Good morning, ladies and gentlemen, and welcome to the Cross Country Healthcare’s Conference Call for the Second Quarter of 2016. This call is being simultaneously webcast live. A replay of this call will also be available until August 18, 2016, and can be accessed either on the company’s website or by dialing 800-395-7443 for domestic calls and 203-369-3271 for international calls and by entering the pass-code 2016. I will now turn the call over to Bill Burns, Cross Country Healthcare’s Chief Financial Officer. Please go ahead, sir.

Thank you, and good morning, everyone. With me today is our CEO, Bill Grubbs. This call will include a discussion of second quarter results for 2016 as disclosed in our press release and will also include a discussion of our financial outlook for the third quarter and full-year 2016. After our prepared remarks, you will have an opportunity to ask questions. Our press release is available on our website at www.crosscountryhealthcare.com. Before we begin, we need to remind you that certain statements made on this call may constitute forward-looking statements. As noted in our press release, forward-looking statements can vary materially from actual results and are subject to known and unknown risks, uncertainties, and other factors, including those contained in the company’s 2015 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as well as in other filings with the SEC. I would encourage all of you to review the risk factors listed in these documents. The company undertakes no obligation to update any of its forward-looking statements. Also, comments during this teleconference reference non-GAAP financial measures, such as adjusted EBITDA or adjusted earnings per share. Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for or superior to financial measures calculated in accordance with U.S. GAAP. More information related to these non-GAAP financial measures is contained in our press release. In order to facilitate a better understanding of the underlying trends in our business, we will refer to pro forma information on this call, giving effect to acquisitions and divestitures as though the transactions had occurred at the start of the periods impacted. As a reminder, we divested our education and seminar business during the third quarter of 2015 and completed the acquisition of Mediscan in October 2015. With that, I’ll now turn the call over to our CEO, Bill Grubbs.

Thank you, Bill. Thank you everyone for joining us this morning. Let me start with a quick overview of the numbers. Although, we had slightly lower revenue growth than anticipated, we exceeded our guidance on gross profit margin, adjusted EBITDA margin, and adjusted EPS. The softer revenue was mostly driven by a bigger decline in our Physician Staffing segment and slightly slower growth in nurse and allied than we had anticipated. But generally, we had a very good quarter, and I’m happy with the results. I’ll come back to the revenue topic in a little bit, because I believe, we will be able to improve our growth rates fairly soon. But our investments in new recruiters and candidate attraction, we should start to see our nurse and allied revenue grow faster starting in the fourth quarter. But first, about a month ago, I passed my three-year anniversary as CEO of Cross Country Healthcare. Each year at this point, I give a kind of state of the union on the business and I would like to do that again this year. Over the past three years, we’ve made significant progress in turning this company around. It has not been a straight line from where we started, which was a company that had revenue of $440 million, was not growing, and was making less than 1% adjusted EBITDA to where we are today with an annual run rate of $800 million and 5.5% adjusted EBITDA. We are ahead of the original plan we had developed for our Board of Directors when I arrived. Last quarter, I made a statement that I felt as good about where we were as a company than at anytime since I’ve been here. I want to reiterate that again by saying that, I feel even more positive…

Thanks, Bill and hello, again, everyone. As Bill mentioned, our second quarter continued to benefit from the strong pricing we have seen at the start of the year, resulting in gross margin, adjusted EBITDA, and adjusted EPS being at or above the upper end of our guidance range. Total revenue, however, was below our expectations as Physician Staffing continued to underperform and our Nurse and Allied business did not get the volume growth we’d expected. However, we continue to be encouraged by the level of demand in our largest segment, as well as positive indications that are initiatives to attract more healthcare professionals are gaining traction. Turning to the financial results. Total revenue was $199.4 million, up 4% from the prior year and up 1% sequentially. The year-over-year increase was driven entirely by growth in Nurse and Allied Staffing, as well as the impact from Mediscan acquisition. Mediscan has continued to perform well with revenue growing by 19% over the prior year. Both our Physician Staffing and search businesses experienced the year-over-year decline of roughly 20%. Gross profit margin for the quarter was 27.5%, up 240 basis points from the prior year and 150 basis points sequentially. Margins expanded in every segment driven primarily by pricing and growth in workforce solutions. Moving down the income statement, SG&A for the quarter was $44.7 million, or 22% of revenue, representing a year-over-year increase of 9%, and a sequential increase of 4%. Throughout the quarter, we continue to make investments in our business adding additional recruiters, attracting more candidates, and continuing to build on our workforce solutions. Sequentially, we significantly increased our spend on candidate attraction to grow our pool of qualified candidates. The initiatives gain traction throughout the quarter and should be contributing to revenue growth later this year. Additionally, we continue…

Thank you. We will now begin a question-and-answer session. [Operator Instructions] One moment please for the first question. Our first question is from Randy Reece of Avondale Partners. Your line is open.

