AMN Healthcare Services (AMN) Q3 2025 earnings call transcript

Good afternoon, everyone. Welcome to AMN HEALTHCARE's third quarter 2025 earnings call. A replay of this webcast will be available at ir. amnhealthcare. com at the conclusion of this call. The 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 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 with With me today are Carrie Grace, President and Chief Executive Officer, and Brian Scott, Chief Financial and Operating Officer. I will now turn the call over to Carrie.

Thank you, Randy, and welcome to today's conference call. Since our last call, AMN has continued to adapt to changes in the marketplace and position the company to win as our industry transitions from recovery to growth. Third quarter revenue of $634 million was $9 million above the high end of our guidance range. Consolidated gross margin was near the upper end of guidance, and SD&A expenses were better than expected. Adjusted EBITDA for the third quarter was $57.5 million, which was 9.1% of revenue, 90 basis points above the high end of our guidance range. After experiencing demand softness in the second quarter, staffing demand recovered moderately in the third quarter, extension rates rebounded, and travel nurse winter orders came in slightly favorable to prior year.

At the same time, permanent hiring activity in the healthcare sector fell notably in the third quarter, according to a private survey of job openings. The different directions of contingent and permanent recruiting suggest that employers are beginning to seek more flexibility in their workforce strategies to meet increasing patient utilization. This is an increasingly attractive strategy as we estimate that the spread between travel nurse bill rates and fully loaded permanent nurse compensation is at a historical low. Bill rates maintain stability through the last nine months, and there are a few indications suggesting that some clients are reconsidering a bill rate strategy in which rates have not kept up with increased costs. In fact, we expect bill rates for nurse and allied staffing to be up modestly year-over-year in the fourth quarter for the first time in three years.

Our consolidated outlook for the fourth quarter calls for revenue a little better than $720 million at the midpoint, or just over $620 million excluding labor disruption revenue. Our guidance includes about 5 million extra SG&A expenses in Q4 related to labor disruption support. While conditions for individual business lines vary, we benefit from the diversification among our 20 solutions, Which keep us well positioned to serve clients' evolving needs and desire for strategic partners over the long run. All three business segments beat consensus revenue estimates in the third quarter, led by 12 million upside in Nurse and Ally solutions. Part of the Nurse and Ally beat came from higher than expected labor disruption revenue. As projected, lower Q2 demand and extensions flowed through to lower Q3 revenue, so less than we expected.

As new demand and extension offers improved in the quarter, our team executed well to capture this demand and set us up for higher travel nurse and allied revenue in Q4. Demand improved modestly through the third quarter into October, including higher winter For the fourth quarter, we expect about $100 million in labor disruption revenue. Total nurse and allied revenue will be up low single digits year-over-year or down approximately 6% to 8% excluding labor disruption. This will be our best year-over-year revenue comparison for the segment in three years. In our Physician and Leadership Solutions segment, revenue grew 2% sequentially in locum tenants and interim leadership, while search revenue was stable. We were pleased to record 3% year-over-year growth in locum tenants' revenue.

The highlight in locum was days booked for MSP clients, which grew by 15% year-over-year, including a nice boost from new client wins. For the fourth quarter, Physician and Leadership Solutions revenue is projected to be down sequentially by approximately 6% due primarily to seasonally lower locum volume. For our Technology and Workforce Solutions segment, third quarter revenue was $7 million lower than the prior quarter. Most of that drop came from the sale of our Smart Square business on July 1st. VMS revenue was We expect technology and workforce solutions revenue to be down mid-single digits compared with the third quarter with seasonally lower language services minutes and the lingering runoff from previously discussed client transitions in our VMS and language services businesses.

I want to touch on the subject of gross margins. Our consolidated gross margin has declined this year caused by an unfavorable revenue mix shift and competitive pressures in staffing and language services. As nurse and allied demand moves from stability to growth, we expect staffing gross margins to stabilize. We expect improvement in international staffing revenue and other high margin services to lift our consolidated gross margin in 2026. In a normal demand recovery, we also would expect to see travelers' average hours work increase and placement mix improve, both of which would create margin growth opportunity. AMN has differentiated itself in many ways this year, including from a financial perspective. At the end of the third quarter, we had a zero balance on our revolving line of credit, down from $210 million at the end of 2024.

