AMN Healthcare Services, Inc. (AMN) Q1 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. And welcome to the AMN Healthcare First Quarter 2011 Earnings Call. At this time, all participants are in a listen-only mode. Later, we'll have a question-and-answer session, and the instructions will be given at that time. [Operator Instructions] As a reminder, the conference is being recorded. I would now like to turn the conference over to your host, Ms. Amy Chang, the Vice President of Investor Relations for AMN Healthcare. Please go ahead.

Thank you, Laurie. Good afternoon, everyone. Welcome to AMN Healthcare's first quarter 2012 earnings call. A replay of this webcast will be available until May 24, 2012, at amnhealthcare.com/investors. Details for the audio replay of the conference call can be found in our earnings press release. Regarding our policy on forward-looking statements, various remarks and characterizations we make during this call about future expectations, projections, plans, prospects, events or circumstances constitute forward-looking statements. Forward-looking statements are identified by words such as believe, anticipate, expect, intend, plan, will, should, would, project may variations of the such words and other similar expressions. It is possible that our actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those identified in our Annual Report on Form 10-K for the year ended December 31, 2011, and our other filings with the SEC which are publicly available. The results reported in this call may not be indicative of results for future quarters. These statements reflect the Company's current beliefs and are based upon information currently available to it. Developments subsequent to this call may cause these statements to become outdated. The Company does not intend, however, to update the guidance provided today prior to its next earnings release. This call may also contain certain non-GAAP financial information. From time to time we make available additional information regarding non-GAAP financial measures including pro forma measures in the earnings release and on the Company's website. On the call today are Susan Salka, our President and Chief Executive Officer, as well as Brian Scott, our Chief Financial Officer. Joining us during the Q&A session will be Ralph Henderson, our President of Healthcare Staffing and Bob Livonius, our President of Strategic Workforce Solutions. I will now turn the call over to Susan.

