AMN Healthcare Services, Inc. Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $1.34b | Revenue (TTM) = $3.43b
Market Cap = $1.34b | Estimated Revenue = $3.39b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $1.72b | Revenue (TTM) = $3.43b
Enterprise Value = $1.72b | Forward Revenue = $3.39b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
AMN Healthcare Services, Inc. Stock Analysis
Analyst Opinions
13 Analysts have issued a AMN Healthcare Services, Inc. forecast:
Analyst Opinions
13 Analysts have issued a AMN Healthcare Services, Inc. forecast:
AMN Healthcare Services, Inc. Events
Past Events
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AUG
6
Q2 2026 Earnings Call
about 2 months ago
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JUN
8
Goldman Sachs 47th Annual Global Healthcare Conference 2026
4 months ago
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MAY
13
Bank of America Global Healthcare Conference 2026
5 months ago
|
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MAY
7
Q1 2026 Earnings Call
5 months ago
|
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FEB
19
Q4 2025 Earnings Call
7 months ago
|
|
NOV
6
Q3 2025 Earnings Call
11 months ago
|
StocksGuide Free
AMN Healthcare Services, Inc. — Q2 2026 Earnings Call
1. Management Discussion
Good afternoon, ladies and gentlemen, and welcome to the AMN Healthcare Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 6, 2026. And I would now like to turn the conference over to Randy Reece, Vice President of Investor Relations. Thank you. Please go ahead.
Good afternoon, everyone. Welcome to AMN Healthcare's Second Quarter 2026 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 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 with me today are Cary Grace, President and Chief Executive Officer; and Brian Scott, Chief Financial and Operating Officer. I will now turn the call over to Cary.
Thank you, Randy, and good afternoon, everyone. We appreciate you joining us today. I am pleased to report that our second quarter results came in better than we forecasted with 5 of our solutions growing revenue year-over-year. Second quarter consolidated revenue was $673 million, 6% above the high end of our guidance range and 2% higher year-over-year. Adjusted EBITDA was $73 million or 10.9% of revenue, up 26% year-over-year. Adjusted EPS came in at $0.77 compared with $0.30 in the year ago quarter.
And we ended the quarter with $362 million in cash on our balance sheet, providing us with the ability to invest in our long-term strategy, including acquisition opportunities. We used our strong financial position to make 2 small yet strategic acquisitions that extend and advance our capabilities. Our performance year-to-date demonstrated our effectiveness in balancing day-to-day execution while simultaneously handling large labor disruption events.
While there were some unique items in our results, I am very encouraged to report that our core earnings exceeded guidance with building momentum that lifts our third quarter outlook. With contingent labor rates at a historically low premium to permanent staff, more clients are using flexible labor to meet their increasing patient demand. There is also continued interest in broader workforce optimization and tech-enabled talent solutions to build sustainable workforces.
As the leader and innovator in total talent solutions, AMN is well positioned to support these market and client needs. Our second quarter performance was highlighted by revenue strength in our travel nurse, international nurse, allied, schools and search businesses. Our Nurse and Allied Solutions segment drove the favorable surprise in the second quarter in several ways. Segment revenue of $422 million grew 11% year-over-year and was 12% ahead of the consensus estimate.
Nurse and Allied revenue benefited from higher volume on increased demand as well as higher-than-expected labor disruption revenue. Segment gross margin was 28.4%, with underlying margins in line with our expectations, along with several beneficial factors specific to the quarter. Travel nurse volume showed 6% year-over-year growth and Allied volume grew 7%, both the highest growth rate these businesses have achieved in 4 years. Improving demand and strong fulfillment drove our performance. Year-over-year, travel nurse orders turned positive in May and accelerated in June.
As of early August, the improvement continued with orders up about 40% year-over-year and 20% higher than August 2024. As expected, international nurse had 23% year-over-year revenue growth in the second quarter. While we continue to benefit from the forward movement in Visa application cutoff dates, Embassy appointments for Visa applicants have not kept pace. Relief from the Embassy backlog will influence how much this business grows in 2027.
Allied orders showed modest year-over-year growth in the first quarter and accelerated through the second quarter with mid-teens growth rates in June and July. Allied demand strength is broad-based in terms of settings and specialties. Notably, our schools business is on track for another year of double-digit revenue growth for the upcoming school year.
Our team is executing very well against this higher demand with high fill rates, which fueled the second quarter outperformance and continued volume momentum. Third quarter guidance includes better than 10% year-over-year volume growth for both travel nurse and allied. As demand increases, we are benefiting from our multiyear focus on process automation, 24/7 business operations and AI enablement of recruiting, resulting in higher fill rates across our MSP, VMS and third-party platforms.
For the third quarter, we expect Nurse and Allied segment revenue to grow 9% to 11% year-over-year. Physician and Leadership Solutions segment revenue in the second quarter was $165 million, lower by 6% year-over-year and in line with guidance. Segment gross margin was 26.5%, down year-over-year, though modestly up from the first quarter. We saw a positive inflection in the second quarter from our search business, which produced 27% year-over-year revenue growth.
New demand showed strong growth across physician and executive search. While the higher demand is being driven by executive turnover and facility expansion, growth is coming also from stronger positioning of AMN solutions in the market, with particular strength in academic medical centers. We are leveraging our market leadership in health care search to broaden our capabilities into adjacent services. In June, we acquired the ESSENTIAL Brand Leadership Assessment solution to support clients in leadership selection, evaluation and coaching as well as succession planning.
Locum tenens revenue in the second quarter was $131 million, lower by 8% year-over-year and in line with guidance. We continue to see more locum demand growth in vendor-neutral third-party channels, which are the most competitive to fill. Our locums business is going through the same process and technology transformation that enabled our nurse and allied business segment to compete successfully across all demand channels.
Interim leadership revenue was $22 million, down 3% from prior year. New searches have been building over the past quarter, which is a reflection of our leading market position, increased investments in our sales team and a growing wave of turnover and project-based needs in health care leadership positions. We are optimistic about the direction of demand and our ability to pursue year-over-year growth in 2027.
For the third quarter, we project Physician and Leadership Solutions revenue to be down 5% to 7% year-over-year. Technology and Workforce Solutions segment revenue was $87 million in the second quarter, down 15% year-over-year and in line with guidance. Segment gross margin was 48.6%, lower sequentially and year-over-year. Language services revenue of $70 million was down 8%, with VMS revenue of $15 million, down 20% from a year ago.
Language services volume was flat year-over-year, while pricing was down 8%. Pricing will remain a headwind as we work through new client wins and renewals. The rollout of our lower-cost core service tier continues to be well received, helping us compete more broadly in the market and win new clients. We are expanding our workforce globalization for service delivery over the next several quarters to stabilize and improve gross margin.
In June, we acquired Jaide Health to extend our medically qualified language interpretation services with AI-enabled support for the patient before and after the clinical interaction. The Jaide platform improves the ability of limited English proficiency patients to communicate through the intake and discharge processes, further strengthening our value proposition of enabling high-quality and cost-effective patient care.
We also continue to strengthen our WorkWise labor force management optimization and engagement platform. We are seeing increasing interest in data and analytics to help drive workforce optimization. Last quarter, we introduced enhancements to our dashboards, including supplier performance and insights with third-party bill and pay rate intelligence that can be segmented by skill set and geographic markets.
We built our strongest solution yet to empower data-driven workforce decision-making. And we continue to enhance the features of our market-leading Passport app, including adding AI-enabled search for clinicians. Passport adoption grew throughout the quarter and recently surpassed 400,000 users, up 33% year-over-year, providing AMN with one of the largest clinician networks in health care staffing.
Importantly, monthly active users increased by more than 50% over the prior year. For the third quarter, we estimate Technology and Workforce Solutions revenue to be down 11% to 13% year-over-year. This quarter's financial performance has continued to improve our balance sheet strength. Our capital allocation approach remains focused on creating long-term shareholder value, reflected in this quarter with the 2 targeted acquisitions that enhance our solutions portfolio while also returning capital through modest share repurchases.
As the health care workforce services market continues to normalize, we are seeing increasing indications of industry consolidation, and we believe our financial strength and market leadership position us well to be both an active participant and a beneficiary of these trends. We also welcomed 2 important additions to our leadership team with the appointment of a new Chief People Officer and Chief Commercial Officer. These proven leaders will help strengthen our talent strategy, enhance our technology-enabled and people-centered solutions and drive a more integrated go-to-market approach aligned with our long-term growth objectives. Their appointments also underscore AMN Healthcare's position as a premier destination for top talent, reflecting the strength of our platform, culture and growth opportunities, as we continue to attract experienced leaders who can help advance our strategic priorities.
Now I'll turn the call to Brian for a deeper look at our second quarter results and third quarter outlook.
Thank you, Cary. I'd like to call out some details to expand on our second quarter financial results published this afternoon. Consolidated second quarter revenue of $673 million grew 2% year-over-year and was 6% above the upper end of our guidance range. The revenue upside came from labor disruption and strong performance in travel nurse, allied and search. Our Q2 guidance had assumed $10 million in labor disruption revenue, while the actual reported revenue came in at $25 million.
Reported gross margin was 30.6%, 210 basis points above the top end of guidance. Second quarter net income was $21 million compared with a net loss of $116 million in the prior year period and net income of $62 million in the prior quarter. Adjusted EBITDA was $73 million or 10.9% of revenue. Adjusted EPS was $0.77. Our consolidated results benefited from several items that are not expected to recur in the third quarter, including a true-up of billing accruals from the large Q1 labor disruption event, a reserve reversal from a prior year event and other favorable reserve adjustments.
These Q2 items added about $27 million to revenue, 290 basis points to our consolidated gross margin and 370 basis points to our adjusted EBITDA margin. Excluding these items, our Q2 revenue would still be almost 2% above the high end of our guidance range, and our EBITDA margin would be at the top end of our 6.7% to 7.2% guidance.
Consolidated SG&A expenses in the quarter were $147 million. Adjusted SG&A, excluding certain items, was $135 million, down 4% compared to the prior year. SG&A included a $5 million unfavorable professional liability actuarial adjustment, partly offset by a $3 million favorable adjustment to the allowance for credit losses.
The Nurse and Allied segment reported revenue of $422 million with a 28.4% gross margin and 13.8% segment operating margin. The previously noted labor disruption billing and reserve adjustments contributed 490 basis points to the gross margin and 600 basis points to segment operating margin during the quarter. Turning to our traditional staffing operations, performance was led by our travel nurse and allied business lines. Travel nurse volume grew 6% year-over-year and was 3% better than the high end of guidance. Allied volume was up 7% year-over-year and exceeded our guidance by 1%. International nurse revenue also grew 23% year-over-year. Nurse and allied average bill rate was nearly flat year-over-year, a bit better than we had expected, and average work were up 1% year-over-year.
Higher demand and strong capture of that demand drove revenue above expectations. Bookings momentum is a key driver of our third quarter revenue outlook, which calls for double-digit year-over-year growth at the midpoint for the Nurse and Allied segment. The highlight of our Physician and Leadership Solutions segment this quarter was search. Physician search grew new searches by 37% sequentially and 40% year-over-year.
Executive search saw new searches increase 30% year-over-year and leadership search volume rose by 60%. Our locum tenens revenue was flat sequentially due in part to a negative sales adjustment that reduced revenue and gross profit by $2 million. Volume increased by just under 1%, which is below our typical seasonal uplift, which we called out on last quarter's call. As Cary noted, we are actively engaged in several initiatives to get this business back to growth. In our Technology and Workforce Solutions segment, while revenue was down 15% year-over-year, it was down 11%, excluding the divestiture of SmartSquare.
Language services continues to navigate through the transition to our shared service strategy, which is enabling us to retain more clients. Minutes were up 3% sequentially and flat year-over-year despite the pressures on the limited English proficiency population and nominal contribution from new clients. Price per minute was down 3% sequentially and 8% year-over-year. Revenue in our VMS business was $15 million in the second quarter, and we expect this revenue to stabilize at this level over the second half of the year with prospects for sequential growth in 2027.
Days sales outstanding for the quarter was 52 days. Excluding working capital effects from the large labor disruption events in the first quarter, DSO was 54 days, flat sequentially and 2 days lower year-over-year. While our earnings release provides additional balance sheet and cash flow details, I want to highlight that we ended the quarter with $362 million in cash and equivalents. This was above our expectation of $175 million, primarily due to favorable working capital impacts, including a remaining outstanding balance of strike-related client deposits of $117 million at quarter end.
Even with Q3 cash flow, including a $20 million interest payment and higher cash tax payments and assuming the remainder of the deposits are repaid this quarter, we would anticipate at least $225 million of cash at quarter end. We ended the second quarter with total debt of $750 million, and our leverage ratio as calculated per our credit agreement was 1.5x. During the second quarter, we repurchased 85,000 shares at an average price of $26.33.
Going forward, and assuming no other material capital allocation needs, we anticipate modest share repurchases primarily to offset dilution from equity awards. Moving to the third quarter outlook. We expect consolidated revenue in the range of $640 million to $655 million. Gross margin is expected to be 27% to 27.5%. Reported SG&A is projected to be 22% to 22.5% of revenue. Operating margin is expected to be 0.2% to 0.8% and adjusted EBITDA margin is expected to be 6.5% to 7%. Additional guidance details are provided in the earnings release.
Now operator, let's open up the call for questions.
And your first question comes from the line of Jeff Silber from BMO Capital Markets.
2. Question Answer
Cary, in your prepared remarks, you mentioned how your clients are seeing contingent percentage at historic lows. Can you just kind of quantify that roughly where it is now, and I know there's no such thing as normal, but what should we expect that to normalize at over time?
Yes. Thank you, Jeff. So if you look at -- and I'll go through kind of the cadence of what that's looked like over the past cycle, pre-COVID, you would have seen that premium of contingent to permanent labor be in the mid- to high teens. During COVID, you got up to 100% premium just because of the significant spike in demand. We're now back down into the mid- to high single digits. Some would put that in some markets at actually even lower than that.
And so the effect of all that is coming out of COVID, getting back to permanent and reducing contingent spend was part of the workforce cost containment strategy. If you look at where we are today, particularly with both the relatively limited premium and the flexibility it provides, it's actually an important part of how you solve for your workforce strategy.
All right. That's helpful. I guess I was thinking about the penetration rate, so to speak, the percentage of contract labor. Any comments on that, how that's tracking in your clients versus what was maybe pre-COVID?
Yes. We have clients that are in different places. And even within clients, you can have especially their urban locations at much higher levels of utilization. I would say as a general comment, we have seen overall utilization with clients that is at or slightly below where they were pre-COVID.
And your next question comes from the line of A.J. Rice from UBS.
First, just to ask about your margin assumption. Obviously, this quarter, there's a lot of puts and takes, but it sounds like you were 10.9% in aggregate. You're going for a 6.5% to 7% EBITDA margin in the third quarter. It doesn't sound like there's -- you're sort of assuming the margin for the core business was about the same in the third quarter that you saw in the second, or is there any place where you're assuming much of a change sequentially quarter-to-quarter?
Thanks, A.J. This is Brian. I would say there's not any significant changes when you work through some of the items that we called out that impacted the higher margin in the second quarter. When you look at the underpinning of that and look from Q2 to Q3, there aren't any significant changes in the gross margins across the 3 different segments, and our SG&A is running pretty consistently as well.
And so when you take that and bring it over, that's where you end up in the range for both the gross margin guidance as well as the adjusted EBITDA. The Technology Workforce Solutions segment is more mix with that business down a bit and that has a higher margin profile. That's why the guide on the gross margin at the midpoint would be a bit below where our second quarter was, again, on a normalized basis, that's probably the one thing I would call out, it's more mix between the segments than it is any material changes within the segment.
And maybe in there somewhere I missed it, but is the guidance on the strike revenue to go back to about $10 million for the third quarter?
Yes. We've embedded in there around $7 million or $8 million of strike-related revenue in the third quarter.
Okay. And then maybe a bigger picture question on the sort of step-up in demand that you're seeing in Nurse and Allied. Is that focused in any particular area, large systems, academic medical centers, community hospitals, MSP, non-MSP? Is there any way you can -- is it across the board, or is there any way to characterize where you're seeing a pickup in strength?
Yes. We're seeing it broad-based. And so both in terms of regions, size of health care providers, and we're also seeing it across service models. So we saw increases in our MSP book. We're seeing increase in vendor-neutral and third-party programs. So the demand acceleration that we're seeing, we've really been in the kind of year-over-year demand increase posture for Allied for most of 2025 and '26. But what we saw in nurse that accelerated in May was broad-based.
You referenced -- just as a last final point on that. You referenced in your comments some market disruption. Do you think what you're seeing is mostly just underlying strength of market, or are you picking up share given some of the disruption that's happening at some of your major competitors?
I think that we are benefiting from 2 things in our business. One is some of the underlying demand acceleration that we believe is happening across the market. And the second part is we are executing very well against that demand. And so we have been talking about this for a couple of years about how we're building a more automated tech-enabled scaled chassis. We're faster. And so it's not just the demand, and we're now playing across the entirety of the market, but we are executing very well on filling that demand.
Yes. [indiscernible] we grew the market overall in the second quarter, which I think is indicative of the -- with our fill rates increasing on vendor neutral, that typically would imply that we're taking some share. And the team has done a great job of delivering high fill rates on our direct and MSPs. And just in terms of overall demand as well, this is something we've talked about, I think, on prior calls with patient utilization still increasing in hospitals, the rate of growth this year has slowed down, but you've still seen several years of increasing patient volumes.
And then over the last several quarters, you've seen a slowdown in the permanent hiring. I think if you looked at the total cost of permanent labor has increased significantly over the last 3 or 4 years. And so as hiring has slowed down and you have the attrition occurring, it's not unsurprising that you start to see demand pick up as well.
And your next question comes from the line of Tobey Sommer from Truist Securities.
I'd love to get your perspective, both historically and prospectively when demand increases or orders increase to this degree, my sense is that historically rates follow if the demand increase persists for long enough, not a month or 2, but call it, 6 months. Are you seeing any difference in bill rates in your order book versus your TOA, and do you expect to?
Yes. Let me give you a little bit of perspective of what we see today, and I'll have Brian layer in what we've seen historically through some of these cycles. So we have seen the broad-based demand that we've been talking about. We haven't yet seen bill rate increases from that. And so bill rates have been stable. We are seeing some places where bill rates are increasing with clients who just need to get them filled, but it's not more sustained. But we would expect that when you start seeing higher periods of demand, particularly if winter orders start coming in and you start seeing that more sustained demand, there is a lag effect, but that you would start to see bill rates improve. Brian, what would you...
Yes. I mean, Tobey, we've been through enough cycles together on this that I think you're spot on. That's what we've seen historically. There is a lag. The exact timing, I think, is hard to predict. But if you do have sustained higher demand, it's still a very competitive environment. That's the one thing that's, I think, a little bit different. You have more suppliers in the industry than you've had historically. So that, I think, is also creating more competition to fill orders where maybe that you haven't seen the rates pick up as much yet. But if it sustains for a longer period and grows more, then at some point, that competition from clients would typically drive rate increases. And we welcome that because that will also create the opportunity for us to bring more supply into the industry because obviously, our #1 priority is filling positions for our clients.
Could you -- speaking of supply, could you sustain a decent level of growth just based on increasing TOA at these bill rates, or do you need higher bill rates to generate the supply to sustain meaningful volume growth?
I think it depends on where the demand is coming from. So we have very large pockets of clients, I'd say, particularly in locations and -- that are very attractive that we could continue to supply at these bill rates. I think as you leave this year and get into next year, you would want to start seeing some bill rate increases just because there's going to be a natural labor market increase expectation that is the foundation of any of these rates.
And then one last question for me, if I could. Could you give us an update on the status of the Kaiser renewal, the RFP out in the market? And I understand you probably can't tell us like who's going to win, you're going to retain, et cetera, but maybe give us your view on the prospects, the format of the proposal, if it's still a unified single vendor?
Yes. So our Kaiser contract goes to the end of 2026, and the client is now in the long expected RFP process. And all of this RFP process is part of the normal governance cadence. We expect this RFP process to be competitive. And we also have a very strong, long-standing relationship with Kaiser and very strong program performance. So we feel well positioned.
And your next question comes from the line of Kevin Fischbeck from Bank of America.
Great. I guess maybe just a follow-up on that one. What historically has happened after the RFP reprocurement? Do they normally seek better terms, or is it basically just similar terms that you would expect on a new contract?
I would say, generally speaking, procurement will strive for better terms as just a theme that we see across the board. I think we talked about this a little bit last quarter, but given the breadth and depth of the Kaiser relationship, we have evolved how we support and service them even during the course of this contract. And so we are more market-like than you would have been 4 years ago or 5 years ago. And I give a lot of credit to both parties for that. So I would say from what we see overall in RFP processes, we're not seeing anything different about how you continue to try to negotiate terms or what people are looking for.
Okay. And then is there a way to size the 2 deals that you did in technology workforce revenue EBITDA contribution annually?
The 2 acquisitions?
Yes.
So the acquisitions that we did, one is in TWS and the language services support -- language services solutions segment, that's Jaide. The other one, the ESSENTIAL Leadership is supportive of our search and advisory capabilities. Between the 2 acquisitions, we spent $3 million on those 2 deals. And think of them as extending our capabilities, and we're already seeing strong support for those capabilities. We have 3 verbals with Jaide and ESSENTIAL leadership assessment is a solution we used in the past that we now own, and we're seeing interest in that as well.
Okay. And then it wasn't clear to me if this was a change in the wording, but it sounded to me like a change in the wording. You've been talking about consolidation in the space for a while, and this time, you added not only that you were going to be a beneficiary of these trends, but maybe that you are also going to be an active participant. Is that a change? Are you now looking at deals more aggressively, or is that kind of always the way you thought about it?
Yes. I don't think there's a major change in the way we thought about it. I think we're -- what changed in the last year is that as we continue to strengthen our balance sheet and reduce our leverage, it's created more opportunity for us to kind of widen our capital allocation aperture. We were heads down really focused over the last couple of years on delevering our balance sheet. And now we -- as we've got our leverage level down 1.5x at the end of the quarter and have got some cash on the balance sheet, and I think with more stability that we've seen in the market, it puts us in a position to be more active in looking at opportunities.
We're always keeping an eye on things coming to market, but we're also better positioned now if we want to be -- you can imagine we've got a pretty strong filter of anything that we would want to consider bringing in. We're very fortunate that we've got the broadest set of solutions in the market today. But we're in a position now that if the right opportunity comes along, we think it would be accretive, then we can participate more actively than we might have been able to 12 or 24 months ago.
And I think the market, as we talked about over the last year, there's been an expectation that there'd be more consolidation that would occur. Quite honestly, most of last year, it was relatively quiet. There were a few transactions in certain categories, but not as many as we expected. That's changed over the last couple of quarters now. We're starting to see more assets come to market. And so that's partly why we said it, but it's a combination of more opportunities, but also us being in a position now to be more of an active participant.
And Kevin, the other piece I'd add to Brian's comments is when we see competitors who are going through some evolutions or changes, it's also an opportunity for us. And we are really much more proactive around going after market opportunities when those present themselves.
And your next question comes from the line of Mark Marcon from Baird.