In early October, we completed a debt refinancing transaction It strengthened our financial position and improved our corporate debt rating. Our earliest debt expiration was extended out to 2029. Our revolver was downsized to reduce carrying costs, and its debt leverage covenant increased to give us more operating flexibility. The next phase of our strategy to gain market shares is in view as we see an increasing number We continue to expand our number of service lines provided to clients, and we continue And we see interest from a number of strategic clients in consolidating their decentralized local expense. We are also making progress on our strategy to fill more of the available demands by improving our speed to fill.

For example, over the past 12 months, we've doubled our fill rate in our vendor-neutral programs. Overall, competition for new clients and renewals has seen less motivation from clients to switch Thank you, Karen.

Good afternoon, everyone. Third quarter consolidated revenue was $634 million, above the high The high end of our guidance range driven by outperformance in our nurse and allied and physician and leadership segments. Revenue was down 8% from the prior year and down 4% sequentially. Consolidated gross margin for the third quarter was 29.1% at the high end of our guidance range. Gross margin declined 190 basis points year over year and 70 basis points sequentially. Consolidated SG&A expenses were $139 million compared with $150 million in the prior year. And $155 million in the previous quarter. Adjusted SG&A, which excludes certain expenses, was $129 million in the third quarter, compared with $141 million in the prior year and $140 million in the previous quarter.

The sequential decrease in adjusted SG&A is primarily attributable to a lower bad debt expense and an unfavorable prior quarter professional liability reserve adjustment. Third quarter nurse and allied revenue was $361 million, down 9% from the prior year, though exceeding the high end of our guidance range, driven by higher than expected travel nurse volume and $12 million of labor disruption revenue.

Sequentially, segment revenue was down 5%, primarily due to lower volume. Year over year, nurse and allied segment volume decreased 11%, and average rate and average hours worked were flat. Sequentially, volume was down 6%, while the average rate was down 1%, and hours worked were flat. Travel nurse revenue in the third quarter was $196 million, a decrease of 20% from the prior year period and 6% from the prior quarter. Allied revenue in the quarter was $142 million, up 1% year-over-year and down 2% sequentially. Nurse and allied gross margin in the third quarter was 24.1%, a decrease of 90 basis points year over year. Sequentially, gross margin was up 20 basis points. We noted in the earnings release that our lower consolidated Q4 gross margin guidance is partly influenced by labor disruption-related factors.

Due in part to timing of activities, labor disruption benefited the nurse and allied segment gross margin in Q3 by about 150 basis points. With a nominal drag to the segment gross margin in Q4. We expect the fourth quarter nurse and allied segment gross margin to be approximately 21%, with a lower sequential outlook also being driven by seasonally lower average hours works and a modest decline in spreads.

Moving to the physician and leadership solution segment, third quarter revenue of $178 million was down 1% year over year. Sequentially, revenue was up 2%, mainly driven by locum tenens' performance. Locum tenens' revenue in the quarter was $146 million, up 3% year-over-year and 2% sequentially. Interim leadership revenue of $23 million decreased 20% from the prior year period, but was up 2% sequentially. Search revenue of $9 million was down 7% year-over-year and flat sequentially. Gross margin for the Physician and Leadership Solution segment was 27.2%, down 110 basis points year-over-year, attributable to a lower bill pay spread in locum tenens and an unfavorable revenue mix shift.

Sequentially, gross margin decreased 100 basis points, and we expect Q4 segment gross margin to remain consistent with Q3. Technology and Workforce Solutions revenue for the third quarter was $95 million, down 12% year-over-year and 7% sequentially, primarily driven by lower VMS revenue and the sale of SmartSquare.

Language Services revenue for the quarter was $75 million, flat year-over-year and down 1% sequentially. VMS revenue for the quarter was $17 million, a decrease of 32% year-over-year and 11% sequentially. Segment gross margin was 51 down 640 basis points from the prior year period we have and the Q has been asked for the Q for the Q We will see that Q&A has been asked for the Q&A. We will see that Q&A has been asked for Q&A. The Q&A has been asked for Q&A, and Q&A has been asked for Q&A. Along with pricing pressure and language services. Consolidated operating income of $48 million included a $39 million gain on the sale of SmartSquare. Third quarter consolidated adjusted EBITDA was $58 million, down 22% year-over-year and 1% sequentially.

