AMN Healthcare Services Inc

Ladies and gentlemen, thank you for standing by and welcome to AMN Healthcare third quarter 2020 earnings call. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star, then the number one on your telephone keypad. If you require any further assistance, please press star zero. I would now like to turn the call over to Randy Reese, Director of Investor Relations. Please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's third quarter 2020 earnings call. A replay of this webcast will be available at ir.amnhealthcare.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, 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. As a result of various factors and cautionary statements, including those identified in our most recently filed forms 10-K 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.amnhealthcare.com. On the call today are Susan Salka, Chief Executive Officer, Brian Scott, Chief Financial Officer, Kelly Rutkowski, Group President and COO of Strategic Talent Solutions, and Landry Seedig, Group President and COO of Nursing and Allied Solutions. I will now turn the call over to Susan.

Thank you so much, Randy, and welcome everyone to our third quarter 2020 conference call. I want to start first with the most important message we have to share today. The entire AMN team is incredibly grateful to our healthcare professionals and clients for the tireless and selfless work they do every day to care for our families and communities. We are honored to partner with them. and do everything we can to ensure every patient has the compassionate and quality care they deserve. We are nine months into a pandemic that is among the biggest challenges our country has ever seen and certainly one of the most daunting events we have personally experienced. Our business inconveniences are minor compared with the harm experienced by the victims of COVID-19. We owe them our commitment to deliver the best quality healthcare possible while preserving the safety and well-being of all caregivers. The AMN team feels a relentless responsibility to do more every day to make a positive impact in this environment. The nation's healthcare ecosystem has mobilized resources in impressive fashion to address regular healthcare needs amid the strains imposed by the pandemic. We are extremely proud of how healthcare professionals keep rising to the challenge. Still, we cannot forget that this all-hands-on-deck response has come at a price. The healthcare labor force is under extreme duress. Average weekly hours for hospital workers appear to have reached record highs. Health systems are finding talent more and more scarce. It is no surprise that the needs are greatest in nursing, and this is also where the shortages are getting worse. Clients are dealing with increasing worker burnout, unanticipated attrition, and the needs of healthcare professionals to have time off after months of stress and strain. Similarly, our clients' internal recruiting capabilities are being pushed to the max, and the labor demand pressure has challenged the ability of the healthcare staffing industry to respond. AMN has been adding resources over the past few months in response to these increased needs. This environment has further heightened interest for healthcare providers to have strong workforce partners. for which AMN has translated to the addition of many new clients as well as the expansion and renewal of existing clients. This scarce labor environment also highlights the benefits of a staffing-led managed services program for which AMN is the nation's leading provider. Just as we are thankful for the efforts of our clients and many thousands of healthcare professionals, we are also deeply grateful for our AMN team members who have adapted so well and keep rising to clear new hurdles. We have great empathy and appreciation for our team members and continue to expand our support system for their well-being. The third quarter tested our resilience with a resurgence of COVID cases and growth in regular patient volumes. As an organization, it was also important that we address issues of social injustice and advancing healthcare equity. Our AMN colleagues responded wholeheartedly and delivered quarterly results that were much better than we expected. Our consolidated revenue was $552 million and our adjusted EBITDA was $77 million. Revenue went down quarter over quarter and year over year as anticipated due to the pandemic-related disruptions. Our nurse and allied solution segment posted revenue of $383 million, down 4% year over year, with our largest business, Travel Nurse Staffing, showing 12% growth. Allied staffing revenue was 28% lower than the year-ago period, driven by continued weakness in therapy. Our imaging, respiratory, and lab specialties were far more resilient and down only single digits. And our school's business was up year over year by double digits. For both nurse and allied, year over year volume comparisons improved throughout the quarter and continued into the fourth quarter. For example, our nursing volume hit a low point in July and has rebounded quickly, being down only in the mid single digits today. Some of the same issues driving vacancies and high attrition for our clients also affect our ability to attract clinicians into the travel industry. While our new candidate recruiting in most specialties is above prior year levels and enabling growth, it's not enough to keep up with the record demand we are facing across Nursing and Ally. In the fourth quarter, we expect nurse and allied solutions revenue to grow nearly 10% sequentially and to be flat to slightly down year over year. We project our largest business of travel nurse staffing to grow revenue approximately 8% sequentially and at least 15% over prior year. Our second largest division in this segment, allied staffing, is also expecting to grow sequentially by about 20%, but still down about 15% year over year. For physician and leadership solutions, third quarter revenue was 109 million, down 24% year over year, but slightly higher than the second quarter and better than guidance. Within this segment, Locum Tenens performance was a standout with 10% sequential revenue growth, although still down 19% from prior year. CRNA, anesthesia, radiology, and dentistry placements led the better performance. Interim leadership revenue fell 31% compared with a year ago on lower volumes. Our physician and