Q1 2024 Cross Country Healthcare Inc Earnings Call
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Operator: Good afternoon everyone. Welcome to Cross Country Healthcare's earnings conference call for the first quarter of 2024. Please be advised that this call is being recorded, and a replay of this webcast will be available on the company's website. Details for accessing the audio replay can be found in the company's earnings release issued this afternoon. At the conclusion of my prepared remarks, I will open the lines for questions. I would now like to turn the call over to Josh Vogel, Cross Country Healthcare's Vice President of Investor Relations. Thank you, and please go ahead, sir.
Speaker Change: Good afternoon, everyone welcome to cross country Healthcare's earnings conference call for the first quarter 'twenty 'twenty four please be advised that this call is being recorded and a replay of this webcast will be available on the company's website details for accessing the audio replay can be five.
Speaker Change: And in the company's earnings release issued this afternoon.
Speaker Change: At the conclusion of our prepared remarks, I will open the lines for questions I would now like to turn the call over to Josh Vogel Cross country Healthcare's, Vice President of Investor Relations.
Joshua David Vogel: Thank you and please go ahead Sir.
Joshua David Vogel: Thank you. Good afternoon, everyone.
Joshua David Vogel: Thank you and good afternoon, everyone I'm joined today by our President and Chief Executive Officer, John Martin as well as Bill Burns, our Chief Financial Officer, and Mark Hood President of delivery.
Joshua David Vogel: I'm joined today by our President and Chief Executive Officer, John Martins, as well as Bill Burns, our Chief Financial Officer, and Marc Krug, Group President of Delivery. Today's call will include a discussion of our financial results for the first quarter of 2024, as well as our outlook for the second quarter. A copy of our earnings press release is available on our website at crosscountry.com. Please note that certain statements made on this call may constitute forward-looking statements.
Speaker Change: Today's call will include a discussion of our financial results for the first quarter of 2024 as well as our outlook for the second quarter a copy of our earnings press release is available on our website at cross country Dotcom.
Joshua David Vogel: Please note that certain statements made on this call may constitute forward looking statements. These statements reflect the company's beliefs based upon information currently available to it as noted in our press release forward looking statements can vary materially from actual results and are subject to known and unknown risks uncertainties and other factors, including those contained in the company's 2023 annual re.
Joshua David Vogel: These statements reflect the company's beliefs based upon information currently available to it. As noted in our press release, forward-looking statements can vary materially from actual results and are subject to known and unknown risks, uncertainties, and other factors, including those contained in the company's 2023 annual report on Form 10-K and quarterly reports on Form 10-Q, as well as in other filings with the SEC. The company does not intend to update guidance or any of its forward-looking statements prior to its next earnings release.
Joshua David Vogel: Port on Form 10-K quarterly reports on Form 10-Q, as well as in other filings with the SEC. The company does not intend to update guidance or any of its forward looking statements. Prior to the next earnings release. Additionally, we reference non-GAAP financial measures such as adjusted EBITDA or adjusted earnings per share such non-GAAP financial measures are provided as additional information.
Joshua David Vogel: Additionally, we reference non-GAAP financial measures such as adjusted EBITDA or adjusted earnings per share. Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for or superior to those calculated in accordance with U.S. GAAP. More information related to these non-GAAP financial measures is contained in our press release. Also, during this call, we may refer to pro forma when normalized numbers pertain to our most recent acquisitions, as though the results were included or excluded from the periods presented. With that, I will now turn the call over to our Chief Executive Officer, John Martins.
Joshua David Vogel: And should not be considered substitutes for or superior to those calculated in accordance with U S. GAAP more information related to these non-GAAP financial measures is contained in our press release also during this call. We may refer to pro forma normalized numbers pertaining to our most recent acquisition and so the results were included or excluded from the periods presented with that.
Joshua David Vogel: I will now turn the call over to our Chief Executive Officer, John Martin.
John A. Martins: Thanks, Josh, and thank you, everyone, for joining us this afternoon. As you can see in today's press release, our first quarter 2024 revenue and adjusted EBITDA were in line with expectations. I am pleased that our team continues to perform well in this difficult environment as demand for travel assignments softens further since the end of last year. And while the market for nurses and allied health professionals remains challenging, our focus is on growth opportunities across all of our portfolio, including our locums, education, home care staffing, search, and recruitment process outsourcing business.
John A. Martins: Thanks, Josh and thank you everyone for joining us this afternoon.
John A. Martins: As you can see in today's press release, our first quarter 2020 for revenue and adjusted EBITDA were in line with patients.
John A. Martins: I'm pleased that our team continued to perform well in this difficult environment as demand for travel assignment softens further because the end of last year.
John A. Martins: While the market for nurse and Allied remains challenging our focus is on growth opportunities across all of our portfolio, including our Locums education homecare staffing.
John A. Martins: <unk> and recruitment process outsourcing businesses with.
John A. Martins: With our pipeline for new business and continued investments in technology, as well as our strong balance sheet, I believe that Cross Country is well-positioned for future growth. Looking more closely at our travel business, while demand is down across the market in the high double digits since we exited 2023, our weekly production is only down in the mid to high single digits. Open order rates for travel have been fairly stable for several quarters, although average bill rates continue to decline as we move down towards the current market rate.
John A. Martins: With our pipeline for new business and continued investments in technology as well as our strong balance sheet I believe that cross country is well positioned for future growth.
John A. Martins: Looking more closely at our travel business well demand is down across the market and the high double digits since we exited 2023.
John A. Martins: Weekly production is always down in the mid to high single digits.
John A. Martins: Indicating our ability to execute.
John A. Martins: Open order rates for travel have been fairly stable for several quarters, Although average bill rates continue to decline as we blend down towards the current market rates.
John A. Martins: Accordingly, travel rates in the first quarter were down roughly 2% sequentially and are expected to decline in the lowest single digits for the next couple of quarters as the market finds its floor. Similar travel, our local or per diem business, has faced market headwinds. In the first quarter, we saw a double-digit sequential decline in volume and a mid- to high-single-digit decline in rates.
John A. Martins: Accordingly travel reached in the first quarter were down roughly 2% sequentially.
John A. Martins: That's it's declined in the low single digits for the next couple of quarters as the market finds its floor.
John A. Martins: Similar travel are local or per diem business.
John A. Martins: Market headwinds in the first quarter, we saw a double digit sequential decline in volume.
John A. Martins: Mid to high single digit decline in weeks.
John A. Martins: We are focused on expanding our local services deeper into non-acute care settings, including within our own office. The local business remains a key part of our value proposition, and we will continue to offer these services in the markets where it makes sense based on client needs and opportunities. Shifting gears, we continue to see strong performance in several of our other lines of business. Physician staffing, for example, reported first quarter revenue up double digits year over year. Driving this was a combination of higher billable days and revenue per day filled, tied to a growing mix of higher bill rate specials.
John A. Martins: We are focused on expanding our local services deeper into non acute care settings.
John A. Martins: Putting within our own walkways.
John A. Martins: The local business remains a key part of our value proposition.
John A. Martins: We'll continue to offer these services in the markets, where it makes sense based on client needs and opportunities.
John A. Martins: Shifting gears, we continue to see strong performance in several of our other lines of business.
John A. Martins: Physician staffing for example reported first quarter revenue up double digits year over year.
John A. Martins: Driving this was a combination of higher billable days and revenue per day filled.
John A. Martins: Tied to a growing mix of higher bill rate specialties.
John A. Martins: Contribution income increased both year-over-year and sequentially, and as a percent of revenue, it was up more than 250 basis points, reflecting the improved mix and our efforts to proactively manage costs. Our home care business was up mid-single digits, both sequentially and year-over-year in the first quarter, on the heels of the recent wins and program implementations that we highlighted on the February call. I'm pleased to note that this division now staffs over 1,700 FTEs with high single digit growth year over year.
John A. Martins: Contribution income increased both year over year and sequentially.
John A. Martins: And as a percent of revenue was up more than 250 basis points, reflecting the improved mix and our efforts to proactively manage costs.
John A. Martins: Our home care business was up mid single digits, both sequentially and year over year in the first quarter on the heels of the recent wins and program implementations that we highlighted on the February call.
John A. Martins: I'm pleased to note that this division now staffs over 1700 Ftes.
John A. Martins: High single digits year over year.
John A. Martins: We believe that this business is poised for robust growth in 2024. Lastly, our education business continued to perform well, up low double digits sequentially. This business continued to expand nationwide, as we are now in more than 20 states. I'd like to take a moment to talk about what we are seeing in the market. And more importantly, what we're doing to remain competitive while also being mindful of preserving shareholder value and profitability. It is clear that health systems have reduced their reliance on continuous, Yet there remain structural staffing shortages and high turnover within these settings.
John A. Martins: We believe that this business is poised for robust growth in 2024.
John A. Martins: Lastly, our education business continued to perform well.
John A. Martins: Low double digits sequentially.
John A. Martins: This business continued to expand nationwide.
John A. Martins: We are now in more than 20 states.
Speaker Change: I'd like to take a moment to talk about what we're seeing in the market.
John A. Martins: And more importantly, what we are doing to remain competitive while also being mindful of preserving shareholder value and profitability.
John A. Martins: It is clear.
John A. Martins: Health systems have reduced the reliance on continuously.
John A. Martins: Yes, it remains structural staffing shortages and high turnover within these settings.
John A. Martins: Accordingly, we believe that a stronger travel environment could emerge sometime in the back half of this year. Having said that, given the current market headwinds, we have taken actions to better align our core structure to the demand environment. As of today, our U.S. headcount is now down more than 20% since the beginning of the year.
John A. Martins: Accordingly, we believe that a stronger travel environment could emerge sometime in the back half of this year.
John A. Martins: Having said that given the current market headwinds, we have taken actions to better align our cost structure because the demand environment.
John A. Martins: As of today, our U S head count is now down more than 20% since the beginning of the year.
John A. Martins: While these decisions are never easy, I am confident that we have sufficient capacity to capitalize when the market bounces. It's also important to note that part of the catalyst behind these reductions is the fact that we've been able to further leverage our operations in India, which will yield millions of dollars in annualized cost savings. Additionally, we expect to drive further efficiencies company-wide by leveraging our technology, such as artificial intelligence and robotic process automation.
John A. Martins: While these decisions are never easy.
John A. Martins: I'm confident that we have sufficient capacity to capitalize when the market rebounds.
John A. Martins: It's also important to note.
John A. Martins: The court or the catalyst behind these reductions is the fact that we've been able to further leverage our operations.
John A. Martins: Which will yield millions of dollars in annualized cost savings.
John A. Martins: Additionally, we expect to drive further efficiencies companywide by leveraging our technology, such as artificial intelligence and.
John A. Martins: Robotic process automation.