Adjusted EBITDA margin for the quarter was 9.1%, down 160 basis points from the prior year period and up 20 basis points sequentially. Third quarter net income was $29 million. This compared with net income of $7 million in the prior year period and a net loss of $116 million in the prior quarter, which included non-cash goodwill and tangible asset impairment charges.

Third quarter GAAP diluted earnings per share with $0.76. Adjusted earnings per share for the quarter was $0.39, compared with $0.61 in the prior year period and $0.30 in the prior quarter. Days sales outstanding for the quarter were 57 days, which was three days lower than a year ago and three days higher sequentially. Operating cash flow for the third quarter was $23 million and capital expenditures were $8 million. As of September 30th, we had cash an equivalence of $53 million and total debt of $850 million. We ended the quarter with a net leverage ratio of 3.3 times to 1.

In October, we completed the refinancing of $500 million of unsecured notes due in 2027, with $400 million of new unsecured notes due in 2031.

Concurrently, we downsized our revolver capacity to $450 million and increased our maximum leverage ratio covenant. These transactions immediately increased our balance sheet resilience.

Moving to fourth quarter guidance, we project consolidated revenue to be in a range of $715 to $730 million. This revenue guidance includes approximately $100 million related to labor disruption support. Gross margin is projected to be between 25.5 and 26%. Excluding the impact of labor disruption revenue, our gross margin would be higher by about 100 basis points. Reported SG&A expenses are projected to be approximately 20 to 20.5% of revenue and include about $5 million of additional costs in the quarter to support labor disruption activity. Operating margin is expected to be 0.2 to 0.8%, and adjusted EBITDA margin is expected to be 6.8 to 7.3%. Additional fourth quarter guidance details can be found at today's earnings release.

Now, operator, please open up the call for questions.

Sure. Yeah, Trevor. This is Brian. No problem. Yeah, so what I'd start with also on the third quarter, the 29%, just for the labor disruption event that we supported, some of the timing activities, we actually got a benefit to some degree to the margin in the third quarter as well. So that 29%, think of that closer to 28% if you're to normalize the third quarter as well. And then we tried to give enough color on the fourth quarter on the guy that if you were to kind of remove the impact as well, you're closer to 27% in the high 26s if you take the midpoint of our range and add 100 basis points. So you're talking about a little over 100 basis points change sequentially from Q3 to Q4 to kind of remove that from the equation.

And there's a couple of factors driving that. One is just revenue mix between the segments. If you look at the guidance we gave, you've got some decline in both our physician and leadership and technology workforce solution segments, both of which have a higher margin profile. So, they're probably the main things that are driving that. And then, to a lesser degree, you have some impact from just seasonality. We mentioned even a nursing outlet where it's usually a little bit lower hours work, and that has a bit of a drag on the margin in the fourth quarter. And kind of the last thing, because you said there's mobile parts here. The third quarter, we do get a little bit of a benefit as well from some favorability on sales reserves in Nurse and Allied.

And so that's why you're seeing that larger change from quarter to quarter within the margins. Okay, Brian, that's helpful. Thank you. If I could maybe follow up on, I guess, the EBITDA margin guidance, I think just, you know, if we're trying to isolate maybe the, you know, X, the big labor disruption event, just what's the underlying performance of the business, I guess. If I just take the midpoint of your guidance there, I think I get about 50, 51 million of EBITDA, but you obviously have that big labor disruption event in there. So if we're trying to use that as kind of a guide for modeling going forward, maybe you could just help us think about what the underlying EBITDA would look like and how that could evolve going forward.

Sure, yeah. Like you said, we try to give enough of the components there. The margin that you said, there was a large amount of revenue, obviously, in the guide from that event. And that did have a larger, I mean, a lower, slightly lower margin profile to it. When you have something of that magnitude, there's a fair amount of what we're billing for that are really just pass-through costs for things like transportation. And so that impacts the margin profile when it's of that magnitude. And just some of the timing, again, is between the third and the fourth quarter. But I think you could probably think about the, you know, X that amount. We're in the kind of mid-sixes EBITDA margin range for the guide if you were to move the impact of the labor disruption in the quarter.

