Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN)
today announced financial results for its second quarter ended June
30, 2020.
SELECTED FINANCIAL INFORMATION:
Variance
Variance
Q2 2020 vs
Q2 2020 vs
Dollars are in thousands, except per share
amounts
Q2 2020
Q2 2019
Q1 2020
Revenue
$
216,779
7
%
3
%
Gross profit margin*
23.4
%
(200
)
bps
(20
)
bps
Net loss attributable to common
shareholders
$
(14,151
)
73
%
(577
)
%
Diluted EPS
$
(0.39
)
$
1.05
$
(0.33
)
Adjusted EBITDA*
$
11,612
84
%
152
%
Adjusted EPS*
$
0.16
$
0.15
$
0.17
Cash flows provided by operations
$
16,569
34
%
(3
)
%
* Refer to accompanying tables and discussion of Non-GAAP
financial measures below.
“Our second quarter results reflect Cross Country’s position as
a leader in the market, as well as strong execution in filling an
unprecedented level of demand from clients responding to COVID-19,”
said Kevin C. Clark, Co-Founder and Chief Executive Officer. He
continued, “We are continuing to adapt to rapid changes in demand
across our industry, and we are committed to achieving our
long-term goal for growth and improved profitability."
Second quarter consolidated revenue was $216.8 million, an
increase of 7% year-over-year and 3% sequentially. Consolidated
gross profit margin was 23.4%, down 200 basis points year-over-year
and down 20 basis points sequentially. Net loss attributable to
common shareholders was $14.2 million compared to $51.7 million in
the prior year and $2.1 million in the prior quarter. Diluted EPS
was a loss of $0.39 per share compared to losses of $1.44 per share
in the prior year and $0.06 per share in the prior quarter.
Adjusted EBITDA was $11.6 million or 5.4% of revenue, as compared
with $6.3 million or 3.1% of revenue in the prior year, and $4.6
million or 2.2% of revenue in the prior quarter. Adjusted EPS was
$0.16 compared to $0.01 in the prior year and a loss of $0.01 in
the prior quarter.
The three and six months ended June 30, 2020 included non-cash
impairment charges of $15.0 million, which was comprised of $10.5
million related to goodwill and customer relationships for the
Search business and $4.5 million related to right-of-use assets and
related property and equipment in connection with leases that were
vacated during the quarter.
For the six months ended June 30, 2020, consolidated revenue was
$426.8 million, an increase of 7% year-over-year. Consolidated
gross profit margin was 23.5%, down 160 basis points
year-over-year. Net loss attributable to common shareholders was
$16.2 million, or $0.45 per diluted share, compared to a loss of
$53.4 million, or $1.49 per diluted share, in the prior year.
Adjusted EBITDA was $16.2 million or 3.8% of revenue, as compared
with $9.9 million or 2.5% of revenue in the prior year. Adjusted
EPS was $0.15 compared to $0.03 in the prior year.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue from Nurse and Allied Staffing was $198.1 million, an
increase of 10% year-over-year and 5% sequentially. Contribution
income was $20.6 million, an increase compared to $16.1 million in
the prior year and $14.2 million in the prior quarter. Average
field FTEs were 5,801 as compared with 7,016 in the prior year and
7,145 in the prior quarter. Revenue per FTE per day was $375
compared to $283 in the prior year and $290 in the prior
quarter.
Physician Staffing
Revenue from Physician Staffing was $16.9 million, a decrease of
6% year-over-year and 7% sequentially. Contribution income was $1.2
million, an increase compared to $0.5 in the prior year and $0.6
million in the prior quarter. Total days filled were 9,195 as
compared with 10,754 in the prior year and 10,199 in the prior
quarter. Revenue per day filled was $1,835 as compared with $1,676
in the prior year and $1,783 in the prior quarter.
Search
Revenue from Search was $1.8 million, a decrease of 54%
year-over-year and 50% sequentially. Contribution loss was $1.1
million, compared to losses of $0.2 million in the prior year and
$0.3 million in the prior quarter.
Cash Flow and Balance Sheet Highlights
Cash flow generated from operations for the quarter was $16.6
million compared to $12.4 million generated in the prior year and
$17.2 million generated in the prior quarter, driven by strong cash
collections. For the six months ended June 30, 2020, cash flow from
operations was $33.7 million, compared to $25.1 in the prior
year.
