Q1 2021 AMN Healthcare Services Inc Earnings Call
Good day, and thank you for standing by and welcome to the H M N healthcare first quarter 2021 earnings conference call.
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Affiliations.
Non-GAAP measures to the most directly comparable gap measures are included in the our earnings release and on our financial reports page at <unk> Dot am in healthcare Dot com.
On the cost day, or Susan Soccer, Chief Executive Officer, Brian Scott, Chief Financial Officer, Kelly, Rykowski Group, President and C O a strategic talent solution <unk>.
<unk> group, President NCO of nursing and Allied solution and James Taylor Group, President and C. O O a physician and leadership solution I will now turn the call over to Susan.
<unk> semi trendy and welcome everyone to our earnings cough, we have a lot of positive news to share with you. Today. However, the most meaningful message is one of gratitude the impact made by our colleagues clients and of course healthcare professional to care for and he'll are can.
<unk> is more important than any financial results were reporting it is fitting that we are celebrating the international year up the nurse recognizing nurses and midwives around the globe for their important contributions today is the first official day of nurse this week and as the large.
Just provider Avner staffing solutions I would like to extend our congratulations and deep appreciation to nurses around the world, including those who are a special part of the family.
It is hard to believe that just 12 months ago. We were in the early stages of what we thought would be a somewhat short lived disruption from COVID-19, Little did we know that the pandemic and other events of the last year would have profound and lasting impact on our country, our communities and our company.
Fortunately today, we have more reasons for hope than uncertainty and we stand together in a much better place than we were a year ago.
Though we saw surges of infections last April and July in the middle of Winter, New COVID-19, 19 cases, where occurring at five times the rate we've seen at the end of September and hospitalization rates soared, even faster Amir.
America's healthcare workers dealt with each surge with tremendous points compassion stamina and great.
Thanks to our healthcare heroes and everyone supporting them, we have made tremendous progress since the worst days of winter.
While we are moving closer to the end of the pandemic, our healthcare Labor force will likely feel the aftershock for years to come some workers were traumatized by what they dealt with on the front lines. Many saw their work schedules become longer and more challenging others had their careers disrupted in some K.
Mrs people decided to retire sooner than planned others have left the profession altogether or are taking extended leafs. This all adds to high levels of vacancies across many healthcare profession.
We entered this year in the midst of urgent healthcare labor demand surges to levels. The industry had never seen before the <unk> team in our supplier partners ramped delivery at an unprecedented pace.
The impact on our financial results with record high revenue of $886 million for the first quarter, 40% higher than the fourth quarter with contributions from all of our businesses.
Our largest segment nurse, an ally solutions had first quarter revenue of 657 million growing a remarkable 55% year over year.
We surpassed 12000 average travelers on assignment for the first time and had our highest ever number of new assignment starts the entire placement in service delivery team at Amazon was nothing short of astonishing in their efforts to meet these demands.
Travel nurse staffing was up 74% year over year on higher volume Bill rates and hours worked the availability of clinician talent for such elevated needs was extremely constrained for our clients and the temporary staffing industry.
This short supply and high demand environment has driven a temporary rise and market wages to attract the critically needed healthcare professional.
Pandemic related demand peeked in January and in March travel nurse orders had returned to historically normal levels.
Recently, however, we have seen demand move higher again in large part because healthcare organizations are experiencing higher than expected attrition, which they cannot fully offset with permanent hiring.
In fact, our total travel nurse orders have risen steadily for six straight weeks with demand growth across all major nurse specialties and geographies.
All nurse businesses grew significantly during the first quarter, one standout I'd like to mention however is our local staffing business.
While Ah relatively smaller part of this segment revenue was up about 150% year over year, you might recall that we made a strategic shift several years ago to close our branch offices and move to a centralized technology driven staffing model. It was bumpy for us in.
This transition. However, these changes prove to be a vital part of the success of this team during the last year and it enabled us to achieve the highest quarterly revenue and am in history for this business.
For the first time ever allies, Daffy surpassed $100 million in revenue up in the quarter by 17% year over year and 33% sequentially.
Imaging respiratory in labs staffing made a dramatic surge in the quarter, but our schools in therapy businesses also enjoyed 10% sequential growth.
Demanded solid across all major allied disciplines, and our team is executing extremely well in this market ally bookings continue to improve through April and we expect stronger year over year revenue growth in the second quarter.
Our revenue cycle solutions business also grew 8% sequentially in the first quarter and this business should return two year over year growth in the current quarter.
For the second quarter of 2021, we expect nurse, an ally solutions sediment revenue to be 34% to 37% higher year over year.
Physician and leadership solutions was the segment most disrupted during the first six months of the pandemic and we were pleased to see all businesses in this segment rebounding nicely in the first quarter.
Revenue came in at 141 million rising, 27% above the fourth quarter and up 2% year over year.
Locum Tenens revenue was 86 million growing 9% year over year Locums revenue included more than $25 million from pandemic related projects.
Core business continues to rebound, which gives us the promise of even better year over year growth in the second quarter.
Interim leadership also had its best recovery quarter since the pandemic began with revenue jumping, 34% above fourth quarter levels from a strong return of core business, coupled with vaccination projects the.
The team delivered hi, Phil rates on strong demand led by our MSP and strategic account relationships.
Physician and executive search improved by 12% over the fourth quarter and the year over year comparison was down 16%, which is half the rate of decline in the previous quarter.
Our second quarter segment outlook for a physician and leadership solutions is for revenue to be up approximately 20% year over year. This is particularly positive considering that we expect only 5% a second quarter to revenue to be pandemic related compared with more than.