Wondering about the overall environment just as it relates to travel nursing, and you mentioned that demand has picked up, Cary. Is there a way of quantifying it just in terms of like number of hospitals served or systems served? Are you expanding the overall aperture of the number of hospitals, or are you just getting deeper in the ones that you've already -- that you've been serving for a while, but just seeing a pickup in demand there?
Yes, it's a little bit of both, Mark. And so from a current client standpoint, we are seeing some utilization increase with them. And some of it is just for same -- what I'll call kind of same hospital needs, but we're also seeing some of our clients expand. And so we're getting the beneficiary of some of that expansion.
And then I'd say the second part of what we've seen from demand growth is we are much more competitive in filling in third-party channels. It's all the [ few ] things that we've been talking about for some period of time. And so that becomes a bit of a flywheel that when you start filling more, they come to you. So we are serving more health care systems through those channels. So we are serving more, and it really is just a function of the fact that we have a much broader aperture of channels and programs that we're supporting, whether directly or through third parties.
Great. And you mentioned earlier that perm hiring at the hospitals has slowed down. There's lots of potential reasons for that, but what do you think the top 3 reasons for that is?
I'd say the top 3 reasons are that they got back to a very good base of permanent hires, and that was a function of 2 things. One is the actual hiring itself, which we know is very high by historical standards coming out of COVID. The second part is you saw retention rates normalize post-COVID as well. So it's not just that you're hiring more, but you're not losing as many clinicians in the back door.
And then the other piece that we are seeing is the cost normalization and frankly, even historical attractiveness of using contingent as a completion strategy and giving you more flexibility. A lot of -- I've been with a number of clients over the past 3 weeks, and one of the things that they continue to look for is not just a cost-effective strategy, but increasing flexibility about how they achieve that.
Great. And then Cary, are you noticing or are the folks in the field noticing any difference with regards to any sort of demographic profiles with regards to the types of people that you're actually placing? And I'm talking about clinicians and nurse travel roles.
I don't know that we've seen any demographic change in the nurses that we're placing. I'll give you one stat and one kind of commentary on what we're seeing in terms of the broader nurse population. So the one stat is you saw in some of the latest labor reports that retirements ticked back up again. And so we kind of started out maybe 1.5%. You're up to a little bit over 2%. We were expecting that.
So I would expect that trend to continue as part of the kind of aging demographic. And related to that, one of the things that what I hear from a number of our clients is really how do I significantly scale up the aperture of clinical experience for some of my younger staff. And so that is something that is very interesting to them because it's not just that you're losing a one-for-one in a retirement, but you're losing the experience that goes with it.
Yes. I'm hearing some of the same things. And then with regards to PLD, I mean, when you think about that, how -- what do you think it would take for some of the trends to turn around and to become a little bit more positive there?
Yes. So let me kind of take it in 2 parts. So locum, very consistent themes to what we talked about last quarter. And so we have seen year-over-year demand increase. Most of that came in the first half of this year. We had some really nice client wins. And so we're seeing the demand that's there. We are not as fast on filling, particularly when a very large part of that market and the demand increase is coming in the third-party channels.
So it's a similar experience that we had in Nurse and Allied. And so we're doing the same transformation that we did in Nurse and Allied very successfully in our locums business. So we would expect those efforts, you would start seeing the full benefits of that as we get into 2027 and that we would return to year-over-year growth in 2027 in Locum. If we look at the Search and leadership businesses, we talked a bit already about the positive second quarter year-over-year performance in Search.
We would expect for the remainder of this year and into 2027 for that to have year-over-year double-digit growth. There's going to be some seasonality in that. At the end of the year, you typically have a little bit of quarter-to-quarter kind of sequential softening, but we would expect from a year-over-year standpoint for that business to be in low double digits and then for interim to get back to growth in 2027.
And your next question comes from the line of Trevor Romeo from William Blair.
Just maybe a couple left for me at this point. So one maybe on the international nursing business. I think you talked about 23% growth in the quarter. You also mentioned the Embassy appointments maybe not keeping pace with the Visa dates. So maybe you could talk through those dynamics a bit. And are your expectations for growth kind of still the same? I think last quarter, it was high teens for 2026 and maybe low double digits for 2027.
Yes. Thanks, Trevor. Yes, the high teens for this year, yes, a lot of the placements that are impacting '26 now have been made. And so really, as we're looking to 2027, we've seen really good progress on the visa dates moving forward, actually more than we had anticipated. But we've seen some of the travel bans that existed. And more recently, in the last few months, we've definitely seen a slowdown. I probably want to call it out on the visa interviews. And so that is starting to impact some of the volume expectations for 2027.
So we -- at this point, we still expect to see growth in 2027 over '26, but that amount of growth is probably a bit lower than we would have expected. There's ample demand, and we have a very large supply of nurses that still want to come here. And there are -- there's discussion about improving the appointments, and that may open up a bit as the next fiscal year starts for the government.
But we'll have more line of sight as we get into the next quarter call on what that looks like and how it would impact '27. So again, sitting here today, we'd expect growth, but it may be more in the single-digit range from what we can see now, but there's still adequate time for that to improve, if we start to see things open up a bit more as well.
Okay, Brian. That's helpful. And then maybe just on the language services business, if you could give a little bit more update on the competitive dynamics there. It sounds like you're kind of expecting lower pricing on renewals coming up. But maybe just how many quarters are we from being fully normalized on that front? And what's your confidence that language services can be both a volume and a revenue growth market kind of beyond this normalization period?
Yes. What we're seeing competitively is very similar to what we've seen over the past couple of quarters. So it is a very competitive environment, and that's just flat out competition, but also that competition going after more limited demand because of some of the immigration policies. And so what we have been seeing and especially this last quarter, we had flat minutes growth and you saw about 8% pricing compression. We would expect that trend to continue for the rest of this year.
If we think about next year, we would expect the compression that we see in minutes pricing to be more muted in '27. We've worked through a number of our client renewals, new clients coming on. And so as we turn to 2027, we would expect with some new client wins with the rollout of our new tiered service strategy help offset some of that compression. And then the second part of it that we've talked about the past 2 quarters is as part of our new service tiered strategy, we have a more global workforce that we have been putting into place. The first part of that was the end of last year into the first quarter. The second part will be the end of this year. That will also be helpful from a gross margin standpoint for this business in '27.
And our next question comes from the line of Jack Slevin from Jefferies.
Maybe just to expand a little bit on that point on language. I guess all the numbers are very clear, and I appreciate all the color on that. Maybe just taking a bit of a step back and looking at some of the competitive actions that have taken place in the market, do you feel like the shift you've made here and the addition of Jaide sort of position you well moving forward for the next couple of years to sort of push past some of these issues and get to a more stable point, both from a revenue and margin perspective? I understand it's a pretty dynamic market, but I'd just be curious to hear about sort of what you're thinking from a product positioning standpoint.
I think there's 2 important things that we've done from a positioning standpoint. The first is this shared service model. And so what that really does is it enables us to be well positioned across the entirety of the market. And so we now have a solution set for clients that are going to try to optimize just on the cost per minute. And we have a very well-proven solution set for clients who are going to optimize for total clinical cost delivery of the model. And we are good in both of those. That has been very important. What Jaide does for us is clients are increasingly interested in a more consistent patient experience from the moment they come in until the moment that they leave. And so we are a leader in the clinical interaction space.
Jaide now enables us to be a leader in before the clinical interaction and after the clinical interaction. And so it's important both in terms of the patient experience that is important to clients, but it's also important because it helps them save money. So there are some very strong results that they've seen early days, taking discharge down from 2 hours to 15 minutes that become part of an important cost savings trajectory for clients as well.
Okay. Very, very helpful. And then another one to double-click on a little bit. I appreciate some of the comments and I think responding to Tobey's question. But I guess on the overall demand environment, I guess I just wanted maybe to frame it a little bit differently than have been asked previously. In 2024, we saw a pretty similar trend, fairly similar time frame where we saw a big spike in demand with sort of low rate on it. Can you maybe just double-click a little more on what you're seeing now that might give you confidence that this is less of an air pocket and more something that's going to sustainably drive some amount of volume as we roll into the back half of this year?
In terms of overall demand?
In terms of -- I'm thinking more Nurse and Allied, but yes, in overall demand.
I think if you look at where we started to see the acceleration inflection, it was in May. We've seen that accelerate as we have gone through the second quarter and even as we speak today. And so we need to see a couple more quarters of this continued demand pattern. But you're also going into a period where you typically get winter orders. And while we're just in the beginning stages of that, the indications our clients are giving us is that they'll look relatively similar to what we saw last year. And so I think where we are from a timing standpoint in that cycle, that would be typically a positive tailwind to seeing demand increase throughout the next couple of quarters. And we want to see 3, 4-plus consecutive quarters of that.
The other thing I think it's notable is that just the sheer number of orders isn't the only important factor, it's the quality of those orders and what rates are at. So when we talk about our average rate, that's on the placements that we're making. If there's a high percentage of orders that are well below that, they just sit there and they typically feel unfilled. So I think what we're seeing is a client that they have a more urgent need, they're stepping up with rates. We have more orders with rates that are attractive enough for us to be able to place into. And that's why you're seeing our fill rates improve and the volume pick up as well. So I think that's something that's different where more clients were testing the market 2 years ago with really low rates and they just could not be filled. We have a higher percentage now that have, and even though the overall average rate has not really increased, the number of orders that we can fill at that rate have.
That ends our question-and-answer session, I will now hand the call back to Cary Grace for final comments.
Thank you for your interest in AMN Healthcare, and a huge thank you to the AMN team members and clinicians who ensure strong quality care every day in our health care system. We look forward to giving you updates next quarter.
This concludes today's call. Thank you for participating. You may all disconnect.
AMN Healthcare Services, Inc. — Q2 2026 Earnings Call
AMN Healthcare Services, Inc. — Goldman Sachs 47th Annual Global Healthcare Conference 2026
1. Question Answer
Okay. We're going to get started here. So we're very pleased to start out the health care services panels at the Goldman Sachs Conference. I'm Scott Fidel. I'm the health care services analyst here at Goldman. We're really pleased to have our first panel for health care services from AMN Healthcare. And here from the company, we've got Brian Scott, Chief Financial Officer; and Randy Reece, VP of Investor Relations and Strategy.
We're going to do a detailed fireside chat. I have plenty of questions. First of all, I want to welcome you, and thank you for coming to the conference. And Brian, I thought maybe just kick it over to you and just give you a couple of minutes if you want to just introduce the company and yourselves and sort of set us up for the Q&A.
You got it. Thanks, Scott. Thanks for having us here.
You're welcome.
So yes, AMN Healthcare has been around for 40 years now, one of the pioneers in customer staffing, started as a travel nurse company, but now today have the broadest set of workforce capabilities serving the health care market exclusively. We provide kind of a total talent strategy for our clients, helping them plan, predict their staffing needs and kind of optimize their total talent strategy.
As you know, in health care, labor is typically the most expensive part of their P&L. And so we can make a significant impact if we're doing our job well. We provide both, like I said, analytics, planning capabilities, and then we can bring the full fulfillment along with that, both temporary staffing as well as permanent placements.
We serve predominantly the hospital market, but we serve really all endpoints, whether it's acute and post-acute and that non-acute growth has been a big part of our growth strategy as well.
We've been a public company since 2001. Revenue is between $2.5 billion to $3 billion right now. And the market, I'll talk about is just -- it's gone through obviously a pretty significant cycle with COVID. There was a significant increase in the staffing TAM for the industry up to about $70 billion. And now we're at somewhere closer to a $40 billion TAM as we've now cycled 3-plus years out, and we've hit this point, we believe, of more normalization.
Where was that pre-COVID?
Pre-COVID, it was about a $30 billion.
Yes, it's a little under $30 billion.
Okay. We grow through out of it. Yes. So it's still -- if you look -- if you kind of take out the spike of COVID, it is a growing TAM, right, for all the things you think about with the aging of those population, increased utilization of health care and then just some pricing increases, but it just had that large increase. And so there's been a lot of structural changes in the way we operate the clients since then, but it's a significant market and growing as well.
And we see opportunities both with our fulfillment capabilities, but now more than ever using technologies and underpinning to both help our clients plan better, more effectively, but also use technology to enable our services and now more so like many companies with AI and how we actually run our operations internally as well.
Well, that's great. Great setup there. And there's just -- it's such a great actually company to start out at the conference because you guys sit really at the intersection of so many key trends in health care and have really since COVID. And it's -- I know it's been quite a roller coaster ride for the company in terms of being so levered to those -- to that sort of COVID cycle that we've seen in terms of the demand trends, which really brings us to, I think, a really important moment right now, given that this year, there's a lot of focus on health care utilization.
And after several years of having a pretty robust utilization backdrop after we had sort of the COVID sort of drop. And then we had the post-COVID just sort of -- as you know so well, just that sort of recovery. But then it seemed that we settled into a pretty aggressive still consumption environment that felt like a little bit more post-COVID and sort of returning to some of the more traditional drivers, the traditional inputs of utilization. But it feels like this year, we've maybe turned the corner a little bit the first quarter. Clearly, there was a step back, but also some seasonal factors [indiscernible] from my coverage of the hospitals and managed care has sort of not bounced back from the second quarter.
But I want to talk about it in the context of your business and sort of demand trends. So maybe if you could sort of walk us through -- and again, not asking you for like the most recent sort of stack, but that sort of the backdrop that we're talking about across your different service lines in terms of how you're seeing that demand environment shaping up in 2026?
Sure. Yes. And I'll talk a little bit -- I'll start with nursing because that's usually where everybody goes, but I'll give some other color on that, too. But the demand -- both demand and pricing have been relatively stable for the better part of the last year plus. So we -- if we go back to the beginning of 2025, our travel nurse demand was actually like about 30% higher than the prior year. Then you came into the second quarter.
And at that point, bill rates were still -- there's still some clients attempting to keep rates low. So it's hard to fill all that demand. But then we got into the second quarter and you had the tariff announcements and then you had the tax bill, which both had a kind of a dampening impact on demand across -- I think it just kind of slowed down buying decisions across health care and other industries. And so that impacted us for several months in the middle of last year.
But then we had a steady improvement in demand, strong winter demand orders as well. And so actually, our first quarter travel nurse volume was actually up for the first time in over 3 years. So that's -- we think that's just another sign that underneath some of that just kind of external influences going on that, ultimately said patient volumes are still higher. You need clinicians to the bedside to deliver care.
And so when we got back to kind of normal conversations with clients, we saw demand pick back up again, and it's remained back up above prior year levels for our travel nursing business, improving our fill rates, speed to fill, and those are -- that's built on several years of initiatives to improve our fulfillment capabilities, and that's flowing through. So at certain demand levels, we could just fill more of those orders.
Allied demand has been up since the beginning of last year. And so Allied is really going to be kind of anything that's not a nurse or a doctor. So the therapy disciplines, imaging, respiratory lab. And then we also serve into the K-12 schools market as well. And Allied demand has been very healthy since the start of last year. It turned -- our volume in Allied turned positive also in the first quarter and see that trajectory continuing going forward as well.
The only area where we've seen a little bit of a slowdown is on the physician staffing side. As we entered the year, we've seen more stability in demand year-over-year for a decade plus in physician staffing. Still see really positive trends there, but there was a little bit of a slowdown in demand, and that's impacted our volume. We may talk about that a little bit later as well. There are some other influences that we can go deeper on to.
But I'd say the general backdrop, as you said, is you still have increased patient utilization in hospitals, both acute and nonacute. Although it's slowing down this year, it's still up year-over-year. And that's a healthy backdrop for us. That's not the only driver of demand for our services. It's really about supply-demand imbalances, if they have higher turnover, other factors that influence the utilization of our staffing services. But certainly, a positive volume environment is a good backdrop for us as well.
All right. Okay. Well, so that's an interesting sort of start in terms of still seeing positive growth, albeit maybe some moderation in terms of the backdrop. Maybe we could talk about, sort of drill into some of the underlying dynamics that have been in focus. And to the extent that you see them, I'm sure you do, because I mean, you have such a sort of a broad and deep perspective on what's going on across payer classes and across service classes, and then in terms of different types of facilities.
And so one of the things that's clearly been sort of a key sort of focal point has been the exchanges and how that market is adjusting post the sunset of the enhanced subsidies. It was a little sort of interesting because in the first quarter, we still had some false positives, I guess, would be the way that, I would sort of put it in terms of still grace periods. You still had sort of payment effectuation period. So the market felt like it still was still sort of relatively sort of unchanged or consistent.
But it feels like now sort of in the second quarter, this is where our expectation is that we'd start to see some more clear signs of that sort of normalization that sort of as we move towards those expected sort of 25% reduction in the exchange market. So why don't we start with that? Why don't we talk about the exchanges, maybe talk about how much that sort of, I guess, just even interacts with your business lines, and what your perspective is on sort of how that market is evolving?
Yes. I mean we pay close attention to, obviously, all those factors, whether it's the exchanges, reimbursement, any external regulatory or government influences. It doesn't directly correlate to demand for our services in most cases. We're not hearing a lot from clients about the exchanges influencing their buying decisions for our services. And I think it's -- there are other factors in play here. When you're thinking about your staffing models, even if they're -- our clients are dealing with the reimbursement environment and how they're going to be able to make sure that they are operating profitably, they're still again going to need clinicians to the bedside.
So I think for us, it's how do we ensure that we're delivering value. And I think it gets back to the tools we have around workforce planning, what's the right mix of permanent and contingent labor, where does flexibility actually become more cost effective for our clients. And those types of dialogues are more important than ever if they are dealing with these challenges of potentially increased reimbursement issues and/or lack of reimbursement from more patients coming in that may not have coverage. And so that's where we have to drive our value more than ever.
And so that has not been a direct influence. And if anything, again, if they're looking for more flexibility to ensure that they can optimize and operate in the most cost-effective way possible, we can bring a lot of those insights. And our -- what's interesting is that coming through the cycle and the pressure that clients have put on our industry around bill rates and bringing them down post-COVID, is that the premium they're paying for contract labor is at the lowest point to an all-in permanent labor, like a permanent hire that it's been historically. So it's -- by our internal measure, it's a single digit, somewhere between 5% and 7% right now differential. Yes.
Exactly what we see in market has been in terms of percentage of coverage.
Yes. So that -- if you're a client and you're like, do I want to bring on more permanent staff, which is more of a fixed cost or do I want to infuse a component of contract labor and that differential is only 5% higher than the all-in cost of a permanent nurse.
There's a third-party study done by KPMG that came out a couple of months ago. And by their calculation, when you look at all the components of permanent hiring, so the hiring costs, turnover costs, training, that practice, it's not just the hourly rate. Contract labor per hour is actually lower than permanent staff. And so that's where that -- if we can help our clients understand that and plan and staff appropriately, we can help them reduce their overall costs to navigate through this reimbursement environment that's changing pretty rapidly.
I don't know, Randy, anything you'd want to add on that?
Yes. If we go back to what happened during the pandemic, first thing out of the gate, health systems laid off recruiters in the spring of 2020. And then towards the end of the year, they had an overwhelming rush for hiring. They've actually -- they actually hired very aggressively from 2021 on, but it was about mid-'22 when they stepped it up to another level. Previously, the aggressive hiring didn't seem to make much of a difference, because the attrition rate was so high. Working in the acute care environment during COVID was not a pleasant place to be. But there was a virtually unlimited budget for permanent hiring from about mid-'22 through the end of '24 or so.
Last year, we saw some change in sentiment that was amplified, I think, by administration actions. And then all of a sudden, our clients are wondering, should I put this, this is essentially a fixed cost and taking on another permanent worker at this wage level. At the time, nurse wage inflation was running 6%, 7% year-over-year. It was a very competitive labor market for nurses.
Since our clients have backed off, and any other time in history, I would think, well, they're reticent to hire wouldn't be good for us, but they still have need to hire. They just are hesitant to hire more permanent staff. So it's a really good alternative we're providing where they can take on the cost for as long as they need it and let it go without any layoff costs.
Great. I want to stick on demand because there's a number of things to talk about. And I mean, just demand and supply, I mean -- and then maybe some of the technology stuff that's probably where we're going to spend our time, I think, for the most part and then sort of whatever else we have time for.
But a couple of other things I definitely wanted to ask you about on the demand side. And maybe we'll go right to that -- the physician staffing trends. You had sort of teased that up a bit in your comment. And in particular, for us and what we focus on a lot are -- have been the trends in hospital-based physician specialists. And a very sort of tightened balance between supply and demand that's has put a lot of expense pressure on the hospitals that we cover.
And it's been really interesting over the last couple of years how -- and it feels like -- and would love your observations on this, you guys probably have an amazing perspective, but like that we've cycled through almost every specialty sort of having their shot at goal, right? And sort of getting that sort of big boost, but then continuing to have these significant increases. And even in some of our recent interactions with the hospitals and some of the visits that we've had recently, they've continued to call out these pressures remain significant.
So from your perspective, maybe talk us through maybe against that sort of construct around like have we been largely sort of cycling through all the specialties, but how, I guess, sort of structural would you say this is at this point? And how do you develop strategies to potentially address and provide some relief into the system and help to solve this key challenge?
Yes. So thank you. With physician staffing, we provide both permanent placement solutions. So our -- we have the largest physician perm placement business in the industry. And then on the temporary side, you locum candidate and we staff across all those specialties, subspecialties and primary care, et cetera. That industry on the staffing side was much more consistent over the last decade plus. It didn't have the big spike and come down like you saw in Nursing and Allied. It's just been a steady grower as you have this aging physician population and just these persistent shortages across specialties. And so that's always been a good backdrop for the industry overall. And expectations are that's going to continue.
I think the rate of growth is slowing down in part, because rates have gone up, again, clients are more focused on it. And so -- but the underlying trends, I think, are favorable. And you're also seeing behavior changes with more physicians looking at locums as a part of their career journey, whereas historically, it was kind of skewed towards end of career physicians that maybe wanted to extend their career, work part time, not have to deal with the administrative burden or if they were coming out of selling a practice, they just wanted to provide patient care. Now you see a lot of early career physicians as well doing locums.
So I think the underlying backdrop, there's some commonalities to what you've seen in even nurse and allied staffing. We have physicians across their entire career at different points wanting to provide the service. What we've also seen from the buyer side, though, is a greater focus now on what they're really spending. Historically, in hospitals, a lot of the buying decisions were made at the unit level, different groups remain locums purchases. You're now seeing more of that being centralized like we've already had for years in Nursing and Allied.
And so we've actually been trying to support that in how to help our clients, there's a lot of spend here we can -- let's help you get your arms around it and control and optimize it more effectively. And so that trend, I think, will play into our Workforce Solutions strategy. Our MSP programs are vendor-neutral and the technology we've built to be able to support better visibility and utilization of spend. And really, we think we're at the apex of being a thought partner to our clients.
We are -- if you look at the 2 largest players in the temporary physician space, they're typically going to be top of market on bill rates. And they're making a higher margin. And so what we've tried to tell the clients is if you can -- let's get your spend more under control. And if we actually can provide more of the staffing for you, we don't have to lower our rates to do that. We can immediately save them money, because they're moving from the most expensive option to something more cost effective. And then we can layer in our perm placement services as well.
And again, let's find the right mix between if you have persistent shortages you're using locums for, let's help fill those jobs, and we'll help you recruit more permanent positions -- technology and permanent solutions, that's going to help our clients drive more cost savings there as well. But those underlying trends you started with are here and they're going to get worse, especially at the specialty level. And so anything you can do to create more options for physicians to extend their careers, move around where they're needed to fill the largest voids, that's going to be really important to make sure that patient care is being delivered as well.
