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Cross Country Healthcare Announces Third Quarter 2023 Financial Results

Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its third quarter ended September 30, 2023.

SELECTED FINANCIAL INFORMATION:

 

 

 

Variance

Variance

 

 

 

Q3 2023 vs

Q3 2023 vs

Dollars are in thousands, except per share amounts

Q3 2023

Q3 2022

Q2 2023

Revenue

$

442,291

 

 

(30)

%

 

(18)

%

Gross profit margin*

 

22.0

%

 

(60)

bps

 

(80)

bps

Net income attributable to common stockholders

$

12,812

 

 

(63)

%

 

(40)

%

Diluted EPS

$

0.36

 

$

(0.57)

 

$

(0.24)

 

Adjusted EBITDA*

$

27,248

 

 

(57)

%

 

(39)

%

Adjusted EBITDA margin*

 

6.2

%

 

(380)

bps

 

(200)

bps

Adjusted EPS*

$

0.39

 

$

(0.68)

 

$

(0.30)

 

Cash flows provided by operations

$

70,311

 

 

(50)

%

 

(41)

%

* Amounts represent measures not calculated in accordance with U.S. generally accepted accounting principles (GAAP) and are referred to as non-GAAP measures. Please refer to the accompanying discussion of how these non-GAAP financial measures are calculated and used under “Non-GAAP Financial Measures” and tables reconciling these measures to the closest GAAP measure, below.

Third Quarter Business Highlights

  • Revenue, Adjusted EBITDA, and Adjusted EPS all within guidance ranges
  • Signed largest Intellify® agreement to date with expected annual spend over $100 million
  • Physician Staffing, Education and Homecare experienced year-over-year revenue growth
  • Strong year to date operating cash flows of $236 million, ending Q3 with no debt
  • Repurchased approximately 600,000 shares of common stock for $14.8 million

“Though the market remains challenging, especially for nursing, we are pleased with the growth in other lines of business like physician staffing, education, and homecare staffing,” said John A. Martins, President and Chief Executive Officer of Cross Country Healthcare. He continued, “I am especially pleased with our traction in the vendor neutral space, leveraging Intellify®, to secure several new clients this quarter. With our strong balance sheet and positive cash flows, we are well-positioned to continue making investments that lead to long-term profitable growth.”

Third quarter consolidated revenue was $442.3 million, a decrease of 30% year-over-year and 18% sequentially. Consolidated gross profit margin was 22.0%, down 60 basis points year-over-year and 80 basis points sequentially. Net income attributable to common stockholders was $12.8 million compared to $34.8 million in the prior year and $21.3 million in the prior quarter. Diluted earnings per share (EPS) was $0.36 compared to $0.93 in the prior year and $0.60 in the prior quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $27.2 million or 6.2% of revenue, as compared with $63.8 million or 10.0% of revenue in the prior year, and $44.4 million or 8.2% of revenue in the prior quarter. Adjusted EPS was $0.39 compared to $1.07 in the prior year and $0.69 in the prior quarter.

For the nine months ended September 30, 2023, consolidated revenue was $1.6 billion, a decrease of 26% year-over-year. Consolidated gross profit margin was 22.4%, flat year-over-year. Net income attributable to common stockholders was $63.6 million, or $1.78 per diluted share, compared to $149.7 million, or $3.97 per diluted share, in the prior year. Adjusted EBITDA was $123.8 million or 7.7% of revenue, as compared with $244.7 million or 11.2% of revenue in the prior year. Adjusted EPS was $1.92 compared to $4.17 in the prior year.

Quarterly Business Segment Highlights

Nurse and Allied Staffing

Revenue was $396.6 million, a decrease of 35% year-over-year and 20% sequentially. Contribution income was $39.2 million, a decrease from $77.8 million year-over-year and $56.5 million sequentially. Average field contract personnel on a full-time equivalent (FTE) basis were 9,849 as compared with 12,524 in the prior year and 11,385 in the prior quarter. Revenue per FTE per day was $434 compared to $526 in the prior year and $474 in the prior quarter. As expected, volume declined as clients continue to right-size their needs, and travel bill rates continued to normalize.

