CCRN
$7.24
Cross Ctry Hlthcr
$.50
7.42%
Earnings Details
Quarter December 2019
Wednesday, March 4, 2020 4:15:00 PM
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Summary

Cross Country Healthcare Guides Earnings Below Estimates

Cross Ctry Hlthcr (CCRN) reported Quarter December 2019 earnings of $0.07 per share on revenue of $215.1 million. The consensus earnings estimate was $0.06 per share on revenue of $208.5 million. Revenue grew 7.1% on a year-over-year basis.

The company said it expects first quarter results to range from a loss of $0.03 per share to breakeven on revenue of $207.0 million to $212.0 million. The current consensus estimate is earnings of $0.02 per share on revenue of $208.4 million for the quarter ending March 31, 2020.

Cross Country Healthcare Inc is a provider of healthcare recruiting, staffing, & workforce solutions. Its workforce solutions include managed service programs, electronic medical record transition staffing, recruitment process outsourcing, among others.

Results
Reported Earnings
$0.07
Earnings Whisper
-
Consensus Estimate
$0.06
Reported Revenue
$215.1 Mil
Revenue Estimate
$208.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Cross Country Healthcare Announces Fourth Quarter and Full Year 2019 Financial Results

BOCA RATON, Fla.--(BUSINESS WIRE)--Cross Country Healthcare, Inc. (the "Company") (NASDAQ: CCRN) today announced financial results for its fourth quarter and full year ended December 31, 2019.

SELECTED FINANCIAL INFORMATION:

Dollars are in thousands, except per share amounts

Q4 2019

Variance
Q4 2019 vs
Q4 2018

Variance
Q4 2019 vs
Q3 2019

Full Year 2019

Variance
2019 vs
2018

Revenue

$

215,096

 

 

7

 

%

3

 

%

$

822,224

 

 

1

 

%

Gross profit margin*

24.7

%

(50

)

bps

30

bps

24.8

%

(90

)

bps

Net loss attributable to common shareholders

$

(1,144

)

 

94

 

%

63

 

%

$

(57,713

)

 

(240

)

%

Diluted EPS

$

(0.03

)

 

$

0.52

 

 

$

0.06

 

 

$

(1.61

)

 

$

(1.13

)

 

Adjusted EBITDA*

$

8,286

 

 

35

 

%

14

 

%

$

25,468

 

 

(19

)

%

Adjusted EPS*

$

0.07

 

 

$

0.07

 

 

$

0.02

 

 

$

0.15

 

 

$

0.03

 

 

Cash flows from operations

$

(5,351

)

 

(604

)

%

62

 

%

$

5,542

 

 

(74

)

%

* Refer to accompanying tables and discussion of Non-GAAP financial measures below.

“I am very proud of the progress we have made throughout 2019, and once again we met or exceeded guidance for revenue and profitability in the fourth quarter,” said Kevin Clark, President and Chief Executive Officer. He continued, “2019 was clearly a successful turnaround year for Cross Country, and with the investments we have made throughout the year taking hold, we enter 2020 in a much stronger position.”

Fourth quarter consolidated revenue was $215.1 million, an increase of 7% year-over-year and 3% sequentially. Consolidated gross profit margin was 24.7%, down 50 basis points year-over-year and up 30 basis points sequentially. Net loss attributable to common shareholders was $1.1 million compared to $19.7 million in the prior year and $3.1 million in the prior quarter. Diluted EPS was a loss of $0.03 per share compared to $0.55 per share in the prior year and $0.09 per share in the prior quarter. Adjusted EBITDA was $8.3 million or 3.9% of revenue, as compared with $6.2 million or 3.1% of revenue in the prior year, and $7.3 million or 3.5% of revenue in the prior quarter. Adjusted EPS was $0.07 as compared with $0.00 in the prior year and $0.05 in the prior quarter.