20% in the first quarter.
In the technology and work Force solutions segment first quarter revenue grew 120% year over year. This included organic growth of 84% as our Vms, an arpeggio businesses did an excellent job capturing demand.
And language services, formerly known as Stratus video had another outstanding quarter with $41 million in revenue. We owned this business for only half a quarter a year ago on a pro forma basis language services grew 37% versus the prior year.
In Vms the past year brought a number of new client wins, which were bolstered by our open talent marketplace solution first quarter revenue for Vms was $32 million per our growth rate of 91% year over year and 60% sequentially.
In the second quarter, we expect segment revenue for technology workforce solutions to be up more than 60% compared with the prior year.
Over the past year technology and work force solutions has greatly improved our ability to help our clients deliver services in the most cost effective manner by leveraging technology. We expanded these solutions in April with the acquisition of Cindy.
Since he is a virtual care platform that enables organization to conduct virtually visit and use secure communications clinician to patient and clinician to clinician multiple participants can be included in virtual visits including physicians nurses medically certified interpreters family and.
Caregivers. This acquisition is part of our strategy to further position am in our marketplace changes over the next five to 10 years as more care moved out of the hospital.
Outpatient and post acute care in their traditional forms have been difficult for the healthcare staffing industry to serve virtual care offers flexibility in ways regular staff augmentation cannot.
<unk>, great opportunity for technology enabled solutions to support care delivery, an outpatient and post acute care.
<unk> mission and strategy are deliberately holistic and aspirational.
We start with how we can support and positively impact our colleagues through our culture and creating opportunities for am and team members to reach their goals and beyond.
<unk> commitment to diversity equity equality and inclusion is a cornerstone to how we act how we invest and how we hold ourselves accountable net.
Next is the difference we make in our communities through our volunteer efforts and financial support but also through our attention to our environment social issues and good governance.
We've had an excellent track record with Cei and ESG. However, we know we can and should always strive to do more.
And for our clients and healthcare professionals, our strategy to be the most trusted and comprehensive total talent solution partner has never been more critical than it is day and into the future bye.
By carefully building in diversifying our talent and technology solutions over the past three decades, we are fortunate to serve our clients as their talent partner and to innovate alongside them.
As the leader in providing managed services programs and the most comprehensive staffing and technology solutions. We are increasingly at the table for strategic workforce discussions and we're able to target our investments in the solutions that matter most to healthcare organizations are stepped up investment.
And technology are paying off with expanded solutions for our clients more speed and flexibility for our healthcare professionals and greater efficiency in our business.
Over the past year. The <unk> team has accomplished more than we could have previously imagined everyone has been working hard and with a passion and commitment that is true to the am and values and a desire to make a positive impact every day.
In addition to our gratitude, we are constantly seeking an implementing more ways to support and elevate the wellbeing of our healthcare professionals and our team members.
Caring for our colleagues in supporting them has long been a cornerstone of almonds culture, but it is also a crucially important factor in the success of business.
While we are much to be proud of we know that every day. There is more work to be done to make a greater impact in a few minutes Kelly Landry and James will join us for the Q&A session, but for now I will turn the call over to our colleague, Brian who will provide more insight on our results.
Thanks, Susan and thanks to everyone for joining the call today first.
First quarter revenue 886 million was well above our guidance range very.
Very tight labor market and recovery and non COVID-19 demand cause volume and price into be stronger than expected. This quarter and this trend is continuing into the second quarter.
Included in the first quarter was approximately $25 million a vaccine project related revenue, which was in line with our expectations.
First quarter consolidated revenue grew 47 per cent year over year and 40% sequentially.
Gross margin for the quarter was above the height of our guidance range at 32.6%, which was 90 basis points lower than prior year and down 30 basis points sequentially.
The margin was lower year over year from expected compressed paid a bill spread a nurse staffing and the outsize growth of nursing Allied staffing relative to overall business mix.
Sequentially the change in business mix was also the biggest driver of the margin decline.
Consolidated SG&A expenses were $161 million or 18, two per cent of revenue compared with $146 million or 24, three per cent of revenue in a year ago quarter at $155 million or $24 six per cent of revenue in the previous quarter.
The lower SG&A margin reflects favourable operating leverage from the increase in revenue.
At a sequential basis SG&A expenses rose due to hiring support revenue growth and vaccine related projects increases and variable compensation of other employee benefits and additional marketing costs drive candidate supply.
And the first quarter nurse valid revenue was $657 million, 55% higher than prior year end up 47% sequentially.
For travel nurse, our largest business in this segment revenue grew 74% over per year with average travelers on assignment growing 8%.
The average nurse Bill right up by approximately 50% and higher average hours worked.
Alan revenue return a year over year growth up 17% from the per year add up 33 per cent sequentially.
Allied volume was up 2% over prior year after being down 17% in the fourth quarter.
Nurse at Allied gross margin of 26.9% was 160 basis points lower than prior year as up 20 basis points sequentially.
The segment margin was lower year over year, primarily from increases in prohibition pay packages the fillmore position.
Segment EBITDA margin of 55% was 150 basis points higher than per year from strong operating leverage.
Physician.
<unk> and leadership solutions revenue in the first quarter was 141 million growing 2% year over year end up 27% sequentially.
Gross margin for the segment was 37% 30 basis points higher than the per year and down 10 basis points sequentially on a higher margin locum tenants and business mix shifts within the segment.
Segment, EBITDA margin was 15.1% up 450 basis points from last year and down 10 basis points sequentially.
The year over year improvement was driven by operating leverage and the higher gross margin.
Technology more force solutions revenue was $89 million of the first quarter growing 120 per cent year over year and 22% sequentially.
