AMN HEALTHCARE SERVICES INC
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
AMN$36.19-23.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001142750-24-000050
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001142750-24-000061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 99 previous paragraphs and 103 current paragraphs.
59 unchanged; 40 reworded; 3 added; 0 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Cost of Revenue. Cost of revenue, which consists predominantly of compensation, benefits, housing, travel and allowance costs for healthcare professionals and medically qualified interpreters, decreased 16% to $474.5 million for the three months ended September 30, 2024 from $564.0 million for the same period in 2023. The $89.5 million decrease was attributable to a decline in our nurse and allied solutions segment, partially offset by increases in our physician and leadership solutions and technology and workforce solutions segments. The decrease in our nurse and allied solutions segment was primarily attributable to a $115.7 million decrease in clinician pay package costs, including housing, travel and allowances, primarily due to the aforementioned decrease in the average number of travelers on assignment. The increase in our physician and leadership solutions segment was driven by a $23.3 million increase in clinician pay package costs, primarily due to the MSDR acquisition. The increase in our technology and workforce solutions segment was primarily attributable to $2.7 million of higher compensation and benefits primarily due to the aforementioned increase in minutes in our language services business. Cost of revenue broken down among the reportable segments is as follows:
Current report
Cost of Revenue. Cost of revenue decreased 22% to $1,548.7 million for the nine months ended September 30, 2024 from $1,982.4 million for the same period in 2023. The $433.7 million decrease was attributable to a decline in our nurse and allied solutions segment, partially offset by increases in our physician and leadership solutions and technology and workforce solutions segments. The decrease in our nurse and allied solutions segment was primarily attributable to a $500.8 million decrease in clinician pay package costs, including housing, travel and allowances, primarily due to the aforementioned decrease in the average number of travelers on assignment. The increase in our physician and leadership solutions segment was driven by a $59.9 million increase in clinician pay package costs, primarily due to the MSDR acquisition. The increase in our technology and workforce solutions segment was primarily attributable to $11.4 million of higher compensation and benefits primarily due to the aforementioned increase in minutes in our language services business. Cost of revenue broken down among the reportable segments is as follows:
Current report
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which is intended to improve disclosures about the expenses of public entities. The new guidance requires more detailed information about the types of expenses in commonly presented expense captions (such as cost of sales and selling, general, and administrative expenses) and requires public entities to disclose, on an annual and interim basis, the amounts of expenses included in each relevant expense caption presented on the face of the income statement within continuing operations, in a tabular format. Additionally, public entities will be required to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, the total amount of selling expenses and, in annual reporting periods, the definition of selling expenses. This standard is effective on either a prospective or retrospective basis for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of adopting this standard on our disclosures.
Reworded paragraphs (40)
Previous wording
We conduct business through three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. For the three months ended June 30, 2024, we recorded revenue of $740.7 million, as compared to $991.3 million for the same period last year. For the six months ended June 30, 2024, we recorded revenue of $1,561.6 million, as compared to $2,117.5 million for the same period last year.
Current wording
We conduct business through three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. For the three months ended September 30, 2024, we recorded revenue of $687.5 million, as compared to $853.5 million for the same period last year. For the nine months ended September 30, 2024, we recorded revenue of $2,249.1 million, as compared to $2,971.0 million for the same period last year.
Previous wording
Nurse and allied solutions segment revenue comprised 62% and 72% of total consolidated revenue for the six months ended June 30, 2024 and 2023, respectively. Through our nurse and allied solutions segment, we provide hospitals and other healthcare facilities with a comprehensive set of staffing solutions, including direct, vendor neutral, and managed services solutions in which we manage and staff all the temporary and permanent nursing and allied staffing needs, as well as the revenue cycle management needs, of a client. A majority of our placements in this segment are under our managed services solution.
Current wording
Nurse and allied solutions segment revenue comprised 60% and 70% of total consolidated revenue for the nine months ended September 30, 2024 and 2023, respectively. Through our nurse and allied solutions segment, we provide hospitals, other healthcare facilities, and schools with a comprehensive set of staffing solutions, including direct, vendor neutral, and managed services solutions in which we manage and staff all the temporary and permanent nursing and allied staffing needs, as well as the revenue cycle management needs, of a client. A majority of our placements in this segment are under our managed services solution.
Previous wording
Physician and leadership solutions segment revenue comprised 24% and 16% of total consolidated revenue for the six months ended June 30, 2024 and 2023, respectively. Through our physician and leadership solutions segment, we place physicians of all specialties, as well as dentists and advanced practice providers, with clients on a temporary basis, generally as independent contractors. We also recruit physicians and healthcare leaders for permanent placement and place interim leaders and executives across all healthcare settings. The interim healthcare leaders and executives we place are typically placed on contracts with assignment lengths ranging from a few days to one year.
Current wording
Physician and leadership solutions segment revenue comprised 25% and 17% of total consolidated revenue for the nine months ended September 30, 2024 and 2023, respectively. Through our physician and leadership solutions segment, we place physicians of all specialties, as well as dentists and advanced practice providers, with clients on a temporary basis, generally as independent contractors. We also recruit physicians and healthcare leaders for permanent placement and place interim leaders and executives across all healthcare settings. The interim healthcare leaders and executives we place are typically placed on contracts with assignment lengths ranging from a few days to one year.
