BP - x1-55358 - 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) August 7, 2006

———————

[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=4324449&doc=2]

———————

Cross Country Healthcare, Inc.

(Exact name of registrant as specified in its charter)

———————


Delaware

0-33169

13-4066229

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

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 August 7, 2006, the Company issued a press release announcing results for the quarter ended June 30, 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 August 7, 2006








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/  EMIL HENSEL

 

Name: 

Emil Hensel

 

Title:

Chief Financial Officer

Dated:  August 10, 2006



3



LINKS


Item 2.02   Results of Operations and Financial Condition

Item 9.01   Financial Statements and Exhibits

 







Cross Country -- Exhibit 99.1

Exhibit 99.1



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=4324449&doc=4]

     NEWS

FOR IMMEDIATE RELEASE

CROSS COUNTRY HEALTHCARE REPORTS

SECOND QUARTER 2006 RESULTS


BOCA RATON, Fla. – August 7, 2006 – Cross Country Healthcare, Inc. (Nasdaq: CCRN) today reported revenue of $156.7 million for the second quarter ended June 30, 2006, and net income of $4.4 million, or $0.14 per diluted share. This compares to revenue of $159.7 million and net income of $1.2 million, or $0.04 per diluted share, in the same quarter of the prior year, which included an after-tax charge of $3.2 million, or $0.10 per diluted share, related to increases in reserves for professional liability claims. Cash flow from operations for the second quarter of 2006 was $9.9 million.


For the six month period ended June 30, 2006, Cross Country Healthcare reported revenue of $316.5 million and net income of $9.0 million, or $0.27 per diluted share. This compares to revenue of $318.5 million and net income of $4.9 million, or $0.15 per diluted share, in the first six months of the prior year, which included the previously mentioned after-tax charge of $3.2 million. Cash flow from operations for the first six months of 2006 was $20.1 million.


“We experienced higher bill rates and expansion of the bill-pay spread in our core nurse staffing business during the second quarter that contributed to year over year improvement in our gross profit margin. However, the continuation of relatively flat hospital admission patterns along with slower applicant activity in the first quarter impacted our staffing volume and booking activity during the second quarter,” said Joseph A. Boshart, President and Chief Executive Officer of Cross Country Healthcare, Inc.


Healthcare Staffing


For the second quarter of 2006, the healthcare staffing business segment (travel and per diem nurse, travel allied health and clinical trials staffing) generated revenue of $144.9 million, a 2% decline from both the second quarter of the prior year and sequentially from the first quarter of 2006. The year-over-year decline reflected slightly higher revenue in the travel staffing business due to higher bill rates that was more than offset by lower revenue from per diem staffing and clinical trials staffing. Segment staffing volume declined 6% from the prior year quarter and 3% sequentially from the first quarter of 2006 – travel staffing volume decreased 4% year over year and 3% sequentially. Historically, staffing volume typically declines 2% to 5% sequentially from the first quarter to the second quarter due to seasonal factors.


Contribution income (defined as income from continuing operations before interest, income taxes, depreciation and amortization and corporate expenses not specifically identified to a reporting segment), increased 50% in the second quarter of 2006 to $13.4 million from $9.0 million in the same quarter of 2005, primarily reflecting the aforementioned charge in the second quarter of 2005 related to professional liability claims. Additionally, during the second quarter of 2006, the bill-pay spread in the travel nurse staffing business expanded while health insurance and housing costs increased.


For the first six months of 2006, segment revenue declined 1% on a year over year basis to $292.5 million from $295.5 million in the same period a year ago, while contribution income increased 28% to $27.3 million from $21.4 million in the prior year period.


(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 second quarter of 2006, the other human capital management services business segment (education and training and retained search business) generated revenue of $11.8 million, which was essentially flat with revenue of $11.8 million in the same quarter of the prior year. This was due to an increase in revenue from the retained physician and healthcare executive search business that was offset by lower revenue in the education and training business. Segment contribution income increased 10% in the second quarter of 2006 to $2.3 million from the same quarter a year ago, reflecting a substantial improvement for the retained search business that was partially offset by a decline for the education and training business. The retained search business generates a substantially higher contribution margin than the education and training business.


For the first six months of 2006, segment revenue increased 4% on a year over year basis to $24.0 million from $23.1 million in the same period a year ago, while contribution income increased 18% to $4.9 million from $4.2 million in the prior year period.


Debt Repayment


During the second quarter of 2006, the Company reduced its borrowings under its revolving credit facility by $8.0 million from the end of the prior quarter. At June 30, 2006, the Company had $10.4 million of total debt on its balance sheet, which represented a debt to total capitalization ratio of 3%.