On June 30, 2020, the Company amended its ABL Loan Agreement
(ABL), which increased the current aggregate committed size of the
ABL from $120.0 million to $130.0 million. As of June 30, 2020, the
Company had $6.2 million in cash and cash equivalents, $49.1
million of borrowings drawn under its ABL, and $19.6 million of
letters of credit outstanding. Availability under the ABL is
subject to a borrowing base, which was $130.0 million as of June
30, 2020.
Outlook for Third Quarter 2020
The guidance below applies to management’s expectations for the
third quarter of 2020.
Q3 2020 Range
Year-over-Year
Sequential
Change
Change
Revenue
$170 million - $180 million
(19)% - (14)%
(22)% - (17)%
Gross Profit Margin
23.8% - 24.3%
(60) bps - (10) bps
40 bps - 90 bps
Adjusted EBITDA
$4.0 million - $6.0 million
(45)% - (17)%
(66)% - (48)%
Adjusted EPS
$(0.06) - $(0.02)
$(0.11) - $(0.07)
$(0.22) - $(0.18)
The Company continues to assess the impacts from COVID-19 on its
operations, which were significant in the second quarter, and are
expected to continue into the third quarter. As a result of the
volatility and uncertainty from the pandemic, the Company has
decided to widen the guidance ranges for the third quarter. Though
the Company does not provide full year guidance, management expects
to see sequential improvement in Revenue and Adjusted EBITDA for
the fourth quarter, given the most recent trend in demand.
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, August 5, 2020, at 5:00 P.M. Eastern Time to discuss its
second 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 August 5th through August 20th at the Company’s
website and a replay of the conference call will be available by
telephone by calling 866-486-4654 from anywhere in the U.S. or
203-369-1642 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, 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 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 "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 other Securities and Exchange Commission filings. You
should consult any further disclosures the Company makes on related
subjects in its filings with the Securities and Exchange
Commission.
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.
Cross Country Healthcare,
Inc.
Consolidated Statements of
Operations
(Unaudited, amounts in
thousands, except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2020
2019
Revenue from services
$
216,779
$
202,757
$
210,064
$
426,843
$
397,928
Operating expenses:
Direct operating expenses
166,045
151,169
160,461
326,506
298,086
Selling, general and administrative
expenses
42,254
45,944
45,881
88,135
91,980
Bad debt expense
898
645
539
1,437
915
Depreciation and amortization
3,929
3,557
3,296
7,225
6,541
Acquisition and integration-related
costs
—
299
77
77
811
Restructuring costs
2,330
137
564
2,894
1,277
Legal settlement charges
—
1,600
—
—
1,600
Impairment charges
15,011
14,502
—
15,011
14,502
Total operating expenses
230,467
217,853
210,818
441,285
415,712
Loss from operations
(13,688
)
(15,096
)
(754
)
(14,442
)
(17,784
)
Other expenses (income):
Interest expense
744
1,438
867
1,611
2,860
Loss on early extinguishment of debt
—
54
—
—
414
Other income, net
(5
)
(76
)
(31
)
(36
)
(158
)
Loss before income taxes
(14,427
)
(16,512
)
(1,590
)
(16,017
)
(20,900
)
Income tax (benefit) expense
(379
)
34,758
178
(201
)
31,746
Consolidated net loss
(14,048
)
(51,270
)
(1,768
)
(15,816
)
(52,646
)
Less: Net income attributable to
noncontrolling interest in subsidiary
103
404
321
424
795
Net loss attributable to common
shareholders
$
(14,151
)
$
(51,674
)
$
(2,089
)
$
(16,240
)
$
(53,441
)
Net loss per share attributable to common
shareholders - Basic and Diluted
$
(0.39
)
$
(1.44
)
$
(0.06
)
$
(0.45
)
$
(1.49
)
Weighted average common shares
outstanding:
Basic and Diluted
36,123
35,824
35,873
35,998
35,763
Cross Country Healthcare,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(Unaudited, amounts in
thousands, except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2020
2019
Adjusted EBITDA: (a)
Net loss attributable to common
shareholders
$
(14,151
)
$
(51,674
)
$
(2,089
)
$
(16,240
)
$
(53,441
)
Interest expense
