SEC Filing | AMN Healthcare Services Inc.

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amn-20230930

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 30, 2023


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.)

2999 Olympus Boulevard	Suite 500
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 1, 2023, there were 37,789,140 shares of common stock, $0.01 par value, outstanding.

Auditor Name: KPMG LLP Auditor Location: San Diego, California Auditor Firm ID: 185

TABLE OF CONTENTS


Item		Page

	PART I - FINANCIAL INFORMATION

1.	Condensed Consolidated Financial Statements (unaudited):	1
	Condensed Consolidated Balance Sheets, As of September 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Comprehensive Income, For the Three and Nine Months Ended September 30, 2023 and 2022	2
	Condensed Consolidated Statements of Stockholders’ Equity, For the Nine Months Ended September 30, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows, For the Nine Months Ended September 30, 2023 and 2022	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
3.	Quantitative and Qualitative Disclosures about Market Risk	28
4.	Controls and Procedures	28

	PART II - OTHER INFORMATION


1.	Legal Proceedings	29
1A.	Risk Factors	29
2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
3.	Defaults Upon Senior Securities	30
4.	Mine Safety Disclosures	30
5.	Other Information	30
6.	Exhibits	31
	Signatures	32

Table of Contents

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, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	29,377	$	64,524
Accounts receivable, net of allowances of $34,426 and $31,910 at September 30, 2023 and December 31, 2022, respectively	565,724		675,650
Accounts receivable, subcontractor	175,976		268,726
Prepaid expenses	18,364		18,708
Other current assets	41,679		66,037
Total current assets	831,120		1,093,645
Restricted cash, cash equivalents and investments	69,995		61,218
Fixed assets, net of accumulated depreciation of $268,131 and $227,617 at September 30, 2023 and December 31, 2022, respectively	187,557		149,276

Other assets	220,512		172,016
Goodwill	935,779		935,364
Intangible assets, net of accumulated amortization of $423,780 and $361,327 at September 30, 2023 and December 31, 2022, respectively	409,803		476,832
Total assets	$	2,654,766	$	2,888,351
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	362,907	$	476,452
Accrued compensation and benefits	263,697		333,244




Other current liabilities	80,522		48,237
Total current liabilities	707,126		857,933
Revolving credit facility	95,000		—
Notes payable, net of unamortized fees and premium	844,393		843,505
Deferred income taxes, net	31,296		22,713

Other long-term liabilities	159,782		120,566
Total liabilities	1,837,597		1,844,717
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000 shares authorized; none issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 200,000 shares authorized; 50,387 issued and 37,774 outstanding at September 30, 2023 and 50,109 issued and 41,879 outstanding at December 31, 2022	504		501
Additional paid-in capital	505,170		501,674
Treasury stock, at cost; 12,613 and 8,230 shares at September 30, 2023 and December 31, 2022, respectively	(1,127,081)		(698,598)
Retained earnings	1,439,186		1,240,996
Accumulated other comprehensive loss	(610)		(939)
Total stockholders’ equity	817,169		1,043,634
Total liabilities and stockholders’ equity	$	2,654,766	$	2,888,351

See accompanying notes to unaudited condensed consolidated financial statements.

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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,
	2023		2022		2023		2022
Revenue	$	853,463	$	1,138,586	$	2,970,985	$	4,117,731
Cost of revenue	563,957		753,560		1,982,352		2,776,300
Gross profit	289,506		385,026		988,633		1,341,431
Operating expenses:
Selling, general and administrative	163,405		215,419		570,775		717,428
Depreciation and amortization (exclusive of depreciation included in cost of revenue)	39,175		33,239		113,599		96,169
Total operating expenses	202,580		248,658		684,374		813,597
Income from operations	86,926		136,368		304,259		527,834
Interest expense, net, and other	11,541		8,961		33,975		28,630
Income before income taxes	75,385		127,407		270,284		499,204
Income tax expense	22,211		34,962		72,094		136,951
Net income	$	53,174	$	92,445	$	198,190	$	362,253

Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities, net, and other	133		(219)		329		(794)
Other comprehensive income (loss)	133		(219)		329		(794)

Comprehensive income	$	53,307	$	92,226	$	198,519	$	361,459

Net income per common share:
Basic	$	1.39	$	2.11	$	5.01	$	8.04
Diluted	$	1.39	$	2.10	$	4.99	$	7.99
Weighted average common shares outstanding:
Basic	38,147		43,785		39,547		45,056
Diluted	38,325		44,039		39,734		45,332

See accompanying notes to unaudited condensed consolidated financial statements.

