Q3 2024 AMN Healthcare Services Inc Earnings Call
Operator: Good day, and thank you for standing by.
Good day, and thank you for standing by and welcome to the a M. In healthcare third quarter 2024 earnings Conference call.
Operator: Welcome to the AMN Healthcare Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
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, just raised to withdraw your question. Please press star one again.
Please be advised that today's conference is being recorded.
Randle Reece: I would now like to hand the conference over to your first speaker today, Randle Reece, Senior Director, Investor Relations and Strategy.
Speaker Change: I'd now like to hand, the conference over to your first speaker today, Randle Reece Senior director Investor Relations and strategy. Please go ahead.
Randle Reece: Please go ahead.
Randle Reece: Good afternoon, everyone. Welcome to AMN Healthcare's third quarter 2024 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com at the conclusion of this call.
Good afternoon, everyone welcome to <unk> Healthcare's third quarter 2024 earnings call.
Speaker Change: A replay of this webcast will be available at IR Dot <unk> health care Dot com.
Speaker Change: The conclusion of this call.
Randle Reece: Remarks we make during this call about future expectations, projections, trends, plans, events, or circumstances constitute forward-looking statements. These statements reflect the company's current beliefs, based upon information currently available to it. Our actual results may differ materially from those indicated by these forward-looking statements because of various factors in cautionary statements. including those identified in our most recently filed Forms 10-K and 10-Q, our earnings released, and subsequent filings with the SEC.
Speaker Change: Remarks, we make during this call about future expectations.
Speaker Change: <unk> trends plans events or circumstances constitute forward looking statements.
Speaker Change: Statements reflect the company's current beliefs based upon 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 including.
Including those identified in our most recently filed forms 10-K and 10-Q.
Speaker Change: The earnings release, and subsequent filings with the SEC.
Randle Reece: The company does not intend to update guidance or any forward-looking statements provided today prior to its next earnings release.
Speaker Change: The company does not intend to update guidance or any forward looking statements provided today prior to its next earnings release.
Randle Reece: This call contains certain non-GAAP financial information. Information regarding and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and on our financial reports page at ir.amnhealthcare.com.
Speaker Change: This call contains certain non-GAAP financial information.
Speaker Change: Information regarding and reconciliations of these non-GAAP measures.
Speaker Change: The most directly comparable GAAP measures are included in our earnings release and on our financial reports page at IR Dot Ameren health care Dot com.
Carrie Grace: On the call with me today are Carrie Grace, President and Chief Executive Officer, and Jeff Knudson, Chief Financial Officer.
Speaker Change: On the call with me today are Kerry Grace, President and Chief Executive Officer, and Jeff <unk>, Chief Financial Officer, I will now turn the call over to Kerry.
Carrie Grace: I will now turn the call over to Carrie. Thank you, Randy, and welcome to today's call. AMN Healthcare continues to build an attractive long-term story while we simultaneously deal with a challenging post-boom market for our industry. Financial results for the third quarter of 2024 were above expectations. Revenue of $688 million was above the upper end of our guidance range. An adjusted EBITDA of $74 million was above the consensus of Southside analysts.
Kerry Grace: Thank you Randy and welcome to today's call and then healthcare continue to build an attractive long term story, while we simultaneously deal with a challenging market for our industry.
Kerry Grace: Financial results for the third quarter of 2024 were above expectation.
Kerry Grace: Revenue of $688 million was above the upper end of our guidance range and adjusted EBITDA of $74 million was above the consensus sell side analysts estimate.
Carrie Grace: excluding some beneficial discrete items, our revenue was in line with guidance. We continue to see signs of a stabilizing market with increasing demand for travel nurse staffing and healthy demand in most other staffing markets. We have also seen relatively stable bill rates for clinicians placed across our nurse, allied, and locum businesses, and new order bill rates among our top clients are evenly divided between raising and lowering rates. that some clients are raising rates is a significant change from the past six quarters. Nurse and allied travelers on assignment have been stable since July. Demand for travel nurse staffing in recent weeks was 60% above the low point in April, so still about 35% below the 2019 order level.
Kerry Grace: Excluding some beneficial discrete item our revenue was in line with guidance.
Kerry Grace: We continue to see signs of a stabilizing market with increasing demand for travel nurse staffing and healthy demand in most other staffing market.
Kerry Grace: We have also seen relatively stable bill rate for clinicians placed across our nurse Allied and Locums businesses and new order Bill rate among our top clients are evenly divided between raising and lowering rate.
Kerry Grace: That some clients are raising rates is a significant change from the past six quarters.
Kerry Grace: Nurse and Allied travelers on assignment had been stable since July.
Kerry Grace: Demand for travel nurse staffing in recent week was 60% above the low point in April it is still about 35% below the 2019 order level.
Carrie Grace: Any areas of improvement in market dynamics have had little effect on near-term performance, but we expect them to be increasingly visible as we go through 2020. While competition to fill these orders has compressed industry gross margins this year, an increasing number of orders are priced below levels anyone will. Unfilled orders for Nurse and Allied and Vendor Neutral Programs increased from about 9% last quarter to 14% currently. Suppliers are increasingly not filling orders priced at levels that don't make economic and Clinicians Expect Pay in Line with Broader Wage and Housing Impact. Our estimates indicate that travel nurse bill rates in the fourth quarter of 2024 have reached the low end of the 15 to 20 percent premium they maintained over the cost of permanent nurses prior to 2024.
Kerry Grace: Any areas of improvement in market dynamics have had little effect on near term performance, but we expect them to be increasingly visible as we go through 2025.
Kerry Grace: While competition to fulfill these orders has compressed industry gross margin this year and increasing number of orders are priced below levels any one rockville.
Kerry Grace: Unfilled orders for nurse and Allied and vendor neutral program increased from about 9% last quarter to 14% currently.
Kerry Grace: Suppliers are increasingly not filling orders price levels that don't make economic sense.
Kerry Grace: Clinicians expect to pay in line with broader ways and housing inflation.
Kerry Grace: Our estimates indicate that travel nurse bill rates in the fourth quarter of 2024.
Kerry Grace: It's the low end of the 15% to 20% premium.
Kerry Grace: Maintained over the cost of permanent nurses prior to 2020.
Carrie Grace: which could help explain the increase in unfilled orders in the As conditions for health care labor continue to normalize, we expect margin pressure to subside as it did in past In some cases, the cost of alternatives to contingent staffing are already more.
Kerry Grace: Which could help explain the increase in unfilled orders in the industry.
As conditions for health care Labor continue to normalize we expect margin pressure to subside as it did in past cycles.
Kerry Grace: In some cases, the cost of alternatives to contingent staffing.
Kerry Grace: Our already more expensive.
Carrie Grace: Reaching this point is likely an important milestone for our industry's return to an improved operating environment. Across our businesses, AMN is responding aggressively to the current state of our industry. We are committed to being the most capable partner for helping clients develop and reach their workforce. Our progress on internal fill rates across nurse and allied has been positive, though affected by the same market dynamics that have resulted in an increase in unfilled orders. While we are ensuring that our pricing is competitive, we are doing so while delivering outstanding value and quality to our clients and healthcare.
Kerry Grace: Reaching this point is likely an important milestone for our industries return to new improved operating environment.
Kerry Grace: Across our businesses Ameren is responding aggressively to the current state of our industry.
Speaker Change: We are committed to being the most capable partner for helping clients develop and reach their workforce.
Speaker Change: Our progress on internal fill rates across nurse and Allied has been positive.
Speaker Change: Affected by the same market dynamics that have resulted in an increase in unfilled orders.
Speaker Change: While we are ensuring that our pricing is competitive we are.
Are doing so while delivering outstanding value and quality to our clients and health care professionals.
Carrie Grace: We continue to build powerful solutions around our outstanding technology.
Speaker Change: We continue to build powerful solutions around our outstanding technology.
Carrie Grace: Since I joined AMN eight quarters ago, the team has moved us from a lagging technology position to an empowered position where our clients and prospects have access to leading tools and technology to help them manage their healthcare work. In the past few months, we moved to net positive on the MSP win-loss scoreboard for 2024, elevated by our improved competitive. Our recent Client Summit in Dallas resulted in a great reception for our new integrated technology suite we call Workplace. WorkWISE integrates workforce planning and reporting, predictive scheduling, vendor management solutions, and candidate engagement. Our client demos last month resulted in consistently positive feedback, and we are energized about our market.
Speaker Change: Since I joined <unk> eight quarters ago. The team has moved up from a lagging technology position to an empowered position, where our clients and prospects have access to leading tools and technology to help them manage their health care workforce.
Speaker Change: In the past few months, we moved to net positive on the MSP win loss Corp Board for.
Speaker Change: For 2020 for elevated by our improved competitive stance.
Speaker Change: Our recent client summit in Dallas resulted in a great reception for our new integrated technologies, we call work wise.
Speaker Change: <unk> integrates workforce planning and reporting predictive scheduling vendor management solution and candidate engagement.
Speaker Change: Our client demos last month resulted in consistently positive feedback and we are energized about our market positioning.
Carrie Grace: Throughout this year, we have seen increasing demand for total talent solutions.
Speaker Change: Throughout this year, we have seen increasing demand for total talent solutions.
Carrie Grace: And our average number of solutions used by our top clients has risen to approximately Because of our broad solution set, we are uniquely positioned to help clients build a sustainable workforce strategy.
Speaker Change: And our average number of solutions used by our top clients has risen to approximately 10.
Speaker Change: Because of our broad solution set we are uniquely positioned to help clients build a sustainable workforce strategy.
Carrie Grace: Now, let's turn back and review our third quarter results by degree. Nurse and Allied Solutions reported $399 million in revenue in the third quarter, 4% better than consensus due primarily to several beneficial factors that increased revenue by approximately 2%. Core performance was as expected, with about 1% upside in volume, offset by bill rate and hours slightly below. Segment operating margin of 8.8% was positively impacted by approximately 180 basis points from the favorable item. Physician and Leadership Solutions revenue for the quarter was $181 million in line with Locum Tenens revenue of $142 million was up 26% year-over-year, including the MSER acquisition, and down 3% organically.
Speaker Change: Now, let's turn back and review our third quarter results by business segment.
Speaker Change: Nurse and Allied solutions reported $399 million in revenue in the third quarter for.
Speaker Change: 4% better than consensus due primarily to several beneficial factors that increased revenue by approximately 2%.
Speaker Change: Core performance was as expected with about 1% upside in volume offset by bill rate and our slightly below forecast.
Speaker Change: Segment operating margin of eight 8% was positively impacted by approximately 180 basis points from the favorable item.
Speaker Change: Physician and leadership solutions revenue for the quarter was $181 million in line with consensus.
Speaker Change: Locum Tenens revenue of $142 million was up 26% year over year, including the MSR acquisition and down 3% organically.
Jeff Knudson: volume for our organic locum business was modestly better than we had Interim leadership and search continue to have lowered segment operating margin of 10% was lower than we had expected due to gross margin pressure primarily from Technology and Workforce Solutions recorded third-quarter revenue of $108 million in line with construction costs. Language Services, which had revenue of $75 million, up 13% year-over-year, saw several client disruptions caused by the CrowdStrike event and hurricanes in the third quarter that our teams helped them manage. We continue to see strong client interest in our language.
