AMN - NYSE

Good day and thank you for standing by. Welcome to the AMN Healthcare Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Randy Reece, Senior Director of Investor Relations and Strategy. Please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's third quarter 2023 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com at the conclusion of this call. Various remarks we make during this call about future expectations, projections, trends, plans, events or circumstances constitute forward-looking statements. These statements reflect the company's current beliefs based upon information currently available to it. Our actual results may differ materially from those indicated by these forward-looking statements because of various factors and cautionary statements, including those identified in our most recently filed Forms 10-K and 10-Q, our earnings release and subsequent filings with the SEC. The company does not intend to update guidance or any forward-looking statements provided today prior to its next earnings release. This call contains certain non-GAAP financial information. Information regarding and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and on our financial reports page at ir.amnhealthcare.com. On the call today are Cary Grace, President and Chief Executive Officer; and Jeff Knudson, Chief Financial Officer. I will now turn the call over to Cary.

Thank you, Randy and welcome everyone. As the healthcare sector tries to find post pandemic normal for demand and costs, managing labor costs while building a sustainable workforce has been a major theme in healthcare for 2023. Amidst extraordinary staffing challenges during the pandemic, healthcare employers struggled to keep up with hiring needs and used contingent labor to bridge the gap. Healthcare organizations have made significant progress in hiring permanent workers and this has been felt across the staffing industry in the form of lower demand for travelers. We anticipated a market reset was coming, but it has been deeper and more sustained than we and the rest of the industry expected. At the same time, as clients think about building a more sustainable workforce, our broad and deep set of technology enabled talent solutions has positioned us well to support clients as they redesign their own workforce mix and day-to-day operations. Third quarter revenue was in line with our expectations. Consistent with what the market is experiencing, third quarter revenue was 14% lower than Q2 and down 25% year-over-year. We expect the rate of sequential decline in revenue to be a mid-single digit percentage for Q4, a slower decline than the prior two quarters. This outlook calls for a stable to slightly higher number of nurse and allied travelers on assignment, offset by lower bill rate and hours and seasonal declines in other businesses. While staffing demand varies from client-to-client, most clients are asking for help with more than temporary staffing. To that end, we have made solid progress on our four key priorities that we discussed at the beginning of the year to extend our leadership in Total Talent Solutions. First, we have reinforced our position as the preferred partner to help healthcare organizations optimize their workforce strategy. We began the year with a strong push to re-establish more proactive relationships with clients after three years of crisis management. To serve all clients current and future needs, AMN has established an accelerated cadence of rolling out enhancements and innovations in our technology platform that will continue through the end of this year and beyond. After focusing on serving our MSP clients in a time of crisis, we are back to serving the broader market with the entirety of our solutions set. We are doing things that will greatly help us and our clients over the long-term, true innovation. Our connection with clients is accelerating in several ways. At the front end, we are making it easier to do business with AMN. This means empowering our client facing team members with greater integration across our -- solutions. We have strengthened our ability to deliver multifaceted tech enabled workforce solutions that simplify labor management and provide a variety of options for making the labor force more flexible and cost effective. Clients will be able to access our full set of solutions through our better integrated sales and service organization. This effort to simplify our client relationships includes a stepped up branding initiative that aims to drive greater recognition of the breadth and depth of our presence in the marketplace for healthcare workforce solutions. Recently, we announced that Staff Care