AMN Healthcare Services Inc

Ladies and gentlemen, thank you for standing by and welcome to the AMN healthcare quarter one 2020 earnings call. At this time, all participants are in the listen only mode. Later we will conduct a question and answer session. Instructions will be given at that time. If you should require assistance during the call, please press star then zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Randy Reese, Director of Investor Relations. Please go ahead.

Good afternoon, everyone. Welcome to AMM Healthcare's first quarter 2020 earnings call. A replay of this webcast will be available at ammhealthcare.investorroom.com following the conclusion of this call. Details for the audio replay of the conference call are in our earnings release issued this afternoon. Various remarks we make during this call about future expectations, projections, 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 as a result of various factors, including those identified in our most recent Form 10-K, our earnings release, and subsequent filings of the SEC. The company does not intend to update the 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 amnhealthcare.investorroom.com. On the call today are Susan Stalka, Chief Executive Officer, Brian Scott, Chief Financial Officer, Kelly Rakowski, Group President and Chief Operating Officer of Strategic Talent Solutions, and Landry Seedig, Group President and Chief Operating Officer of Nursing and Allied Solutions. I will now turn the call over to Susan.

Thank you, Randy, and welcome, everyone. We appreciate you making the time to join us today. The world has changed dramatically over the past two months, creating challenges and collaborations that might have been previously unimaginable. But by far, the greatest impact and sacrifice has been made by our country's healthcare heroes, our nurses, physicians, allied professionals, leaders, and every healthcare worker that puts themselves on the front lines and at risk to care for patients. The selfless perseverance of these heroes and the healthcare organizations who enable life-saving, compassionate care deserve our eternal gratitude. They inspire us, they give us confidence, and they push us to go beyond what we ever thought possible to make our greatest contributions. I am always proud of the AMN team and the passion and talents they pour into our responsibility to enable quality healthcare. But these last few weeks have given me and all of us an even greater sense of pride, purpose, and gratitude. The AMN team stepped up and collaborated in ways I think even surprised ourselves. The spirit of the team combined with a solid business continuity plan enabled us to quickly move our team members to work from home within a matter of days. We were then able to redeploy our talent to where they were needed most. We always prioritized the safety and health of our team members and clinicians and provided them with support as they and we as a team navigated through the crisis. COVID-19 has been highly disruptive to the healthcare community, and the effects on our business have been fast-changing. Soon after the crisis took hold in the U.S. in late March, demand for nurses and respiratory therapists surged as hospitals prepared for anticipated COVID-19 demand. With COVID-19 patient census, elective surgeries, and other healthcare services reduced across the country, many of our businesses experienced cancellations and a decline in demand. The AMN team went to extraordinary lengths to serve clients while also supporting our team members. In March, our business leaders and IT department did an amazing job transitioning over 3,000 team members to remote work. Investments were previously made in equipping our team members with laptops and system enhancements, which paid off during this time. We quickly redeployed and trained internal team members and added temporary resources to augment our nurse placement, credentialing, and support functions to ensure we had all hands on deck to get every clinician to where they were needed most. In total, since mid-March, we deployed over 10,000 healthcare professionals through AMN brands, our MSP and VMS affiliate partners, and marketplace technology solutions. As the needs of our healthcare professionals, clients, and state organizations intensified, we also quickly brought new or expanded solutions to market. We expanded our scalable VMS solution, Open Talent Marketplace, allowing a multitude of healthcare facilities to quickly staff and manage their entire range of contingent talent. Answering the demand from local and state governments, we mobilized a rapid facility response, a full-scale solution for the quick startup, staffing, and management of medical facilities. We accelerated the launch of AMN Passport, our mobile app for healthcare professionals. AMN Passport enables clinicians to access jobs, submit credentials, and enhance the healthcare professional's experience, all through an easy to use AMN branded app. We added functionality to our Stratus platform, enabling clients to utilize our technology and hardware for a variety of other telehealth and screening capabilities. We launched AMN Cares, a telehealth platform that enables care teams to interface with employees or patients at home. And we expanded and created new relationships with tech, retail, and other organizations who need talent and a solution for testing, screening, and other resources to enable a safe return to work environment. I have quite frankly been in awe of how the entire AMN organization evolved at a speed unlike anything I've seen in my 30 years with the company. And we're hopeful that some of these changes we've achieved will create long-lasting benefits. AMN was instrumental in helping educate state and federal officials on the importance of more streamlined and reciprocal licensing of clinicians. We enabled more comprehensive 24-7 support of our healthcare professionals and our clients. We collaborated with our clients to develop streamlined credentialing and onboarding requirements to accelerate the placement process. Our permanent placement services were able to rapidly gain client adoption of virtual interviewing, which allowed recruiting efforts to continue. We were more quickly able to collaborate with existing and new clients to add vital solutions in a matter of days instead of months. More than anything, This is a time when the values-based culture of AMN and the common purpose and passion we share across the company enabled us to stand together and go far beyond what we ever dreamed possible. Many team members said it was as if we had trained our entire careers for this moment and the opportunity to serve and make an impact, and I couldn't agree more. While most of our discussion today will be on the second quarter trends and our road ahead, I want to spend a few moments on the first quarter. Before the COVID-19 crisis began, we had a terrific start across the company to the year. The first two months showed great promise and strong results by most measures. We were also very fortunate to welcome the Stratus team into the AMN family, with that acquisition closing