AMN Healthcare Services (AMN) Q3 2026 earnings call transcript

Good afternoon, everyone. Welcome to AMN Healthcare's third quarter 2026 earnings call. A replay of this webcast will be available at ir. amnhealthcare. com. At the conclusion of this call, remarks we make during this call about future expectations, projections, trends, plans, events, or circumstances constitute forward-looking statements. These statements reflect the company's current beliefs based upon information currently available to it.

Our actual results may differ materially from those indicated by these forward-looking statements because of various factors and cautionary statements, including those identified in our most recently filed forms 10-K and 10-Q, our earnings release, and subsequent filings with the SEC. The company does not intend to update guidance or any forward-looking statements provided today prior to its next earnings release.

This call contains certain non-GAAP financial information. Information regarding and reconciliations of these non-GAAP measures, 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 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.

AMN continued to deliver on our mission of empowering the future of care as reflected in our third quarter results. Revenue of $717 million grew 13% year-over-year, or 6% excluding labor disruption activities. Nurse and allied segment revenue grew 27% from a year ago, or 15% without labor disruption. revenue saw 15% year-over-year revenue growth. Net income for the third quarter was $33 million, or $0.83 per share, and adjusted EBITDA was $94 million. Third quarter results included a $51 million favorable reserve adjustment for past labor disruption events. We see healthcare organizations taking a broader view of their workforce. While clients remain focused on cost and flexibility, increasingly they want better insight and visibility into demand, supply, and performance across their workforce.

That plays to AMN's strengths. Our combination of talent depth, trusted client relationships, operational expertise, and technology-enabled solutions allows us to help clients not simply fill positions, but also make better workforce decisions.

Underlying demand in most of our businesses continued to grow, and our teams executed well against this demand. Third quarter performance benefited from the market uplift, along with our company-specific gains in candidate acquisition and placements across sales channels.

Five of our businesses have returned to year-over-year growth, and we see a path for the remaining businesses to return to growth in 2027. We are particularly encouraged by the growth in our nurse and allied business. Demand has strengthened, and our teams are capturing that demand through the improvements we have made in AI recruiting, speed, and 24-7 execution.

We still view core staffing demand as a bellwether for long-term growth in our total addressable market. We hear common themes from our network of 2,300 clients, which includes some of the country's largest health systems. The most prevalent drivers of travel staffing demand are growth in patient volume and persistent vacancies and turnover in core staff positions.

Across healthcare, permanent hiring has slowed to a level of little more than one-to-one parity with attrition. Many healthcare leaders recognize the flexibility and cost effectiveness of our total talent solutions. The cost premium for travelers over the all-in cost of permanent clinical staff is at a historic low. Improved demand boosted third quarter revenue for Nurse and Allied to $460 million. was 16% higher than a year ago, including 21% growth in travel nurse and a 12% increase for allied. The average number of nurse and allied travelers in the third quarter was 3% higher than Q2, defying typical seasonality. Our education volume is up over 25% year-over-year. and allied demand increased by 70% from the low point in February through October.

While demand and volume have grown, gross margins are holding relatively stable from a combination of flat bill rates and a market that remains highly competitive. Though we have seen healthy increases in supply, we are beginning to see clinicians hold out for higher rates. Historically, this dynamic has led to increased pricing, which would be a positive for margin and operating leverage in the future. Offsetting some of the strength in short-term nurse is our international nurse business, where ongoing delays in embassy visa appointments will result in near-term headwinds for the business. We have very recently seen some appointments come through, but they have been limited, And we expect this lowdown to constrain placements in 2027 until appointments return to more normalized levels.

In the fourth quarter, we project nurse and allied revenue to be down 13 to 15% year-over-year, with labor disruption revenue being $5 million this quarter compared with $124 million in Q4 2025. Including labor disruption, nurse and allied revenue is projected to grow 13% to 15% year over year. Our international business is expected to be down in the low teens sequentially, though still achieving high single digit year over year growth. Physician and leadership solutions revenue was $171 million in the third quarter, down 4% year over year, though 4% higher sequentially. Locum tenant's revenue of $138 million was up 6% sequentially and down 5% year-over-year.

