome to James Taylor, who recently joined US as the segments first group President and Chief Operating Officer, James is an outstanding leader with an excellent record of leading service providers to the healthcare industry.

We are very fortunate to have James and and wonderful family join and then and we look forward to having and participate on the next earnings call.

Physician and leadership solutions Lobbed fourth quarter revenue of 111 million define normal seasonality by being 2% higher.

And then the third quarter.

Within this segment locum tenens performed better than expected and resulted in sequentially flat revenue day.

Year over year revenue GAAP narrowed and was down 12% showing great improvements since the low point earlier in the year.

The higher than expected revenue came from the COVID-19 related assignments and a rebound and the core business.

Interim leadership also continued to improve with revenue increasing 5% sequentially.

Man for interim leaders and placement picked up through the fourth quarter and that momentum has increased and the first part of 2021.

Well, our physician and executive searches were hit hard during the pandemic with revenue is still down 30% year over year and the fourth quarter, we are starting to see stabilization.

Clients are turning their attention back to hiring of new leaders and physician and our team is rebuilding its pipeline of placement.

With these improving trends, we expect first quarter revenue for physician and leadership solutions to grow sequentially by 17% to 19% and narrow the year over year GAAP to be down about 5%.

Our technology and workforce solutions segment revenue of $72 million and the fourth quarter was up 192% year over year.

And the acquisitions of Stratus video and before health made another strong revenue contribution and organic growth of our businesses and this segment was 32% above prior year far exceeding our expectations.

Our Vms business grew revenue, 31% year over year, with 19% organic growth showing a swift rebound compared with previous quarters.

This division benefited from the same trends that drove our strong nursing and allied performance.

In the first quarter, we expect technology and workforce solutions revenue to be up about 100% year over year with over 60% organic growth.

Covid related clinician needs should hit their peak in the first quarter. However, there will be many ongoing needs related to the pandemic such as vaccine administration recovery of electric procedures and other care that may have been delayed.

The well deserved higher than usual compensation packages for nurses and other clinicians supporting the COVID-19 searches should begin to subside and this will also bring down the corresponding bill rates is difficult to predict exactly what the timing and trajectory of this decline will look like amidst the continuing.

Shortly Jim clinicians. So we believe we could experience premium rate declines starting in the second quarter.

As rates and nursing and some allied specialties decline, we would expect to see continued recovery of most of our businesses, which would provide a partial offset to this headwind.

Well, we are only providing first quarter guidance at this time, we will share that we currently expect to see year over year revenue growth in all quarters of 2021.

The work force shortages that were already on a worsening path before the pandemic began have now been made worse by the burdens and pressures on the last year.

The importance of having a strong total talent solutions partner has never been more essential unclear for the complex and sophisticated healthcare systems up today.

And N team sales honored and fortunate to be and such a capable position to help patients clinicians and health care organizations at such a critical time in our country.

In closing, let me emphasize that I have never been more energized and proud of the N and team. They are working literally around the clock and their commitment to service excellence and making a positive impact is an inspiration for all I know I speak for all of our a M and leaders when I say.

And we feel so fortunate to be a part of this team and wish to thank each and every one of our colleagues for their contributions.

And a few minutes Kelly Landry and marine will join us for the Q&A session, but for now I will turn the call over to Brian who will provide more insight into our financial results.

Thank you Susan and good afternoon, everyone.

Fourth quarter revenue of 631 million was well above our guidance range as we previewed last month.

Consolidated revenue grew 14% sequentially and 8% year over year.

On an organic basis revenue grew 1% year over year, even with the headwind from labor disruption staffing, which was $14 million lower this year.

Gross margin for the quarter was just above the high end of our guidance range at 32, 9% seven.

70 basis points lower than prior year, and down 60 basis points sequentially.

Year over year, the margin was lower because of the higher compensation packages and nurse staffing more than offsetting a benefit from higher average hours worked and the acquisitions of higher margin Stratus video and be for health.

Sequentially, the higher pay packages, where the biggest driver of the margin decline.

Consolidated SG&A expenses were $155 million or 24, 6% of revenue compared with $133 million or 22, 7% of revenue and the year ago quarter.

And $111 million or 22% of revenue and the previous quarter.

As noted in our earnings press release for the quarter included a $20 million increase and legal reserves related to a wage and hour claim.

Adjusted SG&A, excluding this legal expense integration related costs and stock based compensation expense was 119 million and this quarter or 18, 8% of revenue.

<unk> weighted $121 million or 27% of revenue and the prior year quarter.

The lower SG&A margin from the prior year reflects a reduction and total head count and travel and convention costs.

