Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN)
today announced financial results for its fourth quarter and full
year ended December 31, 2020.
SELECTED FINANCIAL INFORMATION:
Dollars are in thousands, except per share
amounts
Q4 2020
Variance Q4 2020 vs Q4 2019
Variance Q4 2020 vs Q3 2020
Full Year 2020
Variance 2020 vs 2019
Revenue
$
215,606
—
%
11
%
$
836,417
2
%
Gross profit margin*
25.2
%
50
bps
50
bps
24.2
%
(60
)
bps
Net income (loss) attributable to common
shareholders
$
4,612
503
%
446
%
$
(12,962
)
78
%
Diluted EPS
$
0.13
$
0.16
$
0.17
$
(0.36
)
$
1.25
Adjusted EBITDA*
$
11,500
39
%
34
%
$
36,322
43
%
Adjusted EPS*
$
0.19
$
0.12
$
0.07
$
0.46
$
0.31
Cash flows from operations
$
1,929
136
%
123
%
$
27,204
391
%
* Refer to accompanying tables and
discussion of Non-GAAP financial measures below.
"Our performance in the fourth quarter once again demonstrates
our ability to deliver the critical staff and support needed by our
clients. We continue to see significantly higher demand from COVID,
driving increases in both the number of clinicians on assignments
as well as higher bill rates for the first quarter of 2021," said
Kevin Clark, Co-founder and CEO for Cross Country Healthcare.
Fourth quarter consolidated revenue was $215.6 million,
representing an increase of 11% sequentially and flat with the
prior year. Consolidated gross margin was 25.2%, up 50 basis points
year-over-year and sequentially. Net income attributable to common
shareholders was $4.6 million compared to losses of $1.1 million in
the prior year and $1.3 million in the prior quarter. Diluted EPS
was $0.13 per share compared to losses of $0.03 per share in the
prior year and $0.04 per share in the prior quarter. Adjusted
EBITDA was $11.5 million or 5.3% of revenue, as compared with $8.3
million or 3.9% of revenue in the prior year, and $8.6 million or
4.4% of revenue in the prior quarter. Adjusted EPS was $0.19
compared with $0.07 in the prior year and $0.12 in the prior
quarter.
For the year ended December 31, 2020, consolidated revenue was
$836.4 million, an increase of 2% over the prior year. Consolidated
gross margin was 24.2%, down 60 basis points year-over-year. Net
loss attributable to common shareholders was $13.0 million, or a
net loss of $0.36 per diluted share, compared to a net loss of
$57.7 million, or a loss of $1.61 per diluted share in the prior
year. Adjusted EBITDA was $36.3 million or 4.3% of revenue, as
compared with $25.5 million or 3.1% of revenue in the prior year.
Adjusted EPS was $0.46 compared to $0.15 in the prior year.
Full year 2020 results included non-cash impairment charges of
$16.2 million, which was comprised of $10.7 million, primarily
related to goodwill and customer relationships for the Search
business, and $5.5 million related to right-of-use assets and
related property and equipment in connection with leases that were
vacated during the year. Results for the year ended December 31,
2020 also included $6.1 million in restructuring costs primarily
comprised of employee termination costs and lease-related exit
costs.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue was $196.4 million, representing a 3% increase
year-over-year and 12% sequentially. Contribution income was $22.3
million, compared to $17.8 million in the prior year and $18.2
million in the prior quarter. Average field contract personnel on a
full-time equivalent (FTE) basis were 5,798 as compared with 7,339
in the prior year and 5,403 in the prior quarter. Revenue per FTE
per day was $368 compared to $284 in the prior year and $353 in the
prior quarter.
Physician Staffing
Revenue was $16.4 million, a decrease of 18% year-over-year and
consistent with the prior quarter. Contribution income was $0.9
million, a decrease compared to $1.0 million in the prior year and
an increase compared to $0.8 million in the prior quarter. Total
days filled were 9,911 as compared with 11,672 in the prior year
and 9,682 in the prior quarter. Revenue per day filled was $1,658
as compared with $1,714 in the prior year and $1,699 in the prior
quarter.
Search
Revenue was $2.8 million, a decrease of 24% year-over-year and
an increase of 23% sequentially. Contribution income was $0.6
million, compared to losses of $0.3 million in both the prior year
and the prior quarter.
