AMN Healthcare (AMN) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Vice President of Investor Relations - Randle G. Reece
• President and Chief Executive Officer - Caroline Sullivan Grace
• Chief Financial and Operating Officer - Brian Scott

TAKEAWAYS

• Revenue -- $717.3 million, up 13% year over year or 6% excluding labor disruption activities.
• GAAP Diluted EPS -- $0.83, an increase from $0.76 in the third quarter of 2025.
• Adjusted Diluted EPS -- $1.16, compared to $0.39 in the prior year period.
• Adjusted EBITDA -- $93.6 million, representing 13.0% of revenue and a 63% increase year over year.
• Nurse and Allied Solutions Revenue -- $460.0 million, higher by 27% year over year or 15% excluding labor disruption.
• Nurse and Allied Volume -- 16% higher than a year ago, including 21% growth in travel nurse and a 12% increase for allied professionals.
• Average Travelers on Assignment -- 9,486 professionals, a 3% increase over the second quarter of 2026.
• Physician and Leadership Solutions Revenue -- $171.2 million, down 4% year over year but reflecting a 15% increase in search revenue.
• Locum Tenens Revenue -- $138.2 million, representing 6% sequential growth despite a 5% year-over-year decline.
• Technology and Workforce Solutions Revenue -- $86.1 million, down 9% year over year due to pricing pressure in language services.
• Language Services Revenue -- $69.1 million, a decrease of 8% year over year, with pricing down 9% and minutes slightly higher.
• Vendor Management Systems Revenue -- $15.1 million, 11% lower than the prior year period.
• Consolidated Gross Margin -- 31.9%, 280 basis points higher year over year, primarily due to a labor disruption reserve release.
• Labor Disruption Reserve Adjustment -- $51 million favorable adjustment from prior events, impacting the nurse and allied segment gross margin by 860 basis points.
• Education Volume -- Up more than 25% year over year, driven by higher demand for staffing in educational settings.
• Physician Days Filled -- 48,298 days, with revenue per day filled reaching $2,867.
• Cash and Equivalents -- $256.0 million at quarter end, with no balance drawn on the revolving credit facility.
• Operating Cash Flow -- Used $88.0 million during the quarter, reflecting the refund of client deposits from previous labor disruption events.
• Capital Expenditures -- $10.0 million in the third quarter, focused on technology and workforce optimization platforms.
• Share Repurchases -- Used $8.4 million to repurchase 250,685 shares at an average price of $33.50.
• Total Debt and Leverage -- $750.0 million in debt with a leverage ratio of 1.3x, calculated under the terms of the company's credit agreement.
• Fourth Quarter Revenue Guidance -- Range of $655 million to $670 million, with labor disruption revenue expected to be $5 million.
• Fourth Quarter Gross Margin Guidance -- Projected between 25.7% to 26.2%, reflecting lower search volume and seasonal factors.
• International Nurse Revenue Growth -- On track to achieve more than $150 million in revenue growth for the full year.
• SG&A Expense -- $149.3 million, or 20.8% of revenue, compared with $138.6 million in the prior year period.

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RISKS

• Sullivan Grace stated, "ongoing delays in embassy visa appointments will result in near term headwinds for the business," regarding the international nurse segment.
• Sullivan Grace warned that some clinicians are holding out for higher rates as demand increases, creating potential pricing pressure in specific markets.

SUMMARY

AMN Healthcare Services, Inc. (NYSE:AMN) reported growth in its nurse and allied solutions segment despite a complex operating environment characterized by pricing pressure in technology services and delays in international placements. Management noted that health care organizations are increasingly seeking strategic workforce management and visibility into supply and demand dynamics. The company is currently executing a technology transformation within its physician segment while managing contract renewals and RFP processes for large health systems.

• CEO Sullivan Grace stated, "We are now on track to have the highest levels of productivity in Nurse and Allied that we have ever had."
• Management reported that more than half of the sales pipeline consists of Managed Services Programs as clients seek risk-sharing partnerships.
• The company expects to recover gross margin in its language services business in the first half of 2027 through the expansion of global interpreter capacity.
• CEO Sullivan Grace stated, "The cost premium for travelers over the all in cost permanent clinical staff is at a historic low."
• Management noted that bill rates have remained stable for 18 months, though recent increases in clinician choice may lead to future rate adjustments.
• The company reported that international placements will take four to five months to normalize once embassy visa appointments return to standard levels.

INDUSTRY GLOSSARY

• Locum Tenens: Temporary staffing of physicians and other healthcare providers.
• VMS (Vendor Management Systems): Software used to manage contingent workforce and staffing vendors.
• MSP (Managed Services Programs): A solution where a provider manages the entire contingent staffing process for a client.
• Allied Health: Healthcare professionals such as physical therapists and medical technologists, excluding nurses and doctors.
• Adjusted EBITDA: A non-GAAP measure representing earnings before interest, taxes, depreciation, and amortization, with adjustments for non-cash or non-recurring items.
• RFP (Request for Proposal): A formal business process for soliciting bids from vendors for specific services.
• SLA (Service Level Agreement): A commitment between a service provider and a client regarding specific performance standards.
• RPO (Recruitment Process Outsourcing): A form of business process outsourcing where an employer transfers all or part of its recruitment processes to an external provider.