Hardly offset by $7 million of SG&A expenses added from the acquisitions on Stratus video and be for health.

On a sequential basis, adjusted SG&A was higher by $10 million due to hiring to support the strong revenue growth and other related adjustments to variable compensation and benefits from the better quarter and full year results.

And the fourth quarter and nurse and Allied revenue was 448 million, 6% higher than prior year and up 17% sequentially.

For our travel nurse Division revenue grew 23% over prior year.

Although our nurse travelers on assignment were down 6% year over year. The average nurse fill rate rose by more than 20% and average billable hours worked also increase to historically high levels.

Allied revenue was down 13% from the prior year and grew 23% sequentially on strong placements and a record high demand.

Revenue cycle solutions was down by about 40% from the prior year and posted 8% sequential growth.

Nurse and Allied gross margin of 26, 7% with 230 basis points lower than prior year and down 70 basis points sequentially.

The year over year decline resulted in large part from the prior year, including $14 million more and labor disruption revenue at an unusually high gross margin.

In addition, and the margin is lower from increased clinician pay packages. During this critical time.

Segment EBITDA margin of 13% was 140 basis points lower than prior year on the lower gross margin.

Physician and leadership solutions revenue and the fourth quarter was $111 million, 20% lower year over year and up 2% sequentially.

And welcome Tennant's revenue was $68 million or 12% lower than prior year and flat sequentially and.

And our leadership revenue declined almost 30% from the prior year and was up sequentially by 5% from improved demand and volume.

Search revenue was down just over 30% from prior year and up 10% sequentially.

Gross margin for the segment was 37, 1% 10 basis points lower than the prior year and up 40 basis points sequentially.

Segment EBITDA margin was 15, 2% up 150 basis points from last year, and 100 basis points sequentially. The year over year improvement was driven mainly by reduced SG&A.

Technology and workforce solutions revenue was 72 million and the fourth quarter growing 192% year over year and 21% sequentially.

Organic revenue was up 32% year over year on growth and BMS and a boost from a contact tracing project.

This also drove the sequential increase along with 7% growth and our language interpretation business.

Gross margin was 64, 5% down from the prior year margin of 92, 3% as the acquisition strategy video change the revenue mix.

Segment gross margin was down 160 basis points sequentially also due to a revenue mix shift.

Segment EBITDA margin of 42% was down 140 basis points year over year from the <unk> acquisition and was 100 basis points lower sequentially.

Consolidated fourth quarter, adjusted EBITDA of $89 million was 18% higher year over year, driven by the acquisitions and cost reductions during the year.

Adjusted EBITDA margin of 14, 1% was 120 basis points higher year over year and better by 20 basis points sequentially.

We reported net income of 9 million and diluted earnings per share of <unk> 19, and the fourth quarter and.

Adjusted earnings per share was $1 compared with 85 and a year ago quarter.

Day sales outstanding was 55 days four days better than last quarter.

Operating cash flow for the quarter was $40 million and capital expenditures were $10 million.

Interest.

Expense in the fourth quarter included $11 5 million and one time expenses related to the bond financing transaction, we discussed on the last earnings call.

As of December 31, we had cash and equivalents of $29 million.

During the fourth quarter, we reduced our long term debt by 40 million ended the year with 872 million and long term debt and a leverage ratio of two six times to one.

Recapping some financial highlights for the full year 2020, we reported revenue of $2 4 billion a record level for a M N and and 8% increase from prior year.

Adjusted EBITDA for the year was $321 million up 16% from prior year with a margin of 13, 4% higher by 90 basis points.

2020 adjusted earnings per share was $3 43.

Higher than prior year by 8%.

Full year cash flow from operations was 257 million, which included 48 million and deferred payroll taxes from the cares Act.

Now turning to first quarter guidance, we are projecting consolidated revenue to be and a range of 800 $820 million up 33% to 36% over prior year.

First quarter gross margin is projected to be 31, 5% to 32% down year over year and sequentially, primarily from a segment mix change.

Reported SG&A expenses are projected to be $18 three to 18, 6% of revenue.

Operating margin is expected to be 10, three and 10, 7% and adjusted EBITDA margin is expected to be $14 three to 14, 7%.

Other first quarter estimates include the following depreciation expense of $8 million.

Non cash amortization expense of $15 million.

<unk> based compensation expense of $6 million.

Interest expense of $10 million.

Integration and other expenses of 4 million and an adjusted tax rate of 29%.

And now we'd like to open the call for questions.

Yeah.

Operator, I believe we are ready for our first question.

Thank you. Your first question comes from the line of and Kevin Fischbeck with Bank of America.

