AMN Healthcare Services, Inc. (NYSE:AMN) Q2 2021 Earnings Conference Call August 5, 2021 5:00 PM ET Company Participants Randy Reece - Director of Investor Relations Susan Salka - Chief Executive Officer Brian Scott - Chief Financial Officer Kelly Rakowski - Group President & Chief Operating Officer of Strategic Talent Solutions Landry Seedig - Group President & Chief Operating Officer of Nursing & Allied Solutions James Taylor - Group President & Chief Operating Officer for Physician & Leadership Solutions ...

PART I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended June 30, 2021, reflect significant growth in assets, revenue, and net income, driven by strong performance and strategic acquisitions [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $790,103 | $533,735 | | Cash and cash equivalents | $139,494 | $29,213 | | Accounts receivable, net | $468,299 | $376,099 | | **Total Assets** | **$2,632,443** | **$2,353,507** | | **Total Current Liabilities** | $582,563 | $422,957 | | **Total Liabilities** | $1,666,061 | $1,533,830 | | **Total Stockholders' Equity** | **$966,382** | **$819,677** | - The balance sheet reflects significant growth in liquidity and overall financial position, with cash and cash equivalents increasing nearly fivefold and total assets growing by approximately **11.8%** in the first six months of 2021[7](index=7&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Statement of Comprehensive Income Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $857,445 | $608,351 | $1,743,390 | $1,210,812 | | **Gross Profit** | $280,543 | $197,540 | $569,411 | $399,606 | | **Income from Operations** | $99,174 | $38,401 | $203,576 | $74,144 | | **Net Income** | $66,770 | $22,325 | $137,148 | $35,290 | | **Diluted EPS** | $1.39 | $0.47 | $2.86 | $0.74 | - The company experienced substantial year-over-year growth, with revenue increasing by **44%**, income from operations by **175%**, and net income by **289%** for the six months ended June 30, 2021[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $210,625 | $128,271 | | Net cash used in investing activities | $(53,609) | $(513,262) | | Net cash provided by (used in) financing activities | $(30,703) | $328,994 | | **Net increase (decrease) in cash** | **$126,292** | **$(56,102)** | - Operating cash flow increased by **64%** year-over-year, while investing activities in 2021 were significantly lower due to reduced acquisition spending compared to 2020[17](index=17&type=chunk)[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - On April 7, 2021, the company acquired Synzi Holdings, Inc. and its subsidiary SnapMD, LLC, a virtual care communication platform, for an initial purchase price of **$42.2 million** in cash[33](index=33&type=chunk) - The company operates through three reportable segments: Nurse and allied solutions, Physician and leadership solutions, and Technology and workforce solutions, generating revenues of **$1.28 billion**, **$279.9 million**, and **$182.4 million** respectively for the six months ended June 30, 2021[47](index=47&type=chunk)[49](index=49&type=chunk) - The company is involved in class action lawsuits regarding wage and hour claims, with a potential additional loss estimated at up to **$15 million** beyond existing accruals[74](index=74&type=chunk)[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong H1 2021 performance to high demand for healthcare professionals, with revenue up **44%** to **$1.74 billion** and improved liquidity [Overview of Our Business & Recent Trends](index=20&type=section&id=Overview%20of%20Our%20Business%20%26%20Recent%20Trends) - The company provides healthcare workforce solutions through three segments: Nurse and allied solutions (**74%** of H1 2021 revenue), Physician and leadership solutions (**16%**), and Technology and workforce solutions (**10%**)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - Historically high demand for nurses and allied healthcare professionals is driven by the COVID-19 pandemic, professional burnout, attrition, and retirements[90](index=90&type=chunk)[91](index=91&type=chunk) - Demand in the physician and leadership segment has returned to pre-pandemic levels, with strong growth in VMS and language services due to elevated healthcare utilization[93](index=93&type=chunk)[94](index=94&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Revenue by Segment - Q2 Comparison (in millions) | Segment | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $624.5 | $444.5 | +41% | | Physician and leadership solutions | $139.1 | $108.6 | +28% | | Technology and workforce solutions | $93.9 | $55.3 | +70% | | **Total Revenue** | **$857.4** | **$608.4** | **+41%** | Revenue by Segment - Six Months Comparison (in millions) | Segment | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $1,281.1 | $868.8 | +48% | | Physician and leadership solutions | $279.9 | $246.5 | +14% | | Technology and workforce solutions | $182.4 | $95.5 | +91% | | **Total Revenue** | **$1,743.4** | **$1,210.8** | **+44%** | - Gross margin for Q2 2021 slightly increased to **32.7%** due to a favorable sales mix, while the six-month gross margin slightly decreased to **32.7%** due to lower bill-to-pay spreads in the nurse and allied segment[102](index=102&type=chunk)[110](index=110&type=chunk) - SG&A expenses as a percentage of revenue decreased to **18.3%** in Q2 2021 and **18.2%** for H1 2021, reflecting improved operating leverage despite higher absolute spending[103](index=103&type=chunk)[111](index=111&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $210.6 | $128.3 | | Net cash used in investing activities | $(53.6) | $(513.3) | | Net cash provided by (used in) financing activities | $(30.7) | $329.0 | - The company paid off its **$250.0 million** Additional Term Loan in Q1 2021 and had **$378.1 million** available under its revolving credit facility as of June 30, 2021[116](index=116&type=chunk) - Days Sales Outstanding (DSO) improved to **50 days** at June 30, 2021, from **55 days** at year-end 2020, indicating enhanced collection efficiency[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable debt, with foreign currency risk deemed immaterial due to U.S.-centric revenue - The primary market risk is interest rate risk from variable rate debt, but a **100 basis point** increase is considered immaterial[129](index=129&type=chunk) - Foreign currency risk is deemed immaterial as the company generates substantially all of its revenue in the U.S.