Ladies and gentlemen, thank you for standing by. And welcome to the AMN Fourth Quarter 2007 Earnings Conference Call. At this time all lines are in a listen-only mode. Later there will be an opportunity for questions, and instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to Christopher Schwartz, VP of Investor Relations. Please go ahead sir.

Good afternoon. I would like to welcome everyone to the AMN Healthcare Services conference call to discuss the Company's earnings results for the fourth quarter of 2007. For the call this afternoon, we have Susan Nowakowski, AMN's President and Chief Executive Officer, and David Dreyer, AMN's Chief Financial Officer. A replay of this webcast is available at amnhealthcare.com/investors and will be replayed until March 11, 2007. Details for the audio replay of the conference call can be found in our earnings press release. I would also like to mention our policy regarding forward-looking statements. As we conduct this call, various remarks that we make about future expectations, plans and prospects constitute forward-looking statements. Forward-looking statements are identified by words such as belief, anticipate, expect, intend, plan, will, may and other similar expressions. Any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. 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 31st 2006, and quarterly reports on Form 10-Q for the quarters ended March 31st of 2007, June 30, 2007, and September 30, 2007, and our current reports on Form 8-K, which have been filed with and are publicly available from the SEC. 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 us. Developments subsequent to this call may cause these statements to become outdated.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. I will now turn the call over to Susan Nowakowski, AMN Healthcare's President and Chief Executive Officer.

Thank you, Chris. Good afternoon everyone, and thank you for joining us today. We appreciate your interest in AMN Healthcare and in taking the time to participate in our earnings call. We will talk today primarily about our outlook for the industry and our market positioning. But we also want to provide you with some color on the full year and fourth quarter results for 2007. There are many things going well and opportunity for growth in all of our business segments. But as is true for most staffing companies today, we are not without some short-term challenges due to the uncertain economic conditions. This is a time when we believe our diversified service model helps AMN to expand our overall leadership position within the industry. Revenue for 2007 was a company and an industry record of 1.16 billion, an increase of 8% over 2006. While we did produce efficiencies in operations, these were partially offset particularly during the first half of the year by direct cost pressures causing diluted earnings per share to grow at a slower rate of 3% to a $1.05. While these results are less than our original expectations and certainly less than what we think the industry will achieve in the long-term, we do believe they are consistent, if not slightly higher than the organic growth rates for the overall healthcare staffing industry. The biggest driver of growth in 2007 came from our locum tenens staffing segment which produced 16% year-over-year growth in revenue. Nurse and allied staffing started off with strong volume and pricing growth but declined during the second half of the year due to weakening industry demand in certain large markets. While we remained very focussed on execution within our current service offerings, we also took this opportunity to invest in the…

Thank you. (Operator Instructions). And our first question is from the line of Tobey Sommer with SunTrust Robinson Humphrey. Please go ahead.

Thank you. I wanted to ask a question about – if you could just refresh us on the normal seasonality that you would experience in terms of demand on the travel nurse side, as we work our way through the year?

Sure Tobey. Typically, first you end the year at a relatively low point, because a lot of hospitals are dealing with budgetary concerns and trying to themselves plan for what the upcoming year is going to look like. So you typically see a fall off at the latter part of December and then start to build again in January and February and that’s very inline with the trends that we saw this year. I think we draft kind of early in January, and as I mentioned, the positive news is we have seen a very nice recovery in our orders over the last month to the tune almost a 20% increase from January to February. We then expect to see a continued building into February and March, although, traveler count itself will often fall a little bit in the second quarter just because the number of people ending at April is pretty significant. We’re actually feeling pretty positive about our second quarter and our April traveler count. So it remains to be seen whether that normal trend will happen or whether the build up in orders we see will allow us to control beyond that. The biggest typical seasonal trend is to see the orders building in the summer for your fall placements and if you recall, that's what we didn't see last year. We would normally expect some of the key states such as California to have increased needs going in to August, September, and October. And usually second to third quarter would be your largest pickup in your placement volume and the number of travelers working. So, we are assuming a similar trend to that this year. You can see based on our guidance that we've been cautious about the level at which that demand will pick up throughout the year. But, actually based on some of the recent news we’ve heard from some of the hospitals that we're reporting, they are looking at admission growth of anywhere from 0.5% to 2% for the year. So, I guess, its a little more confidence that we might see those normal seasonal trends resume.

