Q3 2021 AMN Healthcare Services Inc Earnings Call
Yeah.
It says constitute forward looking statements.
These 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 because 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.
The call contains certain non-GAAP financial information.
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 reports page at <unk> Dot <unk> healthcare Dot com.
On the call today are Susan Soccer, Chief Executive Officer, Jeff.
<unk> can knutson, our incoming Chief Financial Officer, Kelly, Rykowski Group, President and C O O of strategic talent solutions Landry.
Land Receded group, President and CEO of nursing and Allied solutions.
And James Taylor Group, President and C O O a physician and leadership solutions.
Also joining R. Chris Schwartz Amen controller.
Who has served as our interim principal financial officer for the third quarter.
And vice President of Finance Stimpy good appalling.
I will now turn the call over to Susan.
Thank you so much Randy and welcome everyone to our earnings call. It's hard to believe that this month is the 20th anniversary of and then becoming a public company over the past two decades, we have strategically evolved and bills and into the largest most diverse.
And consistently high performing company in our industry more importantly, we have created a culture that puts people and values first at every opportunity.
Opportunity, we take action to ensure that we are living up to our commitment to diversity equity equality and inclusion.
Are higher than ever before at first because of COVID-19, but now because many millions delays their care during the height of the pandemic amidst an ageing population.
According to a recent poll, 30% of health care workers had quit or been laid off during the pandemic.
Of those still employ nearly one fifth we're considering leaving the healthcare profession.
This immense pressure on the healthcare workforce has sparked labor activism and for the next several years, the number and magnitude of strike events could exceed anything we've seen in the past.
Mmm and our entire industry are working harder than ever to help healthcare provider's cope with a record labor shortage. We believe our role will be important and essential for years to come providing workers, where they are needed most.
We can also enable many of those now on the sidelines to find work that meets their needs and flexibility in the future.
As the leader in total talent solutions for healthcare Ament takes our responsibility very seriously to strategically support our clients as they adjust their near and long term plans.
Our telehealth and other workforce technology solutions are also more critical than ever to provide innovative approaches to alleviate the labor shortages and so we are investing heavily to ensure that they can meet the changing healthcare delivery models and the needs of our communities.
Demand for our services is much stronger than we had anticipated which is reflected in the better than expected third quarter results.
And our fourth quarter outlook, however, because there is significantly higher demand and supply of clinicians, we believe that even with half of the demand that we are seeing today that we would have likely seen similar volume growth.
Consolidated revenue in the third quarter was $878 million, 59% higher year over year enabled by strong performance from all revenue segments.
Nursing Allied solutions reported revenue of $627 million up 64% year over year.
<unk> travel nurse staffing revenue grew 56% year over year volume growth was the greatest contributor. Although we also had higher bill right.
As we mentioned on our last call we started to see demand rise during the summer even before the Delta variant hit.
Due to staffing shortages demand has sustained the same record high levels since September even though COVID-19 hospitalizations have steadily declined.
And just like our other businesses. This team is executing very well.
Interim leadership revenue grew 59% year over year as the business delivered another consecutive quarter of revenue growth.
Physician and executive search is rebounding much faster than we expected and delivered revenue growth of 33% year over year.
For the fourth quarter, we expect physician and leadership solutions revenue to be approximately 35% higher year over year.
Third quarter revenue for the technology and workforce solutions segment reached a record $100 million the revenue.
Increased an impressive 67% year over year language services continued its strong growth pattern with revenue of $47 million, which is 33% higher than a year ago.
Revenue for our Vms business was $33 million in the quarter growing a remarkable 113% year over year.
Our <unk> solution, which as a reminder, assist clients with recruitment and hiring a permanent staff grew significantly year over year, we're delighted to support many new clients, though market wide demand for RPM is much greater than the available industry capacity.
In the fourth quarter, we expect revenue for the technology and workforce solutions segment to be up approximately 50% compared with prior year.
Enabling consolidated revenue growth of nearly 60% in the third quarter and even greater growth in the fourth quarter would be difficult at any time and it is especially hard in the labor market of 2021.
Across the company, we have added more team members than in any other year and we continue recruiting to support our growth.
We also have made important additions to our leadership team improving our ability to foster our culture developed and care for our team members manage our long term growth and serve our health care professionals and clients always with the greatest integrity and transparency.
One Great example of our leadership addition that makes US stronger is Jeff Knudson, who has joined the <unk> family as our Chief Financial Officer, Jeff.