Previous wording
Technology and workforce solutions segment revenue comprised 14% and 12% of total consolidated revenue for both of the six months ended June 30, 2024 and 2023, respectively. Through our technology and workforce solutions segment, we provide hospitals and other healthcare facilities with a range of workforce solutions, including: (1) language services, (2) software-as-a-service (“SaaS”)-based VMS technologies through which our clients can self-manage the procurement of contingent clinical labor and their internal float pool, (3) workforce optimization services that include consulting, data analytics, predictive modeling, and SaaS-based scheduling technology, and (4) recruitment process outsourcing services in which we recruit, hire and/or onboard permanent clinical and nonclinical positions on behalf of our clients.
Current wording
Technology and workforce solutions segment revenue comprised 15% and 13% of total consolidated revenue for both of the nine months ended September 30, 2024 and 2023, respectively. Through our technology and workforce solutions segment, we provide hospitals and other healthcare facilities with a range of workforce solutions, including: (1) language services, (2) software-as-a-service (“SaaS”)-based VMS technologies through which our clients can self-manage the procurement of contingent clinical labor and their internal float pool, (3) workforce optimization services that include consulting, data analytics, predictive modeling, and SaaS-based scheduling technology, and (4) recruitment process outsourcing services in which we recruit, hire and/or onboard permanent clinical and nonclinical positions on behalf of our clients.
Previous wording
•Billable hours represent hours worked by our healthcare professionals that we are able to bill on client engagements, which are used by management as a measure of volume in our nurse and allied solutions segment;
Current wording
•Billable hours represent the number of hours worked by our healthcare professionals that we are able to bill on client engagements, which are used by management as a measure of volume in our nurse and allied solutions segment;
Previous wording
Since the COVID-19 pandemic, healthcare organizations have aggressively hired permanent staff and focused on cost containment and alternative staffing models that enable them to reduce utilization of contingent labor across the industry. As a result, demand in our travel nurse business has declined significantly to below pre-pandemic levels. While our largest clients continue to reduce spend on contingent labor, we began to see demand increase during the second quarter, although still below pre-pandemic levels. In our allied staffing business, demand continues to be above pre-pandemic levels, and certain specialties such as therapy and imaging are up significantly year-over-year, offsetting the decline in laboratory and other specialties involved in treating COVID-19 patients.
Current wording
Since the COVID-19 pandemic subsided, healthcare organizations have aggressively hired permanent staff and focused on cost containment and alternative staffing models that enabled them to reduce utilization of contingent labor. As a result, demand in our travel nurse business declined significantly and continues to remain below pre-pandemic levels. During the second quarter and through the third quarter, we have seen an increase in demand as measured by open orders, although it has not yet been realized in travelers on assignment. In our allied staffing business, demand continues to be above pre-pandemic levels and was up slightly on a quarter-over-quarter basis and was up significantly year over year primarily from high demand in therapy and imaging.
Previous wording
In our nurse and allied solutions segment, we have seen a decrease in overall staffing volume from prior year due to lower travel nurse demand. Compared to the prior quarter, the average number of travelers on assignment in the second quarter was down due to seasonality, as well as visa retrogression impacting international nurse staffing. Bill rates in the second quarter were down modestly sequentially due to seasonal trends and continued client focus on cost savings.
Current wording
For our nurse and allied solutions segment, in the third quarter we saw a decrease in overall staffing volume from prior year due to lower travel nurse demand in the second quarter and visa retrogression impacting international nurse staffing. Compared to the prior quarter, the average number of travelers on assignment in the third quarter was down due to the lower demand environment earlier in the year and schools seasonality. Bill rates in the third quarter were down modestly from the second quarter due to seasonal trends and continued client focus on cost savings.
Previous wording
In our physician and leadership solutions segment, demand for our locum tenens staffing business declined from prior year and prior quarter. Certified registered nurse anesthetists (CRNAs) continue to be the largest specialty for our locum tenens staffing business. Revenue per day filled increased in the second quarter as compared to the prior year. Demand for our interim leadership and search businesses continues to be below prior year as some healthcare organizations defer hiring decisions or increase insourcing.
Current wording
In our physician and leadership solutions segment, demand for our locum tenens staffing business declined from the prior year though it was higher compared with the prior quarter. Certified registered nurse anesthetists (CRNAs) continue to be the largest specialty for our locum tenens staffing business. Revenue per day filled increased in the third quarter as compared to the prior year. Demand for our interim leadership and search businesses continues to be below prior year as some healthcare organizations defer hiring decisions or increase insourcing.
Previous wording
In our technology and workforce solutions segment, our language services business continued to experience increased utilization in our existing clients and growth from new clients. Volumes in our VMS business followed similar trends as our travel nurse business, although to a greater extent as compared to the prior year. VMS bill rates in the second quarter were flat sequentially, but down year-over-year.
Current wording
In our technology and workforce solutions segment, our language services business continued to experience an increase in minutes from our existing clients and growth from new clients. Volumes in our VMS business followed similar trends as our travel nurse business as compared to the prior year. VMS bill rates in the third quarter were down sequentially and year over year.
Previous wording
The following table sets forth, for the periods indicated, selected unaudited condensed consolidated statements of operations data as a percentage of revenue. Our results of operations include three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The MSDR acquisition impacts the comparability of the results between the three and six months ended June 30, 2024 and 2023. See additional information in the accompanying Note (2), “Acquisitions.” Our historical results are not necessarily indicative of our future results of operations.
