Good day, and thank you for standing by. Welcome to AMN Healthcare's First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randle Reece, Senior Director of Investor Relations. Please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's first quarter 2024 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com at the conclusion of this call. Various remarks we make during this call about future expectations, projections, trends, plans, events or circumstances 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 Cary Grace, President and Chief Executive Officer; and Jeff Knudson, Chief Financial Officer. I will now turn the call over to Cary.

Thank you, Randy, and welcome to our earnings call. I want to first express my gratitude for the AMN Healthcare professionals and team members in the U.S. and around the world for their strong commitment and tireless efforts in the first quarter of 2024 in furthering our mission of empowering the future of care, and especially to our wonderful nurses as we recognize them during National Nurses Month for the extraordinary role they play in healthcare. First quarter revenue of $821 million was in line with expectations, with earnings coming in ahead of consensus estimates. Several of our businesses display positive trends, including language services and locum tenens. Our second quarter revenue guidance for the two business segments other than nurse and allied is in line with consensus. Healthcare organizations focus on reducing contingent labor continues to depress demand for our largest business, nurse staffing. We expect nurse and allied segment revenue in the second quarter of 2024 to be down 14% to 16% from the first quarter, with nurse staffing declining more than the overall segment. Other AMN service lines have been affected by the labor cost squeeze in healthcare, including VMS, RPO and search. Interim leadership, while down year-over-year, showed sequential revenue growth for the first time in six quarters. International nurse staffing revenue in Q1 dropped as expected by 11% sequentially and 7% year-over-year due to the State Department's constraints on new visa applications. We continue to see strong client demand for international nurses. Trends in our allied business are favorable for some specialties. In the first quarter, we saw good year-over-year growth in volume and net weeks booked for therapy and imaging. Our school's business grew on assignment headcount 20% year-over-year. These growing segments were more than offset by declines in lab and especially respiratory, where volume was off 50% from the year-ago quarter late in the pandemic. As we have discussed in previous quarters, we see clients focused on both near-term labor cost spend as well as implementing new models to sustainably address increasing patient demand. Based on the latest client feedback, the majority of our top MSPs have indicated they have reached or cut below their targets for contingent nurse labor spending. Indications from smaller clients are that their progress on contingent nurse labor spending lags the largest systems by a couple of quarters. In the first quarter of this year, the four public hospital companies averaged spending 43.7% of revenue on salaries, wages, and benefits, compared with 45.4% for the same quarter five years ago. These figures are consistent with our view that the largest health systems have made substantial progress on labor cost control, with some moving to grow in a cost-effective manner to meet increasing utilization. We remain convinced that in the long run, growing patient demand across many different sites of care relative to a finite supply of healthcare professionals will drive greater opportunities for both nurses, physicians, and other professionals and the workforce technology solutions that help optimize labor utilization and cost. In line with these trends, we are actively partnering with our clients and prospects to develop and implement workforce models that help them improve efficiency and automation and reduce labor costs using our technology and network of healthcare professionals. We expect the low demand environment to continue for some of our businesses such as travel nursing, VMS, RPO, and search. In anticipation of these trends, we are managing second quarter SG&A expenses, excluding share-based compensation, acquisition-related integration and other costs to be approximately $10 million lower than the first quarter. Working against lower revenue and gross margin headwinds, we are targeting an adjusted EBITDA margin for Q2 that is in line with analyst estimates. We have reduced headcount to align with the lower demand we have seen in some of our service lines. In addition, we have taken other actions to restrain spending where appropriate. We have reduced our CapEx spending plans for 2024 by approximately 20% to a range of $65 million to $70 million for the year, prioritizing spend on key areas of growth and focus with our clients. This includes rolling out the next generation of our industry-leading vendor neutral platform, ShiftWise Flex, to current and new clients. We have successfully migrated clients representing 36% of ShiftWise VMS spend onto Flex in the first quarter and are targeting 70% by the end of the year. Our CapEx plan also includes continued investment in our language services business, which grew 16% year-over-year. Our industry-leading clinical staffing app, AMN Passport, is contributing a rising percentage of our applicants filling high-need jobs. ShiftWise Flex, Passport, and language services account for nearly half of our CapEx spend. Our One AMN transformation strategy is also proceeding well, with some promising gains visible this quarter. New technology and internal process improvements have greatly accelerated our speed in fulfilling orders, which was challenging for us during the pandemic. These changes have cut our order to book time in travel nursing and allied staffing in half and enabled us to improve our position in the vendor-neutral market. At our largest third-party client, where we had ranked outside the top 15 suppliers a year ago, AMN has improved to the number three ranking among vendors. Our new Smart Square mobile app, which enables advanced self-scheduling capability, reached more than 90,000 clinicians in the first 45 days after launch. And the Smart Square workforce optimization platform is ranked best in the class survey again this year. These outcomes are important milestones for our intermediate and long-term growth prospects. All these strategic changes were necessary to restore the ability of AMN to gain market share and serve a fast-changing market that demands broader and more cost-effective solutions to the unique workforce conditions in healthcare, which is expected to be a leading growth sector for the U.S. economy in the coming decades. The physician and leadership solutions and technology and workforce solutions segment have attained some stability in revenue outlook after a solid first quarter. AMN is making early gains in reopening our sales engine to the whole healthcare staffing market and we are seeing our VMS sales pipeline build and progress. With all we have done and have in progress, AMN will be in a better competitive position as the most aligned total talent solutions partner for healthcare professionals and the employers who depend on them when staffing demand comes back. We are also demonstrating the ability to rightsize our organization in concert with market demand. Our business mix is more diversified now than in past cycles, helping AMN maintain profit margins that are higher than AMN experienced in other market downturns. We are managing through short-term risks while building for sustainable long-term growth of a talent-rich values-based organization serving an important mission for all our stakeholders. AMN is proud to have been recognized this month in Becker’s top 150 places to work. Our team members have admirably led through this difficult environment, while keeping our strong values and mission at the center of everything we do. Now, I’ll turn the call over to Jeff for more details about our results and outlook.

