Good day, and welcome to the AMN Healthcare Fourth Quarter 2021 Earnings Call. My name is Brika, and I'll be today's event specialist. I would like to hand the call over to Randy Reece, Senior Director of Investor Relations. So, Randy, please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's fourth quarter and full year 2021 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com, following the conclusion of this call. Details for the audio replay of the conference call are in our earnings release issued this afternoon. Various remarks we make during this call about future expectations, projections, trends, plans, events or circumstances including our financial outlook for 2022 and beyond 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 today are Susan Salka, Chief Executive Officer; Jeff Knudson, Chief Financial Officer; Kelly Rakowski, Group President and COO of Strategic Talent Solutions; Landry Seedig, Group President and COO of Nursing and Allied Solutions; and James Taylor, Group President and COO of Physician and Leadership Solutions. I will now turn the call over to Susan.

Thank you so much, Randy, and welcome, everyone. We are grateful that you joined us today for an update on AMN's impact, strategy and our results. Many forces came together over the past two years that challenge the healthcare industry to its limit. The AMN team is proud to be an important contributor as a leading provider of total talent solutions for healthcare professionals and organizations. Throughout 2021, we scaled our solutions and technology to answer a stunning rise in labor demand across all healthcare. Our clients' need for travel nurses increased by about 2.5 times from the second quarter to the fourth quarter. Demand for allied professionals doubled over that same span. Demand for Physicians in temporary and permanent roles also reached new highs. Our team's efforts to serve the urgent staffing needs of our clients and our country is nothing short of remarkable. We also enabled our hundreds of tremendous supplier partners to respond, which is reflected in the $7.3 billion gross spend under management of our MSP and VMS programs in 2021. For clients, we continue to improve the ease of accessing the resources they need. This labor market crisis is a long-term problem, and clients are looking for more than a short-term fix. They are redesigning their staffing models amidst severe talent shortages and the changing preferences of the workforce. Clinicians desire more flexibility and control over their careers which is increasingly taking them away from the bedside. AMN has multiple solutions which utilize technology and create a more diversified mix of workforce supply across this spectrum of permanent, short-term and long-term contract talent pools. To be the best societal and healthcare contributor possible, there are four primary pillars essential to our success. First and most importantly, is to empower our dedicated team members to make the impact they desire. We have a strong purpose-driven culture at AMN that is steeped in our commitment to our values and important social issues. Second, is to continue evolving the efficiency of our operations to differentiate and improve the experience of our clients and healthcare professionals. Think of it as nailing the basics, but better. We want to delight our customers and exceed their expectations when it matters most. Third, is to deepen relationships with clients and healthcare professionals by listening, analyzing and understanding their needs now and into the future. The evolution of our integrated portfolio of total talent solutions is a great example of this, while also personalizing our service to each organization. The fourth pillar is what we refer to as winning digital. Over the last two years, we have significantly accelerated investments in artificial intelligence and digital staffing to increase our scalability and speed, while also improving the experience of those we serve. We have created analytic dashboards and digitized self-serve capabilities for many aspects of the clinician and client journey. Every day AMN is becoming more agile and digital, adding more valuable capabilities. As an example, you might recall that we mentioned in 2020 that we launched AMN Passport, and we now have over 100,000 clinicians using the app. Passport gives continuous engagement with healthcare professionals and makes it easier for them to find the right opportunities in real-time. Passport uses a matching algorithm that provides customized opportunities to candidates based on their evolving preferences and the dynamic job market. Passport also includes an industry-leading credentialing wallet, which professionals use to manage their documentation and easily share with us and clients. We have more features in store for the Passport app and we are very excited about how it is already making a difference. On future calls we will continue to update you on how our investments in technology and digital are transforming the company. Now, I'd like to turn to a recap of the fourth quarter and some color on trends for the start of 2022. In the fourth quarter of 2021, consolidated revenue was $1.36 billion and adjusted EBITDA was $223 million. Our Nurse and Allied Solutions segment reported revenue of over $1 billion with growth balanced between volume and higher bill rates driven by rising wage expectations of clinicians. Our largest business, travel nurse staffing, grew revenue by 136% driven by volume increases and higher clinician compensation. Earlier I mentioned our multiple solutions that address the long-term workforce needs of our clients. One great example of this is our International Nurse Staffing Solution, which recruits clinicians into the U.S. for clients to build their longer-term workforce with talent from outside the region. These nurses are on assignment