Cross Country Healthcare Announces Third Quarter 2014 Financial Results
-
Revenue was
$188.9 million up 75% year-over-year and 54% sequentially -
Adjusted EBITDA was
$6.6 million or 3.5% of revenue -
Cash Flow from Operations was
$2.5 million -
Fourth Quarter Guidance: Revenue of
$187 million -$192 million and Adjusted EBITDA margin of 3.5% - 4.0%
"Our strong results this quarter reflect the excellent progress we have
made driving revenue growth and integrating our recent acquisition of
Third quarter consolidated revenue was
For the nine months ended
Quarterly Business Segment Highlights
Nurse & Allied
Revenue from the nurse and allied
staffing business segment increased 125% from the same quarter last
year, and 79% sequentially. On a pro forma basis revenue was up 12%
year-over-year and 3% sequentially. Contribution income in this segment
was
Revenue from the physician staffing
business decreased 3% year-over-year and increased 5% sequentially. The
year-over-year decrease is primarily due to lower volume, partly offset
by the impact of the
Other Human Capital Management Services
Revenue from the
other human capital management services business segment was
Cash Flow and Balance Sheet Highlights
Cash flow provided by operating activities was
Outlook for Fourth Quarter 2014
The Company also provided its guidance for the fourth quarter of 2014:
Range |
Year-over-Year |
|||||
Change | ||||||
Revenue |
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71 - 76% | ||||
Gross Profit Margin | 25.7% - 26.2% | (50) - 0bps | ||||
Adjusted EBITDA margin | 3.5% - 4.0% | 190-240 bps | ||||
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.
INVITATION TO CONFERENCE CALL
The Company will hold its quarterly conference call on
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. 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.
ABOUT
Copies of this and other news releases as well as additional information
about
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 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 | Nine Months Ended | ||||||||||||||||||||
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2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||
Revenue from services | $ | 188,944 | $ | 108,048 | $ | 122,656 | $ | 429,691 |
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$ |
329,132 | ||||||||||
Operating expenses: | |||||||||||||||||||||
Direct operating expenses | 141,667 | 79,864 | 90,220 | 319,528 | 244,234 | ||||||||||||||||
Selling, general and administrative expenses | 40,858 | 25,504 | 29,167 | 99,480 | 79,172 | ||||||||||||||||
Bad debt expense | 257 | 215 | 32 | 721 | 769 | ||||||||||||||||
Depreciation | 1,005 | 890 | 817 | 2,796 | 2,952 | ||||||||||||||||
Amortization | 1,011 | 552 | 784 | 2,580 | 1,684 | ||||||||||||||||
Acquisition and integration costs (a) | 2,383 | — | 2,747 | 5,425 | — | ||||||||||||||||
Restructuring costs | — | 109 | 755 | 755 | 484 | ||||||||||||||||
Legal settlement charge | — | — | — | — | 750 | ||||||||||||||||
Total operating expenses | 187,181 | 107,134 | 124,522 | 431,285 | 330,045 | ||||||||||||||||
Income (loss) from operations | 1,763 | 914 | (1,866 | ) | (1,594 | ) | (913 | ) | |||||||||||||
Other expenses (income): | |||||||||||||||||||||
Foreign exchange (gain) loss | (11 | ) | (53 | ) | 27 | 63 | (154 | ) | |||||||||||||
Interest expense | 1,832 | 190 | 289 | 2,376 | 634 | ||||||||||||||||
Change in fair value of convertible note derivative liability | 7,308 | — | — | 7,308 | — | ||||||||||||||||
Loss on early extinguishment and modification of debt (b) | — | — | — | — | 1,419 | ||||||||||||||||
Other (income) expense, net | (51 | ) | (32 | ) | (7 | ) | 3 | (83 | ) | ||||||||||||
(Loss) income from continuing operations before income taxes | (7,315 | ) | 809 | (2,175 | ) | (11,344 | ) | (2,729 | ) | ||||||||||||
Income tax expense (benefit) | 169 | (644 | ) | 1,006 | 104 | (1,401 | ) | ||||||||||||||