Full Conference Call Transcript

Operator: Afternoon, ladies and gentlemen. Welcome to the AMN Healthcare third quarter 2026 Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a Q&A session. If at any time during this call, you require immediate assistance, please press 0 for the operator. This call is being recorded on Thursday, 11/05/2026. I would now like to turn the conference over to Randle G. Reece, vice president of investor relations. Please go ahead.

Randle G. Reece: Good afternoon, everyone. Welcome to AMN Healthcare's third quarter 2026 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com. The conclusion of this call, Remarks we make during this call about future expectations, projections, trends, plans, events, or circumstances, constitute forward looking statements. These statements reflect the Company's current beliefs based upon information currently available to it. Our actual results may differ materially from those indicated by these forward looking statements, because of various factors and cautionary statements including those identified in our most recently filed forms 10-K and 10-Q, our earnings release and subsequent filings with the SEC. Company does not intend to update guidance or any forward-looking 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 with me today are Caroline Sullivan Grace, President and Chief executive officer and Brian Scott, Chief Financial and Operating Officer. I will now turn the call over to Carrie.

Caroline Sullivan Grace: AMN continued to deliver on our mission of empowering the future of care as reflected in our third quarter results. Revenue of $717 million grew 13% year over year, or 6% excluding labor disruption activities. 27% from a year ago, or 15% without labor disruption. Search revenue saw 15% year over year revenue growth. Net income for the third quarter was $33 million or $0.83 per share and adjusted EBITDA was $94 million Third quarter results included a $51 million favorable reserve adjustment for past labor disruption events. We see health care organizations taking a broader view of their workforce.

While clients remain focused on cost and flexibility, increasingly they want better insights and visibility into demand, supply and performance across their workforce. That plays to AMN's strengths. Our combination of talent depth trusted client relationships, operational expertise, and technology enabled solutions allows us to help clients not simply fill positions, but also make better workforce decisions. Underlying demand in most of our businesses continued to grow, and our teams executed well against this demand. Third quarter performance benefited from the market uplift along with our company specific gains in candidate acquisition and placements across sales channels.

5 of our businesses have returned to year over year growth, and we see a path for the remaining businesses to return to growth in 2027. We are particularly encouraged by the growth in our Nurse and Allied business. Demand has strengthened and our teams are capturing that demand through the improvements we have made in AI recruiting, speed and 24/7 execution. We still view core staffing demand as the bellwether long term growth in our total addressable market. We hear common themes from our network of 2.3 thousand clients which include some of the country's largest health systems.

The most prevalent drivers of travel staffing demand are growth in patient volume and persistent vacancies and turnover in core staff positions. Across healthcare, permanent hiring has slowed to a level of little more than 1-to-1 parity with attrition. Many health care leaders recognize the flexibility and cost effectiveness of our Total Talent Solutions. The cost premium for travelers over the all in cost permanent clinical staff is at a historic low. Improved demand boosted third quarter revenue for Nurse and Allied to $460 million. Volume was 16% higher than a year ago including 21% growth in travel nurse and a 12% increase for allied.

The average number of nurse and allied travelers in the third quarter was 3% higher than Q2 defying typical seasonality. Our education volume is up over 25% year over year. Nursing and Allied demand increased by 70% from the low point in February through October. While demand and volume have grown, gross margins are holding relatively stable from a combination of flat bill rates and a market that remains highly competitive. Though we have seen healthy increases in supply, we are beginning to see clinicians hold out for higher rates. Historically, this dynamic has led to increased pricing which would be a positive for margin and operating leverage in the future.

Offsetting some of the strength in short term nurse, is our international nurse business, where ongoing delays in embassy visa appointments will result in near term headwinds for the business. We have very recently seen some appointments come through, but they have been limited and we expect a slowdown to constrain placements in 2027 until appointments return to more normalized levels. In the fourth quarter, we project Nurse and Allied revenue to be down 13% to 15% year over year, with labor disruption revenue being $5 million this quarter compared with 124 million in Q4 2025. Excluding labor disruption, Nurse and Allied revenue is projected to grow 13% to 15% year over year.

Our international business is expected to be down in the low teens sequentially though still achieving high single digit year over year growth. Physician and Leadership Solutions revenue of $171 million in the third quarter, down 4% year over year though 4% higher sequentially. Locum Tenens revenue of $138 million was up 6% sequentially and down 5% year over year. The 15% growth in Search reflects particular strength in Executive Search and physician permanent placement. Our Executive and Interim Search businesses benefit from leadership turnover in healthcare from both planned retirements as well as organizations focused on accelerating their growth transformation, and technology strategies.

Similar to the technology and process improvements made in our Nurse and Allied businesses, our Locums business is in the middle of its own growth acceleration program targeting year over year revenue growth in 2027. Our teams have already begun executing organizational and improvement efforts that have energized the team with larger technology enhancements rolling out in the coming months. For the fourth quarter, we project physician and leadership Solutions revenue to be down 5% to 7% year over year. Third quarter revenue for Technology and Workforce Solutions of $86 million, down 9% year over year and modestly better than our expectations. Language services revenue of $69 million, down 8% year over year and down less than 1% sequentially.

