Q2 2025 AMN Healthcare Services Inc Earnings Call
Good afternoon and thank you for standing by. Welcome to amn healthcare. Second quarter 2025 earnings call. At this time, all participants are in listed only mode after the 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.
I would now like to hand the conference over to your first speaker today, Randy Reese, Vice President of Investor Relations. Please go ahead.
Good afternoon everyone, welcome to amm healthcare. Second quarter 2025 earnings call.
A replay of this webcast will be available at IR. Amen. Healthcare.com at the conclusion of this call.
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 and cautionary statements. Including those identified in our most recently filed forms 10K and 10 Q, our earnings release and subsequent filings with the SEC.
The company does not intend to update guidance or any forward-looking statements provided today prior to its next earnings release.
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, amn healthcare.com
On the call with me today are Carrie Grace president and chief executive officer, and Brian Scott Chief Financial and Operating Officer. I will now turn the call over to Carrie
Thank you, Randy and Welcome to our second quarter conference call.
Second quarter, revenue of 658 million, was at the upper end of our guidance range.
Adjusted ebida, a 58 million and gross margin of 29.8%, exceeded the high end of guidance.
At the end of the second quarter, the balance on our revolving line of credit was down to 70 million. After we repaid, 80 million during the quarter. And we expect further debt reduction this quarter
Through the quarter uncertainty about government policy. Impacts placed the health care sector in a more cautious stance. Compared with the first quarter directly impacting our industry.
Bearing freezes hampered our physician search business and likely affected demand and volume in local. Tenants.
Our academic Medical Center clients have taken the strongest measures to reduce spending in response to Cuts in federal funding for research.
Academic medical centers made up about 20% of our Consolidated Revenue year to date.
Other hospitals have seen some slowing in patient utilization. Those still growing year-over-year.
With the new tax bill. Now finalized our clients have some clarity on future changes to reimbursement and their insured population. Mix.
Much of which will happen gradually over several years.
July saw Improvement, in key metrics across most of our businesses.
In nurse and allies traveler extension rates. Rebounded, sharply in July, which underscores that our clients still have the need for Flexible Staffing.
Travel nurse is largely an acute care business and while orders have been stable since the second half of June, they are running below. Prior year levels, and we need to see higher order levels to regain volume growth.
Ally draws from a more diverse client base with about half of its business coming from non-acute care.
While travel nurse orders, sell more than 10% from March to July Allied orders in July were up, 3% from March benefiting from our strength in Outpatient, Therapy, Rehabilitation and imaging.
We also anticipate a strong year for our Allied schools, business Bill, Tom robust, bookings. In the first half selling season and the benefit of innovative solutions like our televate virtual care platform.
Q3 is the seasonally lowest quarter of the year for school Staffing and our improved bookings? Will be more visible in Q4 where we expect double-digit volume growth from the prior year.
Our International nurse staffing. Business is positioned to resume sequential growth in volume and revenue in the fourth quarter.
With growth Trends continuing into 2026.
We expect this business to have outside growth opportunities over the next 2 to 3 years as Visa retrogression dates, move forward.
Language, Services Revenue was up 1% year-over-year in the second quarter with utilization up 6% from a year ago. Mostly offset by competitive. Pricing pressure.
Utilization decline from May to June and grew again in July and our sales pipeline continued to increase and progress over the past 3 months.
Revenue for our Locum, tenants business was flat year-over-year in the second quarter and we see good opportunity to deliver consistent year-over-year. Growth starting in the third quarter.
Loom tendency, man, so far this quarter, it's 5% higher than Q2.
We recently completed the last stages of the msdr integration and are seeing Traction in adding more locals programs into our existing MSP clients.
As clients seek consistency and cost efficiency in their local spend.
We expect MSP Revenue to reach a historic high, this year with higher, same client, sales, and new opportunities for additional growth in local.
Our Labour disruption business has had a successful start to the year and we could have more activity from now into 2026 supporting a number of clients. In large upcoming collective bargaining agreements.
Our recently completed AI enabled event management. Technology has had positive client, reaction, and combined with our deep expertise. Enables us to scale to support more clients.
The Staffing industry analysts recently released 2024 market share rankings.
Showed that amn retained market, share in an intense competitive environment and travel nurse and Allied, while gaining share due to acquisition and local tenants.
In May amn was named, the largest Healthcare leadership and search form by modern Healthcare.
This year to date our growth strategy to serve all Market channels, has progressed.
Supported by our work WISE Technology infrastructure.
These efforts have been greeted by a healthy pipeline of vendor-led and vendor-neutral MSP opportunities. We are also building up our client list for direct staffing relationships.
We continue to make good progress on diversifying, our revenues and building on our technology enabled services.
Amn passport is 1 of our best success stories.
