Cross Country -- 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 8-K

______________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 12, 2007

[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=4678526&doc=2]

______________

Cross Country Healthcare, Inc.

 (Exact name of registrant as specified in its charter)

______________


Delaware

0-33169

13-4066229

(State or Other Jurisdiction

(Commission

(I.R.S. Employer

of Incorporation)

File Number)

Identification No.)

6551 Park of Commerce Blvd., N.W., Boca Raton, FL 33487

(Address of Principal Executive Office) (Zip Code)

(561) 998-2232

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))









Item 2.02

Results of Operations and Financial Condition

(a)  On February 12, 2007, the Company issued a press release announcing results for the quarter ended December 31, 2006, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K. This information is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.


Item 9.01

Financial Statements and Exhibits

(d) Exhibits


          

Exhibit

     

Description

 

 

 

 

 

99.1

 

Press Release issued by the Company on February 12, 2007

 

 

 

 

 

 

 

 




2



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


         

CROSS COUNTRY HEALTHCARE, INC.

 

 

  

 

 

 

 

By:  

/s/ JOSEPH A. BOSHART

 

 

Joseph A. Boshart

President and Chief Executive Officer

 

 

Dated:  February 14, 2007















3



LINKS


Item 2.02  Results of Operations and Financial Condition

Item 9.01  Financial Statements and Exhibits






United States Securities & Exchange Commission EDGAR Filing

Exhibit 99.1




[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=4678526&doc=4]

     NEWS

FOR IMMEDIATE RELEASE


CROSS COUNTRY HEALTHCARE REPORTS FOURTH QUARTER

AND YEAR-END 2006 RESULTS


BOCA RATON, Fla. – February 12, 2007 – Cross Country Healthcare, Inc. (Nasdaq: CCRN) today reported revenue of $175.7 million and net income of $6.2 million, or $0.19 per diluted share for the fourth quarter ended December 31, 2006 – representing a 7% and 27% increase in revenue and net income, respectively, from the prior year quarter.  A year earlier, the Company reported fourth quarter revenue of $163.7 million and net income of $4.9 million, or $0.15 per diluted share, that included a non-operating after-tax charge of $0.03 per diluted share related to the early extinguishment of debt.  Cash flow from operations for the fourth quarter of 2006 was $3.2 million.


For the year ended December 31, 2006, Cross Country Healthcare reported revenue of $655.2 million and net income of $15.3 million, or $0.47 per diluted share.  This compares to revenue of $645.4 million and net income of $14.8 million, or $0.45 per diluted share, in the prior year.  Cash flow from operations for 2006 was $32.9 million.


“We are pleased to report increases in revenue and operating income over the prior year quarter and sequentially from the third quarter of 2006.  Our total staffing volume was also higher year-over-year and sequentially, including volume from Metropolitan Research, which we acquired in late August 2006,” said Joseph A. Boshart, President and Chief Executive Officer of Cross Country Healthcare, Inc.  “With the fundamentals in our core travel nurse staffing business having improved from the downturn of the past few years, I am optimistic about improved performance for the Company during 2007,” Mr. Boshart added.


Healthcare Staffing


For the fourth quarter of 2006, the healthcare staffing business segment (travel and per diem nurse, travel allied health and clinical research staffing) generated revenue of $164.3 million, an increase of 8% from the prior year quarter and 9% sequentially from the third quarter of 2006.  This improvement, both on a year-over-year and sequential basis, reflected an increase in revenue from travel staffing as well as higher organic revenue from clinical research staffing along with added revenue from Metropolitan Research, which was partially offset by lower revenue from per diem staffing.


Segment staffing volume (including Metropolitan Research) increased 2% from the prior year quarter and 6% sequentially from the third quarter of 2006.  Travel staffing volume increased slightly year-over-year and 5% on a sequential basis.


Contribution income (defined as income from continuing operations before interest, income taxes, depreciation and amortization, legal settlement charge, secondary offering costs and corporate expenses not specifically identified to a reporting segment), increased 7% in the fourth quarter of 2006 to $17.4 million from $16.2 million in the same quarter of 2005, in large part due to the contribution from Metropolitan Research.


For the year ended December 31, 2006, segment revenue increased by 1% to $608.2 million from $599.3 million in the same period a year ago, while contribution income increased 13% to $59.9 million from $52.9 million in the prior year.  

