Earnings Call Transcript - AMN Q1 2023

Operator, Operator

Good day, and thank you for standing by. Welcome to the AMN Healthcare First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker 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 our speaker, Randle Reece, Senior Director of Investor Relations. Please go ahead.

Randle Reece, Senior Director of Investor Relations

Good afternoon, everyone. Welcome to AMN Healthcare’s first quarter 2023 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com following 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, Chief Executive Officer; Jeff Knudson, Chief Financial Officer; Landry Seedig, Group President, and COO of Nursing and Allied Solutions; and James Taylor, President and Chief Operating Officer of Physician and Leadership Solutions. I will now turn the call over to Cary.

Cary Grace, CEO

Thank you, Randy, and welcome, everyone. AMN continues the strong partnership with our clients and clinicians in rebuilding a post-COVID sustainable workforce, which is evident in our solid first quarter results reported today. The industry landscape is changing, and we are moving quickly to bring clients the breadth of our solutions to help them with their workforce challenges and needs. The healthcare workforce landscape was shaken by the pandemic. Clients emerge seeking more sustainable and controllable solutions to achieve their growth targets while balancing quality and cost. We see clients more open to change, looking at new ideas that could help them create a more sustainable workforce. Healthcare professionals are also in transition, focusing on control, flexibility, and well-being in their work and are open to new options to achieve those goals. All of this change is complicated by the continued shortage of healthcare professionals, which we expect to be a challenge for some time. Our latest position in nurse surveys shows rising numbers of professionals who plan to change jobs or leave the profession. We expected a directional change in the market this year, and we are making decisive moves to operationalize our growth plans, including technology and analytics to enable more comprehensive and sustainable workforce solutions, greater client focus, and enhanced speed and efficiency in bringing all our solutions together to benefit our clients and clinicians. We said last quarter that our solution set would become even more comprehensive and differentiated, and it is happening. In recent weeks, our leadership team came together to develop a 12-month plan to accelerate the evolution of our businesses, starting with Nurse and Allied. We are moving swiftly to the implementation phase with changes that will boost our speed to deliver, provide a unified sales experience our clients desire, and strengthen our value proposition. To drive further engagement with a broader pool of clinicians, we have already built AMN Passport into the top-rated and powerful mobile app for nurse job search and career engagement, enabling our recruiters to grow their clinician base more effectively. AMN Passport is the only app that combines customized job search and engagement, AI job matching, credentialing self-service, and time and pay. We will continue to elevate Passport to be a digital staffing solution for all healthcare job seekers at any stage of their careers across all AMN businesses. To help our clients with workforce management, we rolled out several new features this year with more companies to shift-wise, which we believe is the only scalable enterprise VMS platform made for healthcare. We have modernized the architecture of our VMS platforms using advanced cloud services and newer web and mobile technologies, bringing a fresh user-friendly interface. Our data cloud for predictive and advanced analytics is powered by Snowflake and other AI technology partners. We also advanced our capabilities to integrate with our clients' HR systems to drive digital and automation efficiencies. We have a strong history of flexing our cost structure to meet changes in demand. In this current demand environment, we are closely managing our resources while also sustainably scaling our cost base through platform integration and automation across AMN. We believe these efforts, coupled with a favorable revenue mix shift, will sustain an adjusted EBITDA margin above 15% for the full year. Our priorities in capital management remain focused on disciplined growth. This year, we plan to spend approximately $90 million on capital expenditures prioritizing the key technology and operational initiatives I outlined. We are also announcing an accelerated share repurchase program given the long-term growth opportunities we see ahead. Our team remains focused on M&A opportunities as well, and we are confident in our ability to continue to use M&A to strengthen our solution set and enhance shareholder value. Finally, new leadership will bolster our accelerated transformation with three extremely qualified executives reporting directly to me, leading areas that empower our delivery of tech-enabled workforce solutions and our focus on client-centricity and growth. Meredith Lapointe is taking a newly created role as Chief Business Officer responsible for strategy, workforce optimization, marketing, and client relations. Meredith is well known for helping build the healthcare practice at McKinsey for the past 16 years. She knows the best workforce strategy is being implemented today and is uniquely qualified to foster strategic conversations with executives across the healthcare sector. Meredith was drawn to AMN by our powerful set of workforce solutions and technology, the opportunity to create value in our client partnerships, and the strong values and culture of our organization. Pat McCall is coming to AMN to serve as our Chief Growth Officer. Pat's background as a senior strategic sales leader with People 2.0, Randstad Beeline, and other top players already brought him recognition as one of the staffing industry's most influential leaders. Pat is the ideal leader to develop and operationalize an enterprise-wide growth acceleration focused around innovative technology and services. Similar to our other two segments, our Technology and Workforce Solutions segment will now have a dedicated leader. This important segment will be led by Nishan Sivathasan, who served most recently as our Chief Strategy and Experience Officer, including business strategy and M&A. Meredith, Pat, and Nishan are the leaders we need to accelerate our progress in key client and tech-driven solutions to become a central partner enabling the future of care. Now, I'll turn the call over to Jeff for the details about our results and outlook, after which I will return for some final comments.

