Cross Country Healthcare Reports Fourth Quarter and Year-End 2010 Results
For the year ended
"The fourth quarter of 2010 appears to be the nadir of the most
challenging period in our Company's history as our revenue expectation
is for solid sequential growth in the first quarter of 2011," said
Mr. Boshart continued, "In our nurse and allied staffing business, demand for travel nurses is currently running at more than double the level of a year ago, although it remains well below historical levels. Our expectation for revenue improvement is being driven largely by our best-in-class MSP solution, which currently accounts for approximately 30% of our nurse and allied FTEs. Moreover, the number of hospitals where we have been awarded MSP status but have not yet implemented our program gives us confidence that our momentum is sustainable. We are also encouraged by the growth taking place in our clinical trial services business, which is the result of solid performance in the staffing component of this business. Meanwhile, in our physician staffing business, so far this year we have seen more positive indicators, but we remain only cautiously optimistic, in part, because of the limited visibility in this segment."
Nurse and Allied Staffing
For the fourth quarter of 2010, the nurse and allied staffing business
segment (travel and per diem nurse and allied health staffing) generated
revenue of
Segment staffing volume increased 2% sequentially from the third quarter
of 2010, but decreased 8% from the prior year quarter. Travel staffing
volume increased 3% on a sequential basis, but decreased 8% on a
year-over-year basis. The segment revenue per FTE per day for the fourth
quarter of 2010 was
For the year-ended
Physician Staffing
For the fourth quarter of 2010, the physician staffing business segment
generated revenue of
For the year-ended
The Company believes the lingering effects of the recession and the weak housing market continue to delay the retirement plans of many physicians. These factors, along with a trend in which hospitals have had increased success in directly hiring physicians, have resulted in a decrease in demand for temporary physicians.
Clinical Trial Services
For the fourth quarter of 2010, the clinical trial services segment
generated revenue of
For the year-ended
Other Human Capital Management Services
For the fourth quarter of 2010, the other human capital management
services business segment (education and training and retained search)
generated revenue of
For the year-ended
Debt Outstanding and Credit Facility
During the fourth quarter of 2010, the Company reduced its debt by
Guidance for First Quarter 2011
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, any impairment charges or valuation allowances, any significant legal proceedings or repurchases of the Company's common stock.
For the first quarter of 2011, the Company expects:
-
Revenue to be in the
$119.0 million to $121.0 million range. - Gross profit margin to be in the range of 26.5% to 27.0%.
- Adjusted EBITDA to be in the 3.5% to 4.5% range. Adjusted EBITDA, a non-GAAP financial measure, is defined in the accompanying financial statement tables.
-
Earnings per diluted share to be in the range of
$0.00 to $0.02 . The preceding EPS guidance is based on an estimated effective tax rate of 50%. Historically, the Company's gross profit margin declines sequentially from the fourth quarter to the first quarter due to factors such as the reset of payroll taxes, as well as two less days in the first quarter of the year. This combination results in a sequential decrease in earnings estimated at approximately$0.04 per diluted share in the first quarter.
Quarterly Conference Call
Non-GAAP (Generally Accepted Accounting Principles) Financial Measures
This press release and accompanying financial statement tables reference non-GAAP financial measures including non-GAAP adjusted EBITDA, non-GAAP adjusted net income and non-GAAP adjusted earnings per diluted share. These 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. These 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 it excludes certain items that management believes are not indicative of the Company's operating performance. These 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.