Stock Repurchase Program Update


The Company repurchased 46,000 shares of its common stock during the second quarter of 2006 at an average cost of $17.34 per share. Under its stock repurchase program authorized in November 2002, the Company can purchase up to an additional 149,272 shares. 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 June 30, 2006, the Company had approximately 32.1 million shares outstanding.


Guidance For The Third Quarter of 2006


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 (other than the previously announced pending acquisition of the assets of Metropolitan Research Associates, LLC and Metropolitan Research Staffing Associates, LLC (collectively “Metropolitan Research”)), repurchases of the Company's common stock, or pending legal matters.


Based on the present industry dynamics, Cross Country Healthcare expects revenue in the third quarter of 2006 to be in the $160.5 million to $163.0 million range and EPS per diluted share to be in the range of $0.13 to $0.15, subject to the completion and timing of the pending Metropolitan Research acquisition.


(more)








Quarterly Conference Call


Cross Country Healthcare will hold a conference call on Tuesday, August 8th at 9:00 a.m. Eastern Time to discuss its second quarter 2006 financial results. This call will be webcast live by Thomson Financial and may be accessed at the Company's web site at www.crosscountry.com or by dialing 888-395-6878 from anywhere in the U.S. or by dialing 210-234-0001 from non-U.S. locations – Passcode: Cross Country. A replay of the webcast will be available through August 22nd. A replay of the conference call will be available by telephone from August 8th through August 22nd by calling 866-511-1890 from anywhere in the U.S. or by calling 203-369-1945 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.crosscountry.com. Shareholders and prospective investors can also register at the corporate web site 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. In addition, there can be no assurances that the Metropolitan Research acquisition will be completed. 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 its 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

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

June 30,

 

% Change

 

Six Months Ended

June 30,

  

% Change

2006

 

2005

2006

 

2005

  

Revenue from services

     

$

156,697

     

$

159,724

     

(2%)

     

$

316,531

     

$

318,529

     

 

(1%)

Operating expenses:

     

                

Direct operating expenses

     

 

120,455

     

 

128,439

     

(6%)

  

242,900

     

 

252,664

     

 

(4%)

Selling, general and administrative expenses

     

 

26,816

     

 

26,562

     

1%

  

54,989

     

 

52,086

     

 

6%

Bad debt expense

     

 

150

     

 

36

     

317%

  

22

     

 

438

     

 

(95%)

Depreciation

     

 

1,383

     

 

1,215

     

14%

  

2,705

     

 

2,345

     

 

15%

Amortization

     

 

356

     

 

356

     

0%

  

712

     

 

712

     

 

0%

Total operating expenses

     

 

149,160

     

 

156,608

     

(5%)

  

301,328

     

 

308,245

     

 

(2%)

Income from operations

     

 

7,537

     

 

3,116

     

142%

  

15,203

     

 

10,284

     

 

48%

Other expenses:

     

                

Interest expense, net

     

 

320

     

 

952

     

(66%)

  

706

     

 

1,869

     

 

(62%)

Income from continuing operations before income taxes

     

 

7,217

     

 

2,164

     

234%

  

14,497

     

 

8,415

     

 

72%

Income tax expense

     

 

2,793

     

 

838

     

233%

  

5,610

     

 

3,257

     

 

72%

Income from continuing operations

     

 

4,424

     

 

1,326

     

234%

  

8,887

     

 

5,158

     

 

72%

Discontinued operations, net of income taxes

     

 

9

     

 

(77

)

(112%)

  

116

     

 

(273

)

 

(142%)

Net income

     

$

4,433

     

$

1,249

     

255%

 

$

9,003

     

$

4,885

     

 

84%

 

     

                  
 

     

                  

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

     

                  

Income from continuing operations

     

$

0.14

     

$

0.04

     

   

$

0.28

     

$

0.16

    

Discontinued operations, net of income taxes

     

 

0.00

     

 

(0.00

)

    

0.00

     

 

(0.01

)

   

Net income

     

$

0.14

     

$

0.04

     

   

$

0.28

     

$

0.15

   

     

 

     

                  

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

     

                  

Income from continuing operations

     

$

0.14

     

$

0.04

     

   

$

0.27

     

$

0.16

    

Discontinued operations, net of income taxes

     

 

0.00

     

 

(0.00

)

    

0.00

     

 

(0.01

)

   

Net income

     

$

0.14

     

$

0.04

     

   

$

0.27

     

$

0.15

    
 

     

                  

Weighted average common shares outstanding - basic

     

 

32,092

     

 

32,253

     

    

32,109

     

 

32,230

    

Weighted average common shares outstanding - diluted

     

 

32,726

     

 

32,775

     

 

     

     

 

32,773

     

 

32,728

     

   

