Ladies and gentlemen, thank you for standing by, and welcome to the AMN Healthcare Fourth Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Mr. Randy Reece, Director of Investor Relations. Thank you, sir. Please go ahead.

Good afternoon, everyone. Welcome to AMN Healthcare's Fourth Quarter and Full Year 2020 Earnings Call. A replay of this webcast will be available at ir.amnhealthcare.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, 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 guidance or any forward-looking statements provided today prior to its next earnings release. This call contains certain non-GAAP financial information. Information regarding and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and on our financial reports page at ir.amnhealthcare.com. On the call today are Susan Salka, Chief Executive Officer; Brian Scott, Chief Financial Officer; Kelly Rakowski, Group President and COO of Strategic Talent Solutions; Landry Seedig, Group President and COO of Nursing and Allied Solutions; and Maureen Huber, President of Workforce Technology Solutions. I will now turn the call over to Susan.

Thank you so much, Randy, and welcome, everyone. We have all been affected by the events of 2020 but none more so than the people afflicted with COVID-19, their families and caregivers. Health care providers went to astonishing links, putting themselves at risk to save live. Millions of Americans fundamentally change the way they live each day, sacrificing to contain the pandemic, we must never forget those loss. But it is also essential that our efforts are focused on the future and doing all we can to help bring an end to this crisis. While our nation was rocked by the pandemic, we also faced the turmoil of racial and social injustice and political unrest. I feel great pride in the way our AMN team responded to a year of dramatic swings in demand for health care labor while also making great progress on our commitment to social responsibility, diversity and equity. No matter how intense the storm, we never lost sight of all of our stakeholders. We didn't just respond to the crisis, we transformed our company with agility and innovation when our clients and health care professionals needed us most. AMN began 2020 by taking bold steps, acquiring Stratus Video, the leader in virtual language services for health care and launching mobile and other digital capabilities that enhanced how we support our health care professional. These and other investments gave us the ability to deploy new solutions, speeding our pace of innovation and collaboration and creating lasting benefits. To provide you with more insights on how Stratus Video and other technology investments have enabled us to respond, we've invited Maureen Huber to join us on this call. In addition to her role as President of Stratus, Maureen has taken on broader responsibilities as the President of AMN's Workforce Technology Solutions. We are so fortunate to have her leading these teams and creating a vision for how AMN will create greater value through novel technology-based solutions. With that introduction, I will hand the call over to my colleague, Maureen.

Thank you, Susan. The Stratus team was thrilled to join the nation's leader in health care total talent solutions last February. And as we celebrated our one-year anniversary last week, we recognized the successful melding of our purpose-driven cultures, processes and technologies. I am pleased to say that this union has exceeded our high expectations. The importance of AMN's telehealth platforms, including Stratus for language interpretation became even more essential through the last year. Our language interpretation volumes grew about 30% year-over-year in 2020. That momentum continues with first quarter volumes expected to be up at least 35% year-over-year. We help our clients deliver meaningful access to language services provided by more than 3,300 amazing medical interpreters in 208 languages. Additionally, we've integrated our language services into the AMN Televate schools platform to provide interpretations for students and clinicians. We've added language services to several existing MSP clients, and we are differentiating AMN in the market to engage additional strategic clients for seeking a more integrated full-service total talent solutions partner. Our technology-enabled talent solutions are a critical part of AMN's long-term strategy and you have seen how the Company has been steadily investing in these capabilities. Over the last year, we have made advancements to respond to the urgent market needs. We quickly deployed enhanced capabilities and reinforce our AMN team with additional technology. This allowed us to do extraordinary things beyond clinical staffing, including the planning and ramp-up of field hospitals, deployment of an open talent marketplace, return to work and contact tracing solutions and now integrating many of our technologies and services to support mass vaccine administration. We proved our unique ability to offer a total payment solution to rapidly respond to these emerging needs at scale. We will further integrate and re-imagine our technology and staffing capabilities to more efficiently and effectively deliver total talent solutions across acute, post-acute and virtual settings. We believe these advancements will position AMN well for the changing market needs. I look forward to sharing more with you in our Q&A session. And now I'll turn the call back over to you, Susan.

Thank you so much, Maureen. Now, we'll share more about what occurred throughout the fourth quarter and the outlook as we begin 2021. Unfortunately, our country continued to experience higher and higher levels of COVID-19 infections during November and December. After peaking in January, we began to see some more positive trends. With vaccination efforts underway, we appear to be moving into the next phase of this pandemic, and there is a light at the end of the tunnel. The AMN team is working hard to continue to fill critical positions across all of our staffing businesses and adapting our services to partner with organizations to vaccinate our communities. Now let's turn to the financial results and outlook that we announced today. In the fourth quarter, AMN produced record high consolidated revenue of $631 million and adjusted EBITDA of $89 million. The revenue increase was unusually strong as our team leaned in like never before to serve the most extraordinary level of demand we've ever seen. Our Nurse and Allied Solutions segment came in with revenue of $448 million, 6% higher year-over-year. The segment returned to growth ahead of schedule, led by our largest business, Travel Nurse Staffing, which put up a 23% increase. I can't emphasize enough, how impressive this team's performance was, sourcing, recruiting, credentialing placing and on-boarding more health care professionals in one quarter than ever before. We would have normally said that this type of growth was unrepeatable. However, we've already seen the first quarter eclipse the historic high fourth quarter delivery. We reached our highest ever number of assignment starts in January. And in February, we now have the most nurses on assignment in company history. Allied staffing revenue was 13% lower year-over-year in the fourth quarter, and all major Allied disciplines grew on a…

