AMN Healthcare Services (AMN) Q4 2025 earnings call transcript

Good afternoon, everyone. Welcome to AMN HEALTHCARE's fourth quarter and full year 2025 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, 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 for the most directly connected to the SEC.

GAP financial information. Information regarding and reconciliations of these non-GAP measures to the most directly comparable GAP 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.

Thank you, Randy. Welcome, everyone, to our quarterly recap and year-end update. We are pleased to review our 2025 accomplishments and highlight what we expect looking ahead. Several themes prevailed last quarter and so far in the first quarter as we saw healthy seasonality in nurse and allied staffing, a return to sequential growth in international nurse staffing, increasing demand in our We have a great opportunity to see our leadership in search businesses, along with extraordinary need for labor disruption support. We had outsized labor disruption revenue in the fourth quarter, and with two large events in the first quarter, we anticipate significantly more labor disruption revenue this quarter. For the full year 2025, we finished with revenue of $2.73 billion and adjusted EBITDA of $234 million.

We reduced debt by $285 million in 2025. Fourth quarter revenue of $748 million was 2% higher than the year-ago quarter and $18 million above the high end of guidance. Gross margin came in slightly above the high end of the guidance range, and adjusted EBITDA margin was at the high end of guidance. Labor disruption revenue in the fourth quarter was $124 million, nearly doubled over the year-ago quarter. Excluding labor disruption, revenue for the quarter was $624 million, slightly above the midpoint of our guidance range. By segment, excluding labor disruption revenue, nurse and allied solutions, and physician leadership solutions came in at the high end of guidance. Technology and workforce solutions revenue was $2 million below the midpoint of the guidance range.

Nurse and allied revenue of $491 million grew 8% year-over-year. Excluding labor disruption, segment revenue was down 7% year-over-year, improved from down 13% in the third quarter. Travelers on assignment, which do not include labor disruption, grew 6% sequentially in the quarter. In the first quarter of 2026, we expect nurse and allied revenue to be up more than 135% year-over-year, or excluding labor disruption, up 2-4% year-over-year, and up 4-6% from the fourth quarter.

We are seeing positive year-over-year demand in allied, including our school's business, and a seasonal demand decline in travel nurse in line with last year. Physician and Leadership Solutions revenue in the fourth quarter was $170 million, down 2% from the year-ago period. Every business in the segment exceeded the assumptions embedded in guidance, with interim leadership and search showing the most upside. For the first quarter of 2026, we expect physician and leadership revenue to be down 5% to 8% year-over-year. Within this outlook, we project interim to be down in the mid-single digits year-over-year, with SERVTS flat to up from prior year.

We expect locums to be down mid-single digits year-over-year, as we have seen some disruption in early-year demand with certain clients who are experiencing strike events, along with seasonal demand declines. However, our outlook remains positive for sequential growth in the segment for the middle quarters of the year. In the fourth quarter, technology and workforce solutions revenue was $88 million, down 18% year-over-year, or down 14% excluding the divested SmartSquare business. Within language services, our tiered service strategy to address price competition is already in trial with several clients, and we expect to see gross margin benefits from this strategy in the second half of the year. As we have now developed and deployed this new strategy, we are able to support a broader range of client choices.

Our language services delivery models use our leading technology platform to provide medically qualified human interpreters on demand for clinical interactions, as required by federal regulations. To support the entire patient journey, we are expanding our capabilities by investing in AI technology enablement to support the administrative and other non-clinical interactions with patients, or human interaction is not required. We have momentum from new client wins in Q1 and a growing sales pipeline giving us the opportunity to return to year-over-year revenue growth in language services later this year. VMS revenue in the fourth quarter was $16 million, lower by 4% quarter-over-quarter, and 28% year-over-year. After rolling out ShiftWise Flex to our client base in early 2025, our emphasis was on deploying enhanced capabilities in our industry-leading VMS.

These include advanced analytics and reporting, generative and agentic AI, and expanded support for managing internal flow pool and internal agency. These investments broaden our ability to win new business and expand our solution set with current clients.