and Merritt Hawkins have been consolidated under the AMN Physician Solutions brand. As we continue to integrate into the AMN brand across our businesses, we expect to produce many benefits for our healthcare professionals in current and prospective clients. Second, we have made strategic moves to ensure AMN is the preferred employer for healthcare professionals and team members. We have delivered greater workplace flexibility, aligned pay and benefits with market benchmarks, launched new career planning and mentoring support and reinforced our industry leadership in diversity, equality, equity and inclusion. Our team members are gaining empowerment from improved ease of processes, faster, more responsive team communications and the integration of AMN Passport, our industry leading mobile app into our workflows. Passport continues its strong growth of registrants and average daily users. This growth is driven by the increasing value we are building into Passport for healthcare professionals. Our roadmap for Passport is to broaden its reach across the spectrum of healthcare occupations and job types. We are excited about the power that Passport is bringing to healthcare professionals and see it gaining momentum every day. Passport is only part of the promising results we have produced in improving the credentialing process and candidate experience. Third, we have strengthened our portfolio of talent solutions in many ways with our strong commitment to technology enablement of our ONE AMN initiative. We are more digitally connected. AMN already has launched powerful integrations and strong implementation and support capabilities that are essential to integrating our solutions into bigger tech stacks and into total workforce solutions. Over the next few quarters, our transformative efforts will make the value proposition across our solutions come to life. A major milestone in our digital acceleration is the Go-Live this month of ShiftWise Flex, the latest generation of our market leading vendor management system that is trusted by many of the nation's largest health systems. The newly reengineered platform manages a full-range of program management options as well as clinical and non-clinical labor sourcing options from agency staffing and independent contractors to float pool and direct hire. ShiftWise Flex empowers users with intuitive dashboard, real time data-driven labor market insights, powerful supplier support and Passport integration for AI powered talent matching, credentialing and candidate self-service. ShiftWise Flex is here at the right time as health systems seek faster and more powerful and transparent ways to develop sustainable workforce agility that delivers great outcomes for patients and their caregivers. And Fourth, we have continued to generate strong cash flows and put capital to work. Our capital expenditures this year are on track to reach a record high $100 million, focused primarily on innovations that we expect to bring attractive long-term returns. Last week, we announced plans to acquire MSDR, which will bolster our locum tenens growth strategy and present in attractive physician specialties. Accelerating our organic locums growth with an acquisition has been a priority for us. And the expertise and track record of MSDR are strong complements to and growth accelerators for our existing locums business. Our strong balance sheet and cash flows enable us to make acquisitions that improve the value we bring to all stakeholders. Across the AMN organization we are excited to have reached the stage of our progression. I have been honored to lead this extraordinary group of people from identifying needed changes to developing a growth map, accelerating our pace of innovation and delivering results, while simultaneously managing through a significant post pandemic workforce reset. We have turned the sales engine back on for all market segments and have been rewarded with some early traction and wins. We are positioning AMN to win across all market segments as the market recovers. We are confident that the long-term investment thesis for AMN is attractive. The healthcare workforce faces structural constraints serving demand growth for care driven by an aging population. We are convinced that our tech enabled services model will win and AMN is well positioned with valuable clients who need our depth and breadth of solutions. While the overall market continues to be challenging, our pace of positive change is accelerating and AMN is doing the right things to embrace all levels of our very large market opportunity. Now I'll turn the call over to Jeff, who will review our latest financial results and outlook.