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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 Loss		Total
	Shares	Amount				Shares	Amount
Balance, December 31, 2021	49,849	$	498	$	486,709	(2,586)	$	(121,831)	$	796,946	$	(295)	$	1,162,027
Repurchase of common stock	—	—		—		(2,298)	(228,024)		—		—		(228,024)
Equity awards vested, net of shares withheld for taxes	164	2		(9,433)		—	—		—		—		(9,431)

Share-based compensation	—	—		11,259		—	—		—		—		11,259
Comprehensive income (loss)	—	—		—		—	—		146,008		(907)		145,101
Balance, March 31, 2022	50,013	$	500	$	488,535	(4,884)	$	(349,855)	$	942,954	$	(1,202)	$	1,080,932
Repurchase of common stock	—	—		—		(1,876)	(173,867)		—		—		(173,867)
Equity awards vested, net of shares withheld for taxes	19	—		(366)		—	—		—		—		(366)
Share-based compensation	—	—		8,513		—	—		—		—		8,513
Comprehensive income	—	—		—		—	—		123,800		332		124,132
Balance, June 30, 2022	50,032	$	500	$	496,682	(6,760)	$	(523,722)	$	1,066,754	$	(870)	$	1,039,344

Equity awards vested, net of shares withheld for taxes	55	1		(3,836)		—	—		—		—		(3,835)
Share-based compensation	—	—		4,898		—	—		—		—		4,898
Comprehensive income (loss)	—	—		—		—	—		92,445		(219)		92,226
Balance, September 30, 2022	50,087	$	501	$	497,744	(6,760)	$	(523,722)	$	1,159,199	$	(1,089)	$	1,132,633


	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount				Shares	Amount
Balance, December 31, 2022	50,109	$	501	$	501,674	(8,230)	$	(698,598)	$	1,240,996	$	(939)	$	1,043,634
Repurchase of common stock	—	—		—		(1,768)	(176,300)		—		—		(176,300)
Equity awards vested, net of shares withheld for taxes	127	1		(6,135)		—	—		—		—		(6,134)

Share-based compensation	—	—		10,318		—	—		—		—		10,318
Comprehensive income	—	—		—		—	—		84,110		146		84,256
Balance, March 31, 2023	50,236	$	502	$	505,857	(9,998)	$	(874,898)	$	1,325,106	$	(793)	$	955,774
Repurchase of common stock	—	—		(40,000)		(2,354)	(211,964)		—		—		(251,964)
Equity awards vested, net of shares withheld for taxes	103	1		(3,288)		—	—		—		—		(3,287)
Share-based compensation	—	—		4,818		—	—		—		—		4,818
Comprehensive income	—	—		—		—	—		60,906		50		60,956
Balance, June 30, 2023	50,339	$	503	$	467,387	(12,352)	$	(1,086,862)	$	1,386,012	$	(743)	$	766,297
Repurchase of common stock	—	—		40,000		(261)	(40,219)		—		—		(219)
Equity awards vested, net of shares withheld for taxes	48	1		(2,523)		—	—		—		—		(2,522)
Share-based compensation	—	—		306		—	—		—		—		306
Comprehensive income	—	—		—		—	—		53,174		133		53,307
Balance, September 30, 2023	50,387	$	504	$	505,170	(12,613)	$	(1,127,081)	$	1,439,186	$	(610)	$	817,169

See accompanying notes to unaudited condensed consolidated financial statements.

