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) November 5, 2007

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______________

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 November 5, 2007, Cross Country Healthcare, Inc. (“the Company”) issued a press release announcing results for the quarter ended September 30, 2007,  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 7.01

Regulation FD Disclosure


Incorporated by reference is a press release issued by the Company on November 5, 2007, which is attached hereto as Exhibit 99.1. This information is being furnished under Item 7.01 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 November 5, 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/ EMIL HENSEL

 

 

Emil Hensel

Chief Financial Officer

 

 

Dated:  November 7, 2007















3



LINKS


Item 2.02

Results of Operations and Financial Condition

Item 7.01

Regulation FD Disclosure

Item 9.01

Financial Statements and Exhibits






EXHIBIT 99

EXHIBIT 99.1

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     NEWS

FOR IMMEDIATE RELEASE


CROSS COUNTRY HEALTHCARE

REPORTS THIRD QUARTER 2007 RESULTS



BOCA RATON, Fla. – November 5, 2007 – Cross Country Healthcare, Inc. (Nasdaq: CCRN) today reported revenue of $185.1 million in the third quarter ended September 30, 2007, a 14% increase from the prior year quarter. Net income for the third quarter increased to $7.0 million, or $0.22 per diluted share. A year earlier, the Company reported third quarter revenue of $162.9 million and net income of $0.1 million, or $0.00 per diluted share, including an after-tax charge of approximately $5.4 million, or $0.17 per diluted share, related to the settlement of a lawsuit. Cash flow from operations for the third quarter of 2007 was $8.7 million.


For the nine month period ended September 30, 2007, Cross Country Healthcare reported revenue of $536.6 million and net income of $17.3 million, or $0.53 per diluted share. This compares to revenue of $479.4 million and net income of $9.1 million, or $0.28 per diluted share, in the first nine months of the prior year, including the aforementioned charge. Cash flow from operations for the first nine months of 2007 was $17.3 million.


“The significant improvement in our results in the third quarter reflected top line growth and margin expansion in our travel nurse staffing business, substantial contributions from the three clinical trials services acquisitions made since August 2006, and organic growth in our clinical trials services business. While we anticipated that the clinical trials services segment would show strong performance in the third quarter, its results exceeded our expectations,” said Joseph A. Boshart, President and CEO of Cross Country Healthcare, Inc.


“At the same time, we are very pleased with the performance of our travel nurse staffing business in the third quarter. Margin improvement arose from an increase in the bill-pay spread, elimination of costs associated with a co-marketing relationship, and improvement in the pace of payments from certain slow pay accounts. We expect continued margin improvement in our travel nurse staffing business in the fourth quarter,” added Mr. Boshart.

 

Nurse and Allied Staffing


For the third quarter of 2007, the nurse and allied staffing business segment (travel and per diem nurse and travel allied staffing) generated revenue of $145.8 million, an increase of 6% from the prior year quarter. This reflects higher revenue from travel staffing on a year-over-year basis and sequentially from the second quarter of 2007.


Contribution income (defined as income from continuing operations before interest, income taxes, depreciation and amortization, legal settlement charge and corporate expenses not specifically identified to a reporting segment) increased 6% in the third quarter of 2007 to $14.3 million from $13.5 million in the same quarter a year ago.


Segment staffing volume increased 2% from the prior year quarter and decreased 1% sequentially from the second quarter of 2007. Travel staffing volume increased 5% year-over-year and declined 1% on a sequential basis.


For the first nine months of 2007, segment revenue increased 6% to $433.5 million from $409.7 million in the same period a year ago, while contribution income increased 3% to $39.4 million from $38.1 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





Clinical Trials Services


For the third quarter of 2007, the clinical trials services segment generated revenue of $26.2 million, an increase of 97% from $13.3 million in the prior year quarter. The year-over-year improvement reflected the additional revenue from the Metropolitan Research, AKOS and Assent acquisitions, as well as a significant increase in organic revenue.