Thank you, Cary, and good afternoon, everyone. Third quarter revenue of $853 million was near the high-end of our guidance range driven by outperformance in our Nurse and Allied segment. Consolidated revenue was down 25% from the third quarter of 2022. Sequentially, revenue was lower by 14% as the operating environment remained challenging with clients maintaining lower demand levels and lower bill rates within Nurse and Allied and BMS, as well as lower volumes across Physician and Leadership Solutions. Gross margin for the quarter was 33.9%, slightly exceeding our guidance range. Compared with the prior year period, gross margin was up 10 basis points. Sequentially, gross margin increased 60 basis points primarily due to the release of a Workers Compensation reserve. Consolidated SG&A expenses were $163 million or 19.1% of revenue compared with $215 million or 18.9% revenue in the prior year period and $202 million or 20.4% of revenue in the previous quarter. Third quarter SG&A expenses were reduced by several favorable items that amounted to a benefit of $5 million. The decrease in SG&A expenses year-over-year was primarily due to lower employee expenses stemming from the current demand environment and lower bad debt reserve. Sequentially, lower employee expenses driven by lower business volumes and a decrease in non-recurring expenses led to the significant decrease in SG&A expenses. Adjusted SG&A which excludes certain non-recurring expenses and stock based compensation expense was $157 million in the third quarter or 18.4% of revenue, compared with $204 million or 17.9% of revenue in the prior year period and $170 million or 17.1% of revenue in the prior quarter. The increase in adjusted SG&A as a percentage of revenue both year-over-year and sequentially was primarily due to lower revenue. In the third quarter, Nurse and Allied revenue was $573 million, down 31% from the year ago period. Sequentially, segment revenue was down 17%, driven by the continued trend of lower volume, hours and bill rates. Average bill rate was down 10% year-over-year and down 7% sequentially. Year-over-year, volume was down 19% and average hours worked were down 4%. Sequentially, volume was down 12% and average hours were down 1%. Travel nurse revenue for the third quarter was $384 million, a decrease of 34% in the prior year period and 20% from the prior quarter. Allied revenue during the quarter was $168 million, down 12% year-over-year and 8% sequentially. Nurse and Allied gross margin during the third quarter was 27.5%, which increased 50 basis points from the prior year period and 80 basis points sequentially. A benefit of 40 basis points came from the release of a Workers Compensation reserve. Segment operating margin of 14.5% increased 60 basis points year-over-year due to higher gross margin and lower bad debt expense, partially offset by lower SG&A leverage. Sequentially, operating margin decreased 40 basis points as the improvement in gross margin was more than offset by lower SG&A leverage. For our Physician and Leadership Solutions segment, third quarter revenue of $160 million was down 9% year-over-year and sequentially. The decrease in revenue year-over-year was primarily due to lower performance within Interim and Search while sequentially the revenue fall was driven by lower volumes across all three businesses in the segment. Locum tenens revenue in the quarter was $113 million, a 6% increase from the prior year period. Sequentially, locum's revenue was down 8% driven by lower volume primarily in non-CRNA positions. Interim leadership revenue of $31 million decreased 35% from the prior year period and 15% from the prior quarter. Search revenue of $16 million was down 25% from the prior year and down 10% sequentially. Interim and Search revenue were down year-over-year mainly due to lower demand as cost management remains a prominent factor for healthcare assistance. Gross margin for Physician and Leadership solutions was 33.4% down 60 basis points year-over-year mainly due to an unfavorable revenue mix shift partially offset by improved gross margin within locum tenens. Sequentially gross margin was down a 170 basis points primarily due to lower gross margin in locum tenens. Segment operating margin was 13.5% which decreased 10 basis points year-over-year. Sequentially operating margin decreased 150 basis points primarily due to lower gross margin. Technology and Workforce Solutions revenue for the third quarter was $120 million, down 11% year-over-year and 4% sequentially. Language services revenue of $66 million increased 20% year-over-year and 4% sequentially. VMS revenue for the quarter was $38 million, a decrease of 37% year-over-year and 18% sequentially. Segment gross margin was 65%, down from 75.6% in the prior year period, primarily due to an unfavorable revenue mix shift and lower gross margin in Language Services. Sequentially, gross margin fell 170 basis points as margin improvement within Language Services was more than offset by the revenue mix shift. Segment operating margin in the third quarter was 42.1% compared with 52.7% in the prior year and 44.1% in the prior quarter. The decrease in operating margin was driven by lower gross margin compared with the prior periods. Third quarter consolidated Adjusted EBITDA was $134 million, a decrease of 27% year-over-year and 17% sequentially. Adjusted EBITDA margin of 15.7% was down 30 basis points year-over-year and 60 basis points sequentially. The favorable items that impacted SG&A expenses and the workers comp reserve release increased adjusted EBITDA margin by 90 basis points. Third quarter net income was $53 million, down 43% year-over-year and down 13% sequentially. Third quarter GAAP diluted earnings per share was $1.39. Adjusted earnings per share for the quarter was $1.97 compared to $2.57 in the prior year period and $2.38 in the prior quarter. Day sales outstanding was 61 days, 8 days higher than the prior quarter and two days higher than the prior year, primarily due to expected billing delays with the implementation of a new back office system in the quarter. Operating cash flow for the third quarter was $172 million and capital expenditures were $30 million. As of September 30th, we had cash and equivalents of $29 million, long-term debt of $945 million including a $95 million draw on a revolving line of credit and a net leverage ratio of 1.4 times to 1. Moving to fourth quarter 2023 guidance, we project consolidated revenue to be in a range of $790 million to $810 million, down 28% to 30% from the prior year period. Guidance does not include the pending acquisition of MSDR, which we expect to close later this quarter. Gross margin is projected to be between 32.3% and 32.8%. Reported SG&A expenses are projected to be 21% to 21.5% of revenue. Operating margin is expected to be 5.9% to 6.5% and adjusted EBITDA margin is expected to be 12.5% to 13%. Sequentially, adjusted EBITDA margin is expected to be lower due to lower gross margin from a revenue mix shift toward lower margin businesses and less leverage over SG&A with lower revenue. Additional fourth quarter guidance details can be found in today's earnings release. Now operator, please open the call for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Trevor Romeo of William Blair. Please go ahead.