And maybe just to stay on this, can you give us a snapshot in terms of, I guess, sort of 2 parts. One, where are you seeing right now the most particular tightness in terms of specialties? And then when you think about what you said in terms of these trends are only going to get worse, similarly, where do you think, as you look out to specialties, where you think those structural constraints are going to be the most observable?
Definitely, #1 with the bullets mental health. The AMN mental health...
100% agreed here.
The employment in the U.S. has grown at an astonishing rate since 2019 and hasn't flagged a bit. That is a couple of levels above everything else. In our latest -- just review of specialties, the rest of them were fairly bunched up. There's -- I think that Brian was talking about how we help clients understand how much they're actually spending. If you go across the industry, where health systems account for nurse practitioners, physician assistants, CRNAs, varies greatly. Sometimes they're in the direct cost of sales. Sometimes they're in professional services.
A lot of clients don't treat them the way they treat the rest of the positions, but that is the fastest-growing area of spend has been for the past 10 years. So that is -- those are areas that they're lower bill rate. The labor supply hasn't been extremely difficult because the population of the specialist assistants has been growing 8% to 10% a year. They're just slowly being siphoned off of the nurse pile and upskilled.
That's a completely different set of issues from the traditional specialties, which all are very hard to recruit and people don't move very quickly to fill the lifestyle element and the ability to use elder physicians in a flexible way, still keeps those specialties viable.
Yes. And it sounds like the last couple of quarters, at least we've been radiology seems to be in the -- at the sort of that tip of the spear.
Yes, we can see that in Allied too, where our imaging adjacent demand is very strong.
Yes. I want to follow up though on the mental health point because this is something that we've been very focused on and sort of one of our sort of mega themes that when we had launched coverage on managed care and hospitals in October, now we've been initiating coverage on a number of sort of provider stocks, including, for example, some of the outpatient like LifeStance, for example. And one of the themes that we had sort of focused on was around our view that we're still in the early -- very early innings of a long-term mix shift from inpatient to outpatient and non-outpatient, sort of everything but on mental health sort of similar to 20 years ago, right, when we had it in sort of acute care.
And certainly, it seems that sort of the market trends are seem to be supporting that with Universal Health announcing their acquisition of Talkspace. And -- but you guys probably have an incredible vantage point around that in terms of -- because the data is really tough. This is an area where like we have so much data on so much of health care. But when you get into behavioral, to mental health, particularly in that massive outpatient sort of multi, sort of compartmentalized categories, the data is very sort of scattered.
So maybe talk about that. Are you guys really seeing that trend playing out in terms of that? Are you -- in terms of that mix shift playing out from inpatient to outpatient at this point, and maybe where you're seeing across sort of outpatient or digital? I mean, obviously, we had sort of the massive spike, right? And -- but it felt like of all of the different sort of virtual categories that behavior was the one that sort of stuck at the highest sort of go forward, which makes sense, too. But of all the other sort of dynamics, I know there's a lot in there but hopefully you...
I agree though. I mean you still see a decent amount of demand for virtual mental health care. And part of it is, yes, for convenience, it's also just getting access to the right providers in different markets can be very challenging, especially you get into rural markets. And so we certainly serve some of those -- like some of the virtual care providers as well as the acute side. We serve both acute, post-acute. One of our large contract wins more recently was with a state system that is providing mental health services. So a lot of psychiatry and other related services. And that's just, I think, an indication of the high level of demand that it's an area of focus for us to grow as well, particularly in the non-acute.
So we've -- on the nursing side, we've been kind of more anchored into the acute care. But when you talk about both Allied and physician services, we really serve a multitude of markets, the traditional acute, but a lot of it is non-acute settings, whether it's -- you said it could be outpatient, behavioral health centers, virtual physician practices, et cetera. And so as you follow that trend and you want to provide that point of care, Scott, like I said, we can bring the staffing and where it's needed most, and we definitely agree this is an area that will continue to grow.
It would be helpful if we could get some standardization of licensing. That's one of the things that providers have to juggle as you're in this state and who can I bring in my pool of virtual counselors or whoever that is eligible. That's probably -- it's definitely one of the main difficulties in staffing those engagements.
Yes. The regulatory structures are just not mature, right? And...
Some of them are institutionalized by the groups as well because they want to -- I mean shortages are also good. So there's, in terms of negotiating, finding the right balance that's going to serve patients the best way possible, that's always going to be a push pull as well.
Yes. All right. One more in demand and then we'll move to supply. But we have to -- this is one we have to address, which is the Medicaid dynamics and sort of both on the look back and then what's ahead, right? So on the look back, clearly, we've been in this compression phase because of redeterminations, and which sort of, I think a lot of the thinking in the industry was that, that was going to sort of wrap up last year and Medicaid market would probably stabilize.
But from our vantage point, the market -- overall Medicaid has continued to compress somewhat even into '26. And then looking forward, clearly, we've got some major regulatory aspects from the big and beautiful bill (sic) [ One, Big, Beautiful Bill ] that are going to be significant. And we're getting the proposed regulations now, which are significant with Medicaid now state-directed payments and then also with the work requirements. And I'm sure that as you think about lining up sort of your capacity and your resources sort of analyzing these end markets is an important aspect of it. And so maybe bring us into your thinking on that.
Yes. And it goes back to the earlier conversation. It's just to be clear with AMN, we don't have any direct reimbursement risk. We're billing our clients for providing our services. So they're stuck with the difficult challenges -- and so again, our job is to be that thought partner to help them do that cost effectively. We are -- a lot of our largest clients, they're large health systems and they're, in many cases, more in the urban areas, and they may extend into suburban and rural areas, but they're, in most cases, profitable and growing as well.
They're likely to be rolling up more as some of these reimbursement challenges impact smaller hospitals, community hospitals, more rural. And so they're going to be looking for these larger partners to help them drive more cost efficiency as well. So we can partner with the larger systems to help navigate through this reimbursement environment because it's going to limit access to care, if not done accurately.
And then the other thing we're looking at is how do we serve both acute and post-acute because some of the care is going to have to move outside of hospitals because it's a lower cost setting. And so if there's lower reimbursement, they have to find a way to deliver this care in a more cost-effective way. And so that's a big focus for us. Again, as I mentioned, our Allied business is already serving a much more diverse client base, both acute, but also stand-alone imaging centers, stand-alone physical therapy. There's a lot of different ways that we can serve clients with those services. And we're doing the same with Nursing, looking at other endpoints where there's been more utilization, and it's partly to navigate through reimbursement changes.
And so that's where we look at is there's increased utilization of health care over time, what are those points of care going to be? And then how do we partner with the right clients? So that we can kind of make sure we're there to help them in the most cost-effective way possible. But again, thus far, our clients talk about these challenges directly. But at the end of the day, they're also asking us then, well, how can we make sure we bring our workforce in the most cost-effective way to offset any reimbursement changes that are occurring.
The hospital industry has been gating census ever since the pandemic, trying to get their effective capacity to align with their labor capacity. So they've been squeezing off some demand for the past couple of years, probably not as much -- so now census is going to look like. They're concerned about what their payer mix is going to look like. So that's the #1 priority is control over costs.
And we happen to be sitting here at a pretty advantageous position in terms of our relative cost to permanent hiring. There's a couple of other elements that you as a hospital analyst should be aware of. Hospital industry rapidly managed down average hours worked over the past 2 years to the lowest level since 2003, just an abrupt change. If you look at the chart, it looks like this and then poof. And it squeezed about as much out of that as they can, minimizing overtime...
And is that broad nurses in particular or just across all?
Clinical -- you can look at data from a clinical perspective and you can look at it in total.
And that's both on the permanent side as well as on contract labor.
Just to clarify, so that's staff rates?
That lever is maxed out. Wage inflation right now is running at a very slow level, 2% to 3% if they want to push hiring a little harder, there could be some resistance in terms of price to push more of a war for talent, which is just going to increase their wages overall, which then permeates through their entire wage base. So that's...
And that's across all facets to these rates at this point?
Yes. And that's where we can -- again, if they slow down hiring and you start to see wage growth decelerate, if they start to try to push the permanent hiring again, you're likely to create increased wage inflation, which then is going to be a larger cost impact. So...
And they're even sitting at a long-time extreme in terms of supervisor to supervised ratios as well. So in a lot of these ways, they've squeezed about as far as they can squeeze and they need another avenue of flexibility.
And maybe we can pinpoint into nurse supply. And maybe put it against sort of the construct of sort of maybe pre-COVID and sort of then -- let's just sort of -- let's not even sort of go towards COVID. But the structural sort of long-term secular trend there, like first of all, I guess, where are we now relative to, I guess, that pre-COVID trend line that we were talking about? And maybe what are some of the sort of the key sort of upside and downside sort of risk factors around Nursing and Allied?
I think the supply environment is constructive for us. And COVID, it is important because you had a lot of nurses that came into the industry because the pay rates were up so high that would have normally not have come into the industry. I think we've kind of cycled through long enough now where all those clinicians have kind of gone back to permanent jobs. And those that are looking for this lifestyle of this industry is part of their career.
What would you say sort of peak, maybe what was the percentage that they were representing at?
It's hard to say exactly what percentage, but I do know that we went from about 40,000 travel nurses to over 150,000 travel nurses within a couple of years.
And now we are at?
And now it's more like a little under 60,000.
So it's still a larger market overall. But I think it's really about finding that right pricing point that allows us to offer the right pay packages. And there was actually an article in the journal about 1.5 weeks ago about travel nursing its quite -- well it's a good read, because it really focuses on all the things we always highlighted as the reason. It's not just pay. It's the ability to build your skills, live in different markets, kind of maybe test a place before you go into a permanent hire.
We kind of back up a lot of those buying decisions, but we need to have just a market clearing pay rate. And so that's where kind of where clients are getting bill rates to the point that allow us to fill those jobs. When we have bill rates that are appropriate, we fill jobs very quickly over time.
Well, I could have easily gone a double session, but I don't know if we have the room. So I want to thank you guys so much for joining us, and I hope that the conference goes really well for you.
Thanks, Scott. Thanks for having us.
Thanks a lot.
AMN Healthcare Services, Inc. — Bank of America Global Healthcare Conference 2026
1. Management Discussion
Right. I want to thank everyone for joining us. It's my pleasure to be hosting this discussion with AMN Healthcare. With us today, we have Cary Grace, who's the President and CEO; and Brian Scott, who's the CFO of the company. I don't know if you have any prepared remarks or just jump right into Q&A.
Jump right in.
All right. Let's do it. So...
I know that we're the last slot between you and flights home or going out to dinner.
Yes. So all right. Let's do it. So I guess when we think about -- there's been huge ups and downs in this industry over the last -- with COVID and post-COVID. So where do you think we are now from an overall demand perspective across the key business lines?
Yes. So for perspective, and I'll give you a couple of numbers. I think we'll paint the picture of the generational cycle that we just went through in the pandemic in the industry. Going into the pandemic, our target TAM, total TAM available was about $24 billion. In a little bit over 2 years, it went up to $70 billion. On the other side of the pandemic, it really got to about $34 billion, $35 billion. We've seen some growth from there. So if you go back and look at from the original point to now, it's a great growth market.
If you look at from the height of the pandemic, when you just had a huge surge in demand, we had a reset that we've been going through over the past couple of years. We've really seen a lot of stabilization in demand. So the things that we look for in stabilization are things like overall utilization of contract spend, bill rates. And so we've seen stabilization in those metrics in the case of bill rates for a couple of quarters now. What we're seeing largely in our businesses, there's a little bit of variation in it. But in the business that was most impacted by the surge in the pandemic, which was our Travel Nurse business, we actually saw a very good start to the year.
Some of that was some stabilization of demand. It was down a little bit, but certainly stabilizing relative to what we've seen. But for AMN, we have been executing extremely well on the demand that's out there and significant improvements in our fill rates. So for us, we got off to a good start in our businesses. We started to see businesses for the first time since the pandemic return to year-over-year growth. So we had several of them return to year-over-year growth in the first quarter. And we would expect more to return to growth as we leave this year and into 2027.
Yes. So I guess when you think about the bill rates and the -- I think you said the contract spend, can you give us some data points on that? So like are we back to 2019 levels? Or where do you think stabilization -- stabilization happening at a higher level than that? How do you think about that?
Yes. Well, bill rates are higher than they were in 2019. But another way to measure is, what do you -- you look at the bill rate levels, and you would expect some normal increases on an annual basis. What we haven't seen is it keep up as we reset down, it's come down more than you'd expect considering the rising wages. So if you look at perm wages have gone up probably 25% over the last 5 years. But if you were to go back to our 2019 bill rates, we're probably up more in the mid-teens.
So that's where I think you've seen still a competitive environment some compression on margins. And so we've seen a lot of push from clients to try to get rates back down, which was very appropriate coming off the pandemic. But I think it's probably come down more than it should. And so we've been in this point of stability in bill rates for the better part of the last year. And I think on the demand side, as Cary said, we're executing well in the demand that exists. If you -- when we start to see bill rates improve, I think that will be more indicative of a greater urgency from clients to bring in more contract labor.
And I think as we progress further with the slowdown in permanent hiring that's gone on, their desire to not continue to perpetuate high wage increases on permanent staff because that's very costly long term. I think that's when you start to see them relook at contract labor at the levels, particularly at the levels -- the bill rate levels right now as being a very smart alternative because it's -- you're paying little to no incremental cost for that and you buy a lot more flexibility and you actually help manage your overall cost of labor.
And the other part that I'd say is for those of you who aren't as familiar with who we are and what we do, we have very intentionally built a platform, both in terms of solutions, ranging from traditional staffing in every type of clinical role to enabling technology across every type of clinical role. We also support nonclinical. And we do it -- we support permanent staffing, kind of what we call core staffing as well as contract. And so we have a really unique view when we go in and partner with clients because we're not trying to optimize for one element of their workforce. We come in and we get a really good sense with them about what they're looking at and rebuilding their workforce.
And so Kevin, to your point, when you think about where we are in stabilization, when we talk to clients, many of them are at or in some cases, below their contract utilization rate that they were at pre-COVID. Now there's a wide variance of where any individual client is going to be. But there is a really big, very well-placed push coming out of COVID to rebuild your permanent. We benefited from that in our RPO business. And what we're seeing now, we're even starting to see some executives come back and say, it's actually more cost effective for me to have a more flexible completion strategy on my workforce, particularly with some of the uncertainty around what's going to happen in terms of utilization and I want to retain some of that flexibility because it's really not costing me very much to do that, if anything at all.
Yes. And I think when we often hear from the provider side of things, they talk about contract staffing as like a bad thing. Like how do you overcome that perception that like you could be a partner versus being like a temporary extra cost or something?
Yes. Well, I'll tell you a story because it happened this morning. So I was on with a very big prospect -- and one of the execs had come from one of our current clients. And so we were talking about here's how we partner. We have this -- we are incredibly unique because we support the totality of total talent solutions. We have case studies about it. We can talk about how we help you across the continuum.
And oh, by the way, we're the largest health care leadership and search firm. So when we say the continuum, we mean across the board. And so as we were talking about this, this exec chimed in and say, I just want to tell you firsthand experience, this is what they did for me. And they were a true partner. We were at the table. We had goals. We talked about how we were going to do that together. And so that is what -- and what I always want is not for me to be saying it or our people to be saying it, but for our clients to be saying it. Now are we completely there? There was a pretty big emotional overhang for the clients coming out of the pandemic because you saw just really, really significant spikes in bill rates. And everyone was working so fast.
People didn't really understand that it was predominantly going to the clinicians. And of course, it was. That's what it took to get people to travel and to put their health at risk. And so we monitor like how the health is doing overall. I think a lot of that emotional overhang has dissipated. They're still a bit of residual. We actually just did had AI go through and do a search at the latest American Hospital Association set of meetings that they had. And it was the first time in 3 years that you didn't see contract spend come up as one of the key terms.
But I will say now the conversations go back to contract spend is not the lever to solve your workforce challenges going forward. Just mathematically, it's not. And so now you're back to the real work of, okay, what are the things that we're going to do to create a cost-effective, sustainable, high-quality workforce. And it's not going to be one thing that you have to do. There's not a silver bullet. It's going to be multiple things. And the beauty of what we've built is that we have the multiple things. And so we have a very unique ability.
We go in on the physician side and don't just say we're going to help you with locum to maximize your revenue. We go in and say, we're going to help you get to the right staffing, and we have one of the largest perm Phys businesses, and we have one of the largest Locums businesses, and we're going to come in and help you get to the right place. We have technology that can predict with over 95% accuracy what you're going to need. So you're not overstaffed. We have language access services, so you don't have to have clinicians on every shift that have multiple language capabilities. You can do it for a small fraction of the cost bringing in our technology. So we're really finding ways that are going to help our clients be able to bend that cost curve.
So you mentioned a little earlier that of your business showed year-over-year growth for the first time in Q1. And you said on the call that you expect basically all of the business to be back kind of year-over-year growth by the end of 2027. So can you talk a little bit about -- what's there now? What still has to come? And what gives you confidence that the things that aren't there now will have turned by 2027?
Okay. I'm going to go by memory and do this in partnership with my wonderful partner to my left here. So in Q1, I'll do a couple of things about Q1. Obviously, strike supporting labor disruption is one of our 20 businesses and solutions is incredibly important to clients who have it. We supported 5 strikes in the first quarter. We did an unprecedented level in the industry and for us, a strike support. So I'd say kind of thing one, all my comments are normalizing for not having that historic level of strike.
Our nurse business got back to year-over-year growth really driven by international. We had -- our Travel Nurse business is relatively flat. So we're kind of teetering towards getting to that growth level. Our Allied business is back to year-over-year growth. Our schools business has been growing throughout this, and we expect that to continue into the year. Our search business went back to year-over-year growth for the year. So those are the ones that we've already seen go to growth. We would expect as we leave the year, you had -- did I miss any?
You do wonderful.
So you add the ones that are going to -- when they're going to go.
Yes. So as we get further this year, as Cary said, the nurse -- the travel nurse business, international was up 11% year-over-year. So we're back to growth after a couple of years of decline with Visa retroressions. The traditional Travel Nurse business, we're like we're kind of right on the cusp. The guide we gave for Q2 would imply flat to maybe up a little bit in the second quarter. It's so close right now in the back half of the year will either be plus or minus a small amount, but the team is working hard to get there. So I'd say, if anything, we laid out our plan at the beginning of the year, we thought it might not happen in '26 it'd probably be in early '27. So I'd say in that one, we're at or better than we expected to be. And again, I just reemphasize on the allied part. It's our traditional kind of medical Allied, the PT/OT, imaging respiratory. In fact, in the first quarter, all of our -- like the different categories within that were up for the first time in quite some time because respiratory has been on a multiyear decline kind of coming off COVID as well.
So really good performance there, and we think that will continue as well. Our -- where we're a little bit off would be the interim business, which is stable, but we had a little bit momentum to start the year, and it slowed down a little bit, but there -- we've got very deliberate actions to get that to growth. It will probably be in the beginning of '27 as well. The other one, Locums had a slower start to the year. we expect it to be back to growth in the back half of '26. It's going to be more like a first half of '27. And then our VMS and Language Services businesses, they'll both be also in the early part of like first half of '27.
I wouldn't say that there's any big surprises for us there. We've got, again, good -- we're more in a stable environment there. And if you look even our expectations through the rest of this year would be pretty flat revenue. And so as we kind of comp some of the easier metrics as you go into the first part of '27, it won't take much to get them back to positive growth. So as we laid out our longer-term algorithm of getting kind of mid-single-digit top line growth and being able to convert that into double-digit EBITDA growth, that's really more we look at that as being a back half of '27, as we start that -- start to get on that because that's when we'll have all of our business, we believe, into a sustainable positive year-over-year growth trajectory.
And so we think about what the company is going to look like, EBITDA margins like pre-COVID were kind of in that low double digit, maybe 12-ish percent range, then went up to 16% and then in the single digits. Where do you think that the EBITDA margins kind of normalize for you if we think about 3, 5 years from now?
So there's work to do. We -- again, if you take what we just talked about, the longer-term algorithm, it will obviously start to move our EBIT margins up. There are some structural changes in just the margin profile of our traditional Staffing businesses just because there's been more competition coming in and some of the pricing headwinds that we talked about earlier. We do think over time, though, we will see some gross margin improvement in both our traditional Staffing businesses and even more strategic growth in higher-margin services. we think we can get much better operating leverage on revenue growth. And that's really a function of already this really strong base that we've built of SG&A.
We can leverage our existing SG&A to higher revenue. And then longer term, as we make investments in operations, utilization of AI, we can take more costs out over time. And so I think we haven't really set a marker of an EBITDA margin target long term. I think that's when we get to a more sustained level of growth, that's when we set that out there, but we absolutely can chart a course back to that improving starting in '27 and continue to move up longer term as well.
And I think the thing that you saw in the first quarter because we had this really big demand spike coming from the strikes that we supported, is you saw the ability of the leverage off of our core platform. And so the numbers that Brian just talked about, and I'd say particularly the thesis around our EBITDA growth being double what our revenue growth is, you really start to see the power of that leverage in the first quarter.
Yes. So I guess when we think about the margin opportunity, is it more than on the G&A side? Or is it more on the gross margin side when you think about hope where you.
I would say we focus on the things we have more control over first, and that's -- I think that's how we operate. So at this point, I'd say it's more on the G&A and operating leverage. We absolutely will focus on how do we optimize our gross margins across all of our businesses. But there are -- we don't have that full line of sight into how, for example, the staffing gross margins will pick up over time. Hours worked is one we've talked about, that's still running at historically low levels.
Again, it's really hard to predict how much that will go back to where it was in the pre-COVID. If it did, that would be margin accretive. International is margin accretive as well, but margin. Yes. But we're not predicting that our Nurse and Allied Staffing business are going to go back to where they were in 2019. I think that would be a bit overoptimistic in this environment. But we would expect to see some gross margin improvement, but we -- more of it will come from operating leverage.
Talk a little bit about the competitive environment because obviously, it has been more difficult in the last couple of years, but it sounds like you've been winning share again in the first quarter at least. So like how is that going right now?
Yes. So a couple of things. When you go back to that $70 billion TAM that I talked about during COVID, it attracted a lot of folks into the space. And so whether it was companies that have been focused on physician, they got into nurse. So you really did see a really significant number of competitors either kind of broaden their aspirations in the market or come into the market. We've started to see some consolidation. It's still a relatively fragmented market just across really every solution that we play in. So we've started to see some acceleration of consolidation. There was a deal announced last week that had a kind of strategic consolidation piece of that announcement.
We've started to see some midsized players consolidate. We've seen some of the players who got into the market during this -- during the pandemic time period really kind of reestablish their focus and maybe some of their core capabilities. We've seen 2 or 3 examples of that. And so we expect there to be continued both competition and consolidation simultaneously. We did -- we talked about this a bit last year. When SIA put out market share data last year for the year before, we had maintained or grown market share in the vast majority of our businesses for the first time since pre-COVID. And so we look at how we drive that market share growth 3 ways. How do we win net new clients? How do we do more with the clients that we have? So we serve over 2,000 health care organizations. We have 20 solutions.