Good morning.

Hey, Randy. Good morning, Randy.

You mentioned disruption due to changes in the locum tenants business. And I was wondering, if you could just give us more of an idea of what went on there, and what if anything changed from the last time we spoke till now in that business?

Yes, that – adding more color to that, I think is important. When the new President came on, we determined fairly quickly that we didn’t need significant changes to the operation as far as what our go-to-market strategy was, what our internal structure was, the compensation plans we had put in place, the way we operate, all of that was in line. But what the new President found was that, there really was a lack of accountability from an activity standpoint and from a productivity standpoint. And so this is all about leadership and execution. And the new President has been putting in new guidelines for key performance indicators for the team. There are some people that don’t like having those things put in place. And so there are many people that are completely on board and are pleased to have stronger leadership in a direction that they’re going and understanding what they need to do to be successful. There are others that don’t. And so, although, we’re not changing how we run the business, changing the level of accountability and driving productivity has made some disruptions, and they’ve had to change out some people and [hedges to] [ph] build that back up again.

And when you look at the competition in the environment for people in locum tenants, have you made any specific strategic changes to try to improve the growth of your contractor database?

So in locum tenens, the biggest change we’re making, I think, is to our sales efforts. We think our recruiting team is in good shape. We are adding new people, some more junior that we’re training, others that come from the competition that have some more experience. The two initiatives we have are to have a more accountable sales organization. They just didn’t have the targets and quotas needed to drive the orders. The other thing is, during the transition from our old model to the new model over the last 18 months, we lost some of our smaller customers. We did the analysis and we’re billing about a 100 less customers a month than we did 18 months ago. And they’re all small local customers that didn’t get transitioned over to the new salesperson in the new environment. So we have new more sales focused individuals out there driving orders and we’re trying to rejuvenate these customers that we used to do business with that we don’t do business with anymore. And we are starting to see some successes. But it is, again, I don’t expect to see any of that show up in the revenue until next year.

Okay. Now finally, when you revised the revenue guidance, can you give us a feel for what you expect the revenue split to be between nurse and allied and sufficient for the full-year in your revised guidance?

Yes, I think Bill said that in…

I mean, most of the growth through the back-half is going to continue to come from nurse and allied, which now is 86% of our business. As I mentioned on the call in the prepared remarks, we do continue to expect physician staffing to see a year-over-year decline. So nurse and allied, most of the growth will come out of nurse and allied. The legacy business is expected in the mid single digits and it should accelerate as we get into the fourth quarter. Mediscan is continuing to drive double-digit growth through third quarter and is expected to do so again in the fourth quarter. Our search business at this point it’s more of a – we’re looking at it sequentially, and I think we’ll continue to see that growing each quarter throughout the year when exactly Cross is back to year-over-year growth and probably be towards the latter part of the year. So it’s really, I think, the nurse and allied is going to be fueling most of the top line growth.

All right. Thank you very much.

Thank you. Our next question is from Mitra Ramgopal of Sidoti & Company. Your line is open.

Yes. Hi, good morning. First, could you talk a little more in terms of how far you’re long in the parts of bringing on more recruiters on the Nurse and Allied segment?

Yes, we’ve done a pretty good job there. We’re certainly up double-digits on a year-over-year basis through the second quarter. We don’t really disclose what the actual numbers are. But we feel very good that we’ve now – that we’ve been doing this maybe 18 months of adding new recruiters after we started to see the increase in orders at a sustainable level by the third quarter of 2014. So we believe we added a decent level of recruiter. We’re going to continue to add, because the market – we’re still growing into the market demand. But we’re at a sufficient level now that that we think we can handle the additional candidate flow that is required to get us to a level of growth that we believe we should be adding.

Thanks. And I know you mentioned you’re certainly seeing a very favorable pricing. I don’t know if you could add a little more color in terms of the environment or are you seeing any pushback now in terms of clients or is it still an environment we should expect to continue to be good for pricing over the next 12 to 24 months?