If may ask you to followup on any discernible impact related to what I guess is shaping up recently to be a pretty decently active flu season?

Yes I think that has been contributing to the increase in orders in fact, as we post our clients and ask them why there orders are going up. The flu season is one, but, also the number of the new units and the number of buildings that are opening are contributing to that. And we have also heard, more anecdotally is that some of the facilities felt that they may have over hired the number of new grads and have a greater proportion of new nurses on the floor than they would like. As you know, travelers typically have more experience. For us our average traveler has greater than five years of experience, and so, they are seeking to create maybe a more balanced blend of experienced and new nurses. So, I would say those three factors contributing, and then, we have heard again from some of the hospitals that have been reporting that the first quarter saw some positive trends in admission.

And then lastly I will ask one last question and get in the queue. Any discernible differences in demand again on the nursing side geographically or by state that are noteworthy?

Sure, probably the most important to us are the improvements that we've seen in the West. California is one of the states that has picked up more significant rates. I would say, really throughout the whole West we have seen a nice pickup, but also we’ve seen a bit of a pickup in Arizona and Florida which is fairly positive because those are huge markets for us and as I mentioned earlier, they had been pretty slow in the latter part of the fourth quarter. So, we are real pleased with that pickup.

Thank you, Susan.

Thank you.

We will go next to Jeff Silber with BMO Capital Markets. Please go ahead.

Thanks so much. I wanted to shift gears a bit and just focus on locum tenens. The growth in the quarter was, I guess, a little bit slower than what we have been projecting. And you mentioned in David in your remarks about the year-end holiday. Was that of the issue, do you expect growth to go back to, I guess, what staffing industry is looking for sort of the mid teens?

Well. We finished a 16% overall for the year. So, I mean that's, I think, pretty consistent or even a little better than what the staffing industry rates are. Our expectations going forward are pretty much to continue at those rates. What you saw on the fourth quarter was a bit more seasonality than we have seen certainly in prior years. And as we've said in the opening comments, there was holiday season falling on a Tuesday had some impact as well, but we do believe that the overall growth is trending as we expected it would.

The other contributor Jeff is the government business. As you might recall, we tend to see a greater drop off sequentially in the fourth quarter from the government business. So as we look at the declines from third to fourth quarter, I would say they were pretty well spread across all the specialties, although, those that are more susceptible to actual closing such as, surgeries were a little bit harder hip, but that should be expected in the government business load at a slightly greater rate than the private business.

Yeah, that's helpful. And then just again, just focusing on the locum tenens business, adjusted EBITDA in the quarter was also a bit lighter than we had thought. Is it because I guess of the negative leverage of the slower growth?

Yes. There is also one other smaller factor we should probably mention as well that the gross margin you will see were a little bit lower as well and we had to make a slight accounting change in this business except the permanent placement fee where its going to actually built, but the permanent conversion occurs in the following quarter. We had to differ it. It was about $0.5 million worth, and so, it had a pretty big impact on this particular quarter's gross margin so that had some effect for the fourth quarter as well.

Okay. Great. Thank you for letting us know that. The charge that you took, I guess the restructuring charge. Is that all on the nursing and allied side for O'Grady Peyton?

It is. It's all for international.

Yeah, just wanted to double check that's what it's for. And in terms of guidance, can you give us a little bit of color in terms of what we should expect for locum tenens and then in terms of the billing rates, potential increase on the nursing and allied side, what do you think we'll see in terms of volume in 2008 on the nursing and allied side?

We expect volume increases throughout the year from certainly where we are today. As you know, we ended '07 below prior year levels for our nurse business. Some of that was driven by the international decline, but some of which is the pure lower demand. We're closing that gap in the first quarter, although, volumes year-over-year for that segment are still expected to be below prior year level. So, we're expecting to build from there and it's just the magnitude of what that built will be. At the minimum, we expect to and above prior year levels certainly in revenue, but we think there's much more opportunity above that.

Okay. Great. And, just in terms again, just on the guidance side, can you tell us what we should be looking for in terms of depreciation, amortization, and capital spending in '08?

Capital spending, we pretty much trended that 1% revenue. So, 12 to 13 million is pretty accurate. If you look at our depreciation, amortization, we're pretty much looking at the average of fourth quarter, we're going to trend that about to 2.2 depreciation per quarter, and about a million of amortization per quarter, that's certainly consistent.

