Cross Country Healthcare Inc (CCRN) 2008 Q1 法說會逐字稿

Welcome to the First Quarter 2008 Earnings Call. At this time all participants are in a listen-only mode. (OPERATOR INSTRUCTIONS) Today's call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the meeting over to Mr. Howard Goldman, Director of Investor and Corporate Relations. Sir, you may begin.

Good morning. Thank you for listening to this conference call which is also being webcast, and for your interest in the company. With me today are Joe Boshart, our President and Chief Executive Officer, and Emil Hensel, our Chief Financial Officer. On this call we will review our first quarter 2008 results for which we distributed our earnings press release after the close of business yesterday. If you do not have a copy, it is available on our website at www.crosscountryhealthcare.com. Replay information for this call is also provided in the press release.

Before we begin, I would first like to remind everyone that this discussion contains forward-looking statements. Statements that are predictive in nature that depend upon or refute or refer to future events or conditions or that include words such as expect, anticipate, believe, estimate, and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors were set forth under the forward-looking statement section of our press release for the first quarter of 2008, as well as under the caption Risk Factors in our 10-K for the year ended December 31, 2007.

Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed on this teleconference might not occur. Cross Country Healthcare does not have a policy of updating or revising forward-looking statements, and thus it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements.

And now I'll turn the call over to Joe.

Thank you, Howard, and thank you to everyone listening in for your interest in Cross County Healthcare. As reported in our press release issued last evening, our revenue for the first quarter of 2008 was $179 million, up 2% from a year ago. Our net income in the quarter was $5.9 million, up 22% from the prior year, and our earnings per diluted share of $0.19 were up 27% from the prior year, primarily reflecting a substantial improvement in our profit margins, along with a reduction in our share count.

Cash flow for the first quarter was $11.3 million. Our first quarter performance exceeded the expectations we set forth in March because of a more favorable than expected performance across all of our business segments, especially higher than expected hours worked per week and better margins in our travel nursing business, as well as strong results from our physician and executive search business.

Year-over-year results also benefited from the contributions from the two acquisitions made in our clinical trial services business last summer, which also performed above expectations in their first quarter. I want to thank all of our employees for delivering better than expected results in a difficult operating environment.

In our travel nurse staffing business, the story remains much the same as last quarter. We experienced further margin expansion over the prior year quarter, primarily as a result of continuing widening of our bill pay spread. Our housing costs as a percent of revenue declined sequentially from the fourth quarter, reflecting our continued focus on this important area of cost, and we achieved a continued rise in bill rates in the low single-digit range.

It should be noted that all of these positive performance trends have occurred for three consecutive quarters. In addition, we are also encouraged that the surge in demand that we experienced in early February has largely sustained itself, and current demand levels represent a modest improvement from a year ago.

Although our profit margins continue to improve, we have not yet realized any staffing volume benefit from the higher level of demand. While this uptick initially coincided with a surge in flu activity across the country, the current level of demand is likely the result of additional factors which, if sustained, may bode well for improving trends in our business in the second half of this year. However, we have not seen the recent increase in demand changing the momentum of our booking trends, which remain soft in the second quarter.

Our travel nurse business historically does not respond immediately to spikes in demand, as full-time nurses are not likely to give up their seniority and the security of hospital employment for a short-term opportunity to make more as a travel nurse. Typically nurses look for a sustained period of strong or at least consistent demand for travel nurses before a greater number of RNs will leave their full-time hospital employment and take an assignment with us.

Thus, if we continue to see demand trends at or above the year ago level into the summer, we would expect over time the psychology of prospective nurses to become more favorably disposed toward our employment model.

Now turning to our clinical trial services segment, we are pleased with the performance of all three of the companies we acquired over the last two years. They have delivered more than we projected in our models for these businesses, and appear to be benefiting from being part of the larger ClinForce business platform. As a result, our clinical trial services business now represents an important second leg to our company. The annual top line run rate of this business is approximately $100 million, and we are optimistic regarding our ability to gain momentum this year given the current backlog of projects and the pipeline of projects for which we are currently being considered.