In the first quarter, we expect technology and workforce solutions revenue to be down in the mid to upper teams year-over-year or low teams, excluding SmartSquare. We expect language services revenue to be modestly lower sequentially. The downward sequential trend for VMS is moderating, with the driver of decline in the first quarter being two fewer days. As we look forward, our consolidated first quarter outlook includes an assumption of $600 million in labor disruption revenue from multiple strike events.

Although the labor disruption revenue reduces our consolidated gross margin, it does drive operating leverage. Our team has risen to the challenge of serving the day-to-day needs of our 2,000 clients while also managing two large, indefinite-duration strike events on both coasts. I am profoundly impressed by the energy, commitment, and teamwork we have sustained in driving quality outcomes for our clients during these events. We're also very pleased with the performance of the event management system we built over the past two years as the backbone of our differentiated labor disruption solution. Strategic clients expect us to support them through disruptive events, and we are committed to supporting them as part of building long-term partnerships while ensuring continuity of quality patient care.

We have discussed over the past three years how our team has automated, reorganized, tech-enabled, and rebuilt our business processes to ensure that AMN would be ready when staffing demand rebounded. While we have reported on the improvements and our speed to fill and ability to compete across broader market segments, The labor disruption events in recent months have proven that our enhanced platform and solutions can successfully handle significantly higher levels of demand.

Also strengthening our response is how we develop the ability to seamlessly onboard suppliers into our technology and programs during a demand spike. This strengthens our position as a preferred partner for other staffing vendors. Beyond the needs for labor disruption support, we view 2026 as a year of transition as we work to return all our businesses to growth. At the start of this year, conditions in the healthcare labor market show signs of returning to normal as measured by the rates of hiring and attrition. Clients are increasingly using a blended labor model to support revenue growth, and more clients are seeking support for centralizing their control over contingent labor spend, including heightened interest in low cost.

We see rising recognition of the value of having a long-term strategic partner for workforce management, and AMN is well positioned to be that partner. We expect to see allied international in search return to year-over-year growth in Q1, with the other businesses returning to growth in the coming quarters.

After 2026 and excluding labor disruption, we see a path to delivering sustainable organic revenue growth of 4% to 6% per year, While growing operating expenses at half the rate of revenue growth, resulting in 10 to 15 percent growth of adjusted EBITDA.

Cyclical drivers should help our industry return to growth, but we also have positioned AMN to fuel growth from market share gains and an improving revenue mix. In our robust sales pipeline, we see the potential to regain momentum in MSP, where we have demonstrated the value of having AMN as a long-term business partner. We are gaining share in the large, direct, and vendor-neutral segments of the market. The investments we made, including AI enablement across recruiting, applicant tracking, credentialing, The words of the NAMN HEALTHCARE SERVICES IN CONGRESS AND SUPPORT ARE TRANSFORMING THE WAY WE OPERATE. WE ARE DEMONSTRATING THAT WE ARE A MUCH FASTER AND MORE AGILLE COMPANY WITH A STRONGER TECHNOLOGY BASE THAN WE WERE JUST A FEW YEARS AGO, GIVING US GREATER OPTIMISM ABOUT IMPROVING EARNINGS POWER OVER THE LONG TERM.

WORDS CANNOT EXPRESS THE GRATITUDE I HAVE FOR OUR CORPORATE TEAM, OUR CLINICIANS, AND OUR SUPPLIERS FOR THEIR TIRELESS DEDICATION TO ENSURING OUR ABILITY TO SUPPORT AND SUPPORT AND SUPPORT ARE TRANSFORMING THE WAY WE OPERATE. WE ARE DEMONSTRATING THAT WE ARE MUCH FASTER AND We will support our clients in providing continuous care for their patients.

Now, let me turn the call over to Brian for additional details about our fourth quarter results and full year results, along with our first quarter outlook.

Thank you, Carrie, and good afternoon, everyone. Fourth quarter consolidated revenue was $748 million, above the high end of our guidance range, driven by labor disruption revenue that was $24 million above guidance. Revenue was up 2% from the prior year and 18% sequentially. Consolidated gross margin for the fourth quarter was 26.1%, slightly above the high end of our guidance range. Gross margin declined 370 basis points year over year and 300 basis points sequentially. Labor disruption revenue reduced fourth quarter consolidated gross margin by 130 basis points. Consolidated SG&A expenses were $152 million, compared with $159 million in the prior year and $139 million in the previous quarter. Adjusted SG&A, which excludes certain expenses, was $143 million in the fourth quarter, compared with $145 million in the prior year and $129 million in the previous quarter.

