Good day and thank you for standing by. Welcome to the AMN Healthcare Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Randy Reece. Please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's Fourth Quarter and Full Year 2025 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 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. Welcome, everyone, to our quarterly recap and year-end update. We are pleased to review our 2025 accomplishments and highlight what we expect looking ahead. Several themes prevailed last quarter and so far in the first quarter as we saw healthy seasonality in Nurse and Allied staffing, a return to sequential growth in international nurse staffing, increasing demand in our leadership and search businesses, along with extraordinary need for labor disruption support. We had outsized labor disruption revenue in the fourth quarter and with 2 large events in the first quarter, we anticipate significantly more labor disruption revenue this quarter. For the full year 2025, we finished with revenue of $2.73 billion and adjusted EBITDA of $234 million. We reduced debt by $285 million in 2025. Fourth quarter revenue of $748 million was 2% higher than the year ago quarter and $18 million above the high end of guidance. Gross margin came in slightly above the high end of the guidance range and adjusted EBITDA margin was at the high end of guidance. Labor disruption revenue in the fourth quarter was $124 million, nearly doubled over the year ago quarter. Excluding labor disruption, revenue for the quarter was $624 million, slightly above the midpoint of our guidance range. By segment, excluding labor disruption revenue, Nurse and Allied Solutions and Physician and Leadership Solutions came in at the high end of guidance. Technology and Workforce Solutions revenue was $2 million below the midpoint of the guidance range. Nurse and Allied revenue of $491 million grew 8% year-over-year. Excluding labor disruption, segment revenue was down 7% year-over-year, improved from down 13% in the third quarter. Travelers on assignment, which do not include labor disruption, grew 6% sequentially in the quarter. In the first quarter of 2026, we expect Nurse and…

Thank you, Cary, and good afternoon, everyone. Fourth quarter consolidated revenue was $748 million, above the high end of our guidance range, driven by labor disruption revenue that was $24 million above guidance. Revenue was up 2% from the prior year and 18% sequentially. Consolidated gross margin for the fourth quarter was 26.1%, slightly above the high end of our guidance range. Gross margin declined 370 basis points year-over-year and 300 basis points sequentially. Labor disruption revenue reduced fourth quarter consolidated gross margin by 130 basis points. Consolidated SG&A expenses were $152 million compared with $159 million in the prior year and $139 million in the previous quarter. Adjusted SG&A, which excludes certain expenses, was $143 million in the fourth quarter compared with $145 million in the prior year and $129 million in the previous quarter. The sequential increase in adjusted SG&A is primarily attributable to a $5 million unfavorable professional liability actuarial adjustment, a $4 million net increase in bad debt expense and approximately $5 million of additional costs to support the large labor disruption event. Fourth quarter Nurse and Allied revenue was $491 million, up 8% from the prior year, exceeding the high end of our guidance range, driven by higher-than-anticipated labor disruption revenue. Sequentially, segment revenue was up 36%. Excluding labor disruption, segment sequential growth was 5%. Year-over-year Nurse and Allied segment volume decreased 5%, average rate was flat and average hours worked were down 1%. Sequentially, volume was up 6%, average rate was up 1% and hours worked were down 2%. Travel Nurse revenue in the fourth quarter was $209 million, a decrease of 9% from the prior year period, though up 6% from the prior quarter. Allied revenue in the quarter was $147 million, down 1% year-over-year and up 3% sequentially. Within Allied, our Schools…

[Operator Instructions] The first question of the day will be coming from Jeff Silber of BMO.

Since the labor disruption business is such a big part of 4Q and expected to continue in this quarter, I just wanted to drill down a little bit on there. Do you have like either separate operating procedure, separate sales force for this? How do you make sure that it doesn't disrupt the rest of your business?

Yes. A couple of things. One is we have developed over and invested in over the past 2 years, technology and operating model to be able to support strike events. That system is being used not just in the strike events that we're doing now. We also used it in the strike that we supported in the fourth quarter. We have a dedicated strike team. It includes sales down into leadership roles and operations roles for very large events like what we have now. You have resources coming from across the company and from external sources as well. So we have a playbook for how we bring those resources on seamlessly. They're trained. We have operating procedures against it. So we really have built a system so that we will have as little disruption to our core business as possible when we're supporting these types of events. Given the magnitude of what we've supported in the first quarter, we have moved many, many corporate resources on to support this. It has had some marginal impact on some of our core business. But really, relative to the size of events, the playbooks and everything that we've put in place over the past 2 years is working incredibly well.