Cash Flow and Balance Sheet Highlights
Cash flow provided by operations for the quarter was $1.9
million compared to cash flow used in operations of $5.4 million in
the prior year and $8.5 million in the prior quarter, with the
principal driver being a six day sequential improvement in days'
sales outstanding. Cash flow provided by operating activities for
the full year was $27.2 million compared to $5.5 million in the
prior year.
At December 31, 2020, the Company had $1.6 million in cash and
cash equivalents, $53.4 million of borrowings drawn under its
asset-based loan facility (ABL), and $18.5 million of letters of
credit outstanding. Availability under the ABL is subject to a
borrowing base, which was $125.5 million as of December 31, 2020,
with $53.6 million available for borrowing as of December 31,
2020.
Outlook for First Quarter 2021
The guidance below applies only to management’s expectations for
the first quarter of 2021.
Q1 2021 Range
Year-over-Year Change
Sequential Change
Revenue
$280 million - $295 million
33% - 40%
30% - 37%
Gross Profit Margin*
21.2% - 21.7%
(240) bps - (190) bps
(400) bps - (350) bps
Adjusted EBITDA*
$16.0 million - $18.0 million
247% - 290%
39% - 57%
Adjusted EPS*
$0.32 - $0.37
$0.33 - $0.38
$0.13 - $0.18
* Refer to discussion of Non-GAAP
financial measures below.
There remains a high degree of uncertainty regarding the
continued impact from COVID-19 on our business. In particular, the
outlook above assumes sequential increases in bill rates and the
number of clinicians on COVID assignments, and the continued
closures of schools in key markets. As a result of the stronger
projected performance for both revenue and Adjusted EBITDA, as well
as continued uncertainty from the pandemic, the Company continues
the use of wider guidance ranges for the first quarter of 2021.
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 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, February 24, 2021, at 5:00 P.M. Eastern Time to discuss
its fourth quarter and full year 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 February 24th through March 11th at the Company's
website and a replay of the conference call will be available by
telephone by calling 800-510-0118 from anywhere in the U.S. or
203-369-3808 from non-U.S. locations - Passcode: 2021.
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 consultative services
for healthcare customers. Leveraging our 35 years of industry
expertise and insight, CCH solves complex labor-related challenges
for customers while providing high-quality outcomes and exceptional
patient care. As a multi-year Best of Staffing® Award winner, CCH
is committed to an exceptionally high level of service to both our
clients and our healthcare professionals. CCH was the first
publicly traded staffing firm to obtain The Joint Commission
Certification, which it still holds with a Letter of Distinction.
In February 2021, CCH earned Energage's inaugural 2021 Top
Workplaces USA award. CCH has a longstanding history of investing
in its diversity, equality, and inclusion strategic initiatives as
a key component of the organization’s overall corporate social
responsibility program which is closely aligned with its core
values to create a better future for its people, communities, the
planet, and its shareholders.
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 as gross profit margin,
adjusted EBITDA, and adjusted EPS. 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 in our other filings with the SEC. 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
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Revenue from services
$
215,606
$
215,096
$
193,968
$
836,417
$
822,224
Operating expenses:
Direct operating expenses
161,214
161,935
145,965
633,685
618,215
Selling, general and administrative
expenses
44,870
45,572
40,804
173,809
181,959
Bad debt expense
652
505
946
3,035
2,008
Depreciation and amortization
2,199
4,627
3,247
12,671
14,075
Acquisition and integration-related
costs
—
(184
)
—
77
201
Restructuring costs
842
687
2,316
6,052