In our other human capital management segment, our education and retained search businesses both achieved top line growth versus prior year in the first quarter, although only the retained search business was able to translate the top line growth into higher contribution with the income generated by that business up more than 40% year over year.

In summary, as I discussed in March, our company faces challenges to improving performance in the current economic environment. However, we believe we are on a path to growing our earnings and cash flow in 2008. At this time we remain vigilant for creative opportunities to put our modestly levered balance sheet to work. We believe these actions should result in improved share price performance.

And with that, I'd like to now let Emil update you in more detail on our financial performance. Emil.

Thank you, Joe, and good morning everyone. First I will go over the results for the first quarter, and then review our revenue and earnings guidance for the second quarter that we provided in last night's press release.

Consolidated revenue in the first quarter came in at $179 million, approximately $1 million above the upper end of the guidance range. Revenue was up 2% versus the prior year but down 1% sequentially. The year-over-year increase was due to the clinical trial services acquisitions, as well as our search and education businesses, partially offset by lower staffing volume in our nurse and allied staffing business that Joe referred to earlier.

On a sequential basis, the modest decline is attributable to one less day in the first quarter as compared to the fourth quarter. Our gross profit margin was 25.2%, up 220 basis points from the prior year but down 50 basis points sequentially. The year-over-year margin improvement was due primarily to the continued improvement in the bill pay spread in our travel nurse staffing business, and secondarily to a higher mix of revenue from our clinical trial services and other human capital management business which have higher gross profit margins than our nurse and allied staffing business.

The sequential margin decline was less than we anticipated as the expected impact of the payroll tax reset was partially offset by the aforementioned improvement in the bill pay spread. SG&A expenses in the first quarter were up 9% year over year and 1% sequentially. The year-over-year increase was due to the additional overhead associated with the two clinical trial acquisitions, as well as higher compensation expenses which is partially due to the impact of FAS 123R. The small sequential increase is SG&A was due to the reset of payroll taxes.

Net interest expense was $639,000, up 31% from the prior year quarter but down 16% sequentially. The year-over-year increase reflects the additional debt incurred to finance the clinical trial acquisitions, while the sequential decrease was due to lower interest rates. The effective tax rate in the first quarter was in line with our expectations at 38%. Net income in the first quarter was $5.9 million, up 22% over the prior year. Earnings per diluted share were $0.19, up 27% over last year and $0.02 higher than the upper end of the guidance range.

Our balance sheet remains strong. We ended the quarter with $42 million of debt and $3.5 million of cash. Net of cash, our debt to total capital ratio was 9% and the current ratio was 2.5 to 1 at the end of the first quarter. DSOs at the end of the first quarter were 58 days, down one day as compared to both a year ago and sequentially.

We generated $11.3 million of cash from operating activities during the first quarter as compared to $1.6 million of cash used in operations a year ago. The cash from operations combined with $5.5 million of cash on hand and $3 million revolver draw down was used to fund $10.1 million of stock repurchases, $8.6 million in earnout payments, and $800,000 of capital expenditures.

The earnout payments included $6.4 million to the sellers of Metropolitan Research, which satisfied our obligations on this 2006 acquisition, as well as $2.2 million for the sellers of AKOS which we acquired in 2007. Both of these earnout payments were recorded as additional goodwill. Additionally, subsequent to the close of the first quarter, we made a $4.6 million earnout payment to the sellers of Assent, which satisfied our obligations on this 2007 acquisition.

We repurchased approximately 870,000 shares of our common stock during the first quarter at an average cost $11.62 per share. During the quarter, we completed the May 2006 stock repurchase authorization, and we began repurchases under the new $1.5 million share authorization granted by our Board in February of this year.

