Cross Country Healthcare Announces Third Quarter 2017 Financial Results - 01.11.17 - News

BOCA RATON, Fla., Nov. 1, 2017

Cross Country Healthcare, Inc. (PRNewsfoto/Cross Country Healthcare, Inc.)

FINANCIAL HIGHLIGHTS:

Amounts are in thousands, except percent and per share data

Q3 2017

Variance
Q3 2017 vs.
Q3 2016

Variance
Q3 2017 vs.
Q2 2017

ARIVA.DE Börsen-Geflüster

Kurse

Cross Country Healthcare

17,145 $

-1,47%

Revenue

$

228,488

6

%

9

%

Gross profit margin*

26.5

%

(60)

bps

(50)

bps

Net income attributable to common shareholders

$

6,723

(52)

%

39

%

Diluted EPS

$

0.19

$

(0.03)

$

0.06

Adjusted EBITDA*

$

13,769

5

%

27

%

Adjusted EPS*

$

0.23

$

(0.01)

$

0.07

* Refer to accompanying tables and discussion of Non-GAAP financial measures below.

"This was a good quarter that sets us up for an improved financial performance in 2018," said William J. Grubbs, President and Chief Executive Officer. "We have recovered from the lower operating margins earlier in the year and are growing into the investments made in recruiters and candidate attraction. I am particularly pleased that we are on track for another record year of winning new MSPs that should support our current momentum."

Third quarter consolidated revenue was $228.5 million, an increase of 6% year-over-year and 9% sequentially. On a pro forma basis, revenue was down 5% year-over-year and 3% sequentially. Severe weather forced the closure of the Company's travel nurse and allied office in Florida, as well as several branches, resulting in a relatively minor negative impact to revenue and profitability for the third quarter and, due to the nature of the Company's business, it is expected to result in a more significant impact for the fourth quarter. Consolidated gross profit margin was 26.5%, down 60 basis points year-over-year and down 50 basis points sequentially, driven predominantly by the impact of the Advantage RN acquisition. Net income attributable to common shareholders was $6.7 million compared to $14.1 million in the prior year, which included a gain on derivative liability of $7.1 million. Diluted EPS was $0.19 per share compared to $0.22 per share in the prior year. Adjusted EBITDA was $13.8 million or 6.0% of revenue, as compared with $13.1 million or 6.1% of revenue in the prior year. Adjusted EPS was $0.23 in the current quarter as compared to $0.24 in the prior year and $0.16 in the prior quarter.

For the nine months ended September 30, 2017, consolidated revenue was $645.4 million, an increase of 6% year-over-year. Consolidated gross profit margin was 26.4%, down 50 basis points year-over-year. Adjusted EBITDA was $31.1 million or 4.8% of revenue, as compared with $32.7 million or 5.4% of revenue in the prior year. Net income attributable to common shareholders was $9.6 million, compared to net income of $15.9 million in the prior year, which included a $20.0 million gain on derivative liability. On a diluted per share basis, net income attributable to common shareholders was $0.24, compared to a net loss of $0.04, which excludes the impact of the gain on derivate liability related to the Convertible Notes. Adjusted EPS was $0.44 compared to $0.49 in the prior year.

Quarterly Business Segment Highlights

Nurse and Allied Staffing

Revenue from Nurse and Allied Staffing was $200.5 million, an increase of 7% year-over-year and 11% sequentially. The year-over-year increase in segment revenue was predominantly due to the Advantage RN acquisition. Contribution income in this segment was $20.7 million, up from $19.5 million in the prior year. Average field FTEs increased to 7,706 from 6,954 in the prior year. Revenue per FTE per day was $283 compared to $292 in the prior year, primarily reflecting a change in the mix of business.

Physician Staffing

Revenue from Physician Staffing was $24.9 million, a decrease of 1% year-over-year and an increase of 1% sequentially, with both being driven by changes in volume. Contribution income was $1.3 million, down from $2.4 million in the prior year. Total days filled were 15,777 as compared with 16,639 in the prior year, with declines in physician specialties partly offset by growth in advanced practices. Revenue per day filled was $1,562 as compared with $1,576 in the prior year, representing the impact of the shift in mix from growth in advanced practices, which generally have a lower daily bill rate.

Other Human Capital Management Services

Revenue from Other Human Capital Management Services was $3.1 million, a decrease of 5% year-over-year and 15% sequentially. Segment contribution income was essentially breakeven for the current quarter compared to a loss of $0.2 million in the prior year.

Cash Flow and Balance Sheet Highlights

Cash flow provided by operating activities for the quarter was $3.2 million and $28.7 million for the year-to-date period. At September 30, 2017, the Company had $10.8 million in cash and cash equivalents and a $100.0 million term loan outstanding. There were no borrowings drawn on its $115.0 million revolving credit facility, and $21.6 million of letters of credit outstanding, leaving $93.4 million available for borrowings under the revolving credit facility.