with AMN for the first two years, and then the majority go permanent at the same hospital after that. They bring important skills and experience. They create a great future for their families and they become an important part of the community. Demand for international nurses is at an all-time high and expected to continue growing at a strong pace. Allied staffing revenue was 82% higher year-over-year in the fourth quarter, led by more than 50% growth in volume. We've seen growth in pretty much all disciplines across imaging, lab, respiratory and therapy. The strong demand trends continue for Nurse and Allied Solutions as we begin 2022, resulting in our projection that revenue will grow over 80% year-over-year in the first quarter. This outlook assumes travel nurse staffing will grow revenue about 90% over the prior year with allied staffing revenue up about 60%. Our Physician and Leadership Solutions segment had fourth quarter revenue of $164 million, up 47% year-over-year. Locum tenens and interim leadership continued their strong performance both with revenue growth near 50% year-over-year. While pandemic-related assignments contributed some, the primary driver is strong demand and execution in the core business. Physician and executive search revenue was also up about 50% year-over-year. We saw record-high new physician searches in the quarter and we are gaining more strategic clients with multiple searches over a longer contract period. In the first quarter of 2022, we expect revenue for physician and leadership solutions to grow approximately 18% year-over-year with double-digit growth in all businesses. Our technology and workforce solutions segment reached another new high with fourth quarter revenue of $117 million, up 62% year-over-year. Our VMS technology business was the biggest driver with significant growth in gross spend under management. Language Services had another great growth quarter, primarily driven by volume increases from both existing and new clients. In the first quarter of 2022, market trends continue to be strong and we expect Technology and Workforce Solutions revenue to be up about 55% year-over-year. As you can tell from these results and our outlook, the passionate and talented team at AMN is leaning in to answer the call from clients and to give healthcare professionals the flexibility and career choices they are seeking. The significant demand for clinicians, however, is symptomatic of severe problems in the healthcare labor market. Historically, travel and local staffing were used as a short-term and supplemental solution with a relatively small percentage of the workforce preferring this career option. This has obviously changed, both out of necessity to fill critical roles and deliver patient care, but also because of the severe shortage of labor and the expectations and the changing preferences of the workforce. In most professions, when the availability of talent is meaningfully lower than demand, pay rates rise. And this is exactly what has happened in healthcare. For a variety of reasons, nursing has the greatest gap between labor supply and demand, and this is why there have been significant compensation increases. Permanent staff wages are going up considerably, particularly for new hires. For supplemental and travel staffing, increases in compensation expectations have resulted in higher bill rates. Over the past two years, while bill rates for travel nurses have doubled, compensation to travel nurses has tripled. This current crisis has drawn nationwide attention to the nursing shortage, not all of it is constructive or accurate. Certain industry lobbyists have criticized the healthcare staffing industry and are pushing for legislation that would suppress nurse wages. We think this is counterproductive and could reduce the availability of nurses. It would likely discourage nurses from entering or re-entering the market when we need to be doing the exact opposite. Nurses are making more money right now, because they're taking jobs in high-skilled, high-demand and high-stress patient care environments and they're making other personal sacrifices. We are listening and talking extensively with patient care organizations, and we understand the challenges that they're feeling right now as they try to find solutions to the healthcare labor supply problems. Our country needs solutions that involve increasing the supply, mobility, safety, and the well-being of nurses. There is no singular fix to the labor shortage in healthcare. However, our country can make incremental progress by focusing on specific initiatives including support for public and private investments in nursing. The existing nurse supply can be optimized by expanding the state nurse licensing compact, making it easier for hospitals to attract talent from all over the country. Immigration reform would help bring more trained and high-quality clinicians into the country. AMN has aligned with clients and professional organizations, and we've significantly increased our investments to address clinician education, workforce diversity, the resiliency of clinicians and to support clinician wellness programs. We've also created a hardship fund to support clinicians and their families who've suffered losses. The AMN teams remain focused on being a part of the solution and doing all we can to ensure that every patient has the quality compassionate care that they deserve. We know our role in healthcare delivery is more important than ever. I want to express my deepest gratitude for all of the fantastic work done 24/7 by our colleagues, clinicians, clients and all others who are doing their best to provide patient care. In a few minutes, James, Kelly and Landry will join us for the Q&A session. For now, though, I will turn the call over to our colleague, Jeff, who will provide more insight into our financial results.