Yes, I mean really most of the pricing increases we’re seeing this year were implemented in Q3 and Q4 of last year. We’ll talk about this before. It takes a little while for these things to rotate through the assignments and to take hold with new assignments and new contract renewals and so on so forth. So most of these efforts were – efforts that happened in 2015 that are just coming into the numbers this year, that’s why we believe that there’s some sustainability of these through the next few quarters, because it’s already built into the kind of run rates that we’re experiencing today. We always get pushback on price increases. Some of it is driven by us being proactive in markets where we think that it warrants a price increase in order for us to be competitive and service our customers correctly, quite often it comes from the customer, where they call us up and say, I’m not getting my submittals, I’m not getting my job still, what do I have to do? And we could come back with market information that usually means that there are competing hospital down the road, increased our rates by $1 or $2 and if they want to be competitive, they’ve got to keep up with the Joneses. And so we always get pushback, hospitals under a lot of pressure to save money. And that that has allowed us to start changing the conversation with our customers and bringing our workforce solutions to the tables. We have several ways to help our customers to save money. I don’t think we’re going to save the money on contingent labor. The market demand is too high and the supply is too short. But we do change that conversation. I think that’s part of the reason why we’re having so much success in our workforce solutions is we’ve changed the conversation to the market for contingent labor is what it is, let us help you save money in other ways.

Thanks, but finally I was wondering if I can get an update, I might have missed it if you mentioned it, in terms of the $4 million to $5 million being spent on upgrading the IT platform at the end of first-half? How far along are we there?

Sure, Mitra. This is Bill Burns. As we talked about earlier in the – after we released Q1, we were spending at our clip of about $1 million a quarter that trajectory continued through the second quarter, but was really part tied to the first phase, I did mentioned this earlier. We’ve now completed the first phase, which was a large assessment as to the new technologies, comparisons on features, functions, and gaps for our proxies, things that it would take et cetera that’s wrapped up. We’ve also now are in the process of negotiating and we expect to sign a perpetual license agreement. If you recall and comments I’ve made previously, we had thought that the – would be a subscription cloud-based arrangement, which wouldn’t allow for development costs to be capitalized. We now from this point forward expect that the cost will be able to be capitalized. So those investments will shift actually from operating expense and become more of a capital expense for the business. We’re not – at this point it’s still a long-term project. It’s still a 24 to 18 – sorry 12 to 18-month project from this point forward. So the total cost of the project is something that will be looking as we go forward. But it’s going to be I think originally I said $4 million to $6 million in total investments that will probably be the development costs we expect and then there is – there will be a license fees that we’ll pay on top of that, so not a big shift in the numbers just really where it’s geography on the P&L.

But I think it’s important also to note that although some of that original investment we’ve talked about that was going to hit the P&L will now be capitalized. We are certainly more than offsetting that that change by additional investments in candidate attraction and workforce solutions. So you’re not going to see a benefit of the capitalization of the IT investments, because we were actually spending that money on other investments and that definitely more than offsets the – at the capitalization.

That’s a very good point. We are now – I’m looking at the investments from both a non-recurring and a recurring perspective. They will continue to be some non-recurring investments in the business, not all of the technology that we’re implementing is going to move to a perpetual license. So there will be continued costs. But we – as Bill mentioned, we do have a higher footprint of recurring investments that we expect to make in the business that are made in advance of the revenue generation that we reckon them.

It will be fine, once the revenue catches up with it, right now it’s a leading cost.

Okay. Thank you very much.

Thank you. Our next question is from Bill Sutherland of Emerging Growth Equities. Your line is open.

Thanks. Good morning. Would you – Bill Grubbs, would you say the churn that’s been triggered in the locum business with the accountability et cetera is largely behind you?

Yes. That’s – it’s hard to answer a little bit, because yes, I think the actual shock to the team and the fallout of people that on Board and those are all on Board, I think a lot of that is kind of settled in. But that doesn’t mean that he is now clicking on all cylinders and he has got all the resources he needs and he has got revenue back on track again. So there will be a little bit of a lag as his key performance indicators and his activity levels and the changes he is making and how we measure people and drive performance. It still takes a quarter or two to come into play. But yes, I think that everybody has gotten their head around the fact that there’s a new world of accountability that didn’t exist before, and that has kind of settled down somewhat.

So basically, we may see a little bit of the pick in Q4, but really meaningful, it’s going to be next year?

