AMN Healthcare Services Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2026

Key Takeaways

  • Positive Sentiment: Second-quarter results exceeded expectations: Revenue rose 2% year over year to $673 million, 6% above the high end of guidance, while adjusted EBITDA increased 26% to $73 million and adjusted EPS rose to $0.77 from $0.30. Results benefited from $25 million of labor-disruption revenue versus the $10 million assumed in guidance, including approximately $27 million of favorable nonrecurring items.
  • Positive Sentiment: Nurse and Allied Solutions showed a meaningful demand recovery. Segment revenue grew 11%, with travel nurse volume up 6% and Allied volume up 7%; travel nurse orders were up about 40% year over year in early August. The company expects more than 10% volume growth for both businesses in the third quarter, although bill rates have not yet meaningfully increased.
  • Positive Sentiment: AMN strengthened its financial flexibility, ending the quarter with $362 million in cash, $750 million of debt, and 1.5x leverage. Management said the balance sheet enables modest share repurchases and potentially more active participation in industry consolidation, while two small acquisitions expanded its leadership assessment and AI-enabled language-services offerings.
  • Negative Sentiment: Several businesses remain under pressure: Physician and Leadership Solutions revenue declined 6% and Technology and Workforce Solutions revenue fell 15% year over year. Language-services pricing dropped 8% and is expected to remain a headwind through 2026, while locums is undergoing a technology and process transformation that management does not expect to restore year-over-year growth until 2027.
  • Neutral Sentiment: Third-quarter guidance calls for consolidated revenue of $640 million-$655 million and adjusted EBITDA margins of 6.5%-7%, below the reported second-quarter margin because of nonrecurring benefits and a less favorable business mix. International nursing growth in 2027 may also be constrained by embassy appointment backlogs despite faster visa cutoff-date progress.
AI Generated. May Contain Errors.
Earnings Conference Call
AMN Healthcare Services Q2 2026
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Good afternoon, ladies and gentlemen, welcome to the AMN Healthcare second quarter 2026 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 6, 2026. I would now like to turn the conference over to Randle Reece, Vice President of Investor Relations. Thank you. Please go ahead.

Randle Reece
Randle Reece
VP of Investor Relations at AMN Healthcare

Good afternoon, everyone. Welcome to AMN Healthcare's second quarter 2026 earnings call. A replay of this webcast will be available at ir.amnhealthcare.com at the conclusion of this call. Remarks we make during this call about future expectations, projections, trends, plans, events, or circumstances constitute forward-looking statements. These statements reflect the company's current beliefs based upon the information currently available to it. Our actual results may differ materially from those indicated by these forward-looking statements because of various factors and cautionary statements, including those identified in our most recently filed Forms 10-K and 10-Q, our earnings release, and subsequent filings with the SEC. The company does not intend to update guidance or any forward-looking statements provided today prior to its next earnings release. This call contains certain non-GAAP financial information.

Randle Reece
Randle Reece
VP of Investor Relations at AMN Healthcare

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 Cary Grace, President and Chief Executive Officer, and Brian Scott, Chief Financial Officer and Chief Operating Officer. I will now turn the call over to Cary.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Thank you, Randle, good afternoon, everyone. We appreciate you joining us today. I am pleased to report that our second quarter results came in better than we forecasted, with five of our solutions growing revenue year-over-year. Second quarter consolidated revenue was $673 million, 6% above the high end of our guidance range and 2% higher year-over-year. Adjusted EBITDA was $73 million, or 10.9% of revenue, up 26% year-over-year. Adjusted EPS came in at $0.77, compared with $0.30 in the year-ago quarter. We ended the quarter with $362 million in cash on our balance sheet, providing us with the ability to invest in our long-term strategy, including acquisition opportunities. We used our strong financial position to make two small yet strategic acquisitions that extend and advance our capabilities.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Our performance year-to-date demonstrated our effectiveness in balancing day-to-day execution while simultaneously handling large labor disruption events. While there were some unique items in our results, I am very encouraged to report that our core earnings exceeded guidance with building momentum that lifts our third quarter outlook. With contingent labor rates at a historically low premium to permanent staff, more clients are using flexible labor to meet their increasing patient demand. There is also continued interest in broader workforce optimization and tech-enabled talent solutions to build sustainable workforces. As the leader and innovator in total talent solutions, AMN is well positioned to support these market and client needs. Our second quarter performance was highlighted by revenue strength in our travel nurse, international nurse, allied, schools, and search businesses. Our Nurse and Allied Solutions segment drove the favorable surprise in the second quarter in several ways.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Segment revenue of $422 million grew 11% year-over-year and was 12% ahead of the consensus estimate. Nurse and Allied revenue benefited from higher volume on increased demand as well as higher than expected labor disruption revenue. Segment gross margin was 28.4%, with underlying margins in line with our expectations along with several beneficial factors specific to the quarter. Travel nurse volume showed 6% year-over-year growth and Allied volume grew 7%, both the highest growth rates these businesses have achieved in four years. Improving demand and strong fulfillment drove our performance. Year-over-year, travel nurse orders turned positive in May and accelerated in June. As of early August, the improvement continued, with orders up about 40% year-over-year and 20% higher than August 2024. As expected, International Nurse had 23% year-over-year revenue growth in the second quarter.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