The 15% growth in search reflects particular strength in executive search and physician permanent placement. Our executive and interim search businesses benefit from leadership turnover in healthcare from both planned retirements as well as organizations focused on accelerating their growth, transformation, and technology strategies. Similar to the technology and process improvements made in our nurse and allied businesses, our locums business is in the middle of its own growth acceleration program, targeting year over year revenue growth in 2027. Our teams have already begun executing organizational and process improvement efforts that have energized the team, with larger technology enhancements rolling out in the coming months. For the fourth quarter, we project physician and leadership solutions revenue to be down five to seven percent year over year.

Third quarter revenue for technology and workforce solutions was 86 million, down 9% year over year and modestly better than our expectations. Language services revenue was $69 million, down 8% year-over-year, and down less than 1% sequentially. Minutes were up slightly year-over-year, while pricing was down 9%. BMS revenue was $15 million, lower by 11% year-over-year, though flat sequentially. Segment gross margin reflected the cost pressure we anticipated due to renegotiated language services contracts hitting in advance of completing the rollout of our lower cost service model. Our global interpreter capacity will take a step higher in the first half of 2027, which should enable us to recover gross margin. We are continuing to empower WorkWise our data technology and workforce optimization platform while expanding our relationships across the AMN solution set.

We continue to drive innovation in our Passport app for healthcare professionals, and we have enhanced its capabilities. One example is natural language job search, which is already having a positive impact on supply. These efforts are designed to improve outcomes for clients and healthcare professionals and to support more durable, profitable growth over time. As we broaden our scope with advisory and AI innovation, we also expect the market opportunity for total talent solutions to expand. AMN has improved execution and recruiter productivity, broadened access to market segments, advanced our technology enablement, and demonstrated our ability to perform at scale. Now these capabilities are helping our clients manage their workforce more strategically, which we expect to become increasingly important to our success in the long run.

Our teams are leading the way in the industry, simultaneously delivering great performance and innovative solutions for our healthcare professionals and clients. Now, I will turn over the call to Brian for more details about our results and outlook.

Thank you, Carrie. I'd like to expand on our third quarter financial results published this afternoon. Consolidated third quarter revenue of $717 million grew 13% year-over-year and 7% sequentially. Revenue was nearly 10% above the upper end of our guidance range, with the upside coming from strong performance in travel nursing allies, along with higher labor disruption revenue. Our third quarter guidance assumed $7 million of labor disruption revenue, compared with $59 million recognized in the quarter. The additional revenue consisted almost entirely of reserve adjustments associated with prior labor disruption events. Reported gross margin was 31.9%, 440 basis points above the top end of guidance. The higher margin resulted from the labor disruption reserve adjustments, which positively impacted gross margin by 520 basis points.

Third quarter net income was $33 million, compared to $29 million in the prior year period and $21 million in the prior quarter. Adjusted EBITDA was $94 million, or 13% of revenue. Adjusted EPS was $1.16. Consolidated SG&A expenses in the quarter were $149 million. Adjusted SG&A, excluding certain items, was $138 million, up 7% compared to the prior year, driven primarily by higher professional liability-related costs and changes to the allowance for credit losses. The Nurse and Allied Segment reported revenue of $460 million with a 30.9% gross margin and 17.5% segment operating margin. The labor disruption reserve adjustments favorably impacted the segment gross margin by 860 basis points and the segment operating margin by 1,030 basis points. Segment revenue excluding labor disruption activity increased 15% year-over-year, demonstrating strong execution in travel nurse and allies on higher demand.

Travel nurse volume increased 21% year-over-year, while allied volume increased 12%. International nurse also experienced growth during the quarter with revenue increasing 32% year-over-year. However, we are expecting international volume to decline sequentially starting in Q4 until embassy visa appointments resume with some level of normalcy. Nurse and Our Nilead Average Bill Rate was flat year-over-year, while average hours increased approximately 1%. For Physician and Leadership Solutions, revenue of $171 million was up 4% sequentially and down 4% year-over-year. While Contenders Revenue was $138 million, up 6% sequentially and down 5% over prior year. The sequential growth included a 3% increase in days-filled volume. In our technology and workforce solution segment, revenue of 86 million was down 9% year over year and 1% sequentially.