executive search businesses continue to feel the pressures of the slowdown in new hires and experienced revenue 32% lower year-over-year. Demand for interim and search services has improved, but clients remain cautious on spending and hiring of new high-level leaders and physicians. We expect fourth quarter revenue for physician and leadership solutions to be down year-over-year about 26% to 28%. This guidance reflects a sequential seasonal decline in the mid single digits. Our technology and workforce solutions segment reached revenue of 60 million in the third quarter, up 136% year over year. This was a combination of the additional revenue from the acquisitions of B4 Health in December and Stratus Video in February, partly offset by an 8% organic decline. We are extremely pleased with the performance and the positive impact being made by these teams. Stratus achieved $35 million in revenue in the third quarter, 25% higher than its second quarter, and they are on track to exceed our expectations for the year. Our VMS business grew revenue 2% year-over-year, although revenue was down organically by 6% amid the slowing of the overall healthcare staffing market. Our predictive analytics and scheduling division registered solid double-digit revenue growth as they continued to add new clients and expand existing accounts. For the fourth quarter, we expect technology and workforce solutions revenue to be up about 150% year-over-year, including 1% to 2% organic growth. While we are acutely aware of the importance of executing well in the current environment, A&N also continues to make investments to further strengthen and expand our leadership position. This pandemic will have lasting impacts on the healthcare industry and workforce, and we are dedicated to doing all we can to help clients and healthcare professionals in this changing environment. The AMN team is in this for the long haul. As we look to the future, we have four key areas of focus that will drive our strategy as the leading total talent solutions partner. The first is to ensure that we continue to deliver excellence for our clients and healthcare professionals and to further differentiate our service delivery. Second is to deepen our relationships and build even greater loyalty with our key stakeholders. Third is to invest in digital innovation and new solutions. And fourth is to support and develop our team members to reach or exceed their goals. We continue making investments to differentiate our service delivery, which includes things like process automation to increase speed to placement and to make us a more agile company in this dynamic environment. We are also streamlining our processes with more flexible technology and greater integration of our systems. Next, we have several initiatives underway to build stronger, deeper, and more loyal relationships. Over the last decade, AMN has brought together a wide variety of solutions to serve our clients for their workforce management needs. We are committed to further integrating our capabilities into next-generation comprehensive total talent solutions. Our clients have told us that this is the kind of partnership they want from AMN. Supporting our healthcare professionals and creating greater loyalty through their career journey is equally as important. AMN has long been known for the innovation we have brought to the market. Today, this includes things like creating personalized digital experience with mobile apps that empower healthcare professionals to discover their next career opportunity and to interface with AMN when and where they want. Our professionals want 24-7 access and a fast, familiar, easy-to-use experience, and we are committed to being the leader in providing this kind of experience. For clients, we are not only enhancing existing services through innovation, but also creating new solutions. For example, we will continue making investments in our telehealth capabilities. In addition, our growing analytics platform will provide in-depth data and insights to enhance decision-making with our clients. This will be important to help us deliver more data-driven talent solutions. And finally, we are evolving ways to elevate our team members and enable them to reach their goals. This is particularly important today since most of the AMN team is still working from home. We have greatly expanded virtual training capabilities to all team members and to our leaders. Our leaders are building the necessary competencies to lead in this new environment. These new programs also enable us to align with and strengthen our commitment to diversity, equity, and inclusion, and ensure that we provide career growth opportunities to all of our wonderful colleagues. The AMN team is extremely energized and excited about the opportunities ahead, and we believe the events of the last nine months have actually made us stronger and more capable of reaching our vision for the future. Before I hear that off to Brian, I want to take a moment to recognize an important milestone AMN has achieved in our commitment to adding unique and diverse talents to our organization. Recently, we welcomed Rear Admiral Sylvia Trent-Adams to our Board of Directors. Sylvia has built a distinguished career as a nurse researcher and officer and a policy administrator. She has led several key global and national initiatives to strengthen the healthcare ecosystem to improve care and outcomes, particularly for the disadvantaged populations. She served more than 30 years as an officer in the Army in the U.S. Public Health Service. We are excited to have a person of Sylvia's caliber and expertise on our board, and we are already benefiting from her extensive experience and insights during such a critical time. With the addition of Sylvia, AMN has reached another level in board diversity, with five of our nine board members being women, one of the highest ratios for a public company. Our leadership is completely aligned with AMN's broader strategy of pursuing diversity, equity, and inclusion as an end in itself and a means to making AMN a smarter, more agile company that is committed to making a positive impact for all. In a few minutes, Kelly and Landry will join us for the question and answer session. By the way, Landry, happy anniversary. Landry's celebrating 19 years with AMN today. But for now, I will turn the call over to Brian, who will provide more insights into our results. Brian?