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Cross Country Healthcare Announces Third Quarter 2022 Financial Results

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BOCA RATON, Fla.--(BUSINESS WIRE)-- Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its third quarter ended September 30, 2022.

SELECTED FINANCIAL INFORMATION:

 

 

 

Variance

Variance

 

 

 

Q3 2022 vs

Q3 2022 vs

Dollars are in thousands, except per share amounts

Q3 2022

Q3 2021

Q2 2022

Revenue

$

636,098

 

 

70

%

 

(16)

%

Gross profit margin*

 

22.6

%

 

20

bps

 

—

bps

Net income attributable to common stockholders

$

34,793

 

 

48

%

 

(34)

%

Diluted EPS

$

0.93

 

$

0.31

 

$

(0.47)

 

Adjusted EBITDA*

$

63,792

 

 

112

%

 

(24)

%

Adjusted EBITDA margin*

 

10.0

%

 

200

bps

 

(110)

bps

Adjusted EPS*

$

1.07

 

$

0.46

 

$

(0.33)

 

Cash flows provided by (used in) operations

$

140,627

 

 

5,067

%

 

675

%

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

Third Quarter Business Highlights

  • Revenue, Adjusted EBITDA, and Adjusted EPS exceeded previously updated guidance ranges
  • Double-digit year-over-year revenue growth across both segments
  • Adjusted EBITDA margin of 10.0%
  • Repurchased 1 million shares of common stock for $24.3 million
  • Scaled our locum tenens portfolio through the Mint and Lotus acquisitions, which closed in October

“Our third quarter 2022 results once again exceeded expectations. Our advanced technology stack is driving internal efficiency and productivity gains, as well as increases in client and candidate engagement. As market conditions continue to normalize, we are confident that we can continue to grow organically through new client wins, strong execution, and the continued demand for clinicians across the healthcare continuum,” said John A. Martins, President and Chief Executive Officer of Cross Country Healthcare. He continued, “Heading into 2023, we are well positioned and remain confident that we will meet or exceed our annual targets given the pipeline of MSP opportunities, the ongoing rollout of our proprietary vendor-neutral offering, Intellify, and continued investments in our people and technology.”

Third quarter consolidated revenue was $636.1 million, an increase of 70% year-over-year and a decrease of 16% sequentially. Consolidated gross profit margin was 22.6%, up 20 basis points year-over-year and flat sequentially. Net income attributable to common stockholders was $34.8 million compared to $23.4 million in the prior year and $52.9 million in the prior quarter. Diluted earnings per share (EPS) was $0.93 compared to $0.62 in the prior year and $1.40 in the prior quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $63.8 million or 10.0% of revenue, as compared with $30.1 million or 8.0% of revenue in the prior year, and $83.5 million or 11.1% of revenue in the prior quarter. Adjusted EPS was $1.07 compared to $0.61 in the prior year and $1.40 in the prior quarter.

For the nine months ended September 30, 2022, consolidated revenue was $2.2 billion, an increase of 110% year-over-year. Consolidated gross profit margin was 22.4%, up 40 basis points year-over-year. Net income attributable to common stockholders was $149.7 million, or $3.97 per diluted share, compared to $54.4 million, or $1.46 per diluted share, in the prior year. Adjusted EBITDA was $244.7 million or 11.2% of revenue, as compared with $81.1 million or 7.8% of revenue in the prior year. Adjusted EPS was $4.17 compared to $1.66 in the prior year.

Quarterly Business Segment Highlights

Nurse and Allied Staffing

Revenue was $612.3 million, an increase of 72% year-over-year and a decrease of 16% sequentially. Contribution income was $77.8 million, an increase from $40.6 million in the prior year and a decrease from $97.6 million in the prior quarter. Average field contract personnel on a full-time equivalent (FTE) basis were 12,524 as compared with 9,003 in the prior year and 13,494 in the prior quarter. Revenue per FTE per day was $526 compared to $425 in the prior year and $591 in the prior quarter. The increase in the average number of FTEs as compared to the prior year was primarily due to headcount growth in travel nurse and allied. As expected, average bill rates were down sequentially in the low double digits.