Our goal is ultimately to have 20 solutions with all those organizations. And then how do we fill more of the demand that's available. And so we made progress on all 3 of those fronts, and we will continue to drive. We still have significant opportunity to grow in all 3 of those growth levers.
So maybe that's a good way to pivot into the MSP model that you guys have. So how is that working? Obviously, there's been puts and takes about being part of an MSP during COVID and pre-COVID. So how is that going? What's the demand for that model now versus VMS or other alternatives?
Yes. So MSPs for those who don't know the space because we like to put a lot of jargon around it. It's effectively a supplier-led managed program. And the benefits that you have of that type of program is you have SLAs, and you have a group of partners who are very dedicated to supporting you in a world of what we think is going to be continued constraints on supply of clinicians. And so that is one popular model in the marketplace. That had historically been the primary service model that we supported. We did a lot of work 3 years ago to really strengthen our capabilities across the entirety of the market.
That included -- we had a very nice direct business, but it included a lot of work on our vendor-neutral, both platform and processes. We did a total revamp of our tech platform and our vendor-neutral. We've replatformed all of our clients in 2024 and '25. We've had very good response to that. And so we will -- we continue to see opportunities not just to grow our MSP model coming out of this reset in the market and where you're starting to see in pockets more demand for these clinicians. We do think that more will go to MSPs because they want the SLAs around it. That's great. We're phenomenal at supporting that.
We are phenomenal at supporting vendor-neutral. If you want a little bit more of a competitive marketplace for it. And if you want direct, we'll do that as well. So we still see -- if we look at our pipeline, just under half of our pipeline is MSP. So we're still seeing interest in that. And we also see continued strong interest in vendor-neutral as well.
I think one of the big differences for us now is on those vendor neutrals, we can -- we -- historically, even if there was our program, we didn't fill many of the orders. It was very, very low single-digit percentage of them. So we were missing out on all that demand. And again, we were we had a lot of MSP demand and we were winning new contracts. So it was -- it didn't really show through as much. But now in this environment, that's created an opportunity for us as part of how we're growing volume in what is a pretty stable environment, not a lot of programs moving in any direction. But as we improve our speed to fill, we're able to capture more of that demand in our vendor-neutral programs as well as in others as well.
So that's allowing us to take market share kind of everything neutral. We do think over time, as we win more accounts, not only does it drive incremental demand opportunity for us, but it is a platform then to really be able to cross-sell a lot more of our services. When you have a kind of deeper relationship, it usually then it opens the door for us to bring in whether it's our Locum services or interim perm services. So we look at that as another benefit of having MSP. We think it delivers significant value to our clients, but it also -- it creates a deeper relationship with them.
And one of the things that Kevin alluded to in MSPs is because we have built our chassis around a very high-touch model pre-COVID, when COVID happened and you had this demand surge, we didn't have all the automation to be able to fill as fast. We did a lot of work, as Brian just talked about and I talked about earlier. If we look back to the demand that we had really helped by the spike that we saw in the labor disruption activity on an hours adjusted basis, we were just a couple of percentage points off of the demand in COVID -- high point of COVID, and our fill rates were materially better. And so we had always been talking about we have a better chassis, we can automate, we have higher ability to fill in some of these surges, and we did.
So if you were doing low single digit and the vendor-neutral, what are you doing now?
We're doing high single digit in Nurse, and we're doing mid-teens in Allied.
And then when you talk about the cross-selling opportunity, what services make the most sense or where resonate the most when you -- I guess I'm assuming you're leading kind of with a nurse relationship and cross-selling to other things, but...
Typically, in our MSP relationships where we -- because of the SLAs, we tend to have a lot of contact and conversations and partnering with them. You almost always have Nurse. The very next big follow-on would be Allied. We're increasingly getting more Locums. It's been a strategic focus for us. Those tend to be 3 of the bigger areas. We had seen historically growth in our Language services program really without doing a lot of cross-sell into our current clients. That has been a focus for us, particularly over the past year, and we're seeing some traction in that. So the biggest areas that you would typically see would be Nurse, Allied, Locums, Language services. We love to have the interim -- love to have all the businesses.
We really like to have the Interim leadership because it helps us maintain relationships across the organization as we place those leaders in because we can go in and ensure that they have great leadership and great building of their bench. And at the same time, we can come in after replace the leaders and then help them execute their strategies.
And can you talk a little bit about the Language services business that was under pressure last year. It seemed like Q1 was maybe a little bit of a turning point there. So what are you seeing there?
Yes. It was -- last year was -- there was some industry shifts with one of the major competitors aggressively reducing price to take share. And I think it caught the industry a little bit off guard, including ourselves. And so the back half of the year, we typically would not only grow minutes with existing clients, but we would also have growth in utilization from new client wins.
And that really stalled out as we were kind of adapting to this competitive threat. They were large enough where it was making an impact, not just on us, but really every other competitor in the market. And so we've made a variety of structural changes in how we operate. And part of how they were able to bring the pricing down is they're not delivering the same quality of service, right? We typically focus really on having all of our clients have service level agreements where there's a very quick speed to a connection.
There's technology that comes as well. And so there are certain clients that still want all of that, but there's also a buyer subset, particularly when procurement is involved, where they were willing to take -- they want a lower price, even if that meant a trade-off of having no -- little or no SLAs. And again, that then implies a longer connection time. So we've -- for those clients, we now have a service offering that kind of mirrors what that competitor has, which allows us for that buyer to be able to match that and deliver that service.
So as we've done that and even adapted or adjusted some of the pricing for existing clients down, you've seen the impact on our pricing our revenue being down year-over-year. But now we've got this -- we do have the service offering in market. We went -- in the first quarter, we had about $6 million of new contract wins. That's more than -- significantly more than we had all in the back half of last year. So as those start to get implemented over the next couple of quarters, that's going to be upside revenue opportunity as well.
So it is still a very competitive environment, but we've now -- we've got a plan in place that we've started the first phase of execution on and seeing really good results. Our gross margins actually picked up a bit in the first quarter, and we think we're in a really good competitive position. And we still have more work to do in the coming quarters as we look at our cost structure, the blend of our onshore and offshore interpreters. And as we adjust that, we can actually continue to bring down our cost of sales to mirror some of the pressure we've seen on the pricing side. And again, it helps us then be competitive in winning new business, and we have a really healthy pipeline as we look to the back half of the year as well.
And one of the things that's capturing everyone's attention is AI. So can you talk a little bit about how you guys view AI? It seems like you're one of those names that has some opportunities, has potential threats. Like how do you balance those 2? And where do you see the biggest opportunity for you?
Yes. Let me answer it broadly, and then I'm going to piggyback on to because we get this question a bit in our Language services business as well. We look at AI as being incredibly important to operationalizing our future strategy, and I put it in kind of 3 categories. One is we sell client-facing technology. And so we are very focused on how do we embed AI into that technology, whether it's around candidate matching, predictive analytics, even just core customer support within our vendor management system. It's very important for us to have our client-facing platforms have AI embedded in it. We also look at how do we use AI to enable faster and better production of our team.
This has many, many, many applications. But the one that we rolled out most recently was our AI recruiter. We rolled it out in the middle of supporting these very large labor disruption events. And so think of it in a labor disruption event, it's accelerated everything of what we do. We have 4 days to recruit, in this case, thousands and thousands of nurses. And we use AI recruiter to get through typically what would have been a top of the funnel taken 3 days in literally hours. And then we were able to leverage our people to then do the completion strategy at the end. And so we were able to support this type of spike in demand at the highest level of fill rates that we've ever been able to do before.
And it was a lot of things. The automation I talked about, but from a recruiting standpoint, the use of our AI recruiter was incredibly important. And then we're using AI to enable our technology and ops. And so probably one of the first places that we saw really, really big improvements with AI was in development. And so we can now use in our tech development team, we are using AI extensively and the amount that we can develop at a fraction of the cost that even we could do 18 months ago is pretty astounding. We're using it in the operations team. This is Brian's kind of COO role around credentialing and other of our core operations.
So we think it's incredibly important. In our Language services business that Brian talked about earlier, the place that we play in Language services has a regulatory moat around it. And so you are required for reimbursement to have a human interpreter. And so that is where we play today. We think that there is an opportunity because we have these relationships to support the entirety of the patient experience who needs access to interpretation capabilities. And that is something that we are in process of starting to look at and build around how would we support that. And we would do that in an AI-enabled way outside of that moat that is regulated by having a human.
I think that's all we have time for. So thank you very much.
Thank you for having us.
Thank you.
AMN Healthcare Services, Inc. — Q1 2026 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the AMN Healthcare First Quarter 2026 Earnings Call. [Operator Instructions] 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 Reece, Vice President, Investor Relations and Strategy. Please go ahead.
Good afternoon, everyone. Welcome to AMN Healthcare's First Quarter 2026 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 and cautionary statements, including those identified in our most recently filed Form 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 with me today are Cary Grace, President and Chief Executive Officer; and Brian Scott, Chief Financial and Operating Officer.
I will now turn the call over to Cary.
Thank you, Randy, and good afternoon, everyone. We appreciate you joining us today. The AMN team made important achievements since the start of the year. The first quarter was defined by unusually large labor disruption activity. From an operational standpoint, it was a major milestone for AMN. We successfully supported several large events, 2 of which were long duration, while continuing to serve the day-to-day, showcasing our rapid scaling, disciplined execution, broad and deep clinician network and high-touch service delivery.
This experience also validated the investments we've made over the past few years and our technology capabilities, including our event management system and AI recruitment. Technology that enables coordination, compliance and real-time execution at scale, and it highlighted the strength of our mission-driven team working across the company. The energy and endurance of the AMN team, balancing event-specific needs and driving business as usual, were all inspiring, demonstrating all the values and principles that make AMN special.
For the first quarter, AMN delivered revenue of $1.38 billion, above our guidance range and consensus. Gross margin was 26.8%, well above our guidance range. Adjusted EBITDA was $166 million or 12.1% of revenue. The first quarter included $722 million in labor disruption revenue and $656 million in revenue from all other AMN businesses.
Nurse and Allied Solutions recorded year-over-year growth in traveler volume, excluding labor disruption travelers for the first time since 2022. Our Nurse and Allied Staffing businesses performed better than we expected in the first quarter, and are on track for continued strong performance in the second quarter.
Our international staffing business grew revenue by 17% quarter-over-quarter, [indiscernible] year-over-year. This was our first quarter of year-over-year growth in this business since the fourth quarter of 2023, shortly after the State Department implemented Visa retrogression.
Our leadership search business also returned to year-over-year revenue growth. While the revenues from labor disruption events are hard to predict, our ability to move thousands of clinicians to meet the urgent needs of our strategic clients delivered great value on a scale we could not have done just a few years ago.
Our solid performance in the quarter enabled us to pay down our revolver and increase our cash balance, improving our leverage ratio to 1.6x at quarter end. Our strong balance sheet positions us well in the industry to advance our growth strategy and drive value for our shareholders, clients and other stakeholders. While we view the labor disruption execution as a defining accomplishment, we remain focused on the underlying drivers that enable our long-term growth plan, broader and deeper client and clinician relationships, scaled service execution and technology enablement of our solutions.
In our Solutions segment, first quarter revenue for Nurse and Allied Solutions was $1.13 billion, our second highest revenue for the segment in company history. Beyond the labor disruption revenue and international nurse growth, travel nurse revenue grew 13% year-over-year and allied was up 3%. Bill rates and hours also moved favorably, with average bill rate up 6% year-over-year due to a surge in rapid response placements. Nurse demand has been muted, though demand in recent weeks improved to be flat year-over-year. Allied demand has been growing year-over-year since 2025. Our teams are executing very well at filling the available demand. For the second quarter, we expect Nurse and Allied Solutions revenue to be flat to down 2% year-over-year, including a normalization of the segment bill rate.
First quarter revenue for Physician and Leadership Solutions was $164 million, lower by 6% year-over-year. Locum tenens volume was down 9% year-over-year, and revenue per day filled was up 3%. Interim leadership volume was down, partially offset by an increase in pricing. Our search business was highlighted by strong growth in physician permanent placement and new executive searches. We continue to see locums clients focused on managing spend by centralizing program management and hiring permanent physicians. And we have both a healthy pipeline of local MSP prospects as well as a new locum MSP client in the quarter. We also renewed and expanded the contract with our largest locums clients. MSP volume was up year-over-year, and we are driving towards making MSP a higher percentage of our revenue mix.
Overall, locums demand has been softer, with more demand in the third-party channel, which is more competitive and harder to fill. Our lower fill rates in that channel more than offset our MSP progress. Similar to what we did in our nurse business to improve performance in vendor-neutral programs, we have initiatives in place to tech enable and automate our locums recruiting process to increase speed as well as adding more recruiters to enable higher fill rates.
Leadership Solutions has rolled out refreshed go-to-market approaches for executive and leadership search and interim to align with clients' current challenges, including accelerating health care C-suite turnover, rising demand for digitally fluid, data-driven leaders and developing sustainable workforce strategies. Operationally, the team is improving fill rates with AI-enabled candidate matching and enhanced tech and data capabilities to support our search consultants. In the second quarter, we expect Physician and Leadership Solutions revenue to be down approximately 6% to 8% year-over-year.
[ Quarter ] revenue in Technology and Workforce Solutions was $87 million, down 15% year-over-year or 10%, excluding the business we divested last year. Language services continued the rollout of our tiered service and pricing strategy, and we are pleased with our progress, including increased new sales wins and gross margin improvement in the first quarter. Our updated model enables us to serve our clients with the broadest set of language access services while delivering superior clients and patient experience and outcomes.
On our WorkWise workforce technology platform, we rolled out new AI-driven tools designed to help our customers fill roles faster and improve the quality of candidate matches. We added automated candidate scoring, improved search across open orders and available staff and made it easier to create clear job descriptions, improving speed and overall hiring efficiency. We already used our AI recruiter to deploy more than 10,000 clinicians in the first quarter. We also introduced supplier performance analytics, which gives clients more transparency into supplier quality, responsiveness and outcomes. Overall, these updates further differentiate WorkWise and reinforce our ability to help health care organizations make better workforce decisions and manage staffing more efficiently.
Our technology enablement has also strengthened our engagement with health care professionals. Our market-leading clinician app, AMN Passport, plays a critical role in how we improve the connection between client needs and the labor force. Over the past year, we increased the features in utility of Passport. And as a result, Passport users are up more than 30% year-over-year, with monthly active users up more than 50%.
Based on positive client reception, we are accelerating our go-to-market strategy for WorkWise beyond our current client base, and we expect this acceleration to support new sales heading into the second half of the year. For the second quarter, we expect Technology and Workforce Solutions revenue to be down approximately 14% to 16% year-over-year, which implies an improved sequential trend compared with the past 2 quarters.
Overall, we are encouraged by our start to the year, with some key solutions returning to year-over-year growth and plans for additional solutions to return to year-over-year growth this year and into next year. We remain confident that we are moving toward a business model in which we can sustain long-term revenue growth and grow adjusted EBITDA at twice the rate of revenue growth.
Our first quarter performance was a significant demonstration of AMN's capability to scale quickly and deliver at a high level, integrating technology, operational execution and a mission-driven team under intense conditions.
Great people are at the center of our mission and our culture. As we celebrate National Nurses Week this week, we are grateful to and for the tens of thousands of nurses we have the privilege of working with, who enable continuous, high-quality patient care delivered across a wide range of care settings and locations.
With that, I'll turn the call over to Brian to walk through the financial details and outlook consideration.
Thank you, Cary, and good afternoon, everyone.
First quarter consolidated revenue was $1.38 billion, significantly above the high end of our guidance range, driven in large part by labor disruption revenue, exceeding our guidance by $122 million. We also had better-than-expected performance from our travel nurse, allied and international businesses.
Consolidated gross margin for the quarter was 26.8%, above the high end of guidance. Year-over-year gross margin declined 190 basis points and sequentially, was up 70 basis points. First quarter consolidated SG&A expenses were $218 million. Adjusted SG&A, excluding certain items, was $205 million, up compared to the prior year and prior quarter, driven by over $70 million in costs related to the large labor disruption event.
First quarter Nurse and Allied revenue was $1.1 billion, up 173% year-over-year, up 130% sequentially. Excluding $722 million in labor disruption revenue, Nurse and Allied revenue was $405 million, up 8% year-over-year and up 11% sequentially. Nurse revenue, excluding labor disruption, was $254 million, up 12% year-over-year and 16% sequentially. The growth was driven in part by strong rapid response volume and associated higher bill rates, along with the international business recovery. Allied revenue was $151 million, up 3% both year-over-year and sequentially.
Year-over-year segment volume increased 3%, average bill rate increased 6% and average hours worked increased 1%. Sequentially, volume and average bill rate increased 6% and average hours worked increased 2%. The higher bill rate was driven mostly by the rapid response revenue that is not expected to recur in the second quarter. Nurse and Allied gross margin in the quarter was 25.1%, up 240 basis points year-over-year and 350 basis points sequentially as labor disruption and rapid response revenue had a favorable impact on the segment margin.
Moving to Physician and Leadership Solutions, first quarter revenue was $164 million, down 6% year-over-year and 3% sequentially. Locum tenens revenue was $131 million, down 7% year-over-year and 4% sequentially. Interim leadership revenue was $23 million, down 4% year-over-year and 5% sequentially, while search revenue of $10 million was up 4% both year-over-year and sequentially. Segment gross margin for the first quarter was 26.1%, down 120 basis points year-over-year and 140 basis points sequentially. The decrease in gross margin is primarily due to a lower margin in locums and a drag of 110 basis points from increased sales reserves booked in the quarter.
In Technology and Workforce Solutions, first quarter revenue was $87 million, down 15% year-over-year and 1% sequentially. Excluding the July 2025 sale of Smart Square, revenue was down 10% year-over-year, driven mainly by a decrease in pricing and billed minutes in language services. First quarter language services revenue was $69 million, down 8% year-over-year and 1% sequentially. VMS revenue was $16 million, down 18% year-over-year and 2% sequentially.
Segment gross margin was 50%, down 550 basis points year-over-year, driven by pricing pressure in language services and an unfavorable business mix. Sequentially, gross margin increased by 190 basis points, which included a 200 basis point improvement in the language services margin, reflecting the service model changes Cary mentioned in her opening comments. First quarter net income was $62 million. This compared with a net loss of $1 million in the prior year period and a net loss of $8 million in the prior quarter.
First quarter consolidated adjusted EBITDA was $166 million. Adjusted EBITDA margin for the quarter was 12.1%, above the high end of guidance and up 280 basis points from the prior year period and 480 basis points sequentially. Day sales outstanding for the quarter was 26 days. Excluding working capital effects from the large labor disruption event, DSO was 54 days, 4 days lower year-over-year and 2 days lower sequentially. Operating cash flow for the quarter was $562 million and capital expenditures were $7 million.
At quarter end, we had $551 million in cash and equivalents, with a large portion of this cash increase from excess client deposits were the labor disruption events. We ended the first quarter with $367 million in client deposits, of which we have already refunded approximately $250 million this quarter. Assuming the remainder of the deposits are repaid this quarter, we would anticipate having approximately $175 million in cash at quarter end. We ended the first quarter with total debt of $750 million and our leverage ratio, as calculated for our credit agreement, was 1.6x.
Moving to the second quarter outlook. We expect consolidated revenue in the range of $620 million to $635 million. Gross margin is expected to be 28% to 28.5%. Reported SG&A is projected to be approximately 23% to 23.5% of revenue, reflecting continued cost discipline, while supporting growth initiatives. Operating margin is expected to be minus 0.6% to plus 0.1%. And adjusted EBITDA margin is expected to be 6.7% to 7.2%. Additional guidance details are provided in our earnings release.
To echo Cary's comments, we remain confident that we have the team and strategy to deliver leading tech-enabled solutions that will drive sustainable revenue growth with improved operating leverage.
With that, operator, please open up the line for questions.
[Operator Instructions] Our first question comes from the line of Trevor Romeo of William Blair.
2. Question Answer
This is [ Melissa ] on for Trevor. I guess just to start out, what are conversations with the major hospital operators sounding like on contract labor today? Noticed that it's not being called out on the earnings calls anymore. So are you seeing any fill rate normalization going on outside of those crisis and strike type situation? I know you mentioned seeing it in some pockets last quarter.
Yes. Thanks, Melissa. Overall, we are seeing clients continue to focus on cost management as well as ensuring that they have the workforce in place to be able to support increasing levels of patient utilization. So those 2 themes have continued.
To your point, the conversation has shifted with clients where getting to more normalized, both utilization levels and bill rate levels of contract labor was a lever, a big lever coming out of the pandemic. That really has normalized, and we've seen stability for a couple of quarters now. The conversations with clients have really shifted back to what are the levers that we can use to more sustainably create a high-quality cost-effective workforce and gets into a more of a total talent type of solution platform, which we are well positioned against, and its conversations around how do I do more predictive analytics about what my needs are? How do I ensure that I am leveraging the talent that I have most effectively? How am I tech-enabling some of my solutions to be able to close some of the gap between increasing levels of patient utilization and staffing? So we have seen those conversations really shift back to what are the more sustainable total talent strategies that you're going to be able to utilize to support your patient growth volume.
Great. And then maybe if I could just squeeze one more follow-up. On the labor disruption revenue, is there any additional color you guys could give on the client relationships that you guys developed coming out of that large windfall? And just any additional revenue opportunities that came from that this quarter?
Yes. So we supported in the quarter, 5 labor disruption events, 3 of them were large, 2 of the 3 were indefinite. That was historic for us, that was historic for the industry. And when you go through those types of crisis events with clients, your relationships get deeper and stronger. It was an incredibly important moment for the clients that we were supporting in those events. And so we were able to do that successfully, help ensure that they were able to go through and deliver continuous high-quality care for their patients. And that is a very important service, not only what we did in the first quarter that took years of planning to get there, but what we would expect to do in future years with clients going through those events.
Our next question comes from the line of Jeffrey Silber of BMO Capital Markets.
In your prepared remarks, you alluded a few times to your rapid response revenues this quarter. Can you just remind us what the difference between that and your typical labor disruption revenues are and the impact on margins, et cetera?
Yes. Jeff, typically, they are shorter duration assignments, where the client is also looking for us to get somebody deployed very quickly. So that -- in this case, there was some kind of carryover between the -- or crossover between the labor disruption events and these rapid response orders. And so the rates are typically higher, but it's also -- it comes to that as a much higher pay rate as well. So I wouldn't think of it as much as a significant margin answer, but it does have an impact on the volume and higher revenue.
So we mentioned the bill rate being much higher in the first quarter. That was in part because of the mix of those rapid response orders that we had in the quarter. The underlying trend around bill rates hasn't changed a whole lot in the last several quarters, but it was elevated. And that's why we made a point of calling it out as we look at the second quarter, we expect the rates to normalize. But it was -- it's very valuable for clients because, again, they need -- they have that rapid need and we're able to deliver really high fill rates on those orders.
Jeff, one of the things that happens when you're in a longer-duration crisis, like 2 of the labor disruption events that we supported is, you can layer in rapid response. It's still an immediate need, but it is more cost-effective for the client. So it was part of a strategy that we were utilizing with clients to be able to really minimize the cost of them being able to support a long-duration crisis.