I very much look forward to meeting and working with many of you on this call in the near future.
Thank you so much <unk>, we're so glad to have you here and since Jeff is day three on the job he won't necessarily be participating in the Q&A were super fortunate to of course have Chris and sassy here to help us out with any of those questions continue.
Continuing on the people front. We recently also announced that is Shaun Tabatha son will be stepping into the role of Chief people Officer effective January 1st and as Sean joined the MN family over two years ago, as our head of strategy and M&A his people and culture leadership during this weekend.
Has been extremely valuable which made this an obvious choice for me and the team and we are deeply grateful knowshon is going to be at the forefront of our people strategies for the future.
I also want to take this moment to recognize land receded, who is celebrating his 20th anniversary with the Ams team. This week time flies when you're having fun right. Landry Landry is a great example of how am and obtains great talent in our acquisitions and Landry has certainly made the most of this opportunity first and <unk>.
<unk> and growing our Allied Division, then as president of our nurse staffing Division and as you know now earlier. This year. He became group president and actually that was last year Landry right time does fly.
Group President Cielo of our largest revenue segment Landry is truly an outstanding role model of almonds commitment to our ethics and values every single day as a servant leader. He has been a mentor to many developing tremendous leaders along the way. So a huge thanks to you Landry and you are amazing.
Jamie for all that you do to support the ambition and the team in a few minutes Kelly Landry, James and Anthony will join us for the Q&A session, but first I'd like to tag onto Jeff comments, and thank our entire finance tax and accounting leadership team for their great work, enabling a seamless too.
About 270 basis points sequentially.
The favorable swing in the workers compensation accrual in the $23 million of labor disruption revenue added 300 basis points to gross margin compared with a year ago.
<unk> EBITDA margin of 14, 8% was 100 basis points higher than prior year due to the factors that lifted gross margin, partially offset by hiring of new team members support of labor disruption ex activities and other people related expenses.
Physician and leadership solutions revenue in the third quarter was $151 million, which was 38% higher year over year and up 8% sequentially.
Gross margin for this segment was 34, 8% 190 basis points lower than the prior year and down 180 basis points sequentially.
The declines were primarily due to a mix shift toward lower margin specialties.
Segment EBITDA margin was 12, 8% down 140 basis points from last year and down 290 basis points sequentially.
The year over year and sequential decline stem from lower gross margin higher team member of expenses and favorable professional liability expenses in the prior quarter.
The technology and workforce solutions segment had a record revenue of $100 million in the third quarter from 67% year over year and 7% sequentially.
With strong growth across all service lines.
Gross margin was 69, 4% higher by 330 basis points year over year, and up 170 basis points sequentially.
The increases were due to a favorable revenue mix shift.
Segment EBITDA margin of 47, 2% was up 430 basis points year over year and was 180 basis points higher sequentially.
Consolidated third quarter, adjusted EBITDA of $138 million was 80% higher year over year adjusted EBITDA margin of 15, 8% was 190 basis points higher year over year and up 20 basis points sequentially.
We reported net income of 74 million and diluted earnings per share of $1 54 in the third quarter adjusted earnings per share was $1 73, compared with 82 in the year ago quarter.
Days sales outstanding increased to 60 days 10 days higher than last quarter due to a surge in revenue and accounts receivable late in the quarter.
Operating cash flow for the quarter was $17 million and $227 million year to date.
Capital.
$16 million.
As of September 30, we had cash and equivalents of $137 million long term debt of $850 million and a leverage ratio of one five times to one.
Now turning to fourth quarter guidance, we are projecting consolidated revenues to be in a range of $1. One three to one $1 5 billion approximately 80% higher than the prior year.
Fourth quarter gross margin is projected to be 31, 8% to 32, 3%.
Reported SG&A expenses are projected to be 17, 5% to 17, 9% of revenue.
Operating margin is expected to be 11, eight to 12, 3% and adjusted EBITDA margin is expected to be $15 three to 15, 8%.
Other fourth quarter estimates include the following depreciation expense of $10 5 million noncash amortization expense of $16 million stock based compensation expense of $7 million.
Interest expense of $10 million integration and other expenses of $7 million and adjusted tax rate of 27%.
Revenue guidance includes $14 million related to labor disruption activities.
And now I'll pass the call back to Susan for some concluding comments. Thank you. So much Chris we are so proud of how our entire team has responded in this environment, helping our health care professionals and clients during a very critical time.