BMS was the main driver of the sequential growth along with an 8% increase in our language services business.
Segment gross margin was 67, 7% down from the prior year margin of 75, 7% as the addition of language services business change the segment margin profile.
The segment gross margin was up 320 basis points sequentially due to an increase mix of Vms revenue.
Segment EBITDA margin of 47.5% it was up 950 basis points year over year, and was 550 basis points higher sequentially due to the operating leverage from revenue growth.
Consolidated first quarter adjusted EBITDA of 141 million was 90% higher year over year, driven by organic and acquired revenue growth.
Adjusted EBITDA margin of 15.9% was 360 basis points higher year over year, and better by 180 basis points sequentially.
We reported net income $70 million and diluted earnings per share of $1 47 in the first quarter.
Just very for share was $1 70, compared with 79 and the year ago quarter.
Day sales outstanding was 57 days two days higher than last quarter as strong cash collections were offset by the significant growth in revenue in accounts receivable during the quarter.
Operating cash flow for the quarter was $39 million and capital expenditures will $12 million.
As of March 31, we had cash flow equivalents of $78 million, which included a 45 minute or draw on a lot of credit for the <unk> acquisition.
We ended the quarter with $905 million of debt and a leverage ratio of two two times to one.
Now turning to second quarter guidance were projected consolidated revenue to be in the range of eight or 10 $830 million, 33% to 36% higher than per year. The.
This includes approximately 30 million of revenue related to vaccination project.
Second quarter gross margin is projected to be 32, 4% to 32.8%.
Reported SG&A expenses are projected to be $18 six by two per cent of revenue.
Operating margin expected to be $10, 5% to 11% and adjusted EBITDA margins expected to be $14, 4% to 14.9%.
Other second quarter estimates include the following depreciation expense of 8 million non-cash amortization expense of 16 million.
Stock based compensation expense of 6 million.
Interest expense of 10 million integration of other expenses and 3 million at and adjusted tax rate of 28%.
And now we would like to recall for questions.
Thank you as a reminder to ask a question you will need to price star one on your telephone to withdraw your question press the pound key please stand by while we compiled Q&A officer.
Yes first responses from Mark Martin of Bird. Please go ahead.
Good afternoon, and thanks for taking my question congratulations to you and the entire team.
For the results of also what you've done.
In order to address book crisis, I'm wondering how how are you thinking about.
Second quarter from from a bill right perspective, and nurse Allied and how do you think that on stage was the year progressive.
Progressive is do you think that just because.
The nursing.
Burnt out.
Occurred in the shortages that we're likely to seat elevated bill rates through the remainder of the year. How are you thinking about growth.
Thanks Barbara per.
The question, yet I'll I'll give a little bit of color. It would be great to have landry provide some additional commentary as well so.
As we mentioned on the last call we did feel like the flow rates with with peak in the first quarter and then start to decline through the second quarter, we've already in discussions with with clients coming out of the first quarter around that is something we are supportive of where we think it's better for the industry overall per our clients.
That has occurred it was a little bit more delays and we expected I think with a really tight labor market and we talked about our orders actually started to rise again, it kept things very very titans from difficult to see that step down maybe at the rate that our clients would like to see what we're trying to be very thoughtful with them to make sure. They have the staff at eight every day to deliberate patient care as they look through the second.
Quarter the guidance that we've given does reflect a decline in bill right from the second quarter.
It is kind of steady from April May June and we expect that will continue and in the third quarter of it again, that's the kind of a starting point of that decline with all day later than expected and the rate of decline to spend a little bit slower as well Andrew.
Andrew or anything though.
Okay. So that's I think what we still expect right now that what time, we get to the end of the year will be closer to normalize bill right that was our view last time against a little bit book the light start on that.
We'll still end up higher than we were pre COVID-19, just true normal inflation and I think just the typing a day later market further so work and eventual lands is unknown, but we certainly are seeing that number come down.
Okay and how are you.
You, obviously have stalk, a really high level of demand how how do you manage the.
The internal capacity of your internal higher ring.
Well things continue to be.
So strong but with the anticipation.
That the Bill right My Bill.
Thanks market, Susan we are seen really relatively strong demand across most of our business. So while we're talking I think your questions about nursing, specifically I want to make the point that we have strong demand and growing demand across most all of our staffing related businesses as.
Kind of core healthcare utilization returns elective surgeries return and then new layer on the shortages and high attrition, which aren't just a factor in nursing, they're very much a factor across the allied disciplines physician advanced practice and even in executive search and so in those K.
This is it we're trying to help our clients not only in filling the temporary jobs, but of course, helping them.
In their permanent positions, we started hiring I've seen that demands grow across various businesses. We began adding staff last year and are continuing to do so this year, so our recruiter and sales.
Staff is up on a sequential basis, obviously more than say nursing and allied and some of the others that we are adding team members across the.
The businesses and then on top of that our technology has really enabled us to both attract and get people place more quickly I can't say enough about the great job our business and technology teams have done in rapidly deployed some new capabilities. So that we are getting.
And reaching clinician more quickly and in a way that they want to view job. So things like Amen passport that we've been talking about has really helped us to move faster and actually put more of the power in the hands of the clinician to make those decisions.
So that's just a couple of things that we're doing to make sure that we can handle the capacity of Landry I don't know if I sold all your Thunder, if there's anything else you want to add there.
No that covered most of it so of course, a recruiter accounts are higher than prior year. Our sales team accounts or are you just kind of in the low pains right now but.
Susan mentioned and we also have some of the digital investment that we have so.