Let me drill down into our three reporting segments. Our nurse and allied staffing segment which accounted for 78% of first quarter revenue consists of our travel and per diem nurse and travel allied staffing businesses. Our clinical trial services segment accounted for 14% of first quarter revenue, and consists of our legacy ClinForce business plus three recent acquisitions, Metropolitan Research, AKOS, and Assent. Other human capital management services forms our third reporting segment and is comprised of our education and training and retained search business accounting for 8% of the quarter's revenue.

Revenue for the nurse and allied staffing segment was $141 million, down 3% versus the prior year and 2% sequentially. We averaged 4,822 field FTEs in the first quarter, down 6% versus the prior year and 2% sequentially, although above the guidance range that we provided.

This decline in volume primarily reflects sluggish demand for nurses in the seasonal markets of Florida and Arizona. Bill rates as measured by revenue per hour in our travel nurse staffing business increased by 3.5% year over year, continuing the favorable trend in this metric.

Contribution income as defined in our press release was $12.9 million in the first quarter, up 5% from the prior year. Segment contribution margin was 9.1%, up 70 basis points from the prior year. The margin improvement was driven primarily by continued widening of the bill pay spread and secondarily by a moderation in the rate of increase of housing costs partially offset by higher health insurance claims.

Revenue in our clinical trial services segment was $24.9 million, up 26% from the prior year due to the AKOS and Assent acquisitions. We are encouraged by the synergies that we are beginning to realize as a result of the three acquisitions we made in the past two years.

Contribution income was $3.8 million, up 47% from the prior year. Segment contribution margin was 15.2%, up 220 basis points from the prior year due primarily to the impact of the acquired businesses which operate at a higher margin than our Legacy clinical staffing business.

Turning now to the other human capital management services segment, first quarter revenue was $13.7 million, up 16% from the prior year, with both our retained search and our education and training businesses contributing to the year-over-year revenue growth. Segment contribution income was $2.4 million, up 14% from last year, driven by a very strong performance by our retained physician and healthcare executive search business.

This brings me to our guidance for the second quarter of 2008. The following statements are based on current management expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any future mergers, acquisitions and other business combinations, significant legal proceedings, or significant repurchases of our common stock.

Travel bookings were down 10% year over year in the first quarter, reflecting the negative momentum in our travel nurse and allied business that Joe referred to earlier. Based on this, we project the average nurse and allied field FTE income to be in the 4,650 to 4,700 range in the second quarter, down approximately 7 to 8% from prior year.

Revenue for the second quarter is expected to be in the $173 million to $175 million range. We expect our gross profit margin to be in the 26 to 26.5% range in the second quarter, while SG&A expenses are projected to remain sequentially flat. EBITDA margins are expected to be in the 7 to 8% range. Interest expense is projected to the clients sequentially by about 10% due to lower interest rates. Based on these assumptions, EPS per diluted share is expected to be in the $0.19 to $0.21 range.

This concludes our formal comments. Thank you for your attention, and at this time we will open up the lines to answer any questions that you may have.

And thank you. We will now begin the question and answer session. (OPERATOR INSTRUCTIONS) It will be one moment, please, for the first question. And our first question comes from Bruce Ackermann with Sand Hill Equity Research.

Good morning, gentlemen.

Good morning, Bruce.

Could you talk a little about in the clinical trial sector, the organic revenue growth and margin situation and fill us in on that?

The organic or legacy ClinForce business had an essentially flat performance year over year on the top line but substantial improvement in margin on the bottom line. There is a little bit of lumpiness in terms of the revenue growth of this business, as it very much depends on when new trials come on and older trials get completed, so you could have some timing issues as to the revenue growth. But the business is performing quite well and we're very pleased by the growth prospects and the pipeline that the business has in terms of future trials.

Okay. Thank you for that. And one other question, in the nursing business, you mentioned Arizona. Is Arizona impacted by that Hospital Association purchasing group? Is that part of the problems in Arizona?