Okay. That's helpful. Shifting gears a bit. I know the stock market is a bit jittery about AI disrupting a bunch of different businesses. And specifically with your company, I think some of the recent stock pressure might have been because of some fears on your language translation business. Can you talk a little bit about that in terms of what you think the risks might be and how you're countering them?

Yes. And just as a reminder, for our language service business, it is focused on clinical health care setting. And that by government regulation is required to have a human interface and a human providing that service. Our capabilities are tech-enabled, but we have humans who are delivering that, which allows our clients to be able to comply with federal laws. So we really have been focused much more on the clinical side of it. We look long term, this is an important service to be providing to patients and for health care systems. The clinical setting is also higher risk. So beyond it being regulated, it's not an area that we have had any clients coming to us and saying, I want to look at AI as one of the areas that I would want to focus on in the clinical setting. We have had conversations around how do we use better AI enablement, both within our technology that is connecting the patient to all these medically trained interpreters. And we've also had clients who are looking at the overall patient journey and really wanting to ensure that they have some continuity in that patient journey outside of the clinical setting. So going from admitting into the clinical setting into discharge. So in my prepared remarks, I talked a little bit about what we're doing in terms of investing in AI enablement for us to be able to play in a broader part of that journey where you don't have that mandate and regulation to be able to have the human providing the interpretation.

And our next question is coming from the line of A.J. Rice of UBS.

Maybe just a couple of quick questions here. First, just following up on the labor disruption situation. The nurses that you get to fill an uptick that involves $600 million of incremental revenues in the first quarter, are those people that are generally known to you and have taken travel assignments before? Are you getting them from a new source? And do those then become people that you can use to have in your pipeline for future assignments? How should we think about the implications of that kind of revenue increase going forward in the business?

Yes. So a couple of things. One, in terms of the supply that we get, and these are very -- you're having 2 simultaneous indefinite events happening. And so from a supply standpoint, we have crisis workers that are known to us that are coming in for these events. We have some that are new to us. We engage suppliers in these events as well. And so we might have some travelers -- clinicians who are typically travelers come in or per diem and some that really focus on supporting these types of labor disruption events. So you're going to get a little bit of a mix in terms of the clinicians that are coming in. We have had very, very high fill rates in both of these events. So we have had access to great supply to be able to support these clients. We've also been able to use not just what we've built in our event management system over the past 2 years, but what we've done over the past 3 years in being able to recruit faster, and we've used our AI recruiter in these events, we've been able to not just fill at a higher level, we've been able to fill much faster for clients. In terms of the relationship then that we have with these clinicians after this, we have great experiences with them. And so we would view this as an opportunity for them to continue working with us, whether it's supporting future labor disruption events or coming and supporting as a traveler or a per diem type of role.

Okay. Interesting. We've gotten some questions about the Kaiser contract overall, which obviously is a big factor here, that relationship and partnership. I know that doesn't really mature until later in the year. I don't think maybe the end of the year. Is there any update because of all of this that maybe that gets reworked early, and it gets put to bed early?

So our contract with Kaiser goes through the end of this year. We expect them as part of their normal governance process to go through an RFP this year. We have been very busy with them in the beginning of the year, and we have a very strong, deep, long-standing partnership with them.

Okay. And then my last question quickly is a different area. It looks like the March Visa Bulletin was published today and is advancing the retrogression date by 4 months and then you get 2 months of improvement in Philippines. That's sort of meaningful, it seems like to me. Is that enough to change the way you look at the international staffing business for '26?

Yes. So for those that haven't been tracking this afternoon, the latest visa bulletin was released. So the rest of the world advanced 4 months to October 1 of '23, and the Philippines advanced 2 months to August 1, '23. That was more progression than we had expected in this visa bulletin. So we expect -- and we've talked about this in January that we expect mid-teens growth in 2026 from international. That's a higher-margin business for us. And so A.J., think about this that this would help us, particularly kind of at the end of this year going into 2027.

A.J., this is Brian. I mean I think we -- with some of the other restrictions that were put in place late in the fourth quarter and beginning of this year, this is definitely a positive because that's the counterbalance to several countries where we do recruit from that are potentially -- they're on a pause right now that the ways we're going to bring them in there from different countries, but also as those dates move forward, we have a lot of supply in both the Philippines and other markets. And so any time you see that date move forward, it's going to be positive both near and long term.