It's actually helped a lot on our production per person. So we're seeing those.
Quite a bit sequentially, but also up over prior year for a couple of things related to that that we talked about on the digital side.
Also both the advanced medical team so that the acquisition that we did and we got them integrated both on the nurse from al outside and we've seen their production double.
We got them onto our system. So it's just a great success story of given them integrated and it's just a great team that would've been able to maintain it really of our clients out quite a bit.
That's fantastic. Thank you so much.
Thanks Mark.
Thank you you mixed responses from Toby summer with choose Securities. Please go ahead.
Thanks could you discuss what you're hearing three clients about.
Their internal staff you didn't make some color to your prepared remarks about the pressure there and if there's a good way to translate that deficit.
Either in percentage terms of available fulltime ftes versus pre pandemic for.
Weekly hours of available or some other metric to kind of.
True solidified our understanding of though.
Hi, Toby if Kelly. Thank you further question.
I think the first part of your question just to give you a feel for what we're hearing from clients significantly elevated rates of vacancies most of our clients I would say I have had sort of double digit percentage.
Obviously, a combination of things impacting that and they're still facing growing levels of attrition.
Extended leaves of absence.
And I think from their work for existing work force as well that level of fatigue and exhaustion is.
That they're responding to is also limiting some of the hours from a full time employee of perspective, I don't know that we have a good.
<unk>, yet to quantify that Toby, but I will tell you that those trends we expect to continue.
We're working with our clients on how they address the overall work force I mean, we have to take care of all of our clinicians and respond and make sure that they can continue to provide safe care.
There is strategies, we're working through our workforce.
Optimization solutions to help them maximize our optimize their existing ftes and of course, continuing to supplement them appropriately with contingent staff, but.
The flow of difficult to know sort of what those gaps are in ftes and how long those will persist.
Toby if landrieu I would just add that I mean, we've been we've been talking about this for a long time and it was kind of a prediction and what we're seeing today, it's just very real.
We're here to not just from a few clients with almost kind of across the board from our clients.
Amount of vacancies that they have and we believe.
A lot of a demand that we're seeing today relates to those shortages that they have due to a lot of the kind of mental health and burnham footage of of conditions.
Thank you.
From Ah, we looked at your business mix by setting sort of where your conditions are actually doing the work for the customers. How do you see that mix changing.
Overtime.
Huge outpatient home.
Es Toby so Susan here, we absolutely believe we will be following the trends within healthcare to have more care delivered outside of the acute care setting now.
Certainly acute care will continue to see volumes grow with an aging population in the acuity of that aging population. So we expect that our acute care clients will continue to be a very important part of our client base and for that matter a day are becoming much more diversified vertically integrated across <unk>.
Many settings would be a good partner for them, we need to be able to serve them not just in the acute care setting, but also in home health in ambulatory surgery Special project Telehealth as well and total becomes important that we have not only the staff, but the technologies and capabilities, but in addition to that there are.
Clients that just serve those outpatient markets, which is why we're very keenly focused on continuing to build those relationships, yes staffing into them that with the acquisition acquisition of Kinsey that we just made it provides is yet another opportunity to assist those clients with the workforce challenges that day.
Half so you'll see us continue to make these investments to make sure that we are adapting our strategy into those growing and evolving market.
Thanks, So I'm curious, where the where the pandemic just had the most impact.
On the on the industry not just a company and I'm curious among the areas might be changes in licensing and credentialing.
And or sort of Canada's experience so make it open ended for Ya.
Sure I'll address licensing and then open it up to Landry and James to perhaps talk about the candidate experience because it's really across the board.
In terms of licensing and I think you know that most states that put in crisis licensure exception and those orders are going to be continuing but also likely expiring <unk> extended it's always a little hard to tell they tend to extend them at the last minute, but we would expect that most of them will continue through.
A year, but the good news is we continue to also hone our processes and automation and the way that we are able to more swiftly and and unless it with less friction get our clinicians credentials quickly and a lot of those investments that we've made over the.
Last year of really paid off so we think even when crisis licensure.
Comes to an end, we'll be able to actually retain a lot of the progress that's been made and speeding up the the credentialing.
In process for them and having almond passport is a big part of that we really put more of the self serve opportunity in the hands of our clinicians. They can submit an upload documents they can see where they're at in the process easier for them to communicate.
With our team. So I think this last year is actually force the industry to be more efficient and use technology and smarter ways to create that better experience for candidates. So landry maybe start with you and see if you have anything else to add about their experience.
Toby for some of the things that Susan mentioned I mean, the more that we can make it easy to be able to move conditions around the country.
The easier due to the faster that we can be so in the first quarter. We saw the highest number of Niclaneshia starts we've ever seen a lot of it has to do with somebody executive orders that were out there for advice from juror and then standardizing credentialing across our clients. So not all of that will stick.
But.
A lot of it will will will continue to happen and it just helps to be able to move those conditions around easier throughout the country. So under the teams are working hard to work with our clients on the standard us as much as possible.
This is James.
General would add to that is.
90 days into organization was really humbled by our values and mission of who we are as an organization being stood up and being live day in and day out overwhelmed by the generosity the compassion.
<unk> some of our teams to really.
Create an environment that allows people to bring their authentic selves to work and to be successful.
Raised by the learning and the drive in <unk> truly services delivered to helping that candidate will have the best possible experienced that they can have with inside of our organization.
A different day corner, but humbled by the experience and the great work that we've done before me with Kelly and with laser and places to build a solid foundation.
Think it comes through how do we drive solutions for physicians, how do we draw solutions for the whole leaderships out of it and a piece of that puzzle and I'll give you the diversity in an equity and inclusion aside to that will say that we have stood up because we think a diverse workforce. If all levels is wanted to be become compelling and is it.