I'm sure there's an impact, Bruce. I don't think it's the biggest impact. I think just given the unique kind of geographic features of the--particularly the Phoenix market, if the demand were sufficient, the hospitals would have to go outside that buying group and get nurses to come to their facilities. And we have supplied nurses to hospitals outside that buying group at certain periods in the past, so I'm not sure that--it has been a little disorganized, more disorganized than it had been in previous years as far as who's doing what for whom given the Justice Department's review of the--and the trade implications of what the Association was doing.

I think the bigger part of what's going on in Arizona is just that demand was less, Bruce. I think it was impacted by the very strong housing and construction market becoming a relatively weak housing and construction market, which encouraged nurses to work more hours and therefore soaked up some of the excess that we might have benefited from historically in that market, particularly in the winter months. That just didn't seem to happen to the same degree this year.

We have seen in Arizona a strengthening of the market. It's still down year over year, but we have seen directionally an improvement in Arizona, particularly from that low point in February that we referenced in our formal--in the prepared comments. So I'm optimistic, but right now it's still relatively weak year over year in physicians and working nurses.

Okay. Thank you for that. That's all my questions.

Okay, Bruce. Thanks.

And our next question comes from Jeff Silber with BMO Capital Markets.

Thanks so much. Just a quick guidance follow-up question. What type of pricing increase assumptions are you using for your nurse allied business in the second quarter?

3 to 4% year over year.

3 to 4, great. Okay. And then just moving back to the clinical trials business, I know it's a lumpy business on a quarter-to-quarter basis, but over the long term, do you feel that business is a faster growing business than your traditional nursing business, and also what kind of sustainable margins do you think that business can get?

We believe that the--at least in the short term, I think the answer is yes, we believe it is a fast--has faster growth prospects. The number of compounds that are in trial has been increasing, and ClinForce is very well positioned to--or not just ClinForce but all of our clinical trial businesses are very well positioned to take a reasonable share out of this business--potential business.

The margin for the segment, the contribution margin, was in the 15% range, and I think that's a reasonable expectation going forward, as well.

Okay, great. Just a few other numbers questions if you don't mind. What kind of share count are you using for your second quarter guidance?

Approximately $31 million on a fully diluted basis.

Okay. And what was stock-based comp in the quarter?

Approximately $200,000, and it's projected to grow to approximately $400,000 in the second quarter.

Okay. And then going forward, is that the run rate we should be using?

For the remainder of the year, yes.

Okay, great. And you mentioned some of the earnout payments. Are there any more earnouts on the AKOS acquisition or are you done with those, as well?

No. That still has a piece left that will be based on 2008 performance.

And that will be paid in the first or second quarter next year?

First quarter of 2009.

First quarter of '09. Great, okay. I'll let somebody else jump on and I'll get back in queue. Thanks.

Okay. Thanks Jeff.

And the next question comes from Jim Janesky with Stifel Nicolaus.

Thank you. Good morning, Joe and Emil.

Good morning, Jeff.

A couple of questions. First, with respect to the nursing segment, why do you feel or what are you hearing in the field why increased levels of demand, at least in the near term, are not translating into bookings at this time? I mean, we've seen this happen in the past three to five years on a couple of different occasions. I'm just interested to know why you think it's happening now.

I'd just go back to my prepared remarks. Nurses don't--we don't have an inventory of nurses that aren't placed. Generally the nurses that we have that want jobs and are willing to travel are placed, so when we see kind of a spike in demand, or particularly an unseasonal spike in demand that is unanticipated, we don't have nurses. We can't call nurses that are thinking about it, maybe they'll take an assignment sometime in the future, but they don't jump at opportunities if it doesn't--if they're not confident that we're going to have another really good contract for them in three months when they come off assignment.