Our next question is coming from the line of Kevin Fischbeck of Bank of America.

I wanted to follow back up on that point about the labor pool and the strike disruption. Does it in any way crowd out your ability to staff other projects? Is there like a headwind in the core business as a result of this that we should be thinking about when this business goes away? Is there an uplift? Or is that completely separate and not an issue?

No, if you look at some of our guidance for the nurse business in the first quarter, you actually continue to see strong support for the core business. And so the way that we have built our ability to support strike also enables us to continue to support our core clients. And we can also, in a unique way because we have transparency, ensure that those clinicians do not get pulled off from our core clients as well, Kevin. So we've been able to do both simultaneously, and you see that in our guidance for the first quarter. When we look forward to the second quarter, what we would expect to see in the second quarter in our nurse business is the normal seasonal patterning that you have after winter orders. We had healthy winter orders this year. So anything that you would potentially see in the second quarter like that we have line of sight to right now would really be more reflective of that. Given that these are both indefinite strikes that have been going on for some period of time, it's really hard to predict what would happen in the second quarter in terms of as they get back to kind of business as usual, what that looks like. But we're not seeing really any meaningful impact in how it's enabled us to be able to support and staff our core clients.

Yes. I'd just add, I mean, we've talked about on the last few calls that when -- it's still an attractive market, clinicians want to travel. And when there's the right opportunities priced the right way, we're able to pull supply in and fill jobs quickly. So you can imagine these types of events are attractive to nurses that want to fill them, but there's -- that doesn't mean there still aren't a lot of other attractive opportunities. Geographically, these are kind of concentrated in 2 places. particularly in California, you have to be California licensed to be able to work one of these. And so there's a large pool of talent that may not have that license that's working on other assignments as well. So it's -- we -- in this case, again, it's a large market, and this is -- this can be an and strategy for us.

And Kevin, the other part that I would add is you don't have as much certainty when you're going in and working a crisis like this that you would have if you were doing a 13-week travel assignment. So it really is a bit of individual preference about, am I going to potentially take something that would be higher paying but would be not -- you have risk that you may not actually get days or hours versus something that you had more structure around how long the contract was.

Yes. I was going to kind of segue to kind of follow up on that. Just that I guess the way that you kind of been characterizing the softness in the business more recently is that there's a lot of demand from the hospitals, but just not at the right clearing price. I guess like the strike revenue is probably at a higher clearing price. And -- so I'm trying to figure out how much we should be thinking about of the higher fill rates as a relationship to that dynamic just that the rates are higher, and therefore, it's just easier to fill because you're hitting that price point versus some of the things that you've talked about that might actually be more kind of positive indicators as it relates to Q2, 3, 4, to the rest of the year?

Yes. Think of it as -- and this has been a consistent theme really for some period of time. If you have an order that's priced right, it gets filled. And so given how fast you have to build a workforce in a crisis, there's a very strong transparent market around what that looks like. So you typically get it priced right so that you can fill and stand up your workforce. In our non-strike business, if you have orders that are priced right, they're getting filled. So the same corollary holds true. Outside of strike, you might have systems that have an ability to wait a week or wait 2 weeks to see if an order gets filled and then they can increase price. When you're trying to staff a crisis, you don't have some of that same flexibility.

Yes. And we've had some clients where they have -- where the demand is strong enough and the need is urgent enough. And as they adjust price, to Cary's point, we fill those orders very quickly. So we have real-time data around that and continue to educate clients. And I think as you're -- as we talked in the prepared remarks, as you're seeing more normalization in hiring trends by hospitals, so they're kind of going back to the kind of pre-COVID normalized levels of hiring and attrition, they're going to typically find a place where they may have more urgency on trying to fill roles, and that's typically where you might see more flexibility on pricing. And when that happens, we can fill those jobs. So I think we're -- we've been at a point of stability now for several quarters. And I think that the next leg from history would be that you would start to have clients starting to think a little bit differently about how their models around perm and use of contingent labor and that flexibility and the cost, the cost trade-off there. And with that, it drives more constructive conversations about what type of rate is needed to be able to fill the right mix of jobs for them.