744
1,438
867
1,611
2,860
Income tax (benefit) expense
(379
)
34,758
178
(201
)
31,746
Depreciation and amortization
3,929
3,557
3,296
7,225
6,541
Acquisition and integration-related costs
(b)
—
299
77
77
811
Restructuring costs (c)
2,330
137
564
2,894
1,277
Legal settlements and fees (d)
1,561
1,600
—
1,561
1,600
Impairment charges (e)
15,011
14,502
—
15,011
14,502
Loss on early extinguishment of debt
(f)
—
54
—
—
414
Other income, net
(5
)
(76
)
(31
)
(36
)
(158
)
Equity compensation
2,072
1,004
927
2,999
1,535
Applicant tracking system costs (g)
397
315
502
899
1,449
Net income attributable to noncontrolling
interest in subsidiary
103
404
321
424
795
Adjusted EBITDA (a)
$
11,612
$
6,318
$
4,612
$
16,224
$
9,931
Adjusted EPS: (h)
Numerator:
Net loss attributable to common
shareholders
$
(14,151
)
$
(51,674
)
$
(2,089
)
$
(16,240
)
$
(53,441
)
Non-GAAP adjustments - pretax:
Acquisition and integration-related costs
(b)
—
299
77
77
811
Restructuring costs (c)
2,330
137
564
2,894
1,277
Legal settlements and fees (d)
1,561
1,600
—
1,561
1,600
Impairment charges (excluding rebranding
impacts) (e)
15,011
—
—
15,011
—
Rebranding impairments and accelerated
amortization (e)
1,406
15,106
731
2,137
15,106
Loss on early extinguishment of debt
(f)
—
54
—
—
414
Applicant tracking system costs (g)
397
315
502
899
1,449
Nonrecurring income tax adjustments
313
35,675
—
313
35,675
Tax impact of non-GAAP adjustments
(958
)
(1,151
)
(12
)
(970
)
(1,985
)
Adjusted net income (loss) attributable to
common shareholders - non-GAAP
$
5,909
$
361
$
(227
)
$
5,682
$
906
Denominator:
Weighted average common shares - basic,
GAAP
36,123
35,824
35,873
35,998
35,763
Dilutive impact of share-based payments
(i)
76
117
455
265
107
Adjusted weighted average common shares -
diluted, non-GAAP
36,199
35,941
36,328
36,263
35,870
Reconciliation:
Diluted EPS, GAAP
$
(0.39
)
$
(1.44
)
$
(0.06
)
$
(0.45
)
$
(1.49
)
Non-GAAP adjustments - pretax:
Acquisition and integration-related costs
(b)
—
0.01
—
—
0.03
Restructuring costs (c)
0.06
—
0.02
0.08
0.03
Legal settlements and fees (d)
0.04
0.05
—
0.04
0.05
Impairment charges (excluding rebranding
impacts) (e)
0.42
—
—
0.42
—
Rebranding impairments and accelerated
amortization (e)
0.04
0.42
0.02
0.06
0.42
Loss on early extinguishment of debt
(f)
—
—
—
—
0.01
Applicant tracking system costs (g)
0.01
0.01
0.01
0.02
0.04
Nonrecurring income tax adjustments
0.01
0.99
—
0.01
0.99
Tax impact of non-GAAP adjustments
(0.03
)
(0.03
)
—
(0.03
)
(0.05
)
Adjusted EPS, non-GAAP (h)
$
0.16
$
0.01
$
(0.01
)
$
0.15
$
0.03
Cross Country Healthcare,
Inc.
Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
June 30,
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
6,234
$
1,032
Accounts receivable, net
156,104
169,528
Prepaid expenses
5,275
6,097
Insurance recovery receivable
4,954
5,011
Other current assets
1,985
1,689
Total current assets
174,552
183,357
Property and equipment, net
11,960
11,832
Operating lease right-of-use assets
11,553
16,964
Goodwill
90,924
101,066
Trade names, indefinite-lived
5,900
5,900
Other intangible assets, net
39,001
44,957
Other non-current assets
18,311
18,298
Total assets
$
352,201
$
382,374
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$
54,183
$
45,726
Accrued employee compensation and
benefits
36,274
31,307
Operating lease liabilities - current
4,883
4,878
Other current liabilities
3,441
3,554
Total current liabilities
98,781
85,465
Revolving credit facility
49,101
70,974
Operating lease liabilities -
non-current
16,757
19,070
Non-current deferred tax liabilities
6,860
7,523
Long-term accrued claims
25,042
26,938
Contingent consideration
—
4,867
Other long-term liabilities
6,586
4,037
Total liabilities
203,127
218,874
Commitments and contingencies
Stockholders' equity:
Common stock
4
4
Additional paid-in capital
307,985
305,643
Accumulated other comprehensive loss
(1,327
)
(1,240
)
Accumulated deficit
(158,015
)
(141,775
)
Total Cross Country Healthcare, Inc.
stockholders' equity
148,647
162,632
Noncontrolling interest in subsidiary
427
868
Total stockholders' equity
149,074
163,500
Total liabilities and stockholders'
equity
$
352,201
$
382,374
Cross Country Healthcare,
Inc.
