Bill Burns - Chief Financial Officer Bill Grubbs - Chief Executive Officer.

Brandon Fazio - UBS Tobey Sommer - SunTrust Robinson Humphrey Randy Reece - Avondale.

Good morning, ladies and gentlemen. And welcome to the Cross Country Healthcare Conference Call for the First Quarter of 2015. We would like to inform our guests that today’s conference is being recorded, if you have any objection you may disconnect at this time. Additionally, there will be a question-and-answer session on today’s conference call.

[Operator Instructions] This call is being simultaneously webcast live. A replay of this call will also be available until May 21, 2015 and can be accessed either on the company’s website or by dialing 1 (800) 395-7443 for domestic calls and (203) 369-3271 for international calls, and by entering the passcode 2015. I will now turn the call over to Mr.

Bill Burns, Cross Country Healthcare’s Chief Financial Officer. Please go ahead, sir..

Thank you, and good morning, everyone. With me today is our Chief Executive Officer, Bill Grubbs. This call will include a discussion of first quarter results for 2015 as disclosed in our press release and will also include a discussion of our financial outlook for the second quarter of 2015.

After our prepared remarks, you will have an opportunity to ask questions. I’d like to remind everyone that the press release is also available on our website at www.crosscountryhealthcare.com. Before we begin, we need to remind you that certain statements made on this call may constitute forward-looking statements.

As noted in our press release, forward-looking statements can vary materially from actual results and are subject to known and unknown risks, uncertainties and other factors, including those contained in the company’s 2014 annual report on Form 10-K and quarterly reports on Form 10-Q, as well as in other filings with the SEC.

I would encourage all of you to review the risk factors listed in these documents. The company undertakes no obligation to update any of its forward-looking statements. Also, comments during this teleconference reference non-GAAP financial measures such as adjusted EBITDA or adjusted earnings per share.

Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for or superior to financial measures calculated in accordance with U.S. GAAP. More information related to these non-GAAP financial measures is contained in our press release.

In order to facilitate a better understanding of underlying trends of business, we will refer to pro forma information on this call, giving effect to acquisitions as though they were included in the prior period results. With that, I will now turn the call over to our CEO, Bill Grubbs..

one that will generate revenue in Q2 and Q3. One that will generate revenue in Q3 and Q4 and one that will generate -- actually one that will start in Q3 and run through all of 2016. Remember as I just said in the first quarter of 2015, our EMR programs were down significantly year-over-year. So, I’m pleased to see these programs being implemented.

In our $11 million drop in one quarter, I'm glad to be able to see we are going to be able to make some of that up in subsequent quarters. The relationship with our largest customer involves both in MSP, as well as our optimal workforce solutions offering what we call OWS.

At this customer, we've expanded our MSP operation to a new facility that they recently acquired and we've also grown our OWS operations to include a new unit within the hospital system. We have a strong relationship and a long-term contract with this customer that now accounts for approximately 5% of our total revenue.

We are also making progress with our new predictive modeling service where we support our customers’ efforts to improve the scheduling and reduced labor costs, with an interest for more than 20 customers are currently implementing two pilot programs and are in contract negotiations for a third program.

We are encouraged by the interest in this new service line. The combined operations of Cross Country Healthcare and MSN are now starting to pay dividends.

We are currently in negotiations for a second optimal workforce solutions program with the new client and we believe we can continue to grow this service line as our newly expanded workforce solutions sales team gets up to speed.

We are also negotiating a large MSP operation that was presented to us because they see our large branch footprint as a way to help them, as they shift away from the large acute care hospitals to ambulatory facilities that they own, specifically physicians’ offices, independent surgery centers, walk-in clinics, rehab centers and other similar facilities.

We see both of these developments as positive enforcement of our strategy to expand into more value-added services, to be competitive in all sectors within healthcare staffing and to be in the local markets to better serve our customers and adjust to the changes in how healthcare is delivered.

The integration of MSN into our existing businesses is essentially complete and has been very successful. We've achieved the targeted cost synergies of $12 million to $14 million and as I just mentioned, we are working on some promising revenue synergies with the additional capabilities of the combined organizations.