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AMN HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	198,190	$	362,253
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (inclusive of depreciation included in cost of revenue)	117,795		99,087
Non-cash interest expense and other	1,587		1,427

Change in fair value of contingent consideration liabilities	2,430		(1,190)
Increase in allowance for credit losses and sales credits	31,968		22,199
Provision for deferred income taxes	8,495		(5,364)
Share-based compensation	15,442		24,670
Loss on disposal or impairment of long-lived assets	1,793		571

Net loss on investments in available-for-sale securities	228		652
Net gain on deferred compensation balances	(300)		(1,324)
Non-cash lease expense	1,146		4,818
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	77,572		44,532
Accounts receivable, subcontractor	92,750		(14,235)
Income taxes receivable	8,875		(1,426)
Prepaid expenses	344		55,495
Other current assets	3,793		12,399
Other assets	(1,103)		(608)

Accounts payable and accrued expenses	(122,763)		31,855
Accrued compensation and benefits	(78,290)		2,937
Other liabilities	52,503		(99,534)

Deferred revenue	840		(809)

Net cash provided by operating activities	413,295		538,405

Cash flows from investing activities:
Purchase and development of fixed assets	(73,831)		(51,229)
Purchase of investments	—		(13,152)
Proceeds from sale and maturity of investments	9,894		12,549

Proceeds from sale of equity investment	77		68
Payments to fund deferred compensation plan	(24,902)		(21,411)

Cash paid for acquisitions, net of cash and restricted cash received	—		(69,801)
Cash paid for other intangibles	—		(5,091)

Net cash used in investing activities	(88,762)		(148,067)

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	Nine Months Ended September 30,
	2023		2022
Cash flows from financing activities:



Payments on revolving credit facility	(330,000)		—
Proceeds from revolving credit facility	425,000		—


Repurchase of common stock (1)	(424,744)		(401,891)
Payment of financing costs	(3,579)		—
Earn-out payments to settle contingent consideration liabilities for prior acquisitions	(7,500)		—
Cash paid for shares withheld for taxes	(11,943)		(13,632)
Net cash used in financing activities	(352,766)		(415,523)

Net decrease in cash, cash equivalents and restricted cash	(28,233)		(25,185)
Cash, cash equivalents and restricted cash at beginning of period	137,872		246,714
Cash, cash equivalents and restricted cash at end of period	$	109,639	$	221,529

Supplemental disclosures of cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	6,891	$	10,700
Cash paid for interest (net of $1,026 and $452 capitalized for the nine months ended September 30, 2023 and 2022, respectively)	$	25,087	$	18,950
Cash paid for income taxes	$	10,833	$	164,757
Acquisitions:
Fair value of tangible assets acquired in acquisitions, net of cash and restricted cash received	$	—	$	2,731
Goodwill	—		43,301
Intangible assets	—		40,200
Liabilities assumed	—		(8,431)


Contingent consideration liabilities	—		(8,000)
Net cash paid for acquisitions	$	—	$	69,801
Supplemental disclosures of non-cash investing and financing activities:
Purchase of fixed assets recorded in accounts payable and accrued expenses	$	14,841	$	5,187
Excise tax payable on share repurchases	$	3,739	$	—
Right-of-use assets obtained in exchange for operating lease liabilities	$	25,794	$	5,017

(1) The difference between the amount reported for the nine months ended September 30, 2023 and the corresponding amounts presented in the condensed consolidated statements of stockholders’ equity is due to accrued excise tax payable on share repurchases recorded within treasury stock.

See accompanying notes to unaudited condensed consolidated financial statements.

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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, stockholders’ equity 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, 2022, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on February 22, 2023 (the “2022 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, contingent consideration liabilities associated with acquisitions, and income taxes. Actual results could differ from those estimates under different assumptions or conditions.

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The new guidance requires companies to apply the definition of a performance obligation under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities, such as deferred revenue, relating to contracts with customers that are acquired in a business combination. Under prior guidance, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at their acquisition-date fair values in accordance with ASC Subtopic 820-10, Fair Value Measurements—Overall. Generally, this new guidance will result in the acquirer recognizing acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree prior to the acquisition under ASC Topic 606. The Company adopted this standard effective January 1, 2023 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 and restricted investments with an original maturity of three months or less to be cash equivalents and restricted cash equivalents, respectively. Cash and cash equivalents include currency on hand, deposits with financial institutions, money market funds and other highly liquid investments. Restricted cash and cash equivalents primarily includes cash, corporate bonds and commercial paper that serve as collateral for the Company’s 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.

