AMN Healthcare Services, Inc. (AMN) Q2 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to AMN Healthcare's Second Quarter 2020 Earnings Call. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions] I would now like to hand the conference over to Randle Reece, Director of Investor Relations. Thank you. Please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's Second Quarter 2020 Earnings Call. A replay of this webcast will be available 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 expectation, 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 as a result 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 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, Group President and COO of Strategic Talent Solutions; Landry Seedig, Nursing and Allied Solutions; and Dr. Cole Edmonson, Chief Experience and Clinical Officer. I will now turn the call over to Susan.

Thank you so much, Randy. And welcome, everyone, to our second quarter 2020 conference call. Since the beginning of March, the nation and the health care industry have been reeling from the onset of the COVID-19 pandemic. In the early stages of the crisis, the health care industry was grappling with the surge of COVID-19 patients and managing through a shutdown of non-emergency care. The AMN team rose to this challenge and pivoted to help health care professionals and organizations. We quickly expanded existing services and launched new solutions to help the health care sector handle ways of dramatic change. But the greatest impact was made by our health care professionals, who have been on the front lines, caring for patients throughout the crisis. They have borne the greatest burden, and AMN has dedicated even more resources to support them and understand their challenges. We recently completed a survey of nurses across the country that provided further insights into their experience and intentions. To that end, we invited our colleague, Dr. Cole Edmonson, AMN's Chief Experience and Clinical Officer, to answer any questions about what we are doing to support our health care professionals and our current engagement with clients. Today, the outlook for the U.S. economy and health care remains clouded. COVID-19 has spread and surged in states that were a little affected three months ago. Many health care organizations have resumed the full spectrum of care, with patients volume in an uptrend but still below pre-crisis levels. AMN has adjusted to this dynamic environment, and our business is positioned better than ever to handle this demand volatility and capture long-term growth opportunities. With our country under pressure from a pandemic and social upheaval, it's vitally important that AMN demonstrates our commitment to our core values. We are fortifying our actions, supporting social justice and diversity goals with even greater urgency. AMN Healthcare has a longstanding commitment to diversity, equity, equality and inclusion. Our values inherently include the need to fight systemic racism and biases. And during this important time, we've taken action to increase our investments in activities, both internally and externally. As one example, recently, AMN extended financial support to 100 historically underrepresented businesses to attain diverse supplier certifications. We have also amplified our sensitivity training and leadership development programs to foster an even more diverse and inclusive workforce. Our seven employee resource groups have been critical in ensuring we are educating ourselves and taking specific actions as a leader in our industry but also as individuals who want to do our part to effect positive change. During this time of turmoil, we also find that our clients are maintaining their long-term vision despite the near-term headwinds. Our Strategic Accounts team has been highly engaged with health systems that are looking for more complete and robust solutions to the current challenges. They also want a strategic workforce partner who is serious about social issues and collaborating to create more meaningful change. In recent months, we were pleased to be awarded several new or expanded strategic relationships, hovering many of our service lines. And we are excited about the increased opportunities to make a difference on the front lines of health care. Now let's turn to second quarter financial results and business trends. Revenue in the second quarter set another record high for the company at $608 million, with adjusted EBITDA of $81 million. Our Nurse and Allied segment produced revenue of $444 million, up 21% year-over-year, with 13% organic growth. Our largest business, Travel Nurse Staffing, grew 41% year-over-year. Allied Staffing revenue was up 10% year-over-year due to last year's acquisition of Advanced Medical. Organic revenue for Allied was down 13%, due in large part to weakness in physical therapy demand. In the third quarter, Nurse and Allied Solutions revenue is expected to be down approximately 10% from