Good morning ladies and gentlemen, and welcome to the Cross Country Healthcare Earnings Conference Call for the Fourth Quarter and Full-Year of 2016. This call is being simultaneously webcast live. A replay of this call will also be available until March 16, 2017, and can be accessed either on the Company’s website or by dialing 800-391-9854 for domestic calls and 402-220-9828 for international calls and by entering the passcode 2017. I will now turn the call over to Bill Burns, Cross Country Healthcare’s Chief Financial Officer. Please go ahead, sir.

Thank you. Good morning, everyone. Before I begin, I’d like to just share how thrilled I’m to be back from a medical leave and I’d like to thank Chris Pizzi for filling in as our acting CFO while I was out. The call will include a discussion of our fourth quarter and full-year results for 2016 as discussion in our press release and will also include a discussion of our financial outlook for the first quarter of 2017. 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 within these documents. The Company undertakes no obligation to update any of the 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 substitute for or superior to financial measures calculated in accordance with US 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 we may refer to pro-forma information on this call giving effect to acquisitions and divestitures as though the transaction had occurred at the start of the periods impacted. As a reminder, we divested our education seminar business during the third quarter of 2015 and completed the acquisition of Mediscan in October of 2015. With that I will now turn the call over to our CEO, Bill Grubbs.

Thank you Bill, thank you everyone for joining us this morning. Although there were some unusual aspects to our numbers this quarter, we had solid revenue growth ahead of where we thought we would be and with momentum that we believe will support continued strong growth in 2017. We've been working diligently to get at or above the market growth and we are now a trend that we believe achieves that. However, there is some noise in our fourth quarter numbers and in our guidance for the first quarter that needs clarification. So let me start there. In the fourth quarter, we had higher workers' compensation and health insurance experience of about $2 million that we do not expect to carry on into 2017. We're also guiding our first quarter to a lower gross margin due to increase in direct operating costs of between $2 million and $3 million and should normalize by the second quarter. And lastly, in our first quarter guidance, there is an increase in SG&A, we’ll then do investments required to ensure we are able to take advantage of the strong markets and in particular the new business wins which are well above what we had anticipated. We’ll address these in more detail as we go through the numbers. Starting with revenue, I'm pleased that at this point in our turnaround, revenue trends are accelerating. The market remains strong, the economy is stable and we continue to execute on our strategy. Our biggest challenge is how we keep up with the demand we're generating as a result of a significant number of new business wins. We won 24 new managed service programs, MSPs in 2016 and another ten year-to-date in 2017 that’s 34 programs in the last 14 months. Given this our focus on investments are…

Thanks Bill, as Bill mentioned, we're generally pleased with our overall performance this year having met or exceeded many of the goals we set for ourselves. Revenue grew nearly 9% for the full-year and accelerated in the fourth quarter grown by 15%. Our full-year adjusted EBITDA was $44.7 million representing 19% increase over the prior year as we continue to get operating leverage in our business while funding many of the investments necessary for sustained long term growth. Throughout the year we saw continued strengthen in our largest business Nurse and Allied Staffing fueled through both price and volume as well as the addition of Mediscan business. Overall demand for our services remain strong and we saw year-over-year price improvements in all of our segments. Turning to the quarter, total revenue was $222.5 million, up 15% from the prior year and up 4% sequentially. The year-over-year increase was driven predominantly by growth in Nurse and Allied Staffing as well as the impact from the Mediscan acquisition. Gross profit margin for the quarter was 25.9%, down 20 basis points in the prior year and down 120 basis points sequentially. While pricing remains strong for the quarter, gross margin was weaker than expected predominately due to a decline in margins for our Nurse and Allied segment. As Bill mentioned, we had a higher than anticipated level of both workers' comp and health insurance which resulted in approximately $2 million of additional costs. These charges were related to our fourth quarter experience and are not necessarily indicative of an ongoing trend in our business. Excluding the effect of the health and workers' comp costs, our underlying consolidated gross margins would have been approximately 90 basis points higher in the quarter. I think it's also worth mentioning that while these costs spiked in the…

[Operator Instructions] And our first question is from the line of Randle Reece from Avondale Partners. Your line is now open.