Becomes compelling we wanted to have make sure that we had a diversity action plan that as soon as you are all from a client standpoint, how do we help our clients with white papers with Webinars doing public speaking of cream.
Creating diverse pipelines, how do we help them with a new tool that we're going to be introducing the job neutrality that helps take biased phrases and words out of a job descriptions auto market material to be insuring that we get <unk> get the best candidate for the placement how do we help and partner with HBC used to ensure that we were at their.
<unk> centers that were up your career per day that.
That we're partnering with them to be able to drive job opportunity abuse, a position our brand in such a way that helps our ago individuals' to really live their best license out of our organization. So I think something is just as important as the training that we're hoping our clients, we do it internally and doing an extra value of teaching unconscious bias.
Inc. All of these things add up to helping create an environment that hopefully drive the kennedys experienced and hope and hope helps to really attract the best and be able to deliver that to our clients.
Thank you.
Your next responses from AJ Rice with credit Suisse. Please go ahead.
Hi, everybody.
I guess the companies dog amazing job.
Capitalizing on the opportunities and challenges too that the Pandemics presented I guess I appreciate the comments about bill right Susan.
Takes about the second half of the year, I guess I'd broaden it out.
If you look at the financial profile with the company industry.
And how the businesses evolves.
Three months almost since utilized commented on those as you think about that back half.
Going back to some new normal how do you think.
Financial profile or the business profile.
<unk> Dear Frank there may be would even said three months ago or certainly.
Relative to pretend damage.
Yeah a day. Thank you for asking this this is Susan and it's a really important question because I think this is one of the areas that and then really differentiates. Our staff is certainly very important that we differentiate ourselves for our clients and for our candidates, but also when you think about the financial profile and.
Operating model of the organization, it's much more diverse today than it was 10 years ago, and certainly much more diverse than others within our industry and we've got this broad and deep set a comprehensive solutions and that means that as we face headwinds in.
Bill rates coming down as they should over time, we will have more of a counterbalance an offset in other businesses, where the core underlying demand and volumes are continuing to grow and in particular I'd say in the.
Technology workforce solutions helpful that those also happen to have higher margin profiles for US. We also have been able to build a much more diversified client base getting back to the earlier question of the various settings that were in yes. We certainly are the leader in providing services.
To acute care hospitals and systems and very proud of that but we also have built a tremendous client base in other areas, whether it be schools are ambulatory surgery or home health and dental so there'll be many areas that will continue to build relationships and if anything last year.
Has enabled us to create more of those unique relationships that I think will pay off more telehealth is another really important area and we made great strides in the last year and building not only our own capabilities, but also relationships with others.
And then we mentioned the Tec Tech investments that we've made internally that also helped change the profile and efficiency of the organization going forward as we use more automation and.
More self serve capabilities not only is it create a better experience for the candidate. It also creates efficiency for the business. So I am just talking from sort of the business profiling strategic standpoint, but Brian I don't know if you want to share any more specifics on how that relates to our our business mix.
Thanks, Susan.
There's some things are are different some are very much. The same we walked into the beginning of last year, feeling really confident about our business strategy and bringing together are solutions for our clients really differentiated way and we were seeing that translate into strong financial performance. Both at the top and bottom line and I think as you move through some of the noise.
What's going on right now that will start to reappear as he gets into the back half of this year to moving at 2022, So work, which are really coughed value. The mix of our business net foundation that Susan talked about is going to lead to a more sustainable predictable revenue growth for us and we will continue to turn out more and more operating leverage from that as well. So we feel I think we.
Feel more confident never not only in the mix of the business, but our team's ability that really execute well and the investments we've made and seeing true results from that day in and day out it's in bold enough to double down on that and we've accelerated some of those investments and those will pay off their paying off now they have in the last year are really excited about some of the things we're going to be rolling out to the remain.
There are this year that an experienced it'll improve for our clients and our commissions at all of our team members and I think that will that will continue to translate into better results as you move into remainder this year next year as well.
Oh, well I just ask you about.
Operating you you didn't mention.
The business it sort of comes along side stripes and so forth. It seems like to me when an environment.
That may persist for awhile, where union activity cover the hospital coverage is on the rise and May legacy be there for a while I know you're strike days off so just discussed as a wall.
Here, a quarter here quarter day, or I wonder if.
We're entering an environment, where that may become more of a steady.
Source of revenues, what did you say it in a day or discussions and.
Do you think that will increasing we'd be some steady contributed to results from the next few years.
<unk>.
Hey, JF Landry.
Exactly right. There is a very strong pipeline right now potential labour disruption events.
Ever really know when they might happen but.
But there's certainly a lot of noise out there and some potential events that could happen as soon as this year.
But currently we don't have anything in our guidance numbers that were given for Q2.
Okay.
Maybe just last question.
I would ask you to comment a little more about what since a platform does for you.
The press release I'm not 100 is this sort of coming alongside competing with the teller dog or am well or is there some.
This platforms focused at the marketplace in a different way can you just maybe expand a little bit about what that capability digits with the opportunity you see is.
You got it a day of Kelly again, and we're really excited to have.
Cindy and snap empty, which is a subsidiary of some day as well join assets, it's really not a competitive solution. It think of it as a.
A platform that helps us bring together disparate communication vehicle in a way that really streamline communication between the patient.
Their clinician their entire sort of caregiving group so things like.
Phone.
Video messages, even remember patient monitoring bring that all together so it's a very easy to use.