The sequential increase in adjusted SG&A is primarily attributable to a $5 million unfavorable professional liability actuarial adjustment, a $4 million net increase in bad debt expense, and approximately $5 million of additional cost to support the large labor disruption event.

Fourth quarter nurse and allied revenue was $491 million, up 8% from the prior year, exceeding the high end of our guidance range, driven by higher than anticipated labor disruption revenue. Sequentially, segment revenue was up 36%. Excluding labor disruption, segment sequential growth was 5%. Year-over-year, nurse and allied segment volume decreased 5%. Average rate was flat, and average hours worked were down 1%. Sequentially, volume was up 6%. Average rate was up 1%, and hours worked were down 2%. Travel nurse revenue in the fourth quarter was $209 million, a decrease of 9% from the prior year period, though up 6% from the prior quarter. Allied revenue in the quarter was $147 million, down 1% year-over-year and up 3% sequentially.

Within Allied, our school's business grew revenue 10% year-over-year. Nurse and allied gross margin in the fourth quarter was 21 a decrease of 220 basis points year over year Sequentially gross margin was down 250 basis points driven by locum tenants Locum tenants revenue in the quarter was million flat year and down 7 sequentially Interim Leadership Revenue of $24 million decreased 8% from the prior year, but was up 4% sequentially. Surge Revenue of $9 million was down 8% year-over-year and up 1% sequentially. Gross Margin for the Physician and Leadership Solutions segment was 27.5%, down 100 basis points year-over-year. Sequentially, Gross Margin increased by 30 basis points. Technology and Workforce Solutions revenue for the fourth quarter was $88 million, down 18% year-over-year and 7% sequentially.

Language Services revenue for the quarter was $70 million, down 9% year-over-year and 7% sequentially. VMS revenue for the quarter was $16 million, a decrease of 28% year-over-year and 4% sequentially. Segment gross margin was 48.1%, down 920 basis points from the prior year period due to an adverse revenue mix shift, lower margin in language services, and the sale of SmartSquare. Sequentially, gross margin declined 340 basis points. Fourth quarter consolidated adjusted EBITDA with $54 million, down 27% year-over-year and 5% sequentially. Adjusted EBITDA margin for the quarter was 7.3%, down 290 basis points from the prior year period and 180 basis points sequentially. Fourth quarter net loss was $8 million. This compared with net loss of $188 million in the prior year period, which included a non-cash goodwill impairment charge, and net income of $29 million in the prior quarter.

Fourth quarter gap loss per share was $0.20. Adjusted earnings per share for the quarter was $0.22, compared with $0.75 in the prior year period and $0.39 in the prior quarter. Day sales outstanding for the quarter was 47 days, which was 8 days lower than a year ago and 10 days lower sequentially. Excluding impacts from the large labor disruption events, year-end DSO was 56 days. Operating cash flow for the fourth quarter was $76 million, and capital expenditures were $8 million. As of December 31st, we had cash in equivalence of $34 million and total debt of $775 million.

We ended the year with a net leverage ratio of 3.3 times to 1. Recapping financial highlights for the full year 2025, we reported revenue of $2.7 billion, a year-over-year decrease of 8%. Gross margin for the year was 28.3%, a decrease of 250 basis points in the prior year. Adjusted EBITDA was $234 million, a decrease of 31% from the prior year. Full-year adjusted EBITDA margin of 8.6% was 280 basis points lower year-over-year.

For full-year 2025, we reported a gap loss per share of $2.48, and adjusted earnings per share was $1.36, compared with a prior year gap loss per share of $3.85, and adjusted earnings per share of $3.31.

Full year cash flow from operations was $269 million, and capital expenditures totaled $36 million. Moving to first quarter guidance, we project consolidated revenue to be in a range of $1.225 billion to $1.24 billion. This revenue guidance includes approximately $600 million related to labor disruption support, with the final amount subject to completion of the event. Gross margin is projected to be between 23.5 and 24 percent. The impact of labor disruption revenue this quarter reduces our gross margin by about 300 basis points. Reported SGN expenses are projected to be approximately 14.5 to 15 percent of revenue and include about 40 million of additional costs in the quarter to support labor disruption activity. Operating margin is expected to be 5.9 to 6.5 percent, and adjusted EBITDA margin is expected to be 9.6 percent.