prior year. Travel Nurse Staffing revenue is expected to be higher by 3% to 5% over prior year, with lower volumes, offset by higher rates and hours worked. Over the last six weeks, Travel Nurse orders have risen from a combination of a recovery in hospital census and resurgence of COVID-19 activity in many states. Current Travel Nurse orders are significantly above prior year. Allied revenue is expected to be lower than prior year in the third quarter by 27% to 29%. Allied demand has picked up in the last few weeks, which we expect to drive improving volumes as we move through the third quarter. Our Physician and Leadership Solutions segment recorded second quarter revenue of $109 million, which was down 24% year-over-year. Within this segment, Locum Tenens saw a revenue decline of 25% year-over-year, driven by cancellations related to the pandemic. Advanced Practice revenue was up year-over-year, but that was more than offset by declines in other specialties. More recently, we've begun to see some increased demand for other disciplines as nonemergency care has continued to recover. The second largest part of this segment, our Interim Leadership business, had a revenue decline of 17% year-over-year in the second quarter. Revenue for our permanent placement businesses fell by a combined 34% year-over-year in the second quarter as many search engagements were put on hold and new search needs declined. Though business trends have stabilized, we expect third quarter revenue for Physician and Leadership Solutions to be down year-over-year by nearly 30%. Our third segment, Technology and Workforce Solutions, reported revenue of $55 million, up 123% year-over-year, including the acquisitions of Stratus Video in February and b4health in December. Organic revenue was up 3% year-over-year. Our VMS business grew 15% year-over-year in the second quarter, with 5% organic growth. Stratus contributed $28 million of revenue in the quarter and recovered more quickly than we had anticipated when we provided guidance. After a slow start, minutes build increased throughout the second quarter and exceeded pre COVID-19 levels by late June. Our language interpretation services are particularly important at this time because they provide critical support for at-risk patient populations across the country. For the third quarter, we expect Technology and Workforce Solutions revenue to be up approximately 140% year-over-year, including about $35 million from the Stratus and b4health acquisitions. We expect organic revenue to be down slightly year-over-year in this segment. As we anticipated an overall revenue decline from the second to the third quarter, we began taking cost-savings actions. As a result, even with the lower expected revenue, we anticipate that our adjusted EBITDA margin will remain above 13%. This kind of performance would not have been possible without the important technology investments we have made over the past few years and the strategic shift towards total talent solutions that AMN made over a decade ago. We are continuing to make these important investments, including our digital capabilities that create a more positive experience for our clients and health care professionals and enable further efficiencies. Beyond the third quarter, uncertainties remain about the state of the U.S. economy, health care demand and public policy. We can assure you this, however. The AMN team is committed to helping health care professionals and our clients navigate through this fast-changing environment, bringing the strongest set of total talent solutions in the industry. We, along with our extensive network of strategic partners, will continue to work tirelessly to meet the ongoing need for quality health care professionals. Our amazing AMN team members are the lifeblood of these solutions. And every day, I am so impressed with their energy, creativity and commitment. Even though we're all working remotely from one another, we have actually grown closer as a team in these past few months. I recognize how much everyone has been asked to change the way they do business, and I want our remarkable team to know that their efforts are greatly appreciated and essential. In addition, one of the many things I love about the AMN inclusive culture is how supportive and engaged our family and friends are in our mission. So I want to extend a huge thanks to the spouses, partners, parents, children and other family and friends of our team members and of our health care professionals. Your support also makes a very positive impact. And a special shout out and happy tenth anniversary to my wonderful husband, Scott, who has been so supportive to me in the AMN family. I promise, I'll be home at a decent time after our analyst calls to toast and to celebrate with you. In a few minutes, Kelly, Landry and Dr. Cole will join us for the Q&A session. But for now, I will turn the call over to Brian, who will provide more insight into our financial results.