Current wording
The following table sets forth, for the periods indicated, selected unaudited condensed consolidated statements of operations data as a percentage of revenue. Our results of operations include three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The MSDR acquisition impacts the comparability of the results between the three and nine months ended September 30, 2024 and 2023. See additional information in the accompanying Note (2), “Acquisitions.” Our historical results are not necessarily indicative of our future results of operations.
Previous wording
Revenue. Revenue decreased 25% to $740.7 million for the three months ended June 30, 2024 from $991.3 million for the same period in 2023, attributable to a decline in organic revenue across our segments with the greatest decline in our nurse and allied solutions segment.
Current wording
Revenue. Revenue decreased 19% to $687.5 million for the three months ended September 30, 2024 from $853.5 million for the same period in 2023, attributable to a decline in organic revenue across our segments with the greatest decline in our nurse and allied solutions segment.
Previous wording
Nurse and allied solutions segment revenue decreased 36% to $442.4 million for the three months ended June 30, 2024 from $689.0 million for the same period in 2023. The $246.6 million decrease was primarily attributable to a 24% decrease in the average number of travelers on assignment, an approximately 12% decrease in the average bill rate, and a 1% decrease in billable hours.
Current wording
Nurse and allied solutions segment revenue decreased 30% to $399.4 million for the three months ended September 30, 2024 from $573.4 million for the same period in 2023. The $174.0 million decrease was primarily attributable to a 24% decrease in the average number of travelers on assignment, an approximately 8% decrease in the average bill rate, and a less than 1% decrease in average billable hours.
Previous wording
Physician and leadership solutions segment revenue increased 6% to $186.1 million for the three months ended June 30, 2024 from $176.2 million for the same period in 2023. The $9.9 million increase was attributable to higher revenue in our locum tenens business, which was partially offset by lower revenue in our interim leadership, physician permanent placement and executive search businesses. Revenue in our locum tenens business grew approximately 17% during the three months ended June 30, 2024 primarily due to additional revenue of $34.1 million in connection with the MSDR acquisition and a 3% increase in the revenue per day filled on an organic basis, partially offset by a 13% decrease in the number of days filled on an organic basis. Our interim leadership business experienced a 17% decline and our physician permanent placement and executive search businesses declined 27% during the three months ended June 30, 2024, primarily due to lower demand.
Current wording
Physician and leadership solutions segment revenue increased 13% to $180.6 million for the three months ended September 30, 2024 from $159.6 million for the same period in 2023. The $21.0 million increase was attributable to higher revenue in our locum tenens business, which was partially offset by lower revenue in our interim leadership, physician permanent placement and executive search businesses. Revenue in our locum tenens business grew $29.2 million (or 26%) during the three months ended September 30, 2024 primarily due to additional revenue of $32.8 million in connection with the MSDR acquisition and a 5% increase in the revenue per day filled on an organic basis, partially offset by an 8% decrease in the number of days filled on an organic basis. Our interim leadership business experienced a decline of $2.0 million (or 7%) and our physician permanent placement and executive search businesses declined $6.1 million (or 38%) during the three months ended September 30, 2024, primarily due to lower demand.
Previous wording
Technology and workforce solutions segment revenue decreased 11% to $112.2 million for the three months ended June 30, 2024 from $126.1 million for the same period in 2023. The $13.9 million decrease was primarily attributable to a decline within our VMS and outsourced solutions businesses, partially offset by growth within our language services business. Revenue for our VMS business declined 41% for similar reasons as nurse and allied solutions segment revenue and our outsourced solutions business experienced a 58% decline primarily due to lower demand, while our language services business grew 18% primarily due to a 19% increase in minutes during the three months ended June 30, 2024.
Current wording
Technology and workforce solutions segment revenue decreased 11% to $107.5 million for the three months ended September 30, 2024 from $120.5 million for the same period in 2023. The $13.0 million decrease was primarily attributable to a decline within our VMS and outsourced solutions businesses, partially offset by growth within our language services business. Revenue for our VMS business declined $13.1 million (or 34%) for similar reasons as nurse and allied solutions segment revenue and our outsourced solutions business experienced a decline of $8.4 million (or 77%) primarily due to lower demand, while our language services business grew $8.6 million (or 13%) primarily due to a 15% increase in minutes during the three months ended September 30, 2024.
Previous wording
For the six months ended June 30, 2024 and 2023, revenue under our MSP arrangements comprised approximately 47% and 56% of our consolidated revenue, 70% and 73% of our nurse and allied solutions segment revenue, 13% and 21% of our physician and leadership solutions segment revenue, and 3% and 2% of our technology and workforce solutions segment revenue, respectively.
Current wording
For the three months ended September 30, 2024 and 2023, revenue under our MSP arrangements comprised approximately 44% and 51% of our consolidated revenue, 68% and 70% of our nurse and allied solutions segment revenue, 15% and 19% of our physician and leadership solutions segment revenue, and 3% and 2% of our technology and workforce solutions segment revenue, respectively.