I think it’s all about next year. At this point, I’m trying to give the new President enough time to, without undue pressure on him to perform better financially, because rather he make the right changes and get the right people and have the right operating metrics and place than to worry about whether I make $2 million or $3 million more in revenue this year.

Just curious, do you guys focus on all specialties in locum, or I mean, certainly others some are growing much faster than others?

Yes, probably not all specialties we have. We have 17 specialties that we’ve kind of consolidated down into a lower number. Our biggest ones are emergency medicine hospitalists and primary care.

Those are good ones, aren’t they?

They’re good ones absolutely. Unfortunately, we’re not participating in the market, but the good news is, we have great capabilities in those three areas that should be growing. And as the new President gets the people doing their activities, they need to do, I feel good that that those are three good areas that we should be going better than they are today.

I’m not sure it was you or Bill Burns talked about the July trend. Would you mind, I didn’t quite get that, if you don’t?

Just – I guess, the point we’re trying to make is, we’ve continued to have positive cash flow generations through the month of July. And in fact, the point I was really bringing up is that, we now have over $20 million in – of cash available to us. So it’s just showing that we, in the month of July alone, we’ve doubled the cash from where we ended June.

Yes. So if you looked at our net debt today, we have the $40 million term loan, $25 million converts at par, and then over $20 million of cash. So our net debt is very low. Our real leverage ratio was – it’s kind of 1:1 for a trailing 12 months perspective.

And no borrowings under the revolver?

Yes, that’s one you talk about. The other one we talked about in July was the candidate.

Right, right, I was curious about that.

So we have seen, I’m not going to give the exact numbers, but a significant improvement in candidate flow in June over the first five months of the year and even a bigger increase in July. We have set a specific target that we believe we needed to get to in order to start driving double-digit growth for our Nurse and Allied segment. We’re exceeding – we exceeded that for both June and July. So I feel really good about it. If we can keep our conversion rates of apps – applications to – that convert to placements, which I believe will hold up. This is a really good trend for us.

And then last, Bill Grubbs, on the optimum workforce solutions that you said two, al right, at least the two that you’ve talked about prior was like 500 or so slots?

No, there are two smaller ones, and the bigger one that was originally anticipated to go live on July 1. Part of it will come on, on a smaller scale in September. And I think the bigger piece of it will either be November or it will get pushed into next year. There’s just been a delay. That particular hospital system as we’ve seen with some of the results, I have various issues that they’re dealing with and they want to deal with some of those issues before they give us with the projects, so the bigger 500 person, I don’t know if it’s 500, between 300 and 400, I think it was – is pushed out a little bit. And so we’ll come on I think a little bit earlier, but a lot of it’s going to be pushed out a little bit later.

And so you’re still obviously seeing a lot of interest, even though you don’t have a big referenceable account yet, but OWS is still attracting lot of interest?

Yes, it has multiple benefits for the customers. It takes away some of the non-core competencies around logistics with people when hiring and orienting, and credentialing these paraprofessional skills. But there’s also a cost savings initiative for them, and I think that’s what we’re getting the significant interest, since they can’t save money on contingent labor right now, so they’re looking at other way. So we did hire, as I mentioned a couple of senior executives that come from this kind of outsourcing world and they’re out there now kind of talking to our customer base. We may win a couple more this year. They take a month or six weeks to get implemented. I’m not sure it will take a huge effect in the second-half of the year, but I feel very positive going forward. This is going to be a good growth engine for us.

Okay. And then HCM in total with the MSPs et cetera, about where is as a percent of revenue at this point?

Let’s start with what the percent of revenues are, MSPs are, which actually has gone up from last quarter. So last quarter, we kind of have three metrics down. If you look at our total nurse and allied, it’s about 30%. Bill, you did hit the numbers…

Total nurse and allied is about 35% now, including the Mediscan business.

Up from last quarter, it was…

Up from 33% last quarter.

And of our total revenue?

And for total revenue, it’s now roughly 30% of total consolidated revenue versus 28.5% in Q1.

Yes, so within that workforce solutions, certainly our MSPs are growing significantly faster than our non-MSP customers. And as a result you’re seeing and show up as a higher percentage. That’s even with a lower fill rate that we used to have on our existing MSPs. We feel really good that MSPs will be a good growth engine for us. That only the existing ones have been growing quite a bit, but all these new ones that we won this year haven’t been implemented yet and that bodes well, hopefully going into Q4 and into next year as well.