Thank you, Susan. Happy anniversary, and good afternoon, everyone. Second quarter revenue of $608 million was well above our guidance range due to outperformance in our Nurse, Allied and Language Interpretation businesses. At a segment level, Nurse and Allied Solutions and Technology and Workforce Solutions performed better than expected, while Physician and Leadership Solutions was in line with our expectations. Consolidated revenue grew 1% sequentially and 14% year-over-year. On an organic basis, revenue was down 1% sequentially and up 2% year-over-year. Gross margin for the quarter was 32.5%, down 100 basis points, both sequentially and year-over-year. The gross margin decline was due to a mix shift toward lower margin staffing revenue and a reduced margin in the Nurse and Allied segment. Consolidated SG&A expenses were $137 million, or 22.5% of revenue compared with $122 million, or 22.7% of revenue in the same quarter last year. The year-over-year increase included about $10 million of additional SG&A from the acquisitions of Stratus Video, b4health and Advanced Medical; $4 million of restructuring expenses associated with our cost reduction efforts; $4 million of integration related expenses; and a $5 million increase in the earn-out liability for the b4health acquisition. This was partly offset by a reduction in expenses to align our cost structure to the lower expected revenue in the third quarter. We expect our third quarter SG&A run rate to be about 20% lower than the first quarter of this year. We are very proud of the AMN team's agility while remaining focused on delivering great service to our clients and health care professionals in this unprecedented environment. Second quarter Nurse and Allied segment revenue was $444 million, 21% higher than prior year and up 5% sequentially. On an organic basis, revenue grew 13% over prior year, with strong growth in Travel Nurse, partly offset by declines in Allied Staffing, revenue cycle solutions and labor disruption. Travel Nurse revenue was higher by 41%, with organic revenue up by 35% during the quarter. Although second quarter Travel Nurse volume was relatively flat with prior year, the average bill rate was up more than 25%, and average hours worked were also higher due to COVID-19-related crisis rate assignments. Allied revenue was up 10% from prior year, and revenue cycle solutions was down over 40% due to impacts from the pandemic. Nurse and Allied gross margin of 27% was 110 basis points lower than prior year and down 150 basis points sequentially. The year-over-year and sequential declines stemmed from the lower gross margin related to COVID-19 assignments and the decline in revenue cycle solutions. Year-over-year gross margin was also impacted from $11 million less labor disruption revenue. Segment EBITDA margin of 13.8% was 60 basis points lower than prior year and down 20 basis points sequentially. Second quarter Physician and Leadership Solutions segment revenue of $109 million was 24% below prior year and down 21% sequentially. Gross margin of 36.4% was 80 basis points lower than the prior year, and down 30 basis points sequentially due mainly to a lower mix of permanent placement revenue. Segment EBITDA margin was 14.1%, up 90 basis points from last year and up 350 basis points sequentially, driven in large part by cost savings initiatives and lower bad debt expense. Technology and Workforce Solutions revenue was $55 million in the second quarter, up 123% year-over-year and 37% sequentially. Organic revenue was up 3%, both year-over-year and sequentially. Gross margin was 68.7%, lower year-over-year and sequentially due to the acquisition of Stratus Video. EBITDA margin of 39.5% was also down year-over-year because of the Stratus acquisition, but was 150 basis points higher sequentially. Consolidated second quarter adjusted EBITDA of $81 million was 21% higher year-over-year, driven by acquisitions and better operating leverage. Adjusted EBITDA margin of 13.2% was 70 basis points higher year-over-year and better by 90 basis points sequentially. We reported net income of $22 million and diluted earnings per share of $0.47 in the second quarter. Adjusted earnings per share was $0.83 compared with $0.77 in the year-ago quarter. Our GAAP income tax rate in the quarter was 17% and was approximately 32% on an adjusted basis. The low GAAP tax rate was driven by the effects of nontaxable investment gains on our deferred compensation plan. Day sales outstanding at quarter end was 55 days, an 8-day improvement from the same quarter a year ago and two days better than last quarter. The vast majority of our clients have continued to pay according to normal terms. As of June 30, cash equivalents stood at $43 million, and we ended the quarter with $973 million of long-term debt and a leverage ratio of 2.7 times to one times. And since quarter end, we have paid off an additional $45 million of revolver debt. Capital expenditures in the quarter were $6 million. Second quarter operating cash flow was $77 million, driven by several factors, including the lower DSO and the deferral of tax payments from the Cares Act. Turning to third quarter guidance. The pandemic continues to create a volatile demand environment as clients deal with the cross currents of an uneven recovery in health care utilization, along with more recent increases in COVID-19 hospitalizations across many parts of the country. We expect that economic and labor market challenges will also influence the health care industry. These uncertainties are reflected in our third quarter outlook, and we expect them to continue at least through the remainder of the year. Within our Nurse and Allied segment, Travel Nurse revenue is expected to be up 3% to 5% over prior year, with an expected volume decline of over 10% being offset by higher bill rates and hours worked to COVID-related placements across the country. Sequentially, we expect Travel Nurse volume and bill rates to both decline about 10%. Allied revenue is expected to be lower than prior year by 27% to 29%. Overall, Nurse and Allied revenue is expected to be down about 10% from the prior year. For our Physician and Leadership Solutions segment, we expect third quarter revenue to be down nearly 30% from the prior year. Within the Technology and Workforce Solutions segment, our language interpretation business has experienced steady growth in billable minutes since May, which we will expect to continue through the third quarter. Our VMS and Scheduling and Predictive Analytics businesses grew year-over-year in the second quarter and recent trends indicate similar performance in the third quarter. Based on these trends, we expect segment revenue to be up about 140% year-over-year. Overall, we are projecting third quarter consolidated revenue to be in a range of $510 million to $525 million. Third quarter gross margin is projected to be at approximately 33% to 33.5%. Third quarter operating margin is expected to be above 7%, and adjusted EBITDA margin is expected to be greater than 13%. Other third quarter estimates include the following: depreciation expense of $7 million; noncash amortization expense of $15 million; stock-based compensation expense of $4 million; interest expense of $10 million; integration expenses of $6 million; and an adjusted tax rate of 30%. And now we'd like to open up the call for questions.