(Loss) income from continuing operations | (7,484 | ) | 1,453 | (3,181 | ) | (11,448 | ) | (1,328 | ) | ||||||||||||
(Loss) income from discontinued operations, net of income taxes (c) | — | (539 | ) | — | — | 1,943 | |||||||||||||||
Net (loss) income | (7,484 | ) | 914 | (3,181 | ) | (11,448 | ) | 615 | |||||||||||||
Less: Net income attributable to non-controlling interest in subsidiary | 118 | — | — | 118 | — | ||||||||||||||||
Net (loss) income attributable to |
$ | (7,602 | ) | $ | 914 | $ | (3,181 | ) | $ | (11,566 | ) | $ | 615 | ||||||||
Net (loss) income per common share, basic: | |||||||||||||||||||||
Continuing operations | $ | (0.24 | ) | $ | 0.05 | $ | (0.10 | ) | $ | (0.37 | ) | $ | (0.04 | ) | |||||||
Discontinued operations | — | (0.02 | ) | — | — | 0.06 | |||||||||||||||
Net (loss) income attributable to |
$ | (0.24 | ) | $ | 0.03 | $ | (0.10 | ) | $ | (0.37 | ) | $ | 0.02 | ||||||||
Net (loss) income per common share, diluted: | |||||||||||||||||||||
Continuing operations | $ | (0.24 | ) | $ | 0.05 | $ | (0.10 | ) | $ | (0.37 | ) | $ | (0.04 | ) | |||||||
Discontinued operations | — | (0.02 | ) | — | — | 0.06 | |||||||||||||||
Net (loss) income attributable to |
$ | (0.24 | ) | $ | 0.03 | $ | (0.10 | ) | $ | (0.37 | ) | $ | 0.02 | ||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||
Basic | 31,245 | 31,085 | 31,151 | 31,165 | 30,984 | ||||||||||||||||
Diluted | 31,245 | 31,161 | 31,151 | 31,165 | 30,984 | ||||||||||||||||
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Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||
Adjusted EBITDA (d) | |||||||||||||||||||||
(Unaudited, amounts in thousands) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
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2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||
Income (loss) from operations | $ | 1,763 | $ | 914 | $ | (1,866 | ) | $ | (1,594 | ) | $ | (913 | ) | ||||||||
Depreciation | 1,005 | 890 | 817 | 2,796 | 2,952 | ||||||||||||||||
Amortization | 1,011 | 552 | 784 | 2,580 | 1,684 | ||||||||||||||||
Acquisition and integration costs (a) | 2,383 | — | 2,747 | 5,425 | — | ||||||||||||||||
Restructuring costs | — | 109 | 755 | 755 | 484 | ||||||||||||||||
Legal settlement charge | — | — | — | — | 750 | ||||||||||||||||
Equity compensation | 416 | 451 | 90 | 958 | 1,635 | ||||||||||||||||
Adjusted EBITDA (d) | $ | 6,578 | $ | 2,916 | $ | 3,327 | $ | 10,920 | $ | 6,592 | |||||||||||
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Consolidated Balance Sheets | |||||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||
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2014 | 2013 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Current assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 7,732 | $ | 8,055 | |||||||||||||||||
Accounts receivable, net | 108,506 | 60,750 | |||||||||||||||||||
Income taxes receivable | 792 | 538 | |||||||||||||||||||
Prepaid expenses | 8,385 | 6,163 | |||||||||||||||||||
Insurance recovery receivable | 4,611 | 3,886 | |||||||||||||||||||
Indemnity escrow receivable | — | 3,750 | |||||||||||||||||||
Other current assets | 1,072 | 793 | |||||||||||||||||||
Total current assets | 131,098 | 83,935 | |||||||||||||||||||
Property and equipment, net | 12,350 | 6,170 | |||||||||||||||||||
Trade names, net | 48,201 | 42,301 | |||||||||||||||||||
Goodwill, net | 91,109 | 77,266 | |||||||||||||||||||
Other identifiable intangible assets, net | 34,818 | 26,198 | |||||||||||||||||||
Debt issuance costs, net | 1,310 | 464 | |||||||||||||||||||
Non-current insurance recovery receivable | 16,867 | 10,914 | |||||||||||||||||||
Non-current security deposits | 715 | 997 | |||||||||||||||||||
Total assets | $ | 336,468 | $ | 248,245 | |||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||
Accounts payable and accrued expenses | $ | 19,129 | $ | 10,272 | |||||||||||||||||
Accrued employee compensation and benefits | 34,012 | 19,148 | |||||||||||||||||||
