Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jim Janesky – Stifel Nicolaus & Company, Inc.
James Janesky – Stifel Nicolaus & Company, Inc.
When you look at the fourth quarter can you give us an idea by segment the direction of weakness? I would imagine that nurse travel would be probably the weakest, but let us know what the clinical trials and the other segments you think what will happen just based upon the first month or so of activity?
Emil Hensel
Jim, I think you are right. Probably the relatively weaker segment is our nurse staffing segment, but as I indicated in the prepared remarks we do have some short-term issues also in the clinical trial segment due to the delays on certain trials. Probably our strongest relative segment showed the physician staffing, which is having a very good year, and it continues to show good year-over-year growth in the high single digits. So in the order of magnitude I would rank nurse staffing as the weakest and clinical trials kind of in the middle and physician staffing as the strongest relative segment. The smaller of the human capital management segments are essentially flat.
James Janesky – Stifel Nicolaus & Company, Inc.
And 8.6% contribution margin for the physician staffing this quarter; where should that be on a normalized basis?
Emil Hensel
I think the margin that we had in the 22 days of the quarter, was fairly representative of the overall contribution margins of this business, on overall contribution margins of this business.
James Janesky – Stifel Nicolaus & Company, Inc.
And so will it again go back to the nursing volumes being down, why the EBITDA margin's going down about 100 basis points year-over-year?
Emil Hensel
That's correct. It's really the impact of the negative operating leverage that you have when revenues decline. Our SG&A does have some variability, but ultimately the negative operating leverage is the primary reason for the decrease.
Joseph A. Boshart
But consistent with Emil's description earlier, the clinical trial services business is operating with modestly lower gross profit margins in the fourth quarter year-over-year.
James Janesky – Stifel Nicolaus & Company, Inc.
And then last question is seasonality, going from the fourth to the first quarter; it seems as if that tends to surprise some folks sometimes, even though it shouldn't because of the payroll costs. How does the addition of the physician staffing segment affect the seasonality of revenues and earnings in the first quarter?
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