[Operator Instructions] Our first question comes from A.J. Rice with Crédit Suisse.

This is Rob Moon on for A.J. Rice. I was just wondering if you guys could talk to recovery in regions where you were not seeing COVID surges. What is demand – are you seeing demand start to recover in July and early August in the regions where things have calmed down a bit?

Rob, I'll have both Kelly and Landry weigh in on that. Kelly, from the client perspective, but also Landry, maybe more specifically for Nursing and Allied. The short answer, however, is yes, we are seeing recovery of non-COVID-related orders really across most all of our businesses, I'd say, less evident in our permanent placement businesses, but across Nursing, Allied And Locum, we are starting to see the non-COVID orders return, albeit at a slower trajectory. We are seeing some recovery, which is why we now have a combination of both the COVID-related surge orders and a growing base of what we would consider to be more normalized orders. But I'll ask Kelly first to weigh in, and then Landry.

Yes. Just to add to that – thank you, Susan. We – adding on to her perspective, just from a market perspective, we have been doing some modeling, in addition to those areas that have had a high demand. We've been modeling some other areas. And we're expecting to see regular, I would say, pre-COVID volumes in hospitals, particularly getting up to 90% to 95% levels of volume by October or November. So with that is coming the normal demand, as Susan said, both in our contingent staffing needs as well as in our perm hiring. And we are seeing in some of those markets that the permanent hiring has resumed to higher levels or getting back to pre-COVID levels as well.

Yes, and this is Landry. I would just add to that, that the area where we saw the highest need in the first surge was New York and, specifically, New York City. And in that area, right now, as Susan and Kelly mentioned, we are seeing new demand and new placements in areas such like OR. But even the ICU, our travelers on assignment is still up year-over-year in New York and, specifically, New York City. So I think that says a lot about that – the permanent nurses that were there need – still need support from our ICU nurses in that area.

Great. And then just on the follow-up. When I look at the Q3 guide, I see revenues are coming down in the 7% to 10% range, but your margin is improving. Can you kind of talk to the puts and takes on how you're getting that margin progression even in the headwinds to revenue?

Sure. This is Brian here I mean, if you look at the guidance we gave for EBITDA margin, we said over 13%. So that would be relatively consistent with what we reported in the second quarter, getting there kind of slightly differently. The gross margin, we do expect to be up a bit in the third quarter. It's in part driven by just a change in the mix. As I mentioned in our prepared remarks, the margin was a little bit lower than we expected in the second quarter as we had a higher mix of nursing revenue. As that is coming down as a percentage of the total revenue in the third quarter, it naturally has a bit of a lift in the gross margin as we see the Physician and Leadership and Technology and Workforce Segments that have higher gross margins increase the consolidated margin. And then we've gone through some cost reduction effort as you talked about. And so although we are losing a little bit of operating leverage, the team has done a fantastic job of rightsizing expenses to match the revenue. And so we – although we lose a little bit of operating leverage, we're making that up with the higher gross margins. We end up at a pretty similar EBITDA margin level quarter-to-quarter.

Great, thank you guys. Really appreciate it

Our next question is from Tobey Sommer with Truist Securities.

Thank you. I was wondering if you could give us a comment on what you're seeing from a supply standpoint across your main categories. And I'll pause there and just follow up.

Thanks, Tobey. It's a great question because as you can imagine, supply is critically important now, particularly in nursing, where we are at all-time high levels of demand, and I mean that literally in the history of the company. And so the supply that we saw come into the industry and into – our business in the early part of the second quarter has been very helpful as our recruiters continuing to engage with them. But we have to continue to recruit new candidates. We are seeing increased applicants in other areas like in Locum, some of the displaced individuals that perhaps have been forced to rethink their career within Physician and Advanced Practice, or even allied has helped bring in more supply. But I'd like Landry to comment a little bit on the nursing supply, in particular, because the team has done a really great job of making sure that we leverage the investments that we've made, including some of the digital investments we've made like in AMN Passport. So Landry, do you want to add a little more commentary around that?

