Q2 2024 AMN Healthcare Services Inc Earnings Call

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

Speaker Change: To ask a question during the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again please.

Speaker Change: Please be advised that today's conference is being recorded I would now like to turn the call over to Randy Reece Senior director of Investor Relations. Please go ahead.

Randy Reece: Good afternoon, everyone.

Welcome to Amarin healthcare second quarter 2024 earnings call.

Randy Reece: A replay of this webcast will be available at IR Dot <unk> healthcare Dot com.

Speaker Change: At the conclusion of this call.

Speaker Change: The remarks, we make during this call about future expectations projections trends plans events or circumstances constitute.

Speaker Change: Forward looking statements.

Speaker Change: These statements reflect the company's current beliefs.

Speaker Change: Based upon the information currently available to it.

Speaker Change: Our actual results may differ materially from those indicated by these forward looking statements because of various factors and cautionary statements.

Speaker Change: Including those identified in our most recently filed Form 10-K, and 10-Q, our earnings release and subsequent filings with the SEC.

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

Speaker Change: This call contains certain non-GAAP financial information.

Speaker Change: Information regarding and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and on our financial reports page at IR Dot Ameren healthcare Dot com.

Kerry: On the call today are Kerry graves, President and Chief Executive Officer, and Jeff Knudson, Chief Financial Officer, I will now turn the call over to Kerry.

Kerry Graves: Thank you for exhorting us for a review of our latest financial results and updated outlook.

Kerry Graves: Again, some continued challenging market conditions, we made progress on stabilizing our performance.

Speaker Change: Demand for healthcare was impressive this quarter and the market for skilled caregivers show signs of improvement.

Patient demand and labor supply are crucial drivers of long term growth in our businesses.

Speaker Change: Our consolidated revenue for the second quarter was $741 million, which enabled us to produce $16 million and net income of $100 million operating cash flow and adjusted EBITDA of $94 million.

Speaker Change: The adjusted EBITDA margin for the quarter surpassed the high end of guidance.

Speaker Change: Excluding some discrete items that favorably impacted SG&A adjusted EBITDA margin would have been above the high end of our guidance range.

Speaker Change: While we continue to see some pressure on placement volume and revenue from larger clients. We expect our third quarter adjusted EBITDA margin to be higher than sell side analysts expectations.

Our third quarter outlook at the midpoint implies that adjusted EBITDA and adjusted EPS will be in line with expectation.

Speaker Change: Our revenue outlook is approximately 4% below consensus.

<unk> continues to improve how well we are aligned with all segments of the market for total talent solutions in healthcare.

Speaker Change: These efforts are vitally important to our long term success.

Speaker Change: Coming off 2023, when we were in a net loss position with MSP contracts year to date, we are net neutral with wins and losses with last year's Rfps behind us and we are better situated with our clients today.

Speaker Change: The diversification of our business portfolio, including several high margin technology enabled revenue streams.

Speaker Change: Has enabled <unk> to maintain profit margins at attractive levels.

Speaker Change: At the same time, we are delivering to our staffing customers pricing and value that are in line with our industry peers.

Speaker Change: Across our staffing market, we are working toward capturing our share of large opportunities in dms.

Under neutral third party and direct staffing, where we again made progress this quarter.

Speaker Change: With our technology investments and rollout brand consolidation and reorganization of the way, we go to market and deliver Ami.

Speaker Change: Effectively has been re platforming most of the company.

Speaker Change: <unk> flex is now managing more than half of our shift wise vendor neutral spend under management.

Speaker Change: We also began deploying <unk> flex for our master vendor MSP clients earlier this quarter.

Speaker Change: We have a competitive platform that opens opportunities for us in current and new markets.

Speaker Change: This was demonstrated recently when stepwise flex was awarded a multiyear public sector contracts, beating out a competitive lists of healthcare and technology industry rivals.

Speaker Change: We have seen a healthy increase in the Vms pipeline, both in terms of spend under management and the number of deals.

Speaker Change: Yes.

Speaker Change: Our market insights tool is now being used by some of our largest clients and will be part of our shift wise flex platform.

Speaker Change: This powerful tool provides clients with market intelligence to help inform them on market trends and how does the bill rates to attract healthcare professionals by specialty geographic area and by times of the year.

Speaker Change: We are rolling out innovative workforce solutions, leveraging our clinician app <unk> passport include.

Speaker Change: Including internal float pool internal agency and shift level management.

Speaker Change: We have deployed these solutions to help some MSP clients and have an active implementation pipeline.

Speaker Change: We expect that our internal progress will improve our ability to serve clients with new business and gain market share.

Speaker Change: Meanwhile, the <unk> team continues to deliver on our clients' current needs to help them build a high quality sustainable workforce.

Speaker Change: Let's review, our second quarter performance in detail.

Speaker Change: In the second quarter nurse and Allied solutions recorded revenue of $442 million in line with our expectations.

Speaker Change: Across our travel nurse and allied businesses.

Speaker Change: Volume Bill rates and average hours were consistent with our assumptions entering the quarter.

Speaker Change: Gross margin for this segment was lower than the first quarter, primarily because of a favorable workers comp adjustment in the prior quarter.

Speaker Change: We offset the gross margin movement by reducing expenses and controlling costs.

Blime.

Speaker Change: We expect that our internal progress will improve our ability to serve clients, win new business, and gain market share.

Speaker Change: Our third quarter outlook for nurse and Allied revenue is down approximately 32% to 34% year over year better than the first half comparison, but still lower quarter over quarter.

AMN team: Meanwhile, the AMN team continues to deliver our client's current needs to help them build a high quality sustainable workforce.

Speaker Change: Demand as measured by <unk> orders has been on an upward trend since April.

AMN team: Let's review our second quarter performance in detail.

AMN team: In the second quarter, nurse and allies solutions recorded revenue of 442 million in line with our expectations.

Speaker Change: Total nurse and Allied orders grew nearly 20% since the beginning of the second quarter with the strongest growth in travel nurse.

AMN team: Across our travel nurse and allied businesses, volume, bill rates, and average hours were consistent with our assumptions entering the quarter.

Speaker Change: Though this increase was less than half normal seasonality. It was much improved over last year.

Speaker Change: At the same time, we continue to see large clients reduced utilization of contingent labor amid strong permanent hiring and reduced employee attrition.

AMN team: Gross margin for the segment was lower than the first quarter, primarily because of a favorable workers' comp adjustment in the prior quarter.

AMN team: We offset the gross margin movement by reducing expenses and controlling costs.

Speaker Change: Labor market data show that permanent job growth for hospitals in the first half of 2024 was the strongest since 1982.

AMN team: Our third quarter outlook for nurse and allied revenue is down approximately 32 to 34 percent year-over-year, better than the first half comparison, but still lower quarter-over-quarter.

Speaker Change: Taking into account all of these factors, we see scenarios in which nurse and Allied revenue, excluding international could range from being modestly down to modestly higher in Q4 from Q3.

AMN team: Demand as measured by open orders has been on an upward trend since April.

Speaker Change: Visibility for nurse and Allied beyond the current quarter has been challenging since the beginning of 2023.

AMN team: Total nurse and allied orders grew nearly 20% since the beginning of the second quarter with the strongest growth in travel nurse.

Speaker Change: We expect to receive winter needs orders later in Q3, which will give us more visibility into Q4 trends.

AMN team: Though this increase was less than tax normal seasonality, it was much improved over last year.

Speaker Change: Our physician and leadership solutions segment had second quarter revenue of $186 million.

AMN team: At the same time, we continue to see large clients reduce utilization of contingent labor amid strong permanent hiring and reduced employee attrition.

Speaker Change: Up 6% year over year, and about 4% lower than we had expected.

AMN team: Labor market data show that permanent job growth for hospitals in the first half of 2024 was the strongest since 1982.

Speaker Change: The organic locum Tenens business was up 1% quarter over quarter, although down 11% year over year.

Speaker Change: We saw extensions falloff in the quarter as clients were focused on cost management and were slower to make hiring decisions.

AMN team: Taking into account all these factors, we see scenarios in which nurse and allied revenue excluding international could range from being modestly down to modestly higher in Q4 from Q3.

Speaker Change: These factors impacted our organic locums business as well as MCR.

AMN team: Visibility for nurse and allies beyond the current quarter has been challenging since the beginning of 2023.

Speaker Change: Demand in Locums as healthy and coupled with our technology investments to improve our speed to fill as well as MSC RF capabilities. We are excited about our growth potential in this important market.

AMN team: We expect to receive winter needs orders later in Q3, which will give us more visibility into Q4 trends.

Results for interim leadership and search for flat versus the first quarter. So demand remains inconsistent.