Previous wording
Gross Profit. Gross profit decreased 30% to $229.8 million for the three months ended June 30, 2024 from $330.3 million for the same period in 2023, representing gross margins of 31.0% and 33.3%, respectively. The decline in consolidated gross margin for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to (1) a lower margin in our technology and workforce solutions segment primarily due to a change in sales mix resulting from lower revenue in our higher-margin VMS business and higher revenue in our lower-margin language services business and (2) lower margins in our nurse and allied solutions and physician and leadership solutions segments driven by compression in clinician pay packages, including housing and travel. The overall decline was partially offset by a change in sales mix resulting from lower revenue in our nurse and allied solutions segment. Gross margin by reportable segment for the three months ended June 30, 2024 and 2023 was 23.8% and 26.7% for nurse and allied solutions, 30.5% and 35.1% for physician and leadership solutions, and 60.2% and 66.7% for technology and workforce solutions, respectively.
Current wording
Gross Profit. Gross profit decreased 26% to $213.1 million for the three months ended September 30, 2024 from $289.5 million for the same period in 2023, representing gross margins of 31.0% and 33.9%, respectively. The decline in consolidated gross margin for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to (1) lower margins in our nurse and allied solutions and physician and leadership solutions segments driven by compression in clinician pay packages, including housing, travel and allowances and (2) a lower margin in our technology and workforce solutions segment primarily due to a change in sales mix resulting from lower revenue in our higher-margin VMS business and higher revenue in our lower-margin language services business. The overall decline was partially offset by a change in sales mix resulting from lower revenue in our nurse and allied solutions segment. Gross margin by reportable segment for the three months ended September 30, 2024 and 2023 was 25.0% and 27.5% for nurse and allied solutions, 28.3% and 33.4% for physician and leadership solutions, and 57.9% and 65.0% for technology and workforce solutions, respectively.
Previous wording
Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses were $149.0 million, representing 20.1% of revenue, for the three months ended June 30, 2024, as compared to $201.8 million, representing 20.4% of revenue, for the same period in 2023. The decrease in SG&A expenses was primarily due to $24.6 million of lower employee compensation and benefits (inclusive of share-based compensation), a $20.1 million decrease in professional services, legal and other expenses, and a $2.4 million decrease related to changes in the fair value of contingent consideration liabilities from acquisitions recognized in the prior year. The year-over-year decrease in SG&A expenses in our physician and leadership solutions segment was partially offset by $5.9 million of additional SG&A expenses from the MSDR acquisition. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:
Current wording
Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses consist predominantly of compensation and benefits costs for corporate employees, in addition to professional service fees, legal matter accruals and other overhead costs. SG&A expenses were $149.7 million, representing 21.8% of revenue, for the three months ended September 30, 2024, as compared to $163.4 million, representing 19.1% of revenue, for the same period in 2023. The decrease in SG&A expenses was primarily due to a $7.3 million decrease in professional services, legal and other expenses due to prudent expense management. The year-over-year increase in SG&A expenses in our physician and leadership solutions segment was driven by $5.8 million of additional SG&A expenses from the MSDR acquisition, partially offset by $4.6 million of lower segment expenses amid the decline in organic revenue. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:
Previous wording
Depreciation and Amortization Expenses. Amortization expense increased 13% to $49.6 million for the six months ended June 30, 2024 from $43.8 million for the same period in 2023, primarily attributable to additional amortization expense related to the intangible assets acquired in the MSDR acquisition. Depreciation expense (exclusive of depreciation included in cost of revenue) increased 18% to $36.2 million for the six months ended June 30, 2024 from $30.6 million for the same period in 2023, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing technology investments to support our tech-centric total talent solutions initiatives and to optimize our internal front and back-office systems. Additionally, $3.4 million and $2.6 million of depreciation expense for our language services business is included in cost of revenue for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Depreciation and Amortization Expenses. Amortization expense decreased 2% to $22.1 million for the three months ended September 30, 2024 from $22.6 million for the same period in 2023, primarily attributable to having more intangible assets fully amortized during the three months ended September 30, 2024, partially offset by additional amortization expense related to the intangible assets acquired in the MSDR acquisition. Depreciation expense (exclusive of depreciation included in cost of revenue) increased 14% to $19.0 million for the three months ended September 30, 2024 from $16.6 million for the same period in 2023, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing technology investments to support our tech-centric total talent solutions initiatives and to optimize our internal front and back-office systems. Additionally, $1.9 million and $1.6 million of depreciation expense for our language services business is included in cost of revenue for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
Interest Expense, Net, and Other. Interest expense, net, and other was $15.7 million during the three months ended June 30, 2024 as compared to $12.2 million for the same period in 2023. The increase was primarily due to a higher average debt outstanding balance during the three months ended June 30, 2024.
Current wording
Interest Expense, Net, and Other. Interest expense, net, and other was $14.4 million during the three months ended September 30, 2024 as compared to $11.5 million for the same period in 2023. The increase was primarily due to a higher average debt outstanding balance during the three months ended September 30, 2024.
Previous wording
Income Tax Expense. Income tax expense was $5.7 million for the three months ended June 30, 2024 as compared to $18.6 million for the same period in 2023, reflecting effective income tax rates of 26% and 23% for these periods, respectively. Although the amount of annual non discrete items has remained relatively similar year-over-year, income before income taxes has significantly declined year-over-year resulting in an increase in the effective income tax rate. We currently estimate our annual effective tax rate to be approximately 28% for 2024. The 26% effective tax rate for the three months ended June 30, 2024 differs from our estimated annual effective tax rate of 28% primarily due to certain discrete tax benefits recognized during the three months ended June 30, 2024, in relation to income before income taxes.