John A. Martins: Lastly, we will see additional savings as the remainder of our legacy clients are migrated onto Intellify, our vendor-neutral technology platform. Looking forward, we will continue to make targeted investments in technology and businesses that serve to enhance our competitive positioning and operational excellence. As we discussed on our last earnings call, the line between MSP and VMS continues to blur as clients seemingly want to have the best of both worlds.
John A. Martins: Lastly, we will see additional savings as the remainder of our legacy clients are migrated onto telephone are vendor neutral technology platform.
John A. Martins: Looking forward, we will continue to make targeted investments in technology and businesses that serve to enhance our competitive positioning and operational excellence.
John A. Martins: As we discussed on our last earnings call, but why between MSP and Vms continues to blur as clients and we want to have the best of both worlds.
John A. Martins: This is where Intellify has become a critical component of our value proposition, since it can be deployed as both a BMS and MST. Overall, we continue to see strong interest in the market today for this technology, and we are confident that Intelify's value proposition will drive additional business opportunities across the country. In fact, we're excited to share that yet another IntelliFi client was signed last month. Now, turning to our outlook for the second quarter, given the current demand backdrop in travel, we anticipate that second quarter revenue will be between $330 and $340 million, with adjusted EBITDA coming in at $10 to $15 million.
John A. Martins: This is where in telephony has become a critical component of our value proposition.
John A. Martins: Since it can be deployed both.
John A. Martins: <unk> utilizes both Vms and MSP.
John A. Martins: Overall, we continue to see strong interest in the market today for this technology and we are confident that in televised value proposition will drive additional business opportunities to cross country. In fact, we are excited to share, but yet another Intel by client was signed last month.
John A. Martins: Now turning to our outlook for the second quarter.
John A. Martins: Given the current demand backdrop and travel we.
John A. Martins: We anticipate that second quarter revenue will be between 330 and $340 million.
John A. Martins: With adjusted EBITDA coming in at $10 million to $15 million.
John A. Martins: Our goal remains to achieve a high single-digit adjusted EBITDA margin. And as we navigate the headwinds from the pullback in nurse and allied demand, we expect to see mid-single-digit adjusted EBITDA margins near term, while maintaining capacity when the market rebounds. We remain confident in our ability to capture market share by leveraging both our leading client and candidate facing technologies, as well as our expertise in delivering high quality clinical and non
John A. Martins: Goal remains to achieve a high single digit adjusted EBIT margin.
John A. Martins: And as we navigate the headwinds from the pullback in nurse and Allied to Matt.
John A. Martins: We expect to see mid single digit adjusted EBITDA margins near term, while maintaining capacity when the market rebounds.
John A. Martins: We remain confident in our ability to capture market share by leveraging both our leading clients in China AC technology as well as our expertise in delivering high quality clinical and non clinical professionals.
John A. Martins: Coupled with our diversified platform that includes locums, Home Care, and Education, we expect to emerge a stronger, more agile, and profitable organization once the current travel market pressures have passed. We're also focused on putting our healthy balance sheet to work through ongoing strategic technology investment, Sherry Purchases, and Potential M&A. On the M&A front in particular, our goal has not changed.
John A. Martins: Coupled with our diversified platform that includes locums.
John A. Martins: Home care and education, we expect to emerge a stronger.
John A. Martins: More agile and profitable organization once the current travel market pressures dissipate.
John A. Martins: We're also focused on putting our healthy balance sheet to work through ongoing strategic technology investments share repurchases and potential M&A.
John A. Martins: On the M&A front in particular.
John A. Martins: Our goal has not changed we look to close on several accretive acquisitions that we believe will further diversify our platform enhance our value proposition and improve our margin profile.
John A. Martins: We look to close on several accretive acquisitions that we believe will further diversify our platform, enhance our value proposition, and improve our margin profile. In closing, I am encouraged by our prospects for growth and improved profitability as we execute our strategy as a tech-enabled workforce solutions provider. We are seeing strong momentum in many of our business lines outside of travel, and we continue to execute on our initiatives across the organization. I am impressed by the dedication and hard work of all of our employees.
John A. Martins: In closing I'm encouraged by our prospects for growth and improved profitability.
John A. Martins: As we execute our strategy as a tech enabled workforce solutions provider.
John A. Martins: We are seeing strong momentum in many of our business lives outside of travel.
John A. Martins: And we continued to execute on our initiatives across the organization.
John A. Martins: I am impressed by the dedication and hard work.
John A. Martins: All of our employees and I'm very proud to announce that we were recently named as one of the newsweek's latest workplaces for diversity in 2024.
John A. Martins: And I am very proud to announce that we were recently named one of Newsweek's greatest workplaces for diversity in 2024. A recognition like this is a testament to our workplace culture and the reason why we have such a deep pool of talent that has made Cross Country their employer destination of choice. I want to thank all of our employees and our healthcare professionals for your continued hard work and contributions, as well as our shareholders for believing in the company. With that, I will turn the call over to Bill. Thanks, John. And good afternoon, everyone. As highlighted in our press release, performance for the first quarter was largely in line with expectations.
John A. Martins: A recognition like this is a testament to our workplace culture and the reason why we have such a deep pool of talent that has made cross country. They are employer destination of choice.
John A. Martins: I want to thank all of our employees and our health care professionals for your continued hard work and contributions as well as our shareholders for believing in the company.
John A. Martins: With that let me turn the call over to Bill.
William J. Burns: Thanks, John, and good afternoon everyone. As highlighted in our press release, performance for the first quarter was largely in line with expectations, with revenue near the high end of guidance and adjusted even up towards the mid point of our range. Consolidated revenue for the first quarter of $379 million was down 8% sequentially and 39% over the prior year, driven primarily by declines in travel and local assignments in large acute care settings.
William J. Burns: Thanks, John and good afternoon, everyone as highlighted in our press release performance for the first quarter was largely in line with expectations with revenue near the high end of guidance and adjusted EBITDA towards the midpoint of our range.
William J. Burns: All data revenue for the first quarter of $379 million was down 8% sequentially and 39% over the prior year, driven primarily by declines in travel and local assignments in large acute care settings I'll get into more details on the segments in just a few minutes.
William J. Burns: I'll get into more details on the segments in just a few minutes. Gross profit for the quarter was $77 million, which represented a gross margin of 20.4%. Gross margin was down 150 basis points sequentially and 200 basis points over the prior year. The sequential decline was primarily due to the annual reset in payroll taxes, as well as a rise in certain burdens such as health insurance and workers' comp, and an adjustment for professional liability insurance costs. That is not expected to recur.
John A. Martins: Gross profit for the quarter was $77 million, which represented a gross margin of 24% gross.
John A. Martins: Gross margin was down 150 basis points sequentially, and 200 basis points over the prior year.
John A. Martins: The sequential decline was primarily due to the annual resetting of payroll taxes as well as horizon certain burdens, such as health insurance and workers' comp and an adjustment for professional liability insurance cost that is not expected to recur relative.
William J. Burns: Relative to the prior year, the declining gross margin was principally due to the tightening of the bill pay spreads for travel and local assignments, as well as the burdens that impacted the sequential change. Moving down the income statement, selling general and administrative expense was $63 million, down 6% sequentially and 25% over the prior year. The majority of the decrease relates to lower salary and benefit costs associated with our reductions in headcount, as well as lower incentive compensation over the last two years.
John A. Martins: Relative to the prior year the decline in gross margin was principally due to the tightening of the bill pay spreads for travel and local assignments as well as the burdens that impacted the sequential change.
John A. Martins: Moving down the income statement, selling general and administrative expense was $63 million down 6% sequentially and 25% over the prior year.
John A. Martins: The majority of the decrease relates to lower salary and benefit costs associated with a reduction in head count as well as lower incentive compensation over the last two years.
William J. Burns: We have proactively managed our costs to align with the broader market while seeking to preserve adequate capacity for future growth and to maintain the cadence of investments in longer-term projects. In the first quarter, U.S. headcount was down 9% from the start of the year, and we've taken actions in the second quarter to reduce headcount by an additional 15%. Over the last 18 months, we've reduced our total headcount in the U.S. by 40%.
John A. Martins: We are proactively manage our cost to align with the broader market, while seeking to preserve adequate capacity for future growth and to maintain the cadence of investments in longer term projects.
John A. Martins: In the first quarter U S head count was down 9% from the start of the year and we've taken actions in the second quarter to reduce head count by an additional 15%.
John A. Martins: Over the last 18 months, we've reduced total headcount in the U S by 40%.
William J. Burns: While these reductions reflect the headwinds experienced across both our travel and local businesses, it's important to note that a good portion were the result of enhanced productivity and offshoring to our Center of Excellence in India. As of the end of the first quarter, we grew headcount in India by 45% since the start of the year, and we'll continue identifying future opportunities to capture incremental savings. While we are keenly focused on managing our total cost structure to the most efficient level possible, we will continue to make investments in those businesses where we see opportunity for growth, like education and home care staff.
John A. Martins: While those while these reductions reflect the headwinds experienced across both our travel and local businesses. It's important to note that a good portion with the result of enhanced productivity and offshoring to our center of excellence in India.
John A. Martins: As of the end of the first quarter, we grew head count in here by 45% since the start of the year and will continue identifying future opportunities to capture incremental savings.
John A. Martins: While we are keenly focused on managing our total cost structure to the most efficient level possible. We will continue to make investments in those businesses, where we see opportunity for growth like education and home care staff.
William J. Burns: Our SG&A for the first quarter included more than a million dollars of costs pertaining to the implementation of our ERP system. The costs were higher than prior quarters as we have been working simultaneously on two phases of the project. I'm proud to share that as of today, we've successfully completed the first phase of the project, which is the foundation that will allow us to realize significant efficiencies once the second phase is completed in mid-2025.
John A. Martins: Our SG&A for the first quarter includes more than $1 million of cost pertaining to the implementation of our ERP system. The <unk>.
John A. Martins: Costs were higher than prior quarters as we have been working simultaneously on two phases of the project I'm proud to share that as of today. We have successfully completed the first phase of the project, which is the foundation that will allow us to realize significant efficiencies. Once the second phase is completed in mid 2025.
William J. Burns: Excluding these implementation costs for our ERP system, SG&A was down more than 7% sequentially and 26% from the prior year. We reported adjusted EBITDA of $15 million for the quarter, representing an adjusted EBITDA margin of 4%. Though revenue was at the high end of our expectations, our adjusted EBITDA was impacted by a lower-than-expected gross margin, which was partly offset by lower SG&A through tighter cost management. Interest expense in the first quarter was $500,000, which was down 21% sequentially and 87% from the prior year. The decline was entirely driven by lower average borrowings throughout the quarter.
John A. Martins: Excluding these implementation costs for our ERP system, SG&A was down more than 7% sequentially and 26% from the prior year.