Yeah, thanks, Jeff. A couple things. One is we have developed over and invested in over the past two years technology and operating model to be able to support strike events. That system is being used not just in the strike events that we're doing now. We also used it in the strike that we supported in the fourth quarter. We have a dedicated strike team. It includes sales down into leadership roles and operations roles for very large events like what we have now. You have resources coming from across the company and from external sources as well. So we have a playbook for how we bring those resources on seamlessly. They're trained. We have operating procedures against it.

So we really have built a system so that we will have as little disruption to our core business as possible when we're supporting these types of events. Given the magnitude of what we've supported in the first quarter, we have moved many, many corporate resources on to support this. It has had some marginal impact on some of our core business. But really, relative to the size of events, the playbooks and everything that we've put in place over the past two years is working incredibly well.

Okay, that's helpful. Shifting gears a bit, I know the stock market's a bit jittery about AI disrupting a bunch of different businesses. And, you know, specifically with your company, I think some of the recent stock pressure might have been because of some fears on your language translation business. Can you talk a little bit about that in terms of what you think the risks might be and how you're countering them?

Yeah. And just as a reminder, for our language service business, it is focused on clinical healthcare settings. And that, by government regulation, is required to have a human interface and a human providing that service. Our capabilities are tech enabled, but we have humans who are delivering that, which allows our clients to be able to comply with federal laws. So we really have been focused much more on the clinical side of it. We look long term. This is an important service to be providing to patients and for healthcare systems. The clinical setting is also higher risk, so beyond it being regulated, it's not an area that we have had any clients coming to us and saying, you know, I want to look at, you know, AI as one of the areas that I would want to focus on in the clinical setting.

We have had conversations around how do we use better AI enablement, both within our technology that is connecting the patient to all these medically trained interpreters, and we've also had clients who are looking at the overall patient journey and really wanting to ensure that they have some continuity in that patient journey outside of the clinical setting. So going from admitting into the clinical setting into discharge. So my prepared remarks, I talked a little bit about what we're doing in terms of investing in AI enablement for us to be able to play in a broader part of that journey where you don't have that mandate and regulation to be able to have the human providing the interpretation.

Yeah, so a couple of things. One in terms of the supply that we get, and these are very, you're having two simultaneous indefinite events happening. And so from a supply standpoint, we have, you know, crisis workers that are known to us that are coming in for these events. We have some that are new to us. We engage suppliers in these events as well. And so, you know, we might have some travelers, you know, clinicians who are typically travelers come in or per diem, and some that really focus on supporting these types of labor disruption events. So you're going to get a little bit of, you know, a mix in terms of the clinicians that are coming in.

We have had very, very high fill rates in both of these events. So we have had access to great supply to be able to support these clients. We've also been able to use not just what we've built in our event management system over the past two years, but what we've done over the past three years in being able to recruit faster, and we've used our AI recruiter in these events. We've been able to not just fill at a higher level, we've been able to fill much faster for clients. In terms of the relationship then that we have with these clinicians after this, we have great experiences with them, and so we would view this as an opportunity for them to continue working with us, whether it's supporting future labor disruption events or coming and supporting as a traveler or a per diem type of role.

So our contract with Kaiser goes through the end of this year. We expect them as part of their normal governance process to go through an RST this year. We have been very busy with them in the beginning of the year, and we have a very strong, deep, standing partnership with them.

Yeah, so for those that haven't been tracking, this afternoon the latest visa bulletin was released. So the rest of the world advanced four months to October 1st of 23, and the Philippines advanced two months to August 1st of 23. That was more progression than we had expected in this visa bulletin. So we expect, and we've talked about this in January, that we expect mid-teens growth in 2026 from international. That's a higher margin business for us. And so, AJ, think about this, that this would help us particularly kind of at the end of this year going into 2027.