AMN team: Our Physician and Leadership Solutions segment had second-quarter revenue of $186 million, up 6% year-over-year, and about 4% lower than we had expected.

Speaker Change: Segment gross margin in the quarter was lower than the first quarter due to a lower bill pay spread in locum tenants.

AMN team: The organic locum tenens business was up 1% quarter-over-quarter, although down 11% year-over-year.

Speaker Change: This was offset largely by prudent expense management.

Speaker Change: For the third quarter, we expect physician and leadership solutions revenue to be up 12% to 14% year over year.

AMN team: We saw extensions fall off in the quarter as clients were focused on cost management and were slower to make hiring decisions.

Speaker Change: And the technology and workforce solutions segment second quarter revenue was $112 million.

AMN team: These factors impacted our organic locums business as well as MSDR.

Speaker Change: Lower by 11% year over year and in line with our expectations.

AMN team: Demand in locums is healthy, and coupled with our technology investments to improve our speed to fill, as well as MSBR's capabilities, we are excited about our growth potential in this important market.

Language services posted 18% revenue growth driven by strong utilization of video interpretation.

Speaker Change: All other solutions in this segment were consistent with our outlook.

Speaker Change: The TWC segment contributed $47 million of operating income more than 40% of total segment operating income this quarter.

AMN team: Results for interim leadership in search for flat versus the first quarter, so demand remains inconsistent.

AMN team: [inaudible]

Speaker Change: The Gws segment profit margin also improved substantially this quarter.

Speaker Change: Segment growth margin in the quarter was lower than the first quarter due to a lower bill pay spread in local tenants.

Speaker Change: Our long term strategy is to continue increasing the segment share of our revenue and earnings due to its alignment with clients desires for more tech enabled solutions and it's attractive growth and margin profile.

AMN team: This was off that largely by prudent expense management.

AMN team: For the third quarter, we expect physician and leadership solutions revenue to be up 12-14% year-over-year.

Speaker Change: For the third quarter, we project technology, and workforce solutions revenue to be down 10% to 12% from the prior year.

AMN team: In the technology and workforce solution segment, second quarter revenue was $112 million, lower by 11% year-over-year and in line with our expectations.

Speaker Change: We have carefully managed long term strategy and near term spending and an improving environment still having its cross currency.

Speaker Change: Language Services posted 18% revenue growth driven by strong utilization of video interpretation.

Speaker Change: This has made it especially important for <unk> to ensure that our perspective of the changing health care sector is as clear and current as possible.

AMN team: All other solutions in this segment were consistent with our outlook.

AMN team: The TWS segment contributed 47 million of operating income, more than 40% of total segment operating income this quarter.

Speaker Change: We were delighted to add Jim Hinton, two our board of directors.

Speaker Change: Jim has invaluable experience as a former CEO of outstanding Health systems, Baylor, Scott <unk> White and Presbyterian Health services, New Mexico. In addition to serving as a past board chair of the American Hospital Association.

AMN team: The TWS segment profit margin also improved substantially this quarter.

AMN team: Our long-term strategy is to continue increasing the segment share of our revenue and earnings due to its alignment with clients' desires for more tech-enabled solutions and its attractive growth and margin profile.

Speaker Change: We also recently launched our first executive Advisory Board to help guide the company's mission of providing innovative total talent solutions for health care.

AMN team: For the third quarter, we project technology and workforce solutions revenue to be down 10 to 12% from the prior year.

Speaker Change: Our executive Advisory Board will ensure the AMT is closely aligned with the current and future needs of healthcare organizations as they deal with rising demand and increasingly complex labor supply.

Speaker Change: We have carefully managed long-term strategy and near-term spending in an improving environment still having its cross-current.

Speaker Change: At the helm of our Executive Advisory Board as Mike Butler, who is president of Providence, and led the health system through extraordinary growth.

Speaker Change: This has made it especially important for AMN to ensure that our perspective of the changing healthcare sector is as clear and current as possible.

Speaker Change: Before I turn the call over to Jeff for our financial review I want to recognize the wonderful <unk> team and our health care professionals for their impressive efforts, serving our communities and all our stakeholders.

Speaker Change: We were delighted to add Jim Hinton to our board of directors.

Speaker Change: Jim has invaluable experience as former CEO of Outstanding Health Systems Baylor Scott & White and Presbyterian Health Services New Mexico, in addition to serving as a past board chair of the American Hospital Association.

Speaker Change: Of our mission and your excellence are what enables <unk> ability to have such a positive impact and serving the health care needs of our communities.

Speaker Change: We also recently launched our first Executive Advisory Board to help guide the company's mission of providing innovative total talent solutions for healthcare.

Speaker Change: Now Jeff will continue with a review of our quarterly results and outlook.

Jeff Knudson: Thank you Terry and good afternoon, everyone.

Jeff Knudson: Second quarter consolidated revenues were $741 million down 25% from the second quarter of 2023 and down 10% sequentially in line with expectation.

AMN team: Our Executive Advisory Board will ensure that AMN is closely aligned with the current and future needs of healthcare organizations as they deal with rising demand and increasingly complex labor supply.

Jeff Knudson: The sequential decrease was primarily due to lower volume and the nurse and Allied segment in the locum Tenens and BMS businesses.

Speaker Change: At the helm of our Executive Advisory Board is Mike Butler, who is President of Providence, and led the health system through extraordinary growth.

Jeff Knudson: Consolidated gross margin for the second quarter was 31% also in line with expectations.

Speaker Change: Before I turn the call over to Jeff for a financial review, I want to recognize the wonderful AMN team and our health care professionals for their impressive efforts serving our communities and all our stakeholders.

Jeff Knudson: Year over year gross margin decreased 230 basis points, driven mainly by lower margins across all three segments.

Speaker Change: Your mission and your excellence are what enables AMN's ability to have such a positive impact in serving the healthcare needs of our communities.

Jeff Knudson: We offset by a favorable segment mix.

<unk> gross margin decreased 40 basis points, primarily due to lower nurse and Allied segment and lower gross margin, partially offset by a favorable revenue mix shift.

Speaker Change: Now, Jeff will continue with the review of our quarterly results and outlook.

Jeff: Thank you, Terry, and good afternoon, everyone.

Consolidated SG&A expenses were $149 million or 21% of revenue compared with $202 million or 24% of revenue in the prior year period.

Jeff: 2nd quarter consolidated revenue with 741 million, down 25% from the 2nd quarter of 2023, and down 10% sequentially in line with expectations.

$175 million or 21, 3% of revenue in the previous quarter.

Jeff: The sequential decrease was primarily due to lower volume in the nurse and allied segment and the locum tenens in BMS businesses.

Jeff Knudson: The decrease in SG&A expenses year over year was primarily due to lower employee and professional service expenses as we remain steadfast in reducing costs to match the revenues.

Jeff: Consolidated gross margin for the second quarter was 31%, also in line with expectations.

Jeff: year-over-year gross margin decrease 230 basis points driven mainly by lower margins across all three segments, partly offset by a favorable segment mix.

Jeff Knudson: Lower employee expenses and favorable actuarial adjustments for professional liability insurance drove the decrease sequentially.

Jeff Knudson: Adjusted SG&A, which excludes acquisition integration and other costs legal settlement accrual changes.

Speaker Change: The quenchily gross margin decrease 40 basis points. I'm an early due to lower nurse in our life segment and low-conscuers margin, partially offset by a favorable revenue mid-shift.

Jeff Knudson: Stock based compensation expense was $137 million in the second quarter or 18, 5% of revenue.

Jeff: Consolidated SG&A expenses were $149 million, or 20.1% of revenue, compared with $202 million, or 20.4% of revenue in the prior year period.

Jeff Knudson: $170 million or 17, 1% of revenue in the prior year period.

Jeff Knudson: $162 million or 19, 7% of revenue in the previous quarter.

Jeff: and $175 million or 21.3% of revenue in the previous quarter.

Jeff Knudson: Discrete items that we do not expect to recur in the third quarter included an actuarial adjustment for professional liability insurance and a change in the accrual for incentive compensation.

Jeff: The decrease in SG&A expenses year-over-year was primarily due to lower employee and professional service expenses.

Jeff Knudson: These items reduced SG&A by $7 million in the quarter.

Jeff: as we remain steadfast in reducing costs to master revenues.

Jeff Knudson: Nurse and Allied revenue was $442 million in the second quarter down 36% from the second quarter of 2023.

Jeff: Lower employee expenses and favorable actuarial adjustments for professional liability insurance drove the decrease sequentially.

Jeff Knudson: Sequentially segment revenue was down 15% driven by lower volume and lower rates in travel nurse and Allied.