Correction for Barclays Capital Global Healthcare Conference Presentation
The following corrects certain information in the Company's previously
issued press release on
About
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 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, 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
December 31, 2009, and our other
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 (a) |
|||||||||||||||||||||||||
|
(Unaudited, amounts in thousands, except per share data) |
|||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2010 | 2009 |
% Change |
|
2010 | 2009 |
% Change |
|
|||||||||||||||||||
Revenue from services | $ | 113,677 | $ | 124,139 |
(8%) |
|
$ | 468,562 | $ | 578,237 |
(19%) |
|
||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Direct operating expenses | 81,079 | 88,997 |
(9%) |
|
336,250 | 424,984 |
(21%) |
|
||||||||||||||||||
Selling, general and administrative expenses | 27,147 | 27,462 |
(1%) |
|
108,984 | 120,690 |
(10%) |
|
||||||||||||||||||
Bad debt expense | 179 | 227 |
(21%) |
|
294 | - |
ND |
|
||||||||||||||||||
Depreciation | 1,887 | 2,128 |
(11%) |
|
8,043 | 8,773 |
(8%) |
|
||||||||||||||||||
Amortization | 964 | 972 |
(1%) |
|
3,851 | 4,018 |
(4%) |
|
||||||||||||||||||
Impairment charges (b) | 10,764 | 1,726 |
524% |
|
10,764 | 1,726 |
524% |
|
||||||||||||||||||
Legal settlement charge (c) | - | 345 |
(100%) |
|
- | 345 |
(100%) |
|
||||||||||||||||||
Total operating expenses | 122,020 | 121,857 |
0% |
|
468,186 | 560,536 |
(16%) |
|
||||||||||||||||||
(Loss) income from operations | (8,343 | ) | 2,282 |
NM |
|
376 | 17,701 |
(98%) |
|
|||||||||||||||||
Other expenses (income): | ||||||||||||||||||||||||||
Foreign exchange loss |
4 | 35 |
(89%) |
|
76 | 66 |
15% |
|
||||||||||||||||||
Interest expense, net | 755 | 1,296 |
(42%) |
|
4,072 | 6,174 |
(34%) |
|
||||||||||||||||||
Other income | - | - |
- |
|
- | (193 | ) |
100% |
|
|||||||||||||||||
(Loss) income before income taxes | (9,102 | ) | 951 |
NM |
|
(3,772 | ) | 11,654 |
NM |
|
||||||||||||||||
Income tax (benefit) expense | (3,098 | ) | 553 |
NM |
|
(997 | ) | 4,960 |
NM |
|
||||||||||||||||
Net (loss) income | $ | (6,004 | ) | $ | 398 |
NM |
|
$ | (2,775 | ) | $ | 6,694 |
NM |
|
||||||||||||
Net (loss) income per common share: | ||||||||||||||||||||||||||
Basic | $ | (0.19 | ) | $ | 0.01 |
NM |
|
$ | (0.09 | ) | $ | 0.22 |
NM |
|
||||||||||||
Diluted | $ | (0.19 | ) | $ | 0.01 |
NM |
|
$ | (0.09 | ) | $ | 0.22 |
NM |
|
||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||
Basic | 31,103 | 30,917 | 31,060 | 30,825 | ||||||||||||||||||||||
Diluted | 31,103 | 31,108 | 31,060 | 30,999 | ||||||||||||||||||||||
Cross Country Healthcare, Inc. | ||||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||
Adjusted EBITDA, Adjusted Pretax Income, Adjusted Net Income and Adjusted Earnings Per Diluted Share |
||||||||||||||||||||||||||
(Unaudited, amounts in thousands, except per share data) | ||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||
(Loss) income from operations | $ | (8,343 | ) | $ | 2,282 | $ | 376 | $ | 17,701 | |||||||||||||||||
Depreciation | 1,887 | 2,128 | 8,043 | 8,773 | ||||||||||||||||||||||
Amortization | 964 | 972 | 3,851 | 4,018 | ||||||||||||||||||||||
Impairment charges (b) | 10,764 | 1,726 | 10,764 | 1,726 | ||||||||||||||||||||||
Legal settlement charge (c) | - | 345 | - | 345 | ||||||||||||||||||||||
Equity compensation | 715 | 599 | 2,657 | 1,963 | ||||||||||||||||||||||
Adjusted EBITDA (d) | $ | 5,987 | $ | 8,052 | $ | 25,691 | $ | 34,526 | ||||||||||||||||||
Net (loss) income | $ | (6,004 | ) | $ | 398 | $ | (2,775 | ) | $ | 6,694 | ||||||||||||||||
Impairment charges (b) | 10,764 | 1,726 | 10,764 | 1,726 | ||||||||||||||||||||||
Legal settlement charge (c) | - | 345 | - | 345 | ||||||||||||||||||||||
Adjusted pretax income (e) | 4,760 | 2,469 | 7,989 | 8,765 | ||||||||||||||||||||||
Tax effect of impairment charges | (4,164 | ) | (673 | ) | (4,164 | ) | (673 | ) | ||||||||||||||||||