While we continue to benefit from the forward movement in visa application cutoff dates, embassy appointments for visa applicants have not kept pace. Relief from the embassy backlog will influence how much this business grows in 2027. Allied orders showed modest year-over-year growth in the first quarter and accelerated through the second quarter, with mid-teens growth rates in June and July. Allied demand strength is broad-based in terms of settings and specialties. Notably, our schools business is on track for another year of double-digit revenue growth for the upcoming school year. Our team is executing very well against this higher demand with high fill rates, which fueled the second quarter outperformance and continued volume momentum. Third quarter guidance includes better than 10% year-over-year volume growth for both travel nurse and Allied.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

As demand increases, we are benefiting from our multi-year focus on process automation, 24/7 business operations, and AI enablement of recruiting, resulting in higher fill rates across our MSP, VMS, and third-party platforms. For the third quarter, we expect Nurse and Allied segment revenue to grow 9%-11% year-over-year. Physician and Leadership Solutions segment revenue in the second quarter was $165 million, lower by 6% year-over-year, and in line with guidance. Segment gross margin was 26.5%, down year-over-year, though modestly up from the first quarter. We saw a positive inflection in the second quarter from our search business, which produced 27% year-over-year revenue growth. New demand showed strong growth across physician and executive search. While the higher demand is being driven by executive turnover and facility expansion, growth is coming also from stronger positioning of AMN solutions in the market, with particular strength in academic medical centers.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

We are leveraging our market leadership in healthcare search to broaden our capabilities into adjacent services. In June, we acquired the Essential Leadership Assessment Solution to support clients in leadership selection, evaluation, and coaching, as well as succession planning. Locum tenens revenue in the second quarter was $131 million, lower by 8% year-over-year, and in line with guidance. We continue to see more locums demand growth in vendor-neutral third-party channels, which are the most competitive to fill. Our locums business is going through the same process and technology transformation that enabled our Nurse and Allied Solutions segment to compete successfully across all demand channels. Interim leadership revenue was $22 million, down 3% from prior year.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

New searches have been building over the past quarter, which is a reflection of our leading market position, increased investments in our sales team, and a growing wave of turnover and project-based needs in healthcare leadership positions. We are optimistic about the direction of demand and our ability to pursue year-over-year growth in 2027. For the third quarter, we project Physician and Leadership Solutions revenue to be down 5%-7% year-over-year. Technology and Workforce Solutions segment revenue was $87 million in the second quarter, down 15% year-over-year and in line with guidance. Segment gross margin was 48.6%, lower sequentially and year-over-year. Language services revenue of $70 million was down 8%, with VMS revenue of $15 million, down 20% from a year ago. Language services volume was flat year-over-year, while pricing was down 8%. Pricing will remain a headwind as we work through new client wins and renewals.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