(more)



6551 Park of Commerce Blvd., Boca Raton, FL 33487

Tel: (800) 347-2264   Fax: (561) 998-8533   www.crosscountry.com





Other Human Capital Management Services


For the fourth quarter of 2006, the other human capital management services business segment (education and training and retained search) generated revenue of $11.4 million, a 2% increase from revenue of $11.2 million in the same quarter in the prior year.  The improvement reflected higher revenue from the retained search business that was partially offset by a decrease in revenue from the education and training business.  Segment contribution income increased 11% to $2.0 million in the fourth quarter of 2006 compared with the prior year quarter due to greater contribution from both businesses.


For the year ended December 31, 2006, segment revenue increased 2% to $46.9 million from $46.0 million in the same period a year ago, and contribution income rose by 11% to $9.0 million from $8.1 million in the prior year period.


Debt Repayment


At December 31, 2006, the Company had $21.5 million of total debt on its balance sheet and reflected an additional $0.8 million of borrowings net of payments made during the fourth quarter of 2006.  This includes $2.5 million drawn from its revolving credit facility to complete milestone payments related to the Metropolitan Research acquisition.  At year-end 2006, the Company had a debt to total capitalization ratio of 5.4%.


Stock Repurchase Program Update


The Company repurchased 5,000 shares of its common stock during the fourth quarter of 2006 at an average cost of $16.79 per share.  The Company can purchase up to an additional 69,872 shares under its stock repurchase program authorized in November 2002.  In May 2006, the Company’s Board of Directors authorized a new stock repurchase program whereby the Company may repurchase up to an additional 1.5 million of its common shares, subject to the constraints of the Company’s current credit agreement.  The new stock repurchase authorization will commence upon the completion of the previously authorized stock repurchase program.  Under these authorizations, the shares may be repurchased from time-to-time in the open market and may be discontinued at any time at the discretion of the Company.  At December 31, 2006, the Company had approximately 32.1 million shares outstanding.


Guidance For First Quarter 2007


The following statements are based on current management expectations.  Such statements are forward-looking and actual results may differ materially.  These statements do not include the potential impact of any future mergers, acquisitions or other business combinations, repurchases of the Company's common stock, or pending legal matters.


Based on the present industry dynamics, Cross Country Healthcare expects revenue in the first quarter of 2007 to be in the $172 million to $175 million range and EPS per diluted share to be in the range of $0.13 to $0.15.  Historically, the Company’s gross profit margin in its core travel nurse staffing business typically declines sequentially in the first quarter due to the reset of payroll taxes, as well as two less days than in the fourth quarter, which also impacts the Company’s ability to leverage housing expenses.


(more)









Quarterly Conference Call


Cross Country Healthcare will hold a conference call on Tuesday, February 13th at 10:00 a.m. Eastern Time to discuss its fourth quarter and year-end 2006 financial results.  This call will be webcast live by Thomson Financial and may be accessed at the Company's web site at www.crosscountryhealthcare.com or by dialing 888-395-6878 from anywhere in the U.S. or by dialing 517-319-9285 from non-U.S. locations – Passcode: Cross Country.  A replay of the webcast will be available through February 27th.  A replay of the conference call will be available by telephone from approximately noon on February 13th until February 27th by calling 866-431-5849 from anywhere in the U.S. or by calling 203-369-0962 from non-U.S. locations.


About Cross Country Healthcare


Cross Country Healthcare, Inc. is a leading provider of healthcare staffing services in the United States.  The Company has a national client base of approximately 3,000 hospitals, pharmaceutical companies and other healthcare providers.  Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountryhealthcare.com.  Shareholders and prospective investors can also register at the corporate website to automatically receive the Company's press releases, SEC filings and other notices by e-mail.


This release contains forward-looking statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", “suggests” and similar expressions are forward-looking statements.  These 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: our ability to attract and retain qualified nurses and other healthcare personnel, costs and availability of short-term apartment leases for our travel nurses, demand for the healthcare services we provide, both nationally and in the regions in which we operate, the functioning of our information systems, the effect of existing or future government regulation and federal and state legislative and enforcement initiatives on our business, our clients' ability to pay us for our services, our ability to successfully implement our acquisition and development strategies, the effect of liabilities and other claims asserted against us, the effect of competition in the markets we serve, our ability to successfully defend the Company, its subsidiaries, and its officers and directors on the merits of any lawsuit or determine its potential liability, if any, and other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2005. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed in this press release might not occur.  While it is our intention to update guidance quarterly, it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements.  


# # #


For further information, please contact:

Howard A. Goldman

Director/Investor & Corporate Relations

Cross Country Healthcare, Inc.

Phone: 877-686-9779

Email: hgoldman@crosscountry.com








Cross Country Healthcare, Inc.

