8-K
Cross Country Healthcare Inc (CCRN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15\(d\) of the Securities Exchange Act of 1934
Date of Report \(Date of earliest event reported\) August 3, 2022
Cross Country Healthcare, Inc.
\(Exact name of registrant as specified in its charter\)
| Delaware | 0-33169 | 13-4066229 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
6551 Park of Commerce Boulevard, N.W., Boca Raton, Florida 33487
(Address of Principal Executive Office) (Zip Code)
(561) 998-2232
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.0001 per share | CCRN | The Nasdaq Stock Market LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition
(a) On August 3, 2022, Cross Country Healthcare, Inc. (“the Company”) issued a press release announcing results for the quarter ended June 30, 2022, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K. This information is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.
Section 7 – Regulation FD
Item 7.01 Regulation FD Disclosure
Incorporated by reference is a press release issued by the Company on August 3, 2022, which is attached hereto as Exhibit 99.1. This information is being furnished under Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | Press Release issued by the Company on<br> August 3, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| CROSS COUNTRY HEALTHCARE, INC. | ||
|---|---|---|
| By: | /s/ William J. Burns | |
| William J. Burns | ||
| Dated: August 3, 2022 | Executive Vice President & Chief Financial Officer |
Exhibit 99.1
Cross Country Healthcare Announces Second Quarter 2022 Financial Results
BOCA RATON, Fla.--(BUSINESS WIRE)--August 3, 2022--Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its second quarter ended June 30, 2022.
SELECTED FINANCIAL INFORMATION:
| Variance | Variance | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q2 2022 vs | Q2 2022 vs | |||||||||
| Dollars are in thousands, except per share amounts | Q2 2022 | Q2 2021 | Q1 2022 | |||||||
| Revenue | $ | 753,561 | 127 | % | (4 | ) | % | |||
| Gross profit margin* | 22.6 | % | 70 | bps | 40 | bps | ||||
| Net income attributable to common stockholders | $ | 52,894 | 358 | % | (15 | ) | % | |||
| Diluted EPS | $ | 1.40 | $ | 1.09 | $ | (0.23 | ) | |||
| Adjusted EBITDA* | $ | 83,490 | 244 | % | (14 | ) | % | |||
| Adjusted EBITDA margin* | 11.1 | % | 380 | bps | (120 | ) | bps | |||
| Adjusted EPS* | $ | 1.40 | $ | 0.93 | $ | (0.30 | ) | |||
| Cash flows used in operations | $ | 18,141 | 17 | % | 162 | % | ||||
| * Refer to accompanying tables and discussion of non-GAAP (Generally Accepted Accounting Principles) financial measures below. |
Second Quarter Business Highlights
- Revenue and Adjusted EBITDA exceeded guidance ranges
- Record number of professionals on assignment
- Double-digit year-over-year growth across all lines of business
- Adjusted EBITDA margin of 11.1%
- Launched Intellify, our proprietary Vendor Management System for Managed Service Programs (MSPs)
- Rise in demand throughout the quarter, especially for travel assignments
- $50.0 million optional prepayment on the term loan
“Our second quarter 2022 results reflect continued strong performance that showcases our ongoing success in leveraging technology and our deep relationships to efficiently place professionals across the healthcare continuum. We are emerging from the pandemic as a fundamentally different company, with a comprehensive suite of technologies that position us for long-term, sustained growth across all lines of business,” said John Martins, President and Chief Executive Officer of Cross Country Healthcare. He continued, “We remain committed to our investments in people and technology, and we see a strong demand from both existing and new MSP clients setting up a solid runway for continued growth.”
Second quarter consolidated revenue was $753.6 million, an increase of 127% year-over-year and a decrease of 4% sequentially. Consolidated gross profit margin was 22.6%, up 70 basis points year-over-year and up 40 basis points sequentially. Net income attributable to common stockholders was $52.9 million compared to $11.5 million in the prior year and $62.0 million in the prior quarter. Diluted earnings per share (EPS) was $1.40 compared to $0.31 in the prior year and $1.63 in the prior quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $83.5 million or 11.1% of revenue, as compared with $24.3 million or 7.3% of revenue in the prior year, and $97.4 million or 12.3% of revenue in the prior quarter. Adjusted EPS was $1.40 compared to $0.47 in the prior year and $1.70 in the prior quarter.
