Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Cross Country Healthcare Announces Third Quarter 2021 Financial Results


Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its third quarter ended September 30, 2021.

SELECTED FINANCIAL INFORMATION:

 

 

 

Variance

Variance

 

 

 

Q3 2021 vs

Q3 2021 vs

Dollars are in thousands, except per share amounts

Q3 2021

Q3 2020

Q2 2021

Revenue

$

374,905

 

 

93

 

%

13

 

%

Gross profit margin*

22.4

 

%

(230)

 

bps

50

 

bps

Net income attributable to common shareholders

$

23,433

 

 

1,857

 

%

103

 

%

Diluted EPS

$

0.62

 

 

$

0.66

 

 

$

0.31

 

 

Adjusted EBITDA*

$

30,127

 

 

250

 

%

24

 

%

Adjusted EBITDA margin*

8.0

 

%

360

 

bps

70

 

bps

Adjusted EPS*

$

0.61

 

 

$

0.49

 

 

$

0.14

 

 

Cash flows used in operations

$

(2,831)

 

 

67

 

%

(118)

 

%

* Refer to accompanying tables and discussion of non-GAAP (Generally Accepted Accounting Principles) financial measures below.

Business Highlights

"Our performance demonstrates the success we are having in bringing clinicians to the bedside across the nation," said Kevin Clark, Co-Founder and CEO. He continued, "Higher bill rates are really only part of the story, as the investments we have made in people and technology, along with the many changes we have made to core processes, allow us to execute more effectively. We have fundamentally transformed this company and believe we have the ability to continue to grow the number of clinicians on assignment."

Third quarter consolidated revenue was $374.9 million, an increase of 93% year-over-year and 13% sequentially. Consolidated gross profit margin was 22.4%, down 230 basis points year-over-year and up 50 basis points sequentially. Net income attributable to common shareholders was $23.4 million compared to a net loss of $1.3 million in the prior year and net income of $11.5 million in the prior quarter. Diluted earnings per share (EPS) was $0.62 per share compared to a loss of $0.04 per share in the prior year and income of $0.31 per share in the prior quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $30.1 million or 8.0% of revenue, as compared with $8.6 million or 4.4% of revenue in the prior year, and $24.3 million or 7.3% of revenue in the prior quarter. Adjusted EPS was $0.61 compared to $0.12 in the prior year and $0.47 in the prior quarter.

For the nine months ended September 30, 2021, consolidated revenue was $1.0 billion, an increase of 67% year-over-year. Consolidated gross profit margin was 22.0%, down 190 basis points year-over-year. Net income attributable to common shareholders was $54.4 million, or 1.46 per diluted share, compared to a loss of $17.6 million, or 0.49 per diluted share, in the prior year. Adjusted EBITDA was $81.1 million or 7.8% of revenue, as compared with $24.8 million or 4.0% of revenue in the prior year. Adjusted EPS was $1.66 compared to $0.27 in the prior year.

Quarterly Business Segment Highlights

Nurse and Allied Staffing

Revenue was $356.1 million, an increase of 101% year-over-year and 13% sequentially. Contribution income was $40.6 million, an increase compared to $17.9 million in the prior year and $35.3 million in the prior quarter. Average field contract personnel on a full-time equivalent (FTE) basis were 9,003 as compared with 5,403 in the prior year and 7,578 in the prior quarter. Revenue per FTE per day was $425 compared to $353 in the prior year and $454 in the prior quarter. The increase in the average number of FTEs was primarily due to headcount growth in travel nurse and allied, as well as additional headcount resulting from the Cross Country Workforce Solutions Group (WSG) acquisition. In the third quarter, average bill rates rose slightly as we continued to experience higher demand and bill rates related to both COVID-19 and non-COVID-19 assignments, with a record level of demand across a wide range of specialties. Throughout the coronavirus pandemic (COVID-19), we have worked with our clients to adjust bill rates, both increasing and decreasing rates as necessary, to provide critical healthcare professionals.

