AMN HEALTHCARE SERVICES INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following discussion should be read in conjunction with our consular financial statements and the notes thereto and other financial information included elsewhere herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021file with the Securities and Exchange Commission
(“SEC”) on February 24, 2022 (“2021 Annual Report”). Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements.” See “Special Note Regarding Forward-Looking Statements.” We undertake no obligation to update the forward-looking statements in this Quarterly Report. References in this Quarterly Report to “AMN Healthcare,” the “Company,” “we,” “us” and “our” refer to AMN Healthcare Services, Inc. and its owned subsidiaries.

Overview of Our Business

We provide healthcare workforce and staffing services to healthcare organizations solutions across the nation. As an innovative total talent solutions partner, our managed services programs, or “MSP,” vendor management systems, or “VMS,” workforce consulting services, predictive modeling, staff scheduling, credentialing services, revenue cycle solutions, language services, and the placement of physicians, nurses, allied healthcare professionals and healthcare leaders into temporary and permanent positions enable our clients to successfully reduce staffing complexity, increase efficiency and lead their organizations within the rapidly evolving healthcare environment.

We conduct business through three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. For the three months ended March 31, 2022we recorded revenue of $1,552.5 millionas compared to $885.9 million for the same period last year.

Nurse and allied revenue segment comprises 79% and 74% of total revenue for the three months ended March 31, 2022 and 2021, respectively. Through our nurse and allied solutions segment, we provide hospitals and other healthcare facilities with a comprehensive managed services solution in which we manage and staff all of the temporary nursing and allied staffing needs of a client and traditional clinical staffing solutions of variable assignments lengths. We also provide revenue cycle solutions, which include skilled labor solutions for remote medical coding, clinical documentation improvement, case management, and clinical data registry, and provide auditing and advisory services.

Physician and leadership segment revenue revenue 12% and 16% of total solutions ended for the three months ended March 31, 2022 and 2021, respectively. Through our physician and leadership segment, we place physicians of all solutions, as well as dentists and advanced practice providers, with clients on a temporary basis as independent contractors. We also recruit physicians and healthcare leaders for permanent placement and place interim leaders and executives across all healthcare settings. The interim healthcare leaders and executives we place are typically placed on contracts with assignment lengths ranging from a few days to one year, and a growing number of these placements are under our managed services solution.

Technology and workforce segment revenue comprises 9% and 10% of solutions total revenue for the three months ended March 31, 2022 and 2021, respectively. Through our technology and workforce solutions segment, we provide hospitals and other healthcare facilities with a range of workforce solutions, including: (1) language services, (2) software-as-a-service (“SaaS”) VMS technologies through which our clients can manage their temporary staffing needs, (3) workforce optimization services that include consulting, data analytics, predictive modeling, and SaaS-based scheduling technology, (4) recruitment process outsourcing services that leverage our expertise and support systems to replace or complement a client’s existing internal recruitment function for permanent placement needs, (5) telehealth services, (6) credentialing services, and (7) flex pool management and other outsourced solutions services.

As part of our long-term growth strategy to add value for our clients, healthcare professionals, and shareholders, on April 7, 2021 we acquired Synzi, including its wholly-owned subsidiary SnapMD. Synzi and SnapMD offer virtual care technology platforms; Synzi focuses on the care management and home health markets and excels as a patient communication and engagement platform, while SnapMD focuses on the outpatient market and preeminent serves as a clinical communication and documentation platform. See additional information in the accompanying Note (2), “Acquisitions.”

Operating Metrics

In addition to our constituency and segment financial results, we monitor the following key metrics to help us evaluate our results of operations and financial condition and make strategic decisions. We believe this information is useful in understanding our operational performance and trends affecting our businesses.