For the six months ended June 30, 2022, consolidated revenue was $1.5 billion, an increase of 133% year-over-year. Consolidated gross profit margin was 22.4%, up 60 basis points year-over-year. Net income attributable to common stockholders was $114.9 million, or $3.03 per diluted share, compared to $31.0 million, or $0.84 per diluted share, in the prior year. Adjusted EBITDA was $180.9 million or 11.7% of revenue, as compared with $51.0 million or 7.7% of revenue in the prior year. Adjusted EPS was $3.10 compared to $1.05 in the prior year.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue was $731.4 million, an increase of 131% year-over-year and a decrease of 4% sequentially. Contribution income was $97.6 million, an increase compared to $35.3 million in the prior year and a decrease compared to $110.1 million in the prior quarter. Average field contract personnel on a full-time equivalent (FTE) basis were 13,494 as compared with 7,578 in the prior year and 13,454 in the prior quarter. Revenue per FTE per day was $591 compared to $454 in the prior year and $628 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 the year-over-year additional headcount resulting from the Workforce Solutions Group (WSG) acquisition in June 2021. In the second quarter of 2022, average bill rates were down in the mid-single digits as expected, but volumes were stronger as we continued to experience high demand across a wide range of specialties spanning the healthcare continuum. A spike in professionals on assignment and volume growth primarily drove the year-over-year revenue improvement.
Physician Staffing
Revenue was $22.1 million, an increase of 41% year-over-year and a decrease of 4% sequentially. Contribution income was $1.2 million, an increase compared to $0.6 million in the prior year and a decrease compared to $1.8 million in the prior quarter. Total days filled were 12,416 as compared with 9,775 in the prior year and 13,068 in the prior quarter. Revenue per day filled was $1,781 as compared with $1,600 in the prior year and $1,772 in the prior quarter. The year-over-year increase in revenue was primarily due to an increase in volume in primary care physicians and certified registered nurse anesthetists. The year-over-year increase in contribution income was driven by higher revenue, partially offset by higher direct costs.
Cash Flow and Balance Sheet Highlights
Cash flow provided by operations for the quarter was $18.1 million, primarily due to the strong net income growth, partly offset by an increase in accounts receivable. Days' sales outstanding, net of amounts owed to subcontractors, was 66 days as of June 30, 2022, up 10 days year-over-year and up 4 days sequentially, primarily due to the timing of revenue recognized throughout the quarter. For the six months ended June 30, 2022, cash flow used in operations was $10.9 million compared to $9.4 million in the prior year.
Given positive cash from operations, the Company made a $50.0 million optional prepayment on its Subordinated Term Loan to reduce interest costs. At June 30, 2022, the Company had $0.3 million in cash and cash equivalents and $123.9 million principal balance on its term loan, with $85.0 million of borrowings drawn under its ABL facility, and $17.5 million of letters of credit outstanding. As of June 30, 2022, borrowing base availability under the ABL was $300.0 million, with $197.5 million of excess availability.
Outlook for Third Quarter 2022
The guidance below applies to management’s expectations for the third quarter of 2022.
| Q3 2022 Range | Year-over-Year | Sequential | |
|---|---|---|---|
| Change | Change | ||
| Revenue | $605 million - $615 million | 61% - 64% | (20)% - (18)% |
| Gross Profit Margin* | 22.3% - 22.8% | (10) bps - 40 bps | (30) bps - 20 bps |
| Adjusted EBITDA* | $55.0 million - $60.0 million | 83% - 99% | (34)% - (28)% |
| Adjusted EPS* | $0.85 - $0.95 | $0.24 - $0.34 | ($0.55) - ($0.45) |
| * 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 significant share repurchases.
See accompanying non-GAAP financial measures and tables below.
INVITATION TO CONFERENCE CALL
The Company will hold its quarterly conference call on Wednesday, August 3, 2022, at 5:00 P.M. Eastern Time to discuss its second quarter 2022 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 August 3rd through August 17th on the Company’s website and a replay of the conference call will be available by telephone by calling 800-814-6746 from anywhere in the U.S. or 203-369-3827 from non-U.S. locations - Passcode: 8322.