They're full-time nurses. They generally have full-time or financial obligations that are consistent with full-time employment, so they--what nurses want to see before they get into our employment model is a sustainable level of demand, that they will find attractive, high-paying jobs in settings that are interesting to them, and a near-term 40% uptick in demand is generally not conducive to them taking that risk.

Now, as I said, if we--the level of demand appears to have sustained, so I believe it's more than just a flu-related activity. I think there may be some uptick related to non-Medicare admissions as people that have elective surgery they've been putting off maybe have those surgeries because they want to make sure they do it while they have insurance. There may be other factors. Maybe we're just seeing an improvement in the secular trends consistent with the demographics of the population which is growing and aging.

Whatever the reasons, if we see a continuation of consistent and even growing demand as we head into the third quarter and the fourth quarter of next year, I'm actually pretty optimistic that we're going to restore volume growth and momentum in this business. That's not where we are today, and we don't want to give you the impression that we have a near-term expectation. We did--I think we did get some benefit out of the pickup in demand related to--we had slightly more nurses working, and the nurses we did have working worked more hours per week than we anticipated they would work. So I think there was a--it was reflected in our results in the first quarter. But the second half is when I believe we will see a potential benefit from this pickup in demand, assuming it sustains itself through the summer.

So if you had more nurses willing to travel, you think you would have better volume trends?

That's always true, Jim. I mean, if we had an infinite number of nurses that were willing to go wherever we had jobs, we would be a much bigger company. It's again the consistency with which our recruiters are calling nurses, sharing information on jobs. They're going onto our website, seeing where we have jobs available. They're talking to other nurses that they're working next to during the day or whatever their shift is, and they're saying, jeez, there's great opportunities in Seattle and Hawaii, and they're getting them excited.

When they're not hearing that kind of information, they go, I'm not going to quit this job. This is a pretty good job. I have good seniority. I get the shift I want. If I leave and come back, maybe I won't--I'll get to the bottom of the line as far as shift preference, and I may be working the night shift when I really want to work the day shift. That's just the thought process that a nurse has to go through. She has to have confidence that we're going to have really good jobs for her that are great paying jobs and great settings every time she comes off contract. Otherwise, she's not going to leave that full-time employment that she's engaged in.

We don't recruit nurses that aren't working full-time in a hospital, so it's not the nurse that's coming back into the workforce. We're only recruiting nurses that are actively engaged, working on a unit in the hospital today. And they're a little risk averse and they're not willing to give up that attractive position that they currently have for a kind of a flash in the pan. If the flash sustains itself, which it appears to be doing, then I would be--then I am more optimistic that the second half will show some better trends.

And our--the dynamics of our bookings do appear to be stabilizing. There was a negative bias really beginning in the second half of last year that carried through the first quarter. It does appear to be stabilizing, and that's what you need to have happen before you can begin to grow your momentum in the future. We are seeing better trends in our applicant activity, so there are good dynamics. It's just not yet reflected in our booking trends.

Shifting gears to the clinical trials business, can you give us an idea of what type of visibility you have there, and what is the difference between backlog and pipeline? Is backlog some business that you've won waiting to start and pipeline is what you're bidding on?

That's exactly it, Jim. And our backlog would suggest that we continue to have a $100 million run rate of business. Having said that, when we speak to the management of this business, there is enough going on that they feel pretty good about, and a greater breadth of opportunities that they're viable bidders on that they're optimistic as the second half of this business begins to resume organic growth.

Okay. Thank you.

Thanks, Jim.

And our next question comes from David Bachman with Longbow Research.

Good morning. How are you?

Good morning, David.

A question on nurse allied, can you remind me kind of what the breakdown is there between nursing and allied, and then perhaps a little bit more color on what you're seeing in the allied portion of that business?

The allied accounts for about 7% of our revenues, so it's a relatively smaller business. And it consists really of three product lines primarily that have different dynamics. The rehab product line is our largest of the three, and it's exhibiting good growth year over year, but the overall performance is being dragged down by negative trends in our imaging business, our radiology techs, as well as our respiratory therapists.