Jeff: A Justice DNA, which excludes acquisition, integration, and other costs, legal settlement accrual changes, and stock-based compensation expense.

Jeff Knudson: Average bill rate was down 12% year over year and 3% sequentially.

Jeff: was $137 million in the second quarter, or 18.5% of revenue.

Influenced by a mix shift towards the alloy.

Jeff: compared with $170 million, or 17.1% of revenue in the prior year period, and $162 million, or 19.7% of revenue in the previous quarter.

Jeff Knudson: Year over year volume decreased 24% and average hours worked were 1% lower.

Jeff Knudson: Sequentially volume was down 11%, while average hours worked for flat.

Jeff: The screen ID is that we do not expect to recur in the third quarter, including an actuarial adjustment for a professional liability insurance and a change in the accrual for incentive compensation.

Speaker Change: Travel nurse revenue in the second quarter was $277 million, a decrease of 42% from the prior year period and.

Jeff Knudson: 17% from the prior quarter.

Jeff: These items reduced SGNA by 7 million in the quarter.

Jeff Knudson: Allied revenue in the quarter was $151 million down 17% year over year and 11% sequentially.

Jeff: Nurse and Allied revenue was 442 million in the second quarter, down 36% from the second quarter of 2023.

Jeff Knudson: Nurse and Allied gross margin in the second quarter was 23, 8% a decrease of 290 basis points year over year, primarily due to increases in housing traveling alone expenses and the deleveraging impact of lower bill rates.

Jeff: Sequentially, segment revenue was down 15%, driven by lower volume and lower rates than Travel Nurse and Allied.

Jeff: Average bill rate was down 12% year-over-year and 3% sequentially.

Jeff Knudson: Sequentially gross margin decreased 130 basis points, mainly due to our workers comp accrual adjustments that benefited the first quarter margin along with higher housing cost.

Jeff: influenced by a makeshift toward allies.

Jeff: Year over year, volume decreased 24%, and average hours worked were 1% lower.

Jeff Knudson: Segment operating margin of 10, 4% decreased 450 basis points year over year, but increased 10 basis points sequentially.

Jeff: sequentially falling with down to 11% while average hours work for a flat.

Jeff: Travel nurse revenue in the second quarter was $277 million.

The slight increase from the first quarter was driven primarily by favorable insurance actuarial adjustments and lower employee expenses offsetting the lower gross margin.

Jeff: A decrease of 42% from the prior year period and 17% from the prior quarter.

Jeff: Allied revenue in the quarter was 151 million, down 17% year over year, and 11% for cornstarch.

Jeff Knudson: Moving to the physician and leadership solutions segment second quarter revenue of $186 million increased 6% year over year due to the MTR acquisition <unk>.

Jeff: Nurse and allied gross margin in the second quarter was 23.8%, a decrease of 290 basis points year-over-year, primarily due to increases in housing, travel, and allowance expenses.

Jeff Knudson: Sequentially revenue was down 1% driven by lower locum tenens revenue and lower volumes in the search business as expected.

Jeff: and the deleveraging impact of lower bill rates.

Jeff Knudson: Locum Tenens revenue in the quarter was $143 million up 17% year over year with the growth coming from them STR acquisition.

Jeff: Sequentially, gross margin decreased 130 basis points, mainly due to a workers' comp accrual adjustment that benefited the first quarter margin, along with higher housing costs.

Speaker Change: Interim leadership revenue of $30 million decreased 17% from the prior year period and was flat sequentially.

Jeff: Segment operating margin of 10.4% decreased 450 basis points year-over-year but increased 10 basis points sequentially.

Search revenue was $13 million was down 27% year over year and down 1% sequentially as volumes remained low.

Jeff: The slight increase from the first quarter was driven primarily by favorable insurance-actuarial adjustments and lower employee expenses offsetting the lower gross margin.

Speaker Change: Gross margin for the physician leadership solutions segment was 35%.

Speaker Change: 460 basis points year over year, and 110 basis points sequentially.

Jeff: Moving to the physician and leadership solution segment, second quarter revenue of 186 million increased 6% year-over-year due to the MFDR acquisition.

Speaker Change: The year over year decline was primarily attributable to lower bill pay spread within locum tenants.

Speaker Change: We offset by improved gross margin in the Americas.

Jeff: Sequentially, revenue was down 1% driven by lower locum tenens revenue and lower volume in the search business as expected.

Speaker Change: Segment operating margin was 11, 6%, which decreased 340 basis points year over year, primarily due to lower gross margin.

Jeff: Locum Tenens revenue in the quarter was $143 million, up 17% year-over-year with the growth coming from the MSDR acquisition.

Speaker Change: Sequentially operating margin decreased 20 basis points.

Speaker Change: Technology and workforce solutions revenue for the second quarter was $112 million down 11% year over year of the revenue decrease in the Vms business more than offset the language services revenue growth.

Jeff: Interim leadership revenue of $30 million decreased 17% from the prior year period and was flat sequentially.

Speaker Change: Sir Travno 13 million was down 27% year of year and down 1% sequentially as volumes remain loved.

Speaker Change: Sequentially revenue was flat.

Speaker Change: Language services revenue for the quarter was $75 million, an increase of 18% year over year and 5% sequentially.

Speaker Change: Gross margin for the physician leadership solution segment with 30.5% down 460 basis points year over year and 110 basis points, accordingly.

Speaker Change: <unk> revenue for the quarter was $28 million, a decrease of 41% year over year and 5% sequentially.

Speaker Change: The year-over-year decline was primarily attributable to a lower bill pay spread within local tenants, partially offset by improved gross margin in the interim business.

Speaker Change: Segment gross margin was 62% down from 66, 7% in the prior year period, primarily due to lower revenue within the BMS and outsourced solutions businesses.

Speaker Change: Segment operating margin was 11.6%, which decreased 340 basis points year-over-year, primarily due to lower gross margin.

Speaker Change: Segment operating margin in the second quarter was 42, 1% a decrease of 200 basis points from the prior year period, driven by the decrease in gross margin, partially offset by a reduction of SG&A expenses.

Speaker Change: Sequentially, operating margin decreased 20 basis points.

Speaker Change: Technology and Workforce Solutions revenue for the second quarter was 112 million, down 11% year over year at the revenue decrease in the BMS business.

Speaker Change: Segment operating margin increased 280 basis points from the prior quarter, mainly due to lower employee expenses.

Speaker Change: more than offset the language services revenue growth.

Speaker Change: Sequentially, revenue was flat.

Speaker Change: Second quarter consolidated adjusted EBITDA was $94 million, a decrease of 42% year over year and 4% sequentially.

Speaker Change: Language Services revenue for the quarter was 75 million in increase of 18% year over year and 5% sequentially.

Speaker Change: Adjusted EBITDA margin for the quarter of 12, 7% was above the high end of the guidance range, mainly due to favorable insurance actuarial adjustments and lower employee expenses.

Speaker Change: BMS revenue for the quarter was $28 million, a decrease of 41% year-over-year and 5% sequentially.

Speaker Change: Segment gross margin was 60.2%, down from 66.7% in the prior year period, primarily due to lower revenue within the VMS and outsourced solutions businesses.

Speaker Change: Year over year, adjusted EBITDA margin is down 360 basis points, primarily due to deleveraging on lower revenue, while we reduced SG&A expenses to follow the revenue declines.

Speaker Change: Segment operating margin the second quarter was 42.1 percent, a decrease of 200 basis points from the prior year period, driven by the decrease in gross margin, partially offset by reduction of SG&A expenses.

Speaker Change: Sequentially adjusted EBITA margin was up 80 basis points, driven by the technology and workforce solutions segment, and a favorable mix shift.

Speaker Change: Second quarter net income was $16 2 million down 73% year over year and 6% sequentially.

Speaker Change: Segment operating margin increased 280 basis points from the prior quarter, mainly due to lower employee expenses.

Speaker Change: Second quarter GAAP diluted earnings per share was <unk> 42.

Speaker Change: The second quarter consolidated that Justin Even though was 94 million, a decrease of 42% year over year and 4% sequentially.

Speaker Change: Adjusted earnings per share for the quarter was <unk> 98.

Speaker Change: Compared with $2, 38% from the prior year period, and 97 cents in the prior quarter.

Speaker Change: Adjusted EBITDA margin for the quarter of 12.7% was above the high end of the guidance range, mainly due to favorable insurance actuarial adjustments and lower employee expenses.

Speaker Change: Days sales outstanding for the quarter was 63, one day lower than the prior quarter and 10 days higher than a year ago, which was our low more for DSO in 2023.

Speaker Change: Year-over-year adjusted EBITDA margin was down 360 basis points.