[129](index=129&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[130](index=130&type=chunk) - No material changes to the internal control over financial reporting occurred during the quarter ended June 30, 2021[131](index=131&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company faces class action lawsuits regarding wage and hour claims, with a potential additional loss of up to **$15 million** estimated beyond current accruals - The company is party to significant class action lawsuits concerning whether per diem payments should be included in the regular rate of pay for overtime calculations[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - Following an adverse ruling, the company estimates a potential loss of up to **$15 million**, excluding interest and penalties, in excess of amounts currently accrued for these legal matters[76](index=76&type=chunk)[78](index=78&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for 2020 - There have been no material changes to the risk factors disclosed in the company's 2020 Annual Report[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock during H1 2021, but a **$150.0 million** stock repurchase program remains authorized - No shares of common stock were repurchased during the six months ended June 30, 2021[136](index=136&type=chunk) - The company has a board-authorized repurchase program for up to **$150.0 million** of its common stock, established in November 2016 with no expiration date[135](index=135&type=chunk) [Other Part II Items](index=30&type=section&id=Other%20Part%20II%20Items) This section confirms no defaults on senior securities, inapplicability of mine safety disclosures, and lists exhibits filed with the report - Item 3, Defaults Upon Senior Securities: None[137](index=137&type=chunk) - Item 4, Mine Safety Disclosures: Not applicable[137](index=137&type=chunk) - Item 6, Exhibits: Lists the certifications and XBRL data files submitted with the 10-Q filing[139](index=139&type=chunk)

Company Overview and Strategy - AMN Healthcare is a purpose-driven, values-based organization committed to serving all stakeholders[6] - The company is a leader and innovator in total talent solutions for healthcare, uniquely positioned to serve growing health systems and diverse care settings[6] - AMN Healthcare is well-positioned to generate long-term profitable growth with a strong balance sheet and cash flow generation[6] - The company sees continued opportunity for disciplined and strategic M&A to deliver higher margins and more resilient revenues[6] - The company's strategy includes investing in innovation, leveraging total talent solutions, being a holistic partner for clients, and sustaining financial discipline[49] Financial Performance and Metrics - The company's Last Twelve Month (LTM) revenue is $4.2 billion[8] - The company's LTM Adjusted EBITDA is $388 million[9] - The company's LTM Free Cash Flow is $209 million[9] - The company's LTM Gross Margin is 32.8%[9] - The company's LTM Adjusted EBITDA Margin is 14.5%[9] - The company's LTM Free Cash Flow Conversion is 54%[9]

AMN Healthcare Services, Inc. (NYSE:AMN) Q1 2021 Earnings Conference Call May 6, 2021 5:00 PM ET Company Participants Randy Reece - Director of Investor Relations Susan Salka - Chief Executive Officer Brian Scott - Chief Financial Officer Landry Seedig - Group President and Chief Operating Officer of Nursing and Allied Solutions Kelly Rakowski - Group President and Chief Operating Officer of Strategic Talent Solutions James Taylor - Group President and COO of Physician and Leadership Solutions Conference Ca ...

PART I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Unaudited Q1 2021 consolidated financial statements reflect 47% revenue growth to $885.9 million, net income of $70.4 million, total assets of $2.64 billion, and operating cash flow at $39.1 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.64 billion** as of March 31, 2021, driven by current assets, while total liabilities rose to **$1.75 billion** and equity to **$894.1 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $830,357 | $533,735 | | **Total assets** | $2,643,122 | $2,353,507 | | **Total current liabilities** | $598,994 | $422,957 | | **Total liabilities** | $1,749,062 | $1,533,830 | | **Total stockholders' equity** | $894,060 | $819,677 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2021 saw revenue increase **47%** to **$885.9 million**, gross profit grow **43%** to **$288.9 million**, and net income surge to **$70.4 million**, with diluted EPS at **$1.47** Q1 2021 vs. Q1 2020 Performance (in thousands, except per share amounts) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | **Revenue** | $885,945 | $602,461 | | **Gross Profit** | $288,868 | $202,066 | | **Income from operations** | $104,402 | $35,743 | | **Net income** | $70,378 | $12,965 | | **Diluted EPS** | $1.47 | $0.27 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2021 operating cash flow was **$39.1 million**, a decrease from prior year, while investing activities provided **$2.8 million**, a significant shift from Q1 2020's **$492.1 million** use Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $39,131 | $51,365 | | **Net cash provided by (used in) investing activities** | $2,794 | $(492,137) | | **Net cash provided by financing activities** | $24,767 | $456,126 | - The significant use of cash in investing activities in Q1 2020 was due to **$476.4 million** paid for acquisitions, primarily Stratus Video[17](index=17&type=chunk)[112](index=112&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail financial impacts of the Stratus Video acquisition, strong segment revenue growth in Nurse and Allied Solutions (**55%**) and Technology and Workforce Solutions (**120%**), the Synzi/SnapMD acquisition, and ongoing wage and hour legal proceedings - On February 14, 2020, the company acquired Stratus Video for an initial purchase price of **$485.6 million**, with its results included in the technology and workforce solutions segment[36](index=36&type=chunk)[37](index=37&type=chunk) - On April 7, 2021, the company acquired Synzi Holdings, Inc. and its subsidiary SnapMD, LLC, for **$42.5 million** in cash to expand its virtual care communication platforms[80](index=80&type=chunk) Segment Revenue (in thousands) | Segment | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Nurse and allied solutions | $656,661 | $424,346 | +55% | | Physician and leadership solutions | $140,756 | $137,842 | +2% | | Technology and