For the year ended December 31, 2019, consolidated revenue was $822.2 million, an increase of 1% year-over-year. Consolidated gross profit margin was 24.8%, down 90 basis points year-over-year. Net loss attributable to common shareholders was $57.7 million, or a loss of $1.61 per diluted share, compared to a net loss of $17.0 million, or a loss of $0.48 per diluted share in the prior year. Adjusted EBITDA was $25.5 million or 3.1% of revenue, as compared with $31.4 million or 3.8% of revenue in the prior year. Adjusted EPS was $0.15 compared to $0.12 in the prior year.

Quarterly Business Segment Highlights

Nurse and Allied Staffing

Revenue from Nurse and Allied Staffing was $191.4 million, a 7% increase year-over-year and 3% sequentially. Contribution income was $17.8 million, up from $16.1 million in both the prior year and prior quarter. Average field FTEs increased to 7,339 from 7,056 in the prior year and 7,083 in the prior quarter. Revenue per FTE per day was $284 compared to $276 in the prior year and consistent with the prior quarter.

Physician Staffing

Revenue from Physician Staffing was $20.0 million, an increase of 10% year-over-year and a decrease of 2% sequentially. Contribution income was $1.0 million, up from $0.6 million in the prior year and $0.8 million in the prior quarter. Total days filled were 11,672 as compared with 11,663 in the prior year and 11,675 in the prior quarter. Revenue per day filled was $1,714 as compared with $1,565 in the prior year and $1,748 in the prior quarter.

Search

Revenue from Search was $3.7 million, an increase of 4% year-over-year and a decrease of 4% sequentially. Segment contribution loss was $0.3 million for the current quarter compared to a loss of $0.1 million in the prior year and income of $0.1 million in the prior quarter.

Cash Flow and Balance Sheet Highlights

Cash flow used in operating activities for the current quarter was $5.4 million compared to $0.8 million in the prior year. Cash flow provided by operating activities for the full year was $5.5 million compared to $21.0 million in the prior year. The fourth quarter of 2019 cash flow used in operations was impacted by incremental investments in working capital due to the sequential growth in the business and the timing of certain payments with respect to year end. Cash flow provided by operations for the full year of 2019 was also impacted by operating expenditures related to the new applicant tracking system as well as significant non-recurring expenditures such as the settlement of the interest rate hedge and legal settlement payments.

In the fourth quarter of 2019, the Company’s senior credit facility was replaced by a new $120.0 million senior secured asset-based credit facility (ABL). The ABL provides for a five-year revolving credit facility, including a sublimit for swing loans up to $15.0 million and a $35.0 million sublimit for standby letters of credit. At December 31, 2019, the Company had $1.0 million in cash and cash equivalents, $71.0 million of borrowings drawn under its ABL, and $19.9 million of letters of credit outstanding, leaving $29.1 million available for borrowing.

Outlook for First Quarter 2020

The guidance below applies only to management’s expectations for the first quarter of 2020.

 

Q1 2020 Range

 

Year-over-Year

 

Sequential

Change

 

Change

 

 

 

 

 

 

Revenue

$207 million - $212 million

 

6% - 9%

 

(4)% - (1)%

 

 

 

 

 

 

Gross Profit Margin

23.0% - 23.5%

 

(170) bps - (120) bps

 

(170) bps - (120) bps

 

 

 

 

 

 

Adjusted EBITDA

$4.5 million - $5.5 million

 

25% - 52%

 

(46)% - (34)%

 

 

 

 

 

 

Adjusted EPS

$(0.03) - $0.00

 

$(0.05) - $(0.02)

 

$(0.10) - $(0.07)

The estimates above 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, future share repurchases, or any impact from the coronavirus. The guidance also reflects the impacts from certain cost actions the Company has identified and actual results may differ depending on timing and further actions it may take. See accompanying Non-GAAP financial measures and tables below.