Minutes were up slightly year over year, while pricing was down 9%. VMS revenue of $15 million, lower by 11% year over year though flat sequentially. Segment gross margin reflected the cost pressure we anticipated due to renegotiated language services contracts hitting in advance of completing the rollout of our lower cost service model. Our global interpreter capacity will take a step higher in the first half of 2027, which should enable us to recover gross margin. We are continuing to empower Workwise our data technology and workforce optimization platform, while expanding our relationships across the AMN solution set. We continue to drive innovation in our Passport app for health care professionals and we have enhanced its capabilities.

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

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

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

The higher margin resulted from the labor disruption reserve adjustments, which positively impacted gross margin by 25 basis points. Third quarter net income was $33 million compared to $29 million in the prior year period and $21 million in the prior quarter. Adjusted EBITDA was $94 million or 13% of revenue, Adjusted EPS was $1.16. Consolidated SG&A expenses in the quarter were $149 Adjusted SG&A, excluding certain items, was $138 million,, up 7% compared to the prior year. Driven primarily by higher professional liability related costs, and changes to the allowance for credit losses. The Nurse and Allied segment reported revenue of $460 million with a 30.9% gross margin and 17.5% segment operating margin.

The labor disruption reserve adjustments favorably impacted the segment gross margin by 860 basis points and the segment operating margin by 40 basis points. Segment revenue, excluding labor disruption activity, increased 15% year over year, demonstrating strong execution in travel nurse and allies on higher demand. Travel nurse volume increased 21% year over year, while Allied was up 12%. International Nurse also experienced growth during the quarter with revenue increasing 32% year over year. However, we are expecting international volumes to decline sequentially starting in Q4, until embassy visa appointments resume with some level of normalcy. Nurse and Allied average bill rate was flat year over year, while average hours increased approximately 1%.

For physician and leadership solutions, revenue of $171 million was up 4% sequentially and down 4% year over year. Locum Tenens revenue was $138 million, up 6% sequentially and down 5% over prior year. The sequential growth included a 3% increase in days filled volume. In our Technology and Workforce Solutions segment, revenue of $86 million was down 9% year over year, and 1% sequentially. Segment trends continue to reflect pricing pressure and a dynamic operating environment for Language Services, and client specific utilization trends in the VMS business. Language services revenue was down 1% sequentially, Minutes increased 1% sequentially and were up slightly year over year. Pricing declined 1% sequentially, and 9% year over year.

While our tiered service strategy transition remains a near term headwind to revenue, it is helping retain clients and position the business for new client wins. We expect notable progress on our global workforce strategy to deliver gross margin benefits starting in the first half of next year. Helping offset lower pricing. VMS revenue in the quarter was flat sequentially, Platform volume remained below the prior year, while bill rates were up modestly both sequentially and year over year. We expect the business to stabilize around current revenue levels, with prospects for sequential growth in the second half of 2027 through both new client wins and increased volume.

Days sales outstanding for the quarter was 54 days, consistent with the prior quarter. Highlighting some additional balance sheet and cash flow details, we ended the quarter with $256 million in cash and equivalents, Cash flow from operations was a use of $88 million for the third quarter, with year to date operating cash flow of $285 million The third quarter use of cash resulted from refunding most client deposits from previous labor disruption events. We ended the third quarter with total debt of $750 million and our leverage ratio as calculated for our credit agreement was 1.3x. Moving to the fourth quarter outlook.

We expect consolidated revenue in the range of $655 million to $670 million including $5 million of labor disruption revenue. Gross margin is expected to be 25.7% to 26.2%. Reported SG and A is projected to be 21.2% to 21.7% of revenue. Operating margin is expected to be minus 0.1 to 0.5%,. And adjusted EBITDA margin is expected to be 5.8% to 6.3%. Additional guidance details are provided in our earnings release. Our consolidated gross margin guidance is similar to the 26.1% margin we reported in the fourth quarter of 25. This guidance includes a Nurse and Allied margin that is in line with a year ago.

We expect Physician and Leadership gross margin to be down approximately 200 basis points year over year, driven by lower margin in Locum Tenens. And we project Technology and Workforce gross margin to be down approximately 100 basis points from a year ago due to revenue mix and a lower margin in language services. Now operator, let's open up the call for questions

Operator: Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you have a question please press 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press 2. If you are using a speakerphone, please lift the handset before pressing any keys. 1 moment please for your first question. Your first question comes from Trevor Romeo of William Blair. Your line is already open.

Trevor Romeo: Hi there. Thank you for-- hey, Carrie. Thank you for taking the questions. And great to see some underlying acceleration of volumes. Excuse me, for the for the travel business. So I wanted to ask first on that. I mean, just in the momentum that you are seeing, maybe I will ask this 2 different ways. How much would you attribute to market share gains? And then maybe ask a different way. I think you had about 16% volume growth for the segment.