Condensed Consolidated Statements of Income (a)

(Unaudited, amounts in thousands, except per share data)

 

 

Three Months Ended
December 31,

 

 

 

 

Twelve Months Ended
December 31,

 

 

 

 

 

 

2006

 

2005

 

% Change

 

2006

 

2005

 

% Change

 

Revenue from services

     

$

175,745

     

$

163,720

     

 

7%

     

$

655,152

     

$

645,393

     

 

2%

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

 

 

134,485

 

 

125,205

 

 

7%

 

 

502,468

 

 

503,103

 

 

(0%)

 

Selling, general and administrative
expenses

 

 

28,393

 

 

26,026

 

 

9%

 

 

110,172

 

 

104,647

 

 

5%

 

Bad debt expense

 

 

437

 

 

594

 

 

(26%)

 

 

459

 

 

1,177

 

 

(61%)

 

Depreciation

 

 

1,428

 

 

1,608

 

 

(11%)

 

 

5,448

 

 

5,159

 

 

6%

 

Amortization

 

 

440

 

 

356

 

 

24%

 

 

1,570

 

 

1,424

 

 

10%

 

Legal settlement charge

 

 

 

 

 

 

ND

 

 

8,827

 

 

 

 

ND

 

Secondary offering costs

 

 

154

 

 

 

 

ND

 

 

154

 

 

151

 

 

2%

 

Total operating expenses

 

 

165,337

 

 

153,789

 

 

8%

 

 

629,098

 

 

615,661

 

 

2%

 

Income from operations

 

 

10,408

 

 

9,931

 

 

5%

 

 

26,054

 

 

29,732

 

 

(12%)

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

485

 

 

636

 

 

(24%)

 

 

1,464

 

 

3,458

 

 

(58%)

 

Loss on early extinguishment of debt

 

 

 

 

1,359

 

 

(100%)

 

 

 

 

1,359

 

 

(100%)

 

Income from continuing operations
before income taxes

 

 

9,923

 

 

7,936

 

 

25%

 

 

24,590

 

 

24,915

 

 

(1%)

 

Income tax expense

 

 

3,657

 

 

3,004

 

 

22%

 

 

9,317

 

 

9,575

 

 

(3%)

 

Income from continuing operations

 

 

6,266

 

 

4,932

 

 

27%

 

 

15,273

 

 

15,340

 

 

(0%)

 

Discontinued operations, net of income
taxes

 

 

(48

)

 

(47

)

 

2%

 

 

70

 

 

(588

)

 

(112%)

 

Net income

 

$

6,218

 

$

4,885

 

 

27%

 

$

15,343

 

$

14,752

 

 

4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) per common
share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.19

 

$

0.15

 

 

 

 

$

0.48

 

$

0.48

 

 

 

 

Discontinued operations, net of income
taxes

 

 

(0.00

)

 

(0.00

)

 

 

 

 

0.00

 

 

(0.02

)

 

 

 

Net income

 

$

0.19

 

 

$0.15

 

 

 

 

$

0.48

 

$

0.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) per common
share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.19

 

$

0.15

 

 

 

 

$

0.47

 

$

0.47

 

 

 

 

Discontinued operations, net of income
taxes

 

 

(0.00

)

 

(0.00

)

 

 

 

 

0.00

 

 

(0.02

)

 

 

 

Net income

 

$

0.19

 

$

0.15

 

 

 

 

$

0.47

 

$

0.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares
outstanding - basic

 

 

32,025

 

 

32,165

 

 

 

 

 

32,077

 

 

32,229

 

 

 

 

Weighted average common shares
outstanding - diluted

 

 

32,787

 

 

32,697

 

 

 

 

 

32,737

 

 

32,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ND - Not determinable

———————

(a)  The prior period has been reclassified to conform to the 2006 presentation.








Cross Country Healthcare, Inc.

Condensed Consolidated Balance Sheets (a)

(Unaudited, amounts in thousands)

 

 

December 31,
2006

 

December 31
2005

 

 

 

 

 

 

 

 

 

Assets

     

 

 

     

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

$

 

Accounts receivable, net

 

 

114,735

 

 

107,787

 

Deferred tax assets

 

 

11,823

 

 

9,582

 

Income taxes receivable

 

 

1,604

 

 

2,752

 

Other current assets

 

 

18,894

 

 

22,571

 

Total current assets

 

 

147,056

 

 

142,692

 

Property and equipment, net

 

 

20,562

 

 

16,477

 

Trademarks, net

 

 

17,199

 

 

15,499

 

Goodwill, net

 

 

310,173

 

 

302,854

 

Other identifiable intangible assets, net

 

 

9,310

 

 

5,390

 

Debt issuance costs, net

 