Current portion of long-term debt | 4,607 | 8,483 | |||||||||||||||||||
Sales tax payable | 2,718 | 2,404 | |||||||||||||||||||
Deferred tax liabilities | 638 | 535 | |||||||||||||||||||
Other current liabilities | 4,441 | 4,063 | |||||||||||||||||||
Total current liabilities | 65,545 | 44,905 | |||||||||||||||||||
Long-term debt | 60,751 | 93 | |||||||||||||||||||
Non-current deferred tax liabilities | 19,535 | 16,849 | |||||||||||||||||||
Long-term accrued claims | 32,546 | 18,303 | |||||||||||||||||||
Long-term deferred purchase price | 2,424 | — | |||||||||||||||||||
Long-term unrecognized tax benefits | 1,487 | 4,013 | |||||||||||||||||||
Other long-term liabilities | 4,147 | 3,415 | |||||||||||||||||||
Total liabilities | 186,435 | 87,578 | |||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||||
Common stock | 3 | 3 | |||||||||||||||||||
Additional paid-in capital | 247,038 | 246,325 | |||||||||||||||||||
Accumulated other comprehensive loss | (1,075 | ) | (970 | ) | |||||||||||||||||
Accumulated deficit | (96,257 | ) | (84,691 | ) | |||||||||||||||||
Total |
149,709 |
160,667 | |||||||||||||||||||
Non-controlling interest |
324 |
— |
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Total stockholders' equity |
150,033 |
160,667 |
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Total liabilities and stockholders' equity | $ | 336,468 | $ | 248,245 |
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Segment Data (e) | |||||||||||||||||||||||||||
(Unaudited, amounts in thousands) | |||||||||||||||||||||||||||
Three Months Ended | YOY | Sequential | |||||||||||||||||||||||||
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% of |
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% of |
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% of | % change | % change | ||||||||||||||||||||
2014 | Total | 2013 | Total | 2014 | Total | Fav (Unfav) | Fav (Unfav) | ||||||||||||||||||||
Revenue from services: |
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Nurse and |
$ | 147,518 | 78% | $ | 65,580 | 61% | $ | 82,616 | 67% | 125% | 79% | ||||||||||||||||
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32,286 | 17% | 33,353 | 31% | 30,849 | 25% | (3)% | 5% | |||||||||||||||||||
Other Human Capital Management Services | 9,140 | 5% | 9,115 | 8% | 9,191 | 8% | —% | (1)% | |||||||||||||||||||
$ | 188,944 | 100% | $ | 108,048 | 100% | $ | 122,656 | 100% | 75% | 54% | |||||||||||||||||
Contribution income (g) | |||||||||||||||||||||||||||
Nurse and |
$ | 12,575 | $ | 4,998 | $ | 6,652 | 152% | 89% | |||||||||||||||||||
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1,478 | 2,243 | 1,874 | (34)% | (21)% | ||||||||||||||||||||||
Other Human Capital Management Services | (55 | ) | 55 | (232 | ) | (200)% | 76% | ||||||||||||||||||||
13,998 | 7,296 | 8,294 | 92% | 69% | |||||||||||||||||||||||
Unallocated corporate overhead (h) | 7,836 | 4,831 | 5,057 | (62)% | (55)% | ||||||||||||||||||||||
Depreciation | 1,005 | 890 | 817 | (13)% | (23)% | ||||||||||||||||||||||
Amortization | 1,011 | 552 | 784 | (83)% | (29)% | ||||||||||||||||||||||
Acquisition and integration costs (a) | 2,383 | — | 2,747 |
(100)% |
13% | ||||||||||||||||||||||
Restructuring costs | — | 109 | 755 | 100% | 100% | ||||||||||||||||||||||
Income (loss) from operations | $ | 1,763 | $ | 914 | $ | (1,866 | ) | 93% | 194% | ||||||||||||||||||
Nine Months Ended | YOY | ||||||||||||||||||||||||||
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% of |
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% of | % change | |||||||||||||||||||||||
2014 | Total | 2013 | Total | Fav (Unfav) | |||||||||||||||||||||||
Revenue from services: | |||||||||||||||||||||||||||
Nurse and |
$ | 310,327 | 72% | $ | 202,309 | 61% | 53% | ||||||||||||||||||||
|
92,271 | 22% | 97,933 | 30% | (6)% | ||||||||||||||||||||||
Other Human Capital Management Services | 27,093 | 6% | 28,890 | 9% | (6)% | ||||||||||||||||||||||
