Q2 2021 AMN Healthcare Services Inc Earnings Call
Weighted revenue of $624 million up 41% year over year, we hit another record high for average travelers on assignment and.
Including supplier partners through our MSP and Vms platform, our program placed over 70000 nurse and allied clinicians during the quarter.
Travel nurse staffing grew above our expectations at 37% year over year.
This increase was driven primarily by volume growth.
After of REIT decline and demand earlier in the year orders began climbing again in April and now are at record levels.
Total orders in nursing doubled in July compared with the second quarter level.
Our allied staffing team hit another record with 113 million second quarter revenue up 44% year over year.
<unk> imaging respiratory and lab revenue led our allied growth again, rising 76% year over year.
Also important was the continued comeback of therapy, which had been slower in 2020, new therapy orders in the second quarter were more than 50% higher than the first quarter level.
Overall allied demand has seen consistent growth over the last 3 quarters and today the demand is at record high levels.
Across nursing and Allied the labor market is experiencing extreme supply constraints high demand and intense competition for talent clients are exciting problems not only with permanent hiring but also with retention and we're hearing about vacancy rates at very high levels all across the board.
All across the country.
Most of the demand is not related to COVID-19 patients, but rather leaves of absence clinician fatigue normal patient volumes rising and operating room backlog.
Our clients are telling us that this is unlikely to change anytime soon.
And in anticipation of these trends continuing and we had increased investment in each phase of the recruiting placement and on boarding process. We continue to hire additional recruiters and invest and our digital platforms.
These are leading to higher new applicants, although not enough to satisfy the extraordinary demand.
For the third quarter of 2021, we expect nurse and Allied solutions segment revenue to be approximately 45% higher year over year.
Physician and leadership solutions segment revenue for the second quarter was 139 million, 28% higher year over year, which was better than our guidance of 20% growth.
Locum Tenens revenue was 78 million up 26% over prior year overall locums demand has recovered nicely with many specialties exceeding the pre pandemic levels. Our highest demand specialties include anesthesiology advanced practitioners internal medicine.
Primary care and psychiatry.
Interim leadership revenue grew 30% year over year as the business delivered a third consecutive quarter of strong sequential volume growth.
Core demand for interim leaders is growing and has recovered to pre pandemic levels.
Physician and executive search revenue rose by 33% over the year ago quarter and permanent placement demand continues to strengthen.
For the third quarter, we expect physician and leadership solutions revenue to be 25% to 27% higher year over year.
We have seen the strong growth and our outsourcing and technology solutions, including remote language services telehealth workforce and scheduling optimization and recruitment process outsourcing. And addition are managed services programs continue to grow we are adding new clients and existing clients are and.
<unk> net for additional solutions.
And very proud of the <unk> and the recognition they are receiving for their outstanding efforts.
For example, and then recently earned HR O 2 days highest ranking for customer satisfaction and healthcare MSP. We have of nearly 5 billion growth spend under management through our MSP and Vms platform by far the leader and healthcare.
Also advances currently has the highest overall class score for nurse and staff scheduling of.
Oh of solution was recently recognized as a star performer by Everest group in honors or just a few examples of how the a M and team and making a difference for healthcare professionals and clients, we work and a great industry with lots of amazing partners and people, which.
Make these accolades that much more meaningful way.
We are particularly proud of the positive impact, we're having on health equity and access.
We are honored to of been awarded the Eastern region of the theme of vaccine administration program for underserved community.
We mobilized clinicians who administered of nearly 100000 vaccine many delivered by mobile units to limited access areas are telehealth and remote language services are enabled and care and alternative and rural setting.
And their first quarter with and then Sydney delivered 60000 telehealth visit.
Our television platform for schools support 3 mode access to critical therapeutic services for students and supporting over 130000 session throughout the pandemic of.
Over the last year, we have increased investments of our operations to be the best partner possible for our clients and our candidates and.
The the most important investments we can make is always within our own tea of course, we've add and many wonderful new colleagues to the M and family over the last year.
We have also increased our investment and our team members to ensure that we're supporting them and helping them to achieve their personal and professional goals. We've.
We've increased our benefits we've increased our wellness and mental health support we have increased our actions in line with our commitment to diversity equality equity inclusion and the other critical social issues we've.
We've seen tremendous participation and our employee resource groups and now have 8 thriving erp's to support our increasingly diverse team.
We've increased our charitable activities and community impact, which is a very important part of the aim and culture and team member of engagement.
The benefit of all of that can be measured and are strong retention levels.