John A. Martins: We reported adjusted EBITDA of $15 million for the quarter, representing an adjusted EBITDA margin of 4%.
John A. Martins: Though revenue was at the high end of our expectations. Our adjusted EBITDA was a pack was impacted by a lower than expected gross margin, which was partly offset by lower SG&A through tighter cost management.
William J. Burns: The majority of the interest expense reported for the first quarter was related to the carrying cost of the ABL and fees related to outstanding letters of credit. The effective interest rate on amounts drawn under our ABL was 7% as of March 31st. As a result of our strong cash flows, we ended the quarter once again with no debt outstanding. And finally, on the income statement, income tax expense was $1 million, representing an effective tax rate of 27%, which was slightly lower than our expectations due to the impact of discrete items recognized in the quarter.
John A. Martins: Interest expense in the first quarter was $500000, which was down 21% sequentially and 87% from the prior year the.
John A. Martins: The decline was entirely driven by lower average borrowings throughout the quarter.
John A. Martins: The majority of the interest expense reported for the first quarter was related to the carrying costs for the ABL and fees related to outstanding letters of credit.
John A. Martins: Interest rates on amounts drawn under our ABL was 7% as of March 31st.
John A. Martins: As a result of our strong cash flows we ended the quarter once again with no debt outstanding.
John A. Martins: And finally on the income statement income tax expense was $1 million, representing an effective tax rate of 27%, which was slightly lower than our expectations due to the impact from discrete items recognized in the quarter.
William J. Burns: Our overall performance resulted in an adjusted earnings per share of 19 cents, near the midpoint of guidance. Turning to the segments, Nurse and Allied reported revenue of $332 million, down 10% sequentially and 43% from the prior year. Our largest business travel, Nurse and Allied, was down 11% sequentially and 48% from the prior year; billable hours were down 9% sequentially on the softer demand, while bill rates were down 2%. Given the continued softness in travel demand, we expect to see a further sequential decline for revenue for the second quarter in the mid-teens.
John A. Martins: Our overall performance resulted in an adjusted earnings per share of <unk> 19, near the midpoint of guidance.
John A. Martins: Turning to the segments nurse and Allied reported revenue of $332 million down, 10% sequentially and 43% from the prior year.
John A. Martins: Our largest business travel nurse and allied was down 11% sequentially and 48% from the prior year.
John A. Martins: Billable hours were down 9% sequentially on the softer demand our bill rates were down 2%.
John A. Martins: Given the continued softness in travel demand, we expect to see a further sequential decline for revenue for the second quarter in the mid teens.
William J. Burns: Similar to travel, our local business has also been impacted by the softness in demand for continued clinical labor. First quarter revenue was down 36% from the prior year and 19% sequentially. The majority of the decline came from fewer billable hours and, to a lesser extent, lower bill rates.
John A. Martins: Similar to travel our local business has also been impacted by the softness in demand for contingent clinical labor.
John A. Martins: First quarter revenue was down 36% from the prior year and 19% sequentially.
John A. Martins: Majority of the decline came from fewer billable hours and to a lesser extent lower bill rates.
William J. Burns: Though core nurse and allied staffing is facing headwinds, several other businesses continue to experience organic growth. Homecare staffing was up 4% sequentially, while education was up 11%. And given the growth prospects of both of these businesses, they remain focus areas for further investment. Specific to the home care staffing business, we continue to win new PACE clients across the nation and have seven programs currently being implemented and another two contracts likely to sign in the coming quarter that should be catalysts for continued growth.
John A. Martins: So core nurse and Allied staffing is facing headwinds several other businesses continue to experience organic growth homecare staffing was up 4% sequentially, while education was up 11% and.
John A. Martins: And given the growth prospects of both of these businesses they remain focus areas for further investments.
John A. Martins: Specific to the homecare staffing business, we continue to win new pace clients across the nation and have seven programs currently being implemented and another two contracts likely to find in the coming quarter that should be catalysts for continued growth.
William J. Burns: Finally, physician staffing once again delivered a strong top line, reporting $47 million in revenue, which was up 16% over the prior year and flat sequentially. Year-over-year growth was evenly split between price and volume, with the number of days filled increasing across specialties such as anesthesiologists, primary care physicians, CRNAs, and nurse practitioners.
John A. Martins: Finally physician staffing once again delivered a strong topline for putting $47 million in revenue, which was up 16% over the prior year and flat sequentially.
John A. Martins: The year over year growth was evenly split between price and volume with a number of days filled increasing across specialties, such as anesthesiologists primary care physicians see Rnas and nurse practitioners.
William J. Burns: Turning to the balance sheet, we ended the first quarter with $5 million in cash and no outstanding debt. With the help of our balance sheet and strong cash flow, we remain well-positioned to make further investments in technology and accretive acquisitions, as well as to continue purchasing shares under our $100 million share repurchase program. From a cash flow perspective, we generated $6 million in cash from operations in the first quarter, which was impacted by the timing of payments for annual incentives, as well as payroll tax. Collections were largely in line with expectations, though our day sales outstanding increased to 74 days as a result of a single client which added 5 days to this metric.
John A. Martins: Turning to the balance sheet, we ended the first quarter with $5 million in cash and no outstanding debt.
John A. Martins: With the health of our balance sheet and strong cash flow, we remain well positioned to make further investments in technology and accretive acquisitions as well as to continue purchasing shares under our $100 million share repurchase plan.
John A. Martins: From a cash flow perspective, we generated $6 million in cash from operations in the first quarter, which was impacted by the timing of payments for annual incentives as well as payroll taxes.
John A. Martins: Collections were largely in line with expectations, though our days sales outstanding increased to 74 days as a result of a single client, which added five days to this metric.
William J. Burns: Specific to that client, we did see collections resume this quarter and expect that trend to continue. Our goal remains to operate with a DSO of 60 days, which is more in line with our historic performance, and we expect to make progress towards that in the coming quarters. Cash used in investing activities was $2 million, primarily reflecting continued technology investments, predominantly for IntelliFi and our new ERP system.
John A. Martins: Specific to that client, we did see collections resumed this quarter and expect that trend to continue.
John A. Martins: Our goal remains to operate with a DSO of 60 days, which is more in line with our historic performance and we expect to make progress towards that in the coming quarters.
John A. Martins: Cash used in investing activities was $2 million, primarily reflecting continued technology investments predominantly foreign televised and our new ERP system from.
William J. Burns: From a financing perspective, we repurchased an additional 300,000 shares during the quarter under both our 10B51 trading plan and our 10B18. This brings me to our outlook for the first quarter. We are guiding to revenue of between $330 and $340 million, representing a sequential decline of 10% to 13%, driven predominantly by the expected decline in both billable hours and rates for travel. We are guiding to an adjusted EBITDA range of between $10 and $15 million, representing an adjusted EBITDA margin of approximately 4% at the midpoint of guidance.
John A. Martins: From a financing perspective, we repurchased an additional 300000 shares during the quarter. Although both are <unk>, one trading plan and our <unk> team.
John A. Martins: This brings me to our outlook for the first quarter, we are guiding to revenue of between 330 and $340 million, representing a sequential decline of 10% to 13%.
John A. Martins: Driven predominantly by the expected decline in both billable hours and rates for travel.
John A. Martins: We're guiding to an adjusted EBITDA range of between 10% and $15 million, representing an adjusted EBITDA margin of approximately 4% at the midpoint of guidance.
John A. Martins: Adjusted earnings per share is expected to be between 10 and 20.
John A. Martins: Based on an average share count of approximately 34 million shares.
John A. Martins: Also assumed in this guidance is a gross margin of between 21% and 21, 5% interest expense of $500000 depreciation and amortization of $5 million stock based compensation of $2 million and an effective tax rate of between 30 and 32%.
William J. Burns: Adjusted earnings per share is expected to be between $0.10 and $0.20 based on an average share count of approximately 34 million shares. Also assumed in this guidance is a gross margin of between 21% and 21.5%, interest expense of $500,000, depreciation amortization of $5 million, stock-based compensation of $2 million, and an effective tax rate of between 30% and 32%. And that concludes our prepared remarks, and we'd now like to open the lines for questions. Operator?
Speaker Change: And that concludes our prepared remarks, I would now like to open the lines for questions operator.
Operator: Thank you. Before we open the lines for questions, I want to turn the call back over to John Martins for another word. Thank you.
Speaker Change: Thank you before we.
Speaker Change: Ladies and gentlemen, before we open the lines for questions I want to turn the call back over to John Martin's for another word.
John A. Martins: Thank you, operator. I want to remind you that today is the start of National Nurses Month. This month serves not only as a celebration of nurses' unwavering dedication and tireless efforts but also as a poignant reminder of the invaluable role they play in healthcare and our society. Nurses are the compassionate and steadfast pillars of patient care. Their contributions extend far beyond the confines of hospital walls, touching the lives of countless individuals and families around the world.
John A. Martins: Thank you operator, I want to recognize that today is the start of national nurses month. This month serves not only as a celebration of nurses unwavering dedication and tireless efforts, but also as a poignant reminder of the invaluable role they play in health care in our society.
Speaker Change: <unk> are the compassionate and steadfast pillars of patient care.
Speaker Change: Attributes as extends far beyond the confines of hospital walls touching the lives of countless individuals and families around the world.
John A. Martins: Nurses are truly the heroes and the lifeline of the healthcare system. I want to personally thank every nurse out there for their hard work and dedication. Now, I'd like to turn it back to the operator for Q&A.
Speaker Change: Nurses are truly the heroes in the lifeline of the health care system.
Speaker Change: To personally thank every nurse out there for your hard work and dedication and now I'd like to turn it back to the operator for Q&A.
Operator: If you would like to ask a question, please press star 1. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. To withdraw your request, please press star 2. And one moment, please for the first question. Our first question is from Trevor Romeo with William Blair, and your line is open.
Speaker Change: If you would like to ask a question. Please press star one please on mute your phone and record your name clearly when prompted your name is required to introduce your question to withdraw your request. Please press star two and one moment. Please for the first question.
Speaker Change: Our first is from Trevor Romeo with William Blair and your line is open.
Trevor Romeo: Hi, good afternoon. Thanks for taking the questions. The first one is, you know, if you.
Trevor Romeo: Hi, good afternoon, thanks for taking the questions.
Trevor Romeo: The first one is if you look at the Q2 guide I think historically you haven't seen as big of a drop is what you're guiding to in terms of revenue. It looks like maybe it's a little more than 10% below Q1.
Trevor Romeo: At the Q2 guide, I think historically, you haven't seen as big of a drop as what you're guiding to in terms of revenue. Looks like maybe it's a little more than 10% below Q1 consolidated. I think Bill had said maybe down mid-teens for travel. So I was just kind of wondering if you could talk about demand trends through the first four months of the year this year and maybe what's different versus years in the past, and I guess further, do you believe the entire...
