Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN)
today announced financial results for its third quarter ended
September 30, 2020.
SELECTED FINANCIAL INFORMATION:
Variance
Variance
Q3 2020 vs
Q3 2020 vs
Dollars are in thousands, except per share
amounts
Q3 2020
Q3 2019
Q2 2020
Revenue
$
193,968
(7)
%
(11)
%
Gross profit margin*
24.7
%
30
bps
130
bps
Net loss attributable to common
shareholders
$
(1,334)
57
%
91
%
Diluted EPS
$
(0.04)
$
0.05
$
0.35
Adjusted EBITDA*
$
8,598
19
%
(26)
%
Adjusted EPS*
$
0.12
$
0.07
$
(0.04)
Cash flows used in operations
$
(8,456)
41
%
(151)
%
* Refer to accompanying tables and
discussion of Non-GAAP financial measures below.
“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.
Physician Staffing
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.
Search
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.
Q4 2020 Range
Year-over-Year
Sequential
Change
Change
Revenue
$185 million - $195 million
(14)% - (9)%
(5)% - 1%
Gross Profit Margin
24.5% - 25.0%
(20) bps - 30 bps
(20) bps - 30 bps
Adjusted EBITDA
$6.5 million - $8.5 million
(22)% - 3%
(24)% - (1)%
Adjusted EPS
$0.06 - $0.11
$(0.01) - $0.04
$(0.06) - $(0.01)
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.
Cross Country Healthcare,
Inc.
Consolidated Statements of
Operations
(Unaudited, amounts in
thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2020
2019
Revenue from services
$
193,968
$
209,200
$
216,779
$
620,811
$
607,128
Operating expenses:
Direct operating expenses
145,965
158,194
166,045
472,471
456,280
Selling, general and administrative
expenses
40,804
44,407
42,254
128,939
136,387
Bad debt expense
946
588
898
2,383
1,503
Depreciation and amortization
3,247
2,907
3,929
10,472
9,448
Acquisition and integration-related
costs
—
(426)
—
77
385
Restructuring costs
2,316
1,607
2,330
5,210
2,884
Legal settlement charges
—
—
—
—
1,600
Impairment charges
1,071
1,804
15,011
16,082
16,306
Total operating expenses
194,349
209,081
230,467
635,634
624,793
(Loss) income from operations
(381)
119
(13,688)
(14,823)
(17,665)
Other expenses (income):
Interest expense
608
1,398
744
2,219
4,258
Loss on derivative
—
1,284
—
—
1,284
Loss on early extinguishment of debt
—
94
—
—
508
Other income, net
(10)
(54)
(5)
(46)
(212)
Loss before income taxes
(979)
(2,603)
(14,427)
(16,996)
(23,503)
Income tax expense (benefit)
169
94
(379)
(32)
31,840
Consolidated net loss
(1,148)
(2,697)
(14,048)
(16,964)
(55,343)
Less: Net income attributable to
noncontrolling interest in subsidiary
186
431
103
610
1,226
Net loss attributable to common
shareholders
$
(1,334)
$
(3,128)
$
(14,151)
$
(17,574)
$
(56,569)
Net loss per share attributable to common
shareholders - Basic and Diluted
$
(0.04)
$
(0.09)
$
(0.39)
$
(0.49)
$
(1.58)
Weighted average common shares
outstanding:
Basic and Diluted
36,176
35,865
36,123
36,058
35,797
Cross Country Healthcare,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(Unaudited, amounts in
thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2020
2019
Adjusted EBITDA: (a)
Net loss attributable to common
shareholders
$
(1,334)
$
(3,128)
$
(14,151)
$
(17,574)
$
(56,569)
Interest expense
608
1,398
744
2,219
4,258
Income tax (benefit) expense
169
94
(379)
(32)
31,840
Depreciation and amortization
3,247
2,907
3,929
10,472
9,448
Acquisition and integration-related costs
(b)
—
(426)
—
77
385
Restructuring costs (c)
2,316
1,607
2,330
5,210
2,884
Legal settlements and fees (d)
837
—
1,561
2,398
1,600
Impairment charges (e)
1,071
1,804
15,011
16,082
16,306
Loss on derivative (f)
—
1,284
—
—
1,284
Loss on early extinguishment of debt
(g)
—
94
—
—
508
Other income, net
(10)
(54)
(5)
(46)
(212)
Equity compensation
1,064
982
2,072
4,063
2,517
Applicant tracking system costs (h)