workforce solutions | $88,528 | $40,273 | +120% | | **Total Revenue** | **$885,945** | **$602,461** | **+47%** | - The company is involved in class action lawsuits regarding wage and hour claims (Clarke Matter), alleging per diem benefits should be included in overtime calculations, with an adverse Ninth Circuit ruling on February 8, 2021, leading to a **$20 million** accrual increase in Q4 2020 and a possible additional loss of up to **$15 million**[73](index=73&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **47%** revenue growth to organic expansion and the Stratus Video acquisition, noting COVID-19's impact on demand, a slight gross margin decline, and strong liquidity with the Additional Term Loan paid off - The COVID-19 pandemic led to historically high demand for nurses and certain allied healthcare professionals in late 2020 and early 2021, which has continued at elevated levels[88](index=88&type=chunk) - Revenue increased **47%** to **$885.9 million** in Q1 2021, primarily due to a **55%** increase in Nurse and allied solutions revenue and a **120%** increase in Technology and workforce solutions revenue[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Gross margin declined to **32.6%** from **33.5%** in the prior year, mainly due to lower bill-to-pay spreads in the nurse and allied solutions segment, which experienced significant revenue growth[102](index=102&type=chunk) - The company paid off the remaining balance of its **$250.0 million** Additional Term Loan during the first quarter of 2021[109](index=109&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable-rate debt, with a **100 basis point** increase deemed immaterial, and foreign currency risk considered negligible - The company's primary market risk is interest rate risk from variable-rate debt, while foreign currency risk is deemed immaterial[122](index=122&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[123](index=123&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter[124](index=124&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note (9) of the financial statements, detailing ongoing legal matters, primarily class action lawsuits concerning wage and hour claims like the 'Clarke Matter' - Information regarding legal proceedings is detailed in Note (9) of the financial statements[126](index=126&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors disclosed in the 2020 Annual Report, with key risks including COVID-19 impacts, talent retention, and legal challenges - There have been no material changes to the risk factors previously disclosed in the 2020 Annual Report[127](index=127&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares of its common stock under its authorized program during the three months ended March 31, 2021 - The company did not repurchase any shares of its common stock during the first quarter of 2021[129](index=129&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including management compensation agreements, CEO/CFO certifications, and XBRL data files - Exhibits filed with the report include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and various equity plan agreements[132](index=132&type=chunk)

Part I [Business](index=4&type=section&id=Item%201.%20Business) AMN Healthcare provides total talent solutions for the U.S. healthcare industry through three segments, focusing on customer relationships, innovation, and strategic acquisitions - The company's mission is to deliver talent and insights to optimize healthcare workforces, provide opportunities for healthcare professionals, and foster a values-based culture[11](index=11&type=chunk) - AMN Healthcare operates through three reportable segments as of 2020: (1) Nurse and Allied Solutions, (2) Physician and Leadership Solutions, and (3) Technology and Workforce Solutions[25](index=25&type=chunk) - Managed Services Programs (MSPs) are a key part of the business, with approximately **$1.7 billion in annualized gross billings** under management and accounting for about **50% of consolidated revenue in 2020**[26](index=26&type=chunk) - Kaiser Foundation Hospitals and its affiliates represented approximately **14% of the company's consolidated revenue** and **17% of the nurse and allied solutions segment's revenue** for the year ended December 31, 2020[33](index=33&type=chunk) Estimated 2020 U.S. Healthcare Staffing Market Size (by SIA) | Market Segment | Estimated 2020 Market Size (in billions) | | :--- | :--- | | Travel Nurse | $6.7 billion | | Per Diem Nurse | $3.5 billion | | Locum Tenens | $3.4 billion | | Allied Healthcare | $3.7 billion | | **Total** | **$17.3 billion** | [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to demand fluctuations, regulatory and legal liabilities, operational challenges including cybersecurity, and financial risks from substantial indebtedness - The COVID-19 pandemic has caused significant fluctuations in demand for staffing services and could continue to adversely affect business operations and financial results[45](index=45&type=chunk)[47](index=47&type=chunk)[51](index=51&type=chunk) - Consolidation among healthcare delivery organizations could increase their bargaining power, negatively affecting service pricing. A single client, Kaiser Foundation Hospitals, accounted for approximately **14% of consolidated revenue in 2020**, representing a concentration risk[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - The company is subject to legal proceedings and claims related to medical malpractice, employment laws (including wage and hour class actions), and privacy regulations, which could result in substantial liabilities[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - Cybersecurity incidents and security breaches pose a significant risk, as the company collects and stores sensitive personal and proprietary information, and a breach could lead to legal claims, operational disruption, and reputational damage[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - As of December 31, 2020, the company's total indebtedness was **$862.6 million**, which could increase vulnerability to adverse economic conditions and limit operational flexibility due to restrictive covenants[104](index=104&type=chunk) [Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[114](index=114&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) All company properties are leased office facilities, with principal locations in San Diego, California, and Dallas, Texas, deemed adequate for