Physician Staffing

Revenue was $45.7 million, an increase of 92% year-over-year and increased 21% excluding the impact from acquisitions. Contribution income was $2.6 million, an increase from $0.8 million year-over-year and a decrease from $3.5 million sequentially. Total days filled were 23,004 as compared with 13,219 in the prior year and 23,826 in the prior quarter. Revenue per day filled was $1,986 as compared with $1,803 in the prior year and $1,902 in the prior quarter. The year-over-year increase in revenue was driven in part by an increase in volume in several specialties.

Cash Flow and Balance Sheet Highlights

Net cash provided by operating activities for the quarter was $70.3 million. For the nine months ended September 30, 2023, net cash provided by operating activities was $236.4 million as compared to $129.7 million in the prior year.

During the third quarter, the Company repurchased and retired a total of 0.6 million shares of the Company's common stock for an aggregate price of $14.8 million, at an average market price of $23.92 per share. As of September 30, 2023, the Company had 34.7 million unrestricted shares outstanding and $83.7 million remaining for share repurchases.

At September 30, 2023, the Company had $14.3 million in cash and cash equivalents. The Company had no borrowings drawn under its revolving senior secured asset-based credit facility (ABL) and $17.9 million of letters of credit outstanding. As of September 30, 2023, borrowing base availability under the ABL was $227.4 million, with $209.5 million of excess availability.

Outlook for Fourth Quarter 2023

The guidance below applies to management’s expectations for the fourth quarter of 2023.

 

Q4 2023 Range

 

Year-over-Year

 

Sequential

Change

 

Change

 

 

 

 

 

 

Revenue

$400 million - $410 million

 

(36)% - (35)%

 

(10)% - (7)%

 

 

 

 

 

 

Adjusted EBITDA*

$19.0 million - $24.0 million

 

(67)% - (58)%

 

(30)% - (12)%

 

 

 

 

 

 

Adjusted EPS*

$0.25 - $0.35

 

$(0.84) - $(0.74)

 

$(0.14) - $(0.04)

* Refer to discussion of non-GAAP financial measures and reconciliation tables below.

The above estimates are based on current management expectations and, as such, are forward-looking and actual results may differ materially. The above ranges do not include the potential impact of any future divestitures, mergers, acquisitions, or other business combinations, changes in debt structure, or future significant share repurchases.

INVITATION TO CONFERENCE CALL

The Company will hold its quarterly conference call on Wednesday, November 1, 2023, at 5:00 P.M. Eastern Time to discuss its third quarter 2023 financial results. This call will be webcast live and can be accessed at the Company’s website at ir.crosscountry.com or by dialing 888-566-1290 from anywhere in the U.S. or by dialing 773-799-3776 from non-U.S. locations - Passcode: Cross Country. A replay of the webcast will be available from November 1st through November 15th on the Company’s website and a replay of the conference call will be available by telephone by calling 866-361-4943 from anywhere in the U.S. or 203-369-0191 from non-U.S. locations - Passcode: 7168.

ABOUT CROSS COUNTRY HEALTHCARE

Cross Country Healthcare, Inc. is a market-leading, tech-enabled workforce solutions and advisory firm with 37 years of industry experience and insight. We help clients tackle complex labor-related challenges and achieve high-quality outcomes, while reducing complexity and improving visibility through data-driven insights. Diversity, equality, and inclusion is at the heart of the organization’s overall corporate social responsibility program, and closely aligned with our core values to create a better future for its people, communities, and its stockholders.

Copies of this and other press releases, as well as additional information about the Company, can be accessed online at ir.crosscountry.com. Stockholders and prospective investors can also register to automatically receive the Company’s press releases, filings with the Securities and Exchange Commission (SEC), and other notices by e-mail.