Jeff Knudson, CFO

Thank you, Cary, and good afternoon, everyone. First quarter revenue of $1.126 billion was near the high end of our guidance range, with the Technology and Workforce Solutions and Physician and Leadership Solutions segments performing above expectations. Consolidated revenue was down 27% from the peak quarter of the pandemic last year and flat sequentially. Gross margin for the quarter was 32.8% and up 80 basis points from the prior year period, mainly due to a mix shift in revenue towards higher-margin businesses. Sequentially, gross margin decreased 50 basis points primarily driven by the Nurse and Allied Solutions segment. Consolidated SG&A expenses were $206 million or 18.3% of revenue compared with $258 million or 16.6% of revenue in the prior year period and $219 million or 19.5% of revenue in the previous quarter. The decrease in SG&A expenses year-over-year was primarily due to our efforts to adjust expenses in the current demand environment, along with less variable compensation with lower revenue. Sequentially, lower credit loss expense, variable expenses, and legal expenses were the primary reasons for the decrease. Adjusted SG&A, excluding certain non-recurring expenses and stock-based compensation expense, was $191 million in the first quarter or 16.9% of revenue compared with $239 million or 15.4% of revenue in the prior year period. The increase in adjusted SG&A margin year-over-year was mainly driven by lower revenue, offset in part by our expense management initiatives. In the first quarter, Nurse and Allied revenue was $824 million, down 33% from the record high of the prior year period and flat sequentially. Average bill rate was down 22% year-over-year and sequentially was up 3%. Year-over-year, volume was down 11% and average hours worked were down 11%, while average hours worked were down 3%. Sequentially, both volume and average hours were flat. Travel Nurse revenue during the first quarter was $593 million, a decrease of 39% from the prior year period and up 2% versus the prior quarter. Allied revenue during the quarter was $196 million, down 8% year-over-year and flat with the prior quarter. Nurse and Allied gross margin during the first quarter was 25.9%, down 30 basis points from the prior year period and down 70 basis points sequentially. Year-over-year, gross margin was lower, primarily due to lower average hours worked. Quarter-over-quarter, higher pay packages and less labor disruption revenue weighed on the margin comparison. Segment operating margin of 13.8% was 210 basis points lower year-over-year due to lower operating leverage. Sequentially, operating margin increased 110 basis points, primarily reflecting lower credit loss expense. Physician and Leadership Solutions revenue in the first quarter was $166 million, a decrease of 8% year-over-year and 1% sequentially. The Locum Tenens revenue was $107 million, down 5% from the prior year or growing by 11%, excluding pandemic-related assignments and up 3% sequentially. Interim leadership revenue of $40 million decreased 9% from the prior year period and was down 11% from the prior quarter. Search revenue declined 16% from the prior year and was flat sequentially. Interim and search revenue were down from the prior year due to lower demand as hospitals focused on expense management. Gross margin for the Physician and Leadership Solutions segment was 35.2%, up 20 basis points, both year-over-year and sequentially. The slight margin increase year-over-year was primarily due to improved gross margins for interim and locum tenens, partially offset by mix. Sequentially, margin growth was driven by the interim business. Segment operating margin was 15.1%, which increased 370 basis points year-over-year, mainly driven by lower SG&A expenses. Sequentially, operating margin decreased 160 basis points, primarily due to favorable prior quarter professional liability and other adjustments. Technology and Workforce Solutions revenue during the first quarter was $136 million, down 6% year-over-year and up 2% sequentially. Within this segment, Language Services generated revenue of $62 million, an impressive increase of 25% year-over-year and 6% quarter-over-quarter. BMS revenue of $54 million decreased 28% year-over-year and 2% sequentially. Segment gross margin was 71.4% and down 530 basis points from the prior year period and down 190 basis points sequentially. The decrease in gross margin year-over-year was primarily attributable to lower BMS revenue compared with the record high from a year ago. Sequentially, gross margin was lower, driven by a mix shift to language services. Segment operating margin in the first quarter was 49.3%, a decrease of 510 basis points year-over-year and down 90 basis points sequentially. The Consolidated first quarter adjusted EBITDA of $180 million decreased 30% year-over-year and increased 3% sequentially. Adjusted EBITDA margin of 15.9% was 70 basis points lower year-over-year and up 40 basis points sequentially. First quarter net income was $84 million, down 42% year-over-year and up 3% sequentially. First quarter GAAP diluted earnings per share was $2.02 in the quarter. Adjusted earnings per share for the quarter was $2.49 compared to $3.49 in the prior year period and $2.48 in the prior quarter. Day sales outstanding were 55 days, in line with the prior quarter and two days lower than the prior year. Operating cash flow for the first quarter was $43 million, and capital expenditures were $17 million. As of March 31, we had cash and equivalents of $29 million, long-term debt of $990 million, including a $140 million draw on our revolving line of credit and a net leverage ratio of 1.3 times to one times. Today, we announced that we intend to enter into a $200 million accelerated share repurchase program in the coming days. Year-to-date, we have bought back 2.4 million shares of stock for $225 million, excluding brokerage fees and excise tax on share repurchase. As of today, $427 million was outstanding on the repurchase program authorized by our Board of Directors. Moving to second quarter 2023 guidance. We project consolidated revenue to be in a range of $970 million to $1 billion, down 30% to 32% from the prior year period. Gross margin is projected to be 33.4% to 33.9%. Reported SG&A expenses are projected to be 19.1% to 19.6% of revenue. Operating margin is expected to be 10.6% to 11.2%, and adjusted EBITDA margin is expected to be 15.4% to 15.9%. Average diluted shares outstanding are projected to be approximately $39 million. Additional second quarter guidance details can be found in today's earnings release. Last quarter, we talked about 2023 returning to a normal seasonal pattern after a greater than seasonal drop in second quarter revenue. The pullback in spending by hospitals intensified in recent months. The level of travel nurse demand in March and April leads us to expect the third quarter to be our lowest revenue quarter of the year. Travel nurse demand improved modestly in each of the past four weeks. We expect to finish 2023 with approximately $4 billion in revenue and an adjusted EBITDA margin of approximately 15.5%. This view assumes modest improvement in demand from current levels. Now I'd like to hand the call back to Cary.