Tax effect of legal settlement charge | - | (136 | ) | - | (136 | ) | ||||||||||||||||||||
Adjusted net income (e) | $ | 596 | $ | 1,660 | $ | 3,825 | $ | 7,956 | ||||||||||||||||||
Net (loss) income per common share - diluted | $ | (0.19 | ) | $ | 0.01 | $ | (0.09 | ) | $ | 0.22 | ||||||||||||||||
Impairment charges per diluted share | 0.35 | 0.05 | 0.35 | 0.05 | ||||||||||||||||||||||
Legal settlement charge per diluted share | - | 0.01 | - | 0.01 | ||||||||||||||||||||||
Adjusted pretax income per diluted share | 0.16 | 0.07 | 0.26 | 0.28 | ||||||||||||||||||||||
Tax effect of impairment charges per diluted share | (0.14 | ) | (0.02 | ) | (0.14 | ) | (0.02 | ) | ||||||||||||||||||
Tax effect of legal settlement charge per diluted share | - | (0.00 | ) | - | (0.00 | ) | ||||||||||||||||||||
Adjusted earnings per diluted share (e) | $ | 0.02 | $ | 0.05 | $ | 0.12 | $ | 0.26 | ||||||||||||||||||
Weighted average common shares outstanding used in the calculation of non-GAAP Adjusted earnings per diluted share |
31,151 | 31,108 | 31,160 | 30,999 | ||||||||||||||||||||||
Cross Country Healthcare, Inc. | ||||||||||||||||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||||
(Unaudited, amounts in thousands) | ||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 10,957 | $ | 6,861 | ||||||||||||||||||||||
Short-term cash investments | 1,870 | 1,708 | ||||||||||||||||||||||||
Accounts receivable, net | 64,395 | 70,172 | ||||||||||||||||||||||||
Deferred tax assets | 11,801 | 11,794 | ||||||||||||||||||||||||
Income taxes receivable | 5,595 | 7,405 | ||||||||||||||||||||||||
Other current assets | 9,796 | 7,794 | ||||||||||||||||||||||||
Total current assets | 104,414 | 105,734 | ||||||||||||||||||||||||
Property and equipment, net | 14,536 | 19,706 | ||||||||||||||||||||||||
Trademarks, net | 52,055 | 62,858 | ||||||||||||||||||||||||
Goodwill, net | 143,349 | 130,701 | ||||||||||||||||||||||||
Other identifiable intangible assets, net | 24,681 | 28,572 | ||||||||||||||||||||||||
Debt issuance costs, net | 2,112 | 1,536 | ||||||||||||||||||||||||
Non-current deferred tax assets | 2,484 | 5,390 | ||||||||||||||||||||||||
Other long-term assets | 4,577 | 2,092 | ||||||||||||||||||||||||
Total assets | $ | 348,208 | $ | 356,589 | ||||||||||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 7,944 | $ | 8,143 | ||||||||||||||||||||||
Accrued employee compensation and benefits | 17,258 | 16,140 | ||||||||||||||||||||||||
Current portion of long-term debt | 7,957 | 5,733 | ||||||||||||||||||||||||
Interest rate swaps - current | - | 1,427 | ||||||||||||||||||||||||
Other current liabilities | 3,744 | 3,113 | ||||||||||||||||||||||||
Total current liabilities | 36,903 | 34,556 | ||||||||||||||||||||||||
Long-term debt | 45,556 | 56,781 | ||||||||||||||||||||||||
Other long-term liabilities | 19,740 | 19,181 | ||||||||||||||||||||||||
Total liabilities | 102,199 | 110,518 | ||||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||
Stockholders' equity: | ||||||||||||||||||||||||||
Common stock | 3 | 3 | ||||||||||||||||||||||||
Additional paid-in capital | 243,005 | 240,870 | ||||||||||||||||||||||||
Other comprehensive income | (2,401 | ) | (2,979 | ) | ||||||||||||||||||||||
Retained earnings | 5,402 | 8,177 | ||||||||||||||||||||||||
Total stockholders' equity | 246,009 | 246,071 | ||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 348,208 | $ | 356,589 | ||||||||||||||||||||||
Cross Country Healthcare, Inc. | ||||||||||||||||||||||||||
Segment Data (f) | ||||||||||||||||||||||||||
(Unaudited, amounts in thousands) | ||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2010 |
% of |
2009 |
% of |
% Change | 2010 |
% of |
2009 |
% of |
% Change | |||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Nurse and allied staffing | $ | 59,417 | 52% | $ | 65,374 | 53% | (9%) | $ | 242,160 | 52% | $ | 313,038 | 54% | (23%) | ||||||||||||