ABOUT CROSS COUNTRY HEALTHCARE
Cross Country Healthcare, Inc. is a leading tech-enabled workforce solutions and advisory firm with 36 years of industry experience and insight. We solve complex labor-related challenges for customers while providing high-quality outcomes and exceptional patient care. As a multi-year Best of Staffing^®^ award winner, we are committed to an exceptionally high level of service to our clients and our homecare, education, and clinical and non-clinical healthcare professionals. Our locum tenens line of business, Cross Country Locums, has been certified by the National Committee for Quality Assurance (NCQA), the leader in healthcare accreditation, since 2001. We are the first publicly traded staffing firm to obtain The Joint Commission Certification, which we still hold with a Letter of Distinction. Cross Country Healthcare is rated as the top staffing and recruiting employer for women by InHerSights, and Certified^TM^ by Great Place to Work^®^. For two consecutive years, we have received the Top Workplaces USA award and were recently recognized as a recipient of the Top Workplaces Award for Innovation and Leadership by Energage. We have a history of investing in diversity, equality, and inclusion as a key component of the organization’s overall corporate social responsibility program, closely aligned with its core values to create a better future for its people, communities, and its stockholders.
Copies of this and other news releases and additional information about the Company can be obtained online at ir.crosscountryhealthcare.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 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, 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, 2021, 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. Except as may be required by law, 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 | Six Months Ended | ||||||||||||||
| June 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2022 | 2021 | |||||||||||
| Revenue from services | $ | 753,561 | $ | 331,827 | $ | 788,732 | $ | 1,542,293 | $ | 661,068 | |||||
| Operating expenses: | |||||||||||||||
| Direct operating expenses | 583,156 | 259,237 | 613,938 | 1,197,094 | 517,013 | ||||||||||
| Selling, general and administrative expenses | 86,009 | 50,344 | 76,813 | 162,822 | 96,671 | ||||||||||
| Bad debt expense | 3,192 | 466 | 2,369 | 5,561 | 970 | ||||||||||
| Depreciation and amortization | 3,481 | 2,199 | 2,719 | 6,200 | 4,452 | ||||||||||
| Acquisition and integration-related costs | — | 924 | 40 | 40 | 924 | ||||||||||
| Restructuring (benefits) costs | (1,114 | ) | 835 | 480 | (634 | ) | 2,073 | ||||||||
| Impairment charges | — | 1,921 | 1,741 | 1,741 | 2,070 | ||||||||||
| Total operating expenses | 674,724 | 315,926 | 698,100 | 1,372,824 | 624,173 | ||||||||||
| Income from operations | 78,837 | 15,901 | 90,632 | 169,469 | 36,895 | ||||||||||
| Other expenses (income): | |||||||||||||||
| Interest expense | 3,857 | 1,196 | 3,521 | 7,378 | 1,867 | ||||||||||
| Loss on early extinguishment of debt | 1,912 | — | — | 1,912 | — | ||||||||||
| Other income, net | (1,084 | ) | (204 | ) | (8 | ) | (1,092 | ) | (241 | ) | |||||
| Income before income taxes | 74,152 | 14,909 | 87,119 | 161,271 | 35,269 | ||||||||||
| Income tax expense | 21,258 | 3,361 | 25,136 | 46,394 | 4,273 | ||||||||||
| Net income attributable to common stockholders | $ | 52,894 | $ | 11,548 | $ | 61,983 | $ | 114,877 | $ | 30,996 | |||||
| Net income per share attributable to common stockholders - Basic | $ | 1.41 | $ | 0.32 | $ | 1.67 | $ | 3.08 | $ | 0.85 | |||||
| Net income per share attributable to common stockholders - Diluted | $ | 1.40 | $ | 0.31 | $ | 1.63 | $ | 3.03 | $ | 0.84 | |||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 37,471 | 36,625 | 37,028 | 37,251 | 36,404 | ||||||||||
| Diluted | 37,757 | 37,203 | 37,973 | 37,866 | 37,120 |
| Cross Country Healthcare, Inc. | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