Speaker Change: Since the start of 2024, we have reduced DSO by seven days.

Speaker Change: primarily due to deleveraging on lower revenue while we reduce SG&A expenses to follow the revenue declines.

Speaker Change: To end the year below 60 days.

Speaker Change: Sequentially, adjust me, but I'm marching with up 80 basis points.

Speaker Change: Operating cash flow for the second quarter was $100 million and capital expenditures were $27 million.

Speaker Change: Driven by the Technology and Workforce Solutions Segment, and a favorable mix shift.

Speaker Change: We expect capex for the year to total $70 million to $75 million.

Speaker Change: Second quarter net income was $16.2 million, down 73% year-over-year and 6% sequentially.

Speaker Change: As of June 30, we had cash and equivalents of $48 million long term debt of $1 2 billion, including the $345 million draw on our revolving line of credit.

Speaker Change: Second quarter gap diluted earnings per share was $0.42.

Speaker Change: A judge that earned his per share for the quarter with 98 cents, compared to $2.38 in the prior year period, and 97 cents in the prior quarter.

Speaker Change: Net leverage ratio of two six times to one.

Speaker Change: During the quarter, we paid off $80 million of revolver debt, bringing the year to date pay down to $115 million.

Speaker Change: Day sales outstanding for the quarter was 63, one day lower than the prior quarter, and 10 days higher than a year ago, which was our low mark for DSO in 2023.

Speaker Change: Moving to third quarter 2024 guidance, we project consolidated revenue to be in a range of $660 million to $680 million down 20% to 23% from the prior year period.

Speaker Change: Since the start of 2024, we have reduced DSO by 7 days and expect to end the year below 60 days.

Speaker Change: Gross margin is projected to be between 37 and 31, 2%.

Speaker Change: Operating cash flow for the second quarter was $100 million and capital expenditures were $27 million.

Speaker Change: Reported SG&A expenses are projected to be 22 to 22, 5% of revenue.

Speaker Change: We expect CAPEX for the year to total $70 to $75 million.

Speaker Change: Operating margin is expected to be $2, one to two 9% and adjusted EBITA margin is expected to be 10, six to 11, 1%.

Speaker Change: As of June 30, we had cash in equivalence of $48 million, long-term debt of $1.2 billion, including a $345 million draw on our revolving line of credit, and a net leverage ratio of 2.6 times to 1.

Speaker Change: Average diluted shares outstanding are projected to be approximately $38 3 million.

Speaker Change: Additional third quarter guidance details can be found in today's earnings release.

Speaker Change: During the quarter, we paid off $80 million of Revolver debt, bringing the year-to-date pay down to $115 million.

Speaker Change: And now operator, please open the call for questions.

Speaker Change: Moving to third quarter, 2024 guidance, we project consolidated revenue to be in a range of 660 million to 680 million.

Speaker Change: Thank you.

Speaker Change: Andre if you would like to ask a question. Please press star one on your telephone.

Speaker Change: We also ask that you. Please wait for your name is something to be announced before you proceed with your question.

Speaker Change: down 20 to 23 percent from the prior year period. Gross margin is projected to be between 30.7 and 31.2 percent.

Andre: Our first question for today.

Speaker Change: We will be coming from Trevor Romeo.

Speaker Change: Of William Blair. Your line is open.

Speaker Change: Reported SG&A expenses are projected to be 22-22.5% of revenue.

Trevor Romeo: Good afternoon, Thanks for taking my questions team.

Speaker Change: I think one it would just be great. If you could provide any details you have on.

Speaker Change: Operating margin is expected to be 2.1 to 2.9% and adjust to the EBITDA margin is expected to be 10.6 to 11.1%.

Speaker Change: The bill rate and volume assumptions for nurse and Allied that are embedded in the Q3 guide and then thinking to Q4, I think Teri talked about a range of potential outcomes relative to Q3, and Jeff I kind of always appreciate that look you tend to give on these calls for two quarters ahead. So any thoughts on how you'd see Q4 shaping up for bill rates in vol.

Speaker Change: Average diluted shares outstanding are projected to be approximately $38.3 million.

Speaker Change: Additional third quarter guidance details can be found in today's earnings release.

Speaker Change: And now, Operator, please open the call for questions.

Speaker Change: <unk> just based on what you can see at this point would be really helpful.

Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone.

Speaker Change: Got it thanks, Trevor so as it relates to the Q3 guide we have bill rates down low single digits sequentially from Q2 and volumes down low double digits in nurse and Allied from Q2 levels.

Speaker Change: We also ask that you please wait for your name and company to be announced before you proceed with your question.

Speaker Change: Our first question for today.

Speaker Change: Will be coming from Trevor Romeo.

Speaker Change: of William Blair. Your line is open.

Speaker Change: When we think about the fourth quarter.

Trevor Romeo: Good afternoon. Thanks for taking questions, team. Yeah, I think, you know, one, it would just be great if you could provide any details you have on

Speaker Change: <unk> mentioned the range of scenarios excluding international so.

Speaker Change: With the impact of visa retro aggression on the international business, we would expect that business in the fourth quarter to be down $6 million to $8 million sequentially from Q3, So thats about a 200 basis point drag.

Speaker Change: The growth within the segment.

Speaker Change: So when we look at bill rates.

Speaker Change: Volumes quarter over quarter.

Speaker Change: Again winter orders will be.

Speaker Change: Big swing factor for us within the quarter, where not only those volumes come in but the start dates within the quarter and then also where the bill rates land. So we would see bill rates within those range of outcomes being anywhere from flattish.

Speaker Change: To maybe down slightly in the fourth quarter.

Speaker Change: And then volumes ranging from a low single digit increase to low single digit down quarter.

Speaker Change: Quarter over quarter.

Speaker Change: And Trevor we've gotten some indications from clients to expect those orders, but we wouldn't see them until later in the quarter.

Trevor Romeo: Got it okay. Thank you both that was helpful.

Speaker Change: Thank you and one let me say industry.

Speaker Change: One moment for the next questions.

Speaker Change: And our next question will be coming from Bryan.

<unk>: <unk> of Jefferies. Your line is open.

Speaker Change: Hey, good afternoon guys.

Speaker Change: Follow up to <unk> question. So if we see orders up 20% just like you just said plus low single to minus low single in Q4, maybe.

Speaker Change: Help us bridge that.

Speaker Change: Does the order number translate to a different volume expectation and then also how are you thinking about typical seasonality.

Speaker Change: Youre seeing plus 20% orders here and I think normally seasonal patterns are even more pronounced than that so just curious what youre thinking or what you're sick.

Speaker Change: Yeah, Brian on.

Brian: On the seasonality, we went back and looked at the couple of years, leading up to 2019 and normally we would've seen demand increase somewhere in the 25% to 30% range versus what we've seen here this year up 20% and off a lower trough quite honestly so yes.

Speaker Change: The demand trends are improved.

Speaker Change: But it was off a lower base and not quite back to where we were pre pandemic I think when we just think about the volumes.

Speaker Change: Within nurse and Allied one thing I would say is as we look at the monthly see clients within the third quarter. The traveler count is stable July through September, albeit with a lower starting point in July when we were at the end of Q2, so thats a much improved <unk>.

Speaker Change: From.

Speaker Change: From where we were in the second quarter.

Speaker Change: June was the low point.

Speaker Change: Within the quarter.

Speaker Change: So with that demand I would just say when were.

Speaker Change: Gets back to what Gary said about some of our MSP clients, we're still seeing reductions in utilization.

Gary: And we're seeing extension rates.

Speaker Change: At the.

Gary: The low end of what would be historically normal.

Speaker Change: From a continuation standpoint about 500 basis points off the average, but it's within the norm, but at the low end of that range.

Speaker Change: Okay that makes sense and then maybe just as I think about G&A.

Gary: Any discrete items or one timers in the G&A line that you would call out.

Speaker Change: And maybe just how you think we should be modeling G&A going forward.

Speaker Change: Yes, so within the second quarter.

Speaker Change: We had about $7 million of discreet items that added a 100 basis points to adjusted EBITDA margin.

Speaker Change: So ex those we would've been at 11, 7%, which was 20 basis points above the high end of the guide.

Speaker Change: About $4 million about $7 million related to an actuarial adjustment on professional liability insurance, which we true up twice a year in Q2 and Q4.

Speaker Change: The remaining 3 million was related to some variable and incentive compensation accruals, we wouldn't expect those to recur in the third quarter, but despite that we would see adjusted SG&A dollars pretty flattish in the back half to Q3 levels.

As reported on adjusted SG&A.

Speaker Change: All right got it thank you.

Speaker Change: Thank you one moment to the next question.

