Cross Country Healthcare Announces Third Quarter 2018 Financial Results
FINANCIAL HIGHLIGHTS:
Dollars are in thousands, except per share amounts |
Q3 2018 |
Variance Q3 2018 vs Q3 2017 |
Variance Q3 2018 vs Q2 2018 |
||||||||||||||||||||||||||||||
Revenue | $200,717 | (12)% | (2)% | ||||||||||||||||||||||||||||||
Gross profit margin* | 25.7% |
(80) bps |
(50) bps |
||||||||||||||||||||||||||||||
Net loss attributable to common shareholders | $(441) | (107)% | (129)% | ||||||||||||||||||||||||||||||
Diluted EPS | $(0.01) | $(0.20) | $(0.05) | ||||||||||||||||||||||||||||||
Adjusted EBITDA* | $8,112 | (41)% | (7)% | ||||||||||||||||||||||||||||||
Adjusted EPS* | $0.02 | $(0.21) | $(0.03) | ||||||||||||||||||||||||||||||
Cash flows from operations | $3,818 | 20% | (18)% | ||||||||||||||||||||||||||||||
* Refer to accompanying tables and discussion of Non-GAAP financial measures below.
“Our results for the third quarter were in line with our expectations despite a further decline in premium rate business and higher than anticipated healthcare costs,” said
Third quarter consolidated revenue was
For the nine months ended
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue from Nurse and Allied Staffing was
Physician
Revenue from Physician Staffing was
Other Human Capital Management Services
Revenue from Other Human Capital Management Services was
Cash Flow and Balance Sheet Highlights
Cash flow from operations for the quarter was
During the quarter, the Company also repurchased 32,983 shares of common stock for
As of
Outlook for Fourth Quarter 2018
The guidance below applies only to management’s expectations for the fourth quarter of 2018.
Q4 2018 Range |
Year-over-Year | Sequential | |||||||||||||
Change | Change | ||||||||||||||
Revenue | $195 million - $205 million | (11)% - (7)% | (3)% - 2% | ||||||||||||
Gross profit margin | 25.0% - 25.5% | (150) - (100) bps | (70) - (20) bps | ||||||||||||
Adjusted EBITDA | $8 million - $9 million | (35)% - (27)% | (1)% - 11% | ||||||||||||
Adjusted EPS | $0.01 - $0.03 | $(0.16) - $(0.14) | $(0.01) - $0.01 | ||||||||||||
The estimates above are based on current management expectations and, as such, are forward-looking and actual results may differ materially. The above ranges do not include the potential impact of any future divestitures, mergers, acquisitions or other business combinations, any changes in debt structure, or any future share repurchases. See accompanying Non-GAAP financial measures and tables below.
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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 future operating performance. Pro forma measures, if applicable, are adjusted to include the results of our acquisitions, and exclude the results of divestments, as if the transactions occurred 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. Beginning with the third quarter of 2018, the Company modified its non-GAAP performance measures to exclude expenses related to the replacement of its legacy travel nurse front-end system. 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, but are not limited to, 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 healthcare professionals, 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
Cross Country Healthcare, Inc. | |||||||||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||||||||
(Unaudited, amounts in thousands, except per share data) | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, |
June 30, |
September 30, |
|||||||||||||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||||||||
Revenue from services | $ | 200,717 | $ | 228,488 | $ | 204,572 | $ | 615,577 | $ | 645,374 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Direct operating expenses | 149,155 | 168,008 | 150,883 | 456,573 | 475,091 | ||||||||||||||||||||
Selling, general and administrative expenses | 44,086 | 47,346 | 45,284 | 135,004 | 141,182 | ||||||||||||||||||||