Segment trends continue to reflect pricing pressure and a dynamic operating environment for language services and client utilization trends in the VMS business Language services revenue was down 1 sequentially Minutes increased 1 sequentially and were up slightly year Pricing declined 1% sequentially and 9% year-over-year. While our tiered service strategy transition remains a near-term headwind to revenue, it is helping retain clients and position the business for new client wins.

We expect notable progress on our global workforce strategy to deliver gross margin benefits starting in the first half of next year, helping offset lower pricing.

BMS revenue in the quarter was flat sequentially. Platform volume remained below the prior year, while bill rates were up modestly both sequentially and year over year. We expect the business to stabilize around current revenue levels with prospects for sequential growth in the second half of 2027 through both new client wins and increased volume.

Days sales outstanding for the quarter was 54 days, consistent with the prior quarter. Highlighting some additional balance sheet and cash flow details, we ended the quarter with $256 million in cash and equivalents. Cash flow from operations was a use of $88 million for the third quarter, with year-to-date operating cash flow of $285 million. The third quarter use of cash resulted from refunding most client deposits from previous labor disruption events.

We ended the third quarter with total debt of $750 million, and our leverage ratio as calculated for our credit agreement was 1.3 times. Moving to the fourth quarter outlook, we expect consolidated revenue in the range of $655 to $670 million, including $5 million of labor disruption revenue. Gross margin is expected to be 25.7 to 26.2%. Reported SG&A is projected to be 21.2 to 21.7% of revenue. Operating margin is expected to be minus 0.1 to 0.5%.

and adjusted EBITDA margin is expected to be 5.8 to 6.3%. Additional guidance details are provided in our earnings release.

Our consolidated gross margin guidance is similar to the 26.1% margin we reported in the fourth quarter of 2025. This guidance includes a nurse and allied margin that is in line with a year ago. We expect physician and leadership gross margins to be down approximately 200 basis points year over year, driven by a lower margin in locum tenens.

And we project technology and workforce gross margin to be down approximately 100 basis points from a year ago due to revenue mix and a lower margin in language services. Now, operator, let's open up the call for questions.

Yeah. So if I look at the growth that we've seen in Travel Nurse, we've seen that demand growth across all channels. And I think that's very consistent with what the overall market has seen. And if I go at our fill rates by those channels, we have improved our fill rates across every single channel. And so our performance is really a combination of two things. One is the higher demand that we and others in the market are seeing. And the second part of that, and I will give a huge call out to our nurse and ally team, they have done just an extraordinary job on executing against that higher demand.

We've been talking about this over the past three years about what we're doing in terms of operational improvements, technology improvements to build a better platform. We are now on track to have the highest levels of productivity in Nurse and Allied that we have ever had. And that includes the high watermark in 2022 with COVID demand. So I would say what we're seeing is both this continuation demand across all the channels and our ability to execute against that demand across all those channels. that's great kerry thank you um and then you know i i guess on the international business maybe just to dig in a little bit more there i mean you mentioned the the kind of embassy visits headwinds i guess is the is your current view that the low teams sequential decline for q4 would be kind of a one-time step down and then that would be the run rate going forward do you think that could get maybe a little bit lower going into kind of the rest of, I guess, going into 27.

And then kind of a separate question, but related, you know, we did get a pretty significant shift in the political backdrop this week with the midterms. I mean, is there any, like, what's your outlook on kind of whether the winds could shift on the international business, maybe once these near-term delays work their way through? Yeah, let me take the second part of the question first, and then we'll talk about international.

If we go and look at the policy areas that would have the biggest impact on our business from a national standpoint, it would be two areas. One is generally where you had more favorable healthcare policies, either from a reimbursement rate, from expanded access that would drive higher patient utilization levels. So it's too early for us to tell what that is going to look like. But generally, anything that would move in a positive direction on those two would be positive for our business.

And then I'd say the second piece would be immigration policy. And so that would have a positive impact both on our international business as well as on our language services business. On a state level, we are tracking and we always track a number of different, you know, state level policies that may go into impact. And I'd say generally we would want, you know, more restrictive regulation at the state level. But I think there's, you know, it's too early for us to tell from Tuesday night what direction those national policies will go. From an international nurse standpoint, we are still going to be up year over year. So we're on track this year to drive over $150 million of revenue growth in international nurse.