Speaker Change: And our next question will be coming from the line of Jeff similar.

Speaker Change: BMO capital markets. Your line is open.

Jeff Knudson: Thanks, So much I wanted to dig into some of the demand trends that you've been talking about.

Jeff Knudson: I know, it's tough to gauge, but do you think most of your hospital clients are comfortable with the mix of permanent to temporary staff and we think thats going to go lower.

Jeff Knudson: I'll take it to get moving in the right direction.

Jeff Knudson: Okay.

Jeff Knudson: So Geoff maybe I'll talk a little bit about what we're seeing from a macro standpoint.

Geoff: So across the board for most of our clients were seeing higher patient utilization.

Geoff: Against that what we've been seeing over the past four to five quarter.

Geoff: Very strong permanent hiring.

<unk> also seen higher retention rates now those retention rates are coming off of.

Speaker Change: Unusually low retention rate during COVID-19 and we've also seen a lot of effort to hire lower paid workers to support some of the clinical rules.

Speaker Change: But even with all of these efforts and they have been very strong, especially around the permanent hiring youre still seeing open roles.

Speaker Change: Two one to one from a higher standpoint and.

Speaker Change: So we're seeing still pressure as you increase.

Speaker Change: Patient utilization.

Speaker Change: Against the workforce, it's available and if you look at the contingent premium were now in the back half of the year getting back and we're in normal ranges of 15% to 20%.

Speaker Change: And so those sets of dynamics I think are making it more interesting from a demand standpoint.

Speaker Change: What we're seeing from clients is even if they have a target of where they want their contingent spend to be they may have underestimated some of the efforts to permanent hiring or not factored in some of the retention effort. So we're seeing those factors.

Speaker Change: Play and I'd say, particularly over the past quarter or two and where they are coming out.

Speaker Change: Okay.

Speaker Change: Alright, that's helpful. If I could ask a similar question about your own workforce.

Speaker Change: Are you at a point, where you think you've right sized enough that youre workforce can handle the current demand environment and how quickly can you turn as things start to move in the right direction.

Speaker Change: Yes, we feel good about where we are we've been very.

Speaker Change: Conscientious about right sizing as we saw demand.

Speaker Change: Shake out in different parts of our business, but we are positioning ourselves both in terms of our workforce and our capabilities to be able to meet rising demand conditions.

Speaker Change: Alright, thanks, so much for the color.

Speaker Change: Thank you and one moment to the next question.

Speaker Change: And our next question today will be coming from the line of a J rice of UBS. Your line is open.

Hi, Thanks, everybody.

Speaker Change: Everybody.

Speaker Change: Maybe just.

Following on Jeff's comment about.

Kerry Graves: Yes, Kerry to to some degree of fourth quarter with what you are envisioning with revenue.

Speaker Change: Well, how does that translate into do you think we're at a stable point with gross margin from Q3 to Q4, how about SG&A is that.

Speaker Change: Sort of flatten out or is there any reason that would step up or down.

Speaker Change: Thank you.

Speaker Change: Looking for necessarily a specific estimate, but directionally, where we're at as we think we're bottoming out here generally.

Speaker Change: Yes, I would say a J on the gross margins both from.

Speaker Change: Our nurse and Allied standpoint, and also from a consolidated standpoint, I think something.

Speaker Change: In the high Thirty's.

Speaker Change: Yes.

Speaker Change: 30 points.

Speaker Change: <unk> nine to the low 30 ones.

Speaker Change: Is a reasonable estimate.

Speaker Change: For.

Speaker Change: Which is essentially the midpoint of the guide for Q3, and where we were in Q2 that that's reasonable to think about the fourth quarter that same way.

Speaker Change: And then from an adjusted SG&A standpoint.

Speaker Change: Dollars being relatively flattish.

Speaker Change: Q2 levels.

Speaker Change: Would also be the right way to think about the fourth quarter.

Speaker Change: Okay. That's helpful.

Speaker Change: Just thinking about use of cash flow from here.

Speaker Change: I guess by our calculation you ended the quarter at two six times debt to EBITDA I think youll be at three or above as you exit the year is paying down debt priority, where you're comfortable on that leverage ratio as you go forward.

Speaker Change: Yes debt Paydown has been our priority as we've gone through the first half of this year, we've paid off $115 million year to date and that includes the $80 million.

Speaker Change: In the second quarter alone a J. So we'll continue to prioritize debt paydown with excess free cash flow for.

Speaker Change: For the remainder of this year.

Speaker Change: Probably into the early part of 'twenty five as well.

Speaker Change: And.

Speaker Change: I guess I am trying to get at what is.

Speaker Change: What leverage ratio would you sort of be back to a balance between.

Speaker Change: Potentially acquisitions buybacks and leverage.

Speaker Change: Where would you guys feel comfortable at sort of at a good point.

Speaker Change: We'd want to see it back below two five.

Speaker Change: Before we went to prioritize debt paydown.

Speaker Change: Okay. Thanks, a lot.

Speaker Change: Okay.

Speaker Change: Thank you Tim one moment for the next question.

Mark <unk>: Our next question will be coming from the line of Mark <unk>.

Speaker Change: <unk> of Baird. Your line is open.

Speaker Change: Hey, good afternoon, and thanks for taking my questions.

Speaker Change: Really films the comments on the volumes.

I was wondering can you talk a little bit about what youre seeing just in terms of the pay rates.

Through the first half of this year, we've paid off $115 million year-to-date, and that includes $80 million.

the second quarter alone, AJ, so we'll continue to prioritize debt pay down with excess free cash flow for the remainder of this year and probably into the early part of 25 as well.

Speaker Change: With some of the traveling nurses are looking for.

Speaker Change: You did mention that the premiums are coming down to 15% to 20% above perm for contingent and so.

and how I guess I'm trying to get at what is

Speaker Change: So is that sufficient to.

Speaker Change: To fill demand that's the first question.

What leverage ratio would you sort of be back to a balance between potentially acquisitions, buybacks, and leverage? Where would you guys feel comfortable? And it's sort of at a good point.

Speaker Change: Yes, I think historically, if you look at that premium.

That has typically been sufficient to fulfill demand, obviously youre going to have differences in geography.

We'd want to see it back below 2.5.

Speaker Change: <unk>.

Speaker Change: I think mark when you look at one of the things that we look at from a macro standpoint is the premium is off of an increasing permanent weeds.

before we would be prioritized to stay down.

Okay, thanks a lot.

Thank you, and one moment for the next question.

Mark <unk>: And so I think thats going to be one of the dynamics factors that you look at where over the past year and a half we really had the contingent wages.

[inaudible]

Our next question will be coming from the line of Mark Marcon of Baird. Your line is open.

Speaker Change: A very high premium coming down, but now as you've gotten into these normalized.

Good afternoon and thanks for taking my questions.

Speaker Change: <unk>, it's off of a of a base that is increasing.

Bonnet.

I really found the comments on the volumes helpful. I was wondering, can you talk a little bit about what you're seeing just in terms of the pay rates?

Speaker Change: Great. So it sounds like.

Speaker Change: The.

Speaker Change: B the.

Speaker Change: Fill rates are in line with what your expectations would be in.

that some of the traveling nurses are looking for.

Speaker Change: Filling.

You did mention that the premiums are coming down to 15 to 20 percent above perm for contingent. And so, is that sufficient to fill demand? That's the first question.

Speaker Change: <unk> orders is not an issue it's still demand from our clients is that correct.

Speaker Change: Yes, I would say largely that debt.

Speaker Change: If you have specialties that are hard to fill is there going to be hard to tell but if you have orders that are priced at market.

Yeah, I think historically, if you look at that premium, that has typically been sufficient to fulfill demand. Obviously, you're going to have differences in geography and specialties.

Speaker Change: The high fill rates.

Speaker Change: So it really is about the demand is coming back.

Speaker Change: Okay, Great and then can you just talk a little bit I mean, obviously everybody in the entire space is facing the same sort of demand characteristics. It sounds like the bill rates.

I think Mark, when you look at one of the things that we look at from a macro standpoint is the premium is also an increasing current wage.

Speaker Change: Our holding up relatively well can you just talk a little bit about competition and what youre seeing on that front and how confident are you in terms of the prognostication that you gave with regards to how you would expect the bill rates to flow through the balance of this year.

And so I think that's going to be one of the dynamic factors that you look at where, over the past year and a half, we really had the contingent wages at, you know, a very high premium coming down, but now as you've gotten into these normalized

You know, ranges, it's off of a base that is increasing.

Speaker Change: Yes, let me talk a little about competition and then Jeff can talk a little about the transparency we have until we.

