Ladies and gentlemen, thank you for standing by and welcome to the AMN Healthcare Third Quarter 2019 Earnings Call. At this time, everyone joining by phone is in a listen-only or muted mode, and then later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, the conference is being recorded. And I'll now turn the meeting over to our host, Director of Investor Relations and Strategy, Mr. Randy Reece. Please go ahead, sir.

Good afternoon, everyone. Welcome to AMN Healthcare's third quarter 2019 earnings call. A replay of this webcast will be available until November 14 at Good afternoon, everyone. Welcome to AMN Healthcare's Second Quarter 2019 Earnings Call. The replay of this webcast will be available until August 20 at amnhealthcare.investorroom.com following the conclusion of this call. Details for the audio replay of the conference call are in our earnings release issued this afternoon. Various remarks we make during this call about future expectations, projections, 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 as a result of various factors, including those identified in our most recent Form 10-K and subsequent filings with the SEC. The company does not intend to update the 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 amnhealthcare.investorroom.com. On the call today are Susan Salka, Chief Executive Officer; Brian Scott, Chief Financial Officer; Kelly Rakowski, President of Leadership and Search; Ralph Henderson, President of Professional Services and Staffing; and Dan White, President of Workforce Solutions. I will now turn the call over to Susan.

Thank you so much, Randy. Happy Halloween, everyone, and welcome to our third quarter 2019 earnings call. We are two months from the close of what has been a very remarkable decade for AMN Healthcare and the industry in general. Over this span, we have recovered from a major downturn, followed by a time of significant growth. The unprecedented aging population and a strong economy are creating new pressures on healthcare while increasing demand for clinicians, and simultaneously constraining the labor supply. But without a doubt, the most important change in our industry during the last decade has been the adoption of workforce solutions and talent management tools. I am incredibly proud of how the AMN team rose to the occasion and elevated AMN to become healthcare's largest and most innovative talent solutions partner. Ten years ago, we had just a handful of managed services clients representing less than 2% of our revenue. This year, we have $1 billion or nearly half of our revenue generated through managed services clients, and the momentum continues with 2019 already a record year for new contracts. We are certain that the future will bring healthcare transformations far beyond anything that we've already experienced. We know healthcare organizations and clinicians are innovating beyond the traditional models by using new technologies in care delivery settings. Though the healthcare sector races to change, the silver tsunami of the aging clinical population increases the difficulty of balancing labor supply with the increasing care demand. The opportunity to help healthcare providers innovate around talent strategies in care delivery offers great promise for the future of AMN. This challenges every AMN team member to anticipate, create and redefine how we add value for our clients and clinicians as the leader in total talent management in healthcare. We don't see…

Thank you, Susan, and good afternoon, everyone. Third quarter revenue of $568 million was above the high end of our guidance range. The biggest driver of this upside came from our higher than expected performance in our Nurse and Allied segment. Reported revenue was up 6% sequentially and 8% year-over-year. On an organic basis, revenue was flat sequentially and up 1% over prior year. Gross margin for the quarter was above our guidance at 33.5%, up 30 basis points from last year and in line with the prior quarter. The year-over-year increase was a result of higher margins in the Nurse and Allied and Other Workforce Solutions segments, along with a favorable business mix shift within those segments. Third quarter Nurse and Allied Segment Revenue was $363 million, 18% higher than prior year and up 9% sequentially, and included $37 million from the Advanced acquisition. On an organic basis, segment revenue was up 6%, driven by double-digit growth in our allied, international and rapid response business lines. Nurse and Allied gross margin of 27.9% was 50 basis points better than prior year and up 40 basis points from prior quarter. Segment EBITDA margin was 13.1%. Third quarter Locum Tenens segment revenue of $84 million was 17% less than prior year, and up 3% on a sequential basis. Gross margin of 27.5% was 30 basis points lower than the prior quarter. Segment EBITDA margin of 7.3% was in line with our expectations at this level of revenue. Other Workforce Solutions segment revenue was $121 million in the third quarter, up 1% year-over-year and flat sequentially. Segment gross margin at 54.3% increased 190 basis points year-over-year and 30 basis points sequentially, due to a favorable shift in business mix within the segment. [Indiscernible] were $133 million or 23.5% of revenue, compared with…

[Operator Instructions] And our first question from the line of Jeff Silber with BMO Capital Markets, please go ahead.