Thank you so much, Amy. Good afternoon, everyone and welcome to AMN Healthcare's 2012 first quarter earnings conference call. We are pleased to report solid performance today reflecting steady progress towards our strategic calls of revenue growth as the market leader and innovator in Healthcare Workforce Solution and profitability growth through our achievement of operating leverage and improved adjusted EBITDA margins. In April, we also refinanced our credit agreement, which provides a lower cost of debt and created operating flexibility in the future. We'll talk more about the future in just a few minutes but first we will jump right in to overall results. First quarter consolidated revenues are $226 million were in line with our guidance range up 2% sequentially and 5% year-over-year. This represents the seventh consecutive quarter of year-over-year growth for the company. We also achieved a consolidated EBITDA margin of 7.7%, which was better than anticipated. Consolidated gross margins were 27.9% and at the high end of our expectation but they were down slightly from the prior year quarter due to increased housing and other direct cost. These were also offset by improved pricing and bill to pay spreads. Our growth in operating leverage was driven by several key factors. The first is that we are seeing the Medfinders acquisition continue to pay off as we experienced lower SG&A expenses on growing revenues. Another key factor is AMN's continued differentiation in the marketplace. We gained significant market share during 2011 due to our strength in MSP offering and our ability to deliver to our clients through higher fill rates. We continue to be successful and winning new MSP contracts and we are also continuing to see volume growth with our traditional clients. Currently about a third of our Nurse and Allied segment revenues are generated from MSP contracts. According to a recently release staffing industry analyst report MSP usage by large buyers of contingent labor and other industries ranges between 50 and 70%. It's uncertain whether healthcare will reach these high levels, but with estimates of our industry currently at 10% to 20% MSP utilization that certainly appears to be significantly more growth opportunity. As the leader and innovator in healthcare workforce solutions and in particular MSP we believe we are well positioned to capitalize on this trend. We also continue to experience increased interest from our client for other strategic workforce solutions such as recruitment process outsourcing, EMR staffing, and workforce consulting projects. These small but very strategic high margin solutions also help us to move towards our goal of achieving a 10% adjusted EBITDA margin in the next 3 to 5 year. Now I will turn to our results by business segment. First quarter Nurse and Allied revenues were $154 million up 4% sequentially and 14% year-over-over. This growth was driven mainly by the Travel Nurse business where revenues were up 9% sequentially and 22% year-over-year. The sequential growth was driven by strong fill rates high rebook rates and increased nurse applicants. While our orders were softer at the beginning of the year, our team was able to maximize our opportunity with a very strong fill rates during the fourth quarter and the first quarter producing a very healthy sequential and year-over-year volume increase. While the second quarter of the year is often seasonally down for the Travel Nurse business. We are expecting to overcome that seasonal pressure and deliver volume that will be sequentially flat to slightly up. On a year-over-year basis, we expect to see volume of 15% to 17% in the second quarter. Open orders for the Travel Nurse business have increased nearly 50% since mid February and have been trending up steadily. Additionally, the combination of new clients and the diversity of opportunities that we offer candidate has resulted in higher rebook and retention rate of our Travel Nurses. First quarter Travel Nurse average bill rates were up 2% year-over-year and we expect similar bill rate improvements to continue throughout 2012. However, we anticipate gross margins to hold relatively steady since there will likely be continued upward pressure on temporary housing and other direct costs. First quarter local staffing revenues were $21 million, which was down 12% sequentially and 7% compared to prior year. As anticipated, revenues were lower sequentially due to the customary seasonal trends combined with the lack of any meaningful flu driven business so far in 2012. Revenues were also down to the closing of several underperforming offices in the fourth quarter. As mentioned on a last call, we have begun a strategic transformation of our local staffing business. Our strategy involves expanding branch presence in larger markets with significant MSP opportunity while closing underperforming offices in small markets. We recently opened a new office in New York City, to serve a very large MSP client and in latter half of the year, we anticipated opening to additional offices in