Physician Staffing

Revenue was $18.8 million, an increase of 14% year-over-year and 20% sequentially. Contribution income was $0.9 million, an increase compared to $0.8 million in the prior year and $0.6 million in the prior quarter. Total days filled were 12,187 as compared with 9,682 in the prior year and 9,775 in the prior quarter. Revenue per day filled was $1,540 as compared with $1,699 in the prior year and $1,600 in the prior quarter. The increase in revenue was primarily due to an increase in volume in both primary care physicians and nurse practitioners. The increase in contribution income was driven by higher revenue, partially offset by higher direct costs.

Cash Flow and Balance Sheet Highlights

Cash flow used in operations for the quarter was $2.8 million compared to $8.5 million in the prior year and cash flow provided by operations of $15.5 million in the prior quarter, primarily due to strong sequential revenue growth which resulted in a $122.9 million increase in receivables since the start of the year. For the nine months ended September 30, 2021, cash flow used in operations was $12.3 million compared to cash flow provided by operations of $25.3 million in the prior year. Days' sales outstanding was 61 days as of September 30, 2021, down 3 days year-over-year and up 3 days since the beginning of the current year, primarily due to the timing of revenue recognized throughout the quarter given the strong monthly sequential growth through the third quarter.

At September 30, 2021, the Company had $0.8 million in cash and cash equivalents and $99.7 million principal balance on its term loan, with $4.0 million of borrowings drawn under its asset-based loan facility (ABL), and $18.5 million of letters of credit outstanding. Availability under the ABL is subject to a borrowing base, which was $149.2 million as of September 30, 2021, with $126.7 million available for borrowing as of September 30, 2021.

Outlook for Fourth Quarter 2021

The guidance below applies to management's expectations for the fourth quarter of 2021.

 

Q4 2021 Range

 

Year-over-Year

 

Sequential

Change

 

Change

 

 

 

 

 

 

Revenue

$580 million - $590 million

 

169% - 174%

 

55% - 57%

 

 

 

 

 

 

Gross Profit Margin*

22.2% - 22.7%

 

(300) bps - (250) bps

 

(20) bps - 30 bps

 

 

 

 

 

 

Adjusted EBITDA*

$63.0 million - $68.0 million

 

448% - 491%

 

109% - 126%

 

 

 

 

 

 

Adjusted EPS*

$1.01 - $1.11

 

$0.82 - $0.92

 

$0.40 - $0.50

* Refer to discussion of non-GAAP financial measures 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 share repurchases.

As we reported at the end of the second quarter 2021, we expected bill rates for our travel division to decline sequentially. Instead, average bill rates rose slightly during the third quarter and we expect them to rise again in the fourth quarter of 2021. We expect the pandemic to continue impacting our financial performance through at least the end of the current fiscal year. However, while COVID-19 has driven up bill rates with regional spikes in demand related to the Delta variant, the impact from states and healthcare systems enacting vaccination mandates is exacerbating an already tight supply market, and we are also experiencing growing needs in non-COVID assignments resulting in increased demand from clinicians leaving the bedside due to burnout or retirement.

See accompanying non-GAAP financial measures and tables below.

INVITATION TO CONFERENCE CALL

The Company will hold its quarterly conference call on Wednesday, November 3, 2021, at 5:00 P.M. Eastern Time to discuss its third quarter 2021 financial results. This call will be webcast live and can be accessed at the Company's website at ir.crosscountryhealthcare.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 3rd through November 17th at the Company's website and a replay of the conference call will be available by telephone by calling 800-385-2541 from anywhere in the U.S. or 203-369-3263 from non-U.S. locations - Passcode: 2021.

ABOUT CROSS COUNTRY HEALTHCARE

Cross Country Healthcare, Inc. (CCH) is a leader in providing total talent management including strategic workforce solutions, contingent staffing, permanent placement, and consultative services for healthcare customers. Leveraging our 35 years of industry expertise and insight, CCH solves complex labor-related challenges for customers while providing high-quality outcomes and exceptional patient care. As a multi-year Best of Staffing® Award winner, CCH is committed to an exceptionally high level of service to both our clients and our healthcare professionals. CCH was the first publicly traded staffing firm to obtain The Joint Commission Certification, which it still holds with a Letter of Distinction. CCH was recently listed as one of the top four staffing and recruiting employers for women by InHerSights in October 2021 and earned Energage's inaugural 2021 Top Workplaces USA award in February 2021. CCH has a longstanding history of investing in its diversity, equality, and inclusion strategic initiatives as a key component of the organization's overall corporate social responsibility program which is closely aligned with its core values to create a better future for its people, communities, the planet, and its shareholders.

