Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue and adjusted EBITDA for Q1 2024 were in line with expectations, indicating stable financial performance.
- Physician Staffing business reported a significant increase in revenue, up double digits year-over-year, driven by higher billable days and revenue per day.
- Home care business showed robust growth, up mid-single digits sequentially and year-over-year, with over 1,700 FTEs staffed.
- Education business continued to expand, showing low double-digit sequential growth and now operating in over 20 states.
- Strong balance sheet with no debt, providing flexibility for strategic investments, share repurchases, and potential M&A activities.
Negative Points
- Demand for travel assignments continued to soften, with a significant market-wide decline affecting the company's travel business.
- Average bill rates for travel and local assignments are declining, impacting revenue and profitability.
- Gross margin decreased both sequentially and year-over-year, primarily due to tightening bill-pay spreads and increased burdens such as health insurance and workers' comp.
- US headcount reduced by more than 20% since the beginning of the year to align cost structure with current market demand, indicating potential challenges in scaling quickly when market conditions improve.
- Local and per diem business segments faced significant market headwinds, with double-digit declines in volume and revenue.
Q & A Highlights
Q: Can you talk about demand trends through the first four months of the year and what's different versus years in the past?
A: (William Burns, CFO) Demand remained soft through the first quarter, not following historic patterns, primarily driven by the travel sector. The company expects a low single-digit sequential decline in bill rates for Q2 and possibly Q3. Despite the soft demand, there is cautious optimism about a potential stabilization in demand.
Q: What are you seeing in terms of the supply side with the willingness among physicians and advanced practice providers to take locum assignments?
A: (John Martins, CEO) There is a long runway for more physicians to enter the locum space as hospital systems continue to need physicians to drive revenue. The trend of physicians seeking more work flexibility is expected to continue, supporting growth in the locum space.
Q: What feedback are you getting from hospital CEOs or chief nursing officers about demand, and where is your optimism for the back half of the year coming from?
A: (John Martins, CEO) Hospitals are still assessing where demand levels off, but publicly traded hospitals have indicated comfort with contingent labor levels. Surveys show that nurses still face high stress and staffing shortages, suggesting a structural need for travel nurses which may lead to increased demand in the latter half of the year.
Q: Could you discuss the challenges specific to the per diem portion of the nurse and allied business?
A: (John Martins, CEO) The per diem business, particularly in skilled nursing facilities, saw a decline as federal and state funding dried up. The company sees potential in local and per diem staffing, especially in MSP settings, to meet just-in-time labor needs effectively.
Q: What's the outlook for the locums business in terms of sustainability and growth?
A: (John Martins, CEO) The locums business has seen several years of strong growth, and while the pace may not continue as in the past two years, a stable growth rate is expected. The key to growth is attracting the right candidates and offering quality jobs with competitive compensation packages.
Q: How are competitive pressures impacting market share and the P&L, and what's the visibility beyond Q2?
A: (John Martins, CEO) The company has won more deals in the past six months and expects most of the impact from previous competitive pressures to have percolated through the P&L. Visibility into Q3 suggests potential for month-over-month volume growth within the quarter, driven by quality orders from programs that are currently ramping up.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