Hi, good evening. Thanks so much for taking the questions. First one, just on the Travel Nurse and Allied business. I think we're all just kind of trying to find out where the bottom is for the market. I think you talked about fourth quarter reflecting a tapering of that downtrend. I guess as you see it here, do you think the Q4 run rate will be the trough and are there any data points you can point to that kind of give you confidence in that stabilization?

Hey, Trevor, thanks for the question. And I know we talked a bit about this in some of the opening comments. Let me frame out a bit of what we're seeing from clients in the market and then I'll let Jeff fill in a little bit with some of the questions about what we see in Q4 and potentially going into the early part of next year. We're at a point with clients where it really is client-by-client where they are. I think there's a number of public company CEO comments over the past week that have supported the tremendous progress that the healthcare systems have made in replacing their permanent workforce throughout the course of this year. And we certainly have both partnering with our clients on that but seeing that. And so if you look at the travel piece, we have clients who really have progressed to the point that they're now talking about how do I support future volumes and we have clients who still have some work to do in getting their contingent labor back to more normalized levels. Broadly speaking, we think that the industry will be back to by the end of this year what we would consider more normalized levels. I think that's reflected in some of the guidance that we gave about traveler volumes. In Q4, the bill rates is slightly different, so what I would say is we've seen tremendous progress getting back to what we would consider more normal rates as we exit this year but we still have some clients who are working on what their overall levels are. Jeff?

Yes, Trevor, I would just add. When we think about the fourth quarter, I would say on balance the winter needs orders played out as we thought they would. There was a slight headwind from some later start dates and lower bill rates than we had expected and then within the client dynamics, that Cary spoke about, I would say that most of our clients, we did see sequential increases in Q4 over Q3 and their utilization, but there were several large clients that were continuing to reduce utilization with the progress they've made on hiring and retention. So, as we just look at the pace, where they're pacing relative to those that behave that as we thought they would, there could be room for them to improve further in the first quarter and reduce their utilization which could lead to Nurse and Allied, being flat to slightly down in Q1 over Q4. From a bill rate standpoint, in Q2 and Q3 we saw sequential declines in the bill rate of about 7%. The expectation is that bill rates will be down 4% in Q4 over Q3 and that could continue to move low single digits moving into next year downward.

Okay. Thank you, Jeff and Cary. That was helpful. And then for my follow up, I wanted to touch on the MSDR deal a bit more. Could you maybe tell us any more about how that business has grown historically beyond just this year, I think, looks like about 50% growth based on your press release and what kind of growth you'd expect from MSDR going forward and maybe how much opportunity you'd have for both revenue and cost synergies in that deal?