Copies of this and other news releases as well as additional information about the Company can be obtained online at ir.crosscountryhealthcare.com. Shareholders 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 U.S. 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 U.S. 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.

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, and are subject to the "safe harbor" created by those sections. Forward-looking statements consist of statements that are predictive in nature, 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. Forward-looking 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 potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations, 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, demand for the healthcare services we provide, both nationally and in the regions in which we operate, 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 clients' 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 potential liabilities, losses, or other exposures in connection with the WSG acquisition, 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 set forth in Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and in our 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 management's 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, and/or (iv) our strategy, which is based in part on this analysis, will be successful. The Company undertakes no obligation to update or revise forward-looking statements. All references to "we", "us", "our", or "Cross Country" in this press release mean Cross Country Healthcare, Inc. and its 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,

 

2021

 

 

2020

 

 

2021

 

 

2021

 

2020

 

 

 

 

 

 

 

Revenue from services

$

374,905

 

 

 

$

193,968

 

 

 

$

331,827

 

 

 

$

1,035,973

 

 

$

620,811

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

291,111

 

 

 

145,965

 

 

 

259,237

 

 

 

808,124

 

 

472,471

 

Selling, general and administrative expenses

52,847

 

 

 

40,804

 

 

 

50,344

 

 

 

149,518

 

 

128,939

 

Bad debt expense

1,441

 

 

 

946

 

 

 

466

 

 

 

2,411

 

 

2,383

 

Depreciation and amortization

2,680

 

 

 

3,247

 

 

 

2,199

 

 

 

7,132

 

 

10,472

 

Acquisition and integration-related costs

61

 

 

 

?

 

 

 

924

 

 

 

985

 

 

77

 

Restructuring costs

318

 

 

 

2,316

 

 

 

835

 

 

 

2,391

 

 

5,210

 

Impairment charges

?

 

 

 

1,071

 

 

 

1,921

 

 

 

2,070

 

 

16,082

 

Total operating expenses

348,458

 

 

 

194,349

 

 

 

315,926

 

 

 

972,631

 

 

635,634

 

Income (loss) from operations

26,447

 

 

 

(381

)

 

 

15,901

 

 

 

63,342

 

 

(14,823

)

Other expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

2,182

 

 

 

608

 

 

 

1,196

 

 

 

4,049

 

 

2,219

 

Other income, net

(375

)

 

 

(10

)

 

 

(204

)

 

 

(616

)

 

(46

)

Income (loss) before income taxes

24,640

 

 

 

(979

)

 

 

14,909

 

 

 

59,909

 

 

(16,996

)

Income tax expense (benefit)

1,207

 

 

 

169

 

 

 

3,361

 

 

 

5,480

 

 

(32

)

Consolidated net income (loss)

23,433

 

 

 

(1,148

)

 

 

11,548

 

 

 

54,429

 

 

(16,964

)

Less: Net income attributable to noncontrolling interest in subsidiary

?

 

 

 

186

 

 

 

?

 

 

 

?

 

 

610

 

Net income (loss) attributable to common shareholders

$

23,433

 

 

 

$

(1,334

)

 

 

$

11,548

 

 

 

$

54,429

 

 

$

(17,574

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders - Basic

$

0.63

 

 

 

$

(0.04

)

 

 

$

0.32

 

 

 

$

1.49

 

 

$

(0.49

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders - Diluted

$

0.62

 

 

 

$

(0.04

)

 

 

$

0.31

 

 

 

$

1.46

 

 

$

(0.49

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

36,963

 

 

 

36,176

 

 

 

36,625

 

 

 

36,593

 

 

36,058

 

Diluted

37,582

 

 

 

36,176

 

 

 

37,203

 

 

 

37,276

 

