UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~2021


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 001-16753

AMN HEALTHCARE SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		06-1500476
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

8840 Cypress Waters Boulevard	Suite 300
Dallas	Texas	75019
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (866) 871-8519

____________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	AMN	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes ☐ No x

As of ~~November~~August 4, ~~2020,~~2021, there were ~~47,030,832~~47,262,560 shares of common stock, $0.01 par value, outstanding.

TABLE OF CONTENTS


Item	Item		Page	Item		Page

		PART I - FINANCIAL INFORMATION			PART I - FINANCIAL INFORMATION

1.	1.	Condensed Consolidated Financial Statements (unaudited):	1	1.	Condensed Consolidated Financial Statements (unaudited):	1
		Condensed Consolidated Balance Sheets, As of September 30, 2020 and December 31, 2019	1		Condensed Consolidated Balance Sheets, As of June 30, 2021 and December 31, 2020	1
		Condensed Consolidated Statements of Comprehensive Income, For the Three and Nine Months Ended September 30, 2020 and 2019	2		Condensed Consolidated Statements of Comprehensive Income, For the Three and Six Months Ended June 30, 2021 and 2020	2
		Condensed Consolidated Statements of Stockholders’ Equity, For the Nine Months Ended September 30, 2020 and 2019	3		Condensed Consolidated Statements of Stockholders’ Equity, For the Six Months Ended June 30, 2021 and 2020	3
		Condensed Consolidated Statements of Cash Flows, For the Nine Months Ended September 30, 2020 and 2019	5		Condensed Consolidated Statements of Cash Flows, For the Six Months Ended June 30, 2021 and 2020	4
		Notes to Unaudited Condensed Consolidated Financial Statements	7		Notes to Unaudited Condensed Consolidated Financial Statements	6
2.	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
3.	3.	Quantitative and Qualitative Disclosures about Market Risk	33	3.	Quantitative and Qualitative Disclosures about Market Risk	26
4.	4.	Controls and Procedures	34	4.	Controls and Procedures	26

		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION

1.	1.	Legal Proceedings	35	1.	Legal Proceedings	27
1A.	1A.	Risk Factors	35	1A.	Risk Factors	27
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	36	2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
3.	3.	Defaults Upon Senior Securities	36	3.	Defaults Upon Senior Securities	27
4.	4.	Mine Safety Disclosures	36	4.	Mine Safety Disclosures	27
5.	5.	Other Information	36	5.	Other Information	27
6.	6.	Exhibits	37	6.	Exhibits	28
		Signatures	38		Signatures	29

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except par value)


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	58,419	$	82,985	Cash and cash equivalents	$	139,494	$	29,213
Accounts receivable, net of allowances of $8,511 and $3,332 at September 30, 2020 and December 31, 2019, respectively		352,746		352,685
Accounts receivable, net of allowances of $5,513 and $7,043 at June 30, 2021 and December 31, 2020, respectively						Accounts receivable, net of allowances of $5,513 and $7,043 at June 30, 2021 and December 31, 2020, respectively	468,299		376,099
Accounts receivable, subcontractor	Accounts receivable, subcontractor	56,300		72,714		Accounts receivable, subcontractor	130,409		73,985
Prepaid expenses	Prepaid expenses	15,647		11,669		Prepaid expenses	17,861		13,629
Other current assets	Other current assets	30,591		40,446		Other current assets	34,040		40,809
Total current assets	Total current assets	513,703		560,499		Total current assets	790,103		533,735
Restricted cash, cash equivalents and investments	Restricted cash, cash equivalents and investments	60,898		62,170		Restricted cash, cash equivalents and investments	63,441		61,347
Fixed assets, net of accumulated depreciation of $153,390 and $132,900 at September 30, 2020 and December 31, 2019, respectively		112,752		104,832
Fixed assets, net of accumulated depreciation of $179,799 and $161,752 at June 30, 2021 and December 31, 2020, respectively						Fixed assets, net of accumulated depreciation of $179,799 and $161,752 at June 30, 2021 and December 31, 2020, respectively	121,487		116,174
Operating lease right-of-use assets	Operating lease right-of-use assets	81,082		89,866		Operating lease right-of-use assets	72,641		77,735
Other assets	Other assets	125,831		120,254		Other assets	145,463		135,120
Goodwill	Goodwill	869,941		595,551		Goodwill	892,874		864,485
Intangible assets, net of accumulated amortization of $199,488 and $151,417 at September 30, 2020 and December 31, 2019, respectively		580,658		398,474
Intangible assets, net of accumulated amortization of $246,242 and $215,234 at June 30, 2021 and December 31, 2020, respectively						Intangible assets, net of accumulated amortization of $246,242 and $215,234 at June 30, 2021 and December 31, 2020, respectively	546,434		564,911
Total assets	Total assets	$	2,344,865	$	1,931,646	Total assets	$	2,632,443	$	2,353,507
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	152,935	$	156,140	Accounts payable and accrued expenses	$	260,894	$	167,881
Accrued compensation and benefits	Accrued compensation and benefits	184,736		170,932		Accrued compensation and benefits	288,195		213,414

Current portion of notes payable	Current portion of notes payable	9,375		0		Current portion of notes payable	0		4,688
Current portion of operating lease liabilities	Current portion of operating lease liabilities	15,338		13,943		Current portion of operating lease liabilities	15,783		15,032
Deferred revenue	Deferred revenue	11,900		11,788		Deferred revenue	15,065		11,004
Other current liabilities	Other current liabilities	11,884		25,302		Other current liabilities	2,626		10,938
Total current liabilities	Total current liabilities	386,168		378,105		Total current liabilities	582,563		422,957
Revolving credit facility		40,000		0

Notes payable, net of unamortized fees and premium	Notes payable, net of unamortized fees and premium	854,533		617,159		Notes payable, net of unamortized fees and premium	841,731		857,961
Deferred income taxes, net	Deferred income taxes, net	79,681		46,618		Deferred income taxes, net	63,748		67,205
Operating lease liabilities	Operating lease liabilities	81,674		91,209		Operating lease liabilities	71,161		77,800
Other long-term liabilities	Other long-term liabilities	95,736		61,813		Other long-term liabilities	106,858		107,907
Total liabilities	Total liabilities	1,537,792		1,194,904		Total liabilities	1,666,061		1,533,830
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000 shares authorized; NaN issued and outstanding at September 30, 2020 and December 31, 2019		0		0
Common stock, $0.01 par value; 200,000 shares authorized; 49,550 issued and 46,989 outstanding at September 30, 2020 and 49,283 issued and 46,722 outstanding at December 31, 2019		495		493
Preferred stock, $0.01 par value; 10,000 shares authorized; NaN issued and outstanding at June 30, 2021 and December 31, 2020						Preferred stock, $0.01 par value; 10,000 shares authorized; NaN issued and outstanding at June 30, 2021 and December 31, 2020	0		0
Common stock, $0.01 par value; 200,000 shares authorized; 49,824 issued and 47,263 outstanding at June 30, 2021 and 49,614 issued and 47,053 outstanding at December 31, 2020						Common stock, $0.01 par value; 200,000 shares authorized; 49,824 issued and 47,263 outstanding at June 30, 2021 and 49,614 issued and 47,053 outstanding at December 31, 2020	498		496
Additional paid-in capital	Additional paid-in capital	465,438		455,193		Additional paid-in capital	478,302		468,726
Treasury stock, at cost; 2,561 shares at September 30, 2020 and December 31, 2019		(119,143)		(119,143)
Treasury stock, at cost; 2,561 shares at June 30, 2021 and December 31, 2020						Treasury stock, at cost; 2,561 shares at June 30, 2021 and December 31, 2020	(119,143)		(119,143)
Retained earnings	Retained earnings	460,250		400,047		Retained earnings	606,706		469,558
Accumulated other comprehensive income	Accumulated other comprehensive income	33		152		Accumulated other comprehensive income	19		40
Total stockholders’ equity	Total stockholders’ equity	807,073		736,742		Total stockholders’ equity	966,382		819,677
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,344,865	$	1,931,646	Total liabilities and stockholders’ equity	$	2,632,443	$	2,353,507

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands, except per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenue	Revenue	$	551,631	$	567,597	$	1,762,443	$	1,635,215	Revenue	$	857,445	$	608,351	$	1,743,390	$	1,210,812
Cost of revenue	Cost of revenue	366,998		377,566		1,178,204		1,088,883		Cost of revenue	576,902		410,811		1,173,979		811,206
Gross profit	Gross profit	184,633		190,031		584,239		546,332		Gross profit	280,543		197,540		569,411		399,606
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative	Selling, general and administrative	111,235		133,207		394,537		374,872		Selling, general and administrative	156,629		137,068		317,841		283,302
Depreciation and amortization	Depreciation and amortization	26,936		17,085		69,096		41,513		Depreciation and amortization	24,740		22,071		47,994		42,160
Total operating expenses	Total operating expenses	138,171		150,292		463,633		416,385		Total operating expenses	181,369		159,139		365,835		325,462
Income from operations	Income from operations	46,462		39,739		120,606		129,947		Income from operations	99,174		38,401		203,576		74,144
Interest expense, net, and other	Interest expense, net, and other	12,564		7,830		35,061		19,568		Interest expense, net, and other	10,111		11,443		19,055		22,497
Income before income taxes	Income before income taxes	33,898		31,909		85,545		110,379		Income before income taxes	89,063		26,958		184,521		51,647
Income tax expense	Income tax expense	7,831		8,394		24,188		23,873		Income tax expense	22,293		4,633		47,373		16,357
Net income	Net income	$	26,067	$	23,515	$	61,357	$	86,506	Net income	$	66,770	$	22,325	$	137,148	$	35,290

Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation and other	Foreign currency translation and other	(14)		132		(119)		(58)		Foreign currency translation and other	3		(58)		(21)		(105)
Other comprehensive income (loss)	Other comprehensive income (loss)	(14)		132		(119)		(58)		Other comprehensive income (loss)	3		(58)		(21)		(105)

Comprehensive income	Comprehensive income	$	26,053	$	23,647	$	61,238	$	86,448	Comprehensive income	$	66,773	$	22,267	$	137,127	$	35,185

Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	0.55	$	0.50	$	1.29	$	1.85	Basic	$	1.40	$	0.47	$	2.88	$	0.74
Diluted	Diluted	$	0.55	$	0.49	$	1.29	$	1.82	Diluted	$	1.39	$	0.47	$	2.86	$	0.74
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	47,476		46,677		47,406		46,701		Basic	47,659		47,383		47,629		47,371
Diluted	Diluted	47,676		47,607		47,647		47,600		Diluted	48,019		47,562		47,976		47,623

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands)


		Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total			Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total
		Shares	Amount				Shares	Amount									Shares	Amount				Shares	Amount
Balance, December 31, 2018		48,809	$	488	$	452,730	(2,166)	$	(100,438)	$	286,059	$	151	$	638,990
Repurchase of common stock into treasury		—	—		—		(378)	(17,930)		—		—		(17,930)
Balance, December 31, 2019																Balance, December 31, 2019	49,283	$	493	$	455,193	(2,561)	$	(119,143)	$	400,047	$	152	$	736,742

Equity awards vested and exercised, net of shares withheld for payroll taxes	Equity awards vested and exercised, net of shares withheld for payroll taxes	313	3		(10,284)		—	—		—		—		(10,281)		Equity awards vested and exercised, net of shares withheld for payroll taxes	140	1		(4,354)		—	—		—		—		(4,353)

Cumulative-effect adjustment from adoption of the credit loss standard, net of tax																Cumulative-effect adjustment from adoption of the credit loss standard, net of tax	—	—		—		—	—		(1,154)		—		(1,154)
Share-based compensation	Share-based compensation	—	—		5,186		—	—		—		—		5,186		Share-based compensation	—	—		4,927		—	—		—		—		4,927
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—		—	—		34,122		(101)		34,021		Comprehensive income (loss)	—	—		—		—	—		12,965		(47)		12,918
Balance, March 31, 2019		49,122	$	491	$	447,632	(2,544)	$	(118,368)	$	320,181	$	50	$	649,986
Repurchase of common stock into treasury		—	—		—		(17)	(775)		—		—		(775)
Balance, March 31, 2020																Balance, March 31, 2020	49,423	$	494	$	455,766	(2,561)	$	(119,143)	$	411,858	$	105	$	749,080

Equity awards vested and exercised, net of shares withheld for payroll taxes	Equity awards vested and exercised, net of shares withheld for payroll taxes	101	1		(1,254)		—	—		—		—		(1,253)		Equity awards vested and exercised, net of shares withheld for payroll taxes	119	1		(289)		—	—		—		—		(288)
Share-based compensation	Share-based compensation	—	—		3,702		—	—		—		—		3,702		Share-based compensation	—	—		6,347		—	—		—		—		6,347
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—		—	—		28,869		(89)		28,780		Comprehensive income (loss)	—	—		—		—	—		22,325		(58)		22,267
Balance, June 30, 2019		49,223	$	492	$	450,080	(2,561)	$	(119,143)	$	349,050	$	(39)	$	680,440
Balance, June 30, 2020																Balance, June 30, 2020	49,542	$	495	$	461,824	(2,561)	$	(119,143)	$	434,183	$	47	$	777,406

Equity awards vested and exercised, net of shares withheld for payroll taxes		48	1		(1,809)		—	—		—		—		(1,808)
Share-based compensation		—	—		2,825		—	—		—		—		2,825
Comprehensive income		—	—		—		—	—		23,515		132		23,647
Balance, September 30, 2019		49,271	$	493	$	451,096	(2,561)	$	(119,143)	$	372,565	$	93	$	705,104


		Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total			Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total
		Shares	Amount				Shares	Amount									Shares	Amount				Shares	Amount
Balance, December 31, 2019		49,283	$	493	$	455,193	(2,561)	$	(119,143)	$	400,047	$	152	$	736,742
Balance, December 31, 2020																Balance, December 31, 2020	49,614	$	496	$	468,726	(2,561)	$	(119,143)	$	469,558	$	40	$	819,677

Equity awards vested and exercised, net of shares withheld for payroll taxes	Equity awards vested and exercised, net of shares withheld for payroll taxes	140	1		(4,354)		—	—		—		—		(4,353)		Equity awards vested and exercised, net of shares withheld for payroll taxes	132	1		(5,259)		—	—		—		—		(5,258)
Cumulative-effect adjustment from adoption of the credit loss standard, net of tax		—	—		—		—	—		(1,154)		—		(1,154)

Share-based compensation	Share-based compensation	—	—		4,927		—	—		—		—		4,927		Share-based compensation	—	—		9,287		—	—		—		—		9,287
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—		—	—		12,965		(47)		12,918		Comprehensive income (loss)	—	—		—		—	—		70,378		(24)		70,354
Balance, March 31, 2020		49,423	$	494	$	455,766	(2,561)	$	(119,143)	$	411,858	$	105	$	749,080
Balance, March 31, 2021																Balance, March 31, 2021	49,746	$	497	$	472,754	(2,561)	$	(119,143)	$	539,936	$	16	$	894,060

Equity awards vested and exercised, net of shares withheld for payroll taxes	Equity awards vested and exercised, net of shares withheld for payroll taxes	119	1		(289)		—	—		—		—		(288)		Equity awards vested and exercised, net of shares withheld for payroll taxes	78	1		(471)		—	—		—		—		(470)
Share-based compensation	Share-based compensation	—	—		6,347		—	—		—		—		6,347		Share-based compensation	—	—		6,019		—	—		—		—		6,019
Comprehensive income (loss)		—	—		—		—	—		22,325		(58)		22,267
Balance, June 30, 2020		49,542	$	495	$	461,824	(2,561)	$	(119,143)	$	434,183	$	47	$	777,406
Comprehensive income																Comprehensive income	—	—		—		—	—		66,770		3		66,773
Balance, June 30, 2021																Balance, June 30, 2021	49,824	$	498	$	478,302	(2,561)	$	(119,143)	$	606,706	$	19	$	966,382

Equity awards vested and exercised, net of shares withheld for payroll taxes		8	—		(158)		—	—		—		—		(158)
Share-based compensation		—	—		3,772		—	—		—		—		3,772
Comprehensive income (loss)		—	—		—		—	—		26,067		(14)		26,053
Balance, September 30, 2020		49,550	$	495	$	465,438	(2,561)	$	(119,143)	$	460,250	$	33	$	807,073

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	61,357	$	86,506	Net income	$	137,148	$	35,290
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	70,077		41,513		Depreciation and amortization	49,081		42,660
Non-cash interest expense and other	Non-cash interest expense and other	3,727		1,816		Non-cash interest expense and other	(251)		2,817
Write-off of fees on credit facilities		1,773		0
Write-off of fees on credit facilities and senior notes						Write-off of fees on credit facilities and senior notes	158		0
Change in fair value of contingent consideration	Change in fair value of contingent consideration	(1,700)		2,283		Change in fair value of contingent consideration	0		5,000
Increase in allowance for credit losses and sales credits		7,580		6,809
Increase (decrease) in allowance for credit losses and sales credits						Increase (decrease) in allowance for credit losses and sales credits	(526)		6,742
Provision for deferred income taxes	Provision for deferred income taxes	(17,923)		(3,700)		Provision for deferred income taxes	(1,390)		(9,827)
Share-based compensation	Share-based compensation	15,046		11,713		Share-based compensation	15,306		11,274
Loss on disposal or sale of fixed assets	Loss on disposal or sale of fixed assets	3,664		449		Loss on disposal or sale of fixed assets	383		3,321
Amortization of discount on investments	Amortization of discount on investments	(96)		(276)		Amortization of discount on investments	(35)		(71)
Net loss on deferred compensation balances	Net loss on deferred compensation balances	798		0		Net loss on deferred compensation balances	245		379
Non-cash lease expense	Non-cash lease expense	244		(1)		Non-cash lease expense	(794)		180
Changes in assets and liabilities, net of effects from acquisitions:	Changes in assets and liabilities, net of effects from acquisitions:					Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	Accounts receivable	15,151		25,146		Accounts receivable	(91,911)		2,160
Accounts receivable, subcontractor	Accounts receivable, subcontractor	16,414		(12,610)		Accounts receivable, subcontractor	(56,424)		14,245
Income taxes receivable	Income taxes receivable	6,157		(3,401)		Income taxes receivable	4,791		6,157
Prepaid expenses	Prepaid expenses	(3,361)		1,118		Prepaid expenses	(4,186)		(3,260)
Other current assets	Other current assets	2,977		1,332		Other current assets	3,308		584
Other assets	Other assets	3,378		(8,790)		Other assets	962		3,144

