Cross Country Healthcare, Inc. (Nasdaq:CCRN) today reported
quarterly revenue of $175.4 million in the first quarter ended
March 31, 2009, and net income of $3.0�million, or $0.10 per
diluted share. This compares to revenue of $179.3 million and net
income of $5.9 million, or $0.19 per diluted share, in the prior
year. Cash flow from operations for the first quarter of 2009 was a
one-quarter record at $25.6 million.
�In the first quarter of 2009 all segments of our business faced
headwinds. The most significant are those facing our nurse and
allied staffing segment, which represented 60% of total revenue in
the first quarter and where trends remain negative. Open orders for
travel nurses appear to have stabilized over the past two months,
but at levels that will likely lead to further declines in FTE
staffing volume over at least the next two quarters if we do not
see a pick-up in demand from current levels,� said Joseph A.
Boshart, President and Chief Executive Officer of Cross Country
Healthcare, Inc.
�Despite these extremely challenging market conditions, it is
important to put our performance into context: each of our business
segments is profitable. Nonetheless, we continue to be focused on
bringing costs in-line with a lower level of business activity, and
weathering this storm in a better position than our competitors.
Our most important objective over the next several quarters will be
to continue to rapidly de-lever our balance sheet to position us
well for what we believe is an inevitable industry turnaround and a
likely market consolidation that lies ahead. We still believe
strongly in the viability and prospects of all our businesses over
the longer-term,� added Mr. Boshart.
Nurse and Allied Staffing
For the first quarter of 2009, the nurse and allied staffing
business segment (travel and per diem nurse and travel allied
staffing) generated revenue of $105.0 million, reflecting a 25%
decrease from the prior year quarter and a 15% decrease
sequentially from the fourth quarter of 2008. Contribution income
(defined as income from operations before depreciation and
amortization, impairment charges and corporate expenses not
specifically identified to a reporting segment) decreased 22% in
the first quarter of 2009 to $10.0 million from $12.9 million in
the same quarter a year ago, and decreased 21% sequentially from
the fourth quarter of 2008, reflecting a sharp decline in demand
for temporary nurse and allied staffing services due to the current
economic environment and its impact on the national labor market,
as well as continued weak hospital admission trends.
Segment staffing volume decreased 24% from the prior year
quarter and 12% sequentially from the fourth quarter of 2008,
primarily reflecting declines in travel staffing volume.
Physician Staffing
For the first quarter of 2009, the physician staffing business
segment generated revenue of $38.3 million and contribution income
of $3.2 million. Physician staffing days filled for the first
quarter of 2009 were 23,881 days, a decrease of 5% from the prior
year quarter. Revenue per day filled for the first quarter of 2009
was $1,602, an increase of 4% from the prior year quarter. We
believe the demand for temporary physician staffing services has
weakened somewhat as physicians on staff at hospitals and practice
groups appear to be working more hours than they previously did and
delaying plans for retirement due to the current economic
environment and its impact on their investment portfolios.
Clinical Trials Services
For the first quarter of 2009, the clinical trials services
segment generated revenue of $21.0 million, a decrease of 16% from
$24.9 million in the prior year quarter and a decrease of 12%
sequentially from the fourth quarter of 2008. Contribution income
decreased 42% in the first quarter of 2009 to $2.2 million from
$3.8 million in the prior year and declined 35% sequentially from
the fourth quarter of 2008, reflecting negative operating leverage
in the first quarter of 2009 as a result of lower revenue along
with a stronger dollar during the first quarter of 2009 that
negatively impacted the strong revenue growth and contribution
income from the UK operation. We believe the current environment
for clinical trials services reflects a very slow market for new
clinical trials caused by global economic factors and uncertainty
concerning research and development activities following recent
pharmaceutical and biotechnology company mergers and acquisitions,
as well as modifications, delays and cancellations for new and
ongoing trials.
Other Human Capital Management Services
For the first quarter of 2009, the other human capital
management services business segment (education and training and
retained search) generated revenue of $11.1 million, a 19% decrease
from revenue of $13.7 million in the same quarter in the prior year
and a decrease of 12% sequentially from the fourth quarter of 2008,
reflecting a decline in both businesses in this segment. Segment
contribution income decreased 61% to $0.9 million in the first
quarter of 2009 from $2.4 million in the prior year quarter and
decreased 31% sequentially from the fourth quarter of 2008,
reflecting a decline in revenue related to the number of retained
searches and average seminar attendance.