The rollout of our lower cost core service tier continues to be well received, helping us compete more broadly in the market and win new clients. We are expanding our workforce globalization for service delivery over the next several quarters to stabilize and improve gross margin. In June, we acquired Jade Health to extend our medically qualified language interpretation services with AI-enabled support for the patient before and after the clinical interaction. The Jade platform improves the ability of limited English proficiency patients to communicate through the intake and discharge processes, further strengthening our value proposition of enabling high quality and cost-effective patient care. We also continue to strengthen our WorkWise labor force management optimization and engagement platform. We are seeing increasing interest in data and analytics to help drive workforce optimization.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Last quarter, we introduced enhancements to our dashboards, including supplier performance and insights with third-party bill and pay rate intelligence that can be segmented by skill set and geographic market. We built our strongest solution yet to empower data-driven workforce decision-making. We continue to enhance the features of our market-leading Passport app, including adding AI-enabled search for clinicians. Passport adoption grew throughout the quarter and recently surpassed 400,000 users, up 33% year-over-year, providing AMN with one of the largest clinician networks in healthcare staffing. Importantly, monthly active users increased by more than 50% over the prior year. For the third quarter, we estimate Technology and Workforce Solutions revenue to be down 11%-13% year-over-year. This quarter's financial performance has continued to improve our balance sheet strength.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Our capital allocation approach remains focused on creating long-term shareholder value, reflected in this quarter with the two targeted acquisitions that enhance our solutions portfolio while also returning capital through modest share repurchases. As the healthcare workforce services market continues to normalize, we are seeing increasing indications of industry consolidation. We believe our financial strength and market leadership position us well to be both an active participant and a beneficiary of these trends. We also welcomed two important additions to our leadership team with the appointment of a new Chief People Officer and Chief Commercial Officer. These proven leaders will help strengthen our talent strategy, enhance our technology-enabled and people-centered solutions, and drive a more integrated go-to-market approach aligned with our long-term growth objectives.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Their appointments also underscore AMN Healthcare's position as a premier destination for top talent, reflecting the strength of our platform, culture, and growth opportunities as we continue to attract experienced leaders who can help advance our strategic priorities. I'll turn the call to Brian for a deeper look at our second quarter results and third quarter outlook.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Thank you, Cary. I'd like to call out some details to expand on our second quarter financial results published this afternoon. Consolidated second quarter revenue of $673 million grew 2% year-over-year and was 6% above the upper end of our guidance range. The revenue upside came from labor disruption and strong performance in travel nurse, allied, and search. Our Q2 guidance had assumed $10 million in labor disruption revenue, while the actual reported revenue came in at $25 million. Reported gross margin was 30.6%, 210 basis points above the top end of guidance. Second quarter net income was $21 million, compared with a net loss of $116 million in the prior year period, a net income of $62 million in the prior quarter. Adjusted EBITDA was $73 million, or 10.9% of revenue. Adjusted EPS was $0.77.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Our consolidated results benefited from several items that are not expected to recur in the third quarter, including a true-up of billing accruals from the large Q1 labor disruption events, a reserve reversal from a prior year event, and other favorable reserve adjustments. These Q2 items added about $27 million to revenue, 290 basis points to our consolidated gross margin, and 370 basis points to our adjusted EBITDA margin. Excluding these items, our Q2 revenue would still be almost 2% above the high end of our guidance range, and our EBITDA margin would be at the top end of our 6.7%-7.2% guidance. Consolidated SG&A expenses in the quarter were $147 million. Adjusted SG&A, excluding certain items, was $135 million, down 4% compared to the prior year.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

SG&A included a $5 million unfavorable professional liability actuarial adjustment, partly offset by a $3 million favorable adjustment to the allowance for credit losses. The Nurse and Allied segment reported revenue of $422 million, with a 28.4% gross margin and 13.8% segment operating margin. The previously noted labor disruption billing and reserve adjustments contributed 490 basis points to the gross margin and 600 basis points to segment operating margin during the quarter. Turning to our traditional staffing operations, performance was led by our travel nurse and allied business lines. Travel nurse volume grew 6% year-over-year and was 3% better than the high end of guidance. Allied volume was up 7% year-over-year and exceeded our guidance by 1%. International nurse revenue also grew 23% year-over-year.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Nurse and Allied average bill rate was nearly flat year-over-year, a bit better than we had expected, and average hours worked were up 1% year-over-year. Higher demand and strong capture of that demand drove revenue above expectations. Bookings momentum is a key driver of our third quarter revenue outlook, which calls for double-digit year-over-year growth at the midpoint for the Nurse and Allied segment. The highlight of our Physician and Leadership Solutions segment this quarter was search. Physician search grew new searches by 37% sequentially and 40% year-over-year. Executive search saw new searches increase 30% year-over-year, and leadership search volume rose by 60%. Our Locum Tenens revenue was flat sequentially, due in part to a negative sales adjustment that reduced revenue and gross profit by $2 million.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Volume increased by just under 1%, which is below our typical seasonal uplift, which we called out on last quarter's call. As Cary noted, we are actively engaged in several initiatives to get this business back to growth. In our Technology and Workforce Solutions segment, while revenue was down 15% year-over-year, it was down 11% excluding the divestiture of Smart Square. Language services continues to navigate through the transition to our shared service strategy, which is enabling us to retain more clients. Minutes were up 3% sequentially and flat year-over-year, despite the pressures on the limited English proficiency population and nominal contribution from new clients. Price per minute was down 3% sequentially and 8% year-over-year.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Revenue in our VMS business was $15 million in the second quarter, and we expect this revenue to stabilize at this level over the second half of the year, with prospects for sequential growth in 2027. Day sales outstanding for the quarter was 52 days. Excluding working capital effects from the large labor disruption events in the first quarter, DSO was 54 days, flat sequentially and two days lower year-over-year. While our earnings release provides additional balance sheet and cash flow details, I want to highlight that we ended the quarter with $362 million in cash and equivalents. This was above our expectation of $175 million, primarily due to favorable working capital impacts, including a remaining outstanding balance of strike-related client deposits of $117 million at quarter end.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Even with Q3 cash flow including a $20 million interest payment and higher cash tax payments, and assuming the remainder of the deposits are repaid this quarter, we would anticipate at least $225 million of cash at quarter end. We ended the second quarter with total debt of $750 million, and our leverage ratio, as calculated per our credit agreement, was 1.5x. During the second quarter, we repurchased 85,000 shares at an average price of $26.33. Going forward, assuming no other material capital allocation needs, we anticipate modest share repurchases primarily to offset dilution from equity awards. Moving to the third quarter outlook, we expect consolidated revenue in the range of $640 million-$655 million. Gross margin is expected to be 27%-27.5%. Reported SG&A is projected to be 22%-22.5% of revenue.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Operating margin is expected to be 0.2%-0.8%, and adjusted EBITDA margin is expected to be 6.5%-7%. Additional guidance details are provided in the earnings release. Operator, let's open up the call for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Thank you. Your first question comes from the line of Jeff Silber from BMO Capital Markets. Please go ahead.