 

36,058

 

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,

 

2021

 

 

2020

 

 

2021

 

 

2021

 

2020

Adjusted EBITDA:a

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

$

23,433

 

 

 

$

(1,334

)

 

 

$

11,548

 

 

 

$

54,429

 

 

$

(17,574

)

Interest expense

2,182

 

 

 

608

 

 

 

1,196

 

 

 

4,049

 

 

2,219

 

Income tax expense (benefit)

1,207

 

 

 

169

 

 

 

3,361

 

 

 

5,480

 

 

(32

)

Depreciation and amortization

2,680

 

 

 

3,247

 

 

 

2,199

 

 

 

7,132

 

 

10,472

 

Acquisition and integration-related costsb

61

 

 

 

?

 

 

 

924

 

 

 

985

 

 

77

 

Restructuring costsc

318

 

 

 

2,316

 

 

 

835

 

 

 

2,391

 

 

5,210

 

Legal settlements and feesd

(1,556

)

 

 

837

 

 

 

28

 

 

 

(1,153

)

 

2,398

 

Impairment chargese

?

 

 

 

1,071

 

 

 

1,921

 

 

 

2,070

 

 

16,082

 

Other income, net

(375

)

 

 

(10

)

 

 

(204

)

 

 

(616

)

 

(46

)

Equity compensation

1,771

 

 

 

1,064

 

 

 

2,137

 

 

 

5,257

 

 

4,063

 

Applicant tracking system costsf

406

 

 

 

444

 

 

 

315

 

 

 

1,096

 

 

1,343

 

Net income attributable to noncontrolling interest in subsidiaryg

?

 

 

 

186

 

 

 

?

 

 

 

?

 

 

610

 

Adjusted EBITDAa

$

30,127

 

 

 

$

8,598

 

 

 

$

24,260

 

 

 

$

81,120

 

 

$

24,822

 

Adjusted EBITDA margina

8.0

%

 

 

4.4

%

 

 

7.3

%

 

 

7.8

%

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS:h

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

$

23,433

 

 

 

$

(1,334

)

 

 

$

11,548

 

 

 

$

54,429

 

 

$

(17,574

)

Non-GAAP adjustments - pretax:

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration-related costsb

61

 

 

 

?

 

 

 

924

 

 

 

985

 

 

77

 

Restructuring costsc

318

 

 

 

2,316

 

 

 

835

 

 

 

2,391

 

 

5,210

 

Legal settlements and feesd

(1,556

)

 

 

837

 

 

 

28

 

 

 

(1,153

)

 

2,398

 

Impairment charges (excluding rebranding impacts)e

?

 

 

 

1,071

 

 

 

1,921

 

 

 

2,070

 

 

16,082

 

Rebranding impairments and accelerated amortizatione

?

 

 

 

938

 

 

 

?

 

 

 

?

 

 

3,075

 

Applicant tracking system costsf

406

 

 

 

444

 

 

 

315

 

 

 

1,096

 

 

1,343

 

Nonrecurring income tax adjustmentsi

?

 

 

 

?

 

 

 

1,942

 

 

 

1,942

 

 

313

 

Tax impact of non-GAAP adjustments

(1

)

 

 

(20

)

 

 

(11

)

 

 

(14

)

 

(990

)

Adjusted net income attributable to common shareholders - non-GAAP

$

22,661

 

 

 

$

4,252

 

 

 

$

17,502

 

 

 

$

61,746

 

 

$

9,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - basic, GAAP

36,963

 

 

 

36,176

 

 

 

36,625

 

 

 

36,593

 

 

36,058

 

Dilutive impact of share-based paymentsj

619

 

 

 

228

 

 

 

578

 

 

 

683

 

 

253

 

Adjusted weighted average common shares - diluted, non-GAAP

37,582

 

 

 

36,404

 

 

 

37,203

 

 

 

37,276

 

 

36,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS, GAAP

$

0.62

 

 

 

$

(0.04

)

 

 

$

0.31

 

 

 

$

1.46

 

 

$

(0.49

)

Non-GAAP adjustments - pretax:

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration-related costsb

?

 

 

 

?