The workforce shortage long term.
Due to the strains on the workforce retirements and vacancies health care wage inflation has moved much higher the staffing paradigm for all health care services appears to have taken on lasting changes.
We all want nursing bill rates to decline, which will happen when pay rates come down our best guess is that exiting 2022 nursing bill rates will be lower than today, though still 20% to 30% higher than pre pandemic pricing levels.
We have high confidence that the future environment will be favorable for demand across all of our businesses as.
As importantly, the EM team will continue pouring our talents and our hearts into making a positive impact for our health care professionals, our clients patients and our communities now Emma let's begin with the Q&A session. Thank you.
Thank you.
Can you check that you're on mute locally.
I am on muted can you hear me.
Hi type are you able to speak into the cole.
Hello, This is Toby and I'm speaking.
And then maybe if you could share the instructions again on beauty.
Yeah. So if you.
To meet yourself locally on your friends pressed the mute button to register a question Press Star followed by one.
Yeah.
The colors are telling us.
That they can hear each other but we can't hear them.
So you the people who are the other people are on the call can hear each other.
But we we in this room can't hear them.
Yeah.
So there might be a setting that needs to be changed so that we're all together and can hear that.
It would be my guess.
Yeah.
Analysts are telling me that they can hear tobi.
Okay.
Is there a way for them to type in their questions.
Or for somebody to share with us.
In another manner.
Yes.
Thank you for your patience everyone. We appreciate it we will figure this out.
This is a new one this is my <unk> earnings call and we have never had this happen before so that is the environment in which we live today analysts if you could email questions to me I would be happy to read them.
Okay.
And it also is one of our low margin specialties that we have with inside of our portfolio.
Because of the fast growing because of low margin. It represented a significantly a portion of locums that drove our margins down and then last but not least in quarter. Two we had a favorable impact of our provider liability insurance reserve and we did not have that in quarter three so over the three.
Causes that drove the margin down great. That's super helpful and I think we were able to get some questions emailed to US we'll take those now Randy.
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Cole.
The people on the call cannot hear us now.
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With Coty and Waitressed, having mandate the team saw this now.
Okay, Great I am being told it now.
Hope you can hear us so maybe we'll try another question from another.
Yes.
Okay.
This is from Tobey Sommer truest.
The demand environment, mostly the pay rate environment, and the result of resolve over and over and over and over and over.
Oh.
[noise] four sounds like they were working on that tech stuff.
So I understand that they can harris through the webcast, but perhaps not the phone.
So that's it folks could move over to the webcast I think that would be helpful.
And no onion here is on the webcast correct.
We got this.
So thinking about next year, obviously going into the first quarter will be stronger and we because we've seen very strong demand now and once they haven't seen it subside for the last couple of months, we expect to come into the first quarter relatively similar ish.
To the third and the fourth quarter and I'd say something in terms of the overall consolidated revenue between the third and the fourth quarter something in the middle is probably close to what you would expect.
North of $1 billion is very reasonable, we're not giving that as guidance, but if you just do the math and based on the demand today that certainly is a very possible target for us to hit as a starting point and then if we expect volumes to grow throughout the year.
Some seasonality in there across some of the businesses and we have the offsetting headwinds then that's the big question is how much will those headwinds offsets the volume growth and so whether we are down next year, because the bill rates come down faster and quite honestly that would be a good thing.
Has had some uplift from the higher bill rates I'd say the underlying shortage. However will continue we believe continue to drive strong demand and good volume within Vms, but we'll just have that offset of the bill rates coming down as you might recall the revenue.
In Vms comes from a percentage of the overall gross billings that we manage for our clients and just to put it in perspective.
And we will take questions as we get them.
And now let's return to those questions.
The first question comes from a J Rice from Credit Suisse. Please go ahead a J.
Alright. Thanks can you guys hear me.
Yes, Sir we can Yahoo.
I bet the quiet there for a moment maybe nervous.
I guess I'm wondering given the demand surge a greater percent of your fills our revenues being fulfilled.
Fulfilled by your MSP customers versus other clients. How are you managing that push pull of keeping clients across the spectrum happy.
And assuming there is a little prioritization of MSP accounts is that made those who aren't MSP accounts consider shifting in that direction.
For S. W. B growth what are you seeing in the market now.
Yeah, Andy it's Ken I'll keep going.