Jeff Silber
Jeff Silber
Analyst at BMO Capital Markets

Thank you so much. Cary, in your prepared remarks, you mentioned how your clients are seeing the contingent percentage at historic lows. Can you just kind of quantify that, roughly where it is now? I know there's no such thing as normal, but what should we expect that to normalize at over time?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yeah. Thank you, Jeff. If you look at, I'll go through kind of the cadence of what that's looked like over the past cycle. Pre-COVID, you would have seen that premium of contingent to permanent labor be in the mid to high teens. During COVID, you got up to 100% premium just because of the significant spike in demand. We're now back down into the mid to high single digit. Some would put that in some markets at actually even lower than that. The effect of all that is coming out of COVID, getting back to permanent, and reducing contingent spend was part of the workforce cost containment strategy. If you look at where we are today, particularly with both the relatively limited premium and the flexibility it provides, it's actually an important part of how you solve for your workforce strategy.

Jeff Silber
Jeff Silber
Analyst at BMO Capital Markets

All right. That's helpful. I guess I was thinking about the penetration rate, so to speak, the percentage of contract labor. Any comments on that, how that's tracking in your clients versus what was maybe pre-COVID?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yeah. We have clients that are at different places, and even within clients, you can have, especially their urban locations, at much higher levels of utilization. I would say as a general comment, we have seen overall utilization with clients that is at or slightly below where they were pre-COVID.

Jeff Silber
Jeff Silber
Analyst at BMO Capital Markets

Okay. That's really helpful. I'll jump back in the queue. Thanks.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Thanks, Jeff.

Operator

Thank you. Your next question comes from the line of A.J. Rice from UBS. Please go ahead.

A.J. Rice
A.J. Rice
Analyst at UBS

Hi, everybody. First, just to ask about your margin assumption. Obviously, this quarter, there's a lot of puts and takes, but it sounds like you were 10.9% in aggregate. You're going for a 6.5%-7% EBITDA margin in the third quarter. It doesn't sound like there's You're sort of assuming the margin for the core business was about the same in the third quarter that you saw in the second, or is there any place where you're assuming much of a change sequentially quarter-to-quarter?

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Thanks, A.J. This is Brian. I would say there's not any significant changes when you work through some of the items that we called out that impacted the higher margin in the second quarter. When you look at the kind of underpinnings of that and look from Q2 to Q3, there aren't any significant changes in the gross margins across the three different segments. Our SG&A is running pretty consistently as well. When you take that and bring it over, that's where you end up in the range for both the gross margin guidance as well as the adjusted EBITDA. The Technology and Workforce Solutions segment.

A.J. Rice
A.J. Rice
Analyst at UBS

Maybe-

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Yeah. With the segment, the Technology and Workforce Solutions segment is more mixed with that business down a bit, and that has a higher margin profile. That's why the guide on the gross margin, at the midpoint, would be a bit below where our second quarter was, again, on a normalized basis. That's probably the one thing I would call out. It's more mixed between the segments than it is any material changes within the segments.

A.J. Rice
A.J. Rice
Analyst at UBS

It may be in there somewhere and I missed it. Is the guidance on the strike revenue to go back to about $10 million for the third quarter?

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Yeah, we've embedded in there around $7 or $8 million of strike-related revenue in the third quarter.

A.J. Rice
A.J. Rice
Analyst at UBS

Okay. Maybe a bigger picture question on the sort of step up in demand that you're seeing, in Nurse and Allied. Is that focused in any particular area, large systems, academic medical centers, community hospitals, MSP, non-MSP? Is it across the board, or is there any way to characterize where you're seeing a pickup in strength?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yep. We're seeing it broad-based, and so both in terms of regions, size of healthcare providers, and we're also seeing it across service models. We saw increases in our MSP book. We're seeing increase in vendor neutral and third-party programs. The demand acceleration that we're seeing, we've really been in a kind of year-over-year demand increase posture for Allied for most of 2025 and 2026. What we saw in Nurse that accelerated in May was broad-based.