Thank you, Susan, and good afternoon, everyone. Fourth quarter revenue of $631 million was well above our guidance range as we previewed last month. Consolidated revenue grew 14% sequentially and 8% year-over-year. On an organic basis, revenue grew 1% year-over-year, even with a headwind from labor disruption staffing, which was $14 million lower this year. Gross margin for the quarter was just above the high end of our guidance range at 32.9%, 70 basis points lower than prior year and down 60 basis points sequentially. Year-over-year, the margin was lower because of the higher compensation packages and nurse staffing more than offsetting a benefit from higher average hours worked and the acquisitions of higher-margin Stratus Video and b4health. Sequentially, the higher pay packages were the biggest driver of the margin decline. Consolidated SG&A expenses were $155 million or 24.6% of revenue compared with $133 million or 22.7% of revenue in the year ago quarter and $111 million or 20.2% of revenue in the previous quarter. As noted in our earnings press release, the quarter included a $20 million increase in legal reserves related to a wage and hour claim. Adjusted SG&A, excluding this legal expense, integration-related costs and stock-based compensation expense was $119 million this quarter or 18.8% of revenue compared with $121 million or 20.7% of revenue in the prior year quarter. The lower SG&A margin from the prior year reflects a reduction in total headcount and travel and convention costs, partly offset by $7 million of SG&A expenses added from the acquisitions of Stratus Video and b4health. On a sequential basis, adjusted SG&A was higher by $10 million due to hiring to support the strong revenue growth and other related adjustments to variable compensation and benefits for the better quarter and full year results. In the fourth quarter,…

Operator, I believe we are ready for our first question.

Thank you. Your first question comes from the line of Kevin Fischbeck with Bank of America.

I appreciate the directional commentary for the year about revenue growth in every quarter. Is there any reason to think that, that doesn't translate into earnings growth every quarter? Or is there something that we should be factoring in or thinking about either the gross profit or the G&A line that could be a headwind to reporting that?

Well, as -- I'll let you go, Brian, take it.

Yes. Thanks for the question, Kevin. Yes, this was a very -- first quarter, obviously, is going to be a very unique quarter for us. And we don't give full year guidance, but I'll go answer the question because I think it would be helpful maybe to give some additional color around some of our expectations for the year. So this should help you a little bit. We do expect revenue to decline from this Q1 high point that we've given the guidance. As Susan noted, there was a significant increase in demand from the COVID hospitalizations. And that, in turn, led to an increase in pay rates and then correspondingly bill rates, and that certainly was a pretty significant element of the higher guidance, along with some incremental volume as well. Just from an order of magnitude, the average nurse bill rate in the first quarter guidance is expected to be up a little over 20% higher just sequentially from Q4 to Q1. And that was really driven a lot by the COVID hospitalizations, the demand that came from that. Fortunately, well now it's demand has come down now as hospitalizations have declined. We're still at -- well above normalized levels for demand, but off of those highest levels. And we would expect to see bill rates follow as the demand has come down at this highest level, bill land pay rates. So we would, again, expect not only for the second quarter, but through the year, if things continue to improve in terms of COVID hospitalizations. There would be some moderation of the bill rate through the year. And just to give like a framing of the financial impact of that. For example, we assume that we lose about half of that rate increase that we had in…

That's perfect. I guess maybe just last question. You guys sounded pretty optimistic about the supply demand imbalance persisting or maybe even exacerbating as a result of growth. But I guess most of these publicly traded hospital companies are talking about a labor outlook improving, I guess, towards the end of the year. Would just love to kind of hear how you guys are thinking about it, maybe which segments you think post-COVID are kind of seeing the biggest shortages? And if there's anything specifically that you would point to as some segment of your business that pretty clearly, in your view, got worse as a result of COVID assessing more temporary staffing.