current needs Principal Leased Office Spaces (as of Dec 31, 2020) | Location | Square Feet | | :--- | :--- | | San Diego, California | 175,672 | | Dallas, Texas | 108,502 | [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 12, "Commitments and Contingencies," in the Financial Statements and Supplementary Data section - Details on legal proceedings are located in Note 12 of the Consolidated Financial Statements[115](index=115&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business operations - Not applicable[116](index=116&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) AMN Healthcare's common stock trades on the NYSE under 'AMN,' with no cash dividends paid or anticipated, and no share repurchases in 2020 - The company's common stock trades on the New York Stock Exchange under the ticker symbol **"AMN"**[117](index=117&type=chunk) - No cash dividends have been paid in the past, and the company does not expect to pay them in the future, instead retaining earnings for business operations, debt repayment, and potential share repurchases[120](index=120&type=chunk) - The company did not repurchase any shares of its common stock during 2020 under its authorized repurchase program[119](index=119&type=chunk) [Selected Financial Data](index=25&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial data from 2016 to 2020, showing revenue growth and fluctuating net income, with comparability affected by acquisitions Five-Year Selected Financial Data (in thousands, except per share data) | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$2,393,714** | **$2,222,107** | **$2,136,074** | **$1,988,454** | **$1,902,225** | | **Gross Profit** | $791,778 | $743,465 | $696,383 | $644,419 | $619,724 | | **Income from Operations** | $149,265 | $176,915 | $202,828 | $212,440 | $191,632 | | **Net Income** | **$70,665** | **$113,988** | **$141,741** | **$132,558** | **$105,838** | | **Diluted EPS** | **$1.48** | **$2.40** | **$2.91** | **$2.68** | **$2.15** | | **Total Assets** | $2,353,507 | $1,931,646 | $1,492,721 | $1,253,957 | $1,186,881 | | **Total Notes Payable** | $862,649 | $617,159 | $320,607 | $319,843 | $362,942 | | **Total Stockholders' Equity** | $819,677 | $736,742 | $638,990 | $562,527 | $449,383 | - The comparability of financial data is affected by acquisitions, including Stratus Video in 2020, Advanced and Silversheet in 2019, and MedPartners in 2018[125](index=125&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, including an 8% revenue increase in 2020, segment reorganization, pandemic impact, liquidity, and critical accounting policies - Effective in 2020, the company reorganized into three reportable segments: (1) Nurse and Allied Solutions, (2) Physician and Leadership Solutions, and (3) Technology and Workforce Solutions[130](index=130&type=chunk) Comparison of Results for Year Ended Dec 31, 2020 vs. 2019 | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,393.7M | $2,222.1M | +8% | | Gross Profit | $791.8M | $743.5M | +6% | | Gross Margin | 33.1% | 33.5% | -40 bps | | Net Income | $70.7M | $114.0M | -38% | Segment Revenue Performance (2020 vs. 2019) | Segment | 2020 Revenue | 2019 Revenue | Change | | :--- | :--- | :--- | :--- | | Nurse and Allied Solutions | $1,699.3M | $1,562.6M | +9% | | Physician and Leadership Solutions | $466.6M | $562.8M | -17% | | Technology and Workforce Solutions | $227.8M | $96.8M | +135% | - The COVID-19 pandemic significantly impacted demand, with historically high demand for nurses in late 2020, while demand for other services like locum tenens and permanent placement declined due to the suspension of elective procedures[136](index=136&type=chunk)[140](index=140&type=chunk) - Net cash from operating activities increased to **$256.8 million** in 2020 from **$224.9 million** in 2019, partly due to the deferral of employer payroll taxes under the CARES Act[166](index=166&type=chunk) - Net cash used in investing activities was **$538.2 million** in 2020, primarily for the acquisition of Stratus Video for **$476.5 million**[167](index=167&type=chunk) - Critical accounting policies include the valuation and impairment testing of goodwill and indefinite-lived intangible assets, estimation of professional liability reserves, and accounting for contingent liabilities and income taxes[188](index=188&type=chunk)[189](index=189&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable-rate debt, with foreign currency risk considered immaterial due to predominantly U.S. revenue - The primary market risk is interest rate risk from variable interest debt instruments[200](index=200&type=chunk) - Foreign currency risk is considered immaterial because substantially all revenue was generated in the United States in 2020[200](index=200&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes audited consolidated financial statements, the independent auditor's unqualified report, and notes detailing acquisitions, debt structure, and legal contingencies - The independent auditor, KPMG LLP, issued an unqualified opinion on the consolidated financial statements. Critical Audit Matters identified were the professional liability reserve and the fair value of intangible assets acquired in the Stratus Video acquisition[204](index=204&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[212](index=212&type=chunk) Key Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $533,735 | $560,499 | | Goodwill | $864,485 | $595,551 | | Total Assets | $2,353,507 | $1,931,646 | | Total Current Liabilities | $422,957 | $378,105 | | Notes Payable, net | $857,961 | $617,159 | | Total Liabilities | $1,533,830 | $1,194,904 | | Total Stockholders' Equity | $819,677 | $736,742 | - The company completed the acquisition of Stratus Video on February 14, 2020, for a purchase price of **$485.7 million**, resulting in **$269.0 million of goodwill** and **$228.0 million of identified intangible assets**[283](index=283&type=chunk)[284](index=284&type=chunk) - As of December 31, 2020, the company had **$871.9 million in total debt outstanding**, consisting of the Additional Term Loan, 2027 Senior Notes, and 2029 Senior Notes[353](index=353&type=chunk) - The company is involved in wage and hour class action lawsuits. Due to a recent adverse appellate court ruling in the Clarke Matter, the company recorded an additional accrual of **$20.0 million** in the fourth quarter of 2020 and estimates a possible additional loss of up to **$15.0 million**[375](index=375&type=chunk)[376](index=376&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=78&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None reported[379](index=379&type=chunk) [Controls and Procedures](index=78&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020, excluding the Stratus Video acquisition - Management concluded that disclosure controls and procedures were effective as of December 31, 2020[380](index=380&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2020, based on the COSO framework[381](index=381&type=chunk) - The assessment of internal control over financial reporting excluded the Stratus Video business, which was acquired in 2020[382](index=382&type=chunk) [Other Information](index=81&type=section&id=Item%209B.