Yes, let me give you a little bit of how we think about MSDR, particularly in the context of our broader AMN business. I know we have talked for some time about Locums being one of our MNA priorities. And so, we love the market, we love the growth opportunity that we see both in terms of just our clients very focused on revenue growth but also just some of the workforce structural changes that you see within the physician space making more than interested in a Locum's type of role. For MSDR in particular and I'll let Jeff talk a little bit about what we've seen in terms of some of the numbers and certainly they've had very strong historical growth. What's very compelling to us beyond their profile across a number of specialties that we are not as strong in, is that we have really, we think, two significant synergy opportunities. The first one is while they have a consolidated back end platform. They still have some opportunities between their two organizations for front end synergies that we're going to be focused on in 2024. And the second part, Trevor, is if you look at our Locums business today, we are more constrained by supply than demand. So what's very attractive both for MSDR and for AMN is to be able to put the strength of their supply particularly around a number of very key specialties into our already existing demand.

All right. Thank you very much.

Alright, thank you. And one moment for our next question. Next question comes from the line of Kevin Fischbeck of Bank of America. Please go ahead.

Great, thanks. I guess clearly the market is going through some pretty significant changes right now and it's hard to kind of see where share is moving but I guess from your perspective do you feel like you guys are gaining share or losing share over the past couple of quarters into Q4?

Yes, Kevin, let me kind of take it in two parts that I've talked about both of these in the past couple quarters because I think that these are the two elements that we look at relative to the overall share piece. So the first one is we talked a lot about the industry had this pent up RFP cycle for clients coming out of three years of crisis management. That's not AMN phenomena, that was happening across the industry. So if I look at where we are in that RFP cycle for clients, we're at the tail end. So we still have a couple of clients both this quarter and into next quarter that we would consider kind of the tail end of that bigger COVID RFP cycle. If you look at our RFPs going into next year, it is a significantly smaller number of clients that would be going into RFP. So that's been the first piece that we've been very focused on, particularly coming out of COVID and ensuring that we were aligned and realigned with our clients coming out of really a generational crisis. The second piece is on sales, which is incredibly important around just- not just retaining your clients but growing. I talked last quarter about how we have turned on sales after it was really effectively shut off during COVID and the growth that we saw in our pipeline which was quite significant, 300%, if we looked at kind of year-over-year, quarter-to-quarter, we have seen our pipeline continue to expand. That expansion is across MSP, VMS and all of our other solutions. At the same time that we have been continuing to build the sales pipeline we've seen the pipeline progress. So if I look at the indicators of where our share position is going, they are positive.

Okay. Could you just, I guess those two statements felt a little bit integrous to me. If you're saying you're largely through the RFP, but your sales pipeline is high. So what's the difference between the sales pipeline and then the RFP? AMN comment versus industry comment or?

Yes, I'm sorry, Kevin. So if we look at growth, one is, are you keeping all of your clients through this post COVID RPC cycle, thing one. Thing two is, are you continuing to grow on top of that? So we are doing both simultaneously. How are we ensuring that we get through this RP cycle, have a solid base with clients and then how do we continue to grow off of that, both with new clients and names as well as expanding existing client relationships?

Okay. And then can you talk a little bit about the types of services that are being increasingly asked for? Are we seeing a shift back to MSPs or are we still looking at VMS or partial solutions? What are we looking at in this new sales cycle?

We're seeing both. So we are seeing a healthy increase in our MSP pipeline. We are also seeing a healthy increase in our VMS pipeline. So the answer is, if you look at the growth that we've had and I say particularly over the past two to three quarters in our sales pipeline, it's coming from both MSP and VMS solutions.

Would you say that -- how does that compare to your current business specs? Is it more shifted to one versus the other?

You know, it's a good question. I don't know that there's a bias one way or the other. I think that we have become more client centric in how we approach a new client and so we probably had a slight bias towards MSP in the past and if you look at our approach now, we really look at it and say we want to participate fully in all of those markets. So as clients embrace MSP models, we want to be their first choice as clients embrace vendor neutral or other types of hybrid models, we also want to be their first choice.