Secure communications platform. So, it's really focused on creating that experience and that ability for whether it be telehealth company, whether it be their direct clients the caregivers.
To really engage with that customer base, there, particularly focused today in the post acute space the home health space.
And the physician office space.
So we're really excited to help expand that from mostly from a patient experience, but it also allows us potentially to sort of wrap around additional services that our staffing services on that technology to be more holistic. So our early days.
And and welcoming them to the family but.
That helps a day kind of describe a little bit more about that capability.
Okay, No that's great. Thanks, a lot.
You got it.
Thank you your next responses from Brian 10 College of Geoffrey's. Please go ahead.
Hey, good afternoon congratulations.
Susan just a question on the growth outlook for the business right. Obviously, you've had a strong run here. The last few quarters. So if we take a step back and think of where you thought your long term growth was.
January 2020.
Where are you said today.
Different is that outlook, if we say three to five year outlook for you guys.
Well of course, the last year has been nothing like what we thought it would be and so we are in many cases.
Much further ahead of where we thought we would be in in other cases, I still feeling the effects of the pandemic, but when I think about what does that mean going forward from the next three to five years I think we're in a much stronger better position.
Unfortunately, some of it is driven by the acceleration an exaggeration of the shortages that we knew as a country, we're already going to occur over the next three to five years, but they've been exacerbated exacerbated and accelerated by the pandemic far beyond what I think any.
Of us thought would be possible, so that will likely drive more demand across all of our disciplines over the next several years.
Also when we think about our client relationships, we have strength in many of our capabilities and the relationships that we have we talked last call I think about a renewal.
Any of our large clients over the last year and we feel that we have actually strengthen and deepen those relationships because we've been through so much together and while none of us probably delivered perfectly I think impossible during the environment and then we all did far more than we thought was possible and we built.
Strong trust in collaboration with those clients and it really fostered a commitment to do more going forward. We many healthcare organizations fully acknowledge that the healthcare shortages and workforce challenges.
Are not going to go away day, we'd like likely seen some permanent changes and no one knows exactly what it will look like but likely it's going to be harder to attract and keep talent than it was previously so they're wanting to have more conversations about how they can plan for that is Y R. International recruitment business is doing fabulously right.
Now our team is great there and they always execute well, but the demand is far more than we can fill because clients know that they need not only staff now, but they're going to need that core staff, which o'grady paint and our international division helps fulfill they're going to need that core staff three to five years from now so I would say.
I am much more bullish and feel that we're in a better position both strategically from a relationship standpoint, and a growth opportunity.
Got it and then shifting gears a little bit as we think about your tech investments I remember when you bought stratus there was a little bit of I guess apprehension from some investors who didn't understand the strategy at that point, but obviously, it's been highly successful. So can you provide an update on how you've integrated stratus of your sales process and also I guess at that point can you just.
Speak to the plan for integrating since the into the suite of offerings or how do you plan to leverage assets assets of Susie.
Their price.
Yes, we'd love to because.
The language services team has done an amazing job over the last year and certainly the teams integrating in Birmingham Kelly do it since that those businesses are part of per team show to best answer. This question Yeah, Brian.
Like you said the language services. The addition to the entire team.
Number one it's been a terrific offering but number two it really serves such as purpose in the market and addressing health and equity and access challenges, particularly for the.
Limited English proficiency population, which continues to grow across the country. So.
First and foremost, we just our honor to be able to serve and reach that community and ways that obviously, we couldn't before we continue to develop out waive that our clients can help support that community and I think our greatest learning in the past year has been how does that platform extend and the virtual.
Nature of that really allowed or hospital and other clients to take care of that population. So we see a really natural synergy when it comes to addressing patient care I'll tell you, we still have a lot of opportunities to integrate that into our strategic and MSP accounts a lot of their growth has come from.
New clients and expansion and we have a lot more opportunity to introduce and bring them into our MSP relationships. So.
We will say that hasn't been what fueled the growth and most of that.
Really gives us a lot of confidence and how we do that going forward.
Dizzy was actually a <unk>.
A spinoff from if you will from Stratus, so that capability was built within.
The Stratus organization prior sore and we have the opportunity to work with in the in a partnership during the pandemic, creating some solutions leveraging their capabilities and are so.
They have been incorporated language services for example onto their platform and that secure messaging in their virtual care protocols and capabilities. So a lot of opportunities for us to bring those two platforms together as well as bring that together with some of our other services as I mentioned earlier.
Got it and then last question from your fault for your mates Susan So as we think about your international recruitment efforts are we seeing a shortening of the.
The lag time, yet before the nurses to get their immigration documents and I guess looking forward as we think about immigration reform is there anything that you guys have seen that could change for nurses.
Well on reform.
We are hopeful but not optimistic.
Because of course immigration reform include many different facets of both reform for legal and illegal immigration and often times those to get convoluted and things get dragged down and then almost nothing gets done so most reported I read or that we.
Shouldn't count on there being any kind of.
Broad change that would enable us to increase the number of visas available for clinicians with that said there has been some talk.
Improving the processes to make it faster for that.
Tend to occur not necessarily opening up more visas, but just trying to smooth out the process, we have not seen it occur yet in fact, almost the opposite the last year has created quite a few bottlenecks as many of the embassies have been closed or have had limited resources and of course, you had travel bans on top of that and.
So it's actually been quite amazing how well our team has done considering all the obstacles if those obstacles open up more.
They'll be able to I didn't even faster pace because certainly they have the supply the infrastructure the capabilities, we just need more throughput on the immigration front and land or I don't know if there's anything else we share about the ODP team again, such a great job you did a lot of the points there and derive from agent.