%20Other%20Information) Director Michael M.E. Johns, M.D., will not seek re-election at the 2021 annual meeting, leading to a reduction in the Board of Directors to eight members - Board member Michael M.E. Johns, M.D., will not stand for re-election at the 2021 annual meeting after **12 years of service**[395](index=395&type=chunk) - The Board of Directors will be reduced to **eight members** following the 2021 annual meeting[395](index=395&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=81&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Annual Meeting Proxy Statement, including the Code of Ethics for Senior Financial Officers - Information is incorporated by reference from the 2021 Annual Meeting Proxy Statement[396](index=396&type=chunk) - The company has adopted a Code of Ethics for Senior Financial Officers, available on its investor relations website[396](index=396&type=chunk) [Executive Compensation](index=81&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the 2021 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2021 Annual Meeting Proxy Statement[398](index=398&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=81&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the 2021 Annual Meeting Proxy Statement, detailing securities to be issued and available for future issuance under equity plans - Information on security ownership is incorporated by reference from the 2021 Annual Meeting Proxy Statement[398](index=398&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Number of Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Number of Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 696,200 | $— | 2,829,752 | | Not approved by security holders | 20,944 | $— | 179,056 | | **Total** | **717,144** | **$—** | **3,008,808** | [Certain Relationships and Related Transactions, and Director Independence](index=82&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2021 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2021 Annual Meeting Proxy Statement[405](index=405&type=chunk) [Principal Accounting Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the 2021 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2021 Annual Meeting Proxy Statement[406](index=406&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements and exhibits filed with the report, with all financial statement schedules omitted as information is presented elsewhere - This section contains the list of consolidated financial statements filed with the report[408](index=408&type=chunk) - All financial statement schedules were omitted because the required information is presented elsewhere or is not applicable[408](index=408&type=chunk) - A detailed list of exhibits filed with the report is provided, including acquisition agreements, debt indentures, and executive certifications[409](index=409&type=chunk)[410](index=410&type=chunk)[412](index=412&type=chunk) [Form 10-K Summary](index=87&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a Form 10-K summary - None[416](index=416&type=chunk)

AMN Healthcare Services, Inc. (NYSE:AMN) Q4 2020 Results Conference Call February 18, 2021 5:00 PM ET Company Participants Randy Reece - Director of Investor Relations Susan Salka - Chief Executive Officer Brian Scott - Chief Financial Officer Kelly Rakowski - Group President & Chief Operating Officer of Strategic Talent Solutions Landry Seedig - Group President & Chief Operating Officer of Nursing and Allied Solutions Maureen Huber - President of Workforce Technology Solutions. Conference Call Participants ...

AMN Healthcare Services, Inc. (NYSE:AMN) Q3 2020 Earnings Conference Call November 5, 2020 5:00 PM ET Company Participants Randy Reece - Director of Investor Relations Susan Salka - Chief Executive Officer Brian Scott - Chief Financial Officer Landry Seedig - Group President & Chief Operating Officer of Nursing and Allied Solutions Kelly Rakowski - Group President & Chief Operating Officer of Strategic Talent Solutions Conference Call Participants AJ Rice - Credit Suisse Tobey Sommer - Truist Securities Bri ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the relevant periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Assets | $2,344,865 | $1,931,646 | | Total Current Assets | $513,703 | $560,499 | | Goodwill | $869,941 | $595,551 | | Total Liabilities | $1,537,792 | $1,194,904 | | Total Current Liabilities | $386,168 | $378,105 | | Total Stockholders' Equity | $807,073 | $736,742 | - Total assets increased by **$413.2 million**, primarily driven by a significant increase in goodwill and intangible assets due to acquisitions[5](index=5&type=chunk) - Total liabilities increased by **$342.9 million**, mainly due to higher notes payable and deferred income taxes[5](index=5&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $551,631 | $567,597 | $1,762,443 | $1,635,215 | | Gross Profit | $184,633 | $190,031 | $584,239 | $546,332 | | Income from Operations | $46,462 | $39,739 | $120,606 | $129,947 | | Net Income | $26,067 | $23,515 | $61,357 | $86,506 | | Basic EPS | $0.55 | $0.50 | $1.29 | $1.85 | | Diluted EPS | $0.55 | $0.49 | $1.29 | $1.82 | - Revenue decreased **3%** for the three months ended September 30, 2020, but increased **8%** for the nine months ended September 30, 2020, compared to the prior year periods[6](index=6&type=chunk) - Net income increased **10.8%** for the three months ended September 30, 2020, but decreased **29.1%** for the nine months ended September 30, 2020, compared to the prior year periods[6](index=6&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Dec 31, 2019 | Sep 30, 2020 | | :--- | :--- | :--- | | Common Shares Outstanding | 49,283 | 49,550 | | Common Stock Amount | $493 | $495 | | Additional Paid-in Capital | $455,193 | $465,438 | | Retained