Accounts payable and accrued expenses	Accounts payable and accrued expenses	(5,484)		(14,277)		Accounts payable and accrued expenses	91,823		(14,035)
Accrued compensation and benefits	Accrued compensation and benefits	7,630		19,787		Accrued compensation and benefits	65,101		(1,187)
Other liabilities	Other liabilities	29,592		(7,273)		Other liabilities	(5,765)		22,764

Deferred revenue	Deferred revenue	(32)		(2,038)		Deferred revenue	3,582		(72)
Restricted investments balance	Restricted investments balance	12		99		Restricted investments balance	19		6
Net cash provided by operating activities	Net cash provided by operating activities	216,981		146,205		Net cash provided by operating activities	210,625		128,271

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchase and development of fixed assets	Purchase and development of fixed assets	(27,357)		(24,776)		Purchase and development of fixed assets	(23,069)		(19,727)
Purchase of investments	Purchase of investments	(37,418)		(16,759)		Purchase of investments	(17,995)		(23,129)
Proceeds from maturity of investments	Proceeds from maturity of investments	21,500		28,635		Proceeds from maturity of investments	30,700		14,100
Purchase of equity investment						Purchase of equity investment	(500)		0
Payments to fund deferred compensation plan	Payments to fund deferred compensation plan	(7,171)		(11,364)		Payments to fund deferred compensation plan	(1,391)		(6,191)
Proceeds from sale of equity investment		303		0

Purchase of convertible promissory notes	Purchase of convertible promissory notes	(490)		0		Purchase of convertible promissory notes	0		(490)
Cash paid for acquisitions, net of cash and restricted cash received	Cash paid for acquisitions, net of cash and restricted cash received	(476,491)		(228,222)		Cash paid for acquisitions, net of cash and restricted cash received	(41,264)		(476,491)
Cash paid for other intangibles	Cash paid for other intangibles	(1,400)		(1,120)		Cash paid for other intangibles	(90)		(1,400)
Cash received for working capital adjustments for prior year acquisitions	Cash received for working capital adjustments for prior year acquisitions	66		0		Cash received for working capital adjustments for prior year acquisitions	0		66
Net cash used in investing activities	Net cash used in investing activities	(528,458)		(253,606)		Net cash used in investing activities	(53,609)		(513,262)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2020		2019			2021		2020
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Payments on term loans	Payments on term loans	(203,125)		(938)		Payments on term loans	(21,875)		(1,563)
Proceeds from term loans	Proceeds from term loans	250,000		150,000		Proceeds from term loans	0		250,000
Payments on revolving credit facility	Payments on revolving credit facility	(205,000)		(75,000)		Payments on revolving credit facility	(70,000)		(125,000)
Proceeds from revolving credit facility	Proceeds from revolving credit facility	245,000		101,000		Proceeds from revolving credit facility	70,000		225,000
Proceeds from senior notes		202,000		0
Repurchase of common stock		0		(18,705)

Payment of financing costs	Payment of financing costs	(6,898)		(875)		Payment of financing costs	0		(4,181)
Earn-out payments for prior acquisitions		(10,622)		(5,700)
Earn-out payments to settle contingent consideration liabilities for prior acquisitions						Earn-out payments to settle contingent consideration liabilities for prior acquisitions	(3,100)		(10,622)
Cash paid for shares withheld for taxes	Cash paid for shares withheld for taxes	(4,798)		(13,342)		Cash paid for shares withheld for taxes	(5,728)		(4,640)
Net cash provided by financing activities		266,557		136,440
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	(30,703)		328,994
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(119)		(58)		Effect of exchange rate changes on cash	(21)		(105)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	(45,039)		28,981		Net increase (decrease) in cash, cash equivalents and restricted cash	126,292		(56,102)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	153,962		84,324		Cash, cash equivalents and restricted cash at beginning of period	83,990		153,962
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	108,923	$	113,305	Cash, cash equivalents and restricted cash at end of period	$	210,282	$	97,860

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	15,079	$	13,294	Cash paid for amounts included in the measurement of operating lease liabilities	$	9,740	$	10,112
Cash paid for interest (net of $300 and $363 capitalized for the nine months ended September 30, 2020 and 2019, respectively)		$	13,848	$	14,988
Cash paid for interest (net of $195 and $208 capitalized for the six months ended June 30, 2021 and 2020, respectively)						Cash paid for interest (net of $195 and $208 capitalized for the six months ended June 30, 2021 and 2020, respectively)	$	19,028	$	12,759
Cash paid for income taxes	Cash paid for income taxes	$	30,727	$	32,457	Cash paid for income taxes	$	44,061	$	59
Acquisitions:	Acquisitions:					Acquisitions:
Fair value of tangible assets acquired in acquisitions, net of cash and restricted cash received	Fair value of tangible assets acquired in acquisitions, net of cash and restricted cash received	$	35,704	$	28,542	Fair value of tangible assets acquired in acquisitions, net of cash and restricted cash received	$	1,910	$	35,868
Goodwill	Goodwill	274,427		148,095		Goodwill	27,726		274,560
Intangible assets	Intangible assets	228,000		98,580		Intangible assets	12,440		228,000
Liabilities assumed	Liabilities assumed	(61,640)		(34,873)		Liabilities assumed	(812)		(61,937)

Earn-out liabilities		0		(12,122)

Net cash paid for acquisitions	Net cash paid for acquisitions	$	476,491	$	228,222	Net cash paid for acquisitions	$	41,264	$	476,491
Supplemental disclosures of non-cash investing and financing activities:	Supplemental disclosures of non-cash investing and financing activities:					Supplemental disclosures of non-cash investing and financing activities:
Purchase of fixed assets recorded in accounts payable and accrued expenses	Purchase of fixed assets recorded in accounts payable and accrued expenses	$	1,007	$	2,142	Purchase of fixed assets recorded in accounts payable and accrued expenses	$	3,665	$	1,225

See accompanying notes to unaudited condensed consolidated financial statements.

AMN HEALTHCARE SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

1. BASIS OF PRESENTATION

The condensed consolidated balance sheets and related condensed consolidated statements of comprehensive income and cash flows contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”), which are unaudited, include the accounts of AMN Healthcare Services, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all entries necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. These entries consisted of all normal recurring items. The results of operations for the interim period are not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year or for any future period.

The unaudited condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Please refer to the Company’s audited consolidated financial statements and the related notes for the fiscal year ended December 31, ~~2019,~~2020, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission on February ~~25,~~ 26, 2021 (“2020 ~~(“2019~~ Annual Report”).

The preparation of financial statements in conformity with U.S. GAAP requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates, including those related to intangible assets purchased in a business combination, asset impairments, accruals for self-insurance, compensation and related benefits, accounts receivable, contingencies and litigation, ~~earn-out~~contingent consideration liabilities associated with acquisitions, and income taxes. Actual results could differ from those estimates under different assumptions or conditions.

~~Coronavirus Pandemic~~

On March 11, 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, also known as COVID-19, a global pandemic. Due to the pandemic, there has been uncertainty and disruption in the global economy and significant volatility of financial markets. The ~~Company is closely monitoring the~~ impact of the novel coronavirus (COVID-19) pandemic which continues to evolve, and its effects and risks on our operations, liquidity, financial condition and financial results for the full year 2020 and, possibly, beyond. The Company also implemented remote-work arrangements effective mid-March 2020 and, to date, transitioning to a remote-work environment has not had a material adverse impact on the Company’s ability to continue to operate its business, financial reporting process or internal controls and procedures.

The estimates used for, but not limited to, determining the collectability of accounts receivable, fair value of long-lived assets, and goodwill could be impacted by the pandemic. While the full impact of COVID-19, including the duration and severity of the pandemic, remains unknown, the Company has made appropriate estimates based on the facts and circumstances available as of the reporting date. Specifically, the Company continues to monitor the impacts of the pandemic on its customers’ liquidity and capital resources and, therefore, the Company’s ability to collect, or the timeliness of collection of accounts receivable. The impact of COVID-19 did not have a material effect on the Company’s estimates as of ~~September~~June 30, ~~2020. These estimates may change as new events occur and additional information is obtained. See additional information below regarding the allowance for credit losses for accounts receivable.~~2021.

Recently Adopted Accounting Pronouncements

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) ~~2016-13, “Measurement of Credit Losses on Financial Instruments.~~2019-12, “Simplifying the Accounting for Income Taxes.” The ~~FASB also issued~~standard is expected to reduce cost and complexity related to accounting for income taxes. The new guidance eliminates certain exceptions and clarifies and amends existing guidance to promote consistent application among reporting entities. Depending on the amended guidance within this standard, adoption is to be applied on a series of other ASUs, which update ASU 2016-13 (collectively, the “credit loss standard”). This new standard introduces new accounting models for determining and recognizing credit losses on certain financial instruments based on an estimate of current expected credit losses.retrospective, modified retrospective or prospective basis. The Company adopted this standard effective January 1, 2020 using the modified retrospective transition method. The Company recognized the cumulative effect of adopting this guidance as an adjustment to the opening balance of retained earnings of $1,154, net of tax, primarily related to its allowance for credit losses for accounts receivable. Prior period amounts are not retrospectively adjusted. The impact of the adoption of the new standard was not material to the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2020. The Company expects the impact to

~~be immaterial on an ongoing basis. See additional information below regarding the allowance for credit losses for accounts receivable.~~

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” The standard simplifies the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The Company adopted this standard effective January 1, 20202021, and the adoption did not have a material effect on the Company’s consolidated financial statements.

In ~~August 2018,~~January 2020, the FASB issued ASU ~~2018-13, “Disclosure Framework—Changes to~~2020-01, “Clarifying the ~~Disclosure Requirements for Fair Value Measurement.~~Interactions between Topic 321, Topic 323, and Topic 815.” The ~~standard modifies~~new guidance clarifies the ~~current disclosure requirements on~~interactions between accounting standards that apply to equity investments without readily determinable fair ~~value measurements.~~values. Specifically, it addresses the accounting for the transition into and out of the equity method. The Company adopted this standard effective January 1, ~~2020. Refer to information regarding fair value measurements in Note (7), “Fair Value Measurement.”~~2021 on a prospective basis, and the adoption did not have a material effect on the Company’s consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include currency on hand, deposits with financial institutions and highly liquid investments. Restricted cash and cash equivalents primarily represent cash and money market funds on deposit with financial institutions and investments represents commercial paper that serves as collateral for the Company’s outstanding letters of credit and captive insurance subsidiary claim payments. See Note (7), “Fair Value Measurement” for additional information.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed consolidated balance sheets and related notes to the amounts presented in the accompanying condensed consolidated statements of cash flows.

September 30, 2020 December 31, 2019
Cash and cash equivalents $ 58,419 $ 82,985
Restricted cash and cash equivalents (included in other current assets) 15,194 18,393
Restricted cash, cash equivalents and investments 60,898 62,170
Total cash, cash equivalents and restricted cash and investments 134,511 163,548
Less restricted investments (25,588) (9,586)
Total cash, cash equivalents and restricted cash $ 108,923 $ 153,962


	June 30, 2021		December 31, 2020
Cash and cash equivalents	$	139,494	$	29,213
Restricted cash and cash equivalents (included in other current assets)	19,854		18,626
Restricted cash, cash equivalents and investments	63,441		61,347
Total cash, cash equivalents and restricted cash and investments	222,789		109,186
Less restricted investments	(12,507)		(25,196)
Total cash, cash equivalents and restricted cash	$	210,282	$	83,990

Accounts Receivable

The Company records accounts receivable at the invoiced amount. Accounts receivable are non-interest bearing. The Company maintains an allowance for expected credit losses based on the Company’s historical write-off experience, an assessment of its customers’ financial conditions and available information that is relevant to assessing the collectability of cash flows, which includes current conditions and forecasts about future economic conditions.

The following table provides a reconciliation of activity in the allowance for credit losses for accounts receivable:


	~~2020~~
~~Balance as of January 1,~~	$	~~3,332~~
~~Adoption of the credit loss standard, cumulative-effect adjustment to retained earnings~~	~~1,334~~
~~Provision for expected credit losses~~	~~5,178~~
~~Amounts written off charged against the allowance~~	~~(1,333)~~

~~Balance as of September 30,~~	$	~~8,511~~

~~Reclassification~~

The Company reclassified its allowance for accounts receivable in the prior year’s consolidated balance sheet to conform to the current year presentation. The prior year’s balance of accounts receivable (net of allowances) remains unchanged.


	2021		2020
Balance as of January 1,	$	7,043	$	3,332
Adoption of the credit loss standard, cumulative-effect adjustment to retained earnings	0		1,334
Provision for expected credit losses	(1,213)		4,889
Amounts written off charged against the allowance	(317)		(1,023)

Balance as of June 30,	$	5,513	$	8,532

2. ACQUISITIONS

As set forth below, the Company completed 42 acquisitions from January 1, ~~2019~~2020 through ~~September~~June 30, ~~2020. The Company~~2021, which were accounted for ~~each acquisition~~ using the acquisition method of accounting. Accordingly, itthe Company recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the applicable date of acquisition. Since the applicable date of acquisition, the Company has revised the allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on analysis of information that has been made available through ~~September~~June 30, ~~2020.~~2021. The allocations will continue to be updated through the measurement period, if necessary. The Company recognizes acquisition-related costs in selling, general and administrative expenses in the consolidated statements of comprehensive income.

Synzi and SnapMD Acquisition

On April 7, 2021, the Company completed its acquisition of Synzi Holdings, Inc. (“Synzi”) and its wholly-owned subsidiary, SnapMD, LLC (“SnapMD”). Synzi is a virtual care communication platform that enables organizations to conduct virtual visits and use secure messaging, text, and email for clinician-to-patient and clinician-to-clinician communications. SnapMD is a full-service virtual care management company, specializing in providing software to enable healthcare providers to better engage with their patients. The initial purchase price of $42,240 consisted entirely of cash consideration paid upon acquisition. The acquisition was funded primarily through borrowings under the Senior Credit Facility (as defined below). The results of Synzi and SnapMD have been included in the Company’s technology and workforce solutions segment since the date of acquisition. During the second quarter of 2021, $92 was returned to the Company in respect of the final working capital settlement.

The preliminary allocation of the $42,148 purchase price, which was reduced by the final working capital settlement, consisted of (1) $2,794 of fair value of tangible assets acquired, which included $884 cash received, (2) $812 of liabilities assumed, (3) $12,440 of identified intangible assets, and (4) $27,726 of goodwill, of which $6,085 is deductible for tax purposes. The provisional items pending finalization are the valuation of the acquired intangible assets and income tax related matters. The fair value of intangible assets includes $10,890 of developed technology and $1,220 of trademarks with a weighted average useful life of approximately seven years.

Stratus Video Acquisition

On February 14, 2020, the Company completed its acquisition of Stratus Video, a remote video interpreting company that provides healthcare interpretation via remote video, over the phone, and onsite in-person, all supported by proprietary technology platforms. The initial purchase price of $485,568 consisted entirely of cash consideration paid upon acquisition. The acquisition was funded primarily through (1) borrowings under the Company’s $400,000 secured revolving credit facility (the “Senior Credit Facility”), provided for under a credit agreement (the “New Credit Agreement”), and (2) the Second Amendment (as defined in Note (6) below) to the New Credit Agreement, which provided $250,000 of additional available borrowings to the Company. The Senior Credit Facility, New Credit Agreement and ~~the~~ Second Amendment are more fully described in Note (6), “Notes Payable and Credit Agreement.” The results of Stratus Video have been included in the Company’s technology and workforce solutions segment since the date of acquisition. During the second quarter of 2020, an additional $99 of cash consideration was paid to the selling shareholders ~~for~~in respect of the final working capital settlement. The Company incurred ~~$10,548~~$9,525 of acquisition-related costs during the ~~nine~~six months ended ~~September~~June 30, 2020 as a result of its acquisition of Stratus Video.

The ~~preliminary~~ allocation of the $485,667 purchase price, which included the additional cash consideration paid for the final working capital settlement and was finalized during the first quarter of 2021, consisted of (1) ~~$44,880~~$44,092 of fair value of tangible assets acquired, which included $9,176 cash received, (2) ~~$61,640~~$56,059 of liabilities assumed, (3) $228,000 of identified intangible assets, and (4) ~~$274,427~~$269,634 of goodwill, of which ~~$10,186~~$10,182 is ~~expected to be~~ deductible for tax purposes. ~~The provisional items pending finalization are the valuation of the acquired intangible assets and income tax related matters.~~ The intangible assets acquired have a weighted average useful life of approximately seventeen years. The following table summarizes the fair value and useful life of each intangible asset acquired as of the acquisition date:


		Fair Value		Useful Life
				(in years)
Identifiable intangible assets
	Customer Relationships	$	171,000	20
	Tradenames and Trademarks	40,000		5 - 10
	Developed Technology	16,000		5
	Interpreter Database	1,000		4
		$	228,000

During the third quarter of 2020, the Company revised the estimated useful lives for the tradenames and trademarks intangible assets as a result of its plan to rebrand the language ~~interpretation~~services business. Based on this change in circumstances since the date of acquisition, the Company determined that the remaining useful lives of the assets are 5 years and ~~will amortize~~is amortizing the remaining value on a straight-line basis over the remaining useful life. The Company will continue to evaluate the remaining useful lives of other intangible assets impacted by its brand consolidation efforts.