$ | 429,691 | 100% | $ | 329,132 | 100% | 31% | |||||||||||||||||||||
Contribution income (g) | |||||||||||||||||||||||||||
Nurse and |
$ | 25,196 | $ | 13,665 | 84% | ||||||||||||||||||||||
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4,103 | 7,031 | (42)% | ||||||||||||||||||||||||
Other Human Capital Management Services | (121 | ) | 879 | (114)% | |||||||||||||||||||||||
29,178 | 21,575 | 35% | |||||||||||||||||||||||||
Unallocated corporate overhead (h) | 19,216 | 16,618 | (16)% | ||||||||||||||||||||||||
Depreciation | 2,796 | 2,952 | 5% | ||||||||||||||||||||||||
Amortization | 2,580 | 1,684 | (53)% | ||||||||||||||||||||||||
Acquisition and integration costs (a) | 5,425 | — | (100)% | ||||||||||||||||||||||||
Restructuring costs | 755 | 484 | (56)% | ||||||||||||||||||||||||
Legal settlement charge | — | 750 | 100% | ||||||||||||||||||||||||
Income (loss) from operations | $ | (1,594 | ) | $ | (913 | ) | (75)% | ||||||||||||||||||||
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Other Financial Data | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
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2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||||||||
Net cash provided by (used in) operating activities (in thousands) | $ | 2,475 | $ | 7,161 | $ | 3,703 | $ |
(3,056 |
) |
$ | 11,559 | ||||||||||||||||
Nurse and |
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FTEs (f) (i) | 6,396 | 2,241 | 3,177 | 4,227 | 2,341 | ||||||||||||||||||||||
Average nurse and allied staffing revenue per FTE per day (f) (j) | $ | 251 | $ | 318 | $ | 286 | $ | 269 | $ | 317 | |||||||||||||||||
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Days filled (f) (k) | 22,742 | 24,011 | 21,147 | 64,690 | 69,861 | ||||||||||||||||||||||
Revenue per day filled (f) (l) | $ | 1,428 | $ | 1,461 | $ | 1,444 | $ | 1,432 | $ | 1,418 | |||||||||||||||||
(a) On
On
(b) Loss on
early extinguishment and modification of debt relates to the write-off
of unamortized net debt issuance costs related to the repayment of the
Company's term loan and revolver in 2013.
(c) The Company sold its
clinical trial services business on
(d) Adjusted EBITDA, a
non-GAAP (Generally Accepted Accounting Principles) financial measure,
is defined as income or loss from operations before depreciation,
amortization, acquisition and integration costs, restructuring costs,
legal settlement charges, impairment charges and non-cash equity
compensation. 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
income or loss from operations 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)
Segment data provided is in accordance with the Segment Reporting Topic
of the FASB ASC.
(f) Effective
(g) Contribution income is
defined as income or loss from operations before depreciation,
amortization, acquisition and integration costs, restructuring costs,
legal settlement charges, 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.
(h)
Certain prior year amounts have been reclassified to conform to the
current period's presentation. In 2014, the Company refined its
methodology for allocating certain corporate overhead expenses and the
nurse and allied staffing expenses to more accurately reflect this
segment's profitability.
(i) FTEs represent the average number of
nurse and allied contract staffing personnel on a full-time equivalent
basis.
(j) Average revenue per FTE per day is calculated by
dividing the nurse and allied staffing revenue by the number of days
worked in the respective periods. Nurse and allied staffing revenue also
includes revenue from permanent placement of nurses.
(k) Days
filled is calculated by dividing the total hours filled during the
period by 8 hours. Effective
(l) Revenue per day
filled is calculated by dividing the actual revenue invoiced by the
Company's physician staffing segment by days filled for the period
presented. Effective
President
and Chief Executive Officer
wgrubbs@crosscountry.com
Source:
News Provided by Acquire Media