It is Brian, too. I think we, you know, with some of the other restrictions that were put in place late in the fourth quarter and beginning of this year, this is definitely a positive because that's a counterbalance to several countries where we do recruit from that are potentially on a pause right now. The ways we're going to bring them in is they're from different countries, but also as those dates move forward, we have a lot of supply in both the Philippines and other markets. And so anytime you see that date move forward, it's going to be positive both year and long term.

Now, if you look at some of our guidance for the nurse business in the first quarter, you actually continue to see, you know, strong support for the core business. And so the way that we have built our ability to support strike also enables us to continue to support our core clients. And we can also, in a unique way, because we have transparency, ensure that those clinicians do not get pulled off from our core clients as well, Kevin. So we've been able to do both simultaneously, and you see that in our guidance for the first quarter. When we look forward to the second quarter what we would expect to see in the second quarter in our nurse business is the normal seasonal patterning that you have after winter orders We had healthy winter orders this year So anything that you would potentially see in the second quarter like the We have Line of Sight 2 right now would really be more reflective of that Given that these are both indefinite strikes that have been going on for some period of time it really hard to predict you know what would happen in the second quarter in terms of as they get back to kind of business as usual what that looks like But we're not seeing really any meaningful impact in how it enabled us to be able to support and staff our core clients.

Yeah, I just added, I mean, we've talked about the last few calls that when it's still an attractive market, clinicians want to travel, and when there's the right opportunity, priced the right way, we're able to pull supply in and fill jobs quickly. You can imagine these types of events, you know, are attractive to nurses that want to fill them, but that doesn't mean there still aren't a lot of other attractive opportunities.

Geographically, you know, these are kind of concentrated in two places. Particularly in California, you have to be California licensed to be able to work one of these, and so there's a large pool of talent that may not have that license that's working on other assignments as well. So, we can, in this case, again, it's a large market, and this can be an AMN strategy for us.

And Kevin, the other part that I would add is you don't have as much certainty when you're going in and working a crisis like this that you would have if you were doing a 13-week travel assignment. So it really is a bit of individual preference about am I going to potentially take something that, you know, would be higher paying but would be, you know, not – you have risks that you may not actually get days or hours. versus something that you had, you know, more structure around how long the contract was.

Yeah, think of it as, and this has been a consistent theme really for some period of time, if you have an order that's priced right, it gets filled. And so given, you know, how fast you have to build a workforce in a crisis, there's a very strong transparent market around what that looks like. So you typically get it priced right so that you can fill and stand up your workforce. In our non-strike business, if you have orders that are priced right, they're getting filled. So the same corollary holds true. Outside of strike, you might have systems that have an ability to wait a week or wait two weeks to see if, you know, an order gets filled, and then they can increase price.

When you're trying to staff a crisis, you don't have some of that same flexibility.

Yeah, and we've had some clients, you know, where they have, where the demand is strong enough and the need is urgent enough, and as they adjust price, to Carys Point, we fill those orders very quickly. So we have real-time data around that and continue to educate clients. And I think as you're, as we talked about the prepared remarks, as you're seeing more normalization in hiring trends by hospitals, so they're, you know, kind of going back to the kind of pre-COVID normalized levels of hiring and attrition, they're going to, you know, typically find a place where they may have more urgency on trying to fill roles. And that's typically where you might see more flexibility on pricing, and when that happens, we can fill those jobs.

So I think we've been at a point of stability now for several quarters, and I think that the next leg from history would be that you would start to have clients starting to think a little bit differently about how their models around PERM and use of contingent labor and that flexibility and the cost tradeoff there. And with that, it drives more constructive conversations about what type of rate is needed to be able to fill the right mix of jobs for them.

It's a separate dynamic. It is not AI. And so the space that we're in in language services is protected by government regulations requiring human interpreter. What we are seeing in terms of the pricing pressure is really an aggressive competitor consolidator that we talked a bit about in 2025 coming in that put pressure on. We were very agile in responding. We have developed and we now have in pilot a new service model that can compete against that. We have it in pilot with a couple of clients. And so that really is in response to a competitive environment. And the secondary thing we had in 2025 is you had, you know, the impact of tougher immigration policies on the industry.