Approximately ~~$35,329~~$28,318 of revenue and ~~$8,322~~$3,859 of income before income taxes of Stratus Video were included in the unaudited condensed consolidated statement of comprehensive income for the three months ended ~~September~~June 30, 2020. Approximately ~~$78,080~~$42,751 of revenue and ~~$13,787~~$5,465 of income before income taxes of Stratus Video were included in the unaudited condensed consolidated statement of comprehensive income for the ~~nine~~six months ended ~~September~~June 30, 2020.

Pro Forma Financial Information (Unaudited)

The following summary presents unaudited pro forma consolidated results of operations of the Company as if the acquisition of Stratus Video ~~and Advanced (as defined below) acquisitions~~ had occurred on January 1, 2019, which gives effect to certain adjustments, including ~~incremental~~ acquisition-related costs of ~~$4,512~~$1,713 and ~~$20,438, of which $1,023 and $11,662~~$9,525, that were reclassified from the three and ~~nine~~six months ended ~~September~~June 30, 2020, respectively, ~~amortization of intangible assets of $1,307 and $10,924, and interest expense of $1,246 and $5,465 during~~to the three and ~~nine~~six months ended ~~September~~June 30, 2019, respectively. The unaudited pro forma

financial information is not necessarily indicative of the operating results that would have occurred had the ~~acquisitions~~acquisition been consummated as of the date indicated, nor is it necessarily indicative of the Company’s future operating results.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenue $ 551,631 $ 595,211 $ 1,776,315 $ 1,767,010
Income from operations 50,465 36,202 135,618 101,718
Net income 29,030 17,850 71,434 54,667

~~b4health Acquisition~~

On December 19, 2019, the Company completed its acquisition of B4Health, LLC (“b4health”), an innovative technology company and a leading provider of a web-based internal float pool management solution and vendor management system for healthcare facilities. The initial purchase price of $23,006 included (1) $19,906 cash consideration paid upon acquisition and (2) a contingent earn-out payment of up to $12,000 with an estimated fair value of $3,100 as of the acquisition date. The contingent earn-out payment is based on the operating results of b4health for the twelve months ending December 31, 2020. The results of b4health have been included in the Company’s technology and workforce solutions segment since the date of acquisition. During the first quarter of 2020, $66 was returned to the Company for the final working capital settlement.

The allocation of the $22,940 purchase price, which was reduced by the final working capital settlement, consisted of (1) $1,169 of fair value of tangible assets acquired, which included $222 cash received, (2) $823 of liabilities assumed, (3) $9,000 of identified intangible assets, and (4) $13,594 of goodwill, all of which is deductible for tax purposes. The fair value of intangible assets includes $3,000 of developed technology, $4,000 of customer relationships, and $2,000 of trademarks with a weighted average useful life of approximately seven years.

~~Advanced Acquisition~~

On June 14, 2019, the Company completed its acquisition of Advanced Medical Personnel Services, Inc. (“Advanced”), a national healthcare staffing company that specializes in placing therapists and nurses across multiple settings. The initial purchase price of $211,743 included (1) $201,121 cash consideration paid upon acquisition and (2) a contingent earn-out payment of up to $20,000 with an estimated fair value of $10,622 as of the acquisition date. The contingent earn-out payment is based on the operating results of Advanced for the twelve months ending December 31, 2019, which was settled in full during the first quarter of 2020. The acquisition was funded primarily through (1) borrowings under the Senior Credit Facility and (2) the First Amendment (as defined in Note (6) below) to the New Credit Agreement, which provided $150,000 of additional available borrowings to the Company. The results of Advanced have been included in the Company’s nurse and allied solutions segment since the date of acquisition. During the third quarter of 2019, an additional $73 of cash consideration was paid to the selling shareholders for the final working capital settlement.

The allocation of the $211,816 purchase price, which included the additional cash consideration paid for the final working capital settlement, consisted of (1) $29,020 of fair value of tangible assets acquired, which included $2,497 cash and restricted cash received, (2) $28,772 of liabilities assumed, (3) $91,700 of identified intangible assets, and (4) $119,868 of goodwill, of which $57,236 is deductible for tax purposes. The intangible assets acquired have a weighted average useful life of approximately nine years. The following table summarizes the fair value and useful life of each intangible asset acquired:

Fair Value Useful Life
(in years)
Identifiable intangible assets
Customer Relationships $ 68,000 10
Tradenames and Trademarks 10,000 5
Staffing Database 10,300 10
Developed Technology 3,400 3
$ 91,700

~~Silversheet Acquisition~~

On January 30, 2019, the Company completed its acquisition of Silversheet, Inc. (“Silversheet”), which provides innovative software and services to reduce the complexities and challenges of the credentialing process for clinicians and healthcare organizations. The initial purchase price of $31,676 included (1) $30,176 cash consideration paid upon acquisition, funded primarily through borrowings under the Senior Credit Facility, and (2) a contingent earn-out payment of up to $25,000 with an estimated fair value of $1,500 as of the acquisition date. The contingent earn-out payment is based on (A) up to $6,000 based on the operating results of Silversheet for the twelve months ending December 31, 2019, which resulted in no earn-out payment, and (B) up to $19,000 based on the operating results of Silversheet for the twelve months ending December 31, 2020. The results of Silversheet have been included in the Company’s technology and workforce solutions segment since the date of acquisition.

The allocation of the $31,676 purchase price consisted of (1) $2,826 of fair value of tangible assets acquired, which included $651 cash received, (2) $1,567 of liabilities assumed, (3) $6,880 of identified intangible assets, and (4) $23,537 of goodwill, none of which is deductible for tax purposes. The fair value of intangible assets primarily includes $5,300 of developed technology and $1,500 of trademarks with a weighted average useful life of approximately eight years.


	Three Months Ended June 30,		Six Months Ended June 30,
	2020			2020
Revenue	$	608,351		$	1,224,684
Income from operations	$	40,300		$	85,153
Net income	$	23,730		$	42,404

3. REVENUE RECOGNITION

Revenue primarily consists of fees earned from the temporary staffing and permanent placement of healthcare professionals, executives, and leaders (clinical and operational). The Company also generates revenue from its software as a service (“SaaS”)-based technologies, including vendor management systems and scheduling software, and outsourced workforce services, including language interpretation and recruitment process outsourcing. The Company recognizes revenue when control of its services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. Revenue from temporary staffing services is recognized as the services are rendered by clinical and non-clinical healthcare professionals. Under the Company’s managed services program (“MSP”) arrangements, the Company manages all or a part of a customer’s supplemental workforce needs utilizing its own network of healthcare professionals along with those of third-party subcontractors. Revenue and the related direct costs under MSP arrangements are recorded in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent. When the Company uses subcontractors and acts as an agent, revenue is recorded net of the related subcontractor’s expense. Revenue from permanent placement and outsourced workforce services is recognized as the services are rendered. Depending on the arrangement, the Company’s SaaS-based revenue is recognized either as the services are rendered or ratably over the applicable arrangement’s service period.

The Company’s customers are primarily billed as services are rendered. Any fees billed in advance of being earned are recorded as deferred revenue. While payment terms vary by the type of customer and the services rendered, the term between invoicing and when payment is due is not significant. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, previously deferred revenue recognized as revenue was ~~$11,408~~$9,672 and ~~$9,498,~~$10,371, respectively.

The Company has elected to apply the following practical expedients and optional exemptions related to contract costs and revenue recognition:

•Recognize incremental costs of obtaining a contract with amortization periods of one year or less as expense when incurred. These costs are recorded within selling, general and administrative expenses.

•Recognize revenue in the amount of consideration ~~to which~~that the Company has a right to invoice the customer if that amount corresponds directly with the value to the customer of the Company’s services completed to date.

•Exemptions from disclosing the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts for which revenue is recognized in the amount of consideration ~~to which~~that the Company has a right to invoice for services performed and (iii) contracts for which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation.

See Note (5), “Segment ~~Information”~~Information,” for additional ~~information.~~information regarding the Company’s revenue disaggregated by service type.

4. NET INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. The following table sets forth the computation of basic and diluted net income per common share:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	26,067	$	23,515	$	61,357	$	86,506	Net income	$	66,770	$	22,325	$	137,148	$	35,290

Net income per common share - basic	Net income per common share - basic	$	0.55	$	0.50	$	1.29	$	1.85	Net income per common share - basic	$	1.40	$	0.47	$	2.88	$	0.74
Net income per common share - diluted	Net income per common share - diluted	$	0.55	$	0.49	$	1.29	$	1.82	Net income per common share - diluted	$	1.39	$	0.47	$	2.86	$	0.74

Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	47,476		46,677		47,406		46,701		Weighted average common shares outstanding - basic	47,659		47,383		47,629		47,371
Plus dilutive effect of potential common shares	Plus dilutive effect of potential common shares	200		930		241		899		Plus dilutive effect of potential common shares	360		179		347		252
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	47,676		47,607		47,647		47,600		Weighted average common shares outstanding - diluted	48,019		47,562		47,976		47,623

Share-based awards to purchase 844 and 7924 shares of common stock were not included in the above calculation of diluted net income per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, because the effect of these instruments was anti-dilutive. Share-based awards to purchase 32189 and 5562 shares of common stock were not included in the above calculation of diluted net income per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, because the effect of these instruments was anti-dilutive.

5. SEGMENT INFORMATION

The Company’s operating segments are identified in the same manner as they are reported internally and used by the Company’s chief operating decision maker for the purpose of evaluating performance and allocating resources. ~~Effective March 8, 2020, the Company modified its reportable segments.~~ The Company previously utilized 3 reportable segments, which it identified as follows: (1) nurse and allied solutions, (2) locum tenens solutions, and (3) other workforce solutions. In light of the Company’s recent acquisitions and organizational changes to better align its organizational structure with its strategy and operations, the Company’s management reorganized its reportable segments to better reflect how the business is evaluated by the chief operating decision maker. Beginning in the first quarter of 2020, the Company has ~~disclosed the following~~ 3 reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The nurse and allied solutions segment includes the Company’s travel nurse staffing, rapid response nurse staffing and labor disruption, allied staffing, local staffing, and revenue cycle solutions businesses. The physician and leadership solutions segment includes the Company’s locum tenens staffing, healthcare interim leadership staffing, executive search, and physician permanent placement businesses. The technology and workforce solutions segment includes the Company’s language ~~interpretation~~ services, vendor management systems, workforce optimization, recruitment process outsourcing, telehealth, credentialing, and flex pool management and other outsourced solutions businesses.

The Company’s chief operating decision maker relies on internal management reporting processes that provide revenue and operating income by reportable segment for making financial decisions and allocating resources. Segment operating income represents income before income taxes plus depreciation, amortization of intangible assets, share-based compensation, interest expense, net, and other, and unallocated corporate overhead. The Company’s management does not evaluate, manage or measure performance of segments using asset information; accordingly, asset information by segment is not prepared or disclosed.

The following table ~~which includes reclassified prior period data to conform to the new segment reporting structure,~~ provides a reconciliation of revenue and operating income by reportable segment to consolidated results and was derived from each segment’s internal financial information as used for corporate management purposes:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenue
Nurse and allied solutions $ 382,699 $ 398,417 $ 1,251,509 $ 1,139,883
Physician and leadership solutions 109,116 143,842 355,580 423,368
Technology and workforce solutions 59,816 25,338 155,354 71,964
$ 551,631 $ 567,597 $ 1,762,443 $ 1,635,215
Segment operating income
Nurse and allied solutions $ 52,923 $ 52,533 $ 173,706 $ 158,841
Physician and leadership solutions 15,538 17,547 45,432 52,280
Technology and workforce solutions 25,680 11,426 62,814 33,145
94,141 81,506 281,952 244,266
Unallocated corporate overhead 16,490 21,857 76,223 61,093
Depreciation and amortization 26,936 17,085 69,096 41,513
Depreciation (included in cost of revenue) 481 0 981 0
Share-based compensation 3,772 2,825 15,046 11,713
Interest expense, net, and other 12,564 7,830 35,061 19,568
Income before income taxes $ 33,898 $ 31,909 $ 85,545 $ 110,379


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue
Nurse and allied solutions	$	624,485	$	444,464	$	1,281,146	$	868,810
Physician and leadership solutions	139,104		108,622		279,860		246,464
Technology and workforce solutions	93,856		55,265		182,384		95,538
	$	857,445	$	608,351	$	1,743,390	$	1,210,812
Segment operating income
Nurse and allied solutions	$	89,674	$	61,175	$	191,204	$	120,783
Physician and leadership solutions	21,849		15,325		43,065		29,894
Technology and workforce solutions	42,653		21,839		84,742		37,134
	154,176		98,339		319,011		187,811
Unallocated corporate overhead	23,627		31,165		51,048		59,733
Depreciation and amortization	24,740		22,071		47,994		42,160
Depreciation (included in cost of revenue)	616		355		1,087		500
Share-based compensation	6,019		6,347		15,306		11,274
Interest expense, net, and other	10,111		11,443		19,055		22,497
Income before income taxes	$	89,063	$	26,958	$	184,521	$	51,647

The following tables present the Company’s revenue disaggregated by service type. Certain prior period amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue by reportable segment.

Three Months Ended September 30, 2020
Nurse and Allied Solutions Physician and Leadership Solutions Technology and Workforce Solutions Total
Temporary staffing $ 382,699 $ 95,648 $ 0 $ 478,347
Permanent placement 0 13,468 0 13,468
Outsourced workforce 0 0 38,159 38,159
SaaS-based technologies 0 0 21,657 21,657
Total revenue $ 382,699 $ 109,116 $ 59,816 $ 551,631

Three Months Ended September 30, 2019
Nurse and Allied Solutions Physician and Leadership Solutions Technology and Workforce Solutions Total
Temporary staffing $ 398,417 $ 123,540 $ 0 $ 521,957
Permanent placement 0 20,302 0 20,302
Outsourced workforce 0 0 4,643 4,643
SaaS-based technologies 0 0 20,695 20,695
Total revenue $ 398,417 $ 143,842 $ 25,338 $ 567,597

Nine Months Ended September 30, 2020
Nurse and Allied Solutions Physician and Leadership Solutions Technology and Workforce Solutions Total
Temporary staffing $ 1,251,509 $ 310,945 $ 0 $ 1,562,454
Permanent placement 0 44,635 0 44,635
Outsourced workforce 0 0 87,705 87,705
SaaS-based technologies 0 0 67,649 67,649
Total revenue $ 1,251,509 $ 355,580 $ 155,354 $ 1,762,443

Nine Months Ended September 30, 2019
Nurse and Allied Solutions Physician and Leadership Solutions Technology and Workforce Solutions Total
Temporary staffing $ 1,139,883 $ 364,551 $ 0 $ 1,504,434
Permanent placement 0 58,817 0 58,817
Outsourced workforce 0 0 12,435 12,435
SaaS-based technologies 0 0 59,529 59,529
Total revenue $ 1,139,883 $ 423,368 $ 71,964 $ 1,635,215

In connection with the reorganization of its reportable segments effective March 8, 2020, the Company reassigned the goodwill balances to the reporting units, the composition of which changed under the reorganized reportable segments, using the relative fair value reallocation approach. The Company performed a goodwill impairment test at the reporting unit level both immediately before and after the reorganization. The Company determined the fair values of its reporting units using a combination of the income approach (using discounted future cash flows) and the market valuation approach. Based on the results of this testing, the Company determined that the fair values of its reporting units were each greater than their respective carrying values both before and after the reorganization. Therefore, there was 0 impairment loss recognized during the nine months ended September 30, 2020.


	Three Months Ended June 30, 2021
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	624,485	$	121,752	$	0	$	746,237
Permanent placement	0		17,352		0		17,352
Outsourced workforce	0		0		55,186		55,186
SaaS-based technologies	0		0		38,670		38,670
Total revenue	$	624,485	$	139,104	$	93,856	$	857,445

1410


	Three Months Ended June 30, 2020
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	444,464	$	95,701	$	0	$	540,165
Permanent placement	0		12,921		0		12,921
Outsourced workforce	0		0		31,866		31,866
SaaS-based technologies	0		0		23,399		23,399
Total revenue	$	444,464	$	108,622	$	55,265	$	608,351


	Six Months Ended June 30, 2021
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	1,281,146	$	246,966	$	0	$	1,528,112
Permanent placement	0		32,894		0		32,894
Outsourced workforce	0		0		105,793		105,793
SaaS-based technologies	0		0		76,591		76,591
Total revenue	$	1,281,146	$	279,860	$	182,384	$	1,743,390


	Six Months Ended June 30, 2020
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	868,810	$	215,297	$	0	$	1,084,107
Permanent placement	0		31,167		0		31,167
Outsourced workforce	0		0		49,546		49,546
SaaS-based technologies	0		0		45,992		45,992
Total revenue	$	868,810	$	246,464	$	95,538	$	1,210,812

The following table summarizes the activity related to the carrying value of goodwill by reportable segment:

Nurse and Allied Solutions Physician and Leadership Solutions Technology and Workforce Solutions Total
Balance, January 1, 2020 $ 344,316 $ 163,348 $ 87,887 $ 595,551
Goodwill adjustment for Advanced acquisition 29 0 0 29
Goodwill adjustment for b4health acquisition 0 0 (66) (66)
Goodwill from Stratus Video acquisition 0 0 274,427 274,427
Reallocation due to change in segments (14,600) 297 14,303 0
Balance, September 30, 2020 $ 329,745 $ 163,645 $ 376,551 $ 869,941
Accumulated impairment loss as of December 31, 2019 and September 30, 2020 $ 154,444 $ 60,495 $ 0 $ 214,939


	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Balance, January 1, 2021	$	339,015	$	152,800	$	372,670	$	864,485
Goodwill adjustment for Stratus Video acquisition	0		0		663		663

Goodwill from Synzi and SnapMD acquisition	0		0		27,726		27,726

Balance, June 30, 2021	$	339,015	$	152,800	$	401,059	$	892,874
Accumulated impairment loss as of December 31, 2020 and June 30, 2021	$	154,444	$	60,495	$	0	$	214,939

6. NOTES PAYABLE AND CREDIT AGREEMENT

~~The Company’s Credit Agreement and Related Credit Facilities~~

On February 9, 2018, the Company entered into the New Credit Agreement with several lenders to provide for the $400,000 Senior Credit Facility to replace its then-existing credit facilities. ~~The Senior Credit Facility includes a $50,000 sublimit for the issuance of letters of credit and a $50,000 sublimit for swingline loans.~~ On June 14, 2019, the Company entered into the first amendment to the New Credit Agreement (the “First Amendment”) to provide for, among other things, a $150,000 secured term loan credit facility (the “Term Loan”). The Company used the proceeds from the Term Loan, together with a drawdown of a portion of the Senior Credit Facility, to complete its acquisition of Advanced, as more fully described in Note (2), “Acquisitions.” The Company fully repaid all amounts under the Term Loan in 2019.