A.J. Rice
A.J. Rice
Analyst at UBS

Just as a last point, final point on that. You referenced in your comments some market disruption. Do you think what you're seeing is mostly just underlying strength of market, or are you picking up share given some of the disruption that's happening at some of your major competitors?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

I think that we are benefiting from two things in our business. One is some of the underlying demand acceleration that we believe is happening across the market. The second part is we are executing very well against that demand. We have been talking about this for a couple of years, about how we're building a more automated tech-enabled, scaled chassis. We're faster, and so it's not just the demand, and we're now playing across the entirety of the market, but we are executing very well on filling that demand.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Yeah. It's like-

A.J. Rice
A.J. Rice
Analyst at UBS

Okay.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

We grew the market overall in the second quarter, which I think it's indicative of, with our fill rates increasing on vendor neutral, that typically would imply that we're taking some share. The team's done a great job of delivering high fill rates on our direct and MSPs. Just in terms of overall demand as well, this is something we've talked about, I think, on prior calls with patient utilization still increasing at hospitals. The rate of growth this year has slowed down, but you've still seen several years of increasing patient volumes. Over the last several quarters, you've seen a slowdown in the permanent hiring. I think if you've looked at the total cost of permanent labor has increased significantly over the last three or four years.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

As hiring has slowed down and you have the attrition occurring, it's not unsurprising that you start to see demand pick up as well.

A.J. Rice
A.J. Rice
Analyst at UBS

Okay. Interesting. Thanks a lot.

Operator

Thank you. Your next question comes from the line of Toby Sommer from Truist Securities. Please go ahead.

Toby Sommer
Toby Sommer
Analyst at Truist Securities

Thank you. I'd love to get your perspective, both historically and prospectively. When demand increases, or orders increase to this degree, my sense is that historically rates follow if the demand increase persists for long enough, about a month or two, but call it six months. Are you seeing any difference in bill rates in your order book versus your TOA, do you expect to?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yeah, let me give you a little bit of perspective of what we see today, I'll have Brian layer in what we've seen historically through some of these cycles. We have seen the broad-based demand that we've been talking about. We haven't yet seen bill rate increases from that. Bill rates have been stable. We are seeing some places where bill rates are increasing with clients who just need to get them filled, but it's not more sustained. We would expect that when you start seeing higher periods of demand, particularly if winter orders start coming in and you start seeing that more sustained demand, there is a lag effect, that you would start to see bill rates improve. Brian, what would you

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Yeah, Toby, we've been through enough cycles together on this that I think you're spot on. That's what we've seen historically. There is a lag. The exact timing, I think is hard to predict. If you do have sustained higher demand, it's still a very competitive environment. That's the one thing that's, I think, a little bit different. You have more suppliers in the industry than you've had historically. That I think is also creating more competition to fill orders, where maybe that you haven't seen the rates pick up as much yet. If it sustains for a longer period and grows more, at some point that competition from clients would typically drive rate increases.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

We welcome that because that will also create the opportunity for us to bring more supply into the industry, because obviously our number one priority is filling positions for our clients.

Toby Sommer
Toby Sommer
Analyst at Truist Securities

Could you, speaking of supply, could you sustain a decent level of growth just based on increasing TOA at these bill rates, or do you need higher bill rates to generate the supply to sustain meaningful volume growth?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

I think it depends on where the demand is coming from. We have very large pockets of clients, I'd say particularly in locations and that are very attractive that we could continue to supply at these bill rates. The thing is, you leave this year and get into next year, you would want to start seeing some bill rate increases just because there's going to be a natural labor market increase expectation that is the foundation of any of these rates.

Toby Sommer
Toby Sommer
Analyst at Truist Securities

Thank you. Then one last question for me, if I could. Could you give us an update on the status of the Kaiser renewal, the RFP out in the market? I'm assuming you probably can't tell us who's going to win, you're going to retain, et cetera, but maybe give us your view on the prospects, the format of the proposal, if it's still a unified single vendor.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yeah. Our Kaiser contract goes to the end of 2026, and the client is now in the long-expected RFP process. All of this RFP process is part of their normal governance cadence. We expect this RFP process to be competitive, and we also have a very strong, long-standing relationship with Kaiser and very strong program performance. We feel well-positioned.

Toby Sommer
Toby Sommer
Analyst at Truist Securities

Thanks, Cary.

Operator

Thank you. Your next question comes from the line of Kevin Fischbeck from Bank of America. Please go ahead.