Current wording
Income Tax Expense. Income tax expense was $0.8 million for the three months ended September 30, 2024 as compared to $22.2 million for the same period in 2023, reflecting effective income tax rates of 10% and 29% for these periods, respectively. The decrease in the effective income tax rate was primarily attributable to the recognition of a net discrete tax benefit of $2.2 million during the three months ended September 30, 2024 compared to a $1.4 million net discrete tax expense during the same period in 2023, in relation to income before income taxes of $7.8 million and $75.4 million for the three months ended September 30, 2024 and 2023, respectively. We currently estimate our annual effective tax rate to be approximately 24% for 2024. The 10% effective tax rate for the three months ended September 30, 2024 differs from our estimated annual effective tax rate of 24% primarily due to certain discrete tax benefits recognized during the three months ended September 30, 2024, in relation to income before income taxes.
Previous wording
Comparison of Results for the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023
Current wording
Comparison of Results for the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023
Previous wording
Revenue. Revenue decreased 26% to $1,561.6 million for the six months ended June 30, 2024 from $2,117.5 million for the same period in 2023, attributable to a decline in organic revenue across our segments with the greatest decline in our nurse and allied solutions segment.
Current wording
Revenue. Revenue decreased 24% to $2,249.1 million for the nine months ended September 30, 2024 from $2,971.0 million for the same period in 2023, attributable to a decline in organic revenue across our segments with the greatest decline in our nurse and allied solutions segment.
Previous wording
Nurse and allied solutions segment revenue decreased 36% to $961.7 million for the six months ended June 30, 2024 from $1,513.5 million for the same period in 2023. The $551.8 million decrease was primarily attributable to a 24% decrease in the average number of travelers on assignment, an approximately 14% decrease in the average bill rate, and a 2% decrease in billable hours.
Current wording
Nurse and allied solutions segment revenue decreased 35% to $1,361.1 million for the nine months ended September 30, 2024 from $2,086.9 million for the same period in 2023. The $725.8 million decrease was primarily attributable to a 24% decrease in the average number of travelers on assignment, an approximately 12% decrease in the average bill rate, and a 2% decrease in average billable hours.
Previous wording
Physician and leadership solutions segment revenue increased 10% to $374.9 million for the six months ended June 30, 2024 from $342.0 million for the same period in 2023. The $32.9 million increase was attributable to higher revenue in our locum tenens business, which was partially offset by lower revenue in our interim leadership, physician permanent placement and executive search businesses. Revenue in our locum tenens business grew approximately 26% during the six months ended June 30, 2024 primarily due to additional revenue of $71.2 million in connection with the MSDR acquisition and a 6% increase in the revenue per day filled on an organic basis, partially offset by a 10% decrease in the number of days filled on an organic basis. Our interim leadership business experienced a 21% decline and our physician permanent placement and executive search businesses declined 28% during the six months ended June 30, 2024, primarily due to lower demand.
Current wording
Physician and leadership solutions segment revenue increased 11% to $555.5 million for the nine months ended September 30, 2024 from $501.5 million for the same period in 2023. The $54.0 million increase was attributable to higher revenue in our locum tenens business, which was partially offset by lower revenue in our interim leadership, physician permanent placement and executive search businesses. Revenue in our locum tenens business grew $88.6 million (or 26%) during the nine months ended September 30, 2024 primarily due to additional revenue of $104.0 million in connection with the MSDR acquisition and a 6% increase in the revenue per day filled on an organic basis, partially offset by a 10% decrease in the number of days filled on an organic basis. Our interim leadership business experienced a decline of $18.2 million (or 17%) and our physician permanent placement and executive search businesses declined $16.5 million (or 31%) during the nine months ended September 30, 2024, primarily due to lower demand.
Previous wording
Technology and workforce solutions segment revenue decreased 14% to $225.0 million for the six months ended June 30, 2024 from $262.0 million for the same period in 2023. The $37.0 million decrease was primarily attributable to a decline within our VMS and outsourced solutions businesses, partially offset by growth within our language services business. Revenue for our VMS business declined 44% for similar reasons as nurse and allied solutions segment revenue and our outsourced solutions business experienced a 53% decline primarily due to lower demand, while our language services business grew 17% primarily due to a 19% increase in minutes during the six months ended June 30, 2024.
Current wording
Technology and workforce solutions segment revenue decreased 13% to $332.5 million for the nine months ended September 30, 2024 from $382.5 million for the same period in 2023. The $50.0 million decrease was primarily attributable to a decline within our VMS and outsourced solutions businesses, partially offset by growth within our language services business. Revenue for our VMS business declined $57.2 million (or 41%) for similar reasons as nurse and allied solutions segment revenue and our outsourced solutions business experienced a decline of $20.6 million (or 61%) primarily due to lower demand, while our language services business grew $30.0 million (or 16%) primarily due to an 18% increase in minutes during the nine months ended September 30, 2024.
Previous wording
For the three months ended June 30, 2024 and 2023, revenue under our MSP arrangements comprised approximately 45% and 54% of our consolidated revenue, 69% and 73% of our nurse and allied solutions segment revenue, 14% and 21% of our physician and leadership solutions segment revenue, and 3% and 2% of our technology and workforce solutions segment revenue, respectively.
Current wording
For the nine months ended September 30, 2024 and 2023, revenue under our MSP arrangements comprised approximately 46% and 55% of our consolidated revenue, 70% and 73% of our nurse and allied solutions segment revenue, 14% and 20% of our physician and leadership solutions segment revenue, and 3% and 2% of our technology and workforce solutions segment revenue, respectively.