You're talking about double-digit growth in Nurse and Allied this year, I was wondering if you could give us a little more guidance about expectations for how you expect volume growth to trend versus pricing improvement, just the unit revenue per...

That’s a good question because although we had about 20% of our growth came from volume this quarter and 80% from price, we think that will slowly shift through the year. By the end of ’17, we think it will be more in the 50/50 range. So growing at mid-single digit volume and mid-single digit pricing by say the end of the third into the fourth quarter. So that will shift slightly as we go through the year and lap some of the bigger price orders that we have last year.

I wanted to get a little more understanding on the $2 million to $3 million increase in compensation that you guided to in the first quarter. Are you planning to recapture that in the pricing adjustment, is that just a lag time with some of these customers. How should we expect gross margin to improve through the rest of the year?

No it's not the pricing adjustments, we do this actually quite often, but we've never talked about it because it's never shown up in our numbers to any point where we needed to identify it. So quite often when we have big projects or new MSP implementations, we do change the compensation packages so that we can ramp up quickly and make sure that we fulfill the needs of our customers. The reason is we need to talk about at this time is that we're just talking about bigger numbers now, not only bigger numbers of transactions that we don't normally have with a bunch of new wins that we don't normally have, but also we had a higher rate of extensions on these assignments because people are hanging on to their healthcare professionals a little bit longer. That's why this is kind of carrying on into Q1 with a bigger impact than normal. But this is a normal practice that we have to ramp up new programs and big projects. But we do believe it will normalize maybe not 100% in Q2, it's probably going to be completely normalized by the month of May, so we may have a little bit of a drag in April. But generally it will be back to normal fill pace spreads that we were experiencing before we saw a large number of wins.

And finally from me, but the remarkable increase in your MSP wins, over time do you expect this to have any kind of favorable impact on either gross margin or operating leverage or other dynamics as opposed to just share top line growth?

I think it will help us to leverage the adjusted EBITDA bottom line, this is more efficient business for us and we have better relationships and MSPs [indiscernible] for us and more profitable than some of our other business. To give you a little bit of the scale, we came into ’16 probably managing a little over $400 million of spend under management and we ended ’16 with a run rate of managing over $500 million, I'm looking at Bill to make sure that I don’t get the numbers wrong. The new wins, the 34 new wins in the last 14 months have an opportunity of $150 million to $200 million of additional spend on the management. So it is a big deal for us, it will help the volume side of it, but we definitely get the leverage with this kind of volume, this is profitable business for us.

Thank you. And our next question is from the line of Jeff Silber from BMO Capital Markets. Your line is now open.

Just wanted to follow up on those MSP wins, again was a very impressive number. Why do you think you've got this huge growth, is it that the market has expanded more dramatically than you thought, are you gaining more share than you thought or is a combination of both?

I think we are gaining more share than we have in the past and part of that is where we are in our turnaround, where we've hired new people, upgraded staff, improved our processes and so some of it is just kind of where we are in our around. But I think we're seeing some pretty big opportunities at MSPs, I think with the continued strong demand in the market and with the shortage of healthcare professionals, our customers are finding that they can't keep up with this on their own and they're going through to companies like ours in order to help them manage it more efficiently because they're just not getting their needs met. So we do believe that MSPs will continue to be a growth opportunity and as you know from following the general staffing business were many years you know this came late into the healthcare staffing compared to other segments of staffing. And I think it's now kind of coming into its own.

Just shifting gears a bit, with the talk about some potential changes to the Affordable Care Act. I'm just wondering in your discussions with clients, are you seeing any type of changes in attitude, are they planning anything different if we do get some changes in that regulation?