Thank you, Cary, and good afternoon, everyone. First quarter consolidated revenue was $821 million, down 27% from the first quarter of 2023. Sequentially, revenue was flat and organic revenue was down 3%. The sequential decrease was primarily driven by volume in the Nurse and Allied segment and the search and VMS businesses. Consolidated gross margin for the quarter was 31.4%, near the high end of our guidance range. Gross margin was lower by 140 basis points year-over-year, driven mainly by the growth of locum tenens revenue, lower nurse staffing margin and declines in higher margin businesses, partly offset by a favorable segment mix. Sequentially, gross margin decreased 50 basis points, primarily due to the mix shift towards locum tenens in physician and leadership solutions and lower gross margin in our travel nurse business. Consolidated SG&A expenses were $175 million or 21.3% of revenue, compared with $206 million or 18.3% of revenue in the prior year period and $185 million or 22.7% of revenue in the previous quarter. The decrease in SG&A expenses year-over-year reflects our proactive efforts to adjust our expense base to match the current demand environment. Sequentially, SG&A expenses decreased as fourth quarter expenses had been elevated due to the acquisition, integration and other costs associated with the MSDR acquisition. Adjusted SG&A, which excludes acquisition, integration and other costs and stock-based compensation expense was $162 million in the first quarter or 19.7% of revenue compared with $191 million or 16.9% of revenue in the prior year period and $159 million or 19.4% of revenue in the previous quarter. The resumption of incentive compensation, payroll tax reset and a full quarter of MSDR operating expenses added $10 million to adjusted SG&A compared with the prior quarter, partly offset by efficiency efforts. In the first quarter, nurse and allied revenue was $519 million, down 37% from the first quarter of 2023. Sequentially, segment revenue was down 3% driven by lower volume, partially offset by increased hours worked in allied businesses. Average bill rate was down 15% year-over-year and flat sequentially in line with our expectations. Year-over-year volume decreased 24% and average hours worked were 3% lower. Sequentially, volume was down 3%, while average hours worked increased 1%. Travel nurse revenue in the first quarter was $334 million, a decrease of 44% from the prior year period and 5% from the prior quarter. Allied revenue in the quarter was $170 million, down 13% year-over-year and up 4% sequentially. Nurse and allied gross margin in the first quarter was 25.1%, which decreased 80 basis points year-over-year and 40 basis points sequentially. The decrease in gross margin year-over-year was primarily due to lower margin in travel nurse, driven by less leverage over housing, travel and allowances and inflation in these expenses, offset in part by a favorable revenue mix shift as the year-over-year declines in travel nurse outpaced the rest of the segment. Segment operating margin of 10.3% decreased 350 basis points year-over-year and 140 basis points sequentially, driven primarily by the deleveraging effect of lower revenue and to a lesser extent gross margin. Moving to the Physician and Leadership Solutions segment. First quarter revenue of $189 million increased 14% year-over-year, primarily from the MSDR acquisition, partially offset by decreases in interim leadership and search. Sequentially, revenue was up 12%, driven by a full quarter impact of MSDR, partially offset by lower