Bad debt expense | 502 | 433 | 611 | 1,312 | 1,082 | ||||||||||||||||||||
Depreciation and amortization | 2,892 | 2,849 | 2,963 | 8,764 | 7,325 | ||||||||||||||||||||
Acquisition-related contingent consideration (a) | 16 | (605 | ) | 220 | 449 | (54 | ) | ||||||||||||||||||
Acquisition and integration costs (b) | 70 | 1,366 | 76 | 261 | 1,953 | ||||||||||||||||||||
Restructuring costs (c) | 1,351 | 724 | 193 | 1,979 | 724 | ||||||||||||||||||||
Total operating expenses | 198,072 | 220,121 | 200,230 | 604,342 | 627,303 | ||||||||||||||||||||
Income from operations | 2,645 | 8,367 | 4,342 | 11,235 | 18,071 | ||||||||||||||||||||
Other expenses (income): | |||||||||||||||||||||||||
Interest expense | 1,512 | 1,221 | 1,447 | 4,225 | 2,975 | ||||||||||||||||||||
Gain on derivative liability (d) | — | — | — | — | (1,581 | ) | |||||||||||||||||||
Loss on early extinguishment of debt (e) | 36 | — | — | 36 | 4,969 | ||||||||||||||||||||
Other income, net | (170 | ) | (57 | ) | (98 | ) | (369 | ) | (116 | ) | |||||||||||||||
Income before income taxes | 1,267 | 7,203 | 2,993 | 7,343 | 11,824 | ||||||||||||||||||||
Income tax expense | 1,385 | 159 | 1,169 | 3,717 | 1,278 | ||||||||||||||||||||
Consolidated net (loss) income | (118 | ) | 7,044 | 1,824 | 3,626 | 10,546 | |||||||||||||||||||
Less: Net income attributable to noncontrolling interest in subsidiary | 323 | 321 | 285 | 886 | 983 | ||||||||||||||||||||
Net (loss) income attributable to common shareholders | $ | (441 | ) | $ | 6,723 | $ | 1,539 | $ | 2,740 | $ | 9,563 | ||||||||||||||
Net (loss) income per share attributable to common shareholders - Basic | $ | (0.01 | ) | $ | 0.19 | $ | 0.04 | $ | 0.08 | $ | 0.28 | ||||||||||||||
Net (loss) income per share attributable to common shareholders - Diluted | $ | (0.01 | ) | $ | 0.19 | $ | 0.04 | $ | 0.08 | $ | 0.24 | ||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||||
Basic | 35,594 | 35,748 | 35,652 | 35,682 | 34,768 | ||||||||||||||||||||
Diluted (f) | 35,594 | 36,036 | 35,832 | 35,881 | 36,179 | ||||||||||||||||||||
Cross Country Healthcare, Inc. | |||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||||
(Unaudited, amounts in thousands, except per share data) | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, |
June 30, |
September 30, |
|||||||||||||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||||||||
Adjusted EBITDA: (g) | |||||||||||||||||||||||||
Net (loss) income attributable to common shareholders | $ | (441 | ) | $ | 6,723 | $ | 1,539 | $ | 2,740 | $ | 9,563 | ||||||||||||||
Interest expense | 1,512 | 1,221 | 1,447 | 4,225 | 2,975 | ||||||||||||||||||||
Income tax expense | 1,385 | 159 | 1,169 | 3,717 | 1,278 | ||||||||||||||||||||
Depreciation and amortization | 2,892 | 2,849 | 2,963 | 8,764 | 7,325 | ||||||||||||||||||||
Acquisition-related contingent consideration (a) | 16 | (605 | ) | 220 | 449 | (54 | ) | ||||||||||||||||||
Acquisition and integration costs (b) | 70 | 1,366 | 76 | 261 | 1,953 | ||||||||||||||||||||
Restructuring costs (c) | 1,351 | 724 | 193 | 1,979 | 724 | ||||||||||||||||||||
Gain on derivative liability (d) | — | — | — | — | (1,581 | ) | |||||||||||||||||||
Loss on early extinguishment of debt (e) | 36 | — | — | 36 | 4,969 | ||||||||||||||||||||
Other income, net | (170 | ) | (57 | ) | (98 | ) | (369 | ) | (116 | ) | |||||||||||||||
Equity compensation | 981 | 1,068 | 914 | 2,364 | 3,083 | ||||||||||||||||||||
Legacy system replacement costs (h) | 157 | — | — | 157 | — | ||||||||||||||||||||
Net income attributable to noncontrolling interest in subsidiary | 323 | 321 | 285 | 886 | 983 | ||||||||||||||||||||
Adjusted EBITDA (g) | $ | 8,112 | $ | 13,769 | $ | 8,708 | $ | 25,209 | $ | 31,102 | |||||||||||||||
Adjusted EPS: (i) | |||||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||||
