Cross Country Healthcare Announces Second Quarter 2018 Financial Results
Aug. 01, 2018
BOCA RATON, Fla.--(BUSINESS WIRE)--Aug 1, 2018--Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its second quarter ended June 30, 2018.
* 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.
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.
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