Thank you so much. Forgive me; I joined you a bit late. I don't know if you've had an opportunity to talk about the order flow going into the winter season, but if we can get some comments on that, I'd appreciate it. Thanks.

Hi, Jeff. We talked about orders continuing to be very strong and growing, being above prior year more than 20%. And we didn't talk about specifics on sort of the flow of those orders going into the winter season, so Ralph, maybe you'd like to add a little more color on that.

Yes. Thanks, Susan. Thanks for the question too, Jeff. The winter orders are coming in above prior year about 15% higher. There is kind of one interesting trend that we're seeing: it's a little bit later start dates. So the impact on Q4 is a little less than it would have been in the prior. But the higher demand is obviously a good sign.

And is there any indication, I know it's still early, about the flu season this year? I don't know if there's any early read.

It's Ralph. I'll give that a shot. Yes, the early signs: it's pretty quiet right now. It's very in the cycle. We took a look at it actually today. And it might be up a little bit over prior year, prior periods, but it's really not meaningful yet. And I don't -- very few clients are talking or expecting I think a big pop in the flu season this year.

If I could just sneak one more in, it's the numbers question. Brian, on the refinancing, what do you expect in terms of interest savings going forward?

Interest savings at this point -- actual interest expense will be slightly higher, but that trade off of being able to lock in a longer-term, unsecured debt we thought was a good trade off to make. So as I've mentioned, our interest expense going forward will be between $8 million, $8.5 million dollars, a majority of which is fixed within those two tranches of the unsecured debt.

Okay, great. I'll jump back in the queue. Thanks.

Our next question from the line of Tobey Sommer with SunTrust, please go ahead.

Thanks. This is Jasper [ph] on for Tobey. Just a guidance question: I'm seeing 50 bps of improvement sequentially for both gross and operating margin, but EBITDA remained unchanged. I was hoping you could speak to what items might be restraining EBITDA margins a bit.

Hey, Josh. And are you referring to the Q4 guide? Because relative to Q3, the gross margin and the EBITDA margin are pretty consistent in the fourth quarter guidance.

Yes, I was just speaking to the difference between gross and operating and the EBITDA for the 3Q versus Q4.

So Q3 had some additional costs embedded in SG&A, some of which will go away. I mentioned in the prepared remarks we've got some true-ups on there, and -- which the cases are positive because Advanced is performing very well, so we increased the earn-out reserve. But outside of that, from a conversion of GP to EBITDA margin, there's really a pretty consistent performance expectation between the third and the fourth quarter.

Okay, perfect. Thank you.

Our next question from the line of A.J. Rice with Credit Suisse, please go ahead.

Hi, everybody. First of all, maybe jumping off from that last question, when you think about 2020, and I know you don't give formal year ahead guidance, but puts and takes -- obviously there are things happening in the margin in each of the business lines, but there's also makeshift going on that's affecting your margin. Is there any early commentary about how we should think about margin trends and potential for next year and what's you're sort of thinking you could accomplish?

Sure, this is Brian. Yes, as you said, we don't give formal guidance for 2020. But I think that the fourth quarter guide we gave is a good launching point as we head into 2020 where we're seeing some -- obviously some good trends on the order side as we look to next year. The margin expansion will be in part dependent upon the amount of revenue growth that we see next year. We certainly expect to get operating leverage from that. But the gross margin that we're exiting the year at I think is a good starting point for 2020 and I think it'll really be about getting leverage on the revenue next year.