Previous wording
Gross Profit. Gross profit decreased 30% to $487.3 million for the six months ended June 30, 2024 from $699.1 million for the same period in 2023, representing gross margins of 31.2% and 33.0%, respectively. The decline in consolidated gross margin for the six months ended June 30, 2024, as compared to the same period in 2023, was primarily due to (1) a lower margin in our technology and workforce solutions segment primarily due to a change in sales mix resulting from lower revenue in our higher-margin VMS business and higher revenue in our lower-margin language services business and (2) lower margins in our nurse and allied solutions and physician and leadership solutions segments driven by compression in clinician pay packages, including housing and travel. The overall decline was partially offset by a change in sales mix resulting from lower revenue in our nurse and allied solutions segment. Gross margin by reportable segment for the six months ended June 30, 2024 and 2023 was 24.5% and 26.3% for nurse and allied solutions, 31.0% and 35.2% for physician and leadership solutions, and 60.0% and 69.2% for technology and workforce solutions, respectively.
Current wording
Gross Profit. Gross profit decreased 29% to $700.4 million for the nine months ended September 30, 2024 from $988.6 million for the same period in 2023, representing gross margins of 31.1% and 33.3%, respectively. The decline in consolidated gross margin for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to (1) lower margins in our nurse and allied solutions and physician and leadership solutions segments driven by compression in clinician pay packages, including housing and travel and (2) a lower margin in our technology and workforce solutions segment primarily due to a change in sales mix resulting from lower revenue in our higher-margin VMS business and higher revenue in our lower-margin language services business. The overall decline was partially offset by a change in sales mix resulting from lower revenue in our nurse and allied solutions segment. Gross margin by reportable segment for the nine months ended September 30, 2024 and 2023 was 24.7% and 26.6% for nurse and allied solutions, 30.1% and 34.6% for physician and leadership solutions, and 59.4% and 67.9% for technology and workforce solutions, respectively.
Previous wording
Selling, General and Administrative Expenses. SG&A expenses were $323.9 million, representing 20.7% of revenue, for the six months ended June 30, 2024, as compared to $407.4 million, representing 19.2% of revenue, for the same period in 2023. The decrease in SG&A expenses was primarily due to $41.8 million of lower employee compensation and benefits (inclusive of share-based compensation), a $20.6 million decrease in professional services, legal and other expenses, an approximately $11.0 million decrease in other expenses associated with our revenue decline, and a $2.4 million decrease related to changes in the fair value of contingent consideration liabilities from acquisitions recognized in the prior year. The year-over-year increase in SG&A expenses in our physician and leadership solutions segment was driven by $13.4 million of additional SG&A expenses from the MSDR acquisition, partially offset by the aforementioned decreases. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:
Current wording
Selling, General and Administrative Expenses. SG&A expenses were $473.6 million, representing 21.1% of revenue, for the nine months ended September 30, 2024, as compared to $570.8 million, representing 19.2% of revenue, for the same period in 2023. The decrease in SG&A expenses was primarily due to $44.0 million of lower employee compensation and benefits (inclusive of share-based compensation) amid lower organic revenue across our segments, a $27.9 million decrease in professional services, legal and other expenses driven by a $21.0 million increase in the legal settlement accrual for the Clarke matter recognized in the prior year, an approximately $16.3 million decrease in other expenses associated with our revenue decline, and a $2.4 million decrease related to changes in the fair value of contingent consideration liabilities from acquisitions recognized in the prior year. The year-over-year increase in SG&A expenses in our physician and leadership solutions segment was driven by $19.2 million of additional SG&A expenses from the MSDR acquisition, partially offset by $16.7 million of lower employee compensation and benefits on an organic basis amid the decline in organic revenue. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:
Previous wording
Depreciation and Amortization Expenses. Amortization expense increased 12% to $24.7 million for the three months ended June 30, 2024 from $22.1 million for the same period in 2023, primarily attributable to additional amortization expense related to the intangible assets acquired in the MSDR acquisition. Depreciation expense (exclusive of depreciation included in cost of revenue) increased 24% to $18.4 million for the three months ended June 30, 2024 from $14.7 million for the same period in 2023, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing technology investments to support our tech-centric total talent solutions initiatives and to optimize our internal front and back-office systems. Additionally, $1.6 million and $1.4 million of depreciation expense for our language services business is included in cost of revenue for the three months ended June 30, 2024 and 2023, respectively.
Current wording
Depreciation and Amortization Expenses. Amortization expense increased 8% to $71.7 million for the nine months ended September 30, 2024 from $66.3 million for the same period in 2023, primarily attributable to additional amortization expense related to the intangible assets acquired in the MSDR acquisition. Depreciation expense (exclusive of depreciation included in cost of revenue) increased 17% to $55.2 million for the nine months ended September 30, 2024 from $47.3 million for the same period in 2023, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing technology investments to support our tech-centric total talent solutions initiatives and to optimize our internal front and back-office systems. Additionally, $5.4 million and $4.2 million of depreciation expense for our language services business is included in cost of revenue for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Interest Expense, Net, and Other. Interest expense, net, and other was $32.3 million during the six months ended June 30, 2024 as compared to $22.4 million for the same period in 2023. The increase was primarily due to a higher average debt outstanding balance during the six months ended June 30, 2024.