Yes, sure. Tobey, yes, the supply numbers look really good, specific to Travel Nursing. Every month, this year, so far in 2020, our new applications have been above prior year and as well as just up over our goal that we set for ourselves at the beginning of the year. A lot of that has to do with some of the investments that we've been making, a lot of that's in our like digital or our mobile initiatives. Specific to the AMN Passport, that's a mobile app that's really taken off for us. And it's kind of proven that clinicians want to work with us digitally, and they can do things such as search jobs on there, they can self-select the certain jobs, they can review their weekly pay and other self-service things, like uploading their credentialing documents. So it's really help with the whole on-boarding process. But just in general, a lot of those initiatives and the digital initiatives, specifically in the mobile investments that we've made, is really helping drive supply to us.

Tobey, I think this might be a really great opportunity for Dr. Edmonson to weigh in on the Nurse survey that I referenced and sort of the sentiment of nurses and the level of burnout and how they're thinking about their career going forward, because that affects us not just now, but it affects the workforce for our clients going into the future. So Cole, if you wouldn't mind, perhaps, saying a few words about that.

Thank you, Susan. What we found, as we were serving nurses in the field, which is that 87% of them plan on continuing to work in nursing. We did see that about 26% of those that are currently working are planning on making some kind of a change in the next year. That could be a new specialty, a change in their status or even potentially their employers of their practice settings. What we think about that is that it really represents some nice stability in the workforce, but it also has some potential disruption for us in terms of the supply. But I'm also really encouraged that we continue to see the nursing school enrollments be strong. Most programs are really reporting an increase in enrollment, and they're working really hard to increase capacity in their programs. Because as we know, last year, 70,000 qualified nursing students were turned away based on the lack of faculty and the shortages within that industry. So we're very encouraged by what we're seeing, but we also realize that this is one sample that gives kind of where we are today, and as we go forward, we could see differing workforce trends as well. So it's really important we pay attention to wellness of our clinicians. And we also make sure that we're taking care of folks who are on assignment, as well as making sure that we have the ability to make their experience great with AMN, which we do.

Could you comment on what you're hearing from customers about their intentions to utilize tents and perhaps penetration within their workforce, specifically in the MSP book, and maybe you could update us on how big that is for your various lines of business, and if you're able to stitch together any of your technology services, including Stratus into MSPs.

Tobey, it's Kelly, I'll be happy to address all of those points. First of all, we continue to see a strong need coming from particularly our most strategic clients, not only to support current COVID needs but also, there is a level of strain that's on the current workforce, even for someone of those organizations that are coming out of COVID, where they've had high overtime and they're just – generally have some levels of burnout. So – and they're coming into now a more seasonal time where they have higher demand. So we are already working with some of our most strategic customers on their future winter orders and their needs, and they're very similar, if not higher than what we saw the prior year. So we believe that demand, particularly for our MSP clients, is going to continue. They've been extremely appreciative of the kind of partnership they've had with us, our ability to fulfill. Dr. Cole mentioned the level of support that we've continued to provide our clinicians while they're on assignment, supporting their safety, their mental, their well-being and the additional clinical support is really appreciated by our clients. And we have been able to extend additional services to throughout. We have a very – we're in a very good place around our renewals for year this and expansions, many if which that have expanded into providing additional services like Stratus and some of the newer components of our total talent management portfolio. So I would say we're seeing an even closer reliance, independency and much deeper relationships and partnerships with our MSP clients. We're very, very encouraged about the trajectory there.

Last question for me, maybe a numbers one for Brian. What is all this better-than-expected EBITDA going do to the leverage ratio? And when do you think you could have it back down to two times?

We've got better ways to get to two times. We're very pleased with where we sit today in terms of just our credit facility, overall, and the maturities of our debt, and we're a little above – right at three times at the end of last quarter. So with the debt reduction during the quarter, we got down to 2.7. And I'd expect it will be down closer to 2.5 times by the end of the year, maybe a little bit lower than that. It will take a bit more time to get to two times, but we're in a very healthy place in the balance sheet and feel good about it.

Thank you.

Next question is from Jeff Silber with BMO Capital Markets. Your line is open.

Thanks so much. Based on your comments earlier on the volume potential getting back to 90% to 95% by October, November. Is it safe to say that you expect 3Q to be the bottom in terms of revenues?