Cary Grace, CEO

Thank you, Jeff. Before we move to Q&A, I want to recognize the great work that our healthcare professionals and team members are doing on the job every day. Thank you all for your dedication and your consistent excellence. I also want to give special recognition to our nurses, as we celebrate National Nurses Month. Recently, our healthcare leadership solutions team, known under the AMN and B.E. Smith brand, was recognized by Modern Healthcare as the industry leader in executive search. Our congratulations go out to the whole leadership solutions team, which is well positioned to help clients implement their own change efforts in the fast-moving post-pandemic environment. The foundation of our company is our shared values, which are demonstrated in our second annual ESG report. For AMN, this is not a year reporting exercise. We demonstrate how responsible governance drives better health and wellness, diversity, equity, the quality and inclusion, and sustainability across AMN and our community. AMN is an industry leader in ESG performance and disclosure, and that's something we are very proud of. Now, operator, please open the call for questions.

Operator, Operator

Thank you. At this time, we will conduct the question-and-answer session. Our first question comes from Kevin Fischbeck of Bank of America. Your line is now open.

Kevin Fischbeck, Analyst

Great. Thanks. I appreciate the color on the seasonality through the rest of the year. I guess part of the reason why you were expecting some improvement was because you felt like there was kind of a disconnect, I think, between the orders that are coming in and the fundamental demand that the clinicians were seeing. I mean, do you still feel like that is there? And if so, why is it persisting a little bit longer than you thought?