other large metropolitan areas to serve recent MSP client wins. First quarter Allied revenues were $31 million, which was up 1% sequentially and up 7% year-over-year. The growth was due to higher volume in our therapy business. Going into the second quarter, allied order has continued to improve and volume is expected to be up again sequentially and year-over-year. The Allied team has delivered significant improvement in our sales productivity, margin management, and SG&A management. The result is an EBITDA margin that is now double what it was just two years ago. We are also seeing traction with more MSP clients in the allied business. Some of these clients are shared with the nurse staffing business and some are entirely allied MSP. And just like nursing the Allied fill rate are improving significantly and contributing to higher client satisfaction and the ability to win more new business due to our reputation for delivering results. Locum tenens first quarter revenues were $64 million down 2% sequentially and 10% year-over-year, although some of the sequential decline was due to normal seasonality. There was also the continued market driven impact of volume decreases in Radiology and Anesthesia. First quarter locum's gross margins improved 160 basis points sequentially and 90 basis points year-over-year. This was due primarily to improved bill rates and bill pay spreads resulting from the pricing and margin management process changes that we put into place at the end of last year. As we announced in March, we recently made leadership changes in Locum Tenens. In addition we are beginning to see a positive improvement in the business from other changes that were implemented over the last 6 months. Going into the second quarter overall Locum's revenues are expected to be up sequentially based on improved volume. We also expect to see further improvement in pricing and gross margins throughout the year. In physician permanent placement first quarter revenues were $9 million down 4% sequentially and 17% year-over-year. However including the prior year impact of adopting the revenue recognition accounting standard Perm revenues were up 4% year-over-year. The investments we made in growing our sales team throughout 2011 are beginning to payout with new searches up over 10% year-over-year in the first quarter. Going into the second quarter we expect a modest sequential increase in revenues due mainly to these increased new searches. Our placements for recruiter are returning to historic high levels due in part to the increase in active searches. Another contributor has been our increase investment in social and mobile media to reach out in a track a greater supply of physician candidate. We continue to focus on building our team, our marketers and recruiters to ensure that we are able to achieve the high fill rates on our active searches. As the innovator in healthcare workforce solutions, we were closely with our plans to understand the current and future challenges and to bring to life solutions that will help them better manage their clinical workforce. Our success so far particularly with MSP and RPO clients have shown that this strategy is a clear differentiator for us in the marketplace. To support our growth and innovation in workforce solutions, we continue to make internal investments to position us as the industry thought leader. Another big differentiator is our ability to quickly recruit for and fulfilled our client's demand for quality clinicians, especially as the industry continues to rebound. In future years we expect the clinician shortage to intensify as the aging population increases its demand for healthcare services. At the same time the aging clinician population will be retiring. These forces of strong demand and lagging supply of clinicians in almost every discipline, is expected to ramp up significantly in 2014 and beyond. Until that time to ensure we retain our competitive advantage as a recruitment powerhouse, we will continue to make internal investments in our social media, mobile and online technologies. Even though we will continue to leverage technology, we also know that we must maintain a personalized and streamline experience for our clients and clinicians. The number one reason they choose to work with us is because of the experience that they have interacting with our team members. Everyday our team members bring exceptional passion and commitment to delivering value to our healthcare clients and clinicians. This level of engagement and execution combined with our clear differentiated strategy has resulted in the positive results we are reporting today. I would like to thank each of our team members for the contributions to these results and to our ongoing success. I really wish every investor have the opportunity to come to our offices and meet our team members. It doesn't take long to see why so many clients and clinicians prefer to work with AMN. I will come back to you in our Q&A section along with Ralph and Bob, but for now I will turn the call over to our CFO, Brian Scott.