Trevor Romeo: <unk> I think Bill had said maybe down mid teens for travel. So I was just kind of wondering if you could talk about demand trends through the first four months of the year this year and maybe what's different versus years in the past and I guess further.
Trevor Romeo: Do you believe the entire industry is experiencing a similar level of decline or you know.
Trevor Romeo: Are there additional competitive headwinds you're facing or anything more you can say on that front would be really helpful.
William J. Burns: Transcribed by https://otter.ai Sure. Thanks for the question, Trevor. This is Bill Burns.
Trevor Romeo: Sure. Thanks for the question Trevor This is bill Burns.
William J. Burns: You're spot-on. When you look at our second quarter, it is not following historic patterns, and it's entirely driven by travel. You know, as we progressed through the first quarter, demand remained soft and has not yet rebounded. We do think there's some opportunity there, and programs that we've won are still ramping, but that's putting a drag on the second quarter.
William J. Burns: Youre spot on when you look at our second quarter. It is not following historic patterns and it's entirely driven off of travel.
William J. Burns: As we progressed through the first quarter demand remained soft and still has not yet rebounded we do think theres some opportunity there and the programs that we've won are still ramping but that's putting a drag on the second quarter Bill rates for travel are projected to be kind of in the same range of a low single digit 1% to 2% sequential decline going into Q2 and possibly into.
William J. Burns: Bill rates for travel are projected to be kind of in the same range of a low single-digit 1 to 2% sequential decline going into Q2 and possibly into Q3. You know, we don't guide out that far, but rates are trending exactly where we expected them to be. This has really been a volume story across travel nursing.
William J. Burns: Q3, I know, we don't guide out that far but rates are trending exactly where we expected them to be this has really been a volume story across travel nurse.
John A. Martins: And, you know, John, I mean, if you want to comment on the market. Yeah, Trevor, I would just add, these are definitely market conditions. And when we look at the different information that's out there, we can see that demand has fallen off pretty sharply over this first quarter and into the second quarter. Now, I would say over the last six weeks, we've seen demand level off. Well, I think it's too early to say that this is a trend, but we are cautiously optimistic that we are seeing a flattening of demand. But it's still too early to call it that. Thank you. And then, I guess, on the...
William J. Burns: And John I mean, if you want to comment on that the market is Trevor I would just add this is definitely the market conditions.
John A. Martins: When you look at the different information that's out there we can see that demand has fallen pretty sharply over this first quarter and into the second quarter now I would say over the last six weeks, we've seen demand level well I think it's too early to say that this is a trend we are cautiously optimistic.
John A. Martins: Take that we are seeing a flattening of demand, but it's still too early to call. It.
Speaker Change: Okay that makes sense. Thank you and then I guess on the <unk>.
Trevor Romeo: The locum side of the house...
Speaker Change: The local side of the house.
Trevor Romeo: What are you seeing in terms of the supply side, you know, with the willingness among physicians and
Speaker Change: What are you seeing in terms of the supply side, a willingness amongst physicians and advanced practice providers to take those assignments I guess, where are we longer term in that adoption curve.
Trevor Romeo: and Advanced Practice Providers to take those assignments. I guess, you know, where are we longer term?
Speaker Change: The clinicians wanting to take more of a temporary flexible assignments and how much more room is there for that to increase going forward.
Trevor Romeo: Thank you.
John A. Martins: is there for that to increase going forward? Sure, well, in locums. There are, I think, 800,000 physicians in locums, I'm sorry, in the U.S. total number of physicians, and locums is certainly a small part of that. But just like we've seen in travel nursing and other staffing industries, we're seeing physicians are more looking to have more freedom of work, and they're able to really embrace the locum space. And so we think that there is still a long runway for more physicians to enter the locum space. As we see in hospital systems, this is the key component for hospital systems to drive revenue is having physicians. So, as long as that dynamic remains there, we feel very bullish on locum space.
Brian Gil Tanquilut: Our next question is from Brian Tanquilut with Jeffreys. Your line is open.
Speaker Change: Sure.
Speaker Change: There is I think 800000 physicians and locals im sorry.
William J. Burns: In the U S total physicians in Locums.
William J. Burns: Small part of that but just like we've seen in travel nursing and other staffing industries, we're seeing physicians.
William J. Burns: We're looking to have more freedom of work and they are able to really embrace the locums space and so we think that there is still a long runway for more physicians to enter the look with Steve.
William J. Burns: As we see that in hospital systems. This is the key component for hospital systems to drive revenue as having positioned so as long as that dynamic remains there we feel very bullish on the space.
Speaker Change: Okay. Thank you very much.
Speaker Change: Our next question is from Brian <unk> with Jefferies. Your line is open.
Brian Gil Tanquilut: Hey, good afternoon, guys. Maybe, John, I'll go back to the demand question. I mean, in your prepared remarks, you mentioned it sounded like you have an optimistic or more optimistic view of the back half of the year. But what is the feedback when you talk to hospital CEOs or chief nursing officers about how much more cutting is there? I mean, given the strength and demand for volumes at hospitals, like, you know, how does this all blend in? Right? And I am so curious what those conversations are about and where your optimism comes from.
Brian: Hey, good afternoon guys.
Brian: Maybe Jon I'll go back to the demand question I mean in your prepared remarks, you mentioned it sounds like you have an optimistic more optimistic for you in the back half of the year, but what are the what's the feedback when you talk to hospital Ceos are chief nursing officers and how much more cutting is there I mean, given the strength in demand for our <unk>.
Brian: <unk> at the hospitals like how does it all blended readily and so I'm curious what those conversations are and where your optimism is coming from.
John A. Martins: Yeah, interesting question because you are right. Hospitals are still looking to see where that demand level is off, but if we look at what publicly traded hospitals have said over the past several weeks, they seem to be comfortable with where the contingent labor is right now. And when we look not only at those hospitals being comfortable, but we see that the census is up, we see surgeries are increasing, the need and demand for nurses should really continue.
Jon: Yeah interesting question because you are right.
Jon: There are hospitals hospitals are still looking to see where that demand levels. If we look at what the publicly traded hospitals I said over the past several weeks there seem to be.
Jon: Competition to be comfortable with the contingent labor is right now and when we look not only at those hospitals being comfortable but can we see that census is up we're seeing surgeries are increasing.
Brian: The need and demand for nurses.
Brian: Really continue.
John A. Martins: We recently, actually, we launched it today, our annual nurse survey that we conduct in collaboration with Florida Atlantic University's Lynn College of Nursing. And we surveyed over 1,100 nurses and nursing students, and the same trends that we've seen over the last three or four years, Brian. 43% of nurses are saying that they're still struggling with understaffing at their facilities, and 37% are facing a stressful work environment.
Brian: We recently actually looks wash it out today.
Brian: Our annual survey that we conducted in collaboration with Florida Atlantic University are linked college of nursing and we asked we surveyed over 1100 nurses and nursing students.
Brian: <unk>.
Brian: The same of the same in the same trends that we've seen over the last three or four years Brian.
Brian: 43% of nurses are saying that there are still struggling with understaffing at their facilities.
Brian: 37% are facing a stressful work environment and these numbers are a little bit better than they were during COVID-19, but there is still so high and so what we're seeing and why we think that look if the trends can continue a stabilization of demand when we look at the programs that we've won and we're ramping up well.
John A. Martins: Now, these numbers are a little bit better than they were during COVID, but they're still so high. And so what we're seeing and why we think that, look, if the trends can continue of stabilization of demand, when we look at the programs that we've won and we're ramping up, we look at the macro data of the underlying nurse shortage. And we start seeing, hopefully, that we can take those tailwinds and start seeing the back half of the year, month over month volume growth as we get into the back half of the year.
Brian: At the macro data of the underlying nurse shortage.
Brian: And we start seeing hopefully that we can take those tailwind and start seeing in the back half of the year month over month volume growth as we get into the back half of the year I think Thats, where my optimism comes from is that it's the execution of what cross country, assuming our <unk> platform and how it's resonating in the market space.
John A. Martins: And I think that's where my optimism comes from, the execution of what Crush Country is doing with our Intellify platform and how it's responding in the market space. And then, thirdly, we're speaking to the hospital systems. They certainly need our services now.
Brian: And then thirdly, we're sticking to the hospital systems.
Brian: Certainly need are.
Brian: Our services now and and so I think as we get there and then the other component to that is as we start heading towards the summer months of July and August we will start seeing the winter needs come in as well. So you put all of those all those pieces together.
John A. Martins: And so I think as we get there, and then the other component to that is, as we start heading towards the summer months of July and August, we'll start seeing the winter needs come in as well. So when you put all those pieces together, it's not just one piece that makes me optimistic. When I look at the whole picture, that's why I get optimistic about the back half of the year.
Brian: One piece that makes me optimistic when I look at the whole picture is why I get optimistic about the back half of the year.
John A. Martins: That makes sense. Then maybe just shifting gears to the locums business, which was obviously strong during the quarter. So how do you think about the sustainability of that strength, number one. Then second, what do you need to do to continue driving that growth, right? I mean in terms of recruiting and things like that. So just curious what that looks like as you try to strategize around locums.
Speaker Change: That makes sense and then maybe just shifting gears to the Locums business, obviously strong during the quarter. So how do you think about the sustainability of that strength, maybe number one and then second what do you need to do to continue driving that gross revenue in terms of recruiting and things like that so just curious what that looks like as you try to strategize around local.
John A. Martins: We've had, and as the industry has had, several years of great growth in locums, and we've outpaced where the industry was. I wouldn't anticipate that pace that we've had over the past two years to continue this year, but I think we're gonna get closer to a stable pace. I believe Staffing Energy Analyst is predicting about a 12% increase year-over-year, and I think when you look at that, it's probably more in line with where we'll see growth coming. I don't think we're gonna see the 30% growth that we saw in the last couple of years, but it's still a very sustainable growth period.
Speaker Change: Yes.
Speaker Change: We've had and as the industry has had a several years of great growth in Locums and readout piece, where the industry was.
Speaker Change: I wouldn't anticipate that piece that we've had over the past few years to continue this year, but I think when you get more to a stable pace I believe staffing industry analyst is predicting about a 12% increase year over year.
Speaker Change: And I think when you look at that is probably more in line, where we will see growth coming I don't think we can achieve 30% growth that we saw last couple of years, but it's still a very sustainable growth period.
John A. Martins: And in terms of, you know, what we need to continue to grow, it's... It's just the same thing in any industry where you have growth, making sure you are able to attract the right candidates and being able to have the right quality jobs. And we talk a lot about demand, even on the travel nurse and allied side, but the same thing on the physician side: there's demand, and then there's the quality of jobs in demand.
Speaker Change: And in terms of.
Speaker Change: What we need to continue to grow.
Speaker Change: It's.