Through all of the significant change in the last 12 months, I'm encouraged with our continued progress and improved performance. We've emerged as a much stronger organization and are much more competitive in the marketplace.

And although we grew faster than the market in 2014, I believe we will continue to grow at or above the market in our Nurse and Allied Staffing and Other Human Capital Management Services segments in 2015.

As I mentioned earlier, we are on track for our 5% adjusted EBITDA goal in the fourth quarter and to achieve a run rate of 8% adjusted EBITDA sometime in 2017. Let me turn over to Bill Burns to go into the numbers in a little bit more detail..

Thanks, Bill. Let me first review the consolidated results for the quarter. Turning first to revenue, total revenue for the quarter was $186 million, up 57% from the prior year and down 1% sequentially. On a pro forma basis, revenue for the quarter was up 5% from the prior year.

The year-over-year increase in revenue was driven by continued strong demand in our largest segment, Nurse and Allied Staffing, as well as stronger result in our Other Human Capital Management Services segment.

Sequentially, weather had a negative impact of approximately 1% on consolidated revenue, with the majority of the impact of the Nurse and Allied Staffing. Gross profit margin for the quarter was 25.3%, down 50 basis points from the prior year and flat sequentially. The year-over-year decline is largely due to the impact from the MSN acquisition.

As we expected, first quarter gross profit margin was negatively impacted by approximately $1 million or 50 basis points due to the annual payroll tax reset. Moving down the income statement. SG&A for the quarter was $41.2 million, up 40% on a year-over-year basis and down 1% sequentially.

The year-over-year increase was attributable to the impact of the MSN acquisition. As a percent of revenue, SG&A was 22.1%, down nearly 280 basis points year-over-year and flat sequentially.

During the first quarter, we continued to realize synergies from the MSN acquisition and manage our overall cost to improve the operating leverage in our business. As we are now essentially complete with the MSN integration, we will be undertaking further steps to improve the operating effectiveness of our company.

I will touch on these actions in just a moment. Adjusted EBITDA was $6.2 million, representing a 3.3% margin, which was within our expected range. As we mentioned last quarter, we expect that the acquisition and integration charges to taper off significantly.

For the quarter, we recorded approximately $100,000 as compared with $2.5 million in the fourth quarter of 2014. As a result, we have realized the value of the cost synergies we expected to achieve from the MSN acquisition.

Interest expense was $1.7 million up over the prior year and essentially flat from the prior quarter, reflecting the additional interest associated with our subordinated debt used to fund the MSN acquisition. In addition, we recorded a $2.1 million non-cash gain on the change in the fair value of the embedded derivative from our convertible notes.

The primary driver for the decrease in the valuation was the movement in our share price over the quarter. Income tax expense for the quarter was approximately $1 million, primarily due to the impact from continued amortization of indefinite-lived intangible assets for tax purposes.

Net income attributable to common shareholders was $2.9 million or $0.05 per diluted share, as compared to a net loss in the prior year period of $0.8 million or $0.03 per share. Adjusted earnings per diluted share was approximately $0.03. Let me next review the results for our three business segments.

Revenue for Nurse and Allied Staffing was $149.1 million for the first quarter, up 85% year-over-year and up 8% on a pro forma basis. Even with the decline in EMR as Bill mentioned earlier, the negative impact from weather and the winding down of a non-core account acquired with the MSN business, segment revenue was up 1% sequentially.

We averaged 6,454 field FTEs for the quarter, up 107% from the prior year and up 2% sequentially. Revenue per FTE per day was $257, up 1% year-over-year on a pro forma basis and up 2% sequentially.

Segment contribution income for the quarter was $10.6 million, representing a 7.1% contribution margin, down 30 basis points year-over-year and 50 basis points sequentially. The sequential decline was primarily due to the impact of the payroll tax reset.

Turning next to our physician staffing segment, revenue was $27.3 million, down 4% from the prior year and 10% sequentially. On a pro forma basis, physician staffing would have been down approximately 10% from the prior year. The year-over-year and sequential declines were entirely due to lower volume of days filled.