We have a lot of discussions with our customers about the Affordable Care Act and what they see or don't see. We have seen a little bit of slowdown let’s take a wait and see attitude. We did have a little bit of slowdown in some customers, nothing that changed our overall demand; we still have close to record number of orders. But some of them are taking a little bit of a wait and see attitude to see what the current administration may do. But almost everyone though feels somewhat comforted by what the administration has had so far which is we're going to keep pretty existing conditions, we're going to allow children to stay on because their parents [indiscernible] that we're not going to yank insurance away from the 20 million people, we’re going to find a viable alternative for those people. And so, I don't think anybody see that is going to be a big change, certainly not in the short run, ’17 is kind of big, the open enrollment period has passed already and the people that have insurance have insurance. I'm not even sure that they believe it will make significant changes by ’18. Almost everybody is thinking that as long as these people stay insured, their level of demand for healthcare in the hospitals and their healthcare facilities well shouldn't fall off from where it is today.

And then just a couple of quick numbers questions, for your first quarter adjusted EPS guidance, I’m wondering what you’re assuming for tax as in share count?

Share count is roughly 32.5 million shares what we would normally be using. From our taxes, again we don’t have a rage usually to publish our dollar amount, so it’s between $800,000 and $1 million is what we usually see per quarter on tax expense. And then of course, there's the other items below adjusted EBITDA like stock compensation, depreciation and amortization and there’s a couple of other small line items, but those don't vary materially from quarter-to-quarter. So what you've seen in the last several quarters would be expected to occur again in Q1.

Okay. Great. And what should we be building in for capital expenditures for the year. You mentioned the ramp up a little bit in the first half of the year?

It will continue to be elevated in the first half, because of the build out we have still going on at our corporate offices. They're winding down now. We have a little bit of a carryover into 2017. Historically, we’ve spent between $2 million and $3 million. I would say we’re probably looking at somewhere between $3 million and $4 million for the full year.

Yeah. A little bit higher in the first half.

Right. A little bit higher than normal run rate in the first half.

Thank you. And our next question is from the line of Bill Sutherland from The Benchmark Company. Your line is now open.

Thank you. Good morning, guys. On the MSP spend, Bill, you were saying that you had like 500 on a run rate basis at the end of this year, I’m sorry, end of ’16?

Yeah. That we managed. It’s not been the revenue number in our numbers.

Oh, I know. Right. So, what's the fill rate then for you guys like?

I think at the end of Q3, we were filling about 52% of it, I think we’re at about 56% now.

Okay. So if that’s around between high-50s, low-60s?

It was high-80s. It’s been going down during these high demand areas as we get more strategic about where we make our placements and then where we’re going. But we’ve had a conscious effort based on these wins and the ramp-ups to try to start filling a little bit more of it ourselves. So that’s where we’ve gone from 52 to the 56, which I think is a good thing. So the fact that we've gone from managing 400 million at the beginning of the year to 500 million at the end of the year and we have another $150 million to $200 million of opportunity and we’re filling more of a higher percent of it kind of supports our growth comments for the next year.

And the ten wins year-to-date represent, that’s a total potential spend of 150 million to 200 million, is that?

No, no. That’s the total 34 that we won, all in last 14 months.

Oh, I got it. Okay. Got it.

And we’ve won 10, hundred – that would be a lot of.

And then want to understand to make sure I heard clearly what you guys said about the Q2 gross margin, how to think about it?

Yeah. I mean, I’ll let Bill talk about it, but we expect to get back to $2 million to $3 million of extra compensation costs, should be mostly normalized in Q2. We get back most, if not all of the payroll tax reset as well. So –

Yeah. You’re looking at probably between, I would say, at the gross margin level, 60 to 70 basis points for payroll tax that will likely, let’s call it 50 to 60 because it’s wanting to trade out throughout the quarter, 50 to 60 basis point improvement just in payroll tax reset and then the wind down of the $2 million to $3 million of incremental costs, assuming the low end and assuming some drag into Q2, you’re looking at about another 90 to 100 basis point improvement.

