Welcome to the AMN Healthcare fourth quarter 2008 earnings conference. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session, with instructions being given at that time. (Operator Instructions) As a reminder, today’s conference is being recorded. I would now like to turn the conference over to our host, Director of Investor Relations, Mr. Christopher Powell. Please go ahead.

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 2008. 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 web cast is available at amnhealthcare.com/Investors and will be available until March 12, 2009. 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 can constitute forward-looking statements. Forward-looking statements are identified by words such as believe, 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 the various important factors, including those identified in our annual report on Form 10-K for the year ended December 31, 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 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 Developments subsequent to this call may cause these statements to become outdated.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. I will now turn the call over to Susan Nowakowski, AMN Healthcare's President and Chief Executive Officer.

Good afternoon everyone and thank you for joining us today for our fourth quarter earnings call. Companies that achieve sustainable leadership positions always balance between investments that will build a stronger, healthier company for the future while at the same time remaining agile and adjusting to the short-term market trends. In the current economic environment, striking this balance is more critical and more difficult than other. Fortunately, AMN Healthcare’s 24-year history and strong leadership position show our proven ability to strike this balance better than others in our field. Throughout previous economic recessions, AMN Healthcare has executed effectively, built market share, and emerged in a stronger leadership position. Our strategy of leveraging the advantages of our size, our differentiated business model, and our diversified service line, combined with our talented team and solid financial fundamentals give us the ability to be proactive in our market place. It was solid execution of this strategy by our employees that allowed AMN to increase our market share and achieve record revenue of $1.22 billion, adjusted EBITDA of $96 million, and $1.6 of pro forma diluted EPS in 2008. The nurse and allied segment experienced single digit growths that moderated throughout the year. Specifically, short-term nurse staffing experienced consistent year-over-year revenue growth of 2% to 3% over the past three quarters. Based on comments and reports from competitors and our own clients, it is clear that AMN has been expanding market share over the last year. Our broad and diversified client base enables us to better whether this market relative to the competition. To this point, in 2008, our top 10 clients in nurse and allied staffing accounted for only 9% of revenues in that segment. As hospitals reduce the number of staffing companies they use, we are well positioned to retain our slot…

Thank you, Susan and good afternoon. Consolidated revenue for the fourth quarter was $296 million, 3% higher than the same quarter last year and 6% lower than last quarter. The year-over-year increase was due mainly to the acquisition of Platinum Select Staffing last February along with volume growth in the locum tenens staffing segment. The sequential decrease in revenue was mainly from the lower volume in our nursing business that Susan discussed earlier. Fourth quarter revenue was within our revenue guidance given on October 30, 2008. Consolidated gross margin in the fourth quarter was 25.7%, down 90 basis points from the same quarter last year and unchanged with the last quarter. The year-over-year decline was driven mostly by lower gross profit contribution from our higher margin businesses such as international nursing and physician permanent placement along with continued shift in the mixed specialties within our locum tenens staffing segment. Gross margin remained unchanged from the prior quarter despite a typical fourth quarter seasonal downward trend as travelers end assignments early for the holidays. SG&A, as a percentage of revenue in the fourth quarter, was 18.6% down 100 basis points from last year and 50 basis points from last quarter. The improvements were driven primarily by cost cutting initiatives starting during the fourth quarter along with favorable trends and bad debt and insurance expenses. SG&A was down 8% compared to the prior quarter, mostly in employee cost and third-party expenses as management slowed down hiring and spending. In addition, last quarter’s SG&A included a $1.6 million charge for restructuring and legal expenses associated with our pharmacy staffing division. Depreciation and amortization expense in the fourth quarter was $3.6 million, slightly lower than prior quarter and up 12% over last year due mainly to the acquisition of Platinum Select. Net interest expense…