Sure, Kevin. I'll start with that. This is Susan. And then perhaps one of my colleagues would want to add something in. Certainly all of the different clinical disciplines and I would say even beyond clinical disciplines like health care leaders have been affected in its advanced retirements for many individuals who decided they didn't want to stay in the health care environment throughout the COVID pandemic, but also that's perhaps changed their course going forward. So, there's been a larger than usual number of retirements, and while it's hard to find real-time data on that, we're certainly hearing that very clearly from our clients. And then even with the younger workforce, many of the clinicians might say nurses in particular, but also many of the female physicians have had to make a decision to leave the workforce in order to juggle children at home and school at home and again, maybe just not even wanting to take the risks of reentering direct patient care in this environment. So it's believed that we've lost some subset of the nursing workforce permanently, and that will accelerate the shortage path that we were already on. It was already getting quite bad before the pandemic, and it's really just accelerated it considerably. So nursing is probably the area where we believe the shortages will persist at relatively difficult levels, while the demand continues to be really quite strong. In other areas, you might see some of those individuals come back, but they may not come back full time. Physician is one example where we've been really fortunate as a country to have so many more women go into medicine. But typically, the female physicians are working less hours because they're maybe juggling again, families at home. And then now some of them have made a more permanent decision that they'll take that less than full-time schedule and take it even down further on a permanent basis. So there's expected to be some long-term impacts there. And truly, it's really just across the board. So we think that those shortages that will persist will continue to drive a relatively strong demand environment. And then again, as you've got the elective surgeries and other delayed care procedures and whatnot, that will start to come back. And we're already seeing that a little bit in some of the businesses. But as we start to see COVID cases subside, we'd expect for them to come back more. Maybe I'll stop there. And I don't know, Landry, if you have anything else that you want to add in regarding the nursing shortage in particular?

Yes. Maybe I would add in specific to nursing. We have been doing and are in survey quarterly just to look at different trends that are impacting the occupation. And our last survey that we did, we actually did it in January, so it's very recent and found a couple of things in there that I'll mention. One is that 75% of nurses felt burned out of the respondents that responded to the survey. And of course, you might think, well, you would expect that with everything that's been going on. But the important thing there is the trend since we have been doing the survey quarterly, and to see that number increasing every quarter whenever we've asked it. Another thing that we learned of is that only 66% of nurses plan to continue working as they are today within the next year. That means that 34% of the workforce are planning some sort of change in the next year within the next 12 months, which is, again, a really high number from what we've seen and we've asked that question before. So with all that, we got to do our part to try to help the occupation out as much as possible to get through this. But what it does suggest is that we'll likely be in this high demand environment for quite some time.

Your next question comes from the line of A.J. Rice with Crédit Suisse.

Maybe a couple of questions. First of all, Brian, as you're giving those numbers about what happens from first quarter to second quarter and the $50 million potential impact of revenues from having a premium but less premium than you had in the first quarter. Where does that leave you relative to sort of a normal state? Is there still a substantial in that second quarter assumption? Is there still a substantial amount of premium revenue that you're getting? Or is that take you back to pretty much trend line?

Yes. Thanks for the question, A.J. No, that would still have us above where we sat. Maybe if we use as a starting point, it is fourth quarter '19 or the first quarter of '20 kind of pre pandemic. It would still leave us a reasonable amount above that level. So as I mentioned, we would not be surprising if we saw some further reduction in the average rate through the back half of the year, at least in the third quarter, assuming that we see those COVID hospitalizations come down over time. So we do expect to see some further rate reductions. But with the -- as Landry mentioned, the shortages we're seeing. It's going to take some time, I think, for our clients to really adapt to these changes and get their teams a break as well as we get through this. So we do think it will be a -- it will take a few quarters for that to unwind as we get closer to the back half of the year. We still would expect rates to be higher than they were a couple of years ago, which is the normal inflationary rates and probably some acceleration of some of the shortages. Where that lands exactly, we're still determining, but we expect it to still be above where we were pre pandemic.

Okay. Another thing, obviously, we're talking about burn out at a high level and so forth. One metric, I guess, you can track is when people come off of assignment in your Nurse and Allied, are they re-upping for another assignment? Are you seeing a trend there where that percentage is going down as your own nurses or Allied professionals or sort of saying, I need a break now, and I need to come off of that? And the other thing we hear from hospitals is that there is some pressure from people seeing how much they can make as a temporary nurse and giving up their permanent job to do that for at least a time. Are you seeing new applicants pickup would be the flip side to what the hospitals are dealing with? You presumably see new applicants in that? Are you seeing much in the way of new applicants?

Yes, A.J., I'll have Landry pick up most of that. But I will say our recruitment team has done a phenomenal job and our rebook rates have actually improved since kind of the lower point in the middle of the year when, of course, demand dropped for a period. And so the increased demand, but also, I'd say the just the great work of our team and delivering so well during such a difficult environment has helped improve our rebook rates. So we feel really quite good and confident about those. If anything, I think what's really helped us to find ways to serve our clients and clinicians better and faster through digital capabilities and whatnot, certainly having more assignments at attractive compensation rates and whatnot is helpful. But Landry, let me let you add to that and then also talk about applications, which I know is a great story.