revenue from search. Locum tenens revenue in the quarter was $145 million, up 36% year-over-year, with almost all of the growth from the addition of MSDR. Interim leadership revenue of $30 million decreased 25% from the prior year period, but was up 3% from the prior quarter, mainly due to positive trends in both volume and pricing. Search revenue of $13 million was down 29% year-over-year and down 12% sequentially as demand remained soft. Gross margin for the Physician and Leadership Solutions segment was 31.6%, down 360 basis points year-over-year and 170 basis points sequentially. The year-over-year decline was attributable to the revenue mix shift and a lower bill pay spread in organic locum tenens. Segment operating margin was 11.8%, which decreased 330 basis points year-over-year, tracking the lower gross margin. Sequentially, operating margin decreased 120 basis points. Technology and workforce solutions revenue for the first quarter was $113 million, down 17% year-over-year as the revenue increase within language services was more than offset by the declines in our VMS and outsourced solutions businesses. Sequentially, revenue was flat. Language services revenue of $71 million increased 16% year-over-year and 4% sequentially. VMS revenue for the quarter was $29 million, a decrease of 46% year-over-year and 5% sequentially, in line with trends in our travel nurse business. Segment gross margin was 59.9%, down from 71.4% in the prior year period, primarily attributable to lower VMS and outsourced solutions revenue and lower gross margin in language services. Sequentially, gross margin fell 60 basis points, driven by revenue mix shift within the segment. Segment operating margin in the first quarter was 39.3%, a decrease from 49.3% in the prior year driven by the change in revenue mix. First quarter consolidated adjusted EBITDA was $98 million, a decrease of 46% year-over-year and 6% sequentially. Adjusted EBITDA margin for the quarter of 11.9% was slightly above the high end of our guidance range. Year-over-year adjusted EBITDA margin was down 400 basis points and sequentially was down 80 basis points. The decrease in EBITDA margin year-over-year was primarily due to deleveraging on lower revenue. First quarter net income was $17.3 million, down 79% year-over-year and up 39% sequentially. First quarter GAAP diluted earnings per share was $0.45, adjusted earnings per share for the quarter was $0.97 compared with $2.49 in the prior year period and $1.32 in the prior quarter. Days sales outstanding for the quarter was 64, six days lower than the prior quarter and nine days higher than the prior year. We expect more progress towards historically normal DSO through the rest of the year. Operating cash flow for the first quarter was $81 million and capital expenditures were $18 million. As of March 31, we had cash and equivalents of $51 million, long-term debt of $1.3 billion, including a $425 million draw on our revolving line of credit and a net leverage ratio of 2.4:1. Moving to second quarter 2024 guidance. We project consolidated revenue to be in a range of $730 million to $750 million, down 24% to 26% from the prior year period. Gross margin is projected to be between 30.7% and 31.2%. Reported SG&A expenses are projected to be 21.5% to 22% of revenue. Operating margin is expected to be 3% to 3.7% and adjusted EBITDA margin is expected to be 11% to 11.5%. Average diluted shares outstanding are projected to be approximately 38.3 million. Additional second quarter guidance details can be found in today’s earnings release.