444
258
397
1,343
1,707
Net income attributable to noncontrolling
interest in subsidiary
186
431
103
610
1,226
Adjusted EBITDA (a)
$
8,598
$
7,251
$
11,612
$
24,822
$
17,182
Adjusted EPS: (i)
Numerator:
Net loss attributable to common
shareholders
$
(1,334)
$
(3,128)
$
(14,151)
$
(17,574)
$
(56,569)
Non-GAAP adjustments - pretax:
Acquisition and integration-related costs
(b)
—
(426)
—
77
385
Restructuring costs (c)
2,316
1,607
2,330
5,210
2,884
Legal settlements and fees (d)
837
—
1,561
2,398
1,600
Impairment charges (excluding rebranding
impacts) (e)
1,071
1,804
15,011
16,082
1,804
Rebranding impairments and accelerated
amortization (e)
938
295
1,406
3,075
15,401
Loss on derivative (f)
—
1,284
—
—
1,284
Loss on early extinguishment of debt
(g)
—
94
—
—
508
Applicant tracking system costs (h)
444
258
397
1,343
1,707
Nonrecurring income tax adjustments
—
—
313
313
35,675
Tax impact of non-GAAP adjustments
(20)
(59)
(958)
(990)
(2,044)
Adjusted net income (loss) attributable to
common shareholders - non-GAAP
$
4,252
$
1,729
$
5,909
$
9,934
$
2,635
Denominator:
Weighted average common shares - basic,
GAAP
36,176
35,865
36,123
36,058
35,797
Dilutive impact of share-based payments
(j)
228
318
76
253
177
Adjusted weighted average common shares -
diluted, non-GAAP
36,404
36,183
36,199
36,311
35,974
Reconciliation:
Diluted EPS, GAAP
$
(0.04)
$
(0.09)
$
(0.39)
$
(0.49)
$
(1.58)
Non-GAAP adjustments - pretax:
Acquisition and integration-related costs
(b)
—
(0.02)
—
—
0.01
Restructuring costs (c)
0.06
0.05
0.06
0.14
0.08
Legal settlements and fees (d)
0.03
—
0.04
0.07
0.05
Impairment charges (excluding rebranding
impacts) (e)
0.03
0.05
0.42
0.45
0.05
Rebranding impairments and accelerated
amortization (e)
0.03
0.01
0.04
0.09
0.43
Loss on derivative (f)
—
0.04
—
—
0.04
Loss on early extinguishment of debt
(g)
—
—
—
—
0.01
Applicant tracking system costs (h)
0.01
0.01
0.01
0.03
0.05
Nonrecurring income tax adjustments
—
—
0.01
0.01
0.99
Tax impact of non-GAAP adjustments
—
—
(0.03)
(0.03)
(0.05)
Adjusted EPS, non-GAAP (i)
$
0.12
$
0.05
$
0.16
$
0.27
$
0.08
Cross Country Healthcare,
Inc.
Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
September 30,
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
3,446
$
1,032
Accounts receivable, net
168,769
169,528
Prepaid expenses
3,348
6,097
Insurance recovery receivable
4,883
5,011
Other current assets
1,995
1,689
Total current assets
182,441
183,357
Property and equipment, net
12,363
11,832
Operating lease right-of-use assets
10,526
16,964
Goodwill
90,924
101,066
Trade names, indefinite-lived
5,900
5,900
Other intangible assets, net
36,322
44,957
Other non-current assets
19,362
18,298
Total assets
$
357,838
$
382,374
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$
48,619
$
45,726
Accrued employee compensation and
benefits
39,961
31,307
Operating lease liabilities - current
4,732
4,878
Other current liabilities
3,354
3,554
Total current liabilities
96,666
85,465
Revolving credit facility
56,038
70,974
Operating lease liabilities -
non-current
15,762
19,070
Non-current deferred tax liabilities
6,874
7,523
Long-term accrued claims
25,677
26,938
Contingent consideration
—
4,867
Other long-term liabilities
7,901
4,037
Total liabilities
208,918
218,874
Commitments and contingencies
Stockholders' equity:
Common stock
4
4
Additional paid-in capital
309,049
305,643
Accumulated other comprehensive loss
(1,294)
(1,240)
Accumulated deficit
(159,349)
(141,775)
Total Cross Country Healthcare, Inc.
stockholders' equity
148,410
162,632
Noncontrolling interest in subsidiary
510
868
Total stockholders' equity
148,920
163,500
Total liabilities and stockholders'
equity
$
357,838
$
382,374
Cross Country Healthcare,
Inc.