A.J., the only thing that could affect that a little bit is if we are able to see even some greater volume growth in our travel nurse business because of this very strong demand that we have and the tight supply. If we're able to start to convert more of that demand into placement, you might see our mix shift a little bit, which would be very positive overall because that's going to give us more top line growth. But it could have a slightly downward pressure on the gross margin.

Right. Okay. That's helpful. And my other follow-up I guess would be to your comment about what's happening in the skills nursing. We've heard that from some of the rehab providers that the impact of this new reimbursement is obviously to push more people to group, and it's freeing up some physical therapists. I wondered how big is that business for you in Allied and did you see some of that in the third quarter? I know the reimbursement went effective October 1, I believe, so is that really starting in fourth quarter or was there some of that even in third quarter?

Hi, A.J. This is Ralph. I'll take that. You're right. The new Medicare patient-driven model payment did roll out in October. It makes up about 7% of the total Nurse and Allied segment revenues, which includes the Advanced numbers in there. It declined slightly in the third quarter. We are predicting more impact in the fourth quarter decline kind of 20%ish. But it is a small part of our business. And we had anticipated that and we shifted resources to work in other specialties like our Schools business, which is up I think Susan mentioned 50% year-over-year, and other parts of the business. And there's lot of ways we can offset that. The other thing I'd say, I think, about that change is this is probably the fourth or fifth reimbursement change I think I've seen in therapy over the last 12 years, and those customers tend to find ways over time to work through these reimbursement changes and begin to pick up their utilization again after a few quarters. So I couldn't say exactly when they'll get through this one, but I would anticipate that still to be a good market for us in the future.

Okay. That's helpful perspective. Thanks a lot.

And we'll go next to Mark Marcon with Baird. Please go ahead.

Good afternoon. I was wondering if you could talk a little bit more about what you're seeing in terms of the tightness in the labor market and how it's impacting the fill rates, and what sort of steps you could take in order to increase fill rates. So that the first question related to that. And then also, I'm wondering -- how is impacting the demand for your people in terms of recruiters, account managers and compensation levels that you have to provide in order to keep the good ones on board?

Thanks, Mark. I'll start with that and then maybe have my colleagues jump in to help add in some additional commentary. So first, regarding the general healthcare labor market, I know you follow the BLS data right along with us and see that the number of job quits and openings continues to be at relatively historical highs. We're still at roughly a 2:1 ratio for two jobs open for every job being filled. That anecdotally lines up to what we hear from our clients where they are hiring feverishly, but they're also losing people, in their words, faster than they can bring them in. And that's why I think we're also continuing to see an extremely strong demand environment because they're just not able to keep up with the vacancies that they have. And I'll have Ralph and Dan perhaps add in a little bit more color there. But regarding our corporate team, it's absolutely a tight labor market all around for all employers and all kinds of positions; if one of the reasons however why I talk a lot about our culture mattering because the culture that we have within the organization is very much focused on helping our team members to be successful to build a within the organization not just to do a job but rather to really help peruse their personal and professional goals its our stated purpose within the organization. So we try to make sure that were offering more than a competitive compensation package but rather a culture and a holistic environment where people can be successful can be a part of something bigger than themselves. Be part of a company that really makes decisions based on our value and has a great purpose of making a positive impact. These aren't just words I use on an earnings call, there are words that we use everyday within the organization. And that attracts and retain some really phenomenal talent. Our jobs aren't easy and we know and there are challenges that are getting a way every day. So we provide a strong healthy nurturing culture for people. We find that they want to stay and build there carriers with us. So with that Roth let me ask you to way in a little bit more on what we're hearing from clients.

Sure, the question behind that was what's happening with fill rates and high demand market as you probably would anticipate, rates are coming down. I think there is actually a very good job those shifting resources to those most strategic relationships which is our MSP which continue to grow and I think as we talk to last couple of quarters get a lot of success there ramp still building on several of those. In the shortage driven market right now that candidates still are really choosey and they look for opportunities that meet there career goals that fit their skills, right geographic location. All of those sort of things and once all of those boxes are checked and they compare that to their core staff job. And right now when they make that comparison report that the they are seeing rising wages there but there seem flat wages and bill rates with us. And so that's causing this equilibrium or in balance between supply and demand right now but we're work with our clients very closely to help them understand that in the past I think 2016, we seen the clients move that rate very quickly whenever demand needs were not being met, we expect that to happen. Hopefully in the next quarter or so but seen some early signs of movement on pricing that with then allow us to get back to high fill rates again.