Great. Thanks.

I appreciate the directional commentary for the year about revenue growth and every quarter is there is there any reason to think that that doesn't translate into earnings growth every quarter or is there something and we should be factoring and are thinking about on either the gross profit on the G&A line that could be a headwind to.

And reporting that.

Sure.

And I'll, let you go Brian and take it.

Yeah. Thanks for that Kevin question, Kevin Yes.

This was a very.

First quarter, obviously, it can be very unique quarter for us.

And we don't give full year guidance, but I'm glad you asked the question I think it would be helpful. Maybe to give some additional color around from our expectations for the year. So that should help you a little bit we do expect revenue to decline from this Q1 high point that we've given the guidance.

Susan noted.

And there was significant crease and demand from the Covid hospitalizations and at that and turn led to an increase and pay rates and then correspondingly bill rates and that certainly was a pretty significant element of the of the higher guidance along with some incremental volume as well.

Just from an order of magnitude the average nurse bill rate and the first quarter guidance is expected to be up well over 20% higher just sequentially from Q4 to Q1.

And that was really driven a lot by their debt Covid hospitalization and Amanda came from that Fortunately well know and demand has come down now and hospitalizations have declined and were still at well above normalized levels for demand, but offer those highest levels and we would expect to see.

Bill rates fall away and the demand has come down on those highest levels bill and pay rates. So.

No.

We would again expect not only for the second quarter, but through the year if things.

Continue to improve in terms of Covid hospitalization and there would be some some moderation of the bill rate through the year and just give like a framing up.

The financial impact of that if for example, we assume that we.

Lose about half of that rate increase that we had in Q1 and the second quarter that equates to about $50 million lower revenue and the second quarter, just if rates start to come down again to just half of that amount that we increase them and Q1.

We also expect to see some COVID-19 related volume declines across a few of our different business lines.

And we would also expect at the same time and Thats normalizing that we'd start to see some pickup in our core business as healthcare utilization picks up and you see and improvement and electric procedures.

So when you take all this into account.

And we went at this point, if youre thinking about second quarter revenue something more in the low $700 million range and all of that would be down around 10% from the Q1 guide that would still reflect a year over year growth of around 15% to 20%.

And then in terms of how that would flow through on that on the margin.

And I mentioned in my prepared remarks that the Q1 margin guidance is lower than we have been trending and lot of that's because of the mix change with a much higher percentage of revenue from nurse and allied as well as some of these elevated punish and pay packages and.

As we see a little more normalization and growth and our other segments. We would expect the gross margin and work back towards around 33% and then as you kind of translate that down to EBITDA margin. This Q1 margin guidance, we've given would be.

And obviously well above our normal level, we think that will likely be the peak based on we can see right now and as you work through the year, we still expect our EBITDA margin to remain above 13%, but come down from this high level that we gave on our first quarter guidance, so and a lot of moving parts a lot of unknowns at this point, but hopefully that gives you a little more color on what we're expecting for.

A year.

Yeah, that's perfect I guess, maybe just last question.

You guys sounded pretty optimistic about the.

The.

<unk> demand and balance persisting or maybe even exacerbating as a result of.

So, but I guess most of the publicly traded hospital companies are talking about.

You know labor day.

Outlook, improving I guess towards the end of the year.

Just love to kind of hear how do you guys are thinking about it maybe.

Which segments you think.

Post COVID-19 or are kind of seeing the biggest.

Sure digits and if there's anything specifically that you would point to is some segment of your business debt debt.

Pretty clearly and your view got worse as a result of Covid.

And this is being more temporary staffing.

Sure Kevin I'll start with that this is Susan and then you know perhaps from my colleagues will want to add something in.

Certainly all of the different clinical disciplines, and I would say even beyond clinical disciplines like healthcare leaders.

Have been affected and its advanced retirements for many individuals who decided they didn't want to stay in the healthcare environment throughout the Covid pandemic, but also that's perhaps changed their course going forward. So there's been a larger than usual number of retirements and while it's hard to try and real time data on that.

We're certainly hearing that very clearly from our clients and.

And then even with the younger workforce many of the clinicians 90 day nurses in particular, but also many of the female physicians have had to make a decision to leave the work force in order to juggle children at home and school at home and and again, maybe just not even wanting.

To take the risks of reentering direct patient care in this environment and so its believed that we've lost some subset of the nursing workforce.

Permanently and and that will accelerate the shortage path that we were already on and it was already getting quite bad before the pandemic and its really just accelerated it considerably. So nursing is probably the area, where we believe the shortages will persist at relatively difficult left.

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And while the demand continues to be really quite strong.