Net (loss) income attributable to common shareholders | $ | (441 | ) | $ | 6,723 | $ | 1,539 | $ | 2,740 | $ | 9,563 | ||||||||||||||
Non-GAAP adjustments - pretax: | |||||||||||||||||||||||||
Acquisition-related contingent consideration (a) | 16 | (605 | ) | 220 | 449 | (54 | ) | ||||||||||||||||||
Acquisition and integration costs (b) | 70 | 1,366 | 76 | 261 | 1,953 | ||||||||||||||||||||
Restructuring costs (c) | 1,351 | 724 | 193 | 1,979 | 724 | ||||||||||||||||||||
Gain on derivative liability (d) | — | — | — | — | (1,581 | ) | |||||||||||||||||||
Loss on early extinguishment of debt (e) | 36 | — | — | 36 | 4,969 | ||||||||||||||||||||
Legacy system replacement costs (h) | 157 | — | — | 157 | — | ||||||||||||||||||||
Nonrecurring income tax adjustments | — | — | (47 | ) | (47 | ) | — | ||||||||||||||||||
Tax impact of non-GAAP adjustments (j) | (652 | ) | — | (198 | ) | (1,119 | ) | — | |||||||||||||||||
Adjusted net (loss) income attributable to common shareholders - non-GAAP | $ | 537 | $ | 8,208 | $ | 1,783 | $ | 4,456 | $ | 15,574 | |||||||||||||||
Denominator: | |||||||||||||||||||||||||
Weighted average common shares - basic, GAAP | 35,594 | 35,748 | 35,652 | 35,682 | 34,767 | ||||||||||||||||||||
Dilutive impact of share-based payments | 131 | 288 | 180 | 199 | 444 | ||||||||||||||||||||
Adjusted weighted average common shares - diluted, non-GAAP | 35,725 | 36,036 | 35,832 | 35,881 | 35,211 | ||||||||||||||||||||
Reconciliation: | |||||||||||||||||||||||||
Diluted EPS, GAAP | $ | (0.01 | ) | $ | 0.19 | $ | 0.04 | $ | 0.08 | $ | 0.24 | ||||||||||||||
Non-GAAP adjustments - pretax: | |||||||||||||||||||||||||
Acquisition-related contingent consideration (a) | — | (0.02 | ) | 0.01 | 0.01 | — | |||||||||||||||||||
Acquisition and integration costs (b) | — | 0.04 | — | 0.01 | 0.06 | ||||||||||||||||||||
Restructuring costs (c) | 0.04 | 0.02 | 0.01 | 0.05 | 0.02 | ||||||||||||||||||||
Gain on derivative liability (d) | — | — | — | — | (0.05 | ) | |||||||||||||||||||
Loss on early extinguishment of debt (e) | — | — | — | — | 0.15 | ||||||||||||||||||||
Legacy system replacement costs (h) | 0.01 | — | — | 0.01 | — | ||||||||||||||||||||
Tax impact of non-GAAP adjustments (j) | (0.02 | ) | — | (0.01 | ) | (0.03 | ) | — | |||||||||||||||||
Adjustment for change in dilutive shares | — | — | — | — | 0.02 | ||||||||||||||||||||
Adjusted EPS, non-GAAP (i) | $ | 0.02 | $ | 0.23 | $ | 0.05 | $ | 0.13 | $ | 0.44 | |||||||||||||||
Cross Country Healthcare, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited, amounts in thousands) | ||||||||
September 30, | December 31, | |||||||
2018 | 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 28,065 | $ | 25,537 | ||||
Accounts receivable, net | 167,200 | 173,603 | ||||||
Prepaid expenses | 5,870 | 5,287 | ||||||
Insurance recovery receivable | 3,287 | 3,497 | ||||||
Other current assets | 1,821 | 963 | ||||||
Total current assets | 206,243 | 208,887 | ||||||
Property and equipment, net | 13,431 | 14,086 | ||||||
Goodwill, net | 117,589 | 117,589 | ||||||
Trade names, indefinite-lived | 26,702 | 26,702 | ||||||
Other intangible assets, net | 55,599 | 60,976 | ||||||
Non-current deferred tax assets | 17,160 | 20,219 | ||||||
Other non-current assets | 20,214 | 19,228 | ||||||
Total assets | $ | 456,938 | $ | 467,687 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 50,268 | $ | 50,597 | ||||
Accrued employee compensation and benefits | 31,666 | 34,271 | ||||||
Current portion of long-term debt | 7,454 | 6,875 | ||||||
Other current liabilities | 2,567 | 2,845 | ||||||
Total current liabilities | 91,955 | 94,588 | ||||||
Long-term debt, less current portion | 83,132 | 92,259 | ||||||
Long-term accrued claims | 30,566 | 28,757 | ||||||
Contingent consideration | 5,257 | 5,088 | ||||||
Other long-term liabilities | 8,773 | 9,276 | ||||||
