AMN Healthcare Services Inc

business, as well as MSVR. Demand in locums is healthy, and coupled with our technology investments to improve our speed to fill, as well as MSVR's capabilities, we are excited about our growth potential in this important market. Results for interim leadership in search for flat versus the first quarter, though demand remains inconsistent. Segment gross margin in the quarter was lower than the first quarter due to a lower bill pay spread in locum tenens. This was offset largely by prudent expense management. For the third quarter, we expect physician and leadership solutions revenue to be up 12 to 14% year over year. In the technology and workforce solutions segment, second quarter revenue was 112 million. lower by 11% year-over-year, and in line with our expectations. Language Services posted 18% revenue growth driven by strong utilization of video interpretation. All other solutions in the segment were consistent with our outlook. The TWS segment contributed $47 million of operating income, more than 40% of total segment operating income this quarter. The TWS segment profit margin also improved substantially this quarter. Our long-term strategy is to continue increasing the segment share of our revenue and earnings due to its alignment with clients' desires for more tech-enabled solutions and its attractive growth and margin profile. For the third quarter, we project technology and workforce solutions revenue to be down 10% to 12% from the prior year. We have carefully managed long-term strategy and near-term spending in an improving environment still having its cross-currents. This has made it especially important for AMN to ensure that our perspective of the changing healthcare sector is as clear and current as possible. We were delighted to add Jim Hinton to our board of directors. Jim has invaluable experience as former CEO of Outstanding Health Systems, Baylor Scott & White, and Presbyterian Health Services New Mexico, in addition to serving as a past board chair of the American Hospital Association. We also recently launched our first executive advisory board to help guide the company's mission of providing innovative total talent solutions for healthcare. Our executive advisory board will ensure that AMN is closely aligned with the current and future needs of healthcare organizations as they deal with rising demand and increasingly complex labor supply. At the helm of our Executive Advisory Board is Mike Butler, who was President of Providence and led the health system through extraordinary growth. Before I turn the call over to Jeff for a financial review, I want to recognize the wonderful AMN team and our healthcare professionals for their impressive efforts serving our communities and all our stakeholders. Your mission and your excellence are what enables AMN's ability to have such a positive impact in serving the healthcare needs of our communities. Now, Jeff will continue with the review of our quarterly results and outlook.

Thank you, Terri, and good afternoon, everyone. Second quarter consolidated revenue was $741 million, down 25% from the second quarter of 2023, and down 10% sequentially in line with expectations. The sequential decrease was primarily due to lower volume in the nurse and allied segment and the locum tenants and BMS businesses. Consolidated gross margin for the second quarter was 31%, also in line with expectations. Year over year, gross margin decreased 230 basis points, driven mainly by lower margins across all three segments, partly offset by a favorable segment mix. Sequentially, Gross margin decreased 40 basis points, primarily due to lower nursing allied segment and locums gross margin, partially offset by a favorable revenue mid-shift. Consolidated SG&A expenses were $149 million, or 20.1% of revenue, compared with $202 million, or 20.4% of revenue in the prior year period, and $175 million, or 21.3% of revenue in the previous quarter. The decrease in SG&A expenses year over year was primarily due to lower employee and professional service expenses as we remained steadfast in reducing costs to massive revenues. Lower employee expenses and favorable actuarial adjustments for professional liability insurance drove the decrease sequentially. Adjusted SG&A, which excludes acquisition, integration, and other costs, legal settlement accrual changes, stock-based compensation expense was $137 million in the second quarter or 18.5% of revenue compared with $170 million or 17.1% of revenue in the prior year period and $162 million or 19.7% of revenue in the previous quarter. Discrete items that we do not expect to recur in the third quarter included an actuarial adjustment for professional liability insurance and a change in the accrual for incentive compensation. These items reduced SG&A by $7 million in the quarter. Nurse and allied revenue was $442 million in the second quarter, down 36% from the second quarter of 2023. Sequentially, segment revenue was down 15%, driven by lower volume and lower rates in travel nurse and allied. Average bill rate was down 12% year-over-year and 3% sequentially, influenced by a mixed shift toward allied. Year-over-year, volume decreased 24% and average hours worked were 1% lower. Sequentially, volume was down 11% while average hours worked were flat. Travel nurse revenue in the second quarter was $277 million, a decrease of 42% from