Great, thanks for the color guys.

You’re welcome.

Thank you. Our next question is from Tobey Sommer of SunTrust. Your line is open.

Thanks. I’ve alluded kind of follow-up on that last question and maybe you can give us a flavor for the fill rates at MSPs, because if your volume is in fact down a little bit year-over-year, yet you’re increasing your exposure to fill rates, because MSPs are growing then kind of how is that getting achieved in maybe a little bit more color on the moving parts on that? Is that seeming tension between those two things? Thanks.

Yes, I think I get it. So yes, our revenue overall is going at MSPs, although our fill rate is down to about 60% now. So that means that our other revenue want to manage, but there is obviously going out significantly as well. All of that we feel good about it. But if MSPs are growing at that much, that means to run on MSP customers, it must be declining and there is something true to that. If we don’t have a preference, relationship with the customer, it is hard to service them in this environment and we certainly put a lot of our efforts into the MSP side of it. If I break it out a little bit, so our branches, which is a lot of it is predominantly non-MSP, actually grew at 8% year-over-year as I mentioned earlier. So we do have non-MSP business that’s growing as well. Mediscan is doesn’t participate in our MSPs and it grew up 19% year-over-year. So I guess yes, I mean the math says that our non-MSP customers are declining and it is harder and harder to service those customers in this kind of environment. Is that answers the question. And Bill, do you want to add anything?

Thank you. You did a better job answering and I did trying to spit it up. In terms of the recruiters, I’m curious you talk about having started to invest, I guess in earnest, a year or so ago. Demand really picked up with the end of 2014 in terms of orders and whatnot. Could you maybe talk to us about that and if you increase recruiters a year ago, I guess or accelerated the increase, have you had to – are you financing people, because without volume increases, they’re probably not earning a ton yet?

Yes. So the [indiscernible] that, so I did say over a year, but you’re right, it started about 18 months ago. As we saw the increases in 2014, we saw the real peak come at the end of Q3. And then when we saw that it was fairly sustainable, it really was about 18 months ago that we started to bring more recruiters on. But you’re right, we escalated that or increase to the level of recruiter – recruitments and about a year ago, a little over year ago. But it takes six to nine months for recruiter to get up to speed. And yes, there is this kind of chicken and an egg thing, which is they need to get up to speed and be functional before we turn this figure on and bring in more candidate flow. So yes we’ve been financing recruiters that are less productive than our average productivity historically and, but we had to get there again chicken and egg they can’t do one without the other. The worst thing I could do was to have increased my candidate flow and then not been able to place the people and not being able to get back to them that would ruin my reputation in the market. So yes, I have to do one before the other and we now feel that we’re at a point where we have enough resources that know what they’re doing, they’re up to speed that we can now invest in the candidate attraction piece of it. Now we may have not at that clear about the sequential way we do that, but that’s kind of the reality of it.

Okay, and then what’s your outlook for price in kind of the rate growth over the medium-term and you don’t need to provide a specific number, but sort of general color would be useful, because it is a very strong year-over-year growth in Q2 and wondering – I assume some of that was a little bit a catch-up to market? Thanks.

There was a little catch-up. As we mentioned, we got on it late, but that an extra we just paying off, again these were all the turnaround things we’ve been spending time on for the last few years that kind of come together, some of them are coming together or once some of them are facing over time. I think generally nurse and allied pricing will stay above 5% year-over-year price increases for the next few quarters. I don’t see that dropping below that nurse and allied, sorry travel nursing was almost 11%. Will it fall below 10%? There is a possibility, but I think it has some sustainability for the next few quarters as well. So I think we’re going to be pretty close to these. It may drop 100 or 150 basis points from where it is now, but I don’t think it’s going to drop much more than that. And if we can drive the volume that we think we can then this should grow faster than it has been for the last few quarters.

Do you feel like you’re at market now or are you still a little bit below?

At 7 over 7% for nurse and allied overall and 11% for travel nursing, yes, I think so.

Not in terms of growth rates, but in the dollars, which we’re not talking about are you at the bill rate dollar prices in the market?

Yes, I mean I’ll say that the interesting point someone made earlier was do we get a lot of pushback from clients? So we still have some of our larger clients where we’re still negotiating those price increases. So they have yet to materialize not in our numbers, but as those will come online as we start to lap tougher quarter. So I think Bill point about that the mid single-digit kind of price increases looking sustainable to space them what we can see, where we’re still working with client to get the price increases put into place. But on a blended average, I would say we’re pretty close to where we need to be.