How much of that is kind of underlying growth of existing clients and how much they are kind of filling versus new clients or maybe higher fill rates on MSP programs or just maybe any more color you can shed on those dynamics?

Caroline Sullivan Grace: Yeah. So if I look at the growth that we have seen in travel nurse, we have seen that demand growth across all channels. And I think that is very consistent with what the overall market has seen And if I go at our fill rates by those channels, we have improved our fill rates across every single channel. And so our performance is really a combination of 2 things. 1 is the higher demand that we and others in the market are seeing And the second part of that, and I will give a huge call out to our Nurse and Allied team, they have done just an extraordinary job on executing against that higher demand.

We have been talking about this over the past 3 years about what we are doing in terms of operational improvements, technology improvements, to build a better platform. We are now on track to have the highest levels of productivity in Nurse and Allied that we have ever had. And that includes the high watermark in 2022 with COVID demand. So I would say what we are seeing is both this continuation demand across all the channels and our ability to execute against that demand across all those channels.

Trevor Romeo: that is great, Carrie. Thank you. And then, you know, I guess on the international business, maybe just to dig in a little bit more there. I mean, you mentioned the kind of embassy visit headwinds. I guess, is the. Is your current view that the low teens sequentially declined for Q4 would be kind of a 1 time step down, and then that would be the run rate going forward? Do you think that could get maybe a little bit lower going into kind of the rest of I guess, going into 2027?

And then kind of a separate question, but related, you know, we did get a pretty significant shift in the in the political backdrop this week with the midterms I mean, is there any. Like, what is your outlook on kind of whether the winds could shift on the international business, maybe once these near term delays work their way through?

Caroline Sullivan Grace: Yeah. Let me take the second part of the question first, and then we will talk about international. If we go and look at the policy areas that would have the biggest impact on our business from a national standpoint, it would be 2 areas. 1 is, generally, where you had more favorable health care policies either from a reimbursement rate from expanded access that would drive higher patient utilization levels. So it is too early for us to tell what that is going to look like. But, generally, anything that would move in a positive direction on those 2 would be positive for our business. And then I would say the second piece would be immigration policy.

And so that would have a positive impact both on our international business as well as on our language services business. On a state level, we are tracking, and we always track a number of different you know, state level policies that may have an impact. And I would say, generally, we would want you know, not more restrictive regulation at the state level. But I think it is too early for us to tell from Tuesday night what direction those national policies will go. From an international nurse standpoint, we are still going to be up year over year, So we are on track this year to drive over $150 million of revenue growth in International Nurse.

What we have seen since the summertime, and we talked about this, because we had started to see it on our last call, is embassy appointments. Really virtually being nonexistent. And so we had not seen that in past periods of when visa retrogression had improved. So we do not really have any historical context for it. We have very recently in the past 2 weeks started to see some appointments come back through for those that had already been scheduled. We are assuming at this point that we have that slowdown in the fourth quarter that would result in our run rate going into 2027 being lower.

On a more cautious standpoint, if we did not see a lot of improvement, you would expect to be flat. From that step down that you would see in the first part of 2027. If we got improvement in the availability of some of those appointments, that would have a positive impact in the back half of the year. It would still take 4 to 5 months once we get those appointments to get our clinicians on the ground.

Brian Scott: Hey, Trevor. Just to add a little bit that from the third or the fourth quarter, our guide it is about a $5 million reduction in revenue in the international business. There would be another smaller step down from Q4 to Q1. Fortunately, with the stronger performance in the early part of the year, we have gotten a lot new clinicians on assignment. And as you know, they are multiyear. So that gives us more durability in 2027 But, again, without more new starts, that is where we start to kinda just level out from that first quarter.

We do have some expectation for some improvement in back half, but to Carey's point, it is just hard to predict the timing of the embassies reopening for appointments. And that is why we are trying to be a little more cautious in our outlook right now.

Trevor Romeo: Understood. Alright. Well, Carrie, Brian, thank you very much. I appreciate it.

Operator: The next question comes from Jeffrey Silber of BMO Capital Market. Your line is already open.

Jeffrey Silber: Thank you so much. I know in past calls, you have talked about a large client where the contract was up for renewal. I was wondering if we can get an update on that.

Caroline Sullivan Grace: Yes. So this is public. The Kaiser contract goes through the end of 2026. Kaiser is well into a long expected RFP process and that is a normal part of their governance. process for a contract of this size. While this is a competitive RFP, we feel very well positioned. Our partnership and our program are strong and we have built our strike capabilities over the past 2 years with and for Kaiser. And we deliver strongly on those programs.

Jeffrey Silber: Okay. I appreciate that. In your prepared remarks, you talked about some of the changes going on in the Locum Tenens business. I was wondering if we can just double click on that. Can you give us a little bit more color on what you are changing and when do you think the benefits will help the segment?

Caroline Sullivan Grace: The best analogy for what we are doing in locums is what we did in our nurse and allied business that we started almost 3 years ago. And so if we look at our locums business, thing 1 is we want to make sure that we are effectively competing in all channels. So we wanna run strong MSPs. We want to have strong vendor-neutral offerings. We want to have strong direct fill as well as in third party. And so we have done things to be able to compete against competitors in all those channels. We rolled out Locums VMS capabilities.