Passport, our industry-leading app for healthcare professionals, now covers travel and PDM nursing.
Allied and local tenants specialties.
We also have extended passports capabilities to manage. Float pool workers and labor, disruption events.
These editions have given a boost to Passport, which recently surpassed 300,000 registered users.
More significant is the impact passport is making on our efficiency and user engagement.
More than 20% of our nurse and Ally placements. Are now assisted by passport automation.
We have seen other early successes from our rollout of AI capabilities across all facets of our operations.
And this will continue to be a key area of focus for us.
In early July, we completed the sale of our smart Square, scheduling software to a new commercial business, partner simpler.
This transaction enables us to expand the potential, workwise network of Technology Partners to deliver, workforce planning Staffing, and talent deployment to the benefit of our current and future clients.
In 2 and a half years, we have rebuilt our ability to address all channels of the healthcare staffing Market.
We have stabilized and in some areas, modestly grown our staffing market share. And we are well positioned to win as demand recovers.
For the near-term. We continue to manage our cost structure and drive for operational efficiency.
Our financial strength and level of innovation stand out in the industry at a time when many competitors are struggling.
Now, I will hand over the call to Brian for a review of second quarter results and third quarter guidance.
Thank you, Carrie and good afternoon everyone.
Second quarter, Consolidated, Revenue with 658 million.
at the high end of guidance, driven primarily from better than expected performance, and our nurse and Allied segments,
Revenue is down 11% from the prior year and down 5% sequentially.
Consolidated gross margin for the second quarter was 29.8%.
80 basis points above the high end of our guidance range?
Year-over-year gross margin decreased 120 basis points.
Plus sequential growth margin, increase by 100% basis points.
Consolidated estimate expenses were 1555 million compared with 149 million in the prior year and 148 million in the previous quarter.
Adjusted sgna which excludes certain expenses was 140 million in the second quarter.
Compared to the 137 million in the prior year.
And $136 million in the previous quarter.
The sequential sgna increase was primarily due to a 5 million dollar unfavorable professional liability Reserve adjustments.
And $2 million in higher bad debt expense.
More than offsetting lower employee costs, and other expense management efforts.
The majority of the professional liability Reserve adjustment was recorded in the nurse and Allied segment.
While the bad debt charge was in the position and Leadership solution segment.
Second quarter, nurse and Allied Revenue was 382 million.
Down 14% from the prior year driven mainly by lower volume, partially offset by Labour disruption Revenue.
Sequentially segment Revenue was down 8% primarily due to lower layered discussion revenue and seasonally lower volume.
Labour disruption Revenue in the quarter was 16 million compared with 39 million in the first quarter and 0 in the prior quarter.
Year-over-year, segment, volume decreased 16%.
Average rate was down 2% and average hours worked down 1%.
Sequentially volume was down 3% while the average rate in hours worked for both Flats.
Travel nurse Revenue in the second quarter was 208 million, a decrease of 25% from the prior year, period and 4% from the prior quarter.
Allied Revenue in the quarter was 146 million down 4% year-over-year and 1% sequentially.
Nurse and Allied gross margin in the second quarter was 23.9%.
Sequentially. Gross margin was up, 120 basis points, due to lower payroll taxes, and a favorable business mix
Moving to physician and Leadership solution segment.
Second quarter, revenue of 175 million was down 6%. Year-over-year driven by lower volume across the search and interim leadership businesses.
Sequentially Revenue was flat.
Welcome 10 is revenue in the quarter was 143 million.
Flat year-over-year and up 1% sequentially.
Interim leadership revenue of 23 million decreased 25% from the prior year period and 5% sequentially.
Search revenue of 9 million was down, 29% year-over-year and 2% sequentially.
Gross margin for the physician and Leadership solution, segment was 28.2%.
Down 230 basis, points year-over-year on a lower, bill pay spread and an adverse Revenue mix shift.
Sequentially gross, margin increased 90 basis points. Mainly due to a favorable sales Lounge adjustment in the local business.
Technology and Workforce Solutions revenue for the second quarter was 102 million.
Down 9% year-over-year, primarily driven by declines in our VMS and Outsource Solutions businesses.
Sequentially Revenue was flat.
Language Services revenue for the quarter was 76, million up 1%, both year-over-year and sequentially.
The MS revenue for the quarter was 19 million. A decrease of 31% year-over-year and 2% sequentially.
Segment. Gross margin was 55.1% down 5000 in base points from the prior year. Period primarily due to lower revenue from VMS and Outsource Solutions.
Sequentially gross, margin declined, 40, basis points.
At the start of July, we completed the sale of smartware for 75 million.
With 65 million paid at closing and 10 million and an 18-month notes.
This business was included in our technology to work force solution, segments.
Starting in the third quarter, this transaction will reduce annualized Revenue by approximately 17 million and adjusted the ability of the by about 6 million.
