AMN Healthcare Services 2026 Q2 Earnings Call

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.

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 and Operating Officer. I will now turn the call over to Cary.

Thank you, Randy, 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.