Cross Country Healthcare, Inc. (the “Company”) (Nasdaq: CCRN) today
announced financial results for its second quarter ended June 30, 2018.
FINANCIAL HIGHLIGHTS:
Dollars are in thousands, except per share amounts
VarianceQ2 2018 vsQ2 2017
VarianceQ2 2018 vsQ1 2018
(80) bps
60 bps
* Refer to accompanying tables and discussion of Non-GAAP financial
measures below.
“After a good start to 2018 recovering from the headwinds we faced in
the fourth quarter of 2017, we experienced a pull back on spend from
some of our larger customers in the second quarter. This pull back
offsets the growth from our new managed service programs,” said William
J. Grubbs, President and Chief Executive Officer. “We are making
adjustments to our business to address these challenges and believe the
underlying market dynamics will allow us to get back to year-over-year
growth.”
Second quarter consolidated revenue was $204.6 million, a decrease of 2%
year-over-year and 3% sequentially. Excluding the Advantage acquisition,
revenue decreased 12% on a year-over-year basis. Consolidated gross
profit margin was 26.2%, down 80 basis points year-over-year and up 60
basis points sequentially. Net income attributable to common
shareholders was $1.5 million compared to $4.9 million in the prior year
and $1.6 million in the prior quarter. Diluted EPS was $0.04 per share
compared to $0.13 per share in the prior year and $0.05 in the prior
quarter. Adjusted EBITDA was $8.7 million or 4.3% of revenue, as
compared with $10.9 million or 5.2% of revenue in the prior year, and
$8.4 million or 4.0% of revenue in the prior quarter. Adjusted EPS was
$0.05 in the current quarter as compared to $0.16 in the prior year and
$0.06 in the prior quarter.
For the six months ended June 30, 2018, consolidated revenue was $414.9
million, a decrease of less than 1% year-over-year, 10% excluding the
impact of the Advantage acquisition. Consolidated gross profit margin
was 25.9%, down 40 basis points year-over-year. Adjusted EBITDA was
$17.1 million or 4.1% of revenue, as compared with $17.3 million or 4.2%
of revenue in the prior year. Net income attributable to common
shareholders was $3.2 million, or $0.09 per diluted share, compared to
net income of $2.8 million, or $0.05 per diluted share, in the prior
year. Adjusted EPS was $0.11 compared to $0.21 in the prior year.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue from Nurse and Allied Staffing was $179.3 million, a decrease of
1% year-over-year and 3% sequentially. Excluding the Advantage
acquisition, revenue decreased 12% on a year-over-year basis.
Contribution income in this segment was $16.9 million, down from $18.1
million in the prior year, and up sequentially from $16.8 million in the
prior quarter. Average field FTEs decreased to 7,143 from 7,155 in the
prior year and decreased from 7,466 in the prior quarter. Revenue per
FTE per day was $276 compared to $278 in the prior year and $275 in the
prior quarter.
Physician Staffing
Revenue from Physician Staffing was $21.3 million, a decrease of 14%
year-over-year and 1% sequentially. Contribution income was $1.4
million, down from $2.0 million in the prior year and $1.5 million in
the prior quarter. Total days filled were 13,751 as compared with 15,690
in the prior year and 14,250 in the prior quarter. Revenue per day
filled was $1,551 as compared with $1,576 in the prior year and $1,513
in the prior quarter.
Other Human Capital Management Services
Revenue from Other Human Capital Management Services was $3.9 million,
an increase of 6% year-over-year and 8% sequentially. Segment
contribution income was $0.3 million for the current quarter compared to
$0.2 million in the prior year, and consistent with the prior quarter.
Cash Flow and Balance Sheet Highlights
Cash flow provided by operating activities for the current quarter was
$4.7 million compared to $24.1 million in the prior year. At June 30,
2018, the Company had $32.6 million in cash and cash equivalents and a
$97.5 million term loan, par value, outstanding under the term
loan. There were no borrowings drawn on its $115.0 million revolving
credit facility, and $21.6 million of letters of credit outstanding,
leaving $93.4 million available for borrowings under the revolving
credit facility.