Cary Grace, CEO

Hey, Kevin, thanks for the question. What I would say overall, and particularly if you look at some of the public comments the CEOs of some of the largest healthcare systems have said over the past two weeks. I think we were all going into this year knowing, and frankly, we are partnering with our clients to reduce spend on a portion of their workforce that had gotten very escalated in the tail end of the pandemic in the first quarter of last year. So that was something we were doing in partnership. We worked through that in the last half of last year and into the first part of this year. And so we think we've made progress. I think, again, if you hear the public comment that some of those hospital executives will say as well as what we're seeing with clients. We think it's going to continue to be an area of focus from a management standpoint. But we're now getting to the end of how do we really start thinking about how we build our workforce more sustainably and more holistically to grow.

Kevin Fischbeck, Analyst

Okay. Thanks. And I guess we're hearing a bit more about customer churn. You mentioned I guess a little bit to your customers are looking for new solutions. And it sounds like you're trying to respond to that. Do you think or do you expect additional contract losses from this type of evaluation from the customer base, or do you see this as an opportunity to gain share from where you are? Does your guidance assume any puts or takes from that dynamic? Thanks.

Cary Grace, CEO

Let me take a moment to discuss the overall market dynamics we are observing, which are also reflected in the clients approaching us for potential solutions. Clients are now reassessing their workforce post-pandemic and considering how to rebuild for the future. Over the past year, the focus has primarily been on cost management and ensuring workforce costs are sustainable. We're now transitioning to thinking about how to build a sustainable workforce moving forward. As a result, clients are increasingly open to exploring new approaches. This shift has led to one of the most robust pipelines of new opportunities that our team has seen. Clients are also adopting new solutions, seeking transparency, control, and sustainability tailored to their specific needs and the type of workforce control they prefer. The largest portion of our pipeline is in Managed Service Provider (MSP) programs, which continue to show significant strength and interest. When a new client joins one of our platforms, it's common for their previous provider to remain involved as a supplier in the future. The same applies if we are one of multiple MSPs, as we can still provide services or be part of the solution. Overall, given our solutions, scale, brand reputation, and team, we believe that clients seeking sustainable total talent workforce solutions will favor us in this environment.

Kevin Fischbeck, Analyst

All right. Great. Thanks.

Operator, Operator

One moment for our next question. Our next question comes from Trevor Romeo of William Blair. Trevor, your line is now open.

Trevor Romeo, Analyst

Hi, good afternoon. Thanks so much for taking the questions. First one for me is, I appreciate the commentary you just provided about Q3 kind of being the lowest revenue quarter of the year. I was wondering, based on the order activity that you're seeing today, if you could kind of parse that out into your expectations for sequential bill rate and volume trends throughout the rest of the year?

Jeff Knudson, CFO

Sure, Trevor. This is Jeff. So, if we just take a step back, I would say that our outlook on balance for physician leadership solutions and for TWS is in line with our prior view. And then within Nurse and Allied, the nursing business followed the trend line we anticipated, but the industry-wide demand ended up lower than we expected. And so that's what now leads us to believe that Q3 will be the lowest revenue quarter of the year for the Nurse and Allied segment, approximately 10% lower than Q2, and you can think about that pretty evenly split between bill rate and volume. And then we would expect, as the winter needs orders roll in into the fourth quarter timeframe that we would see a sequential increase in volume in the fourth quarter within Nurse and Allied, and bill rates would generally be flattish over Q3 levels.

Trevor Romeo, Analyst

Okay. Great. That's really helpful. Thanks. And then just for the follow-up, I had a question on kind of boomerang nurses, who had left hospitals during the pandemic only to come back to permanent roles. There was an article as on the news recently highlighting that dynamic. Just kind of curious to hear what you're seeing and hearing from your clients on that topic, given that the travel markets cooled a bit and the economic environment might be driving some nurses back to permanent work.