On February 14, 2020, the Company entered into the second amendment to the New Credit Agreement (the “Second Amendment”) to provide for, among other things, a $250,000 secured term loan credit facility (the “Additional Term Loan”). The Second Amendment (together with the New Credit Agreement and the First Amendment, collectively, the “Amended Credit Agreement”) extended the maturity date of the Senior Credit Facility to be coterminous with the Additional Term Loan. The ~~obligations of the Company under the Amended Credit Agreement are secured by substantially all of the assets of the Company. The~~ Company used the proceeds from the Additional Term Loan, together with a drawdown of a portion of the Senior Credit Facility, to complete its acquisition of Stratus Video as more fully described in Note (2), “Acquisitions.”

Borrowings under the Senior Credit Facility and the Additional Term Loan (together, the “Credit Facilities”) bear interest at floating rates, at the Company’s option, based upon either LIBOR plus a spread of 1.00% to 1.75% or a base rate plus a spread of 0.00% to 0.75%. The applicable spread is determined quarterly based upon the Company’s consolidated net leverage ratio (as calculated per the Amended Credit Agreement). The Additional Term Loan is subject to amortization of principal of 2.50% per year for the first year of the term and 5.00% per year thereafter, payable in equal quarterly installments. The Senior Credit Facility is available for working capital, capital expenditures, permitted acquisitions and general corporate purposes. The maturity date of the Credit Facilities is February 14, 2025.

~~In connection with the Second Amendment, the~~ Company incurred $3,899 in fees paid to lenders and other third parties, which were capitalized during the three months ended March 31, 2020 and are amortized to interest expense over the term of the Credit Facilities. In addition, $1,681 of unamortized financing fees incurred in connection with obtaining the New Credit Agreement and First Amendment will continue to be amortized to interest expense over the term of the Credit Facilities.

~~4.625% Senior Notes Due 2027~~

On August 13, 2020, the Company completed the issuance of an additional $200,000 aggregate principal amount of the 4.625% senior notes due 2027 (the “New 2027 Notes”), which were issued at a price of 101.000% of the aggregate principal amount. The New 2027 Notes were issued pursuant to the existing indenture, dated as of October 1, 2019, under which the Company previously issued $300,000 aggregate principal amount of 4.625% senior notes due 2027 (the “Existing 2027 Notes” and together with the New 2027 Notes, the “2027 Notes”). The New 2027 Notes will be treated as a single series with the Existing 2027 Notes and will have the same terms (other than issue price, issue date and the date from which interest accrues) as those of the Existing 2027 Notes. Interest on the 2027 Notes is payable semi-annually in arrears on April 1 and October 1 of each year, commencing October 1, 2020 with respect to the New 2027 Notes. The terms of the Existing 2027 Notes, including maturity date and interest terms, are disclosed in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 8—Notes Payable and Credit Agreement” of the 2019 Annual Report.repaid

1511

~~With proceeds from the New 2027 Notes, the Company (1) repaid $200,000 of~~ its outstanding indebtedness under the ~~existing~~ Additional Term Loan ~~and (2) paid $2,717~~in the first quarter of ~~fees and expenses related to the issuance~~2021. The maturity date of ~~the New 2027 Notes, which were recorded as a reduction of the notes payable balance and are being amortized to interest expense over the remaining term of the 2027 Notes.~~

~~4.000% Senior Notes Due 2029~~

On October 20, 2020, the Company completed the issuance of $350,000 aggregate principal amount of 4.000% senior notes due 2029 (the “2029 Notes”). The Company used the proceeds (1) to redeem all of its outstanding $325,000 aggregate principal amount of 5.125% senior notes due 2024 (the “2024 Notes”) and (2) to repay a portion of its indebtedness under the Senior Credit ~~Facility. See additional information in Note (11), “Subsequent Events.”~~Facility is February 14, 2025.

7. FAIR VALUE MEASUREMENT

The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 3—Fair Value Measurement” of the ~~2019~~2020 Annual Report. The Company has not changed the valuation techniques or inputs it uses for its fair value measurement during the ~~three and nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Assets and Liabilities Measured on a Recurring Basis

The Company’s restricted cash equivalents that serve as collateral for the Company’s outstanding letters of credit

typically consist of money market funds that are measured at fair value based on quoted prices, which are Level 1 inputs.

The Company has a deferred compensation plan for certain executives and ~~key~~ employees, which is composed of deferred compensation and all related income and losses attributable thereto. The Company’s obligation under its deferred compensation plan is measured at fair value based on quoted market prices of the participants’ elected investments, which are Level 1 inputs.

The Company’s restricted cash equivalents and investments that serve as collateral for the Company’s captive insurance company primarily consist of commercial paper that is measured at observable market prices for identical securities that are traded in less active markets, which are Level 2 inputs. Of the ~~$59,196~~$55,353 commercial paper issued and outstanding as of ~~September~~June 30, ~~2020, $25,588~~2021, $12,507 had original maturities greater than three months, which were considered available-for-sale securities. As of December 31, ~~2019,~~2020, the Company had ~~$59,243~~$58,345 commercial paper issued and outstanding, of which ~~$9,586~~$25,196 had original maturities greater than three months and were considered available-for-sale securities.

The Company’s contingent consideration liabilities associated with acquisitions are measured at fair value using a probability-weighted discounted cash flow analysis or a simulation-based methodology for the acquired companies, which are Level 3 inputs. The Company recognizes changes to the fair value of its contingent consideration liabilities in selling, general and administrative expenses in the condensed consolidated statements of comprehensive income.

The following tables present information about the above-referenced assets and liabilities and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:


		Fair Value Measurements as of September 30, 2020									Fair Value Measurements as of June 30, 2021
		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	Money market funds	$	2,354	$	2,354	$	0	$	0	Money market funds	$	2,198	$	2,198	$	0	$	0
Deferred compensation	Deferred compensation	(87,934)		(87,934)		0		0		Deferred compensation	(112,342)		(112,342)		0		0
Commercial paper	Commercial paper	59,196		0		59,196		0		Commercial paper	55,353		0		55,353		0
Acquisition contingent consideration liabilities		(1,400)		0		0		(1,400)


		Fair Value Measurements as of December 31, 2019									Fair Value Measurements as of December 31, 2020
		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	Money market funds	$	2,508	$	2,508	$	0	$	0	Money market funds	$	2,198	$	2,198	$	0	$	0
Deferred compensation	Deferred compensation	(81,064)		(81,064)		0		0		Deferred compensation	(97,184)		(97,184)		0		0
Commercial paper	Commercial paper	59,243		0		59,243		0		Commercial paper	58,345		0		58,345		0
Acquisition contingent consideration liabilities	Acquisition contingent consideration liabilities	(23,100)		0		0		(23,100)		Acquisition contingent consideration liabilities	(8,000)		0		0		(8,000)

1712

Level 3 Information

The following ~~table sets~~tables set forth a reconciliation of changes in the fair value of contingent consideration liabilities classified as Level 3 in the fair value hierarchy:

2020 2019
Balance as of July 1, $ (8,100) $ (10,664)
Change in fair value of contingent consideration liability from Silversheet acquisition 0 42
Change in fair value of contingent consideration liability from Advanced acquisition 0 (4,483)
Change in fair value of contingent consideration liability from b4health acquisition 6,700 0
Balance as of September 30, $ (1,400) $ (15,105)


	2021		2020
Balance as of April 1,	$	0	$	(3,300)




Change in fair value of contingent consideration liability from b4health acquisition	0		(4,800)
Balance as of June 30,	$	0	$	(8,100)

2020 2019
Balance as of January 1, $ (23,100) $ (7,700)
Settlement of PDA and LFT contingent consideration liability for year ended December 31, 2018 0 7,000
Settlement of Advanced contingent consideration liability for year ended December 31, 2019 20,000 0
Contingent consideration liability from Silversheet acquisition on January 30, 2019 0 (1,500)
Contingent consideration liability from Advanced acquisition on June 14, 2019 0 (10,622)
Change in fair value of contingent consideration liability from MedPartners acquisition 0 700
Change in fair value of contingent consideration liability from Silversheet acquisition 0 1,500
Change in fair value of contingent consideration liability from Advanced acquisition 0 (4,483)
Change in fair value of contingent consideration liability from b4health acquisition 1,700 0
Balance as of September 30, $ (1,400) $ (15,105)

~~The fair value measurements of contingent consideration liabilities classified as Level 3 in the fair value hierarchy include the following significant unobservable inputs:~~

As of September 30, 2020 As of December 31, 2019
Volatility 75.0% 50.0%
Discount rate 12.9% 16.5%
Risk-free rate 0.1% 1.5%
Cost of debt 4.5% 5.3%


	2021		2020
Balance as of January 1,	$	(8,000)	$	(23,100)
Settlement of Advanced contingent consideration liability for year ended December 31, 2019	0		20,000
Settlement of b4health contingent consideration liability for year ended December 31, 2020	8,000		0





Change in fair value of contingent consideration liability from b4health acquisition	0		(5,000)
Balance as of June 30,	$	0	$	(8,100)

Assets Measured on a Non-Recurring Basis

The Company applies fair value techniques on a non-recurring basis associated with valuing potential impairment losses related to its goodwill, indefinite-lived intangible assets, long-lived assets, and equity investments.

The Company evaluates goodwill and indefinite-lived intangible assets annually for impairment and whenever events or changes in circumstances ~~occur indicating~~indicate that ~~goodwill might be impaired.~~it is more likely than not that an impairment exists. The Company determines the fair value of its reporting units based on a combination of inputs, including the market capitalization of the Company, as well as Level 3 inputs such as discounted cash flows, which are not observable from the market, directly or indirectly. The Company determines the fair value of its indefinite-lived intangible assets using the income approach (relief-from-royalty method) based on Level 3 inputs.

The Company’s equity investment represents an investment in a non-controlled corporation without a readily determinable market value. The Company has elected to measure the investment at cost minus impairment, if any, plus or minus changes resulting from observable price changes. The fair value is determined by using quoted prices for identical or similar investments of the same issuer, which are Level 2 inputs. The Company recognizes changes to the fair value of its equity investment in interest expense, net, and other in the condensed consolidated statements of comprehensive income.

The balance of the equity investment classified as Level 2 in the fair value hierarchy was $17,220 and $15,449 as of ~~both September~~June 30, ~~2020~~2021 and December 31, ~~2019. There were no changes to the fair value of the equity investment recognized during the three and nine months ended September 30, 2020.~~2020, respectively.

There were no triggering events identified, no indication of impairment of the Company’s goodwill, indefinite-lived intangible assets, long-lived assets, or equity investments, and 0 impairment charges recorded during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

Fair Value of Financial Instruments

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. The fair value of the Company’s ~~2024 Notes~~4.625% senior notes due 2027 (the “2027 Notes”) and ~~2027 Notes~~4.000% senior notes due 2029 (the “2029 Notes”) was estimated using quoted market prices in active markets for identical liabilities, which are Level 1 inputs. The carrying amounts and estimated fair value of the ~~2024~~2027 Notes and the ~~2027~~2029 Notes are presented in the following table. See additional information regarding the 2027 Notes and the 2029 Notes in ~~“Item 8. Financial~~Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of the ~~2019~~2020 Annual Report.


		As of September 30, 2020				As of December 31, 2019					As of June 30, 2021				As of December 31, 2020
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
2024 Notes		$	325,000	$	332,719	$	325,000	$	337,188
2027 Notes	2027 Notes	500,000		511,875		300,000		301,500		2027 Notes	$	500,000	$	519,375	$	500,000	$	521,250
2029 Notes										2029 Notes	350,000		352,625		350,000		357,000

The fair value of the Company’s long-term self-insurance accruals cannot be estimated as the Company cannot reasonably determine the timing of future payments.

8. INCOME TAXES

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, as of ~~September~~June 30, ~~2020,~~2021, the Company is no longer subject to state, local or foreign examinations by tax authorities for tax years before ~~2010,~~2011, and the Company is no longer subject to U.S. federal income or payroll tax examinations for tax years before 2016. Prior to the Company’s acquisition of Advanced, on June 14, 2019, Advanced was under an IRS audit for the years 2011-2013 for various payroll tax matters related to the treatment of certain non-taxable per diem allowances and travel benefits. This audit was completed and an assessment was issued for $8,300 in July 2018. The Company received a final determination from the IRS in November 2019 for $1,300. The Company is indemnified by Advanced for the potential contingent liability for all pre-acquisition open years. The Company acquired Stratus Video on February 14, 2020. The Company is indemnified by Stratus Video for any potential international income tax and contingent tax liability items for pre-acquisition open years up to $2,500. The Advanced and Stratus Video acquisitions are more fully described in Note (2), “Acquisitions.”2017.

The Company believes its indemnifications by Advanced and Stratus Video for all pre-acquisition years and its reserve for unrecognized tax benefits and contingent tax issues are adequate with respect to all open years. Notwithstanding the foregoing, the Company could adjust its provision for income taxes and contingent tax liability based on future developments.

CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. Among other things, the CARES Act contains significant business tax provisions, including a deferral of payment of employer payroll taxes and an employer retention credit for employer payroll taxes.

The Company has deferred payment of the employer’s share of payroll taxes of $48,249, which is included in accrued compensation and benefits and other long-term liabilities in the consolidated balance sheet as of June 30, 2021, with half of such taxes to be paid by the end of 2021 and the other half to be paid by the end of 2022. The Company has claimed an employee retention employment tax credit of $1,201.

9. COMMITMENTS AND CONTINGENCIES: LEGAL PROCEEDINGS

From time to time, the Company is involved in various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. These matters typically relate to professional liability, tax, compensation, contract, competitor disputes and employee-related matters and include individual and class action lawsuits, as well as inquiries and investigations by governmental agencies regarding the Company’s employment and compensation practices. Additionally, some of the Company’s clients may also become subject to claims, governmental inquiries and investigations, and legal actions relating to services provided by the Company’s healthcare professionals. Depending upon the particular facts and circumstances, the Company may also be subject to indemnification obligations under its contracts with such clients relating to these matters. The Company accrues for contingencies and records a liability when management believes an adverse outcome from a loss contingency is both probable and the amount, or a range, can be reasonably estimated. Significant judgment is required to determine both probability of loss and the

estimated amount. The Company reviews its loss contingencies at least quarterly and adjusts its accruals and/or disclosures to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, or other new information, as deemed necessary. The most significant matters for which the Company has established loss contingencies are class actions related to wage and hour claims under California and Federal law. Specifically, among other claims in these lawsuits, it is alleged that ~~employees’ wage statements are not sufficiently clear and~~ certain expense reimbursements should be considered wages and included in the regular rate of pay for purposes of calculating overtime rates.

On May 26, 2016, former travel nurse Verna Maxwell Clarke filed a complaint against AMN Services, LLC, in California Superior Court in Los Angeles County. The Company removed the case to the United States District Court for the Central District of California (Case No. 2:16-cv-04132-DSF-KS) (the “Clarke Matter”). The complaint asserts that, due to the Company’s per diem adjustment practices, traveling nurses’ per diem benefits should be included in their regular rate of pay for

the purposes of calculating their overtime compensation. On June 26, 2018, the district court denied the plaintiffs’ Motion for Summary Judgment in its entirety, and granted the Company’s Motion for Summary Judgment with respect to the Plaintiffs’ per diem and overtime claims. The plaintiffs filed an appeal of the judgment relating to the per diem claims with the Ninth Circuit Court of Appeals (the “Ninth Circuit”). On February 8, 2021, a three-judge panel of the Ninth Circuit issued an opinion that reversed the district court’s granting of the Company’s Motion for Summary Judgment and remanded the matter to the district court instructing the district to enter partial summary judgment in favor of the Plaintiffs. On May 7, 2021, the Ninth Circuit issued an order denying the Company’s petition for rehearing. The Company will continue to defend the lawsuit vigorously and intends to seek to appeal the Ninth Circuit’s decision to the United States Supreme Court, although there is no certainty that the Supreme Court will consider the appeal.

On May 2, 2019, former travel nurse Sara Woehrle filed a complaint against AMN Services, LLC, and Providence Health System – Southern California in California Superior Court in Los Angeles County. The Company removed the case to the United States District Court for the Central District of California (Case No. 2:19-cv-05282 DSF-KS). The complaint asserts that, due to the Company’s per diem adjustment practices, traveling nurses’ per diem benefits should be included in their regular rate of pay for the purposes of calculating their overtime compensation. The Complaint also alleges that the putative class members were denied required meal periods, denied proper overtime compensation, were not compensated for all time worked, including reporting time and training time, and received non-compliant wage statements.