Earnings | $400,047 | $460,250 | | Total Stockholders' Equity | $736,742 | $807,073 | - Total stockholders' equity increased by **$70.3 million** from December 31, 2019, to September 30, 2020, primarily due to an increase in retained earnings and additional paid-in capital[9](index=9&type=chunk) - The cumulative-effect adjustment from the adoption of the credit loss standard reduced retained earnings by **$1,154** (net of tax) as of January 1, 2020[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $216,981 | $146,205 | | Net cash used in investing activities | $(528,458) | $(253,606) | | Net cash provided by financing activities | $266,557 | $136,440 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(45,039) | $28,981 | | Cash, cash equivalents and restricted cash at end of period | $108,923 | $113,305 | - Net cash provided by operating activities increased by **$70.8 million**, primarily due to an increase in other liabilities and improved accounts receivable collections[11](index=11&type=chunk)[13](index=13&type=chunk)[140](index=140&type=chunk) - Net cash used in investing activities significantly increased by **$274.8 million**, mainly due to higher cash paid for acquisitions (**$476.5 million** in 2020 vs **$228.2 million** in 2019)[11](index=11&type=chunk)[13](index=13&type=chunk)[141](index=141&type=chunk) - Net cash provided by financing activities increased by **$130.1 million**, driven by proceeds from term loans and senior notes, partially offset by repayments and acquisition earn-out payments[13](index=13&type=chunk)[142](index=142&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of Presentation](index=10&type=section&id=Note%201.%20BASIS%20OF%20PRESENTATION) - The Company's financial statements are unaudited and prepared in conformity with U.S. GAAP, with management making estimates and assumptions that could differ from actual results[16](index=16&type=chunk)[18](index=18&type=chunk) - The COVID-19 pandemic has created economic uncertainty, but the Company's transition to remote work has not materially impacted operations or financial reporting as of September 30, 2020[19](index=19&type=chunk)[20](index=20&type=chunk) - The Company adopted the credit loss standard (ASU 2016-13) and the goodwill impairment simplification standard (ASU 2017-04) effective January 1, 2020, with immaterial impact on financial statements[21](index=21&type=chunk)[24](index=24&type=chunk) [Note 2. Acquisitions](index=12&type=section&id=Note%202.%20ACQUISITIONS) - The Company completed four acquisitions between January 1, 2019, and September 30, 2020: Stratus Video (Feb 2020), b4health (Dec 2019), Advanced (June 2019), and Silversheet (Jan 2019)[31](index=31&type=chunk)[32](index=32&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk)[43](index=43&type=chunk) Key Acquisition Details (in thousands) | Acquisition | Date | Initial Purchase Price | Segment | Goodwill (Acquisition Date) | | :--- | :--- | :--- | :--- | :--- | | Stratus Video | Feb 14, 2020 | $485,568 | Technology & Workforce | $274,427 | | b4health | Dec 19, 2019 | $23,006 | Technology & Workforce | $13,594 | | Advanced | June 14, 2019 | $211,743 | Nurse & Allied | $119,868 | | Silversheet | Jan 30, 2019 | $31,676 | Technology & Workforce | $23,537 | Pro Forma Consolidated Results (in thousands) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 (Pro Forma) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 (Pro Forma) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $551,631 | $595,211 | $1,776,315 | $1,767,010 | | Net Income | $29,030 | $17,850 | $71,434 | $54,667 | [Note 3. Revenue Recognition](index=14&type=section&id=Note%203.%20REVENUE%20RECOGNITION) - Revenue is primarily derived from temporary staffing and permanent placement of healthcare professionals, SaaS-based technologies (VMS, scheduling), and outsourced workforce services (language interpretation, RPO)[45](index=45&type=chunk) - Revenue is recognized when control of services is transferred to customers, reflecting the consideration expected in exchange for those services[45](index=45&type=chunk) - For MSP arrangements using subcontractors, revenue is recorded net of subcontractor expenses when acting as an agent[45](index=45&type=chunk) [Note 4. Net Income Per Common Share](index=15&type=section&id=Note%204.%20NET%20INCOME%20PER%20COMMON%20SHARE) Net Income Per Common Share (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $26,067 | $23,515 | $61,357 | $86,506 | | Basic EPS | $0.55 | $0.50 | $1.29 | $1.85 | | Diluted EPS | $0.55 | $0.49 | $1.29 | $1.82 | | Weighted Average Common Shares Outstanding - Basic | 47,476 | 46,677 | 47,406 | 46,701 | | Weighted Average Common Shares Outstanding - Diluted | 47,676 | 47,607 | 47,647 | 47,600 | - Basic and diluted EPS increased for the three months ended September 30, 2020, but decreased for the nine months ended September 30, 2020, compared to the prior year periods[50](index=50&type=chunk) [Note 5. Segment Information](index=15&type=section&id=Note%205.%20SEGMENT%20INFORMATION) - Effective March 8, 2020, the Company reorganized its reportable segments into: (1) Nurse and Allied Solutions, (2) Physician and Leadership Solutions, and (3) Technology and Workforce Solutions[51](index=51&type=chunk) Revenue by Reportable Segment (in thousands) | Segment | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Nurse and Allied Solutions | $382,699 | $398,417 | $1,251,509 | $1,139,883 | | Physician and Leadership Solutions | $109,116 | $143,842 | $355,580 | $423,368 | | Technology and Workforce Solutions | $59,816 | $25,338 | $155,354 | $71,964 | | Total Revenue | $551,631 | $567,597 | $1,762,443 | $1,635,215 | Segment Operating Income (in thousands) | Segment | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Nurse and Allied Solutions | $52,923 | $52,533 | $173,706 | $158,841 | | Physician and Leadership Solutions | $15,538 | $17,547 | $45,432 | $52,280 | | Technology and Workforce Solutions | $25,680 | $11,426 | $62,814 | $33,145 | | Total Segment Operating Income | $94,141 | $81,506 | $281,952 | $244,266 | - Goodwill balances were reallocated to reporting units following the segment reorganization, with no impairment loss recognized[60](index=60&type=chunk) [Note 6. Notes Payable and Credit Agreement](index=18&type=section&id=Note%206.