Yes, A.J., on the clinicians that are rebooking extending, we're not seeing anything material there. You, of course, always have a certain percentage of them that are on assignment that extend where they are today. Some of them come off, and they take a new assignment. And then some of them, to your point, which is -- it's always happening, which again, we're not anything different. They'll take some time off. That's one of the benefits of traveling is in between contracts, you can take two or three weeks off. But again, nothing different today than what we've seen over the years, specific to our supply, that funnel is working really, really well right now, seen some extremely strong new applicants and some record levels that have been coming into our business and to our database. Team has done a really nice job pushing a lot of that supply through and getting them on assignment. We couldn't do as much as we've been doing without some of the digital investments that we've been making. I know we've talked about some of these before, but we've got a lot of focus around our mobile initiatives and adding bots to the process, creating a lot of automation, increasing self-service, and really just given -- overall, given our clinicians more control so that they can move through the process and then ultimately get on assignment faster. So speed is a big piece of it. Those investments, of course, also help our internal teams. So we become more efficient, which, of course, has allowed us to hit some of these record numbers of on assignment that we're seeing in the first quarter. And then the last thing I'd mention, I know we've talked about before. Passport, AMN Passport, our mobile application, we continue to see great adoption with that mobile app as well as a great increase in the number of users. And we can see that the investment is really something that our clinicians want. We can see a lot of the stats of where they're spending time. How frequently they're returning to the app, how many users are going to it every single week. And overall, just kind of putting more control in their hands and they give them one place to go to, whether they're searching for a job or all the way through them being on assignment until their last day. So all of that looks really good, it's helped us do what we've been able to do over the last few quarters, and we'll keep on making investments in that mobile app and those digital initiatives as we look forward.

Okay. Maybe one last question. When I think about -- it's fun to talk about the areas that are doing well in the last 12 to 15 months. There are some areas that were adversely impacted by the pandemic of certain placements and allied like rehab therapists. I know some in the specialties in the locals business and then things like permanent placement. Have you started to see any recovery there in demand? Anything you'd highlight there? Or is it still sort of early in the transition now the pandemic to see that?

Yes. A.J., it's Susan. I'll take the first couple and then have Landry comment on Allied. So regarding Locum, really, really nice recovery there, part of it's been the work they've done to assist in some of the COVID activities with whether it be state temporary facilities or just helping our clients overall but even the underlying core business has seen some nice recovery. It's not back to pre pandemic levels. But there are some specialties like anesthesia, behavioral health that are back above pre-pandemic levels just in our core business and others that are lagging a little bit more. But we're continuing to see a steady trajectory upwards. Those should continue to grow faster as the COVID cases subside and you see more elective procedures and more normal care start to return. And it's definitely the dynamic that we're witnessing. So that's a pretty good story now. Search has been the hardest hit by far. I mentioned that still over 30% down in the fourth quarter. But in the fourth quarter, we started to see searches and some placements pick up and more dialogue with clients about those leadership and physician positions they want to start to fill now that just is settling a little bit in terms of how they're managing the COVID crisis, but then also expecting more patient flow back. So they're starting the first quarter off pretty strong and definitely going to close the year-over-year gap. But they will be the lagger, but at least we're starting to see things move forward. And then Allied has been a great story. So Landry, I'll let you take that.

Yes. A.J., Allied of course, went backwards quite a bit midyear last year, and their trajectory is probably one of the best trajectories that I've seen in our businesses. They have an outstanding fourth quarter and really across all their segments, kind of outperforming what we originally thought that they were going to do in the fourth quarter. Of course, respiratory and laboratory specialties have been performing well. Those specialties are closely tied to helping the pandemic. But we saw good performance across all the other parts of the business as well. So therapy performed better, imaging performed better, schools looks great for, in particular, speech language pathologists. So looking to the first quarter, they're experiencing the largest sequential growth that they've seen in the business. And it also includes their volume of travelers on assignment being back above prior year levels.

Your next question comes from the line of Jeff Silber with BMO Capital Markets.

I know we're in a unique time here. But given the kind of bill rate increases that we're seeing, and you're continuing to see this quarter. When we -- in the past, when we've seen these kind of large premium rates or bill rate increases after the things subside, you tended to see some of your clients kind of push back on usage of temp nurses. Can we talk a little bit about that? Would things be different this time? Why or why not?

Yes. That's not our expectation, Jeff. And I think the dynamics are different here. First of all, the shortage environment and some of the factors that Landry mentioned earlier around burn out and decisions by clinicians to do something different, whether it be retired, just should have change their work environment. And our clients know that. There's a real concern amongst the health care systems that we talk with as well as nurse educators that this could put a real dent in the availability of clinicians for quite some time. And as you well know, we don't really have the capacity in nursing schools to increase new nurse graduates because we're pretty much at full capacity already. In fact, if anything, I'd say the dialogue we're having with clients around planning for their needs, not just now, but two, three, five years from now is increasing. And maybe it's a good time for Kelly to comment on some of the conversations we're having with the most strategic clients. And how we are helping them plan, not just for the next quarter or two because we all know we'll get through that together, but rather how we're building our strategic accounts kind of for the future. So Kelly, you want to take that?