Landry Seedig, Group President and COO of Nursing and Allied Solutions

Yes. Trevor, this is Landry. So it's pretty hard to measure whenever the nurses are going from a travel assignment to perm float pool the per diem, et cetera. We, of course, have seen similar reports that you've probably seen where hospital hiring is up a little bit, but the attrition numbers are still pretty high. So still a lot of churn and turnover that we're seeing. Maybe I'll just touch on what we're seeing on our own supply and interest in work in temporary contracts. So that flexibility that travel provides these professionals is still very attractive to them. Our new applicants in the first quarter were lower than Q1 of the prior year, but a lot of that is because Q1 of the prior year was the peak in demand and the peak in bill rates. And then our new applicants, Honeynet applicants, they have been flat for four consecutive quarters now, and they're well above our 2019 levels. In fact, they're about two times what they were before the pandemic. So that interest is definitely there. And so there's really two pieces to that equation. One is the interest. They really like the flexibility of working contracts. And then the second thing is all of the investments that we've been making in our pipeline. So our mobile website, AMN Passport, all those are paying off. It's allowing clinicians to be able to find us a lot easier to be able to apply for us easier and faster. Specific AMN Passport, it continues to be a success story for us. The number of users that are on the platform continues to grow and has a really, really strong engagement. You actually went to the App Store, you can see that it has a star rating of 4.7 out of 5. So really, really high and then it has over 15,000 reviews, which is well above any other competitive back-out in the marketplace.

Trevor Romeo, Analyst

All right. That's great to hear. Thanks very much.

Operator, Operator

One moment for our next question. Our next question comes from Brian Tanquilut of Jefferies. Your line is now open.

Brian Tanquilut, Analyst

Hey. Good afternoon, guys. Maybe I'll follow-up on the last question about Q3. As you think about the business going forward, do you think it's right to think that this is basically the bottom? I know you've seen some inflection or stabilization in the last few weeks on demand. So maybe just curious how you're viewing demand and bill rate trend as we look into next year?

Jeff Knudson, CFO

Yes, Brian. In the last four weeks, we have observed a slight increase in travel nurse demand, and we anticipate that trend to continue through June. Looking ahead to the third and fourth quarters, with a projected $4 billion in revenue for the year, this suggests that the latter half of the year will bring in nearly $1.9 billion, with adjusted EBITDA margins just above 15%. We believe that annualizing the second half provides a solid foundation for considering the business as we move into 2024 and beyond.

Brian Tanquilut, Analyst

Okay. That makes sense. And then maybe shifting gears a little bit to the locum business and the Allied side of the business, I mean, anything we should be thinking about in terms of where, first, what you're seeing, and then maybe any factors that could drive some acceleration in growth in demand for those non-nursing locums business?

James Taylor, President and COO of Physician and Leadership Solutions

Thank you, Brian, for the question. This is James, and we'll speak to the locum side of the marketplace. Locum is a good news story for us. You look at their demand is still 50% higher than 2019 pre-COVID levels. When you think about our business, our business revenue growth is high single digits year-over-year, our fuel rates are up quarter-over-quarter. Our book spreads are up quarter-over-quarter and also year-over-year. From a Q2 standpoint, we still think that we expect to have very solid growth going into next quarter and also more profitable growth within the locums marketplace. The thing that we're looking at is we're very laser-focused on the demand that's out there, but we want to be profitable and have profitable growth, not just any growth. So we're laser-focused on that, and you're able to see that in some of the results that Jeff read out earlier.

Landry Seedig, Group President and COO of Nursing and Allied Solutions

Hey, Brian, it's Landry. I'll talk about Allied. First off, demand in Allied is really strong, more than double what it was before the pandemic, and we're really excited about that. There is a slight mix change affecting volume because some specialty areas related to COVID are decreasing and impacting year-over-year comparisons a bit. This includes areas like phlebotomy, respiratory therapists, and med tech. However, this is balanced by strong demand in therapy, particularly physical therapy, occupational therapy, and imaging. We are really optimistic about the demand, and the team is performing exceptionally well in response, making this a promising area as we move through the rest of the year. Additionally, I want to highlight that our international businesses and school business are also doing very well.

Cary Grace, CEO

And the overall comment that I would make, which I think your question really highlights is one of the core positioning for us with our clients is how we help them holistically across all of their clinician needs. And I think when you hear the comments that both James and Landry talked about, I think it's very reflective of the strong partnerships that we've built with them and really being able to help them serve their patients and continue to grow their businesses and their organizations.

Brian Tanquilut, Analyst

Awesome. Thank you, guys.