Kevin Fischbeck
Kevin Fischbeck
Analyst at Bank of America

Great. Thanks. I guess maybe just to follow up on that one. What historically has happened after the RFP re-procurement? Do they normally seek better terms, or is it basically just similar terms as you would expect on a new contract?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

I would say, generally speaking, procurement will strive for better terms as just a theme that we see across the board. I think we talked about this a little bit last quarter, but given the breadth and depth of the Kaiser relationship, we have evolved how we support and service them, even during the course of this contract. We are more markets-like than you would have been four years ago or five years ago. I give a lot of credit to both parties for that. I would say from what we see overall in RFP processes, we're not seeing anything different about how you continue to try to negotiate terms or what people are looking for.

Kevin Fischbeck
Kevin Fischbeck
Analyst at Bank of America

Okay. Is there a way to size the two deals that you did in technology workforce revenue, EBITDA contribution annually?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

The two acquisitions?

Kevin Fischbeck
Kevin Fischbeck
Analyst at Bank of America

Yeah.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

The acquisitions that we did, one is in PWS, in the language services support, language services solution segment, that's Jade. The other one, the Essential Leadership, is supportive of our search and advisory capabilities. Between the two acquisitions, we spent $3 million on those two deals. Think of them as extending our capabilities, and we're already seeing strong support for those capabilities. We have three verbals with Jade, and Essential Leadership Assessment is a solution we used in the past that we now own, and we're seeing interest in that as well.

Kevin Fischbeck
Kevin Fischbeck
Analyst at Bank of America

Okay. It wasn't clear to me if this was a change in the wording, but it sounded to me like a change in the wording. You've been talking about consolidation in the space for a while, this time you added not only that you were going to be a beneficiary of these trends, but maybe that you were also going to be an active participant. Is that a change? Are you now looking at deals more aggressively, or is that kind of always the way you thought about it?

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Yeah. I don't think there's a major change in the way we've thought about it. I think what changed in the last year is that as we've continued to strengthen our balance sheet and reduce our leverage, it's created more opportunity for us to kind of widen our capital allocation aperture. We were heads down, really focused over the last couple of years on de-levering our balance sheet. Now as we've got our leverage level down more than half times at the end of the quarter and have got some cash on the balance sheet, with more stability that we've seen in the market, it puts us in a position to be more active in looking at opportunities. We're always keeping an eye on things coming to market, we're also better positioned now if we want to be a participant.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

You can imagine we've got a pretty strong filter of anything that we would want to consider bringing in. We're very fortunate that we've got the broadest set of solutions in the market today. We're in a position now that if the right opportunity comes along, we think it'd be accretive, then we can participate more actively than we might have been able to 12 or 24 months ago. I think the market, as we've talked about over the last year, there's been an expectation there'd be more consolidation that would occur. Quite honestly, most of last year it was relatively quiet. There were a few transactions in certain categories, not as many as we expected. That's changed over the last couple of quarters. We're starting to see more assets come to market, that's partly why we said it.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

It's a combination of more opportunities, also us being in a position now to be more of an active participant.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Kevin, the other piece I'd add to Brian's comments is when we see competitors who are going through some evolutions or changes, it's also an opportunity for us. We are really much more proactive around going after market opportunities when those present themselves to gain new clients.

Kevin Fischbeck
Kevin Fischbeck
Analyst at Bank of America

Okay, great. Thanks.

Operator

Thank you. Your next question comes from the line of Mark Marcon from Baird. Please go ahead.

Mark Marcon
Mark Marcon
Analyst at Baird

Good afternoon, thanks for taking my questions. Wondering about the overall environment, just as it relates to travel nursing. You mentioned that demand has picked up, Cary. Is there a way of quantifying it just in terms of number of hospitals served, or systems served? Are you expanding the overall aperture of the number of hospitals, or are you just getting deeper in the ones that you've been serving for a while, but just seeing a pickup in demand there?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

It's a little bit of both, Mark. From a current client standpoint, we are seeing some utilization increase with them, and some of it is just for what I'll call same hospital needs. We're also seeing some of our clients expand. We're getting the beneficiary of some of that expansion. I'd say the second part of what we've seen from demand growth is, we are much more competitive in filling in third-party channels. It's all the seed things that we've been talking about for some period of time. That becomes a bit of a flywheel, that when you start filling more, they come to you. We are serving more healthcare systems through those channels.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

We are serving more, and it really is just a function of the fact that we have a much broader aperture of channels and programs that we're supporting, whether directly or through third parties.

Mark Marcon
Mark Marcon
Analyst at Baird

Great. You mentioned earlier that perm hiring at the hospitals has slowed down. There's lots of potential reasons for that, but what do you think the top three reasons for that is?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

I'd say the top three reasons are that they got back to a very good base of permanent hires, and that was a function of two things. One is the actual hiring itself, which we know was very high by historical standards coming out of COVID. The second part is you saw retention rates normalize post-COVID as well. It's not just that you're hiring more, but you're not losing as many clinicians in the back door. The other piece that we are seeing is the cost normalization and frankly, even historical attractiveness of using contingent as a completion strategy and giving you more flexibility. I've been with a number of clients over the past three weeks, and one of the things that they continue to look for is not just a cost-effective strategy, but increasing flexibility about how they achieve that.