Thank you, Susan, and good afternoon, everyone. Fourth quarter revenue of $1.36 billion was slightly above our updated guidance range we previewed last month. Consolidated revenue increased 116% year-over-year and grew 55% sequentially. Gross margin for the quarter was just above the low end of our guidance range at 31.9%, 100 basis points lower than the prior year and down 290 basis points sequentially. Year-over-year, the margin was lower from higher clinician compensation in nurse staffing, partially offset by higher average hours worked and an increase in higher-margin labor disruption revenue in the quarter. Sequentially, higher compensation rates to attract clinicians with a lesser increase in pricing was the biggest driver of the margin decline. Consolidated SG&A expenses were $239 million or 17.5% of revenue compared with $155 million or 24.6% of revenue in the year-ago quarter and $174 million or 19.8% of revenue in the previous quarter. SG&A expenses increased year-over-year and sequentially primarily due to investments in growing and supporting our team members, communities, and healthcare professionals. Adjusted SG&A, excluding certain non-recurring expenses and stock-based compensation expense, was $213 million this quarter or 15.6% of revenue, compared with $119 million or 18.8% of revenue in the prior year quarter. The improvement in SG&A margin from prior year reflects operating leverage from higher revenue, partially offset by expenses for team members, technology, and other infrastructure to support volume growth. On a sequential basis, adjusted SG&A was higher by $44 million due to hiring to support the strong revenue growth and other related adjustments to variable compensation and benefits from the better quarter and full-year results. In the fourth quarter, nurse and allied revenue was $1.08 billion, a 142% higher than prior year and up 73% sequentially. Fourth quarter results included $85 million in revenue from labor disruption events. For the travel nurse business, revenue grew 136% over prior year and 73% sequentially. Travelers on assignment grew 42% year-over-year. The average travel nurse bill rate rose approximately 60% and average hours worked also increased to historically high levels. During the fourth quarter, demand for travel nurses reached new highs due to extreme shortages of clinicians, higher healthcare utilization, and record high turnover in vacancies. As a result, travel nurse volume grew 21% sequentially along with a 38% increase in bill rates. We expect volume growth to outpace pricing sequentially in the first quarter driven by continued strength and demand and excellent execution by our team. Allied revenue was $185 million, up 82% from the prior year and grew 35% sequentially on strong placements into record high demand. Allied volume was up 54% over prior year and the average bill rate grew 21%. Nurse and Allied gross margin of 27% was 30 basis points better than prior year and down 230 basis points sequentially. $85 million in labor disruption revenue at higher gross margin and a favorable swing in clinician healthcare insurance added 160 basis points from a year ago and was partially offset by a 130 basis point increase in clinician compensation. The sequential decline in gross margin is primarily attributable to higher clinician compensation and insurance costs. Segment EBITDA margin of 16.4% was 340 basis points higher than prior year and 160 basis points better than prior quarter, primarily due to improved operating leverage from higher revenue growth. Physician and Leadership Solutions revenue in the fourth quarter was $164 million, 47% higher year-over-year and up 9% sequentially. Locum Tenens revenue was $99 million, 46% higher than prior year and up 12% sequentially. Interim leadership revenue increased almost 50% in the prior year and was down 1% sequentially. Search revenue increased over 50% from prior year and was up 17% sequentially. Gross margin for this segment was 35.1%, 200 basis points lower than the prior year and up 30 basis points sequentially, primarily due to revenue mix within the segment. Segment EBITDA margin was 11.6%, down 360 basis points from last year and 120 basis points sequentially. The sequential and year-over-year decline in EBITDA margin was primarily due to investments in our team members to support volume growth and higher professional liability insurance expense in the quarter. Technology and Workforce Solutions revenue was $117 million in the fourth quarter, growing 62% year-over-year and 17% sequentially. VMS revenue of $52 million grew 165% year-over-year and 57% sequentially driven by a significant increase in growth spend under management. All other service lines in the segment achieve strong revenue growth on a year-over-year basis. Gross margin was 72%, up from the prior year margin of 64.5% and up 260 basis points sequentially, both driven by revenue mix shift to the higher-margin VMS business. Segment EBITDA margin of 47.4% was up 540 basis points year-over-year and 20 basis points sequentially. Higher gross margin is partially offset by an increase in SG&A expenses to support the growth. Consolidated fourth quarter adjusted EBITDA of $223 million was higher by 149% year-over-year and 61% sequentially driven by the revenue outperformance and associated improvement in operating leverage. Adjusted EBITDA margin of 16.3% was 220 basis points higher year-over-year and better by 50 basis points sequentially. We reported net income of $116 million and diluted earnings per share of $2.42 in the quarter. Adjusted earnings per share was $2.95 compared with $1 in the year-ago quarter. Day sales outstanding was 53 days, seven days better than last quarter due to higher cash collections. Operating cash flow for the quarter was $78 million, and capital expenditures in the quarter were $15 million. Interest expense in the fourth quarter was $9.8 million, $12.9 million lower than prior year, which included $11.5 million in one-time expenses related to a bond refinancing. As of December 31st, we had cash and equivalents of $181 million, long-term debt of $850 million and a net leverage ratio of 1.1 times to 1. Recapping some financial highlights for the full year 2021, we reported revenue of $3.98 billion, a 66% increase from prior year. Adjusted EBITDA for the year was $635 million, up 98% from prior year. Full-year adjusted EBITDA margin of 15.9% was 250 basis points higher year-over-year. 2021 adjusted EPS was $8.03, higher than prior year by 134%. Full-year cash flow from operations was $305 million, which included a $24 million payment of deferred payroll taxes from the Cares Act. As of February 15, 2022, the company had repurchased 726,000 shares of stock valued at $71 million since our previous quarterly report. Earlier this week, our board approved an addition of $300 million to our repurchase authorization and the current amount remaining under the program is $409 million. Now turning to first quarter guidance. We are projecting consolidated revenue to be in a range of $1.475 billion to $1.515 billion, up 66% to 71% over the prior year. First quarter gross margin is projected to be 31.2% to 31.7%, down year-over-year primarily from higher clinician compensation and a mixed shift to lower-margin businesses. Gross margin is lower sequentially due to the labor disruption revenue in the prior quarter and higher clinician compensation, partially offset by a favorable business mixed shift. Reported SG&A expenses are projected to be 15.9% to 16.4% of revenue. Operating margin is expected to be 12.9% to 13.4% and adjusted EBITDA margin is expected to be 16% to 16.5%. Other first quarter estimates include the following: Depreciation expense of $12 million, non-cash amortization expense of $20 million, stock-based compensation expense of $9 million, interest expense of $10 million, integration and other expenses of $6 million, and adjusted tax rate of 27% and 47.8 million diluted shares. While we provide guidance only for the current quarter, our expectations are that first quarter 2022 revenue will be the highest of the year. We expect sequential declines in nurse and allied compensation and to exit the fourth quarter with bill rates approximately 35% below the first quarter peak. Based on these assumptions, we believe consolidated third and fourth quarter revenue will stabilize at approximately $1 billion per quarter with adjusted EBITDA margins of approximately 15%. Going into 2023, we expect a more sustainable sequential growth trend. And now, we'd like to open the call for questions.