Segment contribution income for the first quarter was $2.1 million, representing a 7.7% contribution margin, up 510 basis points from the prior year and down 60 basis points sequentially. The year-over-year improvement was primarily attributable to improved pricing and lower charges related to professional liability.

The sequential decline was attributable to lower sales volumes, resulting in lower leverage -- lower operating leverage for the business. Finally, revenue for the Other Human Capital Management Services segment was $9.5 million, representing an 8% increase over the prior year.

The year-over-year increase was entirely driven by continued strength in our executive and physician search business, which grew by 40% over the prior year. On a sequential basis, segment revenue declined by approximately 9% due to seasonality in our education business, which was also impacted by weather.

Segment contribution income was approximately $600,000 or 6.3% of revenue. On a year-over-year basis, contribution income increased 263% and was flat sequentially. Turning to cash, we ended the quarter with $7.5 million of cash and cash equivalents and $61.7 million of outstanding debt.

Days sales outstanding was 59 days, which was four days higher than the prior year and the prior quarter. Net cash provided by operations was $300,000, as compared to cash used in operations of $9.1 million in the prior year and $1 million used in the prior quarter.

The first quarter tends to be the lightest cash quarter of the year as our many year end liabilities, which have paid at the start of the year as well as the impact from higher payroll taxes. Capital expenditures for the quarter totaled $600,000 in line with our expectations.

During the quarter, we borrowed an additional $3 million under our revolver and had approximately $39 million of availability as of March 31. This brings me to our guidance.

For the second quarter of 2015, we expect consolidated revenue to be in the $188 million to $192 million range, which assumes a pro forma year-over-year and sequential growth rate of 1% to 3%.

While we don't provide specific guidance for segments, we expect the year-over-year growth will come from our Nurse and Allied Staffing and Other Human Capital Management Services and will be partly offset by declines in physician staffing.

Turning to margins, consolidated gross profit margin is expected to be between 25.5% and 26%, while our adjusted EBITDA margin is expected to be between 3.7% and 4.2% for the quarter, which is up 100 to 150 basis points year-over-year and 40 to 90 basis points sequentially.

As Bill mentioned, we continue to expect to exit 2015 with a 5% adjusted EBITDA margin. From an EPS perspective, we expect adjusted earnings per diluted share to be between $0.05 and $0.07, representing a $0.04 to $0.06 improvement year-over-year and $0.02 to $0.04 improvement sequentially.

This range also assumes a diluted share count of 31.9 million shares. And finally, with the MSN integration now complete, we’re beginning the next phase of our optimization efforts to position the company for continued margin expansion.

Plans will include the further centralization of back-office and support functions, the closure or reduction in excess facility space, and the outsourcing of certain non-core functions. Additionally, we will be making continued investments in our IT infrastructure, as we undertake these actions.

The total expected annualized savings is between $4 million and $5 million and we expect to incur restructuring costs associated with these efforts in the range of $1 million to $2 million. We’ll continue to provide updates on these efforts throughout the year.

We believe these actions are necessary to achieve a truly world-class operation focused on delivering the highest level of service to our clients and driving shareholder value. This concludes our prepared remarks. And at this point, I'd like to open up the lines for questions.

Operator?.

Thank you. [Operator Instructions] Our first question is coming from Mr. A.J. Rice from UBS. Your question is up at this time..

Hi. This is Brandon Fazio for A.J. A couple of questions please.

The $12 million headwind that you cited this year, if you add that back to organic growth obviously on the nurse side, what do you think you would have done from an organic standpoint on nurse ex that? And then with your guidance in second quarter of sort of 1% to 3%, it sounds like lot of new contract stuff that you were highlighting on call were coming in the second half of the year, maybe be just walk us through that in that context or so, just with the EMR sort of comp stack up to be for the rest of this year as well would be helpful.

Thank you..

Yeah. Nurse and Allie'd’s without that headwind would've grown at 16%. So the rates are basically double of what the organic rate was. Q3, sorry -- Q2 was interesting because we still have a little bit of headwind from EMR. I’ll give you number there.

We did 13 -- a little over $13 million in the first quarter of 2014 in EMR business, a little over $9 million in the second quarter, went down to $5 million in the third quarter and a little over 2 million in the fourth quarter. So we have a little bit of headwind of EMR in the second quarter as well.