Speaker Change: Just the same thing where in any industry, where you're having growth, making sure you are able to attract the right candidates and being able to have the right quality jobs, we talked a lot about demand even on the travel nurse and Allied side at the same thing on the physician side. There is demand and then theres quality of jobs of demand and you need to make sure you have the quality of the job.
John A. Martins: And you need to make sure you have the quality of job that is right to be able to offer the right compensation packages for these physicians, offering the flexibility they need. And if you can get that quality of job, then it's much easier to match a physician with that job.
Speaker Change: Has the right to be.
Speaker Change: Like what's the rate.
Speaker Change: Compensation packages for these physicians welcoming the flexibility they need and if you can get that quality of the job and then it's much easier to match a physician with that yet.
Speaker Change: Awesome. Thank you.
John A. Martins: Thank you, gentlemen. Our next question is from A.J. Rice with UBS, and your line is open.
Albert J. William Rice: Thank you gentlemen, our next question is from a J rice with UBS and your line is open.
Albert J. William Rice: Thanks. Hi everybody.
Albert J. William Rice: Thanks, Hi, everybody.
Albert J. William Rice: On the gross margin for the quarter, I think at 20.4 it was a little below the guidance of 21, 21.5. You usually have pretty good visibility on the quarter ahead. I know in the prepared remarks you said the gross margin pressure in general was because of the bill pay spread. Did anything happen as the quarter progressed and toward the end of the quarter that put incremental pressure on gross margin? Is that just maybe the mix of Locum's business being stronger, relatively speaking, or something else? Any comments there?
Albert J. William Rice: On the gross margin for the quarter I think it's 24 it was a little below the guidance of 21 21, and a half you usually have pretty good visibility on the quarter ahead I know in the prepared remarks.
Albert J. William Rice: You said the gross margin pressure in general was because of the bill pay spread did anything happen as the quarter progressed towards the end of the quarter. The Ghana put incremental pressure or is that just maybe the mix of locums business being stronger relatively speaking or something else.
Albert J. William Rice: Any comments there.
William J. Burns: Yeah, AJ, this is Bill. Thanks for the question. Yeah, I think in the prepared remarks, you heard me say there were some burden charges. And I think that was probably one of the bigger surprises, which you don't really get to till the end of the quarter. The three biggies there are health insurance, which, you know, costs continue to rise, people are seeing the doctors more frequently, etc. But I think the ones that are actuarial driven, workers' comp, and professional liability, were kind of a quarter-end adjustment that we weren't necessarily anticipating. So that was a little bit more of a surprise to us.
Albert J. William Rice: A J. This is bill thanks for the question.
AJ: Yes, I think in the prepared remarks, you heard me say there there was some burden charges and I think that was probably one of the bigger surprises, which you don't really get to until the end of the quarter.
William J. Burns: The three the three biggies, there are health insurance, which costs continue to rise people are seeing the doctors more frequently et cetera, but.
William J. Burns: The ones that are actuarial driven workers' comp and professional liability, where kind of a quarter and adjustment that we weren't necessarily anticipating so that was a little bit more of a surprise to us, but as I mentioned I don't anticipate.
William J. Burns: Much of that in the health insurance will continue as we move forward, but the majority of the burden that we saw in the quarter for safety from Pls is not expected to recur. So I think we'll see a little bit of an uplift and that's why we've guided back if you noticed the guidance inflection is for sequential change that is larger than just the payroll tax reset the payroll tax reset this quarter was about 65 basis point.
William J. Burns: But, as I mentioned, I don't anticipate much of that, and health insurance will continue as we move forward. But the majority of the burden that we saw in the quarter from, say, PL is not expected to recur. So I think we'll see a little bit of an uplift. And that's why we've guided back. But if you notice the guidance inflection is for sequential change that is larger than just the payroll tax reset.
William J. Burns: The payroll tax reset this quarter was about 65 basis points, and that too is a little bit higher than we've historically seen. Certain jurisdictions had a little bit of a higher payroll tax burden this year than we expected. Most notably, California, we saw that it was a little bit higher than what we had seen in past years. So I was a little bit surprised by the payroll tax and the burdens, which, as I said, I think the burdens normalized coming into Q2.
William J. Burns: That too is a little bit higher than we've historically seen certain jurisdictions had a little bit of a higher payroll tax burden. This year than we expected most notably, California, we saw that was little bit higher than what we had seen in past years, so a little bit surprised on the payroll tax and the burdens, which as I said I think the burdens normalized coming into Q2.
Albert J. William Rice: Okay, and the longer-term issue on the whole bill pay spread seems to be in some ways competitor behavior that people that grab some share in the pandemic we're trying to still hold on to, and I know you've talked about it; your biggest peers have talked about that. Are you seeing some easing of that competitive pressure, or is that still pretty prevalent out there?
William J. Burns: Okay, and the longer term issue on the.
William J. Burns: The whole bill pay spread seems to be in some ways competitor behavior that people that grab some share in the pandemic, we're trying to still hold on to and I know you've talked about it in your biggest peers talked about that are you seeing some easing of of that competitive pressure or is that still pretty prevalent out there.
William J. Burns: Well, I guess I'd say that the pressure is still there. It's obviously always a market competing for talent and with the client on the bill rate side. We don't expect to see a lot of bill rate uplift, although interestingly, the open order rate did tick up a couple of points if I look sequentially and versus the fourth quarter against the year over year. Not enough to write home about, but a couple of points is still positive direction for us on the open order bill rate. And then you look at the compensation side of things. And again, it's a highly competitive market. There's a lot of transparency around the pay packages that nurses can garner.
William J. Burns: Well I guess I'd say the pressure is still there, it's obviously always market competing for talent and with the client on the bill rate side, we don't expect to see a lot of bill rate uplift, although interestingly. The open order rate did tick up a couple of points, if I look sequentially and versus the fourth quarter against a year over year, but not enough to write home about but a couple of points is still positive direct.
William J. Burns: For us on the open order bill rate.
William J. Burns: And then you look at the compensation side of things and again, it's a highly competitive market. There's a lot of transparency around the pay packages that nurses can can garner what's embedded in the numbers sequentially for us while payroll tax and burdens were actually a bit of a hit to us the bill pay housing spread and I lump in housing when I say, the bill pay spread they'll pay house.
William J. Burns: What's embedded in the numbers sequentially for us, while payroll tax and burdens were actually a bit of a hit to us, the bill pay housing spread, and I lump in housing when I say the bill pay spread, the bill pay housing spread was actually favorable for us sequentially from the fourth quarter to the first quarter. Again, small, 20, 30 basis points, but still a move in the right direction. Year over year, there is still tremendous pressure there.
William J. Burns: <unk> spread was actually favorable for us sequentially from the fourth quarter to the first quarter.
William J. Burns: Again, small 2030 basis points, but still a move in the right direction year over year still tremendous pressure there don't expect that to ease anytime soon and I will just repeat remarks I made from the last earnings call, which was the most the majority of the bill pay spread pay rates are coming down.
William J. Burns: Don't expect that to ease anytime soon. And I'll just repeat remarks I made from the last earnings call, which was the majority of the bill pay spread: pay rates are coming down. It is commensurate, if not faster than the bill rates.
William J. Burns: Commensurate if not faster than the bill rates. The piece that's been stubborn has been the <unk> component of the housing component.
William J. Burns: The piece that's been stubborn has been the MNIL component, the housing component.
Albert J. William Rice: Interesting. Okay, maybe a last question on the availability of your supply. I know we've talked that nurse expectations for travel, rate expectations for travelers may be needed to reset. Are you seeing that? What are our expectations for the new travelers, those re-upping? Anything else to talk about in terms of your availability of supply, people re-upping on assignment, etc., etc.?
Speaker Change: Interesting, Okay, maybe a last question on the avail.
Speaker Change: Availability of your supply I know, we've talked that nurse expectations for trial.
William J. Burns: Rate expectations for travelers maybe needed to reset a have you seen that what is our expectations for the new travelers those re upping.
Speaker Change: Anything else to.
Speaker Change: Talk about in terms of your availability of supply people reopening on assignment et cetera et cetera.
John A. Martins: Sure. Thanks, AJ. This is John.
Speaker Change: Sure. Thanks, a J this is John and let's say much different than a year ago, a year ago, the nurses <unk> patients where.
John A. Martins: And I'd say much different than a year ago. A year ago, the nurses' pay expectations were not in line with where the bill rates were coming down, and probably even six months ago. And, you know, Marc, we can add more on this in a second.
Speaker Change: That in line with where the bill rates were coming down and probably even six months ago and Mark you can add more on this in a second but now as we have had a sustained period of deceleration of.
John A. Martins: But now, as we've had a sustained period of deceleration of bill rates and pay rates, I think nurses are more apt to accept that they are lower rates than they were two years ago. But I think there's also another dynamic, and we've pulled this out before, is that at the height of COVID, we had a lot of core nurses who became travelers, and the travel market had expanded much larger. That travel market, as we've all acknowledged as an industry, has now shrunk a little bit, still much larger than we were pre-COVID, but definitely down.
William J. Burns: Bill rates and pay rates.
William J. Burns: The nurses are.
William J. Burns: More.
Mark Hood: <unk> II to accept that there are the lower reason they added two years ago, but I think there is also another dynamic and we've called this out before is that in the height of Covid, we had a lot of core nurses to.
John A. Martins: Became travelers in the travel market had expanded much larger that travel market everyone acknowledges industry has now shrunk a little bit still much larger than we were pre COVID-19, but definitely down. So some of those nurses has left to go back to core and potentially those are the ones that we're seeking the high pay packages what drove them to leave.
John A. Martins: So some of those nurses have left to go back to their core jobs, and potentially, those are the ones that were seeking high pay packages, which drove them to leave their core jobs. But I think the nurses that we have left are the ones that want to travel, want the flexibility, want to enjoy this gig lifestyle, and they are fine with the pay packages. Marc, do you want to add anything to that?
John A. Martins: Their core jobs, but I think the nurses that we have left are the ones that want to travel and want the flexibility once it enjoyed this gig lifestyle and they are they are fine with Paypal, just mark to add anything to that sure Hey, It's Mark Hey, Jay.
Marc Krug: To John's point, I think there's been a reset in expectations at this point, and a lot of the travelers that we use the term "chasing dollars," I think they have gone back to their core positions, and we have the traditional travelers back in the market. There's a lot of pay transparency, and everyone's pretty clear on what the market is at any given moment in any given geography.
Mark Hood: To John's point, I think there has been a reset in expectations at this point and a lot of the travelers that where are we choose the term chasing dollars I think they have gone back to their core positions and we have the traditional travelers back in the market.
Mark Hood: There's a lot of pay transparency and everyone's pretty clear on what the market is at any given moment in any given geography.
