BOCA RATON, Fla.–(BUSINESS WIRE)–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 Company’s 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 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, 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
Contacts
Cross Country Healthcare, Inc.
William J. Burns, Executive Vice President & Chief Financial Officer
561-237-2555
[email protected]