In other areas you might see some of those individuals come back, but they may not come back full time physician is one example, where we've been really fortunate as a country to have so many more women go into medicine, but typically the female physicians are working less hours, because there maybe chuck lean and families at home.

And then now some of them have made a more permanent decision that they'll take that less and full time schedule and take it even down further on a permanent basis. So there is expected to be some from long term impacts there and.

And truly it is really just across the board. So we think that those shortages that will persist.

We'll continue to drive a relatively strong demand environment.

And then again and as Brian said, you've got the elective surgeries and other delayed care procedures and whatnot that that will start to come back and we're already seeing that a little bit.

And some of the businesses, but you know as we start to see Covid cases, subside, we would expect for them to come back more.

And maybe I'll stop there and I don't know Landry. If you have anything else that you want to add and regarding the nursing shortage in particular.

Yes, and maybe I would add and specific to nursing and we have been doing and Orient survey quarterly just to look at different trends that are impacting the occupation and.

And our last survey that we did we actually did it in January so it's very recent and cut down a couple of things and there that I mentioned and one is that 75% of nurses stealth and burnt out of.

Of the respondents that responded to the survey and.

And of course, you might think well and you would expect debt with everything that's been going on but the important thing. There is the trend since we have been doing the survey quarterly and to see that number increasing every quarter whenever we've asked it and.

Another thing that we learned of his debt only 66% of nurses plan to continue working as they are today within the next year.

That means that 34% of the work force are planning some sort of change and the next year within the next 12 months, which is again, a really high number from what we've seen when we've asked that question before so with all that we got to do our part to try to help the occupation day out as much as possible to get through this but.

What it does suggest is that were likely be and this high demand environment for quite some time.

Okay. That's great. Thank you.

Your next question comes from the line of a J rice with credit Suisse.

Hi, everybody.

Maybe a couple of questions.

First of all.

Brian as you were giving those numbers about what happens.

And from first quarter to second quarter, and the $50 million potential impact on revenues from having <unk>.

Premium, but less premium than you had and the first quarter, where does that leave you relative to sort of a normal state is there still a substantial and that second quarter assumption is there still a substantial amount of premium.

Revenue that you're getting or is that take you back to pretty much trend line.

Yes, thanks for the question AJ.

No that would still have us above where we sat and labor for use as a starting point and.

And the fourth quarter, and 19, and the first quarter of 'twenty guidance.

And kind of pre pre pandemic.

It would still leave us.

A reasonable amount above that above that level.

Mentioned weighted.

Would not be surprising if we saw from further reduction and the average rate through the back half day or at least and the third quarter.

Showing that we see this COVID-19 hospitalization has come down over time. So we do expect to see some from further rate reductions, but with a ledger mentioned the shortages were saying it's going to take some time I think for for our clients to really adapt to these changes and and give their team.

Thats a break as well as we get through this so we do think it'll it'll be.

And it'll take a few quarters for that unwind as.

As we get closer to the back half of the year.

And we still would expect rates to be higher than they were a couple of years ago, which is the normal inflationary rates and probably some acceleration from the shortages on where that lands exactly we're still.

Determining but we expect it to still be above and we were pre pandemic.

Okay.

Another thing obviously, we're talking about burn out and then.

High level and so forth.

One metric I guess you can track.

And when people come off of assignment and your <unk>.

Nurse and Allied are they re upping for a net another assignment are you seeing a trend there where that percentage has gone down as your own.

Nurses or allied professionals are sort of saying I need a break now and I need to come off of that and the other thing we hear from.

And from hospitals is that there is some pressure from people see and how much they can make as a temporary.

And mirrors and and giving up their permanent job to do that for at least a tie.

<unk> are you seeing new applicants pick up would be the flip side to what the hospitals are dealing with.

Presumably see new applicants and that are you seeing much and the way of new applicants.

Yeah, a J I'll have landry pick up most of that but I will say our recruitment team has done a phenomenal job and our repo rates have actually improved since kind of the lower point in the middle of the year when of course demand dropped for a period and so the increased demand, but also I'd say that.

Just the great work on our team and and delivering so well during such a difficult environment has helped improve our rebook rates. So we feel really quite good and confident about those if anything I think what's really helped us to find ways to serve our clients and clinicians better and faster through.

Digital capabilities, and whatnot, and certainly having more assignments at attractive compensation rates and whatnot is helpful. But Landry let me, let you add to that and then also talk about applications, which I know is a great story.

Yes, hi, Jay on the debt.

Clinicians that are rebooking and extending we're not seeing anything material. There you are of course always have a certain percentage of them that are on assignment that extend where they are today.