NON-GAAP FINANCIAL MEASURES

This press release and the accompanying financial statement tables reference non-GAAP financial measures, such as gross profit margin, adjusted EBITDA, and adjusted EPS. Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for, or superior to, financial measures calculated in accordance with United States generally accepted accounting principles (GAAP). Such non-GAAP financial measures are provided for consistency and comparability to prior year results; furthermore, management believes they are useful to investors when evaluating the Company's performance as they exclude certain items that management believes are not indicative of the Company's future operating performance. Pro forma measures, if applicable, are adjusted to include the results of our acquisitions, and exclude the results of divestments, as if the transactions occurred in the beginning of the periods mentioned. Such non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. The financial statement tables that accompany this press release include a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure and a more detailed discussion of each financial measure; as such, the financial statement tables should be read in conjunction with the presentation of these non-GAAP financial measures.

In addition, forward-looking adjusted EBITDA and adjusted EPS for fiscal 2023 exclude potential charges or gains that may be recorded during the fiscal year, including among other things, the potential impact of any future divestitures, mergers, acquisitions, or other business combinations, changes in debt structure, or future significant share repurchases. We have not attempted to provide reconciliations of such forward-looking non-GAAP earnings guidance to the comparable GAAP measure, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K, because the impact and timing of these potential charges or gains is inherently uncertain and difficult to predict and is unavailable without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of our financial performance.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this press release contains statements relating to our future results (including certain projections and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995, and are subject to the "safe harbor" created by those sections. Forward-looking statements consist of statements that are predictive in nature and/or depend upon or refer to future events. Words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", "suggests", "appears", "seeks", "will", "could", and variations of such words and similar expressions are intended to identify 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 include, but are not limited to, the following: the overall macroeconomic environment, including increased inflation and interest rates, demand for the healthcare services we provide, both nationally and in the regions in which we operate, our ability to attract and retain qualified nurses, physicians and other healthcare personnel, costs and availability of short-term housing for our travel healthcare professionals, the functioning of our information systems, the effect of cyber security risks and cyber incidents on our business, the effect of existing or future government regulation and federal and state legislative and enforcement initiatives on our business, our customers ability to pay us for our services, our ability to successfully implement our acquisition and development strategies, including our ability to successfully integrate acquired businesses and realize synergies from such acquisitions, the effect of liabilities and other claims asserted against us, the effect of competition in the markets we serve, our ability to successfully defend the Company, its subsidiaries, and its officers and directors on the merits of any lawsuit or determine its potential liability, if any, and other factors, including, without limitation, the risk factors set forth in Item 1A. "Risk Factors" in the Companys Annual Report on Form 10-K for the year ended December 31, 2022, as filed and updated in our Quarterly Reports on Form 10-Q and other filings with the SEC. You should consult any further disclosures the Company makes on related subjects in its filings with the SEC.

Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results and readers are cautioned not to place undue reliance on these forward-looking statements, which reflect managements opinions only as of the date of this press release. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. Except as may be required by law, the Company undertakes no obligation to update or revise forward-looking statements. All references to "the Company", "we", "us", "our", or "Cross Country" in this press release mean Cross Country Healthcare, Inc. and its consolidated subsidiaries.

Cross Country Healthcare, Inc.

Consolidated Statements of Operations

(Unaudited, amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2023

 

2022

 

 

 

 

 

 

Revenue from services

$

442,291

 

$

636,098

 

 

$

540,695

 

$

1,605,693

 

$

2,178,391

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Direct operating expenses

 

344,932

 

 

492,553

 

 

 

417,556

 

 

1,245,772

 

 

1,689,647

 

Selling, general and administrative expenses

 

69,627

 

 

80,706

 

 

 

78,938

 

 

232,825

 

 

243,568

 

Bad debt expense

 

2,355

 

 

1,101

 

 

 

3,134

 

 

10,397

 

 

6,662

 

Depreciation and amortization

 

4,540

 

 

3,214

 

 

 

4,432

 

 

13,876

 

 

9,414

 

Restructuring costs

 

348

 

 

2,493

 

 

 

913

 

 

1,690

 

 

1,859

 

Legal settlement charges

 

 

 

 

 

 

 

 

1,125

 

 

 

Impairment charges

 

186

 

 

3,856

 

 

 

533

 

 

719

 

 

5,597

 

Total operating expenses

 