Really of course varies by market, but we are seeing not only base wage inflation and I don't have a consistent percentage for you a J, but in addition to that.
Premium pay strategies have also.
Been very dynamic and have gone up during this time period. So we are seeing increase in ship differentials bonuses paid for additional shifts additional overtime were seeing sign on bonuses for nursing, which we haven't traditionally seen nationally.
At any other time, so it's a very competitive marketplace and so we're seeing those rates play out in many different ways and perm core staffing as well as contingent staffing.
Okay, great. Thanks, a lot.
As a reminder, ladies and gentlemen to register a question. Please press star followed by one on your telephone keypad.
The following question comes from Brian <unk> from Jefferies. Please go ahead Brian.
Hey, good afternoon, guys. Thanks, so much for Ting.
Maybe my first question apologies, if we missed the stat, but.
Share with us how much hiring you've been able to do for our recruiters are revenue generating roles what productivity has looked like in those rules.
Sure Brian.
As I mentioned and I think most believe in the industry our growth prospects have certainly increased whereas previously we might have looked to some of our staffing businesses and said well maybe three to four to five 6% growth I think that has turned into more like double digit growth.
Unity once we get through any headwinds in bill rates coming down we see this shortage persistent it is it's not even just us and to our clients and it speaks to the conversations that we're having with them today about their desire to work with us on longer term staffing plans, whether it would be.
Bill will be to continue to add Perm staff through utilization of RP O International staffing and having a better visibility into what theyre planning needs are going to be down the road.
<unk>.
Say that because it's really important that it is not just wishful thinking on our part, but it is quite real and when we talk with our clients. They are very concerned about the protected nature of this shortage and the numbers alone would support that in terms of vacancies being at such a high level you look at the number of quits and <unk>.
Health care right now and we just hit another record month and quits across the country. The number of job openings to hires is two three openings to everyone higher and so there is really a difficult difficult time that is not going to and anywhere in the near future and so.
We think that certainly accelerates our growth opportunity and probably takes our volume growth up into the higher single digits, if not double digits and then of course, we have these other solutions that are either smaller or technology related things.
Things like Stratus.
Our language interpretation service, which grew this quarter at 33% and has been now we may not expect it to grow at 33% every quarter for the future, but if you can just continue to grow in the teens that will be nice significant growth in businesses like that of course have strong margins strong recurring revenue et cetera. So hopefully that's helpful.
One target I'll throw out there for you Brian is we've talked a lot about our EBITA margin target being 14% and clearly we've blown through that.
This quarter, we reported high Fifteens and next quarter kind of reporting 15, five to high <unk>, We think that our next sustainable target is around 15% now just like now we may have quarters, where we're above that maybe even in the <unk>. So we may have somewhere were below based on investments.
We're making but we do think in the.
The next few years, 15% EBITDA margin is a realistic sustainable target for us to aim for.
Thanks, Brian.
Okay.
Thank you.
Sure.
Oh, Yes, one last question does the nation Stratus.
Do you think the penetration there.
Cross selling was part of it.
Pieces right and it seems like we're starting to see a slight slowdown down the grocery to more of a normalization. So do you think that we get.
The close of the penetration rate.
In the.
Just a book of business.
Traditional business lines, where we need to start thinking about selling beyond your existing client base.
Hey, Brian It's Kelly.
You know our growth rates I will say our growth rates are still strong and stratus and have been I think we saw in prior quarters higher sequential growth rates just as they were recovering back to normal patient care volume.
The good news for US is a lot of our more recent growth has been from existing stratus customers. There's still a lot of fragmentation in this market.
Need for more integrated solutions and full scale solutions across the health enterprises, and we still have an opportunity to further penetrate into our existing clients or existing <unk> clients. So we've.
Due to the just how the market has been the ability to add on our change services. At this time much more of our growth has been through expansion and utilization of existing customers. So we see a lot of runway for us to continue to add language services to our portfolio of services with our strategic clients. So we do expect more growth.
And new business going forward and Brian you just think about the macro drivers of this business.
Look at 67 million residents in the U S. R. 22% of the population now speak a language other than English at home.
Equal to the entire population of France, and its growing and in nine states more than one in four residents now speak a language other than English at home.
And so these statistics will continue to drive the need for adoption I think actually the pandemic helped to put a spotlight on the fact that translation and interpretation is an essential part of quality patient care as well as driving a good patient.