So, it sounds scary like the, um,

Jeff Knudson: We have been in a competitive environment, we continue to be in competitive environment. So I don't see that changing in the short and intermediate term.

The fill rates are in line with what your expectations would be and filling the orders is not an issue, it's still just demand from the clients, is that correct?

Speaker Change: So we've seen pressure as everyone in the industry has over the past year.

Jeff Knudson: So.

Jeff Knudson: That's reflected in.

Yeah, I'd say largely that's it. I mean, if you have specialties that are hard to fill, they're going to be hard to fill. But if you have orders that are priced at market, you see high fill rates. So it really is about the demand coming back.

Speaker Change: What you have seen from a performance standpoint, but also our forecast.

Speaker Change: Yes, Mark and then I would just say on on the bill rates for the third quarter. When we look at the bill rates that we have in July for our travelers on assignment and where were booking.

Okay, great. And then can you just talk a little bit, I mean, obviously, everybody in the entire space is facing the same sort of demand characteristics. It sounds like the bill rates

Speaker Change: Future.

Speaker Change: That supports that low single digit down into the third quarter and then obviously.

Speaker Change: Seasonally we will get some influence on the bill rate from those winter needs orders and.

are holding up relatively well. Can you just talk a little bit about competition and what you're seeing on that front and how constant are you in terms of the prognostication that you gave with regards to it?

Speaker Change: We believe in a flattish scenario would offset any pressure on bill rates in the non winter needs orders.

Speaker Change: Great and then on a positive note.

how you would expect the bill rates to flow through the balance of this year.

Speaker Change: Youre seeing really nice traction with shift wise.

Speaker Change: You mentioned getting up to 50% what do you think that can get to and what would be the implications of that.

Yeah, let me talk a little bit about competition and then, you know, Jeff can talk a little bit about the transparency we have on Bill Reeth.

We have been in a competitive environment, we continue to be in a competitive environment.

Yes, So let me give context for what 50% is so we are very happy with how we are doing on shift like flex and so our number one goal is to re platform our shift wise clients into shifts like flex so that 50%.

So, I don't see that changing in the short and intermediate term. And so, we've seen pressure, as everyone in the industry has, over the past year, so

You know, that's reflected in, you know, both what you have seen from a performance standpoint, but also our forecast.

Speaker Change: Number is we are over.

Speaker Change: <unk> way in terms of client spend under management, putting them onto shipped twice flex. We also started with our first MSP client and we expect as we end this year to have the majority of our.

Yeah, Mark, and then I would just say on the bill rates for the third quarter, when we look at

You know, the bill rates that we have in July for our travelers on assignment and where we're booking.

and the future TOA that supports that low single digit down into the third quarter. And then obviously, seasonally, we'll get some influence on the bill rate from those winter needs orders.

Speaker Change: Vms clients completed and we would expect to have made significant progress with our MSP clients. So first.

Priority for US is re platforming existing client the second piece Mark is building our pipeline, which we saw very healthy progress again.

We believe in a flattish scenario would offset, you know, any pressure on bill rates in the non-winter needs orders.

Speaker Change: When we look at it from a quarter over quarter basis.

Great. And then on a positive note, you're seeing really nice traction with shift-wise. You mentioned getting up to 50%. Where do you think that can get to and what would be the implications of that?

Speaker Change: What are the financial implications of that.

Speaker Change: So if you think about the financial implications.

Speaker Change: One on re platforming.

Speaker Change: You should not be accretive from a revenue standpoint, they are existing clients, we think that there's opportunities, especially because just like flex has enhanced capabilities from a technology standpoint for that to be a platform that we can do more with some of those existing clients.

So let me give context for what 50% is. So we are very happy with how we are doing on shift-wise flex.

And so our number one goal is to re-platform our shift-wise clients into shift-wise flex.

Speaker Change: If you look at our pipeline that pipeline revenue impact really wouldn't have any impact until 2025 as you started to work down.

So that 50% number is, we are over halfway in terms of client spend under management, putting them on to shift twice flex. We also started with our first MST client.

Speaker Change: The pipeline and then onboard.

Speaker Change: And from that pipeline.

Speaker Change: So it won't have an impact this year you should expect it to have more of an impact.

And we expect, as we end this year, to have the majority of our VMS clients completed, and we would expect to have made significant progress with our MSP clients.

Speaker Change: You get into the back half of 2025.

Speaker Change: Great. Thanks for the color I appreciate it.

Thank you and one will move to the next question. Please.

So, first, you know, priority for us is re-platforming existing clients. The second piece, Mark, is building our pipeline, which we saw very healthy progress against when we look at it from a quarter-over-quarter basis.

Our next question will be coming from the line of Kevin Fischbeck of Bank of America. Your line is open.

Kevin Fischbeck: Great. Thanks.

What are the financial implications of that?

Kevin Fischbeck: I guess a year.

Speaker Change: The second somebody to say that.

So, if you think about the financial implications, the first one on re-platforming,

The orders are up about 20% since the beginning of Q2, but so yes talking about.

should not be a creative from a revenue standpoint. They're existing clients. We think that there's opportunities, especially because just why black has enhanced capabilities from a technology standpoint, for that to be a platform that we can do more with some of those existing clients.

Speaker Change: Still a little bit below Q2 average.

Speaker Change: <unk>.

Speaker Change: Revenue and then.

Speaker Change: Q4, it sounds like still also kind of stable ish. Despite the orders going up so does that does that mean something around I guess, you mentioned that orders.

If you look at our Pipeline, that Pipeline revenue impact really wouldn't have any impact until 2025. As you started to work down, the Pipeline and then on board, you know, wins from that Pipeline.

Speaker Change: Are you able to be filled if they are at market does that mean that these orders that are coming in are not at market or why isn't there a better correlation between 20% and.

Speaker Change: And the revenue numbers over the next few quarters.

Speaker Change: Yes, I'd say two things one is you always have some mix of orders that are going to be.

So, it won't have an impact this year, you should expect it to have more of an impact as you get into the back half of 2021.

Speaker Change: At market rates or below and so what you tend to see is for orders that come in that arnett market. They have very low fill rate and they tend to age. So that's going to be true as you see increased demand youre going to have some of those orders that are not going to be at market.

Great, thanks for the call, appreciate it.

Thank you. And one moment for the next question, please.

Our next question will be coming from the line of Kevin Fishback of Bank of America. Your line is open.

Speaker Change: And the <unk>.

You tend to see them age.

Speaker Change: In terms of when you look at what we're seeing overall from the demand increases in open orders that we've seen since the beginning of April and a little bit of what Jeff had talked about earlier. We're also seeing for some large clients where they have reduced utilization we've seen this.

Great, thanks. I guess you're the second somebody to say that, you know, the orders are up about 20% since the beginning of Q2, but still, you know, talking about, you know, stable but below Q2 average.

Jeff Knudson: A lot in our extension rate.

Revenue and then, you know, Q4 sounds like still also kind of stable-ish despite the orders going up. So does that does that mean something around I guess you mentioned that orders

Jeff Knudson: So that's the piece, Kevin where we're seeing.

Speaker Change: Promising signs around the demand, but we still have some stabilization.

Speaker Change: That we are seeing some of our clients.

are able to be filled if they're at market. Does that mean that these orders that are coming in are not at market? Or why isn't there a better correlation between 20% and the revenue numbers over the next 10 quarters?

Speaker Change: Okay, and then I guess the winter orders.

Speaker Change #100: I guess I think historically you have a little bit of color at this point it sounds like it sounds like it's kind of been pushed back a little bit as far as when those orders come in is that is there.

Yeah, I'd say two things. One is you always have some mix of orders that are going to be, you know, at market rates or below. And so what you tend to see is for orders that come in that aren't at market, they have very low fill rates and they tend to age.

Speaker Change #100: And the implication for that I guess in the past that they come in a little bit later does that mean.

Speaker Change #101: The orders are going to be lower or does it or does that not necessarily follow through.

Kevin Fischbeck: Yes, I think Kevin.

Speaker Change #102: From a timing standpoint, we're expecting it to look like last year I don't know that coming in later.

So, that's going to be true as you see increased demand. You're going to have some of those orders that are not going to be at market.

Kevin Fischbeck: Signals anything in terms of volume, but what we did see last year versus pre pandemic was a shift where more of those Q4 starts were in the mid to late November timeframe, which was.

You tend to see them age.

In terms of when you look at what we're seeing overall from the demand increases and open orders that we've seen since the beginning of April , and it's a little bit of what Jeff had talked about earlier.

Kevin Fischbeck: Couple of weeks later than normal what we had seen 2019 at Pryor.

