Cross Country Healthcare Announces First Quarter 2015 Financial Results
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Revenue was
$186.0 million , up 57% year-over-year and 5% on a pro forma basis* -
Adjusted EBITDA was
$6.2 million or 3.3% of revenue versus$1.0 million or 0.9% of revenue in the prior year -
Net income attributable to common shareholders was
$0.05 per diluted share; Adjusted net income attributable to common shareholders was$0.03 per diluted share -
Second Quarter Guidance: Revenue of
$188 million -$192 million and Adjusted EBITDA margin of 3.7% - 4.2%
* See discussion of Non-GAAP financial measures below.
"We had a good start to 2015 with strong year-over-year revenue growth
and a
First quarter consolidated revenue was
Quarterly Business Segment Highlights
Nurse and
Revenue from Nurse and
Revenue from
Other Human Capital Management Services
Revenue from Other Human Capital Management Services was
Cash Flow and Balance Sheet Highlights
Cash flow provided by operating activities was
Outlook for Second Quarter 2015
The Company also provided guidance for the second quarter of 2015:
Range | Year-over-Year | |||
Change | ||||
Revenue |
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53% - 57% | ||
Gross profit margin | 25.5% - 26.0% | (90) - (40) bps | ||
Adjusted EBITDA margin | 3.7% - 4.2% | 100 - 150 bps | ||
Adjusted net income attributable to common shareholders per diluted share |
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The estimates above are based on current management expectations and, as
such, are forward-looking and actual results may differ materially.
These ranges do not include the potential impact of any future mergers,
acquisitions or other business combinations, any impairment charges or
valuation allowances, or any material legal or restructuring charges.
Adjusted net income attributable to common shareholders per diluted
share assumes an adjusted weighted average share count consistent with
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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 are adjusted to include the results of our acquisitions as if they were acquired 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, without limitation, 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 nurses and physicians, 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
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
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Consolidated Statements of Operations | |||||||||||||||||||||
(Unaudited, amounts in thousands, except per share data) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
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2015 | 2014 | 2014 | |||||||||||||||||||
Revenue from services | $ | 185,964 | $ | 118,091 | $ | 188,134 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||
Direct operating expenses | 138,927 | 87,641 | 140,493 | ||||||||||||||||||
Selling, general and administrative expenses | 41,166 | 29,455 | 41,538 | ||||||||||||||||||
Bad debt expense | 91 | 432 | 295 | ||||||||||||||||||
Depreciation | 960 | 974 | 1,070 | ||||||||||||||||||
Amortization | 982 | 785 | 995 | ||||||||||||||||||
Acquisition and integration costs (a) | 118 | 295 | 2,532 | ||||||||||||||||||
Restructuring costs | — | — | 85 | ||||||||||||||||||
Impairment charges (b) | — | — | 10,000 | ||||||||||||||||||
Total operating expenses | 182,244 | 119,582 | 197,008 | ||||||||||||||||||
Income (loss) from operations | 3,720 | (1,491 | ) | (8,874 | ) | ||||||||||||||||
Other expenses (income): | |||||||||||||||||||||
Interest expense | 1,737 | 255 | 1,784 | ||||||||||||||||||
(Gain) loss on derivative liability | (2,147 | ) | — | 9,363 | |||||||||||||||||
Other expense (income), net | 43 | 107 | (46 | ) | |||||||||||||||||
Income (loss) before income taxes | 4,087 | (1,853 | ) | (19,975 | ) | ||||||||||||||||
Income tax expense (benefit) | 1,037 | (1,071 | ) | 112 | |||||||||||||||||
Consolidated net income (loss) | 3,050 | (782 | ) | (20,087 | ) | ||||||||||||||||
Less: Net income attributable to noncontrolling interest in subsidiary | 116 | — | 131 | ||||||||||||||||||
Net income (loss) attributable to common shareholders | $ | 2,934 | $ | (782 | ) | $ | (20,218 | ) | |||||||||||||
Net income (loss) per share attributable to common shareholders - Basic | $ | 0.09 | $ | (0.03 | ) | $ | (0.65 | ) | |||||||||||||
Net income (loss) per share attributable to common shareholders - Diluted | $ | 0.05 | $ | (0.03 | ) | $ | (0.65 | ) | |||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||
Basic | 31,294 | 31,098 | 31,264 | ||||||||||||||||||
Diluted (c) | 35,454 | 31,098 | 31,264 | ||||||||||||||||||
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Reconciliation of Non-GAAP Financial Measure | ||||||||||||||||||||||
(Unaudited, amounts in thousands) | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
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2015 | 2014 | 2014 | ||||||||||||||||||||