Some of them come off and they and they take a new assignment.

And then some of them to your point, which is it's always happened, which again, we're not seeing anything different and they will take some time off and that's one of the benefits of traveling is it between contracts you can take two or three weeks off but again nothing nothing different today than what we've seen over the years spin.

Specific to our supply that funnel is working really really well right now and seeing some.

Im extremely strong new applicants and some.

Record levels that have been coming into our business and to our database.

It seems on a really nice job pushing.

Supplied through and get them on assignment.

Couldnt do as much as we've been doing without some of the digital investments that we've been making.

And I know we've talked about some of these before but we've got a lot of focus around our mobile initiatives and <unk>.

Adding bots to the process, Craig and a lot of automation and increasing self service and.

And really just given overall given our clinicians more control so that they can move through the process and then ultimately get on assignment faster. So speed is a big big piece of it.

And those investments of course also help our internal teams so we become more efficient.

Which of course has allowed us to hit some of these record numbers of on assignments that we're seeing and the first quarter.

And then the last thing I'd mentioned and we've talked about before.

Passport and <unk> passport, our mobile application, we continue to see great adoption with that mobile app.

As well as great increase and the number of users and we can see that the investment is really something that our clinicians want and we can see a lot of the stats on where they are spending time.

And how frequently they are returning to the App. How many users are going through it every single week and overall and just kind of put more control and their hands and they give them one place to go to whether they're searching for a job or all the way through the MP and on assignment till their last day. So.

All of that looks really good it's helped US do what we've been able to do over the last few quarters, and we will keep on making investments in <unk> and that mobile app and those digital initiatives.

As we look forward.

Okay, and maybe one last question when I think about it.

And just wanted to talk about the areas that are doing well and the last 12 to 15 months.

There are some areas that were adversely impacted by the pandemic certain placement and allied like rehab.

Therapist, and now so I'm on the specialties and the Locums business and then things like permanent placement.

And you started to see any recovery there and demand.

And anything you'd highlight there or is it still sort of early and the transition out of the pandemic to see that.

Yeah, a J, Susan and I will take the first couple and then have Landry comment on Allied so regarding locums.

Really really nice recovery, there and a part of it's been the work they've done to assist and some of the COVID-19 activities with whether it be state temporary facilities or just helping our clients overall, but even the underlying core business has seen some nice recovery.

It's not back to pre pandemic levels, but there are some specialties like anesthesia.

Behavioral health that are back above pre pandemic levels, just in our core business and others that are lagging a little bit more on it.

But we're continuing to see a steady trajectory upwards those should continue to grow faster as the Covid cases, subside and you see more elective procedures and more normal care start to return and it's definitely the dynamic that we're witnessing.

And so that's a pretty good story now you know search has been the hardest hit by far I mentioned and that still over 30% down in the fourth quarter, but in the fourth quarter, we started to see searches and some placement pickup and and more dialogue with clients about those leadership and physician.

<unk> that they want to start to fill now that dust is settling a little bit in terms of how they're managing the COVID-19 crisis, but then also expecting more patient flow back so they're starting the first first quarter off.

Pretty strong and definitely going to close the year over year GAAP, but they will be a lagger, but at least we're starting to see things move forward and then allied been a great story. So landry on that you take that.

Yes, AJ Allied of course went back.

And quite a bit midyear last year and their trajectory.

One of the best trajectory that I've seen and our businesses they had an outstanding fourth quarter and really across.

All their segments kind of outperforming what we originally thought that they were going to do and the fourth quarter.

Of course, respiratory and laboratory specialties have been performing well on those specialties are closely tied to help and the pandemic but.

We saw good performance across all the other parts of the business as well so therapy performed better.

Imaging performed better schools looks great for and particular speech language pathologists. So.

Going into the first quarter, they are experiencing the largest sequential growth that they've seen and the business.

And it also includes their volume of travelers on assignment being back above prior year levels.

Okay. Thanks, a lot.

Thanks JJ.

Your next question comes from the line of Jeff Silber with BMO capital markets.

Thanks, so much.

And I know were and any a unique time here, but given the kind of bill rate increases that we're seeing and youre continuing to see this quarter.

And when we when we and the path when we've seen these kind of large or premium rates or bill rate increases after the things subside you tended to see some of your clients kind of pushback on the usage of Tim services.

Can we talk a little bit about that.

Would things be different this time why or why not.

Yeah, that's not our expectation Jeff.

And I think the dynamics are different here first of all the shortage environment and some of the factors that.