Speaker Change: Volume for our organic Locums business was modestly better than we had projected.
Speaker Change: Interim leadership and search continued to have lower demand.
Segment operating margin of 10% was lower than we had expected due to gross margin pressure primarily from mix.
Speaker Change: Technology and workforce solutions recorded third quarter revenue of $108 million in line with consensus.
Speaker Change: Language services, which had revenue of $75 million up 13% year over year saw several clients disruptions caused by the crowd strike event and hurricanes in the third quarter that our teams to help them manage their.
Speaker Change: We continue to see strong client interest in our language services solutions.
Jeff Knudson: VMS revenue was $25 million in the third quarter in line with our Now, I'll turn the call over to Jeff for more details about our.
Speaker Change: Vms revenue was $25 million in the third quarter in line with our expectations.
Speaker Change: Now I'll turn the call over to Jeff for more details about our results.
Jeff Knudson: Thank you, Carrie, and good afternoon, everyone. Third quarter consolidated revenue was $688 million above the high end of guidance. Revenue was down 19% from the third quarter of 2023 and down 7% sequentially. primarily due to lower volume in nurse and allied, interim, and search. Consolidated gross margin for the third quarter was 31%. Year over year, gross margin decreased 290 basis points, driven by lower margin across all three segments, partly offset by a favorable revenue mix. Sequentially, gross margin was flat. Consolidated SG&A expenses were $150 million, or 21.8% of revenue, compared with $163 million, or 19.1% of revenue in the prior year period, and $149 million, or 20.1% of revenue in the previous year.
Jeff: Thank you Carrie and good afternoon, everyone.
Jeff: Third quarter consolidated revenue was $688 million above the high end of guidance revenue was down 19% from the third quarter of 2023 and down 7% sequentially pre.
Jeff: Primarily due to lower volume in nurse and Allied interim and search businesses.
Jeff: Consolidated gross margin for the third quarter was 31% year.
Jeff: Year over year gross margin decreased 290 basis points, driven by lower margin across all three segments, partly offset by a favorable revenue mix shift sequentially.
Jeff: Sequentially gross margin was flat.
Jeff: Consolidated SG&A expenses were $150 million or 21, 8% of revenue compared with $163 million or 19, 1% of revenue in the prior year period, and $149 million or 21% of revenue in the previous quarter.
Jeff Knudson: The decrease in SG&A expenses year-over-year was primarily due to lower employee and professional services. sequentially, SG&A expenses were flat. Adjusted SG&A, which excludes acquisition, integration, and other costs. Legal Settlement Accrual Changes and Stock-Based Compensation Expense was $141 million in the third quarter, or 20.5% of revenue, compared with $157 million, or 18.4% of revenue, in the prior year period, and $137 million, or 18.5% of revenue, in the previous year. Third quarter nurse and allied revenue was $399 million, down 30% from the prior year period and 10% from the previous quarter, primarily driven by lower volume and rates in travel nurse and lower volume in allied.
Jeff: The decrease in SG&A expenses year over year was primarily due to lower employee and professional service expenses.
Jeff: Sequentially SG&A expenses were flat.
Jeff: Adjusted SG&A, which excludes acquisition integration and other costs legal settlement accrual changes and stock based compensation expense was $141 million in the third quarter or 25% of revenue compared with $157 million or 18, 4% of <unk>.
Jeff: Revenue in the prior year period, and $137 million or 18, 5% of revenue in the previous quarter.
Jeff: Third quarter nurse and Allied revenue was $399 million down 30% from the prior year period, and 10% from the previous quarter, primarily driven by lower volume and rates in travel nurse and lower volume in Allied.
Jeff Knudson: Average bill rate was down 8% year over year and 2% sequentially. Year-over-year, volume decreased 24%, and average hours worked were flat. Sequentially, volume was down 11% while average hours worked were flat. Travel nurse revenue in the third quarter was $244 million, a decrease of 37% from the prior year period and 12% from the prior quarter. Allied revenue in the quarter was $141 million, down 16% year-over-year and 7% sequentially. Nurse and allied gross margin in the third quarter was 25%, a decrease of 250 basis points year over year, primarily due to deleveraging of housing and travel.
Jeff: Average bill rate was down 8% year over year and 2% sequentially.
Jeff: Year over year volume decreased 24% and average hours worked were flat sequentially.
Jeff: Sequentially volume was down 11%, while average hours worked were flat.
Jeff: Travel nurse revenue in the third quarter was $244 million, a decrease of 37% from the prior year period and 12% from the prior quarter.
Allied revenue in the quarter was $141 million down 16% year over year and 7% sequentially.
Jeff: Nurse and Allied gross margin in the third quarter was 25% a decrease of 250 basis points year over year, primarily due to deleveraging of housing and travel expenses.
Jeff Knudson: Sequentially, gross margin increased to 120 basis points. mainly due to beneficial discreet Segment operating margin of 8.8%, decreased 570 basis points year over year, mainly due to lower gross margin and deleveraging of SG&A expenses. Sequentially, segment operating margin decreased 160 basis. driven primarily by prior quarter favorable insurance actuarial adjustments and continued deleveraging on lower revenue. Moving to the Physician Leadership Solutions segment, third quarter revenue of 181 million increased 13% year over year with the growth coming from the MSDR acquisition. Consequently, revenue was down 3%, driven primarily by lower volume in the search. Locum Tenens revenue in the quarter was $142 million, up 26% year-over-year, driven by the MSDR acquisition.
Jeff: Sequentially gross margin increased 120 basis points, mainly due to beneficial discreet items.
Jeff: Segment operating margin of eight 8% decreased 570 basis points year over year, mainly due to lower gross margin and deleveraging of SG&A expenses sequentially segment operating margin decreased 160 basis points, driven primarily by prior quarter favorable insurance actuary.
Jeff: Aerial adjustments and continued deleveraging on lower revenue.
Jeff: Moving to the physician leadership solutions segment third quarter revenue of $181 million increased 13% year over year with the growth coming from the <unk> acquisition <unk>.
Jeff: Sequentially revenue was down 3%, driven primarily by lower volume and the search business.
Jeff: Locum Tenens revenue in the quarter was $142 million up 26% year over year, driven by the <unk> acquisition <unk>.
Jeff Knudson: Sequentially, revenue was flat. Interim leadership revenue of $29 million, decreased 7% from the prior year period and 5% sequentially. search revenue of $10 million was down 38% year-over-year and 23% sequentially. Gross Margin for the Physician Leadership Solution Segment was 28.3%. down 510 basis points year-over-year in 220 basis points. The decrease in gross margin is primarily attributable to a lower bill pay spread in locum tenens and a revenue mix. segment operating margin was 10%, which decreased 350 basis points year over year, primarily due to lower gross margin, partially offset by SG&A leverage from higher revenue. Sequentially, operating margin decreased to 160 basis.
Jeff: Sequentially revenue was flat.
Jeff: Interim leadership revenue of $29 million decreased 7% from the prior year period and 5% sequentially.
Jeff: Search revenue of $10 million was down 38% year over year and 23% sequentially.
Jeff: Gross margin for the physician leadership solutions segment was 28, 3%.
Jeff: <unk> 510 basis points year over year, and 220 basis points sequentially.
Jeff: The decrease in gross margin is primarily attributable to a lower bill pay spread in locum tenants and a revenue mix shift.
Jeff: Segment operating margin was 10%, which decreased 350 basis points year over year, primarily due to lower gross margin, partially offset by SG&A leverage from higher revenue.
Jeff: Sequentially operating margin decreased 160 basis points due to lower gross margin.
Jeff Knudson: due to lower growth. Technology and Workforce Solutions revenue for the third quarter was 108 million, down 11% year over year, as the revenue growth in language services was more than offset by the decrease in the BMI. Sequentially, revenue was down 4%. primarily attributable to the VMS. Language Services revenue for the quarter was $75 million, an increase of 13% year-over-year and flat sequentially. VMS revenue for the quarter was $25 million, a decrease of 34% year-over-year. and 9% sequence. Segment gross margin was 57.9%, down from 65% in the prior year period, primarily due to a revenue mix shift away from the VMS and outsource solutions business.
Jeff: Technology and workforce solutions revenue for the third quarter was $108 million down 11% year over year as the revenue growth in language services was more than offset by the decrease in the BMS business.
Sequentially revenue was down 4% primarily attributable to the Vms business.
Jeff: Language services revenue for the quarter was $75 million, an increase of 13% year over year and flat sequentially.
Jeff: BMS revenue for the quarter was $25 million, a decrease of 34% year over year and 9% sequentially.
Jeff: Segment gross margin was 57, 9% down from 65% in the prior year period, primarily due to our revenue mix shift away from the BMS and outsource solutions businesses. So.
Jeff Knudson: Consequently, gross margin decline, 230 bases. mainly due to lower margin in language services and a revenue mix. Segment operating margin in the third quarter was 39%, a decrease of 310 basis points from the prior year period, driven primarily by lower gross margin, partially offset by expense management. Sequentially, lower gross margin led to segment operating margin decreasing 300%. Third quarter consolidated adjusted EBITDA was $74 million, a decrease of 45% year-over-year and 21% sequentially. Adjusted EBITDA margin for the quarter was 10.7%. down from 15.7% in the prior year period, primarily due to lower gross margin and deleveraging on lower revenue.
Jeff: Sequentially gross margin declined 230 basis points, mainly due to lower margin and language services and a revenue mix shift.
Jeff: Segment operating margin in the third quarter was 39% a decrease of 310 basis points from the prior year period, driven primarily by lower gross margin, partially offset by expense management.
Jeff: Sequentially lower gross margin led to segment operating margin decreasing 310 basis points.
Jeff: Third quarter consolidated adjusted EBITDA was $74 million, a decrease of 45% year over year and 21% sequentially.
Jeff: Adjusted EBITDA margin for the quarter was 10, 7%.
Jeff: Down from 15, 7% in the prior year period, primarily due to lower gross margin and deleveraging on lower revenue.
Jeff Knudson: The sequentially adjusted EBITDA margin was down 200 basis points, driven by the favorable actuarial adjustments for professional liability insurance in the prior quarter. and the D-Leverage on lower reps. Third quarter net income was $7 million, down 87% year over year and 57%. Third Quarter Gap Diluted Earnings Per Share was $18. Adjusted earnings per share for the quarter was 61. compared with $1.97 in the prior year period and $0.98 in the prior quarter. Day Sales Outstanding for the quarter was three days lower than the prior quarter, and one day lower than a year. Since the start of 2024, we have reduced our DSO by 10.
Jeff: Sequentially adjusted EBITDA margin was down 200 basis points, driven by the favorable actuarial adjustments for professional liability insurance and the prior quarter.
Jeff: And the deleverage on lower revenue.
Jeff: Third quarter, net income was $7 million down 87% year over year and 57% sequentially.
Jeff: Third quarter GAAP diluted earnings per share was <unk> 18.
Jeff: Adjusted earnings per share for the quarter was 61.
Jeff: Compared with $1 97 in the prior year period and 98 in the prior quarter.
Jeff: Days sales outstanding for the quarter was 63 days lower than the prior quarter and one day lower than a year ago.