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	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	29,377	$	64,524
Restricted cash and cash equivalents (included in other current assets)	25,634		37,225
Restricted cash, cash equivalents and investments	69,995		61,218
Total cash, cash equivalents and restricted cash and investments	125,006		162,967
Less restricted investments	(15,367)		(25,095)
Total cash, cash equivalents and restricted cash	$	109,639	$	137,872

The Company maintains its cash and restricted cash in bank deposit accounts primarily at large, national financial institutions, which typically exceed federally insured limits. The Company has not experienced any losses in such accounts.

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:


	2023		2022
Balance as of January 1,	$	31,910	$	6,838

Provision for expected credit losses	5,464		10,129
Amounts written off charged against the allowance	(2,948)		(1,773)

Balance as of September 30,	$	34,426	$	15,194

Reclassifications

To conform to the current year presentation, certain reclassifications have been made to prior year balances in the condensed consolidated balance sheets and accompanying Note (10), “Balance Sheet Details.”

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2. ACQUISITIONS

The Company accounted for the acquisition set forth below using the acquisition method of accounting. Accordingly, the Company recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition. The goodwill recognized for the acquisition is attributable to expected growth as the Company leverages its brand and diversifies its services offered to clients, including potential revenue growth and margin expansion. The Company did not incur any material acquisition-related costs.

Connetics Acquisition

On May 13, 2022, the Company completed its acquisition of Connetics Communications, LLC (“Connetics”), which specializes in the direct hire recruitment and permanent placement of international nurse and allied health professionals with healthcare facilities in the United States. The initial purchase price of $78,764 included (1) $70,764 cash consideration paid upon acquisition, funded through cash on hand, and (2) contingent consideration (earn-out payment) of up to $12,500 with an estimated fair value of $8,000 as of the acquisition date. The contingent earn-out payment is based on the operating results of Connetics for the twelve months ending May 31, 2023, which resulted in a payment of $7,500 in the third quarter of 2023. The results of Connetics have been included in the Company’s nurse and allied solutions segment since the date of acquisition. During the fourth quarter of 2022, $231 was returned to the Company in respect of the final working capital settlement.

The allocation of the $78,533 purchase price, which was reduced by the final working capital settlement and was finalized during the second quarter of 2023, consisted of (1) $3,172 of fair value of tangible assets acquired, which included $963 cash received, (2) $8,244 of liabilities assumed, (3) $40,200 of identified intangible assets, and (4) $43,405 of goodwill, of which $42,905 is deductible for tax purposes. The intangible assets acquired have a weighted average useful life of approximately thirteen 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	$	32,800	15
	Staffing database	4,200		5
	Tradenames and trademarks	3,200		5
		$	40,200

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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 technology-enabled services, including language interpretation and vendor management systems, and talent planning and acquisition services, including 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 recruitment process outsourcing services is recognized as the services are rendered. Depending on the arrangement, the Company’s technology-enabled service 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.

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 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 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,” for additional information regarding the Company’s revenue disaggregated by service type.

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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,
	2023		2022		2023		2022
Net income	$	53,174	$	92,445	$	198,190	$	362,253

Net income per common share - basic	$	1.39	$	2.11	$	5.01	$	8.04
Net income per common share - diluted	$	1.39	$	2.10	$	4.99	$	7.99

Weighted average common shares outstanding - basic	38,147		43,785		39,547		45,056
Plus dilutive effect of potential common shares	178		254		187		276
Weighted average common shares outstanding - diluted	38,325		44,039		39,734		45,332

Share-based awards to purchase 43 and 84 shares of common stock were not included in the above calculation of diluted net income per common share for the three and nine months ended September 30, 2023, respectively, because the effect of these instruments was anti-dilutive. Share-based awards to purchase 14 and 15 shares of common stock were not included in the above calculation of diluted net income per common share for the three and nine months ended September 30, 2022, respectively, because the effect of these instruments was anti-dilutive.