You may have been in the day of the park for sure you're recently.
I guess the only other thing I would add that they are expected to add a new all time high of our international conditions on assignment.
Looks like towards the end of Q too if not at the beginning of Q3. So really just kind of shows the execution of that came and got the right strategy and such a good a good name out in the marketplace bill to attract supply.
From other countries and bring him into the United States to help out our clients.
Awesome. Thank you.
Thank you your next responses from Kevin Fishback with Bank of America.
Great. Thanks, I just wanted to try to better understand this kind of a second.
Search if you will and.
Referrals and the man I mean I guess.
It sounds like you're saying.
Yeah, I think he specifically said burnout was one of the reasons I guess, how much visibility do you have into the exact reason why a client as to asking for someone like me do you know whether that referral was coming in because the hospitals growing volumes I need from the staff at work. The hospital just had an entire turnover need someone to.
So I'm just trying to understand cause it feels like.
It's dynamic of burn out and being able to kind of measure that from quarter to quarter wood.
I just love over the ability to the same day your grades and demand.
Yes, it's landry so.
Don't Peg every order for kind of a reason code of wife might be coming in but were of course very close to our clients all the way up into the C suite and.
That's exactly what we're Aaron right now is that a lot of the demand is just purely their vacancy rates that they have the attrition rates, but they've had at their own facility. So I think it's probably one of the biggest reasons if not the reason that we've seen some of the the pretty big increases over the last five to six weeks.
Since sequentially increases over the last five or six weeks, we're we're nowhere close to where the orders were.
December January timeframe.
They were extremely high at that point, but.
Other thing to point out is that it's not.
Any one client it's not any one special to just about anyone geography were seen it across the board.
New demand.
In total demand.
I would also mentioned.
Even with the COVID-19 hospitalizations that decline bear they have continued to see.
Really really strong demand their favorite actually even today there at all time highs that we've never seen in the business.
And one of the good things there is that it's rare that we would see every specialty within the hour.
And that's what we're seeing today. So I know, we've talked previously about therapy, physical therapy, and occupational therapy, having some edwin.
At the end of 2019, and if you look at the demand that we're experiencing there right now.
It's.
If you had looked last year with a double digit from now it's in the hundreds of workers that we have so really hard numbers and the good thing about that is that we have really great recruiters. There. We have a great database are really good at staffing physical therapy and occupational therapy.
Interested to see what they do here over the next couple of months or on a great trajectory. If there was one specialty with an hour that I would point out that is down year over year, it's respiratory.
And really the biggest reason for that it's up against some really hot comps from prior year, but where we are to day is still quite a bit higher than what we were the same pre pandemic.
Kevin if it's okay I think it would be helpful. Pertains to also comment on what we're hearing from clients regarding the Locums and interim leadership demand and what's driving that thank you Susan and thank you to come in for the question I would add is very difficult as much as what landrieu said of quantifying.
Specific information around the whole Bruno reduced here or just a few numbers force the local demand total demanded that 98% prequel.
And is that 93 per cent of core business of recovery.
Drivers of those recoveries into anesthesiology CRM day surgery dental in a piece of specialties and there within 10% of being at the pre cold with numbers like Landrieu, we do have a few lagging a specialty user net.
In radiology, an interim which from.
Nominal first quarter.
Demand and quarter, one was flat, but they had a.
High level uptick and quarter force will be held.
The fourth quarter numbers and just keep in mind 10, 12% of their order volume results from our COVID-19 Ah related so demanded is expected to sustain.
Elevated levels of going through quarter to just by way of just.
How we see this in the year, we just expect interim to reach his pre COVID-19 core revenue numbers in late 2021, and Locums in early 2022 to get to their prequel with numbers search and quarter three of 2022.
Okay, then that's helpful.
I guess.
The last question just trying to.
Reconcile the descendants and since it's not necessarily news so maybe maybe it's not though.
Something I have to worry about but I guess, when we talked to the hospital companies I know, it's a small suburb the industry but.
Hearing you talk about demand and burnout that all makes sense, but then when you're talking to the hospital company. They often talk about you won't get as many nurses because we won't it nurses on quarantine from allowed to so that some of the men will go down us with that.
And so I guess it seems like this potential offset to some of this so they're talking about pretty swift reduction in temporary neighbor and it sounds like you're you're talking about more kind of sustained these for a few more quarters.
All of it is there.
There's some way to kind of reconcile Woodbridge, you know what seems to be.
Touch addicting commentary about.
Temporary stepping over the next few quarters.
Kevin I don't think it's contradicting.
Landry mentioned the demand while it's grown over the last six weeks is still quite a bit lower than where we peeked in December and January. So we would say that the demand and the need has come down as well.
It did come down and then it actually has come back up but not nearly back to those levels. So actually think we're in sync.
And I do think that the issues around attrition and vacancies is something that no one could fully anticipate the level of impact because it's hard to know how many nurses are going to come back into roles as facilities need them to come back and I think what they're finding is not as many wants to come back.
Into full time Rolls also some clinicians who worked through the pandemic are burned out and they.
Helped so much trauma that they want to need to take time off and or do something different or retire early so they sort of hung in there until what they thought was near the end and now there to party you just look at the jolt.
<unk> data and we've got the highest level of job openings in February of 21, 27% above prior year and the number of openings to hires is at a record high of 2.3 to one. So these issues I think are just now really manifesting themselves.
<unk>.
They're wanting to get staff back up and they are finding that they can find the permanent staff to re hire so hopefully that helps you to reconcile the commentary a little bit.