Mark Marcon
Mark Marcon
Analyst at Baird

Great. Cary, are you noticing, or are the folks in the field noticing any difference with regards to any sort of demographic profiles with regards to the types of people that you're actually placing? I'm talking about clinicians in nurse travel roles.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

I don't know that we've seen any demographic change in the nurses that we're placing. I'll give you one stat and one kind of commentary on what we're seeing in terms of the broader nurse population. The one stat is, you saw in some of the latest labor reports that retirements ticked back up again. We kind of started out maybe 1.5%. You're up to a little bit over 2%. We were expecting that. I would expect that trend to continue as part of the aging demographic. Related to that, one of the things that I hear from a number of our clients is really how do I significantly scale up the aperture of clinical experience for some of my younger staff?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

That is something that is very interesting to them because it's not just that you're losing a one for one in a retirement, but you're losing the experience that goes with it.

Mark Marcon
Mark Marcon
Analyst at Baird

Yeah. I'm hearing some of the same things. With regards to PLD, when you think about that, what do you think it would take for some of the trends to turn around and to become a little bit more positive there?

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Let me kind of take it in two parts. Locums, very consistent themes to what we talked about last quarter. We have seen year-over-year demand increase. Most of that came in the first half of this year. We had some really nice client wins. We're seeing the demand that's there. We are not as fast on filling, particularly when a very large part of that market and the demand increase is coming in the third-party channels. It's a similar experience that we had in Nurse and Allied Solutions. We're doing the same transformation that we did in Nurse and Allied Solutions very successfully in our locums business. We would expect those efforts, you would start seeing the fill benefits of that as we get into 2027, and that we would return to year-over-year growth in 2027 in locums.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

If we look at the search and leadership businesses, we talked a bit already about the positive second quarter, year-over-year performance in search. We would expect for the remainder of this year and into 2027 for that to have year-over-year double-digit growth. There's going to be some seasonality in that. The end of the year, you typically have a little bit of quarter-to-quarter kind of sequential softening. We would expect from a year-over-year standpoint for that business to be in low double digits and then for interim to get back to growth in 2027.

Mark Marcon
Mark Marcon
Analyst at Baird

That's great. Thank you so much. I'll check back in the queue.

Operator

Thank you. Your next question comes from the line of Trevor Romeo from William Blair. Please go ahead.

Trevor Romeo
Trevor Romeo
Analyst at William Blair

Hi, thanks for taking the questions. Just maybe a couple left for me at this point. One may be on the international nursing business. I think you talked about 23% growth in a quarter. You also mentioned the embassy appointments maybe not keeping pace with the visa dates. Maybe you could talk through those dynamics a bit, and are your expectations for growth kind of still the same? I think last quarter it was high teens for 2026 and maybe low double digits for 2027.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

Thanks, Trevor. The high teens for this year. Yes, a lot of the placements that are impacting 2026 now have been made. Really, as we're looking to 2027, we've seen really good progress on the visa dates moving forward, actually more than we had anticipated. Between some of the travel bans that existed and more recently in the last few months, we've definitely seen a slowdown. I wanted to call it out on the visa interviews. That is starting to impact some of the volume expectations for 2027. We, at this point, would still expect to see growth in 2027 over 2026, but that amount of growth is probably a bit lower than we would have expected. There's ample demand, and we have a very large supply of nurses that still want to come here.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

There's discussion about improving the appointments and that may open up a bit as the next fiscal year starts for the government. We'll have more line of sight as we get into the next quarter call on what that looks like and how it would impact 2027. Again, sitting here today, we'd expect growth, but it may be more in the single-digit range from what we can see now. There's still adequate time for that to improve if we start to see things open up a bit more as well.

Trevor Romeo
Trevor Romeo
Analyst at William Blair

Okay, Brian, thank you. That's helpful. Maybe just on the language services business, if you could give a little bit more update on the competitive dynamics there. It sounds like you're kind of expecting lower pricing on renewals coming up. Maybe just how many quarters are we from being fully normalized on that front? What's your confidence that language services can be both a volume and a revenue growth market kind of beyond this normalization period? Thanks.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yeah. What we're seeing competitively is very similar to what we've seen over the past couple quarters. It is a very competitive environment, and that's just flat out competition, but also that competition going after more limited demand because of some of the immigration policies. What we have been seeing, and especially this last quarter, we had flat minutes growth, and you saw about 8% pricing compression. We would expect that trend to continue for the rest of this year. If we think about next year, we would expect the compression that we see in minutes pricing be more muted in 2027. We've worked through a number of our client renewals, new clients coming on. As we turn to 2027, we would expect with some new client wins with the rollout of our new tiered service strategy, help offset some of that compression.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

The second part of it that we've talked about the past two quarters is as part of our new service tiered strategy, we have a more global workforce that we have been putting into place. The first part of that was the end of last year into the first quarter. The second part will be the end of this year. That will also be helpful from a gross margin standpoint for this business in 2027.