3,571
Legal settlement charges
—
—
—
—
1,600
Impairment charges
166
—
1,071
16,248
16,306
Total operating expenses
209,943
213,142
194,349
845,577
837,935
Income (loss) from operations
5,663
1,954
(381
)
(9,160
)
(15,711
)
Other expenses (income):
Interest expense
671
1,048
608
2,890
5,306
Loss on derivative
—
—
—
—
1,284
Loss on early extinguishment of debt
—
1,470
—
—
1,978
Other expense (income), net
326
144
(10
)
280
(68
)
Income (loss) before income taxes
4,666
(708
)
(979
)
(12,330
)
(24,211
)
Income tax (benefit) expense
(156
)
(108
)
169
(188
)
31,732
Consolidated net income (loss)
4,822
(600
)
(1,148
)
(12,142
)
(55,943
)
Less: Net income attributable to
noncontrolling interest in subsidiary
210
544
186
820
1,770
Net income (loss) attributable to common
shareholders
$
4,612
$
(1,144
)
$
(1,334
)
$
(12,962
)
$
(57,713
)
Net income (loss) per share attributable
to common shareholders - Basic and Diluted
$
0.13
$
(0.03
)
$
(0.04
)
$
(0.36
)
$
(1.61
)
Weighted average common shares
outstanding:
Basic
36,177
35,869
36,176
36,088
35,815
Diluted
36,778
35,869
36,176
36,088
35,815
Cross Country Healthcare,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(Unaudited, amounts in
thousands)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Adjusted EBITDA:a
Net income (loss) attributable to common
shareholders
$
4,612
$
(1,144
)
$
(1,334
)
$
(12,962
)
$
(57,713
)
Interest expense
671
1,048
608
2,890
5,306
Income tax (benefit) expenseb
(156
)
(108
)
169
(188
)
31,732
Depreciation and amortization
2,199
4,627
3,247
12,671
14,075
Acquisition and integration-related
costsc
—
(184
)
—
77
201
Restructuring costsd
842
687
2,316
6,052
3,571
Legal settlements and feese
600
—
837
2,998
1,600
Impairment chargesf
166
—
1,071
16,248
16,306
Loss on derivativeg
—
—
—
—
1,284
Loss on early extinguishment of debth
—
1,470
—
—
1,978
Loss on disposal of fixed assets
364
—
—
364
—
Other expense (income), net
(38
)
144
(10
)
(84
)
(68
)
Equity compensation
1,340
879
1,064
5,403
3,396
Applicant tracking system costsi
690
323
444
2,033
2,030
Net income attributable to noncontrolling
interest in subsidiary
210
544
186
820
1,770
Adjusted EBITDAa
$
11,500
$
8,286
$
8,598
$
36,322
$
25,468
Adjusted EPS:j
Numerator:
Net income (loss) attributable to common
shareholders
$
4,612
$
(1,144
)
$
(1,334
)
$
(12,962
)
$
(57,713
)
Non-GAAP adjustments - pretax:
Acquisition and integration-related
costsc
—
(184
)
—
77
201
Restructuring costsd
842
687
2,316
6,052
3,571
Legal settlements and feese
600
—
837
2,998
1,600
Impairment charges (excluding rebranding
impacts)f
166
—
1,071
16,248
1,804
Rebranding impairments and accelerated
amortizationf
—
1,978
938
3,075
17,379
Loss on derivativeg
—
—
—
—
1,284
Loss on early extinguishment of debth
—
1,470
—
—
1,978
Applicant tracking system costsi
690
323
444
2,033
2,030
Nonrecurring income tax adjustments
(18
)
(428
)
—
295
35,247
Tax impact of non-GAAP adjustments
(2
)
—
(20
)
(992
)
(2,044
)
Adjusted net income attributable to common
shareholders - non-GAAP
$
6,890
$
2,702
$
4,252
$
16,824
$
5,337
Denominator:
Weighted average common shares - basic,
GAAP
36,177
35,869
36,176
36,088
35,815
Dilutive impact of share-based
paymentsk
601
472
228
340
251
Adjusted weighted average common shares -
diluted, non-GAAP
36,778
36,341
36,404
36,428
36,066
Reconciliation:
Diluted EPS, GAAP
$
0.13
$
(0.03
)
$
(0.04
)
$
(0.36
)
$
(1.61
)
Non-GAAP adjustments - pretax:
Acquisition and integration-related
costsc
—
(0.01
)
—
—
—
Restructuring costsd
0.02
0.02
0.06
0.16
0.10
Legal settlements and feese
0.02
—
0.03
0.09
0.05
Impairment charges (excluding rebranding
impacts)f
—
—
0.03
0.45
0.05
Rebranding impairments and accelerated
amortizationf
—
0.05
0.03
0.09
0.48
Loss on derivativeg
—
—
—
—
0.04
Loss on early extinguishment of debth
—
0.04
—
—
0.05
Applicant tracking system costsi
0.02
0.01
0.01
0.05
0.06
Nonrecurring income tax adjustments
—
(0.01
)
—
0.01
0.98
Tax impact of non-GAAP adjustments
—
—
—
(0.03
)
(0.05
)
Adjusted EPS, non-GAAPj
$
0.19
$
0.07
$
0.12
$
0.46
$
0.15
Cross Country Healthcare,
Inc.
Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
December 31,
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
1,600
$
1,032
Accounts receivable, net
170,003
169,528
Prepaid expenses
5,455
6,097
Insurance recovery receivable
4,698
5,011
Other current assets
1,355
1,689
Total current assets
183,111
183,357
Property and equipment, net
12,351
11,832
Operating lease right-of-use assets
10,447
16,964
Goodwill
90,924
101,066
Trade names, indefinite-lived
5,900
5,900
Other intangible assets, net
34,831
44,957
Other non-current assets
19,409
18,298
Total assets
$
356,973
$
382,374
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$
49,877
$
45,726
Accrued employee compensation and
benefits
35,540
31,307
Operating lease liabilities - current
4,509
4,878
Other current liabilities
3,497
3,554
Total current liabilities
93,423
85,465
Revolving credit facility
53,408
70,974
Operating lease liabilities -
non-current
15,234
19,070
Non-current deferred tax liabilities
6,592
7,523
Long-term accrued claims
25,412
26,938
Contingent consideration
—
4,867
Other long-term liabilities
7,995
4,037
Total liabilities
202,064
218,874
Commitments and contingencies
Stockholders' equity:
Common stock
4
4
Additional paid-in capital
310,388
305,643
Accumulated other comprehensive loss
(1,280
)
(1,240
)
Accumulated deficit
(154,737
)
(141,775
)
Total Cross Country Healthcare, Inc.
stockholders' equity
154,375
162,632
Noncontrolling interest in subsidiary
534
868
Total stockholders' equity
154,909
163,500
Total liabilities and stockholders'
equity
$
356,973
$
382,374
Cross Country Healthcare,
Inc.
Segment Datal
(Unaudited, amounts in
thousands)
Three Months Ended
Year-over-Year
Sequential
December 31,
% of
December 31,
% of
September 30,
% of
% change
% change
2020
Total
2019
Total
2020
Total
Fav (Unfav)
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
196,374
91
%
$
191,417
89
%
$
175,244
90
%
2.6
%
12.1
%
Physician Staffing
16,429
8
%
20,011
9
%
16,452
9
%
(17.9
)%
(0.1
)%
Search
2,803
1
%
3,668
2
%
2,272
1
%
(23.6
)%
23.4
%
$
215,606
100
%
$
215,096
100
%
$
193,968
100
%
0.2
%
11.2
%
Contribution income (loss):m
Nurse and Allied Staffing
$
22,265
$
17,849
$
18,233
24.7
%
22.1
%
Physician Staffing
942
1,034
827
(8.9
)%
13.9
%
Search
570
(297
)
(308
)
291.9
%
285.1
%
23,777
18,586
18,752
27.9
%
26.8
%
Corporate overheadn
14,907
11,502
12,499
(29.6
)%
(19.3
)%
Depreciation and amortization
2,199
4,627
3,247
52.5
%
32.3
%
Acquisition and integration-related
costsc
—
(184
)
—
(100.0
)%
—
%
Restructuring costsd
842
687
2,316
(22.6
)%
63.6
%
Impairment chargesf
166
—
1,071
(100.0
)%
84.5
%
Income (loss) from operations
$
5,663
$
1,954
$
(381
)
189.8
%
NM
Year Ended
Year-over-Year
December 31,
% of
December 31,
% of
% change
2020
Total
2019
Total
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
757,949
91
%
$
732,815
89
%
3.4
%
Physician Staffing
67,934
8
%
74,605
9
%
(8.9
)%
Search
10,534
1
%
14,804
2
%
(28.8
)%
$
836,417
100
%
$
822,224
100
%
1.7
%
Contribution income (loss):m
Nurse and Allied Staffing
$
75,293
$
64,353
17.0
%
Physician Staffing
3,619
2,758
31.2
%
Search
(1,124
)
(823
)
(36.6
)%
77,788
66,288
17.3
%
Corporate overheadn
51,900
46,246
(12.2
)%
Depreciation and amortization
12,671
14,075
10.0
%
Acquisition and integration-related
costsc
77
201
61.7
%
Restructuring costsd
6,052
3,571
(69.5
)%
Legal settlement chargese
—
1,600
100.0
%
Impairment chargesf
16,248
16,306
0.4
%
Loss from operations
$
(9,160
)
$
(15,711
)
41.7
%
NM-Not meaningful.