So those really were the two factors that we saw in 2025, but they are separate and not related to anything from an AI standpoint. We do believe not just for this business, but for all of our businesses as you heard in our comments and some of the answers to our questions. We think AI can be a creative to us. We're using it in our client facing technology, in how we automate our own processes, and how we support our recruiters. And so we think that AI can be very helpful to us in terms of helping productivity and speed and things that are really important in our business.

Sure. Yeah, we tried to give some of that in the – both in the release and the prepared remarks. So you can, for example, the total revenue, you know, again, if you can take that range and you were to strip out the $600 million that we put in, you know, that's going to put you in the $625 to $640 revenue range, you know, completely excluding anything related to labor disruption. And then on the gross margin, the 23.5 to 24, we said there's about a 300 basis points drag related to that. So you can, if you kind of exclude that, you're looking at somewhere, you know, more in the 26.8, you know, close to 27% range.

So not, just slightly down from the, from the fourth quarter. And then the underlying SG&A would be running in the 130 to 135 range. So they can kind of, you can kind of work through the math on that. And that's adjusted SG&A to, I'm going to refer to what the underlying adjusted EBITDA would be. It's pretty similar to what we had in the fourth quarter when you strip out strike, and that's the run rate we're at right now.

Yeah, I mean, I guess I'd say to start with the, you know, we expect to, through this year, we talked about to start to see, you know, recovery in year-over-year growth. We have a couple businesses, you know, like Search and International, that in the first quarter we expect to be, you know, at either flat or up in the first quarter, and at different quarters throughout the year, we start to regain positive growth. So that's why we said really that longer term algorithm as you move into 2027, you're kind of lapping these different quarters of getting back to positive growth. And then we would expect, you know, through each of our segments, not disproportionately different rates of growth, more in that we gave a 4% to 6% range.

I don't think we'd expect any to be significantly above or below that range. But as we see a more normalized environment for our core staffing businesses, we think that between volume and rate, you know, an environment we're going to see continued increasing demand for healthcare consumption. I think that's a reasonable expectation for the top line. And then some modest improvement in mixed driving gross margin, but really the other big factor is the ability to drive operating leverage as we see continued top line growth. I think the initiatives we have, the investments we've made over the last several years and really upgrading a lot of our core systems, now as we continue to invest in operational improvement and starting to embed AI more into a lot of our operations, we're seeing, you know, it's very early still, but we're already starting to see some of the benefits of that and how we can scale at a lower cost.

And so we're confident that as we get into the out years that we'll be able to generate a nice incremental margin on that top-line growth, and that's how you get to the double-digit EBITDA growth rate that we think we can achieve longer term.

Sure. Hey, Toby. Yeah, I think that you characterized it well to start there. As Kerry mentioned earlier, as the winter orders come off in nursing, it would be very normal to expect to see a decline sequentially from Q1 to Q2, and I think we're still in the middle of this quarter, but as we look at the demand and booking trends, We would expect to see that happen in the second quarter, but pretty consistent with a normal sequential decline. Allied has been performing very well. The team is firing on all cylinders. They have some typical decline just on the school's part of the business as you start to move into the summer. But that segment overall, and then international, we would expect to see growth sequentially end year over year in the second quarter.

But the net of that, we would expect to be down sequentially in the second quarter for nurse and allied. Conversely, for the physician and leadership segment, we typically see growth in locum tenens from the first to the second quarter. And with the trends we're seeing in interim surge, we'd expect the same. So that segment should be up. It will partly offset the decline in NURSE and Allied, and then the technology workforce solutions. As we talked about language services, some of the changing strategies we have there has allowed us to start to regain some footing on winning new contracts. We've had several wins in the first quarter here and more under contract. I think that, and then we had some headwinds in Q1 early in the quarter with some of the weather impacts.

So we'd expect to see a little better performance in language services in the second quarter. So the net of all that, it probably comes out, it takes out, you know, strike from that. This is probably a pretty flattish second quarter would be a reasonable expectation, just if we have our normal kind of seasonal behavior along with some of the momentum we're seeing in certain businesses.

Yeah, we're basically trying to provide it up to, you know, kind of where we are today as best we can to say that. So the extent that they continue, obviously, you know, all parties are, I'm sure, working through trying to get these resolved. But if they continue longer, then, you know, we've historically not wanted to try to predict whether these happen or how long they'll be in duration. So we'll only really give what we can see in front of us right now.