Thank you. Please hold on for our first question.

Great. Thanks. Just to get a little bit more color about kind of how you’re thinking about, I appreciate the comments about like kind of the long-term underpinnings of demand for the business. I think those are clear. I guess the question we’re all still trying to figure out is when does that bottom? Do you believe that Q2 is kind of where we should be thinking about the bottom and the back half of the year continued growth? Or is it still not clear? Or do you expect a little bit more continued decline in the back half? Thanks.

Hey, Kevin, this is Jeff. So when we look at demand within travel nursing during the first quarter, it was down approximately 30% from the fourth quarter of 2023 average. And in the recent weeks, really since April 1, although that demand has been stable, it’s down 13% from the first quarter average. So when we look into the back half right now for travelers on assignment within nurse and allied, we would expect June to be the low point. And those travelers on assignment in the month of June will be about 10% lower than the second quarter average. And so that’s the trajectory that we would be carrying into the third quarter.

Kevin, I mentioned this in the opening comments, but as we talk to our clients, for the majority of our largest MSP clients, they’re at or below what their target contingent spend is on the nursing side. We still have some clients who are probably lagging by a couple quarters of what you see in the largest clients, the narrative around the largest clients, I think you’ve seen that even in some of the public commentary around the largest health systems. And so the question for us and Jeff gave you some color about what we’ve been seeing over the past quarter, and certainly the past couple of weeks is where that kind of across the board stabilizes out between what we’re seeing with a number of our clients versus what we’re also seeing with some clients who still have some work to do.

Okay. That’s helpful. I guess – so that means that you think that the back half of the year off of June that’s kind of the low point. Is there something to point to there as far as actual indication of demand? Because some of the companies that are public have been saying for a few several quarters that they might look to hire more, but it doesn’t seem like they have. I’m just trying to get a little more color as to kind of is it more just a view of what you see broadly from a macro perspective, supply demand eventually should go on, or are there like firmer kind of initial conversations about what the back half or 2025 might look like?

Well, I’d say two things. If you look at the macro conditions, all of the supply demand to macro conditions remain intact in the travel nurse market because you had such high utilization and cost coming out of COVID that was a big area of focus as we’ve talked about over the past couple quarters. So one is macro conditions, but our focus really is on bottoms up, rolling up feedback with every individual client and where they are. Not every client has a target. A number of clients do, especially our largest clients. And so we really are working with them on what their goals are and aggregating up that feedback.

Okay, great. And maybe just last question, can you talk a little bit about the competitive environment for new contracts? I think last quarter you talked about a relatively large contract that I think is kicking in more towards the end of Q2. So I guess maybe more in Q3 would we see it? But anything to highlight there as far as contract wins, contract losses, turn things like that heading into the back half? Thanks.

Yes. So we continue to make progress both on sales and renewals. And I know over the past couple quarters we talked about coming out of the pandemic, you had really multi-year renewals that you had really represented a larger year last year than certainly we have this year. We are tracking better on both sales and I’d say kind of overall renewals than last year. We continue to build and progress our pipeline from a sales standpoint and almost half of our pipeline is vendor neutral. So we’re making progress as expected. What I will say is it’s a very competitive market. It has been a competitive market. We expect it to continue to be a competitive market.

Hi. Good afternoon. Thanks for taking the questions. I just wanted to go back one more on the demand environment for nurse and allied. I guess when you speak to the client base, are you still seeing a high level of scrutiny on the staffing decisions from the CFOs or the finance organizations of the clients? Or is any of that decision making starting to shift back to the clinical side? Just kind of wondering if that might be a sign of alleviating pressure if some of the CFOs kind of take a step back in that process.

Yes. Thanks, Trevor. I would say it depends on the clients. And so we have some clients where you still see, I’d say, strong engagement of both the clinical team and the finance team in those decisions. You see some clients where it really is the clinical team looking at how they’re going to staff relative to their target. Our goal, as you know, is we want to be the total talent solutions partner for our clients. So we work with our clients on how they want to staff across the board, and that’s through the clinical team; the finance team is often engaged in how they optimize their workforce against the patient demand they’re seeing.

Okay. Thanks, Cary. That’s helpful. And then for the follow-up, just switching over to the locum side. And this is your first full quarter with MSDR. So if you have any update on how that’s fitting into the company thus far, that would be great. And then on the organic side, I think Jeff you had said almost all the growth was from MSDR in the quarter. So could you give us maybe a progress update on some of the efforts to reinvigorate growth, kind of on the legacy side of locums, and where you’re seeing success? Or are still seeing some challenges there?