Okay. And then just last question. On the AI disruption potential, I wasn't sure I was 100% following because it sounds like you guys feel like the business has some in-place moat to it that you really can't be disrupted because of the regulatory aspect of face-to-face, but it also sounds like you're responding and changing your pricing and you're seeing pressure on that business at the same time. So just are those separate dynamics that are causing it and it's not AI, it's something else? Or how should we be thinking about that?

It's a separate dynamic. It is not AI. And so the space that we're in, in language services is protected by government regulations requiring human interpreters. What we are seeing in terms of the pricing pressure is really an aggressive competitor consolidator that we talked a bit about in 2025 coming in that put pressure on. We were very agile in responding. We have developed and we now have in pilot a new service model that can compete against that. We have it in pilot with a couple of clients. And so that really is in response to a competitive environment. And the secondary thing we had in 2025 is you had the impact of tougher immigration policies on the industry. So those really were the 2 factors that we saw in 2025, but they are separate and not related to anything from an AI standpoint. We do believe not just for this business, but for all of our businesses, as you heard in our comments and some of the answers to our questions, we think AI can be accretive to us. We're using it in our client-facing technology in how we automate our own processes and how we support our recruiters. And so we think that AI can be very helpful to us in terms of helping productivity and speed and things that are really important in our business.

The next question is coming from the line of Trevor Romeo of William Blair.

I wanted to ask about your guidance and specifically the margin piece. I know it is probably very difficult to fully strip out the strike business. But just any help you can give us on kind of what underlying margins with a normal level of labor disruption revenue would look like and what's embedded in the Q1 guidance from that perspective?

Sure. Yes, we tried to give some of that in the -- both in the release and the prepared remarks, but you can -- for example, the total revenue, again, if you can take that range and you were to strip out the $600 million that we put in, that's going to put you in the $625 million to $640 million revenue range, completely excluding anything related to labor disruption. And then on the gross margin, the 23.5% to 24%, we said there's about a 300 basis points drag related to that. So you can -- if you kind of exclude that, you're looking at somewhere more in the 26.8%, close to 27% range. So not -- just slightly down from the fourth quarter. And then the underlying SG&A would be running in the [ 130 to 135 ] range. So I think you can kind of work through the math on that. That's adjusted SG&A to kind of infer what the underlying adjusted EBITDA would be. It's pretty similar to what we had in the fourth quarter when you strip out strike, and that's the run rate we're at right now.

Okay. That's helpful. And then I guess I just wanted to follow up on the long-term targets. You talked about, I guess, 4% to 6% organic growth on the top line beyond this year. Just given that there have been a lot of changes to some of your businesses over the last few years, would love to narrow down what are your expectations for each of the segments over the long term? And maybe just the moving pieces that could get you to the bottom end or the top end of those ranges would be great.

Yes. I mean I guess I'd say to start with the -- we expect to maybe this year, we talked about to start to see recovery in the year-over-year growth. We have a couple of businesses like Search and International that in the first quarter, we expect to be at either flat or up in the first quarter. And at different quarters throughout the year, we start to regain positive growth. So that's why we said really that longer-term algorithm as you move into 2027, you're kind of lapping these different quarters of getting back to positive growth. And then we would expect through each of our segments, not disproportionately different rates of growth, more in that -- we gave a 4% to 6% range. I don't think we'd expect it to be significantly above or below that range. But as we see a more normalized environment for our core staffing businesses, we think that between volume and rate, an environment, we're going to see continued increasing demand for health care consumption. We think that's a reasonable expectation for the top line. And then some modest improvement in mix driving gross margin, but really the other big factor is the ability to drive operating leverage as we see continued top line growth. I think the initiatives we have, the investments we've made over the last several years and really upgrading a lot of our core systems. Now as we continue to invest in operational improvement and starting to embed AI more into a lot of our operations, we're seeing -- it's very early still, but we're already starting to see some of the benefits of that and how we can scale at a lower cost. And so we're confident that as we get into the out years that we'll be able to generate a nice incremental margin on that top line growth, and that's how you get to the double-digit EBITDA growth rate that we think we can achieve longer term.

And the next question is coming from the line of Tobey Sommer of Truist.

I wanted to ask a question about seasonality past the first quarter. Sometimes after the winter period where there's seasonally better demand, Travel Nurse and perhaps sometimes Allied can be down sequentially in 2Q to the extent you care to, could you comment about seasonal patterns that you expect to unfold for the balance of the year?