Jeff: Since the start of 2024, we have reduced our DSO by 10 days.
Jeff Knudson: Operating cash flow for the third quarter was $67 million and capital expenditures were $19 million. As of September 30th, we had cash in equivalents of $31 million, long-term debt of $1.1 billion, including a $285 million draw on our revolving line of credit, and a net leverage ratio of 2.8 times During the quarter, we paid off $60 million of revolver debt, bringing the year-to-date pay down to $175 million. We proactively increased the Maximum Leverage Covenant on our revolving line of credit from 4 times to 4.5 times through the end of 2021. we remain focused on paying down debt and returning to our target leverage ratio of two to two and a half.
Jeff: Operating cash flow for the third quarter was $67 million and capital expenditures were $19 million.
Jeff: As of September 30, we had cash and equivalents of $31 million long term debt of $1 1 billion, including a $285 million draw on our revolving line of credit and a net leverage ratio of two eight times to one.
Jeff: During the quarter, we paid off $60 million of revolver debt, bringing the year to date pay down to $175 million.
Jeff: We proactively increased the maximum leverage covenant on our revolving line of credit from four times to four five times through the end of 2025.
Jeff: We remained focused on paying down debt and returning to our target leverage ratio of two to two five times.
Jeff Knudson: For the fourth quarter, we project consolidated revenue to be in a range of $685 million to $705 million. down 14 to 16 percent from the prior year period. Gross margin is projected to be between 29.3 and 29.8%. Reported SBNA are projected to be 21.5 to 22% of replicants. Operating margin is expected to be 1.8 to 2.5. An adjusted EBITDA margin is expected to be 9.2 to 9.7%. Average diluted shares outstanding are projected to be approximately $38.4 million.
Jeff: For the fourth quarter, we project consolidated revenue to be in a range of 685 million to $705 million down 14% to 16% from the prior year period.
Gross margin is projected to be between 29, 3% and 29, 8%.
Jeff: Reported SG&A expenses are projected to be 21, 5% to 22% of revenue.
Jeff: Operating margin is expected to be one 8% to two 5% and adjusted EBITA margin is expected to be nine 2% to nine 7%.
Jeff: Average diluted shares outstanding are projected to be approximately $38 4 million.
Jeff Knudson: Additional fourth quarter guidance details can be found in today's earnings report.
Jeff: Additional fourth quarter guidance details can be found in today's earnings release.
Carrie Grace: Now I will hand the call back to Kerry to further discuss fourth quarter.
Speaker Change: Now I will hand, the call back to Kerry to further discuss fourth quarter guidance.
Carrie Grace: Thank you, Jeff. As Jeff finishes his final earnings call at AMN, I want to thank him for everything he has done for the company in his three years as CEO. Jeff embodies AMN's strong core values and has been a steady hand through a wide range of market conditions.
Kerry Grace: Thank you Jeff as Jeff finish this his final earnings call Amen I want to thank him for everything he has done for the company in three years as CFO.
Kerry Grace: <unk> embodies <unk> strong core values and has been a steady hand through a wide range of market conditions.
Carrie Grace: I personally appreciated his partnership as I joined AMN, and I can say with certainty that he will be missed, and we wish him much success in his new endeavor. Our fourth quarter outlook includes headwinds and tailwinds that are characteristics of current market conditions. The low end of our revenue guidance range for the fourth quarter is 1% higher than the consensus. This revenue outlook includes $45 million in revenue we don't expect to recur in Q1, driven by labor demand. For the fourth quarter, our outlook for Nurse and Allied Solutions revenue is 4% higher than the prior quarter.
Kerry Grace: I personally appreciated his partnership as I joined <unk> and I can say with certainty that he will be missed.
Kerry Grace: And we wish him much success in his new endeavor.
Kerry Grace: Our fourth quarter outlook includes headwinds and tailwind that are characteristic of current market conditions.
Kerry Grace: The low end of our revenue guidance range for the fourth quarter is 1% higher than the consensus estimate.
Kerry Grace: This revenue outlook includes $45 million in revenue, we don't expect to recur in Q1, driven by labor disruption.
Kerry Grace: For the fourth quarter, our outlook for nurse and Allied solutions revenue is 4% higher than the prior quarter.
Carrie Grace: The other two segments have a revenue outlook about 5% below consensus. For Physician and Leadership Solutions, we're calling for revenue to be 4% lower sequentially in Q4, in line with normal season average. In technology and workforce solutions, we expect the revenue trend for language services to remain seasonally flat in Q4, while VMS should trend sequentially lower in volume and hours in line with the. at the midpoint of our adjusted EBITDA margin guidance of 9.2 to 9.7 percent. There is an approximately 125 basis point benefit due to the nurse and allied revenue that we do not expect to recur in Q1, including a benefit of 60 basis points to consolidated gross While the market remains competitive, after nearly two years of downward pressure, we see broader evidence of normalization in the staffing market.
Kerry Grace: The other two segments have a revenue outlook about 5% below consensus estimates.
Kerry Grace: Core physician and leadership solutions, we're calling for revenue to be 4% lower sequentially in Q4 in line with normal seasonality.
Kerry Grace: In technology and workforce solutions, we expect the revenue trend for language services to remain seasonally flat in Q4, while Vms should trend sequentially lower in volume in hours in line with the staffing market.
Kerry Grace: At the midpoint of our adjusted EBITDA margin guidance of nine 2% to nine 7%.
Kerry Grace: There is an approximately 125 basis point benefit due to the nurse and Allied revenue that we do not expect to recur in Q1, including a benefit of 60 basis points to consolidated gross margin.
Kerry Grace: While the market remains competitive after nearly two years of downward pressure, we see broader evidence of normalization and the staffing market.
Carrie Grace: which could help us as we go through 2020. Our number of travelers on assignment declined through the first seven months of the year. In September, traveler count was slightly higher than July, and this stabilization has continued in the fourth quarter. Some clients are starting to raise bill rates in certain hard-to-fill specialties, as well as in areas where they need to increase capacity to meet strong patient needs. These are reasons for optimism, and we expect labor scarcity to reemerge as one of our industry's driving forces.
Kerry Grace: Which could help us as we go through 2025.
Kerry Grace: Our number of travelers on assignment declined through the first seven months of the year.
Kerry Grace: In September traveler count was slightly higher than July and this stabilization has continued in the fourth quarter.
Kerry Grace: Some clients are starting to raise bill rates in certain hard to fill specialties as well as in areas, where they need to increase capacity to meet strong patient demand.
Kerry Grace: These are reasons for optimism and we expect labor scarcity to reemerge as one of our industries driving forces next year.
Operator: Now, operator, please open the call for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Now operator, please open the call for questions.
Speaker Change: Thank you.
Speaker Change: At this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again please.
Speaker Change: Please standby, while we compile the Q&A roster.
Okay.
Trevor Romeo: Our first question comes from Trevor Romeo with William Blair, please go ahead. Hey, good afternoon. Thanks so much for taking the questions. First of all, Jeff, great working with you the past couple of years. Best of luck going forward.
Speaker Change: Our first question comes from Trevor Romeo with William Blair. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hey, good afternoon. Thanks, so much for taking the questions first of all Jeff Great working with you the past couple of years and best of luck going forward.
Trevor Romeo: I wanted to, I guess, maybe first just circle back on the margin outlook, maybe based on some of those comments at the end from Carrie. I think You know, we've heard a lot about gross margin pressure across the industry. It sounds like the guidance also includes some one-time benefit you called out. Maybe excluding that, maybe it's in the eights for EBITDA margin, if that kind of makes sense. Just thinking ahead, you know, if we don't see much improvement in gross margins, can you kind of talk about some of the puts and takes for SG&A going forward?
Speaker Change: Wanted to I guess, maybe first just circle back on the margin outlook, maybe based on some of those comments at the end some carry I think.
Speaker Change: We've heard a lot about gross margin pressure across the industry. It sounds like the guidance also includes some one time benefit you called out maybe excluding that it maybe it's in the eights for EBIT margin.
Speaker Change: Is that kind of makes sense.
Speaker Change: Thinking ahead.
Speaker Change: If we don't see much improvement in gross margins can you talk about some of the puts and takes for SG&A going forward maybe for one just how you plan to balance the crude capacity and such.
Jeff Knudson: Maybe for one, just how you plan to balance recruiter capacity and such. Ultimately, I guess, trying to get at whether you think sort of that maybe eight, nine percent is the new normal or just any thoughts on that would be really helpful.
Speaker Change: Ultimately I guess trying to get at whether you think.
Speaker Change: Sort of that maybe eight 9% as a new normal or just any thoughts on that would be really helpful.
Jeff Knudson: Yeah, Trevor, thanks for the question. So, if we think, and I'll, and I'll start with what would drive gross margin improvement. And so, if we look at what has impacted our gross margin at different points throughout the year, it's really been a combination of mix as well as pressure around bill pay spread. And so, if you would go back and look at what could positively impact it for us, because we have a very broad, diverse set of solutions, seeing some recovery in some of those higher margin solutions within each of our segments. So, that would look like VMS in our TWF solution, search and interim in PLS.
Speaker Change: Yes.
Speaker Change: Thanks for the question. So if we think and I'll start with what would drive gross margin improvement.
Speaker Change: So if we look at what has impacted our gross margin.
Different points throughout the year, it's really been a combination of mix.
Speaker Change: As well as presser.
Speaker Change: Round Bill pay spread and so if you would go back and look at what could positively impacted for us because we have a very broad diverse set of solutions.
Speaker Change: Seeing some recovery in some of those higher margin solutions.
Speaker Change: Within each of our segments. So that would look like Vms in RTW Ax solution.
Speaker Change: Search and interim Mpls and then we also have a large high margin international nurse business that has been affected this year and into next year by visa Retrogression, we expect that headwind to taper off in the second quarter of 2025.
Jeff Knudson: And then we also have a large, high margin international nurse business that has been affected this year and into next year by visa retrogression.
Jeff Knudson: We expect that headwind to taper off in the second quarter of 2025. So, the first thing that would help us from a gross margin standpoint would be the favorable mix of our businesses going the other way as we start to see growth. We see very competitive conditions across all of our businesses, and so if you start to see some improvement in bill pay spread, that would also help.
Jeff: So the first thing that would help us from a gross margin standpoint would be the favorable mix of our businesses.
Jeff: Going the other way as we start to see growth.
Jeff: We see very competitive conditions across all of our businesses.
Jeff: So if you start to see.
Some improvement in Bill pay spread that would also help and then the third lever. When you go down from an EBITDA margin standpoint is we would expect as you start to see some of that improvement and you've seen us do this throughout the past two years.
Jeff Knudson: And then the third level, when you go down from an EBITDA margin standpoint is, we would expect, as you start to see some of that improvement, and you've seen us do this throughout the past two years, is for us to look at ways where we can start getting some offsets to, I'd say, kind of natural labor costs headwinds, number one. And then as we get some of this higher margin business growth, getting some leveraging of our EBITDA.
Jeff: Is for us to look at ways, where we can start getting some <unk>.
Jeff: <unk> offset to I'd say kind of natural labor cost headwinds number one.
Jeff: And then as we get some of this higher margin business growth getting some leveraging of our SG&A.