The Company believes that its wage and hour practices, including those associated with the cases described above, conform with the ~~established~~applicable law in all material respects. However, ~~litigation is always subject to~~because of the February 2021 ruling by the Ninth Circuit in the Clarke Matter and the inherent uncertainty ~~and~~of litigation, the Company is not able to reasonably predict if any matter will be resolved in a manner that is materially adverse to the Company, ~~beyond~~and accordingly, it recorded an increase to its accruals established in connection with the matters described above amounting to $20,000 during the fourth quarter of 2020. While the Company continues to believe that it has meritorious defenses against the suits described above, the ultimate resolution of these matters could result in a loss of up to $15,000, excluding interest and penalties, in excess of the amounts currently accrued. ~~In addition, for the~~For all other matters, ~~for which it is at least reasonably possible that the estimated loss will change in the near term,~~ the Company is unable to currently estimate the possible loss or range of loss beyond the amounts already accrued.

~~With regard to loss~~ Loss contingencies accrued as of ~~September~~June 30, ~~2020, which~~2021 are included in accounts payable and accrued expenses and other long-term liabilities in the ~~condensed~~ consolidated balance sheets, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows.sheets.

2015

10. BALANCE SHEET DETAILS

The consolidated balance sheets detail is as follows:


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Other current assets:	Other current assets:					Other current assets:
Restricted cash and cash equivalents	Restricted cash and cash equivalents	$	15,194	$	18,393	Restricted cash and cash equivalents	$	19,854	$	18,626
Income taxes receivable	Income taxes receivable	0		5,984		Income taxes receivable	1,800		6,591
Other	Other	15,397		16,069		Other	12,386		15,592
Other current assets	Other current assets	$	30,591	$	40,446	Other current assets	$	34,040	$	40,809

Fixed assets:	Fixed assets:					Fixed assets:
Furniture and equipment	Furniture and equipment	$	45,807	$	37,315	Furniture and equipment	$	52,024	$	47,355
Software	Software	210,735		191,050		Software	239,660		220,971
Leasehold improvements	Leasehold improvements	9,600		9,367		Leasehold improvements	9,602		9,600
		266,142		237,732			301,286		277,926
Accumulated depreciation	Accumulated depreciation	(153,390)		(132,900)		Accumulated depreciation	(179,799)		(161,752)
Fixed assets, net	Fixed assets, net	$	112,752	$	104,832	Fixed assets, net	$	121,487	$	116,174

Other assets:	Other assets:					Other assets:
Life insurance cash surrender value	Life insurance cash surrender value	$	87,485	$	79,515	Life insurance cash surrender value	$	107,360	$	98,161
Other	Other	38,346		40,739		Other	38,103		36,959
Other assets	Other assets	$	125,831	$	120,254	Other assets	$	145,463	$	135,120

Accounts payable and accrued expenses:	Accounts payable and accrued expenses:					Accounts payable and accrued expenses:
Trade accounts payable	Trade accounts payable	$	29,331	$	26,985	Trade accounts payable	$	55,608	$	28,089
Subcontractor payable	Subcontractor payable	59,753		75,562		Subcontractor payable	136,983		79,364
Accrued expenses	Accrued expenses	44,240		36,344		Accrued expenses	45,113		37,849
Loss contingencies	Loss contingencies	7,302		6,146		Loss contingencies	10,746		7,613
Professional liability reserve	Professional liability reserve	9,104		7,925		Professional liability reserve	6,498		8,897
Other	Other	3,205		3,178		Other	5,946		6,069
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	152,935	$	156,140	Accounts payable and accrued expenses	$	260,894	$	167,881

Accrued compensation and benefits:	Accrued compensation and benefits:					Accrued compensation and benefits:
Accrued payroll	Accrued payroll	$	51,016	$	47,381	Accrued payroll	$	100,080	$	59,721
Accrued bonuses		27,833		22,613
Accrued bonuses and commissions						Accrued bonuses and commissions	49,969		34,514
Accrued travel expense	Accrued travel expense	1,796		2,459		Accrued travel expense	2,434		1,998
Health insurance reserve	Health insurance reserve	5,537		4,019		Health insurance reserve	6,011		5,590
Workers compensation reserve	Workers compensation reserve	9,554		8,782		Workers compensation reserve	10,774		10,244
Deferred compensation	Deferred compensation	87,934		81,064		Deferred compensation	112,342		97,184
Other	Other	1,066		4,614		Other	6,585		4,163
Accrued compensation and benefits	Accrued compensation and benefits	$	184,736	$	170,932	Accrued compensation and benefits	$	288,195	$	213,414

Other current liabilities:
Acquisition related liabilities		$	1,400	$	20,000

Other		10,484		5,302
Other current liabilities		$	11,884	$	25,302

Other long-term liabilities:	Other long-term liabilities:					Other long-term liabilities:
Workers compensation reserve	Workers compensation reserve	$	19,711	$	18,291	Workers compensation reserve	$	21,911	$	20,930
Professional liability reserve	Professional liability reserve	33,642		34,606		Professional liability reserve	30,343		31,997
Unrecognized tax benefits	Unrecognized tax benefits	5,751		5,431		Unrecognized tax benefits	5,365		5,447

Other	Other	36,632		3,485		Other	49,239		49,533
Other long-term liabilities	Other long-term liabilities	$	95,736	$	61,813	Other long-term liabilities	$	106,858	$	107,907

2116

~~11. SUBSEQUENT EVENTS~~

On October 20, 2020, the Company completed the issuance of $350,000 aggregate principal amount of the 2029 Notes, which mature on April 15, 2029. Interest on the 2029 Notes is payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2021.

With the proceeds from the 2029 Notes and cash generated from operations, the Company (1) redeemed the entire outstanding $325,000 aggregate principal amount of the 2024 Notes on November 4, 2020, (2) paid $9,857 consisting of the associated redemption premium and all accrued and unpaid interest on the 2024 Notes, (3) repaid $40,000 under the Senior Credit Facility, and (4) paid approximately $4,500 of fees and expenses related to the offering and issuance of the 2029 Notes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results

of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto and other financial information included elsewhere herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission (“SEC”) on February ~~25,~~ 26, 2021 (“2020 ~~(“2019~~ Annual Report”). Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements.” See “Special Note Regarding Forward-Looking Statements.” We undertake no obligation to update the forward-looking statements in this Quarterly Report. References in this Quarterly Report to “AMN Healthcare,” the “Company,” “we,” “us” and “our” refer to AMN Healthcare Services, Inc. and its wholly owned subsidiaries.

~~Changes to Our Reportable Segments~~

Effective March 8, 2020, we modified our reportable segments. We previously utilized three reportable segments, which we identified as follows: (1) nurse and allied solutions, (2) locum tenens solutions, and (3) other workforce solutions. In light of our acquisitions as well as our organizational changes to better align our structure with our strategy, our management reorganized our reportable segments to better reflect how the business is evaluated by the chief operating decision maker. Beginning in the first quarter of 2020, we have disclosed the following three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The nurse and allied solutions segment includes our travel nurse staffing, rapid response nurse staffing and labor disruption, allied staffing, local staffing, and revenue cycle solutions businesses. The physician and leadership solutions segment includes our locum tenens staffing, healthcare interim leadership staffing, executive search, and physician permanent placement businesses. The technology and workforce solutions segment includes remote video interpreting, vendor management systems, workforce optimization, recruitment process outsourcing, education, credentialing and flex pool management businesses. Prior period data in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been reclassified to conform to the new segment reporting structure.

Overview of Our Business

We provide healthcare workforce solutions and staffing services to healthcare organizations across the nation. As an innovative total talent solutions partner, our managed services programs, or “MSP,” vendor management systems, or “VMS,” workforce consulting services, ~~remote video interpretation services,~~ predictive modeling, staff scheduling, credentialing services, revenue cycle solutions, language services, and the placement of physicians, nurses, allied healthcare professionals and healthcare leaders into temporary and permanent positions enable our clients to successfully reduce staffing complexity, increase efficiency and lead their organizations within the rapidly evolving healthcare environment.

We conduct business through three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. For the three months ended ~~September~~June 30, ~~2020,~~2021, we recorded revenue of ~~$551.6~~$857.4 million, as compared to ~~$567.6~~$608.4 million for the same period last year. For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we recorded revenue of ~~$1,762.4~~$1,743.4 million, as compared to ~~$1,635.2~~$1,210.8 million for the same period last year.

Nurse and allied solutions segment revenue comprised ~~71%~~74% and ~~70%~~72% of total consolidated revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Through our nurse and allied solutions segment, we provide hospitals and other healthcare facilities with a comprehensive managed services solution in which we manage and staff all of the temporary nursing and allied staffing needs of a client and traditional clinical staffing solutions of variable assignment lengths. We also provide revenue cycle solutions, which ~~includes~~include skilled labor solutions for remote medical coding, clinical documentation improvement, case management, and clinical data registry, and ~~provides~~provide auditing and advisory services.

Physician and leadership solutions segment revenue comprised ~~20%~~16% and ~~26%~~20% of total consolidated revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Through our physician and leadership solutions segment, we provide

a comprehensive managed services solution in which we manage all of the locum tenens needs of a client and place physicians of all specialties, as well as dentists and advanced practice providers, with clients on a temporary basis as independent contractors. We also recruit physicians and healthcare leaders for permanent placement and place interim leaders and executives across all healthcare settings. The interim healthcare professionals we place are typically placed on contracts with assignment lengths ranging from a few days to one year, and a growing number of these placements are under our managed services solution.

Technology and workforce solutions segment revenue comprised 9%10% and 4%8% of total consolidated revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Through our technology and workforce solutions segment, we provide hospitals and other healthcare facilities with a range of workforce solutions, including: (1) language ~~interpretation~~ services, (2) software-as-a-service (“SaaS”) VMS technologies through which our clients can manage their temporary staffing needs, (3) workforce optimization services that include consulting, data analytics, predictive modeling, and SaaS-based scheduling technology, (4) ~~RPO~~recruitment process outsourcing services that leverage our expertise and support systems to replace or complement a client’s existing internal recruitment function for permanent placement needs, (5) telehealth services, (6) credentialing services, and ~~(6)~~(7) flex pool management and other outsourced solutions services.

As part of our long-term growth strategy to add value for our clients, healthcare professionals, and shareholders, on April 7, 2021 and February 14, 2020, ~~December 19, 2019, June 14, 2019, and January 30, 2019,~~ we acquired Synzi, including its wholly-owned subsidiary SnapMD, and Stratus Video ~~b4health, Advanced,~~(which we have since rebranded as AMN Language Services), respectively. Synzi and ~~Silversheet, respectively. Stratus Video is a remote video interpreting company that provides healthcare interpretation via remote video, over~~SnapMD offer virtual care technology platforms; Synzi focuses on the ~~phone, and onsite in-person, supported by proprietary technology platforms. b4health is an innovative technology company providing a web-based internal float pool~~care management solution and vendor management system for healthcare facilities. Advanced is a national healthcare staffing company that specializes in placing therapists and nurses across multiple settings, including hospitals, schools, clinics, skilled nursing facilities, and home ~~health. Silversheet provides innovative credentialing software solutions to clinicians~~health markets and ~~healthcare enterprises.~~primarily serves as a patient communication and engagement platform, while SnapMD focuses on the outpatient market and primarily serves as a clinical communication and documentation platform. See additional information in the accompanying Note (2), “Acquisitions.”

Operating Metrics

We monitor the following key metrics to help us evaluate our financial condition and performance, identify trends affecting our businesses, and make strategic decisions:

•average travelers on assignment represents the average number of nurse and allied healthcare professionals on assignment during the period;

•bill rates represent the hourly straight-time rates that we bill to clients;

•billable hours represent hours worked by our healthcare professionals that we are able to bill on client engagements;

•days filled is calculated by dividing total locum tenens hours filled during the period by eight hours;

•revenue per day filled is calculated by dividing revenue of our locum tenens business by days filled for the period; and

•bill-to-pay spreads represent the differential between wages paid to healthcare professionals and amounts billed to clients.

Recent Trends

Demand for our temporary and permanent placement staffing services is driven in part by U.S. economic and labor ~~trends. During~~trends, and in 2020 through present, the ~~first few months of 2020, the positive macroeconomic and labor trends created a highly competitive market for healthcare professionals. However, when~~COVID-19 pandemic has significantly impacted demand. When the imposition of “shelter-in-place” orders and the suspension of elective and “non-essential” healthcare services occurred in March 2020 in response to the COVID-19 health crisis, demand for many of our businesses declined significantly. ~~Although most of~~With these ~~“shelter-in-place”~~ orders and ~~service~~ suspensions ~~have been loosened and~~ lifted, general utilization of healthcare ~~continues~~has continued to ~~be below the~~improve and has generally returned to pre-COVID-19 ~~levels, which continues to negatively impact~~levels. Since late 2020, we have been experiencing historically high demand for ~~many of our business lines other than nursing,~~nurses and certain allied disciplines, language interpretation services and our vendor management technology solutions. At the same time, demand for our nursing services has fluctuated significantly throughout the nine months of the year based on COVID-19 related needs and is currently at a historically high level.healthcare professionals. With the ~~uncertainty regarding safety concerns, the increase in unemployment, related~~unpredictable economic ~~concerns~~and employment recovery, healthcare professional “burnout” and the uncertainty surrounding the COVID-19 pandemic, we ~~are unable to predict the extent and duration to which~~have less visibility on future demand levels for many of our businesses ~~will continue to be impacted by the COVID-19 pandemic.~~than pre-pandemic.

In our nurse and allied solutions segment, prior to the COVID-19 pandemic, our ability to recruit enough nurses to meet the then-current demand levels was impacted by the tight labor market and modest bill rate increases. ~~Starting in early March, and in response to~~At the COVID-19 public health crisis, bill rates and wages for nurses increased significantly in order to attract nurses to higher risk positions. In the latter part of April, we experienced a significant cancellation of requests for nurses as hospitalization rates from COVID-19 were initially well below originally expected levels in most areaspeak of the US other than the northeast. In May and early June, with the decrease in COVID-19 related requests coupled with the lower healthcare utilization overall, demand in our nursing businesses dropped well below prior year levels, and bill rates started trending back towards standard rate levels. Starting in late-June, as COVID-19 infection rates and hospitalizations significantly increased across many areas of the country,pandemic, record high demand for nurses ~~rose quickly, and total demand for nursing has exceeded prior year levels since mid-July and is currently at record levels. Demand for nurses~~was most concentrated in specialties including ICU and telemetry nurses. Now, the current historic demand levels are dispersed across many specialties. Our clients are faced with increased labor shortages resulting from nurse burnout, attrition, retirements and ~~medical surgical nurses is particularly strong, and needs are high across~~ the ~~country.~~impact of mandatory vaccination requirements. With the significantly higher demand and ~~urgent~~often need to quickly fill positions, bill rates and wages for these nurses ~~are currently~~have continued to remain well above prior year levels. Although the number of nurses on travel assignments has ~~been increasing each month~~increased since ~~the lowest point in~~ July 2020, our ability to adequately meet the high client demand is constrained by the tight labor market along with nurse burnout and other issues related to the pandemic. In addition, as a result of the significant increase in COVID-19 infection and hospitalization rates throughout the third quarter and into October, our workers’ compensation insurance costs have increased.

The demand in our allied staffing division ishas also ~~seeing~~remained strong. Entering 2021, we saw record ~~demand, but this demand significantly varies by discipline. We have seen a significant increase in~~ demand for respiratory therapists and lab technicians due to COVID-19. The demand for respiratory therapy has declined from its peak as COVID-19 hospitalizations have declined, but still remains at elevated levels. After initially declining at the ~~high COVID-19 infections and~~

~~hospitalizations across~~start of the ~~country. Demand~~pandemic, demand for our imaging and lab specialties ~~has~~ steadily recovered and ~~is now~~remains well above ~~prior year~~pre-pandemic levels. ~~For speech language therapists contracted~~With the partial return to ~~work with schools, the uneven levels of~~ in-person education has slowed in growth, but this slowdown in growth has been partially mitigated by the fact that many therapists have been able to deliver care through the adoption of our teletherapy platform. Prior to the COVID-19 public health crisis, our allied staffing division experienced a decline inand additional federal stimulus, demand for ~~physical~~ therapists ~~from skilled nursing facility~~in schools has increased for placements both now and ~~home health clients resulting from recently implemented Medicare reimbursement changes. This decline in demand was further exacerbated by~~for the impact of COVID-19 in March. Although the utilization of physical therapists has been slowly increasing with the general recovery in healthcare, demand and placements for this discipline are still well below priornext school year.

In our physician and leadership solutions segment, we have seen a return in demand to pre-pandemic levels. We have seen particularly higher demand for certain specialties, such as anesthesiologists, certified registered nurse anesthetists and advanced practice clinicians, in our locum tenens ~~division started the year well, with recruiter productivity and revenue increasing after disruptions~~division. Longer term, we expect continued strong core demand resulting from ~~process~~an increased level of burnout and ~~technology changes made during 2018. However, in mid-March, as a result~~turnover of ~~COVID-19, our locum tenens business experienced a significant increase in order cancellations and a decrease in overall demand due to the suspension of elective procedures and non-essential~~ healthcare ~~services. With healthcare utilization resuming in late April, demand and placements for locum tenens has been slowly improving, but the recovery is inconsistent across specialties.~~

~~For our interim~~ leadership division, demand decreased as providers reacted to lower patient volumes and focused on cost containment. Our physician permanent placement and healthcare executive search businesses experienced a decline in overall search demand as many clients have temporarily suspended filling open roles due to uncertainty from the COVID-19 public health crisis. Since June, demand for our interim and permanent placement services has improved from their lowest levels, but clients remain cautious in hiring in this uncertain environment.roles.