Operator, Operator

One moment for our next question. Our next question comes from Jeffrey Silber of BMO Capital Markets. Your line is now open.

Jeffrey Silber, Analyst

Thank you so much. You spoke earlier in terms of working with your clients to help them manage their own costs. I'm just wondering if you can give us a little bit more color on what you're doing internally to manage your own cost in this environment of declining revenues to try to keep your margins above that 15% level?

Cary Grace, CEO

Yes. Let me take that one first. For all of you who have been with us throughout the years, you have witnessed firsthand that AMN has always adapted well as market conditions fluctuate, whether that is flexing up to demand or flexing down to demand. And it really is a core value proposition to our clients because we are there to help them in times of need and be able to meet their needs quickly and seamlessly. So if you look at our ability to do that, particularly even in this quarter, while our revenues went down 27% year-over-year, our adjusted SG&A is down 20% year-over-year, and the majority of that expense reduction has not impacted headcount. So the things that we are doing, one is we have active experience planning, so we went into this year knowing that we were working with our clients to reduce key elements of their workforce spend and plan for that. We are always doing continuous performance management, attrition as the primary drivers of how we continue to manage those costs.

Jeffrey Silber, Analyst

Okay. That's really helpful. I appreciate that. Jeff, you mentioned that the revenue and adjusted EBITDA numbers you provided for 2023 assume some modest demand improvement. What would those numbers look like without any demand improvement?

Jeff Knudson, CFO

Yeah, I would say it's in the low single-digit range, Jeff, is what the improvement is into Q3 and Q4 in the demand environment. And again, our viewpoint on bill rates is that they'll be down high single digits in the second quarter, down mid-single digits in the third quarter, and that's informed on the visibility we have into Q3 right now, as well as the open orders that we're recruiting for, and then flat sequentially into Q4. So that's the bill rate side of the equation, and it's not a huge lift on the volume side from what we're seeing right now. It's, again, in that low single-digit range.

Jeffrey Silber, Analyst

So the demand improvement is mostly coming in the fourth quarter, that's what you're saying?

Jeff Knudson, CFO

Sequentially over Q3, yeah, because Q2, we do expect Q3 will be down mid-single digits for Q2.

Jeffrey Silber, Analyst

All right. Thanks so much for clarifying that. I appreciate it.

Operator, Operator

One moment for our next question. Our next question comes from Tobey Sommer of Truist Securities. Tobey, your line is now open.

Tobey Sommer, Analyst

Thanks. As the business and demand trends stabilize, I'm curious if demand picks up, do you think you'll be able to grow your Travel Nurse business above and beyond seasonality at current pricing trends, or would it require bill rates out in the market to increase to lure in some additional supply to generate growth?

Cary Grace, CEO

So if you step back and think a little bit about what we typically see from a volume standpoint, as volumes go up, you tend to see bill rates and pay rates have to go up to be able to attract that. I think what we've seen and maybe the balancing piece of that that we have witnessed over the past couple of quarters is you've actually seen stabilization really since the high point of Q1 2022. So I would say at this point, we're not assuming that you're going to see a substantial increase in bill rates. And we still think that the balance between bill rates and volume could still define if you had a slight increase in volume towards the end of the year.

Tobey Sommer, Analyst

Okay. Could you talk to us about two sort of detailed questions? How is your spend under management from an MSP perspective and churn within the book of business? And maybe could you contextualize winter orders sort of size that and influence and how much higher price that is than the average? Thank you.

Cary Grace, CEO

Let me give some overall context about MSP, and then I'll have Landry talk a little bit about the winter orders. As you have seen, as we talked about just the significance of our MSP programs in terms of spend, and I'd say this was particularly true during COVID, where we made a very intentional and strategic priority to focus our limited supply on our MSP clients. Our MSP spend tends to track what you see overall in our Nurse and Allied business because that is the biggest program under our MSPs. So, when you go through and as we talk about some of what we're seeing overall in the Nurse and Allied business, that tends to align well with what we're seeing overall in our MSP. Now, as we've come out of the pandemic, we have been able to provide more support than we did during the pandemic to some of our BMS programs. And so you're seeing that alignment still stay correlated, but it's not quite as one for one as you may have seen during the pandemic.