What we have seen since the summertime, and we talked about this because we had started to see it on our last call, is embassy appointments really virtually being nonexistent. And so we hadn't seen that in past periods of when visa retrogression had improved. So we don't really have any historical context for it. We have very recently in the past two weeks started to see some appointments come back through for those that had already been scheduled.

We are assuming at this point that we have that slowdown in the fourth quarter. That would result in our run rate going into 2027 being lower. On a more cautious standpoint, if we didn't see a lot of improvement, you would expect to be flat from that step down that you would see in the first part of 2027. If we got improvement in the availability of some of those appointments, that would have a positive impact in the back half of the year. It would still take four to five months once we get those appointments to get our clinicians on the ground.

Trevor, just to add a little bit, from the third or the fourth quarter in our guide, it's about a $5 million reduction in revenue in the international business. There would be another smaller step down from Q4 to Q1. Fortunately, with the stronger performance in the early part of the year, we've gotten a lot of new clinicians on assignment. And as you know, they're multi-year, so that gives us more durability in 27. But again, without more new starts, that's where we start to kind of just level out from that first quarter. We do have some expectation for some improvement in the back half, but to Kerry's point, it's just hard to predict the timing of the embassy's reopening for appointment, and that's why we're trying to be a little more cautious in our outlook right now.

Thank you. 2026. Kaiser is well into a long-expected RFP process, and that is a normal part of their governance process for a contract of this size. While this is a competitive RFP, we feel very well positioned. Our partnership and our program are strong, and we have built our strike capabilities over the past two years with and for Kaiser. And we deliver strongly on those programs.

The best analogy for what we're doing in locums is actually what we did in our nurse and allied business that we started almost three years ago. And so if we look at our locums business, thing one is we want to make sure that we are effectively competing in all channels. So we want to run strong MSPs. We want to have strong vendor neutral offerings. We want to have strong direct fill as well as in third parties. And so we've done things to be able to compete against competitors in all those channels. We rolled out locum CMS capabilities in the early part of last year. And what you have seen us embark on over the past two quarters is really improving our speed to fill.

In very competitive third-party channels, you need to be really strong and fast to be able to get your candidates in. And so we are going through the same process that we went through in Nurse and Allies. It includes looking at every part of that process. How do we automate? How do we tech enable? How do we shorten every part of that process? So that work is going on. It will build over time. We should start to see some improvements in the beginning of 2027. I would expect that to build as we go into 2027 and return the business to growth sometime next year.

Yeah, sure. I don't think there were any major surprises you see. With that adjustment out, we still ended up above the high end of our guidance for engine revenue. The gross margin was at the low end of our range, and in part that's a bit of a mixed component with Nurse and Allied having a lower gross margin. That has an influence there. We did have a nearly $3 million actuarial adjustment for workers' compensations. The normal process we go through two times a year. So that had a drag directly on the gross margin, and that flowed directly into EBITDA as well. So that's probably the most significant variable that would have, that impacted the EBITDA dollars relative to the guide we gave.

Outside of that, it was, you know, most things were relatively in line with what we expected. Again, and seeing strong, you know, the nice, obviously, the strong upside on the revenue that we're seeing flow through for nurse and allied in the fourth quarter is definitely a bright spot for us.

Yep. Yep.

Yeah. So what we have seen, if I normalize for supply that we felt coming in when we had some large strikes, so the fourth quarter of last year and the first quarter, we've seen a steady increase in supply really going back to last year. and when we look at that supply, what we have started to see very recently, because there's a lot more demand out there, is you will see some clinicians hold off actually booking to see if bill rates are going to increase. They're always maximizing and looking for both the opportunity and maximizing their pay rates with that opportunity. So I think, Kevin, we're starting to see what we would expect, what we really look at as normal market behavior, when you start to see that demand, supply starts really having more choice.

And so we would expect, especially in places where you have unfilled orders, that you would start to see and build on more clients that were increasing their bill rates to fill those orders. Bill rates overall have been stable for 18 months. We've seen pockets underneath that where bill rates have increased. We just need to see that more consistently. I would say some early signs that we're seeing around trying to get more supply on behalf of the systems are things like guaranteed work weeks. We did see in the third quarter some increase in rapid response orders. It's too early to call it a trend. But those types of signs would be, you know, we believe precursors to starting to see bill rates start to go up in 2027.