Thank you. The first question we have from the phone lines comes from Kevin Fischbeck of Bank of America. Hey, Kevin, I've opened your line.

All right. Great. Thank you. Yes. I just want to maybe just follow up on that last comment there. So it sounds like if I'm reading this right that you think that that billion-dollar revenue, 15% margin where you end this year is the kind of the run rate number? As we enter 2023 and you should be showing some sort of growth off of that kind of $4 billion annualized number. Is that's the right way to interpret that?

That's fair, Kevin. And we see that stabilizing throughout the entire back half of that billion-dollar run rate in both Q3 and Q4.

That's really helpful. That number is higher than we anticipated, and it seems you might have expected it too. How do you view the long-term demand, and what factors are contributing to that number being higher than many providers expect, given that they are looking for significant and rapid decreases in bill rates? I understand you mentioned a considerable cut in bill rates, but they remain significantly above pre-pandemic levels. I'd like to hear your thoughts on how you see the marketplace reaching equilibrium in the latter half of this year compared to your expectations from a couple of years ago.

Well, when we think about Q4 and being 35% off of these Q1 piece, it's really not that far off from what we had said last quarter in terms of where they would settle out pre-pandemic. And we would actually see the largest or anticipate the largest sequential declines in both Q2 and Q3 with a more modest impact into Q4.

And Kevin, to maybe just build on that is what creates a longer-term view of maybe a stronger market than perhaps what others anticipated is the severity of the shortages and high level of demand that we expect to continue. While we expect demand to come down a bit in nursing and even in some of the allied categories. It's still going to be well above pre-pandemic levels. And that gives us an opportunity to continue to grow volumes. And it's not just nurse and allied, the physician and leadership businesses have seen extraordinarily strong demand minus pandemic-related assignments and are on a really nice growth trajectory. And then you layer on top of that the technology solutions that we have in place that clients are increasingly wanting to bring into more of a holistic total talent solution offering. And quite honestly, we're in a much stronger position today and needed in terms of those total talent solutions to create mid and long-term strategies for our clients. I'm sure somewhere on this call, Kelly will have a chance to share more of that with you. We can get on to some other questions. But I think maybe that something that wasn't fully appreciated, and how critical it is to have multiple, not just short-term, but mid and long-term strategies because this shortage is not going away and clients know that.

Okay. Let me just last question then. Do you in your guidance are you assuming that you've had kind of any meaningful share gains over this time period? Or is this largely a reflection of you growing along with your view of where the market demand is? Thanks.

Right now, since there isn't good public data available on the broader market, we're assuming that in the core staffing businesses we're probably growing alongside the market. We have deliberately focused on the MSP segment of the market, which of course has been the larger growing part of the market. And so, we probably have picked up some share there. Although, it's really difficult for us to really quantify that since the numbers aren't readily available. And as we look forward, those clients that want a more holistic approach to their talent issues, I think that's where in the future we'll be in a better position to pick up share. Thanks Kevin.

Thank you, Kevin. We now have our next question from A.J. Rice of Credit Suisse. So AJ, please go ahead when you're ready.

Yes. Thank you. Hi, everyone. First I was just going to ask, because you're the second one today to mention potentially a little more activity with international nurses coming into the U.S. to one of the public hospital companies, you mentioned it earlier today. Can you just tell us is that a meaningful change we're seeing? Is that still something that's down the road and how much might that be able to help the current situation if it changes?

Hey, A.J. It's Landry. I'll address that. Yes, we are exploring every avenue in our international business to find nurses. The International Solutions program is a solid option for them, typically offering contracts of two to three years and competitive rates that encourage nurses to remain in their positions. Last year, our international business generated around $100 million in revenue, making it a significant player relative to competitors in that sector. However, it represents a smaller portion of our overall business. During the pandemic, we faced several challenges.

But there hadn't been any change.

Go ahead A.J.

No. I'm sorry. There hasn't been a change in ability of foreign nurses to access the U.S. or is that still something that's been talked about, but actually hasn't happened?