Physician Staffing

Revenue was $23.8 million, an increase of 27% year-over-year and 8% sequentially. Contribution income was $0.8 million, a decrease from $0.9 million in the prior year and $1.2 million in the prior quarter. Total days filled were 13,219 as compared with 12,187 in the prior year and 12,416 in the prior quarter. Revenue per day filled was $1,803 as compared with $1,540 in the prior year and $1,781 in the prior quarter. The year-over-year increase in revenue was driven by an increase in volume in hospitalists and certified registered nurse anesthetists. The year-over-year decrease in contribution income was driven by higher indirect costs.

Cash Flow and Balance Sheet Highlights

Cash flow provided by operations for the quarter was $140.6 million, due to the strength of collections of accounts receivable. For the nine months ended September 30, 2022, cash flow provided by operations was $129.7 million compared to cash used in operations of $12.3 million in the prior year.

On August 16, 2022, the Company's Board of Directors authorized a new $100 million stock repurchase program. During the quarter, the Company repurchased and retired a total of 1.0 million shares of the Company's common stock for $24.3 million, at an average market price of $23.97 per share. As of September 30, 2022, the Company had 36.5 million unrestricted shares outstanding and $87.2 million remaining for share repurchase.

At September 30, 2022, the Company had $30.3 million in cash and cash equivalents, a portion of which was used to complete the acquisition of Mint and Lotus on October 3, 2022. The Company had $123.9 million principal balance on its term loan, with $9.2 million of borrowings drawn under its revolving senior secured asset-based credit facility (ABL), and $17.5 million of letters of credit outstanding. As of September 30, 2022, borrowing base availability under the ABL was $300.0 million, with $273.3 million of excess availability.

Outlook for Fourth Quarter 2022

The guidance below applies to management’s expectations for the fourth quarter of 2022.

 

Q4 2022 Range

 

Year-over-Year

 

Sequential

Change

 

Change

 

 

 

 

 

 

Revenue

$590 million - $600 million

 

(8)% - (6)%

 

(7)% - (6)%

 

 

 

 

 

 

Gross Profit Margin*

22.3% - 22.8%

 

(75) bps - (25) bps

 

(35) bps - 15 bps

 

 

 

 

 

 

Adjusted EBITDA*

$52.0 million - $57.0 million

 

(36)% - (30)%

 

(18)% - (11)%

 

 

 

 

 

 

Adjusted EPS*

$0.85 - $0.95

 

($0.55) - ($0.45)

 

($0.22) - ($0.12)

* 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, November 2, 2022, at 5:00 P.M. Eastern Time to discuss its third 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 November 2nd through November 16th on the Company’s website and a replay of the conference call will be available by telephone by calling 866-430-4724 from anywhere in the U.S. or 203-369-0926 from non-U.S. locations - Passcode: 1339.

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 CertifiedTM by Great Place to Work®. For two consecutive years, we have received the Top Workplaces USA award and the Top Workplaces Award for Diversity, Equity & Inclusion Practices, and were recently recognized as a recipient of the Top Workplaces Awards for Innovation and Leadership by Energage, and the Women Executive Leadership Elevate Award recognizing gender diversity in our Boardroom. 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 press releases, as well as additional information about the Company, can be accessed 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 of 1995, 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. 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, the ongoing impacts of the coronavirus 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, 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, 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,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,

 

2022

 

2021

 

2022

 

 

2022

 

2021

 

 

 

 

 

 

 

Revenue from services

$

636,098

 

 

$

374,905

 

 

$

753,561

 

 

 

$

2,178,391

 

 

$

1,035,973

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

 

492,553

 

 

 

291,111

 

 

 

583,156

 

 

 

 

1,689,647

 

 

 

808,124

 

Selling, general and administrative expenses

 

80,216

 

 

 

52,847

 

 

 

86,009

 

 

 

 

243,038

 

 

 

149,518

 

Bad debt expense

 

1,101

 

 

 

1,441

 

 

 

3,192

 

 

 

 

6,662

 

 

 

2,411

 

Depreciation and amortization

 

3,214

 

 

 

2,680

 

 

 

3,481

 

 

 

 

9,414

 

 

 

7,132

 

Acquisition and integration-related costs

 

490

 

 

 

61

 

 

 

—

 

 

 

 

530

 

 

 

985

 

Restructuring costs (benefits)

 

2,493

 

 

 

318

 

 

 

(1,114

)

 

 

 

1,859

 

 

 

2,391

 

Impairment charges

 

3,856

 

 

 

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Cross Country Healthcare, Inc.

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