Okay. The payroll tax reset is just an annual thing, right. I’m kind of --

Yeah. That’s right.

Yeah. I wasn’t sure why that was getting called out. Okay. And I’ll stay here. Oh, Mediscan growth is so impressive, Bill. Have you -- how should we think about that going forward?

I'm excited about it. We're actually talking to them about how we think that even higher number, we're looking at some, because they’re having such good success, we want to build on that success. We’ve got a good management team there, we do think that the public and the charter schools across the nation are under-served in the market and we think we can take a market share there. So we're looking at some small bolt-on acquisitions, we're looking at some organic step-up for growth, but just to temper that a little bit, everything tends to work in the school year. So all the plans we’re making now will start in September of this year and we’d see the growth in the fourth quarter. You wouldn’t see anything incremental till then. But we’re a big believer in it and this is a business that we can continue to grow and take advantage of some opportunities in the marketplace.

That's good enough for modeling that the Mediscan has a step function in the fourth quarter as far as growth. That’s it from me. Thanks guys.

Thank you. And our next question is from the line of Tobey Sommer from SunTrust Robinson Humphrey. Your line is now open.

Good morning. This is Kwan Kim on for Tobey. Thank you for taking my questions. Regarding capital deployments, aside from increasing investments in staff, how would you rank your priorities and utilization of cash in 2017? Thank you.

I think we obviously have a very strong balance sheet at this point in time. We are active in the market and we generate $30 million of cash. So if we continue on this trajectory, we will be in a very strong cash position with hardly any debt because the convertible notes will likely go away in July of ’17. I think we’re certainly looking at the top -- besides the organic side, M&A or acquisitions are a primary focus for us. We're actively looking at any number of targets in every given quarter. We are selective about the companies we want to pursue. We look for companies that fit our growth strategy have the right elements that we think can fit really well with us, either they’re growing up geographically, they're growing at to continued specialties or they have a higher margin profile than the rest of our business. That would be the predominant use of it. We don't have much debt right now, so there's not -- I can't say I would actually go back and early pay off term loans. We are paying off the term loan at about $0.5 million a quarter. And then, I don’t know, we will need to fund working capital if we contribute to grow at high single digits if not getting into double digits. We seem to be growing up without cash drops as well. But acquisitions is really what we would like to do. We’ve had good success with our acquisitions before, looking at Mediscan that we acquired 15 months ago, growing at 28% year-over-year right now. I think it’s a good sign that we could continue to expand in that area. So I think acquisitions is probably the number one use of it for us.

Thank you. And on physician staffing specifically, are you anticipating the first half of 2017 to be a period of turnaround in that area and do you see any signs that you will accelerate that turnaround. Thank you.

Yeah. So it was down 20% for the second quarter of last year. Year-over-year, it was down 19% in the third quarter. Now, it’s down 9% in the fourth quarter. We expect it to get less worse in the first and the second quarter, but it will still have a declining revenue in the first half of the year. We do think we can get it back to low single digit growth in the second half of the year, maybe in Q3, maybe little late for Q4, but it'll continue to show a slow improvement going forward. It’s on a good trajectory right now. But they’re not 100% there yet.

Thank you. Our next question is from the line of A.J. Rice from U.B.S. Your line is now open.

Hello, everybody. Just I know you've been asked about this a couple of times, but I just want to make sure I understand. So of the MSP wins, the 34 over the last 15 months or so, are those mostly new MSP contracts or health system decided they need to go to MSPs that they haven't historically or is there the competitive landscape changing in some dynamic where people that already have MSPs are deciding to change?

The vast majority were new. Certainly more than half of them were new. I don't know the exact percentage. I know one of the largest one was one that switched. Quite a few of these are new. I'm looking at a list now. Quite a few of them are new. If I had to guess, I’d say, I don't know, 60%, 70% of them are new, the rest of them were taken from the competition.