Yes. Let me start and talk a little bit about MSDR. And so I think this is officially their first full quarter part of the AMN team, and we are both excited about what they can do for our clients and excited about working with them. We talked about the rationale behind MSDR and what it can do for our locums portfolio, particularly in their strengths around site surgery, radiology and behavioral health. What we focused on in the first quarter is the integration. So when we talked about the MSDR acquisition, it really was the acquisition to some degree of two companies, MSI and DRW. And so while those two companies shared back end systems and a number of functions, they still hadn’t integrated some of their front office capabilities, including their candidate pool. So the first quarter, we focused and completed the integration of those two firms so that we could then integrate and start doing order sharing with AMN. So that integration went very well, and we are in the process of starting to do the order sharing now with that combined company with AMN. We did not have some of the revenue growth during that integration that we would have expected. And so as we now have the integration completed on an accelerated timeline and we’re starting to do order sharing with AMN, we are excited about what that can do to help us with the locums demand that we have as we go through this quarter and beyond.

Trevor, this is Jeff. On the core side, the locums business was up 1% year-over-year. We would expect sequential growth on the core side as we move into Q2, and then improving year-over-year comparisons in the back half for organic locums.

Thanks. Hi, everyone. First of all, maybe just to go back to contracting and customer activity, about last year, there was a lot of chatter about an unusually high number of people going out for contracting, people wanting post-pandemic to try something different. If they had been MSP, maybe they were going to look at vendor neutral solutions or maybe they were going to look at insourcing. Have we sort of worked through that? And now it’s back to normal course of business that you have contracts come up, but maybe some of that accelerated churn and a desire to try something different has been satisfied at this point? Or how would you characterize customers' approach to RFPs?

I’d almost kind of take it as if I look at approach to RFPs, you did have what I’d say, this kind of hiatus during the pandemic that probably created a little bit of a higher watermark last year. The thing that we’re seeing from clients is really looking at new models that are going to help them build a workforce in a labor environment that they expect to continue to be supply constrained. And so the conversations and what we get very excited about, especially given our solutions portfolio, is there’s a lot of focus on the tech enablement of those capabilities. And so as we talked to clients, we rolled out automated technology that enables internal float pools, and went live with our clients last year on that. And so those types of solutions, A.J., I think there’s as much interest and maybe on the margin, even more interest around how do I really think about the next-generation of solutions that we can work with you on to build a sustainable workforce that’s both high quality, cost-effective and more automated.

Okay. I know a lot of focus on demand and rightly so. But any updated thoughts on how supply is trending? Are you seeing new recruits coming to travel nursing? Have you seen most of the people that maybe just did it on a temporary basis and the pandemic wash out at this point? His expectations around pay rates on the people that are doing travel nursing, is that sort of gotten in line with where the market is?

Yes. If you look overall, new applications remain above pre-pandemic levels. So you can look at that as I’d say, a general commentary on supply; you’re going to find pockets. We have this in certain specialties of allied. We have it, I’d say, across the physician market, where you’re going to have more demand than supply. If you look at the psychology, and I’ll specifically talk to travel nurse, we do a survey, and if you look at the survey, there’s a high single-digit percentage of almost 20,000 nurses that said they wanted to travel. And for that core group, it wasn’t necessarily just around pay; it was around lifestyle, ability to manage well-being. And so that core group, I think we continue to see strong interest in doing travel roles. There were some nurses who may have come in at the pandemic, both as the service and need arise and also the pay. But I think you’ve largely seen that normalize back.

A.J., on your bill pay spread question. I would just say when we look at the second quarter for nurse and allied gross margin, the pay rates relative to the bill rates quarter-over-quarter compared to the first quarter are very stable. It’s really the other elements of the pay package, housing and travel, that are putting some pressure on the nurse and allied gross margins along with the mix shift away from international nurse due to the impacts of visa retrogression. And to a lesser extent, we’re seeing a reduction in hours, particularly within allied is what’s causing the sequential pressure in Q2 on nurse and allied gross margins.

Okay. All right, thanks a lot.

Hey, good afternoon. I just want to reconcile some of the comments so far. So what I’m hearing is June is probably the bottom, but I also hear, Cary, your comments about how your smaller clients are saying that they’re probably a couple of quarters away from seeing the bottom of them reducing their reliance on temp. So just curious, I mean, without thinking guidance, right? But is it right to think that there should be carry or could be carryover impact or further declines in revenue as we think about Q3 versus Q2?