As I hope you’ve learned from our comments today, we are very focused on building and sustaining for the long term while remaining balanced with the need to expand our leadership position today and adjust the company’s infrastructure ahead of the challenging market condition. We are confident that we are well positioned to navigate through this market environment. Like most industries, the current economic environment is making it more difficult to forecast our annual financial performance and provide meaningful guidance. Therefore, we will continue to share general business trends, but we will no longer provide specific quarterly or full year financial guidance. During the first quarter, order levels have slowed from most our business lines, most significantly with nurse and allied. This has resulted in travel nurse volumes declining by double-digit percentages both sequentially and year over year. In locum tenens, aggregate volumes are trending fairly consistently with prior year and prior quarter levels. Pricing is stable across most of our business lines, helping to maintain gross margins. On a consolidated basis, we are anticipating first quarter revenues to decline in the low to mid-teens on both a year over year and sequential basis, driven primarily by volume declines in nursing. The company expects to record a restructuring charge of approximately $3 million in the first quarter related to employee severance benefits and lease termination costs. Non-cash restructuring expenses are expected to total $400,000. We expect these restructuring actions to result in savings of approximately $10 million for 2009 and $15 million annually thereafter. As I said earlier, we have taken proactive steps to manage our business and strengthen our operating model through this economic downturn. There are three key aspects of our strategy that we continue to focus on. First, capturing more market share by leveraging our client base; second, proactively adjusting our cost structure and capturing additional productivity gains; and finally pursuing further penetration in emerging market opportunities and client segments. We are working very hard to ensure that we can flex our operating model in the short term while at the same time making the appropriate investments to be well positioned and innovative in the long term, and with that, we would now like to open up the call to your questions.

(Operator Instructions). Your first question comes from the line of Tobey Sommer with Suntrust Robinson Humphrey. Please go ahead. Tobey Sommer – Suntrust Robinson Humphrey: I was wondering if you could give us a little bit more color on the moderating pricing that you described, perhaps talking about it on a customer size basis or geographic basis if that’s helpful and then maybe how long ago it started, and you said you don’t expect pricing erosions, so maybe comment on that as well.

First, I’ll address nurse staffing. I’d say there’s not a particular region or client size, although certainly the larger clients have more of an impact if they are not willing to increase rates or even more so desiring to keep rates solid or flat, so I don’t think there’s a big distinction there that you can make. We do have standard cost of living increases built in to our contracts, so there is a certain amount of somewhat natural pricing increases that will occur across the board and then for those clients that do have orders, they still want to make sure that they are competitive in their bill rate which translates through to the pay raise, but with that said, in the past year we have been experiencing about a 3% increase in our revenue per traveler per day. We expect that to moderate to kind of flat to just maybe slightly up. We are pretty confident as we sit here today that the pricing increases that we expect to receive will offset the pricing decreases, and there will be some. There will be some clients out there that will want to bring their rates down because they just don’t have the quantity of needs that they’ve had the in past. Turning to locum, we’ve continued to see some pretty strong pricing across all of the divisions with the exception of radiology. With the softness in demand in volumes has come a need to also reduce the pricing, so going forward, we expect that to continue, so it somewhat offsets the increases that we expect to continue to see in our other areas. Within physician permanent placement, we expect pricing to be relatively stable. We are the high-priced solution out there. We provide a premium service, and for that, charged probably a higher price than your typical contingency type of firm, so we hope that in this environment, we will be able to maintain that pricing, but there could of course be some opportunity there for softness. Does that help? Tobey Sommer – Suntrust Robinson Humphrey: That does. We have been hearing a lot about hospitals from a fundamental standpoint perhaps not quite seeing as much demand for admissions, but I’m wondering if you could comment about their own financing. It seems like there be artificially low demand because of hospitals really trying to conserve cash. Is that something that you are feeling out in the market place?

It is something we are hearing from our clients somewhat across board that they actually have needs and demands, but they are having to conserve all operating cash to continue to proceed with maybe some capital projects, whether they be equipment or building related, so there may be a bit. It is hard to quantify, but there may be a bit of pent-up demand there that could be relieved when they start to see better cash flows themselves.

Your next question comes from the line of James Janesky with Stifel Nicolaus & Company, Inc. James Janesky – Stifel Nicolaus & Company, Inc.: When you look at the total revenue declines that you expect in the first quarter, and your comments that locum tenens and physician are relatively stable, when you flow that through the numbers, we are talking about a pretty dramatic decline in nursing allied, approaching 20% both sequentially and year over year. First, is that your expectation and you commented about the hospital environment, but has the employment market also had a negative effect on the demand for travelers?