Okay. All right. I know a few quarters ago, we talked about the need to step up maybe a few quarters ago, investment in your online recruiting and some of your other social media, use of social media to recruit. Can you just give us an update on that and how are you seeing, is that having an impact on your access to new applicants and so forth, can you give us a flavor for that?

Yeah. It's actually worked very well. We started that in June. We said it would take 90 to 120 days to really kind of work its way through the system before you started to see revenue from it. We do believe that that’s a big factor in the growth that we saw in Q4 was the fact that we are attracting more healthcare professionals and we feel good about that and the reason -- so we stepped up that and we've been hiring recruiters as well as you know. You’ve got to have, don’t use attract in Canada, we don't have the people to process them. The reason why we're, I know you didn’t ask this question, but it’s kind of a follow-on is the reason why we need to step it up again now is that, but of the 34 wins in the last 14 months, 19 of them came in the fourth quarter and the first quarter. So more than half of the wins came in the last two quarters. So we haven't even started to implement and ramp those up yet, which is why we're stepping up the level of investment or we just won't be able to handle the extra volume. But that’s an initiative for digital media, search engine optimization, driving more candidates into the system has worked very well for us.

Okay. And on these new MSPs and just in the tone of business in general is I think there's been some discussion about alternate side and other non-traditional venues seeing some route there, can you update us on whether that’s at all a factor in any of this?

It’s not so much of the MSP wins, but that’s actually a good story that I probably should highlight it. We talked a long time about why we wanted a national footprint of branches around the country, because we’ve seen the jobs grow in healthcare. It's three to one in the ambulatory and outpatient facilities compared to the acute care environmental, and that means that where the jobs are and that’s where we should be able to service. Our branch business which serve us as the local marketplace grew at, what Bill, pretty big?

Yeah. Hang on a second. The branch was up, yeah, as substantial, over 20% growth.

Yeah. So our branch business is growing at over 20% right now and that’s -- we think that's a very positive thing for us. And that’s -- some of that may be helping to support a local MSP, but most of it is local market business in these ambulatory and outpatient facilities where we’re seeing some growth opportunities.

Okay. And just a last question on the locums business, you say you’ve guided moving in a better trajectory now. What sort of needs to be done to get it? Is it the underlying market needs to show some improved strength or is there certain specialties that you need to ramp up your recruiting and what -- give us a little flavor for, I know you’ve made management changes there, but what is sort of left to be done that needs to be done?

Yes. It’s actually fairly simple. We need to make management changes. We had upgrade some of the staff. We had to improve our operating model. All those things are in place. It really is down for the fact that we had to replace some of the producers, the sales people and recruiters and they’re just not up to speed yet. So it's really about people getting up to speed and coming into their own and that's the really last thing to be done.

Thank you. And our next question is from the line of Brooks O'Neil from Lake Street Capital Markets. Your line is now open.

Good morning. I have a couple of questions. I unfortunately want to focus on couple of things I don’t understand. One is in Q4, it appears that you had these elevated healthcare workers comp expenses; it doesn't appear they were in the models. So I'm just trying to understand exactly what that is and what drove it and maybe if you can help us understand why it was unexpected?

Yes. So we obviously accrue the expected workers compensation cost in every given quarter and every single month at a rate that historically has been experienced rate. And by the way, coming out of Q4, we don't see our workers comp experiences any different than what we’ve historically accrued to. We did have and I think it was specifically four large lands for workers' comp in Q4 that pretty much drove the big variance.

It was a handful of claims that have come through, four or five claims that have come through in the quarter for worker's comp that were a little bit higher than the norm.

So what we look for is, if you see a change in workers comps, it's a general change. Are we doing riskier business, are we doing something that will create an ongoing need to accrue at a different level and now that we're a couple of months into ’17, we don't see any change from our normal workers comp accrual. This looks like it was already specific to Q4.