Sure. Yes, I think that you characterized it well to start there. We -- as Cary mentioned earlier, as the winter orders come off in nursing, it would be very normal to expect to see a decline sequentially from Q1 to Q2. And I think as -- we're still in the middle of this quarter. But as we look at the demand and booking trends that we would expect to see that happen in the second quarter, but pretty consistent, we'd say a normal sequential decline. Allied has been performing very well, is kind of firing on all cylinders. They have some typical decline just on the Schools part of the business as you start to move into the summer. But that segment overall -- and then international, we would expect to see growth sequentially and year-over-year in the second quarter. But the net of that, we would expect to be down sequentially in the second quarter for Nurse and Allied. Conversely, for the Physician and Leadership segment, we typically see growth in locum tenens from the first to the second quarter. And with it, the trends we're seeing in interim search, we would expect the same. So that segment should be up and will partly offset the decline in Nurse and Allied and then the Technology and Workforce Solutions as we talked about Language Services, some of the changing strategies we have there has allowed us to start to regain some footing on winning new contracts. We've had several wins in the first quarter here and more under contract. I think that -- and then we had some headwinds in Q1 with early in the quarter with some of the weather impacts. So we'd expect to see a little better performance in Language Services in the second quarter. So the net of all that, it probably comes out if you take out strike from that, it's probably a pretty flattish second quarter would be a reasonable expectation just if we have our normal kind of seasonal behavior along with some of the momentum we're seeing in certain businesses.

I appreciate that. And just one question on the strike for me with the $600 million. Is there a date upon which if the strikes end prior to that, that it will be less than $600 million and a period of time that it would be perhaps greater than that just as we ride out the rest of the quarter, how do we interpret news flow relative to those numbers?

Yes. We're basically trying to provide it up to kind of where we are today as best we can. So I'll just say that. So to the extent that they continue, obviously, all parties are I'm sure working through trying to get these resolved. But if they continue longer, then we've historically not wanted to try to predict whether these happen or how long they'll be in duration. So we'll only really give what we can see in front of us right now.

Got you. And one more for me, if I could. There was a study out about the relative pricing and cost of full-time nurse labor versus contingent staff that showed things close to parity. In the context of these strikes, which invariably end in a new contract that guarantees full-time comp increases, what's your expectation for bill rates in that relationship between contingent travel nurses and their full-time equivalents?

Yes. If you -- the data that Randy puts together would show something relatively similar, Tobey, to that report that you mentioned. We've already started having some clients, particularly coming up from finance and CFOs starting to really look at that and looking at contingent labor as being an attractive opportunity for them, not just on a relative cost basis, but you get flexibility along with the cost parity that you're mentioning. And so over time, what we really need to start seeing in 2026 is increases in bill rates, right? So we've talked about stabilizing bill rates that we saw throughout 2025. What we really would want to see in 2026 is increases in bill rates to reflect some of the underlying natural increases that you would see in terms of wage expectations. We started to see that in pockets, but we'd want to see it more consistently.

And our next question is coming from the line of Mark Marcon of Robert W. Baird.

Most of mine have been asked, but just going on the strike, if it continues, are there any sort of downsides that you foresee in terms of just the reputation or the branding with regards to other nurses that may not participate in a strike or anything along those lines or from a legislative perspective? I imagine the clients are really grateful but just wondering this general reputation. And then obviously, unions are typically averse to travel nursing and any sort of legislative pressure they might put on.

So clients are very grateful, and it's a very important service that we provide to clients. We only provide support to our strategic clients just because of the intensity of what it requires to be able to deliver. From a clinician standpoint and from a union standpoint, these solutions give the unions the ability to strike. From a legal standpoint, if there was not an ability to be able to support patient care, it would take away the ability for them to strike. So we look at the solution set for us as a really important service, not just to clients, but broadly speaking, to clinicians and at the core of it to support continuity of care. So these opportunities to support a crisis attracts -- is very attractive to a group of clinicians. So we think it enhances our ability to offer a wide range of roles that different clinicians may want and for us to be an important connector for them to these opportunities.

Great. And then can you give us -- so just if we take a look at that $600 million, you basically said that's through -- is that through today in terms of the day? And so therefore, we can calculate what the revenue per day is, and therefore, we could -- if the strikes continue, we could basically assume that there's further upside with regards to the estimates that you provided. Is that a correct way to look at it?

Doing revenue per day would be hard because you can't think of these strikes as being static. They're dynamic. You might have some of their union members coming back at different points in time. So it's not kind of a take the number and try to do an average number.