Second quarter Consolidated, adjusted Eva. That was 58 million down 38% year-over-year and 9% sequentially.
Adjusted the margin for the quarter was 8.9% down 380 basis points from the prior period and 40 basis point sequentially.
During the second quarter we recorded a non-cash. Goodwill impairment charge of 110 million related to our physician and Leadership solution segments.
We also recorded a non-cash and tangible asset impairment charge of 18 million related to our nurse and Allied segments.
Second quarter, net loss was 116 million.
Driven by the Goodwill and intangible asset impairment charges.
This compared with net income of 16 million and the prior period and a net loss of 1 million in the prior quarter.
Second quarter, gapped. A little loss per share with 3.2 cents.
Adjusted earnings per share for the quarter was 30 cents, compared to 98 cents in the prior year, period and 45 cents per quarter.
They spelled outstanding for the quarter of 54 days, which was 9 days, lower than a year ago, and 1 day lowers sequentially.
Operating cash flow in the second quarter with 79 million and capital expenditures is worth 10 million.
The quarter and year-to-date cash flow has been favorably impacted by an approximately $50 million increase in client deposits related to labor disruption events.
These deposits will be repaid during the third quarter. Somewhat upsetting. The proceeds received from the smart Square sales.
As of June 30th, we had cash and equivalents of 42 million and total debt of 920 million, including 70 million drawn on a revolver.
We ended the quarter with a net leverage ratio of 3.3 times to 1.
Moving to third quarter guidance. We project Consolidated Revenue to be in a range of 610 to 625 million.
This Revenue guidance includes 5 million related to Labour disruption support.
Gross margin is projected to be between 28.7 and 29.2%.
Reported sgna expenses, are projected to be approximately 23% of Revenue.
Operating margin is expected to be 6 to 6 and 1.5%.
And adjusted to the margin is expected to be 7.7 to 8.2%.
Additional third quarter guidance. Details can be found in today's earnings release.
And now, let's go back to Carrie for some closing remarks.
Month.
Doug will always be a pivotal figure in both the growth story of amn and as a friend and mentor to so many of us,
Doug had served on our Board of Directors for 26 years.
And was the board's chairman for 17 years.
Doug's Legacy lives on in the values. He championed the people he impacted and the continued impact of amn on the lives of healthcare professionals and patients across the country.
We are grateful for his extraordinary contributions and extend, our deepest sympathies to his wife Laura and his entire family.
I know I speak for many in saying How Deeply he will be missed.
Among the many great things about amn are people and our culture are the foundation of what makes amn so special and we are grateful for the many years. Doug was a part of the wonderful amn team.
Operator, you can open the call for questions now.
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 1 1 1 on your telephone and wait for your name to be announced to withdraw your question. Please press star 1 1 1 again.
Please stand by while we compile the Q&A roster.
In our first question comes from Trevor Romeo with William.
Your line is now open.
Hey, good afternoon, everybody. Thanks for taking the questions. The first 1 I had was, um, we just love, I guess any more color on on how your clients are kind of thinking about their contingent labor needs at this point, I I think Carrie you noted, the, you know, the slower decision-making in Q2 followed by some improvement in July. I think there were a few comments, um, you already have on kind of the demand levels, but would love maybe just more color on on how you saw the trends move throughout the quarter and maybe more importantly, what your clients are are telling you as far as, uh, you know, where they're contingent labor needs, could go forward with the various uncertainties out there.
Yeah. Um so let me take demand first and then I'll maybe more broadly talk about what we're seeing in terms of their needs around, um, Workforce Solutions. So I mentioned this in the call but what we really saw is we we kicked off the year is a very healthy start to the year, we saw year-over-year increases in demand, um as we got into the second quarter, we really started to see the uncertainty of some, you know, pending policy changes. Whether it was around tariffs around Healthcare funding as part of the spending Bill and for academic Medical
Centers, potential Cuts in, in research budgets. And so, we saw that uncertainty result in delays in decision-making throughout the the second quarter.
What we've seen really starting in July and we've, you know, we're only kind of a week into August, but we have seen demand stabilized in nurse.
We are seeing demand up in Allied and in local.
And we saw extension rates in July rebound, sharply back. Um, and so we've seen some of the delayed decision making really start to break free a little bit.
As we've entered the third quarter.
Now, what we experienced in the second quarter plays through to what we see in the third quarter. And so some of the stabilization or increase in demand, we would expect to start to come through more in the fourth quarter, or towards the end of the year.
if I step back and think a little bit about what clients are thinking about contingent labor,
we really are at a period where for many clients they have normalized, both their utilization of Labor. And when we look at where premium um contingent cost over a fully loaded, permanent cost is we're down to high single digits. This past quarter, we were more at 9% which is at a really
Kind of low-end of what you would see historically. And so we've seen that contingent spend normalized as systems were focused on permanent hiring, and they were focused on building flexibility. Whether that was in in Flex polls. Um, or or other ways.
