John Martins: Sure. Thanks, A.J. This is John. And I’d say, much different than a year ago. A year ago, the nurses patients were not in line with where the bill rates were coming down and probably even 6 months ago, and Marc, we can add more on this in a second. But now as we’ve had a sustained period of deceleration of bill rates and pay rates, I think nurses are more apt to accept that they are at the lower rate than they had 2 years ago. But I think there’s also another dynamic, and we’ve called this out before, is that in the height of COVID, we had a lot of core nurses who became travelers. And the travel market had expanded much larger. That travel market, as we will acknowledge as an industry has now shrunk a little bit, still much larger than we were pre-COVID but definitely down.
So some of those nurses have left to go back to core. And potentially, those are the ones that we’re seeking the high pay packages, what drove them to leave their core jobs. But I think the nurses that we have left are the ones that want to travel, want the flexibility, want to enjoy this gig lifestyle and they are fine with payback. Marc, do you want to add anything to that?
Marc Krug: To John’s point, I think there’s been a reset on expectations at this point, and a lot of the travelers that were — we do is the term chasing dollars. I think they have gone back to their core positions, and we have the traditional travelers back in the market. There’s a lot of pay transparency. And everyone is pretty clear on what the market is at any given moment in any given geography.
A.J. Rice: Just to make sure, to put a fine point on that, it seemed like a few quarters back you guys were saying that if you could just get expectations down to a certain level, there was a lot of incremental demand that might reserve. Is it now that we’re sort of getting close to expectations being in line with market, and it’s just — we’ve got to get to a point where supply demand and volumes, the hospitals, et cetera, pick up to the point where they need to incremental nurses and it’s less about getting expectations sort of nurses in line with the hospitals’ willingness to pay.
John Martins: Yes. That’s definitely part of it, A.J., that we have to get the expectation where we — you get the orders right. But I think a bigger part we’ve talked about this on a couple of earnings calls is that all our jobs aren’t equal quality jobs where hospitals will put out orders that are really lie really going to have a hard time or really unable to fill. And so the ones that are billable the ones that the expectations are of — what the market bill rate is, and where the market pay rate would be. And so when we get those coming together and we’re finding more and more of those now, it’s coming, the gap is shrinking where we’re getting more quality jobs that’s when you start seeing the market be able to have the — take that extra surplus and be able to fill those needs.
Operator: Now our next question is from Bill Sutherland with the Benchmark Company.
Bill Sutherland: I wanted to just focus on Ally just slightly. If you could remind us kind of what that is as a proportion of the travel business or just Nurse and Allied business. And then just a little unpack kind of what’s going on with some of those outlied positions.
John Martins: Sure. So it’s about 40% of our total nurse — total travel. And I’ll hand it over to Marc, if you want to talk about some of the specialties and what’s going on in the outlook world, what you’re seeing?
Marc Krug: Sure. And demand is very strong in physical therapy. Imaging continues to have very strong demand. I don’t foresee that slowing down anytime soon, increased reliance on imaging for diagnosis and efficient patient care with the higher volume and the shortage of imaging professionals and the shortage of people going into the profession is really going to drive demand.
John Martins: This is John. I would add to that. When we’re looking at allied demand, it also follows a lot of the surgeries. So as we’re seeing surgery going up, it’s the ancillary services that you need, a lot of them are actually, most of them are the allied services. So those ones we’re seeing demand go higher, just like we’re seeing a lot of demand for CRNAs and anesthesiologists. The Allied world follows when surgeries go up.
Bill Sutherland: And so what would the growth of that piece of the business be in the — did you point it out in 1Q? Or can you talk about what you’re thinking about for 2Q?
Bill Burns: We don’t typically carve out Travel Allied, we think of it as total — we talk to total travel, as you heard. What I can tell you is when we’re looking at the second quarter, the majority of the demand is on the — majority of the falloff in volume is on the nursing side. Given the mix of the specialties within Allied to Marc’s earlier point, if you’re not imaging, you might — sorry, if you’re not seeing it respiratory, you were making it up in imaging and lab. So there’s a lot more modalities that make up Allied. So that business has been a little bit more, I’d call it, resistant to the decline that we’ve seen across the rest of travel.
Bill Sutherland: Okay. And then just one last one. I’m thinking — I keep thinking about kind of your visibility beyond the second quarter and just in terms of the client behavior and what their needs are looking like. What do you think apart from when you start to see the winter orders, I mean is there any like duration changes in terms of assignments? Or is there anything else that’s changing that makes it harder to kind of understand what’s going under the hood at the client side so that you can have some sense of where demand will be maybe 1 quarter further out.
John Martins: No. I think we’re seeing assignment links have been pretty consistent. I would say for — the past 2 quarters, actually, let’s call it, third quarter and actually call it — for third quarter, fourth quarter, we would see — we saw our renewal rates going down a little bit, which has made sense because demand was going down. And now we’re seeing that renewal rates tick up. So to me, and they’re probably pretty significantly on the renewal rates compared to the third and fourth quarter, first quarter. What that tells me is that the hospitals are needing these nurses more as the renewal rates go up. And I would anticipate that our renewal rate will continue to increase throughout the remainder of the year as hospitals really or need these clinicians.