Yes. The needs are dynamic. So it doesn't -- it's probably directionally -- I can understand we're going to take that approach, but it's not -- that would be oversimplifying in terms of going forward.

Okay. Great. And then just on the 4% to 6% long-term growth rate, are you being a little conservative? Just when we take a look at the patient and clinician demographics, from a longer-term perspective, it looks like we should end up seeing some very healthy long-term demand. So I'm just kind of wondering how you're thinking about that. Or are you thinking just long term, meaning just '27, '28? Or is that truly long term?

I like the way you think, but I think we want to be mindful that there are external forces, whether it's economic changes that can influence our industry and just the unknown of the future. I think that's -- we feel like that's a reasonable way to approach a longer-term market. We'll always be striving, of course, to exceed that. And a big function will be just our ability to gain share over time as well. I think we're well positioned to do that. But we also want to make sure -- I think part of the point of providing some of that long term is just that we do think we're moving back into a market that is a little more in a stable mode and the way we interact with our clients, creating opportunity for us to grow with them and the ability to drive incremental margin over time as well. So again, we'll always strive to obviously deliver the best results possible for our shareholders. But with it, there's just enough unknown in the future. I think it's more appropriate to be prudent in any type of expectations we set.

Also because we really only provide guidance 1 quarter out, I think giving a framework that is longer than that is also helpful, particularly given the comments that we talked about last year around stabilization and some of the factors that not only you mentioned, but also Brian talked about.

Our next question is coming from the line of Constantine Davides of Citizens.

Brian, I guess, first question for you. Anything you can articulate around cash flow expectations for the year? And I guess I'm thinking specifically of what you might see in the first quarter with the outside strike benefit, but any other factors we should be contemplating? I know you took CapEx way down in '25. So wondering if that's the right level for '26 as well. But any kind of factors or considerations on cash flow?

Yes. Thanks for the question. I'll start with the second part of that on the CapEx side. We had said for '25, we were expecting to spend somewhere in the kind of $40 million to $45 million range. We ended up at just in the high 30s. We would still expect to be in that low 40s -- low to mid-40s range. The higher CapEx we had for several years in part was it gave us the ability to really upgrade a lot of our systems that had some technical debt and also advance some of our systems like our ShiftWise VMS. So the good news is with a lot of that work done, it's allowing us even at this lower level of CapEx to deploy a much larger percentage into enhancements and innovation, including some of the AI initiatives that we've been accelerating. We'll -- if we continue to see really good returns, we have the ability to invest more, and that's, we think, a competitive advantage for us where I think a lot of our -- a lot of the competition is probably having to pull back more, and this gives us an opportunity to continue to lean in and invest more in our systems. But we think at that level, we're able to still advance our strategy. On the cash flow side, you'll see for 2025, we actually had a very, very high conversion of our EBITDA to free cash flow, kind of 2 influences there, but there was some very, very favorable working capital components to it that puts us at a higher level than we'd normally see. Historically, we've talked about free cash flow to EBITDA somewhere in that 60% to 65% range, well above that in '25. You'll see some of that flip the other way in 2026. We'll likely have more of a working capital drag in the year. So if you looked across the 2 years, we'd expect to be up in that 60% or higher range, but it would not expect to be at the same level in '26 as we had in '25. But we'll still have a nice healthy continued free cash flow, and that is allowing us to -- we've now, at this point, paid off our revolver, and we can invest in the business and continue to bring our leverage ratio down with longer-term target is to get below 3. With the guidance we've given for the first quarter, we'd expect to be below 3 on an LTM in Q1. And so this -- we're feeling very, very positive about our balance sheet position and again, the ability to invest in the business.

Great. I appreciate that color, Brian. And then, Cary, just I guess, any commentary around pipeline for new business in Nurse and Allied? And I guess, specifically, what are you seeing in terms of volume of opportunities this part in '26 versus maybe what you saw last year and any kind of trends you'd call out?