Yes. So, over the last year and a half, there were a couple of challenges. One of those would have been some travel bans that were in place. Another area that hurt us from bringing in some supply temporarily was that some of the embassies were shut down due to the different spikes that might have been going on around the world. More recently, we've seen some more positive legislation. So kind of at that state department level we've seen the states prioritize employment thesis to the top. So that way we bring in international nurses as well as their families into the United States. It's probably not enough especially with the amount of demand that we have out there. Our clients are asking us about international nurses just about every day from a majority of our clients, but things like making more visas available would be a good legislative change that would help bring in even more supply to the United States.

Okay. And then, when you're thinking of the back half for the year and more things started to normalize, but obviously at a higher level of overall demand. It seems like you've given up a little bit and we hear this from the other players as well on the bill pay spread to sort of help out the health system customers and so forth. If rates come down as you anticipate, do you think we'll see those bill pay spreads sort of revert to a normal level? Is that part of your thinking on the margin in the back half of the year? And I guess the other aspect to things normalizing. I would assume at this level on your MSP clients you still probably filling only a percentage of the orders. Are you anticipating that as things declined or normalized? Let's put it that way, did you'll see that bill rate increase or is that not part of what you're thinking about as you talk about a billion-dollar revenues in third and fourth quarter?

So first on the gross margin. As bill rates decline and we see fewer crisis and premium rate assignments, we would expect that we will see a bit of improvement in gross margin. We want to give ourselves time, and it's still a very competitive market for that to occur. So whether it happens in the third and fourth quarter or more into 2023, is still a little bit of a TBD. But absolutely, as we've given a higher proportion of that incremental bill rate to clinicians in the form of compensation, which was the purpose of it, as that might unwind a bit, then we'll see that bill-pay spread improve a bit as well. And Kelly, did you want to take the other part of the question?

Yes. So A.J. I think the way you are thinking about that is correct. So we have seen some erosion in both our overall bill rates for MSP clients with demand at such significantly high levels, as well as the AMN filled portion of that directly. So we would expect as demand comes down overall, we can improve our overall bill rates, as well as improve the percentage that AMN is able to fill as those normalize as well.

Okay, just one final point on that before I hand it over. In light of the tight supply-demand situation with your MSP accounts, we've previously discussed this. Some clients with systems that haven't transitioned to MSP relationships can't all be prioritized. There's a perception that smaller competitors are entering the market to meet some of these demands. Have you observed this, and do you think that as conditions ease, these new relationships will prove to be long-lasting, or do you expect those clients to return as you gain more capacity to meet demand?

Well, yes, there have been new entrants for sure over the last couple of years, in fact, that's been even positive for us as many of them have become great subcontractors and supplier partners for us. And some of them are also pursuing direct contracts as you've said. Another place that they are delivering their services is through our VMS platforms. Recall, we have not only our staffing led MSP programs, but we have also the two largest technology VMS platforms ShiftWise and Medefis, which is basically an open talent marketplace. When we aren't the primary MSP provider, we open it up to literally hundreds of staffing providers like some of those that you've just mentioned and they're staffing through our platforms. And that will continue for them. Now, what we're seeing is tremendous demand for both VMS and staffing led MSP going forward. So, for any client that maybe didn't have some sort of program in place or if they did and they're just not happy with it, we're absolutely seeing those opportunities come up. So, we think actually there's more opportunity for us ahead, because we have multiple solutions for those clients.

Okay, great. Thanks a lot.

The next question comes from Brian Tanquilut of Jefferies. So Brian, please go ahead when you're ready.

Hey, good afternoon guys and congrats on the quarter of the year. I guess I'll just go back to the comments on your outlook for the rest of the year, right, a $1 billion of revenue. Just wondering, how do you gauge your visibility into pricing or pricing power? And what do you think is a glide path towards the normalization of rates over the course of the year?

I would like to clarify that we don't have direct pricing power. Instead, we respond to market conditions, particularly the compensation market and the expectations of clinicians. This market environment is what influences compensation, which in turn affects bill rates. To move from our current position to a 35% reduction depends on demand levels and clinician expectations, and we don't have a clear view on that. However, as mentioned in our third-quarter call, we believe a 10% CAGR per year is a reasonable target. This suggests about a one-third increase compared to pre-pandemic levels and a one-third decrease from our current state, allowing for different interpretations. It's helpful to consider wage inflation in healthcare, which was around 10% year-over-year for hospitals in the fourth quarter, and likely higher for clinicians, possibly around 12%. This isn't an unusual figure; other industries are seeing significant wage growth as well, with hospitality and financial services close to 20%, and retail at 16%. Therefore, a 10% to 15% increase in hospital wages is a plausible expectation. We believe this gives us a way to estimate where we are headed. While we hope to see a reduction, indicating that demand and shortages may be easing, there remains a possibility that the fourth quarter could be higher than anticipated, similar to our earlier outlook for the first quarter.

Now that makes a lot of sense, Susan. And then just a point of clarification. So, if we're looking at bill rates down 35 versus peak in Q1. That's about 35% or so below pre-COVID levels. Is that the right way to think about that?

Above, it's about, yes, 33 above, yes.

