Cross Country Healthcare Announces Third Quarter 2020 Financial Results
November 04, 2020 at 16:15 PM EST
Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its third quarter ended September 30, 2020.
“We are encouraged by the resurgence in demand and have made steady progress growing our businesses throughout the third quarter,” said Kevin C. Clark, Co-Founder and Chief Executive Officer. “Cross Country’s digital transformation remains on track with the successful deployment of our new applicant tracking system for our largest business."
Third quarter consolidated revenue was $194.0 million, a decrease of 7% year-over-year and 11% sequentially. Consolidated gross profit margin was 24.7%, up 30 basis points year-over-year and 130 basis points sequentially. Net loss attributable to common shareholders was $1.3 million compared to $3.1 million in the prior year and $14.2 million in the prior quarter. Diluted EPS was a loss of $0.04 per share compared to losses of $0.09 per share in the prior year and $0.39 per share in the prior quarter. Adjusted EBITDA was $8.6 million or 4.4% of revenue, as compared with $7.3 million or 3.5% of revenue in the prior year, and $11.6 million or 5.4% of revenue in the prior quarter. Adjusted EPS was $0.12 compared to $0.05 in the prior year and $0.16 in the prior quarter.
The nine months ended September 30, 2020 included non-cash impairment charges of $16.1 million, which was comprised of $10.7 million, primarily related to goodwill and customer relationships for the Search business, and $5.4 million related to right-of-use assets and related property and equipment in connection with leases that were vacated during the year.
For the nine months ended September 30, 2020, consolidated revenue was $620.8 million, an increase of 2% year-over-year. Consolidated gross profit margin was 23.9%, down 90 basis points year-over-year. Net loss attributable to common shareholders was $17.6 million, or $0.49 per diluted share, compared to a loss of $56.6 million, or $1.58 per diluted share, in the prior year. Adjusted EBITDA was $24.8 million or 4.0% of revenue, as compared with $17.2 million or 2.8% of revenue in the prior year. Adjusted EPS was $0.27 compared to $0.08 in the prior year.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue was $175.2 million, a decrease of 5% year-over-year and 12% sequentially. Contribution income was $18.2 million, an increase compared to $16.1 million in the prior year and a decrease compared to $20.6 million in the prior quarter. Average field contract personnel on a full-time equivalent basis (FTE)s were 5,403 as compared with 7,083 in the prior year and 5,801 in the prior quarter. Revenue per FTE per day was $353 compared to $284 in the prior year and $375 in the prior quarter.
Revenue was $16.5 million, a decrease of 19% year-over-year and 2% sequentially. Contribution income was $0.8 million, consistent with the prior year and a decrease compared to $1.2 million in the prior quarter. Total days filled were 9,682 as compared with 11,675 in the prior year and 9,195 in the prior quarter. Revenue per day filled was $1,699 as compared with $1,748 in the prior year and $1,835 in the prior quarter.
Revenue was $2.3 million, a decrease of 41% year-over-year and an increase of 26% sequentially. Contribution loss was $0.3 million, compared to income of $0.1 million in the prior year and a loss of $1.1 million in the prior quarter.
Cash Flow and Balance Sheet Highlights
Cash flow used in operations for the quarter was $8.5 million compared to $14.2 million used in the prior year and $16.6 million provided by operations in the prior quarter, with the principal driver being a 15 day sequential increase in days' sales outstanding. For the nine months ended September 30, 2020, cash flow provided by operations was $25.3 million, compared to $10.9 in the prior year.
As of September 30, 2020, the Company had $3.4 million in cash and cash equivalents, $56.0 million of borrowings drawn under its asset-based loan facility (ABL), and $19.5 million of letters of credit outstanding. Availability under the ABL is subject to a borrowing base, which was $110.2 million as of September 30, 2020, with $34.7 million available for borrowing as of September 30, 2020.
Outlook for Fourth Quarter 2020
The guidance below applies to management’s expectations for the fourth quarter of 2020.
The Company continues to assess the impacts from COVID-19 on its operations, which were significant in the second and third quarters, and are expected to continue into the fourth quarter. As a result of the volatility and uncertainty from the pandemic, the Company has continued the use of wider guidance ranges for the fourth quarter.
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 share repurchases. 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, November 4, 2020, at 5:00 P.M. Eastern Time to discuss its third quarter 2020 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 November 4th through November 19th at the Company’s website and a replay of the conference call will be available by telephone by calling 800-391-9847 from anywhere in the U.S. or 402-220-3093 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, made with the Securities and Exchange Commission (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 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, and 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", and "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 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, 2019, and our Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30, 2020, and our other SEC filings. 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. 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.