So we see opportunities to continue to expand any bulk not just what we're doing today and language interpretation, but actually add on other services, we have ipads and thousands of facilities around the country. We can add on other capabilities and services. So it's a great question as you can tell we're very bullish and.
It's a very very important service to patients that might otherwise be in a vulnerable situations. So it really helps add to the healthcare equity and access of this country.
All right, let's move to the next question.
The next question comes from Tobey Sommer from truly Securities. Please go ahead.
Thank you al overtone throughout all of stuffing.
Companies have tried to automate.
During his term as well as the backend of Credentialing and Onboarding payroll.
Your efforts in that regard and how do they stack up against others, who are focused on it in the marketplace.
Thanks, Toby and as you know it's been a huge focus of ours for several years and I'm really proud to say I do think we're leading the industry in digital transformation and the use of mobile apps and I'm going to let Landry tell that story because I think it's best told in the nurse and Allied business, where we've had the greatest impact.
Yeah, Tobey is landry, so I know we've talked about.
Moreover, for our mobile App and there is of course, a lot of a lot of benefits from the investments that we've been making there we've been doing that for nearly two years now.
It's a good place where conditions. They can go in they can they can find themselves in match the job easier. They can ultimately kind of take themselves all the way through the process. So they can apply for a job they can get submitted to a job.
It supports them and their onboarding.
Submit their credentials and just recently we have.
Previous where they can enter time and they can see other pay information so.
We continue monthly to rollout new enhancements there one good stat on it just to kind of show the adoption of it as well as some of the efficiencies.
Within the organization is that since inception, there has actually been over 330000 credentialing documents that have been uploaded through the applications, though so.
A lot of that automation has really allowed our teams to.
You focus on more high touch areas and just overall, making that.
Experience better for the clinician and just if I can.
Sure.
Thank you very much I'll pass it to the next people so that we can get more people.
Thanks Tobey.
The next question comes from Tim Mulrooney from William Blair. Please go ahead.
Hey, this is a sampling in for Tim Thanks for taking our questions here, but we'll keep it one as well.
Michelle as well.
To start I guess.
Do you have an estimate for the percentage of your nursing staff and talent pool.
And it remains on vaccinated Sterling could you could you help quantify it for maybe what type of revenue headwind might represent to you over the next several quarters here.
Hey, Dan its Landry I can take that.
Nationally expected at about 96%.
<unk> are currently vaccinated and about 88% of nurses are vaccinated theres not any really.
Really great stuff that we can find for allied that matches, our same skill set but from what we can tell internally it looks to be about the same as what we see on the nursing side.
So far we have been requiring our health care professionals to fall the standards that health systems and states have put in place for their mandate.
As of today, there is 19 states.
Requires some sort of mandate and then of course, you've got a lot of large health systems out in the marketplace.
A mandate in place.
Right now from from our experience from everybody who has already put a mandate in place it's had an impact on 1% approximately 1% of our clinicians.
Just due to their vaccination status, so very low percentage.
Of course, we're getting ready to head towards the rest of our population.
We're anticipating.
There might be changes federally.
So we'll be working on the rest of our population here pretty soon but we really don't anticipate any major negative impact from that and there will be some puts and takes in there and just based on what we've seen already so far a very.
Very small percentage of our population thats been negatively impacted.
Perfect. That's helpful. Appreciate the color there.
Thanks.
The next question comes from Bill Sutherland from the Benchmark Company. Please go ahead bill.
Thank you very much.
Right.
Oh My God one question.
Im glad were.
All told communicated together here now.
When I'm doing conference calls Susan with.
Health care providers.
<unk> types.
One of the things that they're always kind of putting out there for investors is yes.
Our labor costs are up because we're not happy and one of the initiatives, we're going to take is to somehow get the contract labor number down from the.
4%.
We're going to get that back down to maybe not where it was in the past, but we're going to get a demand.
Is that just wishful thinking.
On their part.
I guess, that's my question.
Yeah, So I think there's absolutely a.
Higher for healthcare organizations and for Us and I think our industry to get the overall current cost of contract labor down primarily because of the very high pay rates that are driving the higher bill rates and I think we're all anxious for that to subside it is being driven by.
The shortage and so that is going to continue to be a challenge with such high demand levels, but we believe that we can do our part in that over time things will start to subside that alone will bring the cost of contract labor down, but when it comes to the <unk>.
Mix of permanent and flexible staff.