Thanks, Ed Jase. I think it's probably easier to use Q4 as a building block because then it will reflect some of the changes we've seen throughout this year. And even, for example, with international, you said we've seen the step down from Q3 to Q4. So it's kind of a better launching point, along with the improvements we've seen in our nurse and allied business.

And so our typical path is that Q4, you see the gross margin down some. Again, part of that is reflected by the lower international business, which has a higher gross margin attached to it. But there's also some seasonality. In Q4, we typically see the margin down at some lower search volume. The minutes in language services are typically a little bit lower. So this is not unusual for the margin to be lower. And then we'd see that start to pick back up in the first quarter. And then, as Kerry mentioned, some of our businesses that we expect to get back to growth during 27 have a higher margin profile as well. So we see an opportunity to see that gross margin improve through the year.

And then you kind of build on the revenue components that you typically see in the business. And again, we've got parts like locums where we've seen some declines during this year. A little bit of day sale volume in the third quarter is positive to see the fourth quarter revenue is pretty reflective of normal seasonality. But we would start to see that accelerate as we go through 27 as well. Okay. And two other things just quickly on. One is the $51 million favorable reserve adjustment. Does that sort of reset the balance sheet? Are you carrying other reserves that you're waiting for something to materialize on before making a decision on? Or how should we think about that?

And then you mentioned Kaiser, but I was wondering about broader commentary on what you're seeing in terms of RFP activity. There's a lot of, you know, some of your competitors, it seems like they're in financial distress, as best I can determine. There's others that are going through major consolidation. Is that generating more RFP activity around MSP or around, are you just seeing more new customer interest? And how would you characterize that?

Let me answer the second part of the question.

I'll turn it over to Brian for the first.

Generally, what we are seeing in the market is we have had very strong client retention. The flip side of that is it is harder to get clients to move. What we are seeing, and our pipeline is up quarter over quarter, is clients really looking for the combination of a partner who can help them across the spectrum of talent solutions have innovative technology and be able to put those together. So we are well positioned for what we're seeing as a trend of what clients want in the marketplace. and our financial strength is a part of us going into that process in a really strong position. I will say of note for the third quarter in a row, if we look at our total pipeline, more than half of our pipeline is MSP.

So we have seen more clients talking about wanting to have partners that are going to be risk sharing with them and having SLAs against being able to get the fill. So that's a trend that we have started to see over the past couple quarters. But we feel good about our pipeline build, about our commercial team, and about our positioning of our solutions against the needs that clients are talking about, what they need to build a workforce of the future.

I'll go ahead. I was going to share another point. I mean, we still have some remaining strike events from prior periods. So there are some remaining reserves as well as some deposits left, but that declared a lot of the deck during the third quarter. But we always have some until we finalize all of our invoices and reconcile them with the clients. We want to make sure we've got sufficient coverage there. But this is obviously a pretty significant amount of it.

Yeah, if you look at – we look at overall demand, and then we look at what you would call winter orders. If we look at winter orders so far this year, it's in line with both what we expected and last year. And so we're seeing consistency of what we would have thought we would have had in winter orders. Beyond that, we're seeing much more of this broad-based demand. So the demand growth that we are seeing is really broad-based demand growth and not coming from any kind of specific increases in winter orders.

Yeah, we've had really strong retention rates, which can be – for flu, it's sometimes difficult for clients to predict it. And by the time that they may be experiencing increases maybe in ER visits, it's hard to then catch up to that with new orders. We don't typically get a tremendous amount of flu-related orders, but it usually will have a positive impact on extensions. If they have clinicians there, they're going to want to maintain them if they're seeing an increase in census.

That's typically a positive trend when you have a higher seasonal flu environment.

The other thing, Constantine, I would say is in addition to just the overall patient utilization increases, some of our clients are telling us that they're seeing some increases in acuity level. So it's not just, you know, kind of the census going up, but also, you know, on the margin, some higher acuity.

So if you look at the pricing headwind that we had this year, it should be, we expect it to be in the high single digits. And so you've seen a little bit of offset in terms of just minutes growth, but really the big driver of what we've seen from a pricing, we would expect to still have an impact on pricing next year, but it should be more moderated than what we experienced this year. So we've been talking about it this year with high single digits. It's more like mid-single digits next year.