———————

(a)

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









Cross Country Healthcare, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands)


  

June 30,

2006

 

December 31,

2005

 

Assets

     

      

Current assets:

     

      

Cash and cash equivalents

     

$

58

     

$

 

Accounts receivable, net

     

 

97,144

     

 

107,787

 

Deferred tax assets

     

 

6,703

     

 

7,642

 

Income taxes receivable

     

 

4,483

     

 

2,752

 

Other current assets

     

 

14,229

     

 

22,571

 

Total current assets

     

 

122,617

     

 

140,752

 

Property and equipment, net

     

 

17,495

     

 

16,477

 

Trademarks, net

     

 

15,499

     

 

15,499

 

Goodwill, net

     

 

302,854

     

 

302,854

 

Other identifiable intangible assets, net

     

 

4,678

     

 

5,390

 

Debt issuance costs, net

     

 

633

     

 

689

 

Total assets

     

$

463,776

     

$

481,661

 
 

     

      

Liabilities and Stockholders' Equity

     

      

Current liabilities:

     

      

Accounts payable and accrued expenses

     

$

7,700

     

$

12,082

 

Accrued employee compensation and benefits

     

 

36,709

     

 

47,940

 

Current portion of long-term debt

     

 

2,288

     

 

5,483

 

Other current liabilities

     

 

4,685

     

 

4,378

 

Total current liabilities

     

 

51,382

     

 

69,883

 

Non-current deferred tax liabilities

     

 

37,032

     

 

32,546

 

Long-term debt

     

 

8,144

     

 

19,946

 

Total liabilities

     

 

96,558

     

 

122,375

 
 

     

      

Commitments and contingencies

     

      
 

     

      

Stockholders' equity:

     

      

Common stock

     

 

3

     

 

3

 

Additional paid-in capital

     

 

254,269

     

 

255,340

 

Retained earnings

     

 

112,946

     

 

103,943

 

Total stockholders' equity

     

 

367,218

     

 

359,286

 
 

     

      

Total liabilities and stockholders' equity

     

$

463,776

     

$

481,661

 









Cross Country Healthcare, Inc.

Segment Data  (a) (b)

(Unaudited, amounts in thousands)


  

Three Months Ended

June 30,

  

% Change

 

Six Months Ended

June 30,

  

% Change

2006

 

2005

  

2006

 

2005

 

Revenue from unaffiliated customers:

     

                   

Healthcare staffing

     

$

144,927

     

$

147,897

     

 

(2%)

 

$

292,527

     

$

295,452

     

 

(1%)

Other human capital management services

     

 

11,770

     

 

11,827

     

 

(0%)

  

24,004

     

 

23,077

     

 

4%

 

     

$

156,697

     

$

159,724

     

 

(2%)

 

$

316,531

     

$

318,529

     

 

(1%)

 

     

                 

Contribution income (c):

     

                 

Healthcare staffing

     

$

13,435

     

$

8,969

     

 

50%

     

$

27,309

     

$

21,384

     

 

28%

Other human capital management services

     

 

2,327

     

 

2,112

     

 

10%

     

 

4,916

     

 

4,161

     

 

18%

 

     

 

15,762

     

 

11,081

     

 

42%

     

 

32,225

     

 

25,545

     

 

26%

 

     

                 

Unallocated corporate overhead

     

 

6,486

     

 

6,394

     

 

1%

     

 

13,605

     

 

12,204

     

 

11%

Depreciation

     

 

1,383

     

 

1,215

     

 

14%

     

 

2,705

     

 

2,345

     

 

15%

Amortization

     

 

356

     

 

356

     

 

0%

     

 

712

     

 

712

     

 

0%

Interest expense, net

     

 

320

     

 

952

     

 

(66%)

  

706

     

 

1,869

     

 

(62%)

Income from continuing operations before income taxes

     

$

7,217

     

$

2,164

     

 

234%

     

$

14,497

     

$

8,415

     

 

72%

 

     

        

     

         

     

                     


Cross Country Healthcare, Inc.

Financial Statistics

(Unaudited)


  

Three Months Ended

June 30,

     

Six Months Ended

June 30,

    
  

2006

 

2005

     

2006

 

2005

    

Net cash provided by operating activities (in thousands)

 

$

9,872

     

$

6,326

     

    

$

20,101

     

$

9,652

    

FTEs (d)

  

5,240

     

 

5,556

     

     

5,333

     

 

5,583

    

Weeks worked (e)

  

68,120

     

 

72,228

     

     

138,658

     

 

145,158

    

Average healthcare staffing revenue per FTE per week (f)

  

2,128

     

 

2,048

     

     

2,110

     

 

2,035

    

———————

(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 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.