Yeah, No I I I think that it does yeah. So I used to be basically you're saying that you think that overall demand is going to continue to increase book Bill rates are gonna be coming down from the hospital's perspective, total spending might be coming down even though you're seeing.
For me demand as far as number.
Yes, yes, I think that.
Fair characterization.
And I guess <unk>, if if the number of placements of going.
Just feels to me like that says this is quite Amanda balance manipulates shouldn't necessarily becoming.
Down as rapidly white wise.
There that mismatch of higher demand your lower bill right.
Brian keep in mind again demand is elevated above what we consider normal levels kind of pre pandemic, but still significantly off the very highest point in that it led to some really unprecedented pricing levels that were there.
Everybody wants to get off of natural over the dialogue is but they're still elevated we've we've talked about the fact that we expect that to remain at that level, but off at very high point that we saw boutique in March.
It will come down this again, because demand as above normal levels, but still off at peak level. I think that's the part that kind of think about that it's not as strong and it's really not sustainable as you have a little more predictability and the needs right now and a little more lead time. It just allows us to to be able to feel more jobs at a lower level of lower rate than we had but.
Four but it will sustain at a higher level. So I think that again that pace of decline is the hardest thing to predict we are seeing it come down as we as we have new bookings through the second quarter in the third quarter, but it everything right now says it will stay elevated above again levels that we saw a year and a half ago because of the shortages and the higher.
Level of demand that we we saw a year and a half ago.
Alright, we'll go about reference points I guess alright. Thank you.
Thank you.
Thank you your next responses from Jeff Silver with BMO capital markets. Please go ahead.
So much I know it's played I'll just ask one.
If we're expecting bill rates to continue to go down sequentially, maybe putting words in your mouth.
But how would you be able to maintain the bill right spread what should we be expecting over the next few quarters.
Well again, the race bill right somewhat tied to pay rates and so that that's where we've been really thoughtful with our clients are are making sure. We do this in a methodical way and don't have big jarring changes in the rates and we kind of worked we'll work our way down and I think most clinicians understand that day the higher.
Pay rates they saw as a pig at the pandemic were very unique to the situation and so we still have a very compelling proposition for for clinicians.
Just pay as well and so I think as long as long as it's done and it's kind of thoughtful way over a period of time.
Will likely see and we expect to see spreads improve because we've talked about even on the prepared remarks, we were taking our lower margin on the higher bill rates.
During this time very very deliberately and so as you start to re normalize back to more reasonable bill rates pay rates will come down the spread to actually approval a bit as well.
Okay that makes a lotta sense. Thanks, so much.
Thank you your next responses from Mitra Rumka, Paul with Sidoti. Please go ahead.
Yes, Hi, again this will equip should from me also I was just curious if you take a longer view. It tells him to go with the opportunities if the pandemic.
Resulted as it relates to your MFC relationships, maybe accelerating that.
Clients and.
Maybe change your day, a mindset until just be more willing now to come on board so to speak.
Yes, I think I mentioned earlier, we definitely have seen a strengthening in relationships that we have but also those organizations that perhaps didn't have a strong from me.
Managed services partner and someone to help them not just through the crisis, but now to think ahead about how they are going to tackle the longer term shortages and challenges we've seen some of those dialogue.
Emerge and opportunities in a pipeline for potential new client relationships that gives us a lot of.
Positive.
Optimism.
The future and how we can continue to build our our client base, but in addition to new clients, we have actually a greater opportunity just to continue to partner with our existing clients and find opportunities to help them in areas, where we might not already be so we have an MSP client, where we have nurse now I'd serve.
<unk>, we can bring in the language services.
Solution. So that we can help them to consolidate and save dollars and have a more consistent experienced around their language interpretation services. We can bring in locums. We can bring in our executive leadership businesses. So there's still a lot of opportunity for us to cross cell and.
Add and expand many of our existing relationships.
Okay. Thanks, Good question congrats to get on the great quota.
Thank you me too.
Your next responses from Sam customer with William Blair. Please go ahead.
Hey, guys. Thanks for taking the question here are you from a quick clarifying question.
Thank you mentioned the prepared remarks, the only five per cent of the second quarter revenue expected to be from.
Depend on that was was that only for physician when your ship and if so can you share with respect your true the company as a whole here.
That is correct that was specific to the physician and leadership segment and really that's the area, where we were able to provide that type of color is very difficult and.
For nursing and Allied is Susan Landry mentioned, it's not every order it gets tagged in a certain way and it was.
The hospitals are able to move the orange around where needed. During this time, so it's very difficult to isolate that I mean, I think we're it's as you think about the second quarter. The majority I would say the pure pandemic related demand is is dissipated right. The majority of what we're seeing now is is based on just the hospital volume.
<unk> and their and their staffing levels, they needed and meeting that as well. So I don't I don't have an exact percentage of it I'd say, we will look at it as a very low percentage of of our second quarter Guide.
Would be related to now it had mentioned the vaccine related projects I guess you could you could say that's partly related to to vendemiaire, but we were able to isolate that project forward look at more than me provided that number but outside of that for just the normal recurring business revenue in the guide is the vast majority of it is we'd look at it as more normal operations.
Gotcha, that's helpful. Thanks, and best of luck and quarter here.
Thank you.
There are no further questions in the queue at this time.
Wonderful well. Thank you everyone for joining us today, we truly are so grateful for all the contributions that so many people and organizations are making during this critical time, we have brighter days ahead for sure and you can rest assured that the <unk> team is focused on always evolving and.
Making a positive impact not chest through our business that in our communities and through all issues that I think any good organization should be focused on so thank you everyone.
Thank you for joining US today. This concludes today's conference call you may now disconnect.
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