Debt Repayments/Borrowings
During the first quarter of 2009, the Company reduced borrowings
on its term loan and revolving credit facility by $15.0 million
from the end of the prior quarter. At March 31, 2009, the Company
had $117.4 million of total debt on its balance sheet and a debt,
net of unrestricted cash, to total capitalization ratio of 28%. At
the end of the first quarter of 2009, the Company�s debt leverage
ratio (as defined in its credit agreement) was 1.99 to 1, which is
well under the 2.75 to 1 ratio currently required under the terms
of the Company�s credit agreement. Subsequent to the end of the
first quarter, the Company used cash on hand to pay approximately
$7.5 million in earn-out payments related to the MDA and AKOS
acquisitions and made an $8.0 million optional pre-payment on its
term debt as a result of its continued strong cash flow.
Stock Repurchase Program Update
Pursuant to the terms of the Company�s credit agreement, Cross
Country Healthcare is currently restricted from repurchasing shares
of its common stock. As a result, the Company intends to use all of
its available cash to repay debt for the foreseeable future. Under
the remainder of its current authorization, the Company can
repurchase up to 1,441,139 shares of its common stock. At March 31,
2009, the Company had approximately 30.8 million shares
outstanding.
Guidance For Second Quarter 2009
The following statements are based on current management
expectations. Such statements are forward-looking and actual
results may differ materially. These statements do not include the
potential impact of any future mergers, acquisitions or other
business combinations, any impairment charges, any significant
legal proceedings or repurchases of the Company's common stock.
Cross Country Healthcare expects revenue in the second quarter
of 2009 to be in the $153 million to $156 million range and
earnings per diluted share to be in the range of $0.04 to
$0.06.
Annual Meeting of Stockholders
At the Company�s Annual Meeting of Stockholders held on May 5,
2009, all seven directors were re-elected to hold office until the
next Annual Meeting or until their successors are duly elected and
qualified. Stockholders also approved and ratified the appointment
of Ernst & Young LLP as the Company�s independent registered
public accounting firm for the fiscal year ending December�31,
2009.
Quarterly Conference Call
Cross Country Healthcare will hold a conference call on
Thursday, May 7th at 10:00 a.m. Eastern Time to discuss its first
quarter 2009 financial results. This call will be webcast live by
Thomson Reuters and may be accessed at the Company's web site at
www.crosscountryhealthcare.com or by dialing 877-917-1549 from
anywhere in the U.S. or by dialing 312-470-7109 from non-U.S.
locations � Passcode: Cross Country. A replay of the webcast will
be available through May 21st. A replay of the conference call will
be available by telephone from approximately noon on May 7th until
May 21st by calling 866-458-4758 from anywhere in the U.S. or
203-369-1315 from non-U.S. locations � Passcode: 2009.
About Cross Country Healthcare
Cross Country Healthcare, Inc. is a diversified leader in
healthcare staffing services. The Company offers a comprehensive
suite of staffing and outsourcing services to the healthcare
market, which together include being a leading national provider of
nurse and allied staffing services and multi-specialty physician
staffing services; a provider of clinical trials services to global
pharmaceutical and biotechnology customers; and a provider of other
human capital management services focused on healthcare. The
Company has more than 5,000 contracts with hospitals and healthcare
facilities, pharmaceutical and biotechnology customers, and other
healthcare organizations. 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 at the corporate
website to automatically receive the Company's press releases, SEC
filings and other notices by e-mail.
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�, �seeks�,
�will� and variations of such words and similar expressions
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, without limitation, 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 nurses and physicians, 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
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,
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, 2008, and our other Securities and
Exchange Commission filings made during 2009.
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., its
subsidiaries and affiliates.