During the second quarter of 2018, the Company repurchased 157,056
shares of common stock for $1.8 million, at an average market price of
$11.53 per share. As of June 30, 2018, the Company had 35.6 million
shares outstanding. The Company has 542,987 shares remaining for
repurchase under its current share repurchase program, subject to
certain conditions in its credit agreement.
Outlook for Third Quarter 2018
The guidance below applies only to management’s expectations for the
third quarter of 2018. Though the Company does not provide full year
guidance, organic growth for the full year and continued margin
improvement are expected based on continued favorable market dynamics
and demand for its services. In addition to the normal operating
leverage from anticipated revenue growth, the Company will be
undertaking actions designed to further align its cost structure for
improved profitability towards achieving its goal of an 8% Adjusted
EBITDA margin.
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, any
changes in debt structure, any future share repurchases, or the
initiative to replace its legacy system supporting its travel nurse
staffing business. See accompanying Non-GAAP financial measures and
tables below.
INVITATION TO CONFERENCE CALL
The Company will hold its quarterly conference call on Wednesday, August
1, 2018, at 5:00 P.M. Eastern Time to discuss its second quarter 2018
financial results. This call will be webcast live and can be accessed at
the Company’s website at www.crosscountryhealthcare.com
or by dialing 800-857-6331 from anywhere in the U.S. or by dialing
517-623-4781 from non-U.S. locations – Passcode: Cross Country. A replay
of the webcast will be available from August 1st through August 15th at
the Company’s website and a replay of the conference call will be
available by telephone by calling 800-391-9846 from anywhere in the U.S.
or 402-220-3132 from non-U.S. locations – Passcode: 2018.
ABOUT CROSS COUNTRY HEALTHCARE
Cross Country Healthcare is a national leader in providing innovative
healthcare workforce solutions and staffing services. Our solutions
leverage our nearly 40 years of expertise and insight to assist clients
in solving complex labor-related challenges while maintaining high
quality outcomes. We are dedicated to recruiting and placing highly
qualified healthcare professionals in virtually every specialty and area
of expertise. Our diverse client base includes both clinical and
nonclinical settings, servicing acute care hospitals, physician practice
groups, outpatient and ambulatory-care centers, nursing facilities, both
public schools and charter schools, rehabilitation and sports medicine
clinics, government facilities, and homecare. Through our national
staffing teams and network of 72 office locations, we are able to place
clinicians on travel and per diem assignments, local short-term
contracts and permanent positions. We are a market leader in providing
flexible workforce management solutions, which include managed service
programs (MSP), internal resource pool consulting and development,
electronic medical record (EMR) transition staffing, recruitment process
outsourcing, predictive modeling, and other outsourcing and consultative
services. In addition, we provide both retained and contingent placement
services for healthcare executives, physicians, and other healthcare
professionals.
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 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, 2017, 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.
% ChangeFav/(Unfav)
Year-over-Year
—
%
(7)
%
13
%
—
%
—
%
1
%
(199
)
414
%
2
%
(2)
%
(31)
%
21
%
67
%
(100)
%
(11)
%
Nurse and Allied Staffing statistical data:
Physician Staffing statistical data:
Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting
Principles) financial measure, is defined as net income
attributable to common shareholders before interest expense,
income tax expense, depreciation and amortization,
acquisition-related contingent consideration, acquisition and
integration costs, restructuring costs, gain on derivative
liability, loss on early extinguishment of debt, other income,
net, equity compensation, 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.
Adjusted EPS, a non-GAAP financial measure, is defined as net
income attributable to common shareholders per diluted share
before the diluted EPS impact of acquisition-related contingent
consideration, acquisition and integration costs, restructuring
costs, gain on derivative liability, loss on early extinguishment
of debt, 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 uses Adjusted EPS
as one performance measure in its annual cash incentive program
for certain members of its management team. 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.
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