Okay, thanks again. That's helpful. And then maybe if I could just do one more, if you don't mind. I guess, you know, encouraging definitely to hear about sequential volume growth in the Q4. So I guess my question there is, you did talk about winter orders being up, I think, modestly versus last year. I guess, do you get the sense that this is more of a winter phenomenon, or would you kind of chalk up the sequential volume growth to some kind of underlying improvement in demand and maybe a shift in the contingent versus permanent staff that I think Carrie alluded to in the comments?

Yeah, so Trevor, we're really looking at it as being both. And so if I kind of give you the shape of demand since our last call, so we talked about in the second quarter we saw a pause in some decision making as people were really trying to digest potential policy changes. If I take travel nurse, so the low point in demand was mid-May, and fast forward to now, we're up about 50% in demand from that low point. We're still a little bit off year over year from where we were last year, but you've seen consistent growth since that low point in May in travel nurse. In allied demand, we're now flat year over year. And in locums, we've seen growth in locums Q2 to Q3.

We're still mid-single digit down year over year. But what we're seeing, and certainly we had healthy winter orders come in, but we're seeing demand improvement broader than just winter orders. And really that combination is what's driving what you're seeing Q3 to Q4. And if we even strip out some functionality piece, we're seeing a good growth in the fourth quarter.

Okay, that's encouraging.

Thanks, Brian.

Yeah, let me maybe pick up on some themes that we see going into next year, and I know we don't give guidance, but I'll give you some transparency about what we see.

First, and this has been a negative impact for us the past two-plus years, is we expect to see more favorable revenue mix. That will be coming from International Nurse, which we already have seen enough from a visa retrogression this year to have some transparency about those placements next year. We expect International Nurse to be up from a revenue standpoint 20 plus percent, and that's a higher margin business. VMS. We've had a tailwind in VMS predominantly from our Metafist marketplace platform of clients going off. And so we would expect as we get into 2023 for VMS to turn positive, and that has been a headwind for us. And then we also are seeing healthy demand increases from our leadership and search businesses.

And those are the higher margin businesses, both in PLS and their accretive to margin from a consolidated standpoint. So Kevin, first is we're seeing more tailwinds around some of our higher margin businesses as we leave this year and go into 2026. We've also been very focused on filling, especially where we have more direct access to demand. So think MSPs, our own VMS platform and direct accounts. I mentioned this in my opening remarks year over year. We've doubled our internal capture on our own VMS. So we'll continue to focus on that. And then we're starting to see with some clients some movement in bill rates. That's really from an industry standpoint, one of the things we'll be looking for as we get into 2026 is more consistent improvement of bill rates, which would obviously have a strong impact on margins.

We're not necessarily assuming strong underlying growth. We just have had post-COVID some clients who had gone on to this marketplace VMS coming off of it, and that process had a fairly long tail on it that we are at the very end of. And we've also layered in some wins that we've had this year. So the combination of those two things will help us get back to growth on our VMS business in 2026.

The markets remain competitive, and we're seeing that both in terms of what we see for clients and, you know, in our overall pipeline, as well as just competition to fill open orders.

But we're not seeing competitors be irrational. And so if orders aren't priced at market, you're seeing them stay open. So while we're seeing, you know, a competitive environment, we also see rationality in that environment. And we feel like the market is really favoring total talent solutions platforms. And so that is a message that's resounding in the marketplace of looking and saying, I'm not coming in just to fill, you know, on one type of solution, but I'm coming in and I'm helping you build. A sustainable workforce solution. And so we feel like our platform is very well positioned as the market goes into that next phase.

Yeah you know you going to see some variance among systems about both where they are overall financially and kind of where they are in workforce in general But the two themes that I say are predominant across all of our clients is they are focused on revenue growth and they simultaneously very focused on cost containment So the more prevalent sentiment that we hear is pretty consistent with what you've heard from some of the public company health systems who have reported over the past couple weeks, which is they're still expecting to have low single-digit increases in patient utilization. They're focused on how do we ensure that we're able to meet those demands, but also do it from a workforce standpoint in an affordable way, knowing that labor has been increasing higher than reimbursement rates.