%20NOTES%20PAYABLE%20AND%20CREDIT%20AGREEMENT) - The Company's debt structure includes a **$400 million** Senior Credit Facility, a **$250 million** Additional Term Loan (under the Amended Credit Agreement), and **4.625%** Senior Notes due 2027[63](index=63&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk) - In August 2020, an additional **$200 million** of **4.625%** Senior Notes due 2027 were issued, with proceeds used to repay **$200 million** of the Additional Term Loan[66](index=66&type=chunk)[67](index=67&type=chunk) - The Amended Credit Agreement extended the maturity date of the Senior Credit Facility to February 14, 2025, coterminous with the Additional Term Loan[64](index=64&type=chunk) [Note 7. Fair Value Measurement](index=20&type=section&id=Note%207.%20FAIR%20VALUE%20MEASUREMENT) - Assets and liabilities measured on a recurring basis include money market funds (Level 1), deferred compensation (Level 1), commercial paper (Level 2), and acquisition contingent consideration liabilities (Level 3)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) Fair Value Measurements as of September 30, 2020 (in thousands) | Asset/Liability | Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Money market funds | $2,354 | $2,354 | $— | $— | | Deferred compensation | $(87,934) | $(87,934) | $— | $— | | Commercial paper | $59,196 | $— | $59,196 | $— | | Acquisition contingent consideration liabilities | $(1,400) | $— | $— | $(1,400) | - Goodwill and indefinite-lived intangible assets are evaluated annually for impairment using Level 3 inputs (discounted cash flows)[79](index=79&type=chunk) [Note 8. Income Taxes](index=23&type=section&id=Note%208.%20INCOME%20TAXES) - The Company is subject to U.S. federal, state, and foreign taxation, with open tax years generally after 2016 for federal and 2010 for state/local/foreign[85](index=85&type=chunk) - Indemnifications are in place for potential tax liabilities from the Advanced and Stratus Video acquisitions for pre-acquisition periods[85](index=85&type=chunk) [Note 9. Commitments and Contingencies: Legal Proceedings](index=23&type=section&id=Note%209.%20COMMITMENTS%20AND%20CONTINGENCIES:%20LEGAL%20PROCEEDINGS) - The Company is involved in various lawsuits and claims in the ordinary course of business, including professional liability, tax, compensation, and employee-related matters[86](index=86&type=chunk) - Loss contingencies are accrued when probable and reasonably estimable, with significant judgment required[86](index=86&type=chunk) - Accrued loss contingencies as of September 30, 2020, are not expected to have a material adverse effect on the Company's financial position or results of operations[88](index=88&type=chunk) [Note 10. Balance Sheet Details](index=25&type=section&id=Note%2010.%20BALANCE%20SHEET%20DETAILS) Selected Balance Sheet Details (in thousands) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Other Current Assets | $30,591 | $40,446 | | Fixed Assets, net | $112,752 | $104,832 | | Other Assets | $125,831 | $120,254 | | Accounts Payable and Accrued Expenses | $152,935 | $156,140 | | Accrued Compensation and Benefits | $184,736 | $170,932 | | Other Current Liabilities | $11,884 | $25,302 | | Other Long-Term Liabilities | $95,736 | $61,813 | - Fixed assets, net, increased by **$7.9 million**, primarily due to increased investment in software and furniture/equipment[90](index=90&type=chunk) - Accrued compensation and benefits increased by **$13.8 million**, mainly due to higher accrued payroll and bonuses[90](index=90&type=chunk) [Note 11. Subsequent Events](index=26&type=section&id=Note%2011.%20SUBSEQUENT%20EVENTS) - On October 20, 2020, the Company issued **$350 million** aggregate principal amount of **4.000%** Senior Notes due 2029[91](index=91&type=chunk) - Proceeds from the 2029 Notes and cash from operations were used to redeem all outstanding **5.125%** Senior Notes due 2024 (**$325 million**) and repay **$40 million** under the Senior Credit Facility[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, liquidity, capital resources, and recent business trends [Changes to Our Reportable Segments](index=26&type=section&id=Changes%20to%20Our%20Reportable%20Segments) - Effective March 8, 2020, the Company reorganized its reportable segments to better align with strategy and operations, now comprising Nurse and Allied Solutions, Physician and Leadership Solutions, and Technology and Workforce Solutions[94](index=94&type=chunk) [Overview of Our Business](index=26&type=section&id=Overview%20of%20Our%20Business) - The Company provides healthcare workforce solutions and staffing services, including managed services programs (MSP), vendor management systems (VMS), remote video interpretation, and placement of various healthcare professionals[95](index=95&type=chunk) - Recent acquisitions (Stratus Video, b4health, Advanced, Silversheet) aim to add value through remote video interpreting, float pool management, staffing, and credentialing software[101](index=101&type=chunk) Segment Revenue Contribution (Nine Months Ended Sep 30) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Nurse and Allied Solutions | 71% | 70% | | Physician and Leadership Solutions | 20% | 26% | | Technology and Workforce Solutions | 9% | 4% | [Recent Trends](index=27&type=section&id=Recent%20Trends) - COVID-19 significantly impacted demand, with initial declines in many businesses due to 'shelter-in-place' orders and suspension of elective services, followed by fluctuating and historically high demand for nursing services[102](index=102&type=chunk)[103](index=103&type=chunk) - Nurse and allied solutions experienced significant increases in bill rates and wages for nurses, especially in specialties like ICU and telemetry, with overall nursing demand at record levels since mid-July[103](index=103&type=chunk) - Physician and leadership solutions saw a decline in locum tenens, interim leadership, and permanent placement demand due to COVID-19, with slow and inconsistent recovery[106](index=106&type=chunk)[107](index=107&type=chunk) - Technology and workforce solutions, particularly VMS technologies and language interpretation, experienced initial declines but later saw increased utilization and new client adoption, exceeding pre-COVID-19 levels by mid-June for interpretation[108](index=108&type=chunk)[109](index=109&type=chunk) - The Company implemented cost reduction measures in Q2 2020, including workforce reductions and reduced spending, but is selectively increasing workforce and restoring benefits as businesses recover[111](index=111&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - No material changes in critical accounting