Okay. That's really helpful. Second, my follow-up question is just regarding the competitive landscape. You obviously saw one of your larger competitors looks like they're going private again. I'm just curious what you're seeing from those dynamics. Have you seen some of the smaller players leave, and are the larger players consolidating? I'm just wondering your thoughts on that.
Let me start and then I know Brian has touched on this as well. We've talked for some period of time that we expected there to be consolidation in the industry for a whole host of reasons. Coming out of the pandemic, you had too much supply of competitors. And as you continue to see the tech enablement of these services playing a bigger role, that tends to have a bias towards more scale players.
You've seen some of that consolidation pick up more recently. Obviously, there's announcement yesterday about one competitor, but you've seen some merging in some places, both of more traditional staffing companies, but also of some of the more tech-enabled types of solutions. You've seen over the past year, some workforce forms that had gotten into nursing, get out of nursing. So you're seeing it play out in a couple of different ways. But we would expect for that consolidation to continue.
Yes, absolutely. I think that's -- you said is taking a little longer, and we know that there's still some of our competitors that have -- are dealing with larger amounts of leverage, and they're working through that. And so I think that will tend to ultimately drive more consolidation as well.
And then some of the platform players, again, as they've consolidated, I think it's a reflection of many clients really looking for partners to help them more effectively manage their labor force and be thoughtful about the right mix and fulfillment. And so if you're purely just a platform player, you may be able to just deliver on some fill, but you're not really bringing incremental value to the clients because they're trying to really manage their costs in the most effective way. So we think that's an important part of our strategy. It's really being a thought partner with our customers to help them optimize their utilization of perm, contingent, how do we help them on both of those fronts. And I think that's -- more and more of those are the conversations and where we can really be a bigger partner for our customers.
Our next question comes from the line of A.J. Rice of UBS.
Maybe first, just to ask, you've had a lot of moving parts, the labor disruption, your comments about rapid response. When you look at the underlying market dynamics, do you have an updated view on whether you think the key areas, nursing, allied locum tenens, what is the year-to-year trend there? Is it growing? What would you say the -- when you normalize, what do you think the underlying market looks like these days?
So let me give you some comments about what we're seeing in demand, and Brian can kind of layer in. We gave a lot of numbers taking out labor disruption very intensely so you could get a good sense of where we are in the businesses without those events coming through. We feel good about how we started the year overall.
Nurse and Allied, you are seeing healthy demand in Allied, you're seeing particularly the past couple of weeks, an uptick in demand in nurse. So we're about flat year-over-year with where we were this time last year, Allied turned to year-over-year demand growth in 2025 and has continued. And so we see into Q2, continued strong especially fill performance across Nurse and Allied.
If we look at PLS, in locums, I made some comments in my beginning statement where we've seen weaker demand as we started off the year. We've seen a bit of an uptick over the past couple of weeks. But a lot of that demand structurally is in the third-party channel, where it's typically the most competitive when we have harder fill rates. We have a number of initiatives and a lot of successful proof points with what we did in that space in Nurse and Allied, and we have that underway in locum. So as we go through the year, we feel better about our capabilities in locums to be able to compete in that space and would expect to get to year-over-year growth in the first part of 2027. Search is already there, and we expect it to stay there in year-over-year growth.
And then if we go into the TWS segment, we talked about, both Brian and I, what we're seeing already from the service model rollout that we've talked about the past 2 quarters. We feel very good about how that's being operationalized in the outcomes. And we expect that, that service model improvements to continue throughout the course of this year. And for VMS, we would expect us to continue to onboard new client wins as we go through the year and get to year-over-year growth in 2027.
I appreciate that. Go ahead.
I was going to add, A.J., just as Cary said, we're -- the Allied team has done a really fantastic job both in our traditional disciplined with therapy, imaging, lab, and respiratory, all of them are up. And then our schools business continues to have really strong momentum, as we talked about in the last couple of quarters. And so both demand and fulfillment team is performing really well. And as Cary mentioned, international is back to the growth as well.
But on the -- so if you look at the Nurse and Allied segment, in total, excluding labor disruption, we're back to -- the guide would presume kind of flat to slightly up, and that's where we see the potential to continue to have a positive year-over-year comp going forward here, driven more right now by international allies, including the schools business. The travel nurse business is right on the cusp of getting back to a positive year-over-year growth on a consistent basis. So feel really good about the momentum in that segment.
No, I appreciate all that. I guess I was also just sort of trying to get a sense, I know you're doing a lot of things to get back on a solid growth trajectory. I just was wondering, is the underlying market in some of those key segments help? Or is it still sort of trudging along? I was thinking more in terms of the overall market from what you see.
I may ask, if there's anything on that, fine. But I was -- you made the comment again about the revenue. You're moving toward a model where revenues -- well, adjusted EBITDA grows twice as fast as revenues. I wondered if you could flesh that out a little bit? Is that business efficiencies you're working on? Is that just operating leverage as the market starts to rebound? What are some of the pieces that would allow you to have adjusted EBITDA growth consistently 2x revenue growth?
Yes. Thanks, A.J. And I think we talked about that a few months ago, and that's really meant to be kind of our longer-term growth algorithm. And as we kind of lay that out, there was a working assumption that we'd have the businesses all are predominantly back into a growth mode.
And so as Cary kind of walked through some of the service lines and where we are, we have confidence as we move into 2027, we have good opportunity to get back to a growth model across our service lines. That's really where you start to see that kick in. So it's partly a function of -- with top line growth more -- we laid out more in the 4% to 6% range. That would be -- that would occur at some point later in 2027 as we get all the businesses growing.
When that happens in conjunction with a lot of the operational changes we continue to make to be a more efficient model, as process changes, automation, more deployment of AI, we think can drive a more efficient model. And we've got to be able to leverage our platform already. So I think the combination of continued process improvements and technology improvements, along with getting the top line business growing consistently, that would absolutely give us the opportunity to get that double-digit EBITDA growth.
And A.J., the other things that we'd want to see in terms of just things we track beyond the demand comments that I made is we continue to see stabilization in bill rates in nurse. You've seen some modest increases in allied and in locum. We want to see as we leave this year, increases in those bill rates. We're seeing that with some clients as they want to get orders billed, but you want to see that more sustainably to mirror what you would expect to be some increases in the labor market.
We saw some modest uptick in average hours worked. That would also be something that as we leave this year, that would be something else that would be very constructive overall of the industry turning from stabilization to more sustained growth.
Our next question comes from the line of Tobey Sommer of Truist.
This is Tyler Barishaw on for Tobey. On your net leverage, you took that down to 1.6x. How should we think about it over the remainder of the year?
Yes. Thanks, Tyler. So the intra dynamic, as we talked about in the prepared remarks with the cash balance. Our credit agreement actually as a governor on the amount of cash we can apply towards our net debt. So that's where we get that the 1.6x. But as you -- as I mentioned, as we work through a refunding of a fair amount of that cash balance during the second quarter, that would basically end up with a pretty similar leverage ratio at the end of Q2 based on our guidance. And right now, if you just -- if you roll out to the rest of the year, we'd expect to have a leverage ratio that would be at 2x or less through the remainder of this year.
So we feel really positive about our position on the balance sheet. We paid off our revolver. We've extended the maturities of our existing debt out to 2029 and 2031. And so this, we think, puts us in a really strong position on the balance sheet to really focus exclusively on how we grow in the business here, and that's investing in our teams and our operations, accelerating some of the capital investments that we have already laid out to grow the business as well and gives us a lot more flexibility to consider different capital allocation options as we go through this year and into '27.
Got it. And you mentioned Nurse and Allied had volume growth for the first time ex strike since 2022. Can you maybe talk about that, how that's looking for the rest of the year? Do you think that trend can sustain?
Yes. For the segment overall, we absolutely see the ability for us to maintain positive year-over-year growth in our volume. Again, I kind of laid out -- and really, all the teams are executing really well. Cary mentioned, our -- the demand environment in nursing has been stable but a bit muted. I think we expect to see that pick up, and we continue to look for ways to expand our client relationships and bring in new clients, both our strategic MSP and VMS but also more direct relationships. So that will open up more demand opportunity. But the teams are doing a fantastic job of filling into the demand that we have across our nurse, allied and international businesses. So I think that's where we have confidence we can continue to grow volume as we go through this year.
Our next question comes from the line of Jack Slevin of Jefferies.
This is [ Brett ] on for Jack Slevin. I was wondering if you could provide a little bit of additional color here to help us bridge the second quarter gross margin guide?
So the bridging from Q1 to Q2?
Correct.
Yes. There's -- yes, so there are a couple of moving pieces, as you can imagine, with -- particularly with the large amount of labor disruption revenue in the first quarter. So that the 26.8% that we reported, as I mentioned in the prepared remarks, we did have some drag from the -- some sales adjustments that predominantly hit our Physician and Leadership segment.
So what I'd say is if you really try to kind of strip out some of the different kind of onetime items you'd look at a gross margin in the first quarter, a little over 27% or 27.3%, 27.4% range. The guidance we've given for Q2, the midpoint is 28.2%. As we talked about that, there's about 10 million of labor disruption revenue embedded in that guidance. Part of that is actual contractual activities that we've got. There's also a part, as we reconciled some prior year events and finalize those invoices, there was some benefit from that, which is a kind of flow straight through. So that gross margin is a bit elevated in our guide for the second quarter. You should think about it still being a little bit more in the 27.5% range for Q2. I think it's important as you think about that even as you're looking at our expectations through the remainder of the year. That's really the right way to think about the launching point for the third and fourth quarter as well.
Great. That's helpful. And then maybe for my follow-up, just with the update to Visa retrogressions, how should we be thinking about the progression for the international business this year and then as we move into next year?
Yes. So overall, consistent with what we talked about last quarter, we would expect high teen year-over-year growth in international this year. We had improvement in the retrogression dates over the past quarter. But what you're really seeing now is those candidates going into the next phase of the approval process, which is sitting at the embassies.
We haven't assumed any significant acceleration of those candidates through the embassy process. We'll know more over the coming, I'd say, kind of quarter plus, how that's going. But if that goes faster than what we're anticipating, that you would see maybe some lift at the very end of this year that would help support some low double-digit growth into next year. We are not assuming at this point that you're going to see any lift of any of the travel bans or the travel suspension that would also be a tailwind to our assumptions and would predominantly affect and be accretive to 2027 growth.
Our next question comes from the line of Kevin Fischbeck of Bank of America.
Great. Maybe to ask a question -- it was asked earlier, maybe a little bit differently. Do you guys have insight into like what percentage of your clients are back down to temp staffing as a percentage of their total workforce today like relative to where they were in 2019? And how many are still kind of at elevated levels versus that level?
Yes. We don't have total insight. Obviously, for companies that are more public about their results, we have some insights. And I think the piece that we always focus on is what is the percentage because obviously, the underlying cost of labor, whether it's contingent or permanent, has gone up.
Since 2019, I would say overall, when we compare our current client base to clients that we see -- or I should say, prospects that we see in our pipeline, we see more of our nonclients who may still have a little bit of work to do to get the utilization levels down. We were very partnering with our clients post the pandemic to get them down to more sustainable utilization levels. So I would say, generally, across our client base, they're more focused and shifting towards how do I build and retain my workforce as opposed to how am I reducing that?
Yes. And I think there's also -- I think there's more and more recognition of this inflection. We've seen where the aggressive permanent hiring that was done post pandemic has also led to significant wage increases for permanent labor. And so they're -- and you look at the reset that's occurred in bill rates for contract labor. And you're certainly at this point where we talked before the differential is -- can be very small. Sometimes there's no differential. And so as clients think about fluctuating patient volumes, managing their total workforce cost, I think that's -- we're shifting more to that dialogue versus just purely focusing on the contract labor volume. It's more what is the total cost of their labor and what is the value of having flexibility. And so I think that's where we're seeing more dialogue and less focus on that reduction at this point.
Okay. And then you mentioned language services margin is up a couple hundred basis points year-over-year. I guess, can you talk a little bit more about what drove that? And I guess, where generally pricing is going? Has pricing stabilized for that business?
Yes. Let me do a high level, and then I'm going to turn it over to Nishan to add some color. So we have been operationalizing a new service model that we talked about the past couple of quarters that really has 3 enhancements to it. One is an increased offshore mix of resources, right? We always have an onshore/offshore mix. It's them utilizing their devices as opposed to us providing it, and more accommodating SLA. So kind of longer speed to answer in some cases. So we have been rolling that out since the end of last year, and I would attribute that to most of what you've seen on the margin piece.
But Nishan, maybe talk a little about the competitive environment and pricing.
Yes. It's a great question, Kevin. Competitive environment continues to be there, although we did see it maybe coming down a little bit through this year. But we expect staying through the balance of this year, but it is starting to stabilize a bit more. So feeling much more positive about our competitive position and posture in that market.
And I just want to point out that the 200 basis points was sequential. So we're still down -- we're down year-over-year, but we've seen that decline we saw throughout 2025. And so with the model changes, this is the first quarter we've seen it start to inflect back up again. So even though we're seeing pricing come down the way -- the changes we made in our cost structure for how we're delivering our services, which, again, focus is still always on the highest quality in the industry, but we've been able to do it in a way we're going to be able to bring down our cost for the delivery that's helping us improve that margin.
I guess maybe is this the bottom then? Do you think this is -- do you think you can keep going up from here? Is this the right way to think about it? Has those 2 things cause better pricing pressure still there -- offset?
I think there's going to be a cycle that you have to work through for some of these pricings as maybe some contracts come up. I think there's still going to be a tail of that, that we've already factored into this. And so -- but we do believe that, to Nishan's comment, the -- it's a much more stable environment than we had seen in the past. We're also seeing and expect minutes quarter-over-quarter to be flat. So there's more stability that we're seeing than we had seen in the past, but we think it's going to be competitive. And we think there's going to continue to be competition for the business and particularly consolidation. We've been very focused on not just getting new clients, but consolidating spend with some of our larger clients.
The other piece that I'll mention, I know we talked about this on the last call as well, is one of our areas of focus in our service model is how do we support the end-to-end patient experience. So while there is a moat around the clinical experience that there has to be a human involved in that interpretation. There is an opportunity for us from an admission standpoint, a discharge standpoint to use more AI-enabled capabilities that we are working on.
Our next question comes from the line of Mark Marcon of Baird.
You mentioned some changing dynamics with the client that are less focused on reducing their contract labor. I was wondering if you could talk about any sort of impact that, that could potentially have with regards to their willingness to see increased bill rates and to raise them to levels where we could actually -- they're more compelling to the nurses and we can have bigger fill rates?
I think we continue to see overall focus on cost management. So where we're seeing clients increase bill rates is when physicians are not getting filled. And so I think that dynamic is going to be the dynamic that is going to really be the tailwind behind bill rates increasing. When you have positions that are priced appropriately, you see them filled. So that dynamic, I think, will continue. And as clients need more of these positions, with a higher degree of urgency, you will see more of those fill rates increase. But I would expect that to happen for time, and it will really be probably market by market and client by client.
Great. And then with regards to just the cost consciousness, are you seeing any sort of attitudinal change at all with regards to the pressures that they were feeling when we were going through the early stages of DOGE? Is that starting to lift at all? Is that going to have any impact with regards to leadership within PLD? And how we should think about that portion of the business?
What I would say overall is while we saw this time last year much more of a pause to step back and assess, okay, what are the implications of Big Beautiful Bill? What we're seeing now is much -- is really a focus on just how do we support what is expected to be an increase in patient utilization just from an aging population demographic. And do that when we know there is going to be, at some point, a limited amount of clinicians. And so how do we start having those strategies and do that in a way that is cost effective because our costs are going up higher than what we are getting reimbursed for. So I'd say that is still the general theme that we are hearing. And what we are feeling is still a focus on those cost-spending strategies for the workforce, including how do we ensure on the physician side that we are fully staffed so that we can maximize revenue.
And to your other question on the leadership side, we did talk about that in the prepared remarks that as we talk about the aging clinical population, in fact, you're also seeing an aging leadership population within health care and the changing of the skill sets needed to navigate this environment. And so we are -- as we drive our go-to-market strategy and the way we're interacting with clients and bringing value, I think it's -- there's a lot of opportunity for us to help them find the right talent for where they are in that journey. And so I think we're feeling good about our position in that market to grow our leadership, both the interim and our search businesses, to address some of the talent -- kind of depending talent gaps we think are going to occur as well as some of the new skills that are needed to help our clients navigate this world as well.
I am showing no further questions at this time. So I would like to turn it back to Cary Grace for closing remarks.
Thank you all for your interest in AMN, and a very special thank you to our extraordinary team and the strong partnerships that we have with our clients, clinicians and suppliers, who collectively helped us get off to a very strong start to the year.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
AMN Healthcare Services, Inc. — Q1 2026 Earnings Call
AMN Healthcare Services, Inc. — Q4 2025 Earnings Call
1. Management Discussion
Good day and thank you for standing by. Welcome to the AMN Healthcare Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Randy Reece. Please go ahead.
Good afternoon, everyone. Welcome to AMN Healthcare's Fourth Quarter and Full Year 2025 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 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 with me today are Cary Grace, President and Chief Executive Officer; and Brian Scott, Chief Financial and Operating Officer. I will now turn the call over to Cary.
Thank you, Randy. Welcome, everyone, to our quarterly recap and year-end update. We are pleased to review our 2025 accomplishments and highlight what we expect looking ahead. Several themes prevailed last quarter and so far in the first quarter as we saw healthy seasonality in Nurse and Allied staffing, a return to sequential growth in international nurse staffing, increasing demand in our leadership and search businesses, along with extraordinary need for labor disruption support.
We had outsized labor disruption revenue in the fourth quarter and with 2 large events in the first quarter, we anticipate significantly more labor disruption revenue this quarter. For the full year 2025, we finished with revenue of $2.73 billion and adjusted EBITDA of $234 million. We reduced debt by $285 million in 2025. Fourth quarter revenue of $748 million was 2% higher than the year ago quarter and $18 million above the high end of guidance.
Gross margin came in slightly above the high end of the guidance range and adjusted EBITDA margin was at the high end of guidance. Labor disruption revenue in the fourth quarter was $124 million, nearly doubled over the year ago quarter. Excluding labor disruption, revenue for the quarter was $624 million, slightly above the midpoint of our guidance range. By segment, excluding labor disruption revenue, Nurse and Allied Solutions and Physician and Leadership Solutions came in at the high end of guidance.
Technology and Workforce Solutions revenue was $2 million below the midpoint of the guidance range. Nurse and Allied revenue of $491 million grew 8% year-over-year. Excluding labor disruption, segment revenue was down 7% year-over-year, improved from down 13% in the third quarter. Travelers on assignment, which do not include labor disruption, grew 6% sequentially in the quarter.
In the first quarter of 2026, we expect Nurse and Allied revenue to be up more than 135% year-over-year or excluding labor disruption, up 2% to 4% year-over-year and up 4% to 6% from the fourth quarter. We are seeing positive year-over-year demand in Allied, including our Schools business and the seasonal demand decline in Travel Nurse in line with last year. Physician and Leadership Solutions revenue in the fourth quarter was $170 million, down 2% from the year ago period.
Every business in the segment exceeded the assumptions embedded in guidance with interim leadership and search showing the most upside. For the first quarter of 2026, we expect Physician and Leadership revenue to be down 5% to 8% year-over-year. Within this outlook, we project interim to be down in the mid-single digits year-over-year with search flat to up from prior year.
We expect locums to be down mid-single digits year-over-year as we have seen some disruption in early-year demand with certain clients who are experiencing strike events, along with seasonal demand declines. However, our outlook remains positive for sequential growth in the segment for the middle quarters of the year. In the fourth quarter, Technology and Workforce Solutions revenue was $88 million, down 18% year-over-year or down 14%, excluding the divested Smart Square business.
Within language services, our tiered service strategy to address price competition is already in trial with several clients, and we expect to see gross margin benefits from this strategy in the second half of the year. As we have now developed and deployed this new strategy, we are able to support a broader range of client choices. Our language services delivery models use our leading technology platform to provide medically qualified human interpreters on demand for clinical interactions as required by federal regulations.
To support the entire patient journey, we are expanding our capabilities by investing in AI technology enablement to support the administrative and other nonclinical interactions with patients where human interaction is not required. We have momentum from new client wins in Q1 and a growing sales pipeline, giving us the opportunity to return to year-over-year revenue growth in Language Services later this year.
VMS revenue in the fourth quarter was $16 million, lower by 4% quarter-over-quarter and 28% year-over-year. After rolling out ShiftWise Flex to our client base in early 2025, our emphasis was on deploying enhanced capabilities in our industry-leading VMS. These include advanced analytics and reporting, generative and Agentic AI and expanded support for managing internal float pool and internal agency.
These investments broaden our ability to win new business and expand our solution set with current clients. In the first quarter, we expect Technology and Workforce Solutions revenue to be down in the mid- to upper teens year-over-year or low teens, excluding Smart Square. We expect Language Services revenue to be modestly lower sequentially. The downward sequential trend for VMS is moderating with the driver of decline in the first quarter being 2 fewer days.
As we look forward, our consolidated first quarter outlook includes an assumption of $600 million in labor disruption revenue from multiple strike events. Although the labor disruption revenue reduces our consolidated gross margin, it does drive operating leverage. Our team has risen to the challenge of serving the day-to-day needs of our 2,000 clients while also managing 2 large indefinite duration strike events on both coasts.
I am profoundly impressed by the energy, commitment and teamwork we have sustained in driving quality outcomes for our clients during these events. We're also very pleased with the performance of the event management system we built over the past 2 years as the backbone of our differentiated labor disruption solution.
Strategic clients expect us to support them through disruptive events, and we are committed to supporting them as part of building long-term partnerships while ensuring continuity of quality patient care. We have discussed over the past 3 years how our team has automated, reorganized, tech-enabled and rebuilt our business processes to ensure that AMN would be ready when staffing demand rebounded.
While we have reported on the improvements in our speed to fill and ability to compete across broader market segments, the labor disruption events in recent months have proven that our enhanced platform and solutions can successfully handle significantly higher levels of demand. Also strengthening our response is how we develop the ability to seamlessly onboard suppliers into our technology and programs during a demand spike. This strengthens our position as a preferred partner for other staffing vendors.
Beyond the needs for labor disruption support, we view 2026 as a year of transition as we work to return all our businesses to growth. At the start of this year, conditions in the health care labor market show signs of returning to normal as measured by the rates of hiring and attrition. Clients are increasingly using a blended labor model to support revenue growth, and more clients are seeking support for centralizing their control over contingent labor spend, including heightened interest in locum.
We see rising recognition of the value of having a long-term strategic partner for workforce management, and AMN is well positioned to be that partner. We expect to see Allied International and Search return to year-over-year growth in Q1, with the other businesses returning to growth in the coming quarters. After 2026 and excluding labor disruption, we see a path to delivering sustainable organic revenue growth of 4% to 6% per year while growing operating expenses at half the rate of revenue growth, resulting in 10% to 15% growth of adjusted EBITDA.
Cyclical drivers should help our industry return to growth, but we also have positioned AMN to fuel growth from market share gains and an improving revenue mix. In our robust sales pipeline, we see the potential to regain momentum in MSP, where we have demonstrated the value of having AMN as a long-term business partner. We are gaining share in the large direct and vendor-neutral segments of the market.
The investments we made, including AI enablement across recruiting, applicant tracking, credentialing and support, are transforming the way we operate. We are demonstrating that we are a much faster and more agile company with a stronger technology base than we were just a few years ago, giving us greater optimism about improving earnings power over the long term.