Trevor Romeo: Okay, thanks, Kerry. That's, that's helpful.
Speaker Change: Okay. Thanks Kerry that's that's helpful.
Trevor Romeo: And then, you know, maybe hitting on that broader solutions point on language services, I just wanted to ask on that, as that continues to, I guess, kind of become a larger part of the company from a revenue, but seems like especially in EBITDA perspective, was just wondering if you could share any updated metrics there, maybe your growth outlook for say, the medium term, including how much cross selling runway you have left, and then also what kind of margins that business is running at nowadays. Yeah, so we love the language services business. We continue to see very healthy client demand in that in that space.
Speaker Change: And then maybe hitting on that.
Speaker Change: Broader solutions point on language services I just wanted to ask on that as that continues to I guess kind of become a larger part of the company from a revenue, but it seems like especially an EBIT perspective.
Speaker Change: Just wondering if you could share any updated metrics there maybe your growth outlook for say the medium term, including how much cross selling runway you have left and then also what kind of margins that business is running out nowadays.
Speaker Change: Yes, So we love the language services business we.
We continue to see very healthy client demand in that in that space.
Carrie Grace: It is a high margin business for AMN. Within the TWS segment, it is a lower margin business.
Speaker Change: It is a high margin business for Ameren within the TWC segment. It is a lower margin business.
Trevor Romeo: If you look at Q3, our quarterly revenue growth was affected by a delayed ramp of a single large new client that we've talked about through the course of this year, partially due to hurricane. We expect the ramp-up of the clients to resume in Q1. So you should expect as we go into next year to see a ramp-up of growth in that business. but but generally, you know, double digits is still kind of what you're thinking for in your turn? Yep. Double digits and 40 plus percent gross margin. Got it. Okay.
Speaker Change: If you look at Q3.
Speaker Change: Our quarterly revenue growth was affected by a delayed ramp of a single large new clients that we've talked about through the course of this year, partially due to hurricanes.
Speaker Change: We expect the ramp up of the client to resume in Q1. So you should expect as we go into next year to see a ramp up of growth in that business.
Speaker Change: But generally.
Speaker Change: Double digits.
Speaker Change: Still kind of what youre thinking for.
Speaker Change: In your term.
Speaker Change: Double digits in 40 plus percent gross margin.
Carrie Grace: And then just maybe one really quick other one would be, I think you mentioned, Carrie, the discrete item is benefiting Q2 revenue or Q3 revenue by 2% earners. Now, could you just expand on what those were?
Speaker Change: Got it Okay, and then just maybe one really quick other one would be I think you mentioned carry the.
Speaker Change: Discrete items benefiting Q2 revenue Q3 revenue by 2% for nurse and Allied could you just expand on what those were.
Randle Reece: Yeah, I'll turn it over to Randy and you can give some detail. They were primarily sales allowance and SLA true ups in the nurse and allied segment in the third quarter. The consolidated gross margin, excluding the discrete items, would have been 30%, so it benefited by about 100 basis points. Got it.
Speaker Change: Now I'll turn it over to Randy you can give some detail.
Speaker Change: Okay.
Speaker Change: They were primarily sales allowance an SLA true ups in the nurse and Allied segment.
Speaker Change: In the third quarter.
Speaker Change: The consolidated gross margin, excluding the discrete items would have been 30%. So it benefited by about 100 basis points.
Trevor Romeo: Okay, that's all I had. Thanks so much.
Speaker Change: Got it okay. That's all I had thanks so much.
Mark Marcon: Thank you. Our next question comes from Mark Marcon with Robert W. Baird. Please go ahead. Good afternoon, and thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mark Marcon with Robert W. Baird. Please go ahead.
Mark Marcon: Hey, good afternoon, and thanks for taking my questions Jeff.
Mark Marcon: Jeff, best of luck in future endeavors. It's been a pleasure working with you over the last three years. I really appreciate all the help. Can we talk a little bit about where you really appreciate the guidance for the fourth quarter? If we just take a look at travel nursing, without that $45 million benefit, for some of the labor disruption work. Where would the fourth quarter guide be for just for travel nurses? Well, all of the revenue that is in that $45 million, most of which is the labor disruption, there are a couple of other items. It would be, you'd take all the $45 million out of Travel Nurse or out of Nursing Allies.
Speaker Change: Best of luck in future endeavors. So it's been a pleasure working with you.
Speaker Change: Over the last three years I really appreciate all the help.
Speaker Change: Can we talk a little bit about.
Where are you.
Speaker Change: Really appreciate the guidance for the fourth quarter.
Speaker Change: Just take a look at travel nursing without that at $45 million benefit.
Speaker Change: For the for some of the labor disruption work well when would the fourth quarter guide beef.
Speaker Change: Travel nursing.
Speaker Change: Well all of the <unk>.
Speaker Change: Revenue.
Speaker Change: That is in.
Speaker Change: In that $45 million, which most of which is.
Speaker Change: Labor disruption there are couple of other items.
Yes.
Speaker Change: Would be you would take all of the $45 million out of travel nurse or out of nurse and allied.
Mark Marcon: Right. I got that, Randy. I just meant if we just look at just the pure travel nursing, what would the year-over-year decline Or said another way, what percentage of nursing allied would you expect to be traveled?
Speaker Change: Right I got that Randy just I guess.
Speaker Change: If we just look at just the pure travel nursing what would the year over year decline.
Speaker Change: Or said another way what percentage of nursing Allied would you expect to be travel nursing.
Randle Reece: Yeah, so we'll take that offline.
Speaker Change: Yes.
Speaker Change: Yeah, let's take that offline, hey, Mark if you, but if I.
Mark Marcon: Hey, Mark, if you, but if I go back to the guidance that we gave for nurse and allied last quarter, we had said, hey, we can see some scenarios where we would expect to be slightly down to flat to slightly up. If you take away the strike guidance that we gave you. And so relative to that, to the guidance we gave before, our outlooks for core NAS. Q3 to Q4 is flat to down low single digits. So it is in line with what we had talked about last. Okay, great. That's really helpful. I appreciate that.
Speaker Change: I go back to the guidance that we gave for <unk>.
Speaker Change: First in Allied last quarter, we had said hey, we can see some scenarios, where we would expect to be slightly down to flat to slightly up if you take away the strike guidance that we gave you.
Speaker Change: And so relative to that.
Speaker Change: The guidance, we gave before our outlook for core NAF.
Speaker Change: Q3 to Q4 is flat to down low single digits. So it is in line with what we had talked about last quarter.
Speaker Change: Okay, Great. That's really helpful. I appreciate that and can you talk a little bit more about just what youre seeing both in terms of.
Carrie Grace: And can you talk a little bit more about just what you're seeing, both in terms of, you know, the orders that you feel are relevant and fillable and pricing and also supply and thinking about, you know, beyond the fourth quarter as we start thinking out towards the first quarter? Because in a certain sense, it seems like things are basing out and we're starting to hit a bottom. But there's a couple of elements that, you know, make you wonder a little bit about that. And so I'm just trying to get a better sense for how you're thinking about that when you parse through.
Speaker Change: The orders that you feel are.
Speaker Change: Our relevant.
Speaker Change: Philip Bowl and in pricing.
Speaker Change: And also supply and thinking about BR.
Speaker Change: Beyond the fourth quarter as we start thinking out towards the first quarter because.
Speaker Change: In a certain sense. It seems like things are basing out and we're starting to hit a bottom, but theres a couple of elements that.
Speaker Change: It makes you wonder a little bit about that and so I'm just trying to get a better sense for how youre thinking about that when you parse through.
Carrie Grace: all of the elements, and specifically with regards to travel. Yeah, so if you take some of the comments that I made generally about some of these signs that we're seeing broadly around stabilization, whether that's in bill rate stability, the demand, getting back to, you know, very well in actually the low end range of contingent premium spend to permanent cost, the things, Mark, that you would still want to see are, we still see clients underneath that in different places. And so we have some clients who to get orders filled will increase bill rates. We have some that are still trying to decrease.
Speaker Change: All of the elements and specifically with regards to travel nursing.
Speaker Change: Yes. So if you take some of the comments that I made generally about some of the signs that we're seeing broadly around stabilization.
Speaker Change: Whether that's in bill rate stability, the demand getting back to you know very well in actually at the low end range of contingent premium spend to permanent cost.
Mark Marcon: The things Mark that you would still want to see are we still see clients underneath that in different places and so we had some client too to get orders filled will increase bill rates. We have some that are still trying to decrease them and.
Carrie Grace: And we see clients in different places on utilization as well. So, you know, while we've certainly seen progress, we'd want to see continued progress on that front. We have seen, as I mentioned in my opening comment, an uptick in unfilled orders, which I think is significant, given that it is a incredibly competitive environment. You know, on balance, we probably have overcapacity in the tribal nurse industry right now. You're starting to see some of that rationalized out, but you still see a very competitive environment and unfilled orders increasing. So, I think you'd want to see some of those orders getting cleared by getting better matching expectations between the clients and the.
Mark Marcon: And we see clients in different places on utilization as well so.
Mark Marcon: While we've certainly seen progress we'd want to see continued progress on that front.
Mark Marcon: We have seen as I mentioned in my opening comment in uptake and unfilled orders.
Mark Marcon: I think is significant.
Significant given that it is a incredibly competitive environment on balance, we probably have overcapacity in the travel nurse industry right now youre starting to see some of that rationalize out.
But you still see a very competitive environment.
Mark Marcon: And unfilled orders, increasing so I think you'd want to see some of those orders getting cleared by getting better matching expectations between the clients and the clinician.
Carrie Grace: And then, what's your expectation on the VMS side? Because... That would also be an indicator with regards to what we're seeing with regards to general order levels, because you're obviously filling your orders first.
Speaker Change: And then what's your expectation on the Vms side because of.
Speaker Change: That would also be an indicator with regards to what we're seeing with regards to <unk>.
Speaker Change: General order levels, because youre, obviously filling your orders first and then on the MSP side.
Carrie Grace: And then on the MSP side, what are the trends there, just broadly speaking? Yeah, and so what I would say on the VMS side is that that does track the broader market. VMS was down in the third quarter, we expect it to be down in the fourth quarter. And I would say we're seeing, you know, plus or minus similar patterns across the industry. Again, you have clients in different places. So underneath any of the trends, we would have some MSP clients that may be increasing this quarter, and we have some that would be decreasing.
Speaker Change: What are the trends there.
Speaker Change: Broadly speaking.
Speaker Change: Yes, so what I would say on the Vms side is that that does track the broader market.
Speaker Change: Vms was down in the third quarter, we expect it to be down in the fourth quarter.
Speaker Change: And I would say.
Speaker Change: Being plus or minus.
Speaker Change: Similar patterns across the industry again, you have clients in different places.
Speaker Change: So underneath any of the trends we would have some MSP clients that may be increasing this quarter and we have some that would be decreasing.
Carrie Grace: If that's the industry trend, the other piece that we are seeing is we have been very focused on growing our portfolio. So we have moved in MSPs to a net win position year-to-date this year versus a net loss position last year.
Speaker Change: If that's the industry trend the other piece that we are seeing is we have been very focused on.