That’s right, Brian. I mean, I don’t think we were saying that Q2 or that June was the bottom. We were saying it’s the low point within the second quarter. And so that’ll be about 10% below the average travelers on assignment that we have for the entire quarter. We would also expect some modest bill rate decreases in the low single digits Q3 over Q2.

Thanks so much. Just wanted to, again, just come back to some of the numbers within the guidance. The revenue guidance for the second quarter, is it possible to give us some color between bill rates and volumes that go into that?

Yes. Sure Jeff. Bill rates for the Nurse and Allied segment will be down low single digits when compared to Q1 in line with our expectations, given that the winner needs orders that those clinicians will be rolling off in the second quarter. And then volume within nurse and allied will be down in the low double digit range Q2 over Q1.

And Jeff, they do updates throughout the year. We would expect, really, if there was going to be a change that it would start trending more towards the back of the year, where we would start seeing that in some of the bulletins, potentially.

And then just from there, just maybe a broader, maybe political question. We’re heading into election season. I know there’s not necessarily any federal overriding regulations that impact your business. I know there are some, but from a big picture, not as much as some other industries. But can you talk about what the environment might be like if we do see a change in administration and are there any specific states to call out where there may be some changes going on? Thanks.

You know what I would say from a state standpoint, I think you're seeing some of the — it's a highly regulated space. We would continue for it to be that. So I don't know if we would envision any material change state-by-state, depending on what happens. And for us on a national level, we really look at it as the demand for healthcare professionals over the intermediate to long-term is a need that's going to happen regardless of political affiliation. And so we work very closely with our clients to help ensure that we're supporting them with all the data and facts they need.

I wanted to ask you a question, as you work into the back half of the year 3Q, 4Q, based on existing trends in the businesses, will we get to a point where the growing businesses are sort of approximately equivalent, equivalent from a revenue perspective to the travel nurse and associated businesses that are in decline? And if so, when do you see that happening? By my math, it's kind of early 4Q.

From a segment level and I don't know, from a segment level, Tobey, I think nurse and allied would continue to be our largest segment even in the back half of the year.

Yes, I'm actually disaggregating it in the businesses with the detail that you provide underneath the segments.

Just looking at travel nurse?

The businesses that are in decline so the associated revenues with travel nurse that influence TWS, et cetera.

I think travel nurse would continue to be our largest business. And then even if you were to take the other two segments in entirety, they would outpace travel nurse, but they wouldn't outpace the entire nurse and allied segment.

Hi, just a couple follow ups to some of the earlier questions and maybe starting with locums. How much does having a scaled-up locums franchise help you compete for maybe MSP type opportunities? Or is locum still very much a separate sort of engagement?

I would say, having the added capabilities that MSDR had, in addition to the capabilities that we already had, has strengthened our positioning in the overall market and certainly our ability to more completely go after locum MSPs. We also are having early success on talking to our existing clients around expanded capabilities. So if we have an existing client who's using us for nurse or nurse and allied, how we add locums capabilities. Importantly, with the rollout of ShiftWise Flex, our new generation vendor management system, we can support nurse, allied and locums, as well as clinical, nonclinical physicians. So there's a number of things that we have done to enhance our capabilities and ability to effectively position ourselves competitively in that space.

Got it. And then I know you talk about sort of smaller systems, larger systems in terms of travel nursing, and kind of where they are and progress towards reducing contingent labor spend. Can you give us some sense for just how your book of business might be bifurcated along those lines?

Against large and smaller? Think of it as we serve the largest health systems and we also serve the smallest. And so your MSP clients probably tend a bit towards some of the larger. And I think, Constantine, the real question when you're looking at where you're going to see all of this kind of find the equilibrium, I think there's going to be a couple of pieces on that. One is while the majority of our largest clients are at or below their targets, you need to start seeing growth off of where they are. And then you need to see some of these other clients who have typically lagged the largest clients one or two quarters find their bottom. And so there's a number of different outcomes around where you could find the equilibrium depending on those two pieces. But those are the conditions that we're really monitoring.

Thank you. Hello, everybody. On education, I'm hearing the K-12 contracting activity is pretty strong for the 24, 25 year has been. Have you been seeing a lot of activity?