We've gotten through a number of our clients renewing and kind of going to those potentially new service models. And so we would still have some in 2027 and then, you know, a tail of that into 2028. But we will also be rolling out by the end of the first quarter, the last part of our new service model. And so that's where we would have access to a broader supply of global commission. And we would expect to recapture some of our margin.

It's still in the kind of mid-30s right now. We've historically been up over 40%, so that's where we think we can find our way back closer to a 40% margin, which is, we think it's pretty normalized with where our competition is with this broader global workforce. And I'd say the other part, and we talked about this a bit over the past two quarters and we continue to see it, is we are seeing a focus, a more balanced focus on cost per minute and quality. We had had a shift, I'd say, in 2025 and into the first part of this year where you really had more of a, you know, monofocus on cost per minute. And we're starting to see both on the clinical side and in procurement, a focus back into we want, you know, really competitive price per minute, but we also don't want to sacrifice quality.

And so we had a win back of a client for that. And so we think that that will be a strong differentiator for us that we can deliver both.

Maybe I'll start with this and then have Brian add. I always say this quote, and it continues to be true. There's an 80% chance the strike will happen, 80% chance it won't. We have under contract support for some medium and large strikes. So it's hard to predict when those may happen, but our team has gotten very good at this, particularly over the past 12 plus months.

We have incorporated into our guidance about $50 million of strike revenue. for next year, and we have a pipeline that is healthy. You just never know, even if you get contracted for a strike, whether or not that strike will actually happen.

Toby, to Kerry's point, we have multiple clients we're already contracted with for events that could still happen this year but there several also that are more likely to be in the first half of next year It just the difficulty is just whether predicting if they will happen and how long they would be in the revenue impact But we've seen for sure just industry-wide a greater preponderance of labor disruption events actually occurring.

We know there's one right now. There's been notice given for an indefinite strike in the East Coast. It's not one of our events, but it's indicative that you're just seeing a little more tension between the unions and the hospitals and more events occurring. And so this is a high-value offering for clients at a critical time, and we're proud to be able to provide, we think, a top-tier service.

So we expect there will be activity next year as we've had each of the last several years, but it's always difficult to predict the exact timing and magnitude.

Yeah, and Toby, the other interesting thing that we are seeing in strikes that you really hadn't seen before is you didn't see indefinite strikes. And so to have some of those indefinite strikes is also something that, you know, we continue to monitor. Is that a trend that we'll continue to see in the future?

Yeah, no, I mean, with Nurse and Ally, again, if you kind of take out some of the, you know, the labor disruption activity, obviously, it's created, you know, quite a bit of variability. And we've mentioned that we've had stable margins there. We saw some, you know, some improvement during this year with the growth in international, and we had expected originally for that trend to continue in 27 until some of the more recent events with the embassies. And so, you know, we're, again, we would expect to see some rate improvements over time and is even, you know, having more as our pipeline of programs grows, that creates more opportunity to have more direct relationships, which typically has a better margin profile attached to it.

So, there are certainly opportunities between bill rates, program activation to see some improvements over time. But right now, we're, you know, we're looking, again, stability is a good thing and we're seeing really good flow through in our EVA with the volume growth. So we would expect over time, as history repeats, that we would see some improvement. But I think it'll be a slow build over time with Nurse and Allied. And then on the locum side, I think we've kind of hit the, we believe, the low point as we go into the fourth quarter to Q1. And so now our opportunity is, as we make these process and technology changes, is to grow into some of the specialties that have higher margins.

We've had good success over the last couple of quarters in winning more direct contracts. We just need to, again, execute better into them, and I think that's going to be another catalyst for margin improvement in locums. And then we're seeing really, really great performance in our search businesses. We're getting close to turning the corner for interim leadership business in physician and leadership, and both of those service lines both have a higher margin profile as well. So we have a good degree of confidence as we go through 27 that we should see margin improvement in that segment.

Sure. I mean, again, we would normally expect to see some improvement in kind of all of our, I think these days in all of our businesses from Q4 to Q1. It's probably a little more muted in our technology workforce solutions right now, just as we're going through some of these transitions. But, you know, for the nurse and allied business, stable, some modest growth. And the same thing in the position of leadership as you see locums usually improve from the fourth quarter. And then on the gross margin, we would again expect to see some modest improvement again just from mixed going from Q4 to Q1. The one headwind is that we have a higher payroll tax on our staffing business in the first quarter, but we are expecting to see a little bit of improvement in gross margin in Q1.