We're also seeing for some large clients, where they have reduced utilization, we've seen this, you know, a lot in our extension rate. And so, that's the piece, Kevin, where we're seeing, you know,

Kevin Fischbeck: And is that is that a new normal does that mean that.

Kevin Fischbeck: Hospitals are just waiting a little bit longer to to use temp staffing and thats just the way it's.

Speaker Change #103: <unk> going to be but with you is that if they need that they need it and they'll eventually.

promising signs around the demand but we still have some stabilization that we are seeing some of our clients.

Speaker Change #103: Yes, it could look I don't know if its a new normal it could look like last year, but we also.

Speaker Change #104: Then did see some of the benefit into that.

Okay, and then I guess the winter orders...

Speaker Change #105: Into the first quarter I would say the total duration of those orders was probably on par with what we had seen in 2019. They started later, but then maybe went a little longer into the first quarter and Kevin the other part that I would say and again I don't know that we can call. This the new normal, but we're seeing some of these delays just across the board it's not.

I think, historically, you have a little bit of color at this point. It sounds like it's kind of been pushed back a little bit, as far as when those orders come in. Is there an implication for that, I guess, in the past, if they come in a little bit later?

you know mean that the orders are going to be lower or does or does that not necessarily follow through?

Speaker Change #104: With winter orders.

Yeah, I think Kevin, like, from a timing standpoint, we're expecting it to look like last year. I don't know that coming in later.

Kevin Fischbeck: So I don't know that I would read anything into that.

Kevin Fischbeck: Okay, and then I guess last question on the SG&A.

Kevin Fischbeck: Syed.

Syed: You spiked out the $7 million.

signals anything in terms of volume but what we did see last year versus pre pandemic was a shift where more of those

Syed: Is there anything else there because I guess in the press release commentary about lower compensation costs.

Speaker Change #107: With lower demand was that is that something that we should be on the lookout for if demand does improve will there will be pressure on G&A.

Q4 starts were in the mid to late November timeframe, which was, you know, a couple weeks later than normal what we had seen You know 2019 and prior

Speaker Change #108: Next year or is this a good base to be thinking about G&A as a percentage of.

And is that, is that a new normal? Does that mean that...

Speaker Change #108: Of revenue going forward.

Speaker Change #108: I think probably the biggest thing for for next year.

Hospitals are just waiting a little bit longer to use temp staffing and that's just the way it's going to be but a few ways that if they need it, they need it and they'll eventually.

Speaker Change #110: From a base standpoint, and similar to last year as we would have a reset on incentives and variable compensation just again given the year that we've had in 2024 and then you would have your normal merit and other inflationary type adjustments that would hit in 2005 that arent in that base right now.

Yeah, it could look, I don't know if it's a new normal it could look like last year, but we also

then did see some of the banner fit into that.

into the first quarter. I would say the total duration of those orders was probably on par with what we had seen in 2019. They started later, but then maybe went a little longer into the first quarter.

Speaker Change #111: Is there a way to size that.

Speaker Change #112: On the incentive and variable side, you can think about that probably in the $3 million to $4 million per quarter range.

And Kevin, the other part that I'd say, and again, I don't know that we can call this a new normal, but we're seeing some of these delays just across the board. It's not just with winter orders, so I don't know that I would read anything into that.

Speaker Change #112: Okay perfect. Thanks.

Speaker Change #113: Thank you so much.

Speaker Change #114: The next question please.

Okay, and then, I guess, last question on the SG&A...

Speaker Change #114: And our next question will be coming from the line of Tobey Sommer of Securities. Your line is open.

side, you know, you spiked out the $7 million.

Is there anything else there? Because I guess in the press there was commentary about, you know, lower compensation costs and...

Speaker Change #115: Thank you.

Speaker Change #116: I was wondering if you could talk about how you feel.

with lower demand, was that, is that something that we should be on the lookout for if demand does improve? Will there be pressure on G&A next year or is this a good base to be thinking about, you know, G&A as a percentage of revenue going forward?

Speaker Change #117: Youre doing with all the internal idiosyncratic changes you could make.

Speaker Change #118: To address the marketplace demand has fallen off for a protracted period of time.

I think, probably the biggest thing for next year.

Speaker Change #119: You consolidated some branches.

Speaker Change #119: Trying to cross sell more services is my understanding.

From a base standpoint, similar to last year's, we would have

Speaker Change #120: How do you feel like.

A reset on incentive and variable compensation just again given the year that we've had in 2024 and then you would have your normal merit and other inflationary type adjustments that would hit in 25 that are on in that base right now.

Speaker Change #120: Like you're prosecuting the changes you can control.

Speaker Change #120: Yes. So if you think about some of the core pieces Tobey that we've talked about.

That we are changing our model to ensure that we are.

Is there a way to find that?

Speaker Change #120: Aligning ourselves to a bigger market Tam.

On the incentive and variable side, you can think about that probably in the three to four million per quarter range.

Speaker Change #120: First is our go to market strategy. So we had been for a number of years focused on a very important but.

Yeah, perfect, thanks.

Speaker Change #120: A minority part of the market in MSP.

Speaker Change #120: So we have aligned ourselves to all segments of the market and we're seeing progress on that so if you look at Q1 to Q2.

And our next question will be coming from the line of Tobey Sommer of Truett Securities. Your line is open.

Speaker Change #120: We saw healthy increases in the positions filled in third party indirect relationships.

Thank you. I was wondering if you could talk about how you feel...

Speaker Change #120: We had a number of initiatives that were aimed against that including.

you're doing with all the internal idiosyncratic changes you could make.

Speaker Change #120: Operational automation.

Speaker Change #120: Significant progress in our seed to sale. So there were operational and technology enhancements behind being able to achieve some of those increases.

to address the marketplace as demand has fallen now for a protracted period of time. You consolidated some brands.

Speaker Change #120: From a brand standpoint, we are completed with the brand integration.

You're trying to cross sell more services is my understanding. How do you feel like you're prosecuting the changes you can control?

Speaker Change #120: And so we have consolidated the staffing brands we're keeping.

Speaker Change #121: <unk>, which serves a very different audiences separate and you will see a reinvigoration of that brand. So we're seeing strong outcomes and our overall brand testing, we're seeing over 250000 clinicians who are now on our passport app.

Yeah, so if you think about some of the core pieces, Tobey, that we've talked about, that we are...

Changing our models to ensure that we are aligning ourselves to a bigger market, Pam. You know, the first is...

Speaker Change #121: So we're seeing progress on our go to market strategy to align ourselves against the entirety of the market.

Our go-to-market strategy.

So we have been, for a number of years, focused on a very important but, you know, a minority part of the market in MST.

Speaker Change #121: On our Digitization of the company again, and I know I talked about a number of these initiatives in my opening comments.

Speaker Change #122: But we've been very focused on how we align and innovate with our clients to help them build sustainable workforces.

So, we have aligned ourselves to all segments of the market, and we're seeing progress on that. So, if you look at Q1 to Q2, we saw healthy increases in the positions filled in third party and direct relationships.

Speaker Change #122: A lot of that is what we've done with ship twice flex and the data and analytics and the market data as well as AI enabled workforce planning and scheduling.

So we had a number of initiatives that were aimed against that, including operational automation. We made significant progress in our speed to fill. So there were operational and technology enhancements behind being able to achieve some of those increases.

Speaker Change #122: Our scheduling platform was rated number one in class for the second year in a row. So we've done a lot of work around ensuring that we have a tech enabled set of services to help clients with where they want to go.

Speaker Change #122: And I'd say the same thing for clinicians with the enhancements that we've done on passport and connecting our clinician app two really important client technology. So that we can that come with clinicians to clients.

from a brand standpoint, we are completed with the brand integration. And so we've consolidated the staffing brands. We're keeping the BEE Smith which serves a very different audience. I'm separate and you will see a reinvigoration of that brand.

Speaker Change #122: And.

Speaker Change #122: At this juncture, how do you think it's.

So, we're seeing strong outcomes in our overall brand testing. We're seeing, you know, over 250,000 clinicians who are now on our Passport app.

Speaker Change #123: Influencing market share or wallet share Holly.

Speaker Change #123: You choose to think about it.

Holly: Yeah, so from a market share standpoint.

So we're seeing progress on our good-a-market strategy to align ourselves against the entirety of the market.

Holly: What we experience going.

Speaker Change #125: Focused on MSP clients during a significant period of growth during COVID-19 that was not favorable to us.

on our digitization of the company. Again, and I know I talked about a number of these initiatives in my opening comment, but we've been very focused on how we align and innovate with our clients to help them build sustainable workforces.

Speaker Change #125: If we look at this year versus last year in terms of net wins and losses.

Speaker Change #125: We came out of last year, where we were in a net loss position.