Thank you, Susan. Good afternoon, everyone. First quarter revenue from continuing operations was $226.4 million, up 5% from last year and 2% from last quarter. Our gross margin for the quarter was 27.9% at the upper end of our expectation, but down to 120 basis points from last year and down 40 basis points from last quarter. The year-over-year decrease was due to prior year benefits from accrual based workers compensation reserve adjustment in the Nurse and Allied segment and the impact from the 2011 adoption of a new revenue recognition accounting standard in the physician permanent placement segment excluding these items the year-over-year gross margin was higher by 30 basis points due to improved gross margins in both the physician segment. The sequential decrease was in line with our expectations in which even primarily by higher housing and other direct costs in the quarter total of $47.2 million or 20.8% of revenue compared to 22.6% in the same quarter last year and 22.1% in the prior quarter. The year-over-year improvement was due to the absence of integration related expenses. The improved SG&A leverage from the acquisition synergies and refund received in connection with a favorable settlement of an assessment from the California Employment Development Department partly offset by higher professional liability and bad debt expenses. The settlement refund was recorded and unallocated corporate expenses. Compared to the prior quarter the decrease was due to continued operating leverage improvement and the settlement refund offset partly by higher professional liability cost. We expect that SG&A to increase somewhat in the second quarter to drive support growth in the business and the additional supply driven investments that Susan mentioned earlier. Our Nurse and Allied segment revenue increased sequentially by 4% to $153.9 million, volume grew 2.4% sequentially to 5,443 healthcare professionals and revenue per day was up 2.6% on higher bill rates and increase in hours worked. Nurse and Allied gross margin decreased in line with our expectations year-over-year by 110 basis points and sequentially by 100 basis points to 26.4%. Excluding the previously noted prior year workers compensation reserve benefit, segment gross margin was consistent year-over-year. The sequential margin decline was primarily from higher housing and other direct cost more than offsetting improved bill pay spread. In addition you may recall with the fourth quarter gross margin was particularly strong. First quarter Nurse and Allied operating income was $17.1 million or 11.1% of revenue as compared to $18.1 million or 12.2% of revenue in the prior quarter. The sequential decrease was due to the lower gross margin and an increase in SG&A related primarily to higher professional liability cost. A locum tenens segment revenue decreased by 1.6% from the prior quarter reflecting a 3.4% decrease in days filled and a 1.8% increase revenue per day filled. Gross margin of 27.1% was up by 90 basis points from the prior year and sequentially by a 160 basis points due to improved bill pay spread and favorable mix shift. Locum's operating income of $4.4 million or 7% of revenues compares to $3.9 million or 6.1% in the prior quarter. Within our physician permanent placement segment, revenue decreased sequentially by 4%. On a year-over-year basis, revenue declined by 17%. However excluding a prior year adoption of new revenue recognition accounting standard, revenue was up year-over-year by 4%. Physician permanent placement operating income for the first quarter was $1.7 million or 18.9% of revenue. On a GAAP basis we reported first quarter pre-tax income from continuing operation to $6.8 million. Our tax rate in the quarter was 49% which is consistent with our current expected full year rate of approximately 50%. Diluted earnings per share from continuing operations was 7% for the first quarter which compares with the 4% in both the prior year and prior quarter. As March 31st, our cash equivalents totaled $4.9 million and our total debt outstanding net of discount with $193 million. Operating cash flow for the quarter was $9.6 million and capital expenditures for the first quarter were $1 million. Day sales outstanding, excluding the retained home healthcare accounts receivable were 56 days compared to 57 days in the last quarter and 54 days last year. Given the current favorable financing market and the company's improved financial performance in industry outlook on April 5th, we replaced our existing credit facilities with a new $200 million term loan and $50 million revolving Lien credit. The term loan which matures on April 2018 will initially bear interest at LIBOR by 475 basis points with a 1.25% LIBOR floor. It requires minimum annual payments of 1% of the initial principle balance and a standard require excess cash flow payment due annually, which starts at 50%. The Revolver which matures in April 2017 will initially bear interest at LIBOR plus 425 basis points. Both facilities have an interest rate and excess cash flow step downs based on the company's financial leverage. The new credit agreement also has an improved covenant structure, which includes the financial leverage, ratio covenant and an interest coverage covenant. In conjunction with this transaction $3.9 million of transaction cost and $2 million original issue discounts were capitalized and will be amortized over the term of the new agreement. We also expensed $8.6 million of non-cash deferred financing cost and original issue discount and a $1.2 million prepayment penalty associated with the previous credit facilities. These costs will be included in the interest expense in the second quarter. The lower debt interest rate will result in cash interest savings of approximately $1 million per quarter into 2014, and for the foreseeable future we intend to continue applying our excess free cash flow to pay down our debt balance. Now let's turn to our guidance for the second quarter. Consolidated revenues are expected to be between $229 million and $233 million driven by anticipated sequential growth across all business segments. Gross margin is expected to remain steady between 27.5% and 28%. SG&A expenses are anticipated to be approximately 21.2% to 22% of revenue. Adjusted EBITDA margin is expected to be approximately 7%. And with the new credit agreement we expect interest expense to be approximately $3.5 million per quarter for the remainder of 2012. This excludes the one-time write-off of fees associated with the old credit agreement. Also non-cash stock-based compensation expense is expected to be approximately $1.6 million per quarter. With that, we would like to open up the call for questions.

