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

And one other thing I should mention, Brian is, if we look year-over-year at our MSP pipeline, our pipeline is 300% higher than this time last year.

Brian Tanquilut: Got it. Okay, that’s awesome. I guess my follow-up kind of related as well. I mean as AJ mentioned earlier, I mean one of your competitors is talking about challenges with recruitment and whatnot, but they called out the tightening of spread between bill rate and take rate. And as I look at your margins in Nurse and Allied for the quarter, obviously you’re not showing any deterioration. So maybe just curious what your outlook is for margins going forward. Gross margins in Nurse and Allied given those commentaries?

Jeff Knudson: We would expect Nurse and Allied gross margins in the fourth quarter. That’s typically seasonally low for us, Brian, just because of the hours worked. And the Q3 levels should be pretty comparable to where we were in Q2.

Brian Tanquilut: Got it. All right. Thank you.

Operator: Thank you. One moment for our next question. Next question is from Kevin Fischbeck of Bank of America.

Kevin Fischbeck: Great, thanks. Wanted to ask about what you guys believe your visibility is into the Q4 trend, because I guess this is now two quarters where both you and your public competitor have taken down guidance for the year. And so it seems like the market is in flux, and it’s kind of hard to hit what seems to be a moving target, because I think last quarter you both sounded confident that things were firming. I guess is there a reason to believe that the data points you’re getting today are better or more informed data points than what you saw at this point last year? Or whether things are still in flux and visibility is still kind of below average?

Jeff Knudson: Yes, Kevin, I would say for us, we would really say the behavior among our top clients was very different than what we had seen historically. We’ve talked many times about how we thought this year would return to some level of normal seasonal patterns, and we did assume a partial recovery, and then we saw utilization decline into the third quarter. As it relates to Q4, we do believe that the stability that we’ve seen in the demand trends over the past three months, as well as the indications that we’ve received from our clients on their winter order needs, is what gives us that visibility into Q4 and that Nurse and Allied revenue will increase sequentially over Q3 and that Q3 will be the trough within Nurse and Allied.

Kevin Fischbeck: Okay, and I guess maybe your commentary is a little bit different than theirs, but I guess the competitor was kind of saying that there were a lot of orders that were coming in below kind of market rates and just not being filled. I don’t call them phantom orders, but kind of orders that potentially the hospital never fully expected to be filled. I just want to make sure that I have read that these orders in your view are kind of orders that make sense at or near market rates that you’re seeing firming and there’s no mix in kind of how those orders are looking and whether you’ve got real confidence that they’re actually fillable orders?

Landry Seedig: Hey, Kevin, it’s Landry. So I don’t disagree with the other public competitor that if some of those orders had higher pay rates, that they would go at a higher fill rate. So I don’t disagree with that. The thing is, that’s always been a component in the marketplace. And what we see on those orders that are going unfilled is not disproportionate to what we would have seen before. So that’s why we believe the mix of those orders and based on what the bill rates are and what the market is demanding and what clinicians are demanding, that we need some more demand. And like Cary and Jeff both mentioned, it’s leveled out. And we’ve seen the list of winter needs from our clients, from some of our top clients. It’s not official, but those lists show us that the demand that will be coming in for winter needs, which means Q4 and into Q1 is at or above what we saw last year.