| (Unaudited, amounts in thousands, except per share data) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2022 | 2021 | |||||||||||
| Adjusted EBITDA:^a^ | |||||||||||||||
| Net income attributable to common stockholders | $ | 52,894 | $ | 11,548 | $ | 61,983 | $ | 114,877 | $ | 30,996 | |||||
| Interest expense | 3,857 | 1,196 | 3,521 | 7,378 | 1,867 | ||||||||||
| Income tax expense^b^ | 21,258 | 3,361 | 25,136 | 46,394 | 4,273 | ||||||||||
| Depreciation and amortization | 3,481 | 2,199 | 2,719 | 6,200 | 4,452 | ||||||||||
| Acquisition and integration-related costs^c^ | — | 924 | 40 | 40 | 924 | ||||||||||
| Restructuring (benefits) costs^d^ | (1,114 | ) | 835 | 480 | (634 | ) | 2,073 | ||||||||
| Legal settlements and fees^e^ | — | 28 | — | — | 403 | ||||||||||
| Impairment charges^f^ | — | 1,921 | 1,741 | 1,741 | 2,070 | ||||||||||
| Loss on disposal of fixed assets | 6 | — | 19 | 25 | — | ||||||||||
| Loss on early extinguishment of debt^g^ | 1,912 | — | — | 1,912 | — | ||||||||||
| Gain on lease termination^h^ | (1,064 | ) | (197 | ) | (21 | ) | (1,085 | ) | (224 | ) | |||||
| Other income, net | (26 | ) | (7 | ) | (6 | ) | (32 | ) | (17 | ) | |||||
| Equity compensation | 2,114 | 2,137 | 1,601 | 3,715 | 3,486 | ||||||||||
| Applicant tracking system costs^i^ | 172 | 315 | 195 | 367 | 690 | ||||||||||
| Adjusted EBITDA^a^ | $ | 83,490 | $ | 24,260 | $ | 97,408 | $ | 180,898 | $ | 50,993 | |||||
| Adjusted EBITDA margin^a^ | 11.1 | % | 7.3 | % | 12.3 | % | 11.7 | % | 7.7 | % | |||||
| Adjusted EPS:^j^ | |||||||||||||||
| Numerator: | |||||||||||||||
| Net income attributable to common stockholders | $ | 52,894 | $ | 11,548 | $ | 61,983 | $ | 114,877 | $ | 30,996 | |||||
| Non-GAAP adjustments - pretax: | |||||||||||||||
| Acquisition and integration-related costs^c^ | — | 924 | 40 | 40 | 924 | ||||||||||
| Restructuring (benefits) costs^d^ | (1,114 | ) | 835 | 480 | (634 | ) | 2,073 | ||||||||
| Legal settlements and fees^e^ | — | 28 | — | — | 403 | ||||||||||
| Impairment charges^f^ | — | 1,921 | 1,741 | 1,741 | 2,070 | ||||||||||
| Applicant tracking system costs^i^ | 172 | 315 | 195 | 367 | 690 | ||||||||||
| Loss on early extinguishment of debt^g^ | 1,912 | — | — | 1,912 | — | ||||||||||
| Nonrecurring income tax adjustments^k^ | — | 1,942 | — | — | 1,942 | ||||||||||
| Tax impact of non-GAAP adjustments | (1,061 | ) | (11 | ) | 184 | (878 | ) | (12 | ) | ||||||
| Adjusted net income attributable to common stockholders - non-GAAP | $ | 52,803 | $ | 17,502 | $ | 64,623 | $ | 117,425 | $ | 39,086 | |||||
| Denominator: | |||||||||||||||
| Weighted average common shares - basic, GAAP | 37,471 | 36,625 | 37,028 | 37,251 | 36,404 | ||||||||||
| Dilutive impact of share-based payments | 286 | 578 | 945 | 615 | 716 | ||||||||||
| Adjusted weighted average common shares - diluted, non-GAAP | 37,757 | 37,203 | 37,973 | 37,866 | 37,120 | ||||||||||
| Reconciliation: | |||||||||||||||
| Diluted EPS, GAAP | $ | 1.40 | $ | 0.31 | $ | 1.63 | $ | 3.03 | $ | 0.84 | |||||
| Non-GAAP adjustments - pretax: | |||||||||||||||
| Acquisition and integration-related costs^c^ | — | 0.03 | — | — | 0.03 | ||||||||||
| Restructuring (benefits) costs^d^ | (0.03 | ) | 0.02 | 0.01 | (0.02 | ) | 0.05 | ||||||||
| Legal settlements and fees^e^ | — | — | — | — | 0.01 | ||||||||||
| Impairment charges^f^ | — | 0.05 | 0.05 | 0.05 | 0.05 | ||||||||||
| Applicant tracking system costs^i^ | — | 0.01 | 0.01 | 0.01 | 0.02 | ||||||||||
| Loss on early extinguishment of debt^g^ | 0.05 | — | — | 0.05 | — | ||||||||||
| Nonrecurring income tax adjustments^k^ | — | 0.05 | — | — | 0.05 | ||||||||||
| Tax impact of non-GAAP adjustments | (0.02 | ) | — | — | (0.02 | ) | — | ||||||||
| Adjusted EPS, non-GAAP^j^ | $ | 1.40 | $ | 0.47 | $ | 1.70 | $ | 3.10 | $ | 1.05 |
| Cross Country Healthcare, Inc. | ||||||
|---|---|---|---|---|---|---|
| Consolidated Balance Sheets | ||||||
| (Unaudited, amounts in thousands) | ||||||