That's great and how much of an increase would it take Ralph?

I'm not an economist last time it took a movement in still single digit Mark, mid-single digit.

And then I certainly appreciate your comments in terms of the culture being differentiator and helping you attract folks. Just wondering, just in terms of being able to you know continues to grow the business is that is it a tight labor market from that perspective?

We're not really constrained by our ability to recruit great talent. One of the benefits I think we also have in been a company with a national geographic footprint. We have clients and clinicians working in office but we also have corporate key members working all over the company. And so we have the opportunity to recruit talent in many different labor markets and we're getting better and better at being able to have key members working in different geographies and having key members. So I think that helped us a lot in having the flexibility to meet the talent where it is versus expecting it to come to us.

That's great and lastly was there any rapid response revenue in the quarter?

We mentioned that in our nursing business, in the nurse segment that a couple of the stat performers where our international business we are bringing nurses into the U.S on long-term contract. but then also rapid response which are those shorter duration, higher bill rate contracts they also had a very strong quarter.

Mark this is Dan, I just want to way in a little bit more and whip these two things together. So you were asking about what we do, what clients do with rates being challenged. The first thing we do is go to them with other solutions. We have many that we can provide here in the international nursing example is a really good one. So if fill rates are low and it's hard to get somebody in a shorter-term assignment they look to grab a different category of labor and solve this problem longer terms. So actually a really good example of time things together.

Our next question from the line of Jason Plagman with Jefferies. Please go ahead.

Just wanted to touch on the comment on the alloy business and the changes in the nursing segment. Do you think, do you have the opportunities to redirect some of those candidates into other settings to kind of to offset that headwind so its only a short-term impact or do you think that something that all kind of persists for 2,3, 4 quarters.

It's a good question I guess some of the good news about this is the skilled nursing setting is was actually one of the lowest pain environment and the resources in the studies. We think will be interested in acute care jobs which are higher-paying. It will take a little bit of time to get through that transition from one setting to another, but that's what our planning been around this change for the past several quarters. And I would guess that virtually all of them will eventually go back to work at another assignment in a different setting, matter how long that takes.

That's helpful and in the OWS segment the revenue you mentioned revenue being a little bit challenged looking Q4. When should we expect that to get back to stability or even growth is that realistic for 2020 or what was kind of that process there.

Jason it is, I think the first half of 2020 would be our target the exact timing a big difficult to predict but we're seeing some really nice bright spots within the business if you recall there is a variety of solutions that they offer coding, case management, CDI and so. Some of those business are actually showing some nice trends and yet some other were having some challenges. So we think kind of early mid next year will be in a better stabilized positioned for growth and since you asked about other workforce solutions I might just piggy back on that and ask Kelly to share a share little bit about what's happening in leadership in search because we got some really good trend and as you saw some really nice performing there.

And we had a nice quarter and expect that to continue and couple of things we were seeing from a leadership and search perspective. One is the demand remain strong as well. The shortage extend so the leadership positions and as our clients are challenged to higher permanent physicians nurses and leaders as well as an uptick in that business is well. But I think a lot of our success come from the strategy and integration that we been working on internally a year ago we had nine different brands working in the space, we're down to now on a clear for service line and they are working together we're combining our data base, we're getting more traction in the market because we're having more efficient of our resources. So we're getting greater coverage which is covering a lot more opportunities for us and also helping with some of our more reasonable business like pizza and gain advantage from being a part of that. So, we're really staring to see that turn round and we saw that executive search business for example really growing this past quarter. So we're very excited now the ability to build off of that strong platform and extend the services and to advisory and strategic services that our clients are really asking us to help them from an optimization standpoint.