Landry Seedig, Group President and COO of Nursing and Allied Solutions

Hey Tobey, I'll hit on the winter orders real quick. This is Landry. So, our definition of winter orders is whenever a client is giving us bulk orders kind of in the June to July timeframe for orders or start dates that typically start either at the latter end of Q3 or throughout Q4. So, that’s kind of the way that we label our winter orders. The last couple of years, it's been hard for some of those accounts to plan for that, just with the different fluctuations that were going on in the market. We are anticipating winter needs this year. And you asked about the bill rates on them, I'd say the biggest reason for the bill rate increase is that we see higher utilization among our clients that drive higher rates. So, a lot of it is more of a geographic phenomenon than customers truly paying a higher rate for that time of the year.

Operator, Operator

Our next question comes from A.J. Rice of Credit Suisse. Your line is now open.

A.J. Rice, Analyst

Hi everyone. Thank you for the question. To clarify, Jeff, you previously projected revenue of $4.2 billion to $4.3 billion this year, and now you're revising that to $4 billion. The EBITDA margin, which you had indicated would be between $15 million and $15.5 million, is now expected to be at the upper limit of $15.5 million. If my calculations are correct, the midpoint was previously $650 million for EBITDA and is now $620 million. That’s a $30 million adjustment for the entire year, with the first quarter being slightly higher and the third quarter somewhat lower, understandably. Would you attribute this entirely to a shift in perspective regarding Allied and travel nursing, or are there other significant changes to your outlook?

Jeff Knudson, CFO

Yes, A.J., so I would agree with your numbers. I would say it's really a travel nurse change predominantly. Obviously, with some of the demand trends that we talked about on the nursing side, that is impacting our VMS business as well. But that's largely offset by strength within Language Services. So Language Services was up 25% year-over-year in the first quarter. So any hit to the VMS business is largely being offset by Language Services within TWF, and the change is really coming within travel nurse.

A.J. Rice, Analyst

Okay. And then, when you think about supply and demand of getting nurses who are willing to step up for assignments. You talked about if volume improves, you might have to see a little rate improvement to get that volume. What about this concept of at some point, you hit a breakpoint where it's going to be really hard to get nurses, and it will dramatically pull back. As you're looking at where you think rates would bottom in the third quarter, are you pretty close to that number where you'd see a meaningful percentage of the people that are willing to take travel assignments today might back off, so that, that gives you a second way to consider where a floor might be, or you still think there's some leeway there?

Landry Seedig, Group President and COO of Nursing and Allied Solutions

Hey, A.J., it's Landry. I think the main point I want to make is that what we're seeing with travel nurses right now isn't due to a lack of supply but rather a demand issue. There's a strong interest in travel nursing, but there aren't enough nurses to meet all the permanent, temporary, and per diem needs in the market. The desire to take travel assignments is present, so that's not a concern. Regarding pay, it comes down to supply and demand economics. We've taken this into account while assessing where we believe demand will be and what the pay should reflect, and we're discussing this with our clients. However, pay is just one of several factors that clinicians consider when deciding to travel. The most significant factor is location, which takes precedence over other considerations. Pay is indeed among the top four factors, but flexibility and working conditions are also very important. As it stands today, we're not facing a supply issue. If demand increases, we'll be in a position to meet it.

A.J. Rice, Analyst

Okay.

Cary Grace, CEO

And I would underscore with that, we just released our nurses' survey on Monday. And I think all the points that Landry put in there underscore it. So we're still seeing a huge interest. And as much as anything, it's the lifestyle choice.

A.J. Rice, Analyst

Interesting. One final question regarding your mention in the prepared remarks about interest in mergers and acquisitions and your willingness to pursue them. I know the company has discussed this previously, but Cary, now that you've had some time in the role, does your understanding of the organization and the competitive landscape influence the types of deals you might consider?

Cary Grace, CEO

Yes. Overall, I maintain consistent views from last quarter. First, we are always exploring mergers and acquisitions as a means to accelerate our growth in key areas. This remains true. For some time, we observed a relatively slow M&A environment due to broader market volatility. However, we expect that to begin stabilizing as the year progresses. We are looking for opportunities that will offer better solutions for our clients, increased tech enablement, and strong growth potential, especially in specialized areas where we continue to see demand.

Kevin Fischbeck, Analyst

Okay. Great. Thanks a lot.