All right. Got it. And then, I guess my last question. So as I think about what you just said, right, I mean, billion dollars, 15 margins, a run rate of 600 exiting the year, 10-ish percent growth rate. So mid-600s of EBITDA for 2023 not unthinkable. Is that the right way we should be thinking about that?

That math, is it works. We're not giving that guidance for 2023. But yes, if you take a billion times 50%, you get 150 times 600 and then you're growing off of that, that is what that math would come out to.

Awesome. All right. Thank you guys.

Thanks, Brian.

Thank you, Brian. We now have Jeff Silber of BMO Capital. So, please go ahead Jeff.

Thank you for taking my questions. I appreciate it and I also appreciate the framework you gave us for the rest of the year. Let me play devil's advocate beyond this. I know we're in an environment that's unprecedented. But if you look back over history, when we've seen spikes in demand for travel nurses, once kind of that demand level subsides, the hospitals try to push back a bit on the amount of usage and percentage of their workforce that this aspect comprises. Why won't we see something similar going forward? And maybe the run rate you're talking about may actually be lower?

Yes. We are inside as you use the word I think, Jeff, an unprecedented environment, and the shortages that we've seen historically don't even resemble what we're in today in terms of the sheer number of vacancies. Last year we had what, quits of something we peaked out at like 50% at times and the number of job openings to hires is 2.7 to 1. We have never seen numbers like this. So it's not a matter of what perhaps they want to do, it's what is possible. And it's not just a matter of recruiting. There are changing preferences. And sometimes they could maybe recruit individuals with some higher pay. I mean, they could increase wages 20% for permanent nurses. I think that's unlikely considering that nurse wages are around a quarter of a hospital's budget. It would be a tremendous increase in their overall cost of labor. But even if they were to try something like that, what we found is that the preferences of the clinicians have made a step change. Certainly, you have a younger population that prefers more flexibility, control over their career and doesn't want to be at an employer for more than a year or two. And so travel becomes very attractive. But even as we look at our applications coming in and news starts, we've seen a big uptick in people in their 30s and 40s. And that just really didn't happen to this magnitude before. In fact, they're the greatest percentage increase. So suddenly you've got more of the nursing population that's both been introduced to a flexible work environment and guess what? They're preferring it. And that's not that much different than what's happening across other industries and even our company. Our team members have been home working for the last two years. We've not gone formally back into our offices. And it's probably no surprise that the majority of them don't want to come back into the offices full-time. They've gotten a taste of the flexibility and autonomy and control that they have and they want to keep that. So just sort of use that analogy with nurses, they're feeling the same.

Yes. I'll add on to what Susan mentioned regarding demand. Today marks a significant shift from anything we have previously experienced. Our nursing demand is currently three times higher than pre-pandemic levels for this time of year, and a third higher than last year, which itself showed strong demand. Across all high-need specialties, we see significant year-over-year increases compared to pre-pandemic, with the exception of ICU, which remains our second highest demand despite being down year-over-year. Med Surg is currently the top specialty, indicating a severe shortage, and we rarely see it rank first. Demand for specialties related to labor and delivery, postpartum, and pediatrics is particularly high. While elective procedures and surgeries have returned, they are not exceeding pre-pandemic levels, and our need for OR nurses is three to four times higher than before the pandemic. This reflects a consistent high demand as we move past Omicron. Similarly, allied specialties like therapy, respiratory, lab, and radiology are seeing substantial increases compared to three years ago. James and Jeff can provide additional insights on our initiatives.

From a demand perspective across all our business lines, we are experiencing record highs. In the fourth quarter, demand for locum services has increased by 28% sequentially and 103% year-over-year. This growth is driven by various specialties, particularly CRNA, advanced practice, and primary care. Notably, our core demand for locums is significantly higher than pre-COVID levels, by one and a half times. We anticipate this trend to continue. In terms of interim staffing, core demand remains robust, especially in nurse leadership roles. Key specialties include surgical services and emergency services, similar to what we see in women's services. Although interim orders volume declined slightly by 1% sequentially in the third quarter, it remains up 18% year-over-year. Our search practice has shown significant growth, with new searches up 34.5% sequentially and 109% year-over-year in the fourth quarter of 2021. We continue to see strong demand for specific roles such as nurse practitioners, physician assistants, chairs, and C-suite positions, which we expect will carry into 2022.

Okay. Anyone else?

You probably provided more information than necessary. So I think...

I really appreciate it. No, I really appreciate the thoughtfulness. Thanks so much.

Thanks, Jeff.

Thank you. We now have the next question from Tobey Sommer of Truist Security. So, Tobey, please go ahead.

Thank you. I was wondering what your current thoughts are on the structural nature of the shortage versus something that may be more medium-term, in terms of your survey work or what you're hearing from recruiters. Are you able to distinguish between retirements, clinicians who have moved to non-clinical jobs, and those who are reducing their full-time hours, thereby increasing the demand for assignment work?