But the bigger -- the bigger item we have to deal with is the fact that our core Nurse and Allied business grew at 11% year-over-year in the second quarter last year. And the MSN business, right, before we closed the deal also grew at 12% year-over-year in the second quarter last year. So we're bumping up against a pretty big comp number.

So having us drop back down to what I consider market rate, which is high single-digit growth in Nurse and Allied, it is to be expected now that we are lapping some pretty big growth numbers in Q2.

So we have Q2 guidance implies high single-digit growth for Nurse and Allied, high single-digit growth for Other Human Capital Management Services and what brings us down to the lower pro forma growth is really still the underperformance in our physician staffing.

Did I get all the questions?.

Yes. Thank you.

Also the timing on the, actually, that’s the cost restructuring here with $4 million to $5 million in savings, is that expect to be implemented all through this year or is that a longer time period that we should be thinking about those savings being realized?.

I think we’re going to try to get all the questions done in the second and third quarter for the most part so that this is part of us helping to get to our 5% adjusted EBITDA in the fourth quarter. So our goal is to get them all done in the next two quarters..

Great. Thank you very much..

Where the cost will come in, it will vary. We’re not sure how much will come in Q2 and how much will come in Q3. So we’re still looking at the timing of some of these. But it’s all happening in Q2 and Q3..

Great. Thanks..

Our next question comes from Mr. Tobey Sommer from SunTrust Robinson Humphrey. Your question is up at this time..

Thanks. I’d like to start with the growth in 2Q. And I understand the context that you just provided to that kind of informs my question. Growing in line with the market, even with some tough comp.

What make you -- might you’d be able to do to exceed the market rate of growth? And is there something you could share with us, maybe, about additions to sales generating headcount that we can use to kind of get some visibility as to drivers for growth in out quarters as oppose to just 2Q? Thanks..

Yeah. There is a few things that I’d like to see happen there that could drive things a little bit better.

I think part of the reason why we didn’t get as much growth in Q1 as I would have liked although as I said I’m pretty pleased with the fact that we got over that $12 million headwind and still added another $11 million on top of the Nurse and Allied basis.

But I’d expect to that big MSP that we won last -- in the fourth quarter that we implemented in Q1 and it got delayed. So there are several things that could happen. One is we continue to invest in recruiters to bring in candidates and our applications are actually up, quite a bit actually. They were up from Q3 to Q4 last year.

Our Nurse and Allied applications were up about 6% but from Q4 to Q1, our Nurse and Allied applications are up another 26%. So as these new recruiters continue to get up the speed, if the faster they get up the speed, the more revenue we’ll get out of it.

Also with three MSPs and the three EMR projects as they come on board a little bit faster than our normal ramp rates, that could provide a little bit of benefit on the revenue growth as well. So there are some things that could happen faster than they normally do.

But we are bumping up against double-digit growth as well as a little bit of headwind from the EMR projects that carried out from Q1 last year..

Right.

How quickly -- what is the change in sales generating headcounts, recruiters, et cetera?.

It’s hard now that we’re fully integrated with MSN for me to do a kind of year-over-year comparison. It gets very confusing. We have talked about being up 20% as of the end of October last year that was on year-to-date basis. We’re up another 13% we announced by the end of February this year from that number in October.

And we expect to be up another 10% from the end of February number by the end of May and we're still on track for that. We still have several recruiters that are kicking in.

But most of those recruiters, all the ones that I’ve just talked about, since all -- most of those are still within their first six months, which is really kind of the ramp up time before they start to kick in. So they are just now starting to kick into productivity, which you can see with the growth in our applications..

Right. So in a 10-month period or so, that’s an increase of -- I don’t know 40% or 50% kind..

That’s about right..

Okay. And how long do you think this productive market for growth may last, because I’m sure that is integral to you making these hiring choices given the ramp time that it takes. You got to think that there is a new hire today has the runway to get you the return you like..

That’s right. And part of this just is trying to take advantage of the current trends but also predicting whether or not this is going to be sustainable going forward. I think it’s very positive that we've seen near historic high demands. For the last six months, we haven’t seen any slowdown. We’ve thousand of orders that come in every week.