421,988

 

 

583,923

 

 

 

505,506

 

 

1,506,404

 

 

1,956,747

 

Income from operations

 

20,303

 

 

52,175

 

 

 

35,189

 

 

99,289

 

 

221,644

 

Other expenses (income):

 

 

 

 

 

 

 

 

 

Interest expense

 

669

 

 

3,498

 

 

 

3,149

 

 

7,508

 

 

10,876

 

Loss on early extinguishment of debt

 

 

 

 

 

 

1,723

 

 

1,723

 

 

1,912

 

Other expense (income), net

 

134

 

 

(27

)

 

 

11

 

 

133

 

 

(1,119

)

Income before income taxes

 

19,500

 

 

48,704

 

 

 

30,306

 

 

89,925

 

 

209,975

 

Income tax expense

 

6,688

 

 

13,911

 

 

 

8,961

 

 

26,332

 

 

60,305

 

Net income attributable to common stockholders

$

12,812

 

$

34,793

 

 

$

21,345

 

$

63,593

 

$

149,670

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders - Basic

$

0.37

 

$

0.94

 

 

$

0.60

 

$

1.80

 

$

4.02

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders - Diluted

$

0.36

 

$

0.93

 

 

$

0.60

 

$

1.78

 

$

3.97

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

34,954

 

 

37,101

 

 

 

35,351

 

 

35,386

 

 

37,200

 

Diluted

 

35,152

 

 

37,492

 

 

 

35,524

 

 

35,742

 

 

37,741

 

Cross Country Healthcare, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited, amounts in thousands, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2023

 

2022

Adjusted EBITDA:a

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

$

12,812

 

 

$

34,793

 

 

$

21,345

 

 

$

63,593

 

 

$

149,670

 

Interest expense

 

669

 

 

 

3,498

 

 

 

3,149

 

 

 

7,508

 

 

 

10,876

 

Income tax expenseb

 

6,688

 

 

 

13,911

 

 

 

8,961

 

 

 

26,332

 

 

 

60,305

 

Depreciation and amortization

 

4,540

 

 

 

3,214

 

 

 

4,432

 

 

 

13,876

 

 

 

9,414

 

Acquisition and integration-related costs

 

13

 

 

 

490

 

 

 

64

 

 

 

59

 

 

 

530

 

Restructuring costsc

 

348

 

 

 

2,493

 

 

 

913

 

 

 

1,690

 

 

 

1,859

 

Legal settlements and feesd

 

 

 

 

 

 

 

 

 

 

1,125

 

 

 

 

Impairment chargese

 

186

 

 

 

3,856

 

 

 

533

 

 

 

719

 

 

 

5,597

 

Loss on disposal of fixed assets

 

43

 

 

 

 

 

 

 

 

 

43

 

 

 

25

 

Loss on early extinguishment of debtf

 

 

 

 

 

 

 

1,723

 

 

 

1,723

 

 

 

1,912

 

Loss (gain) on lease terminationg

 

96

 

 

 

(9

)

 

 

 

 

 

104

 

 

 

(1,094

)

Other (income) expense, net

 

(5

)

 

 

(19

)

 

 

11

 

 

 

(14

)

 

 

(51

)

Equity compensation

 

1,433

 

 

 

1,491

 

 

 

2,205

 

 

 

5,413

 

 

 

5,206

 

System conversion costsh

 

425

 

 

 

74

 

 

 

1,104

 

 

 

1,658

 

 

 

441

 

Adjusted EBITDAa

$

27,248

 

 

$

63,792

 

 

$

44,440

 

 

$

123,829

 

 

$

244,690

 

Adjusted EBITDA margina

 

6.2

%

 

 

10.0

%

 

 

8.2

%

 

 

7.7

%

 

 

11.2

%

 

 

 

 

 

 

 

 

 

 

Adjusted EPS:i

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

$

12,812

 

 

$

34,793

 

 

$

21,345

 

 

$

63,593

 

 

$

149,670

 

Non-GAAP adjustments - pretax:

 

 

 

 

 

 

 

 

 

Acquisition and integration-related costs

 