Speaker Change: Growing our portfolio. So we have moved in MSP to a net win position.
Speaker Change: Year to date this year versus a net loss position last year.
Carrie Grace: Mark, we also mentioned in the prepared remarks that within our vendor neutral and VMS business, there had been an increase during the quarter in unfilled orders, which is an indication of how many orders might be mispriced versus the market. In addition, in our VMS business, we are hopeful and see a path to resuming sequential growth in revenue sometime next year.
Mark Marcon: Mark We also mentioned in the.
Speaker Change: Our prepared remarks that.
Speaker Change: Within our vendor neutral Vms business, there had been an increase during the quarter in the unfilled orders, which is an indication of how many orders might be mispriced versus the market.
Speaker Change: In addition in our Vms business, we are hopeful.
Speaker Change: And see a path to resuming sequential growth in revenue.
Speaker Change: Sometime next year.
Mark Marcon: Great.
Mark Marcon: And then one last one. You know, we take a look at the deleveraging that you're experiencing in terms of the the the SG&A and and the margin profile there. Is that, is that partially because you're maintaining some capacity with the thought that, hey, we're getting some stabilization? And do you feel like you've got excess capacity at this point in terms of recruiters, account managers, etc.? And if so, how should we think about the incremental margins when things eventually change?
Speaker Change: Great and then one last one.
Speaker Change: We take a look at the deleveraging.
Speaker Change: You are experiencing in terms of the.
Speaker Change: The SG&A and.
Speaker Change: And the margin profile there.
Speaker Change: Does that.
Speaker Change: That partially because.
Speaker Change: You are maintaining some capacity with the thought that hey, we're getting some stabilization.
Speaker Change: And do you feel like you've got excess capacity at this point in terms of <unk>.
Speaker Change: Recruiters account managers et cetera.
Speaker Change: If so how should we think about the incremental margins when things eventually turn.
Carrie Grace: So you should think about our capacity on two fronts. One, we would expect to get some productivity off of our current producer base as market conditions improve. So we do think that there is capacity, particularly as we complete some of the automation projects that we've been focused on over the past couple of quarters. We also have embedded capacity within our international nurse business. And so we have been very intentionally during this temporary period of visa retrogression to keep all of our candidates in line and ready to go. So as the retrogression dates improve, we can immediately get our candidates placed in the clients that have requested them.
Speaker Change: So you should think about our capacity on two fronts.
Speaker Change: One.
Speaker Change: We would expect to get some productivity off of our current producer base as market conditions improve so we do think that there is capacity, particularly as we complete some of the automation projects that we've been focused on over the past couple of quarters. We also have.
Speaker Change: Bedded capacity within our internal our international nurse business and so we have been very intentionally during this temporary period of visa retro aggression to keep all of our candidates in line and ready to go so as the Retrogression date. Some crew we can immediately get <unk>.
Speaker Change: It's placed in the client.
Speaker Change: Have requested them so theres capacity from that front Mark that we would expect you to start seeing in 2025.
Carrie Grace: So there's capacity from that front mark that we would expect you to start seeing in 2022. Mark, if we were to add $100 million back of international nurse revenue, we believe it would improve our consolidated Just Diva Del Margin by 100 basis points. That's one of the best levers that we will have in terms of improving operating leverage, and we would expect to resume growth in 2020.
Speaker Change: Mark Thank you.
Speaker Change: Work to add $100 million back of international nurse revenue, we believe it would improve our consolidated adjusted EBITDA margin by 100 basis points.
Speaker Change: One of.
Speaker Change: The best levers that we will have in terms of improving operating leverage and we would expect to resume.
Speaker Change: Growth in 2026.
Mark Marcon: That's very helpful.
Speaker Change: That's very helpful. Thank you.
A.J. Rice: Thank you. Our next question comes from A.J. Rice with UBS. Please go ahead. Hi everybody.
Speaker Change: Thank you.
Speaker Change: Our next question comes from a J rice with UBS. Please go ahead.
Speaker Change: Okay.
A.J. Rice: A couple ones and then I might just ask you about 25, make sure I get the run rate we're exiting the year at. But specifically, you're saying you picked out your net wins on MSP, but we're also talking about... and other places. Is there anything about MSP economics that's become more competitive? Is the competitive landscape reflecting itself in competition for MSPs as well? Yeah, the competitive landscape is, you know, intense across the entire, you know, across all service models, AJ, and a number of features of MSPs, particularly, you know, just some, you know, how much lead time you had changed during COVID.
Speaker Change: Hi, everybody a couple of months and then I wanted to just ask you about 25 I'll make sure I get the run rate, we're exiting the year at.
Speaker Change: Specifically you say.
Speaker Change: You picked up your net wins on MSP, but we're also.
Speaker Change: Talking about.
Speaker Change: Increased competition on the Bill pay spread in other places is there anything about that.
Speaker Change: MSP economics.
Speaker Change: To become more competitive as the competitive landscape.
Speaker Change: Reflecting itself in competition for MSP as well.
Speaker Change: Yes, the competitive landscape is.
Speaker Change: Intense across the entire across all service model a J.
Speaker Change: And a number of features of MSP.
Speaker Change: Particularly.
Speaker Change: Yeah.
Speaker Change: Just.
Speaker Change: How much lead time, you had changed during COVID-19.
A.J. Rice: And so I wouldn't say that there's anything unique about MSPs relative to the overall market, the entire market.
Speaker Change: So I wouldn't say that there's anything unique about MSP is relative to the overall market the entire market is competitive.
Carrie Grace: Okay, and On the LOCUMS business, I think you mentioned the specialty mix dynamics was having some impact on margin. Can you comment on what types of placements you're making, where the strength in placements is right now in LOCUMS, and maybe elaborate a little more on that, if I've got it right, that that's a margin pressure? So, there's 2 things about it in the locum space. 1 is you're seeing the same bill pay pressure that you're seeing everywhere else as the primary factor. And so, you know, it's the pay expectations in locums is even more acute than you would even see in parts of nurse and allied just because of the shortage of positions and the demand for them because they're so closely tied to revenue.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Our Locums business I think you mentioned.
Speaker Change: The specialty mix dine.
Speaker Change: Dynamics was having some impact on margin can you comment on what types of placements youre, making where the strength.
Speaker Change: And placements is right now in Locums, and maybe elaborate a little more of that.
Speaker Change: If I've got it right, but thats a margin pressure.
Speaker Change: So there's two things about it in the loop with phase one is youre seeing the same bill pay pressure that youre seeing everywhere else as the primary factor.
Speaker Change: And so.
Speaker Change: The PE.
Speaker Change: Patients in Locums is even more acute than you would even see in parts of nurse and allied just because of the shortage of physicians.
Speaker Change: And the demand for them because they are so closely tied to revenue.
Carrie Grace: So, it really has been more of a bill pay spread underneath that. We still see some strong demand in CRNA, which does tend to have lower margins and some of the other specialties.
Speaker Change: So it really has been more of a bill pay spread.
Speaker Change: Underneath that we still see some strong demand and see RNA, which does tend to have lower margins than some of the other specialties, but besides that I think the big headline is the is the same pressure that we're seeing in other parts of our of our business.
Carrie Grace: But besides that, I think the big headline is the same pressure that we're seeing in other parts of our of our.
A.J. Rice: Okay, last question for me would relate to the comments you made, and obviously doing math on the fly always gets me in trouble, but you're saying, I think if you take out the strike revenue for the fourth quarter and have a run rate, then you apply like an 8% EBITDA margin to that. that would sort of suggest on an annualized basis, you're jumping off at a 200 million EBITDA run rate. And now I know Randy just said that if you could get the international back, that would be 100 basis points, which would make a difference.
Okay.
Speaker Change: Question for me would relate to the.
Speaker Change: The comments you made and obviously doing math on the fly always gives me in trouble but.
Speaker Change: Youre, saying I think if you take out the strike revenue for the fourth quarter and.
Speaker Change: It had run rate then you acquire like an 8% EBITDA margin to that.
Speaker Change: That would sort of suggest on an annualized basis, youre jumping off $200 million EBITDA run rate.
Speaker Change: And I know Randy just said that if you can get the international bag that would be 100 basis points, which can make a difference.
A.J. Rice: But is that the jumping off point? And then are there obvious places to look for improved performance off of that exit year run rate from 24 to 25? When you go to modeling 2025, I suggest that you do normalize Q4, but it's a little bit different than what the way you presented the midpoint of revenue guidance, excluding the revenue that we don't expect to recur. would be $650 million. The midpoint of the adjusted EBITDA margin guidance would be about 8.3%. So you're several million higher on the quarterly run rate EBITDA there. And then, A.J., the other things that we took out, because it's hard to predict, is strike.
Speaker Change: Is that the jumping off point and then are there obvious places to look for.
Speaker Change: Improved performance off of that exit.
Speaker Change: <unk> run rate from 2004 to 2012.
Speaker Change: When you go to modeling 2025, I suggest that you do normalized Q4, but it's a little bit different than the way you presented the midpoint of revenue guidance, excluding the revenue that we don't expect to recur.
Speaker Change: It would be $650 million.
Speaker Change: The.
Speaker Change: Midpoint of the adjusted EBITDA margin guidance would be about eight 3%.
Speaker Change: So your.
Speaker Change: Several million dollars higher on the quarterly run rate.
Speaker Change: EBITDA there.
Speaker Change: And then the other things.
Speaker Change: The things that we took out because it's hard to predict is strike.
A.J. Rice: And so we have the largest labor disruption pipeline since I've been here. There's a number of CBAs that are up next year. It's hard to predict, but it is a very strong pipeline. We just don't put that in there. And then you would start to see modest growth coming off the fourth quarter, particularly in businesses like PLS and language services that are seasonally low in the fourth quarter. Yes, we normalized Q1 in a conservative way, just taking out all of the labor disruption revenue that we expect to have material labor disruption revenue next year. I got you.
Speaker Change: And so we have the largest labor disruption pipeline since I've been here.
Speaker Change: There is a number of ppas that are that are up next year, it's hard to predict but it is a very strong pipeline.
Speaker Change: We just don't put that in there.
Speaker Change: And then you would you would start to see.
Speaker Change: Modest growth coming off the fourth quarter, particularly in businesses like Pls and language services.
Speaker Change: That are seasonally low in the fourth quarter.
Speaker Change: Yes, we normalized.
Speaker Change: Q1.
Speaker Change: Conservative way, just taking out all of the.
Speaker Change: Labor disruption revenue.
Speaker Change: But we.
Speaker Change: We expect to have material labor disruption revenue next year.
Speaker Change: Okay got you alright. Thanks.
A.J. Rice: All right. Thanks. That's some helpful starting points.
Speaker Change: Helpful Starting point.
Tobey Sommer: Thank you. Our next question comes from Tobey Sommer with Truist. Please go ahead. Thank you. I wanted to ask something about orders. What's the change in the volume of orders that are coming in around the prevailing bill rate of travelers you have on assignment today? I just want to make sure that we're trafficking in sort of data and we're not, that's more indicative of demand that could reasonably be filled, instead of also including outlier rates that are too low to be profitably filled. Maybe you've already kind of scrubbed the data and you're conveying it that way.
Speaker Change: Thank you.