Accelerated Share Repurchase

On May 8, 2023, the Company entered into an accelerated share repurchase (“ASR”) agreement with a counterparty whereupon the Company prepaid $200,000 and received an initial delivery of 1,760 shares of its common stock, which was 80% of the prepayment amount based on a price of $90.89 per share. On August 10, 2023, the Company received a final delivery of approximately 261 additional shares of its common stock, representing the remaining 20% of the prepayment amount and final settlement of the ASR agreement. The total number of shares received and average price per share of $98.97 was based on the volume-weighted average price over the term of the ASR agreement, less an agreed upon discount.

During the second quarter of 2023, the prepayment was recognized as a reduction to stockholders’ equity, consisting of (1) an increase in treasury stock, which reflected the fair value of the shares received upon initial delivery, and (2) a reduction in additional paid-in capital, which reflected the pending settlement of the ASR agreement. The reduction in additional paid-in capital was reclassified to treasury stock during the three months ended September 30, 2023 upon final settlement.

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. The Company has 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 the Company’s travel nurse staffing (including international nurse staffing and rapid response nurse staffing), labor disruption staffing, local staffing, international nurse and allied permanent placement, allied 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 services, vendor management systems, workforce optimization, virtual care, and 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 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:

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue
Nurse and allied solutions	$	573,426	$	828,317	$	2,086,921	$	3,157,834
Physician and leadership solutions	159,554		175,152		501,540		530,355
Technology and workforce solutions	120,483		135,117		382,524		429,542
	$	853,463	$	1,138,586	$	2,970,985	$	4,117,731
Segment operating income
Nurse and allied solutions	$	82,882	$	115,182	$	299,320	$	471,141
Physician and leadership solutions	21,609		23,904		73,165		64,280
Technology and workforce solutions	50,664		71,145		173,297		232,526
	155,155		210,231		545,782		767,947
Unallocated corporate overhead	27,196		34,635		108,286		116,356
Depreciation and amortization	39,175		33,239		113,599		96,169
Depreciation (included in cost of revenue)	1,552		1,091		4,196		2,918
Share-based compensation	306		4,898		15,442		24,670
Interest expense, net, and other	11,541		8,961		33,975		28,630
Income before income taxes	$	75,385	$	127,407	$	270,284	$	499,204

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, 2023	$	382,005	$	152,800	$	400,559	$	935,364


Goodwill adjustment for Connetics acquisition	415		—		—		415

Balance, September 30, 2023	$	382,420	$	152,800	$	400,559	$	935,779
Accumulated impairment loss as of December 31, 2022 and September 30, 2023	$	154,444	$	60,495	$	—	$	214,939

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Disaggregation of Revenue

The following tables present the Company’s revenue disaggregated by service type:


	Three Months Ended September 30, 2023
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	384,102	$	—	$	—	$	384,102
Labor disruption services	777		—		—		777
Local staffing	16,991		—		—		16,991
Allied staffing	167,622		—		—		167,622
Locum tenens staffing	—		112,514		—		112,514
Interim leadership staffing	—		30,910		—		30,910
Temporary staffing	569,492		143,424		—		712,916
Permanent placement	3,934		16,130		—		20,064
Language services	—		—		66,406		66,406
Vendor management systems	—		—		38,116		38,116
Other technologies	—		—		5,052		5,052
Technology-enabled services	—		—		109,574		109,574
Talent planning and acquisition	—		—		10,909		10,909
Total revenue	$	573,426	$	159,554	$	120,483	$	853,463


	Three Months Ended September 30, 2022
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	583,463	$	—	$	—	$	583,463
Labor disruption services	19,479		—		—		19,479
Local staffing	31,814		—		—		31,814
Allied staffing	190,044		—		—		190,044
Locum tenens staffing	—		106,055		—		106,055
Interim leadership staffing	—		47,559		—		47,559
Temporary staffing	824,800		153,614		—		978,414
Permanent placement	3,517		21,538		—		25,055
Language services	—		—		55,502		55,502
Vendor management systems	—		—		60,304		60,304
Other technologies	—		—		7,290		7,290
Technology-enabled services	—		—		123,096		123,096
Talent planning and acquisition	—		—		12,021		12,021
Total revenue	$	828,317	$	175,152	$	135,117	$	1,138,586