First on the latter, yes, absolutely. I think the unemployment rate has had an impact on the demand for nurses as more permanent nurses are picking up more nurses hours going from part-time to full-time, going from retirement back into the workforce. We hear that from the nurses themselves. We hear that from our clients, and I think we have even seen hospitals say that publicly, so I think that will definitely continue to have an impact. In terms of the volume trends for the first quarter, we are not providing specific guidance, but you basically rephrased pretty accurately what we have said in our comments and that is fairly stable trends in locums and physician perm placement, nursing down double digits year over year and sequentially. James Janesky – Stifel Nicolaus & Company, Inc.: With the cost reduction plans in place and along with the revenue comments, what expectation do you have for EBITDA margins in terms of a decline in the first quarter? For example, you were down sequentially about $5 million in SG&A. Could you expect something of that magnitude again into the March quarter keeping in mind that there are payroll resets and revenue decline?

Jim, we don’t have the payroll set because we amortize that throughout the year, but I think as our comments stated, generally we are seeing a downsizing of our SG&A expenses. The one caveat in the first quarter is the restructuring that we mentioned, almost $3 million, so when you put all that in, we are not going to give you a guidance on the EBITDA margin, but you basically have, I think, consistency and then you’ve got the cost from that restructuring. James Janesky – Stifel Nicolaus & Company, Inc.: But ex the restructuring, you would still expect a decline in the EBITDA margin, right, just because of the trends?

We’re really not giving that guidance. If you noticed we specifically didn’t give earnings guidance nor would we provide EBITDA guidance for the first quarter. Sorry, Jim. James Janesky – Stifel Nicolaus & Company, Inc.: When you look at the rest of 2009 from a demand perspective, especially on the nurse travel side, if current trends persisted both within hospitals, while some hospitals are increasing physician recruitment, we’ve also heard that other hospitals might be laying off both nurses and physicians, and the employment market, I don’t expect that it’s going to improve throughout 2009, do you see anything on the horizon other than market share gains as you mentioned and possibly the healthcare stimulus package that could increase patient admission rates, do you see anything on the horizon that could improve demand as we move throughout the year?

I think it is uncertain, which is again why we are not really looking forward and providing clarity on where we think things are going. The things that we think can help us are the market share and the fact that we ought to be able to provide more assignments to more candidates to hopefully maintain and grow more of our piece of the business. The economic stimulus package should provide some increased demand for first primary care physicians, which is our largest segment in locum, and then secondarily, if you increase admissions into the facilities, should drive an increase demand there as well. It’s just hard to quantify how much that will be and exactly when it will happen, but we those as only being potentially positive for our business.

Your next question comes from the line of David Bachman with Longbow Research. David Bachman – Longbow Research: I was just looking at the $10 million in cost savings in ’09 and then $15 million annualized and I was just thinking about how those roll on through the year. It’s sort of looking like once we get into the third and fourth quarters of the year, that those cost savings would be sort of fully realized across both of those quarters and maybe some coming on in the second, or is there much more of an impact in the fourth and the third for instance?

David Bachman – Longbow Research: I guess you are not providing guidance for the year, and obviously there is no visibility there, but it’s safe to say though that as we move through the year and we anniversary some of the downturn that we’ve seen at least in nursing volumes so that by the time we get towards the fourth quarter at least from a comparative point of view, we’re a little better off than we are in the first quarter, maybe from a revenue perspective?

Certainly the fourth quarter comps will be the easiest on a year over year basis, so I would agree there. It just depends where the market goes between now and then.

(Operator Instructions) Your next question comes from the line of Jeffrey Silber with BMO Capital Markets. Jeffrey Silber – BMO Capital Markets: In looking at your press release, and I know you chose these words carefully, you state so far in ’09, we got volumes specifically for nursing down double digits, and then you are looking for consolidated revenue to be down low to mid-teens. Should we infer from that that double digits is higher than low to mid-teens? You can’t fault me for trying.

I think you know the mix of our business well, Jeff, and so I think you can probably do the math and get something close to what you’re suggesting. Jeffrey Silber – BMO Capital Markets: Fair enough. I’ll work on that. Let me just go back to business overall. Susan, in your comments you talked about the fact that you still want to make sure that you are positioned well to take share. I’m just wondering does pricing come in to that? Are you going to be changing your pricing strategy in order to keep doing that?