| June 30, | December 31, | |||||
| 2022 | 2021 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 279 | $ | 1,036 | ||
| Accounts receivable, net | 701,926 | 493,910 | ||||
| Prepaid expenses | 6,774 | 7,648 | ||||
| Insurance recovery receivable | 5,750 | 5,041 | ||||
| Other current assets | 3,594 | 638 | ||||
| Total current assets | 718,323 | 508,273 | ||||
| Property and equipment, net | 18,241 | 15,833 | ||||
| Operating lease right-of-use assets | 5,058 | 7,488 | ||||
| Goodwill | 113,360 | 119,490 | ||||
| Trade names, indefinite-lived | 5,900 | 5,900 | ||||
| Other intangible assets, net | 42,863 | 42,344 | ||||
| Non-current deferred tax assets | 8,096 | 11,525 | ||||
| Other non-current assets | 27,120 | 21,956 | ||||
| Total assets | $ | 938,961 | $ | 732,809 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued expenses | $ | 189,805 | $ | 109,753 | ||
| Accrued compensation and benefits | 65,409 | 65,580 | ||||
| Current portion of debt | — | 4,176 | ||||
| Operating lease liabilities - current | 4,145 | 4,090 | ||||
| Income tax payable | 30 | 7,307 | ||||
| Current portion of earnout liability | 7,500 | 7,500 | ||||
| Other current liabilities | 1,769 | 1,364 | ||||
| Total current liabilities | 268,658 | 199,770 | ||||
| Long-term debt, less current portion | 205,376 | 176,366 | ||||
| Operating lease liabilities - non-current | 7,017 | 10,853 | ||||
| Non-current deferred tax liabilities | 222 | 190 | ||||
| Long-term accrued claims | 26,869 | 25,314 | ||||
| Non-current earnout liability | 7,500 | 9,000 | ||||
| Other long-term liabilities | 12,508 | 13,788 | ||||
| Total liabilities | 528,150 | 435,281 | ||||
| Commitments and contingencies | ||||||
| Stockholders' equity: | ||||||
| Common stock | 4 | 4 | ||||
| Additional paid-in capital | 320,000 | 321,552 | ||||
| Accumulated other comprehensive loss | (1,335 | ) | (1,293 | ) | ||
| Retained earnings (accumulated deficit) | 92,142 | (22,735 | ) | |||
| Total stockholders' equity | 410,811 | 297,528 | ||||
| Total liabilities and stockholders' equity | $ | 938,961 | $ | 732,809 |
| Cross Country Healthcare, Inc. | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Segment Data^l^ | ||||||||||||||||||
| (Unaudited, amounts in thousands) | ||||||||||||||||||
| Three Months Ended | Year-over-Year | Sequential | ||||||||||||||||
| June 30, | % of | June 30, | % of | March 31, | % of | % change | % change | |||||||||||
| 2022 | Total | 2021 | Total | 2022 | Total | Fav (Unfav) | Fav (Unfav) | |||||||||||
| Revenue from services: | ||||||||||||||||||
| Nurse and Allied Staffing | $ | 731,443 | 97 | % | $ | 316,188 | 95 | % | $ | 765,580 | 97 | % | 131 | % | (4 | )% | ||
| Physician Staffing | 22,118 | 3 | % | 15,639 | 5 | % | 23,152 | 3 | % | 41 | % | (4 | )% | |||||
| $ | 753,561 | 100 | % | $ | 331,827 | 100 | % | $ | 788,732 | 100 | % | 127 | % | (4 | )% | |||
| Contribution income:^m^ | ||||||||||||||||||
| Nurse and Allied Staffing | $ | 97,567 | $ | 35,284 | $ | 110,101 | 177 | % | (11 | )% | ||||||||
| Physician Staffing | 1,220 | 562 | 1,765 | 117 | % | (31 | )% | |||||||||||
| 98,787 | 35,846 | 111,866 | 176 | % | (12 | )% | ||||||||||||
| Corporate overhead^n^ | 17,583 | 14,066 | 16,254 | (25 | )% | (8 | )% | |||||||||||
| Depreciation and amortization | 3,481 | 2,199 | 2,719 | (58 | )% | (28 | )% | |||||||||||
| Acquisition and integration-related costs^c^ | — | 924 | 40 | 100 | % | 100 | % | |||||||||||
| Restructuring (benefits) costs^d^ | (1,114 | ) | 835 | 480 | 233 | % | 332 | % | ||||||||||
| Impairment charges^f^ | — | 1,921 | 1,741 | 100 | % | 100 | % | |||||||||||
| Income from operations | $ | 78,837 | $ | 15,901 | $ | 90,632 | 396 | % | (13 | )% | ||||||||
| Six Months Ended | Year-over-Year | |||||||||||||||||
| June 30, | % of | June 30, | % of | % change | ||||||||||||||
| 2022 | Total | 2021 | Total | Fav (Unfav) | ||||||||||||||
| Revenue from services: | ||||||||||||||||||
| Nurse and Allied Staffing | $ | 1,497,023 | 97 | % | $ | 629,196 | 95 | % | 138 | % | ||||||||