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	Nine Months Ended September 30, 2023
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	1,453,988	$	—	$	—	$	1,453,988
Labor disruption services	11,515		—		—		11,515
Local staffing	61,038		—		—		61,038
Allied staffing	545,959		—		—		545,959
Locum tenens staffing	—		341,129		—		341,129
Interim leadership staffing	—		107,553		—		107,553
Temporary staffing	2,072,500		448,682		—		2,521,182
Permanent placement	14,421		52,858		—		67,279
Language services	—		—		191,732		191,732
Vendor management systems	—		—		138,843		138,843
Other technologies	—		—		18,191		18,191
Technology-enabled services	—		—		348,766		348,766
Talent planning and acquisition	—		—		33,758		33,758
Total revenue	$	2,086,921	$	501,540	$	382,524	$	2,970,985


	Nine Months Ended September 30, 2022
	Nurse and Allied Solutions		Physician and Leadership Solutions		Technology and Workforce Solutions		Total
Travel nurse staffing	$	2,329,240	$	—	$	—	$	2,329,240
Labor disruption services	102,549		—		—		102,549
Local staffing	109,265		—		—		109,265
Allied staffing	611,226		—		—		611,226
Locum tenens staffing	—		324,663		—		324,663
Interim leadership staffing	—		139,519		—		139,519
Temporary staffing	3,152,280		464,182		—		3,616,462
Permanent placement	5,554		66,173		—		71,727
Language services	—		—		158,031		158,031
Vendor management systems	—		—		210,470		210,470
Other technologies	—		—		21,787		21,787
Technology-enabled services	—		—		390,288		390,288
Talent planning and acquisition	—		—		39,254		39,254
Total revenue	$	3,157,834	$	530,355	$	429,542	$	4,117,731

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6. NOTES PAYABLE AND CREDIT AGREEMENT

On February 10, 2023, the Company entered into the third amendment to its credit agreement (the “Third Amendment”). The Third Amendment provides for, among other things, the following: (i) an extension of the maturity date of the secured revolving credit facility (the “Senior Credit Facility”) to February 10, 2028, (ii) an increase of the revolving commitments to $750,000, and (iii) a transition from LIBOR to a SOFR-based interest rate. The obligations of the Company under the amended credit agreement are secured by substantially all of the assets of the Company. Additional information regarding the credit agreement, Senior Credit Facility and Third Amendment is 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 2022 Annual Report.

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 2022 Annual Report. The Company has not changed the valuation techniques or inputs it uses for its fair value measurement during the nine months ended September 30, 2023.

Assets and Liabilities Measured on a Recurring Basis

The Company invests a portion of its cash and cash equivalents in non-federally insured 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 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 include commercial paper and corporate bonds. The commercial paper is measured at observable market prices for identical securities that are traded in less active markets, which are Level 2 inputs. The corporate bonds are measured using readily available pricing sources that utilize observable market data, including the current interest rate for comparable instruments, which are Level 2 inputs. The following table presents the fair value of commercial paper and corporate bonds issued and outstanding:


	As of September 30, 2023		As of December 31, 2022
Commercial paper	$	47,618	$	31,536
Corporate bonds	—		—
Total classified as restricted cash equivalents	$	47,618	$	31,536
Commercial paper	$	—	$	—
Corporate bonds	15,367		25,095
Total classified as restricted investments	$	15,367	$	25,095

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 table presents information about the above-referenced assets and liabilities and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

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	Fair Value Measurements as of September 30, 2023								Fair Value Measurements as of December 31, 2022
Assets (Liabilities)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds	$	657	$	—	$	—	$	657	$	36,895	$	—	$	—	$	36,895
Deferred compensation	(150,074)		—		—		(150,074)		(128,465)		—		—		(128,465)
Corporate bonds	—		15,367		—		15,367		—		25,095		—		25,095
Commercial paper	—		47,618		—		47,618		—		31,536		—		31,536
Acquisition contingent consideration liabilities	—		—		—		—		—		—		(5,070)		(5,070)

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, 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 indicate that 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, and other information available to the Company such as the rights and obligations of the securities. 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 was $19,204 as of both September 30, 2023 and December 31, 2022.

There were