INVITATION TO CONFERENCE CALL

The Company will hold its quarterly conference call on Wednesday, March 4, 2020, at 5:00 P.M. Eastern Time to discuss its fourth quarter and full year 2019 financial results. This call will be webcast live and can be accessed at the Company's website at www.crosscountryhealthcare.com or by dialing 888-566-1099 from anywhere in the U.S. or by dialing 773-799-3716 from non-U.S. locations - Passcode: Cross Country. A replay of the webcast will be available from March 4, 2020 through March 19, 2020 at the Company's website and a replay of the conference call will be available by telephone by calling 800-294-4406 from anywhere in the U.S. or 203-369-3231 from non-U.S. locations - Passcode: 2020.

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 other consultative services for healthcare clients. Leveraging nearly 35 years of expertise and insight, CCH solves complex labor-related challenges for clients while providing high-quality outcomes and exceptional patient care. As a multi-year Best of Staffing® Award winner, CCH is committed to excellence in delivery of its services and was the first public company to earn The Joint Commission Gold Seal of Approval® for Health Care Staffing Services Certification with Distinction.

Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountryhealthcare.com. Shareholders and prospective investors can also register to automatically receive the Company's press releases, SEC filings and other notices by e-mail.

NON-GAAP FINANCIAL MEASURES

This press release and accompanying financial statement tables reference non-GAAP financial measures. 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 STATEMENT

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, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange 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", 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: 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 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, 2018, and our other Securities and Exchange Commission filings made prior to the date hereof.

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. 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

 

Year Ended

 

December 31,

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2019

 

2018

 

 

 

 

Revenue from services

$

215,096

 

 

$

200,907

 

 

$

209,200

 

 

$

822,224

 

 

$

816,484

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Direct operating expenses

161,935

 

 

150,348

 

 

158,194

 

 

618,215

 

 

606,921

 

Selling, general and administrative expenses

45,572

 

 

45,226

 

 

44,407

 

 

181,959

 

 

180,230

 

Bad debt expense

505

 

 

892

 

 

588

 

 

2,008

 

 

2,204

 

Depreciation and amortization

4,627

 

 

3,016

 

 

2,907

 

 

14,075

 

 

11,780

 

Acquisition-related contingent consideration (a)

(184

)

 

2,108

 

 

(426

)

 

(110

)

 

2,557

 

Acquisition and integration costs (b)

 

 

230

 

 

 

 

311

 

 

491

 

Restructuring costs (c)

687

 

 

779

 

 

1,607

 

 

3,571

 

 

2,758

 

Legal settlement charges (d)

 

 

 

 

 

 

1,600

 

 

 

Impairment charges (e)

 

 

22,423

 

 

1,804

 

 

16,306

 

 

22,423

 

Total operating expenses

213,142

 

 

225,022

 

 

209,081

 

 

837,935

 

 

829,364

 

Income (loss) from operations

1,954

 

 

(24,115

)

 

119

 

 

(15,711

)

 

(12,880

)

Other expenses (income):

 

 

 

 

 

 

 

 

 

Interest expense

1,048

 

 

1,429

 

 

1,398

 

 

5,306

 

 

5,654

 

Loss on derivative (f)

 

 

 

 

1,284

 

 

1,284

 

 

 

Loss on early extinguishment of debt (g)

1,470

 

 

43

 

 

94

 

 

1,978

 

 

79

 

Other expense (income), net

144

 

 

(49

)

 

(54

)

 

(68

)

 

(418

)

Loss before income taxes

(708

)

 

(25,538

)

 

(2,603

)

 

(24,211

)

 

(18,195

)

Income tax (benefit) expense (h)

(108

)

 

(6,195

)

 

94

 

 

31,732

 

 

(2,478

)

Consolidated net loss

(600

)

 

(19,343

)

 

(2,697

)

 

(55,943

)

 

(15,717

)

Less: Net income attributable to noncontrolling interest in subsidiary

544

 

 

348

 

 

431

 

 