| Physician Staffing | 45,270 | 3 | % | 31,872 | 5 | % | 42 | % | ||||||||||
| $ | 1,542,293 | 100 | % | $ | 661,068 | 100 | % | 133 | % | |||||||||
| Contribution income:^m^ | ||||||||||||||||||
| Nurse and Allied Staffing | $ | 207,668 | $ | 72,701 | 186 | % | ||||||||||||
| Physician Staffing | 2,985 | 1,990 | 50 | % | ||||||||||||||
| 210,653 | 74,691 | 182 | % | |||||||||||||||
| Corporate overhead^n^ | 33,837 | 28,277 | (20 | )% | ||||||||||||||
| Depreciation and amortization | 6,200 | 4,452 | (39 | )% | ||||||||||||||
| Acquisition and integration-related costs^c^ | 40 | 924 | 96 | % | ||||||||||||||
| Restructuring (benefits) costs^d^ | (634 | ) | 2,073 | 131 | % | |||||||||||||
| Impairment charges^f^ | 1,741 | 2,070 | 16 | % | ||||||||||||||
| Income from operations | $ | 169,469 | $ | 36,895 | 359 | % |
| Cross Country Healthcare, Inc. | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Summary Condensed Consolidated Statements of Cash Flows | |||||||||||||||
| (Unaudited, amounts in thousands) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2022 | 2021 | |||||||||||
| Net cash provided by (used in) operating activities | $ | 18,141 | $ | 15,505 | $ | (29,038 | ) | $ | (10,897 | ) | $ | (9,422 | ) | ||
| Net cash used in investing activities | (1,752 | ) | (26,286 | ) | (2,096 | ) | (3,848 | ) | (27,472 | ) | |||||
| Net cash (used in) provided by financing activities | (17,321 | ) | 15,434 | 31,308 | 13,987 | 53,438 | |||||||||
| Effect of exchange rate changes on cash | 3 | (14 | ) | (2 | ) | 1 | (17 | ) | |||||||
| Change in cash and cash equivalents | (929 | ) | 4,639 | 172 | (757 | ) | 16,527 | ||||||||
| Cash and cash equivalents at beginning of period | 1,208 | 13,488 | 1,036 | 1,036 | 1,600 | ||||||||||
| Cash and cash equivalents at end of period | $ | 279 | $ | 18,127 | $ | 1,208 | $ | 279 | $ | 18,127 | |||||
| Cross Country Healthcare, Inc. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Other Financial Data | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2022 | 2021 | |||||||||||
| Consolidated gross profit margin^o^ | 22.6 | % | 21.9 | % | 22.2 | % | 22.4 | % | 21.8 | % | |||||
| Nurse and Allied Staffing statistical data: | |||||||||||||||
| FTEs^p^ | 13,494 | 7,578 | 13,454 | 13,474 | 7,096 | ||||||||||
| Average Nurse and Allied Staffing revenue per FTE per day^q^ | $ | 591 | $ | 454 | $ | 628 | $ | 609 | $ | 486 | |||||
| Physician Staffing statistical data: | |||||||||||||||
| Days filled^r^ | 12,416 | 9,775 | 13,068 | 25,484 | 19,244 | ||||||||||
| Revenue per day filled^s^ | $ | 1,781 | $ | 1,600 | $ | 1,772 | $ | 1,776 | $ | 1,656 |
| (a) | Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) attributable to common stockholders before interest expense, income tax expense<br> (benefit), depreciation and amortization, acquisition and integration-related costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt,<br> gain or loss on disposal of fixed assets, gain or loss on lease termination, gain or loss on sale of business, other expense (income), net, equity compensation, and applicant tracking system costs. Adjusted EBITDA should not be<br> considered a measure of financial performance under GAAP. Management presents Adjusted EBITDA because it believes that Adjusted EBITDA is a useful supplement to net income attributable to common stockholders as an indicator of<br> 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<br> 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) | The Company released the majority of its valuation allowance on deferred tax assets as of December 31, 2021, resulting in increased income tax expense in 2022. |
| (c) | Acquisition and integration-related costs include costs for legal and advisory fees for the Workforce Solutions Group (WSG) acquisition that closed on June 8, 2021. |