Segment Data (j)
(Unaudited, amounts in
thousands)
Three Months Ended
Year-over-Year
Sequential
June 30,
% of
June 30,
% of
March 31,
% of
% change
% change
2020
Total
2019
Total
2020
Total
Fav (Unfav)
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
198,098
91
%
$
180,787
89
%
$
188,233
89
%
10
%
5
%
Physician Staffing
16,872
8
%
18,028
9
%
18,181
9
%
(6
)%
(7
)%
Search
1,809
1
%
3,942
2
%
3,650
2
%
(54
)%
(50
)%
$
216,779
100
%
$
202,757
100
%
$
210,064
100
%
7
%
3
%
Contribution income (loss): (k)
Nurse and Allied Staffing
$
20,638
$
16,111
$
14,157
28
%
46
%
Physician Staffing
1,219
508
631
140
%
93
%
Search
(1,051
)
(181
)
(335
)
(481
)%
(214
)%
20,806
16,438
14,453
27
%
44
%
Corporate overhead (l)
13,224
11,439
11,270
(16
)%
(17
)%
Depreciation and amortization
3,929
3,557
3,296
(10
)%
(19
)%
Acquisition and integration-related costs
(b)
—
299
77
100
%
100
%
Restructuring costs (c)
2,330
137
564
NM
(313
)%
Legal settlement charges (d)
—
1,600
—
100
%
—
%
Impairment charges (e)
15,011
14,502
—
(4
)%
(100
)%
Loss from operations
$
(13,688
)
$
(15,096
)
$
(754
)
9
%
NM
Six Months Ended
Year-over-Year
June 30,
% of
June 30,
% of
% change
2020
Total
2019
Total
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
386,331
91
%
$
356,424
89
%
8
%
Physician Staffing
35,053
8
%
34,187
9
%
3
%
Search
5,459
1
%
7,317
2
%
(25
)%
$
426,843
100
%
$
397,928
100
%
7
%
Contribution income (loss): (k)
Nurse and Allied Staffing
$
34,795
$
30,407
14
%
Physician Staffing
1,850
913
103
%
Search
(1,386
)
(604
)
(129
)%
35,259
30,716
15
%
Corporate overhead (l)
24,494
23,769
(3
)%
Depreciation and amortization
7,225
6,541
(10
)%
Acquisition and integration-related costs
(b)
77
811
91
%
Restructuring costs (c)
2,894
1,277
(127
)%
Legal settlement charges (d)
—
1,600
100
%
Impairment charges (e)
15,011
14,502
(4
)%
Loss from operations
$
(14,442
)
$
(17,784
)
19
%
NM-Not meaningful.
Cross Country Healthcare,
Inc.
Summary Condensed Consolidated
Statements of Cash Flows
(Unaudited, amounts in
thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2020
2019
Net cash provided by operating
activities
$
16,569
$
12,355
$
17,162
$
33,731
$
25,142
Cash used in investing activities
(1,528
)
(429
)
(962
)
(2,490
)
(1,674
)
Net cash used in financing activities
(21,402
)
(5,383
)
(4,599
)
(26,001
)
(14,678
)
Effect of exchange rate changes on
cash
(4
)
1
(34
)
(38
)
21
Change in cash and cash equivalents
(6,365
)
6,544
11,567
5,202
8,811
Cash and cash equivalents at beginning of
period
12,599
18,286
1,032
1,032
16,019
Cash and cash equivalents at end of
period
$
6,234
$
24,830
$
12,599
$
6,234
$
24,830
Cross Country Healthcare,
Inc.
Other Financial Data
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2020
2019
Consolidated gross profit margin (m)
23.4
%
25.4
%
23.6
%
23.5
%
25.1
%
Nurse and Allied
Staffing statistical data:
FTEs (n)
5,801
7,016
7,145
6,473
7,016
Average Nurse and Allied Staffing revenue
per FTE per day (o)
$
375
$
283
$
290
$
328
$
281
Physician Staffing
statistical data:
Days filled (p)
9,195
10,754
10,199
19,394
21,034
Revenue per day filled (q)
$
1,835
$
1,676
$
1,783
$
1,807
$
1,625
(a)
Adjusted EBITDA, a non-GAAP (Generally
Accepted Accounting Principles) financial measure, is defined as
net (loss) income attributable to common shareholders before
interest expense, income tax expense (benefit), depreciation and
amortization, acquisition and integration-related costs,
restructuring costs, legal settlements and fees, impairment
charges, gain or loss on derivative, loss on early extinguishment
of debt, gain or loss on sale of business, other expense (income),
net, equity compensation, applicant tracking system costs, 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.