So a lot of that's what we've done with Shift-Wise Flex.

and the data and analytics and the market data as well as AI-enabled workforce planning and scheduling.

Speaker Change #125: <unk> and expect to be net neutral on clients from this year.

Speaker Change #125: And so that is progress obviously, we want to translate and get to a position where we're getting into network.

Our scheduling platform was rated number one in class.

for the second year in a row. So we've done a lot of work around ensuring that we have a tech-enabled set of services to help clients with where they want to go.

Speaker Change #125: Okay.

Speaker Change #125: What are the.

Speaker Change #126: The signs telling you with respect to your international business.

Visa retrogression are there any updates that you've either seen indicate when you could see a turn or.

And I'd say the same thing for clinicians with the enhancements that we've done on Passport and connecting our clinician apps to really important client technology so that we can connect clinicians to clients.

Speaker Change #127: Date chef in the future that youre anticipating some sort of an update.

There is a there is a bulletin released today and I would say it was largely neutral.

And at this juncture, how do you think it's?

Influencing Market Chair, and or Wallet Chair, probably choose to think about it.

Speaker Change #128: We're looking for is the October Bulletin, which typically comes out in late September that will set the visa for next year and so we should have a better idea.

Yeah, so from a market share standpoint

What we experience going, you know, focus on MSP clients during, you know, a significant period of growth during COVID, that was not favorable to us.

Speaker Change #128: As that Bulletin comes out about what we would expect in terms of pieces for the future.

Speaker Change #129: Our strategy on the international side is we are.

Speaker Change #130: Very intentionally keeping our pipeline very up to date, so as those decent numbers.

If we look at this year versus last year in terms of net wins and losses, we came out of last year where we were in a net loss position. We are and expect to be net neutral on clients from this year.

Speaker Change #130: Get clarified and get awarded that we have all of our commissions in place and ready to go.

And so, that is progress. Obviously, we want to translate and get to a position where we're getting into networks.

Speaker Change #130: Thank you.

Speaker Change #130: Thank you one moment to the next question.

[inaudible]

And what are the signs telling you with respect to your international business?

Speaker Change #130: Our next question will be coming from the line of Bill Sutherland of benchmark excuse me benchmark.

Speaker Change #131: Company Your line is open.

Visa retrogression. Are there any updates that you've either seen that indicate when you could see a turn or dates out in the future that you're anticipating some sort of an update? Thanks.

Bill Sutherland: Hi, everybody.

Speaker Change #133: I was just wondering at this point I think we've checked all the questions here.

Chip: Chip on in locum.

There was a bulletin released today, and I would say it was largely neutral.

Chip: <unk>.

Speaker Change #135: Acquisition did you call out the impact in <unk> and what's in it which is the <unk> guidance.

What we're looking for is the October bulletin, which typically comes out in late September . That will set the visas for next year, and so we should have a better idea, you know, as that bulletin comes out, about what we would expect in terms of visas for the future.

Speaker Change #136: Yes, it was $34 million of revenue in the second quarter.

Speaker Change #136: Bill and we would expect that to be maybe down modestly sequentially into Q3.

Speaker Change #137: Is that seasonality.

Our strategy on the international side is we are very intentionally keeping our pipeline very up-to-date so as those beast the numbers.

Speaker Change #138: No I think that.

Carrie: Guess, what Carrie was talking about earlier with what we're seeing probably more broadly and locums, where we're seeing.

get clarified and and get awarded that we have all of our commissions in place and ready to go.

Speaker Change #140: Delays in client decision, making and and just lower extensions and probably more of a focus.

Thank you.

Carrie: On the cost of Locums.

Thank you. One moment for the next question.

Carrie: Demand is still healthy, but it is down from the beginning of the year and certainly down year over year.

Our next question will be coming from the line of Bill Sutherland of Benchmark Company. Your line is open.

Carrie: And.

Carrie: What I was sort of taking away from earlier comments is that the bill pay spread.

Hey everybody. I was just wondering at this point, I think we've checked all the questions here.

Carrie: And the <unk>.

Carrie: Travelers.

Speaker Change #141: It's getting kind of back to something that is normal.

Jeff, in LOCUM, the MSDR acquisition, did you call out the impact in 2Q and what's in the 3Q guidance?

Speaker Change #141: But.

Speaker Change #141: Weighing on the.

Speaker Change #141: The spreads gross margin is lodging and other costs related to them.

Speaker Change #142: The trials, which expenses is that.

Yeah, it was 34 million of revenue in the second quarter.

Speaker Change #142: So is that what you guys are seeing.

Speaker Change #144: Yes, that's accurate when we think about nurse and allied gross margins in the second quarter.

Bill and we would expect that to be maybe down modestly sequentially into Q3.

Speaker Change #145: All other elements of the bill pay spread actually improved slightly over Q1 levels and the downdraft came from the housing in the per Dms as well as we add a favorable workers comp adjustment.

Well, that's seasonality.

Now, I think that.

Just what Carrie was talking about earlier with what we're seeing probably more broadly in locums where we're seeing delays in client decision-making and and just in lower extensions and probably more of a focus

Speaker Change #145: In the first quarter that didn't repeat in Q2 within nurse and Allied.

Speaker Change #145: Okay.

Speaker Change #146: And then just zooming out a little bit.

Speaker Change #146: Kind of curious.

on the cost of locums. Demand is still healthy but it is down from the beginning of the year and it's certainly down year over year.

Speaker Change #147: About the marketplaces impact on.

Speaker Change #148: You are.

Speaker Change #148: Just competitively and in the past to Evan.

Speaker Change #148: Data.

and what I was taking away from earlier comments is if the bill pays for adding.

Speaker Change #149: No big difference in how you do but I'm curious what it looks like today.

Speaker Change #148: Thanks.

and the travelers is getting kind of back to something that is normal but what's weighing on.

What marketplace itself.

Speaker Change #148: The marketplaces.

Speaker Change #148: That are.

Speaker Change #148: Designed to do.

The spread versus margin is lodging and other costs related to, you know, the traveler's expenses. Is that?

Speaker Change #148: Very automated.

Speaker Change #148: As far as government.

Speaker Change #148: Physicians.

Speaker Change #150: Got it.

Speaker Change #150: I think what we've seen particularly over.

[inaudible]

Yeah, that's accurate, you know, when we think about nursing allied gross margins in the second quarter

Speaker Change #150: The past.

Speaker Change #150: <unk>.

Speaker Change #150: Is that when you look at the supply demand equation, it's actually been the premium spin on.

You know, all other elements of the bill pay spread actually improved slightly over Q1 levels and the downdraft came from the housing and the per diems, you know, as well as we had a favorable workers comp adjustment.

Speaker Change #150: Who has access to the demand and so the marketplaces tend to be a conduit or supply, but theyre not always connected and is directly to the demand side as you would see.

in the first quarter that didn't repeat in Q2 within Nurse and Allied.

Speaker Change #150: Vendor neutral.

Speaker Change #151: Direct or MSP relationships so.

Okay, and then just zooming out a little bit, I'm kind of curious...

Speaker Change #151: They obviously are out there.

Speaker Change #151: But we haven't seen them be as as much of a factor in this lower demand environment.

about the marketplace's impact on

Speaker Change #152: Okay. Thanks.

on your, you know, just competitively and, you know, in the past, they haven't...

Speaker Change #151: Makes sense, okay. Thanks, everybody.

Speaker Change #151: Thank you. This does conclude today's Q&A session I would like to go ahead and turn the call back over to Gary for closing remarks. Please go ahead.

I don't think made a

You know, big difference in how you do, but curious what it looks like today. Thanks.

Gary: Thank you all for your continued interest in <unk>, we look forward to continuing to update you on our important mission of empowering the future of care.

What Marketplace does?

the Market Places.

Then our...

You know, designed to be very automated as far as building positions.

Yes.

Speaker Change #153: Thank you. This concludes today's meeting you may all disconnect.

Oh, got it. You know, I think what we've seen, particularly over in the past six quarters, is that

When you look at the supply-demand equation, it's actually been, the premium's been on, you know, who has access to the demand.

And so the marketplaces tend to be a conduit for supply, but they're not always connected in as directly.

So the demand side is, you would say, you know, vendor neutral, direct or MSP relationship, so, you know, they obviously are out there, but we haven't seen them be as much of a factor in this lower demand environment.

Makes sense. Okay. Thanks, everybody.

Thank you. This does conclude today's Q&A session. I would like to go ahead and turn the call back over to Carrie for closing remarks. Please go ahead.

Thank you all for your continued interest in AMN. We look forward to continuing to update you on our important mission of empowering the future of care.

Thank you. This concludes today's meeting. You may all disconnect.

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