In the early part of last year, and what you have seen us embark on over the past 2 quarters is really improving our speed to fill in very competitive third party channels. You need to be really strong and fast to be able to get your candidates in. And so we are going through the same process that we went through in Nurse and Allied. It includes looking at every part of that process How do we automate How do we tech enable? How do we shorten every part of that process? So that work is going on. It will build over time. We should start to see some improvements in the beginning of 2027.

I would expect that to build as we go through 2027. and returning the business to growth sometime next year.

Jeffrey Silber: Okay. Fantastic. Thanks for the color.

Operator: The next question comes from Kevin Fischbeck of Bank of America. Your line is already open.

Kevin Fischbeck: All right. Great. Thanks. I just want to get a better sense of kind of the underlying performance in the quarter. I guess if I strip out that reserve adjustment from an EBITDA perspective. It looks like you guys were maybe at the low end of what your guidance was from an EBITDA perspective even though the revenue number was a good few percentage points above kind of where you thought the quarter would end up. Can you just kind of talk about on a core basis, kind of the puts and takes around the excess revenue growth and margins and how that played out.

Brian Scott: Yeah. Sure. I do not think there were any major surprises you see. We you know, with that adjustment out, we still ended up above the high end of our guidance range on revenue. The gross margin, was at the low end of our range, and in part was a bit of a mix component with Nurse and Allied having a lower gross margin that has an influence there. We did have a, nearly $3 million extra adjustment for workers' compensation. it is a normal process we go through 2x a year. So that had a drag directly on the gross margin and that flowed directly into EBITDA as well.

So that is probably the most significant variable that would have that impacted the EBITDA dollars relative to the guide we gave. Outside of that, it was most things were relatively in line with what we expected. Again, seeing strong-- nice always-- the strong upside on the revenue that we are seeing flow through for Nurse and Allied in the fourth quarter is definitely a bright spot for us. Okay.

Kevin Fischbeck: So if I can get back to just to say that back. The way you guys looking at it, strong demand, better than expected revenue if you adjust for that, I guess, 2 reserves that you had to take, 1 positive, 1 negative. You would be at the high end of the EBITDA number. Yep.

Brian Scott: Oh, okay.

Kevin Fischbeck: And then, I guess, Carrie, you would said something along the lines of some signs that the supply is good, but people are starting to look at maybe holding the line on rates that they would accept. Can you just talk a little bit more about kind of what you are seeing there, and maybe how long it might take for when you see these types of signs before pricing starts to firm.

Caroline Sullivan Grace: Yeah. So what we have seen, if I normalize for supply that we saw coming in when we had some large strikes to the fourth quarter of last year and the first quarter we have seen a steady increase in supply really going back to last year. And when we look at that supply, what we have started to see very recently because there is a lot more demand out there, is you will see some clinicians hold off actually booking to see if bill rates are going to increase, They are always maximizing and looking for both the opportunity and maximizing their pay rates with that opportunity.

So I think, Kevin, we are starting to see what we would expect, what we really look at is normal market behavior when you start to see that demand, supply starts having more choice. And so we would expect especially in places where you have unfilled orders, that you would start to see and build on more clients that were increasing their bill rates to fill those orders. Bill rates overall had been stable for 18 months. We have seen pockets underneath that where bill rates have increased. We just need to see that more consistently.

I would say some early signs that we are seeing around trying to get more supply on behalf of the systems are things like guaranteed work weeks. We did see in the third quarter some increase in rapid response orders. it is too early to call it a trend. But those types of signs would be, we believe, precursors to starting to see bill rates start to go up in 2027.

Kevin Fischbeck: Alright. Great. Thanks.

Operator: Your next question comes from AJ Rice of UBS. Your line is already open.

Albert Rice: Hi, everybody. Just to think about 2026, there is been a lot of puts and takes in terms of disruption revenue and some of the other things you are calling out. And then to think about modeling for 2027, getting a baseline to jump off of, should we think of what the normalized year of 2026 making adjustments for things that are sort of unusual? And use that to compare to 2027 when you take your normalized fourth quarter and anticipate some growth off of that going into next year. Just conceptually help us out on that.

And I wondered beyond the comments on international, are there other puts and takes that you would wanna make sure we keep in mind when we are starting to think about our buildup for 2027?

Brian Scott: Thanks, AJ. I think it is probably easier to use Q4 as a building block because then it will reflect some of the things. Some of the changes we have seen throughout this year and even, for example, with international as you said, we have seen the step down from Q3 to Q4. So it is kind of a better launching point. Along with the improvements we have seen in our Nurse and Allied business. And so our, you know, typical path is that Q4, you see the gross margin down some, Again, part of that is reflected by the lower international business, which has a higher gross margin attached to it.

But there is also some seasonality in Q4 where we typically see the margin down at lower some lower search volume. The minutes in language services typically a little bit lower. So that this is not unusual for the margin to be lower, and it would see that start to pick back up in the first quarter. And then as Carrie mentioned, some of our businesses that we expect to get back to growth during 2027 have a higher margin profile as well. So we see an opportunity to see that gross margin improve through the year. And then you would kind of build on the revenue components that you typically see in the business.