I think we are ready for questions.

[Operator Instructions] Our first question is from the line of Jeff Silber with BMO Capital Markets.

You folks talked about direct costs going up in the Nurse and Allied segment. I was wondering if we can get a little bit more color on that specifically. Is it housing is beyond housing and where do you think that's going to go for the rest of the year?

Jeff, thanks for the question. It has been primarily housing and that's really been true across all businesses and not unique to us. It's a nationwide issue as rents go up and it's the rents, but it's also the term that we are able to negotiate, which can affect things like vacancy days. I will say that a team has done a very good job over the last year, in particular controlling some of those kind of site factors such as vacancy, which is actually down on a year-over-year basis for the first time in a while, but rents continue to inch up across the country at 5% to 10%. And I would say that work hour right in that range because our housing tends to be in those same areas. In the physician business, it doesn't impact as much because some of our housing cost is pass-through directly to the clients, but in nursing and allied, it's generally an all encompassing bill rate where we need to manage that cost as carefully and directly as possible. So we expect to keep and basically continue to see those trends with housing up in sort of the 5% to 10% range on an annual basis.

Okay, great. That's helpful. Can you talk a little bit about wage rate trends specifically in the Nurse and Allied segment?

Yes. Our pay bill spreads actually are pretty consistent. There hasn't been a lot of change over the quarter and we don't expect to see a lot of change going forward. We did see about a 2% increase in our bill rate and probably just see about a corresponding increase in pay rates.

Okay, great. And then just a couple of numbers question. In terms of capital spending and D&A for the year, what should be, would be modeling?

We talked in the last call about CapEx is being about $6 million to $8 million this year. We are $1 million in the first quarter. So the likelihood that we will be more in the lower end of that range, but we still expect to ramp up our CapEx a little bit in the second half of the year. We talked about some of these supply driven initiatives that we have as we start to work through those. Well, we don't see our CapEx up a little bit in the second half of the year. Depreciation was a little under $2 million in the first quarter. Again as we build our CapEx a little bit in the second half of the year, you'd expect to see that move up a little bit, but it's still going to be right around $2 million to $2.2 million per quarter.

All right, great. And then share count for the current quarter and for the year?

For current quarter, it was $46.2 million a little bit under that. It will be similar amount in the second quarter and then it will be a little bit higher in the third and fourth quarter, maybe more like $46.5 million.

[Operator Instructions] We go to Mark Marcon with R.W. Baird.

Nice progress on the nursing segments. I was wondering could you talk a little bit about your comments around the fill rates, because it sounded like the orders early in the quarter went down, but the fill rates went up and that helped to power things through. Can you just - what was that driven by?

Mark, this is Ralph. Thanks for the question. So we did see order drop. I think I mentioned that in the March call where we've seen some declines in orders at that time. The flu season was just really kind of dampening what normally would happen in the first quarter and there really was no meaningful flu season at all. I think the CBC said it was the lowest count that they have ever seen in terms of the kind of the intensity of the flu. So throughout the quarter then orders began to climb and from mid February where we are at today orders were up about 50% which is great. A couple of other positive things, 8 to 9 weeks really of steady growth and there are a couple other positive things about our orders right now. It's really evenly distributed between East and West which usually bodes well for us. We like the diversity and our database looks like that. So that's always helpful for us as well. And the last point on orders is that about one out of 5 clients that have an order right now is a client that actually hasn't ordered from us within the last 2 years. So we think that speaks well for the future trend in the industry. The last point was on the fill rates because our fill rates on MSPs have always been higher and they actually grew throughout the quarter. Having fewer orders we were able to still grow the business which is something we have been talking I know about for several quarters that we thought during any kind of economic downturn, any slowdown in orders. We would be able to perform and I think this quarter was good evidence that exactly what we expected to happen would have - did happen.

I think to just really reflect the efficiency and productivity of the MSP model and I also want to make sure that everyone of those are-- fill rates have improved at our traditional accounts as well and our traditional clients. So just across the board the team is doing a terrific job of creating efficiency and improving fill rates. I think our additional supply, applied new applicants being up year-over-year, quarter over quarter also helps that, but as a recruiter is submitting applicants out for different job opportunities, they know their profitability of placement is much greater at an MSP client. And so they can be much more efficient with a time which is why our productivity of recruiters is at the highest it has been in a couple of years and has been up year-over-year now for quite a while. So it really just reflects the leverage that we can get out of both sales and operating leverage from our MSP model and I think you are just really seeing that shine through.

That's great. And with regards to the nurse behavior, what are you seeing from that perspective are you doing anything more than being more efficient, in terms of getting orders filled? You've obviously talked about taking up the pay rates. Have you done enough there, or would we anticipate more on that end?