Words cannot express the gratitude I have for our corporate team, our clinicians and our suppliers for their tireless dedication to ensuring our ability to support our clients and providing continuous care for their patients. Now let me turn the call over to Brian for additional details about our fourth quarter results and full year results, along with our first quarter outlook.
Thank you, Cary, and good afternoon, everyone. Fourth quarter consolidated revenue was $748 million, above the high end of our guidance range, driven by labor disruption revenue that was $24 million above guidance. Revenue was up 2% from the prior year and 18% sequentially. Consolidated gross margin for the fourth quarter was 26.1%, slightly above the high end of our guidance range. Gross margin declined 370 basis points year-over-year and 300 basis points sequentially.
Labor disruption revenue reduced fourth quarter consolidated gross margin by 130 basis points. Consolidated SG&A expenses were $152 million compared with $159 million in the prior year and $139 million in the previous quarter. Adjusted SG&A, which excludes certain expenses, was $143 million in the fourth quarter compared with $145 million in the prior year and $129 million in the previous quarter.
The sequential increase in adjusted SG&A is primarily attributable to a $5 million unfavorable professional liability actuarial adjustment, a $4 million net increase in bad debt expense and approximately $5 million of additional costs to support the large labor disruption event. Fourth quarter Nurse and Allied revenue was $491 million, up 8% from the prior year, exceeding the high end of our guidance range, driven by higher-than-anticipated labor disruption revenue.
Sequentially, segment revenue was up 36%. Excluding labor disruption, segment sequential growth was 5%. Year-over-year Nurse and Allied segment volume decreased 5%, average rate was flat and average hours worked were down 1%. Sequentially, volume was up 6%, average rate was up 1% and hours worked were down 2%. Travel Nurse revenue in the fourth quarter was $209 million, a decrease of 9% from the prior year period, though up 6% from the prior quarter.
Allied revenue in the quarter was $147 million, down 1% year-over-year and up 3% sequentially. Within Allied, our Schools business grew revenue 10% year-over-year. Nurse and Allied gross margin in the fourth quarter was 21.6%, a decrease of 220 basis points year-over-year. Sequentially, gross margin was down 250 basis points, driven by the lower labor disruption margin in the quarter. Moving to the Physician Leadership Solutions segment.
Fourth quarter revenue of $170 million was down 2% year-over-year. Sequentially, revenue was down 5%, driven by seasonality in locum tenens. Locum tenens revenue in the quarter was $136 million, flat year-over-year and down 7% sequentially. Interim leadership revenue of $24 million decreased 8% from the prior year but was up 4% sequentially. Search revenue of $9 million was down 8% year-over-year and up 1% sequentially.
Gross margin for the Physician and Leadership Solutions segment was 27.5%, down 100 basis points year-over-year. Sequentially, gross margin increased by 30 basis points. Technology and Workforce Solutions revenue for the fourth quarter was $88 million, down 18% year-over-year and 7% sequentially. Language Services revenue for the quarter was $70 million, down 9% year-over-year and 7% sequentially. VMS revenue for the quarter was $16 million, a decrease of 28% year-over-year and 4% sequentially.
Segment gross margin was 48.1%, down 920 basis points from the prior year period due to an adverse revenue mix shift, lower margin in Language Services and the sale of Smart Square. Sequentially, gross margin declined 340 basis points. Fourth quarter consolidated adjusted EBITDA was $54 million, down 27% year-over-year and 5% sequentially. Adjusted EBITDA margin for the quarter was 7.3%, down 290 basis points from the prior year period and 180 basis points sequentially.
Fourth quarter net loss was $8 million. This compared with net loss of $188 million in the prior year period, which included a noncash goodwill impairment charge and net income of $29 million in the prior quarter. Fourth quarter GAAP loss per share was $0.20. Adjusted earnings per share for the quarter was $0.22 compared with $0.75 in the prior year period and $0.39 in the prior quarter.
Days sales outstanding for the quarter was 47 days, which was 8 days lower than a year ago and 10 days lower sequentially. Excluding impacts from the large labor disruption events, year-end DSO was 56 days. Operating cash flow for the fourth quarter was $76 million, and capital expenditures were $8 million. As of December 31, we had cash and equivalents of $34 million and total debt of $775 million. We ended the year with a net leverage ratio of 3.3x to 1.
Recapping financial highlights for the full year 2025, we reported revenue of $2.7 billion, a year-over-year decrease of 8%. Gross margin for the year was 28.3%, a decrease of 250 basis points from the prior year. Adjusted EBITDA was $234 million, a decrease of 31% from the prior year. Full year adjusted EBITDA margin of 8.6% was 280 basis points lower year-over-year.
For full year 2025, we reported a GAAP loss per share of $2.48 and adjusted earnings per share was $1.36 compared with the prior year GAAP loss per share of $3.85 and adjusted earnings per share of $3.31. Full year cash flow from operations was $269 million and capital expenditures totaled $36 million. Moving to first quarter guidance. We project consolidated revenue to be in the range of $1.225 billion to $1.24 billion.
This revenue guidance includes approximately $600 million related to labor disruption support with the final amount subject to completion of the events. Gross margin is projected to be between 23.5% and 24%. The impact of labor disruption revenue this quarter reduces our gross margin by about 300 basis points.
Reported SG&A expenses are projected to be approximately 14.5% to 15% of revenue and include about $40 million of additional costs in the quarter to support labor disruption activity. Operating margin is expected to be 5.9% to 6.5% and adjusted EBITDA margin is expected to be 9.7% to 10.2%. Additional first quarter guidance details can be found in today's earnings release. Now operator, please open up the call for questions.
[Operator Instructions] The first question of the day will be coming from Jeff Silber of BMO.
2. Question Answer
Since the labor disruption business is such a big part of 4Q and expected to continue in this quarter, I just wanted to drill down a little bit on there. Do you have like either separate operating procedure, separate sales force for this? How do you make sure that it doesn't disrupt the rest of your business?
Yes. A couple of things. One is we have developed over and invested in over the past 2 years, technology and operating model to be able to support strike events. That system is being used not just in the strike events that we're doing now. We also used it in the strike that we supported in the fourth quarter. We have a dedicated strike team.
It includes sales down into leadership roles and operations roles for very large events like what we have now. You have resources coming from across the company and from external sources as well. So we have a playbook for how we bring those resources on seamlessly. They're trained. We have operating procedures against it. So we really have built a system so that we will have as little disruption to our core business as possible when we're supporting these types of events.
Given the magnitude of what we've supported in the first quarter, we have moved many, many corporate resources on to support this. It has had some marginal impact on some of our core business. But really, relative to the size of events, the playbooks and everything that we've put in place over the past 2 years is working incredibly well.
Okay. That's helpful. Shifting gears a bit. I know the stock market is a bit jittery about AI disrupting a bunch of different businesses. And specifically with your company, I think some of the recent stock pressure might have been because of some fears on your language translation business. Can you talk a little bit about that in terms of what you think the risks might be and how you're countering them?
Yes. And just as a reminder, for our language service business, it is focused on clinical health care setting. And that by government regulation is required to have a human interface and a human providing that service. Our capabilities are tech-enabled, but we have humans who are delivering that, which allows our clients to be able to comply with federal laws. So we really have been focused much more on the clinical side of it.
We look long term, this is an important service to be providing to patients and for health care systems. The clinical setting is also higher risk. So beyond it being regulated, it's not an area that we have had any clients coming to us and saying, I want to look at AI as one of the areas that I would want to focus on in the clinical setting. We have had conversations around how do we use better AI enablement, both within our technology that is connecting the patient to all these medically trained interpreters.
And we've also had clients who are looking at the overall patient journey and really wanting to ensure that they have some continuity in that patient journey outside of the clinical setting. So going from admitting into the clinical setting into discharge. So in my prepared remarks, I talked a little bit about what we're doing in terms of investing in AI enablement for us to be able to play in a broader part of that journey where you don't have that mandate and regulation to be able to have the human providing the interpretation.
And our next question is coming from the line of A.J. Rice of UBS.
Maybe just a couple of quick questions here. First, just following up on the labor disruption situation. The nurses that you get to fill an uptick that involves $600 million of incremental revenues in the first quarter, are those people that are generally known to you and have taken travel assignments before?
Are you getting them from a new source? And do those then become people that you can use to have in your pipeline for future assignments? How should we think about the implications of that kind of revenue increase going forward in the business?
Yes. So a couple of things. One, in terms of the supply that we get, and these are very -- you're having 2 simultaneous indefinite events happening. And so from a supply standpoint, we have crisis workers that are known to us that are coming in for these events. We have some that are new to us. We engage suppliers in these events as well.
And so we might have some travelers -- clinicians who are typically travelers come in or per diem and some that really focus on supporting these types of labor disruption events. So you're going to get a little bit of a mix in terms of the clinicians that are coming in. We have had very, very high fill rates in both of these events. So we have had access to great supply to be able to support these clients.
We've also been able to use not just what we've built in our event management system over the past 2 years, but what we've done over the past 3 years in being able to recruit faster, and we've used our AI recruiter in these events, we've been able to not just fill at a higher level, we've been able to fill much faster for clients.
In terms of the relationship then that we have with these clinicians after this, we have great experiences with them. And so we would view this as an opportunity for them to continue working with us, whether it's supporting future labor disruption events or coming and supporting as a traveler or a per diem type of role.
Okay. Interesting. We've gotten some questions about the Kaiser contract overall, which obviously is a big factor here, that relationship and partnership. I know that doesn't really mature until later in the year. I don't think maybe the end of the year. Is there any update because of all of this that maybe that gets reworked early, and it gets put to bed early?
So our contract with Kaiser goes through the end of this year. We expect them as part of their normal governance process to go through an RFP this year. We have been very busy with them in the beginning of the year, and we have a very strong, deep, long-standing partnership with them.
Okay. And then my last question quickly is a different area. It looks like the March Visa Bulletin was published today and is advancing the retrogression date by 4 months and then you get 2 months of improvement in Philippines. That's sort of meaningful, it seems like to me. Is that enough to change the way you look at the international staffing business for '26?
Yes. So for those that haven't been tracking this afternoon, the latest visa bulletin was released. So the rest of the world advanced 4 months to October 1 of '23, and the Philippines advanced 2 months to August 1, '23. That was more progression than we had expected in this visa bulletin.
So we expect -- and we've talked about this in January that we expect mid-teens growth in 2026 from international. That's a higher-margin business for us. And so A.J., think about this that this would help us, particularly kind of at the end of this year going into 2027.
A.J., this is Brian. I mean I think we -- with some of the other restrictions that were put in place late in the fourth quarter and beginning of this year, this is definitely a positive because that's the counterbalance to several countries where we do recruit from that are potentially -- they're on a pause right now that the ways we're going to bring them in there from different countries, but also as those dates move forward, we have a lot of supply in both the Philippines and other markets. And so any time you see that date move forward, it's going to be positive both near and long term.
Our next question is coming from the line of Kevin Fischbeck of Bank of America.
I wanted to follow back up on that point about the labor pool and the strike disruption. Does it in any way crowd out your ability to staff other projects? Is there like a headwind in the core business as a result of this that we should be thinking about when this business goes away? Is there an uplift? Or is that completely separate and not an issue?
No, if you look at some of our guidance for the nurse business in the first quarter, you actually continue to see strong support for the core business. And so the way that we have built our ability to support strike also enables us to continue to support our core clients. And we can also, in a unique way because we have transparency, ensure that those clinicians do not get pulled off from our core clients as well, Kevin.
So we've been able to do both simultaneously, and you see that in our guidance for the first quarter. When we look forward to the second quarter, what we would expect to see in the second quarter in our nurse business is the normal seasonal patterning that you have after winter orders. We had healthy winter orders this year. So anything that you would potentially see in the second quarter like that we have line of sight to right now would really be more reflective of that.
Given that these are both indefinite strikes that have been going on for some period of time, it's really hard to predict what would happen in the second quarter in terms of as they get back to kind of business as usual, what that looks like. But we're not seeing really any meaningful impact in how it's enabled us to be able to support and staff our core clients.
Yes. I'd just add, I mean, we've talked about on the last few calls that when -- it's still an attractive market, clinicians want to travel. And when there's the right opportunities priced the right way, we're able to pull supply in and fill jobs quickly. So you can imagine these types of events are attractive to nurses that want to fill them, but there's -- that doesn't mean there still aren't a lot of other attractive opportunities.
Geographically, these are kind of concentrated in 2 places. particularly in California, you have to be California licensed to be able to work one of these. And so there's a large pool of talent that may not have that license that's working on other assignments as well. So it's -- we -- in this case, again, it's a large market, and this is -- this can be an and strategy for us.
And Kevin, the other part that I would add is you don't have as much certainty when you're going in and working a crisis like this that you would have if you were doing a 13-week travel assignment. So it really is a bit of individual preference about, am I going to potentially take something that would be higher paying but would be not -- you have risk that you may not actually get days or hours versus something that you had more structure around how long the contract was.
Yes. I was going to kind of segue to kind of follow up on that. Just that I guess the way that you kind of been characterizing the softness in the business more recently is that there's a lot of demand from the hospitals, but just not at the right clearing price. I guess like the strike revenue is probably at a higher clearing price.
And -- so I'm trying to figure out how much we should be thinking about of the higher fill rates as a relationship to that dynamic just that the rates are higher, and therefore, it's just easier to fill because you're hitting that price point versus some of the things that you've talked about that might actually be more kind of positive indicators as it relates to Q2, 3, 4, to the rest of the year?
Yes. Think of it as -- and this has been a consistent theme really for some period of time. If you have an order that's priced right, it gets filled. And so given how fast you have to build a workforce in a crisis, there's a very strong transparent market around what that looks like. So you typically get it priced right so that you can fill and stand up your workforce.
In our non-strike business, if you have orders that are priced right, they're getting filled. So the same corollary holds true. Outside of strike, you might have systems that have an ability to wait a week or wait 2 weeks to see if an order gets filled and then they can increase price. When you're trying to staff a crisis, you don't have some of that same flexibility.
Yes. And we've had some clients where they have -- where the demand is strong enough and the need is urgent enough. And as they adjust price, to Cary's point, we fill those orders very quickly. So we have real-time data around that and continue to educate clients.
And I think as you're -- as we talked in the prepared remarks, as you're seeing more normalization in hiring trends by hospitals, so they're kind of going back to the kind of pre-COVID normalized levels of hiring and attrition, they're going to typically find a place where they may have more urgency on trying to fill roles, and that's typically where you might see more flexibility on pricing. And when that happens, we can fill those jobs.
So I think we're -- we've been at a point of stability now for several quarters. And I think that the next leg from history would be that you would start to have clients starting to think a little bit differently about how their models around perm and use of contingent labor and that flexibility and the cost, the cost trade-off there. And with that, it drives more constructive conversations about what type of rate is needed to be able to fill the right mix of jobs for them.
Okay. And then just last question. On the AI disruption potential, I wasn't sure I was 100% following because it sounds like you guys feel like the business has some in-place moat to it that you really can't be disrupted because of the regulatory aspect of face-to-face, but it also sounds like you're responding and changing your pricing and you're seeing pressure on that business at the same time. So just are those separate dynamics that are causing it and it's not AI, it's something else? Or how should we be thinking about that?
It's a separate dynamic. It is not AI. And so the space that we're in, in language services is protected by government regulations requiring human interpreters. What we are seeing in terms of the pricing pressure is really an aggressive competitor consolidator that we talked a bit about in 2025 coming in that put pressure on. We were very agile in responding. We have developed and we now have in pilot a new service model that can compete against that.
We have it in pilot with a couple of clients. And so that really is in response to a competitive environment. And the secondary thing we had in 2025 is you had the impact of tougher immigration policies on the industry. So those really were the 2 factors that we saw in 2025, but they are separate and not related to anything from an AI standpoint.
We do believe not just for this business, but for all of our businesses, as you heard in our comments and some of the answers to our questions, we think AI can be accretive to us. We're using it in our client-facing technology in how we automate our own processes and how we support our recruiters. And so we think that AI can be very helpful to us in terms of helping productivity and speed and things that are really important in our business.
The next question is coming from the line of Trevor Romeo of William Blair.
I wanted to ask about your guidance and specifically the margin piece. I know it is probably very difficult to fully strip out the strike business. But just any help you can give us on kind of what underlying margins with a normal level of labor disruption revenue would look like and what's embedded in the Q1 guidance from that perspective?
Sure. Yes, we tried to give some of that in the -- both in the release and the prepared remarks, but you can -- for example, the total revenue, again, if you can take that range and you were to strip out the $600 million that we put in, that's going to put you in the $625 million to $640 million revenue range, completely excluding anything related to labor disruption. And then on the gross margin, the 23.5% to 24%, we said there's about a 300 basis points drag related to that.
So you can -- if you kind of exclude that, you're looking at somewhere more in the 26.8%, close to 27% range. So not -- just slightly down from the fourth quarter. And then the underlying SG&A would be running in the [ 130 to 135 ] range. So I think you can kind of work through the math on that. That's adjusted SG&A to kind of infer what the underlying adjusted EBITDA would be. It's pretty similar to what we had in the fourth quarter when you strip out strike, and that's the run rate we're at right now.
Okay. That's helpful. And then I guess I just wanted to follow up on the long-term targets. You talked about, I guess, 4% to 6% organic growth on the top line beyond this year. Just given that there have been a lot of changes to some of your businesses over the last few years, would love to narrow down what are your expectations for each of the segments over the long term? And maybe just the moving pieces that could get you to the bottom end or the top end of those ranges would be great.
Yes. I mean I guess I'd say to start with the -- we expect to maybe this year, we talked about to start to see recovery in the year-over-year growth. We have a couple of businesses like Search and International that in the first quarter, we expect to be at either flat or up in the first quarter. And at different quarters throughout the year, we start to regain positive growth.
So that's why we said really that longer-term algorithm as you move into 2027, you're kind of lapping these different quarters of getting back to positive growth. And then we would expect through each of our segments, not disproportionately different rates of growth, more in that -- we gave a 4% to 6% range. I don't think we'd expect it to be significantly above or below that range.
But as we see a more normalized environment for our core staffing businesses, we think that between volume and rate, an environment, we're going to see continued increasing demand for health care consumption. We think that's a reasonable expectation for the top line.
And then some modest improvement in mix driving gross margin, but really the other big factor is the ability to drive operating leverage as we see continued top line growth. I think the initiatives we have, the investments we've made over the last several years and really upgrading a lot of our core systems.
Now as we continue to invest in operational improvement and starting to embed AI more into a lot of our operations, we're seeing -- it's very early still, but we're already starting to see some of the benefits of that and how we can scale at a lower cost. And so we're confident that as we get into the out years that we'll be able to generate a nice incremental margin on that top line growth, and that's how you get to the double-digit EBITDA growth rate that we think we can achieve longer term.
And the next question is coming from the line of Tobey Sommer of Truist.
I wanted to ask a question about seasonality past the first quarter. Sometimes after the winter period where there's seasonally better demand, Travel Nurse and perhaps sometimes Allied can be down sequentially in 2Q to the extent you care to, could you comment about seasonal patterns that you expect to unfold for the balance of the year?
Sure. Yes, I think that you characterized it well to start there. We -- as Cary mentioned earlier, as the winter orders come off in nursing, it would be very normal to expect to see a decline sequentially from Q1 to Q2. And I think as -- we're still in the middle of this quarter. But as we look at the demand and booking trends that we would expect to see that happen in the second quarter, but pretty consistent, we'd say a normal sequential decline.
Allied has been performing very well, is kind of firing on all cylinders. They have some typical decline just on the Schools part of the business as you start to move into the summer. But that segment overall -- and then international, we would expect to see growth sequentially and year-over-year in the second quarter.
But the net of that, we would expect to be down sequentially in the second quarter for Nurse and Allied. Conversely, for the Physician and Leadership segment, we typically see growth in locum tenens from the first to the second quarter. And with it, the trends we're seeing in interim search, we would expect the same.
So that segment should be up and will partly offset the decline in Nurse and Allied and then the Technology and Workforce Solutions as we talked about Language Services, some of the changing strategies we have there has allowed us to start to regain some footing on winning new contracts. We've had several wins in the first quarter here and more under contract.
I think that -- and then we had some headwinds in Q1 with early in the quarter with some of the weather impacts. So we'd expect to see a little better performance in Language Services in the second quarter. So the net of all that, it probably comes out if you take out strike from that, it's probably a pretty flattish second quarter would be a reasonable expectation just if we have our normal kind of seasonal behavior along with some of the momentum we're seeing in certain businesses.
I appreciate that. And just one question on the strike for me with the $600 million. Is there a date upon which if the strikes end prior to that, that it will be less than $600 million and a period of time that it would be perhaps greater than that just as we ride out the rest of the quarter, how do we interpret news flow relative to those numbers?
Yes. We're basically trying to provide it up to kind of where we are today as best we can. So I'll just say that. So to the extent that they continue, obviously, all parties are I'm sure working through trying to get these resolved. But if they continue longer, then we've historically not wanted to try to predict whether these happen or how long they'll be in duration. So we'll only really give what we can see in front of us right now.
Got you. And one more for me, if I could. There was a study out about the relative pricing and cost of full-time nurse labor versus contingent staff that showed things close to parity. In the context of these strikes, which invariably end in a new contract that guarantees full-time comp increases, what's your expectation for bill rates in that relationship between contingent travel nurses and their full-time equivalents?
Yes. If you -- the data that Randy puts together would show something relatively similar, Tobey, to that report that you mentioned. We've already started having some clients, particularly coming up from finance and CFOs starting to really look at that and looking at contingent labor as being an attractive opportunity for them, not just on a relative cost basis, but you get flexibility along with the cost parity that you're mentioning.
And so over time, what we really need to start seeing in 2026 is increases in bill rates, right? So we've talked about stabilizing bill rates that we saw throughout 2025. What we really would want to see in 2026 is increases in bill rates to reflect some of the underlying natural increases that you would see in terms of wage expectations. We started to see that in pockets, but we'd want to see it more consistently.
And our next question is coming from the line of Mark Marcon of Robert W. Baird.
Most of mine have been asked, but just going on the strike, if it continues, are there any sort of downsides that you foresee in terms of just the reputation or the branding with regards to other nurses that may not participate in a strike or anything along those lines or from a legislative perspective? I imagine the clients are really grateful but just wondering this general reputation. And then obviously, unions are typically averse to travel nursing and any sort of legislative pressure they might put on.
So clients are very grateful, and it's a very important service that we provide to clients. We only provide support to our strategic clients just because of the intensity of what it requires to be able to deliver. From a clinician standpoint and from a union standpoint, these solutions give the unions the ability to strike. From a legal standpoint, if there was not an ability to be able to support patient care, it would take away the ability for them to strike.
So we look at the solution set for us as a really important service, not just to clients, but broadly speaking, to clinicians and at the core of it to support continuity of care. So these opportunities to support a crisis attracts -- is very attractive to a group of clinicians. So we think it enhances our ability to offer a wide range of roles that different clinicians may want and for us to be an important connector for them to these opportunities.
Great. And then can you give us -- so just if we take a look at that $600 million, you basically said that's through -- is that through today in terms of the day? And so therefore, we can calculate what the revenue per day is, and therefore, we could -- if the strikes continue, we could basically assume that there's further upside with regards to the estimates that you provided. Is that a correct way to look at it?