Contribution income increased 191% in the third quarter of 2007 to $5.1 million from $1.7 million in the same quarter of 2006 due to a combination of higher revenue, an improvement in the organic gross profit margin, as well as the additional contribution from the acquired businesses.


For the first nine months of 2007, segment revenue increased 91% on a year-over-year basis to $65.4 million from $34.3 million in the same period a year ago, while contribution income increased 140% to $10.6 million from $4.4 million in the prior year period.


Other Human Capital Management Services


For the third quarter of 2007, the other human capital management services business segment (education and training and retained search) generated revenue of $13.2 million, a 15% increase from revenue of $11.5 million in the same quarter in the prior year. The increase reflected higher revenue from both the retained search business and the education and training business. Segment contribution income decreased to $1.6 million in the third quarter of 2007 from $2.2 million in the prior year quarter due to higher legal expenses related to a specific case that concluded during the third quarter of 2007, and higher direct mail costs.


For the first nine months of 2007, segment revenue increased 6% to $37.6 million from $35.5 million in the same period a year ago, while contribution income decreased to $5.7 million from $7.1 million in the prior year period.


Debt Repayments/Borrowings


During the third quarter of 2007, the Company borrowed $15.2 million net of repayments from its revolving credit facility, which was primarily used to fund the Assent Consulting acquisition, fund capital expenditures and to repurchase shares of its common stock. At September 30, 2007, the Company had $44.1 million of total debt on its balance sheet and a debt to total capitalization ratio of 10.2%.


Stock Repurchase Program Update


The Company repurchased 116,340 shares of its common stock during the third quarter of 2007 at an average cost of $15.78 per share. The Company can repurchase up to an additional 1,222,874 shares of its common stock under its current authorization. Shares may be repurchased from time-to-time in the open market subject to the constraints of the Company’s current credit agreement and such repurchases may be discontinued at any time at the discretion of the Company. At September 30, 2007, the Company had approximately 31.9 million shares outstanding.


Guidance For Fourth Quarter And Full-Year 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, significant legal proceedings or significant repurchases of the Company's common stock.


(more)








Cross Country Healthcare expects revenue in the fourth quarter of 2007 to be in the $179 million to $182 million range and earnings per diluted share to be in the range of $0.21 to $0.23. For the full-year, the Company expects 2007 revenue to be in the $715 million to $718 million range and earnings per diluted share to be in the range of $0.74 to $0.76.


Quarterly Conference Call


Cross Country Healthcare will hold a conference call on Tuesday, November 6th at 10:00 a.m. Eastern Time to discuss its third quarter 2007 financial results. This call will be webcast live by CCBN/Thomson Financial and may be accessed at the Company's web site at www.crosscountryhealthcare.com or by dialing 877-915-2768 from anywhere in the U.S. or by dialing 203-844-7000 from non-U.S. locations – Passcode: Cross Country. A replay of the webcast will be available through November 20th. A replay of the conference call will be available by telephone from approximately noon on November 6th until November 20th by calling 866-386-1316 from anywhere in the U.S. or 203-369-0402 from non-U.S. locations.


About Cross Country Healthcare


Cross Country Healthcare, Inc. is a leading provider of healthcare staffing and related services in the United States. The Company has a national client base of approximately 4,000 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, including from time to time entering into Letters of Intent which may or may not result in the completion of an acquisition, 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, 2006, as well as in our Quarterly Reports on Form 10-Q issued during 2007. 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

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


 

 

Three Months Ended
September 30,

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2007

 

2006

 

 

% Change

 

2007

 

2006

 

 

% Change

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services

 

$

185,124

 

$

162,876

 

 

14%

 

$

536,556

 

$

479,407

 

 

12%

 

Operating expenses:

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

     

 

 

 

Direct operating expenses

 

 

139,266

 

 

125,083

 

 

11%

 

 

408,606

 

 

367,983

 

 

11%

 

Selling, general and administrative expenses

 

 

31,486

 

 

26,790

 

 