Total liabilities | 219,683 | 229,968 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock | 4 | 4 | ||||||
Additional paid-in capital | 302,007 | 305,362 | ||||||
Accumulated other comprehensive loss | (1,033) | (1,166) | ||||||
Accumulated deficit | (64,371) | (67,111) | ||||||
Total Cross Country Healthcare, Inc. stockholders' equity | 236,607 | 237,089 | ||||||
Noncontrolling interest in subsidiary | 648 | 630 | ||||||
Total stockholders' equity | 237,255 | 237,719 | ||||||
Total liabilities and stockholders' equity | $ | 456,938 | $ | 467,687 |
Cross Country Healthcare, Inc. | |||||||||||||||||||||||||||
Segment Data (k) | |||||||||||||||||||||||||||
(Unaudited, amounts in thousands) | |||||||||||||||||||||||||||
Three Months Ended | % Change Fav/(Unfav) | ||||||||||||||||||||||||||
September 30, | % of | September 30, | % of | June 30, | % of | Year-over- | |||||||||||||||||||||
2018 | Total | 2017 | Total | 2018 | Total | Year | Sequential | ||||||||||||||||||||
Revenue from services: | |||||||||||||||||||||||||||
Nurse and Allied Staffing | $ | 176,344 | 88% | $ | 200,492 | 88% | $ | 179,339 | 88% | (12)% | (2)% | ||||||||||||||||
Physician Staffing | 21,158 | 10% | 24,871 | 11% | 21,334 | 10% | (15)% | (1)% | |||||||||||||||||||
Other Human Capital Management Services | 3,215 | 2% | 3,125 | 1% | 3,899 | 2% | 3% | (18)% | |||||||||||||||||||
$ | 200,717 | 100% | $ | 228,488 | 100% | $ | 204,572 | 100% | (12)% | (2)% | |||||||||||||||||
Contribution income: (l) | |||||||||||||||||||||||||||
Nurse and Allied Staffing | $ | 16,534 | $ | 20,663 | $ | 16,909 | (20)% | (2)% | |||||||||||||||||||
Physician Staffing | 1,307 | 1,340 | 1,383 | (2)% | (5)% | ||||||||||||||||||||||
Other Human Capital Management Services | 70 | (1) | 312 | NM | (78)% | ||||||||||||||||||||||
17,911 | 22,002 | 18,604 | (19)% | (4)% | |||||||||||||||||||||||
Unallocated corporate overhead (m) | 10,937 | 9,301 | 10,810 | (18)% | (1)% | ||||||||||||||||||||||
Depreciation and amortization | 2,892 | 2,849 | 2,963 | (2)% | 2% | ||||||||||||||||||||||
Acquisition-related contingent consideration (a) | 16 | (605) | 220 | (103)% | 93% | ||||||||||||||||||||||
Acquisition and integration costs (b) | 70 | 1,366 | 76 | 95% | 8% | ||||||||||||||||||||||
Restructuring costs (c) | 1,351 | 724 | 193 | (87)% | (600)% | ||||||||||||||||||||||
Income from operations | $ | 2,645 | $ | 8,367 | $ | 4,342 | (68)% | (39)% | |||||||||||||||||||
Nine Months Ended |
% Change Fav/(Unfav) |
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September 30, |
% of |
September 30, |
% of |
Year-over- Year |
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2018 | Total | 2017 | Total | ||||||||||||||||||||||||
Revenue from services: | |||||||||||||||||||||||||||
Nurse and Allied Staffing | $ | 540,788 | 88% | $ | 564,527 | 87% | (4)% | ||||||||||||||||||||
Physician Staffing | 64,052 | 10% | 71,055 | 11% | (10)% | ||||||||||||||||||||||
Other Human Capital Management Services | 10,737 | 2% | 9,792 | 2% | 10% | ||||||||||||||||||||||
$ | 615,577 | 100% | $ | 645,374 | 100% | (5)% | |||||||||||||||||||||
Contribution income: (l) | |||||||||||||||||||||||||||
Nurse and Allied Staffing | $ | 50,203 | $ | 54,426 | (8)% | ||||||||||||||||||||||
Physician Staffing | 4,190 | 4,207 | —% | ||||||||||||||||||||||||
Other Human Capital Management Services | 694 | (200) | 447% | ||||||||||||||||||||||||
55,087 | 58,433 | (6)% | |||||||||||||||||||||||||
Unallocated corporate overhead (m) | 32,399 | 30,414 | (7)% | ||||||||||||||||||||||||
Depreciation and amortization | 8,764 | 7,325 | (20)% | ||||||||||||||||||||||||
Acquisition-related contingent consideration (a) | 449 | (54) | (931)% | ||||||||||||||||||||||||
Acquisition and integration costs (b) | 261 | 1,953 | 87% | ||||||||||||||||||||||||
Restructuring costs (c) | 1,979 | 724 | (173)% | ||||||||||||||||||||||||