Overall, David, the business is declining year over year, and that's our expectation really for this year. The rehab business is probably not big enough to offset the relative weakness we're seeing, particularly in the RAD tech, and very disappointing and unexpected to us was the weakness that we're seeing in the respiratory therapy area, as well.

Right. Okay. Okay, good. Well, that's helpful and that seems consistent with what we're hearing other places. Can you--I know you talked a little bit more about Arizona, but just on a geographic basis, you're still seeing some softness, you said, that it's continued out of the first quarter. Can you just give us a little bit more color on maybe where you're seeing pockets of strength for areas that are still softer than even you had been expecting?

Well, I would actually qualify the comments, really for the first--for 16 months we've been saying that demand is lower year over year, and really today is the first time we can say that demand is up year over year. It is not evenly--our experience is not even across the country. The good news, probably the greatest strength we're seeing today is the biggest state for our placements today, which is California. California is showing strong growth year over year. Arizona is down year over year, but with--so far this year is showing good sequential improvement in demand dynamics.

Weakness is--the Southeast is pretty weak. Florida in particular is very weak year over year and doesn't show signs of really resuming growth in the short term. It's been pretty disappointing. That's a very important market to us. It's our second-largest market.

The Northeast, Mid-Atlantic, Upper Midwest are showing pretty good demand dynamics. The Northwest has been strong for several quarters, continues to be strong. So it's an uneven performance, David, but it's--I'm encouraged that we can actually say demand is up year over year, and as we head into the summer, the comparisons year over year, particularly in the seasons markets, were so weak last year in Arizona and Florida that I'm optimistic we can show some better trends and better comparison year over year as we get to the second half.

Great. So if supply begins to loosen up a bit, then there's definitely some advantage there. And then can you just--we've seen some legislation on the nurse visa retrogression issues brought forward. Just can you remind me what that means for you, if anything? I guess looking forward maybe it's a 2009 story, if a story at all.

We don't--given the dynamics of immigration, we have not invested heavily in a robust pipeline of prospective nurses trained in foreign markets. There's not a tremendous upside. Today that business represents about 1% of the nurses we have on contract, down from probably a peak of 2% historically. It's a relatively new effort for us. This decade, the dynamics haven't been good this decade from an immigration perspective, so there's not a tremendous upside. There would be an upside, it's just probably less than it would be for other companies.

Okay. That's helpful. Well, good job in the first quarter.

Thank you, David.

And I'll jump off here. Thanks.

Appreciate it.

Our next question comes from Michel Morin from Merrill Lynch.

Yes, good morning.

Good morning, Michel.

A couple of quick ones. First, the contribution margins in the nurse and allied or in healthcare staffing were good but maybe a little bit lighter than what I would have expected given the stronger top line. You mentioned the headwind from insurance. Could you quantify that by any chance?

Well, the impact--well, first of all, let me give you a little background. We are self-insured on health insurance, and given the population of nurses we have insured, you always expect a number of large claims at any given time. This particular quarter we had just an unusually high number, about twice as much as you would normally expect statistically. So it's really just driven by current claim experience, and the impact on the contribution income was roughly--it was close to $0.02 a share, so a little under $1 million.

Great. Okay. And then I wanted to drill down a little bit more on the per diem. I think your release said that you saw some growth there, and I was wondering, Joe, is there any--is that telling us anything about--is it a kind of confirmation of the strong demand that you're seeing, or how should we read that 3% I think was the number increase?

Yes. I don't want to read too much into it. I mean, we're encouraged by it, Michel. Again, we're not in--we're not a broad, nationally positioned per diem company. We're in 17 markets, so those markets might have different dynamics than other markets nationally. But we are encouraged by the short-term, near-term dynamics of our per diem business. They tend to have a broader base of customers. For example, they do more businesses with nursing homes than our travel business does, so again there may be some different dynamics within the mix of where we're generating that FTE growth.