So there is a lot of focus on sustainability of solutions, which gets a little bit back to my point around total talent solutions platform. And the other piece, Toby, that's really more recent, we actually heard this at a healthcare conference this week, is there's growing recognition about the affordability of contingent labor relative to permanent labor, and particularly by finance executives. So if you look at where we are on a premium of contingent labor to fully loaded permanent costs, you're under 10%. And so when you look at, you know, this past quarter, permanent hiring in healthcare was down the most we've seen in several years. You've also seen this, you know, increase in demand since the second quarter for contingent, and a growing recognition about the affordability of contingent and the role it can play in creating.

I think, you know, we have been talking about stabilization of bill rates for some time period, and as I mentioned, for nurse and allies, we're going to see in the fourth quarter, you know, a very slight increase in bill rates for the first time in three years.

We need to see that more consistently, Toby. So you just look at it from an underlying labor cost standpoint. You really do need to, as an industry, get to increasing bill rates. We're seeing clients who've had open orders out there for some time period that aren't priced to market. We saw that even today a client changed some bill rates. So we are starting to see that gradually happen. You just need to see it more consistently as we get into 2026.

Yeah, to add, I think for the more near term, the rate increases that we think are needed are really to be more attractive when you look at what the compensation packages need to be just to entice a nurse to take an assignment. So we're not necessarily focused on using that as a way to expand margins near term. That's really about how do we drive more volume. When you have clients that have open orders sitting there for a period of time, they're recognizing that they probably, you know, They pressure tested rates long enough to know that they're not going to get filled, and if they have that need, particularly as they're maybe not doing as much permanent hiring or looking at that cost equation.

So we're more excited about these potential rate increases being utilized to fill more orders. That will allow us to drive more volume. We'll get operating leverage on that. We've got, you know, this business can support a larger amount of volume that we have today, and we'll gain a lot of operating leverage on that. So that's kind of goal number one for us.

The other thing that will typically follow that, as Kerry mentioned earlier, is if there is that greater need and urgency to get the orders filled, we'll also continue to educate on utilizing the travelers that have an assignment more. And so as you see the average hours increase, that's where you start to see some of that pull through that you're talking about, because some of those costs like per diems are more fixed in nature, and that will allow kind of a win for both sides. The client already has people on the ground that can do more work for them, and that has some margin benefit for us as well.

And Toby, what I would say is, you know, if you think about this, you know, from a market standpoint, we see, we don't have a problem with supplies if you have an order that is priced right. And so that is going to be the factor that we will continue to be monitoring around clients, not only the demand increasing, but are you seeing a recognition of places where if you need to get the order filled, you increase bill rates.

Thanks.

It doesn't change our strategy or what we're going to do. So we do think in the intermediate and long term, this industry needs to consolidate. So I think that is a direction that we think will happen. For this particular deal, it doesn't change what we would do in 2026 or strategy.

Yeah, overall, we are still seeing a healthy supply now in certain locations or certain specialties. You may be more constrained. I'd say overall in local, you see more supply challenges. than you do in NURSE and ALLIES more broadly. What we are seeing is if an order is priced right, then we can fill that order. And so that is the dynamic that we've been spending a lot of time with clients on is, you know, AJ, how do we get them to a point where we can actually fill that order?

Yeah, I mean, we're trying to trust the investments we're making in our, you know, in past what we've talked about in previous calls, the ability to engage with clinicians more directly, get opportunities in front of them with more speed and more frequent touch points. We think that's where we're going to continue to make more differentiation so that we can attract more supply to AMN. And then for those orders that have rates, you know, we'll get them filled, but, you know, we have a lot of, we put a lot of work around how do we put that plenched in experience so that we are thought of as the employer of choice. And we've had some really good success in the investments we've made there.

Okay, and AJ, sir, as an example, we have something called pre-check where we can outline the type of roles that's going to be interesting to you that we can automatically fill, and we can get a sense from different clinicians about what type of pay package they would need to be able to take jobs. So we're getting even better at predictive analytics to be able to help our clients understand where supply is, what their expectations are, and that combined with a lot of data that we have and we've put on our WorkWise platform around going market rates, we think that's going to become increasingly helpful to them in 2026 to be able to get the type of contingent staff that they need.