Great. And one last quick one for me. Brian was there any meaningful labor disruption revenue in quarter.

No, it was under 5 million pretty much in line with put in our guidance and that is similar as I mention for the fourth quarter guide don't have any material amount expected as well. Just as a reminder to me look at our performance in Q3 sequentially Q2 did have a little over 10 million of strike related activities but the third quarter was modest as was the prior year and another quarter.

And we will go next to Bill Sutherland with The Benchmark Company. Please go ahead.

I was curious about this education business and the momentum there and could you just speak to kind of how sustainable that looks like for the as you go into 2020?

This is Ralph. This business was one of the more attractive reasons why we wanted to get into advanced and part of our overall strategy is been and as a company has been going to new setting where we see growth opportunities where healthcare goes we want to be there. So as you seen the past with our introduction home health and some other things we've done. We continue to do that not just by the line of business but also the on a study basis. The advance medical by the way called out there quarter they had a great quarter and they were big contributors to our Q3 success on a pro forma basis. They were up about 15% year-over-year and we expect there were to come in, stronger in the fourth quarter, driven by both their performance and MPS but also there schools business. The school business are very pregnant market estimates are around billion dollars we've seen better one than that and the largest players there's a couple of $100 million and were probably in the top 3 to 5 players right now but we would anticipate further of that was very quickly. The team has performed very well on. So that assignment length is very long, which is also favorable little more predictable because its nine assignment and you get a little help us out when were you little bit softer in the summer it does get soft. So that you will have that everybody used to that cadence as that happens but overall we're winning new contracts there. We are moving some of the recruiters office, skilled nursing business into the school setting, so that we could take advantage of that even more.

So when you think about the growth group it kind of get set up at the beginning of the school year in the sense and I mean not completely, but the parameters. So have this as a trendline when you see where you stand with new winds and so forth next year for the next school year.

Although we did continue to fill some jobs throughout the year there are some school that I think will have a regularly or something like that. So we still will fill some jobs but yet you're right, it's pretty much baked in advance fiscal year's.

Once we have that contract in place. We have this working to school majority of them end up using us for multiple years. So the nice thing is even if its not only that long in nine month assignment the large majority end up having needs each year, we can continue to build on those relationships and add more as we look forward.

Just remind us the scale the business currently for you guys.

So the run rate because of its little bit its hard to use the calendar year but the run rate right now for the fourth, if you look at the fourth quarter forward is revenue. Now it will again, its highest that these for the Q4 and Q1 and then you get that a little bit lower but when the 40 to 50 on the annualize basis right now.

We will go next to Mitra Ramgopal with Sidoti & Company. Please go ahead.

Just wanted to get a sense in terms of the MSP pipeline as you look out the 2020 and also any potential in terms of the overall fill rate, the improving I think it's running right now bended around 55% to 65% in your thoughts on getting that up even higher as you look out over the next 12 months.

This is Dan. I think I'll start with that and see if anyone else want to add some color. So Susan mentioned in her opening remarks were nearing the end of the year at this point and have really good visibility into our full year MSP sales. And really happy to say that 2019 will be our best year ever, which is absolutely the right way to put an exclamation point on a decade for sure. The nice part about that is the contracts represent diverse settings excellent geographic and specially mix, provide a lot of opportunity for our healthcare professionals. So sort of balancing a lot of things there. For a little bit of color these deals for this year averaged about 3.5 service lines. Overall, and that's really helped increase our average deal size quite well, year-over-year. So you know that's a really nice trend as well. Our pipeline is strong were still seeing interest from first-time buyers, which for me is always a good indicator of overall market opportunity is probably also a good thing is just give some color around today, we manage 2.6 billion in contingently labor spend for our managed service clients. The ramp remaining to be implemented and materialized from these wins is over $250 million that will probably realize over the next 18 to 24 months. And again is kind of a reminder, our managed service programs range from just simply providing some technology that allows companies to manage their contingently from their own all the way to fully outsourced programs that we manage and drive the business outcomes on the behalf of our clients. One of the reasons why want to add color back to Mark around how we use different pieces of the puzzle to really solve the workforce optimization equation. That's one of the reasons why you keep using this total talent sort of category in an phrase. So for us it's not just about fill rate on short-term needs is also about looking at how they build their flexible, how they manage international assistance. So that's really a broader equation then I think your referring to.