But most importantly, we see the strong engagement of our team show up every day and the caring courageous and committed support that they give our clients are clinicians and to 1 another.
Now and then 1 of our great colleagues does decide to depart and pursue a new personal or professional goal outside of and then you're all aware I believe that Brian Scott made that decision recently, Brian has been and amazing friend and colleague to me and many of the.
Over the past 17 years, including the last 10 years plus as our CFO.
Since that's more than twice the average tenure of a typical public companies CFO I think that says a lot about Brian talents, but also his commitment to his colleagues and to our purpose.
I've learned a great deal from the Brian over the years and I will forever be grateful as I know, we all will be for all you've done to evolve and then.
1 of the greatest legacy is that Brian and need for US is the strength of the teen the team that he's created and developed all of the leaders of across our finance accounting cathodic customer services team are exceptionally strong which is why we did not feel the need to name and interim CFO when.
We are conducting the search for Brian to replacement.
We are super fortunate that Chris Schwartz is seamlessly stepping into the role as the interim principal financial officer, which is of course of natural extension for him as controllers and he's already responsible for most of the elements of financial SEC reporting and the interface with our auditors.
Amongst many other things a crib has been a colleague with am and since 2005 and has done the phenomenal job and a variety of financial leadership and Investor Relations Rolls and.
And he too has been instrumental and our evolution.
And he also happens to be of great role model for our culture and our values. So I. Thank you and all of our leaders Chris for everything you do including 2 of this transition.
And a few minutes Kelly Landry Jayne and Chris will join us for the Q&A sessions, but for now I will turn on the call over to Brian who will give us more insight.
Well. Thank you Susan sort of those very kind of work you have definitely a bittersweet day and before I jump and the numbers on.
1 of these take a moment to acknowledge all of my maid and colleagues.
The revised 17 plus years, a day and then I'd of been H fire every day, while your passion to drive your dedication to serving our customers our communities and each other you are true the best of the best both professionally and personally and while I'm. So proud of of what we've accomplished.
Hello, and revenue was $624 million and 41% higher than the prior year and down 5% of sequentially.
For travel nurse, our largest business of revenue growth, 37% over prior year with average travelers and assignment of of 22% the.
The average bill rate up 14%.
And the slightly higher average average works.
As expected the average bill rate declined sequentially from the first quarter of peak levels that were fueled by COVID-19 related needs.
However, the sequential decline of about 9% was less than anticipated and demand increased through the second quarter.
We are expecting <unk> to the down again sequentially and the high single digits, but remained at elevated levels throughout the balance of the year.
Allied revenue was $113 million of 44% from the prior year and up 4% sequentially.
Allied volume was up nearly 40% of a prior year with the average growth rate higher by 4%.
The nurse and Allied gross margin of $26 and 6% was 40 basis points lower than prior year and down 30 basis points sequentially.
The second gross margin was lower year over year, primarily from increases and clinicians hey packages the Fillmore position.
Segment, EBITDA margin of $14, and 4% with 60 basis points higher than prior year unimproved operating leverage.
The physician and leadership solutions revenue and the second quarter was $139 million, which was 28% higher year over year and down 1% sequentially.
Gross margin for the segment was $36 and 6% 20 basis points higher than the prior year and down 40 basis points sequentially.
The year over year equivalent is due to a favorable mix shift towards the interim leadership and search businesses.
The sequential reduction and gross margin was due primarily to a mixture of toward lower margin specialties and locum tenens, along with the reduction and covered related projects.
Segment, EBITDA margin was $15 and 7% of 160 basis points from last year and up 60 basis points sequentially. The.
The year over year improvement was driven primarily by operating leverage on the strong revenue growth.
Technology workforce solutions segment revenue was 94 million and the second quarter growing 70% of year over year, and 6% sequentially with strong growth across all service lines and the segment.
Segment gross margin was 67, 7% down of 100 basis points year over year and flat sequentially. The.
The year over year change with DHA revenue mix shift within the segment.
Segment EBITDA margin of 45, 4% with the 590 basis points year over year and was 210 basis points lower sequentially.
Consolidated second quarter, adjusted EBITDA of of $134 million was 66% higher year over year, driven by revenue growth and improved operating leverage.
Adjusted EBITDA margin of $15, and 6% with 240 basis points higher year over year, and lower by 30 basis points of essentially.
We reported net income of $67 million and delete earnings per share of $1.39 and the second quarter.
Adjusted earnings per share was $1.64 compared with 83 cents and the year ago quarter.
Details outstanding approved of 50 days 7 days lower than the last quarter as strong cash collection caught up with the large increases and revenue and accounts receivable that occurred and the first quarter.