Yes, absolutely. Hi, Jeff and I think you made the comment about are they going to push back on utilization? I think it's a much more holistic view, as Susan mentioned. They're certainly looking at the workforce in general, understanding what the impact is going to be with them in the short-term and the long term. And it's not just about the workforce today of what's changing in health care, looking at changes in the care delivery model, looking at changes in sites of service, the impact of telehealth in the future. So we're able to talk with them and help them with that planning. And I think in the short term, we're seeing -- there's an expectation of still using this complementary workforce. But also around how can we optimize what you have today. They're looking at how can they keep the level of flexibility and agility in their workforce that they didn't have at the outset that they really recognize as a limitation for them to be able to move different types of resources around to where the needs are. So we use our Avantas workforce optimization solutions to help them with that. And I would also say on the perm side, helping them backing with very high vacancy rates, a lot of our clients are seeing above 10% in their full-time clinical staff. And they don't have -- they're not resourced appropriately to help them bring that workforce back on mass. So how can they be more agile and effective in backfilling some of those permanent roles as well? So we're really helping them end-to-end on all of their strategies. But we certainly see the partnership and the reliance on travel nurses, local nurses, flex nurses to continue in the future as well.

Okay. That's fair enough. And based on that, I'm just curious what your own internal hiring plans are for this year? And in which areas do you think you might be adding?

We are hiring significant resources right now, as you can imagine. Some of it is temporary in nature to help support some of the projects we have going on. We've talked about the vaccine administration support work that we're doing in California. And we expect actually that there will be more opportunities and more projects going forward. But those are admittedly a little shorter term, probably most of them will kind of occur this year. And then we've been adding across really almost all of our businesses because we are seeing growth in pretty much all of our businesses. And so we want to make sure that we're adding resources. We have, I think, 10% more recruiters or more. And then we're continuing to add on top of that. So it's a time when we're adding resources in anticipation of the underlying business continuing to grow. We know the first quarter is a bit of an anomaly with the surge in COVID cases and kind of all that ensued with that. But we also see the underlying business continuing to rebound and come back and there's no reason it shouldn't. And if anything, nurse travelers on assignment, as an example, volumes should continue to grow. So we need to be continuing to add resources. Now earlier, Landry mentioned the investments that we're making in digital. And I will say a lot of the automation that we added over the last year has been very beneficial to create efficiency for us. And not only has it created cost savings and speed and more reliability. It's also fueled our desire to accelerate our investments and do more, which is why our CapEx that you see is a bit higher than usual, and we're glad to spend that money because we're getting some really nice benefits out of it. If anything at our size and scale and in our leadership position, we need to be really advancing our digital and analytical capabilities for us but really for the benefit of our clients, our clinicians and even the industry. And so we're doing a lot of that, which will also help ensure that when we're hiring, it's not just to move data around, it's really more to add value.

Your next question comes from the line of Tobey Sommer with Truist Securities.

This is Jasper Bibb on for Toby. I wanted to ask, how you would assess your performance with MSP accounts this past year? And could you update us on account retention and what the pipeline looks like there? Thanks.

I know Kelly is thrilled to tell you about that. So I'm going to hand it over to her.

Thanks, Jasper. And -- well, first, as we reflect on this past year, very strong performance. We've been sharing, I think, with you throughout the last few quarters as demand became so high, we really prioritized and focused on our most strategic accounts and of course, supporting the rest of the industry to the extent we could with other solutions as well. So we ended up as we look at the year. We were up about 20% over prior year in both gross spend as well as direct revenue from our MSP clients. I would say, for the most part, our relationships really strengthened throughout the year. And one evidence of that is we actually had a fair amount of large renewals in 2020. We were able to successfully renew '20 accounts out of the '21 that were up from last year. And then coming into next year, we have much less of our revenue up for renewal, about 50% less in 2021. But we're on pace to continue those relationships. And the other, I think, really bright spot for us is in those renewals, we're also seeing a level of extensions into different service lines and also longer-term contracts as our clients and us, are both committed to those longer-term strategic partnerships. So we're really encouraged and really grateful for the relationship that we have with our clients throughout the year. They had to pivot and adjust with us so that we could collectively be successful in getting them the resources that they need. We have a healthy pipeline. I will say a lot of -- while we had actually probably our strongest sales year last year in 2020. We are close to about $500 million in gross spend that we brought under contract. Some of that was through expansions but also about two-third of that was from new business, and we did in the back half of the year, have to do a fair amount of that through technology client-led solutions. This year, now we're starting to see much more engagement around AMN-led managed services programs. We have a very healthy funnel. And I would say we're much stronger engagement now as they've started to be able to engage and think about their future needs. So I would say, we're in a very strong position around our existing clients and pretty bullish on our ability to grow in this environment as well.

And then on the M&A front, there were some deals in the news this month. As leverage comes down, would you consider adding scale in nursing or locums? Or is that not as attractive to these valuations?