 

 

 

0.03

 

 

 

0.03

 

 

?

 

Restructuring costsc

0.01

 

 

 

0.06

 

 

 

0.02

 

 

 

0.06

 

 

0.14

 

Legal settlements and feesd

(0.03

)

 

 

0.03

 

 

 

?

 

 

 

(0.02

)

 

0.07

 

Impairment charges (excluding rebranding impacts)e

?

 

 

 

0.03

 

 

 

0.05

 

 

 

0.05

 

 

0.45

 

Rebranding impairments and accelerated amortizatione

?

 

 

 

0.03

 

 

 

?

 

 

 

?

 

 

0.09

 

Applicant tracking system costsf

0.01

 

 

 

0.01

 

 

 

0.01

 

 

 

0.03

 

 

0.03

 

Nonrecurring income tax adjustmentsi

?

 

 

 

?

 

 

 

0.05

 

 

 

0.05

 

 

0.01

 

Tax impact of non-GAAP adjustments

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

(0.03

)

Adjusted EPS, non-GAAPh

$

0.61

 

 

 

$

0.12

 

 

 

$

0.47

 

 

 

$

1.66

 

 

$

0.27

 

 

Cross Country Healthcare, Inc.

Consolidated Balance Sheets

(Unaudited, amounts in thousands)

 

 

September 30,

 

 

December 31,

 

2021

 

 

2020

 

 

 

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

842

 

 

 

$

1,600

 

Accounts receivable, net

301,040

 

 

 

170,003

 

Prepaid expenses

3,418

 

 

 

5,455

 

Insurance recovery receivable

4,655

 

 

 

4,698

 

Other current assets

3,318

 

 

 

1,355

 

Total current assets

313,273

 

 

 

183,111

 

Property and equipment, net

14,877

 

 

 

12,351

 

Operating lease right-of-use assets

8,064

 

 

 

10,447

 

Goodwill

112,990

 

 

 

90,924

 

Trade names, indefinite-lived

5,900

 

 

 

5,900

 

Other intangible assets, net

44,145

 

 

 

34,831

 

Other non-current assets

21,171

 

 

 

19,409

 

Total assets

$

520,420

 

 

 

$

356,973

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued expenses

$

73,033

 

 

 

$

49,877

 

Accrued employee compensation and benefits

54,875

 

 

 

35,540

 

Current portion of debt

3,426

 

 

 

2,425

 

Operating lease liabilities - current

4,362

 

 

 

4,509

 

Current portion of earnout liability

7,500

 

 

 

?

 

Other current liabilities

1,466

 

 

 

1,072

 

Total current liabilities

144,662

 

 

 

93,423

 

Long-term debt, less current portion

98,665

 

 

 

53,408

 

Operating lease liabilities - non-current

12,280

 

 

 

15,234

 

Non-current deferred tax liabilities

9,388

 

 

 

6,592

 

Long-term accrued claims

25,521

 

 

 

25,412

 

Long-term contingent consideration

7,500

 

 

 

?

 

Other long-term liabilities

5,605

 

 

 

7,995

 

Total liabilities

303,621

 

 

 

202,064

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Common stock

4

 

 

 

4

 

Additional paid-in capital

318,415

 

 

 

310,388

 

Accumulated other comprehensive loss

(1,312

)

 

 

(1,280

)

Accumulated deficit

(100,308

)

 

 

(154,737

)

Total Cross Country Healthcare, Inc. stockholders' equity

216,799

 

 

 

154,375

 

Noncontrolling interest in subsidiary

?

 

 

 

534

 

Total stockholders' equity

216,799

 

 

 

154,909

 

Total liabilities and stockholders' equity

$

520,420

 

 

 

$

356,973

 

 

Cross Country Healthcare, Inc.