Tobey Sommer: Our next question comes from Tobey Sommer with Truest. Please go ahead.
Tobey Sommer: Thank you.
Speaker Change: I wanted to ask something about orders, what's the change in the volume of orders.
Speaker Change: That are coming in around the prevailing bill rates of travelers you have on assignment today.
Speaker Change: Want to make sure that were trafficking and sort of data.
Speaker Change: And we're not that's.
Speaker Change: More indicative of demand that could reasonably be filled instead of also including outlier rates that are too low to be profitably filled maybe you've already kind of scrubbed. The data in your convey it that way I just don't know.
Tobey Sommer: I just don't know.
Carrie Grace: You know, if we look at, I guess, until you sometimes go out and see if you can get a clinician to be interested in that role, there's a piece of them that I think, there's a group of them, Tobey, that are just unfillable if they come in. There's a group of them that's probably in some middle ground, and then there's a group that is fillable. I don't have a specific number of the incremental number of orders coming in that we would put in those categories because part of the dynamic that's affecting it is if you look at underlying pay expectations, they're very dynamic.
If we look at I guess until you sometimes go out and see if you can get a condition.
Speaker Change: To be interested in that role there is a piece of them that I think there is there is a group of them Tobey that are just until <unk> as they come in there is a group of them that probably in some middle ground and then there's a group that is available.
Speaker Change: I don't have a specific number of the incremental number of orders coming in.
Speaker Change: That we would put in those categories because part of the dynamic that's affecting it is if you look at underlying Te expectations, they're very dynamic and so annualized our MK is in the high single digits.
Carrie Grace: And so annualized RMK is in the high single digits. And so what they would have expected in the first quarter of this year, that's also dynamic. But what we've seen overall, and how we look at, I'd say, the orders that we think are, we see nobody fill, that number has increased quarter over quarter. We did note, Tobey, that in our vendor neutral and VMS business, we saw 14% of orders unfilled in Q3. That's probably representative of the proportion of orders that are kind of an extreme on the price. So when you convey the percentage change in orders and compare them to prior periods or pre-pandemic, are you adjusting and filtering out orders that are sort of at a nonsensical price for the market conditions?
Speaker Change: So what they would have.
Speaker Change: <unk> in the first quarter of this year, that's also dynamic, but what we've seen overall in how we look at.
Speaker Change: I would say the orders that we think are.
Speaker Change: We see nobody Phil that number has increased quarter over quarter.
Speaker Change: We did note tobey that in our.
Speaker Change: Vendor neutral Vms business, we saw 14% of orders unveiled in Q3.
Speaker Change: That's probably representative of the proportion of orders there.
Speaker Change: Kind of an extreme on the pricing.
So when you convey the percentage change in orders in comparison to prior periods of pre pandemic are you adjusting.
Speaker Change: Adjusting and filtering out orders that are.
Speaker Change: Sort of a non surgical price to the market conditions.
Tobey Sommer: No.
Speaker Change: No.
Jeff Knudson: Okay, what's a fair conversion kind of assumption from EBITDA to free cash? And how do you see CapEx? Because we just had some pretty heavy lifting for CapEx and with declining margins, I'm just trying to refine what the free cash profile looks like at the company. We would normally just assume 65% conversion of adjusted EBITDA to operating cash flow, and then you would have CAPEX. We expect our CapEx number to be lower in the fourth quarter. just Reducing it in line with revenue, but we have, we completed a lot of projects this year, that's the higher CapEx that we've had.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Fair.
Speaker Change: Conversion.
Speaker Change: Kind of.
Speaker Change: Sumption from EBITDA to free cash.
Speaker Change: And how do you see capex, because we just had some pretty heavy lifting for capex and with declining margins.
Speaker Change: Trying to refine what the free cash profile looks like as a company.
Speaker Change: We would normally.
Speaker Change: Just assume.
Speaker Change: 65% conversion of <unk>.
Speaker Change: Adjusted EBITDA.
Speaker Change: Operating cash flow and then you would have capex.
Speaker Change: <unk>.
Speaker Change: We expect our capex number to be lower in the fourth quarter.
Speaker Change: Just.
Speaker Change: Reducing it in line with revenue.
Speaker Change: But we have come.
Speaker Change: We completed a lot of projects this year.
Speaker Change: That's.
Speaker Change: The higher Capex that we've had.
Jeff Knudson: Hey, Tobey, just to give details on the projects we completed. So we've talked a lot about shift, life, flex and the work that we've done there. We are we should be virtually complete the replatforming. of our VMS clients by the end of this year and we will be the majority completed with our MSP clients on shift twice flex and we'll finish that up in Q1. The same thing for our applicant tracking system. And in getting that completed this year, so there's some significant projects. That we had in place that will be done so. Between that completion and where we are from a kind of overall revenue standpoint, we will be down in You may have noticed our operating cash flow as a percentage of just EBITDA has been quite good this year to date, and we did have a three-day improvement in DSO in the third quarter.
Speaker Change: And Tobey.
Speaker Change: Give detail.
Speaker Change: For the projects, we completed so we've talked a lot about supply.
Speaker Change: And the work that we've done there.
Speaker Change: We are we should be virtually complete the re platforming.
Speaker Change: Of our.
Speaker Change: Vms clients by the end of this year and we will be the majority completed with our MSP clients once or twice flex and we'll finish that up in Q1.
Speaker Change: Same thing for our applicant tracking system.
Speaker Change: And in getting that completed this year. So there is some significant projects that.
Speaker Change: That we had in place that will be done so.
Speaker Change: Between that completion and where we are.
Speaker Change: Kind of overall revenue standpoint.
We will be down in Capex next year.
Speaker Change: You may have noticed.
Speaker Change: Operating cash flow as a percentage of the.
Speaker Change: Adjusted EBITDA has been quite good this year to date.
Speaker Change: We did have a three day improvement in DSO in the third quarter.
Jeff Knudson: Our operating cash flow this quarter included an outflow for a legal settlement, so it would have been... a really boom quarter without that.
Our operating cash flow this quarter included.
Speaker Change: The outflow for.
Speaker Change: Legal settlement, so it would've been.
Speaker Change: Really boom quarter without that.
Tobey Sommer: Thank you. If I may sink one more in, under the last, I guess, the last year and a half or so, you kind of reengaged from a sales perspective with the market and the customers that you kind of weren't calling on, unified a bunch of brands. What sort of traction are you seeing related to that? And is it sort of fully in the business as of the third quarter? Or do you still think that you're in the ramping stage of that reengagement process with non-core customers from three or four years ago? I think we are still in the ramping phase and not the least of which is because the typical sales cycle depending on what it is on you know language services that sales cycle is not as long if you're talking about an MSP it can be a year to a year plus and so the signs that we have around the re-engagement of all the work that we've been doing not just with clients and prospects but just aligning ourselves more broadly across the market is from a sales pipeline standpoint we've seen quarter over quarter growth the the biggest growth factor in that has been growth in vendor neutral prospects so when we launched shift white flex really the beginning of the year we have been very successful in building a pipeline around those capabilities we've also seen progression through the pipeline of of those opportunities so those are the those that's one of the leading indicators we would look at we're in a net win position year to date for MSPs which is an improvement from what we saw last year and then the final piece and I know we mentioned this is in our comments is if we look at our top clients we improved the average number of solutions that we have with them so it's we want to get our solutions in pipelines and then we want to be able to expand with that client into more Thank you very much.
Speaker Change: Thank you if I may sneak one more in.
Speaker Change: Sure.
Speaker Change: Under the last I guess year, and a half or so.
Speaker Change: Kind of re engaged from a sales perspective with the market.
Speaker Change: Customers that we're calling on.
Speaker Change: Unified a bunch of brands.
Speaker Change: What sort of traction are you seeing related to that.
Speaker Change: And.
Speaker Change: Is it is it sort of fully in the business as of the third quarter or do you still think that you are in the ramping stage of that reengagement process with.
Speaker Change: Non core customers from three or four years ago.
Speaker Change: I think we are still in the ramping phase.
Speaker Change: Not the least of which is because the typical sales cycle.
Speaker Change: Depending on what it is on language services that sales cycle is not as long. If you are talking about an MSP.
Speaker Change: It can be a year or two a year plus and so the signs that we have around the reengagement.
Speaker Change: Of all the work that we've been doing not just with clients and prospects, but just aligning ourselves more broadly across the market is from a sales pipeline standpoint, we have seen quarter over quarter growth.
Speaker Change: The the biggest growth factor in that has been growth in vendor neutral prospects. So when we launched shift why specs really the beginning of the year. We have been very successful in building our pipeline around those capabilities. We've also seen progression through the pipeline.
Speaker Change: Of of those opportunities. So those are the that's.
Speaker Change: Thats one of the leading indicators, we would look at.
Speaker Change: We're in a net win position year to date for MSP, which is an improvement from what we saw last year and then the final piece and I know we mentioned this is in our comments is if we look at our top clients.
Speaker Change: We improved the average number of solutions that we have with them. So we want to get our solutions in pipelines and then we want to be able to expand with that client into more solution set.
Speaker Change: Thank you very much.
Tobey Sommer: Thank you.
Speaker Change: Thank you.
Joanna Gajuk: Our next question comes from Joanna Gajuk with Bank of America. Please go ahead. Hi, thanks so much for taking the question here. So maybe first, a follow-up, maybe I missed it, but when it comes to the demand trends, I know you compared it to 2019. But did you talk about, I guess, year-to-date or sequentially where you've seen the demand? And I guess as it relates also to seasonal orders, any commentary there? Yeah, so if we look at demand in different businesses, so while travel nurse demand has increased since the beginning of the second quarter, and we've seen that continue into the fourth quarter, part of the third quarter demand was seasonal orders, Joanna, and while that demand has been welcome since April, you are still tracking about 35% below what you would have seen in pre-COVID.
Speaker Change: Our next question comes from Joanna <unk> with Bank of America. Please go ahead.
Speaker Change: Hi, Thanks, so much for taking the question here. So maybe first a follow up maybe I missed it but when it comes to the demand trends I know you compared it to 2019, but could you talk about the I guess year to date or sequentially seeing the demand and I guess as it relates to.
Speaker Change: Two two.
Speaker Change: Seasonal orders any any commentary there.
Speaker Change: Yes, so if.
Speaker Change: If we look at demand.
Speaker Change: In different businesses so wow.
Speaker Change: Travel nurse demand has increased.
Speaker Change: The beginning of the second quarter.
Speaker Change: And we saw and we've seen that continue into the into the fourth quarter.
Speaker Change: Part of the third quarter demand was seasonal orders Joanna.
Speaker Change: And while that while that demand has been welcome.
Speaker Change: April.
Speaker Change: You are still tracking about 35% below what you would have seen.
Carrie Grace: We're seeing healthy demand in Allied and at levels above what you saw in 2019. We're seeing lower demand in locums than last year, still healthy and above 2019.
In pre Covid.
Speaker Change: We're seeing healthy demand in allied and at levels above what you saw in 2019.
Speaker Change: We're seeing lower demand in locums than last year still healthy and above 2019.
Joanna Gajuk: Okay, that's helpful.
Speaker Change: Okay. That's helpful and then I guess another follow up on the discussion around the.