Cross Country Healthcare,
Inc.
Summary Condensed Consolidated
Statements of Cash Flows
(Unaudited, amounts in
thousands)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Net cash provided by (used in) operating
activities
$
1,929
$
(5,351
)
$
(8,456
)
$
27,204
$
5,542
Net cash used in investing activities
(956
)
(898
)
(1,169
)
(4,615
)
(2,940
)
Net cash (used in) provided by financing
activities
(2,827
)
(2,186
)
6,818
(22,010
)
(17,599
)
Effect of exchange rate changes on
cash
8
9
19
(11
)
10
Change in cash and cash equivalents
(1,846
)
(8,426
)
(2,788
)
568
(14,987
)
Cash and cash equivalents at beginning of
period
3,446
9,458
6,234
1,032
16,019
Cash and cash equivalents at end of
period
$
1,600
$
1,032
$
3,446
$
1,600
$
1,032
Cross Country Healthcare,
Inc.
Other Financial Data
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Consolidated gross profit margino
25.2
%
24.7
%
24.7
%
24.2
%
24.8
%
Nurse and Allied
Staffing statistical data:
FTEsp
5,798
7,339
5,403
6,037
7,113
Average Nurse and Allied Staffing revenue
per FTE per dayq
$
368
$
284
$
353
$
343
$
282
Physician Staffing
statistical data:
Days filledr
9,911
11,672
9,682
38,987
44,381
Revenue per day filleds
$
1,658
$
1,714
$
1,699
$
1,742
$
1,681
(a)
Adjusted EBITDA, a non-GAAP (Generally
Accepted Accounting Principles) financial measure, is defined as
net income (loss) attributable to common shareholders before
interest expense, income tax (benefit) expense, 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 disposal of fixed assets, 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)
Income tax expense for the year ended
December 31, 2019 includes $35.8 million of expense related to the
establishment of valuation allowances on our deferred tax assets in
the second quarter.
(c)
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.
(d)
Restructuring costs are primarily
comprised of employee termination costs, lease-related exit costs,
and reorganization costs as part of planned cost savings
initiatives.
(e)
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 year ended December 31, 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 year
ended December 31, 2020, we incurred $3.0 million in legal fees
related to an ongoing legal matter outside the normal course of
operations.
(f)
Impairment charges in 2020 of $16.2
million were comprised of $10.7 million primarily related to
goodwill and other intangible assets for the Search business and
$5.5 million related to right-of-use assets and related property
and equipment in connection with leases that were vacated during
the year. 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.
(g)
Loss on derivative represents the amount
paid to terminate an interest rate hedge related to our term loan
that was refinanced in October 2019.
(h)
Loss on early extinguishment of debt for
the year ended December 31, 2019 consists of write-off and
extinguishment costs related to the refinancing of our debt in the
fourth quarter of 2019, and the write-off of debt issuance costs in
the prior quarters related to optional prepayments on our term loan
made in the first and second quarters and an optional reduction in
borrowing capacity under our prior revolving credit facility.
(i)
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.
(j)
Adjusted EPS, a non-GAAP financial
measure, is defined as net income (loss) 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.
(k)
Due to the net loss for the three months
ended December 31, 2019 and September 30, 2020, and for the years
ended December 31, 2020 and 2019, 472, 228, 340, and 251 shares (in
thousands), respectively, were excluded from diluted weighted
average shares.
(l)
Segment data provided is in accordance
with the Segment Reporting Topic of the FASB ASC.
(m)
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.
(n)
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).
(o)
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.
(p)
FTEs represent the average number of Nurse
and Allied Staffing contract personnel on a full-time equivalent
basis.
(q)
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.
(r)
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.
(s)
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/20210224005831/en/
Cross Country Healthcare, Inc. William J. Burns, 561-237-2555
Executive Vice President & Chief Financial Officer
wburns@crosscountry.com
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