1,770

 

 

1,234

 

Net loss attributable to common shareholders

$

(1,144

)

 

$

(19,691

)

 

$

(3,128

)

 

$

(57,713

)

 

$

(16,951

)

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common shareholders - Basic

$

(0.03

)

 

$

(0.55

)

 

$

(0.09

)

 

$

(1.61

)

 

$

(0.48

)

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common shareholders - Diluted

$

(0.03

)

 

$

(0.55

)

 

$

(0.09

)

 

$

(1.61

)

 

$

(0.48

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

35,869

 

 

35,582

 

 

35,865

 

 

35,815

 

 

35,657

 

Diluted (i)

35,869

 

 

35,582

 

 

35,865

 

 

35,815

 

 

35,657

 

 

Cross Country Healthcare, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited, amounts in thousands)

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2019

 

2018

Adjusted EBITDA: (j)

 

 

 

 

 

 

 

 

 

Net loss attributable to common shareholders

$

(1,144

)

 

$

(19,691

)

 

$

(3,128

)

 

$

(57,713

)

 

$

(16,951

)

Interest expense

1,048

 

 

1,429

 

 

1,398

 

 

5,306

 

 

5,654

 

Income tax (benefit) expense (h)

(108

)

 

(6,195

)

 

94

 

 

31,732

 

 

(2,478

)

Depreciation and amortization

4,627

 

 

3,016

 

 

2,907

 

 

14,075

 

 

11,780

 

Acquisition-related contingent consideration (a)

(184

)

 

2,108

 

 

(426

)

 

(110

)

 

2,557

 

Acquisition and integration costs (b)

 

 

230

 

 

 

 

311

 

 

491

 

Restructuring costs (c)

687

 

 

779

 

 

1,607

 

 

3,571

 

 

2,758

 

Legal settlement charges (d)

 

 

 

 

 

 

1,600

 

 

 

Impairment charges (e)

 

 

22,423

 

 

1,804

 

 

16,306

 

 

22,423

 

Loss on derivative (f)

 

 

 

 

1,284

 

 

1,284

 

 

 

Loss on early extinguishment of debt (g)

1,470

 

 

43

 

 

94

 

 

1,978

 

 

79

 

Other expense (income), net

144

 

 

(49

)

 

(54

)

 

(68

)

 

(418

)

Equity compensation

879

 

 

1,211

 

 

982

 

 

3,396

 

 

3,575

 

Applicant tracking system costs (k)

323

 

 

501

 

 

258

 

 

2,030

 

 

658

 

Net income attributable to noncontrolling interest in subsidiary

544

 

 

348

 

 

431

 

 

1,770

 

 

1,234

 

Adjusted EBITDA (j)

$

8,286

 

 

$

6,153

 

 

$

7,251

 

 

$

25,468

 

 

$

31,362

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS: (m)

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

Consolidated net loss attributable to common shareholders

$

(1,144

)

 

$

(19,691

)

 

$

(3,128

)

 

$

(57,713

)

 

$

(16,951

)

Non-GAAP adjustments - pretax:

 

 

 

 

 

 

 

 

 

Acquisition-related contingent consideration (a)

(184

)

 

2,108

 

 

(426

)

 

(110

)

 

2,557

 

Acquisition and integration costs (b)

 

 

230

 

 

 

 

311

 

 

491

 

Restructuring costs (c)

687

 

 

779

 

 

1,607

 

 

3,571

 

 

2,758

 

Legal settlement charges (d)

 

 

 

 

 

 

1,600

 

 

 

Impairment charges (excluding rebranding impacts) (e)

 

 

22,423

 

 

1,804

 

 

1,804

 

 

22,423

 

Rebranding impairments and accelerated amortization (e)

1,978

 

 

 

 

295

 

 

17,379

 

 

 

Loss on derivative (f)

 

 

 

 

1,284

 

 

1,284

 

 

 