We are gathering insights from surveys and public data, but translating that into a model is challenging. Anecdotally, we hear from our clients that retirements are at a notably high level. The Bureau of Labor Statistics data gives some insight, but it indicates that quick retirements are a significant factor, and many clinicians are unlikely to return. Additionally, many nurses are opting to leave bedside care. While they may still want to use their nursing skills, they are finding opportunities with companies like Amazon, which removes them from acute or long-term care settings. We believe this trend will persist, and these individuals are less likely to return to nursing. This situation represents a substantial change in the nursing supply, and as I've mentioned before, we need to implement strategies to enhance the supply and ensure we retain our current nurses. The concern from our clients is that many of those who left do not plan to return, suggesting that this will be an ongoing issue for several years. Rebuilding the nursing workforce could take a decade due to the loss of both knowledge and personnel. This is not a quick fix, and there isn't a single solution, as the problem has many layers and is long-term.

Well, if you were here for the data, shouldn't you get access to it at some point?

Okay.

And with the share repurchase activity and the renewed authorization, could you give us a sense for what you're seeing in the acquisition marketplace, the public company stocks has been a little bit volatile here. Has that conveyed yet to more moderated expectations of sellers?

Yes. I think, Tobey, we're also very interested in doing something on the M&A front and those tech-enabled solutions. But I don't think our share repurchase authorization certainly the expansion is not mutually exclusive from that when we think about the spot in the balance sheet and right now the liquidity profile that we have and the flexibility on the balance sheet to take on potentially more leverage is the right opportunity present itself that we could execute on that opportunity in addition to the share repurchase program. But right now, there are a handful of things in the market and we'll continue to take a look at them as we move to the year.

And has there been any change in the valuation parameters compared to six, nine months ago?

It's hard to say right now, I mean, there's nothing from a valuation expectation standpoint that I think would be all that different from where we were six to nine months ago.

I think for some of the staffing companies what you find is exactly what you and others are trying to dissect is where is the business going to land and then grow into 2023 assuming that we do come down through the year. And so, if there's been valuation adjustments, it's been around what does the future look like and then putting an appropriate valuation on that number. I think unfortunately, because there's not great information about and visibility on exactly where that will land, at least some analysts have shot pretty low on what they think that would be, which is why we thought it would be helpful to give a little visibility on our thinking. And I think our thinking is kind of in line with what we've seen and heard from other expectations.

Thanks you very much.

Thanks, Tobey.

We now have the next question from Mark Marcon from Baird. So Mark, I've opened your line.

Hey, good afternoon and thanks for taking my questions. A couple. First of all, in terms of your internal staff, where does that currently stand? And how does that compare to this time last year? And how are you thinking about that changing as the year unfolds? And as we go from these peak levels down to that billion-dollar base on a quarterly run rate basis before we start building back up?

Thanks for asking, Mark, because as you know our team and the culture that we have is so very vital and critical to our success. We've added a little over 20% to our staff over the last year. And through that time as you can imagine in a virtual environment added a lot of support for our team members, as well in terms of training and their wellness and making sure our leaders are effective in this environment. So a lot of investment not just in adding more people and resources, but making sure that everyone feels successful. And guess what? We're adding a lot of people right now as well. If you go to our job board, we have a lot of open positions, because we're adding additional resources across the company, but I'd say, in particular within the business units where we have this very strong demand and we continue to want more talent that can convert that demand into placement. So I am very proud, that as you saw we were just recently named as one of America's best employers by Forbes. That's very reflective of our culture and I think our commitment to our team members, but also to the communities and they certainly care very much about that. I will say we are investing heavily in digital. I mentioned the Passport App and that's really externally facing, but it has a lot of internal benefits as well. The digital investments that we're making create efficiency. They help us also to remove the burdensome frustrating work that might cause burnout and cause people to want to leave. Actually, I'll say, our attrition is actually quite good relative to what I'm hearing from other industries. We are about where we were at pre-pandemic levels and I think in this market, that's a win.

That was great. And then, you talked about the 15% EBITDA margin in the second half of this year. How are you thinking about margin expansion beyond that? Does that seem like a reasonable run rate to stay at as maybe there's some bill rate spread compression that might continue or should we think about that as a point where margins could even increase further? And that's one question is from a margin perspective. And I was also wondering if you could also talk about just the number of applications that you're getting for clinicians and the length of assignments that you're seeing? You talked about the number of people that are attracted to a flexible lifestyle from a clinician perspective. I'm wondering if you could just dimensionalize that a little bit further? Thank you.

Yes. On the 15%, I would say we would actually as we move through the back half of the year, we would hope to see a slight improvement in gross margins, which would partially offset some of the leverage we're going to lose on SG&A, right, as bill rates come down and revenue comes down into the back half. And then moving forward from there we would have to continue to optimize our business mix as things normalize and have some of these technology investments that we're making to improve efficiency, as those start to come to fruition that's where we could look to sustain that 15% EBITDA margin over longer periods of time, quarter in and quarter out.