Adjusted EBITDA (d): | ||||||||||||||||||||||
Consolidated net income (loss) attributable to common shareholders | $ | 2,934 | $ | (782 | ) | $ | (20,218 | ) | ||||||||||||||
Depreciation | 960 | 974 | 1,070 | |||||||||||||||||||
Amortization | 982 | 785 | 995 | |||||||||||||||||||
Interest expense | 1,737 | 255 | 1,784 | |||||||||||||||||||
Income tax expense (benefit) | 1,037 | (1,071 | ) | 112 | ||||||||||||||||||
Acquisition and integration costs (a) | 118 | 295 | 2,532 | |||||||||||||||||||
Restructuring costs | — | — | 85 | |||||||||||||||||||
Impairment charges (b) | — | — | 10,000 | |||||||||||||||||||
(Gain) loss on derivative liability | (2,147 | ) | — | 9,363 | ||||||||||||||||||
Other expense (income), net | 43 | 107 | (46 | ) | ||||||||||||||||||
Equity compensation | 376 | 452 | 429 | |||||||||||||||||||
Net income attributable to noncontrolling interest in subsidiary | 116 | — | 131 | |||||||||||||||||||
Adjusted EBITDA | $ | 6,156 | $ | 1,015 | $ | 6,237 | ||||||||||||||||
Adjusted net income attributable to common shareholders per diluted share: | ||||||||||||||||||||||
Net income (loss) attributable to common shareholders per diluted share | $ | 0.05 | $ | (0.03 | ) | $ | (0.65 | ) | ||||||||||||||
Acquisition and integration costs (a) | — | 0.01 | 0.05 | |||||||||||||||||||
Restructuring costs | — | — | — | |||||||||||||||||||
Impairment charges (b) | — | — | 0.29 | |||||||||||||||||||
(Gain) loss on derivative liability | (0.04 | ) | — | 0.18 | ||||||||||||||||||
Valuation allowance on adjusted items | (0.02 | ) | 0.01 | 0.15 | ||||||||||||||||||
Adjustment for change in dilutive shares (e) | 0.04 | — | 0.01 | |||||||||||||||||||
Adjusted net income attributable to common shareholders per diluted share | $ | 0.03 | $ | (0.01 | ) | $ | 0.03 | |||||||||||||||
Weighted average common shares outstanding - diluted | 35,454 | 31,098 | 31,264 | |||||||||||||||||||
Adjustment to diluted shares | (3,521 | ) | — | 447 | ||||||||||||||||||
Adjusted weighted average common shares - diluted | 31,933 | 31,098 | 31,711 | |||||||||||||||||||
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Consolidated Balance Sheets | |||||||||||||
(Unaudited, amounts in thousands) | |||||||||||||
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2015 | 2014 | ||||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 7,465 | $ | 4,995 | |||||||||
Accounts receivable, net | 121,145 | 113,129 | |||||||||||
Income taxes receivable | 238 | 307 | |||||||||||
Prepaid expenses | 5,862 | 6,073 | |||||||||||
Insurance recovery receivable | 5,893 | 5,624 | |||||||||||
Other current assets | 693 | 1,055 | |||||||||||
Total current assets | 141,296 | 131,183 | |||||||||||
Property and equipment, net | 11,756 | 12,133 | |||||||||||
Trade names, net | 38,201 | 38,201 | |||||||||||
Goodwill, net | 90,647 | 90,647 | |||||||||||
Other identifiable intangible assets, net | 32,841 | 33,823 | |||||||||||
Debt issuance costs, net | 1,163 | 1,257 | |||||||||||
Other non-current assets | 17,594 | 17,889 | |||||||||||
Total assets | $ | 333,498 | $ | 325,133 | |||||||||
Liabilities and Stockholders' Equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable and accrued expenses | $ | 24,265 | $ | 27,314 | |||||||||
Accrued employee compensation and benefits | 36,230 | 28,731 | |||||||||||
Current portion of long-term debt and capital lease obligations | 6,608 | 3,607 | |||||||||||
Sales tax payable | 2,636 | 2,573 | |||||||||||
Deferred purchase price | 2,223 | — | |||||||||||
Deferred tax liabilities | 1,716 | 1,981 | |||||||||||
Other current liabilities | 2,761 | 2,790 | |||||||||||
Total current liabilities | 76,439 | 66,996 | |||||||||||
Long-term debt and capital lease obligations | 68,664 | 70,467 | |||||||||||
Non-current deferred tax liabilities | 19,142 | 18,038 | |||||||||||
Long-term accrued claims | 30,427 | 32,068 | |||||||||||
Long-term deferred purchase price | — | 2,333 | |||||||||||
Other long-term liabilities | 5,249 | 4,899 | |||||||||||
Total liabilities | 199,921 | 194,801 | |||||||||||
Commitments and contingencies | |||||||||||||
Stockholders' equity: | |||||||||||||
Common stock | 3 | 3 | |||||||||||
Additional paid-in capital | 247,778 | 247,467 | |||||||||||
Accumulated other comprehensive loss | (1,104 | ) | (1,118 | ) | |||||||||
Accumulated deficit | (113,540 | ) | (116,474 | ) | |||||||||
Total |
133,137 | 129,878 | |||||||||||
Noncontrolling interest | 440 | 454 | |||||||||||
Total stockholders' equity | 133,577 | 130,332 | |||||||||||
Total liabilities and stockholders' equity | $ | 333,498 | $ | 325,133 | |||||||||
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Segment Data (f) | |||||||||||||||||||||||||||||||||||
(Unaudited, amounts in thousands) | |||||||||||||||||||||||||||||||||||
Three Months Ended |
Year-over- Year |
Sequential |
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% of |
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% of |