Yes, I think - this is Ralph again. It's a good question. We haven't seen a lot of upward pressure on pay. It's really just kind of been in line with the kind of the normal economic increases there, but what we haven't seen is that increase in number of candidates who are coming in the door. So we are in kind of the double digits now. And the conversion rate has improved slightly on those nurses, which is the number of applicants that actually go to work and the time period it takes for us to get them out to work. So I guess I would say behavioral change on their part there. It seemed to be a little less reluctant and not dragging their feet as long before they go out on their first assignment that's obviously good for the business. And I think Susan mentioned our rebook and retention rates were up though they're kind of near an all time high I think right now, at least for the last several years. Which, probably indicates that nurses, our Travel Nurses and I think this happened in their allied business as well, are again much more comfortable with travel assignments, because they tend to then rebook onto another assignment and not going back to kind of their home job in their home states as frequently.

Great. And in terms of the capacity that you have with the recruiters you said that they're in your multi-year highs and in terms of the productivity, do they still have more room to go?

Yes, recruiter productivity, is up like 15% on a year-over-year basis. It's still roughly probably 10% below, you know what we - what all time highs are, but we've added some technology we actually think we might even push it beyond that as well. Another thing I know we didn't get to talk about but that Susan had talked about some investments in our advertising and marketing and some things, we don't want to share some of it, because it's - there are some things that we're doing that are competitive in nature but we are - we are streamlining the process to bring applicants in the door and we're making and some of the SG&A investments that we're making are to fund those initiatives, you know, things like your mobile devices are being enable so that nurses can access jobs more readily I think you may have seen a couple of announcements we made about that. And then other things, kind of technology wise so again we think that will drive recruiter productivity, we think it will actually make our marketing dollars more efficient at the same time and they'll help us grow the business faster than we would have been able to under kind of - with our current technology and current processes.

Great. And then with regards to Locums how should we think about the trends there, you know, obviously the radiology has been an issue for a while, when does that kind of flatten out.

Yes, this Ralph. I'll try to - it's just been 8 weeks now, so I'm getting deeper end of business every day I spent I think 4 or 5 of those weeks out in Dallas, with the Locums team and Sean is in the role now and getting off to a great start there. On the sequential trend you know, you have kind of one last day so we'll put that one in there as one of the sequential issues but the issue of being kind of having kind of locked in the syndrome on anesthesia and radiology beginning to ease a little bit. We're shifting our investments towards specialties that are growing faster. And you know steering that boat kind of where the market is on I think a better job already. Really kind of half of our specialties actually performed really well, so I want to make sure, and in we acknowledge, like our emergency room, our dentistry business, those specialties actually are growing at and above market rate so, I think that's good evidence so once we get the resources aligned in a right way that the businesses is ready to perform, as well as if you looked at that margin increase, when they couldn't switch to specialties, as best as they wanted to - they did show that they could executive very well on their margin initiative, you see the big jump we took in the quarter on margins and the team just did a super job of doing what they could in the timeframe to add.

And just one numbers question on - the unallocated SG&A, how should we think about that sequentially.

For the - you mean for the next quarter? Well we were - we were about you see that we have the 5.7 this quarter, I mean we talked about there was the refund that we pushed through that the corporate unallocated. So we've been running more in that in the $7 million to $8 million range and I think that's our expectation that you'd be in that going forward as well.

Okay. So the size of that of the refund was exactly how much?

The refund was about $2 million. Now every quarter we kind of have some space. So we'd also mentioned the first quarter had higher reserves, particularly our malpractice, and so that - we pushed that refund through corporate and allocated the other ones went through the business lines. So that definitely influenced the first quarter corporate unallocated being lower, but if you we've been running more in that because - $7.5 million to $8 million range and that would be a I think a reasonable number and going forward.

[Operator Instructions] And we'll go back to Tobey Sommer with SunTrust.