(b)
Acquisition and integration-related costs
include costs for prior acquisitions, costs incurred for potential
transactions, and accretion and valuation adjustments related to
the contingent consideration liability for the Mediscan
acquisition.
(c)
Restructuring costs are primarily
comprised of employee termination costs, lease-related exit costs,
and reorganization costs as part of planned cost savings
initiatives.
(d)
Legal settlements and fees include legal
settlement charges as presented on the consolidated statements of
operations as well as legal fees pertaining to non-operational
legal matters which are included in selling, general and
administrative expenses. For the three months ended June 30, 2019,
we incurred legal settlement charges pertaining to the resolution
of a medical malpractice lawsuit in excess of carrier limits as
well as a California wage and hour class action settlement. For the
six months ended June 30, 2020, we incurred $1.6 million in legal
fees related to an ongoing legal matter outside the normal course
of operations, the majority of which were incurred during the
second quarter.
(e)
The three and six months ended June 30,
2020 included non-cash impairment charges of $15.0 million, which
was comprised of $10.5 million related to goodwill and other
intangible assets for the Search business and $4.5 million related
to right-of-use assets and related property and equipment in
connection with leases that were vacated during the quarter.
Impairment charges in 2019 related to trade name impairment of
$14.5 million related to Nurse and Allied Staffing resulting from
the Company's rebranding initiative. Rebranding impairments and
accelerated amortization related to finite-lived trade names in
connection with the rebranding initiatives.
(f)
Loss on early extinguishment of debt
relates to the write-off of debt issuance costs as a result of an
optional reduction in borrowing capacity in the revolving credit
facility exercised in the first quarter of 2019, and optional
prepayments on the Company's term loan of $7.5 million and $5.0
million made in the first and second quarters of 2019,
respectively.
(g)
Applicant tracking system costs are
related to the Company's project to replace its legacy system
supporting its travel nurse staffing business. These costs are
reported in selling, general and administrative expenses on the
consolidated statement of operations and included in corporate
overhead in segment data.
(h)
Adjusted EPS, a non-GAAP financial
measure, is defined as net (loss) income attributable to common
shareholders per diluted share before the diluted EPS impact of
acquisition and integration-related costs, restructuring costs,
legal settlements and fees, impairment charges, rebranding
impairments and accelerated amortization, gain or loss on
derivative, loss on early extinguishment of debt, gain or loss on
sale of business, applicant tracking system costs, 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 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.
(i)
Due to the net loss for the three months
ended June 30, 2020, June 30, 2019, and March 31, 2020, and for the
six months ended June 30, 2020 and 2019, 76, 117, 455, 265, and 107
shares (in thousands) were excluded from diluted weighted average
shares.
(j)
Segment data provided is in accordance
with the Segment Reporting Topic of the FASB ASC.
(k)
Contribution income is defined as income
or loss from operations before depreciation and amortization,
acquisition and integration-related costs, restructuring costs,
legal settlement charges, impairment charges, and corporate
overhead. Contribution income is a financial measure used by
management when assessing segment performance.
(l)
Corporate overhead includes unallocated
executive leadership and other centralized corporate functional
support costs such as finance, IT, legal, human resources, and
marketing, as well as public company expenses and corporate-wide
projects (initiatives).
(m)
Gross profit is defined as revenue from
services less direct operating expenses. The Company's gross profit
excludes allocated depreciation and amortization expense. Gross
profit margin is calculated by dividing gross profit by revenue
from services.
(n)
FTEs represent the average number of Nurse
and Allied Staffing contract personnel on a full-time equivalent
basis.
(o)
Average revenue per FTE per day is
calculated by dividing the Nurse and Allied Staffing revenue per
FTE by the number of days worked in the respective periods. Nurse
and Allied Staffing revenue also includes revenue from the
permanent placement of nurses.
(p)
Days filled is calculated by dividing the
total hours invoiced during the period, including an estimate for
the impact of accrued revenue, by 8 hours.
(q)
Revenue per day filled is calculated by
dividing revenue as reported by days filled for the period
presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005970/en/
Cross Country Healthcare, Inc. William J. Burns, 561-237-2555
Executive Vice President and Chief Financial Officer
wburns@crosscountry.com
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