Some of the growth probably disproportionately has been in lower-value specialties like CNAs and LPNs than specifically RNs, but we're encouraged. We're not overly excited by it. It's just nice to see that business get its footing. We have--I think we have excellent management in that business. We do look to grow that business over time, not through a large acquisition of a broad-based provider but really market by market where we can achieve a significant market share in the per diem business.

We would be very interested in getting into that market through acquisition or organically, so it's been a pretty disciplined approach so far, but we like the business and we'd like to grow in the business. I don't think the dynamics tell us so much about the near-term opportunity, but they're pointing in the right direction.

And that business is profitable and has remained profitable even as it's been under pressure these last few years?

It's been profitable since we bought in 2003.

Great. And then just finally, just to clarify something on the Assent earnout, was that also goodwill?

Yes.

Okay, great. Thank you.

Thanks, Michel.

And our next question comes from Jeff Silber with BMO Capital Markets.

Thanks. Just a quick follow-up. Excuse me. You had mentioned in your remarks the weakness in the respiratory therapy business. I know it's a relatively small piece of the business, but if you can provide a little bit more color on what's going on I would appreciate it.

Well, what we're hearing, Jeff, is they're--well, initially we didn't have a flu season, and then we did have a flu season. We saw a little bit of a pickup later in the first quarter, but not to a point that gives us hope that we've--the worst is behind us in this business. What we're hearing is that you're just seeing greater numbers of respiratory therapists trained and available to work in hospitals. And really the dynamics of these allied disciplines tend to be very different from the nursing business.

The nursing business again is--it's 25% of a hospital's operating cost. The nurses are perceived to be fungible so the hospital, when they're looking to control costs, they typically focus on the nursing segment. A lot of the other disciplines, although it's not true of respiratory therapy, but a lot of the other disciplines like the RAD, the X-ray techs and the MRI techs, if the hospital doesn't have them, they have very expensive capital equipment that's idle, so they're willing to pay more, and there's not--there's a handful of those professionals within the acute care hospital. So the hospitals can double salaries in the short-term so that they have--they're generating revenue from the imaging that they can do with their patient population, whereas the nurse is really--it's a cost center.

And the opportunity for--and sometimes it's actually nurses going back and when they see that ultrasonographers are making more than they are, they'll go back and get the certification to be an ultrasonographer. It's not a yearlong process. It tends to be weeks to six months for a lot of these allied disciplines to get the training for certifications or licensure that you need.

So I think the market can respond more quickly in these smaller professional disciplines than it can in nursing, and that's why we still love the travel nursing business. We think it's the--long term, it's a great place to be because of the very unique labor market dynamics that are present in the nursing market.

So given all that, would you say that the nurse business is probably a more profitable business than that allied business?

I think if we were only an allied provider, we would have lower profit margins than we do today. Today we really offer allied as an associated service. We're generally selling to the same hospitals. We put the rates for the disciplines on the blanket contract that we have with the hospital. The hardest part is to get the contract, so once you have that and you can just add these disciplines, it's a fairly efficient add-on service. If we were purely allied, we would not be as attractive an investment opportunity.

Now, having said that, there are other companies that focus on some of the higher-end disciplines in allied, CRNAs, nurse practitioners, the radiation therapists which are much higher-end disciplines. We don't tend to be as strong, but in the disciplines that we're in, I would--I'm glad they're not our only offering today.

Okay. Appreciate the help. Thanks so much.

Okay, Jeff.

(OPERATOR INSTRUCTIONS)

Okay. If there are no further questions, Barb, and I--

And I'm showing no further questions.

Okay. Thank you. I appreciate that, and I want to thank everyone for joining us this morning, and we'll look forward to updating you on our second quarter this summer. Take care.

And thank you for your participation in today's call. Please disconnect your line at this time.