Current wording
Interest Expense, Net, and Other. Interest expense, net, and other was $46.8 million during the nine months ended September 30, 2024 as compared to $34.0 million for the same period in 2023. The increase was primarily due to a higher average debt outstanding balance during the nine months ended September 30, 2024.
Previous wording
Income Tax Expense. Income tax expense was $11.7 million for the six months ended June 30, 2024 as compared to $49.9 million for the same period in 2023, reflecting effective income tax rates of 26% for both the six months ended June 30, 2024 and 2023. The 26% effective tax rate for the six months ended June 30, 2024 differs from our estimated annual effective tax rate of 28% primarily due to certain discrete tax benefits recognized during the six months ended June 30, 2024, in relation to income before income taxes.
Current wording
Income Tax Expense. Income tax expense was $12.5 million for the nine months ended September 30, 2024 as compared to $72.1 million for the same period in 2023, reflecting effective income tax rates of 24% and 27% for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the effective income tax rate was primarily attributable to the Company’s recognition of a net discrete tax benefit of $5.5 million during the nine months ended September 30, 2024 compared to a net discrete tax benefit of $2.9 million recognized during the same period in 2023, in relation to income before income taxes of $53.1 million and $270.3 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
As of June 30, 2024, (1) $345.0 million was drawn with $384.6 million of available credit under our $750.0 million secured revolving credit facility (the “Senior Credit Facility”), (2) the aggregate principal amount of our 4.625% senior notes due 2027 (the “2027 Notes”) outstanding was $500.0 million, and (3) the aggregate principal amount of our 4.000% senior notes due 2029 (the “2029 Notes”) outstanding was $350.0 million. We describe in further detail our Amended Credit Agreement (as defined below), under which the Senior Credit Facility is governed, the 2027 Notes, and the 2029 Notes in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of our 2023 Annual Report.
Current wording
As of September 30, 2024, (1) $285.0 million was drawn with $444.6 million of available credit under our $750.0 million secured revolving credit facility (the “Senior Credit Facility”), (2) the aggregate principal amount of our 4.625% senior notes due 2027 (the “2027 Notes”) outstanding was $500.0 million, and (3) the aggregate principal amount of our 4.000% senior notes due 2029 (the “2029 Notes”) outstanding was $350.0 million. We describe in further detail our Amended Credit Agreement (as defined below), under which the Senior Credit Facility is governed, the 2027 Notes, and the 2029 Notes in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of our 2023 Annual Report.
Previous wording
As of June 30, 2024, the total of our contractual obligations under operating leases with initial terms in excess of one year was $54.9 million. We describe in further detail our operating lease arrangements in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (5), Leases” of our 2023 Annual Report. We also have various obligations and working capital requirements, such as certain tax and legal matters, contingent consideration and other liabilities, that are recorded on our consolidated balance sheets. See additional information in the accompanying Note (7), “Fair Value Measurement,” Note (8), “Income Taxes,” Note (9), “Commitments and Contingencies,” and Note (10), “Balance Sheet Details.”
Current wording
As of September 30, 2024, the total of our contractual obligations under operating leases with initial terms in excess of one year was $52.7 million. We describe in further detail our operating lease arrangements in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (5), Leases” of our 2023 Annual Report. We also have various obligations and working capital requirements, such as certain tax and legal matters, contingent consideration and other liabilities, that are recorded on our consolidated balance sheets. See additional information in the accompanying Note (7), “Fair Value Measurement,” Note (8), “Income Taxes,” Note (9), “Commitments and Contingencies,” and Note (10), “Balance Sheet Details.”
Previous wording
Net cash provided by operating activities for the six months ended June 30, 2024 was $180.9 million, compared to $241.1 million for the same period in 2023. The decrease in net cash provided by operating activities was primarily attributable to (1) a decrease in net income excluding non-cash expenses of $114.1 million primarily due to a decline in segment operating income across our segments, (2) a decrease in other liabilities between periods of $63.9 million primarily due to prior year increases in income taxes payable (resulting from the timing of income tax payments) and accrued loss contingencies, (3) an increase in accounts receivable and subcontractor receivables between periods of $27.3 million primarily due to declines in revenue and associate vendor usage during the six months ended June 30, 2024 along with timing of collections, and (4) an increase in income taxes receivable between periods of $12.5 million primarily due to an overpayment of estimated taxes during prior year. The overall decrease in net cash provided by operating activities was partially offset by (1) an increase in accounts payable and accrued expenses between periods of $100.1 million primarily due to a smaller decrease in the subcontractor payable balance in the current year as compared to the prior year, which was the result of decreases in associate vendor usage and timing of payments, and (2) an increase in accrued compensation and benefits between periods of $63.8 million primarily due to bonuses and commissions that were paid during the three months ended March 31, 2023. Our Days Sales Outstanding (“DSO”) was 63 days at June 30, 2024, 70 days at December 31, 2023, and 53 days at June 30, 2023.