And we mentioned earlier around burnout and decisions by clinicians to do something different whether it be retire just shows you change there their work environment and our clients know that and there was a real concern amongst the healthcare systems that we talk with as well as nurse educators that this could put a.

A real dent and the availability of clinicians for quite some time and as you well know we don't really have the capacity and nursing schools to increase new nurse graduates because we're pretty much at full capacity already.

In fact, if anything I'd say the dialogue, we're having with clients around planning for their their their needs not just now but 235 years from now is increasing and and maybe it's a good time for Kelly to comment on some of the conversations we're having with the most strategic.

Clients and how we are helping them plan not just for the next quarter or two because we all know we'll get through that together, but rather how were.

Building on our strategic accounts kind of for the future. So Kelly you want to take that.

Yeah, absolutely Hi, Jeff.

And I.

I think you made the comment about you know are they going to push back on utilization I think it's a much more holistic view us as Susan mentioned.

And they're certainly looking at the work force in general.

Understanding what the impacts going to be with them on the short term and the long term and it's not just about the work force today.

Thanks.

What's changing and healthcare looking at changes and the care delivery model looking at changes and sites of service the impact of telehealth and the future. So we're able to talk with them and help them with that planning and I think and the short term.

And we're seeing you know theres, an expectation I'm still using this complementary workforce, but also around how can we optimize what you have today, they're looking at how can they keep the level of flexibility and agility and their and their workforce that they didn't have at the outset that they really recognized as a limitation for them to be able.

To move different types of resources, Iraq to where the needs are and so we use our advantaged workforce optimization solutions to help them with that and.

And I would also say on the Perm side, helping them back. So we're seeing very high vacancy rates a lot of our clients are seeing up above 10% and their full time clinical staff.

And they don't have the they're not resource appropriately to help them bring them and bring that work force back on math, so how can they be more agile and effective and back filling some of those permanent roles as well. So we're really helping them and to end on all of their strategies, but we serve.

See the partnership and the reliance on.

And.

Travel nurses local nurses flex nurses tickets and you in the future as well.

Okay, that's fair enough.

And based on that I'm, just curious what your own internal hiring plans are for this year and which areas do you think you might be adding.

We are hiring.

And significant resources right now as you can imagine some of it is temporary in nature to help support some of the projects we have going on we've talked about the vaccine administration support work that we're doing.

And California, and we expect actually that there will be more opportunities and more projects going forward, but those are admittedly a little shorter term probably most of them will occur this year.

And then we've been adding across really almost all of our businesses because we are seeing growth and pretty much all of our businesses and so we want to make sure that we're adding resources we have.

10% more recruiters or more.

And then we're continuing to add on top of that so it's a time when we're adding resources in anticipation of the underlying business continuing to grow we know the first quarter is a bit of an anomaly with those to surge and COVID-19 cases, and kind of all of that and suite with that but we.

Also see the underlying business continuing to rebound and come back and there's no reason it shouldn't and if anything you know nurse on.

And travelers on assignment as an example volumes should continue to growth. So we need to be continuing to add resources now.

Earlier Landry mentioned, the investments that we're making and digital.

And I will say a lot of the automation that we added over the last year has been very beneficial to create efficiency force and not only is it created cost savings and speed and and more reliability and it's also fueled our desire to accelerate our investments and do more which is why.

And our Capex that you see it's been higher than usual and we're glad to spend that money because we're getting some really nice benefits out of it.

Anything at our size and scale and and our leadership position, we need to be really advancing our digital and analytical capabilities for us, but really for the benefit of our clients, our clinicians and even the industry.

And so we're doing a lot of that which will now.

Also help ensure that you know when we're hiring it's not just to move data around it's really more to add value.

Alright, Thats really helpful. Thanks, so much.

Thanks, Jeff.

Your next question comes from the line of Tobey Sommer with the true with Securities.

Okay.

Hey, good afternoon. This is Jasper bibb on for Tobey I wanted to ask how you would assess your performance with MSP accounts. This past year and could you update us on account retention and what the pipeline looks like there.

I know Kelly is thrilled to tell you about that and so I'm kind of cash.

And it over to her.

You bet. Thanks Jasper.

First as we reflect on this past year very strong performance, we've been sharing I think with you throughout the last few quarters.

As you know demand became so high we really prioritized and focused on our most strategic accounts and.

And of course supporting the rest of the industry to the extent, we could with other solutions as well. So we ended up as we look at the year, we are up about 20%.

Over prior year, and both growth spend as well as direct revenue from our MSP clients I would say for the most part our relationships really strengthened throughout the year and why.

Evidence of that is we actually had a fair amount of large.

Renewals and 2020 and.

We are able to have.

<unk> successfully renew.