And just like our survey that we published today, it’s the same story we’re hearing about — nearly 50% of nurses when you ask them, are saying that their — they feel it there’s a shortage of staffing at their facilities. And we’ve been talking about this for a while, but it only go on for so long. If we think about back to the rate recession, back in 2008 and ’09, it was something that was very similar that happened where hospitals utilized nurses in an extra shift for 48 hours. They use less contingency, but they only hold on for so long before those nurses got broke out. And I think between COVID between pandemic and between the last 18 months of hospitals trying to write the financial shift, there’s only so much you can push on nurses before you really need to bring in health so that the nurses want to remain and stay at the bedside because that’s all our goal.
At the end of the day, we’re part of the solution of the overall delivery of health care. And we want to make sure that we’re the right percentage of contingent labor. We don’t need to be all of their labor, right. We want to me that right contingency. So we want to ensure part of what our offerings do with Intellify now and some of our other products that we’re launching. — is we’re helping core staffs at hospitals. And the reason that’s important is we want to make sure that we help hospitals engage and retain course that and even are able to bring in more core staff so that we can help with that contingency label piece that we need.
Operator: Our next question now is from Constantine Davides with Citizens JMP.
Constantine Davides: Can you expand a little bit on the challenges specific to the per Gen portion of the Nurse and Allied business. It sounds like the first quarter decline was almost twice as large sequentially as what the segment experienced as a whole, if I heard you correctly. And then I guess a follow-up to that is what are you sort of contemplating in your second quarter outlook as far as that business — as far as that business goes?
John Martins: I’ll start with per diem, what we’re seeing in that marketplace. And because it runs very parallel to the nursing side, on travel nursing side, we’re seeing very similar pullback in the utilization of those nurses on a daily basis. And then an additional — in addition, not only is part of it in the acute care health care, which is very similar to our travel nursing side, the other part, the large part of our per diem nursing business is in the skilled nursing facilities. And during COVID, there was a large run-up of clinicians in the skilled nursing facilities as a federal state and local monies were put in place to help fund those skilled nursing facilities producing labor. As that money dried up over the last year, we saw that business not just us at the market.
So the skill nursing facilities utilization went down for contingent labor. So that’s really the stray behind that marketplace now. We’re looking at, we believe in the local space and podium space, that there are opportunities and pockets where we can excel. And that’s where we’re focusing right now. In our MSPs, it is a crucial piece in many of our MSPs to help find that just-in-time labor. We also work in conjunction with float pools to make sure that we’re offsetting the flow pools that hospitals have whether we’re running the hospital to have their own pool to help offset those just-in-time last needs. So it’s really a critical piece to our business, especially when it comes to helping hospitals just in time. But I think we can say where we saw on the decline was really just the market conditions that we’ve seen in the nursing world through both the acute care and the subacute LTC space.
Bill Burns: And Constantine, this is Bill. I would just throw in there that the local business, unlike travel, which has a bit more of an annuity concept to it, where it’s a longer assignment terms so you have more predictability. The local business, if I look at the billings — weekly billings across that business for the first quarter relative to how we exited the fourth quarter there wasn’t much of a deterioration. It was really more if you compared it to the start of the fourth quarter. So Q1 was running pretty consistently across the quarter for all the weeks. And so we asked about the second quarter guide and what’s implicit in that. it’s essentially flat sequentially. We’re not expecting that to see a lot more deterioration or a lot of uptick. I think that business tends to move a little bit quicker up or down based on what the market is doing than travel does.
Operator: Our next question now is from Tobey Sommer with Truist Securities. And your line is open.
Tobey Sommer: Last year, there was some competitive pressures impacting market share. Have the effects of that percolated through the P&L? Or is there anything lingering that could provide a headwind of sorts moving forward?
John Martins: Tobey, I’d say over the last 6 months, we’ve definitely won more than our fair share of deals and we’re ramping those deals up. And we’ve called out, as you pointed, we called out last year that we did have a higher-than-average number of losses back over 18 months ago through a year ago. And so both of those have already been out of the system for the most part. And even some of the ones that we’ve lost, we called out, we’ve actually retained a large portion of those travelers on assignment. So to answer your question, I would say yes, it’s mostly baked out because there’s still some good guys and bad guys, but I think the good guys far outweigh the bad guys at this point.
Tobey Sommer: Okay. And then with the visibility you have, you said demand has kind of been stable for a handful of weeks, 6 weeks, I think you said. Would you think at this point that TOA in 3Q would grow sequentially, be flat or stable?
Bill Burns: Yes. I don’t know if I’m calling out the full quarter. I think we would expect to be growing TLA across the third quarter and whether that averages to a full increase over the second quarter, I think, remains to be seen.
John Martins: Yes. It’s nuanced strike, Tobey, where when does that lift come up in the volume. And so we do think that, yes, we — within the third quarter, fourth quarter, but I think we do think optimistically in the third quarter, we could see month-over-month volume growth within the quarter.