Wanted to ask - as you look across different geographies do you see any strengths or weaknesses, developing?

Probably the most notable change has been in the Travel Nurse orders over the last year where we've always had strong orders and stronger orders in the west. But if you look at the order base today, it's actually roughly split half and half between the east and the west. In fact, we've seen a greater pick-up in the east while the west has declined a little bit, on year-over-year basis. And we actually see that as a very positive sign it's reflection of the health of the market that it's not just one region, that's growing and doing well, it really is pervasive across the country, so it's a good sign of a healthier market but it's also very deliberate on our part. We think that one of the reasons, our travelers come to us as we have a broader more attractive selection of assignments and you need to have orders in all parts of the country. And so we've been very focused on growing our client base in markets where maybe we weren't as concentrated. And so I think if we look at our order base and our travel account today it's an even healthier dispersion across the country.

Great, that's helpful. And then kind of stepping back a little bit, as you talk to different healthcare organizations, do you get the sense then budget pressures are relieving a little bit and you're seeing stabilization, just how do these clients feel in terms of their budgets now and going forward?

I may have Bob jump in and answer that because it's been particularly interesting as we're out selling our MSPs and our workforce solutions, and then I'll jump in and talk about some of the other businesses.

Toby, thanks this is Bob. I would agree that there's always a focus and I continue to have a focus on cost cutting and cost controls I think as we all know this the healthcare reforms has, provide so much uncertainty still that some of the decisions that are being made are just to procrastinate. And one of the ways that they look for doing things as doing what they're already doing maybe a little bit more efficiently. I think our MSP program, and RPO programs and everything else just kind of take a - hit a sweet spot with them in terms of just identifying where they're already spending money that they could be doing it more efficiently. Not necessarily at a lower rate you know per hour, because quality is so important to them and patient safety and re-hospitalization and readmission is actually a big driver towards them, wanted to add enough labor, whether that's their permanent labor or our contract labor, to make sure that they are positioned for this readmission and patient safety incentives that are going to come forth, coming down the line. So we've seen less pricing pressure and actually more efficiency gains that we've been able to try to talk about with our clients.

You know, Frank, the other thing that, I think reflects the kind of more forward-looking focus, of our clients is the improvement that we've seen in our physician front placement business I mentioned that we had our new searches up over 10% in year-over-year, and in the first quarter and that was a great sign, that our clients are looking more towards their future and how they're going to continue to build out their business and more and more they're looking to partner with more sophisticated firms to help them, figure out how they're going to approach their overall physician staffing not just this year, but in future years as well. So some of that improved performance that we've seen in the physician firm placement business as a reflection of just generally budgets opening up and larger systems in particular looking to partner with us, so we think that that's a great sign for us because we are by far the largest retained search and permanent placement firm in the physician industry. The other thing that's happening kind of behind the scenes is while general unemployment has improved a little bit the economy is improved a little bit, the nurse attrition and healthcare job opening quits - have increased more significantly. If you look at the JOLTS data put out by the BLS, in February the number of job openings in healthcare was up 26% year-over-year. And we think that's very reflective of what we're hearing from our clients that they're seeing their clinicians, nurses in particular more empowered more emboldened to move on. And so attrition is up, and we have one client on the east coast where they had a whole operating room - group of nurses leave. And I think you seen that reflected. Strikes are happening and so I think there's more pushback from the nurses where maybe they couldn't leave when they wanted to a year or two ago, and now that the economy is improving slightly, they are starting to make them moves and changes that they want to make. You know the number of job-quits also has reported in that same report and it was up 12% year-over-year. So I think that the improvement that we're seeing is a culmination of all of these factors.

[Operator Instructions] And we have no additional questions at this time I'll turn it back to Susan Salka.

Okay, well thank you again, everyone, for joining us today. We really do appreciate your continued support of AMN Healthcare, and we look forward to updating you on our progress next quarter.

And ladies and gentlemen, this will conclude our conference call for today. We thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.