13

 

 

 

490

 

 

 

64

 

 

 

59

 

 

 

530

 

Restructuring costsc

 

348

 

 

 

2,493

 

 

 

913

 

 

 

1,690

 

 

 

1,859

 

Legal settlements and feesd

 

 

 

 

 

 

 

 

 

 

1,125

 

 

 

 

Impairment chargese

 

186

 

 

 

3,856

 

 

 

533

 

 

 

719

 

 

 

5,597

 

Loss on early extinguishment of debtf

 

 

 

 

 

 

 

1,723

 

 

 

1,723

 

 

 

1,912

 

System conversion costsh

 

425

 

 

 

74

 

 

 

1,104

 

 

 

1,658

 

 

 

441

 

Tax impact of non-GAAP adjustments

 

(208

)

 

 

(1,802

)

 

 

(1,132

)

 

 

(1,767

)

 

 

(2,679

)

Adjusted net income attributable to common stockholders - non-GAAP

$

13,576

 

 

$

39,904

 

 

$

24,550

 

 

$

68,800

 

 

$

157,330

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average common shares - basic, GAAP

 

34,954

 

 

 

37,101

 

 

 

35,351

 

 

 

35,386

 

 

 

37,200

 

Dilutive impact of share-based payments

 

198

 

 

 

391

 

 

 

173

 

 

 

356

 

 

 

541

 

Adjusted weighted average common shares - diluted, non-GAAP

 

35,152

 

 

 

37,492

 

 

 

35,524

 

 

 

35,742

 

 

 

37,741

 

 

 

 

 

 

 

 

 

 

 

Reconciliation:

 

 

 

 

 

 

 

 

 

Diluted EPS, GAAP

$

0.36

 

 

$

0.93

 

 

$

0.60

 

 

$

1.78

 

 

$

3.97

 

Non-GAAP adjustments - pretax:

 

 

 

 

 

 

 

 

 

Acquisition and integration-related costs

 

 

 

 

0.01

 

 

 

 

 

 

 

 

 

0.01

 

Restructuring costsc

 

0.01

 

 

 

0.07

 

 

 

0.03

 

 

 

0.05

 

 

 

0.05

 

Legal settlements and feesd

 

 

 

 

 

 

 

 

 

 

0.03

 

 

 

 

Impairment chargese

 

0.01

 

 

 

0.10

 

 

 

0.01

 

 

 

0.02

 

 

 

0.15

 

Loss on early extinguishment of debtf

 

 

 

 

 

 

 

0.05

 

 

 

0.05

 

 

 

0.05

 

System conversion costsh

 

0.01

 

 

 

 

 

 

0.03

 

 

 

0.04

 

 

 

0.01

 

Tax impact of non-GAAP adjustments

 

 

 

 

(0.04

)

 

 

(0.03

)

 

 

(0.05

)

 

 

(0.07

)

Adjusted EPS, non-GAAPi

$

0.39

 

 

$

1.07

 

 

$

0.69

 

 

$

1.92

 

 

$

4.17

Cross Country Healthcare, Inc.

Consolidated Balance Sheets

(Unaudited, amounts in thousands)

 

 

September 30,

 

December 31,

 

2023

 

2022

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

14,301

 

 

$

3,604

 

Accounts receivable, net

 

410,373

 

 

 

641,611

 

Income taxes receivable

 

5,239

 

 

 

10,915

 

Prepaid expenses

 

4,779

 

 

 

11,067

 

Insurance recovery receivable

 

7,807

 

 

 

7,434

 

Other current assets

 

2,730

 

 

 

1,042

 

Total current assets

 

445,229

 

 

 

675,673

 

Property and equipment, net

 

26,262

 

 

 

19,662

 

Operating lease right-of-use assets

 

2,628

 

 

 

3,254

 

Goodwill

 

135,430

 

 

 

163,268

 

Other intangible assets, net

 

57,256

 

 

 

44,723

 

Deferred tax assets

 

6,534

 

 

 

7,092

 

Insurance recovery receivable

 

22,329

 

 

 

23,058

 