18%

 

 

90,927

 

 

81,779

 

 

11%

 

Bad debt expense

 

 

 

 

 

 

 

 

 

1,265

 

 

22

 

 

NM

 

Depreciation

 

 

1,370

 

 

1,315

 

 

4%

 

 

4,359

 

 

4,020

 

 

8%

 

Amortization

 

 

622

 

 

418

 

 

49%

 

 

1,361

 

 

1,130

 

 

20%

 

Legal settlement charge

 

 

 

 

8,827

 

 

(100%)

 

 

34

 

 

8,827

 

 

(100%)

 

Total operating expenses

 

 

172,744

 

 

162,433

 

 

6%

 

 

506,552

 

 

463,761

 

 

9%

 

Income from operations

 

 

12,380

 

 

443

 

 

NM

 

 

30,004

 

 

15,646

 

 

92%

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss

 

 

59

 

 

 

 

ND

 

 

59

 

 

 

 

ND

 

Interest expense, net

 

 

808

 

 

273

 

 

196%

 

 

1,823

 

 

979

 

 

86%

 

Income from continuing operations before income taxes

 

 

11,513

 

 

170

 

 

NM

 

 

28,122

 

 

14,667

 

 

92%

 

Income tax expense

 

 

4,464

 

 

50

 

 

NM

 

 

10,810

 

 

5,660

 

 

91%

 

Income from continuing operations

 

 

7,049

 

 

120

 

 

NM

 

 

17,312

 

 

9,007

 

 

92%

 

Discontinued operations, net of income taxes

 

 

 

 

2

 

 

(100%)

 

 

 

 

118

 

 

(100%)

 

Net income

 

$

7,049

 

$

122

 

 

NM

 

$

17,312

 

$

9,125

 

 

90%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.22

 

$

0.00

 

 

 

 

$

0.54

 

$

0.28

 

 

 

 

Discontinued operations, net of income taxes

 

 

 

 

0.00

 

 

 

 

 

 

 

0.00

 

 

 

 

Net income

 

$

0.22

 

$

0.00

 

 

 

 

$

0.54

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.22

 

$

0.00

 

 

 

 

$

0.53

 

$

0.28

 

 

 

 

Discontinued operations, net of income taxes

 

 

 

 

0.00

 

 

 

 

 

 

 

0.00

 

 

 

 

Net income

 

$

0.22

 

$

0.00

 

 

 

 

$

0.53

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

31,954

 

 

32,067

 

 

 

 

 

32,041

 

 

32,095

 

 

 

 

Weighted average common shares outstanding - diluted

 

 

32,433

 

 

32,618

 

 

 

 

 

32,631

 

 

32,721

 

 

 

 


ND - Not determinable

NM - Not meaningful








Cross Country Healthcare, Inc.

Condensed Consolidated Balance Sheets (1)

(Unaudited, amounts in thousands)


 

 

September 30,
2007

 

December 31,
2006

 

 

   

 

 

   

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

$

 

Accounts receivable, net

 

 

123,848

 

 

114,735

 

Deferred tax assets

 

 

5,360

 

 

7,888

 

Income taxes receivable

 

 

2,333

 

 

1,602

 

Other current assets

 

 

18,151

 

 

18,126

 

Total current assets

 

 

149,692

 

 

142,351

 

Property and equipment, net

 

 

24,284

 

 

20,562

 

Trademarks, net

 

 

19,253

 

 

17,199

 

Goodwill, net

 

 

325,253

 

 

310,173

 

Other identifiable intangible assets, net

 

 

16,690

 

 

9,310

 

Other assets

 

 

1,474

 

 

1,331

 

Total assets

 

$

536,646

 

$

500,926

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

11,838

 

$

13,744

 

Accrued employee compensation and benefits

 

 

27,701

 

 

29,213

 

Current portion of long-term debt

 

 

1,196

 

 

1,550

 

Accrued legal settlement charge

 

 

 

 

6,704

 

Other current liabilities

 