Okay, great. Thanks.

Thank you. One moment for our next question. Next question comes from the line of Tobey Sommer of Truist Securities. Please go ahead.

Hey, good afternoon. This is Jasper Bibb on for Tobey. Just curious what you're seeing from a bill pay spread perspective? Do you see spreads continuing the narrow into the first quarter of 2024 or are you starting to see that spread compression stabilize a bit on some of your newer orders? Thanks.

Yes, Jasper, this is Jeff. I would say, if you exclude the workers comp benefit that we received in the third quarter, the midpoint of our gross margin guidance is down about a 100 basis points sequentially in Q4 over Q3. That's pretty equally driven, I would say, by a change in business mix shifting to lower margin businesses across certainly PLS and TWS, but we are seeing compression in the bill pay spread just given the lower demand environment on Nurse and Allied and that's a driver of the Q4 over Q3 change. And as we move into next year and certainly the early part of the first two quarters of next year, we wouldn't anticipate that to change from a bill pay spread dynamic standpoint.

Okay, got it. Yes, apologies if I missed this, but was there any strike planning or labor disruption work contemplated in the 4Q revenue guide? Like, I know there's been some union action that -- clients the past couple of months, but not sure if that's translated to anything from a revenue perspective?

Yes. There's about $2 million of Labor disruption revenue embedded in the Q4 guide and that number was right around a $1 million in our Q3 actually is a little less than that, so pretty immaterial both periods.

Okay, great. Thanks for taking the questions.

Thank you. One moment for our next question. Next question comes from the line of Brian Tanquilut of Jefferies. Please go ahead.

Hey, good afternoon. Hey, Carrie, I'll just follow up to Kevin's questions earlier. As I think about, cover, we cover the hospitals, right? And they're all still saying that they're still trying to reduce their use and spend on contract labor. And I know you, I mean in you're prepared remarks, you talked about kind of like a flattening or the stabilization of broader demand. So how should we be thinking about that? And you know what gives you the confidence that you're not losing a share in this environment?

You know, I guess what we have anecdotally heard from others is that what we've been experiencing is similar to what others are experiencing our industry. Obviously we work very closely with a number of suppliers. Broadly across a number of different clinical roles and so as we work with our clients around how they think about rebuilding a sustainable workforce. To your point, Brian, there was a significant focus around how do you bring down contingent labor, both in terms of the size, but also if you looked at the marginal cost of that labor relative to permanent hires, there was a historically high difference between that. So the focus I think was both on numbers, but it was also because you were at a point where you had a dislocation in terms of the marginal cost. If you look at what has happened subsequently, you've seen the marginal cost, partially because the marginal cost of a permanent hire has gone up, the labor inflation, but also the cost of contingent labor has gone down. As systems look at how they're going to really manage and be able to staff a cost effective full mix, it has become much more cost effective for them to bring in contingent labor for the Flex. Now is that true for every client? No, there are some clients that are still at relatively high contingent labor costs. There are other clients and some have been public about this even more recently who they're at a point where they look at it and say, hey, I need to actually build back volume and I can do this in a more cost effective way. So there's not a one size fits all answer. For a client, we have clients who are in different places. We have seen to Jeff's earlier comment. A number of our clients start to actually go back up, but we still have some very large clients who have targets that they would want to bring it down a little bit from where they are now.

Okay, that makes sense. Maybe Jeff, as I think about your fourth quarter guidance, right, so midpoint $800 million of revenue, you gave the margin there. So, you know, just a little over $100 million of EBITDA for Q4. Is that the right jumping off point to use? I mean annualize that and then put a growth rate on top of that? And then what are the other moving parts that we need to be thinking about as we think about 2024? I know you called out some of the- what do you call it? Discretionary bonuses that were not in the back half of 2023. So just trying to get any help but you can share with us as we -- try to model 2024.