In our technology and workforce solutions segment, our VMS technologies ~~initially~~ experienced increased growth ~~following~~as demand levels related to the ~~outbreak~~COVID-19 pandemic continued at elevated levels during the first half of the ~~COVID-19 public health crisis as clients utilized~~year. The high demand resulted in the continued high utilization of our VMS technologies ~~to effectively manage their increased~~and elevated bill rates. This trend has continued in a manner very consistent with the robust demand for ~~nurses. As demand for nurses declined during the quarter, utilization of the VMS technologies also declined. However, more recently, orders~~nurse and ~~placements in the technologies have risen again, and new clients are also adopting the platforms to engage with contingent labor.~~allied staffing.

~~In early March, the~~The utilization inof our language ~~interpretation~~services business ~~declined as a result~~continued to grow throughout the first half of the ~~COVID-19-related suspension or~~year as the restriction of elective and “non-essential” healthcare ~~services. However, utilization started~~services continued to ~~increase in late April as many of these restrictions were lifted~~ease and healthcare utilization ~~resumed~~returned to more normal activities. ~~By mid-June, weekly interpretation minutes utilized were above pre-COVID-19 levels and have continued to steadily increase from both existing and new clients.~~

At the onset of the COVID-19 pandemic, we experienced a delay in discussions with clients regarding new contracts or ~~expansions. As clients~~expansions, but these conversations and contracts have ~~recently begun to resume normal operations, we have contracted for several new managed services programs and service line expansions.~~resumed. As a result of our ongoing focus on these types of strategic MSP relationships, the percentage of our staffing revenue derived from our MSP clients ~~continues~~has continued to increase.

~~In response~~As our businesses have continued to recover from the ~~reduced demand for services as a result~~negative impacts of the COVID-19 pandemic ~~throughout the second quarter,~~experienced last year, we ~~took actions~~have increased our workforce to ~~reduce~~support our ~~selling, general~~clients’ needs and ~~administrative expenses. Cost reduction actions taken included, among other things, suspending~~our new service offerings. We have also increased spending

in certain areas including employer contributions under our 401(k) retirement savings ~~plan~~ and deferred compensation ~~plan, reducing our workforce~~plans, along with employee bonuses and other incentives to ~~correspond to reduced demand,~~attract and reducing variable compensation, travel, professional services and marketing expenses. As our businesses continue to recover, we have been selectively increasing our workforce, increasing spending in certain areas and restoring certain benefits, although overall expenses are still well below the levels before COVID-19.retain talent.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to intangible assets purchased in a business combination, asset impairments, accruals for self-insurance, compensation and related benefits, accounts receivable, contingencies and litigation, ~~earn-out~~contingent consideration (“earn-out”) liabilities associated with acquisitions, and income taxes. We base these estimates on the information that is currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary from these estimates under different assumptions or conditions. If these estimates differ significantly from actual results, our consolidated financial statements and future results of operations may be materially impacted. There have been no material changes in our critical accounting policies and estimates, other than the adoption of the Accounting Standards Updates (“ASUs”) described in ~~Item 1. Condensed Consolidated Financial~~

~~Statements—~~the accompanying Note 1, “Basis of Presentation,” as compared to the critical accounting policies and estimates described in our ~~2019~~2020 Annual Report.

Results of Operations

The following table sets forth, for the periods indicated, selected unaudited condensed consolidated statements of operations data as a percentage of revenue. Our results of operations include three reportable segments: (1) nurse and allied solutions, (2) physician and leadership solutions, and (3) technology and workforce solutions. The ~~Silversheet, Advanced, b4health~~Stratus Video, Synzi and ~~Stratus Video~~SnapMD acquisitions impact the comparability of the results between the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 depending on the timing of the applicable acquisition. Our historical results are not necessarily indicative of our future results of operations.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Unaudited Condensed Consolidated Statements of Operations:	Unaudited Condensed Consolidated Statements of Operations:									Unaudited Condensed Consolidated Statements of Operations:
Revenue	Revenue	100.0	%	100.0	%	100.0	%	100.0	%	Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	Cost of revenue	66.5		66.5		66.9		66.6		Cost of revenue	67.3		67.5		67.3		67.0
Gross profit	Gross profit	33.5		33.5		33.1		33.4		Gross profit	32.7		32.5		32.7		33.0
Selling, general and administrative	Selling, general and administrative	20.2		23.5		22.4		22.9		Selling, general and administrative	18.3		22.5		18.2		23.4
Depreciation and amortization	Depreciation and amortization	4.9		3.0		3.9		2.6		Depreciation and amortization	2.8		3.7		2.8		3.5
Income from operations	Income from operations	8.4		7.0		6.8		7.9		Income from operations	11.6		6.3		11.7		6.1
Interest expense, net, and other	Interest expense, net, and other	2.3		1.4		1.9		1.1		Interest expense, net, and other	1.2		1.9		1.1		1.8
Income before income taxes	Income before income taxes	6.1		5.6		4.9		6.8		Income before income taxes	10.4		4.4		10.6		4.3
Income tax expense	Income tax expense	1.4		1.5		1.4		1.5		Income tax expense	2.6		0.7		2.7		1.4
Net income	Net income	4.7	%	4.1	%	3.5	%	5.3	%	Net income	7.8	%	3.7	%	7.9	%	2.9	%

Comparison of Results for the Three Months Ended ~~September~~June 30, ~~2020~~2021 to the Three Months Ended ~~September~~June 30, ~~2019~~2020

Revenue. Revenue ~~decreased 3%~~increased 41% to ~~$551.6~~$857.4 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$567.6~~$608.4 million for the same period in ~~2019,~~2020, primarily attributable to ~~lower~~higher organic revenue in our ~~physician and leadership solutions and~~ nurse and allied solutions ~~segments, partially offset by additional revenue of $36.6 million from our b4health~~ and ~~Stratus Video acquisitions. Excluding the additional revenue from acquisitions, revenue decreased 9%.~~technology and workforce solutions segments.

Nurse and allied solutions segment revenue ~~decreased 4%~~increased 41% to ~~$382.7~~$624.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$398.4~~$444.5 million for the same period in ~~2019.~~2020. The ~~$15.7~~$180.0 million ~~decrease~~increase was primarily attributable to ~~a 20% decrease in the average number of healthcare professionals on assignment, partially offset by~~ an approximately ~~15%~~10% increase in the average bill rate, a 28% increase in the average number of travelers on assignment, and a 2% increase in billable hours during the three months ended ~~September~~June 30, ~~2020.~~2021.

Physician and leadership solutions segment revenue ~~decreased 24%~~increased 28% to ~~$109.1~~$139.1 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$143.8~~$108.6 million for the same period in ~~2019.~~2020, with the prior year significantly impacted by a demand decline related to the pandemic. The ~~$34.7~~$30.5 million ~~decrease~~increase was primarily attributable to a ~~16% decrease~~21% increase in the number of days filled and a 4% ~~decrease~~increase in the revenue per day filled in our locum tenens business ~~which was attributable to the continued impact of COVID-19 since the second half of March of 2020,~~ during the three months ended ~~September~~June 30, ~~2020. In addition, revenue in our~~2021, as we are

seeing a return of core business demand and volume. Our interim leadership business experienced an approximately 30% growth from a recovery in demand and COVID-19 project work. Our physician permanent placement and executive search businesses ~~declined during the three months ended September 30, 2020 due~~also grew as search counts build back up to ~~a decrease in overall demand as some clients continued to place new searches on hold due to the COVID-19 public health crisis.~~pre-COVID-19 levels.

Technology and workforce solutions segment revenue increased ~~136%~~70% to ~~$59.8~~$93.9 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$25.3~~$55.3 million for the same period in ~~2019.~~2020. The ~~$34.5~~$38.6 million increase was primarily attributable to ~~additional revenue of $36.6 million from~~organic growth within our ~~b4health~~language services, VMS, and ~~Stratus Video acquisitions during the three months ended September 30, 2020.~~outsourced solutions businesses.

For the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, revenue under our MSP arrangements comprised approximately ~~49%~~58% and ~~43%~~55% of our consolidated revenue, ~~67%~~75% and ~~54% for~~70% of our nurse and allied solutions segment revenue and ~~16%~~15% and ~~20% for~~22% of our physician and leadership solutions segment revenue, respectively.

Gross Profit. Gross profit ~~decreased 3%~~increased 42% to ~~$184.6~~$280.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$190.0~~$197.5 million for the same period in ~~2019,~~2020, representing gross margins of ~~33.5%~~32.7% and ~~33.5%~~32.5%, respectively. ~~Consolidated~~The increase in consolidated gross margin

for the three months ended ~~September~~June 30, ~~2020,~~2021, as compared to the same period in ~~2019,~~2020, was primarily ~~impacted~~due to a change in sales mix resulting from higher revenue in our technology and workforce solutions segment and its higher margins as compared to our staffing businesses, which was partially offset by a lower gross margin in relation to the higher revenue in our nurse and allied solutions segment, driven primarily by lower bill-to-pay spreads. Gross margin by reportable segment for the three months ended June 30, 2021 and 2020 was 26.6% and 27.0% for nurse and allied solutions, 36.6% and 36.4% for physician and leadership solutions, and 67.7% and 68.7% for technology and workforce solutions, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses were $156.6 million, representing 18.3% of revenue, for the three months ended June 30, 2021, as compared to $137.1 million, representing 22.5% of revenue, for the same period in 2020. The increase in SG&A expenses was primarily due to higher ~~workers’~~employee compensation and ~~health insurance~~benefits and other expenses associated with our revenue growth. The overall increase was partially offset by a $10.3 million decrease related to acquisition, integration, changes in the fair value of contingent consideration liabilities from acquisitions, restructuring, and extraordinary legal expenses. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:


	(In Thousands)
	Three Months Ended June 30,
	2021		2020
Nurse and allied solutions	$	76,487	$	58,829
Physician and leadership solutions	29,014		24,239
Technology and workforce solutions	21,482		16,488
Unallocated corporate overhead	23,627		31,165
Share-based compensation	6,019		6,347
	$	156,629	$	137,068

Depreciation and Amortization Expenses. Amortization expense increased 5% to $15.8 million for the three months ended June 30, 2021 from $15.1 million for the same period in 2020, primarily attributable to additional amortization expenses related to the intangible assets acquired in the Synzi and SnapMD acquisition and the shortened useful lives of tradename intangible assets during the third quarter of 2020. Depreciation expense increased 27% to $8.9 million for the three months ended June 30, 2021 from $7.0 million for the same period in 2020, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing information technology investments to support our total talent solutions initiatives and to optimize our internal front and back office systems. Additionally, $0.6 million and $0.4 million of depreciation expense for our language services business is included in cost of revenue for the three months ended June 30, 2021 and 2020, respectively.

Interest Expense, Net, and Other. Interest expense, net, and other was $10.1 million during the three months ended June 30, 2021 as compared to $11.4 million for the same period in 2020. The decrease was primarily due to a lower average debt outstanding balance for the three months ended June 30, 2021, which resulted from repayments of the Credit Facilities (as defined below) partially offset by the issuances of higher interest bearing senior notes during the third and fourth quarters of 2020.

Income Tax Expense. Income tax expense was $22.3 million for the three months ended June 30, 2021 as compared to $4.6 million for the same period in 2020, reflecting effective income tax rates of 25% and 17% for the three months ended June 30, 2021 and 2020, respectively. The increase in the effective income tax rate was primarily attributable to the recognition of a $1.1 million discrete tax benefit for fair value changes in the cash surrender value of our Company Owned Life Insurance

(“COLI”) during the three months ended June 30, 2021 compared to a $4.3 million discrete tax benefit for COLI during the same period in 2020, in relation to income before income taxes of $89.1 million and $27.0 million for the three months ended June 30, 2021 and 2020, respectively. We currently estimate our annual effective tax rate to be approximately 26% for 2021. The 25% effective tax rate for the three months ended June 30, 2021 differs from our estimated annual effective tax rate of 26% primarily due to the ~~COVID-19 pandemic,~~discrete tax benefits for COLI recognized during the three months ended June 30, 2021, in relation to income before income taxes.

Comparison of Results for the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Revenue. Revenue increased 44% to $1,743.4 million for the six months ended June 30, 2021 from $1,210.8 million for the same period in 2020, primarily attributable to higher organic revenue in our nurse and allied solutions and technology and workforce solutions segments along with additional revenue of $21.4 million from our Stratus Video, Synzi and SnapMD acquisitions.

Nurse and allied solutions segment revenue increased 48% to $1,281.1 million for the six months ended June 30, 2021 from $868.8 million for the same period in 2020. The $412.3 million increase was primarily attributable to an approximately 25% increase in the average bill rate, a 16% increase in the average number of travelers on assignment, and a 3% increase in billable hours during the six months ended June 30, 2021.

Physician and leadership solutions segment revenue increased 14% to $279.9 million for the six months ended June 30, 2021 from $246.5 million for the same period in 2020. The $33.4 million increase was primarily attributable to a 9% increase in the number of days filled and a 7% increase in the revenue per day filled in our locum tenens business during the six months ended June 30, 2021, which was driven in part by COVID-19 project work as well as a return in core demand and volume. The revenue increase was also attributable to growth in our interim leadership, physician permanent placement, and executive search businesses due to an increase in overall demand as engagement and search counts build back up to pre-COVID-19 levels along with COVID-19 project work.

Technology and workforce solutions segment revenue increased 91% to $182.4 million for the six months ended June 30, 2021 from $95.5 million for the same period in 2020. The $86.9 million increase was primarily attributable to organic growth within our VMS, language services, and outsourced solutions businesses along with additional revenue of $21.4 million from our Stratus Video, Synzi and SnapMD acquisitions during the six months ended June 30, 2021.

For the six months ended June 30, 2021 and 2020, revenue under our MSP arrangements comprised approximately 58% and 51% of our consolidated revenue, 75% and 65% of our nurse and allied solutions segment revenue and 14% and 19% of our physician and leadership solutions segment revenue, respectively.

Gross Profit. Gross profit increased 42% to $569.4 million for the six months ended June 30, 2021 from $399.6 million for the same period in 2020, representing gross margins of 32.7% and 33.0%, respectively. The decline in consolidated gross margin for the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to a lower gross margin in relation to the higher revenue in our nurse and allied solutions segment, driven primarily by lower bill-to-pay spreads, which was partially offset by ~~the change~~higher revenue in ~~sales mix resulting from~~ our ~~b4health~~technology and ~~Stratus Video acquisitions~~workforce solutions segment and ~~their~~its higher margins as compared to our staffing businesses. Gross margin by reportable segment for the ~~three~~six months ended ~~September~~June 30, 2021 and 2020 was 26.8% and ~~2019 was 27.4% and 28.5%~~27.7% for nurse and allied solutions, ~~36.7%~~36.8% and ~~36.8%~~36.6% for physician and leadership solutions, and ~~66.1%~~67.7% and ~~93.0%~~71.7% for technology and workforce solutions, respectively. The year-over-year gross margin decline in the technology and workforce solutions segment was primarily due to the change in sales mix resulting from ~~the addition of lower margin Stratus Video as compared to~~ our ~~SaaS-based technologies within the segment.~~

~~Selling, General and Administrative Expenses~~. Selling, general and administrative (“SG&A”) expenses were $111.2 million, representing 20.2% of revenue, for the three months ended September 30, 2020, as compared to $133.2 million, representing 23.5% of revenue, for the same period in 2019. The decrease in SG&A expenses was primarily due to cost reduction measures that were initiated during the second quarter of 2020 and a $10.3 million decrease related to acquisition, integration, changes in the fair value of earn-out liabilities from acquisitions, restructuring, and extraordinary legal expenses. The overall decrease was partially offset by $5.7 million of additional SG&A expenses from the b4health and Stratus Video acquisitions. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:

(In Thousands)
Three Months Ended September 30,
2020 2019
Nurse and allied solutions $ 52,067 $ 60,925
Physician and leadership solutions 24,537 35,455
Technology and workforce solutions 14,369 12,145
Unallocated corporate overhead 16,490 21,857
Share-based compensation 3,772 2,825
$ 111,235 $ 133,207

~~Depreciation and Amortization Expenses~~. Amortization expense increased 72% to $19.6 million for the three months ended September 30, 2020 from $11.4 million for the same period in 2019, primarily attributable to additional amortization expenses related to the intangible assets acquired in the b4health and Stratus Video acquisitions and the shortened useful lives of tradename intangible assets during the third quarter of 2020. Depreciation expense increased 28% to $7.3 million for the three months ended September 30, 2020 from $5.7 million for the same period in 2019, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing front and back office information technology initiatives.

~~Interest Expense, Net, and Other~~. Interest expense, net, and other, was $12.6 million during the three months ended September 30, 2020 as compared to $7.8 million for the same period in 2019. The increase is primarily due to a higher average debt outstanding balance for the three months ended September 30, 2020, which resulted from (1) borrowings under our Amended Credit Agreement (as defined below in this Item 2) used to finance the Stratus Video acquisition ~~(2) the issuance of our Existing 2027 Notes (as defined below in this Item 2) in October 2019,~~ and (3) the issuance of our New 2027 Notes (as defined below in this Item 2) in August 2020. The proceeds from the issuances of the higher interest bearing senior notes were used to repay, in whole in the fourth quarter of 2019 and in part in the third quarter of 2020, our indebtedness under the Credit Facilities (as defined below in this Item 2).

~~Income Tax Expense~~. Income tax expense was $7.8 million for the three months ended September 30, 2020 as compared to $8.4 million for the same period in 2019, reflecting effective income tax rates of 23% and 26% for the three months ended September 30, 2020 and 2019, respectively. The decrease in the effective income tax rate was primarily attributable to the recognition of a $1.6 million discrete tax benefit for fair value changes in the cash surrender value of our Company Owned Life Insurance (“COLI”) during the three months ended September 30, 2020 compared to a $0.2 million discrete tax benefit for COLI during the same period in 2019, in relation to income before income taxes of $33.9 million and $31.9 million for the three months ended September 30, 2020 and 2019, respectively. We currently estimate our annual effective tax rate to be approximately 29% for 2020. The 23% effective tax rate for the three months ended September 30, 2020 differs from our estimated annual effective tax rate of 29% primarily due to the discrete tax benefits for COLI and shared-based compensation recognized during the three months ended September 30, 2020, in relation to income before income taxes.