Yes. Jasper, our priorities are to continue to add things that will help us be a better toll talent solution partner for our clients. So at the top of that list are probably tech-enabled workforce solutions that help us to create efficiency and in some cases, enable virtual care. Stratus was a fantastic example where the team had taken a traditional kind of on-premise or maybe over-the-phone workforce solution and created a video solution that really adds so much more value and a better experience for all. So those types of things will certainly be towards the top of our list. We could add on to existing tech enabled solutions. The language interpretation industry is pretty fragmented still, even though we're the leader in virtual language interpretation. There's opportunities to do other tuck-in acquisitions. Maureen and the Stratus team had actually done that before. They joined AMN and have a great track record there. So, we'd be very confident in doing that. There are other tech capabilities that might enable us to extend what we're doing into Home Health, as an example, which we think is a really important market. It's important that we support the patient and clients where care is shifting and whether that be virtual and telehealth or home care or just helping our existing acute care clients to be more efficient in how they use the workforce, we want to do that. So again, tech-enabled at the top, I would say second would be adding on to existing areas where we believe there's a lot of growth opportunity, and maybe we don't have as much scale as we would like. Nice example of that would be our schools related business. Our schools team is doing a phenomenal job right now. And there, again, we have a wonderful virtual capability through our Televate platform. And yet, the schools part of the industry is still pretty fragmented. And so, we could increase our footprint and continue to build that business by additional acquisitions. So that's just one example, but there are others throughout the Company. So hopefully, that's helpful.

Your next question comes from the line of Brian Tanquilut with Jefferies.

Congratulations, obviously, strong year. I guess my first question, Susan, just to follow-up on that point you made in Stratus, obviously, really strong results out of those guys. Is there anything you can share with us in terms of what's driving that? I mean, are there new contract wins that you can point to? And maybe taking the opposite side of that, I mean, how much more market share do you think realistically is there for Stratus to take over with low-hanging fruit versus having to take from existing providers and competitors?

Thanks for the question, Brian, and it is all of our lucky day because we have Maureen Huber here, who is the expert in not only Stratus but language interpretation. So I'm going to let her take that question.

Thank you, Susan. And that's a very generous complement seems as I struggle with the English language at times. And I'm always honored and humbled to represent the language services team and organization. And the U.S. medical interpreting market is a $1.6 billion industry. And that comes in the form of on-site interpreting as well as over the phone and video interpretation. Video interpretation, only approximately half of the hospitals in the U.S. have made a video-based decision. Most rely heavily on their staff interpreters or over the phone. And over the phone, as we know, most communication, 93% of communication is nonverbal. So the preferred modality, especially around patient safety and improved outcomes is being able to be present for the provider and the patient visually. So there's a lot of opportunity there for video, especially as the on-site interpretation for patient safety as well as the safety of the interpreters and our providers really was reduced during COVID period. And with our tech-enabled services, we actually doubled the number of call centers where we could enable the hospital systems own staff to provide services. So we are working in partnership with our current clients to explore better opportunities for filling the gap and the needs that on-site interpreting either through video or other tech-enabled services with our in-person application. So to answer your question, what's the opportunity in the market share? The LEP population continues to grow in the United States, and it's outpacing other areas. It's pretty significant. Part of that will come from the conversion of only the phone to video and others will come from the continued on-site interpreting and removing that from a patient safety perspective.

Maureen, I know another great thing, the team has really made advancement in is integrating our language interpretation services into other telehealth platforms in the ability to support acute care facilities but also into other telehealth providers, and we've really just scratched the surface in that. I think we've got 25 to 30 platforms that we've integrated in. And so there's a lot of opportunity as telehealth in general grows. If you have a telehealth encounter, you need an interpreter there. And most telehealth companies or technology providers aren't going to provide that network of 3,000-plus language interpreters. And so we are a wonderful plug-in to services that are already or going to be launched?

No, I appreciate that. And then I guess, just back on the nursing side, I mean, a lot of questions today have been asked on the demand side. But I think in the past, we've talked about how supply has been the bigger constraint. So -- and I guess the fact that you guys have invested a lot in recruitment and technology. But as premium pay starts to come down, how are you guys thinking about the willingness of nurses who are currently employed full-time to take brakes and take some of these ad-hoc post things with you guys or with other staffers?

Yes, Brian, I'm sure there will be some element of the clinicians that have decided to join in the COVID fight that will go back into permanent roles. But many of them will now have their eyes opened to the travel industry. Actually just talked with a nurse like that a couple of weeks ago, who said, I never thought about traveling, but COVID pulled me into the industry. And now I see all the great benefits. And so I'm going to spend the next year traveling, and this is something that is typical. Once someone gets introduced, to the industry, they don't usually just take one assignment. And again, the rates might cause some to go back into other roles but some will say, no. This is a career choice that I want to make for some period of time. And so that's a really positive thing for our industry overall, it will keep more of these new candidates and kind of new starts that we talked about within the industry for some period of time. And Landry, I don't know if there's anything else you want to add to that?

No, I think you covered it. I don't really have a whole lot more to add from the clinician side. If I was going to make one more point, it's that our clients also like this flexibility of being able to bring clinicians on in a temporary capacity. So, we're hearing that from them that it's -- if you went back five years ago, it was -- I want to try to minimize the amount of contractors or temporary labor. And right now, the conversations are more about how do I have this flexible staffing model for the future?