Yes.

Okay. Thank you and then two last questions for me. You commented about workforce solutions couple times, but I don’t think I’ve heard you specify how big that business is at this point, and maybe, if you could comment on how big aspiration you like it to be?

Yes, it depends on whether you include all the MSP revenue into workforce solutions or just the kind of fees we get so.

You get them deferred in the fees.

Yes, so we get fees for our MSPs that we just – but our MSPs are growing and that’s fine. And I think that will end up continuing to grow as percentage of our overall revenue and as of our nurse and allied revenue. So I’m just going to remove that from the workforce solutions. So if you look at the other pieces of it optimal workable solutions is $20 million $30 million today. So I’d like that to be $100 million in the next few year. It’s a great value proposition for us and we think there’s some traction with our customers looking at it. Predictive analytics is still kind of in pilot mode and isn’t generating a lot of revenue right now. Our recruitment process outsourcing is, I don’t know, 300,000 to 500,000 a quarter maybe that’s only because I don’t have the infrastructure. I get to do more. I could win five of those a month if I had the infrastructure. So it’s again a chicken and an egg, I need to invest in the infrastructure. But I’d like that to be tens of millions of dollars in the next couple of years. And then the other one is our healthcare education services, which is mostly the charter school business. And that’s…

That’s probably on a run rate of about $16 million – $15 million, $16 million.

It’s $15 million, $4 million, $5 million a quarter, the most right now. I really want to expand that nationally, and I’d like to get that to $50 million or $100 million over the next couple years. So we think there’s some growth opportunities, at least, but they’re more medium to long-term than they are in the next few quarters.

Okay. And last question for me, you mentioned the net debt being very reasonable and perhaps even low on a long-term basis. Is this workforce solutions area, where you would prefer to deploy capital, or would – acquiring staffing business that has a well oiled recruiting engine be more beneficial to you at this stage?

Yes. I think we would like to do both. I have some acquisition goals that I would mind achieving on the workforce solutions side that could boost RPO or optimal workforce solutions or – and certainly on the education side. I would love to do an acquisition in any of those three areas. But I also would like to do some additional acquisitions on the staffing side. We have – we’re still under the scale from what I would like to be on, both allied overall and physician staffing, and there are several of our businesses built within our organization that have higher gross profit margin. So search would be an area I would look at local allied businesses over 30% gross profits. So there are some strategic areas on staffing that I wouldn’t mind boosting as well. So, look, we’ve got enough power. Our covenant says, we can get to 3.5 times leverage, we’re well below that today, and we’re in a good market condition. So we’re out there actively looking to see what’s available.

Last question for me, if I may seek one more in, some of the public hospital companies talked about slower admissions growth into Q, is anything like that evident in your order flow? Thanks.

Yes, I saw that as well. Although, I did see some of them also talk about strong outpace in services, which is a growing area for us. We have not seen any of that in our orders. In fact, I originally have said that we had passed our previous peak of nurse and allied orders in this quarter. And one of finest people went back and looked and actually those one week, like last year, it was a little bit higher. But we’re really at the all-time high of orders. We have not seen any drop off based on the numbers that we reported in the public hospital systems. We used to be almost 90% acute care hospital as a percent to our revenue. We’re now down to about 70%. So we certainly are growing and that business is growing. So it means that, we’re growing on non-acute care business faster than our acute care business and I like that. I like that diversification and I like that split, because that’s how healthcare is being delivered today. And I think with our brand infrastructure, we’re well-positioned to take advantage of that growth in ambulatory and outpatient. So that hasn’t bothered us a whole lot and we haven’t seen a drop of it in demand because of it.

Thank you very much.

Thank you. And our last question is from A.J. Rice of UBS. Your line is now open.

Yes. Hello, I make a couple of questions if I could, just trying to triangulate the comments on the recruiter additions over the last year, I – you made it for a while they ramp up in the timeframe you talked about six to nine months, and you’ve seen a little progress, it sounds like in latter or some progress in the last two months. Are you, if you think back to where you were thinking you’d be in the beginning of the year even as you’re starting to ramp this up, or would you say that the performance of those incremental recruiters is lagging what you thought, are you – are they sort of progressing as you thought, how – I’m not really sure I’m walking away with an understanding of whether they’re having the impact yet that you thought they were going to have?