Loss on early extinguishment of debt (g)

1,470

 

 

43

 

 

94

 

 

1,978

 

 

79

 

Applicant tracking system costs (k)

323

 

 

501

 

 

258

 

 

2,030

 

 

658

 

Nonrecurring income tax adjustments

(428

)

 

122

 

 

 

 

35,247

 

 

75

 

Tax impact of non-GAAP adjustments (l)

 

 

(6,668

)

 

(59

)

 

(2,044

)

 

(7,787

)

Adjusted net income (loss) attributable to common shareholders - non-GAAP (m)

$

2,702

 

 

$

(153

)

 

$

1,729

 

 

$

5,337

 

 

$

4,303

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average common shares - basic, GAAP

35,869

 

 

35,582

 

 

35,865

 

 

35,815

 

 

35,657

 

Dilutive impact of share-based payments (i)

472

 

 

 

 

318

 

 

251

 

 

186

 

Adjusted weighted average common shares - diluted, non-GAAP

36,341

 

 

35,582

 

 

36,183

 

 

36,066

 

 

35,843

 

 

 

 

 

 

 

 

 

 

 

Reconciliation: (m)

 

 

 

 

 

 

 

 

 

Diluted EPS, GAAP

$

(0.03

)

 

$

(0.55

)

 

$

(0.09

)

 

$

(1.61

)

 

$

(0.48

)

Non-GAAP adjustments - pretax:

 

 

 

 

 

 

 

 

 

Acquisition-related contingent consideration (a)

(0.01

)

 

0.06

 

 

(0.02

)

 

(0.01

)

 

0.08

 

Acquisition and integration costs (b)

 

 

0.01

 

 

 

 

0.01

 

 

0.01

 

Restructuring costs (c)

0.02

 

 

0.02

 

 

0.05

 

 

0.10

 

 

0.08

 

Legal settlement charges (d)

 

 

 

 

 

 

0.05

 

 

 

Impairment charges (excluding rebranding impacts) (e)

 

 

0.63

 

 

0.05

 

 

0.05

 

 

0.63

 

Rebranding impairments and accelerated amortization (e)

0.05

 

 

 

 

0.01

 

 

0.48

 

 

 

Loss on derivative (f)

 

 

 

 

0.04

 

 

0.04

 

 

 

Loss on early extinguishment of debt (g)

0.04

 

 

 

 

 

 

0.05

 

 

 

Applicant tracking system costs (k)

0.01

 

 

0.01

 

 

0.01

 

 

0.06

 

 

0.02

 

Nonrecurring income tax adjustments

(0.01

)

 

 

 

 

 

0.98

 

 

 

Tax impact of non-GAAP adjustments (l)

 

 

(0.18

)

 

 

 

(0.05

)

 

(0.22

)

Adjusted EPS, non-GAAP (m)

$

0.07

 

 

$

 

 

$

0.05

 

 

$

0.15

 

 

$

0.12

 

 

Cross Country Healthcare, Inc.

Consolidated Balance Sheets

(Unaudited, amounts in thousands)

 

 

December 31,

 

December 31,

 

2019

 

2018

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,032

 

 

$

16,019

 

Accounts receivable, net

169,528

 

 

166,128

 

Prepaid expenses

6,097

 

 

6,208

 

Insurance recovery receivable

5,011

 

 

4,186

 

Other current assets

1,689

 

 

2,364

 

Total current assets

183,357

 

 

194,905

 

Property and equipment, net

11,832

 

 

13,628

 

Operating lease right-of-use assets

16,964

 

 

 

Goodwill

101,066

 

 

101,060

 

Trade names, indefinite-lived

5,900

 

 

20,402

 

Other intangible assets, net

44,957

 

 

55,182

 

Non-current deferred tax assets

 

 

23,750

 

Other non-current assets

18,298

 

 

18,076

 

Total assets

$

382,374

 

 

$

427,003

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

45,726

 

 