Income from operations | $ | 11,235 | $ | 18,071 | (38)% | ||||||||||||||||||||||
NM-Not meaningful. | |||||||||||||||||||||||||||
Cross Country Healthcare, Inc. |
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, |
June 30, |
September 30, |
|||||||||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||||
Net cash provided by operating activities | $ | 3,818 | $ | 3,180 | $ | 4,666 | $ | 21,757 | $ | 28,705 | |||||||||||
Cash used in investing activities |
(1,239 |
) |
(86,873 |
) |
(1,287 |
) |
(3,554 |
) |
(90,259 |
) |
|||||||||||
Net cash (used in) provided by financing activities |
(7,025 |
) |
60,527 |
(3,418 |
) |
(15,591 |
) |
51,671 | |||||||||||||
Effect of exchange rate changes on cash |
(48 |
) |
(5 |
) |
(23 |
) |
(84 |
) |
18 | ||||||||||||
Change in cash and cash equivalents |
(4,494 |
) |
(23,171 |
) |
(62 |
) |
2,528 |
(9,865 |
) |
||||||||||||
Cash and cash equivalents at beginning of period | 32,559 | 33,936 | 32,621 | 25,537 | 20,630 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 28,065 | $ | 10,765 | $ | 32,559 | $ | 28,065 | $ | 10,765 | |||||||||||
Cross Country Healthcare, Inc. |
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, |
June 30, |
September 30, |
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2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||||
Consolidated gross profit margin (n) | 25.7% | 26.5% | 26.2% | 25.8% | 26.4% | ||||||||||||||||
Nurse and Allied Staffing statistical data: |
|||||||||||||||||||||
FTEs (o) | 6,953 | 7,706 | 7,143 | 7,187 | 7,355 | ||||||||||||||||
Average Nurse and Allied Staffing revenue per FTE per day (p) | $ | 276 | $ | 283 | $ | 276 | $ | 276 | $ | 281 | |||||||||||
Physician Staffing statistical data: |
|||||||||||||||||||||
Days filled (q) | 13,375 | 15,567 | 13,751 | 41,611 | 45,823 | ||||||||||||||||
Revenue per day filled (r) | $ | 1,582 | $ | 1,598 | $ | 1,551 | $ | 1,539 | $ | 1,551 | |||||||||||
(a) | Acquisition-related contingent consideration represents the fair value and accretion adjustments to the contingent consideration liabilities for the Mediscan acquisition that closed on October 30, 2015 and the US Resources Healthcare acquisition that closed on December 1, 2016. | |
(b) | Acquisition and integration costs are primarily related to the Advantage RN, LLC acquisition that closed effective July 1, 2017. | |
(c) | Restructuring costs related to severance and lease consolidations incurred as part of separate and discrete cost savings initiatives. | |
(d) | Gain on derivative liability for the nine months ended September 30, 2017 represents the change in the fair value of embedded features of the Convertible Notes. | |
(e) | Loss on early extinguishment of debt for the three and nine months ended September 30, 2018 is related to an early payment of $5.0 million made in the third quarter on the Company's term loans. For the nine months ended September 30, 2017, the loss on early extinguishment of debt is related to the Company's settlement of its Convertible Notes on March 17, 2017. | |
(f) | Due to the net loss for the three months ended September 30, 2018, 130,965 shares were excluded from diluted weighted average shares. When applying the if-converted method to our Convertible Notes, 967,342 shares were included in diluted weighted average shares for the nine months ended September 30, 2017. | |
(g) | Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, is defined as net income attributable to common shareholders before interest expense, income tax expense, depreciation and amortization, acquisition-related contingent consideration, acquisition and integration costs, restructuring costs, gain on derivative liability, loss on early extinguishment of debt, other income, net, equity compensation, legacy system replacement costs, and includes 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 attributable to common shareholders as an indicator of operating performance. Management uses Adjusted EBITDA for planning purposes and as one performance measure in its incentive programs for certain members of its management team. Adjusted EBITDA, as defined, closely matches the operating measure typically used in the Company's credit facilities in calculating various ratios. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue. | |