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% of | % change | % change | ||||||||||||||||||||||||||||
2015 | Total | 2014 | Total | 2014 | Total | Fav (Unfav) | Fav (Unfav) | ||||||||||||||||||||||||||||
Revenue from services: | |||||||||||||||||||||||||||||||||||
Nurse and |
$ | 149,112 | 80 | % | $ | 80,730 | 68 | % | $ | 147,382 | 78 | % | 85 | % | 1 | % | |||||||||||||||||||
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27,347 | 15 | % | 28,599 | 24 | % | 30,360 | 16 | % | (4 | )% | (10 | )% | ||||||||||||||||||||||
Other Human Capital Management Services | 9,505 | 5 | % | 8,762 | 8 | % | 10,392 | 6 | % | 8 | % | (9 | )% | ||||||||||||||||||||||
$ | 185,964 | 100 | % | $ | 118,091 | 100 | % | $ | 188,134 | 100 | % | 57 | % | (1 | )% | ||||||||||||||||||||
Contribution income (h) | |||||||||||||||||||||||||||||||||||
Nurse and |
$ | 10,602 | $ | 5,989 | $ |
11,208 |
77 | % | (5 | )% | |||||||||||||||||||||||||
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2,116 | 731 | 2,520 | 189 | % | (16 | )% | ||||||||||||||||||||||||||||
Other Human Capital Management Services | 602 | 166 | 635 | 263 | % | (5 | )% | ||||||||||||||||||||||||||||
13,320 | 6,886 |
14,363 |
93 | % | (7 | )% | |||||||||||||||||||||||||||||
Unallocated corporate overhead | 7,540 | 6,323 |
8,555 |
(19 | )% |
12 |
% | ||||||||||||||||||||||||||||
Depreciation | 960 | 974 | 1,070 | 1 | % | 10 | % | ||||||||||||||||||||||||||||
Amortization | 982 | 785 | 995 | (25 | )% | 1 | % | ||||||||||||||||||||||||||||
Acquisition and integration costs (a) | 118 | 295 | 2,532 | 60 | % | 95 | % | ||||||||||||||||||||||||||||
Restructuring costs | — | — | 85 | — | % | 100 | % | ||||||||||||||||||||||||||||
Impairment charges (b) | — | — | 10,000 | — | % | 100 | % | ||||||||||||||||||||||||||||
Income (loss) from operations | $ | 3,720 | $ | (1,491 | ) | $ | (8,874 | ) | 349 | % | 142 | % | |||||||||||||||||||||||
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Other Financial Data | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
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2015 | 2014 | 2014 | |||||||||||||||||||||||||
Net cash provided by (used in) operating activities (in thousands) | $ | 270 | $ | (9,234 | ) | $ | (1,016 | ) | |||||||||||||||||||
Nurse and |
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FTEs (g) (i) | 6,454 | 3,119 | 6,340 | ||||||||||||||||||||||||
Average Nurse and |
$ | 257 | $ | 288 | $ | 253 | |||||||||||||||||||||
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Days filled (g) (k) | 17,413 | 20,123 | 19,874 | ||||||||||||||||||||||||
Revenue per day filled (g) (l) | $ | 1,587 | $ | 1,444 | $ | 1,486 | |||||||||||||||||||||
(a) On
(b) The fourth quarter of 2014 includes non-cash impairment charges of
(c) When applying the if-converted method to our Convertible Notes for
the three months ended
(d) Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, is defined as net income (loss) attributable to common shareholders before depreciation and amortization, interest expense, income tax expense (benefit), acquisition and integration costs, restructuring costs, legal settlement charge, (gain) loss on derivative liability, impairment charges, other expense (income), net, equity compensation, and 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 (loss) attributable to common shareholders as an indicator of operating performance. Management uses Adjusted EBITDA as one performance measure in its annual cash incentive program for certain members of its management team. In addition, management monitors Adjusted EBITDA for planning purposes. Adjusted EBITDA, as defined, closely matches the operating measure typically used in the Company's credit facilities in calculating various ratios. Management believes Adjusted EBITDA, as defined, is useful to investors when evaluating the Company's performance as it excludes certain items that management believes are not indicative of the Company's operating performance. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue.
(e) Adjustments to net income attributable to common shareholders in the
three months ended
(f) Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC.
(g) Effective
(h) Contribution income is defined as income (loss) from operations before depreciation and amortization, acquisition and integration costs, restructuring costs, impairment charges, and corporate expenses not specifically identified to a reporting segment. Contribution income is a financial measure used by management when assessing segment performance.
(i) FTEs represent the average number of Nurse and
(j) Average revenue per FTE per day is calculated by dividing the Nurse
and
(k) Days filled is calculated by dividing the total hours filled during the period by 8 hours and excludes accrued days filled.
(l) Revenue per day filled is calculated by dividing the actual revenue
invoiced by
President
and Chief Executive Officer
wgrubbs@crosscountry.com
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