mid-February. Of course, everything changed in March. Even with the turmoil that began in March, our first quarter revenue still set another record high for the company at $602 million with adjusted EBITDA of $74 million. Our nurse and allied segment produced revenue of $424 million, up 14% year-over-year with 3% organic growth. Under our new segment reporting structure, Nurse and Allied includes our revenue cycle solutions business. Our largest business, Travel Nurse Staffing, grew 12% year-over-year. Allied Staffing revenue was up 41% year-over-year. The year-over-year increase was a combination of organic growth and the acquisition of Advanced Medical last June. Allied Therapy, including our schools offering, and revenue cycle solutions felt an immediate impact from the closing of schools and other healthcare settings and the relaxation of clinical documentation requirements. The teams did an excellent job during April in pivoting our allied sales resources to support higher demand for respiratory therapists and transitioning over 90% of our school therapists onto our teletherapy platform. Our second largest segment, called Physician and Leadership Solutions, recorded first quarter revenue of $138 million, which was up 1% year-over-year. Within this segment, our locum tenens solution business started the year strong, only to be disrupted by the pandemic and resulting cancellations. While previously on track for year-over-year growth, this business completed the quarter with a revenue decline of 2%. The second largest part of this segment, our interim leadership business, grew 3% year-over-year in the first quarter. While they felt some disruption in March from the crisis, they saw fewer cancellations and we were able to provide dozens of leaders to serve during the crisis. Our permanent placement businesses were up 4% in the first quarter despite the slowdown in March. Our third segment, Technology and Workforce Solutions, reported revenue of $40 million, up 84% year-over-year, including the acquisitions of Stratus Video in February and B4 Health in December. The segment was up 13% organically. One of the standout performers of this group was our VMS business, which grew revenue 26% year-over-year in the first quarter. Our newly acquired language interpretation business, Stratus Video, contributed $14 million of revenue in the quarter, slightly less than expected as its volumes were disrupted by clients' reduced patient census in late March. Prior to that disruption, they were performing better than expected. Our predictive analytics business had strong revenue growth in the first quarter. We have modified our formal guidance due to the uncertainties created by COVID-19 and the economic environment. However, we want to still be as transparent as possible and provide you with some insights on recent trends and our outlook for the next few months. When the crisis first hit, the demand for clinicians who could care for COVID-19 patients spiked, and our industry cast a call to action for nurses and other clinicians to come forward and help. We were amazed and inspired by the response. Many thousands of clinicians raised their hands to go where and when they were needed most. Still, there were also clinicians and physicians that were suddenly without work due to the decrease in elective procedures and the closure of other health care settings. While we still have new demand for COVID-19-related clinicians coming in, it has declined, which is very good news for our country. Some clients, particularly in hot spots like New York, are still in need of hundreds of existing and additional clinicians to serve the patients they have and expect. Across the country, many clients are starting to resume services, including opening operating rooms, rehab centers, and physician offices. We are receiving needs for clinicians to help ramp these services and expect more in the coming weeks. We are also working with clients to ensure that we can all pivot again quickly should there be another surge of cases. Some major healthcare systems view this as a real possibility. We are incorporating lessons learned to ensure we can collaborate and work even more swiftly and efficiently together. Some clients are also indicating that they are seeking to create a more flexible labor plan. This will enable them to respond to patient volumes and best match their workforce spending with the revenue ramp. Utilization of travelers and temporary clinicians will be a valuable tool for them during this time. We can also help clients to better manage their internal float pools through our technology offerings like V4 Health. AMN's revenue should ramp as hospitals resume their more normal procedures and patient census, and they seek opportunities to optimize their workforce through the use of technology solutions. In the meantime, our second quarter revenue is projected to be down sequentially, and we will exit the quarter at the lowest revenue trend year-to-date. Fortunately, we have created a flexible cost structure and will be able to respond to marketplace changes as necessary. We have successfully navigated periods of demand decline before, exiting these times as a stronger organization. And AMN is a more diversified company today than it was during the previous downturn. Our addition of multiple workforce solutions and more strategic partnerships strengthens the resilience of our business and further differentiates us. To adjust our cost structure to the temporary decline in revenue, we have already taken several steps to eliminate non-essential costs, such as travel, events, and professional services. We also reduced staffing levels through attrition and a small layoff of our less tenured team members and suspended our retirement matching program. These collective efforts plus the natural reduction in variable spending that occurs with lower volumes enabled AMN to reduce our SG&A by about 15% from our pre-crisis run rate in February. Our cost structure is highly flexible. and we will continue to make the needed investments to advance our total talent strategy to ensure that AMN is well positioned for the future. We always owe a debt of gratitude to our healthcare professionals, but at this time, that gratitude is more meaningful than ever. As the industry leader and one of the world's most vocal supporters of nurses and other clinicians, We feel an immense responsibility to ensure that we and others are doing the right things to care for and support our clinicians. During this crisis, I am so proud of how our team and clients partnered to ensure we were rising to this responsibility. And finally, to our incredible AMNT members, I am simply in awe of you. You have overcome barriers and found creative solutions for our clients and healthcare professionals in perhaps the most dynamic environment we've ever seen. We ask a lot of each other, and you more than delivered. You inspire me every day, and I truly cannot thank you enough. In a few minutes, Kelly and Landry will join us for the question and answer session, but for now, I would like to turn the call over to Brian, who will provide more insight into our financial results. Brian?