Segment Datak

(Unaudited, amounts in thousands)

 

 

Three Months Ended

 

Year-over-
Year

 

Sequential

 

September 30,

% of

 

September 30,

% of

 

June 30,

% of

 

% change

 

% change

 

2021

Total

 

2020

Total

 

2021

Total

 

Fav (Unfav)

 

Fav (Unfav)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services:

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

356,139

 

95

%

 

$

177,516

 

91

%

 

$

316,188

 

95

%

 

101

%

 

13

%

Physician Staffing

18,766

 

5

%

 

16,452

 

9

%

 

15,639

 

5

%

 

14

%

 

20

%

 

$

374,905

 

100

%

 

$

193,968

 

100

%

 

$

331,827

 

100

%

 

93

%

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income:l

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

40,645

 

 

 

$

17,925

 

 

 

$

35,284

 

 

 

127

%

 

15

%

Physician Staffing

910

 

 

 

827

 

 

 

562

 

 

 

10

%

 

62

%

 

41,555

 

 

 

18,752

 

 

 

35,846

 

 

 

122

%

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overheadm

12,049

 

 

 

12,499

 

 

 

14,066

 

 

 

4

%

 

14

%

Depreciation and amortization

2,680

 

 

 

3,247

 

 

 

2,199

 

 

 

17

%

 

(22)

%

Acquisition and integration-related costsb

61

 

 

 

?

 

 

 

924

 

 

 

(100)

%

 

93

%

Restructuring costsc

318

 

 

 

2,316

 

 

 

835

 

 

 

86

%

 

62

%

Impairment chargese

?

 

 

 

1,071

 

 

 

1,921

 

 

 

100

%

 

100

%

Income (loss) from operations

$

26,447

 

 

 

$

(381

)

 

 

$

15,901

 

 

 

NM

 

 

66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

Year-over-
Year

 

 

 

September 30,

% of

 

September 30,

% of

 

 

 

% change

 

 

 

2021

Total

 

2020

Total

 

 

Fav (Unfav)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services:

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

985,335

 

95

%

 

$

569,306

 

92

%

 

 

 

 

73

%

 

 

Physician Staffing

50,638

 

5

%

 

51,505

 

8

%

 

 

 

 

(2)

%

 

 

 

$

1,035,973

 

100

%

 

$

620,811

 

100

%

 

 

 

 

67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income:l

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

113,346

 

 

 

$

51,334

 

 

 

 

 

 

121

%

 

 

Physician Staffing

2,900

 

 

 

2,677

 

 

 

 

 

 

8

%

 

 

 

116,246

 

 

 

54,011

 

 

 

 

 

 

115

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overheadm

40,326

 

 

 

36,993

 

 

 

 

 

 

(9)

%

 

 

Depreciation and amortization

7,132

 

 

 

10,472

 

 

 

 

 

 

32

%

 

 

Acquisition and integration-related costsb

985

 

 

 

77

 

 

 

 

 

 

NM

 

 

 

Restructuring costsc

2,391

 

 

 

5,210

 

 

 

 

 

 

54

%

 

 

Impairment chargese

2,070

 

 

 

16,082

 

 

 

 

 

 

87

%

 

 

Income (loss) from operations

$

63,342

 

 

 

$

(14,823

)

 

 

 

 

 

527

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM-Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

2021

 

 

2020

 

 

2021

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

$

(2,831

)

 

 

$

(8,456

)

 

 

$

15,505

 

 

 

$

(12,253

)

 

$

25,275

 

Net cash used in investing activities

(1,888

)

 

 

(1,169

)

 

 

(26,286

)

 

 

(29,360

)

 

(3,659

)

Net cash (used in) provided by financing activities

(12,569

)

 

 

6,818

 

 

 

15,434

 

 

 

40,869

 

 

(19,183

)

Effect of exchange rate changes on cash

3

 

 

 

19

 

 

 

(14

)

 

 

(14

)

 

(19

)

Change in cash and cash equivalents

(17,285

)

 

 

(2,788

)

 

 

4,639

 

 

 

(758

)

 

2,414

 

Cash and cash equivalents at beginning of period

18,127

 

 

 

6,234

 

 

 

13,488

 

 

 

1,600

 

 

1,032

 

Cash and cash equivalents at end of period

$

842

 

 

 

$

3,446

 

 

 

$

18,127

 

 

 

$

842

 

 

$

3,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cross Country Healthcare, Inc.