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•Average travelers on assignment represents the average number of nurse and
allied healthcare professionals on assignment during the period, which is used
by management as a measure of volume in our nurse and allied solutions segment;
•Bill rates represent the hourly straight-time rates that we bill to clients,
which are an indicator of labor market trends and costs within our nurse and
allied solutions segment;
•Billable hours represent hours worked by our healthcare professionals that we
are able to bill on client engagements, which are used by management as a
measure of volume in our nurse and allied solutions segment;
•Days filled is calculated by dividing total locum tenens hours filled during
the period by eight hours, which is used by management as a measure of volume in
our locum tenens business within our physician and leadership solutions segment;
and
•Revenue per day filled is calculated by dividing revenue of our locum tenens
business by days filled for the period, which is an indicator of labor market
trends and costs in our locum tenens business within our physician and
leadership solutions segment.

Recent Trends

Demand for our temporary and permanent placement staffing services is driven in part by US economic and labor trends, and since early 2020 through present, the COVID-19 pandemic “Great Resignation” have combined demand. Since late 2020, we have been experiencing all high demand for nurses and certain healthcare professionals and demand across all segments and business lines is above pre-COVID-19 levels.

With high demand levels across many specialties in nurse and allied solutions segment, clients continue to face increased labor shortages resulting from nurse burnout, and retirements. We have recently seen travel nurse demand begin to moderate, though still above pre-pandemic levels, due to reductions in COVID-19 hospitalizations and crisis needs. The wages for nurses and the corresponding bill rates we charge our clients peaked in the first quarter of 2022 due to the shortage of clinicians quickly, significantly higher demand and our clients quickly’ need to frequently fill positions. Our ability to adequately meet the high client demand continues to be constrained by the tight labor market. We anticipate bill rates to decline from first quarter levels, but remain well above pre-pandemic levels throughout the remainder of 2022.

The overall demand in allied staffing division reached all-time highs in the first quarter, which resulted in our record levels of travelers on assignment. We continue to see strong overall demand in our allied staffing division with COVID-19-driven demand in respiratory and laboratory specialties leveling off.

In our physician and leadership segment, demand has recovered and now solutions exceeds pre-pandemic levels. We are seeing strong demand for locum tenens and interim leadership as well as for permanent physicians and leaders. In our locum tenens division, we have seen particularly high demand for certain specialties, such as anesthesiologists, certified nurse registered anesthetists (CRNAs) and advanced practice clinicians. Longer term, we expect continued strong demand resulting from an increased level of burnout and turnover of healthcare leadership roles.

In our technology and workforce solutions segment, our VMS technologies experienced increased utilization and revenue growth due to continued high demand levels and bill rates. We anticipate utilization and rates to subside as COVID-19 bills decline while remaining well above pre-pandemic levels.

The utilization of our language services business continued to grow as healthcare utilization returned to a more normal level.

The demand for our recruitment process outsourcing services remains strong as clients look for solutions to help address the increased labor shortages and the need to address vacancies in their permanent roles and challenges with staffing their internal recruiting teams. We expect this increased demand to continue in the current constrained labor market.

As our businesses have continued to grow, we have increased our sales and operations workforce to support our clients and healthcare professionals. We have also increased spending to support our current team members and retain talent.

Critical Accounting Policies and Estimates

The of our financial statements in compliance with
United States generally accepted accounting principles (“US GAAP”) requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities On an ongoing basis, we evaluate our estimates, including those related to tangible assets purchased in a business combination, asset impairments, accruals for self-insurance, compensation and related benefits, accounts receivable, contingencies and litigation, contingent (“earn-out”) liabilities associated with acquisitions, and income taxes. information that is currently

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available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary from these estimates under different assumptions or conditions. If these estimates differ significantly from actual results, our consular financial statements and future results of operations may be materially affected. There have been no material changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2021 Annual Report.

Results of Operations

The following table sets, for the periods indicated, selected unaudited statements concurrently of operations data as a percentage of revenue. Our results of operations include three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The Synzi and SnapMD acquisition affects the comparability of the results between the three months ended March 31, 2022 and 2021. Our historical results are not certainly indicative of our future results of operations.

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