$

43,744

 

Accrued employee compensation and benefits

31,307

 

 

33,332

 

Current portion of long-term debt

 

 

5,235

 

Operating lease liabilities - current

4,878

 

 

 

Other current liabilities

3,554

 

 

3,075

 

Total current liabilities

85,465

 

 

85,386

 

Long-term debt, less current portion

70,974

 

 

77,944

 

Operating lease liabilities - non-current

19,070

 

 

 

Non-current deferred tax liabilities

7,523

 

 

95

 

Long-term accrued claims

26,938

 

 

29,299

 

Contingent consideration

4,867

 

 

7,409

 

Other long-term liabilities

4,037

 

 

8,672

 

Total liabilities

218,874

 

 

208,805

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

4

 

 

4

 

Additional paid-in capital

305,643

 

 

303,048

 

Accumulated other comprehensive loss

(1,240

)

 

(1,462

)

Accumulated deficit

(141,775

)

 

(84,062

)

Total Cross Country Healthcare, Inc. stockholders' equity

162,632

 

 

217,528

 

Noncontrolling interest in subsidiary

868

 

 

670

 

Total stockholders' equity

163,500

 

 

218,198

 

Total liabilities and stockholders' equity

$

382,374

 

 

$

427,003

 

 

Cross Country Healthcare, Inc.

Segment Data (n)

(Unaudited, amounts in thousands)

 

 

Three Months Ended

 

Year-over-Year

 

Sequential

 

December 31,

% of

 

December 31,

% of

 

September 30,

% of

 

% change

 

% change

 

2019

Total

 

2018

Total

 

2019

Total

 

Fav (Unfav)

 

Fav (Unfav)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services:

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

191,417

 

89%

 

$

179,125

 

89%

 

$

184,974

 

88%

 

6.9%

 

3.5%

Physician Staffing

20,011

 

9%

 

18,253

 

9%

 

20,407

 

10%

 

9.6%

 

(1.9)%

Search

3,668

 

2%

 

3,529

 

2%

 

3,819

 

2%

 

3.9%

 

(4.0)%

 

$

215,096

 

100%

 

$

200,907

 

100%

 

$

209,200

 

100%

 

7.1%

 

2.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income: (o)

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

17,849

 

 

 

$

16,136

 

 

 

$

16,097

 

 

 

10.6%

 

10.9%

Physician Staffing

1,034

 

 

 

565

 

 

 

811

 

 

 

83.0%

 

27.5%

Search

(297

)

 

 

(70

)

 

 

78

 

 

 

(324.3)%

 

(480.8)%

 

18,586

 

 

 

16,631

 

 

 

16,986

 

 

 

11.8%

 

9.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overhead (p)

11,502

 

 

 

12,190

 

 

 

10,975

 

 

 

5.6%

 

(4.8)%

Depreciation and amortization

4,627

 

 

 

3,016

 

 

 

2,907

 

 

 

(53.4)%

 

(59.2)%

Acquisition-related contingent consideration (a)

(184

)

 

 

2,108

 

 

 

(426

)

 

 

108.7%

 

(56.8)%

Acquisition and integration costs (b)

 

 

 

230

 

 

 

 

 

 

100.0%

 

—%

Restructuring costs (c)

687

 

 

 

779

 

 

 

1,607

 

 

 

11.8%

 

57.2%

Impairment charges (e)

 

 

 

22,423

 

 

 

1,804

 

 

 

100.0%

 

100.0%

Income (loss) from operations

$

1,954

 

 

 

$

(24,115

)

 

 

$

119

 

 

 

108.1%

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

 

Year-over-Year

 

 

 

December 31,

% of

 

December 31,

% of

 

 

 

 

% change

 

 

 

2019

Total

 

2018

Total

 

 

 

 

Fav (Unfav)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services:

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

732,815

 

89%

 

$

718,613

 

88%

 

 

 

 

2.0%

 