That, um, whether they want to do programs or they want to do PDM. So we are seeing the start of broader conversations about how you're really going to manage and sustain a quality, cost-effective workforce in the future. Um, things like predictive analytics, more data. We're seeing interest in program management, particularly in historically decentralized areas like local, um, and so we would expect, Trevor, those trends to continue, particularly as organizations are dealing with still increasing patient utilization and a limited supply of clinicians.
Interesting. Yeah, thank you very much Carrie. That's that's really helpful color.
And then I guess, I also just wanted to ask on on your gross margins, particularly in the nurse and Allied segment, I think they picked up nicely from from last quarter. So I was just wondering, if you could give us a little bit more color on the drivers. There, I think Brian talked about a, a favorable mix. But did you actually see kind of underlying spreads improve a bit there or the competitive activity stabilized and then what's your outlook for spreads in kind of the core nursing Allied Moving Forward?
Yes, thanks Trevor. Um, yeah, the underlying spreads in nurse now that have been more stable. So, yeah, we did have a little bit of better gross market performance. Um, from what we guided uh, in both the nurse and Allied and physician leadership segments, but it was a it was most of that was more um either a couple of 1-time items, like sales allowance. We had a, a payroll tax benefits um in the in the second quarter as well. And then we picked up a little bit of additional International perm. Placement Revenue at a very high margin. So there were a couple of of good guys in the quarter which helped out um, same on physician and Leadership. We had a sales allowance reduction. Um, so the and and the same thing in loms, you we didn't see an improvement in margin and so as we think about our Focus right now is actually on just trying to drive as much volume as possible, and has been pretty stable bill rates and so that has led to pretty stable margins and we would expect to see that as we go into the third and fourth quarter as well.
Got it. Yeah. Nice. Nice to see, um, some stabilization there. All right. Thank you both. I really appreciate it.
Thank you.
Our next question comes from Kevin fishbach with Bank of America.
Great, thanks. Um I was just wondering if you could provide a little more color I guess and when you kind of think that these numbers will have kind of actually bottomed, I guess we talked about some of the firming and demand that you're seeing, are those comments um like seasonally adjusted, I know that oftentimes uh, timing through the year can change when orders start to rebound or would be expected to rebound. So, just wanted to
Um, you know, get more color. What kind of 1 you thought we might start to see year-over-year growth again?
Yeah. Um number 1, Welcome Back. It's nice to hear your voice. Um, a couple things in demand, if I look at
Our second quarter year-over-year and what we're seeing in clients.
Um, if you look at the decrease in utilization,
The vast majority of that year-over-year, decrease.
Came from a concentrated number of clients.
And the majority of that concentrated group of clients was academic medical centers.
And so we saw the biggest change in utilization from a relatively small group of clients.
In the remainder of the utilization declined. Year-over-year, it was concentrated in clients that were at the tail end of rolling off that we had lost in 2023 or 2024. So think of that as really that tail end has has played through
If we look at what we're seeing in the early days of Q3, we are seeing academic medical centers in aggregate. Their volumes up from what we saw. Um, over the past 4 quarters
so Kevin what I would say is in terms of where we have seen some of the declines,
We're seeing even into this quarter, some stabilization of those clients and you're always going to have puts and takes in any given month or quarter for some clients. But I think some of the challenges that we had seen over the past year, um we've seen that play out over the past, couple quarters.
But also, you know, we started to feel a little bit in April, but more. So in May and June that also compounded, the impact we're seeing on on volume in the third quarter orders have been stable now for the last, you know, 2 plus months. Um, still at a lower level than they were earlier in the year, but they've, you know, with extension rates picking back up again and stability in order levels. It feels like we're, you know, we're kind of at this current normal level right now. We've had some better booking Trends and so our expectation is that go through the back, half of the year, um, just make conservatively is that we're, you know, we'll, we'll start to see more winter orders come in the next, you know, 60 days. And we are already having some conversations with clients about that and so that as you think about the shape of our volume, you'll you'll see some declines from Jill. Um, July through the end of the quarter which is already really just a function of what happened in the in the second quarter.
But as we continue to look at our booking Trends and moving into the fourth quarter that will start to turn back positive on a month-to-month basis heading through the fourth quarter and as we move into into 26 as well. So in the overall it feels like the backdrop has is stable and now it's a question of just if that extension rate is kind of the first sign of clients, getting back to a little bit more normal buying Behavior. The next thing we'd want to see is order start to improve again as well. And in the meantime, of course, we're not just waiting for that to happen. We're we're, you know, we're making very proactive steps around, you know, improving our fill rates with the orders that we have.