Yes, so that’s a good question. So it’s a combination of them getting up to speed and being ready and a combination of the total number. And so, yes, we’re behind where we expected to be. I expected to pull the trigger on higher candidate attraction a little bit earlier in the year, which is why we had, in essence, implied a significantly higher revenue number for the second-half. But between the total number of recruiters and whether they were up to speed or not came in a little bit later than we had anticipated. So, again, as I mentioned there was no value in turn to speak it on for more candidates and increasing the number of applications we had, if I didn’t have sufficient or capable resources to process them. So, yes, we were a little bit behind the number and a little bit behind those that were coming up to speed. And so we didn’t turn that that on until the beginning of June, and that’s a couple of months later than we anticipated. So that couple of months of extra growth gets pushed into next year and we end up slightly slower growth than we had originally guided to.

Okay. And then when you think about the – what you’re going to do for candidate attraction. Is that similar to what you saw three, six months ago, or are you thinking about doing incremental things and I guess is there anyway to put a dollar amount on what you’re doing. It sounds like it’s mostly raising the company’s online profile, but I wonder if there were any other broader things you highlight there?

Yes, this is – there are several things that I’m not going to talk about all the particulars, because it’s a bit competitive. But I think the several aspects of it, there are quite a few things that we knew we needed to do that than we just delayed until we were ready for them. We are trying some new things that have come from the external consultants that we haven’t thought of before. Some of those are working, some of them aren’t. But we’re very pleased that we’re getting exposure to things that we haven’t thought of on our own. And the third one is, it is costing significantly more than we had anticipated. The market is so robust that there’s a lot of competition out there, and the cost of attracting candidates has certainly gone up year-over-year. So this is costing us more than we had originally anticipated. I’m okay with it, because the results are showing really, really good trends and revenue will catch up to these costs. But those are kind of the three things that we had – that we look at. Yes, we knew certain things we had to do. We were holding them off until we were ready, some new things we’re trying that are paying off and then it’s costing a little bit more than we had anticipated.

Okay, now you gave a number of metrics on pricing, but I’m just – I didn’t hear it, maybe I missed it. On the branching side, more of the per diem type of stuff, what is the price increase you’re seeing there? Is that similar to travel?

We were up 6.6% year-over-year in our branch pricing. That’s the combination of per diem and local allied.

Okay, okay. And then another definitional thing maybe you said, you got about a 60% fill rate in the MSPs. Is that your fill – you’re filling those positions or is that include your subcontracting to third parties to fill and I wondered how much are you actually going?

Our fill rate – our MSPs is almost 100%. It’s in the high 90s overall. It’s our…

Okay.

It’s about 60% of the business that’s available at the MSPs. So our overall spend under management is up quite a bit and the overall revenue we’re getting is up quite a bit, even though our percentage is gone down from what used to be in the high 80s to 60%.

I gotcha, okay. And then just last, Bill Burns, you mentioned the opportunity that potentially refinanced $25 million convert next year are becomes callable. You just out in the market getting a little bit of a sense of where the markets are if rates stay the same, I’m trying to understand, it’s $25 million note, would you end up having needing to refinance and in terms of capital or other debt and then what might get this savings opportunity beyond that at this point, anyway you can talk about that?

Absolutely, so if you think about those are convertible notes, and so there was a strike price on the shares of $7.10. So they’re well in the money. We would become callable and so we could choose to pay cash or we get choose to force the convert obviously with…

But we can choose off our cash.

But we can choose off our cash, right, which they would – I mean that’s the backup if the shares were trading below the strike, right.

Right, right.

The reality is to make sure that they will convert and they were to fixed rate of 8%. So the savings were straight 8% on the $25 million that you see, and it obviously cleans up a bit of the noise in the financials within better derivatives go away.

So the debt piece will go away, a couple million dollars of interest will go away and those converts are already not diluted share account anyway.

Yes.

And we sized the new facility with that in mind that the converse would go away not requiring any cash, but we have we feel we have enough liquidity and dry powder, as I mentioned we have no borrowings into the $100 million revolver. One thing we didn’t mentioned on this call, but it’s in our other disclosures is that we do have an accordion feature built into the step that structures as well for an additional $50 million. So that would require going back to the lenders, but at least it’s there. So we have – we feel we’re very well financed right now.

Okay, great. Thanks a lot.

Okay, thanks AJ.

Thanks everyone for joining us this morning. And I look forward to updating you with our third quarter results in August. Thank you.

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