Yes, Brian, so I'll list out a couple of tailwinds and headwinds off of that Q4 exit rate. So you know, certainly on the tailwind side we would expect continued growth in Language services, moving into next year that business was up 20% year-over-year in Q3. We'll obviously have the tailwind in locums from the MSDR acquisition which we spoke about earlier and then we saw the opportunity to capitalize on a pretty large sales pipeline. I would say just given ramp and other things, any new client wins would probably impact the second-half of 2024, much more so than the first half. And then, we still do have the opportunity to improve our internal capture within Nurse and Allied we're still a couple 100 basis points below pre-pandemic norms on that side. From a headwind standpoint, we talked about where certain clients are and that there could be further reductions in Q1, over Q4 levels. And then within Nurse and Allied we will have an impact on our international nurse business next year from Visa Retrogression. That will again disproportionately impact the back half of next year, but there will start to be impact in Q1 and Q2. We would anticipate that business to be down about $70 million on the top line year-over-year next year and that'll also pose a 30 to 40 basis point headwind to Nurse and Allied gross margins just from a mix standpoint. And then additionally, just given the performance this year, we do have very low levels of incentive comp in the Q4 run rate and that'll be about $5 million to $6 million of additional SG&A moving into next year per quarter that's not in Q4.

Jeff, if I add all that, I mean, are you still expecting growth in -- next year?

Yes. I mean, I think with just, I mean with the MSDR acquisition alone. Yes, there would be growth but you know off of the Q4 run rate, in Nurse and Allied, again if it's flattish to slightly down in Q1 then we would expect Q2 and Q3 to be seasonally lower off that Q1 base next year.

Okay. Got it, thank you.

All right. Thank you. One moment for our next question. Next question comes from the line of Jeff Silber of BMO Capital Markets. Please go ahead.

Hey, thank you, Ryan on for Jeff. Just looking at some of the industry data, the NCLEX pass rates up this year, some of the Visa stuff you just mentioned and then the burnout, how do you kind of triangulate those different factors for the outlook on supply governance next year?

Yeah, a couple of things on supply if we -- I'm going to split out Nurse and Allied with Locums. So if we look at Nurse and Allied supplies, so we look at just applications that we get, we are up significantly from pre-COVID levels. So depending on kind of what area I think 30% to 50%. above and so we still see very healthy supply. You know, part of the burnout challenge it actually -- these types of roles become attractive to clinicians who still want to stay and participate in patient care, but want more control over how they do that. From a locums standpoint we've had strong demand. You know you can take that year-over-year, you can take it since pre-COVID and so we are looking for more supply and I would say that's true of the entire industry. So as much as we've talked about the nursing shortage and then and the nursing burnout, the physician numbers are actually marginally worse. And so, that supply we think is going to be one that is MSDR is going add a lot of supply for us in that space. But it's something that we think is going to make the locums business attractive, particularly as we can keep more positions in, maybe in roles that they can have more control over.

Got it and then just on the physician bill rates, I know you put out a report recently about higher salaries for doctors. Would you expect the trajectory of the bill rate increase over the next, you know, couple years or so to mirror what we saw in Nurse or it would be a little bit more gradual on the way up and down?

We would expect -- if we just look at our RDF trends in locums this year that that would probably moderate going into 2024 than where we were at this year in terms of year-over-year increases.

Okay. Thank you for your question. [Operator Instructions] One moment for our next question. Next question comes from the line of Andre Childress of Baird. Please go ahead. Okay, I see Andre online, if you could make sure you're unmuted.

Maybe we'll come back to Andre.

Okay, Andre, if you could rejoin using the Call Me feature, we may be able to address your question. Seeing no questions, additional questions at this time, I'll go ahead and hand the call back over to Cary Grace, President, Chief Executive Officer. Please go ahead.

So, thank you on behalf of our entire AMN team who have the privilege of working with our clients and clinicians every day to positively impact healthcare. We thank all of you for your interest in AMN.