But I would, so for locums, if you look year over year, eight of our ten specialties grew. So there was broad-based demand for locums across the specialties. If you looked at it more recently, the specialty demand really was driven at a higher level by surgery, hospitalist, dentistry, and anesthesia. So locums were seeing broad-based demand. I'd say the four that I just mentioned were seeing, you know, strong demand, particularly over the past quarter. From an allied standpoint, therapy and imaging were the top. And I would also say because in our ally business, we have a schools business that grew very healthy this year, and we would expect that to continue into 2026.

Yeah, so a couple of things. One, if you look at our pipeline, our pipeline actually grew very nicely quarter over quarter. Underneath it, between MSP and VMS, there is a bias towards MSP in the pipeline. We had been trending post-COVID where the pipeline had a bias towards VMS. Now, both grew quarter over quarter, but we do see a bias in MSP. The other two themes that we see from a sales standpoint is we have momentum in extensions, and so that has been a focus for us to do more with our current clients. And so we are seeing momentum in expansions with clients. A focus has been on how we put locums in there, language services.

And then I'd say the last theme that we're seeing from a sales standpoint is if we lose in a pipeline, we are increasingly losing to the incumbent and to inertia.

And so, again, we think we have a differentiated platform around total talent solutions as we go into 2026 that we'll be able to combat some of that.

It's inclusive of all orders. But what I would say underneath that is if we look at more kind of age-dump in orders, there's been a very slight uptick, but not meaningfully.

Yeah, and as we talked about the trend the last few months, Mark, you said the winner order needs, more of those are typically priced at the rate we fill, and that's why you saw that the third quarter, although we saw sequences decline, as we expected, we, you know, we beat the guidance we gave, and it's, as you started getting more of those orders in, the team did a great job of filling them quickly, and some of that, and even in the extension rates when they came back, you know, were able to keep more on assignment. So that impacts the third quarter, but even more so the sequential increase that we're going to see in the fourth quarter is driven by that.

And then for those other ones, some of these orders that have lower rates, it's not that none of them get filled. It's just that a much lower percentage. So as they're posting those, the team will work, but the fill rates and the time to fill is lower overall. And so, you know, Carrie mentioned we had a client today that on some of those orders that have been sitting there, they increased the rate because they're recognizing they need to get them filled. And so that's taking an existing order and getting a better rate where the team will be able to act on it immediately and get the majority of those filled as well. So it's – when we look at the order trends, we've always kind of included everything, but as that mix changes towards more of them having rates that are priced appropriately, we know we can convert more of them to placements.

What I will say, you know, that has existed for some time is international nurses are typically a very good solution, broadly speaking for a number of health systems, but in particular for rural systems. It's attractive for the clinician coming over and bringing their family over. It's a very cost-effective way for these systems to be able to put in a longer-term clinician in there. So the international dimension is typically, you know, marginally more important to rural hospitals than you would see elsewhere. But we haven't seen any real noticeable difference in rural hospitals versus others. But I think that decision-making that is what we're seeing as you've got more CFOs and finance folks involved in some of the buying decisions is that there is uncertainty.

And so wanting that flexibility as they pull back on some of their permanent hiring and recognizing that the incremental cost for bringing in contract labor is about as low as it's ever been. And so I think that not only in their rural areas, maybe they don't have access otherwise, or they want that flexibility, that same type of dynamic we're seeing with certain clients in different settings as well.

No, I don't think anything that would change that dynamic. Those assignments, some of them do carry into the first quarter, so it wouldn't be unreasonable to expect that we'd see phenomenal growth from Q4 to Q1 in nursing. I think we still have work to do to fill in that quarter, but with the demand trends, especially, you know, as we saw more of a decline during the third quarter, and then as that's picked up through the fourth quarter, that should carry through into the first quarter as well.

We'll also, as Karen mentioned, we've had a real strong year with schools business, so that should be – that will carry through into the first quarter for Allied as well. And then seasonally, we're lower in our locums business and even search and enter to some degree. And so as that bounces back in the first quarter as well, that will be sequential growth is what we've seen historically and would expect to see this year as well.