~~Comparison of Results for the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019~~

~~Revenue~~. Revenue increased 8% to $1,762.4 million for the nine months ended September 30, 2020 from $1,635.2 million for the same period in 2019, primarily attributable to additional revenue of $154.4 million from our Silversheet, Advanced, b4health, and Stratus Video acquisitions and higher organic revenue in our nurse and allied solutions segment, partially offset byits lower ~~revenue in our physician and leadership solutions segment. Excluding the additional revenue from acquisitions, revenue decreased 2%.~~

Nurse and allied solutions segment revenue increased 10% to $1,251.5 million for the nine months ended September 30, 2020 from $1,139.9 million for the same period in 2019. The $111.6 million increase was primarily attributable to additional revenue of $72.2 million in connection with the Advanced acquisition. Excluding the impact from the Advanced acquisition, the increase was also attributable to an approximately 14% increase in the average bill rate, partially offset by a 12% decrease in the average number of healthcare professionals on assignment and an approximately $15.0 million decrease in labor disruption revenue during the nine months ended September 30, 2020.

Physician and leadership solutions segment revenue decreased 16% to $355.6 million for the nine months ended September 30, 2020 from $423.4 million for the same period in 2019. The $67.8 million decrease was primarily attributable to a 13% decrease in the number of days filled during the nine months ended September 30, 2020 and a 3% decrease in the revenue per day filled in our locum tenens business. In addition, revenue in our interim leadership and permanent placement businesses declined during the nine months ended September 30, 2020 due to a decrease in overall demand as some clients placed new searches on hold due to the COVID-19 public health crisis.

Technology and workforce solutions segment revenue increased 116% to $155.4 million for the nine months ended September 30, 2020 from $72.0 million for the same period in 2019. Of the $83.4 million increase, $82.2 million was attributable to additional revenue from our Silversheet, b4health and Stratus Video acquisitions during the nine months ended September 30, 2020.

For the nine months ended September 30, 2020 and 2019, revenue under our MSP arrangements comprised approximately 49% and 46% of our consolidated revenue, 65% and 58% for nurse and allied solutions segment revenue and 17% and 20% for physician and leadership solutions segment revenue, respectively.

~~Gross Profit~~. ~~Gross profit increased 7% to $584.2 million for the nine months ended September 30, 2020 from $546.3 million for the same period in 2019, representing gross~~ margins of 33.1% and 33.4%, respectively. The decline in consolidated gross margin for the nine months ended September 30, 2020 was primarily due to a lower gross margin in our nurse and allied solutions segment, driven primarily by lower bill-to-pay spreads and higher workers’ compensation insurance expenses due to the COVID-19 pandemic, partially offset by the change in sales mix resulting from our b4health and Stratus Video acquisitions and their higher margins as compared to our staffing businesses. Gross margin by reportable segment for the nine months ended September 30, 2020 and 2019 was 27.6% and 28.3% for nurse and allied solutions, 36.6% and 36.9% for physician and leadership solutions, and 69.5% and 93.0% for technology and workforce solutions, respectively. The year-over-year gross margin decline in the technology and workforce solutions segment was primarily due to the change in sales mix resulting from the addition of lower margin Stratus Video as compared to our SaaS-based technologies within the segment.

Selling, General and Administrative Expenses. SG&A expenses were ~~$394.5~~$317.8 million, representing ~~22.4%~~18.2% of revenue, for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, as compared to ~~$374.9~~$283.3 million, representing ~~22.9%~~23.4% of revenue, for the same period in ~~2019.~~2020. The increase in SG&A expenses was primarily due to ~~$24.4~~higher employee compensation and benefits, share-based compensation and other expenses associated with our revenue growth. The overall increase was partially offset by a $19.9 million ~~of additional SG&A expenses from the Silversheet, Advanced, b4health, and Stratus Video acquisitions, a $6.9 million increase~~decrease related to acquisition, integration, changes in the fair value of ~~earn-out~~contingent consideration liabilities from acquisitions, restructuring, and extraordinary legal expenses, a $3.5 million lower favorable actuarial-based decrease in our professional liability reserves as compared to the same period in 2019, and a $3.3 million increase in share-based compensation expense. The increase was partially offset by cost reduction measures that were initiated during the second quarter of 2020.expenses. SG&A expenses broken down among the reportable segments, unallocated corporate overhead, and share-based compensation are as follows:

(In Thousands)
Nine Months Ended September 30,
2020 2019
Nurse and allied solutions $ 172,256 $ 164,308
Physician and leadership solutions 84,820 103,950
Technology and workforce solutions 46,192 33,808
Unallocated corporate overhead 76,223 61,093
Share-based compensation 15,046 11,713
$ 394,537 $ 374,872

2721


	(In Thousands)
	Six Months Ended June 30,
	2021		2020
Nurse and allied solutions	$	151,857	$	120,189
Physician and leadership solutions	59,829		60,283
Technology and workforce solutions	39,801		31,823
Unallocated corporate overhead	51,048		59,733
Share-based compensation	15,306		11,274
	$	317,841	$	283,302

Depreciation and Amortization Expenses. Amortization expense increased ~~89%~~9% to ~~$48.1~~$31.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$25.4~~$28.5 million for the same period in ~~2019, with the increase~~2020, primarily attributable to additional amortization expenses related to the intangible assets acquired in the ~~Advanced, b4health and~~ Stratus Video, Synzi and SnapMD acquisitions ~~the shortened useful life of the tradename intangible asset acquired in the MedPartners acquisition, which occurred during the third quarter of 2019,~~ and the shortened useful lives of tradename intangible assets during the third quarter of 2020. Depreciation expense increased ~~30%~~24% to ~~$21.0~~$17.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$16.1~~$13.7 million for the same period in ~~2019,~~2020, primarily attributable to an increase in purchased and developed hardware and software placed in service for our ongoing information technology investments to support our total talent solutions initiatives and to optimize our internal front and back office ~~information technology initiatives.~~systems. Additionally, $1.1 million and $0.5 million of depreciation expense for our language services business is included in cost of revenue for the six months ended June 30, 2021 and 2020, respectively.

Interest Expense, Net, and Other. Interest expense, net, and other was ~~$35.1~~$19.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to ~~$19.6~~$22.5 million for the same period in ~~2019.~~2020. The ~~increase is~~decrease was primarily due to a ~~higher~~lower average debt outstanding balance for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, which resulted from ~~(1) borrowings under our Amended~~repayments of the Credit Agreement (as defined below in this Item 2) used to finance the Stratus Video and Advanced acquisitions, (2) the issuance of our Existing 2027 Notes (as defined below in this Item 2) in October 2019, and (3) the issuance of our New 2027 Notes (as defined below in this Item 2) in August 2020. The proceeds fromFacilities partially offset by the issuances of ~~the~~ higher interest bearing senior notes ~~were used to repay, in whole in the fourth quarter of 2019 and in part in~~during the third ~~quarter~~and fourth quarters of 2020, ~~our indebtedness under~~and a $1.3 million gain related to the ~~Credit Facilities (as defined below~~change in ~~this Item 2).~~fair value of an equity investment.

Income Tax Expense. Income tax expense was ~~$24.2~~$47.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to ~~income tax expense of $23.9~~$16.4 million for the same period in ~~2019,~~2020, reflecting effective income tax rates of ~~28%~~26% and ~~22%~~32% for ~~these periods,~~the six months ended June 30, 2021 and 2020, respectively. The ~~increase~~decrease in the effective income tax rate was primarily attributable to the recognition of $3.5 million of discrete tax benefits during the six months ended June 30, 2021 compared to $0.6 million of ~~$2.9 million and $9.8 million~~discrete tax benefits during the same period in 2020, in relation to income before income taxes of ~~$85.5~~$184.5 million and ~~$110.4~~$51.6 million for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~We currently estimate our annual effective income tax rate to be approximately 29% for 2020.~~

Liquidity and Capital Resources

In summary, our cash flows were:


		(In Thousands)					(In Thousands)
		Nine Months Ended September 30,					Six Months Ended June 30,
		2020		2019			2021		2020

Net cash provided by operating activities	Net cash provided by operating activities	$	216,981	$	146,205	Net cash provided by operating activities	$	210,625	$	128,271
Net cash used in investing activities	Net cash used in investing activities	(528,458)		(253,606)		Net cash used in investing activities	(53,609)		(513,262)
Net cash provided by financing activities		266,557		136,440
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	(30,703)		328,994

Historically, our primary liquidity requirements have been for acquisitions, working capital requirements, and debt service under our credit facilities and senior notes. We have funded these requirements through internally generated cash flow and funds borrowed under our credit facilities. During the first quarter of 2021, we paid off the remaining balance of our $250.0 million secured term loan credit facility (the “Additional Term Loan”). As of ~~September~~June 30, ~~2020,~~2021, (1) ~~the total of our Additional Term Loan (as defined below) outstanding (including both current and long-term portions) was $46.9 million, (2) $40.0 million~~no amount was drawn with ~~$338.1~~$378.1 million of available credit under our $400.0 million secured revolving credit facility (the “Senior Credit Facility” and, together with the ~~Senior Credit Facility (as defined below)~~Additional Term Loan, the “Credit Facilities”), (2) the aggregate principal amount of our 4.625% senior notes due 2027 (the “2027 Notes”) outstanding equaled $500.0 million and (3) the aggregate principal amount of our ~~5.125% Senior Notes~~4.000% senior notes due ~~2024~~2029 (the ~~“2024~~“2029 Notes”) outstanding equaled ~~$325.0 million and (4) the aggregate principal amount of our the 2027 Notes (as defined below) outstanding equaled $500.0~~$350.0 million. We describe in further detail our amended credit agreement, ~~in effect prior to the second amendment thereof,~~ under which ~~our Senior~~the Credit ~~Facility is~~Facilities are governed, the ~~2024~~2027 Notes, and the ~~2027~~2029 Notes in ~~“Item 8. Financial~~Part II, Item 8, “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (8), Notes Payable and Credit Agreement” of our ~~2019~~2020 Annual Report. See additional information on our Amended Credit Agreement (as defined below) and the New 2027 Notes (as defined below) in Note (6), “Notes Payable and Credit Agreement” to the accompanying Condensed Consolidated Financial Statements.

We believe that cash generated from operations and available borrowings under ~~our~~the Senior Credit Facility will be sufficient to fund our operations, including expected capital expenditures, for at least the next 12 ~~months and beyond.~~months. We intend to finance

potential future acquisitions with cash provided from operations, borrowings under ~~our~~the Senior Credit Facility or other borrowings under our ~~Amended Credit Agreement,~~amended credit agreement, bank loans, debt or equity offerings, or some combination of the foregoing. The following discussion provides further details of our liquidity and capital resources.

Operating Activities

Net cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$217.0~~$210.6 million, compared to ~~$146.2~~$128.3 million for the same period in ~~2019.~~2020. The increase in net cash provided by operating activities was primarily attributable to (1) an increase in accounts payable and accrued expenses between periods of $105.9 million primarily due to an increase in associate vendor usage and timing of payments, (2) an increase in net income excluding non-cash expenses of $101.6 million primarily due to improved operating results in our nurse and allied solutions and technology and workforce solutions segments, and (3) an increase in accrued compensation and benefits between periods of $66.3 million primarily due to increases in pay rates, billable hours, and the average number of travelers on assignment in our nurse and allied solutions segment and increased employee compensation and benefits. The overall increase was partially offset by (1) an increase in accounts receivable and subcontractor receivables between periods of $164.7 million due to a higher average receivables balance in the current year, which was due to increases in revenue and associate vendor usage and partially offset by improved collections, and (2) a decrease in other liabilities between periods of ~~$36.9 million, and a corresponding decrease in income tax receivable between periods of $9.6~~$28.5 million primarily due to our election in the prior year to defer ~~estimated income tax payments and~~ employer payroll taxes in accordance with the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was partially offset by the contingent consideration earn-out payment for the Advanced acquisition (in excess of its acquisition-date fair value, which is noted below in financing activities), (2) a decrease in accounts receivable and subcontractor receivable between periods of $19.0 million due to improved collections and a decrease in associate vendor usage, (3) an increase in ~~accounts payable and accrued expenses between periods of $8.8 million primarily due to the payment of~~accruals established in connection with a ~~loss contingency~~legal matter during the ~~second~~fourth quarter of 2019, (4) a decrease in other assets between periods of $12.2 million due to lower long-term prepayments and deposits. The overall increase was partially offset by a decrease in accrued compensation and benefits between periods of $12.2 million primarily due to lower employee contributions to the deferred compensation plan as compared to the prior year.2020. Our Days Sales Outstanding (“DSO”) was 5950 days at ~~September~~June 30, ~~2020,~~2021, 55 days at December 31, ~~2019,~~2020, and 5755 days at ~~September~~June 30, ~~2019.~~2020.

Investing Activities

Net cash used in investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$528.5~~$53.6 million, compared to ~~$253.6~~$513.3 million for the same period in ~~2019.~~2020. The ~~increase~~decrease was primarily due to (1) ~~$476.5~~$41.3 million used for acquisitions during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, as compared to ~~$228.2~~$476.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, and (2) a net ~~purchase~~proceeds of restricted investments related to our captive insurance company of ~~$15.9~~$12.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, as compared to a net ~~proceeds~~purchase of ~~$11.9~~$9.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019, which is primarily due to strategic planning of investing in longer maturities.~~2020. In addition, capital expenditures were ~~$27.4~~$23.1 million and ~~$24.8~~$19.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Financing Activities

Net cash used in financing activities during the six months ended June 30, 2021 was $30.7 million, primarily due to (1) repayments of $70.0 million under the Senior Credit Facility and $21.9 million under the Additional Term Loan, (2) $5.7 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards, and (3) $3.1 million for acquisition earn-out payments, partially offset by borrowings of $70.0 million under the Senior Credit Facility. Net cash provided by financing activities during the ~~nine~~six months ended ~~September~~June 30, 2020 was ~~$266.6~~$329.0 million, primarily due to ~~(1)~~ borrowings of ~~$245.0~~$225.0 million under the Senior Credit Facility ~~(as defined below)~~ and $250.0 million under the Additional Term Loan, ~~(as defined below),~~ which were primarily used to fund our Stratus Video acquisition, ~~and (2) $202.0 million of gross proceeds received in connection with the issuance of the New 2027 Notes (as defined below),~~ partially offset by (1) the ~~repayments~~repayment of ~~$205.0~~$125.0 million under the Senior Credit Facility, ~~and $203.1 million under the Additional Term Loan,~~ (2) $10.6 million for acquisition ~~contingent consideration~~ earn-out payments, (3) ~~$4.8~~$4.6 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards, and (4) ~~$6.9~~$4.2 million payment of financing costs in connection with the Amended Credit Agreement (as defined below) and the issuance of the New 2027 Notes. Net cash provided by financing activities during the nine months ended September 30, 2019 was $136.4 million, primarily due to borrowings of $101.0 million under the Senior Credit Facility and $150.0 million of borrowings under the Term Loan (as defined below) used to fund our Advanced acquisition, partially offset by (1) the repayment of $75.0 million under the Senior Credit Facility, (2) $18.7 million paid in connection with the repurchase of common stock, (3) $5.7 million for acquisition contingent consideration earn-out payments, and (4) $13.3 million in cash paid for shares withheld for payroll taxes resulting from the vesting of employee equity awards.

~~Amended Credit Agreement~~

On February 9, 2018, we entered into a credit agreement (the “New Credit Agreement”) with several lenders to provide for a $400.0 million secured revolving credit facility (the “Senior Credit Facility”) to replace our then-existingamended credit agreement. The Senior Credit Facility includes a $50.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. On June 14, 2019, we entered into the first amendment to the New Credit Agreement (the “First Amendment”) to provide for, among other things, a $150.0 million secured term loan credit facility (the “Term Loan”). On February 14, 2020, we entered into the second amendment to the New Credit Agreement (the “Second Amendment”) to provide for, among other things, a $250.0 million secured term loan credit facility (the “Additional Term Loan” and, together with the Senior Credit Facility, the “Credit Facilities”). The Second Amendment (together with the New Credit Agreement and the First Amendment, collectively, the “Amended Credit Agreement”) extended the maturity date of the Senior Credit Facility to be coterminous with the Additional Term Loan. Our obligations under the Amended Credit Agreement are secured by substantially all of our assets. For more detail regarding the terms of the Amended Credit Agreement, including maturity dates, payment and interest terms, please see Note (6) to the accompanying Condensed Consolidated Financial Statements, “Notes Payable and Credit Agreement.”

~~4.625% Senior Notes Due 2027~~

On August 13, 2020, AMN Healthcare, Inc., a wholly owned subsidiary of the Company, completed the issuance of an additional $200.0 million aggregate principal amount of 4.625% senior notes due 2027 (the “New 2027 Notes”), which were issued at a price of 101.000% of the aggregate principal amount. The New 2027 Notes were issued pursuant to the existing indenture, dated as of October 1, 2019, under which we previously issued $300.0 million aggregate principal amount of 4.625% senior notes due 2027 (the “Existing 2027 Notes” and together with the New 2027 Notes, the “2027 Notes”). The New 2027 Notes will be treated as a single series with the Existing 2027 Notes and will have the same terms (other than issue price, issue date and the date from which interest accrues) as those of the Existing 2027 Notes. Interest on the 2027 Notes is payable semi-annually in arrears on April 1 and October 1 of each year, commencing October 1, 2020 with respect to the New 2027 Notes. The terms of the Existing 2027 Notes, including maturity date, redemption and interest terms, are described in further detail in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—4.625% Senior Notes Due 2027” of our 2019 Annual Report.