No. We are not. We do find that it’s a great opportunity now to be out talking to clients, even if their needs are low or even in some cases nonexistent. It’s actually one of the traps many companies fall into. They pull back so much on their sales resources that they forget to stay in touch with their clients, both the travelers and the facilities, and so it is really important that we are out there talking with them, and if their needs are down, they don’t need as many providers. We’ve seen many facilities pulled back and rationalize the number of companies that they are working. In fact, one of the largest utilizers of travel nurses across the country just decreased the number of vendors by about 50%, so it’s a real opportunity for us to really solidify our position and in some cases actually gain a preferred status where they are willing to give us the orders ahead of the competition. In fact, over the last five months, we have been able to increase the number of preferred status accounts in our nursing business by almost 50%, so it’s a good time for us to out there building stronger relationships with clients. Jeffrey Silber – BMO Capital Markets: David, I just want to go back to something you had said in your comments. When you were talking about gross margins in the locum tenens business, you talked about a favorable actuarial insurance adjustment. Can you give us a little bit more color or maybe potentially quantify that?

It was approximately $1 million of factorable actuarial adjustment. If you go back to our insurance trends, we had fairly significant costs back in second quarter, and now we’re seeing a credit, but if you look for the full year, it’s trending under 2% of revenue, the malpractice insurance cost for the locums, and that’s actually very consistent with what we’ve expected in prior years. Jeffrey Silber – BMO Capital Markets: What is would you be guiding for capital spending in ’09?

This year in 2008, it came out to basically being 0.7%. It’s been below 1%. That 0.7% is pretty much a rate that we would assume because of lower revenue base, so it’s under 1% of revenue. Jeffrey Silber – BMO Capital Markets: In terms of stock-based compensation, what should we be looking for this year?

This is one I guess I’ll give you a number for, at least for the first quarter. We did finish at $9 million for 2008, which is obviously out there and our first quarter run rate is about $2.8 million and we probably looking at $9 million of full-year stock-comp expense.

Your next question comes from the line of AJ Rice with Soleil Securities. AJ Rice – Soleil Securities: You guys have in the current portion of debt about $50 million, so I guess it’s three different buckets. You have $11 million in cash, and it looks to me in the fourth quarter, your free cash flow was about $12 million, and I guess we don’t know what it is, but you look for to being lower at least in the first half than that. Does any of that debt due in the next 12 months roll automatically, or could you give us some feeling for if there is any issue there, or do you feel comfortable you’ll be able to address it?

When you say roll, it’s primarily the revolver and our term B, and we basically have $120 of term B outstanding and we’ve got about $30 of revolver, so there is no call of them of any sort, so our term goes out to 2010 on the term B. It’s 2011 on the revolver, so there are really no immediately pressing events. Again, we talked about covenant compliance. We believe short term certainly we’re going to be in compliance. If you looked at the leverage ratios that we report to the banks, there is basically plenty of room, so again we don’t see any events that would trigger anything with our debt right now. We would like to refinance at some point, but clearly that’s not now. We’ll be patient. AJ Rice – Soleil Securities: I was just focusing on the current portion. Some of it was amortizing down. I need to go back I guess and look at that, but maybe just quickly on a couple of other items. Susan, you mentioned beyond radiology that there had been a couple of areas where there had been a little bit of softness. I know anesthesiology was one you mentioned. Can you just go back to those, and is there any rationale for the slowness in your mind that might make us feel like it’s either just a very temporary volatility or something that may be a little longer term for some of those areas that you pointed out? I think there was three or four.

Yes, sure. It was surgery and anesthesia, which are obviously somewhat tied together. We started to see some of that in the third quarter and continued into the fourth quarter, although anesthesia got hit just a little bit harder. We do think there is some impact from fewer elective surgery occurring which has been pretty widely reported. Although the bulk of our business really more around general surgery, we have to believe that there is some opportunity there internally as well to improve. The other thing that we’re seeing in some of these areas like anesthesia where you have a group of physicians that are providing services to the facilities is if their overall income is down whether it be their own investment or just availability of work, they are less likely to bring a locum in to help augment because they need the income themselves, so we’re seeing some doctors that might have historically taken time off even over the holidays just stay put in order to make sure they preserve their own income, and that eats into a little bit of the demand. We do hope and believe that surgery and anesthesia will do better going into 2009. So far, it looks a little bit better for anesthesia, but surgery is just a little bit more choppy. AJ Rice – Soleil Securities: Is the surgery highly hospital placements or is there any meaningful percentages going to ambulatory surgeries?