Cloud computing

 

5,455

 

 

 

4,460

 

Other assets

 

6,616

 

 

 

6,649

 

Total assets

$

707,739

 

 

$

947,839

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

114,797

 

 

$

185,507

 

Accrued compensation and benefits

 

57,420

 

 

 

72,605

 

Operating lease liabilities

 

2,782

 

 

 

4,132

 

Earnout liability

 

6,910

 

 

 

7,500

 

Other current liabilities

 

1,669

 

 

 

1,896

 

Total current liabilities

 

183,578

 

 

 

271,640

 

Debt

 

 

 

 

148,735

 

Operating lease liabilities

 

3,040

 

 

 

4,880

 

Accrued claims

 

32,652

 

 

 

35,881

 

Earnout liability

 

5,000

 

 

 

18,000

 

Uncertain tax positions

 

9,906

 

 

 

7,646

 

Other liabilities

 

3,902

 

 

 

3,838

 

Total liabilities

 

238,078

 

 

 

490,620

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

 

4

 

 

 

4

 

Additional paid-in capital

 

241,732

 

 

 

292,876

 

Accumulated other comprehensive loss

 

(1,394

)

 

 

(1,387

)

Retained earnings

 

229,319

 

 

 

165,726

 

Total stockholders' equity

 

469,661

 

 

 

457,219

 

Total liabilities and stockholders' equity

$

707,739

 

 

$

947,839

 

Cross Country Healthcare, Inc.

Segment Dataj

(Unaudited, amounts in thousands)

 

 

Three Months Ended

 

Year-over-

Year

 

Sequential

 

September 30,

% of

 

September 30,

% of

 

June 30,

% of

 

% change

 

% change

 

2023

Total

 

2022

Total

 

2023

Total

 

Fav (Unfav)

 

Fav (Unfav)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services:

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

396,595

90

%

 

$

612,270

96

%

 

$

495,376

92

%

 

(35

)%

 

(20

)%

Physician Staffing

 

45,696

10

%

 

 

23,828

4

%

 

 

45,319

8

%

 

92

%

 

1

%

 

$

442,291

100

%

 

$

636,098

100

%

 

$

540,695

100

%

 

(30

)%

 

(18

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income:k

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

39,226

 

 

$

77,838

 

 

$

56,481

 

 

(50

)%

 

(31

)%

Physician Staffing

 

2,576

 

 

 

837

 

 

 

3,541

 

 

208

%

 

(27

)%

 

 

41,802

 

 

 

78,675

 

 

 

60,022

 

 

(47

)%

 

(30

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overheadl

 

16,412

 

 

 

16,447

 

 

 

18,891

 

 

%

 

13

%

Depreciation and amortization

 

4,540

 

 

 

3,214

 

 

 

4,432

 

 

(41

)%

 

(2

)%

Restructuring costsc

 

348

 

 

 

2,493

 

 

 

913

 

 

86

%

 

62

%

Impairment chargese

 

186

 

 

 

3,856

 

 

 

533

 

 

95

%

 

65

%

Other costs

 

13

 

 

 

490

 

 

 

64

 

 

97

%

 

80

%

Income from operations

$

20,303

 

 

$

52,175

 

 

$

35,189

 

 

(61

)%

 

(42

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

Year-over-

Year

 

 

 

September 30,

% of

 

September 30,

% of

 

 

 

% change

 

 

 

2023

Total

 

2022

Total

 

 

Fav (Unfav)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services:

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

1,474,273

92

%

 

$

2,109,293

97

%

 

 

 

 

(30

)%

 

 

Physician Staffing

 

131,420

8

%

 

 

69,098

3

%

 

 

 

 

90

%

 

 

 

$

1,605,693

100

%

 

$

2,178,391

100

%

 

 

 

 

(26

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income:k

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

162,876

 

 

$

285,506

 

 

 

 

 

(43

)%

 

 

Physician Staffing

 

7,841

 

 

 

3,822

 

 

 

 

 

105

%

 

 

 

 

170,717

 

 

 

289,328

 

 

 

 

 

(41

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overheadl

 

