AMN Healthcare Services, Inc. (NYSE:AMN) Q2 2023 Earnings Call Transcript

Trevor Romeo: Hi, good afternoon. Thanks so much for taking the questions. One, I kind of appreciate the commentary on winter order indications kind of giving you confidence in Q4 growing sequentially for Nursing and Allied Solutions. I guess as you look kind of forward based on what you’re seeing and hearing now, does it feel like there’s potential for further softness in either bill rates or volumes next year after the winter? Or does it kind of feel like Q3 of this year will truly be the trough for the travel business in this demand kind of cycle? And hospitals are comfortable with where they stand kind of in terms of contract labor?

Cary Grace: Yes, let me give you some macro comments, and then I’ll let Landry and Jeff chime in a little bit on what we could expect to see from a bill rate. And I think we talked a bit about what we expect to see from a demand standpoint. If you look at the macro thesis that we’ve talked about for some time, that remains intact. And so on the one side, we expect to continue to see an increase in overall healthcare demand utilization, aging demographics, a number of factors going into that, and you will continue to have supply constraints against that. And so we expect for there to continue to be demand across the board for the services we provide, everything from workforce planning into how we operationalize their workforce strategies of which contingent staffing is a piece of that.

If you look at on average, what you have seen and I think this has been reinforced in the commentary from some of the public company hospital systems, on average, you’re getting back into a range of normal on contingent labor. The caveat that I would put to that is clients are at different paces of change in getting there. So while we have clients that have gotten down into what they would consider some of their target rates, we have other clients that still are at high levels for a variety of reasons. And so when we think about what that looks like, this year really has been one of how do we get back into more of a normal, sustainable workforce framework. So we expect that we will continue to see the supply demand imbalance, creating a need for our broad based services as we go forward.

Jeff Knudson: Yes. And Trevor, on the bill rate side, our expectations for the fourth quarter is that bill rates would be down low single-digits off of Q3 levels, that would put 2023 exit rate, call it somewhere in the 32%, 33% above pre-pandemic levels, or a 7% CAGR from 2019. And that’s very much in line with where, from a CAGR standpoint, where annualized nurse wage inflation is running since 2019. So that gives us confidence that that’s the starting point for bill rates as we think about ’24.

Trevor Romeo: Yes, understood. Thanks for that color. And then I just kind of wanted to touch on the Locums business, which I think you highlighted as a record revenue quarter in the second quarter. Just wondering, are you seeing broad based increases in demand across the Locums book or any particular specialties driving the strength and then given the strength in Q2 for Locums, I guess how do you reconcile that with the Q3 guide of PLS segment kind of being down 3% to 5%?

Cary Grace: Hey, as I turn that over to James to give some color, I want to just underscore and congratulate our entire Locums team for the quarter. It was extraordinary. James, you want to talk a little bit about what you’re seeing?