Have, um, you know, building our pipeline of of MSP opportunities, to, you know, access more orders. And we've talked about, improving our internal capture on third-party as well. All those things are are gaining traction and so that would be incremental as we move into the back, half of the year.
Okay and then I guess I appreciate the the commentary around um, you know, legislative uncertainty I guess particularly among teaching hospitals. But um I guess we did also see during the quarter sequential declines in growth rates of volumes. Um, you know, I guess to what extent of of hospitals, you know, been talking to you about that and and how it might relate to their, you know, need for uh temp Staffing.
What what we're seeing is when you get into kind of July and into August, we started to see demand either stabilize in nurse and or pick up in Allied and in, um, locals, we would typically see Kevin and clients have told us to expect similar timing. This year, we would start to see winter order needs come in the end of this month and early September. So we kind of look at demand both in terms of what we've been seeing in the base business and then we would expect in the next, you know,
6 weeks, 8 weeks to start seeing some future orders come in around some of their winter needs.
but I don't, you know,
The rate of growth in, in patient volume has slowed down, it's still, uh, you know, it was up, it was up last year, it's still up on a year-over-year basis. So I don't think that's really the major, you know, driver of any change in clients, buying Behavior. I think it's been some of these other factors that we've talked about
That that have been, you know, more impactful but really haven't had, you know, client feedback around with the the volume slowing down. So that that's a big driver of any change in their, in their buying.
All right, great. That's helpful. Thank you.
Our next question comes from.
Uh, thanks. Hi everybody. Um,
Maybe, uh, the flip side of, uh,
These, um, academic medical centers in hospitals, generally, putting hiring freezes on and being a little tougher on the, uh, permanent, uh, hires, uh, might be a step up in people being willing to consider travel nurse assignments or Allied assignments, have you? Um, have you seen what, what, what's happening with respect to you? Um, people, um, you know, new applicants and so forth.
Um, so we have seen, we still have healthy Supply take aside, you know, certain Specialties or locations. Um, it this really is about demand not about Supply. And so, if you have an order that is Priced, Right? Um, we don't have a challenge filling it and in fact, you know, even when, when you know, people will pull up and look at like, demand week to week, if you have orders that come in that are priced appropriately, that'll get filled immediately. It won't even kind of, you know, uh,
The package attractive enough for them to sign on. Um, that is true overall, I'd say that's particularly true in local where you still see, you know, healthy demand, um, and locals and have seen that throughout the year. And
It really is. You have to have attractive pay packages to be able to get them to sign on because they have a number of options.
it's a good point, I think that you seen that slow down in in
Some slow down Healthcare hiring there, there still hiring. But usually there's a lag effect of that. So if we go through, if they continue to slow down on their permanent hiring,
And you have, you know, from a normal attrition it it takes a few months, but then we've seen that before, where then you start to, they start to feel more of a, pension on their, on their Staffing levels and that's where you can see the man, pick up, but it hasn't, we haven't seen that yet. But it's, it's certainly we've seen that Trend historically,
Okay, I know you called out uh uh some wins. And MSP, I wondered if you could step back, uh, there was some debate a while back but it seemed like it was normalizing. Uh, people either moving away from MSP or people churning contracts generally, what what are you seeing now is are you seeing more activity? And that's part of what you're picking up. I know the market is somewhat disruptive with deals out there and so forth. Is that creating opportunities what's happening on the MSP side? And your ability to potentially grab uh, incremental share
Yeah, um, what we have themes so far is coming out of coid. We saw 2 things around programs number 1 is almost no matter. What model a client was in. They weren't happy with what the outcomes were during Co. So they were open to new models.
Um, we have seen, and we still see clients that may look at different models, but we've seen, you know, I I'd say a little bit of normalization of that sentiment coming up that we saw coming out of Co. The other thing we saw is we saw a bias towards vendor neutral.
Really in 2023 and 24 in 2025. If you look at our pipeline, we have a slight bias back to supplier lead mfps.
And so you are seeing some of that normalized. We've had a couple of examples in our pipeline where we had a client who may have gone to a tech only solution, they're having challenges filling and so they're open. Now to going back in more of a risk aligned risk sharing type of program, um, like a supplier Le MSP. So,
Our strategy has been to serve clients in the model that they choose, whether that's a supplier-led or vendor-neutral MSP, whether that's direct.
We have had success in all of those over the past, you know, 18 months, which is really why you saw an Sia with the recent market share rankings us holding our market share and so we want to serve that growing group of clients at once msps. We also simultaneously want to serve clients who want vendor neutral and direct relationships and build from there.
Okay, thanks a lot.
Okay.
Our next question comes from, Toby summer with truist.
Thanks. Uh, we want to start out with just a, a question on the guidance.
um, how do we Square the
The uh, Revenue Below in uh, in in gross margin.