53,959

 

 

 

50,284

 

 

 

 

 

(7

)%

 

 

Depreciation and amortization

 

13,876

 

 

 

9,414

 

 

 

 

 

(47

)%

 

 

Restructuring costsc

 

1,690

 

 

 

1,859

 

 

 

 

 

9

%

 

 

Legal settlement chargesd

 

1,125

 

 

 

 

 

 

 

 

(100

)%

 

 

Impairment chargese

 

719

 

 

 

5,597

 

 

 

 

 

87

%

 

 

Other costs

 

59

 

 

 

530

 

 

 

 

 

89

%

 

 

Income from operations

$

99,289

 

 

$

221,644

 

 

 

 

 

(55

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other costs include acquisition and integration-related costs.

Cross Country Healthcare, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

70,311

 

 

$

140,627

 

 

$

119,248

 

 

$

236,424

 

 

$

129,730

 

Net cash used in investing activities

 

(3,408

)

 

 

(2,915

)

 

 

(3,996

)

 

 

(10,900

)

 

 

(6,763

)

Net cash used in financing activities

 

(53,273

)

 

 

(107,661

)

 

 

(114,871

)

 

 

(214,825

)

 

 

(93,674

)

Effect of exchange rate changes on cash

 

(2

)

 

 

(10

)

 

 

1

 

 

 

(2

)

 

 

(9

)

Change in cash and cash equivalents

 

13,628

 

 

 

30,041

 

 

 

382

 

 

 

10,697

 

 

 

29,284

 

Cash and cash equivalents at beginning of period

 

673

 

 

 

279

 

 

 

291

 

 

 

3,604

 

 

 

1,036

 

Cash and cash equivalents at end of period

$

14,301

 

 

$

30,320

 

 

$

673

 

 

$

14,301

 

 

$

30,320

 

 

 

 

 

 

 

 

 

 

 

Cross Country Healthcare, Inc.

Other Financial Data

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

Revenue from services

$

442,291

 

 

$

636,098

 

 

$

540,695

 

 

$

1,605,693

 

 

$

2,178,391

 

Less: Direct operating expenses

 

344,932

 

 

 

492,553

 

 

 

417,556

 

 

 

1,245,772

 

 

 

1,689,647

 

Gross profit

$

97,359

 

 

$

143,545

 

 

$

123,139

 

 

$

359,921

 

 

$

488,744

 

Consolidated gross profit marginm

 

22.0

%

 

 

22.6

%

 

 

22.8

%

 

 

22.4

%

 

 

22.4

%

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing statistical data:

 

 

 

 

 

 

 

 

 

FTEsn

 

9,849

 

 

 

12,524

 

 

 

11,385

 

 

 

11,251

 

 

 

13,157

 

Average Nurse and Allied Staffing revenue per FTE per dayo

$

434

 

 

$

526

 

 

$

474

 

 

$

476

 

 

$

582

 

 

 

 

 

 

 

 

 

 

 

Physician Staffing statistical data:

 

 

 

 

 

 

 

 

 

Days filledp

 

23,004

 

 

 

13,219

 

 

 

23,826

 

 

 

68,927

 

 

 

38,703

 

Revenue per day filledq

$

1,986

 

 

$

1,803

 

 

$

1,902

 

 

$

1,907

 

 

$

1,785

 

(a)

Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) attributable to common stockholders before interest expense, income tax expense (benefit), depreciation and amortization, acquisition and integration-related (benefits) costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on disposal of fixed assets, gain or loss on lease termination, gain or loss on sale of business, other expense (income), net, equity compensation, and system conversion costs. Adjusted EBITDA is not and should not be considered a measure of financial performance under GAAP. Management presents Adjusted EBITDA because it believes that Adjusted EBITDA is a useful supplement to net income attributable to common stockholders as an indicator of operating performance. Management uses Adjusted EBITDA for planning purposes and as one performance measure in its incentive programs for certain members of its management team. Adjusted EBITDA, as defined, closely matches the operating measure as defined by the Company's credit facilities. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue.