Yes, we have, Bill. I think that business was up 20% for us quarter-over-quarter, or excuse me, year-over-year in the first quarter. And we would expect that growth to continue. And that growth is coming not only from on-site clinicians, but also through teletherapy for us, which is growing faster than the overall 20% rate.

So you can look into the next school year and kind of see that sustainable?

We would expect it to, yes.

I think what we saw in interim, and we're still seeing a bit in terms of permanent search, is the same type of cost management that you experienced and that we were talking about in the travel nurse business also impacted those businesses. So if you could hold off on hiring an interim leader, then you saw that happen last year. I think, against the backdrop of, from a macro standpoint, the continued expectation of patient demand increasing, you're seeing a number of our clients now go back and look at, ensuring that they're staffed from a leadership standpoint.

Yes. So, Bill, I would just say, even though we saw an improvement in the trend sequentially, the business was down 25% year-over-year. But I would say, encouragingly to us that the stabilization that we saw both on the price and the volume within interim was the first time we had seen that quarter over quarter since the second half of 2022.

Hey, this is Andre on for Mark Marcon. Thank you for taking our questions. My first question is just to follow on to some of the comments you guys had earlier about some of the clients lagging about a quarter or two from the other clients or the larger clients that have kind of more so reset to normalize or targeted levels. But among the MSP clients that aren't back to those targeted levels, how much further do they have to go to get to those targeted levels if you could provide a range that's like 5% or 15 or 20%. And then also, how many MSD clients are now dipping below those targeted levels?

We've had some of our clients go below their targeted levels, and that already happened in some cases. I don't know that I have a number to say, somebody kind of 5% or more than that. What I would say is we saw – and we saw this last year. We saw the largest systems really lead the way in getting back to, I'd say, more normalized workforce structure, and the smaller organizations just got a later start in some cases, and we have some that don't have a targeted goal, and they're just looking at what's happening from a patient demand standpoint and making decisions about how they're going to structure their workforce. I think the important thing that we talk to clients about, again, because we help them optimize against their total workforce, is coming off of the normalization we've seen around contingent labor the past year. You're really heading into a period where the premium over contingent labor over fully loaded cost has been getting into normal levels, and we expect it by the end of the year to be there based on what's happened with bill rates and also what's happened to embedded cost rises in permanent labor. So the conversation is, I'd say, kind of getting back to what's the most effective way for me to staff my organization. And that looks a little bit different this year than it did this time last year.

Great. Thank you for all that color. And then as a quick follow-up, you mentioned a lot of the improvements from a technology perspective. And I know, Cary, that's been a big point of emphasis since you joined. And you also mentioned that that's been a lot bigger of a point of emphasis among clients that they're looking for tech-enabled solutions. So could you provide a little bit more of an update in terms of where you are on that journey on a technology modernization front or what inning do you view you are in and what are some of the things that you are most excited about? Thank you.

I guess, baseball season is starting now that we're kind of in innings. We feel very good about what we have delivered over the past year. And I'll start with ShiftWise Flex, which is the new generation of our VMS. We are, at the end of this quarter, almost 40% complete based on spend under management with our clients. That rollout has gone very well to be the majority complete by the end of the year. And so ShiftWise Flex has been a big positive both in terms of, for our current clients as well as for prospects, because it can support the entire clinician base, like I talked about earlier. And we've also integrated into our mobile app so that we can support internal float pools and a number of other capabilities that are very important to our clients. So I put ShiftWise Flex at the top of the list. We've done a significant amount of automation around our order to fill. We talked about the stats that we've already achieved, which is we've reduced our time by half. That has led to both increased clinician as well as client satisfaction. And we also saw quarter-over-quarter, an increase in our internal capture. And while we're not back to our internal capture rates pre-COVID, the progress that we made quarter-over-quarter was very validating for us and the work that we've done both operationally and from a technology standpoint. And then another big thing that we've done is we are almost complete with the integration of all of our brands into AMN. And that's more than a logo. That is, we have a front door in our mobile app called Passport for all of our clinicians. And we have an ability for our clients and our clinicians to be able to experience the breadth of AMN, both in terms of our solutions offerings, but for our clinicians, a number of jobs. So we will continue to make a lot of progress to support our clients in a tech-enabled way.

This concludes today's conference call. Thank you for participating, and you may now disconnect.