Down. But something better. What are the moving pieces? Uh, bonus of the rules came to mind, but perhaps there are other moving pieces you could illustrate for us.
Hey Toby. Um well on the I I'll maybe just start on the sg&a. Um as we as you mentioned in in the prepared remarks, our second quarter sgna
Um it it we've done a really good work, the teams in great work and, you know, trying to manage our cost effectively, you know, made process and automation changes to be able to bring down some of our costs. And so um that that was really playing through in the second quarter but then we had the um Actuarial adjustment um and let our bad debt that you know collectively was you know 7 million in change. So if you if you remove that and look at the underlying sgna you're looking at something you know, in the low 130s
Um, and then with the, the sale of smart Square, kind of the third quarter is the first quarter reflecting about a $2 million dollar reduction sgna from that as well. So we're we're in the low 130 range of sgna which is what's that's adjusted sgna. So excluding stock-based comp, and a a small amount of their right back the um that's where you end up.
For the third quarter and that and reflecting through the to the margin.
On the, on the gross margin side, you know, I kind of mentioned the Q2 had had a couple of, um, unique items that were, that were favorable to Smart square that vesture. It's about a 30 basis point impact to gross margin on a Consolidated basis about 100 to the segment. But if you think about the second quarter, actual, to the third quarter, guys, kind of a midpoint again, about 30 basis points related to that sale. And then the balance of it is is a few things that happened in the second quarter that aren't in our current, the Third on underneath that you've got pretty stable margin profile across the businesses.
I appreciate that. Thank you.
Uh, with respect to strike opportunities going forward.
Um, are, are you still managing that aspect of your business, only for kind of your your best core clients?
Um, where you can manage the whole experience or are you, uh, pursuing business, sort of more broadly in a, in a different fashion?
Um, we are using our strike support to support our clients.
So both are MSP clients as well as our VMS clients um and there is strong interest in in both of those groups.
Um the technology that we have built enables us to be able to scale more effectively in supporting strikes without disrupting our Core Business. The challenge we had historically Toby is you know, when we were supporting a strike for a strategic client, it really took so many resources away from our Core Business. That it was hard to do both simultaneously. We made a lot of operational. Efficiencies Brian just talked about a number of them and the technology that we built that we can do both and we were able to do both in the fourth and and first quarter um in the strikes that we supported
We have a healthy pipeline that we were intentional about building for the back half of the year that we are supporting a number of clients, in some large cbas that they are negotiating. You never know if a strike is going to go or not, um, but we feel like this is both an important capability that matters greatly to clients.
That we want to support and we have a differentiated ability to support it now than we did in the past.
If I could, uh, speak one in and then, you know, get back in the queue one more about language services. Um, what's the growth algorithm in expectation from here after I think what you described as a slowdown in Q2? Thank you.
Yeah, let me tell you a little bit about what we're seeing um in language services. So first we love this business. It is an important service that we provide um, both in acute and non-acute settings, when we look at quarter over quarter, we had, you know, mid single digit growth in utilization. But that was off that we've seen significant competitive pressure on price per minute and so that resulted in very, you know, from a net basis, very, very modest growth. We would expect those Trends to continue. Um, from a Topline standpoint, the softness in utilization that that we saw, um, really kind of in the second quarter going into the into the third quarter. When we talked to others in the industry, they are seeing something similar.
Um, so our focus is not just on, you know, continuing to strongly manage the business, but we have built over the past, couple quarters a strong pipeline um, that we would expect to progress as we go through the next couple quarters that would help us get back to Stronger. Topline growth ending this year going into next year.
Thank you.
Our next question comes from Brian tankette with Jeffrey.
Hey, good afternoon. You've got Jack levanon. Um,
Just wanted to to maybe turn a little more broadly just to the competitive environment um and and appreciate your comments on sort of being able to hold share with some of the latest.
Uh, SI data that's out there, but maybe thinking about opportunities to potentially win share, I guess. The chatter we get is that plenty of the private.
whether it's on price or or other things from
the competitors in the landscape and then and then maybe just how you think about
what does that look like? On a multi-year basis, if you are to sort of win out in the market, um, is it more of just the same and then waiting for others to capitulate or or is there, you know, more action that needs to be taken? Thanks.
Yeah. So a couple things 1. I'll talk about just the you know, kind of winning shared Dynamics and then I know we've also started to see what we think are the beginnings of consolidation that will continue the the industry still relatively fragmented. Um so in terms of what we're seeing from a competitive Dynamic um our goal
Is to gain. Share and so stabilizing. And in some cases, growing our share, which, you know happened in 2024 is a step to, um, gaining market share. We are very focused on how we do that, in a couple of ways. 1 is, how do we continue to build on net new clients?