Okay. That’s good. Secondly, I'm trying to understand in Q1, obviously, a pretty big impact relative to what people expected in terms of your expense level and the resulting impact on margin and EPS. So I'm trying to understand why that is a one-time type phenomena given the ongoing positive trends in the business and probably more importantly for me, I just want to understand exactly what those expenses are and how they work? It sounded like it's kind of a normal course of business type thing, but it seems elevated here in Q1.

No. It’s definitely elevated and part of it is the reason I just talked about on the previous question about how many MSPs we won in Q4 and Q1. So part of this is just an increase in headcount in order to deal with the number of wins we've had and taken advantage of that. I think the big picture is that we’re seeing good momentum that we've been working hard to get to for a long period of time and we had to make some business decisions that unfortunately don’t conform because there is a three month window that public companies have to live in, but are the right decisions to make for the company long term. And I have to make those decisions and I don't want to, three months from now, I would say, yeah, [indiscernible] because we didn’t make the right level of investment that we needed to. So I’ve made the decision that we needed to do this, we needed to ramp up with the extra comp packages in Q4 that tails into Q1, we needed to hire additional staff and we needed to continue a higher level of investment in digital media and searches and optimization and social media and so on and so forth. Those are the right things to do. It will mean we'll have a slightly depressed margin for a quarter, maybe, a little bit into Q2, but in the end, we will end up with -- we’ll get back on track to growing our adjusted EBITDA to 8% and we'll do it on a much higher revenue numbers. So it's the right decision to make. I know it looks lumpy, but it’s -- I had to make that decision.

Sure. So again, I'm just trying to understand here, so the likely pace here is it’s not like you’ve made one-time cash payments to people, the expenses are going to continue on beyond Q1, but the revenue is likely to kick in beyond Q1, so that the margin is better. Is that right?

Kind of. The compensation costs will actually normalize by Q2, so that will not carry on. It will come back to the levels that they were at before. So that kind of goes away after Q1. The investments will stay and yes, we expect to grow into those investments, so that the bottom line comes back to a level that we want it to be at. But the compensation costs that we changed to ramp up certain large projects and large customers, that will right size it up. We already see that in the numbers, we see all the new places have been weak and all the placements that are happening now are for April and going forward and those are back to normalized rates for us. So we’re comfortable that we will be back to normalized rates in Q2.

So those are like recruiting bonuses or something you pay to track people to fill those spots?

Yeah. I mean there were certain things we did based on geography, a certain skill set where we upped the pay rate. We may have -- or a geography where housing was getting more expensive and may have increased the housing allowance and in certain locations. It was a total pay package, the multiple variables in there. So it's not particularly a bonus or a cash payment or housing or M&I, it's a combination of all of those things.

Sure. I don’t mean to be dense, Bill and I apologize, but I'm just trying to understand how that type of an expense is one-time, is going to fade away after Q1.

Well, because all these assignments are 13 week assignments and when they change out, we put the people back on to a more normalized pay package. So we have that ability to make our new placements at the rates that we want and renewals at the rates that we want. So we have control over getting those back to where we want them to be.

Sure. Okay. That's helpful. So the last thing I wanted to ask about, if I'm hearing you correctly, there's a nice acceleration in momentum in your business growth, is accelerating the things you’ve been doing to strengthen the operating performance of the company, are paying dividends. Fourth quarter revenue up 15%, I think your guidance for 2017, well, it was obviously more generalized, but it’s for a -- I guess a mid to high single digit growth rate. So I am trying to understand what I'm missing in the picture of powerful and consistent ongoing tailwinds, but you think revenue growth is going to be a bit slower as the year goes along. Help me understand that.

Yeah. There's a couple of things in there. So although we expect nurse and allied to grow double digits in ’17, it still will be pulled down a little bit by our physician staffing, either still declining in the first half or not growing at the same level. So it's impressive the overall company growth and I know we had that in Q4 as well. But Q4 was boosted a little bit by the project revenue that we talked about in Q3 that carried over into Q4 as well that will not be recurring going forward. So that also has a little bit of an effect of not staying at the 15% level. But we also get beat up a lot when we don’t hit our revenue numbers and although, I think we’re being cautious to say that company will grow at 7% to 8% for all of ’17, do I think there is an upside to that, I do think there is an upside to that, but I’m not going to go stick my neck out and tell you that we’re going to grow double digits for the whole company next year.