Doing revenue per day would be hard because you can't think of these strikes as being static. They're dynamic. You might have some of their union members coming back at different points in time. So it's not kind of a take the number and try to do an average number.
Yes. The needs are dynamic. So it doesn't -- it's probably directionally -- I can understand we're going to take that approach, but it's not -- that would be oversimplifying in terms of going forward.
Okay. Great. And then just on the 4% to 6% long-term growth rate, are you being a little conservative? Just when we take a look at the patient and clinician demographics, from a longer-term perspective, it looks like we should end up seeing some very healthy long-term demand. So I'm just kind of wondering how you're thinking about that. Or are you thinking just long term, meaning just '27, '28? Or is that truly long term?
I like the way you think, but I think we want to be mindful that there are external forces, whether it's economic changes that can influence our industry and just the unknown of the future. I think that's -- we feel like that's a reasonable way to approach a longer-term market. We'll always be striving, of course, to exceed that. And a big function will be just our ability to gain share over time as well. I think we're well positioned to do that.
But we also want to make sure -- I think part of the point of providing some of that long term is just that we do think we're moving back into a market that is a little more in a stable mode and the way we interact with our clients, creating opportunity for us to grow with them and the ability to drive incremental margin over time as well.
So again, we'll always strive to obviously deliver the best results possible for our shareholders. But with it, there's just enough unknown in the future. I think it's more appropriate to be prudent in any type of expectations we set.
Also because we really only provide guidance 1 quarter out, I think giving a framework that is longer than that is also helpful, particularly given the comments that we talked about last year around stabilization and some of the factors that not only you mentioned, but also Brian talked about.
Our next question is coming from the line of Constantine Davides of Citizens.
Brian, I guess, first question for you. Anything you can articulate around cash flow expectations for the year? And I guess I'm thinking specifically of what you might see in the first quarter with the outside strike benefit, but any other factors we should be contemplating? I know you took CapEx way down in '25. So wondering if that's the right level for '26 as well. But any kind of factors or considerations on cash flow?
Yes. Thanks for the question. I'll start with the second part of that on the CapEx side. We had said for '25, we were expecting to spend somewhere in the kind of $40 million to $45 million range. We ended up at just in the high 30s. We would still expect to be in that low 40s -- low to mid-40s range. The higher CapEx we had for several years in part was it gave us the ability to really upgrade a lot of our systems that had some technical debt and also advance some of our systems like our ShiftWise VMS.
So the good news is with a lot of that work done, it's allowing us even at this lower level of CapEx to deploy a much larger percentage into enhancements and innovation, including some of the AI initiatives that we've been accelerating. We'll -- if we continue to see really good returns, we have the ability to invest more, and that's, we think, a competitive advantage for us where I think a lot of our -- a lot of the competition is probably having to pull back more, and this gives us an opportunity to continue to lean in and invest more in our systems.
But we think at that level, we're able to still advance our strategy. On the cash flow side, you'll see for 2025, we actually had a very, very high conversion of our EBITDA to free cash flow, kind of 2 influences there, but there was some very, very favorable working capital components to it that puts us at a higher level than we'd normally see.
Historically, we've talked about free cash flow to EBITDA somewhere in that 60% to 65% range, well above that in '25. You'll see some of that flip the other way in 2026. We'll likely have more of a working capital drag in the year. So if you looked across the 2 years, we'd expect to be up in that 60% or higher range, but it would not expect to be at the same level in '26 as we had in '25.
But we'll still have a nice healthy continued free cash flow, and that is allowing us to -- we've now, at this point, paid off our revolver, and we can invest in the business and continue to bring our leverage ratio down with longer-term target is to get below 3. With the guidance we've given for the first quarter, we'd expect to be below 3 on an LTM in Q1. And so this -- we're feeling very, very positive about our balance sheet position and again, the ability to invest in the business.
Great. I appreciate that color, Brian. And then, Cary, just I guess, any commentary around pipeline for new business in Nurse and Allied? And I guess, specifically, what are you seeing in terms of volume of opportunities this part in '26 versus maybe what you saw last year and any kind of trends you'd call out?
#1, we have a healthy pipeline, and it's broad-based. And so it's relatively evenly split maybe with a slight bias to vendor neutral in the pipeline. We started to see a theme in 2025 that we talked about that even if there was RFPs going out, there was a bias towards incumbency.
That kind of cuts both ways. It helps us from an incumbency standpoint, but you have to have a pipeline sufficient enough to get enough of those opportunities through. As we left 2025 and into this year, we have seen wins both on the MSP side and on the vendor-neutral side, which we would expect to come on sometime in the next quarter, quarter plus, which will help us on a volume standpoint.
We also have sales teams that are focused on direct opportunities, which we've seen momentum on both in 2025 and as we go into 2026 as well as cross-selling to our existing client base, which we think is a -- continues to be a significant opportunity for us. We got traction on that in '24, '25 and into this year. But we see a balanced and healthy sales pipeline as well as conversion of that pipeline as we left last year.
And the next question is coming from the line of Jack Slevin of Jefferies.
Congrats on the quarter. And I appreciate you sneaking me in here at the end of the call. I'll just leave it to one. Most of mine have been asked. And I don't know if it's just me, but I guess the size of the strike number is frankly a little disorienting, and I'm still sort of just coming out of it on that one. So maybe just to like level set on expectations. I know you don't guide for the full year, but that '26 base scenario you had sort of talked about in January at a conference.
I guess when you think about the 1Q guide ex strike, and I know it's a little hard to parse those numbers, but sort of that trajectory and the trajectory in general of the business versus sort of how you've been speaking to it earlier this year, it seems like it's a little better, but I'd just love to get your thoughts like maybe more specifically on the margin front about are things shaping up the way that you've been thinking about when we try to parse away as best we can this big opportunity you've got in front of you in the first quarter?
Yes, I'll start. I mean, I guess I'd say, generally, we have a pretty similar view for the year. I understand how the guide for -- these are 2 kind of unprecedented events in terms of the size and duration. And so it has this impact on the first quarter. But if you kind of look through that, and we've tried to give enough color on what the underlying business trends are looking like, say overall, it's pretty consistent with what we expected coming into the year, which is a good thing.
We have good conviction on our growth strategy and seeing good trends almost across the board here. And for those that aren't, we're actively working on that. So I wouldn't say there's any significant change. And again, if you take the Q1 less some of the taking out labor disruption, it's pretty aligned with, I think, overall with where consensus is, and that is probably driven by the commentary we've given before. And the trends through the year, I think, are still pretty consistent with what we've shared. So I don't know if you had anything to add, Cary.
Yes. The only [indiscernible] what Brian just said. As you think about strike, and I know we've talked about this in a number of different ways, but it is incredibly important to clients to provide this. And so beyond the numbers, it was -- it's very important to the clients that we're supporting that they can provide continuity of care. The second piece for us is and it gets a little bit back into what Brian was just talking about in terms of our revolver is at 0 right now.
It's an important frame around how we think about cash and our ability to continue to get our leverage ratio down. So that outlook did change with this, Jack, and just the magnitude of it. And I know we talked about that, and Brian talked about it in some of the prepared remarks that we had.
But the third piece is it really -- we had confidence in everything we are building and automating and our ability to really deliver in a high-demand environment in a different way to be able to do these events simultaneous with supporting our core business at a high level really was a test for us that of everything that we've built over the past 3 years. And so that gives us even a higher degree of confidence as demand in the industry comes back on how we can deliver on that.
Yes. The other thing that's kind of exciting is as you've gone through these events, as Cary mentioned earlier, some of the deployment of AI tools because you're having to spin up a significant amount, obviously, of clinical workers in a very short order and then just all the logistics and operational support that goes behind that.
So we've -- the technology team has done a fantastic job partnering with the business to advance probably faster than we would have otherwise, some of our AI recruiting capabilities, some of our reporting capabilities. And so that work, although focused first on labor disruption is extremely transferable to our core business.
So that is one, I think, opportunity that we're just getting -- shining a light on more that we think will help us as we go through this year, and it will accelerate the pace, not only in our recruiting, but some of our other operations as well. And that's -- the team is getting very excited about that.
Yes. And the last part that I probably know this is a call about numbers, and there's a lot of them in this. Our people are extraordinary. And so we talk about our culture being different, about it being something that is incredibly important to how we go to market, how we serve clients. If you spent 1 minute with any of our teams that are supporting these events, you would have a very clear view about how that is incredibly differentiating for us.
Thank you. This does conclude today's Q&A session. I would now like to turn the call over to Cary Grace for closing remarks. Please go ahead.
Thank you for your interest in our company and for the opportunity not only to talk about 2025, but also to get a sense of our very busy start to 2026. So thank you for your interest.
This concludes today's conference call. You may all disconnect.
AMN Healthcare Services, Inc. — Q4 2025 Earnings Call
AMN Healthcare Services, Inc. — Q3 2025 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the AMN Healthcare's Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Randy Reece, Vice President, Investor Relations. Please go ahead.
Good afternoon, everyone. Welcome to AMN Healthcare's Third Quarter 2025 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 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 with me today are Cary Grace, President and Chief Executive Officer; and Brian Scott, Chief Financial and Operating Officer.
I will now turn the call over to Cary.
Thank you, Randy, and welcome to today's conference call. Since our last call, AMN has continued to adapt to changes in the marketplace and position the company to win as our industry transitions from recovery to growth. Third quarter revenue of $634 million was $9 million above the high end of our guidance range. Consolidated gross margin was near the upper end of guidance, and SG&A expenses were better than expected. Adjusted EBITDA for the third quarter was $57.5 million, which was 9.1% of revenue, 90 basis points above the high end of our guidance range.
After experiencing demand softness in the second quarter, staffing demand recovered moderately in the third quarter, extension rates rebounded, and Travel Nurse winter orders came in slightly favorable to prior year. At the same time, permanent hiring activity in the health care sector fell notably in the third quarter according to a private survey of job openings.
The different directions of contingent and permanent recruiting suggest that employers are beginning to seek more flexibility in their workforce strategies to meet increasing patient utilization. This is an increasingly attractive strategy as we estimate that the spread between Travel Nurse bill rates and fully loaded permanent nurse compensation is at a historical low.
Bill rates maintained stability through the last 9 months, and there are a few indications suggesting that some clients are reconsidering a bill rate strategy, in which rates have not kept up with increased costs. In fact, we expect bill rates for Nurse and Allied Staffing to be up modestly year-over-year in the fourth quarter for the first time in 3 years.
Our consolidated outlook for the fourth quarter calls for revenue a little better than $720 million at the midpoint or just over $620 million, excluding Labor Disruption revenue. Our guidance includes about $5 million extra SG&A expenses in Q4 related to Labor Disruption support.
While conditions for individual business lines vary, we benefit from the diversification among our 20 solutions, which keep us well positioned to serve clients' evolving needs and desire for strategic partners over the long run. All 3 business segments beat consensus revenue estimates in the third quarter, led by $12 million upside in Nurse and Allied Solutions. Part of the Nurse and Allied beat came from higher-than-expected Labor Disruption revenue.
As projected, lower Q2 demand and extensions flowed through to lower Q3 revenue, though less than we expected. As new demand and extension offers improved in the quarter, our team executed well to capture this demand and set us up for higher Travel Nurse and Allied revenue in Q4.
Demand improved modestly through the third quarter into October, including higher winter orders. For the fourth quarter, we expect about $100 million in Labor Disruption revenue. Total Nurse and Allied revenue will be up low single digits year-over-year or down approximately 6% to 8%, excluding Labor Disruption. This will be our best year-over-year revenue comparison for the segment in 3 years.
In our Physician and Leadership Solutions segment, revenue grew 2% sequentially in Locum Tenens and Interim Leadership, while Search revenue was stable. We were pleased to record 3% year-over-year growth in Locum Tenens revenue. The highlight in Locum was days booked for MSP clients, which grew by 15% year-over-year, including a nice boost from new client wins.
For the fourth quarter, Physician and Leadership Solutions revenue is projected to be down sequentially by approximately 6%, due primarily to seasonally lower Locum's volume. For our Technology and Workforce Solutions segment, third quarter revenue was $7 million lower than the prior quarter. Most of that drop came from the sale of our Smart Square business on July 1. VMS revenue was $2 million lower and Language Services revenue less than $1 million lower.
In the fourth quarter, we expect Technology and Workforce Solutions revenue to be down mid-single digits compared with the third quarter with seasonally lower language services minutes and the lingering runoff from previously discussed client transitions in our VMS and Language Services businesses.
I want to touch on the subject of gross margins. Our consolidated gross margin has declined this year caused by an unfavorable revenue mix shift and competitive pressures in Staffing and Language services. As Nurse and Allied demand moves from stability to growth, we expect Staffing gross margins to stabilize. We expect improvement in international staffing revenue and other high-margin services to lift our consolidated gross margin in 2026. In a normal demand recovery, we also would expect to see travelers average hours worked increase and placement mix improve, both of which would create margin growth opportunity.
AMN has differentiated itself in many ways this year, including from a financial perspective. At the end of the third quarter, we had a 0 balance on our revolving line of credit, down from $210 million at the end of 2024. In early October, we completed a debt refinancing transaction that strengthened our financial position and improved our corporate debt rating. Our earliest debt expiration was extended out to 2029. Our revolver was downsized to reduce carrying costs and debt leverage covenant increased to give us more operating flexibility.
The next phase of our strategy to gain market share is in view as we see an increasing number of prospects, seeking more complete talent solutions. Our performance on client retention remained strong year-to-date, and our latest Net Promoter Scores were significantly improved from last year.
Our aggressive plan to improve technology, processes and customer focus paid off with a 700 basis point year-over-year improvement in client satisfaction. We continue to expand our number of service lines provided to clients, and we see interest from a number of strategic clients in consolidating their decentralized locum spend.
We are also making progress on our strategy to fill more of the available demand by improving our speed to fill. For example, over the past 12 months, we doubled our fill rate in our vendor-neutral program. Overall, competition for new clients and renewals has seen less motivation from clients to switch vendors as they prioritize other initiatives. However, we remain confident that our client-first approach and industry-leading spectrum of talent solutions will win over the coming quarters and years.
Now, I will turn over the call to Brian to give more details on our latest financial results and business outlook.
Thank you, Cary, and good afternoon, everyone. Third quarter consolidated revenue was $634 million, above the high end of our guidance range, driven by outperformance in our Nurse and Allied and Physician and Leadership segments.
Revenue was down 8% from the prior year and down 4% sequentially. Consolidated gross margin for the third quarter was 29.1% at the high end of our guidance range. Gross margin declined 190 basis points year-over-year and 70 basis points sequentially.
Consolidated SG&A expenses were $139 million compared with $150 million in the prior year and $155 million in the previous quarter. Adjusted SG&A, which excludes certain expenses, was $129 million in the third quarter compared with $141 million in the prior year and $140 million in the previous quarter.
The sequential decrease in adjusted SG&A is primarily attributable to a lower bad debt expense and an unfavorable prior quarter professional liability reserve adjustment. Third quarter Nurse and Allied revenue was $361 million, down 9% from the prior year, though exceeding the high end of our guidance range, driven by higher-than-expected Travel Nurse volume and $12 million of Labor Disruption revenue. Sequentially, segment revenue was down 5%, primarily due to lower volume.
Year-over-year, Nurse and Allied segment volume decreased 11% and average rate and average hours work were flat. Sequentially, volume was down 6%, while the average rate was down 1% and hours work were flat.
Travel Nurse revenue in the third quarter was $196 million, a decrease of 20% from the prior year period and 6% from the prior quarter. Allied revenue in the quarter was $142 million, up 1% year-over-year and down 2% sequentially.
Nurse and Allied gross margin in the third quarter was 24.1%, a decrease of 90 basis points year-over-year. Sequentially, gross margin was up 20 basis points. We noted in the earnings release that our lower consolidated Q4 gross margin guidance is partly influenced by Labor Disruption-related factors. Due in part to timing of activities, Labor Disruption benefited the Nurse and Allied segment gross margin in Q3 by about 150 basis points, with a nominal drag to the segment gross margin in Q4.
We expect the fourth quarter Nurse and Allied segment gross margin to be approximately 21%, with the lower sequential outlook also being driven by seasonally lower average hours works and a modest decline in spreads.
Moving to the Physician and Leadership Solutions segment. Third quarter revenue of $178 million was down 1% year-over-year. Sequentially, revenue was up 2%, mainly driven by Locum Tenens' performance. Locum Tenens' revenue in the quarter was $146 million, up 3% year-over-year and 2% sequentially.
Interim leadership revenue of $23 million decreased 20% from the prior year period, but was up 2% sequentially. Search revenue of $9 million was down 7% year-over-year and flat sequentially. Gross margin for the Physician and Leadership Solutions segment was 27.2%, down 110 basis points year-over-year, attributable to a lower bill pay spread in locum tenens and an unfavorable revenue mix shift.
Sequentially, gross margin decreased 100 basis points, and we expect Q4 segment gross margin to remain consistent with Q3. Technology and Workforce Solutions revenue for the third quarter was $95 million, down 12% year-over-year and 7% sequentially, primarily driven by lower VMS revenue and the sale of Smart Square.
Language Services revenue for the quarter was $75 million, flat year-over-year and down 1% sequentially. VMS revenue for the quarter was $17 million, a decrease of 32% year-over-year and 11% sequentially. Segment gross margin was 51.5%, down 640 basis points from the prior year period due primarily to a lower revenue mix from VMS, the sale of Smart Square and lower margin in language services. Sequentially, gross margin declined 360 basis points, driven by the same factors.
We anticipate segment gross margin stepping down by about 100 basis points in the fourth quarter, with lower expected VMS revenue along with pricing pressure in Language Services. Consolidated operating income of $48 million included a $39 million gain on the sale of Smart Square. Third quarter consolidated adjusted EBITDA was $58 million, down 22% year-over-year and 1% sequentially.
Adjusted EBITDA margin for the quarter was 9.1%, down 160 basis points from the prior year period and up 20 basis points sequentially. Third quarter net income was $29 million. This compared with net income of $7 million in the prior year period and a net loss of $116 million in the prior quarter, which included noncash goodwill and intangible asset impairment charges.
Third quarter GAAP diluted earnings per share was $0.76. Adjusted earnings per share for the quarter was $0.39 compared with $0.61 in the prior year period and $0.30 in the prior quarter. Days sales outstanding for the quarter were 57 days, which was 3 days lower than a year ago and 3 days higher sequentially.
Operating cash flow for the third quarter was $23 million and capital expenditures were $8 million. As of September 30, we had cash and equivalents of $53 million and total debt of $850 million. We ended the quarter with a net leverage ratio of 3.3x to 1.
In October, we completed the refinancing of $500 million of unsecured notes, due in 2027; with $400 million of new unsecured notes, due in 2031. Concurrently, we downsized our revolver capacity to $450 million and increased our maximum leverage ratio covenant. These transactions immediately increased our balance sheet resilience.
Moving to fourth quarter guidance. We project consolidated revenue to be in the range of $715 million to $730 million. This revenue guidance includes approximately $100 million related to Labor Disruption support. Gross margin is projected to be between 25.5% and 26%. Excluding the impact of Labor Disruption revenue, our gross margin would be higher by about 100 basis points.
Reported SG&A expenses are projected to be approximately 20% to 20.5% of revenue and include about $5 million of additional costs in the quarter to support Labor Disruption activity. Operating margin is expected to be 0.2% to 0.8% and adjusted EBITDA margin is expected to be 6.8% to 7.3%. Additional fourth quarter guidance details can be found in today's earnings release.
Now operator, please open up the call for questions.
[Operator Instructions] And our first question comes from Trevor Romeo of William Blair.
2. Question Answer
First one, I had kind of a -- might be a multipart question on the margin guidance just because I know there are kind of a lot of moving pieces here. So maybe just starting with the gross margins. I think, you're 29% in Q3, 100 basis points of unfavorable from the Labor Disruption in Q4, but I think, even if you add that back, it's like a 240 to 250 basis point drop sequentially in gross margin. So could you help us think about, I guess, the individual drivers of that on the consolidated and the magnitude of each one?
Sure. Yes, Trevor, this is Brian. No problem. Yes. So I start with also on the third quarter, that the 29% just for the Labor Disruption event that we supported some of the timing activities, we actually got a benefit to some degree to the margin in the third quarter as well. So that 29% to get that closer to 28% if you'd normalize the third quarter as well. And then we tried to give enough color on the fourth quarter on the guide that if you were to kind of remove the impact as well, you're closer to 27% in the high 26s if you take the midpoint of our range and that 100 basis points.
So you're talking about a little over 100 basis points change sequentially from Q3 to Q4 to kind of remove that from the equation. And there's a couple of factors driving that. One is just revenue mix between the segments. You have a -- if you look at the guidance we gave, you've got some decline in both our Physician and Leadership and Technology Workforce Solutions segments, both of which have a higher margin profile. So those are probably the main things that are driving that.
And then to a lesser degree, you have some impact from just seasonality. We mentioned even in Nurse and Allied, where there's usually a little bit lower hours work, and that has a bit of a drag on the margin in the fourth quarter. And kind of the last thing, because you said there's multiple parts here, the third quarter, we did get a little bit of a benefit as well from some favorability on sales reserves in Nurse and Allied. And so that's why you're seeing that larger change from quarter-to-quarter in the margins.
Okay. Brian, that's helpful. If I could maybe follow up on, I guess, the EBITDA margin guidance. I think, just if we're trying to isolate, maybe the ex the big Labor Disruption event, just what's the underlying performance of the business, I guess. If I just take the midpoint of your guidance there, I think, I get about $50 million, $51 million of EBITDA, but you obviously have that big Labor Disruption event in there. So if we're trying to use that as kind of a guide for modeling going forward, maybe you could just help us think about what the underlying EBITDA would look like and how that could evolve going forward?
Sure. Yes. I mean, we tried to give enough of the components there. The margin -- you said there was a large amount of revenue, obviously, in the guide from that event, and that did have a larger -- I mean, a lower -- slightly lower margin profile to it. When you have something of that magnitude, there's a fair amount of what we're billing for that are really just pass-through costs for things like transportation.
And so that impacts the margin profile when it's of that magnitude and just some of the timing again is between the third and the fourth quarter, but I think, you could probably think about the ex that amount, you're -- we're in the kind of mid-6s EBITDA margin range for the guide if you were to move the impact of the Labor Disruption in the quarter.
Okay. That's helpful. And then maybe if I could just do one more, if you don't mind. I guess, encouraging definitely to hear about sequential volume growth into Q4. So I guess my question there is, you did talk about winter orders being up, I think, modestly versus last year. I guess, do you get the sense that this is more of a winter phenomenon? Or would you kind of chalk up the sequential volume growth to some kind of underlying improvement in demand, and maybe a shift in the contingent versus permanent staff that, I think, Cary alluded to in the comments?
Yes. So Trevor, we're really looking at it as being both. And so if I kind of give you the shape of demand since our last call, so we talked about in the second quarter, we saw a pause in some decision-making as people really trying to digest potential policy changes. If I take Travel Nurse, so the low point in demand was mid-May, and fast forward to now, we're up about 50% in demand from that low point.