 

8,895

 

 

5,931

 

Total current liabilities

 

 

49,630

 

 

57,142

 

Non-current deferred tax liabilities

 

 

45,880

 

 

39,972

 

Long-term debt

 

 

42,918

 

 

19,979

 

Other long-term liabilities

 

 

10,386

 

 

8,977

 

Total liabilities

 

 

148,814

 

 

126,070

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock

 

 

3

 

 

3

 

Additional paid-in capital

 

 

250,272

 

 

254,273

 

Other stockholders' equity

 

 

137,557

 

 

120,580

 

Total stockholders' equity

 

 

387,832

 

 

374,856

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

536,646

 

$

500,926

 

———————

(1)

Prior period data has been reclassified to conform to current period's presentation.








Cross Country Healthcare, Inc.

Segment Data (a)

(Unaudited, amounts in thousands)


 

 

Three Months Ended
September 30,

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2005

 

2006

 

 

% Change

 

2007

 

2006

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and allied staffing

 

$

145,780

 

$

138,111

 

 

6%

 

$

433,497

 

$

409,661

 

 

6%

 

Clinical trials services

 

 

26,164

 

 

13,290

 

 

97%

 

 

65,444

 

 

34,267

 

 

91%

 

Other human capital management services

 

 

13,180

 

 

11,475

 

 

15%

 

 

37,615

 

 

35,479

 

 

6%

 

 

 

$

185,124

 

$

162,876

 

 

14%

 

$

536,556

 

$

479,407

 

 

12%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution income (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and allied staffing

 

$

14,329

 

$

13,473

 

 

6%

 

$

39,385

 

$

38,110

 

 

3%

 

Clinical trials services

 

 

5,064

 

 

1,740

 

 

191%

 

 

10,597

 

 

4,412

 

 

140%

 

Other human capital management services

 

 

1,639

 

 

2,181

 

 

(25%)

 

 

5,728

 

 

7,097

 

 

(19%)

 

 

 

 

21,032

 

 

17,394

 

 

21%

 

 

55,710

 

 

49,619

 

 

12%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated corporate overhead

 

 

6,660

 

 

6,391

 

 

4%

 

 

19,952

 

 

19,996

 

 

(0%)

 

Depreciation

 

 

1,370

 

 

1,315

 

 

4%

 

 

4,359

 

 

4,020

 

 

8%

 

Amortization

 

 

622

 

 

418

 

 

49%

 

 

1,361

 

 

1,130

 

 

20%

 

Legal settlement charge

 

 

 

 

8,827

 

 

(100%)

 

 

34

 

 

8,827

 

 

(100%)

 

Foreign exchange loss

 

 

59

 

 

 

 

ND

 

 

59

 

 

 

 

ND

 

Interest expense, net

 

 

808

 

 

273

 

 

196%

 

 

1,823

 

 

979

 

 

86%

 

Income from continuing operations
before income taxes

 

$

11,513

 

$

170

 

 

NM

 

$

28,122

 

$

14,667

 

 

92%

 


Cross Country Healthcare, Inc.

Other Financial Data

(Unaudited)


 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities (in thousands)

 

$

8,696

 

$

9,610

 

$

17,326

 

$

29,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nurse and allied staffing statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

FTEs (c)

 

 

4,999

 

 

4,912

 

 

5,067

 

 

4,974

 

Weeks worked (d)

 

 

64,987

 

 

63,856

 

 

197,613

 

 

193,986

 

Average nurse and allied staffing revenue per FTE per week (e)

 

$

2,243

 

$

2,163

 

$

2,194

 

$

2,112

 

———————

(a)

Prior period segment data has been reclassified to segregate clinical trials services as a separate business segment. Segment data provided is in accordance with FASB Statement 131.

(b)

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

(c)

FTEs represent the average number of nurse and allied contract staffing personnel on a full-time equivalent basis. Clinical trials services are no longer included in this statistic.

(d)

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

(e)

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