~~We used the proceeds from the issuance of the New 2027 Notes to repay $200.0 million of our indebtedness under the Additional Term Loan during the third quarter of 2020.~~

~~4.000% Senior Notes Due 2029~~

On October 20, 2020, AMN Healthcare, Inc., a wholly owned subsidiary of the Company, completed the issuance of $350.0 million aggregate principal amount of 4.000% Senior Notes due 2029 (the “2029 Notes”). The 2029 Notes will mature on April 15, 2029. Interest on the 2029 Notes will be payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2021.

At any time and from time to time on and after April 15, 2024, we will be entitled at our option to redeem all or a portion of the 2029 Notes upon not less than 10 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount on the redemption date) set forth below, plus accrued and unpaid interest, if any, to (but excluding) the redemption date (subject to the right of holders of record of the 2029 Notes on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve month period commencing on April 15 of the years set forth below:

Period Redemption
Price
2024 102.000 %
2025 101.000 %
2026 and thereafter 100.000 %

At any time and from time to time prior to April 15, 2024, we may also redeem 2029 Notes with the net cash proceeds of certain equity offerings in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the 2029 Notes issued, at a redemption price (expressed as a percentage of principal amount) of 104.000% of the principal amount thereof plus accrued and unpaid interest, if any, to (but excluding) the applicable redemption date.

In addition, we may redeem some or all of the 2029 Notes at any time and from time to time prior to April 15, 2024 at a redemption price equal to 100% of the principal amount of the 2029 Notes redeemed, plus accrued and unpaid interest thereon, if any, to (but excluding) the applicable redemption date, plus a “make-whole” premium based on the applicable treasury rate plus 50 basis points.

Upon the occurrence of specified change of control events as defined in the indenture governing the 2029 Notes, we must offer to repurchase the 2029 Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the purchase date.

~~The indenture governing the 2029 Notes contains covenants that, among other things, restricts our ability to:~~

•~~sell assets;~~

•~~pay dividends or make other distributions on capital stock, make payments in respect of subordinated indebtedness or make other restricted payments;~~

•~~make certain investments;~~

•~~incur or guarantee additional indebtedness or issue preferred stock;~~

•~~create certain liens;~~

•~~enter into agreements that restrict dividends or other payments from our restricted subsidiaries to us;~~

•~~consolidate, merge or transfer all or substantially all of their assets;~~

•~~enter into transactions with affiliates; and~~

•~~create unrestricted subsidiaries.~~

These covenants are subject to a number of important exceptions and qualifications. The indenture governing the 2029 Notes contains affirmative covenants and events of default that are customary for indentures governing high yield securities. The 2029 Notes and the guarantees are not subject to any registration rights agreement.

We used the proceeds from the issuance of the 2029 Notes, along with cash generated from operations, to redeem all of our outstanding $325.0 million aggregate principal amount of 2024 Notes on November 4, 2020, (2) pay the associated redemption premium and all accrued and unpaid interest on the 2024 Notes, (3) repay $40.0 million under the Senior Credit Facility, and (4) pay fees and expenses related to the transaction.

Letters of Credit

At ~~September~~June 30, ~~2020,~~2021, we maintained outstanding standby letters of credit totaling $24.1 million as collateral in relation to our workers’ compensation insurance agreements and a corporate office lease agreement. Of the $24.1 million of outstanding letters of credit, we have collateralized $2.2 million in cash and cash equivalents and the remaining $21.9 million is collateralized by the Senior Credit Facility. Outstanding standby letters of credit at December 31, ~~2019~~2020 totaled ~~$19.8~~$24.1 million.

Off-Balance Sheet Arrangements

At ~~September~~June 30, ~~2020,~~2021, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Contractual Obligations

There have been no material changes during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, other than the borrowings and repayments under ~~the Amended Credit Agreement and the issuance the New 2027 Notes,~~our amended credit agreement, which are described in the accompanying Note (2), ~~“Acquisitions”~~“Acquisitions,” and Note

(6), “Notes Payable and Credit Agreement,” to the table entitled “Contractual Obligations” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our ~~2019~~2020 Annual Report.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” The standard is expected to reduce cost and complexity related to accounting for income taxes. The new guidance eliminates certain exceptions and clarifies and amends existing guidance to promote consistent application among reporting entities. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. We are currently evaluating the impact of adopting this standard on our consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, “Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The new guidance clarifies the interactions between accounting standards that apply to equity investments without readily determinable fair values. Specifically, it addresses the accounting for the transition into and out of the equity method. This standard is effective on a prospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the effect of adopting this standard on our consolidated financial statements, but do not expect the adoption to have a material impact.

There have been no ~~other~~ new accounting pronouncements issued but not yet adopted that are expected to materially affect our consolidated financial condition or results of operations.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We base these forward-looking statements on our expectations, estimates, forecasts, and projections about future events and about the industry in which we operate. Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “should,” “would,” “project,” “may,” variations of such words, and other similar expressions. In addition, any statements that refer to projections of demand or supply trends, financial items, anticipated growth, future growth and revenues, future economic conditions and performance, plans, objectives and strategies for future operations, expectations, or other characterizations of future events or circumstances are forward-looking statements. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Factors that could cause actual results to differ materially from those implied by the forward-looking statements in this Quarterly Report are set forth in our ~~2019~~2020 Annual Report and include but are not limited to:

•the effects of the COVID-19 pandemic on our business, financial condition and results of operations;

•the duration and extent to which hospitals and other healthcare entities ~~decrease~~adjust their utilization of temporary nurses and allied healthcare professionals, physicians, healthcare leaders and other healthcare professionals and workforce technology applications as a result of the suspension or reinstitution of restrictions placed on non-essential and elective healthcare as a result of the COVID-19 pandemic;

•the duration that individuals may continue to forgo non-essential and elective healthcare as “safer at home” restrictions and recommendations are reinstituted in parts of the country and lifted in others;

•the extent and duration that a significant spike in unemployment that has resulted from the COVID-19 pandemic will cause an increase in under- and uninsured patients and a corresponding reduction in overall healthcare utilization and demand for our services;

•the extent to which the COVID-19 pandemic may disrupt our operations due to the unavailability of our employees or healthcare professionals due to illness, risk of illness, quarantines, travel restrictions, mandatory vaccination requirements, desire to travel and work on temporary assignments or other factors that limit our existing or potential workforce and pool of candidates;

•the severity and duration of the impact the COVID-19 pandemic has on the financial condition and cash flow of many hospitals and healthcare systems such that it impairs their ability to make payments to us, timely or otherwise, for services rendered;

•the effects of economic downturns or slow recoveries, which could result in less demand for our services, pricing pressures and negatively impact payments terms and collectability of accounts receivable;

•any inability on our part to anticipate and quickly respond to changing marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, or client ~~needs;~~needs and requirements, including mandatory vaccination requirements;

•the negative effects that intermediary organizations may have on our ability to secure new and profitable contracts;

•the level of consolidation and concentration of buyers of healthcare workforce, staffing and technology solutions, which could affect the pricing of our services and our ability to mitigate concentration risk;

•the ability of our clients to increase the efficiency and effectiveness of their staffing management and recruiting efforts, through predictive analytics, online recruiting, telemedicine or otherwise, which may negatively affect our revenue, results of operations, and cash flows;

•the repeal or significant erosion of the Patient Protection and Affordable Care Act without a corresponding replacement may negatively affect the demand for our services;

•any inability on our part to recruit and retain sufficient quality healthcare professionals at reasonable costs, which could increase our operating costs and negatively affect our business and profitability;

•any inability on our part to grow and operate our business profitably in compliance with federal and state regulation, including privacy laws, conduct of operations, costs and payment for services and payment for referrals as well as laws regarding employment and compensation practices and government contracting;

•any challenge to the classification of certain of our healthcare professionals as independent contractors, which could adversely affect our profitability;

•the effect of investigations, claims, and legal proceedings alleging medical malpractice, violations of employment, privacy and wage regulations and other legal theories of liability asserted against us, which could subject us to substantial liabilities;

•any technology disruptions or our inability to implement new infrastructure and technology systems effectively may adversely affect our operating results and ability to manage our business effectively;

•any failure to further develop and evolve our current workforce solutions technology offerings and capabilities, which may harm our business;

•disruption to or failures of our SaaS-based technology, or our inability to adequately protect our intellectual property rights with respect to such technology, sufficiently protect the privacy of personal information, which could reduce client satisfaction, harm our reputation and negatively affect our business;

•security breaches and cybersecurity incidents, including ransomware, that could compromise our information and systems, which could adversely affect our business operations and reputation and could subject us to substantial liabilities;

•any inability on our part to quickly and properly credential and match quality healthcare professionals with suitable placements, which may adversely affect demand for our services;

•any inability on our part to continue to attract, develop and retain our sales and operations team members, which may deteriorate our operations;

•our increasing dependence on third parties, including offshore vendors, for the execution of certain critical functions;

•the loss of our key officers and management personnel, which could adversely affect our business and operating results;

•any inability to consummate and effectively incorporate acquisitions into our business operations, which may adversely affect our long-term growth and our results of operations;

•businesses we acquire may have liabilities or adverse operating issues, which could harm our operating results;

•any increase to our business and operating risks as we develop new services and clients, enter new lines of business, and focus more of our business on providing a full range of client solutions;

•any inability on our part to maintain our positive brand awareness and identity, which may adversely affect our results of operation;

•the expansion of social media platforms presents new risks and challenges, which could cause damage to our brand reputation;

•any recognition of an impairment to the substantial amount of goodwill or indefinite-lived intangibles on our balance sheet;

•our indebtedness, which could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry, and expose us to interest rate risk to the extent of any variable rate debt;

•the terms of our debt instruments that impose restrictions on us that may affect our ability to successfully operate our business; and

•the effect of significant adverse adjustments to our insurance-related accruals on our balance sheet, which could decrease our earnings or increase our losses and negatively impact our cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, and commodity prices. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, our primary exposure to market risk was interest rate risk associated with our variable interest debt instruments. A 100 basis point increase in interest rates on our variable rate debt would not have resulted in a material effect on our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we generated substantially all of our revenue in the United States. Accordingly, we believe that our foreign currency risk is immaterial.

Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of ~~September~~June 30, ~~2020~~2021 were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September~~June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3426

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

~~None.~~Information with respect to this item may be found in the accompanying Note (9), “Commitments and Contingencies: Legal Proceedings,” which is incorporated herein by reference.

Item 1A. Risk Factors

We do not believe that ~~in addition~~there have been any material changes to the risk factors disclosed in Part I, Item 1A of our ~~2019~~2020 Annual Report, the following risks could materially adversely affect our business or our consolidated operating results, financial condition or cash flows, which, in turn, could cause the price of our common stock to decline.Report. The risk factors described ~~below and~~ in our ~~2019~~2020 Annual Report are not the only risks we face. Factors we currently do not know, factors that we currently consider immaterial or factors that are not specific to us, such as general economic conditions, may also materially adversely affect our business or our consolidated operating results, financial condition or cash flows. The risk factors described below qualify all forward-looking statements we make, including forward-looking statements within the section entitled “Risk Factors” in Part I, Item 1A of our 2019 Annual Report.

~~The widespread outbreak of illness or other public health crisis could have an adverse effect on our business, financial condition and results of operations~~.

We could be negatively affected by the widespread outbreak of an illness or any other public health crisis. The COVID-19 pandemic has negatively impacted the global economy and created significant volatility and disruption of financial markets.There remains a significant risk that the “shelter-in-place” orders, quarantines and restrictions on travel and mass gatherings that were ordered earlier in the year to slow the spread of the virus may be reinstituted as COVID-19 rates continue to climb in many parts of the country. In addition, many “non-essential” businesses continue to restrict their operations or shift to a remote working environment, which restricts the delivery of non-emergency healthcare.

Demand for our staffing services and workforce technology solutions is sensitive to changes in economic activity and has fluctuated significantly over the course of the COVID-10 pandemic. Demand for non-essential and elective healthcare has been negatively impacted by the COVID-19 pandemic. Many hospitals and other healthcare entities have significantly decreased their utilization of temporary healthcare professionals, interpreters, coders and permanent recruitment and placement services, which has resulted in decreased demand for many of our service offerings and utilization of our workforce technology platforms. We expect this decreased demand will have an adverse effect on our business, financial condition and results of operations. Many individuals may continue to forgo non-essential and elective healthcare even after “safer at home” restrictions and recommendations are lifted. We are unable to predict the duration and extent to which demand for our services will be negatively impacted by the COVID-19 pandemic.

In addition, the significant spike in unemployment that has resulted from the COVID-19 pandemic will likely cause an increase in under- and uninsured patients, which generally results in a reduction in overall healthcare utilization and a decrease in demand for our services. At this time, we are unable to predict the duration and extent to which our businesses will be negatively impacted by the increased unemployment and under- and uninsured rates resulting from the COVID-19 pandemic.

The COVID-19 pandemic, and any other outbreak of illness or other public health crises, may also disrupt our operations due to the unavailability of our corporate team members or healthcare professionals due to illness, risk of illness, quarantines, travel restrictions or other factors that limit our existing or potential workforce and pool of candidates. In addition, we may experience negative financial effects of the COVID-19 due to higher workers’ compensation and health insurance costs, for which we are largely self-insured. We may also be subject to claims regarding the health and safety of our healthcare professionals and our corporate team members.

Given the economic impact the COVID-19 pandemic has had on the financial condition of many hospitals and healthcare systems, many of our clients have experienced cash flow issues and difficulty gaining access to sufficient credit, which has, in some cases, impaired their ability to make payments to us, timely or otherwise, for services rendered and we have already experienced an increase to our allowance for credit losses for accounts receivable. We may also be subject to claims from these clients relating to the ability to provide services under terms and conditions that they believe are fair and reasonable.

The foregoing and other continued disruptions to our business as a result of COVID-19 could have an adverse effect on our business, financial condition and results of operations. The extent of the impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration and spread of the COVID-19 outbreak, which is highly uncertain and cannot be predicted at this time.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

From time to time, we may repurchase our common stock in the open market pursuant to programs approved by our Board. We may repurchase our common stock for a variety of reasons, such as acquiring shares to offset dilution related to equity-based incentives and optimizing our capital structure. On November 1, 2016, our Board authorized us to repurchase up to $150.0 million of our outstanding common stock in the open market. Under the repurchase program announced on November 1, 2016 (the “Company Repurchase Program”), share purchases may be made from time to time beginning in the fourth quarter of 2016, depending on prevailing market conditions and other considerations. The Company Repurchase Program has no expiration date and may be discontinued or suspended at any time.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we did not repurchase any shares of common stock. We describe in further detail our repurchase program and the shares repurchased thereunder in Part II, Item 5, “Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” set forth in our ~~2019~~2020 Annual Report.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

3627

Item 6. Exhibits


Exhibit Number						Description

~~4.1~~						~~Indenture, dated as of October 20, 2020, by and among AMN Healthcare, Inc., the guarantors party thereto, and~~U.S. Bank National Association.*

31.1						Certification by Susan R. Salka pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*

31.2						Certification by Brian M. Scott pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*

32.1						Certification by Susan R. Salka pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2						Certification by Brian M. Scott pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS						XBRL Instance Document.*

101.SCH						XBRL Taxonomy Extension Schema Document.*

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB						XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.*


*						Filed herewith.

3728

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~November~~August 6, ~~2020~~2021


AMN HEALTHCARE SERVICES, INC.

/S/ SUSAN R. SALKA
Susan R. Salka President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November~~August 6, ~~2020~~2021


/S/ BRIAN M. SCOTT
Brian M. Scott Chief Accounting Officer, Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)

3829


	Three Months Ended September 30, 2020
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	382,699	$	95,648	$	0	$	478,347
Permanent placement	0		13,468		0		13,468
Outsourced workforce	0		0		38,159		38,159
SaaS-based technologies	0		0		21,657		21,657
Total revenue	$	382,699	$	109,116	$	59,816	$	551,631


	Three Months Ended September 30, 2019
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	398,417	$	123,540	$	0	$	521,957
Permanent placement	0		20,302		0		20,302
Outsourced workforce	0		0		4,643		4,643
SaaS-based technologies	0		0		20,695		20,695
Total revenue	$	398,417	$	143,842	$	25,338	$	567,597


	Nine Months Ended September 30, 2020
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	1,251,509	$	310,945	$	0	$	1,562,454
Permanent placement	0		44,635		0		44,635
Outsourced workforce	0		0		87,705		87,705
SaaS-based technologies	0		0		67,649		67,649
Total revenue	$	1,251,509	$	355,580	$	155,354	$	1,762,443


	Nine Months Ended September 30, 2019
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Temporary staffing	$	1,139,883	$	364,551	$	0	$	1,504,434
Permanent placement	0		58,817		0		58,817
Outsourced workforce	0		0		12,435		12,435
SaaS-based technologies	0		0		59,529		59,529
Total revenue	$	1,139,883	$	423,368	$	71,964	$	1,635,215


	2020		2019
Balance as of July 1,	$	(8,100)	$	(10,664)


Change in fair value of contingent consideration liability from Silversheet acquisition	0		42
Change in fair value of contingent consideration liability from Advanced acquisition	0		(4,483)
Change in fair value of contingent consideration liability from b4health acquisition	6,700		0
Balance as of September 30,	$	(1,400)	$	(15,105)


	As of September 30, 2020	As of December 31, 2019

Volatility	75.0%	50.0%
Discount rate	12.9%	16.5%
Risk-free rate	0.1%	1.5%
Cost of debt	4.5%	5.3%


Period	Redemption Price
2024		102.000	%
2025		101.000	%
2026 and thereafter		100.000	%