(b)

Income taxes for the 2023 three and nine month periods reflected a decrease in book income.

(c)

Restructuring costs were primarily comprised of employee termination costs, lease-related exit costs, and reorganization costs as part of planned cost savings initiatives.

(d)

Legal settlements and fees included legal settlement charges as presented on the consolidated statements of operations, as well as legal fees pertaining to non-operational legal matters outside the normal course of operations, which are included in selling, general and administrative expenses. For the nine months ended September 30, 2023, the Company incurred $1.1 million, including legal fees, to settle a wage and hour class action lawsuit.

(e)

Impairment charges of $0.7 million for the nine months ended September 30, 2023 were comprised of $0.2 million related to right-of-use assets and related property in connection with vacated leases in the third quarter of 2023, and $0.5 million in the second quarter of 2023 related to the write-off of an IT project. Impairment charges for the nine months ended September 30, 2022 were comprised of $2.0 million related to right-of-use assets and related property in connection with leases that were vacated and $1.9 million primarily related to the write-off of an IT project in the third quarter of 2022, and $1.7 million in the first quarter of 2022 related to right-of-use assets and related property in connection with vacated leases.

(f)

Loss on early extinguishment of debt for the nine months ended September 30, 2023 consisted of the write-off of debt issuance costs related to the payoff and termination of the term loan on June 30, 3023. Loss on early extinguishment of debt for the nine months ended September 30, 2022 consisted of a prepayment premium and the write-off of debt issuance costs related to an optional prepayment on the term loan in the second quarter of 2022.

(g)

The gain on lease termination for the nine months ended September 30, 2022 was primarily a result of the early termination of the lease for one of the Company's corporate offices, recognized in the second quarter of 2022.

(h)

System conversion costs include ERP system costs related to the upgrading and integrating of our middle and back-office platforms, with certain development costs capitalized and amortized in accordance with the Company's policies, and applicant tracking system costs related to the Company's project to replace its legacy system supporting its travel nurse staffing business.

(i)

Adjusted EPS, a non-GAAP financial measure, is defined as net income (loss) attributable to common stockholders per diluted share before the diluted EPS impact of acquisition and integration-related (benefits) costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on sale of business, system conversion costs, and nonrecurring income tax adjustments. Adjusted EPS is not and should not be considered a measure of financial performance under GAAP. Management presents Adjusted EPS because it believes that Adjusted EPS is a useful supplement to its reported EPS as an indicator of operating performance. Management believes it provides a more useful comparison of the Company's underlying business performance from period to period and is more representative of the future earnings capacity of the Company. Quarterly non-GAAP adjustment may vary due to rounding.

(j)

Segment data is provided in accordance with the Segment Reporting Topic of the Financial Accounting Standards Board Accounting Standards Codification.

(k)

Contribution income is defined as income (loss) from operations before depreciation and amortization, acquisition and integration-related (benefits) costs, restructuring (benefits) costs, legal settlement charges, impairment charges, and corporate overhead. Contribution income is a financial measure used by management when assessing segment performance.

(l)

Corporate overhead includes unallocated executive leadership and other centralized corporate functional support costs such as finance, IT, legal, human resources, and marketing, as well as public company expenses and corporate-wide projects (initiatives).

(m)

Gross profit is defined as revenue from services less direct operating expenses. The Company's gross profit excludes allocated depreciation and amortization expense. Gross profit margin is calculated by dividing gross profit by revenue from services.

(n)

FTEs represent the average number of Nurse and Allied Staffing contract personnel on a full-time equivalent basis.

(o)

Average revenue per FTE per day is calculated by dividing Nurse and Allied Staffing revenue, excluding permanent placement, per FTE by the number of days worked in the respective periods.

(p)

Days filled is calculated by dividing the total hours invoiced during the period, including an estimate for the impact of accrued revenue, by 8 hours.

(q)

Revenue per day filled is calculated by dividing revenue as reported by days filled for the period presented.

 

Contacts

Cross Country Healthcare, Inc.

William J. Burns, Executive Vice President & Chief Financial Officer

561-237-2555

wburns@crosscountry.com

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