 

563

 

 

689

 

Total assets

 

$

504,863

 

$

483,601

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

13,744

 

$

12,082

 

Accrued employee compensation and benefits                                       

 

 

38,190

 

 

47,940

 

Current portion of long-term debt

 

 

1,550

 

 

5,483

 

Other current liabilities

 

 

14,758

 

 

4,378

 

Total current liabilities

 

 

68,242

 

 

69,883

 

Non-current deferred tax liabilities

 

 

43,079

 

 

34,486

 

Long-term debt

 

 

19,979

 

 

19,946

 

Total liabilities

 

 

131,300

 

 

124,315

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock

 

 

3

 

 

3

 

Additional paid-in capital

 

 

254,273

 

 

255,340

 

Other stockholders' equity

 

 

119,287

 

 

103,943

 

Total stockholders' equity

 

 

373,563

 

 

359,286

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

504,863

 

$

483,601

 

———————

(a)  The prior period has been reclassified to conform to the 2006 presentation.









Cross Country Healthcare, Inc.

Segment Data (a) (b)

(Unaudited, amounts in thousands)

 

 

Three Months Ended
December 31,

 

 

 

 

Twelve Months Ended
December 31,

 

 

 

 

 

 

2006

 

2005

 

% Change

 

2006

 

2005

 

% Change

 

Revenue from unaffiliated customers:

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Healthcare staffing

 

$

164,320

 

$

152,480

 

 

8%

 

$

608,248

 

$

599,346

 

 

1%

 

Other human capital management services

 

 

11,425

 

 

11,240

 

 

2%

 

 

46,904

 

 

46,047

 

 

2%

 

 

 

$

175,745

 

$

163,720

 

 

7%

 

$

655,152

 

$

645,393

 

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income (c):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare staffing

 

$

17,356

 

$

16,245

 

 

7%

 

$

59,878

 

$

52,939

 

 

13%

 

Other human capital management services

 

 

1,951

 

 

1,758

 

 

11%

 

 

9,048

 

 

8,116

 

 

11%

 

 

 

 

19,307

 

 

18,003

 

 

7%

 

 

68,926

 

 

61,055

 

 

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated corporate overhead

 

 

6,877

 

 

6,108

 

 

13%

 

 

26,873

 

 

24,589

 

 

9%

 

Depreciation

 

 

1,428

 

 

1,608

 

 

(11%)

 

 

5,448

 

 

5,159

 

 

6%

 

Amortization

 

 

440

 

 

356

 

 

24%

 

 

1,570

 

 

1,424

 

 

10%

 

Legal settlement charge

 

 

 

 

 

 

ND

 

 

8,827

 

 

 

 

ND

 

Secondary offering costs

 

 

154

 

 

 

 

ND

 

 

154

 

 

151

 

 

2%

 

Interest expense, net

 

 

485

 

 

636

 

 

(24%)

 

 

1,464

 

 

3,458

 

 

(58%)

 

Loss on early extinguishment of debt

 

 

 

 

1,359

 

 

(100%)

 

 

 

 

1,359

 

 

(100%)

 

Income from continuing operations
before income taxes

 

$

9,923

 

$

7,936

 

 

25%

 

$

24,590

 

$

24,915

 

 

(1%)

 


Cross Country Healthcare, Inc.

Other Financial Data

(Unaudited)

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

Net cash provided by operating activities (in thousands)

     

$

3,207

     

$

9,924

     

$

32,918

     

$

30,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

FTEs (d)

 

 

5,659

 

 

5,551

 

 

5,416

 

 

5,573

 

Weeks worked (e)

 

 

73,567

 

 

72,163

 

 

281,632

 

 

289,796

 

Average healthcare staffing revenue per FTE per week (f)

 

 

2,234

 

 

2,113

 

 

2,160

 

 

2,068

 

———————

(a)

Segment data provided is in accordance with FASB Statement 131.

(b)

Certain 2005 quarterly amounts have been reclassified to conform to 2006 presentation.

(c)

Defined as income from continuing operations before interest, income taxes, depreciation, amortization, legal settlement charge, secondary offering costs and corporate expenses not specifically identified to a reporting segment. Contribution income is a financial measure used by management when assessing segment performance.

(d)

FTEs represent the average number of contract staffing personnel on a full-time equivalent basis.

(e)

Weeks worked is calculated by multiplying the FTEs by the number of weeks during the respective period.

(f)

Average healthcare staffing revenue per FTE per week is calculated by dividing the healthcare staffing revenue by the number of weeks worked in the respective periods. Healthcare staffing revenue includes revenue from permanent placement of nurses.