And, we have got parts like locums where we have seen some declines during this year. A little bit of base sales volume in the third quarter is positive to see the fourth quarter revenue is pretty reflective of normal seasonality. But we would start to see that accelerate as we go through 2027 as well. Okay.

Albert Rice: And 2 other things just quickly on. 1 is the $51 million favorable reserve adjustment. Does that sort of reset the balance sheet? Are you carrying other reserves, that you are waiting for something to materialize before making a decision on? Or how should we think about that And then you mentioned Kaiser, but I was wondering about broader commentary on what you are seeing in terms of RFP activity. there is a lot of--there are some of your competitors that seem like they are in financial distress as best I can determine. there is others that are going through major consolidation.

Is that generating more RFP activity around MSP or around are you just seeing more new customer interest, and how would you characterize that?

Caroline Sullivan Grace: Let me answer the second part of the question. I will turn it over to Brian for the first. Generally, what we are seeing in the market is we have had very strong client retention The flip side of that is it is harder to get clients to move. What we are seeing. And our pipeline is up quarter over quarter is clients really looking for the combination of a partner who can help them across the spectrum of talent solutions have innovative technology, and be able to put those together. So we are well positioned for what we are seeing is a trend of what clients want in the marketplace.

And our financial strength is a part of us going into that process in a really strong position. I will say of note, for the third quarter in a row, if we look at our total pipeline, more than half of our pipeline is MSP. So we have seen more clients talking about wanting to have partners that are going to be risk sharing with them. And having SLAs against being able to get the fill. So that is a trend that we have started to see over the past couple quarters. But we feel good about our pipeline build.

About our commercial team, and about our positioning of our solutions against the needs that clients are talking about what they need to build the workforce of the future.

Albert Rice: Okay.

Brian Scott: Thanks so much. I will go ahead. Yeah. I can share another point. We still have some remaining strike events from prior periods. So there are some remaining reserves as well as some deposits left, but that cleared a lot of that during the third quarter. But we always have some until we finalize all of our invoices and reconcile them with the clients. We wanna make sure we have got sufficient coverage there. But this is obviously a pretty significant amount of it.

Albert Rice: Okay. Thanks so much.

Operator: Your next question comes from Constantine Davides of Citizens. Your line is already open.

Constantine Davides: Thank you. Just a question on sort of seasonality and I know we are seeing a somewhat earlier start to the flu season. How should we think about that impact demand in the third quarter? What does that say about sort of fourth quarter, first quarter? Just trying to think through the impact of that. If that is material to you guys at all.

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

Brian Scott: Yeah, we have had really rates, which can be. You know, for fluids, it is sometimes difficult for clients to predict it. And by the time that they may be experiencing, you know, increases, maybe in ER visits, it is hard to then catch up to that with new orders. So we do not typically get a, you know, tremendous amount of flu related just orders, but it usually will have a positive impact on extensions if they have clinicians there they are gonna wanna maintain them if they are seeing an increase in census. So that is simply a positive trend when you have a higher seasonal flu. Environment.

Caroline Sullivan Grace: And the other thing comes to me, I would say, is in addition to just the overall patient utilization increases, some of our clients are telling us that they are seeing some increases in acuity levels. So it is not just you know, the census going up, but also, you know, on the margin, some higher acuity.

Constantine Davides: Okay. Great. Thanks for that color.

Caroline Sullivan Grace: And then Carrie, just on the language services business, to what extent do you believe you can see some relief from some of the pricing dynamics you have experienced this year as you enter next year? And then you made a remark about interpreter capacity and maybe that benefiting margins from Q4 to Q1. I just wanted to drill into that a little bit as well. So if you look at the pricing headwind that we had this year, it should be--we expect it to be in the high single digit And so you have seen a little bit of offset in terms of just minutes growth.

But really, the big driver of what we have seen from a revenue standpoint has been that pricing. We would expect to still have an impact of. On pricing next year, but it would. It should be more moderated than what we experienced this year. So we have been talking about it this year with high single digits. it is more like mid single digits next year. We have gotten through a number of our clients renewing. And, you know, kind of going to those, you know, new service models. So we would still have some in 2027, and then, you know, a tail of that into 2028.

But we will also be rolling out by the end of the first quarter the last part of our new service model. And so that is where we would have access to a broader supply of global commissions and we would expect to recapture some of our margin.

Constantine Davides: And where is the gross margin on that business today?

Brian Scott: Just the language part. it is it is still in the kinda mid thirties now. We have historically been up over 40%, so that is where we think we can find our way back closer to a 40% margin, which is we think it is it is pretty normalized with where our competition is with this broader global workforce.

Caroline Sullivan Grace: And I would say and I would say the other part, and we talked about this a bit over the past 2 quarters, and we continue to see it. Is we are seeing a focus a more balanced focus on cost per minute and quality. We had a shift, I would say, in 2025 and into the first part of this year where you really had more of a, you know, mono focus on cost per minute. And we are starting to see both on the clinical side and in procurement. A focus back into we want really competitive price per minute but we also do not wanna sacrifice quality.

