OVERVIEW
AMN demand fell sharply in the early part of the pandemic, but began recovering with the high demand for high wage ICU and critical care nurses needed to treat COVID hospitalizations. With vaccinations and the return of in-person care, AMN's base business began to recover too and 2021 turned out to be an exceptional year for demand. A good year became a tough comp, with the result a consensus outlook that forecast down revenue in 2022, and a middling outlook beyond that. Our view is 2022 and beyond is much better for much longer. As we wrote about recently, we think the elevated levels of Health Care labor demand reflects only the earliest stages of a release of pent up demand that will drive the demand for labor for an extended period.
AMN guided wage rates to fall from the 2021 peak back into a range 20-30% higher than pre-pandemic levels, but while pricing is expected to revert, volume is expected to remain strong in 2022. Now that the current outlook for COVID outlook calls for a peak in cases in 1Q22, the reversion to those post pandemic price levels are going to significantly delayed. As we've seen each successive wave of COVID, the range of impacts changes, with generally less impact on routine and in person care with each wave. Although Delta Variant proved to be disruptive in states with lower vaccination rates, the overall impact was modest compared to previous waves. Therefore, we think pent up demand will remain a tailwind as well.
Our outlook isn't without risks, as waning vaccine efficacy and the Nu Variant could become significant complications to our view, but we expect high vaccination rates, which are higher than during Delta Variant, boosters, antibody therapies, and eventually the oral therapy Paxlovid, will dampen the impact from this upcoming wave of COVID. While early, the data looks to be agreeing as the ratio of hospitalization to COVID cases is lower than during previous outbreaks, which is in line with our expectations.
With the twin drivers of in person care and COVID likely providing a tailwind to demand, we expect another wave of COVID, particularly one with the uncertainty of the Nu Variant, to put incremental pressure on labor supply. We're already seeing strong pricing trends which have yet to peak. We think shares can retest the upper band of the multiple ranges with continued accelerating volume and pricing and we think there is upside to $150 -$180, or 25% to 50% from here.
Please reach out to with any feedback or inquiries.
Best,
Thomas Tobin
Managing Director
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