Actually hearing the opposite from the health care executives I speak Theyre talking about the staffing paradigm changing forever.
Things like we will never go back to the way we used to staff for two reasons one the extreme shortage that is expected to persist for many many many years to come second the preference.
The younger workforce and this desire to have more flexibility not to commit long term and to participate in what's referred to as the gig economy and that is absolutely. We think driving some of that behavior, along with just the frustration of the pandemic and and people being <unk>.
Burned out so yeah that will likely increase the mix of flexible staff over time, if we truly see this staffing paradigm shift that we expect.
So they'll stop complaining when the rates get back to you now.
Wherever they settle or is what youre, saying, yes, I think that will help a lot.
Yeah, I totally agree that will help a lot for everybody and be more sustainable.
Right. Okay. Thanks, Tim I appreciate it.
Question. Thanks Bill.
The next question comes from Kevin Fischbeck from Bank of America. Please go ahead.
Hi, guys. Thanks for taking the question. This is Courtney on for Kevin Douglas just a few follow ups on what we've talked about today.
The color you guys gave on Stratus has been especially helpful and it definitely seems like you know you're pivoting towards growing up the tech business I'm talking to workforce solutions. So I was just wondering with the focus right now in that segment kind of be looking at new assets or more so really just an integration.
And ramping up and really just trying to get higher penetration in the cross selling opportunity.
So the latter is definitely the first priority investing and our current tech and tech enabled solution. So things like language interpretation, Cimzia, which we recently acquired our telehealth platform and education silver sheet, which is our credentialing platform.
And and advances, which is our workforce optimization predictive analytics. So we have a lot of opportunity there to continue to invest expand the capabilities. So that we can penetrate.
In different ways with the clients that we have as well as perhaps address new markets and <unk> is a great example, they are doing a wonderful job in acute care, but theres a whole another opportunity in the non acute post acute.
Industry and so we could continue to expand upon those opportunities just within the technologies that we currently have in place, but we are also looking at new capabilities in the tech and tech enabled space. They are relatively high valuations so as.
You expect we're being very disciplined about what we pursue but when the right opportunity comes along I think you've seen we are willing to pay and even pay a premium for those things that really makes sense. So hopefully that's helpful. Courtney.
Yeah, No that's super helpful. And then I guess, one last quick one.
You guys had been recording some labor disruption revenues and strike related revenues for the past few quarters. So just curious you know are these coming from one single client or are these coming from multiple different orders.
And then just you know how has that trended over the past few quarters.
Yeah, Hey coordinates Landry.
No.
First of all on the revenue Q3 of this year, we had 23 million and included in our guidance for Q4, we've included $14 million.
So we have a very robust pipeline as you can imagine a potential labor disruption event. There's a lot of negotiations that are taking place out in the market.
I'm barely we focus that more to support our MSP customers. So a lot of our prioritization that we've taken internally has to do with making sure that they're taking care of it doesn't mean that we don't have.
Contracts to support other potential disruptions that are out in the marketplace with some other clients that we do business with.
But that just kind of gives you an idea of that profile. There are some labor events that are actually active today that we're not supporting.
Better out in the marketplace that have been going on for quite some time.
But we are helping our clients today to help prepare for some potential labor events that could happen.
Okay got it thanks guys.
Thank you Courtney.
The final question, we have in the queue comes from Mark Marcon from Baird Capital. Please go ahead.
Hi, good afternoon, I'm glad we all got connected.
Sure.
So just to follow up with regards to disruption.
Susan.
Your early comments you talked about.
Level of activism.
So sort of a broad question on your specific question. The broad question is this.
How do you think that.
The level of labor activism is going to end up impacting.
So over the next few years.
From a broad perspective, and then I just wanted to make sure I understood.
You know what what you were saying with regards to.
Okay.
I was assuming that you were going to be helping one of your where your largest client.
And the elements that are currently in the news.
Is that an incorrect assumption.
So I'll take them in reverse order, that's not an incorrect assumption we have as you know some wonderful large strategic clients that we have assisted with strike activity in the past and we're always first focused on them and so we have been planning and working with.
This particular client for several months now and we're very well prepared should we be needed to step in its still an uncertain situation and so.
Got it.
No no we have whenever we're planning and <unk>.
In preparing there are fees that are collected to cover expenses that we're incurring and to recruit the clinicians to be at the ready and do a certain amount of credentialing and perhaps pre orientation. So that's the $14 million in fees that.