Operator, Operator

One moment for our next question. Our next question is going to be coming from Bill Sutherland of The Benchmark Company. Your line is now open. I think Bill is not with us.

Jeff Knudson, CFO

Please move to the next question.

Operator, Operator

One moment for our next question. Our next question is going to be coming from Andre Childress of Baird. Your line is now open.

Andre Childress, Analyst

Hey. This is Andrea on for Mark Marcon. Thank you for taking our questions. So my first question, just want to follow up on some previous comments you had on the expectations you laid out. Where do you now bill rates and volumes that exit the year compared to pre-pandemic levels?

Landry Seedig, Group President and COO of Nursing and Allied Solutions

Yeah. On the bill rate side, we would still expect them to be 30% to 35% above pre-pandemic, Andre, and that's roughly 30% lower than they were in the peak of the first quarter of last year.

Andre Childress, Analyst

And then, on the volume side... I am sorry. Go ahead.

Landry Seedig, Group President and COO of Nursing and Allied Solutions

Yeah. On the volume side, it would be in the 20% to 25% range above pre-pandemic.

Andre Childress, Analyst

Okay. Great. Thank you. And then, the language services business continues to see a lot of really great strength. How do you view the opportunities in that space? And how large could that business ultimately become?

Cary Grace, CEO

We take a broad perspective on this and truly appreciate the language services business for several reasons. One significant macro trend is that one in five patients do not use English as their primary language, making this demographic highly appealing. Additionally, health systems aim to create optimized workforces that are patient-centric, and language services play a crucial role in that effort. This allows them to offer support in hundreds of languages in a cost-effective manner without scheduling multiple language clinicians during certain shifts. We value this alignment with macro demographics and our capability to effectively serve both clients and patients. Moreover, our commitment to diversity and inclusion complements this focus. Observing the overall growth in this area, we anticipate continued expansion for the business, as we still note strong demand and interest. A key focus for us going forward is to enhance and scale the business, particularly by expanding our offerings in different languages to meet that demand.

Andre Childress, Analyst

Great. Thank you. And I guess transitioning over to some capital allocation and strategy questions. I guess the first quick one will be, could you provide some more details on the accelerated buyback program, particularly on the timing?

Jeff Knudson, CFO

Yes, we plan to proceed with that in the coming days, and the size of the initiative will be $200 million. It is expected to occur in the second quarter and will be completed over several months, ideally by the midpoint of the fourth quarter.

Andre Childress, Analyst

Great. And Cary, you spoke about some of the leadership changes, some of the initiatives to accelerate the businesses. Could you provide a little bit more color on some of those initiatives? And what are you most excited about?

Cary Grace, CEO

I recently celebrated my five-month milestone at AMN. When I joined, I committed to quickly understanding the market by engaging with our clients and clinicians. Today, I announced initiatives that emphasize our focus on three critical areas for our growth in the coming years. First, it's clear that clients are focused on building a sustainable workforce. There is a rising demand for utilization, coupled with short-term limitations on clinician supply. They are seeking partners who can help them explore various strategies to ensure workforce sustainability, which is a significant priority for us. Second, we aim to grow our business at AMN. We've discussed our broad range of over 20 solutions but recognize that we need to improve the seamless integration of these solutions for our clients' benefit. Lastly, we want to spotlight our technology-enabled solutions. A challenge with strong Managed Service Provider (MSP) programs is that clients often don’t see the tech we have supporting them. We have made robust investments in our technology and want to ensure that we effectively showcase these solutions. As part of our restructuring, we've appointed a Chief Revenue Officer, Pat McCall, alongside a dedicated Chief Business Officer to focus on our corporate growth strategy and assist clients in developing a sustainable workforce. Meredith Lapointe, who has extensive experience with Healthcare at McKinsey, will contribute to this mission. Finally, Nishan, who has led our strategy and marketing efforts, will now focus on our technology workforce solutions to drive growth. We're aligning strong leadership around these central areas and prioritizing our internal one AMN initiative.

Andre Childress, Analyst

Thank you so much.

Operator, Operator

I would now like to turn it back to Cary Grace, Chief Executive Officer.

Cary Grace, CEO

Thank you all for joining us in this call, and thank you for your continued interest in AMN. We look forward to talking to you over the coming weeks and months.

Operator, Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.