Got you. And then last question for me really quickly. You obviously touched on vaccinations. In what role or what are the -- which clients are you touching on the vaccination side? Will this be the retail pharmacies? Will we look at the drive-thrust? And then what are kind of like the economics? Or how should we be thinking about that opportunity?

Sure. And certainly, for our clients, our health care clients, we're supporting them. In fact, we might have had staff on-premise that was previously assisting with COVID testing, and now they've shifted to vaccine administration. And that will probably ramp up over time as more vaccine becomes available. But even beyond that, probably obvious and traditional way of staffing with our existing clients. My team's done a phenomenal job of partnering with clients and other organizations to build a multidisciplinary sort of program so that we can help staff mass vaccination sites. I'm going to ask Kelly to give you a little more insight on that because her team's really led the charge on that, and we've had some great success just in the last couple of months. But really, we're just at the beginning, I think, of what the need is going to be. So Kelly, you want to take that?

Yes. Just to give a little bit more color on that. And I think Susan is right, I think we've had the opportunity to help several of our clients with more clinic-like vaccine capabilities. But we've also been able to really scale up to help in what we're calling some these mass vaccination sites and we're partnering currently with one client to operationalize these. And that multidisciplinary nature is really critical because the nature of these sites required both clinical and nonclinical staff, different levels of licensure to manage the different parts of the vaccine, management and administration, and we were able to tap into all of our resources truly across AMN to staff these appropriately in just a matter of weeks. And we've also been able to underlie those solutions with our technology using our VMS technology, using our scheduling optimization technology to support that as well. So we do know that we are very capable of standing up these sites in a matter of weeks. We're kind of at the mercy, like our clients and other organizations right now, around the supply of vaccines. But we see as that supply ramps up. We're in several conversations with other health systems as well as potentially some state or governmental programs that are going to do these across the nation. So it could be very significant in the next couple of quarters, or it could be a little bit more moderate type of volume remains to be seen, but we are absolutely ready and had great success being able to do it thus far.

Your next question comes from the line of Mark Marcon with Baird.

I was wondering if you could talk a little bit about the Tech and Workforce Solutions. You've, obviously, had very strong organic growth there. Wondering if you can segment that between the flow-through coming through MSP and VMS versus more of the monthly client adds? And then the second question is, how do we think about Tech and Workforce Solutions on a go-forward basis beyond the first quarter? Would you expect that to continue to increase sequentially throughout the year?

So I'll have Maureen pick that up, since a lot of the discussion is around Stratus and VMS and to some degree, Avantas, which all fall within her purview. And certainly, we've had some great growth across really all of those businesses, but in particular, Stratus and VMS. So Maureen, you want to take that and talk about where that growth is coming from both existing clients as well as some of the new clients that we've been able to add through our MSP contracts?

I'm actually going to take that Susan, it's Kelly. As we look at the whole segment, we go back to the first part of the question, which was how much of that is driven by the MSP and kind of COVID related volume. The business that really has impacted there the most is VMS. So, we'll see the same kinds of trends in VMS and both volume and bill rates that we're seeing in our Nurse and Allied division and expect that to kind of moderate throughout the year. Although as we look at our new clients and a new business that got on last year in VMS. About two-thirds of that was COVID related, but we expect another one-third of that to maintain a kind of normal business, if you will. Our other business of Stratus, in particular, we expect to see continued growth throughout the year. Maureen mentioned a lot of the dynamics there, the ability to win new business. We continue to both bring Stratus into our AMN clients as well as have other organic growth through a more robust sales support network are enabling them with. So we're expecting to see a steady increase of Stratus. And then the others like our outsourced solutions and Avantas, which have been -- Avantas has been very steady throughout the year. We'll see some moderate growth from them as more and more clients are engaging us in both our consulting and our technology solutions. And the outsourced business has been lumpy, we have -- that has been buoyed by contact tracing program. But we are -- and our core RPO business was a little bit softer, but we're starting to see that pick up, as I mentioned, with the higher vacancy rates and hospitals really needing additional resources and their talent acquisition functions to backfill those. We are engaged with a lot of our strategic customers around helping them in that regard. So probably the biggest one that is tied to kind of the volatility, if you will, around the contingent staffing is on the VMS side. All the others are pretty steady eddy.

And so when we factor in the VMS relative to the growth in the others, do you think that we would end up seeing sequential growth in Q2 for Tech and Workforce Solutions and going forward? Because it does sound like things are going pretty well there.

Yes, I'll grab that. So I think as Kelly said, VMS will have some of the same headwinds that nursing is having as rates come down, they will experience some decline in their revenues. So you'll have a decline in VMS revenue, but it will be offset by increases in Stratus and Avantas through the year. So probably a step down in Q2, and then from there, kind of a more stable positive growth trajectory, but we'll be feeling that headwind of the VMS decline probably in this -- mostly the second quarter, but maybe going into the third quarter as well. And so, it will be either kind of steady after the second quarter or maybe a little bit of growth.

