AMN projects Q4 revenue above $720M at midpoint as labor disruption drives near-term growth

Earnings Call Insights: AMN Healthcare Services, Inc. (AMN) Q3 2025

MANAGEMENT VIEW

* Caroline Grace, President and CEO, reported "third quarter revenue of $634 million was $9 million above the high end of our guidance range." She noted that adjusted EBITDA for the third quarter was $57.5 million, or 9.1% of revenue, 90 basis points above guidance. Grace highlighted, "staffing demand recovered moderately in the third quarter, extension rates rebounded, and Travel Nurse winter orders came in slightly favorable to prior year." She indicated permanent hiring activity in the healthcare sector fell notably, suggesting employers are seeking more flexibility. Grace stated, "we expect bill rates for Nurse and Allied Staffing to be up modestly year-over-year in the fourth quarter for the first time in 3 years."
* Grace announced, "our consolidated outlook for the fourth quarter calls for revenue a little better than $720 million at the midpoint or just over $620 million, excluding Labor Disruption revenue," and guided to "about $100 million in Labor Disruption revenue" for Q4. She said, "all 3 business segments beat consensus revenue estimates in the third quarter, led by $12 million upside in Nurse and Allied Solutions," with part of the beat due to higher-than-expected Labor Disruption revenue.
* She pointed out, "at the end of the third quarter, we had a 0 balance on our revolving line of credit, down from $210 million at the end of 2024," highlighting financial flexibility after a recent debt refinancing.
* Grace emphasized, "our aggressive plan to improve technology, processes and customer focus paid off with a 700 basis point year-over-year improvement in client satisfaction."
* Brian Scott, CFO & COO, stated, "third quarter consolidated revenue was $634 million, above the high end of our guidance range, driven by outperformance in our Nurse and Allied and Physician and Leadership segments." He added, "consolidated gross margin for the third quarter was 29.1% at the high end of our guidance range."

OUTLOOK

* Management projects "consolidated revenue to be in the range of $715 million to $730 million" for Q4, including approximately $100 million related to Labor Disruption support.
* Gross margin is projected to be "between 25.5% and 26%. Excluding the impact of Labor Disruption revenue, our gross margin would be higher by about 100 basis points."
* Reported SG&A expenses are expected to be "approximately 20% to 20.5% of revenue and include about $5 million of additional costs in the quarter to support Labor Disruption activity."
* Operating margin is forecast at "0.2% to 0.8% and adjusted EBITDA margin is expected to be 6.8% to 7.3%."
* Grace stated, "we expect improvement in international staffing revenue and other high-margin services to lift our consolidated gross margin in 2026."

FINANCIAL RESULTS

* Third quarter consolidated revenue was $634 million, down 8% year-over-year and 4% sequentially.
* Consolidated gross margin for the third quarter was 29.1%, a decline of 190 basis points year-over-year and 70 basis points sequentially.
* Nurse and Allied revenue was $361 million, down 9% from the prior year; Travel Nurse revenue was $196 million, a decrease of 20% year-over-year.
* Allied revenue in the quarter was $142 million, up 1% year-over-year.
* Technology and Workforce Solutions revenue for the third quarter was $95 million, down 12% year-over-year, impacted by the sale of Smart Square.
* Consolidated operating income of $48 million included a $39 million gain on the sale of Smart Square.
* Third quarter adjusted EBITDA was $58 million, down 22% year-over-year.
* Third quarter net income was $29 million, compared with a net loss of $116 million in the prior quarter.
* Adjusted earnings per share for the quarter was $0.39 compared with $0.61 in the prior year period and $0.30 in the prior quarter.

Q&A

* Trevor Romeo, William Blair: Asked about the drivers for sequential gross margin changes and underlying EBITDA margin guidance. Brian Scott explained, "there's a couple of factors driving that. One is just revenue mix between the segments...to a lesser degree, you have some impact from just seasonality." Scott added, "when you have something of that magnitude, there's a fair amount of what we're billing for that are really just pass-through costs for things like transportation."
* Romeo followed up on volume growth, and Grace responded, "we're really looking at it as being both"—seasonal and underlying demand improvement. She noted, "from that low point in demand [mid-May], we're up about 50% in demand."
* Kevin Fischbeck, BofA Securities: Asked about margin outlook across business lines. Grace said, "we expect International Nurse to be up from a revenue standpoint, 20-plus percent, and that's a higher-margin business."
* Tobey Sommer, Truist: Inquired about federal healthcare funding cuts and contingent labor demand. Grace replied, "the more prevalent sentiment...is they're still expecting to have low single-digit increases in patient utilization."
* Mark Marcon, Baird: Questioned rural hospital demand. Grace said, "we haven't seen any discernible trends or differences in rural hospitals," but "international nurses are typically a very good solution."

SENTIMENT ANALYSIS

* Analysts pressed for clarity on gross margin drivers and the sustainability of margin improvements, showing a slightly cautious tone, especially around the impact of Labor Disruption and future margin floors.
* Management maintained a confident tone in prepared remarks but adopted a more nuanced, detailed approach during Q&A, acknowledging challenges while emphasizing underlying growth drivers and stabilization. Direct phrases from Scott such as "no problem" and Grace's repeated references to data-driven improvements reflected steady confidence.
* Compared to the previous quarter, management's tone shifted from a defensive explanation of softness and uncertainty to a more constructive, forward-looking stance, citing specific growth drivers and operational improvements.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for Q4 revenue is significantly higher than Q3 actuals, boosted by anticipated Labor Disruption revenue.
* Management emphasized stabilization and modest improvement in bill rates, compared to the previous quarter's focus on softness and policy-driven caution.
* Gross margin guidance reflects near-term compression due to revenue mix and Labor Disruption, compared to sequential improvement cited in Q2.
* Analysts in both quarters focused on demand trends, margin sustainability, and competitive dynamics, but the current quarter included more detailed discussions on underlying business improvement and margin floors.
* The prior quarter highlighted uncertainty and cost control, while the current quarter spotlights improvement in client satisfaction and operational execution.

RISKS AND CONCERNS

* Management noted "consolidated gross margin has declined this year caused by an unfavorable revenue mix shift and competitive pressures in Staffing and Language services."
* Price compression in Language Services and the impact of technology evolution were flagged, with Grace indicating, "we have seen growth moderate throughout the year...offset by pricing pressure."
* Seasonality and the unpredictable timing of Labor Disruption events pose risks to revenue and margin consistency.
* Management acknowledged ongoing competitive challenges but observed, "we're not seeing competitors be irrational."

FINAL TAKEAWAY

Management signaled stabilization and early signs of growth across core staffing businesses, supported by improving client satisfaction and financial flexibility. While near-term results are influenced by outsized Labor Disruption events and margin pressure from revenue mix, AMN expects a return to revenue and margin improvements in 2026, driven by international nurse growth, technology advances, and expanding total talent solutions for healthcare clients.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/amn/earnings/transcripts]

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