policies and estimates, other than the adoption of ASUs described in Note 1, were reported[112](index=112&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Key Financial Highlights (Unaudited Condensed Consolidated Statements of Operations) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $551.6M | $567.6M | $1,762.4M | $1,635.2M | | Gross Profit | $184.6M | $190.0M | $584.2M | $546.3M | | Gross Margin | 33.5% | 33.5% | 33.1% | 33.4% | | SG&A Expenses | $111.2M (20.2% of revenue) | $133.2M (23.5% of revenue) | $394.5M (22.4% of revenue) | $374.9M (22.9% of revenue) | | Depreciation and Amortization | $26.9M | $17.1M | $69.1M | $41.5M | | Income from Operations | $46.5M | $39.7M | $120.6M | $129.9M | | Net Income | $26.1M (4.7% of revenue) | $23.5M (4.1% of revenue) | $61.4M (3.5% of revenue) | $86.5M (5.3% of revenue) | - Revenue for the three months decreased **3%** YoY, primarily due to lower revenue in physician and leadership solutions and nurse and allied solutions, partially offset by **$36.6 million** from acquisitions[115](index=115&type=chunk) - Revenue for the nine months increased **8%** YoY, driven by **$154.4 million** from acquisitions and higher organic revenue in nurse and allied solutions, partially offset by declines in physician and leadership solutions[127](index=127&type=chunk) - SG&A expenses decreased for the three months due to cost reduction measures and lower acquisition-related costs, but increased for the nine months due to acquisition-related expenses and higher share-based compensation[122](index=122&type=chunk)[133](index=133&type=chunk) - Depreciation and amortization expenses significantly increased for both periods due to intangible assets from recent acquisitions and shortened useful lives of tradename assets[123](index=123&type=chunk)[135](index=135&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $216,981 | $146,205 | | Net cash used in investing activities | $(528,458) | $(253,606) | | Net cash provided by financing activities | $266,557 | $136,440 | - Operating cash flow increased due to higher other liabilities (CARES Act deferrals) and improved accounts receivable collections[140](index=140&type=chunk) - Investing cash flow increased significantly due to **$476.5 million** used for acquisitions in 2020[141](index=141&type=chunk) - Financing cash flow increased due to borrowings from the Senior Credit Facility, Additional Term Loan, and New 2027 Notes, partially offset by repayments and acquisition earn-out payments[142](index=142&type=chunk) - As of September 30, 2020, the Company had **$46.9 million** outstanding on the Additional Term Loan, **$40.0 million** drawn on the Senior Credit Facility (with **$338.1 million** available), **$325.0 million** in 2024 Notes, and **$500.0 million** in 2027 Notes[138](index=138&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) - The Company is evaluating the impact of ASU 2019-12 ('Simplifying the Accounting for Income Taxes') and ASU 2020-01 ('Clarifying the Interactions between Topic 321, Topic 323, and Topic 815'), both effective after December 15, 2020, but does not expect a material impact from ASU 2020-01[156](index=156&type=chunk)[157](index=157&type=chunk) [Special Note Regarding Forward-Looking Statements](index=36&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements based on expectations, estimates, forecasts, and projections, which involve risks and uncertainties that could cause actual results to differ materially[159](index=159&type=chunk) - Key risk factors include the effects of the COVID-19 pandemic on business, demand for services, operational disruptions, financial condition of clients, economic downturns, ability to recruit and retain healthcare professionals, regulatory compliance, and integration of acquisitions[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk from variable interest debt - The primary market risk exposure is interest rate risk from variable interest debt instruments[161](index=161&type=chunk) - A **100 basis point** increase in interest rates would not have a material effect on the financial statements for the three and nine months ended September 30, 2020[161](index=161&type=chunk) - Foreign currency risk is considered immaterial as substantially all revenue is generated in the United States[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and notes no material changes in internal financial reporting controls - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2020[162](index=162&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2020[163](index=163&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no legal proceedings to report under this item - No legal proceedings are reported in this section[165](index=165&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section outlines additional risk factors, primarily focusing on the adverse effects of the COVID-19 pandemic - The COVID-19 pandemic has negatively impacted the global economy and created significant volatility, posing risks to the Company's business, financial condition, and results of operations[168](index=168&type=chunk) - Demand for staffing services and workforce technology solutions is sensitive to economic activity and has fluctuated significantly due to COVID-19, with decreased demand for non-essential healthcare services[169](index=169&type=chunk) - Risks include potential disruptions to operations due to employee unavailability, increased workers' compensation and health insurance costs, and impaired ability of clients to make timely payments[171](index=171&type=chunk)[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchase program and confirms no shares were repurchased during the period - The Board authorized a **$150 million** common stock repurchase program on November 1, 2016, with no expiration date[174](index=174&type=chunk) - No shares of common stock were repurchased during the nine months ended September 30, 2020[175](index=175&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities to report - No defaults upon senior securities are reported in this section[175](index=175&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable[175](index=175&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported in this section[175](index=175&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q - Exhibits include the Indenture dated October 20, 2020, certifications by Susan R. Salka and Brian M. Scott, and various XBRL taxonomy documents[177](index=177&type=chunk)