AMN Healthcare Services Inc

And welcome to AMN Healthcare fourth quarter 2024 earnings 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 the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the conference over to Randi. Sir, you may begin.

Good afternoon, everyone. Welcome to AMN Healthcare's fourth quarter and full year 2024 earnings call. A replay of this webcast will be available at ir.amnhealthcare.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 in cautionary statements, including those identified in our most recently filed forms 10-K and 10-Q, our earnings release, and subsequent filings with the FDC. 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 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 quarterly conference call. We are pleased to report that AMN Healthcare ended 2024 with solid financial results, and that trend has continued as we've started 2025. Fourth quarter revenue of $735 million was $30 million above the high end of our guidance range, and adjusted EBITDA of $75 million also exceeded expectations. Our nurse and allied solutions revenue was 6% above the high end of guidance, and the segment still beefed by 1%, excluding upside in labor disruption revenue. Physician and leadership solutions revenue was on target, aided by outperformance from physician permanent placement. Technology and workforce solutions revenue was 4% better than guidance, as language services saw improved volume. During the quarter, we repaid $75 million in revolver debt, enabled by another quarter of strong cash flow. our industry continues to see signs of stabilization. Consistent with last quarter, travel nurse orders remain above the April 2024 level, though still 20% below pre-pandemic. These orders typically trend down after November, and the drop this year is much less than in the past two years, and in line with pre-pandemic seasonality. Allied orders grew 7% year-over-year in the fourth quarter, with new orders up 20% year-over-year. Locum tenens demand was better than normal seasonality, rising 6% from Q3 to Q4. Staffing gross margins declined through 2024, and we are more recently seeing stabilization of margins across our staffing businesses. Unfilled orders in vendor-neutral programs increased again in the fourth quarter as candidates continued to pass over jobs with low pay rates, and more staffing firms resist the pressure to accept unprofitable margins. As 2025 unfolds, macro indicators tell us that after more than two years of stepped-up hiring, the healthcare sector has erased the permanent staffing deficit that grew from 2020 to 2022. Wage inflation has remained high, especially for highly qualified professionals. Factors that caused our industry's trajectory to detach from labor market fundamentals have eased, as travel nurse utilization and bill rates have returned to normal levels. The next step would be to see client behavior to continue moving towards a renewed focus on long-term objectives for cost-effective flexibility. Hospitals experienced strong growth in patient volume last year, and recent analyst survey call for 3% to 4% admissions growth this year. To accommodate that volume growth, hospitals grew employment 4% in 2024, and at year end was 12% higher than the end of 2021, when workforce difficulties were most acute. Despite tactics to offset labor costs, hospital wage inflation moved back up to 5% in the fourth quarter of 2024. Healthcare organization managed wage pressures last year by reducing average hours worked across their workforce to their lowest level since 2013. Consistent with that, average hours for travelers also are at a 12-year low. which is negatively impacting the staffing industry's gross margin. In many instances of client needs, we can now demonstrate that travel nurses are an attractive alternative to using overtime, to leaving vacant positions open, and even to aggressive permanent hiring. As travel nurse staffing was 30% of our 2024 revenue, any demand recovery in this specialty would boost our efforts to return to growth. Since our last report, we have continued to see stable bill rates for nurse and allied staffing, and bill rates have continued to rise in locum tenants. For the nurse and allied segment, our first quarter outlook assumes volume down in the low single digits compared with the fourth quarter average, driven by expected lower international nurse assignments due to visa retrogression, and lower utilization by a few of our large clients. mostly offset by growth in other MSP clients and direct and third party channels. For physician and leadership solutions, we expect first quarter revenue to be down slightly from the prior quarter. Our technology and workforce solutions outlook for the first quarter assumes a low single digit dip compared with Q4 due to lower VMS volume with language services and outsourced solutions modestly up. Language services achieved our highest minutes delivered in Q4, and we expect to continue that trend in Q1. As the healthcare industry seeks long-term solutions for its workforce needs, the AMN team is united behind our mission of innovation and service to healthcare professionals and the diverse organizations that provide care for millions of Americans. Clinicians and clients have made their voices clear. They want more choices, more visibility, and more control. We are uniquely positioned to provide information-rich technology tools that give clients and healthcare professionals what they need now. In 2024, we launched and scaled best-in-class technology solutions that provide unprecedented visibility, cost control, mobility and efficiency in staffing management. By the end of the year, we had successfully rolled out our next-generation VMS, ShiftWise Flex, to almost all our ShiftWise users. With its ease of use, automation of key functions, support for clinical and non-clinical roles, data-packed market pricing surveillance, internal resource pool management, and more, ShiftWise Flex is poised to attract new clients in 2025 and beyond. Our market-leading app for healthcare professionals, Passport, now enables clinicians to store their preferences and, enabled by AI, automatically apply for matching opportunities. a powerful advantage in competing for the most attractive position. Passport also supports locum tenens for the first time. We rolled out our next generation in-person interpreter scheduling system in our language services business, enabling convenient scheduling by location and language, broadening the capabilities of our interpretation platform. And we have raised the bar higher with WorkWise, which integrates our demand forecasting, staffing and sourcing, predictive scheduling, and workforce management solutions into a powerful platform. Clients are increasingly looking for integrated technology solutions, and we are very pleased with the reception WorkWise has received from current and prospective clients. The recently launched event management capabilities of WorkWise have made AMN a more effective partner supporting clients during labor disruption events, where our scale and financial strength are also advantages. Technology innovations and operational scale drive our strategy to embrace all parts of our 41 billion addressable market, enabling us to expand service offerings and capture share, not just in our MSPs, but also in the direct and third-party channels. Our allied business has improved its direct market fill rates in recent months. Our locums MSP volume is on an uptrend, which is being reinforced by the addition of locum support to ShiftWise Flex. In summary, AMN has evolved in many ways to identify and focus on the changing needs of clients and healthcare professionals. Though we provide 18 different solutions to thousands of clients, We work as one AMN, one highly flexible organization capable of delivering AMN service and value in a form that is customized to each client's unique situation. We have changed the way we operate, making it easier for clients to access our full range of solutions and easier for clinicians to access a broader set of opportunities. The more we enable client success in workforce management, the more AMN will be differentiated in the marketplace. We expect our client centric strategy to get stronger over time, building long term value for all our stakeholders. Now, I'm thrilled to reintroduce Brian Scott, who will add his perspective on our results and outlook.