Tobey Sommer: What are the KPIs or demand signals that you used to sort of inform that? Or is it predicated on the survey work and over working of nurses. So I’m kind of trying to get at how tangible that is.
John Martins: Sure. If we continue to see the demand — continue to be stable as it is as we’ve seen over the last 6 weeks, and then demand can uptick a little bit, that gives us the confidence that our — higher or lower confidence factor, if that helps. Does that answer your question? And then within demand, I would say if the quality of the…
Bill Burns: Yes, I was going to throw it in there. When we look at what we expect in the order volume, majority of the order improvement we would expect to see as we move through the second quarter will be from programs that are our programs. And so the quality of those orders tend to be a little bit better than, say, if it was just a market order that we are competing against other players for us. So I think that’s a little bit of what we have a lens on is we know the programs that we’ve won. We know what’s been — it’s currently in implementation and/or ramping right now. And that’s what we would look for the third quarter. I don’t have an exact line of how many orders that is and what it will look like, but the quality of the order should improve.
And I would just throw out 1 other comment and then John made this in the prepared remarks, but as demand softened, it’s down quite a bit more than our production is. We’re still managing to produce or deliver our internal KPI as Netex booked. We continue to see across the travel landscape that we’re producing or our production levels are maintaining despite the fact that orders have curtailed quite a bit.
Tobey Sommer: In terms of Intellify, the external customers you have on that? Are they MSP, vendor neutral is 1 of the aspects that you’ve been talking about as an opportunity to tap into that vendor neutral. So I want to get a sense for progress on that particular front.
John Martins: Yes. Sure. Tobey, this is John. Some of them have been vendor-neutral. But this is what we’re seeing. And some of them are pure but neutral, but what we’re seeing is a blur, I called it out in the prepared remarks. There’s a blurring line between MSP and VMS for a lot of clients right now, where we’re seeing clients that they want to make sure that they have a vendor panel and they’re not reliant on 1 particular strategic agency to fill all their needs, but they also want someone who is going to be accountable, if the needs don’t get met. And that’s where when you’re sometimes a pure vendor neutral play and have — don’t have the staffing arm to back it, all you can do is raise bill REITs or go and essentially lead to your agencies to fill a need where when you are associated with a staff and strategic standing company, that’s way have any company to step in and help fill those needs.
So that blurring or that hybrid is really becoming — seeming more popular where people can have the best of both worlds. We can still send those orders out, have a vendor-neutral feel, but knowing that they have the backing of Cross Country for that accountability when they need those needs met.
Operator: Our final question is from Kevin Steinke with Barrington Research. Your line is open.
Kevin Steinke: Last quarter, you had expressed some optimism around the pipeline for Intellify and MSP. Just what’s that looking like now? And — it sounds like you still expect that to contribute to stronger results in the second half of 2024. So if you could speak to that, that would be helpful.
John Martins: Sure, Kevin. This is John. As I said in my prepared remarks, we just signed the contract last month with another new Intellify win, which is a fairly large client. And we have a really truly robust pipeline. And I know we’ve said the last couple of quarters, but it’s 1 of the biggest pipelines we’ve had in the company’s history. And it’s still robust. It’s still there. I would say this clients are a little slower to make decisions right now, I think, because there’s a little less pressure to make decisions than they had in the last 18 months when the finance teams needed to save money, and they were looking for people to offer them cost savings immediately and they were making decisions probably based on cost savings and maybe not holistic approaches to solving their long-term needs.
. And so as we’ve gone through that phase and into this new phase, the cycles are running a little bit longer right now, but we’re still very, very excited about where we are in our — with our pipeline. .
Kevin Steinke: And I believe you made a remark in your prepared comments when talking about local staffing that you’re committed to providing it where it makes sense. I mean, does that imply that you might look at that business and maybe pare it back in some sense? Or is that still kind of a full commitment compared to what you’re currently doing there?
John Martins: Yes. There’s whole commitment in per diem. But I think what we’re seeing in that statement is, we want to make sure that we are finding the right opportunities for that business. And obviously, that is to supplement our MSP space, making sure our clients have a whole house full service of services to be able to fill their needs. But also — we also want to make sure that it makes sense. This is a great example. We don’t necessarily need to have a premium business that fills a client that has one need per year as opposed to filling a client that would have a volume business that we can actually have a longer strategic partnership with. So when we look at how we envision protium moving in the future, it’s really creating partnerships with clients that were going to have strategic relationships where we can offer more than just one service to them.
Operator: Thank you very much. Ladies and gentlemen, this does conclude the Q&A period. I’ll now turn it back over to John Martins for closing remarks.
John Martins: Thank you, operator. Before I sign off, I want to relate one last time how truly optimistic I am for the long-term prospects across country, given that the underlying fundamentals for the industry are intact. We really have a great team and we have a great brand, and we are well positioned to come out ahead once the market rebounds. In closing, I’d like to thank everyone for participating in today’s call, and we look forward to updating you on the progress of the company on the next call.
Operator: Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation. You may disconnect now.