Albert J. William Rice: Okay, just to make sure to put a fine point on that it seemed like a few quarters back you guys were saying that if you could just get expectations down to a certain level, there was a lot of incremental demand that might resurface. Is it now that we're sort of getting close to expectations being in line with the market, and it's just we've got to get to a point where supply and demand, and volumes of hospitals, etc. pick up to the point where they need incremental nurses, and it's less about getting expectations for the nurses in line with the hospital's willingness to pay?
Speaker Change: Okay, just to make sure to put a fine point on that it seemed like a few quarters back you guys were saying that if you could just get expect deputations down to a certain level there was.
Mark Hood: A lot of incremental demand that might resurface is it now that we're sort of getting close to our expectations being in line with market and it's just.
Mark Hood: We've got to get to a point, where supply demand and our volumes are the hospitals et cetera pick up to the point, where they need to.
Albert J. William Rice: Incremental nurses and it's less about getting.
Mark Hood: Expectations for the nurses in line with the hospitals willingness to pay.
John A. Martins: Yeah, that's definitely part of it, A.J., that we have to get the orders right. But I think a bigger part, we've talked about this on a couple of earnings calls, is that all our jobs aren't equal quality jobs where hospitals will put out orders that are really low bill rates. It's a really hard time; we're really unable to fill them. And so the ones that are fillable are the ones where the expectations are of where the market bill rate is and where the market pay rate is.
Albert J. William Rice: Yes.
Speaker Change: It's definitely part of it a J that we have to get the expertise.
Speaker Change: You get the orders right, but I think a bigger part was we've talked about this on a couple.
John A. Martins: The earnings calls.
John A. Martins: Is that all our jobs are all equal quality jobs, where hospitals will put out orders that are really mobility. That's a really hard time, we're really unable to fill and so.
John A. Martins: One is that are available are the ones that the expectations are.
John A. Martins: With the market Bill rate is.
John A. Martins: And we are and where the market pay rate would be and so when we get those coming together and we're finding more and more of those now it's coming but the gap is shrinking we are getting more quality jobs. That's when you start seeing the market be able to have the <unk>.
John A. Martins: And so when we get those coming together, and we're finding more and more of those now, it's coming, the gap is shrinking, we're getting more quality jobs, that's when you start seeing the market be able to have the extra surplus and be able to fill those needs.
John A. Martins: That extra surplus and be able to fill those needs.
Albert J. William Rice: Okay, great, thanks so much.
Speaker Change: Okay, great. Thanks, so much.
William Sutherland: Thank you everyone. Now our next question is from Bill Sutherland with The Betchmark Company, and your line is open.
Albert J. William Rice: Thank you everyone now our next question is from Bill Sutherland with Benchmark Company. Your line is open.
William Sutherland: Hey guys, I wanted to just focus on Ally just slightly. If you could remind us kind of what that is as a proportion of the travel business or just nursing Ally business, and then just a little, you know, unpack kind of what's going on with some of those Ally positions. Thanks.
William Sutherland: Hey, guys.
William Sutherland: I wanted to just focus on ally just slightly.
William Sutherland: If you could remind us kind of what that is as a proportion of the travel business.
William Sutherland: Just nurse and Allied business and then.
William Sutherland: Just a little.
William Sutherland: Unpack kind of what's going on.
William Sutherland: With some of those positions.
William Sutherland: Physicians thanks.
John A. Martins: Sure. So it's about 40% of our total nurses. Of total travel. Of total travel. And, you know, I'll hand it over, Marc, if you want to talk about some of the specialties and what's going on in the allied world, what you're seeing.
Speaker Change: Sure. So it's about 40% of our total nurse of total trials total travel.
William Sutherland: And.
Marc Krug: I'll hand, it over to Mark if you want to talk about some of the specialties and what's going on in the Allied World. What are you seeing sure and demand is very strong and physical therapy imaging continues to have very strong demand.
Marc Krug: Sure, and demand is very strong in physical therapy. Imaging continues to have very strong demand, and I don't foresee that slowing down anytime soon. You know, increased reliance on imaging for diagnosis and efficient patient care with higher volumes and the shortage of imaging professionals and the shortage of people going into the profession are really gonna drive demand.
Marc Krug: I don't foresee that slowing down anytime soon increased reliance on the imaging for diagnosis and efficient patient care with the higher volume.
Marc Krug: And the shortage.
Marc Krug:
Marc Krug: Imaging professionals and the shortage of people going into the profession is really going to drive demand.
John A. Martins: Yeah, and AJ, this is John. I would, I'm sorry.
John A. Martins: And AJ, this is John. I'm sorry, Bill. I'm sorry, Bill. This is John.
Marc Krug: Hey, Jay This is John I am sorry, Bill sorry.
John A. Martins: This is John I would add to that.
John A. Martins: When we're looking at Allied demand. It also follows a lot of of the surgeries. So as we're seeing surgery.
John A. Martins: <unk>.
John: And the ancillary services that you need a lot of them or actually most of them are the allied services. So those ones were seeing demand go higher just like we're seeing a lot of demand for <unk> and anesthesiologists.
John A. Martins: I would add to that, when we're looking at allied demand, it also follows a lot of surgeries. So as we're seeing surgery go up, it's the ancillary services that you need. A lot of them, or actually most of them, are allied services. So those ones, we're seeing demand go up higher, just like we're seeing a lot of demand for CRNAs and anesthesiologists.
John A. Martins: The Allied World follows what surgeries go up.
Speaker Change: Got it and.
John A. Martins: So, what would the growth of that... of that piece of the business be? Did you point it out in 1Q, or can you talk about what you're thinking about for 2Q?
John A. Martins: So what would the growth.
John A. Martins: So that piece of the business day.
John A. Martins: Did you pointed out in <unk> or can you talk about what you're thinking about for <unk>.
John A. Martins: We don't typically carve out travel allied; we think of it as, you know, total. We talk about total travel, as you heard. What I can tell you is when we're looking at the second quarter, the majority of the demand is for nursing, and the majority of the fall off in volume is on the nursing side. Given the mix of the specialties within allied, to Marc's earlier point, if you're not seeing it in imaging, you might be, sorry, if you're not seeing it in respiratory, you might be making it up in imaging and lab.
John A. Martins: We don't typically carve out travel Allied do we think of it as total we talked to total travel as you as you heard what I can tell you is when we're looking at the second quarter. The majority of the demand is on the nurse at the majority of the falloff in volume is on the nursing side, given the mix of the specialties within Allied to Mark's earlier point, if youre not.
John A. Martins: Seeing an imaging you might be I am sorry, if you're not staying in respiratory you're making it up in imaging and lab. So theres a lot more modalities that makeup allied so that business has been a little bit more I call. It a resistant to the decline that we've seen across the rest of the travel.
John A. Martins: So there are a lot more modalities that make up allied, so that business has been a little bit more, I'd call it, resistant to the decline that we've seen across the rest of travel. And then just to one last one, I keep thinking about kind of your visibility beyond the second quarter and just in terms of, you know, client behavior and what they are looking like. What do you think? you know, apart from when you start to see the winter orders, is there?
John A. Martins: Okay.
John A. Martins: And then just just one last one I'm thinking I keep thinking about kind of your visibility.
John A. Martins: Beyond the second quarter.
John A. Martins: And just in terms of you know.
John A. Martins: The client behavior.
John A. Martins: What their needs.
John A. Martins: <unk> are.
John A. Martins: We're looking like what.
Speaker Change: What do you think.
John A. Martins: Apart from when you start to see the winter orders.
John A. Martins: Is there.
John A. Martins: any like duration changes in terms of assignments, or is there anything else that's changing that makes it harder to kind of understand what's going on under the hood at the client side so that you can have some sense of where demand will be maybe one quarter further out?
John A. Martins: Any like duration changes in terms of assignments or is there anything else that's changing that makes it harder to kind of.
John A. Martins: I understand what's going on under the Hood at the client side. So that you can have some sense of where demand will be maybe one quarter further out.
John A. Martins: No, I think we're seeing assignment lengths have been pretty consistent. I would say for the past two quarters, actually, let's call it third quarter and fourth quarter, we saw our renewal rates going down a little bit, which made sense because demand was going down. And now we're seeing that renewal rates tick up. So to me, and they're up pretty significantly on the renewal rates compared to third and fourth quarter and first quarter.
John A. Martins: No I think we're seeing assignment lengths are have been pretty consistent.
John A. Martins: I would say for the past two quarters actually got Scott third quarter and well.
John A. Martins: Actual quote.
John A. Martins: Third quarter fourth quarter, we would see we saw our renewal rates going down a little bit which is it made sense because demand was going down and now we're seeing that renewal rates tick up.
John A. Martins: So to me and they're up probably.
John A. Martins: We are pretty significantly on the renewal rates compared to the third or fourth quarter first quarter.
John A. Martins: What that tells me is that hospitals are needing these nurses more as the renewal rates go up. And I would anticipate that our renewal rate will continue to increase throughout the remainder of the year as hospitals really need these clinicians. And just like our survey that we published today, it's the same story we're hearing. Nearly 50% of nurses, when you ask them, are saying that they feel like there's a shortage of staffing at their facilities. And we've been talking about this for a while, but it can only go on for so long.
John A. Martins: What that tells me is that the hospitals are needing these nurses more as as the renewal rates go up and I would anticipate that our renewal rate will continue to increase throughout the remainder of the year as hospitals are really.
John A. Martins: <unk> need these questions and just like our survey that we that we published today.
John A. Martins: It's the same story, we're hearing that.
John A. Martins: Nearly 50% of nurses when you ask them are saying that they're there they feel that there is a shortage of staffing at their facilities.
John A. Martins: We've been talking about this for a while but it can only go on for so long.
John A. Martins: If we think about the Great Recession back in 2008 and 2009, there was something very similar that happened, where hospitals utilized nurses for an extra shift for 48 hours; they used less contingency, and they could only hold on for so long before those nurses got burnt out. And I think between COVID, the pandemic, and the last 18 months of hospitals trying to right the financial shift, there's only so much you can push on nurses before you really need to bring in help so that the nurses want to remain and stay at the bedside.
John A. Martins: We think about back to the great recession back in 2008 nine it was something that was very similar that happened, where where hospitals utilized nurses in an extra shift for 48 hours.
John A. Martins: They use less contingency, but they can only hold on for so long before those nurses got broke out and I think between COVID-19 between pandemic in between the last 18 months of hospitals trying to right the financial ship.
John A. Martins: Thanks, So much you can push on nurse as before.
John A. Martins: You really need to.
John A. Martins: In help so that the nurses wanted to remain and stay at the bed side, because that's like that's our goal at the end of the day.
John A. Martins: Because that's all our goal. At the end of the day, we're part of the solution for the overall delivery of healthcare. And we want to make sure that we're the right percentage of contingency labor. We don't need to be all of their labor, right? We want to be that right contingency. So part of what our offerings do with Intellify now and some of our other products that we're launching is we're helping core staff at hospitals.