#1, we have a healthy pipeline, and it's broad-based. And so it's relatively evenly split maybe with a slight bias to vendor neutral in the pipeline. We started to see a theme in 2025 that we talked about that even if there was RFPs going out, there was a bias towards incumbency. That kind of cuts both ways. It helps us from an incumbency standpoint, but you have to have a pipeline sufficient enough to get enough of those opportunities through. As we left 2025 and into this year, we have seen wins both on the MSP side and on the vendor-neutral side, which we would expect to come on sometime in the next quarter, quarter plus, which will help us on a volume standpoint. We also have sales teams that are focused on direct opportunities, which we've seen momentum on both in 2025 and as we go into 2026 as well as cross-selling to our existing client base, which we think is a -- continues to be a significant opportunity for us. We got traction on that in '24, '25 and into this year. But we see a balanced and healthy sales pipeline as well as conversion of that pipeline as we left last year.

And the next question is coming from the line of Jack Slevin of Jefferies.

Congrats on the quarter. And I appreciate you sneaking me in here at the end of the call. I'll just leave it to one. Most of mine have been asked. And I don't know if it's just me, but I guess the size of the strike number is frankly a little disorienting, and I'm still sort of just coming out of it on that one. So maybe just to like level set on expectations. I know you don't guide for the full year, but that '26 base scenario you had sort of talked about in January at a conference. I guess when you think about the 1Q guide ex strike, and I know it's a little hard to parse those numbers, but sort of that trajectory and the trajectory in general of the business versus sort of how you've been speaking to it earlier this year, it seems like it's a little better, but I'd just love to get your thoughts like maybe more specifically on the margin front about are things shaping up the way that you've been thinking about when we try to parse away as best we can this big opportunity you've got in front of you in the first quarter?

Yes, I'll start. I mean, I guess I'd say, generally, we have a pretty similar view for the year. I understand how the guide for -- these are 2 kind of unprecedented events in terms of the size and duration. And so it has this impact on the first quarter. But if you kind of look through that, and we've tried to give enough color on what the underlying business trends are looking like, say overall, it's pretty consistent with what we expected coming into the year, which is a good thing. We have good conviction on our growth strategy and seeing good trends almost across the board here. And for those that aren't, we're actively working on that. So I wouldn't say there's any significant change. And again, if you take the Q1 less some of the taking out labor disruption, it's pretty aligned with, I think, overall with where consensus is, and that is probably driven by the commentary we've given before. And the trends through the year, I think, are still pretty consistent with what we've shared. So I don't know if you had anything to add, Cary.

Yes. The only [indiscernible] what Brian just said. As you think about strike, and I know we've talked about this in a number of different ways, but it is incredibly important to clients to provide this. And so beyond the numbers, it was -- it's very important to the clients that we're supporting that they can provide continuity of care. The second piece for us is and it gets a little bit back into what Brian was just talking about in terms of our revolver is at 0 right now. It's an important frame around how we think about cash and our ability to continue to get our leverage ratio down. So that outlook did change with this, Jack, and just the magnitude of it. And I know we talked about that, and Brian talked about it in some of the prepared remarks that we had. But the third piece is it really -- we had confidence in everything we are building and automating and our ability to really deliver in a high-demand environment in a different way to be able to do these events simultaneous with supporting our core business at a high level really was a test for us that of everything that we've built over the past 3 years. And so that gives us even a higher degree of confidence as demand in the industry comes back on how we can deliver on that.

Yes. The other thing that's kind of exciting is as you've gone through these events, as Cary mentioned earlier, some of the deployment of AI tools because you're having to spin up a significant amount, obviously, of clinical workers in a very short order and then just all the logistics and operational support that goes behind that. So we've -- the technology team has done a fantastic job partnering with the business to advance probably faster than we would have otherwise, some of our AI recruiting capabilities, some of our reporting capabilities. And so that work, although focused first on labor disruption is extremely transferable to our core business. So that is one, I think, opportunity that we're just getting -- shining a light on more that we think will help us as we go through this year, and it will accelerate the pace, not only in our recruiting, but some of our other operations as well. And that's -- the team is getting very excited about that.

Yes. And the last part that I probably know this is a call about numbers, and there's a lot of them in this. Our people are extraordinary. And so we talk about our culture being different, about it being something that is incredibly important to how we go to market, how we serve clients. If you spent 1 minute with any of our teams that are supporting these events, you would have a very clear view about how that is incredibly differentiating for us.

Thank you. This does conclude today's Q&A session. I would now like to turn the call over to Cary Grace for closing remarks. Please go ahead.

Thank you for your interest in our company and for the opportunity not only to talk about 2025, but also to get a sense of our very busy start to 2026. So thank you for your interest.

This concludes today's conference call. You may all disconnect.