Trevor Romeo
Trevor Romeo
Analyst at William Blair

Okay. Thank you very much.

Operator

Thank you. Our next question comes from the line of Jack Slevin from Jefferies. Please go ahead.

Jack Slevin
Jack Slevin
Analyst at Jefferies

Good afternoon. Thanks for taking the questions. Maybe just to expand a little bit on that point on language. I guess all the numbers are very clear, and appreciate all the color on that. Maybe just taking a bit of a step back and looking at some of the competitive actions that have taken place in the market. Do you feel like the shift you've made here and the addition of Jade sort of position you well moving forward for the next couple of years to sort of push past some of these issues and get to a more stable point, both from a revenue and margin perspective? I understand it's a pretty dynamic market. I'd just be curious to hear about sort of what you're thinking from a product positioning standpoint.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Yeah, I think there's two important things that we've done from a positioning standpoint. The first is this tiered service model. What that really does is it enables us to be well-positioned across the entirety of the market. We now have a solution set for clients that are going to try to optimize just on the cost per minute. We have a very well-proven solution set for clients who are going to optimize for total clinical cost delivery of the model. We are good in both of those. That has been very important. What Jade does for us is clients are increasingly interested in a more consistent patient experience. From the moment they come in till the moment that they leave. We are a leader in the clinical interaction space.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Jade now enables us to be a leader in before the clinical interaction and after the clinical interaction. It's important both in terms of the patient experience that is important to clients. It's also important because it helps them save money. There are some very strong results that they've seen early days, taking discharge down from 2 hours to 15 minutes, that become part of an important cost savings trajectory for clients as well.

Jack Slevin
Jack Slevin
Analyst at Jefferies

Okay. Very helpful. Then another one to double-click on a little bit. Appreciate some of the comments and I think responding to Toby's question. I guess on the overall demand environment, I guess I just want maybe to frame it a little bit differently than I've been asked previously. In 2024, we saw a pretty similar trend, fairly similar timeframe, where we saw a big spike in demand with sort of low rate on it. Can you maybe just double-click a little more on what you're seeing now that might give you confidence that this is less of an air pocket and more something that's going to sustainably drive some amount of volume as we roll into the back half of this year? Thanks.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

In terms of overall demand?

Jack Slevin
Jack Slevin
Analyst at Jefferies

In terms of overall, I'm thinking more nurse and allied, but yes, in overall demand.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

I think if you look at where we started to see the acceleration inflection, it was in May. We've seen that accelerate as we have gone through the second quarter and even as we speak today. We need to see a couple more quarters of this continued demand pattern. You're also going into a period where you typically get winter orders, and while we're just in the beginning stages of that, the indications our clients are giving us is that they'll look relatively similar to what we saw last year. I think where we are from a timing standpoint in that cycle, that would be typically a positive tailwind to seeing demand increase throughout the next couple quarters. We want to see three, four plus consecutive quarters of that.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

The other thing I think it's notable is that just the sheer number of orders isn't the only important factor. It's the quality of those orders and what rates are at. When we talk about our average rate, that's on the placements that we're making. If there's a high percentage of orders that are well below that, they just sit there and they typically go unfilled. I think what we're seeing is a client, as they have a more urgent need, they're stepping up with rates. We have more orders with rates that are attractive enough for us to be able to place into, and that's why you're seeing our fill rates improve and the volume pick up as well. I think that's something that's different, where more clients were testing the market two years ago with really low rates and they just could not be filled.

Brian Scott
Brian Scott
CFO and COO at AMN Healthcare

We have a higher % now that have. Even though the overall average rate has not really increased, the number of orders that we can fill at that rate has.

Jack Slevin
Jack Slevin
Analyst at Jefferies

Got it. Okay. Really helpful. Appreciate all the thoughts.

Operator

Thank you. That ends our question and answer session. I will now hand the call back to Cary Grace for final comments.

Cary Grace
Cary Grace
President and CEO at AMN Healthcare

Thank you for your interest in AMN Healthcare. A huge thank you to the AMN team members and clinicians who ensure strong quality care every day in our healthcare system. We look forward to giving you updates next quarter.

Operator

This concludes today's call. Thank you for participating. You may all disconnect.

Executives
Analysts
Powered by Quartr