Yeah, if you – the data that Randy puts together would show something relatively similar, Toby, to that report that you mentioned. We've already started having some clients, particularly coming up from finance and CFOs, starting to really look at that and looking at contingent labor as being an attractive opportunity for them, not just on a relative cost-based basis. But you get flexibility along with, you know, the cost parity that you're mentioning. And so over time, what we really need to start seeing in 2026 is increases in bill rates, right? So we've talked about, you know, stabilizing bill rates that we saw throughout 2025. What we really would want to see in 2026 is increases in bill rates to reflect some of the underlying Natural increases that you would see in terms of wage expectations.

We started to see that in pocket, but we'd want to see it more consistently.

So clients are very grateful, and it's a very important service that we provide to clients. We only provide support to our strategic clients just because of the intensity of what it requires to be able to deliver. However, from a clinician standpoint and from a union standpoint, these solutions give the unions the ability to strike. From a legal standpoint, if there was not an ability to be able to support patient care, it would take away the ability for them to strike. So we look at the solution set for us as a really important service, not just the clients, but broadly speaking to clinicians and at the core of it to support continuity of care. So these opportunities to support a crisis is very attractive to a group of clinicians.

So we think it enhances our ability to offer a wide range of roles the different clinicians may want, and for us to be an important connector for them to these opportunities.

I'm doing revenue per day would be hard because you can't think of these strikes as being static. They're dynamic. You might have some of their union members coming back at different points in time. So it's not kind of a take the number and try to do an average number. Yeah, the needs are dynamic, so it doesn't – it's probably directionally, I can understand we're going to take that approach, but it's not – that would be oversimplifying in terms of going forward.

Well, I like the way you think, but I think we want to be mindful that there are external forces, whether it's economic changes that can influence our industry and just the unknown of the future. I think that we feel like that's a reasonable way to approach a longer-term market. We'll always be striving, of course, to exceed that, and a big function will be just our ability to gain share over time as well. I think we're well-positioned to do that, but we also want to make sure. I think part of the point of providing some of that long-term is just that we do think we're moving back into a market that is a little more in a stable mode, and the way we interact with our clients, creating opportunity for us to grow with them.

And the ability to drive incremental margin over time as well. So again, we'll always strive to obviously deliver the best results possible for our shareholders, but with it, there's just enough unknown in the future. I think it's more appropriate to be prudent in any type of expectations we set.

Hey, Mark, also because we really only provide guidance one quarter out, I think giving a framework that is longer than that is also helpful, particularly given, you know, the comments that we talked about last year around stabilization and some of the factors that not only you mentioned, but also Brian talked about.

Yeah, thanks for the question. I'll start with the second part of that on the CapEx side. We had said for 25, we were expecting to spend somewhere in the kind of 40 to 45 million range. We ended up at just in the high 30s. We would still expect to be in that low 40s, low to mid 40s range. The higher capex we had for several years in part was it gave us the ability to really upgrade a lot of our systems that had some technical debt and also advance some of our systems like our ShiftWise VMS. So the good news is, you know, with a lot of that work done, it's allowing us even at this lower level of CapEx to deploy a much larger percentage into enhancements and innovation, including some of the AI initiatives that we've been accelerating.

If we continue to see really good returns, we have the ability to invest more, and that's, I think, a competitive advantage for us. I think a lot of the competition is probably having to pull back more, and this gives us an opportunity to continue to lean in and invest more in our systems. But we think at that level, we're able to still advance our strategy.

On the cash flow side, you'll see for 2025, we actually had a very high conversion of our EBITDA to free cash flow. Got two influences there, but there was some very, very favorable working capital components to it that puts us at a higher level than we'd normally see. Historically, we've talked about free cash flow to EBITDA somewhere in that 60% to 65% range, well above that in 2025. You'll see some of that flip the other way in 2026. We'll likely have more of a working capital drag in the year. So if you looked across the two years, you know, we'd expect to be up in that 60% or higher range, but it would not expect to be at the same level in 26 as we've had in 25.