Segment Data (k)
(Unaudited, amounts in
thousands)
Three Months Ended
Year-over-Year
Sequential
September 30,
% of
September 30,
% of
June 30,
% of
% change
% change
2020
Total
2019
Total
2020
Total
Fav (Unfav)
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
175,244
90
%
$
184,974
88
%
$
198,098
91
%
(5)
%
(12)
%
Physician Staffing
16,452
9
%
20,407
10
%
16,872
8
%
(19)
%
(2)
%
Search
2,272
1
%
3,819
2
%
1,809
1
%
(41)
%
26
%
$
193,968
100
%
$
209,200
100
%
$
216,779
100
%
(7)
%
(11)
%
Contribution income (loss): (l)
Nurse and Allied Staffing
$
18,233
$
16,097
$
20,638
13
%
(12)
%
Physician Staffing
827
811
1,219
2
%
(32)
%
Search
(308)
78
(1,051)
(495)
%
71
%
18,752
16,986
20,806
10
%
(10)
%
Corporate overhead (m)
12,499
10,975
13,224
(14)
%
5
%
Depreciation and amortization
3,247
2,907
3,929
(12)
%
17
%
Acquisition and integration-related costs
(b)
—
(426)
—
(100)
%
—
%
Restructuring costs (c)
2,316
1,607
2,330
(44)
%
1
%
Impairment charges (e)
1,071
1,804
15,011
41
%
93
%
(Loss) income from operations
$
(381)
$
119
$
(13,688)
(420)
%
97
%
Nine Months Ended
Year-over-Year
September 30,
% of
September 30,
% of
% change
2020
Total
2019
Total
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
561,575
91
%
$
541,398
89
%
4
%
Physician Staffing
51,505
8
%
54,594
9
%
(6)
%
Search
7,731
1
%
11,136
2
%
(31)
%
$
620,811
100
%
$
607,128
100
%
2
%
Contribution income (loss): (l)
Nurse and Allied Staffing
$
53,028
$
46,504
14
%
Physician Staffing
2,677
1,724
55
%
Search
(1,694)
(526)
(222)
%
54,011
47,702
13
%
Corporate overhead (m)
36,993
34,744
(6)
%
Depreciation and amortization
10,472
9,448
(11)
%
Acquisition and integration-related costs
(b)
77
385
80
%
Restructuring costs (c)
5,210
2,884
(81)
%
Legal settlement charges (d)
—
1,600
100
%
Impairment charges (e)
16,082
16,306
1
%
Loss from operations
$
(14,823)
$
(17,665)
16
%
Cross Country Healthcare,
Inc.
Summary Condensed Consolidated
Statements of Cash Flows
(Unaudited, amounts in
thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2020
2019
Net cash (used in) provided by operating
activities
$
(8,456)
$
(14,249)
$
16,569
$
25,275
$
10,893
Net cash used in investing activities
(1,169)
(368)
(1,528)
(3,659)
(2,042)
Net cash provided by (used in) financing
activities
6,818
(735)
(21,402)
(19,183)
(15,413)
Effect of exchange rate changes on
cash
19
(20)
(4)
(19)
1
Change in cash and cash equivalents
(2,788)
(15,372)
(6,365)
2,414
(6,561)
Cash and cash equivalents at beginning of
period
6,234
24,830
12,599
1,032
16,019
Cash and cash equivalents at end of
period
$
3,446
$
9,458
$
6,234
$
3,446
$
9,458
Cross Country Healthcare,
Inc.
Other Financial Data
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2020
2019
Consolidated gross profit margin (n)
24.7
%
24.4
%
23.4
%
23.9
%
24.8
%
Nurse and Allied
Staffing statistical data:
FTEs (o)
5,403
7,083
5,801
6,116
7,039
Average Nurse and Allied Staffing revenue
per FTE per day (p)
$
353
$
284
$
375
$
335
$
282
Physician Staffing
statistical data:
Days filled (q)
9,682
11,675
9,195
29,077
32,709
Revenue per day filled (r)
$
1,699
$
1,748
$
1,835
$
1,771
$
1,669
(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 nine months ended September 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 nine months ended September 30, 2020, we
incurred $2.4 million in legal fees related to an ongoing legal
matter outside the normal course of operations, incurred during the
second and third quarters.
(e)
Impairment charges in 2020 of $16.1
million were comprised of $10.7 million primarily related to
goodwill and other intangible assets 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 second and third quarters. 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
and $1.8 million related to the Company's decision to cease use of
certain of its leased properties in conjunction with its
restructuring plan. Rebranding impairments and accelerated
amortization related to finite-lived trade names in connection with
the rebranding initiatives.
(f)
Loss on derivative represents the amount
paid to terminate an interest rate hedge related to our term loan
that was refinanced in October 2019.
(g)
Loss on early extinguishment of debt for
the three and nine months ended September 30, 2019 represents
write-offs of debt issuance costs related to a reduction in
borrowing capacity on our revolving credit facility. The nine
months ended September 30, 2019 also includes write-offs of debt
issuance costs due to optional prepayments in the first and second
quarters as well as an optional reduction in borrowing capacity
taken in the first quarter.
(h)
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.
(i)
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.
(j)
Due to the net loss for the three months
ended September 30, 2020, September 30, 2019, and June 30, 2020,
and for the nine months ended September 30, 2020 and 2019, 228,
318, 76, 253, and 177 shares (in thousands) were excluded from
diluted weighted average shares.
(k)
Segment data provided is in accordance
with the Segment Reporting Topic of the FASB ASC.
(l)
Contribution income is defined as income
(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.
(m)
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).
(n)
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.
(o)
FTEs represent the average number of Nurse
and Allied Staffing contract personnel on a full-time equivalent
basis.
(p)
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.
(q)
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.
(r)
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/20201104005580/en/
Cross Country Healthcare, Inc. William J. Burns, 561-237-2555
Executive Vice President & Chief Financial Officer
wburns@crosscountry.com
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