the prior year period and 17% from the prior quarter. Allied revenue in the quarter was 151 million, down 17% year-over-year, and 11% sequentially. Nurse and allied gross margin in the second quarter was 23.8%, a decrease of 290 basis points year-over-year, primarily due to increases in housing, travel, and allowance expenses, and the deleveraging impact of lower bill rates. Sequentially, gross margin decreased 130 basis points, mainly due to a workers' comp accrual adjustment that benefited the first quarter margin, along with higher housing costs. Segment operating margin of 10.4% decreased 450 basis points year over year, but increased 10 basis points sequentially. The slight increase from the first quarter was driven primarily by favorable insurance actuarial adjustments and lower employee expenses, offsetting the lower gross margin. Moving to the Physician and Leadership Solutions segment, second quarter revenue of $186 million increased 6% year-over-year due to the MSDR acquisition. Sequentially, revenue was down 1%, driven by lower locum tenens revenue and lower volume in the search business, as expected. Locum tenens revenue in the quarter was $143 million, up 17% year-over-year with the growth coming from the MSDR acquisition. Interim leadership revenue of 30 million decreased 17% in the prior year period and was flat sequentially. Search revenue of 13 million was down 27% year-over-year and down 1% sequentially as volumes remained low. Gross margin for the physician leadership solution segment was 30.5%, down 460 basis points year-over-year and 110 basis points sequentially. The year-over-year decline was primarily attributable to a lower bill pay spread within locum tenants, partially offset by improved gross margin in the interim business. Segment operating margin was 11.6%, which decreased 340 basis points year-over-year, primarily due to lower gross margin. Sequentially, operating margin decreased 20 basis points. Technology and workforce solutions revenue for the second quarter was $112 million, down 11% year-over-year as the revenue decrease in the VMS business more than offset the language services revenue growth. Sequentially, revenue was flat. Language services revenue for the quarter was $75 million, an increase of 18% year-over-year and 5% sequentially. VMS revenue for the quarter was $28 million, a decrease of 41% year-over-year and 5% sequentially. Segment gross margin was 60.2%, down from 66.7% in the prior year period, primarily due to lower revenue within the VMS and outsourced solutions businesses. Segment operating margin in the second quarter was 42.1%, a decrease of 200 basis points from the prior year period, driven by the decrease in gross margin, partially offset by reduction of SD&A expenses. Segment operating margin increased 280 basis points from the prior quarter, mainly due to lower employee expenses. Second quarter consolidated adjusted EBITDA was $94 million, a decrease of 42% year-over-year and 4% sequentially. Adjusted EBITDA margin for the quarter of 12.7% was above the high end of the guidance range, mainly due to favorable insurance actuarial adjustments and lower employee expenses. Year-over-year, adjusted EBITDA margin was down 350 basis points, primarily due to deleveraging on lower revenue while we reduced SG&A expenses to follow the revenue declines. Sequentially, adjusted EBITDA margin was up 80 basis points, driven by the technology and workforce solution segment and a favorable mix shift. Second quarter net income was $16.2 million, down 73% year over year and 6% sequentially. Second quarter gap diluted earnings per share was 42 cents. Adjusted earnings per share for the quarter was 98 cents, compared with $2.38 in the prior year period and 97 cents in the prior quarter. Day sales outstanding for the quarter was 63, one day lower than the prior quarter, and 10 days higher than a year ago, which was our low mark for DSO in 2023. Since the start of 2024, we have reduced DSO by seven days and expect to end the year below 60 days. Operating cash flow for the second quarter was 100 million and capital expenditures were 27 million. We expect CapEx for the year to total 70 to 75 million. As of June 30th, We had cash and equivalents of $48 million, long-term debt of $1.2 billion, including a $345 million draw on our revolving line of credit and a net leverage ratio of 2.6 times to one. During the quarter, we paid off $80 million of revolver debt, bringing the year-to-date pay down to $115 million. Moving to third quarter 2024 guidance, we project consolidated revenue to be in a range of $660 million to $680 million, down 20 to 23 percent from the prior year period. Gross margin is projected to be between 30.7 and 31.2 percent. Reported SG&A expenses are projected to be 22 to 22.5 percent of revenue. Operating margin is expected to be 2.1% to 2.9%, and adjusted EBITDA margin is expected to be 10.6% to 11.1%. Average diluted shares outstanding are projected to be approximately $38.3 million. Additional third quarter guidance details can be found in today's earnings release. And now, operator, please open the call for questions.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. We also ask that you please wait for your name and company to be announced before you proceed with your question. Our first question for today will be coming from Trevor Romeo of William Blair. Your line is open.