But we'll still have a nice, healthy, continued free cash flow, and that is allowing us to – we've now, at this point, paid off our revolver, and we can invest in the business and continue to bring our leverage ratio down with longer-term targets as you get below 3. With the guidance we've given for the first quarter, we'd expect to be below three on an LTM in Q1. And so, we're feeling very, very positive about our balance sheet position and, again, the ability to invest in the business.

And then, Kerry, just, I guess, any commentary around pipeline for new business in NURSED and Allied? And, you know, I guess specifically what are you seeing in terms of volume of opportunities this part in 26 versus maybe what you saw last year and any kind of trends you'd call out? Thanks.

Number one, we have a healthy pipeline, and it's broad-based, and so it's relatively evenly split, maybe with a slight bias to vendor neutral in the pipeline. We started to see a theme in 2025 that we talked about that even if there was RFPs going out, there was a bias towards incumbency. That kind of cuts both ways. It helps us from an incumbency standpoint, but you have to have a pipeline sufficient enough to get enough of those opportunities through. As we left 2025 and into this year, we have seen wins both on the MSP side and on the vendor neutral side, which we would expect to come on sometime in the next quarter, quarter plus, which will help us on a volume standpoint.

We also have sales teams that are focused on direct opportunities, which we've seen momentum on both in 2025 and as we go into 2026, as well as cross-selling to our existing client base, which we think continues to be a significant opportunity for us. We got traction on that in 24, 25, and into this year. But we see a balanced and healthy sales pipeline as well as conversion of that pipeline as we left last year.

Yeah, I'll start. I mean, I guess I'd say generally we have a pretty similar view for the year. I understand how the guide for these are two kind of unprecedented events in terms of the size and duration, and so it has this impact on the first quarter. But if you're going to look through that, we've tried to give enough color and what the underlying business trends are looking like. So overall, it's pretty consistent with what we expected coming into the year, which is a good thing. We have good conviction on our growth strategy and seeing good friends almost across the board here. And for those that aren't, we're actively working on that. So I wouldn't say if there's any significant change.

And again, if you take the Q1 lesson of the taking out labor disruption, it's pretty aligned with, I think, overall with where consensus is, and that is probably driven by the commentary we've given before. And the trends through the year, I think, are still pretty consistent with what we've shared.

Yeah, the only ditto on what Brian just said, as you think about STRIKE, and I know we've talked about this in a number of different ways, but it is incredibly important to clients to provide this. And so beyond the numbers, it was very important to the clients that we're supporting that they can provide continuity of care. The second piece for us is, and it gets a little bit back into what Brian was just talking about in terms of, you know, our revolvers at zero right now. It's an important frame around how we think about cash and our ability to, you know, continue to get our leverage ratio down. So that outlook did change with this, Jack, and just the magnitude of it.

And I know we talked about that, and Brian talked about it in some of the prepared remarks that we had. But the third piece is, it really, we had confidence in everything we were building and automating and our ability to really deliver in a high-demand environment in a different way. To be able to do these events simultaneous with supporting our core business at a high level really was a test for us of everything that we've built over the past three years. And so that gives us even a higher degree of confidence as demand in the industry comes back on how we can deliver on that.

Yeah, the other thing that's kind of exciting as you've gone through these events is, as Kerry mentioned earlier, some of the deployment of AI tools, because you're having to spin up a significant amount, obviously, of clinical workers in a very short order, and then just all the logistics and operational support that goes behind that. So we've, you know, the technology team has done a fantastic job partnering with the business to advance probably faster than we would have otherwise, some of our AI recruiting capabilities, some of our reporting capabilities. And so that work, although, you know, focused first on labor disruption, is extremely transferable to our core business. So, you know, that is one, I think, opportunity that we're just getting shining a light on more that we think will help us as we go through this year, and it will accelerate the pace, not only in our recruiting, but some of our other operations.

And that's the team's getting very excited about that.

Yeah, and the last part that I put, I know this is a call about numbers, and there's a lot of them in this. Our people are extraordinary. And so we talk about our culture being different, about it being something that is incredibly important to how we go to market, how we serve clients. So if you spent one minute with any of our teams that are supporting these events, you would have a very clear view about how that is incredibly differentiating for us.

Thank you for your interest in our company and for the opportunity not only to talk about 2025, but also to get a sense of our very busy start to 2026. So thank you for your interest.