Operating cash flow of for the quarter was $171 million and $211 million a year to date cash.
Capital expenditures and the quarter, where $11 million.
As of June 30th and we had cash and equivalents of of 100 million long term database hundred and $50 million and of leverage ratio of 1.7 times the 1.
Now turning to third quarter guidance, we are projecting consolidated revenue to be in the range of $770.790 million $40 and 43% higher than the prior year. This.
This includes approximately $20 million of revenue related to the labour disruption activities.
Third quarter gross margin is projected to be 33, 4 to $33 and 9% of.
Reported SG&A expenses of rejected the 19, 80% of 22% of revenue.
Operating margin and expect to be 10% to 10.5% and adjusted EBITDA margins expected to be $14, 2 to $14 and 7%.
Or the third quarter estimates include the following depreciation expense of 10 million non.
Non-cash amortization expense of 16 million.
Stock based compensation expense of 3.5 million.
Interest expense of $10 million.
Integration and other expenses of 3 million and and adjusted tax rate of 28%.
And now we would like to open up the call for questions.
As a reminder to ask a question you will need to press the star 1 on your telephone to withdraw your question has passed the county.
Sam Biophore composite Q&A roster.
And your first question comes from from the line of Mark on that.
From from Bird.
And congratulations everybody and and Brian Congratulations to you it's been great working with you over the years I've got several questions related to converse and Allied obviously demand is extremely strong on both of them.
And both nurse from Allied I'm wondering you mentioned, where you're thinking about pricing being for for the upcoming quarter.
I'm wondering if you could expand a little bit on that with regards to travel nursing just in terms of the pricing expectations for the coming quarter, but also as as you were thinking about the year on folding because.
Clearly the or the shortages don't seem to be abating.
And then how are you thinking about that with regards to the allied as well.
And markets Landry.
Maybe it might be helpful. Just kind of talk about the trend that we've we've seen even starting on January so our our ability of is actually take at the end of the first quarter and the since that point they'd been steadily decreasing.
They they really have not been declining quite as was the steepest what we'd originally but.
From what we can tell though especially where the demand as of today and we can see of course of the rates on all of our new borders we would expect that it would probably take a turn again and we'd start to seek increases and our average bill rate as we exit the third quarter. So we're seeing increases across almost all of the specialties and nursing.
Even the the orders that are tied to specialties. The that are there to take care of Kobe patients.
And it's really play the extremely high demand that's driving up the rates there is of lag.
Because there's a lot of instances, where you might see rates that are impacting orders, which then of course would impact future placements, but.
But it looks like we should start to see our average bill rate increased 2 to 3 months from whenever you would see some of the peak demand, which were experienced and right now so feel a little bit too early to tell but that's how we are currently thinking about it.
Landry how much are you thinking that those still rates could actually go up on a year over year basis once once that starts occurring.
And it's still really hard of the sale more of just because we are still book again, and even today, we're still looking and a little bit into the third quarter and.
And we can see the orders and but there's some other things there is such as mix that and make it a little bit difficult right now the fully predict it originally we thought that a likely decline even the throughout the that.
The entire year and this was where we're seeing the demand drive now we think of it will take a turn right at the end of the of the third quarter and.
And if essentially come.
Of the exit of the year.
That's great and then can you talk a little bit about what you're seeing in terms of still right.
And and also given.
Given the dynamics that are occurring very.
Various units what you're seeing in terms of follow on assignments and lastly related to that I imagine you're fill rates are better than the.
The rate of clinicians across both the nurse and Allied are back to where they were pre pandemic.
Yeah.
Might be the opportunity for Kelly can chime in regarding our MMP programs and you asked mark about the preference of.
Clients to have a staffing led MSP versus Vms and of course, we are.
We're really fortunate that we can offer both of which was extremely valuable during the last year and as you heard me mentioned, we added many new clients and our technology Vms platform and that certainly has helped make an impact there and help drive that revenue for that division, but we're finding more and more clients are.
Wanting to have that staffing by the offering so maybe Kelly you could chat a little bit of a couple of comments on the thank you Susan.
Mark and you certainly see.
Stronger performance from a field perspective, with our ammo and lot of programs. So we have seen a strong part of our overall performance and technology and workforce solutions. This quarter was due to the strength of Vms, we've seen higher demand sustain as well we have a little less influence despite really strong partnerships with our suppliers our ability.
The partner with our clients and our MSP program strategize with them.
Around utilization around Bill range of our marketing strategies, certainly benefits those MSP programs, and they see that and and higher fill rates.