Got it. And then with regards to just the bill rates for the first quarter, how much are the bill rates up in terms of the projection on Nurse and Allied relative to kind of a normal environment?

This is Brian. Well, we said, we're not in a normal environment, so it's a very different metric. As I mentioned, we kind of did the math. In the fourth quarter, we'd said our nurse bill rate up a little over 20% in the fourth quarter and then seeing about a 20% sequential increase into the first quarter. So, we're up 40% or so, on a year-over-year basis in the Q1 guide. So that is far from normal. And as we mentioned, we think that will start to come down as we get into the second quarter and into the third quarter as well. And we, honestly, hope that, that happens because that means that we're continuing to see progress with vaccinations and hospitalizations move down and moving more towards a more normalized environment, and we think that will be healthy for our clients, of course, and for our industry overall as well. So, this is something we knew we'd see an increase. It's obviously a bit more than we anticipated, but also have been very consistent in articulating that we expect that to come down and we'd like to see that happen as well. And when that does, we'll still continue to expect to see the volume recovery that we've already had over the last couple of quarters as well. Allied has seen some pricing growth as well, far less than what we've had in nursing. And so, there's a little bit of a tick up in the fourth and first quarter. We do expect that to also come down a bit as you see some of the respiratory therapy and a couple of other specialties that have seen a little bit greater increase, but the order of magnitude is not nearly significant as on nursing.

Great. And then on the vaccine administration to -- it doesn't sound like you're baking in a lot for that, but it could end up being significant. Is that the correct interpretation?

Yes. Yes. Exactly, it's a little early at this point. We've got several different things in the pipeline but until we have kind of contract signed to really understand the scope of the services and the duration is very difficult for us to predict anything at this point.

Great. And Brian, can you just give us a feel for CapEx for the full year, what your expectation is in cash flow? And how we should think about that?

Yes. Sure. As Susan mentioned, we are investing right now, and we think it's really critical. The fourth quarter CapEx was about $10 million. I think that's a good baseline to start one -- start with for 2021, and I think it will be at least a level through the year. And it really, it's been with the pandemic, there's a lot of talk about just a pull forward of digital and telemedicine. And so, we have had a really good strategy around our digital mobile initiatives analytics. We've talked about that over the last year. We really have focused on even accelerating some of those investments as we need to really match where our clients are heading. And as they're moving those ways more quickly, we, as the leader of the industry, need to do the same thing as well. So there's a lot of benefits for clients for the health care professionals that we put to work every day. There's sufficiency as well, but we really strongly believe in these initiatives. And feel we've got the best team ever with folks like Maureen and our IT team to really drive these initiatives, so we're really positive on that. So you should assume somewhere in the probably $40 million to $45 million range for the year.

And our final question comes from Sam Kusswurm with William Blair.

I just have a quick one relating to telehealth, actually, and some of the comments made on tech-enabled acquisitions. I guess I'm wondering, in the large space that virtual health is, where you see yourselves able to develop internal capabilities versus where you think you would need to look outside from these solutions? And how are you making that decision between the two different approaches?

Yes, great question. So I'll start with a couple of points and then have Maureen kind of add on. So, first, when you think about telehealth, there's more than just the tech-enabled offerings that we have to play in. So we are a staffing provider for telehealth. You think about our schools business, we have over about 300 therapists that are working on our Televate telehealth platform, about half of them are ours, half of them are therapists that are working for the schools. And we have a lot of opportunity to expand that both for therapists but also in adding in school psychologists and other capabilities. So we can't forget about the opportunity that we have to combine our staffing and recruitment capabilities with the telehealth platforms that we already have. And then Maureen, I'll have you talk about the expansion opportunities for Stratus and where we go with that as well as Televate and then maybe kind of other opportunities and some other categories that we might not necessarily extent Televate and Stratus into.

Thank you, Susan. And so as we think about the hospital at home and the initiatives around hostile without valves and supporting our acute care clients today. How we can leverage our existing technology and capabilities to provide tech-enabled services across that care continuum. So, as we continue to support those initiatives, that takes us from the acute care setting and into the home. And as we heard Landry say earlier, many of nurses are looking for some type of change in the next 12 months. And so a lot of that will be driven towards these virtual care environments and also following that care continuum. So we'll continue to support those initiatives also with our language services. As we thought about the integrations and the points we integrate with more than two dozen existing telehealth platforms, but the number of clients that we've implemented with has increased tenfold in the last 12 months. So we're continuing to see that expansion, especially from the acute care providers and the adoption of virtual care. And I think we'll continue to see those initiatives grow as they're reevaluating their virtual care strategy.

Okay. Hopefully, that answers your question. And I do believe that was our last question. So, we want to thank you all for joining us today on this earnings call, and we look forward to updating you on our next call.

And that does conclude today's call. Thank you for your participation. You may now disconnect.