 

Physician Staffing

74,605

 

9%

 

82,305

 

10%

 

 

 

 

(9.4)%

 

 

Search

14,804

 

2%

 

15,566

 

2%

 

 

 

 

(4.9)%

 

 

 

$

822,224

 

100%

 

$

816,484

 

100%

 

 

 

 

0.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income: (o)

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing

$

64,353

 

 

 

$

66,200

 

 

 

 

 

 

(2.8)%

 

 

Physician Staffing

2,758

 

 

 

4,755

 

 

 

 

 

 

(42.0)%

 

 

Search

(823

)

 

 

763

 

 

 

 

 

 

(207.9)%

 

 

 

66,288

 

 

 

71,718

 

 

 

 

 

 

(7.6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overhead (p)

46,246

 

 

 

44,589

 

 

 

 

 

 

(3.7)%

 

 

Depreciation and amortization

14,075

 

 

 

11,780

 

 

 

 

 

 

(19.5)%

 

 

Acquisition-related contingent consideration (a)

(110

)

 

 

2,557

 

 

 

 

 

 

104.3%

 

 

Acquisition and integration costs (b)

311

 

 

 

491

 

 

 

 

 

 

36.7%

 

 

Restructuring costs (c)

3,571

 

 

 

2,758

 

 

 

 

 

 

(29.5)%

 

 

Legal settlement charges (d)

1,600

 

 

 

 

 

 

 

 

 

(100.0)%

 

 

Impairment charges (e)

16,306

 

 

 

22,423

 

 

 

 

 

 

27.3%

 

 

Loss from operations

$

(15,711

)

 

 

$

(12,880

)

 

 

 

 

 

(22.0)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM-Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

Cross Country Healthcare, Inc.

Summary Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

$

(5,351

)

 

$

(760

)

 

$

(14,249

)

 

$

5,542

 

 

$

20,997

 

Net cash used in investing activities

(898

)

 

(3,124

)

 

(368

)

 

(2,940

)

 

(6,678

)

Net cash used in financing activities

(2,186

)

 

(8,176

)

 

(735

)

 

(17,599

)

 

(23,767

)

Effect of exchange rate changes on cash

9

 

 

14

 

 

(20

)

 

10

 

 

(70

)

Change in cash and cash equivalents

(8,426

)

 

(12,046

)

 

(15,372

)

 

(14,987

)

 

(9,518

)

Cash and cash equivalents at beginning of period

9,458

 

 

28,065

 

 

24,830

 

 

16,019

 

 

25,537

 

Cash and cash equivalents at end of period

$

1,032

 

 

$

16,019

 

 

$

9,458

 

 

$

1,032

 

 

$

16,019

 

 

 

 

 

 

 

 

 

 

 

 

Cross Country Healthcare, Inc.

Other Financial Data

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

Consolidated gross profit margin (q)

24.7

%

 

25.2

%

 

24.4

%

 

24.8

%

 

25.7

%

 

 

 

 

 

 

 

 

 

 

Nurse and Allied Staffing statistical data:

 

 

 

 

 

 

 

 

 

FTEs (r)

7,339

 

 

7,056

 

 

7,083

 

 

7,113

 

 

7,154

 

Average Nurse and Allied Staffing revenue per FTE per day (s)

$

284

 

 

$

276

 

 

$

284

 

 

$

282

 

 

$

275

 

 

 

 

 

 

 

 

 

 

 

Physician Staffing statistical data:

 

 

 

 

 

 

 

 

 

Days filled (t)

11,672

 

 

11,663

 

 

11,675

 

 

44,381

 

 

53,039

 

Revenue per day filled (u)

$

1,714

 

 

$

1,565

 

 

$

1,748

 

 

$

1,681

 

 

$

1,552

 

(a)

 

Acquisition-related contingent consideration represents the fair value and accretion adjustments to the contingent consideration liabilities for prior acquisitions, primarily the Mediscan acquisition.