And so I feel pretty good. I think the only two things that could derail is a negative ruling from the Supreme Court on the subsidies for the Affordable Care Act in the states that don't run their own exchanges or some slowdown in the economy.

And although, I know we had a kind of anemic economic growth in Q1, I think that's probably mostly related to weather. The other economic indicators don't worry me a whole lot. So I believe it’s going to be sustainable for a while and that's why we're making the investments..

Okay. Thanks. Two more questions for me. What sort of percent exposure may you have to face using the federal exchange? I understand that that’s kind of the majority of the country I think..

Well, it’s a majority. I don't know. I know that out of the 11.5 million people that have signed up, I think there’s 7 million or 7.5 million that get some kind of subsidy. But they will all be affected by the ruling. And even those that are affected by the ruling doesn’t mean they’re going to drop out of the system.

But I don't know the specific answer to what….

Okay..

… how much total exposure we in those specific States..

Then my last question and I’ll get back in the queue. What sort of plans or flexibility may you have to optimize the balance sheet over the next year or so? Thanks..

Yeah. I’ll turn that over to Bill Burns. We have been looking at options with our capital structure. Now, I’ll let Bill talk about it..

Thanks. And hi, Tobey. So obviously, we’re much different company than we were a year ago. It certainly opens up a lot more opportunities for us to look at our financing alternatives. We are -- our sub-debt, at least the term portion of our sub-debt becomes callable on July 1st.

So we’re obviously evaluating how that plays into our long-term cap structure. But really the decision is going to way also into other acquisition opportunities that may come along.

So we’re looking at of all uses -- multiple ways that leveraging up the balance sheet to either pay down just our term debt or to look at additional investments in the business like acquisitions..

Thank you very much..

Our next question comes from Mr. Randy Reece from Avondale. Mr. Reece, your question is up at this time..

Good morning..

Hey, Randy..

I was -- I want to talk about physician staffing and try to get a little more understanding about what happened between Q4 and Q1.

I was wondering if you could discuss the variances in your operating metrics versus what you were looking for and how much was controllable, and how much maybe wasn’t?.

Well, it’s -- we -- I’ve spent a lot of time up there and I’m obviously disappointed that we’re not making faster progress, even though I’ve been saying for quite a while, I didn't expect to see much improvement until the second half of ’15. I mean, even though I’ve been saying that, obviously, I was hoping for to come around as sooner.

I was encouraged when I was up there a couple weeks ago. I do believe we’re taking a lot of the right actions. We have a better visibility to our metrics and to our sales, and recruitment activity. We've seen a pretty decent increase.

If you go from our number of submissions of physicians into positions from January to the end of April, they are up about 60% or 70%. So we’re seeing a lot more activity, but it still takes a while for that to turn into revenue for us. So I’m encouraged by the actions we’ve taken. I'm encouraged by the acceptance of the new model.

I’m encouraged by the activity that we’re seeing. But I -- it's still disappointing that we’re not seeing the progress that we had hope to see sooner than this..

And Randy, this is Bill. I would just also add, the other thing that the thing is encouraging is the price increases we are seeing. We have seen them across all but one of our specialties. So that's that was a nice sequential change for us going from Q4 into Q1.

So there are, obviously, the volume declines that we need to outstrip, but I think to those point the productivity is eventually going to have to trickle through..

Yeah..

I mean the team is struggling there a little bit because we’ve put in some additional controls on pricing and -- gross profit margins. And that does limit them a little bit and probably contributes somewhat to some of the revenue shortfall.

But the fact is, I need the gross profit to increase and I need the bottomline to increase and both of those increased year-over-year in the quarter. So that's encouraging but we need to get the revenue back on track as well..

That sounds like that your volume issues might've been spread across the business and not really localized in any particular area?.

No. There are couple of specialties, I don’t know if you have them..

Yeah. I have it here..

There’s a couple specialties that kind of hit harder than others but its not geographic based, its customer specific, there are a couple specialties, I don’t….

Yeah. The top decliners were in emergency medicine OB/GYN and primary care for the quarter in terms of volume declines. There was other smaller declines and actually few at specialties actually had volume increases like anaesthesia and hospital and advanced practices so..