Other Financial Data

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

September 30,

 

2021

 

 

2020

 

 

2021

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated gross profit marginn

22.4

%

 

 

24.7

%

 

 

21.9

%

 

 

22.0

%

 

23.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

FTEso

9,003

 

 

 

5,403

 

 

 

7,578

 

 

 

7,732

 

 

6,116

 

Average Nurse and Allied Staffing revenue per FTE per dayp

$

425

 

 

 

$

353

 

 

 

$

454

 

 

 

$

462

 

 

$

335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physician Staffing statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

Days filledq

12,187

 

 

 

9,682

 

 

 

9,775

 

 

 

31,430

 

 

29,077

 

Revenue per day filledr

$

1,540

 

 

 

$

1,699

 

 

 

$

1,600

 

 

 

$

1,611

 

 

$

1,771

 

(a)

Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) attributable to common shareholders before interest expense, income tax expense (benefit), depreciation and amortization, acquisition and integration-related costs, restructuring 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 sale of business, other expense (income), net, equity compensation, applicant tracking system costs, and includes net income attributable to noncontrolling interest in subsidiary. Adjusted EBITDA 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 shareholders 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)

Acquisition and integration-related costs include costs for legal and advisory fees for the WSG acquisition that closed on June 8, 2021, and valuation adjustments related to the contingent consideration liability for the Mediscan acquisition.

(c)

Restructuring costs are 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 include 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, 2021, legal settlements and fees resulted in a net benefit of $1.2 million due to a recovery in the third quarter of $1.6 million. For the nine months ended September 30, 2020, we incurred $2.4 million in legal fees related to an ongoing legal matter outside the normal course of operations.

(e)

Impairment charges for the nine months ended September 30, 2021 were comprised of $1.9 million related to right-of-use assets and related property in connection with leases that were vacated during the second quarter and $0.1 million related to the write-off of a discontinued software development project. Impairment charges in 2020 of $16.1 million were comprised of $10.7 million primarily related to goodwill and other intangible assets for the former Search business and $5.4 million related to right-of-use assets and related property and equipment in connection with leases that were vacated during the second and third quarters. Rebranding impairments and accelerated amortization related to finite-lived trade names in connection with the rebranding initiatives.

(f)

Applicant tracking system costs are related to the Company's project to replace its legacy system supporting its travel nurse staffing business. These costs are reported in selling, general and administrative expenses on the consolidated statement of operations and included in corporate overhead in segment data.

(g)

Cross Country Talent Acquisition Group, LLC was controlled by the Company but not wholly owned. The Company recorded the ownership interest of the noncontrolling shareholder as noncontrolling interest in subsidiary. Effective December 31, 2020, the sole professional staffing services agreement held by this joint venture was terminated and, as a result, the Company dissolved Cross Country Talent Acquisition Group, LLC in the third quarter of 2021. The Company subsequently entered into a direct staffing agreement with the hospital system.

(h)

Adjusted EPS, a non-GAAP financial measure, is defined as net income (loss) attributable to common shareholders per diluted share before the diluted EPS impact of acquisition and integration-related costs, restructuring costs, legal settlements and fees, impairment charges, rebranding impairments and accelerated amortization, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on sale of business, applicant tracking system costs, and nonrecurring income tax adjustments. Adjusted EPS 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.

(i)

Non-recurring income tax adjustment for the nine months ended September 30, 2021 reflects a valuation allowance related to a state rate change as a result of the WSG acquisition.

(j)

Due to the net loss for the three and nine months ended September 30, 2020, 228 and 253 shares (in thousands) were excluded from diluted weighted average shares.

(k)

Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC. In the first quarter of 2021, the Company modified its reportable segments and now discloses two reportable segments - Nurse and Allied Staffing and Physician Staffing beginning in the first quarter of 2021. Revenue in the amount of $2.3 million and $7.7 million, respectively, and contribution loss of $0.3 million and $1.7 million, respectively, included in the previously-reported Search segment have been reclassified to Nurse and Allied Staffing for the three and nine months ended September 30, 2020.

(l)

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

(m)

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).

(n)

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.

(o)

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

(p)

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.

(q)

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.

(r)

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

 


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