And 'twenty 'twenty accounts out of the 21 that were up from last year, and then coming into next year, we have much less of our revenue up for renewal about 50% less than in 2021.

But we're on pace to continue.

Continue those relationships and and the other.

And really bright spot for us and those renewals were also seeing a level of extensions into different service lines and also longer term contracts.

As our clients and us are both committed to those longer term strategic partnerships that we're really encouraged and really grateful for the relationship that we have with our clients throughout the year. They they had to pivot and and adjust with us and so that we could collectively be successful and and getting them and the resources that they need we have a healthy pie.

And I will say a lot of them, while we had actually probably our strongest.

Sales year last year and 2020, we are close to about $500 million.

And growth spend that we brought under contract some of that was through expansions, but also about two thirds of that was from new business and we did and the back half of the year have to do a fair amount of that through technology.

Clients are on client led solutions this year and now we're starting to see much more engagement around and that led and managed services programs and we have a very healthy funnel and I would say we're much stronger engagement now.

As they've started to be able to engage and think about their future needs. So.

I would say were and are very strong position around our existing clients and and pretty bullish on our ability to grow and this environment as well.

Thanks, and then on the M&A front and there were some deals on the news. This month as leverage comes down when you consider adding scale and nursing, our locums or is that not as attractive to you at these valuations.

Jasper.

Our priorities are and to continue to add.

Things that will help us be a better toll town solution partner for our clients. So at the top of that list are probably tech enabled work force solutions.

Help us to create efficiency and and in some cases enabled virtual care and <unk>.

This was a fantastic example, where you know they and team took and taken a traditional kind of on premise or maybe over the phone workforce solution and created a video solution that really add so much more value and a better experience for all so those types of things will certainly be <unk>.

The top of our list, we could add on to existing tech enabled solutions.

<unk> language interpretation industry is pretty fragmented still even though we're the leader in virtual language interpretation. There is opportunities to do other tuck in acquisitions Marine and the Stratus team had actually done that before they joined and men and have a great track record there so we'd be very confident and doing that.

And there are other tech capabilities that might enable us to extend what we're doing into home health as an example, which we think is a really important market. It's important that we.

Of course, the patients and clients, where care is shifting and whether that be virtual and telehealth or home care on or just helping our existing acute care clients to be more efficient in how they use at work force we want to do that so and tech enabled at the top I would say second would be.

Adding on to existing areas, where we believe there's a lot of growth opportunity and maybe we don't have as much scale as we would like Nice example of that would be our schools related business.

And our schools team is doing a phenomenal job right now and there again, we have a wonderful virtual capability through our TV platform.

And yet the schools and part of the industry is still pretty fragmented and so we could increase our footprint and continue to build that business by additional acquisitions and that's just one example, but there are others throughout the company.

So hopefully that's helpful.

No I appreciate the color thanks for taking the questions.

Thanks.

Your next question comes from them from line of Brian <unk> with Jefferies.

Hey, good morning, good afternoon, guys congratulations.

Strong year.

My first question, Susan just to follow up on that point them in Stratus, obviously really strong results out of those guys.

Is there anything you can share with us in terms of what's driving that and are there new contract wins that you can point to and maybe taking the opposite side of that I mean, how much more market share do you think realistically is there for stratus to take over low.

Hanging fruit versus having to take from existing providers and competitors.

Thanks for the question, Brian and it is all of our Lucky day, because we have marine humor here, who is the expert.

Not only stratus, but language interpretation, so I'm going to let her take that question.

Thank you Susan and that's a very generous complement seen as I struggled with English language at times and and.

And then.

Honored and humbled to represent the language services team and organization and the U S. Medical interpreting market is a $1 6 billion dollar industry and that comes in the form of onsite interpreting as well as over the phone and video interpretation Vinny.

Video interpretation only approximately half of the hospitals and the U S have made a video based decision.

Rely heavily on their staff interpreters or over the phone.

And over the phone as we know both communication and 93% of communication is non verbal so the preferred modality, especially around patient safety and improved outcomes is being able to be present for the provider and the patient visually so theres a lot of opportunity there for the video, especially as.

The onsite interpretation from patient safety as well as the safety of the temperatures and our providers.

Really it was reduced during COVID-19 period, and with our Tech enabled services, we actually doubled the number of call centers, where we could enable the hospital systems on staff to provide services. So we're working in partnership with our current clients to explore better opportunities.

For filling the gap and the needs that onsite interpreting either through video or other tech enabled services with our in person application. So to answer your question whats the opportunity and the market share.

The L. A P population continues to growth and the United States and it's outpacing other areas its pretty significant part of that will come from the conversion of over the phone.