Yeah. Advance practice is really, really doing well for us. What was the growth in….

Year-over-year it was up over 20% in volume..

Yeah..

Very good. Thank you very much..

And we have one other question coming in from Mr. Tobey Summer from SunTrust Robinson Humphrey. Mr. Summer, your question is up at this time..

Thanks.

I heard you talk about bill rates, but I missed it, if you quantified them, what were bill rate -- what was bill rate growth in the Travel Nurse business?.

Yeah. So....

And where might it go in a couple quarters once this renewal stuff kind of has been digested?.

Yeah. We dint talk about the specifics, but that's a good question actually. So we had grown our Nurse and Allied bill rates by 3% in the third quarter last year. We grew them by 3.8% in the fourth quarter last year. So we were somewhat hopeful that we would start to improve even on that 3.8% as we came into the year.

We saw slowdown in it, it actually our Nurse and Allied rates grew by 2.2% in the first quarter on a year-over-year basis, which is a little over $1 and we still got bill-pay expansion, although we gave about 80% of it up to the nurse in this quarter.

And I do think that's mostly timing, as I mentioned on earlier in the call, even I didn’t say the specific numbers. We should be seeing a higher bill rate increase. I know the percentages we are negotiating and they just haven’t come through yet. We are seeing that they improved from January to February to March and into April.

So I'm hope -- I believe we will have higher bill rate percentage growth and higher bill pay spreads in the second quarter..

And is that -- when you say coming through, do you mean coming through like evidence in the P&L or being realized at the customer level?.

We saw them being realized at the customer level from each month so far year-to-date. We obviously did not see them a whole lot in the P&L in the first quarter, but I believe we’ll start to see that in the second quarter..

And is it broad-based at this point, or is it still certain specialties with outsized bill rate growth that is influencing the overall mix?.

Yes. We’re trying to get bill rate increases on because of two reasons, one, is geographies that are hard to fill positions or specialties that are hard to fill. It’s not necessarily across the board.

But in some cases, we are getting general rate increases across the board, because the customers are seeing that their fill rates are down, their submittals are down, and the issue is that there are competing hospital down the street has up their rates and so they need to keep up with the challenges.

So it’s somewhat broad-based, but very specific high rates, we have something -- we have a couple of specialties in California.

And I don't remember what it is at top of my head that they just could not find that they have multiple openings, could not find the people, they up the rates to well over $100 an hour just to be able to start getting submittals.

Now that's not going to happen across the board, but it just shows you that in certain skill sets when the hospital’s losing revenue or they don't have quality at the bedside that they are going to do something about it..

Okay. That makes sense.

And then just wanted to get a little bit of color on the per diem business and how that’s going? I know your footprint is bigger now and that's a business that kind of requires skills, office managers in branch to kind of perform optimistic?.

Yes. It’s actually been working very well. We've seen good growth in our -- it's actually our branch-based business, which is a combination of our old per diem, the MSN per diem and the Allied Health Group that we acquired from On Assignment. We call that our branch business now.

And our branch business, actually the old Allied Health Group business is growing as well as our per diem as well as the acquired per diem. So we are seeing some pretty broad-based growth of a little bit higher than mid-single-digit growth on a year-over-year basis. So that’s still going well.

We have a good team there, good regional people, good branch managers, and we expect that to continue. As I mentioned earlier, our customers are -- we see it in the jobs reports that there's a lot of growth in the nonacute care ambulatory facilities.

Our customers are now coming to us and saying we need to deal with these differently, and the fact that we have a larger brands footprint is actually helping us to support those customers. So that's helping us to maintain the growth in our branch-based operation..

Okay. Last question for me is, you’ve come close to wrapping up your integration with MSN and I guess maybe even it’s up -- it’s pretty well done. Are you still at this point having an internal focus to kind of generate better growth and position and kind of lap this EMR, or are you still actively looking at M&A? Thanks..

Yes. Now that we have done the integration, we have looked at a few M&A opportunities, nothing that was in the right price range. And so we’ve walked away from a couple. There are things in the marketplace. We will continue to look at them. The Board is supportive of that.

The fact is that we’ve done two acquisitions that we’ve integrated very well and they continue to perform well. So I think I feel comfortable that I have the right team in place and the Board feels comfortable that we can execute an integrated acquisition. We do have some firepower with $39 million to $40 million of availability.

Plus as Bill mentioned, we have a lot more options now of financing than we did a year ago when we weren’t performing that well. The 12 months makes a big difference when you start generating $6 million or $7 million a quarter in EBITDA. So yes, we are looking and we'll continue to look.

But it needs to be strategic and it needs to be at the right price, but we're not ruling that out..

Thanks. I guess I have one more. In the first quarter, you said you had $2 million in business comp against $13 million year ago, so $11 million headwind.

Does that $2 million go to zero at some point in the future quarter or is that kind of a rate that business may continue?.

No. I think it’s probably going to up slightly in Q2, because we have one program that’s being implemented now. It will probably go up in Q3, because we have a couple of brief programs being implemented by Q3. So, we’ll probably see a little bit of increase in the next few quarters on the EMR business. Eventually, in a couple years that could be gone.

But we don't -- we believe that there is some level of follow-on to these EMR projects.

In fact, the one program that we have starting in Q3 that will go all the way through the end of ’16 is someone that already went through the whole program and implemented one technology, find out they didn’t like it and now they’ve got some of the government subsidies to do that.

Now, that with their own time, with their own money, they are now changing to a new technology and that’s going to go for a while. We see other companies that have been through three phases of upgrades or tweaking what they have.

So, we think there is a little bit of follow-on work, but I don't think, if you look at last year we did $13 million, $9 million that's 22 plus 5 is 27. We did almost $30 million of EMR business. I don’t think it’s going to get back to that level, but I think there is probably a couple years of some level of EMR for a little while..

Thank you very much for the color..

Thanks, Tobey..

Our next question comes from Mr. Randy Reece from Avondale. Mr. Reece, your question is up at this time..

Hi. I just wanted to follow-up on some of these organic or pro forma growth numbers. There is a significant difference between the organic growth rate in Nurse and Allied and the pro forma growth rate this quarter and how -- I know that the MSN business was a little unpredictable probably last quarter.

Did that improved this quarter?.

What was it? Sorry..

I think the question is, how is the MSN acquisition performing relative to our core business and…?.

We can’t see that anymore. It's all integrated in together. So the addressing part is, in the second quarter of last year before we acquired it, our Nurse and Allied grew at just about what they did before we acquired.

And then in the third quarter of last year, when we can still see the two with them, hours grew at 12% year-over-year and the MSN business grew at 12% year-over-year. But now by the fourth quarter, we can’t see them independently anymore and certainly, we can’t in the first quarter of ‘15. So it's just an integrated business now.

So, you have to look at it on the whole..

All right. Thank you very much..

And what was the second part of that?.

Well. Is an extension -- I know that looking at fourth quarter results, you had felt like the acquired MSN business is pretty less predictable than you expected.

I don’t know how much you can tell about it now, if you rolling it up all in a different way but how did you felt?.

I know what you are referring to, Randy. I was talking about our branch-based business which is the per diem business we acquired from MSN. And I was making the comment that it is only our second quarter with a very large branch-based business.

And it's just a little bit less predictable than the travel business that you book things 30-days in advance and they intend to be on assignment for three months of the time. Branch-based businesses, two shifts here, three shifts there, five shifts there, just a little bit harder to predict.

So, I didn't mean to send the message that we don't have visibility to it. It is just a different method of forecasting in the branch-based businesses versus the travel business and that’s what I was referring to..

All right. Thank you..

And let me close our questions in the queue at this time..

Okay. Great. So, Operator, do you have closing a comment? You want to make for us. Let me just close out. So, I want to thank everyone for joining us and for their questions. And we will be back to update our second quarter results in August. Over to you, Operator..

Thank you very much. This does conclude today’s conference. A replay of today’s conference will be available through May 21, 2015. You may access the replay by dialing 1-800-395-7443 or 1-203-369-3271. Please use the passcode of 2015. Thank you for joining. You may now disconnect..