We're also bring our RPL team, we had a great year as well and we talked about them, but they had a really nice uplift and added new clients that's because our clients need help in there permanent hireling and we see that and we can come in when they are having challenge with there with both the prompt as we're having challenging finding the contingent labor for them we can bring the recruitment processing outsourcing team and to help them make sure that they are getting the maximum benefit out of there hiring. So Ralph just one more comment on pill rate.

On the absolute pill rate which conclude us and contractors were in the high 90s mid to high 90s, most of those clients and what your referring too is more kind of what we call internal capture, which is the share of the revenue that we get and it is running the more towards the high end of that range that you gave right now with the exception of a handful several new clients that we won in the last year which are still early in the ramp. So the first year we bring on a new client, we might capture 30% to 35% of so some of the larger deals lately are right it right at that level and trending upward. But we would anticipate even with a supply challenges that are fill rates are MSP it's a traditional client probably what will be more difficult in getting there jobs fill.

That's great. Just a quick question on the recruitment side, you expanded recruitment team with the advance acquisition and was just wondering as you look out in terms of the business you expect to bring on if you feel comfortable in terms of having enough team in place now that you can suck leveraging that.

This is Ralph, I will talk about the nurses and allied but I think Kelly want to talk about resource issues adding as well. But in our, we've added about 20% to 25% incremental capacity with the advance team recruited productivity is nowhere near all time highs. It might even be at 80% threshold. So there's lots of upside there with lots of new recruiters over the hiring be done over the last two years. In all of those businesses and we continue to hire so were you know opportunistic and we try to find those things out when we can find good talent but so you overall we haven't slow down our investment in our recruiting team. Kelly.

And I would add to that very similar trends and leadership in search, I think our integration has allowed us to book at higher productivity as well as to move people to where and fluctuate where the demand is and so we're having a greater opportunity to shift our resources that way. I will say back to seasons comment around our culture and our ability to attract we have also seen past year a significant increase in retention and that has allowed us to both increase productivity and slow down some of our hiring demand but we're absolutely seeing people very interested in joining our mission and so we're able to keep our pace with the demand.

Okay, that's great. Thanks again for taking the questions.

And our next question from the line of Alex Maroccia with Berenberg Capital Markets, your line is open.

Hey, good afternoon. Thanks for taking the questions. How much higher do you think you can get that 50% number for MSPs? And do you think future expansion there would primarily come from new or existing clients?

The number will rise based on our ability to continue to penetrate our existing clients, as I think both Dan and Ralph alluded to. We certainly have several clients that we brought on over the last year, and more that we've signed but won't be launching until the first part of 2020 that will give us more runway to build that $1 billion sort of 50% of our revenue that you alluded to. But over time, we would expect that we will win additional clients, as Dan said. We see a lot of appetite out in the market. And as you see more of these systems merging and increasing their own level of complexity and sophistication, they more and more want to turn to an organization that mirrors that, and not just for contingent staffing, but someone who can really be a holistic, total talent partner for them. We're hearing that much more frequently today, and I think it's showing up in the RFPs and in the conversations that we're having with them. And so we believe that both first time buyers but also clients that might have had a more technology only or sort of early stage program in place will likely want and need to have something more holistic and with multiple solutions to help tackle their workforce challenges. So we think that's going to be something that will help give us more opportunity with more wins. We also believe that we have a lot more runway and opportunity to have more of our service lines and solutions being delivered through our existing clients, and that doesn't have as much to do with the ramp and a new launch as it does doing a better job of understanding their strategic priorities, their challenges, and how we can actually better integrate and connect our own teams and our own businesses so that we can be offering them a more cohesive, seamless set of solutions. That's what they want. They don't want to have to go 10 different organizations to provide the different solutions that we can bring to the table. So the easier we can make it for them to work with one organization that's well integrated and connected internally as well as externally, we think that gives us a lot of runway to increase the number of service lines that our more strategic clients are using.