It’s primarily hospital. AJ Rice – Soleil Securities: You had obviously talked about some of the cost initiatives and some things you’ve done with the vendors already and some additional things you’re looking at as well as the downsizing of divisions or the brand structure. Can you give us some flavor for, and I don’t know if you guys are willing to put dollars around any of that, how meaningful those are, sort of trying to gauge what cost savings have already been implemented and what’s still to come in the future?

Sure. I’m not sure we can answer all of it. For the restructuring piece in the first quarter which was really the reductions in force, the brand consolidation, and the facility consolidation, the annualized saving is expected to be about $15 million. It’s $10 million in 2009 and $15 million thereafter; however, on top of that, we would expect that there could be continued savings from maybe further attrition. I mentioned that we’re very selectively replacing positions where people may be leaving the organization, so I would expect that there could be some further opportunity there, and then on top of that, we have our third party vendor pieces where we’ve downsized either our utilization of their services, or we’ve negotiated better rates. Now, that’s within SG&A. Beyond that, our team has also done a really good job in housing, for example, and being able to negotiate better lease terms, particularly in our nurse housing. We are aided a little bit by the market environment certainly, but the team has done a great job and has actually brought our average daily rent cost, just kind of rent cost, down on a year over year basis, so we think there is further opportunity even in some of our direct cost areas, and that will also help us maintain some stable margins. AJ Rice – Soleil Securities: You’re saying some things you’ve done with the vendor using less of their services. I guess maybe I’m at the end of the day here and not thinking of it, but what is an example of a vendor that you don’t need as much that you were using?

Some might revolve around information technology. If there are projects that we were working on that would maybe require us to go outside of the company for particular expertise in, and we’ve certainly skinned back the number of projects that we’re working on within the company, which then translates through to needing less services externally, and this is really across the board. We have a philosophy of leaving no stones unturned, maybe it’s even leave no pebble unturned, and looking at every single vendor and look for opportunities to go back to them to ask for reductions in our spending. I think every company is doing that.

Certainly that was things like audit fees, tax advisors, internal audit, and those things still need to be done, but we’re trying to leverage much more of the work in house, so that we really reduce our use of the outside parties.

Your next question comes from the line of Tobey Sommer with Suntrust Robinson Humphrey. Tobey Sommer – Suntrust Robinson Humphrey: Just a followup question on the pricing. I know being the largest you’re not necessarily a price taker from your competition, but have you noticed any different behavior out in the market place at this point?

Not with any significant competitors. You certainly always have a lot of pricing pressure, and I would say in locums for example as the market has grown and become more attractive, you bring in more smaller companies that might be willing to be creative on pricing, so our team has done a great job of combating that, but probably more pressure there. In nurse staffing, we haven’t seen any of our major competitors doing anything that would suggest that they’re trying to buy the business with lower pricing. I think people have learned over the years that that’s a hard hole to dig yourself out of, so we’re not feeling significant pressure. Still, as I mentioned earlier, we have to be out in front of the clients continuing to sell the value that we bring to the table so that we can make sure we maintain our pricing. Tobey Sommer – Suntrust Robinson Humphrey: A question on market share. You’re confident that you’ve been able to take market share in recent quarters. Is the volume decline that you’ve seen in nursing, is it perhaps even more severe at the industry level in your opinion?

I think it has been at least through what’s been reported publicly and what is expected in the fourth quarter. It you just go back to the third quarter, for example, when our short term travel nurse business was basically kind of flat on a year over year basis, some of our competitors were reporting double digit declines then. In the fourth quarter while we might not have all the reported numbers, there are indications that they were again expecting double digit declines, and our travel nurse business was basically flat on a year over year basis. On top of that, we do get reports from some of our larger clients and systems, and just to point out one example, one of the larger systems across the country, we have currently 3.2 nurses working for every single nurse that our top competitor has. That was 2.8 in the third quarter, so we’ve pretty significantly expanded our market position, we think, in some of our larger clients. Tobey Sommer – Suntrust Robinson Humphrey: Just to review the comments about volumes trends in the first couple of months of the year, could you refresh my memory as to whether there is any difference between the double digit declines and what an organic rate of decline may be for the first quarter? Is there any acquisition contribution in that first quarter?

No. We did have the Platinum Select acquisition in the first quarter of ’08, but when I’m talking about double digit declines, I’m really talking about nursing, and that would be pure organic.

We have no more questions in queue. Please continue.

Thank you everyone for joining us today. We appreciate your interest in AMN, and we look forward to continuing to update you on our next earnings call.