(h) | Legacy system replacement costs for the three and nine months ended September 30, 2018 are related to the Company's project to replace its legacy system supporting its travel nurse staffing business. These costs are reported in selling, general, and administrative expenses on the consolidated statement of operations and included in unallocated corporate overhead in segment data. | |
(i) | Adjusted EPS, a non-GAAP financial measure, is defined as net income attributable to common shareholders per diluted share before the diluted EPS impact of acquisition-related contingent consideration, acquisition and integration costs, restructuring costs, gain on derivative liability, loss on early extinguishment of debt, legacy system replacement costs, and nonrecurring income tax adjustments. Adjusted EPS should not be considered a measure of financial performance under GAAP. Management presents Adjusted EPS because it believes that Adjusted EPS is a useful supplement to its reported EPS as an indicator of operating performance. Management believes it provides a more useful comparison of the Company's underlying business performance from period to period and is more representative of the future earnings capacity of the Company. | |
(j) | Due to the Company previously maintaining a full valuation allowance, there was no tax impact on non-GAAP measures in the three and nine months ended September 30, 2017. | |
(k) | Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC. | |
(l) | Contribution income is defined as income from operations before depreciation and amortization, acquisition-related contingent consideration, acquisition and integration costs, restructuring costs, core system replacement costs, and corporate expenses not specifically identified to a reporting segment. Contribution income is a financial measure used by management when assessing segment performance. | |
(m) | Unallocated corporate overhead includes corporate compensation and benefits, and general and administrative expenses including rent and utilities, computer supplies and expenses, insurance, professional expenses, corporate-wide projects (initiatives), and public company expense. | |
(n) | Gross profit is defined as revenue from services less direct operating expenses. The Company's gross profit excludes allocated depreciation and amortization expense. Gross profit margin is calculated by dividing gross profit by revenue from services. | |
(o) | FTEs represent the average number of Nurse and Allied Staffing contract personnel on a full-time equivalent basis. | |
(p) | Average revenue per FTE per day is calculated by dividing the Nurse and Allied Staffing revenue per FTE by the number of days worked in the respective periods. Nurse and Allied Staffing revenue also includes revenue from the permanent placement of nurses. | |
(q) | Days filled is calculated by dividing the total hours invoiced during the period, including an estimate for the impact of accrued revenue, by 8 hours. Prior periods have been recalculated to include the impact of the accrued revenue. | |
(r) | Revenue per day filled is calculated by dividing revenue as reported by days filled for the period presented. Prior periods have been recalculated to include the impact of the accrued revenue and days. | |
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Source:
Cross Country Healthcare, Inc.
William J. Grubbs, 561-237-6202
President & Chief Executive Officer
wgrubbs@crosscountry.com