So if you'd like -- Alex, this is Dan. I'll just give you color around that example. So if you think about our Top 40 [indiscernible] which they're going to represent the majority of that revenue that you're looking at, 1/3 of them use five offerings at least, and I could see that becoming -- half of those clients using six or more over the next couple of years. There's that much room for us to grow without even adding new ones.

All right. That's great color. Thanks a lot. And then on a separate note, you mentioned the California fires during your prepared remarks. In terms of natural disasters, what have you historically seen in terms of demand uptick in the affected areas, and then which parts of the business would see the greatest uptick in utilization?

Yes, so our first priority, as you can imagine, is supporting our clinicians and -- not even our clinicians, all clinicians that are in the midst of that crisis, as well as our clients. And that's what we're doing, and our teams our there on the ground helping them, but the of course we're making sure that if they have additional staffing needs, that we are quickly responding to that. And in some cases, they may have nurses and we may have nurses that get disrupted while they're there. And so what do we do to support them in that situation? We've not seen a high number of new needs come through for clinicians in those territories. It's possible that could happen as things settle. But for right now, there's been a few additional needs, but not a lot. Likewise, there's been a few disruptions. But I would say at this point, the two appear to be somewhat balancing each other out.

Okay, great. Thanks a lot.

Thanks, Alex.

Thank you. [Operator Instructions] And we'll go to Jasper Bibb with SunTrust. Your line is open.

Thanks. It's actually Tobey Sommer for Jasper. Could you describe maybe how the lag this go around compares to where we're seeing kind of resurgent demand but not the corresponding price reaction by customers in the market? Just kind of compare and contrast it to what you're used to. I'm trying to figure out whether this is a normal duration or it's taking longer.

Sure, Tobey. And sounds like you've got some great trick-or-treaters there in the background. I'm glad that they could join us. We'll get you out with them so you can get their loot here shortly. We have -- I'm not sure we've ever had what I would call a normal cycle. And you've been there with us through most of the cycles that we've seen in terms of upticks and the declines in demand. It's taking a little longer this time for us to see the corresponding supply come back into the market, and I think there's two reasons for it. One is that we saw very high -- higher bill rates, premium rates being used as demand rose the last time in that sort of 2016 timeframe. And then we saw premium rates come down, and because of that, pay rates came down and less assignments being offered at those higher pay rates with bonuses. And as pay rates came down in travel nursing on an average basis, the actual rates of nurses went up in permanent positions. Depending upon which survey you read, it might be sort of 6% to 8% over a 3-year period. And so I think nurses are looking at that going well I see rising wages in the permanent environment, but not necessarily rising wages yet in travel positions. So until we start to see that opportunity for higher compensation packages, I think our supply will be a bit constrained. Now there's lots of other things that we can do and are doing to work with clients to make sure their assignments are as attractive as possible, things like standardizing credentialing, making sure we're interviewing quickly, and we are seeing some movement within pricing that can then translate through to compensation. But until we start to see a little more movement, I think that growth will be a little bit limited. How long? It's really hard to say. I mean I'd say it's been maybe two or three months longer than I would have expected at this point, but we are starting to see some early signs both in bill rates changing, conversations with clients about what their ongoing needs are going to be, and then as we mentioned, the rise in rapid response assignments. So hopefully that's helpful.

It is. Thank you very much.

Thanks, Tobey.

We have no additional questions at this time, so please continue.

Well thank you again, everyone, for joining us, especially on Halloween. We hope you have a great and safe evening, and we look forward to updating you on our progress next quarter.

Thank you. Ladies and gentlemen, this concludes our teleconference for today. Thank you for your participation and for using AT&T Conferencing. You may now disconnect.