And the million in amortization does include the impact of the Platinum acquisition?

Platinum you might round it up, on a go forward basis, it is probably like a 2 million of amortization with platinum and you won't really see the effect of that until Q2.

Okay. Great. And then, one more and I'll jump back in. You mentioned the issues in terms of California, Arizona, and Florida, and how they've rebounded a bit occurring quarter. Can you give us some order of magnitude how large those states are as of percentage of revenues, percentage of travelers and anything you could help that would be appreciative?

Yeah, there are three largest states, and I think the only one that we've called out historically is California, which within the nursing business runs around 25% of our travelers work, and that's been pretty consistent, although, in the past it may be nudged up higher than that, that's about where it is now.

And. Would it be safe to say that the other two Florida and Arizona combined would be equal to California?

No, less.

Little less than that. Okay, great. Alright, I'll jump back in. Thanks.

Thanks Jeff.

And, we'll go to Jim Janesky with Stifel Nicolaus. Please go ahead.

Yes, thank you. Susan, when you look at the fact and as you have reported that traveler and allied has been a very tough segment now for, not only for 2007, but for several years now. What gives you any degree of confidence that that is going to improve as the year goes on and certainly what I'm hearing from hospital admission rates, from analysts including our own that covers hospitals is that our way could really turn out to be another tough year. So, if you could just give us an idea, and then, in your outlook for 2008, what are you counting on and I wasn't really clear what you were counting on in terms of recovery to kind of get to the range of numbers that you put out?

Okay. Well, first, starting with what we are doing and what we believe we can do to help drive that growth, we have several initiatives internally that we think can help us to put ourselves in a stronger competitive position and help gain market share even within this assume of flat market.

Okay.

I think there are things that we haven't been aggressive on in the past that we’ll see us rolling out in a more aggressive manner and we've been seeing some wins on that. So, we feel pretty optimistic that we can grow market share within the existing environment. On top of that, we're seeing positive trends in our demand today. I mentioned the pickup in demand that we're seeing really across the country, but in particular some of those very important states for us. So, that's a sign of confidence that we're seeing in a market that is certainly moving in the positive direction, and for that matter pretty significant increases over the last 4 to 6 weeks. And then we look even more externally to what our clients are saying and what they say their needs are going to be. I mentioned some of the quotes, while you might be hearing other things, some of the things we're hearing are forecasts of admission growth anywhere from a 0.5% to 1% to 2% to 2.5%. And as we talk anecdotally with our clients, they’re talking about increase needs due to opening up more units and more facilities. So, I think we’re hearing enough positive news out there that makes us believe that demand growth that we are seeing today will continue. With that said, it is not ceratin, we just are looking at these external factors as well as knowing internally what we are doing to help drive things.

Okay. And, can you give some idea of where in the spectrum of recovery you would need to get to in order to kind of hit the numbers that you put out, not so much in the first quarter which is almost over, but in the second, third and fourth quarters?

Well, we’re not going to be providing quarterly guidance or for that matter segment guidance. So I don't think we want to start to put numbers out there to try to lead towards what the growth might be in nursing versus locums versus the perm placement. Clearly, we are expecting growth from where we are today. And to matter kind of when and what pace that will occur, I would say second to third quarter as always is the most important transition for us during the year. So, I would look towards that call to be an important point for us to have a good view on what the growth is going to be in the latter half of the year.

Okay, great. With respect to the economy and the employment market, overtime a more difficult employment environment we've talked about that on many occasions, and a more difficult employment environment could lead to nurses going back to work. What have you – how is that factored into your outlook for all of your business, frankly? How have you approached that?

On the nursing side, I think we've already felt some impact from that with the general unemployment rate rising at the latter part of '07. And gain in January, I think it was up about 30 basis points over the prior year. And so, I think that’s part of what contributed to our lower demand. If it were to continue to rise at a more significant pace, lets say go from 4.9% to 6%. I think it could have an impact. But it stays kind of sub 5.3, 5.5, I think our demand will be fine.

Okay, great. Thank you.

Thanks Jim.

Next question is from Michel Morin with Merrill Lynch. Please go ahead.