(b)

 

Acquisition and integration costs are related to the Advantage RN, LLC acquisition that closed effective July 1, 2017 and the American Personnel, Inc. acquisition that closed effective December 1, 2018, as well as expenses incurred for potential transactions.

(c)

 

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

(d)

 

Legal settlement charges relate to the resolution of a medical malpractice lawsuit as well as a California wage and hour class action settlement.

(e)

 

Impairment charges are non-cash charges and, for 2019 related to: the second quarter trade name impairment of $14.5 million related to Nurse and Allied Staffing resulting from our rebranding initiative; and the third quarter impairment of right-of-use assets related to our decision to cease use of certain properties in conjunction with our restructuring plan. Rebranding impairments and accelerated amortization represents the combined impact of impairment of the Nurse and Allied Staffing indefinite-lived trade names as well as accelerated amortization of finite-lived trade names relating to our rebranding initiatives. Impairment charges for the three months and year ended December 31, 2018 are non-cash charges related to the goodwill and trade names of Physician Staffing.

(f)

 

Loss on derivative represents the amount paid to terminate an interest rate hedge related to our term loan that was refinanced in October 2019.

(g)

 

Loss on early extinguishment of debt for the year ended December 31, 2019 consists of: write-off and extinguishment costs of $1.5 million related to the refinancing of our debt in the fourth quarter of 2019, and write-off of debt issuance costs of $0.5 million in the prior quarters related to optional prepayments on our term loan made in the first and second quarters and an optional reduction in borrowing capacity under our prior revolving credit facility. Loss on early extinguishment of debt in the 2018 periods related to optional prepayments made on our term loans in the third and fourth quarters.

(h)

Income tax expense for the year ended December 31, 2019 includes $35.8 million of expense related to the establishment of valuation allowances on our deferred tax assets in the second quarter.

(i)

 

Due to the net loss for the three months ended December 31, 2019 and 2018, and September 30, 2019, and the years ended December 31, 2019 and 2018, 472, 148, 318, 251, and 186 shares (in thousands) were excluded from diluted weighted average shares.

(j)

 

Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, is defined as net (loss) income attributable to common shareholders before interest expense, income tax (benefit) expense, depreciation and amortization, acquisition-related contingent consideration, acquisition and integration costs, restructuring costs, legal settlement charges, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, 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 typically used in the Company's credit facilities in calculating various ratios. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue.

(k)

 

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 unallocated corporate overhead in segment data.

(l)

 

Due to the Company’s establishment of a valuation allowance in the second quarter of 2019 there was no tax impact on the non-GAAP measures in the fourth quarter of 2019. The tax impact for the year ended December 31, 2019 was primarily related to an income tax benefit associated with the impairment of indefinite-lived intangible assets in the second quarter.

(m)

 

Adjusted EPS, a non-GAAP financial measure, is defined as net (loss) income attributable to common shareholders per diluted share before the diluted EPS impact of acquisition-related contingent consideration, acquisition and integration costs, restructuring costs, legal settlement charges, 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.

(n)

 

Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC. In the second quarter of 2019, the Company merged its permanent search recruitment brands. As a result, certain amounts have been reclassified from Nurse and Allied Staffing to Search to conform to the current year presentation.

(o)

 

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

(p)

 

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).

(q)

 

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.

(r)

 

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

(s)

 

Average revenue per FTE per day is calculated by dividing the Nurse and Allied Staffing revenue per FTE by the number of days worked in the respective periods. Nurse and Allied Staffing revenue also includes revenue from the permanent placement of nurses. Prior periods have been recalculated to reflect the impact of the segment reporting changes noted above.

(t)

 

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.

(u)

 

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

 

Cross Country Healthcare, Inc.
William J. Burns, 561-237-2555
Executive Vice President and Chief Financial Officer
wburns@crosscountry.com

Source: Cross Country Healthcare, Inc.