Video and others will come from the continued onsite interpreting and removing that from a patient safety perspective.

Maureen I know on another another great thing the team has really made advancement in is integrating our.

Language interpretation services into other telehealth platforms, and the ability to support acute care facilities, but also and into other telehealth providers and we've really just scratched the surface and that I think and we've got 25% to 30 platforms that we've integrated in and so there is a law.

Lot of opportunity and telehealth in general growth. If you have a telehealth and counter you need and interpret are there and most telehealth companies or technology providers aren't going to provide that network of 3000, plus language interpreters and so we are a wonderful plug in.

Two services that are already or going to be launched.

And I appreciate that and then I guess just back on the nursing side I mean, a lot of questions that have been asked on the demand side, but I think in the past we've talked about how supply has been the bigger constraint. So.

And I get the fact that you guys have invested a lot and recruitment and technology, but as premium pay starts to come down.

How are you guys thinking about the willingness of nurses, who are currently employed full time to take breaks and take.

Some of these ad hoc.

And post things, whether you guys are with other staffers.

Yeah, Brian.

And I'm sure there will be some element of the clinicians that have decided to to join and the Covid fight that will go back into permanent rules, but many of them will now have their eyes opened to the travel industry actually just talked with a nurse like that a couple of weeks ago, who said you know I never thought about traveling but COVID-19.

Pulled me into the industry and now I see all the great benefits and so I'm going to spend the next year traveling and this is something that is typical when someone gets introduced to the industry. They don't usually just take one assignment and again the rates might cause some to go back into other roles.

But some will say no. This is a career choice that I want to make for some period of time and so that's a really positive thing for our industry. Overall it will keep more of these new candidates and kind of new starts that we talked about within the Inc.

This three for some period of time and Landry I don't know if there's anything else you want to add to that.

No I think you covered it I don't really have a whole lot more to add from the clinician side. If I was going to make one more point, it's that our clients also like this flexibility.

Of being able to bring clinicians on.

And a temporary capacity so we're hearing that from on debt.

And if you went back five years ago, it was and I'm going to try to minimize.

The amount of contractors are temporary labor and right now the conversations are more about how do I have this flexible staffing model from the future.

Got you and then last question from me really quickly you, obviously touched on and vaccinations.

And what role or what are the which clients are you touching on the vaccination. So I will this be the retail pharmacies will be will we be looking at the drive throughs and then what are kind of like the economics or how should we be thinking about that opportunity.

Sure and you know certainly for our clients our healthcare clients. We're supporting them. In fact, we might have had staff on premise that was previously assisting with COVID-19 testing and now they shifted to vaccine administration and that will probably ramp up over time as more of that.

<unk> seen becomes available, but even beyond that probably obvious and traditional way of staffing with our existing clients and team's done a phenomenal job of partnering with clients and other organizations to build and more multi disciplinary.

And so program. So that we can help staff mass vaccination sites I'm ask Kelly to give you a little more insight on that because her teams really led the charge on that and and we've had some great success just in the last couple of months, but really we're just at the beginning and I think of what the need is going to be so Kelly you want to take that.

Yeah, just to give a little bit more color on that and I think Susan is right I think we've had the opportunity to help several of our clients with more clinic like.

And vaccine capabilities, but we've also been able to really scale up to help and what we're calling from mass vaccination sites and we're partnering currently with with one client and to operationalize These and that multidisciplinary nature of it is really critical because the nature of the site <unk>.

Require both clinical and non clinical staff different levels of licensure to manage the different parts of the vaccine and manage.

<unk> and administrations and we were able to tap into all of our resources truly across day of men to two to stack. These are related and just a matter of weeks and we've also been able to underlie those solutions with our technology using our Vms technology, using our scheduling optimization technology.

And to support that as well. So we do know that we are very capable of standing up. These these sites and a matter of weeks Wolf, we're kind of at the mercy like our clients and and other organizations right now around the supply of vaccines, but we see as that supply ramps up where and several conversations with them.

And other health systems, as well as potentially some state or.

Governmental and programs that are going to do these across the nation. So it could be very significant.

And the next couple of quarters.

Or it could be a little bit more moderate type of volume.

Remains to be seen but we are absolutely ready and had great success being able to do it thus far.

Awesome. Thank you guys congrats again.

Thank you.

Your next question comes from the line of Mark Mark on was scared.

Hey, good afternoon and congrats.

Wondering if you could talk a little bit about the tech and work Force solutions. You, obviously have very strong organic growth. There wondering if you can segment that.

Between the flow through coming through MSP and Vms versus.

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