John A. Martins: We're part of the solution of the overall delivery of healthcare and we want to make sure that we're the right percentage of contingent labor, we don't need to be all of their labor rate, we want to be that right contingency. So we wanted to ensure I mean part of what our offerings do with it.
John A. Martins: I know in some of our other products that we're launching is we're helping core staffs at hospitals and the reason that's important is we want to make sure that we help hospitals engage and retain core staff and even are able to bring in more core staff. So that we can help with that contingency labor piece that we need.
John A. Martins: And the reason that's important is that we want to make sure that we help hospitals engage and retain core staff and are even able to bring in more core staff so that we can help with that contingency labor piece that we need.
John A. Martins: Okay. Thanks, John, for all the callers.
Speaker Change: Okay. Thanks, John for all the color.
Constantine Kyriakos Davides: Thank you very much. Our next question is now from Constantine Davides with Citizens JMP, and your line is open.
John A. Martins: Thank you entirely our next question now is from Constantine Davita with citizens JMP and your line is open.
Constantine Kyriakos Davides: Hey guys, can you expand a little bit on the challenges specific to the pergium portion of the nurseries and Allied Business. It sounds like the first quarter decline was almost twice as large sequentially as what the segment experienced as a whole, if I heard you correctly. And then, I guess, a follow-up to that is, what are you sort of contemplating in your second quarter outlook as far as that business goes?
Constantine Kyriakos Davides: Hey, guys can you.
Constantine Kyriakos Davides: Spanned a little bit on the challenges.
Constantine Kyriakos Davides: Specific to the per diem portion of the nurse and Allied business. It sounds like the first quarter decline.
Constantine Kyriakos Davides: It was almost twice as large sequentially is what the segment.
Constantine Kyriakos Davides: Experienced as a whole if I heard you correctly.
Constantine Kyriakos Davides: And then I guess a follow up to that is what are you sort of contemplating.
Constantine Kyriakos Davides: And your second quarter outlook as far as that business as far as that.
John A. Martins: Hey Constantine, I'll start with Per Diem and what we're seeing in that marketplace. And because it runs very parallel to the nursing side, our travel nursing side, we're seeing a very similar pullback in the utilization of those nurses on a daily basis. And then, additionally, not only is part of it in the acute care healthcare, which is very similar to our travel nursing side, but the other part, although a large part of our Per Diem nursing business is in skilled nursing facilities.
Speaker Change: I'll start with <unk>.
Constantine Kyriakos Davides: With <unk> and what we're seeing in that marketplace and because it runs very parallel to the nursing side, our travel nursing side, we're seeing very similar pullback in the utilization of those nurses on a daily basis.
John A. Martins: In additional in addition, not only is <unk>.
John A. Martins: Part of it in the acute care health care, which is very similar to our travel nursing side. The other part, Illinois, although a large part of our per diem nursing does it isn't the skilled nursing facilities and.
John A. Martins: And during COVID, there was a large run-up of clinicians in the skilled nursing facilities as federal, state, and local monies were put in place to help fund those skilled nursing facilities for community labor. As that money dried up over the last year, we saw that businesses, not just us in the market, saw that skilled nursing facility utilization went down for contingent labor.
John A. Martins: During COVID-19.
John A. Martins: <unk>.
John A. Martins: There was a large run off of.
John A. Martins: Clinicians in a skilled nursing facilities as.
John A. Martins: As federal state and local of monies.
John A. Martins: <unk> put in place to help fund those skilled nursing facilities, reducing labor.
John A. Martins: As that as that money dried up over the last year, we saw that that business is not just us, but the market sort of skilled nursing facilities.
John A. Martins: Your utilization went down contingent labor such as.
John A. Martins: So that's really the story behind that marketplace. Now, what we're looking at, we believe in the local space, in the per diem space, that there are opportunities and pockets where we can excel. And that's where we're focusing right now. In our MSPs, it is a crucial piece in many of our MSPs to help find that just-in-time labor. We also work in conjunction with flow pools to make sure that we're offsetting the flow pools that hospitals have, whether we're running the hospital to have their own flow pool, to help offset those just-in-time last needs.
John A. Martins: Really the story behind that marketplace now we're looking at we believe in the local space and premium space that there are opportunities and pockets, where we can excel and that's where we're focusing in right now.
John A. Martins: Our MSP is a crucial piece in many of our MSP to help find that just in time labor.
John A. Martins: Also we also work in conjunction with flow pools to make sure that we're offsetting the float pools at hospitals AD, whether we're running a hospital to have their own coal.
John A. Martins: Help offset those just in time last needs. So it's really a critical piece to our business, especially when it comes to helping hospitals just in time, but I think we can say where we saw on the decline was really just the market conditions that we've seen in the nursing world through both the acute care and the sub acute LTC space and costing this is bill I would just throw in there.
John A. Martins: So it's really a critical piece to our business, especially when it comes to helping hospitals just in time. But I think we can say where we saw the decline was really just the market conditions that we've seen in the nursing world through both the acute care and the subacute LTC space. And Kosti, this is Bill.
William J. Burns: And Constantine, this is Bill. I would just throw in there that, you know, the local business, unlike travel, which has a bit more of an annuity concept to it, where it's a longer assignment term, so you have more predictability. The local business, if I look at the billings, weekly billings across that business for the first quarter relative to how we exited the fourth quarter, there wasn't much of a deterioration. It was really more so if you compared it to the start of the fourth quarter.
William J. Burns: The local business, unlike travel, which has a bit more of an annuity concept to it where it's a longer assignment terms you got more predictability to the local business if I look at the.
William J. Burns: The billings weekly billings across that business for the first quarter relative to how we exited the fourth quarter. There wasn't much of a deterioration. It was really more if you compared it to the start of the fourth quarter. So Q1 was running pretty consistently across the quarter for all the weeks and so when you asked about the second quarter guide and what's implicit in that is essentially flat sequentially, we're not expecting that.
William J. Burns: So Q1 was running pretty consistently across the quarter for all the weeks. And so you asked about the second quarter guide and what's implicit in that. It's essentially flat sequentially. We're not expecting that to see a lot more deterioration or a lot of uptick. I think that business tends to move a little bit quicker up or down based on what the market's doing than travel does. Got it. Thank you
William J. Burns: A lot more deterioration or a lot of uptick I think that business tends to move a little bit quicker up or down based on what the market's doing then traveled us.
William J. Burns: Got it thank you.
William J. Burns: Sure.
Tobey O'Brien Sommer: Our next question is now from Tobey Sommer with Truist Securities, and your line is open.
William J. Burns: Our next question now is from Tobey Sommer with Truest Securities and your line is open.
Tobey O'Brien Sommer: Thanks. Last year, there were some competitive pressures impacting market share. Have the effects of that percolated through the P&L, or is there anything lingering that could provide a headwind of sorts moving forward?
Tobey O'Brien Sommer: Thanks.
Tobey O'Brien Sommer: Last year, there was some competitive pressures.
Tobey O'Brien Sommer: Impacting market share has had the effects of that.
Tobey O'Brien Sommer: Percolated through the P&L or is there anything lingering that could provide us.
Tobey O'Brien Sommer: Headwind of sorts moving forward.
John A. Martins: You know, Tobey, I'd say, you know, over the last six months, we've definitely won more than our fair share of deals, and we're ramping those deals up. And we've called out, as you've pointed out, we called out last year that we did have a higher than average number of losses back, you know, over 18 months ago through a year ago. And so most of those have already been out of the system for the most part.
Tobey O'Brien Sommer: It tells me I would say over the last six months we've definitely.
John A. Martins: One more than our fair share of deals.
John A. Martins: And we are ramping those deals up and we've pulled out as you pointed we called out last year that we did have a higher than average number of losses back Gil over 18 months ago to a year ago.
John A. Martins: And so most of those have.
John A. Martins: Already been out of the system for the most part and even some of the ones that we've lost we've called out we've actually retained a large portion of those.
John A. Martins: And even some of the ones that we've lost, we've called out, we've actually retained a large portion of those travelers on assignment. So to answer your question, I would say, yes, it's mostly baked out because there are still some good guys and bad guys, but I think the good guys far outweigh the bad guys at this.
John A. Martins: Although as travelers on assignment.
John A. Martins: And to answer your question I would say, yes, it's mostly baked out because there is still some good guys and bad guys, but I think the good guys far outweigh the bad guys at this point.
John A. Martins: Okay, and then with the visibility you have, you said demand has kind of been stable for a handful of weeks, six weeks. Would you think at this point that TOA in 3Q would grow sequentially, be flat, or stable? Yeah, I don't know if I'm calling out the full quarter. I think we would expect to be growing TLA across the third quarter, and whether that averages to a full increase over the second quarter, I think, remains to be seen.
Speaker Change: Okay and then.
John A. Martins: Uh huh.
John A. Martins: With the visibility you have you said.
John A. Martins: Demand has kind of been stable for a handful of weeks six weeks I think you said.
John A. Martins: Would you think at this point that that key OE in three Q would grow sequentially be flat or stable.
John A. Martins: Yes, I don't know if I'm, calling out the full quarter I think we would expect to be growing <unk> across the third quarter and whether that averages to a full increase over the second quarter I think remains to be seen.
John A. Martins: Yeah, you know, it's nuanced, right, Tobey, where does that lift come in the volume? And so we do think that, yes, within the third quarter or fourth quarter, but I think we do think optimistically about the third quarter, we could see month over month volume growth within the quarter.
John A. Martins: Nuanced right Tobey, where when does that.
John A. Martins: Lift come up in the volume and so we do think that yes, we within the third quarter or fourth quarter, but I think we do think optimistically in third quarter, we could see month over month volume growth within the quarter.
Tobey O'Brien Sommer: What are the KPIs or other...
John A. Martins: What are the Kpis are demand signals that used to sort of inform that or is it you know is it predicated on the.
Tobey O'Brien Sommer: And I'm just curious, are those the same signals that you use to sort of inform that, or is it predicated on survey work and the overworking of nurses?
Tobey O'Brien Sommer: The survey work and overworking of nurses, so I'm kind of trying to get at how.
Tobey O'Brien Sommer: So I'm kind of trying to figure out how...
Tobey O'Brien Sommer: How tangible that is.
Speaker Change: Uh huh.
Tobey O'Brien Sommer: <unk> that is.
John A. Martins: Sure, if we continue to see the demand be... Transcribed by https://otter.ai. And then within demand, I would say it's the quality of the job.
Tobey: Sure if we continue to see the demand.
John A. Martins: We continue to be stable as it is that we've seen over the last six weeks and then demand can uptick a little bit that gives us the confidence factor or higher or lower half is accurate that helps does that answer your question.