Yes good afternoon everyone. Just on the quarter that just passed, the revenues came in a bit light relative to your expectations, and that doesn't happen very often. In fact, I don't think it's happened in the last couple of years. So, I was wondering what was the key thing that didn't turn out quite the way you had predicted?

It was a little bit lower, in the lower end of guidance range. As our guidance range was the 286 to 288, I would say really, the seasonal factors we talked about were probably most of that. In fact, in the locum's impact there was probably a little more impact on our seasonality than we'd probably estimated on the higher end of that guidance number. But, overall, I think you can see by the margin and the end results, we believe it actually largely came in as expected.

Okay. And, on the restructuring charge for international, is that pretty much as much as we’re going to see at this point? Or, if there is no resolution, should we expect that there could be some additional costs in '08?

No, that was, I mean, we downsized both, mostly building, but also people in order to more or less operate at this current level. I think there's no further downside to go. I mean, clearly we’ve got the business fairly efficient. The more important thing would be to build it back up quickly when those visas become available. And that is something that we are absolutely prepared to execute, and that’s probably the more likely event.

Okay. And then just finally, in terms of the change that you noticed in the West. Susan, was it really about this over hiring of less experienced nurses and wanting to rebalance, or was there anything else that plays there that might have changed the dynamic in that region?

No, that was just one of the factors, as I said, I think the stronger flu season, new units and buildings just hiring hospitals within California, in particular, talking about bursting at the same. So, I think that their staffing needs are pretty strong. And I also think that we had not attacked the Northwest markets as proactively as we could have in the past and our team has done a great job of building demand within the Northwest region.

Great, thanks very much.

Alright, thanks Michel.

Again we do have a followup from Tobey Sommer with SunTrust Robinson Humphrey. Go ahead please.

Thank you. I just wanted to dig in to the Peyton O'Grady volumes as it relate to your expectation for overall volume growth in the nurse staffing segment. Is it about 4% to 5% of revenue and you are currently modeling for that to kind of dissipate as we work our way through the year?

Yes, in terms of the number of travelers on assignment, we ended the year at around 400 travelers on assignment for that business and we are expecting it to kind of dwindle down to around a 100 range. It could be slightly better if we are able to get a few visas through here and there, but that's directionally magnitude where we're going.

And you expected with that effect, be able to show some volume growth in the year or to what extent will volume growth on an overall basis be impacted by that trend?

Including that decline, we would expect to be able to grow volumes throughout the year. So, a significant offset to that towards the latter half of the year obviously to what we believe we can do in our domestic placement and through allied as well.

Thanks. And just to be clear, are you currently in this environment able to still squeak pie and get a few visas just not in any magnitude that will be impactful for the business?

Yeah, it's a good point. They do readjust the visa dates on a monthly basis, and most recently they actually did move them forward to 2005 for some countries. So we were able to get a few visas pushed through. So, that will help us a little bit throughout the year. But you are talking 20, 30, maybe 40 visas at a time. So they are not big numbers that are going to change the trajectory of the business.

One last question on this, if you were to get some movement, let's say at year-end or at any point in time in the next couple of quarters, how big is the queue of nurses that you have available, that are documented and gone through some licensing procedure that could start in comfortable position?

It’s fairly significant, several hundred and it is just a matter of when you could get them through. And quite honestly, how long some of them will hang on; you know part of the reason we need a very talented staff to remain on, even though we are not making a lot of new placements is to keep that pipeline fresh and engaged and ready to go. Once we have the floodgates open with visas available, we'll start putting them through the system and it will take anywhere from four to six months depending upon where they were in the process to get them placed. So you wouldn't see an immediate impact from it. It would really be probably a two-quarter impact before we would start to see revenues slowing.

Thank you very much.

Thanks Tobey.

Thank you. And that does conclude the Q&A portion of our call. I'll turn it back to Ms. Nowakowski for closing remarks.

Thanks so much. I know many of you have had the pleasure of meeting our Chairman and Cofounder Steven Francis over the years. AMN is the realization of his vision to build the largest and finest healthcare staffing company in the nation. This April, upon the completion of his term as Chairman of the Board, Steve will step away from his AMN Board role to devote himself full-time to his campaign from the area of San Diego. I know I speak for all of us when I wish Steve our very best in his new venture. And thank you everyone for joining our call today. We look forward to talking with many of you over the next few months and providing everyone with a further update on our performance during our first quarter earnings call.

And ladies and gentleman, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.