Yeah, so a couple things about what we're doing in locums. One is we have made very intentional moves over the past 18 months to structurally be able to support our locums MSPs. That includes in our shiftwise flex platform, having capabilities that we rolled out at the end of last year to extend what we had done for nurse and allied into locums. We also added our locums clinicians onto Passport earlier this year. So we have more AMN platform integration of our locums business into core technology that we have built to support our nurse and ally business. Second is we have been proactively selling to our current clients locums capabilities. In a number of cases, one of the trends that you're seeing broadly is a desire, particularly for regional national systems, to centralize, pretty decentralized locum spend.

Oftentimes that will happen with the same program leaders that lead nurse and allied. So we've been doing those two things. And then the third very important piece is that if you look at year over year our fill rates in locum, you have seen one of the biggest increases of our fill rates in our MSPs. So we're not only prioritizing continuing to expand our Locums MSP clients and the platform that we have underneath it, but we have a world-class Locums MSP team that has increased our fill rate on those platforms year-over-year.

Yeah, so a couple things. If you just look at statistically across what has happened in collective bargaining agreements, broadly you are seeing more strikes than you had seen historically. So that is one trend that we follow. We have a healthy pipeline of strikes that our clients have asked us to engage in over the next 12 months. Our strike solution set is a very important one for clients that have unionized populations, and we only support strikes of our clients. But we are seeing, you know, continued strong activity there. And so we would expect our strike business to continue to be active over the next 12 months.

Let me start first on the long term. This business is really important to us, not just in terms of what it can do to support our clients and to support them in providing really strong patient care. It's incredibly important around access. So this is a business that we like. We have seen growth moderate throughout the year. That has coincided, as others in the I will now turn the call over to management for the Q&A industry as well with tougher immigration policies. And so a bit of what you've seen, Constantine, in the second quarter, and you saw it again this quarter, is if you've seen some modest growth in minutes, you've seen that offset by pricing pressure.

And so we saw that this quarter, we would expect to see that again next quarter. We do expect there's some changes that we're going to make to our operating model in terms of that will improve the We would expect you to start seeing the benefit of that in 2026. But we do think that growth will be more modest than you may have seen 18 months ago. But we still think that this is a growth business and that we are well positioned to be able to win in it.

I'll take those in reverse order. So, yes, you did hear that the – just by the – some of the – the way the services were rolled out for the event, we got a margin benefit in the third quarter. So, you know, call it somewhere to the range of 100 basis points gross margin on the consolidated for Q3. And then for Q4, we kind of called out because we have this large amount of revenue in Nurse and Allied, which has a lower margin profile, that that dragged the consolidated margin down in our guidance. And so if you were to add that back and even maybe just take like a small amount of like what we say kind of normalized, you'd end up somewhere closer to 27%.

So 29 becomes 28, and then the guide we give, you know, with that adjustment is more like 27. So there's about 100 basis points changing the margin from Q3 to Q4 on that adjusted basis. Does that help?

You did hear correct. I was going to say, if you were to take our guidance for revenue and remove all or most of the bet strike revenue number we gave, I believe that you should be able to take the inputs we gave and you'd end up somewhere in the kind of mid-sixes range for adjusted EBITDA margin in the quarter.

The answer is yes. We look at that as probably a floor again. If you take it somewhere in the – if you took the guidance we gave and you get at the 100 basis points, you'd be looking at, you know, 26.5 to 27. And again, if you assume, though, some normalized amount of labor obstruction activity, you're somewhere in that 27% range. And that, I think, is a reasonable floor. And then you can kind of build from the components that Carrie mentioned earlier in terms of the opportunities we see heading into 26, some of which we have clear line of sight to, like the With the volume increase, we expect to see an international starting in Q1 and others that we'll be aggressively working through during the year.

Yeah, trend remains the same. So if we look at where academic medical centers are year over year, they are still lagging our non-academic medical care system, but we are getting closer to them being stabilized. And I would expect that as we really start kind of 2026, that they would be, if not stabilized, very close to stabilized.

That's 20%. Yeah.

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