John A. Martins: And then within demand I would say if the quality up.
William J. Burns: Yeah, I was going to throw it in there. When we look at what we expect in order volume, the majority of the order improvement we would expect to see as we move through the second quarter will be from programs that are our own. And so the quality of those orders tends to be a little bit better than, say, if it was just a market order that we're, you know, competing against other players for.
Speaker Change: I was going to throw in there.
John A. Martins: We look at what we expect in the order volume and the majority of the order improvement we would expect to see as we move through the second quarter will be from programs that are our programs and so the quality of those orders tend to be a little bit better than say if it was just a a market order that we're competing against other players for us. So I think that's a little bit of a.
William J. Burns: So I think that's a little bit of what we have a lens on, we know the programs that we've won. We know what's currently in implementation and is ramping right now. And that's what we would look for for the third quarter.
William J. Burns: We have a lens on as we know the programs that we've won we know what's been it's currently in.
William J. Burns: Implementation and are ramping right now and Thats, what we would look forward for the third quarter I don't have an.
John A. Martins: I don't have an exact line of how many orders that is and what it will look like, but the quality of the orders should improve. And I would just throw out one other comment, and John made this in his prepared remarks, but as demand softened, you know, it's down quite a bit more than our production. We're still managing to produce or deliver our internal KPIs in that week's book. We continue to see across the travel landscape that we're producing, or our production levels are maintaining despite the fact that orders have curtailed quite a bit.
William J. Burns: In exact line of how many orders that is and what it will look like but the quality of the order should improve and I would just throw out one other comment John made this in the prepared remarks, but as demand softened, it's down quite a bit more than our production as we are still managing to produce or deliver our internal kpis net weeks booked we continue to see across the travel.
John A. Martins: On a scale that we are producing or our production levels are maintaining despite the fact that orders have curtailed quite a bit.
John A. Martins: Okay, in terms of Intellify, the external customers you have on that, are they MSPs, vendor neutral? One of the... aspects that you've been talking about is an opportunity to tap into that vendor neutrality. So I want to get a sense for progress on that particular, Yeah, sure.
John A. Martins: Okay.
John A. Martins: In terms of and Telefonica.
John A. Martins: The external customers you have on that.
John A. Martins: Are they MSP vendor neutral.
John A. Martins: One of the.
John A. Martins: Aspects that you've been talking about it as an opportunity to tap into that vendor neutral. So I wanted to get a sense for progress on that particular front.
John A. Martins: Yeah, sure Tobey, this is John. Some of them have been vendor neutral, but this is what we're seeing, and some of them are pure vendor neutral. But what we're seeing is a blur, and I called it out in the prepared remarks. There's a blurring line between MSP and VMS for a lot of clients right now, where we're seeing clients that want to make sure that they have a vendor panel, and they're not reliant on one particular strategic agency to fill all their needs.
John A. Martins: Yeah sure Tobey this is John.
John A. Martins: Some of them had been vendor neutral.
John A. Martins: But this is what we're seeing.
John A. Martins: Sure a bit unusual, but what we're seeing is the alert I called it out in the prepared remarks.
John A. Martins: There is a blurring of lines between MSP and Vms for a lot of clients right now.
John A. Martins: We're seeing clients that.
John A. Martins: They want to make sure that they have a vendor panel in the not reliant on one particular.
John A. Martins: The strategic agency to fill all their needs.
John A. Martins: But they also want someone who is going to be accountable if it needs don't get met.
John A. Martins: But they also want someone who is going to be accountable if needs aren't met. And that's where, when you're sometimes a pure vendor-neutral play and don't have the staffing arm to back it, all you can do is raise bill rates or go and essentially plead to your agencies to fill a need, where when you are associated with a staffing company, that strategic staffing company can step in and help fill those needs.
John A. Martins: And that's where when you are sometimes a pure vendor neutral play and have don't have the staffing arm to back it.
John A. Martins: All you can do is resell rights or go in essentially plead to your agencies to fill a need.
John A. Martins: Where when you are associated with a <unk>.
John A. Martins: And strategically having company.
John A. Martins: So that blur, that blurring, or that hybrid is really becoming, seeming more popular where people can have the best of both worlds. We can still send those orders out, have a vendor-neutral feel, but know that they have the backing of cross-country for that accountability when they need those needs met.
John A. Martins: Should you have any could step in and help fill those needs.
John A. Martins: That blur that blurring or that hybrid is really becoming excuse me more popular where people can have the best of both worlds. We can still send those orders out have a vendor neutral feel but knowing that they have.
John A. Martins: Backing of cross country.
John A. Martins: Accountability when they need us those needs met.
Speaker Change: Thank you very much.
Tobey O'Brien Sommer: Thank you. Our final question is from Kevin Steinke with Barrington Research. Your line is open.
John A. Martins: Thank you. Our final question is from Kevin Steinke with Barrington Research. Your line is open.
Kevin Mark Steinke: Hi, thanks for taking the questions. Last quarter, you had expressed some optimism around the pipeline for IntelliFi and MSP. What's that looking like now? It sounds like you still expect that to...
Kevin Mark Steinke: Hi, Thanks for taking the questions. So.
Kevin Mark Steinke: Last quarter, you had expressed some optimism around the.
Kevin Mark Steinke: Does the pipeline for <unk> and MSP.
Kevin Mark Steinke: Just what's that looking like now and.
Kevin Mark Steinke: It sounds like you still expect that to.
Kevin Mark Steinke: Contribute to stronger results in the second half of 2024.
Kevin Mark Steinke: So if you could speak to that that'd be helpful.
Kevin Mark Steinke: contribute to stronger results in the second half of 2020.
Kevin Mark Steinke: Sure. Kevin This is John as I said in my prepared remarks, we just signed a contract last month.
John A. Martins: have with 2024. So if you could speak to that, that would be helpful.
John A. Martins: Sure, Kevin, this is John. As I said in my prepared remarks, we just signed a contract last month with another new IntelliFi win, which is a fairly large client. And we have a really, truly robust pipeline. And I know we've said in the last couple quarters, but it's one of the biggest pipelines we've had in the company's history. And it's still robust; it's still there. But I would say this: clients are a little slower to make decisions right now, I think because there's a little less pressure to make decisions than they had the last 18 months when the finance teams needed to save money, and they were looking for people to offer them cost savings immediately.
John A. Martins: Other new <unk> win.
John A. Martins: Is it fairly large large client and.
John A. Martins: We have a really truly robust pipeline and I know, we've said the last couple of quarters, but it's one of the biggest pipelines we've had in the Companys history.
John A. Martins: It's still robust its still there I would say this.
John A. Martins: Clients are a little slower to make decisions right now I think because theres, a little less pressure to make decisions and they had the last 18 months win.
John A. Martins: The finance teams needed to save money and they were looking for people to.
John A. Martins: Offer them cost savings immediately and they were making decisions probably based on cost savings and maybe not holistic approaches to solving their long term needs and so as we've gone through that phase and into this new phase the cycles are running a little bit longer right now, but we're still very very excited about where we are in our with our.
John A. Martins: And they were making decisions probably based on cost savings and maybe not holistic approaches to solving their long-term needs. And so as we've gone through that phase and into this new phase, the cycles are running a little bit longer right now, but we're still very, very excited about where we are with our pipeline.
John A. Martins: Our.
John A. Martins: With our pipeline.
John A. Martins: Okay, thanks, that's helpful. And I believe you made a remark in your prepared comments when talking about local staffing that you're committed to providing it where it makes sense. What I mean is that... (inaudible)
Speaker Change: Okay. Thanks, that's helpful.
John A. Martins: Believe you made a remark in your prepared comments when talking about <unk>.
John A. Martins: Local staffing.
John A. Martins: That you are committed to providing it where it makes sense I mean does that.
John A. Martins: Imply that you might look at that business and.
John A. Martins: Maybe.
John A. Martins: Pair it back in some sense or is that still.
John A. Martins: A full commitment.
John A. Martins: Compared to what you're currently doing there.
Kevin Mark Steinke: What you're currently doing there.
John A. Martins: Yeah, it's a full commitment in per diem, but I think what we're saying in that statement is we want to make sure that we are finding the right opportunities for that business, and obviously, that is to supplement our MSP in our MSP space, making sure our clients have a whole house full service of services to be able to fill their needs, but we also want to make sure that it makes sense, and here's a great example We don't necessarily need to have a per diem business that fills a client that has one need per year, as opposed to filling a client that would have a volume business that we can actually have a longer strategic partnership with. So when we look at how we envision per diem moving in the future, it's really creating partnerships with clients so that we can have strategic relationships where we can offer more than just one service.
Speaker Change: Yeah, it's interesting.
Kevin Mark Steinke: Full commitment in premium, but I think what we're saying in that statement is we want to make sure that we are finding the right opportunities for that business and obviously that is to supplement our MSP and our MSP space, making sure our clients had a whole house full service.
Kevin Mark Steinke: All right, yeah, that makes sense. All right, thanks for taking the questions. I'll turn it over to you.
Kevin Mark Steinke: <unk> services to be able to fill their needs.
Kevin Mark Steinke: But also we also want to make sure that it makes sense in his great example.
Kevin Mark Steinke: Next we don't necessarily need to have a pretty and business that fills a client that has one need per year.
Kevin Mark Steinke: As opposed to filling a client that would have a volume business that we can actually have a longer strategic partnership with so when we look at how we envision <unk> moving in the future, it's really creating partnerships with clients that we can have strategic relationships, where we can offer more than just one service to them.
Kevin Mark Steinke: Alright.
Speaker Change: That makes sense alright, thanks for taking the questions I will turn it back over.
Kevin Mark Steinke: Thank you very much ladies and gentlemen, this does conclude the Q&A period, I'll now turn it back over to John Martin for closing remarks.
Operator: Thank you very much. Ladies and gentlemen, this does conclude the Q&A period. I'll now turn it back over to John Martins for closing remarks. Thank you, Albert.
John A. Martins: Thank you, operator. Before I sign off, I want to reiterate one last time how truly optimistic I am for the long-term prospects of Cross Country, given that the underlying fundamentals for the industry are intact. We really have a great team, and we have a great brand, and we are well-positioned to come out ahead once the market rebounds. In closing, I'd like to thank everyone for participating in today's call, and we look forward to updating you on the progress of the company on the next call.
John A. Martins: Thank you operator before I sign off I want to relate one last time.
John A. Martins: Truly optimistic I am for the long term prospects of cross country, given that the underlying fundamentals for the industry are intact, we really have a great team and we have a great brand and we are well positioned to come out ahead once the market rebounds in closing I'd like to thank everyone for participating in today's call and we look forward to updating you on the progress.
John A. Martins: The company on the next call.
Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may disconnect now. Speakers, we are in a private post-conference.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may disconnect now.
Operator: The speakers we are in private post conference.