Carrie Grace: And I guess another follow up on the discussion on the gross margins. So you're saying that the rates are stable, but there's still this pressure on compensation. So how do you expect this to play out, you know, internationally? I understand there could be some mixed you know, benefits if this international business comes back and such, but that kind of just, you know, on maybe just the the nurse piece, you know, how do you expect the gross margin? Because also, you know, we talked about competition there. So is there any indication of any, you know, changing in competition as in like easing that pressure?
Speaker Change: The gross margin I'm, sorry, so you're saying that the rates are stable, but the full discretion of compensation. So how do you expect this to play out.
Speaker Change: Into next year I understand there could be some mix.
Speaker Change: Benefits of this international business comes back and such but that kind of just you know.
Speaker Change: Or maybe just the nurse piece.
Speaker Change: How do you expect the gross margin because also you talked about competition there so.
Speaker Change: Any indication of any changes in competition I think like easing back pressure.
Carrie Grace: When you go back and look at cycles and the part of the cycle that we're in, you will sometimes see an overcorrection that will work its way out, and you'll see some margin improvement as you come out of that. And so we would expect that to happen. That will take a bit of time for that to work through. So we've started to see part of it is, you know, an overcapacity of suppliers. Coming out of COVID, we've started to see that we saw a supplier retrenched from the travel nurse business in the third quarter. So I think you're starting to see a bit of that rationalization.
Speaker Change: When you go back and look at cycles and the part of the cycle that we're in you will sometimes see an over correction.
Speaker Change: That will work its way out and Youll see some margin improvement as you come out of that.
Speaker Change: And so we would expect that to happen.
Speaker Change: That will take a bit of time for that for that to work through.
Speaker Change: So we started to see part of it is.
Speaker Change: An overcapacity of of suppliers.
Speaker Change: Coming out of Covid, we've started to see that we saw a supplier retrench from the travel nurse business in the third quarter. So I think youre starting to see a bit of of that rationalization.
Carrie Grace: So that would be, I'd say, the demand piece of it. If you look at from a mixed standpoint, We would expect our biggest mixed challenge in nurse has been the international nurse and visa retrogression. We would expect that to taper off in the second quarter of 2025. And then we would expect to see, as we exit 2025 at the end, some growth that you'd really see, you know, accelerate in 2000. And that will have, that will have a, as that business both tapers off, and then as we get back into a growth mode for that business, that will have a positive impact on growth margin and EBITDA margin, both for nursing allies and for our consolidated Right, I understand.
Speaker Change: So that would be by I'd say the demand piece of it.
Speaker Change: <unk>.
Speaker Change: If you look at from a mix standpoint.
<unk>.
Speaker Change: We would expect our biggest mix challenge in nurse has been the international nurse and visa retro aggression.
Speaker Change: We would expect that to taper off in the second quarter of 2025.
Speaker Change: And then we would expect to see as we exit 2025 at the end.
Speaker Change: Some.
Speaker Change: Growth that we'd really see accelerate in 2026.
Speaker Change: And that will have that will have a as that business. Both tapers off and then as we get.
Speaker Change: Back into a growth mode for that business that will have a positive impact on.
Speaker Change: On gross margin and EBITDA margin, both for nurse and Allied and for our consolidated results.
Speaker Change: Right understood and if I may squeeze a last one on the when you were talking about competition and some people leaving.
Carrie Grace: And if I may squeeze a last one on when we're talking about competition and some people leaving the market or not offering that particular service, Bob, do you expect maybe some assets to be picked up as in like consolidation? Is there something that you would be interested in? I think if you just look at the shape of the industry and some of the fragmentation, along with clients wanting more tech-enabled solutions, I think those two things will drive consolidation in the industry. For us, we always look at opportunities that are going to either give us some unique capabilities that we don't have.
Speaker Change: The market or not offering.
Speaker Change: Particular service they expect.
Speaker Change: Maybe some assets could be picked up as in like consolidation is there something that you would be interested in.
Speaker Change: I think if you just look at the shape of the industry and some of the fragmentation.
Speaker Change: Along with clients wanting more tech enabled solution I think those two things will drive consolidation in the industry.
Speaker Change: For us we always look at opportunities that are going to either give us some unique capabilities that we don't have.
Carrie Grace: or would give us an ability to scale something where we see significant opportunities.
Speaker Change: Or would give us an ability to scale, something where we see significant opportunity.
Carrie Grace: Great, thank you so much for the call.
Speaker Change: Great. Thank you so much for the color.
Operator: Thank you.
Speaker Change: Thank you.
Brian Tanquilut: Our next question comes from Brian Tanquilut with Jeffrey's. My apologies. Please go ahead. Good afternoon. Maybe just a question on carry on seasonal placements.
Speaker Change: Our next question comes from Brian to cricket <unk> with Jefferies. My apologies. Please.
Speaker Change: Please go ahead.
Speaker Change: Hey, good afternoon, maybe just a question on carry on seasonal placements just to follow up on Joanne. It's question I don't think we've touched on kind of like commentary qualitative commentary in terms of expectations for Q1, how should we be thinking about that progression from Q4 to Q1, given what youre seeing with seasonal orders heading into.
Carrie Grace: Just to follow up on Joanna's question. I don't think we've touched on kind of like commentary, qualitative commentary in terms of expectations for Q1. How should we be thinking about that progression from Q4 to Q1, given what you're seeing with seasonal orders heading into this quarter? We don't have as much transparency at this point into Q1, but what you would typically see if we look at winter orders as an example, we saw this last year and we saw this play through again this year. We had start date last year that went into Q1 and we have that same phenomena now, so that will be a help for us.
Speaker Change: This quarter into next.
Speaker Change: So we don't have as much transparency at this point into Q1, but what you would typically see if we look at winter orders as an example, we saw this last year and we saw that play through again this year.
Speaker Change: We had start date.
Speaker Change: Last year that went into Q1, and we have that same <unk>.
Speaker Change: Phenomenon now so that will be a help for us so we would expect.
Carrie Grace: So we would expect that to be helpful from a Q1 standpoint overall. We typically after Q1 would see some drop off of winter orders, but that really happens more Q2 versus Q1.
Speaker Change: That to be helpful. From a Q1 standpoint overall, we typically after Q1 would see some drop off of winter orders, but that really happens more Q2 versus Q1.
A.J. Rice: So maybe I'll follow up on that, right? So tying back to AJ's question from earlier, I mean, if we look at your implied guidance for Q4, and then adjust for that seasonal factor of Q4 and Q1, you know, we're landing at roughly a $200 million run rate. So just curious, what would be the missing pieces to get to a number that grows that significantly from that sort of run rate? While we don't give guidance, what we try to do is give you a core, taking everything out, including labor disruption, which we typically have some in, it's just hard to predict.
Speaker Change: So maybe I'll follow up on that rate tying back to <unk> question from earlier I mean, if we look at your implied guidance for Q4.
Speaker Change: And then adjust for the seasonal factor in Q4 and Q1.
Speaker Change: Landing at roughly a $200 million run rate. So just curious what would be the missing pieces to get to a number the gross debt significantly from that sort of run rate.
Speaker Change: While we don't give guidance what we tried to do is give you.
Speaker Change: <unk> core.
Speaker Change: Taking everything out, including labor disruption, which we typically have some in it's just hard to predict.
Carrie Grace: I think AJ went to a low-end range of guidance on EBITDA margin would be kind of thing one that you would look through. And then if you go back and look at what you would expect in different businesses, you would typically in PLS and language services, particularly with some of the commentary that I gave about language services and the client deployment, you would see growth off of seasonal Q4 loads.
Speaker Change: I think a J went to a low end range of guidance on EBITDA margin would be kind of thing one that you would look through and then if you go back and look at what you would expect in different businesses.
Speaker Change: You would typically in pls.
Speaker Change: Language services, particularly with some of the commentary that I gave about language services and the client deployment.
Speaker Change: Deployment, you would see growth off of seasonal.
Speaker Change: Q4 lows.
Carrie Grace: and we don't typically in Nurse and Allies you would see more of the traveler-declined second quarter not in the Got it.
Speaker Change: And we don't typically in nurse and Allied you would see more of that trailer decline in second quarter not in the first quarter.
Speaker Change: Okay got it thank you.
Constantine Davides: Thank you. Our next question comes from Constantine Davides with Citizens J&P Securities. Please go ahead. Hi. One follow-up on the international business. Did you provide a run rate on how that business performed in the third quarter?
Speaker Change: Q.
Speaker Change: Our next question comes from Constantine Davita with citizens JMP Securities. Please go ahead.
Speaker Change: Hi, one follow up on the international business did you provide.
Speaker Change: Our run rate on how that business performed in the third quarter.
Carrie Grace: And Terry, just updated thoughts on when you say it tapers out second quarter 25, if you could just get a little bit more color there on where you think that bottom. Yeah, so if you look at the international business, and we take what it looks like pre-visa retrogression, that was a $225 million business. We expect in Q4 for it to be 180. And then we would expect another year-over-year impact of $60 million in 2025. That's a year-over-year comparison. If we look at the cadence of that in 2025, you would expect it to have a meaningful tapering in Q2.
Speaker Change: Terry just updated thoughts on when you say papers out second quarter or 25 years.
Speaker Change: You can just give a little bit more color there on where you think that bottoms.
Speaker Change: Yeah. So if you look at the international business.
Speaker Change: And we take it.
Speaker Change: It looks like pre piece of retro aggression that was the $225 million business.
Speaker Change: We are expecting Q4 for it to be 180.
Speaker Change: And then we would expect another year over year impact of $60 million in 2025.
Speaker Change: Okay.
Speaker Change: That's a year over year comparison, if we look at the cadence of that in 2025.
Speaker Change: You would expect it to.
Speaker Change: Have a meaningful tapering in Q2.
Carrie Grace: And then we would get to growth as we end 2025.
Speaker Change: And then we would get to growth as we end.
Speaker Change: 2025.
Carrie Grace: We're looking at the Gross Margin Debt Lend from International. tapering from being about 70 basis points in Q4. to about 40 basis points in Q1 and then minuscule after that.
Speaker Change: We're looking at.
Speaker Change: Looking at the gross margin line from international.
Speaker Change: Tapering from being about 70 basis points in Q4.
Speaker Change: Two about 40 basis points in Q1, and then <unk>.
Speaker Change: SKU all after that.
Carrie Grace: Thanks, and then... Harry, just following up on notion or that you alluded to just top clients having an average 10 Solutions. Can you just talk about how may be broadly defined discrete solution, how that penetration has changed in the past year or two, and I guess where the. best opportunities to further penetrate those clients. Entry 2025.
Speaker Change: Thanks, and then.
Speaker Change: Yes.
Speaker Change: Gary just following up on this.
Speaker Change: Notion.
Speaker Change: Related to just top client selling and averages.
Speaker Change: <unk> solutions can you just talk about.
Speaker Change #100: Maybe broadly defined discrete.
Shannon: Shannon how that penetration has changed in the past year or two and I guess where the.
Shannon: Best opportunities to further penetrate those clients.
Shannon: For 2025.