On strategic net new clients. So, net new wins expansions net of losses year to date. We are up modestly. We can continue to build our Pipeline and progress our pipeline, to be able to get new
brand new new clients to be able to sell more of our solutions to
second is, how do we continue to expand? Which we have had success in? I'd say, particularly in local strike and to a lesser degree in language Services, um, to some of our MSP clients. And then how do we fill more? So Brian talked about this, a little bit earlier in some of our operational. Um, initiatives we have higher fill rates, um, both on our, um, internal capture of our msps, but also on our own VMS platforms, and you will see us continue to focus on those areas. So, that is the trifecta of how we continue to, um, work on gaining market share from a competitive standpoint. We think that the challenging position that some of our competitors are in is going to give us an ability to continue to have differentiated Solutions.
Um, to be able to win more clients. With strike is a great example of a very important solution for clients that have unionized populations that we now can uniquely support in ways that other competitors can't. Um, what we're doing with passport, and being able to support float. Pools is another great example.
so,
we think that we will extend our differentiation, um, during this period, you know, with with competitors, having challenges,
We've also seen the beginnings of some consolidation um over the past 2 quarters. We think that will continue into 2026 um and we think there's always opportunity over the coming years um that that consolidation will benefit us
Okay, got it really really helpful color. Uh I'll just jump with with 1 quick, follow-up here and just say, on the international piece, appreciate some of the updated commentary there. I'm wondering if you can just dig in a little bit deeper in terms of
You know exactly, we see the turn probably later this year but then what the path to sort of grow that over time, you know, I guess what the checks we would want to see are to to know that that is on track and the extent of the recovery in revenues that you can get on a on a multi-year basis. Thanks.
Um, so let me give you a little bit of the shape of what that will look like. And then between Brian and I, we can talk through, you know uh different scenarios of what that could look like. So we expect an international that we will go back to growth, it will be very modest in the fourth quarter. Um, the bigger thing for us in the fourth quarter is that this has been a very a significant headwind for us for the past 2 years as retrogradation has taken place. So us getting back to being neutral with a very slight positive.
In the fourth quarter, um, is important to us.
As we get into 2026.
We would expect, even under conservative assumptions.
For us to grow both revenue and ibida.
In the double digits.
Depending on different scenarios of how much forward movement of retrogression. You would get
That could, you know, range, you know, more highly in terms of how you get the recovery. It'll be a multi-year recovery. Um, but.
we know enough now and even under conservative assumptions that that you will get into double digit growth, both top and ibida for international next year.
Yeah, I'll see if we you know that all the talk of immigration it's you say it hasn't.
A little bit of a Slowdown in some of the state department processing but you know those visas that are allocated still exists. And so you know we we still see, you know, good demand from clients. There's still, you know, we have a a large and growing pipeline instead of carries point, it's as we talked about before. It's
Still feel like it's not a matter of if it's just a matter of when and it's just very difficult to predict the you know, how the dates will continue to move forward. We know they will, they'll be, you know, got a new budget. You're coming up soon we typically see in the heels of that, you know, movement on the dates. And so we're, you know, we're just being a little bit cautious on on our
Forecasts of what that would look like. If you went back into history, we've had retrogression. There's been periods, where there's been pretty significant movement forward, but we just, it's just really hard to predict at this point. Um, what's going to happen? But if it carries Point even in a very conservative scenarios, we we absolutely expect to resume growth, um, particularly as we move into 26, it's just that the magnitude is still the part that we can't quite predict.
And the the last piece that I'll that I'll mention is whether it's, you know, the hospital Association or other lobbying groups, there's really broad support for um, bringing in clinicians. It is an incredibly important source of um clinical Supply really AC for all hospitals. But I'd say really acutely for um, rural hospitals and so we would expect, you know, they're to continue to be a strong level.
Of support, um, into 2026.
Got it. Super helpful. Appreciate all the questions.
Our next question comes from Marc Maron with Beard.
Good afternoon. Most of my questions have been asked, but I wanted to just dig in a little bit deeper on some of them. So, starting with Visa retrogression, can you remind us what the peak level of revenue on the international nursing side was? And where is it currently? So that we have a base level that we're going to build double digits from.
Brian's getting you that. Yeah, I mean, it just is a reminder. We...
Come down by about $100 million from the peak in 2023.
So, it's, we were, we were at about 225 million of Revenue. In 2023, we're running right now more like 125.
So that's when we talked historically, you know, previously about this, you know, just getting back to that level, that $100 million and the flow-through from that. Um, and we have pipeline that could take us beyond that, but that gives you a kind of order of magnitude in our pivot on margin. You know, it's north of 30% in that business.
Right? And and then on, on the Labour disruption side, it sounds like we're building it. We did 16 million last quarter. We're building in 5 million for this quarter, but it sounds like there are a lot of cbas. So is that is that 5 million really conservative number?