Well, the fourth quarter would normally be a sequential uptick for us, particularly in Nursing. And as Kelly alluded, we're starting to see the winter orders come in at a good rate, again, sort of as good, if not, in some cases, a little bit better than last year, and we're adding on many new clients. And so we would expect that can contribute to the fourth quarter. You only hear hesitancy in my voice because it's just hard to tell in this environment and the volatility, what the actual volumes might be. But I also think we're going to continue to have surges across the country. That's absolutely what we're hearing from HHS, as well as from our clients. And so I think we have to be ready for both. We have to be ready for resumption of normal care in normal settings as well as COVID patients that might have a spike in demand. So that's what we're anticipating right now.

Okay, that's really helpful. I appreciate that. You also talked at the beginning about the fact that you spent maybe investments in technology, being able to have, I won't say a smooth kind of transition here, but smoother than most. Do you think once we get through this, that the business might be structurally different than it was in the past, potentially getting your back towards that, I think, 14% margin goal that you talked about earlier?

Yes. We do think that's still a very achievable goal for us. And if anything, this crisis has forced us or enabled us to perhaps make some of the investments even faster because we needed to move quickly to get automation in place, and we saw what was possible and the benefit that could be achieved. And so a lot was accomplished already in the first part of this year, and we absolutely have our sight set on accomplishing a lot more in the next six months to 12 months. And so I think based on those investments, which create efficiency, as well as just our continued improvement of processes and making sure that we're streamlining things internally as well as externally with our clients, should lead us towards that. We're not putting a time frame on it yet, but I actually have even greater confidence in achieving that goal now, or at least sooner than I did at the beginning of the year.

Okay, great, that's really helpful. Thanks so much.

Thanks.

Our next question is from Brian Tanquilut with Jefferies. Your line is open.

Hey, good afternoon. Susan, just a follow-up on your answer to Jeff's first question. So I know your visibility is kind of limited. But if we're thinking about continued surges, right, into next year, and do you feel like that's a good baseline to be thinking about in terms of the strength of the business if this will build on from we're seeing right now in terms of Q4 demand for Travel Nursing?

Yes. So I want to I make sure I understand the question. So if we have a kind of undercurrent of normal growth and a resumption of normal services. As Kelly alluded to, the predictive analytics that we put in place using our clients' information would suggest that we'd be back to those levels. And on top of that, you would have COVID-related needs. I don't know that it means that we'd be fully back to normal in all of our businesses by the first part of next year, but we would be moving in that direction. Some, such as permanent placement, are absolutely going to take longer to achieve that. And I do think even in Locums, for example, where there's been greater disruption, it could take longer. But in other areas such as Nursing and Allied, I think we're seeing the signs of an earlier recovery.

Appreciate it. And then my second question, over the years, as people look at your story, one of the things that you guys always said is that adding the MSP angle to the story was a way to reduce risk from whether it's economic shock or external risks, right? And as we sit here, this is really the first quarter where you had a big test in terms of macro disruption to your business with COVID. As you look at it, do you think – do you believe that the strategy with MSP and growing that side of the business has worked in terms of shielding your business from increased volatility?

Yes. I absolutely do. In fact, if you look at the second quarter, in particular, where our clients, of course, our MSP clients needed us so desperately, we were able to fill their jobs and, certainly, we had great help from our strategic partners and affiliate vendors, and they also deserve a lot of credit for ensuring we got clinicians to the front lines. They were fantastic collaborative partners. But AMN also really stepped up to the plate. In fact, we have our highest levels of direct fill or capture across most of our businesses, in particular, nursing. But overall, we hit a high point for the company in terms of our direct capture of MSP revenue. So hopefully, that helps answer your question.

Brian, this is Brian. The other thing I'd just add is, MSP is really just part of our total talent strategy. So when you think about these clients and how we can help them, it's just only one element now. So we've been – as Cole mentioned earlier, really excited about our ability to add other service lines, so we can help them as well, whether it's permanent services or predictive and scheduling capabilities now with Stratus as well. So we're seeing high involvement mark from those clients and wanting to engage further beyond just that traditional MSP for contingent labor and finding other ways that we can help them deliver great patient care and be more efficient at the same time. The other thing I think for us, as you look at the DSO coming down and the strong collections, the fact that we have more of our business through some of the – the really strong large systems in the country, I think, is also a benefit for us in terms of the predictability of revenue and ability to collect that as well.

Awesome. Thank you.

[Operator Instructions] Ladies and gentlemen, this does conclude the Q&A period. I'll now turn it back over to Susan Salka for any closing remarks.

Thank you, everyone, for joining us today. We're very grateful for your time and your support of AMN and our purpose and mission across the organization. Hope you have a wonderful evening. And of course, as always, be well.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.