Carrie Grace: So we look at solutions where we'll go and say, our major solution category is under our three business lines. So you would have travel nurse in there, you'd have international, you'd have labor disruption. We would have per diem. You go down the list then for PLS and for technology workforce solutions. That number has gone from, call it about nine, to now, 10 Solutions. The things that we have seen over the past couple quarters, there's been a renewed interest in revenue cycle management. I think as systems have focused on really maintaining and growing their revenue base.
Shannon: So we look at solutions, where we will go and say our major solution categories under our three business lines. So you would have travel nurse and there you'd have international you'd have labor disruption.
Shannon: We would have per diem you go down the list them for Pls and for our technology workforce solutions.
Shannon: That number has gone from call it about nine to now.
Shannon: <unk>.
Shannon: 10 solutions.
The things that we have seen.
Shannon: Over the past couple of quarters, there's been renewed interest in revenue cycle management.
Shannon: As systems have focused on.
Maintaining and growing their revenue base.
Carrie Grace: We've seen an interest in low-income programs getting managed more centrally out of teams that may have helped manage nurse and allied programs. We actually have, are building a strong locum pipeline in vendor neutral. We're seeing that same trend there. And we just launched locum capabilities in shift-wise flex this past quarter. So we think we're well positioned to be able to serve a number of our MSP clients who don't have locums with us in a different way than we were even two quarters ago.
Shannon: We've seen an interest in <unk>.
Shannon: <unk> program getting managed more centrally.
Shannon: Out of team that May have helped manage nurse and Allied program.
Speaker Change #102: We actually have our building.
Speaker Change #102: <unk> strong locums pipeline.
Speaker Change #102: In vendor neutral, we're seeing that same trend there and we just launched locums capabilities and shipped by flex. This past quarter. So we think we're well positioned to be able to serve a number of our MSP clients, who don't have locums with us.
In a different way than we were even two quarters ago.
Carrie Grace: We see an interest in workforce advisory and planning and scheduling. And are those, are those businesses, those clients that sort of have that, those nine or ten solutions, are you seeing that they're just inherently more sticky than the rest of your book? They're inherently more sticky, and it gives us, you know, more ways to engage with different parts of the organization. So, you know, between HR, finance, procurement, technology, those solutions at different points in time will pull different leadership. And so it gives us an opportunity to not just be more sticky, but to have broader relationships across the system.
Speaker Change #102: We've seen interest in workforce.
Speaker Change #102: Advisory and planning.
Speaker Change #102: And scheduling.
Speaker Change #103: And are those are those businesses those clients sort of asset.
Speaker Change #104: <unk> solutions are you, saying that they are just inherently more sticky than the rest of your book.
Speaker Change #105: They are inherently more sticky.
Speaker Change #105: And it gives us.
Speaker Change #105: More ways to engage with different.
Speaker Change #105: Parts of the organization so between HR finance procurement technology those solutions at different points in time, we'll pull different.
Speaker Change #105: Leadership, and so it gives us an opportunity to not just be more sticky but to have broader relationships across the system.
Carrie Grace: Thank you.
Speaker Change #106: Thank you.
Jeff Silber: Our next question comes from Jeff Silber with BMO Capital Markets. Please go ahead. Thanks so much. I know it's late. I'll just ask one. And this may be a stupid question. So forgive me. You've talked a few times about, I guess, the imbalance between what the providers are willing to pay what the clinicians are willing to accept. Is there anything you or anybody else in the industry can proactively do to narrow that gap? Or is it just something we have to wait for the market to kind of work itself out? You know, the thing that that is being done, there's a lot of market data and transparency, including data that that we have, and that we've included in an ownership like platform.
Speaker Change #107: Our next question comes from Jeff Silber with BMO capital markets. Please go ahead.
Speaker Change #108: Thanks, So much I know, it's late I will just ask one.
Speaker Change #108: Maybe a stupid question. So forgive me you've talked a few times about I guess the imbalance between what the providers are willing to pay what the clinicians are willing to accept.
Speaker Change #108: Is there anything you or anybody else in the industry can proactively do to narrow that gap or is this just something we have to wait for the market to kind of work itself out.
Speaker Change #109: The thing that is being done there is a lot of.
Speaker Change #109: Market data and transparency, including data that we have and that we've included in our supply platform.
Carrie Grace: Jeff, if you think about how fast some of this normalized, you know. You've had two things that have both been fairly dynamic. One is when you look at, you know, our starting point of where bill rates were at the end of COVID, they neutralized, they went down pretty quickly. At the same time, clinician expectations don't change as fast. And between their expectations not changing fast and underlying wage increases that are happening across healthcare workforce, that's the dynamic piece that it really does need to work its way out. And we're seeing that happen where we see clients increasing bill rates.
Jeff Silber: Jeff If you think about how fast some of this normalized.
Speaker Change #111: You've had two things that have both been fairly dynamic one is when you look at our starting point of where bill rates were.
Speaker Change #111: At the end of Covid.
Speaker Change #111: They neutralized they went down pretty quickly.
Speaker Change #111: At the same time clinician expectations don't change as fast.
Speaker Change #111: And between their expectations, not changing fast and underlying wage increases that are happening across health care workforce. That's the dynamic piece that it really does need to work its way out and we're seeing that happen where.
Speaker Change #111: Where we see clients increasing bill rates it in.
Carrie Grace: It's in, you know, either incredibly needed positions, specialties that are hard to fill. And so you're starting to see some of that behavior that you would expect from a, you know, kind of normalized market happening, but there's still a lot more that has to happen.
Speaker Change #111: Either incredibly needed position specialties that are hard to fill.
Speaker Change #111: So you are starting to see some of that behavior that you would expect from me.
Speaker Change #111: Kind of normalized market happening.
Speaker Change #111: But theres still a lot more that has to happen.
Jeff Silber: I appreciate the color.
Speaker Change #112: Okay I appreciate the color.
Bill Sutherland: Thank you. Our next question comes from Bill Sutherland with The Benchmark Company. Please go ahead. Hey, everybody, and best wishes, Jeff. I'll keep it brief, too. Maybe yes, too.
Thank you.
Speaker Change #113: Our next question comes from Bill Sutherland with Benchmark Company. Please go ahead.
Speaker Change #114: Hey, everybody.
Speaker Change #114: And best wishes Jeff.
Speaker Change #114: Keep it brief too.
Speaker Change #114: Maybe ask too.
Carrie Grace: Following up on Jeff's question about the hospital kind of mindset here as we head into the winter flu season and patient census, assuming kind of a normal, Season. Is there a sense that they've got more flexibility that they can work with in-house and they're, you know, pretty happy with their retention and hiring? Or is there a sense that this is maybe the thing that switches, particularly given where the premiums are right now for you know, for travelers and others. I think it depends on the client. We are, there's been a significant amount of permanent hiring, really, across the board, and that needed to happen.
Speaker Change #114: Following up on Jeff's.
Speaker Change #114: Question about the hospital kind of mindset here as we head into the winter. Please season patient census, assuming kind of a normal.
Speaker Change #114: Susan.
Speaker Change #115: Is there a sense that.
Speaker Change #115: <unk> got more flexibility that they can.
Speaker Change #115: Work with in house, and they're pretty happy with our retention and hiring or is there a sense that this is Mike.
Speaker Change #115: The thing that switches and getting a particularly given where the premiums are right now for.
Speaker Change #115: For travelers and others.
Speaker Change #116: I think it depends on the client.
Speaker Change #116: We are.
Speaker Change #116: There has been a significant amount of permanent hiring.
Speaker Change #116: Really across the board and that needed to happen you needed they needed to rebuild their permanent base.
Carrie Grace: You needed, they needed to rebuild their permanent base. So, for some clients, they may be looking and saying, hey, I still had a little bit of capacity. We're seeing some clients where they really need the contingent workforce to come in, and that's where we're seeing bill rates increase to be able to attract that talent. You typically, in December, especially over the holidays, that's not as attractive sometimes for folks to take those assignments. But we would expect that just with the underlying pressure of increased patient demand. And this normal contingent premium spread that we're at right now, we're actually at the lower end of historical averages.
Speaker Change #116: For some clients they may be looking and saying, hey, I still had a little bit of capacity.
Speaker Change #116: Seeing some clients, where they really need.
Speaker Change #116: The contingent workforce to come in and that's where we're seeing bill rate increase to be able to attract that talent.
Speaker Change #116: You typically in December, especially over the holidays.
Speaker Change #116: That's not as attractive sometimes for for folks to take those assignments.
Speaker Change #116: But we would expect that just with the underlying pressure of increased patient demand.
Speaker Change #116: And this normal contingent premium spread that we're at right now we're actually at the lower end of historical averages.
Carrie Grace: It now really is becoming the affordable option to get some excess clinician capacity for these. Gotcha.
Speaker Change #117: It now really is becoming.
Speaker Change #117: The affordable option to get some excess.
Speaker Change #117: Clinician capacity for these systems.
Speaker Change #117: Gotcha.
Carrie Grace: Last one, SG&A, the assumptions or kind of where you're seeing it this quarter, did that require any more headcount actions or do you plan any further actions as you head into the new year? It didn't include any headcount actions. We had taken some reductions in the beginning of, actually we did in the beginning of the third quarter, the very beginning of the third quarter. So we did that that you'll see play through, and we really are looking at it as, you know, as demands in different businesses. We see them, we want to make sure that we are positioned to take advantage of them, and at the same time, we always look at ways for us to be prudent in managing our customers.
Last one SG&A the assumptions.
Speaker Change #117: Or kind of where youre seeing it this quarter does that require.
Speaker Change #118: Any more head count actions or do you plan any further.
Speaker Change #119: Further actions.
Speaker Change #119: As you head into the new year.
Speaker Change #119: It didn't include any head count actions we had.
Speaker Change #119: Taken.
Speaker Change #119: Some reduction in the beginning of.
Speaker Change #119: Actually we did during the beginning of the third quarter and severity of the third quarter.
Speaker Change #119: So we did that that you'll see play through and.
Speaker Change #119: We really are looking at it as you know.
Speaker Change #119: As demands in different businesses.
Speaker Change #119: We see them, we want to make sure that we are positioned to take advantage of them and at the same time, we always look at ways for us to be prudent in managing our expenses.
Carrie Grace: Okay. Thanks, Karen.
Speaker Change #120: Mhm, Okay. Thanks, Karen I appreciate it.
Operator: Appreciate it.
Carrie Grace: Thank you. I'm showing no further questions at this time.
Speaker Change #121: Thank you.
Speaker Change #122: I'm showing no further questions at this time I would now like to turn it back to Kerry Grace for closing remarks.
Carrie Grace: I'd now like to turn it back to Carrie Grace for closing remarks. Thank you for your interest in AMN Healthcare, and thank you to all of AMN's dedicated team members and clinicians who make a positive impact on the health of so many. We appreciate everything you do.
Kerry Grace: Thank you for your interest in <unk> health care and thank you to all of Aam's dedicated team members and clinician to make a positive impact on the health of so many we appreciate everything you do.
Operator: Thank you for your participation in today's conference.
Kerry Grace: Okay.
Speaker Change #123: Thank you for your participation in today's conference. This concludes the program you may now disconnect.
Operator: This concludes the program.
Operator: You may now disconnect.
Speaker Change #123: Okay.
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