Outlook for Fourth Quarter 2017

	Q4 2017 Range	Year-over-Year	Sequential
	Q4 2017 Range	Change	Change

Revenue	$223 million - $228 million	0% - 2%	(2)% - 0%

Gross profit margin	26.3% - 26.8%	40 - 90 bps	(20) - 30 bps

Adjusted EBITDA	$13 million - $14 million	8% - 17%	(6)% - 2%

Adjusted EPS	$0.18 - $0.20	$(0.02) - $0.00	$(0.05) - $(0.03)

The estimates above are based on current management expectations and, as such, are forward-looking and actual results may differ materially. This guidance reflects an estimated negative impact on revenue from weather events of approximately $4 million. The above ranges do not include the potential impact of any future divestitures, mergers, acquisitions or other business combinations, any impairment charges or valuation allowances, any acquisition-related measurement period adjustments, changes in debt structure, or any material legal or restructuring charges. See accompanying Non-GAAP financial measures and tables below.

INVITATION TO CONFERENCE CALL

The Company will hold its quarterly conference call on Thursday, November 2, 2017, at 9:00 A.M. Eastern Time to discuss its third quarter 2017 financial results. This call will be webcast live and can be accessed at the Company's website at www.crosscountryhealthcare.com or by dialing 800-857-6331 from anywhere in the U.S. or by dialing 517-623-4781 from non-U.S. locations - Passcode: Cross Country. A replay of the webcast will be available from November 2nd through November 16th at the Company's website and a replay of the conference call will be available by telephone by calling 800-570-8799 from anywhere in the U.S. or 203-369-3294 from non-U.S. locations - Passcode: 2017.

ABOUT CROSS COUNTRY HEALTHCARE

Cross Country Healthcare is a national leader in providing innovative healthcare workforce solutions and staffing services. Our solutions leverage our nearly 40 years of expertise and insight to assist clients in solving complex labor-related challenges while maintaining high quality outcomes. We are dedicated to recruiting and placing highly qualified healthcare professionals in virtually every specialty and area of expertise. Our diverse client base includes both clinical and nonclinical settings, servicing acute care hospitals, physician practice groups, outpatient and ambulatory-care centers, nursing facilities, both public schools and charter schools, rehabilitation and sports medicine clinics, government facilities, and homecare. Through our national staffing teams and network of 80 office locations, we are able to place clinicians on travel and per diem assignments, local short-term contracts and permanent positions. We are a market leader in providing flexible workforce management solutions, which include managed services programs (MSP), internal resource pool consulting and development, electronic medical record (EMR) transition staffing, recruitment process outsourcing, predictive modeling, and other outsourcing and consultative services. In addition, we provide both retained and contingent placement services for healthcare executives, physicians, and other healthcare professionals.

Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountryhealthcare.com. Shareholders and prospective investors can also register to automatically receive the Company's press releases, SEC filings and other notices by e-mail.

NON-GAAP FINANCIAL MEASURES

This press release and accompanying financial statement tables reference non-GAAP financial measures. Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for, or superior to, financial measures calculated in accordance with U.S. GAAP. Such non-GAAP financial measures are provided for consistency and comparability to prior year results; furthermore, management believes they are useful to investors when evaluating the Company's performance as they exclude certain items that management believes are not indicative of the Company's operating performance. Pro forma measures, if applicable, are adjusted to include the results of our acquisitions, and exclude the results of divestments, as if the transactions occurred in the beginning of the periods mentioned.]Such non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. The financial statement tables that accompany this press release include a reconciliation of each non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure and a more detailed discussion of each financial measure; as such, the financial statement tables should be read in conjunction with the presentation of these non-GAAP financial measures.

FORWARD LOOKING STATEMENT

In addition to historical information, this press release contains statements relating to our future results (including certain projections and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. Forward-looking statements consist of statements that are predictive in nature, depend upon or refer to future events. Words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", "suggests", "appears", "seeks", "will", and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include, but are not limited to, the following: our ability to attract and retain qualified nurses, physicians and other healthcare personnel, costs and availability of short-term housing for our travel healthcare professionals, demand for the healthcare services we provide, both nationally and in the regions in which we operate, the functioning of our information systems, the effect of cyber security risks and cyber incidents on our business, the effect of existing or future government regulation and federal and state legislative and enforcement initiatives on our business, our clients' ability to pay us for our services, our ability to successfully implement our acquisition and development strategies, including our ability to successfully integrate acquired businesses and realize synergies from such acquisitions, the effect of liabilities and other claims asserted against us, the effect of competition in the markets we serve, our ability to successfully defend the Company, its subsidiaries, and its officers and directors on the merits of any lawsuit or determine its potential liability, if any, and other factors set forth in Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, and our other Securities and Exchange Commission filings made prior to the date hereof.

Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results and readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date of this press release. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors' likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. The Company undertakes no obligation to update or revise forward-looking statements. All references to "we", "us", "our", or "Cross Country" in this press release mean Cross Country Healthcare, Inc. and its subsidiaries.

Cross Country Healthcare, Inc.

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