Operator: One moment for our next question. Our next question comes from Jeffrey Silber of BMO Capital Markets. Your line is now open.
Jeffrey Silber: Thank you so much . You spoke earlier in terms of working with your clients to help them manage their own costs. I’m just wondering if you can give us a little bit more color on what you’re doing internally to manage your own cost in this environment of declining revenues to try to keep your margins above that 15% level?
Cary Grace: Yes. Let me take that one first. For all of you who have been with us throughout the years, you have witnessed firsthand that AMN has always adapted well as market conditions fluctuate, whether that is flexing up to demand or flexing down to demand. And it really is a core value proposition to our clients because we are there to help them in times of need and be able to meet their needs quickly and seamlessly. So if you look at our ability to do that, particularly even in this quarter, while our revenues went down 27% year-over-year, our adjusted SG&A is down 20% year-over-year, and the majority of that expense reduction has not impacted headcount. So the things that we are doing, one is we have active experience planning, so we went into this year knowing that we were working with our clients to reduce key elements of their workforce spend and plan for that.
We are always doing continuous performance management, attrition as the primary drivers of how we continue to manage those costs.
Jeffrey Silber: Okay. That’s really helpful. Appreciate that. Jeff, I think you had mentioned that you — I don’t know if you used the word goals, but for 2023, the revenue and adjusted EBITDA numbers that you gave us assumes some modest demand improvement. What would those numbers be if there’s no demand improvement?
Jeff Knudson: Yeah, I would say it’s in the low single digit range, Jeff, is what the improvement is into Q3 and Q4 in the demand environment. And again, our viewpoint on bill rates is that they’ll be down high single digits in the second quarter, down mid-single digits in the third quarter, and that’s informed on the visibility we have into Q3 right now, as well as the open orders that we’re recruiting for, and then flat sequentially into Q4. So that’s the bill rate side of the equation, and it’s not a huge lift on the volume side from what we’re seeing right now. It’s, again, in that low single-digit range.
Jeffrey Silber: So the demand improvement is mostly coming in the fourth quarter, that’s what you’re saying?
Jeff Knudson: Sequentially over Q3, yeah, because Q2, we do expect Q3 will be down mid-single digits for Q2.
Jeffrey Silber: All right. Thanks so much for clarifying that. I appreciate it.
Operator: One moment for our next question. Our next question comes from Tobey Sommer of Truist Securities. Tobey, your line is now open.
Tobey Sommer: Thanks. As the business and demand trends stabilize, I’m curious if demand picks up, do you think you’ll be able to grow your Travel Nurse business above and beyond seasonality at current pricing trends, or would it require bill rates out in the market to increase to lure in some additional supply to generate growth?
Cary Grace: So if you step back and think a little bit about what we typically see from a volume standpoint, as volumes go up, you tend to see bill rates and pay rates have to go up to be able to attract that. I think what we’ve seen and maybe the balancing piece of that that we have witnessed over the past couple of quarters is you’ve actually seen stabilization really since the high point of Q1, 2022. So I would say at this point, we’re not assuming that you’re going to see a substantial increase in bill rates. And we still think that the balance between bill rates and volume could still define if you had a slight increase in volume towards the end of the year.
Tobey Sommer: Okay. Could you talk to us about two sort of detailed questions. How is your spend under management from an MSP perspective and churn within the book of business? And maybe could you contextualize winter orders sort of size that and influence and how much higher price that is than the average? Thank you.
Cary Grace: Let me give some overall context about MSP, and then I’ll have Landry talk a little bit about the winter orders. As you have seen, as we talked about just the significance of our MSP programs in terms of spend and I’d say this was particularly true during COVID, where we made a very intentional and strategic priority to focus our limited supply on our MSP clients. Our MSP spend tends to track what you see overall in our Nurse and Allied business because that is the biggest program under our MSPs. So, when you go through and as we talk about some of what we’re seeing overall in the Nurse and Allied business, that tends to align well with what we’re seeing overall in our MSP. Now, as we’ve come out of the pandemic, we have been able to provide more support than we did during the pandemic to some of our BMS programs. And so you’re seeing that alignment still stay correlated, but it’s not quite as one for one as you may have seen during the pandemic.
Landry Seedig: Hey Tobey, I’ll hit on the winter orders real quick. This is Landry. So, our definition of winter orders whenever a client is giving us bulk orders kind of in the June to July timeframe for orders or start dates that typically start either at the latter end of Q3 or throughout Q4. So, that’s kind of the way that we label our winter orders. The last couple of years, it’s been hard for some of those accounts to plan for that, just with the different fluctuations that were going on in the market. We are anticipating winter needs this year. And you asked about the bill rates on them, I’d say the biggest reason for the bill rate increase is that we see higher utilization in our clients that drive higher rates. So, a lot of it is more of a geographic phenomenon that it is, customers truly paying a higher rate for that time of the year.
Operator: Our next question comes from A.J. Rice of Credit Suisse. Your line is now open.