Current wording
Net cash provided by operating activities for the nine months ended September 30, 2024 was $247.6 million, compared to $413.3 million for the same period in 2023. The decrease in net cash provided by operating activities was primarily attributable to (1) a decrease in net income excluding non-cash expenses of $186.9 million primarily due to a decline in segment operating income across our segments, (2) a decrease in other liabilities between periods of $62.8 million primarily due to prior year increases in income taxes payable (resulting from the timing of income tax payments) and accrued loss contingencies, (3) an increase in income taxes receivable between periods of $12.5 million primarily due to an overpayment of estimated taxes during the year ended December 31, 2022, and (4) a decrease in accounts payable and accrued expenses between periods of $9.0 million primarily due to payment of the legal settlement amount for the Clarke matter in the current year, partially offset by a larger decrease in the subcontractor payable balance in the prior year as compared to the current year primarily attributable to declines in associate vendor usage and timing of payments. The overall decrease in net cash provided by operating activities was partially offset by (1) an increase in accrued compensation and benefits between periods of $62.2 million primarily due to bonuses and commissions that were paid during the three months ended March 31, 2023 and (2) a decrease in accounts receivable and subcontractor receivables between periods of $41.8 million primarily due to a larger decrease in the receivables balance in the current year as compared to the prior year, which was primarily attributable to declines in revenue and associate vendor usage during the nine months ended September 30, 2024 along with timing of collections. Our Days Sales Outstanding (“DSO”) was 60 days at September 30, 2024, 70 days at December 31, 2023, and 61 days at September 30, 2023.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2024 was $43.7 million, compared to net cash used in investing activities of $54.9 million for the same period in 2023. The decrease was primarily due to $4.5 million of payments to fund the deferred compensation plan during the six months ended June 30, 2024, as compared to $17.9 million of payments during the six months ended June 30, 2023. In addition, capital expenditures were $45.4 million and $43.9 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 was $65.7 million, compared to net cash used in investing activities of $88.8 million for the same period in 2023. The decrease was primarily due to $8.4 million of payments to fund the deferred compensation plan during the nine months ended September 30, 2024, as compared to $24.9 million of payments during the nine months ended September 30, 2023. In addition, capital expenditures were $64.7 million and $73.8 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Net cash used in financing activities during the six months ended June 30, 2024 was $119.1 million, due to repayments of $140.0 million under the Senior Credit Facility and $4.1 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards, partially offset by borrowings of $25.0 million under the Senior Credit Facility. Net cash used in financing activities during the six months ended June 30, 2023 was $247.7 million, due to (1) $424.7 million paid in connection with the repurchase of our common stock, (2) repayments of $220.0 million under the Senior Credit Facility, (3) $9.4 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards, and (4) $3.6 million payment of financing costs in connection with the Third Amendment (as defined below), all of which was partially offset by borrowings of $410.0 million under the Senior Credit Facility.
Current wording
Net cash used in financing activities during the nine months ended September 30, 2024 was $179.6 million, due to repayments of $260.0 million under the Senior Credit Facility and $4.6 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards, partially offset by borrowings of $85.0 million under the Senior Credit Facility. Net cash used in financing activities during the nine months ended September 30, 2023 was $352.8 million, due to (1) $424.7 million paid in connection with the repurchase of our common stock, (2) repayments of $330.0 million under the Senior Credit Facility, (3) $11.9 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards, (4) $7.5 million for acquisition contingent consideration earn-out payments and (5) $3.6 million payment of financing costs in connection with the Third Amendment (as defined below), all of which was partially offset by borrowings of $425.0 million under the Senior Credit Facility.
Previous wording
On February 10, 2023, we entered into the third amendment to our credit agreement (the “Third Amendment”). The Third Amendment (together with the credit agreement as amended to date, collectively, the “Amended Credit Agreement”) provides for, among other things, an increase to the revolving commitments under the Senior Credit Facility to $750.0 million and an extension of the maturity date of the Amended Credit Agreement to February 10, 2028. Our obligations under the Amended Credit Agreement are secured by substantially all of our assets. We describe in further detail the terms of the Amended Credit Agreement in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of our 2023 Annual Report.
Current wording
On February 10, 2023, we entered into the third amendment to our credit agreement (the “Third Amendment”). The Third Amendment (together with the credit agreement as amended to such date, collectively, the “Amended Credit Agreement”) provided for, among other things, an increase to the revolving commitments under the Senior Credit Facility to $750.0 million and an extension of the maturity date of the Amended Credit Agreement to February 10, 2028. As reported in our Current Report on Form 8-K filed on November 7, 2024, on November 5, 2024, we entered into the fourth amendment to our credit agreement (the “Fourth Amendment”) which increased our consolidated net leverage ratio covenant for the year ending December 31, 2025. Our obligations under the Amended Credit Agreement are secured by substantially all of our assets. We describe in further detail the terms of the Amended Credit Agreement in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of our 2023 Annual Report.
Previous wording
•any failure to further develop and evolve our current workforce solutions technology offerings and capabilities, which may harm our business and/or impact our ability to compete with new technologies and competitors;
Current wording
•any failure to further develop and evolve our current workforce solutions technology offerings and capabilities, an increase in competition, or the ability of our competitors to respond more quickly to new or emerging client needs and marketplace conditions, which may harm our business and/or impact our ability to compete;
Previous wording
•any inability on our part to maintain our positive brand awareness and identity, which may adversely affect our results of operation;
Current wording
•any inability on our part to maintain our positive brand awareness and identity, which may adversely affect our results of operations;
Previous wording
•any recognition of an impairment to the substantial amount of goodwill or indefinite-lived intangibles on our balance sheet;
Current wording
•any recognition of an impairment to the substantial amount of goodwill or intangible assets on our balance sheet, which would adversely affect our results of operations;
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations