Hello, and welcome to the AMN Healthcare Third Quarter 2021 Earnings Call. My name is Emma, and I will be your operator today. [Operator Instructions] It's now my pleasure to hand the call over to Randy Reece, Senior Director of Investor Relations, to begin. Please go ahead..

Good afternoon, everyone. Welcome to AMN Healthcare's Third Quarter 2021 Earnings Call. A replay of this webcast will be available at ir.amnhealthcare.com, following the conclusion of this call. Details for the audio replay of the conference call are in our earnings release issued this afternoon.

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. The 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 Susan Salka, Chief Executive Officer; Jeff Knudson, our incoming Chief Financial Officer; Kelly Rakowski, Group President and COO of Strategic Talent Solutions; Landry Seedig, Group President and COO of Nursing and Allied Solutions; and James Taylor, Group President and COO of Physician and Leadership Solutions.

Also joining are Chris Schwartz, AMN Controller, who has served as our Interim Principal Financial Officer for the third quarter; and Vice President of Finance, Santhi Gullapalli. I will now turn the call over to Susan..

Thank you so much, Randy, and welcome, everyone, to our earnings call. It's hard to believe that this month is the 20th anniversary of AMN becoming a public company. Over the past two decades, we have strategically evolved and built AMN into the largest, most diverse and consistently high-performing company in our industry.

More importantly, we have created a culture that puts people and values first. At every opportunity, we take action to ensure that we are living up to our commitment to diversity, equity, equality and inclusion.

Over the past two decades, we have dramatically increased our impact in our communities by dedicating resources to important social issues and helping others to achieve their goals in a sustainable way. I'm reminded every day how deeply our team members care about what we do, and making a difference in this world.

Our culture is truly special and unique. And so I want to start by thanking my incredible colleagues for all that you do and who you are. Just like our clients and healthcare professionals, our team members are working extraordinarily hard to do our part in this environment.

Over the last two decades, I have also spoken frequently on these calls about the demographic changes that were likely to unfold. As the Baby Boomers began to reach retirement age, we expected to see pressure intensifying on the demand for and access to healthcare in this country.

Amplifying this trend, the number of people entering the healthcare workforce may not be enough to offset those who are exiting. We expected these workforce changes to come slowly and be most significant around 2025.

However, the COVID-19 pandemic has accelerated the rate of change in ways no one foresaw Virtually every day, we see headlines about health systems losing workers faster than they can hire them. Staffing shortages are impacting access to and timeliness of care.

The clinical workforce on average is getting younger, which means they are less experienced at a time when patient care is growing more complex. Acuity levels are higher than ever before at first, because of COVID-19, but now because many millions delayed their care during the height of the pandemic amid an aging population.

According to a recent poll, 30% of healthcare workers had quit or been laid off during the pandemic. Of those still employed, nearly 1/5 were considering leaving the healthcare profession.

This immense pressure on the healthcare workforce has sparked labor activism and for the next several years, the number and magnitude of strike events could exceed anything we've seen in the past. AMN and our entire industry are working harder than ever to help healthcare providers cope with a record labor shortage.

We believe our role will be important and essential for years to come, providing workers where they're needed most. We can also enable many of those now on the sidelines to find work that meets their needs and flexibility in the future.

As the leader in total talent solutions for healthcare, AMN takes our responsibility very seriously to strategically support our clients as they adjust their near- and long-term plans. Our telehealth and other workforce technology solutions are also more critical than ever to provide innovative approaches to alleviate the labor shortages.

And so we are investing heavily to ensure that they can meet the changing healthcare delivery models and the needs of our communities. Demand for our services is much stronger than we had anticipated, which is reflected in the better-than-expected third quarter results and our fourth quarter outlook.

However, because there is significantly higher demand than supply of clinicians, we believe that even with half of the demand that we are seeing today that we would have likely seen similar volume growth. Consolidated revenue in the third quarter was $878 million, 59% higher year-over-year, enabled by strong performance from all revenue segments.

Nurse and Allied Solutions reported revenue of $627 million, up 64% year-over-year. Travel Nurse Staffing revenue grew 56% year-over-year. Volume growth was the greatest contributor, although we also had higher billings. As we mentioned on our last call, we started to see demand rise during the summer even before the Delta variant hit.

Due to staffing shortages, demand has sustained the same record high levels since September even though COVID-19 hospitalizations have steadily declined. With the clinician shortage and high-demand persisting, pay rates have also increased and correspondingly, bill rates have risen.

As typical, we are passing on a greater percentage of these bill rates to our clinicians. Our Allied Staffing team hit another record high with $136 million in the third quarter revenue, up 62% year-over-year. Allied volume grew more than 50% year-over-year.

Demand in the third quarter grew 72% over the second quarter level, and October orders were more than 20% above third quarter average. Demand is very strong across all Allied disciplines, including therapy, imaging, respiratory labs, case managers and medical assistance.

In the fourth quarter of 2021 for the entire Nurse and Allied segment, we expect revenue to be in 96% to 100% higher year-over-year. Physician and Leadership Solutions segment revenue for the third quarter was $151 million, 38% higher year-over-year.

That is the best organic growth rate this segment has recorded in company's history, but this is actually the case for all of our segments. Locum tenens revenue was $89 million, up 31% over prior year. Locum's providers on assignment reached their highest level since 2018, and demand increased 36% from the second quarter.

Revenue growth was consistently good across specialty, and just like our other businesses, this team is executing very well. Interim leadership revenue grew 59% year-over-year as the business delivered another consecutive quarter of revenue growth.

Physician and executive search is rebounding much faster than we expected and delivered revenue growth of 33% year-over-year. For the fourth quarter, we expect Physician and Leadership Solutions revenue to be approximately 35% higher year-over-year. Third quarter revenue for the Technology and Workforce Solutions segment reached a record $100 million.

The revenue increased an impressive 67% year-over-year. Language Services continued its strong growth pattern with revenue of $47 million, which is 33% higher than a year ago. Revenue for our VMS business was $33 million in the quarter, growing a remarkable 113% year-over-year.

Our RPO solution, which as a reminder, assists clients with recruitment and hiring of permanent staff grew significantly year-over-year. We're delighted to support many new clients though marketwide demand for RPO is much greater than the available industry capacity.

In the fourth quarter, we expect revenue for the Technology and Workforce Solutions segment to be up approximately 50% compared with prior year. Enabling consolidated revenue growth of nearly 60% in the third quarter and even greater growth in the fourth quarter would be difficult at any time, and it is especially hard in the labor market of 2021.

Across the company, we have added more team members than in any other year, and we continue recruiting to support our growth.

We also have made important additions to our leadership team, improving our ability to foster our culture, develop and care for our team members manage our long-term growth and serve our healthcare professionals and clients always with the greatest integrity and transparency.

One great example of a leadership addition that makes us stronger is Jeff Knudson, who has joined the AMN family as our Chief Financial Officer. Jeff brings very valuable healthcare and other sector expertise that will help us continue to build and execute on our mission and financial goals.

As importantly, Jeff is a perfect match for the value-based, highly engaged and fast-paced culture at AMN. At this time, I'd like to invite you, Jeff, to share a little bit about yourself..

Thanks so much, Susan. My family and I are thrilled about joining AMN at such a fascinating time. I live here in Dallas with my wife, [Selena] and the youngest of our three children. While our older two are very much enjoying the first [indiscernible] years in college.

Personally, I'm extremely excited to return to healthcare and join an organization with such diverse workforce and staffing solutions.

I'm especially looking forward to working with Susan and the entire management team at AMN and maintain and extend the company's history of industry leadership while delivering long-term value to our team members, healthcare professionals, clients, communities we serve and shareholders.

I would also like to thank Chris, Santhi and the entire financial organization for their leadership over the past several months. I very much look forward to meeting and working with many of you on this call in the near future..

Thank you so much, Jeff. We're so glad to have you here. And since Jeff is day three on the job, he won't necessarily be participating in the Q&A. We're super fortunate to, of course, have Chris and Santhi here to help us out with any of those questions.

Continuing on the people front, we recently also announced that Nishan Sivathasan will be stepping into the role of Chief People Officer effective January one. We Nishan joined the AMN family over two years ago as our Head of Strategy and M&A.

His people and culture leadership during this pandemic has been extremely valuable, which made this an obvious choice for me and the team, and we are deeply grateful, and Nishan is going to be at the forefront of our people strategies for the future.

I also want to take this moment to recognize Landry Seedig, who is celebrating his 20th anniversary with the AMN team this week. Time flies when you're have in front right, Landry.

Landry Is a great example of how AMN obtained great talent in our acquisitions, and Landry has certainly made the most of this opportunity first in leading and growing our Allied division, then as President of our Nurse Staffing division,, And as you know, now, earlier this year, he became Group President and COO -- Actually, that was last year, Landry, right? Time does fly.

He's now Group President and COO of our largest revenue segment. Landry is truly an outstanding role model of AMN's commitment to our ethics and values every single day. As a servant leader, he's been a mentor to many developing tremendous leaders along the way.

So a huge thanks to you, Landry, and your amazing wife Jamie for all that you do to support the AMN mission and the team. In a few minutes, Kelly Landry, James and Santhi will join us for the Q&A session.

But first, I'd like to tag on to Jeff's comments and thank our entire finance tax and accounting leadership team for their great work enabling seamless transition as we search for our new CFO. At one of the busiest times we have ever seen, it's especially comforting to have such a strong and capable team, so thank you, everyone.

And now I will turn the call over to our colleague, Chris, who will provide more insight on our financial results..

depreciation expense of $10.5 million, noncash amortization expense of $16 million, stock-based compensation expense of $7 million, interest expense of $10 million integration and other expenses of $7 million and adjusted tax rate of 27%. Revenue guidance includes $14 million related to labor disruption activities.

And now I'll pass the call back to Susan for some concluding comments..

Thank you so much, Chris. We are so proud of how our entire team has responded in this environment, helping our healthcare professionals and clients during a very critical time. Some influences driving nursing and allied demand and order levels will certainly subside a bit over time.

However, we believe the largest driver of labor shortages will endure and that the long-term growth opportunities for AMN are stronger now than they ever were before. The need for healthcare organizations to have a total talent solutions partner has been escalated to a higher level, and we are very energized about the future.

While we are not giving formal guidance for 2022, I have a few comments about our expectations. Health care labor shortages that we had expected to play out over many years have clearly been accelerated rate. This will have a long-term impact on workforce management and patient care delivery model.

Looking specifically at 2022, we believe volumes will grow year-over-year across all of our businesses. Nurse demand is at record high levels and expected to decline somewhat in 2022 but remain well above pre-pandemic levels. As a result, we expect our volumes to be on a positive trajectory for the year.

Allied is doing exceptionally well with growth being driven primarily by strong volumes. We expect to enter 2022 with Allied demand remaining at these record levels and volumes continuing to grow. Locum tenens demand is nearly 1.5 times higher than pre-pandemic, which we expect will continue our upward trend in placements.

Interim leadership, search and RPO have strong and growing demand. The need for virtual language services continues to grow each quarter, and our other technology businesses are seeing increased interest as clients seek broader solutions to address the workforce shortage long term.

Due to the strains on the workforce, retirements and vacancies, healthcare wage inflation has moved much higher. The staffing paradigm for all healthcare services appears to have taken on last thing changes. We all want nursing bill rates to decline, which will happen when pay rates come down.

Our best guess is that exiting 2022 nursing bill rates will be lower than today, though still 20% to 30% higher than pre-pandemic pricing level. We have high confidence that the future environment will be favorable for demand across all of our businesses.

As importantly, the AMN team will continue pouring our talent and our hearts into making a positive impact for our healthcare professionals, our clients, patients and our communities. Now Emma, let's begin with the Q&A session. Thank you..

[Operator Instructions] Our first question comes from Tobey Sommer from Truist Securities. Our next question today comes from Jeff Silber from BMO..

It sounds like we may be having some technical difficulties because I know Tobey and Jeff are very experienced at this..

So we have Tobey who reregistered question. [Operator Instructions].

Emma, the callers are telling us that they can hear each other, but we can't hear them..

So you....

The other people who are on the call can hear each other, but we in this room can't hear them..

So there might be a setting that needs to be changed so that we are all together and can hear that, would be my guess..

Yes. The analysts are telling me that they can hear Tobey..

Okay. Is there a way for them to type in their questions or for somebody to share with us in another manner. Thank you for your patience, everyone. We appreciate it. We will figure this out. This is a new one. This is my 80th earnings call, and we have never had this happen before. So that is the environment in which we live today..

Analysts, if you could email questions to me, I would be happy to read them..

While we're waiting for those questions, I'm sure we have some things that we can share proactively, maybe knowing questions might be on people's minds. So as we wait for those questions, James, perhaps I'll ask you to first share a little bit more detail about the great performance in Physician and Leadership Solutions.

And some of the drivers of both the revenue growth, but also the lower gross margins in that mix change that we referred to..

And just to add to the great success that we've had, all practices are contributing a very strong performance in quarter 3.

Overall, as you heard, our revenue was $151 million, up sequentially 8% and the highest revenue quarter since quarter three of 2018 performing versus prior year, so a very strong recovery of revenues, up 38% as was part of the prior mention. Also, we have sequential growth of core revenue that is up as well.

I will say that our margin and capital margin question -- quarter-over-quarter, our gross margin and operating margins are down. There really are three main contributors to driving that impact. First of all, we have the higher mix of Locums business. Locums is in lower-margin practice with inside of the PLS division.

And in quarter 3, they represented a large portion of our segment revenue. Second point is our business specialty mix. CRNA is our largest growing specialty that's growing. And it also is one of our low-margin specialties that we have with inside of our portfolio.

Because of fast growing and locums margin, it represented a significantly portion of locums that drove our margins down. And then last but not least, in quarter two, we had a favorable impact of our provider liability insurance reserves, and we did not have that in quarter 3. So those are the three causes that drove the margin down..

Great. That's super helpful. And I think we were able to get some questions email to it, so we'll take those now, Randy..

Jeff Silber of BMO asks Susan, you called out labor disruption as a long-term driver.

How do you go to market with this without offsetting unions and other groups? Or is there another way?.

Yes. Whenever we originally got into the neighborhood destruction business, it was actually because our clients were asking us to get into it. So it's a difficult business, as you can imagine, kind of helping our clients out in some of their most difficult times. There's quite a few labor negotiations happening right now across the country.

We mentioned that in Q3, we had $23 million worth of labor disruption or strike [indiscernible]. And we've actually included about $14 million that's in our Q4 guidance. These things are very unpredictable. It could really happen at any time.

There's a few events that are actually currently going on out in the marketplace today that we're not involved in. And then there's also some events that we're trying to help our clients prepare for. So overall, as you would imagine, the potential for some larger labor events is in our pipeline..

Operator, I'm told that the people on the call cannot hear us now..

We just experienced a bit of technical difficulty. We're just having a number of the teams sort this now..

Okay. Great. I am being told that now that folks can hear us. So maybe we'll try another question from another analyst..

Yes. This is from Tobey Sommer of Truist. Susan, could you put together your segment comments for 2022.

Okay. We apologize. Clearly something that's happened with the conference call technology. So we will continue on with some comments and try to get it fixed. Otherwise, we may have to set up another call so that we can answer questions later. But Landry, why don't you share a little bit more about Nurse and Allied and some of the trends..

I do have a bunch of questions. Okay..

I just don't think anyone can hear us..

I got one message saying that could hear us. Okay.

Looking at the revenue trajectory for 2022, will revenue grow? Or what should we think of early in '22 sequentially for modeling?.

So I laid out the trends and the sort of the demand drivers for 2022. And of course, the big variable is the demand environment, mostly the pay rate environment and the result of result rate for us. Sounds like they're working on that tech stuff. So I understand that they can hear us through the webcast, but perhaps not the phone.

So that if folks can move over to the webcast, I think that would be helpful. And no one in here is on the webcast, correct? Okay. We got this.

So thinking about next year, obviously, going into the first quarter will be stronger, and we -- because we've seen very strong demand now and COVID haven't seen it subside for the last couple of months, we expect to come into the first quarter relatively similar-ish to the third and the fourth quarter.

And I'd say something in terms of the overall consolidated revenue between the third and the fourth quarter, something in the middle, is probably close to what you'd expect north of $1 billion is very reasonable. We're not giving that as guidance.

But if you just do the math, and based on the demand today, that certainly is a very possible target for us to hit as a starting point.

And then if we expect volumes to grow throughout the year, some seasonality in there across some of the businesses, and we have the offsetting headwinds, then that's the big question of how much will those headwinds offset the volume growth.

And so whether we are down next year because the bill rates come down faster, quite honestly, that would be a good thing because it means that things are coming back to a semi more normalized state in a more sustainable state, even though well above pandemic levels. then it could offset the volume and we could have a decline year-over-year.

But that would set us up very well going into 2023.

So I know it's not an exact answer, which is why we're not giving guidance for next year because there's still relatively a lot of uncertainty around bill rates and pay rates in particular, but I'd have to say the kind of other underlying drivers of our core business are exceptionally strong, and we expect that we'll continue to see growth across most of our businesses with the exception of again this.

And no one in here is on the webcast, correct? Okay. We got this.

So thinking about next year, obviously, going into the first quarter will be stronger, and we -- because we've seen very strong demand now and COVID haven't seen it subside for the last couple of months, we expect to come into the first quarter relatively similar-ish to the third and the fourth quarter.

And I'd say something in terms of the overall consolidated revenue between the third and the fourth quarter, something in the middle, A Llied in the bill rates.

Santhi, is there anything That you would add in there?.

Yes. I would like to say that the same trends that are affecting us and Allied would impact the MS business also in Technology Workforce Solution otherwise you covered everything else..

That's an excellent point, Santhi. Our VMS business, which as you might recall, provides a vendor-neutral technology solutions for clients that don't want or need a staffing-led MSP. It provides them a solution to manage their contingent staff. And that business has done exceptionally well throughout the pandemic.

The team is executing exceptionally well. We have many new clients, as you can expect. And -- but they also have some of the same influences of the higher demand, driving higher pay rates, higher and then higher bill rates. So as that comes down, there's still a headwind there as well.

And that shows up in that technology and Other Workforce Solutions segment. Thank you, Santhi..

We have a next question from A.J. Rice of Credit Suisse. So you are seeing some strength in areas that were adversely impacted or did not participate in the COVID surge.

So is the strength in VMS, interim RPO and so on a normalized run rate or is this reflective of some pent-up demand being worked through?.

Well, I just addressed the component, which certainly has had some uplift from the higher bill rates, I'd say. The underlying shortage, however, will continue -- we believe, continue to drive strong demand and good volume within VMS, but we'll just have that offset of the bill rates coming down.

As you might recall, the revenue in VMS comes from a percentage of the overall gross billings, that we manage for our clients.

And just to put it in perspective, today, we have a run rate of over $6 billion of gross spend under management across our VMS system and our MSP, So that's a significant increase from what we had seen over the last few years.

Volume is part of the story, additional clients, but also those bill rates, but the other parts of the business, our language services business is growing exceptionally well. I talked about the 33% growth. That has been the story since we acquired that company at the beginning of 2020.

Early days, we had a little bit of COVID-related activity and projects. But today, it's more business as usual. And I'll actually ask Kelly Rakowski to jump in on some of the other businesses since they report to her..

Yes. And thank you for the question, A.J.

We're really delighted to see the balance of our businesses really come back strong and strong performance by the teams and really speaks to the need some of these services that while they might not have been as directly impacted by COVID, certainly the needs of our client base, as they work through a multitude of strategies to address the shortages, that's impacting healthcare services across the board.

So Susan mentioned our virtual language services. So as volume has increase in our patient care areas. Our team has just performed very well across all of our modalities and language services. You mentioned RPO, A.J., which certainly was suppressed for a good portion of the COVID surges.

And now as we're seeing a significantly high and growing vacancy rates in most organizations, a much higher demand for our RPO services. Our team has mobilize and grown very quickly. We were there to support our most strategic clients as they look to fill those permanent vacancies, and have those longer-term solutions.

I think Susan said in her script, though, there's a, the market demand is so significant, we're being very selective about and really prioritizing as we have all along our most strategic clients to help them with that capacity on the perm side.

Same goes for other things like our workforce technology, predictive analytics, where our clients are really turning to us to help them look to other solutions to help them optimize their workforce as well. So we're going to continue to see that the macro factors are actually supporting the need for these services going forward as well..

Emma, let's return to those questions..

First question comes from A.J. Rice from Credit Suisse..

I guess I'm wondering, given the demand surge or a greater percent of your fills revenues being fulfilled by your MSP customers versus other clients.

How are you managing that push-pull of keeping clients across the spectrum happy? And assuming there is a little prioritization of MSP accounts that made those who are MSP accounts consider shifting in that direction?.

A.J., this is Kelly again. I think we've been sharing all along that it's been very important for us to honor our long-term commitments to our MSP clients. and we continue to do so. And we're seeing about the same percentage of fill, although our total fills have gone up.

We've been really fortunate to turn to other solutions like our vendor-neutral solutions that Susan mentioned, our open talent marketplace to really support our new clients that weren't able to implement MSP during this time. We've also seen some growth.

So while we have been selective, we have certainly had some very strong wins for not only hospital base and health system-based MSPs, but also in some newer sectors. We had a global cruise line who signed a large MSP with us this past quarter. We've had a couple of home health organizations, starting new MSPs.

So I think the market has really seen the value of having a strategic partner and they know the need is going to persist. So we've been really pleased with the business that we have been able to add and looking to find other ways to support organizations. And it's not just about our capacity.

It's also about their capacity to manage a change at this time. So other solutions have helped them alleviate and meet some of their needs. And we continue to work with them so that as volume starts to moderate, we'll be able to bring additional clients on board..

Okay. Maybe one more. I think I heard you say that beyond the demand for temporary staff that you were seeing upward wage pressure in the permanent staff of the health systems you serve.

Can you give us any perspective? I know pre-pandemic, I think we were sort of plugging in 3% every year for SWB growth? What are you seeing in the market now?.

Yes, A.J. It's Kelly. I'll keep going. It really, of course, varies by market, but we are seeing not only base wage inflation, and I don't have a consistent percentage for you, A.J. But in addition to that, premium pay strategies have also been very dynamic and have gone up during this time period.

So we're seeing increase in shift differential bonuses paid for additional shifts, additional overtime. We're seeing sign-on bonuses for nursing, which we haven't traditionally seen nationally and any other time. So it's a very competitive marketplace.

And so we're seeing those rates play out in many different ways in perm core staffing as well as contingent staffing..

[Operator Instructions] following question comes from Brian Tanquilut from Jefferies..

I have my first question, apologies if we missed the stat, but can you share with us how much hiring you've been able to do for recruiters or revenue-generating roles what productivity has looked like in those roles?.

Sure, Brian. Well, I'll start, this is Susan. I'll start at an enterprise level. I mentioned in my prepared remarks that we have been adding significant staff across the organization, and we have growth of about 30% in our FTEs year-over-year across the enterprise, and we are also still adding many, many more as we enter into 2022.

And I'll ask Landry to share a bit about the recruiters and sales team within Nurse and Allied, which is probably one of the areas you're most interested in..

Brian, it's Landry. So we have been, certainly, as you can imagine, increasing our producer count. We actually have increased our counts now for five consecutive quarters, and we're continuing to do that. So probably maybe even more what you're looking at is what we're thinking even going into next year.

And so I would expect that we will continue -- or we will be continuing to grow that number. You also asked about the productivity number. I would say it's a good story that that's actually flat.

So you think about the number of people that we've been bringing in and to get them ramped up and they still be able to maintain our consistent productivity levels per person is actually a good story..

Got you. Appreciate that.

And then, Susan, you talked about how you think as we exit the pandemic, things would still be pretty robust, but maybe any comments you can share with us in terms of what your thoughts are in terms of like the long-term growth rate that we should be thinking about post-pandemic for your different business lines?.

Sure, Brian. As I mentioned, and I think most believe in the industry, our growth prospects have certainly increased, whereas previously, we might have looked to some of our staffing businesses and said, well, maybe 3% to 4% to 5%, 6% growth. I think that has turned into more like double-digit growth opportunity.

Once we get through any headwinds in bill rates coming down, we see this shortage persisting.

It's not even just us, it's our clients and it speaks to the conversations that we're having with them today about their desire to work with us on longer-term staffing plans, whether it be ability to continue to add perm staff to utilization of RPO, international staffing and having a better visibility into what their planning needs are going to be down the road.

So it's -- I'd say that because it's really important that it's not just wishful thinking on our part but quite real. And when we talk with our clients. They're very concerned about the protect the nature of this shortage. And the numbers alone would support that in terms of vacancies being at such a high level.

You look at the number of quits in healthcare right now, and we just hit another record month in quit across the country. The number of job openings, the hires is 2.3 openings to everyone hire. And so there's really a difficult, difficult time that is not going to end anywhere in the near future.

And so we think that certainly accelerates our growth opportunity and probably takes our volume growth up into the higher single digits, if not double digits.

And then of course, have these other solutions that are either smaller or technology-related things like stratus, our language interpretation service, which grew this quarter at 33% and has been. Now we may not expect it to grow at 33% every quarter for the future.

But if you can just continue to grow in the teens, that will be nice significant growth. And businesses like that, of course, have strong margins, strong recurring revenue, etc. So hopefully, that's helpful. One target I'll throw out there for you, Brian, is, We've talked a lot about our EBITDA margin target being 14%.

And clearly, we've blown through that. This quarter, we reported high 15 in the next quarter kind of reporting 15.5% to high 15. We think that a next sustainable target is around 15%. Now just like now, we may have quarters where we're above that, maybe even in 16%. So we may have somewhere we're below based on investments that we're making.

But we do think, In the next few years, 15% EBITDA margin is a realistic sustainable target for us to aim for..

If I may throw one last question..

Sure..

Okay. One last question. Since you mentioned Stratus, do you think the penetration there? I mean in the past, cross-selling was part of the thesis, right? And it seems like we're sorry to see a slight slowdown now in the growth rate or more of a normalization.

So do you think that we're getting close to the penetration rate within the existing book of business and the traditional business lines where we need to start thinking about selling beyond your existing client base?.

Brian, it's Kelly. Our growth rates -- I would say our growth rates are still strong in Stratus and have been, I think we saw in prior quarters higher sequential growth rates just as they were recovering back to normal patient care volumes. The good news for us is a lot of our more recent growth has been from existing Stratus customers.

There's still a lot of fragmentation in this market need for more integrated solutions and full-scale solutions across the health enterprises. And we still have an opportunity to further penetrate into our existing clients, our existing AMN clients.

So we've -- due to just how the market has been, the ability to add on or change services at this time, much more of our growth has been through expansion and utilization of existing customers. So we see a lot of runway for us to continue to add language services to our portfolio of services with our strategic clients.

So we do expect more growth in new business going forward..

And Brian, you just think about the macro drivers of this business. You look at 67 million residents in the U.S. or 22% of the population now speak a language other than English at home. That's equal to the entire population of France, and it's growing. And in nine states, more than one in four residents now speak a language other than English at home.

And so these statistics will continue to drive the need for adoption. I think actually they helped to put a spotlight on the fact that translation and interpretation is in the essential part of quality patient care as well as driving a good patient experience.

So we see opportunities to continue to expand and evolve not just what we're doing today in language interpretation, but actually add on other services. We have iPads and thousands of facilities around the country. We can add on other capabilities and services. So it's a great question.

As you can tell, we're very bullish, and it's a very, very important service to patients that might otherwise be in a vulnerable situation. So it really helps add to the healthcare equity and access of this country..

Next question comes from Tobey Sommer from Truist Securities..

Over time, throughout all of staffing, companies have tried to automate the front-end system as well as the back end, the credentialing and onboarding our payroll.

How are your efforts in that regard? And how do they stack up against others who are focused on it in the marketplace?.

Thanks, Tobey. And as you know, it's been a huge focus of ours for several years, and I'm really proud to say I do think we're leading the industry in digital transformation and the use of mobile apps, and I'm going to let Landry tell that story because I think it's best hole in the Nurse and Allied business where we've had the greatest impact..

Yes, Tobey, it's Andrew. So I know we've talked about AMN past port before. That's our mobile app. And there's, of course, a lot of benefits from the investments that we've been making there. We've been going at that for nearly two years now. And it's a good place for clinicians, they can go and they can find themselves and match their jobs easier.

They can ultimately kind of take themselves all the way through the process. So they can apply for a job, they can get submitted to a job, It supports them in their onboarding, making submit their credentials. And just recently, we have created to where they can enter time and they can see all their pay information.

So we continue monthly to roll out new enhancements there. One good stat on it, just to kind of show the adoption of it as well as some of the efficiencies that it's creating within the organization is that since inception, there's actually been over 330,000 credentialing documents that have been uploaded through the application itself.

So a lot of that automation has really allowed our teams to focus on more high-touch areas and just overall making the experience better for the clinician and just making us more efficient..

Next question comes from Tim Mulrooney from William Blair..

This is Sam filling in for Tim. We'll keep it on as well just to get over to show as well. Start I guess like we have an estimate for the percentage of your nursing staff and talent pool that remains unvaccinated still.

And could you help quantify us for maybe what type of revenue headwind this might represent for you over the next several quarters here?.

Tim, it's Landry. I can take that. So nationally, it stated that about 96% of physicians are currently vaccinated, and about 88% of nurses are vaccinated. There's not any really great stat that we can find for Allied that matches our same skill set. But from what we can tell internally, it looks to be about the same as what we see on the nursing side.

So far, we have been requiring our healthcare professionals to follow the standards that health systems and states have put in place for their mandates. As of today, there's 19 states that require some sort of mandate. And of course, we've got a lot of large health systems out in the marketplace that have a mandate in place.

As of right now, we, from our experience from everybody that's already put a mandate in place, it had an impact on 1%, approximately 1% of our clinicians just due to their vaccination status. So a very low percentage. Of course, we're getting ready to head toward the rest of our population.

Of course, we're anticipating there might be changes federally. And so we'll be working on the rest of our population here pretty soon. But we really don't anticipate any major negative impact from that. There will be some puts and takes in there.

And just based on what we've seen already so far, a very small percentage of our population that's been negatively impacted..

Next question comes from Bill Sutherland from the Benchmark Company..

I have one question. When I'm on conference calls, Susan, with healthcare providers of various types One of the things that they're always kind of putting out there for investors is, yes, our labor costs are up, and we're not happy.

And one of the dose we're going to take is to somehow get the contract labor number down from, it's now up to 4%, and we're going to get that back down to maybe not where it was in the past, but we're going to get it down. Is that just wishful thinking on their part? Yes, I guess that's the main question..

one, the extreme shortage that is expected to persist for many, many, many years to come. Second, the preference of the younger workforce and this desire to have more flexibility not to commit long term and to participate in was referred to as the gig economy.

And that is absolutely, we think driving some of the behavior along with just the frustrations of the pandemic and people being burned out. So that will likely increase the mix of flexible staff over time if we truly see this staffing paradigm shift that we expect..

They'll stop complaining when the rates get back to wherever they settle in is what you're in..

I think that will help a lot. Yes. I totally agree. That will help a lot for everybody and be more sustainable..

The next question comes from Kevin Fischbeck from Bank of America..

This is Courtney on for Kevin. So I guess, just a few follow-ups on what we've talked about today. So I guess, the color you guys gave on Stratus has been especially helpful, and it definitely seems like you're paying toward growing out the tech business, Tech and Workforce Solutions.

So I was just wondering, with the focus right now in that segment kind of be looking at new assets or more so really just on integration and ramping up and really just trying to get higher penetration in the cross-selling opportunity..

So the latter is definitely the first priority, investing in our current tech and tech-enabled solutions. So things like language interpretation, [indiscernible], which we recently acquired, our telehealth platform and Education, Silversheet, which is our credentialing platform and Avantas, which is our workforce optimization, predictive analytics.

So we have a lot of opportunity there to continue to invest, expand the capability so that we can penetrate in different ways with the clients that we have as well as perhaps address new markets. Avantas is a great example. They're doing a wonderful job in acute care, but there's a whole another opportunity in the non-acute post-acute industry.

And so we could continue to expand upon those opportunities just within the technologies that we currently have in place. But we are also looking at new capabilities in the tech and tech-enabled space. They are relatively high valuations. So as you expect, we are being very disciplined about what we pursue.

But when the right opportunity comes along, I think you've seen, we are willing to pay and even pay a premium for those things that really make sense. So hopefully, that's helpful, Courtney..

Yes. No, that's super helpful. And then I guess, one last quick one, I guess. You guys have been recording some labor disruption revenues and strike-related revenues for the past few quarters.

So just curious, are these coming from one singular client? Are these coming from multiple different orders? And then just how has that trended over the past few quarters?.

Courtney, it's Landry. So first off, on the revenue, Q3 of this year, we had $23 million included in our guidance for Q4, we've included $14 million, So we have a very robust pipeline, as you can imagine, of potential labor disruption event. There's a lot of negotiations that are taking place out in the market.

Primarily, we focus that to support our MSP customers. So a lot of our prioritization that we think internally has to do with making sure that they're taking care of, but it doesn't mean that we don't have contracts to support other potential disruptions that are out in the marketplace with some other clients that we do business with.

But that just kind of gives you an idea of that profile. There are some labor events that are actually active today that we are not supporting that are out in the marketplace that have been going on for quite some time, but we are helping our clients today help prepare for some potential labor events that could happen..

Final question we have in the queue comes from Mark Marcon from Baird Capital..

So just a follow-up with regards to disruption. Susan, in your early comments, you talked about the level of activism. So I have a broad question and a specific question. The broad question is just how do you think that the level of labor activism is going to end up impacting the space over the next few years.

from a broad perspective? And then I just wanted to make sure I understood what you were saying with regards to -- I was assuming that you were going to be helping one of your largest client and the elements that are currently in the news.

Is that an incorrect assumption?.

Yes, I'll take them in reverse order. That's not an incorrect assumption. We have, as you know, some wonderful large strategic clients that we've assisted with strike activity in the past. And, and we're always first focused on them.

And so we have been planning and working with this particular client for several months now, and we're very well prepared should we be needed to step in. It's still an uncertain situation. And so.

So you're not building that in..

No, no, we have, whenever we're planning and in preparing, there are fees that are collected to cover expenses that we're incurring and to recruit the clinician be at the ready and do a certain amount of credentialing and perhaps pre-orientation, So that's the $14 million in fees that Landry referred to, not all from one client, but a decent portion of them are.

And then if a strike event would occur, then that would be on top of our guidance. We're not including any expectation of that right now. And then getting back to your other question on the longer-term effect, I really believe and based on what we've even seen, not just guessing that these labor disruption events will be more intense.

They'll likely be larger. They'll be longer and just in order of magnitude, have a greater impact, certainly in the profession itself for our clients. We heard of one healthcare organization that said they were going to actually just close the hospital because they didn't want to have to try to deal with labor disruption during this environment.

Now that's not practical in every community, and it's not practical on a sustainable level, but that's the kind of challenges that they're dealing with, knowing how hard it's going to be to recruit staff in an already critical time of deep shortages.

So what will be the results of some of that besides it's highly disruptive, Yes, for us, an opportunity to assist and add value possibly for us, it will create some lumpiness in our results going forward, although quite honestly, at our size now, $14 million just doesn't really move the needle as much.

But if there are large events, it might be a little bit more impactful or a little bit more noise in our earnings. For the industry, for the nursing profession, I think it will likely put more pressure on wage increases. That question was asked earlier.

And the study came out in August indicating that frontline healthcare workers saw on average wage increase of 8% and talking with our clients, we've heard 10% and 12% baseline wage increases. And they're saying or their nurses are saying, that still is not nearly enough.

So it's hard to say where it will settle in, but clearly, wages and benefits for nurses will increase. And quite honestly, they should. And it's hard to say what that will ultimately settle at, but I think it will be nothing like we saw before with the 2%, 3% increases.

I also believe that healthcare organizations going back to my part will have a different staffing paradigm mix, and we'll be utilizing more flexible staff rather than core staff.

A, because that will be what the workforce prefers, but it will also for them, probably be more economical in some ways to have that flexibility of having travelers and staff when they need them. Hopefully, that's helpful, Mark..

That is. Do you think that, is this -- I've seen different periods where there's been activism with regards to healthcare workers.

Do you think that this is the most intense period that you've ever seen?.

Yes. Definitely..

Great. And then how are you thinking about the glide path in terms of the bill rates? You kind of gave us an expectation for where it should end up being by the end of the year.

Do you think that's a relatively smooth path? Or -- and then can you also talk a little bit about Allied because it seems like there's probably room for further expansion on the bill rates there, just given the overall level of demand?.

I'll talk about the glide path and then maybe Landry, you could chime in on Allied. So we think that the first quarter will continue to be relatively more elevated and that we would see the more significant decreases come in the second and third quarter. And then fourth quarter would probably just glide through.

But if we're to sort of look at the sequential changes, second and third quarter would be our best guess right now.

So Landry, you want to talk about Allied?.

Yes. Overall, I mean, the demand in Allied is significantly right now. And it's across a lot of their different they're different specialties. So therapy, I know we've talked about it a lot in the past. It's a 10 times what we had seen even a year ago. And even in respiratory, you would expect that, that might have already come down.

Respiratory is at five times from what it was a year ago. So they already have some elevated rates or higher rates due to the strong demand that's there. Yes, you could expect where the demand is today that we would expect some bill rate increases.

Due to different puts and takes in that business, we actually would expect it maybe to be a little bit more flat as we go into next year and throughout the year. If you went back a year ago therapy -- maybe two years ago, therapy made up a very large percentage of that overall business, and now that's kind of flipped.

And imaging, respiratory and lab makes up a larger percentage of the business and so -- which typically carries a higher bill rate. So we think that there's big upside in therapy. So it would be more of a mixed story that might keep that bill rate flat as we go into next year..

There are no further questions, so I'll hand back to the team for closing remarks. [Call Ends Abruptly].