We're still a little bit off year-over-year from where we were last year, but you've seen consistent growth since that low point in May in Travel Nurse. In allied demand, we're now flat year-over-year. And in Locums, we've seen growth in Locums Q2 to Q3. We're still mid-single-digit down year-over-year. But what we're seeing -- and certainly, we had healthy winter orders come in, but we're seeing demand improvement broader than just winter orders. And really, that combination is what's driving what you're seeing Q3 to Q4. And if we even strip out some of the seasonality piece, we're seeing a good growth in the fourth quarter.
And our next question comes from Kevin Fischbeck of Bank of America.
Great. Maybe just to go back to the gross margin discussion. I guess in Q3, it looked like all the businesses had year-over-year gross margin compression. Can you just talk a little bit about the outlook for gross margins for next year across the businesses? It sounds like you think that the demand firming in Nurse and Allied is going to provide some stability there, but I guess it wasn't clear to me exactly what you were thinking about the other 2 businesses.
Yes. Let me maybe pick up on some themes that we see going into next year. And I know we don't give guidance, but I'll give you some transparency about what we see. First, and this has been a negative impact for us the past 2-plus years, is we expect to see more favorable revenue mix. That will be coming from international nurse, which we already have seen enough from a visa retrogression this year to have some transparency about those placements next year. We expect International Nurse to be up from a revenue standpoint, 20-plus percent, and that's a higher-margin business.
VMS, we've had a tailwind in VMS predominantly from our Medefis marketplace platform of clients going off. And so we would expect, as we get into 2023, for VMS to turn positive, and that has been a headwind for us. And then we also are seeing healthy demand increases from our leadership and search businesses. And those are the higher-margin businesses, both in PLS, and they're accretive to margin from a consolidated standpoint. So Kevin, first is, we're seeing more tailwinds around some of our higher-margin businesses as we leave this year and go into 2026.
We've also been very focused on filling, especially where we have more direct access to demand. So think MSPs, our own VMS platform and direct accounts. I mentioned this in my opening remarks, year-over-year, we've doubled our internal capture on our own VMS. So we'll continue to focus on that. And then we're starting to see with some clients, some movement in bill rates. That's really from an industry standpoint. One of the things we'll be looking for as we get into 2026 is more consistent improvement of bill rates, which would obviously have a strong impact on margins.
Okay. Great. And the VMS improvement that you expect next year, is that tied? Or I guess when, I think, about VMS, I kind of think about it more tied broadly to Nurse demand. Is that happening because you expect Nurse and Allied demand to grow, and therefore, VMS will grow along with that? Or are you seeing...
We're not necessarily assuming strong underlying growth. We just have had post-COVID, some clients who had gone on to this marketplace VMS coming off of it. And that process had a fairly long tail on it that we are at the very end of. And we've also layered in some wins that we've had this year. So the combination of those 2 things will help us get back to growth on our VMS business in 2026.
Okay. And I guess maybe just talk a little bit about the competitive dynamic, I guess, in the past, you noted that there's been some players who were kind of aggressive. How do you feel broadly about the competitive backdrop right now?
The markets remain competitive, and we're seeing that both in terms of what we see for clients and in our overall pipeline as well as just competition to fill open orders, but we're not seeing competitors be irrational, and so if orders aren't priced at market, you're seeing them stay open.
So while we're seeing a competitive environment, we also see rationality in that environment. And we feel like the market is really favoring total talent solutions platforms. And so that is a message that's resounding in the marketplace of looking and saying, I'm not coming in just to fill on one type of solution, but I'm coming in and I'm helping you build a sustainable workforce solution. And so we feel like our platform is very well positioned as the market goes into that next phase.
And our next question comes from Tobey Sommer of Truist.
I want to ask something just kind of out in the future here. If you look at the federal health care funding cuts, such as Medicaid, and there are more to a decent list of them. Do you see customers having higher or lower demand for contingent labor because these changes kind of get feathered in over time, independent of the shutdown outcome?
Yes, you're going to see some variance among systems about both where they are overall financially and kind of where they are in workforce in general, but the 2 themes that I'd say are predominant across all of our clients is they are focused on revenue growth, and they're simultaneously very focused on cost containment. So the more prevalent sentiment that we hear is pretty consistent with what you've heard from some of the public company health systems, who have reported over the past couple of weeks, which is they're still expecting to have low single-digit increases in patient utilization.
They're focused on how do we ensure that we're able to meet those demands, but also do it from a workforce standpoint in an affordable way, knowing that labor has been increasing higher than reimbursement rates. So there is a lot of focus on sustainability of solutions, which gets a little bit back to my point around total talent solutions platform.
And the other piece, Tobey, that's really more recent, we actually heard this at a health care conference this week is there's growing recognition about the affordability of contingent labor relative to permanent labor, and particularly by finance executives. So if you look at where we are on a premium of contingent labor to fully loaded permanent costs, you're under 10%.
And so when you look at this past quarter, permanent hiring in health care was down the most we've seen in several years. You've also seen this increase in demand since the second quarter for contingent, and a growing recognition about the affordability of contingent and the role it can play in creating a flexible workforce.
Well, having finance professionals be advocates would be a reversal and probably just what the doctor ordered, so to speak. Within Nurse and Allied, could you talk about from a bill rate, pay rate and spread perspective, do you think bill rates can rise enough so that you can pass on at least the elements that seem to be empirically with a decent amount of inflation, I'm thinking of per diems and housing specifically.
I think, we have been talking about stabilization of bill rates for some time period. And as I mentioned, for Nurse and Allied, we're going to see in the fourth quarter, a very slight increase in bill rates for the first time in 3 years. We need to see that more consistently, Tobey. So you just look at it from an underlying labor cost standpoint, you really do need to, as an industry, get to increasing bill rates. We're seeing clients who've had open orders out there for some time period that aren't priced to market. We saw that even today, a client changed some bill rates. So we are starting to see that gradually happen. You just need to see it more consistently as we get into 2026.
Yes. So I'd just add, I think, for the more near term, our -- the rate increases that we think are needed are really to be more attractive when you look at what the compensation packages need to be just to entice a nurse to take an assignment. So we're not necessarily focused on using that as a way to expand margins near term. That's really about how do we drive more volume.
When we have clients that have open orders sitting there for a period of time, they're recognizing that they probably -- they pressure tested rates long enough to know that they're not going to get filled. And if they have that need, particularly as they're maybe not doing as much permanent hiring, they're looking at that cost equation. So we're -- I think, we're more excited about these potential rate increases being utilized to fill more orders. That will allow us to drive more volume. We'll get operating leverage on that. We've got -- this business can support a larger amount of volume that we have today, and we'll gain a lot of operating leverage on that. So that's kind of goal #1 for us.
The other thing that will typically follow that, as Karen mentioned earlier, is if there is that greater need and urgency to get their orders filled, we'll also continue to educate on utilizing the travelers that have an assignment more. And so as you see the average hours increase, that's where you start to see some of that pull-through that you're talking about because some of those costs like per diems are more fixed in nature, but -- and that will allow kind of a win for both sides. The client already has people on the ground that can do more work for them, and that has some margin benefit for us as well.
And Tobey, what I would say is if you think about this from a market standpoint, we see -- we don't have a problem with supply if you have an order that is priced right. And so that is going to be the factor that we will continue to be monitoring around clients, not only the demand increasing, but are you seeing a recognition of places, where if you need to get the order filled, you increase bill rates.
I'm going to sneak in one last one, if I could. Your only public competitor has got due to potentially be acquired here in the next month. Is that a good thing or a bad thing for AMN and the industry if that goes through or does not?
It doesn't change our strategy or what we're going to do. So we do think in the intermediate and long term, this industry needs to consolidate. So I think, that is a direction that we think will happen. For this particular deal, it doesn't change what we would do in 2026 or our strategy.
Our next question comes from A.J. Rice of UBS.
Can you just maybe give us some update on what you're seeing on the clinician side, the supply of clinicians re-upping for additional assignments, new people applying, et cetera? Can you give us any flavor for how you're seeing that developed and expectations around rate increases that you need to get to get people to -- incremental people to sign up for travel assignments?
Yes. Overall, we are still seeing a healthy supply now in certain locations or certain specialties, you may be more constrained. I'd say overall in Locums, you see more supply challenges than you do in Nurse and Allied more broadly. What we are seeing is if an order is priced right, then we can fill that order. And so that is the dynamic that we've been spending a lot of time with clients on is, A.J., how do we get them to a point where we can actually fill that order?
Yes. I mean, we're [indiscernible] the investments we're making in our cash flow, we talked about in previous calls, the ability to engage with clinicians more directly, get opportunities in front of them with more speed and more frequent touch points. We think that's what we're going to continue to make more differentiation so that we can attract more supply to AMN. And then for those orders that have rates, we'll get them filled, but we have a lot of -- we put a lot of work around how do we improve that clinician experience so that we are thought of as the employer of choice. At this time, we've had some really good success in the investments we've made there.
And A.J., as an example. We have something called PreCheck, where we can outline the type of role that's going to be interesting to you that we can automatically fill. And we can get a sense from different clinicians about what type of pay package they would need to be able to take jobs.
So we're getting even better at predictive analytics to be able to help our clients understand where supply is, what their expectations are -- and that, combined with a lot of data that we have, and we've put on our Workwise platform around going market rates, we think that's going to become increasingly helpful to them in 2026 to be able to get the type of contingent staff that they need.
Interesting. When you think about the Allied business or maybe even Locums, I know, there's different specialties that come and go in demand. Are you seeing any changes in the demand -- underlying demand for certain types of clinicians in either of those categories, or easing of demand for people in any of those categories?
But I would -- so for Locums, if you look year-over-year, 8 of our 10 specialties grew. So there was broad-based demand of Locum across the specialties. If you looked at it more recently, the specialty demand really was driven at a higher level by surgery, hospitalist, dentistry and anesthesia. So Locums, we're seeing broad-based demand. I'd say the 4 that I just mentioned, we're seeing strong demand, particularly over the past quarter. From an allied standpoint, therapy and imaging were the top. And I would also say, because in our Allied business, we have a schools business that grew very healthy this year, and we would expect that to continue into 2026.
And maybe just a final question on new business opportunities. Are you seeing more opportunities? There's turnover in MSPs? Are you seeing more opportunities in just traditional non-MSP clients? Any way to characterize where the new business opportunities are concentrated?
Yes. So a couple of things. One, if you look at our pipeline, our pipeline actually grew very nicely quarter-over-quarter. Underneath it, between MSP and VMS, there is a bias towards MSP in the pipeline. We had been trending post-COVID where the pipeline had a bias towards VMS. Now both grew quarter-over-quarter, but we do see a bias in MSP.
The other 2 themes that we see from a sales standpoint is, we have momentum in extensions. And so that has been a focus for us to do more with our current clients. And so we are seeing momentum in expansions with clients. A focus has been on how we put Locums in there, language services. And then I'd say the last theme that we're seeing from a sales standpoint is, if we lose in a pipeline, we are increasingly losing to the incumbent and to inertia. And so again, we think we have a differentiated platform around total talent solutions as we go into 2026 that we'll be able to combat some of that.
And our next question comes from Mark Marcon of Robert W. Baird.
Cary, Brian, you mentioned that if orders are priced right, we can get the clinicians. When you talked about the orders trending up, are you talking about only the orders that you would consider to be priced right? Or is that inclusive of orders that potentially aren't really fillable?
It's inclusive of all orders, but what I would say underneath that is if we look at more kind of aged open orders, there's been a very slight uptick, but not meaningfully.
Yes. And as we've talked about the trends in the last few months, Mark, the winter order, more of those are typically priced at the rate we fill. And that's why you saw that the third quarter, although we saw a sequential decline as we expected, we beat the guidance we gave. And it's -- as we started getting more of those orders in, the team did a great job of filling them quickly. And some of that -- and even in the extension rates when they came back, we're able to keep more on assignment.
So that impacts the third quarter, but even more so, the sequential increase that we're going to see in the fourth quarter is driven by that. And then for those other ones, some of these orders that have lower rates, it's not that none of them get filled. It's just that a much lower percentage. So as they're posting those, the team will work, but the fill rates and the time to fill is lower overall. And so Cary mentioned we had a client today that on some of those orders have been sitting there, they increased the rate because they're recognizing they need to get them filled.
And so that's taking an existing order and getting a better rate, where the team will be able to act on it immediately and get the majority of those filled as well. So it's -- when we look at the order trends, we've always kind of included everything, but as that mix changes towards more of them having rates that are priced appropriately, we know we can convert more of them to placements.
Great. That's encouraging. And then can you talk a little bit more about what you're seeing in terms of demand trends out of rural hospitals and particularly the ones that have been impacted by Medicaid cuts. We're starting to hear a little bit about how some of those facilities might be trending more towards travel nursing to an even greater extent than they already did, partially because if they're uncertain about their financial outlook, they'd rather turn to the travelers. Is that true? Does that resonate? What are you seeing from that perspective?
We haven't seen any discernible trends or differences in rural hospitals. What I will say that has existed for some time is international nurses are typically a very good solution, broadly speaking, for a number of health systems, but in particular, for rural systems. It's attractive for the clinician coming over and bringing their family over. It's a very cost-effective way for these systems to be able to put in a longer-term clinician in there. So the international dimension is typically, marginally more important to rural hospitals than you would see elsewhere, but we haven't seen any real noticeable difference in rural hospitals versus others.
But I think, that decision-making that is what we're seeing as you've got more CFOs and finance folks involved in some of the buying decisions is that there is uncertainty and so wanting that flexibility as they pull back on some of their permanent hiring and recognizing that the incremental cost for bringing in contract labor is about as low as it's ever been. And so I think, that not only in the rural areas, maybe they don't have access otherwise or they want that flexibility, that same type of dynamic we're seeing with certain clients in different settings as well.
Great. And then, can you -- just in terms of normal seasonality, if we strip out the Labor Disruption revenue from the fourth quarter, how should we think about the normal seasonality in terms of Q4 and Q1? Typically, we see the winter orders staying through Q1, but wondering if there's anything that would change that dynamic this year?
No, I don't think anything that would change that dynamic. Those assignments, some of them do carry into the first quarter. So it wouldn't be unreasonable to expect that we'd see nominal growth from Q4 to Q1 in nursing. We still have work to do to fill in that quarter, but with the demand trends, especially as we saw more of a decline during the third quarter. And then as that's picked up through the fourth quarter, that should carry through into the first quarter as well.
We'll also, as Cary mentioned, that we've had a real strong year with schools business. So that should be -- that will carry through into that first quarter for Allied as well. And then seasonally, we're lower in our Locums business and even search entered some degree. And so as that bounces back in the first quarter as well, those are -- that will be a sequential growth is what we've seen historically, and we would expect to see this year as well.
And our next question comes from Constantine Davides of Citizens.
Cary, in your prepared remarks, you highlighted the Locum days book strength for your MSP clients. Can you expand upon exactly what you're doing to better leverage your MSP relationships for Locum starting with what transpired in the third quarter? And then I guess as a follow-up to that, is there a structural reason why the percentage of revenue from MSPs for Locums has kind of stayed pretty steady in the high teens level versus what you see typically in Nurse and Allied?
Yes. So a couple of things about what we're doing in Locum. One is, we have made very intentional moves over the past 18 months to structurally be able to support our Locums MSPs. That includes in our ShiftWise Flex platform, having capabilities that we rolled out at the end of last year to extend what we had done for Nurse and Allied into Locums. We also added our Locums clinicians onto Passport earlier this year. So we have more AMN platform integration of our Locums business into core technology that we have built to support our Nurse and Allied business.
Second is, we have been proactively selling to our current clients, Locum's capabilities. In a number of cases, one of the trends that you're seeing broadly is a desire, particularly for regional national systems to centralize pretty decentralized Locum spend. Oftentimes, that will happen with the same program leaders that lead Nurse and Allied. So we've been doing those 2 things.
And then the third very important piece is that if you look at year-over-year, our fill rates in Locums, you have seen one of the biggest increases of our fill rates in our MSPs. So we're not only prioritizing continuing to expand our Locums MSP clients and the platform that we have underneath it, but we have a world-class Locums MSP team that has increased our fill rate on those platforms year-over-year.
And then just a few moving pieces with Labor Disruption in the third quarter and fourth quarter, but overall, a pretty strong year for that part of your business. And as you look ahead to 2026, and I know forecasting this activity is probably an imprecise science, but at a high level, how is 2026 shaping up from a collective bargaining standpoint across the client base?
Yes. So a couple of things. If you just look at statistically across what has happened in collective bargaining agreements, broadly, you are seeing more strikes than you had seen historically. So that is one trend that we follow. We have a healthy pipeline of strikes that our clients have asked us to engage in over the next 12 months. Strike -- our strike solution set is a very important one for clients that have unionized populations, and we only support strikes of our clients, but we are seeing continued strong activity there. And so we would expect our strike business to continue to be active over the next 12 months.
Great. And then if I could just sneak one last one in. The language services part of the business, can you just expand a little bit on the sort of the demand there, the level of price compression you're seeing? And I guess just your longer-term thoughts on the business, just given how quickly technology in that area seems to be evolving.
Let me start first on the long term. This business is really important to us, not just in terms of what it can do to support our clients and to support them in providing really strong patient care. It's incredibly important around access. So this is a business that we like. We have seen growth moderate throughout the year. That has coincided as others in the industry have seen as well with tougher immigration policies.
And so a bit of what you've seen, Constantine, in the second quarter, and you saw it again this quarter is if you've seen some modest growth in minutes, you've seen that offset by pricing pressure. And so we saw that this quarter, we would expect to see that again next quarter. We do expect there's some changes that we are going to make to our operating model in terms of -- that will improve our cost to serve that we would expect you to start seeing the benefit of that in 2026, but we do think that growth will be more modest than you may have seen 18 months ago, but we still think that this is a growth business and that we are well positioned to be able to win in it.
And our next question comes from Jack Slevin of Jefferies.
I'm going to apologize in advance, but I want to go back over some of the strike margin stuff. So if you'll just bear with me, what I'm getting is the 10 basis point gross margin impact that you called out in the $5 million of G&A. But Brian, I thought, I also heard a mid-6s comment on EBITDA margin ex-strike. So on my math, it's a little below 6%, if you plug those other 2 pieces. I just want to make sure I heard that commentary right.
And then the second piece of the question on that front. I think, I heard some commentary that maybe made it sound like the Labor Disruption trends ultimately benefited 3Q based on some of the stuff that's happening now. Did I hear that correctly? Or just trying to understand on the strike front sort of how to take the balance, a few comments on that.
Yes, I'll take those in reverse order. So yes, you did hear right. So hear that the -- just by some of the -- the way the services were rolled out for the event, we got a margin benefit in the third quarter. So call it, somewhere to the range of 100 basis points gross margin on the consolidated and for Q3. And then for Q4, we kind of called out because we have this large amount of revenue in Nurse and Allied, which has a large -- a lower margin profile that, that dragged the consolidated margin down in our guidance.
And so if you were to add that back and even maybe just take like a small amount of like what we said kind of normalized, you'd end up somewhere closer to 27%. So 29% becomes 28% and then the guide we give with that adjustment is more like 27%. So there's about 100 basis points change in the margin from Q3 to Q4 on that adjusted basis. Does that help?
Yes, I think that's helpful. Yes. No, no, I appreciate it.
You did hear correct. I was trying to say, if you were to take our guidance for revenue and remove all or most of the -- that strike revenue number we gave that you should be able to take the inputs we gave and you'd end up somewhere in the kind of mid-6s range for adjusted EBITDA margin in the quarter.
Okay. Got it. That's really helpful. And then second one on this front. I mean, I think, what it sounds like to me, I'm hearing a lot of things that might trend positively when you talk about VMS, return on international, the schools points you brought up and then just overall having a bill rate environment that has been pretty stable to now possibly trending up into '26.
If you look at the ex-strike margins in 4Q and appreciating there's a little bit of seasonality there. But if you look at the ex-strike margins in 4Q, is that a decent way to think about a floor on where margins can go going forward? Or can you just help me piece together sort of how we go from that margin level forward?
Yes. The short answer is yes. We look at that as probably a floor again. If you take it somewhere in the -- if you took the guidance we gave and you get at the 100 basis points, you're looking at 26.5% to 27%. And again, if you assume though some normalized amount of labor restructuring activity, you're somewhere in that 27% range. And that, I think, is a reasonable floor. And then you can kind of build from the components that Terry mentioned earlier in terms of the opportunities we see heading into '26, some of which we have clear line of sight to like with the volume increase we expect to see in international starting in Q1 and others that we'll be aggressively working through during the year.
And our next question comes from Jeff Silber of BMO Capital Markets.
I know it's late. I'll just ask one. I think, last quarter, you talked about some of the weakness in academic medical centers considering what was going on with funding, et cetera. Can we get an update on that? Has that changed at all?
Yes. Trend remains the same. So if we look at where academic medical centers are year-over-year, they are still lagging our non-academic medical care systems, but we are getting closer to them being stabilized. And I would expect that as we really start, kind of, 2026, that they would be, if not stabilized, very close to stabilized.
And can you just remind me what percentage of the business that is?
I'm pulling it up from last quarter.
20%.
Yes.
I'm showing no further questions. I'd like to turn it back to Cary Grace for closing remarks.
Thank you. As we focus on a strong finish to the year and look forward to 2026, I want to thank our AMN team members who have worked tirelessly to deliver industry-leading total talent solutions to health care providers to enable them to provide high-quality and uninterrupted patient care. We are who we are because of the dedication of our AMN team. We appreciate your interest in AMN Healthcare and look forward to talking to you next quarter. Thank you, operator.
This concludes today's conference call. Thank you for participating, and you may now disconnect.
AMN Healthcare Services, Inc. — Q3 2025 Earnings Call
Financial data from AMN Healthcare Services, Inc.
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 3,434 3,434 |
24%
24%
100%
|
|
| - Direct Costs | 2,480 2,480 |
28%
28%
72%
|
|
| Gross Profit | 954 954 |
15%
15%
28%
|
|
| - Selling and Administrative Expenses | 657 657 |
7%
7%
19%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 298 298 |
38%
38%
9%
|
|
| - Depreciation and Amortization | 137 137 |
13%
13%
4%
|
|
| EBIT (Operating Income) EBIT | 161 161 |
174%
174%
5%
|
|
| Net Profit | 105 105 |
135%
135%
3%
|
|
In millions USD.
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AMN Healthcare Services, Inc. Stock News
Company Profile
AMN Healthcare Services, Inc. provides healthcare workforce solutions and staffing services to healthcare facilities across the nation. Its workforce solutions include managed services programs and recruitment process outsourcing. The company operates through the following segments: Nurse and Allied Solutions, Locum Tenens Solutions and Other Workforce Solutions. The Nurse and Allied Solutions segment provides hospital and other healthcare facilities with a range of clinical workforce solutions. The Locum Tenens Solutions segment offers managed service programs, vendor management systems solution and traditional temporary staffing. The Other Workforce Solutions other workforce solutions segment consists of the following Company businesses physician permanent placement services, healthcare interim leadership staffing and executive search services, vendor management systems, recruitment process outsourcing, education, mid-revenue cycle management, and workforce optimization services. AMN Healthcare Services was founded on November 10, 1997 and is headquartered in San Diego, CA.
StocksGuide Premium
| Head office | United States |
| CEO | Ms. Grace |
| Employees | 2,664 |
| Founded | 1997 |
| Website | www.amnhealthcare.com |