And then, hey, this is Landry. I'll jump in on supply length of assignment and then, James, maybe he's got a couple of comments on this as well. So within the Nurse and Allied segment, our new applicants in 2021 actually been in 2020, and 2020 was a record year for us. I'd say, a lot of that was due to the investments that we've been making over the last three years. Investments make it easier for clinicians to find us. Easier for them to apply to us. A lot of that's on mobile. So you think about our websites that we put in place or we've mentioned AMN Passport a couple of times. One stat on it is that today half of our new applicants that come in, come in with no human interaction. So those are what we call internally, no touch. If you took that same stat from a year ago like 25% of our applications that came in were no touch. So, you can really see a lot of that self-service and digital AMN Passport investments really helping out and it speaks to the efficiency that we've been talking about, better overall experience for our clinicians. As it relates to duration, the only time we saw shorter assignment requests would have been in that Q2 maybe Q3, 2020 where there was a lot more unknowns. Our on-assignment placements right now we're back to that kind of normal 13-week. Our extensions are running at what you would expect and what we would have seen or called normal before the kind of roller coaster. Our clients would likely take any clinician that we have. So if there's a clinician right now that will come in and work two weeks or six weeks or eight weeks or even longer, they would certainly take them. But our overall general assignment length right now, a vast majority of those are on 13-week assignments.

Much like Landry, we have 56 days as the average length of assignment for a physician, which varies by specialty. We have observed that this average has not changed significantly since pre-COVID, perhaps fluctuating by a day or two. However, our interim assignments saw a slight decrease of 0.3 days last year due to COVID-related activities leading to shorter assignments. Normally, our assignments last around 25 weeks, and by the first quarter of 2022, we have returned to and are even exceeding that average.

And Mark, since I know you love numbers so much, I'll tell you like our application in short-term nursing are running well ahead of last year like more than 50% ahead of last year. Is that helpful to give you the magnitude?

Fantastic. Appreciate that. Thank you.

Thank you, Mark. We now have a final question on the line from Tim Mulrooney of William Blair. So Tim, please go ahead when you're ready.

Yes. Thanks for squeezing me in here you guys. I'll keep this really quick. I just wanted to build upon Landry's conversation earlier about demand. In the travel nurse business, curious, how much are your open positions comprised of COVID-related nurse demand and RN demand and how much is related to non-COVID RN positions like the medical surgical nurses?

Yes. Hey Tim. You really can't look at it as just COVID versus non-COVID. For example, the operating room demand is three to four times what it was before the pandemic, and this area wasn't significantly affected by COVID. Another example is therapy, which is currently up 800%. These are substantial figures, and that increase is compared to even a year ago, which also wouldn't have been largely impacted by the pandemic. I hope that clarifies things. Additionally, we received questions about whether demand was due to internal staff being out sick, but that would typically lead to brief demand since they would be out for about two weeks; however, we did not see that trend. In January, our travel clinicians faced peak sickness, with over 600 at one point either in quarantine or out sick, which is much higher than the previous spikes where we saw closer to 200. This situation is factored into our guidance for Q1. Our hospitals and health systems experienced similar issues, but I wouldn’t say any demand is specifically related to that.

I think that's helpful. I mean, I think you did kind of answer the question. You're seeing, I mean, COVID cases are coming down and you're seeing a massive increase in demand in physicians that have nothing to do with COVID, is that right?

That's right.

Okay. Lastly, just the Supreme Court upheld a federal mandate requiring healthcare workers at facility they receive Medicaid or Medicare funding to be fully vaccinated or lose that funding I think that comes at the end of February or the end of mid-March depending upon which state, but I mean, do you think this could cause more RN resignations across the market in the coming weeks? You guys are close to the end market, so you're probably a good person to ask. And if so, what do you think that would do to AMN's bill rates and volumes?

Hi, Tim, it's Kelly. I want to share some insights on our experiences. This is a relevant question as we are navigating these issues not only at the federal level but also in light of additional state and local regulations, as well as specific policies from some of our health systems regarding mandates. We have been addressing these concerns for a couple of months now. Managing the mandates, collecting information from our clinicians, and collaborating with our suppliers and clients has been a complex undertaking. We are committed to assisting our clients in meeting these mandates. So far, we have made good progress with several of the large mandates, and we have not observed a significant decrease in the number of clinicians able to work due to non-compliance. Our clients have confirmed this as well, but there are still several deadlines approaching. Additionally, some clients and states will require boosters alongside vaccination. Therefore, we will continue to monitor and collect data on our clinicians' statuses. At this point, the impact has been minimal, and we do not expect this to change significantly. While we have seen a few vaccinated clinicians not receiving boosters, the numbers are very small, so we do not foresee a considerable effect on our clients or the supply at this time.

Great color. Thank you, Kelly.

Thank you, Tim. I wanted to clarify the statistic I shared about applications. It was actually in the fourth quarter that we saw over a 50% increase. The first quarter is also looking very strong, so I wanted to correct that for the record. I believe that was our last question. We appreciate everyone joining us today. This is a crucial time for our country, the healthcare market, and for us. We take our responsibilities very seriously. I am incredibly proud of this team and everyone involved in providing excellent patient care every day. We look forward to updating you on our next call.