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

Constantine Davides: Okay. Thank you.

Operator: Your next question comes from Tobey Sommer of Truist. Your line is already open.

Tobey Sommer: Thank you. What are your expectations for incremental labor disruption activity though, both over the near term and into next year.

Caroline Sullivan Grace: Maybe I will start with this and then have Brian add. I always say this quote and it continues to be true. there is an 80% chance a strike will happen, an 80% chance it will not. We have under contract support for some medium and large strikes So it is hard to predict when those may happen, but our team has gotten very good at this. Particularly over the past 12-plus months. We have incorporated into our guidance about $50 million of strike revenue. But for next year, And we have a pipeline that is that is healthy You just never know even if you get contracted for a strike whether or not that strike will actually happen.

Brian Scott: Yeah. Tobey, I mean, to Carrie's point, we have multiple clients we are already contracted with that for events that could still happen this year, but there is several also that are more likely to be in the first half of next year. it is just the difficulty is just predicting if they will happen and how long they would be in revenue impact.

But we have seen for sure just industry wide a greater preponderance of labor disruption events actually occurring We know there is 1 right now. there is been notice given for an indefinite strike on the East Coast. it is not 1 of our events, but it is just. it is indicative that you are just seeing, you know, a little more tension between the unions and the hospitals. and more events occurring. And so this is a high value, offering for clients at a critical time. And we are proud to be able to provide, we think, a, you know, top-tier service So we are.

We expect there will be activity next year as we have had each of the last several years. But it is always difficult to predict the exact timing and magnitude.

Caroline Sullivan Grace: And so the other interesting thing that we are seeing in strikes that you really had not seen before is you did not see indefinite strikes. And so to have some of those indefinite strikes is also something that, you know, we continue to monitor as you know, is that a trend that we will continue to see in the future?

Tobey Sommer: Right. And then I know you are just in a previous question talked about margin trends in the Language Services business. But if we can continue to get some revenue growth and locums and nursing allied, some of the bigger parts of the portfolio. How long do you think gross margins will lag and still contract before eventually, hope flattening out and expanding because the competitive nature of the markets despite some financial pressure at some competitors. Has not really abated now for years.

Brian Scott: And so are you talking more on a consolidated basis? Just our overall margin. Maybe, Nurse and Allied as well as Locums, couple of the larger buckets.

Tobey Sommer: Does he already walked through language services. Thanks.

Brian Scott: Yeah. No. I mean, with Nurse and Allied, again, if you kinda take out some of the, you know, the labor structure activity, obviously, is created you know, quite a bit of variability, and we have mentioned that we have had stable margins there. We saw some you know, some improvement during this year with the growth in international, and we had expected originally for that trend to continue in 2027. Until some of the more recent events with the embassies. And so, you know, we are again, we would expect to see some rate improvements over time.

And as even, you know, having more as our pipeline of programs grows, that creates more opportunity to have more direct relationships, which typically has a better margin profile attached to it. So there are certainly opportunities between bill rates program activation, to see some improvements over time But right now, we are you know, we are looking. Again, stability is a good thing, and we are seeing really good flow through. In our EBITDA with the volume growth. So we would expect over time if as history repeats, that we would see some improvement. But I think it will be a slow build over time with Nurse Now.

I And then on the locums side, I think we have kind of hit the. We believe it is more of the low point as we go into the fourth quarter into Q1. And so now our opportunity is, as we make these process and technology changes is to grow into some of the specialties that have higher margins, We have had good success the last couple of quarters in winning more direct contracts. We just need to again execute better into them, and I think that is gonna be another catalyst for margin improvement in locums. And then we are seeing really great performance in our search businesses.

We are getting close to turning the corner for our interim leadership business in physician and leadership. And both of those service lines both have a higher margin profile as well. So we have, I think, a good degree of confidence as we go through 2027. That we should see margin improvement, in that segment.

Tobey Sommer: Thanks. And lastly, I have a modeling question Can you remind us of the 4Q to 1Q sequential changes in gross margin and EBITDA margins to help us bridge that as we try to get our quarters right for 2027.

Brian Scott: In whatever you would consider a normal year. Sure. I mean, Again, we would normally expect to see some improvement in kind of all of our. I think these days in all of our businesses, from Q4 to Q1. it is probably a little more muted in our technology workforce solutions right now just as we are going through some of these transitions. But you know, for the Nurse and Allied business, stable to some modest growth and the same thing on the Physician and Leadership as you see locums usually improve from the fourth quarter. And then on the gross margin, we would again expect to see some modest improvement, again, just from mix going from Q4 to Q1.

The 1 headwind is that we have a higher payroll tax on our staffing business in the first quarter, but we are expecting to see a little bit of improvement in gross margin in Q1. The net of all that, it probably would not be significant change in EBITDA from Q4 to Q1. But that becomes kind of the building block for the rest of the year. We expect to see growth. Top and bottom line to the year.

Tobey Sommer: Thank you.

Operator: Your next question comes from Jack Slevin of Jefferies. Your line is already open.