| (d) | Restructuring (benefits) costs are primarily comprised of employee termination costs, lease-related exit costs, and reorganization costs as part of planned cost savings<br> initiatives. Amounts for the three and six months ended June 30, 2022 include a benefit associated with the early termination of one of the Company's corporate offices which was previously restructured. |
| (e) | Legal settlements and fees include legal settlement charges as presented on the consolidated statements of operations as well as legal fees pertaining to<br> non-operational legal matters outside the normal course of operations which are included in selling, general and administrative expenses. For the three and six months ended June 30, 2021, we incurred legal fees related to various<br> legal matters outside the normal course of operations. |
| (f) | Impairment charges for the six months ended June 30, 2022 was comprised of $1.7 million related to right-of-use assets and related property in connection with leases<br> that were vacated. Impairment charges for the six months ended June 30, 2021 was 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<br> $0.1 million related to the write-off of a discontinued software development project. |
| (g) | Loss on early extinguishment of debt for the three and six months ended June 30, 2022 consists of a prepayment premium and the write-off of debt issuance costs related<br> to the optional prepayment on our term loan made in the second quarter of 2022. |
| (h) | The gain on lease termination for the three and six months ended June 20, 2022 is a result of the early termination of one of the Company's corporate offices,<br> recognized in the second quarter of 2022. |
| (i) | 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<br> reported in selling, general and administrative expenses on the consolidated statement of operations and included in corporate overhead in segment data. |
| (j) | Adjusted EPS, a non-GAAP financial measure, is defined as net income (loss) attributable to common stockholders per diluted share before the diluted EPS impact of<br> acquisition and integration-related costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on sale of business, applicant<br> 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<br> 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<br> the future earnings capacity of the Company. |
| (k) | Non-recurring income tax adjustment for the three and six months ended June 30, 2021 reflects a valuation allowance related to a state rate change as a result of the<br> WSG acquisition. |
| (l) | Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC. |
| (m) | Contribution income is defined as income (loss) from operations before depreciation and amortization, acquisition and integration-related costs, restructuring<br> (benefits) costs, legal settlement charges, impairment charges, and corporate overhead. Contribution income is a financial measure used by management when assessing segment performance. |
| (n) | Corporate overhead includes unallocated executive leadership and other centralized corporate functional support costs such as finance, IT, legal, human resources, and<br> marketing, as well as public company expenses and corporate-wide projects (initiatives). |
| (o) | Gross profit is defined as revenue from services less direct operating expenses. The Company's gross profit excludes allocated depreciation and amortization expense.<br> Gross profit margin is calculated by dividing gross profit by revenue from services. |
| (p) | FTEs represent the average number of Nurse and Allied Staffing contract personnel on a full-time equivalent basis. |
| (q) | 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<br> respective periods. |
| (r) | 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. |
| (s) | Revenue per day filled is calculated by dividing revenue as reported by days filled for the period presented. |
Contacts
Cross Country Healthcare, Inc.
William J. Burns, Executive Vice President & Chief Financial Officer
561-237-2555
wburns@crosscountry.com