Thank you. And our next question is from the line of Mitra Ramgopal from Sidoti & Company. Your line is now open.

Yes. Hi. Just a couple of questions. First, just wondering if the IT spend that you started in 2016, if that’s behind you now?

Yes. That has ended. We have a new CIO now, you may have noticed and we still have a big IT project. I don't believe we will start it up this year. We will start the planning process this year and most likely start that project in 2018 and we’ll let everybody know what the capital and/or P&L impact of that is as we do the exploration and do the upfront work, but I think otherwise, we're back to kind of normal.

Yeah. And the money we spent in the first half of ’16 on that project is, while it was all expensed, because at that point in time, we were looking at a cloud based solution. A lot of expenses were really in the assessment to documentation, looking at the existing system, all of that still has value to us as we go forward. So I don’t expect a recurrence of those types of expenses. And as Bill mentioned, we’ll know as we go further into this, which solution we ultimately pick, how we choose the contract for and whether the ongoing cost will be capital in nature or more cloud based and therefore in operating expense, but right now, there is no project spend, no significant project spend. There is always ongoing IT projects in the business, a combination of CapEx and OpEx, but nothing significant to call out for Q1 of ’17.

Thanks. And then just quickly on the RPO business you acquired back in December, if you can give a sense as to how that's come along, if any, you got any competition in the fourth quarter and as you look potentially to make some acquisitions. Are there any areas you really feel you need to be in, in terms of driving increased growth?

Yeah. So the RPO business has done well for us. As I mentioned, it’s given us the structure to be able to deal with some of the demand we have. They have won a couple of projects already early in this year that we’re pleased to see. Bu it’s still very small and will take a little while to ramp up. So I think as a structure to get to be a little bit bigger, we will start to identify some of the particulars around that, but it really was about getting the infrastructure in place. From an acquisition standpoint, recently, I was looking at two businesses, which as I mentioned, ours is growing very rapidly and we like to add on to that. And so we're looking on there. Allied is still -- our local Allied business is still fairly small for us. I wouldn't mind adding onto local Allied business in the local marketplaces as well. And because of all of the wins and the demand that we have today, originally, I wasn’t looking at travel nursing operations, but I could use some extra capacity right now that takes a long time to grow organically. So we would look at some travel nursing operations as well.

Thanks. That’s very helpful. And finally on the MSP, obviously you’ve won a lot of business over the last year plus and I was wondering if there's anything different you're doing that’s resulted in that or is this just a question of timing and things coming together?

I think a lot of it is timing. We upgraded management a couple years ago. As I mentioned, I promoted the head of workforce solutions to a full President title reporting to me now. The team has done a great job in getting out there. We’ve done a good job at our existing MSPs that act as references for us and I think the market is moving in this direction because of the dynamics of high demand and shortage of supply. So I do think we're taking market share now. The market probably took share from us for a couple of years before this and I think we are just kind of coming into our own. And I think it's more timing than anything else.

Thank you. And our last question is from the line of Randle Reece from Avondale Partners. Your line is now open.

Hi. I had just one follow-up. Was there a significant difference in gross margin between nurse and allied and physician in the fourth quarter? Was all of the hit you were talking about from insurance concentrated in one segment over the other?

Yeah. Both health and workers’ comp affected the nurse and allied segment. The physician side is all 10.99, so we don’t have health insurance costs or workers' compensation costs there. But physicians was a couple of hundred basis points of it. It was the back quarter. There will be probably more in line as we normalize in future quarters. Okay. Thank you everyone for joining us this morning. I look forward to updating you with our first quarter results in May. Thanks again. Bye.

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