And as well as other value that they receive from that we are seeing and the market from a new program perspective, many clients who were without workforce solution partners throughout the pandemic really turning now towards reassessing their strategies and engaging us in conversations.
And that evidence of new business, we brought on and the last quarter and a very strong pipeline going forward to the end of the year. So we're very bullish on <unk>.
Continue to prioritize our current and services programs, but looking to with our expansion take on more and be able to provide more support for the industry.
Sounds really promising congratulations.
With volume.
Your next question comes from the line of Tobey Sommer from 2 of Securities.
Thank you.
I was wondering if you could describe what youre hearing from clients and seeing.
Can you state you have visibility into.
The <unk>.
Full time labor supply and the shortening of the extent to which there are.
Short term medium term issues, such as hopefully hopefully and describing the Hercules.
The burn out the needs of.
Vacations do other things of full time staff that may remain in the labor force versus structural things like the retirements and.
Early in the catch up from from last year, where we may have seen delays I imagine thanks.
Yes, very important question Tobey. This is Susan on and as you can imagine those conversations are happening pretty much daily earlier today, and Landry and I were on a call with 1 of our largest clients about their outlook and it's very similar to what we hear from other large systems and large clients and net they don't see the ending any time soon.
I believe that Theres been a shift in the work force that will have impacts from many years to come whether it be the is the combination of all of those things that you've just described and its retirements people choosing to do other things there are existing staff being burned out the team.
Wanting to get too good staffing levels from a quality of care standpoint, but it becomes a little bit of a vicious circle right, where if you're under GAAP people are being burned out and they quit and it just makes the scenario that much more difficult and so because of that we're talking with them about certainly urgent immediate.
And at Atkins, and collaborative things and we can do to get them of the staffing. The immediately but then also what can we do mid term and longer term and some of the solutions that we have the offer are things like Rps and in fact, our <unk> business had a phenomenal second quarter.
And it is a great pipeline going forward because so many clients are wanting assistance and a new way of new best practices to recruit their permanent staff, we're talking with clients about new Grad programs, where we can provide and we've done this before with some of our large clients on where we.
The new grads and of Preceptor program and those individuals can ultimately go permanent our international business Ogrady, Peyton and that team has done a phenomenal job of.
Serving clients and remember international nurse has come over on Green cards and.
And our on assignment with us for generally 2 years before they go permanent and they are seen as a core staffing solution as opposed to of temporary solution. So we're and we're having these conversations with clients. We are fortunate that we have the ability to discuss multiple solutions for them.
That address that kind of short term mid term and long term needs that they have.
And I'll just add 1 more thing there was also a need for it.
Flow pool management, and how do they optimize the availability of of.
On the nurses that they may have locally and use technology, which is why things like our before health technology and become very valuable.
Right. Thank you.
Have you heard any.
The legislative or industry wide net.
As yours too.
And sort of changes to improve.
Supply.
The.
And that could impact the market and over any sort of medium term because.
Doing something to encourage.
The students.
And many years away from and countries.
Alright, there are.
I'll start with Theres, nothing material or significant there certainly are things being discussed and there <unk>.
Vance meant albeit slow on things like the nursing license licensure compact, which now has 38 states that are are members of that compact of the advanced practice compact is really just getting started with only north Dakota involved.
The physical therapy compact head of 21 net proceeds all of those things help the mobility of clinicians crossing state lines and enabling the delivery of care faster. We have the treat act that's been introduced that of national level.
And helped a bit in times of.
National healthcare crisis, which were and to be able to get clinicians moved around and utilizing their license or across state lines as well, but none of that is going to materially change the supply of clinicians and the next year.
Okay last question from me.
Could you comment on your.
Your internal.
Efforts to streamline the.
On recruiting and implement technology and.
On board people and Ah.
And as automated of fashion as possible Credentialing et cetera, and then maybe juxtapose that with.
And what's going on.
And the market as you see it if the if there is a judge the position to be had.
Because of this.
A lot of times crises.
Spur innovation acceptance of of.
The frameworks and processes that the.
Maybe a normal times wouldn't be and bridge.
Absolutely.
Last year has certainly advanced innovation, both within and across the industry and I think adoption as well and many cases, maybe the the tool and the technology was there, but there was the hesitancy whether it be with candidates for clients to utilize it. So we've definitely seen faster adoption of digital capabilities.
1 Great example, is our aim and passport app, which enables clinicians to serve for jobs and look for their next great assignments, certainly gives us the ability to personalize the experience for them and and push out personalized opportunities that are going to be of the greatest interest.