We have line of sight to the 5 million in the third quarter. We always put Mark 5 million in because we can't really you know, with any degree of precision, like both timing and magnitude be able to predict more than that. Um, there is upside in the third quarter from that number if
Some of those cbas. Um, if if the union strike there is also upside potential in the fourth quarter as well based on the cbas that, that we know we are supporting
So there is both third quarter and fourth quarter upside. Yeah, it's but it's a bigger, the more likely, the larger Revenue opportunity would be for and and first quarter next year there are a couple of smaller things that could happen in the third quarter. But again it's just
We have good. Actually, we have, we have
Contracted work that supports the guidance we gave.
There are a couple of other factors that may or may not happen that are smaller. It's, but you know, I'm not so conservative, you know, maybe. But I think it's appropriate based on what we know right now.
Think about pricing as we do get that stabilization or or rationalization in terms of Industry capacity.
I, you know.
We've seen more in terms of the pricing is just the competitive environment and and we've really been in that for, for several years. Um, so I don't know that. Anything has incrementally changed. I think, Mark, when you look at, you know, we've had relative stability in
Bill rates, um, in nursing you, you know, Revenue per day and locals, has has continued to increase, but you've seen relative stability in in our nurse and Ally business.
So what you'd really want to see as you get into 2026 is that you still have underlying increases in, you know, wages that are going on. And you'd really want to see that reflected in bill rates, because the premium spread from contingent to permanent is high single digits. And so I don't know that there's a lot of room to go from there.
So that's what you want to see more competitively um and I think that, you know, regardless of financial position, there's going to be an interest in, you know, all players being able to maintain some level of of margin.
Right? And then you you you have the smart Square Devastator. You're not anticipating any other devices. Are you
No, you know, um, from a background standpoint and I know we talked about this in the press release. Um, what we were seeing in smart Square, which really led to the Strategic decision of a Devastator is, um, it's a great platform. It's a great team that buy and the implementation was increasingly becoming part of a broader Erp by indecision, and it was tied in a lot of cases to time and attendance.
In simpler it was a great outcome for the clients of that platform.
And for US it allows us to focus our capex spend.
On areas that are growing more strongly.
And it really created for us an ability to more robustly partner with all these different providers that also have some scheduling systems, we had kind of a competitive.
Friction with them in the past so we view that whole opportunity as a very strategic decision.
Great and then just from a financial perspective.
<unk> got that $50 million that you are going to be paying back. But then you ended up getting the cash.
How are you thinking about.
Then you also mentioned that you plan to pay some more of the revolver.
Where do we think.
Cash flow is going to be for the third quarter.
Well.
On an operating cash flow, we will have a use of cash because of the deposit refined by that to your point, we will have authorized proceeds.
From that sale, so maybe I'll start a little bit differently, we are and we're getting like other companies some cash tax benefit from the tax bill.
We would expect all of our balance to be somewhere around $30 million at the end of the third quarter.
So that's probably.
Robert are you trying to get to that we're we're obviously continuing to make really good progress on reducing our revolver balance.
More and more line of sight to getting that fully paid off here if not at the end of the year shortly thereafter.
Okay. Thank you.
Our next question comes from Jeff Silber with BMO capital markets.
Hey, good afternoon.
And for Jeff I was just hoping to dig into the underlying bill rate and volume assumptions for the third quarter nurse and Allied Guide I think you mentioned pretty stable bill rates and perhaps some softness on the volume front I was just hoping to get some more color there. Thank you.
Yeah, I mean, that's you've kind of characterized it pretty well.
The bill rates have been have been pretty stable until we.
Really as Terry mentioned that that would be that would unlock more volume if clients are still.
Testing low rates.
Certain certain markets and certain clients and so that we can fill that it takes longer.
Or in some cases, they just they can't be filled by us or anybody else when we get an appropriate price quarter, we're able to fill them very quickly. So are the as you look at the guide we gave for the third quarter it really for the travel nurse business.
That decline is really all volume driven we haven't you haven't really seen any change in an hour's work as well. So that's the bulk of the of the sequential change.
Allied is also a downloaded partly just again with the with the school year this kind of a low point.
And the season and.
Yes.
It's probably the main drivers for the for the nurse and Allied segment.
Got it and then just for the follow up was wondering what your exposure is to rural hospitals.
Yes.
We pulled that up a couple of months ago, we don't have.
<unk> kind of disproportionate exposure to rural versus urban so I'd say, it's not kind of.
Oversized or undersized.
Okay.
Great. Thank you.
This concludes our question and answer session I would now like to turn it back to Kerry Grace for closing remarks.
Thank you for joining our second quarter earnings call our entire team appreciate your interest in Ameren healthcare.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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