Jack Slevin: Hey, good evening. Thanks for taking my question. I wanted to touch on VMS a bit. Starting to see sort of a turn in some of the you know, the nonstrike core nurse and allied revenues, and I and I get that it is not an exact tie in your fill rates and other pieces that tie into VMS. But maybe just thinking about some of the difference between that turning back to growth and VMS still you know, staying stable, if you could give a little more color on how to think about you know, what we might see with the progression there, what is happening underneath the surface, it would be great.

Caroline Sullivan Grace: Yeah. So, Jack, what we typically see is you see the VMS business kind of mirror what you see in the Nurse and Allied business. We had 1 client that went off the platform, and that came through in the second quarter of this year. And so think of what we have seen kind of this quarter as we exit this year as being more client-specific to our platform. than not necessarily kind of correlating. You are always gonna have puts and takes of, you know, specific clients and what they are trying to achieve. Which will have some difference. But as we look into 2027, we have wins from this year that we are in process of onboarding.

So you will start to see those come through and build as we go into 2027. And then we would expect, you know, between what you are seeing in overall demand increases in the market, onboarding of these new clients particularly because we built so many capabilities in Workwise that are playing and being received very well. In the market that as we exit 2027, you would be, you know, back in a position of year over year growth.

Jack Slevin: Got it. Very helpful. Appreciate it.

Operator: Your next question comes from Mark Marcon from Baird. Your line is already open.

Mark Marcon: Good evening. Most of my questions have been asked, but I wanted to go back to 1 thing that you. you mentioned before, Carrie. In terms of the nurses being a little bit more selective because they are sensing uptick in terms of demand. Are you seeing any sort of behavior in terms of nurses that were previously not travelers starting to sample or are becoming more engaged with looking at travel opportunities anything along those lines?

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

Mark Marcon: Okay. And those nurses that are travelers but are holding out for higher bill rates, are they actually seeing success ultimately in terms of waiting and ultimately getting a higher bill rate?

Caroline Sullivan Grace: I guess it depends on where they end up going. We have not seen widespread movement of bill rates. And so you know, there is such a transparency both for the client and for the clinician. Around all these roles, and I think that has just increased with all these tech platforms you know, between Passport and what we do on our Workwise platform. We have certainly created a lot of transparency. So they have an ability more than they have before to be able to really go and compare and contrast different options. And so I do not know that they have uniformly seen success in doing it right now because bill rates have not been consistently increasing.

But it is a behavior that we want just in terms of feedback to clients about if they wanna lock down some of the supply. Really getting bill rates at market levels is going to help do that and increase as we end the year and go into 2. Into 2027.

Brian Scott: Yeah. Mark, we have had, I mean, there is. Some of those orders clearly have they have good bill rates when that allow for a more compelling compensation package. And those ones we are able to fill pretty effectively. it is just that it is in part of the reason why you see orders growing faster than volume is that you know, some of those are just competitive with others, but it is also, you know, there is gonna be a large quadrant that just still have rates that may just not be attractive enough.

And that is the longer that goes on, and there is a greater urgency from clients, that is when the rates will start to increase, and that will allow us to pull more supply. So there is enough now for us to continue to see this growth, but it could be even greater if you had more of those orders with rates that were really attractive. And to Carrie's point, it is very transparent. We wanna partner our clients to get them the right rate make sure the order is filled. And they are, you know, they are. It just takes time for them to kinda work through that.

And when the urgency is great enough, we are seeing rate adjustments. When they happen, we can fill the orders faster than we have ever done historically.

Caroline Sullivan Grace: Yeah. Mark, 1 point on the fast piece, and we have touched on this in past conversations. We have gotten so fast that even if you looked at, like, weekly open orders, there is a healthy portion of orders that will not even be on next week's report because we filled them. Literally within a couple days. And so we look at that velocity and the speed because we wanna get them filled fast, and we want them to be priced appropriately.

For clients and clinicians both And then we do the same thing when we see orders really starting to be out there for a while around what is the level of urgency for that and give guidance to clients around what they would need to do to get that order filled if it is an urgent need.

Mark Marcon: In terms of the premiums that you are currently seeing relative to full time, You have gone through multiple quarters where you have said it is at the lowest level. In terms of, like, when have you seen a difference in terms of the regions where there is actually been you know, significant strike actions in terms of what that premium looks like and has that resulted in any sort of change in terms of the ability to fill even faster?

Caroline Sullivan Grace: I do not think we have seen necessarily a premium difference relative to strike. If we look at what that level is, and this is fully loaded including recruitment costs, you are in the low single digits. And so it is at you know, historic low levels. Which is 1 of the reasons why we will have some clients come and say to us, this is a very affordable option, particularly with the flexibility and access to potentially permanent talent that it gives me. What I will say is when you have regions that overall have higher pay rates because they are more expensive geographies, you can attract talent from outside that region.

Because that is an attractive pay rate relative to where they may be otherwise and what their permanent role opportunities are there.

Mark Marcon: Got it. Thank you.

Operator: There are no further questions at this time. I will hand over the call to Carrie Grace for closing comments. Please go ahead.

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

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

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