Landry referred to not all from one client, but a decent portion of them are and then is a strike event would occur then that would be on top of our guidance, we're not including any expectation of that right now.
And then getting back to your other question on the longer term effect.
Really believe based on what we've even seen not just not just guessing that these labor disruption events will be more intense.
<unk> be larger they'll be longer and just in order of magnitude have a greater impact certainly in the profession itself for our clients. We heard of one health care organization that said they were going to actually just close the hospital because they didn't want to have to try to deal with labor disruption during.
This environment now that's not practical in every community and it is not practical honest at sustainable level, but that's the kind of challenges that they're dealing with knowing how hard it is going to be to recruit staff in an already critical time of deep shortages, so well what will be the result of some of that besides just highly disk.
<unk>, yes for us an opportunity to assist and add value.
Assembly for ICL create some lumpiness in our results going forward, although quite honestly at our size now $14 million just doesn't really move the needle as much but if there are large events it might be a little bit more impactful or a little bit more noise in our in our earnings for the industry for the nurse.
<unk> per fashion I think it will likely put more pressure on wage increases that question was asked earlier and steady came out in August indicating that frontline health care workers saw an average wage increase of 8% and talking with our clients, we've heard 10, and 12% baseline wage increases in there.
Same or their nurses are saying that still is not nearly enough.
So it's hard to say, where it will settle in but clearly wages and benefits for nurses will increase and quite honestly, they should and it's a it's hard to say what that will ultimately settle out but I think it will be nothing like we saw before with the 2% to 3% increases I also believe that.
Health care organizations going back to my prior comment.
We'll have a different staffing paradigm mix.
And we will be utilizing more flexible staff rather than core SaaS, a because that will be what the workforce prefers but it will also for them probably pay more economical in some ways to have that flexibility of of.
Of having travelers and staff when they need them. So hopefully that's helpful. Mark.
That is do you think that.
I've seen different periods, where theres been activism.
With regards to health care workers.
Think that this is the most intense period that you've ever seen.
Yes.
Definitely.
Great and then how are you thinking about the glide path in terms of the bill rates, you kind of give us your expectation for where it should end up being by the end of the year do you think that's a relatively smooth path or.
And then can you also talk a little bit about call. It because it seems like there's probably room for further expansion on the bill rates there just given the overall level of demand.
Yeah, I'll talk about the glide path and then maybe Landry you could.
I'm in an allied so we we think that the.
The first quarter, we will continue to be relatively more elevated and that we would see the more significant decreases come in the second and third quarter.
And then fourth quarter, we'd probably just glide through but we're just sort of look at the sequential changes second and third quarter would be our best guess right now so Landry you want talk about allied.
Yes overall the demand in Allied is up significantly right now.
It's across a lot of their different very different specialties.
No therapy, I know, we talked about a lot in the past.
What we have seen even a year ago.
And thank you mitigate respiratory you would expect that that might have already come down respiratory is up five times from what it was a year ago. So.
They already have some elevated rates or higher rates due to the strong demand. That's there yes, you could expect with where the demand is today that we would expect some bill rate increases.
Due to the different puts and takes in that business, we'd actually expect it maybe to be a little bit more flat as we go into next year and throughout the year.
If you went back a year ago therapy.
Maybe two years ago therapy made up a very large percentage of that overall business and now that kind of flip and imaging respiratory and where it makes up a larger percentage of the business and so and which typically carries a higher bill rate. So.
We think that there's a big upside in therapy. So it would be more of a mixed story that Mike might keep that bill rates flat as we go into next year.
I appreciate the.
The specificity Landry that's very helpful. Thank you.
Thank you.
Yeah.
Fair enough I had a question so I'll hand back to the team for closing remarks.
Great. Thank you so much and I, thank everybody for your patience today.
Really looking forward to as you can tell our ability to continue to make an important impact at this time and now at the time when we need to be laser focused on delivery, we need to be and are investing in our clients our businesses our people our communities.
It's a time when we are incredibly proud of the essential positive impacts, we're making we're very grateful for our amazing colleagues and partners and we're humbled humbled by the extraordinary efforts of health care professionals and organizations. During this difficult time. So we appreciate you all and look forward to chatting again, when we give our.
Our fourth quarter results in February Thank you all.
Okay.
Ladies and gentlemen, this concludes today's call. Thank you all for joining you may now disconnect your lines.
Okay.