The net of all that, it probably wouldn't be significant change in EBITDA from Q4 to Q1, that becomes kind of the building block for the rest of the year. We expect to see growth top and bottom lines of the year.

Yeah, so, Jack, what we typically see is you see the VMS business, you know, kind of mirror what you see in the nurse and ally business. We had one client that went off the platform, and that came through in the second quarter of this year. And so think of what we have seen kind of this quarter as we exit this year as being more specific, client-specific to our platform, than it not necessarily, you know, kind of correlating. You're always going to have puts and takes of, you know, specific clients and what they're trying to achieve, which will have some difference.

But as we look into 2027, we have wins from this year that we are in process of onboarding. So you'll start to see those come through and build as we go into 2027. And then we would expect, you know, between what you're seeing in, you know, overall demand increases in the market, onboarding of these new clients, particularly because we built so many capabilities in WorkWise that are playing and being received very well in the market, that as we exit 2027, you'd be, you know, back in a position of year-over-year growth.

We're not seeing it. We're seeing new applicants come in. I think we're not seeing just a significant influx of nurses who have never traveled. I think you need to see much higher pay rates for that phenomena to start happening. But I will say, you know, even as we look into this next leg of growth, we would expect as you get higher bill rates, that would attract, you know, additional new nurses into the market. But we haven't necessarily seen it be a huge factor yet.

I guess it depends on where they end up going. We haven't seen widespread movement of bill rates. And so, you know, there's such a transparency both for the client and for the clinician around all these roles. And I think that has just increased with all these tech platforms, you know, between Passport and what we do on our WorkWise platform. We have certainly created a lot of transparency. So they have an ability more than they have before to be able to really go and compare and contrast different options.

And so I don't know that they've uniformly seen success in doing it right now because we feel rates haven't been consistently increasing. but it's a behavior that we want just in terms of feedback to clients about if they want to lock down some of the supply. Really getting bill rates at market levels is going to help do that increasingly as we end the year and go into 27.

Mark, the demand growth we've had, I mean, some of those orders clearly have good bill rates that allow for a more compelling compensation package, and those ones were able to fill pretty effectively. It's just that part of the reason why you see orders growing faster in the volume is that, you know, some of those are just competitive with others, but it's also, you know, there's going to be a large cadre of them that just still have rates that may just not be attractive enough. And that's, the longer that goes on and there's a greater urgency from clients, that's when the rates will start to increase and that will allow us to pull more supply. So, you know, there's enough now for us to continue to see this growth, but it could be even greater if you had more of those orders with rates that were really attractive.

And to Carrie's point, it's very transparent. We want to partner with our clients to get them the right rate, make sure the order's filled, and it just takes time for them to kind of work through that. And when the urgency is great enough, we're seeing rate adjustments. When they happen, we can fill the orders faster than we've ever done historically.

Yeah, Mark, one point on the FAST piece, and we've touched on this in past conversations. we have gotten so fast that even if you looked at like weekly open orders, there is a healthy portion of orders that won't even be on next week's report because we filled them literally within a couple days. And so we look at that velocity and the speed because we want to get them filled fast and we want them to be priced appropriately for clients and clinicians both. And then we do the same thing when we see orders really starting to be out there for a while around what is the level of urgency for that and give guidance to clients around what they would need to be to get that order filled if it is an urgent need.

I don't think we've seen necessarily a premium difference relative to strike. If we look at what that level is, and this is fully loaded, including recruitment costs, you're in the low single digits. And so it is at historic low levels, which is one of the reasons why we will have some clients come and say to us, this is a very affordable option, particularly with the flexibility and access to potentially permanent talent that it gives me. What I will say is when you have regions that overall have higher pay rates because of more expensive geographies, you can attract talent from outside that region because that is an attractive pay rate relative to where they may be otherwise and what their permanent role opportunities are there.

Mark.

Thank you for your interest in AMN Healthcare, and thank you to our clients, our clinicians, our team members, and suppliers who work tirelessly every day to ensure quality workforce outcomes and care are delivered.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.