�
Cross Country Healthcare, Inc. Consolidated Statements
of Income (Unaudited, amounts in thousands, except per share
data) � � �
Three Months Ended March 31,
2009 2008 % Change � � Revenue from services $
175,417 $ 179,251 (2 %) Operating expenses: Direct operating
expenses 130,358 134,074 (3 %) Selling, general and administrative
expenses 34,664 32,165 8 % Bad debt expense (95 ) 484 (120 %)
Depreciation 2,305 1,786 29 % Amortization � 1,023 � � 673 � 52 %
Total operating expenses � 168,255 � � 169,182 � (1 %) Income from
operations 7,162 10,069 (29 %) Other expenses:
Foreign exchange gain
(73 ) (6 )
NM
�
Interest expense, net � 1,701 � � 639 � 166 % Income before income
taxes 5,534 9,436 (41 %) Income tax expense � 2,498 � � 3,586 � (30
%) Net income � 3,036 � � 5,850 � (48 %) � Net income per common
share: Basic $ 0.10 � $ 0.19 � (47 %) Diluted $ 0.10 � $ 0.19 � (47
%) � Weighted average common shares outstanding: Basic 30,775
31,149 Diluted 30,934 31,333 � NM - Not meaningful �
Cross
Country Healthcare, Inc. Condensed Consolidated Balance
Sheets (Unaudited, amounts in thousands) �
March
31, December 31, 2009 2008 Assets
Current assets: Cash and cash equivalents $ 19,087 $ 10,173
Restricted cash 5,000 5,000 Accounts receivable, net 104,534
117,794 Deferred tax assets 11,583 11,287 Income taxes receivable -
977 Other current assets � 15,690 � � 16,149 � Total current assets
155,894 161,380 Property and equipment, net 24,582 25,985
Trademarks, net 64,411 64,443 Goodwill, net 122,533 122,598 Other
identifiable intangible assets, net 31,418 32,459 Debt issuance
costs, net 2,444 2,676 Other long-term assets � 16,759 � � 16,309 �
Total assets $ 418,041 � $ 425,850 � �
Liabilities and
Stockholders' Equity Current liabilities: Accounts payable and
accrued expenses 11,813 12,440 Accrued employee compensation and
benefits 25,694 21,334 Current portion of long-term debt 8,177
15,826 Income taxes payable 761 - Other current liabilities � 6,853
� � 6,682 � Total current liabilities 53,298 56,282 Long-term debt
109,266 117,255 Interest rate swaps 2,289 2,382 Other long-term
liabilities � 15,979 � � 15,908 � Total liabilities 180,832 191,827
� Commitments and contingencies � Stockholders' equity: Common
stock 3 3 Additional paid-in capital 237,696 237,372 Other
stockholders' equity � (490 ) � (3,352 ) Total stockholders' equity
237,209 234,023 � � Total liabilities and stockholders' equity $
418,041 � $ 425,850 �
Cross Country Healthcare,
Inc.
Segment Data (a) (Unaudited, amounts in thousands) �
�
Three Months Ended March 31, � �
2009 %
of Total �
2008 % of Total % Change �
Revenues: Nurse and allied staffing $ 105,029 60 % $ 140,666 78 %
(25 %) Physician staffing 38,258 22 % - - ND Clinical trials
services 20,987 12 % 24,869 14 % (16 %) Other human capital
management services � 11,143 6 % � 13,716 8 % (19 %) $ 175,417 100
% $ 179,251 100 % (2 %) � Contribution income (b) Nurse and allied
staffing $ 10,028 $ 12,861 (22 %) Physician staffing 3,242 - ND
Clinical trials services 2,187 3,770 (42 %) Other human capital
management services � 929 � 2,395 (61 %) 16,386 19,026 (14 %) �
Unallocated corporate overhead 5,896 6,498 (9 %) Depreciation 2,305
1,786 29 % Amortization � 1,023 � 673 52 % Income from operations $
7,162 $ 10,069 (29 %) �
ND - Not determinable
�
Cross Country Healthcare , Inc. Other Financial
Data (Unaudited) �
Three Months Ended March
31, �
2009 �
2008 Net cash provided by operating
activities (in thousands) $ 25,575 $ 11,335 �
Nurse and allied staffing
statistical data:
FTEs (c) 3,647 4,822 Weeks worked (d) 47,411 62,686 Average nurse
and allied staffing revenue per FTE per week (e) $ 2,215 $ 2,244 �
� (a) Segment data provided is in accordance with FASB Statement
131.
(b) Defined as income from
operations before depreciation, amortization, impairment charges
and corporate expenses not specifically identified to a reporting
segment. Contribution income is a financial measure used by
management when assessing segment performance.
(c) FTEs represent the average number of nurse and allied contract
staffing personnel on a full-time equivalent basis. (d) Weeks
worked is calculated by multiplying the FTEs by the number of weeks
during the respective period.
(e) Average revenue per FTE per
week is calculated by dividing the nurse and allied staffing
revenue by the number of weeks worked in the respective periods
(unadjusted for the number of billing days). The three months ended
March 31, 2008 included 1 more billing day than the three months
ended March 31, 2009, due to leap year. Nurse and allied staffing
revenue also includes revenue from permanent placement of
nurses.
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