Physician staffing | 27,895 | 25% | 33,253 | 27% | (16%) | 121,599 | 26% | 151,853 | 26% | (20%) | ||||||||||||||||
Clinical trial services | 15,301 | 13% | 14,862 | 12% | 3% | 61,957 | 13% | 71,678 | 13% | (14%) | ||||||||||||||||
Other human capital management services | 11,064 | 10% | 10,650 | 8% | 4% | 42,846 | 9% | 41,668 | 7% | 3% | ||||||||||||||||
$ | 113,677 | 100% | $ | 124,139 | 100% | (8%) | $ | 468,562 | 100% | $ | 578,237 | 100% | (19%) | |||||||||||||
Contribution income (g) | ||||||||||||||||||||||||||
Nurse and allied staffing | $ | 5,623 | $ | 7,175 | (22%) | $ | 22,888 | $ | 30,641 | (25%) | ||||||||||||||||
Physician staffing | 2,958 | 3,831 | (23%) | 13,052 | 15,165 | (14%) | ||||||||||||||||||||
Clinical trial services | 1,336 | 918 | 46% | 6,391 | 7,029 | (9%) | ||||||||||||||||||||
Other human capital management services | 1,279 | 1,033 | 24% | 3,768 | 2,973 | 27% | ||||||||||||||||||||
11,196 | 12,957 | (14%) | 46,099 | 55,808 | (17%) | |||||||||||||||||||||
Unallocated corporate overhead | 5,924 | 5,504 | 8% | 23,065 | 23,245 | (1%) | ||||||||||||||||||||
Depreciation | 1,887 | 2,128 | (11%) | 8,043 | 8,773 | (8%) | ||||||||||||||||||||
Amortization | 964 | 972 | (1%) | 3,851 | 4,018 | (4%) | ||||||||||||||||||||
Impairment charges | 10,764 | 1,726 | 524% | 10,764 | 1,726 | 524% | ||||||||||||||||||||
Legal settlement charge | - | 345 | (100%) | - | 345 | (100%) | ||||||||||||||||||||
(Loss) income from operations | $ | (8,343 | ) | $ | 2,282 | NM | $ | 376 | $ | 17,701 | (98%) | |||||||||||||||
Cross Country Healthcare, Inc. | ||||||||||||||||||||||||||
Other Financial Data | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||
Net cash provided by operating activities (in thousands) (a) | $ | 6,737 | $ | 2,476 | $ | 31,522 | $ | 72,400 | ||||||||||||||||||
Nurse and allied staffing statistical data: | ||||||||||||||||||||||||||
FTEs (h) | 2,124 | 2,314 | 2,185 | 2,735 | ||||||||||||||||||||||
Days worked (i) | 195,408 | 212,888 | 797,525 | 998,275 | ||||||||||||||||||||||
Average nurse and allied staffing revenue per FTE per day (j) | $ | 304 | $ | 307 | $ | 304 | $ | 314 | ||||||||||||||||||
Physician staffing statistical data: | ||||||||||||||||||||||||||
Days filled (k) | 17,924 | 21,851 | 78,346 | 95,253 | ||||||||||||||||||||||
Revenue per day filled (l) | $ | 1,556 | $ | 1,522 | $ | 1,552 | $ | 1,594 | ||||||||||||||||||
(a) Prior year data has been reclassified to conform to the current year's presentation. | ||||||||||||||||||||||||||
(b) Impairment charges in the three months and year ended December 31, 2010, relate to the impairment of trademarks acquired in the Company's MDA acquisition, of which $10.0 million was for a trademark in the Company's physician staffing business segment and $0.7 million was for a trademark in the Company's nurse and allied staffing business segment. Impairment charges in the three months and year ended December 31, 2009 relate to an impairment of a specific trademark and database in the Company's clinical trial services business segment. | ||||||||||||||||||||||||||
(c) Legal settlement charge relates to an agreement to settle a class action lawsuit (Maureen Petray and Carina Higareda v. MedStaff, Inc.). | ||||||||||||||||||||||||||
(d) Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, is defined as (loss) income from operations before depreciation, amortization, non-cash impairment charges, a legal settlement charge related to a class action lawsuit (named above), 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 (loss) income 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, including compliance with its debt covenants. Adjusted EBITDA, as defined, closely matches the operating measure used in the Company's Debt Leverage Ratio and Minimum Fixed Charges Ratio as defined by its Credit Agreement. 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. | ||||||||||||||||||||||||||
(e) Adjusted pretax income, Adjusted net income and Adjusted earnings per diluted share, non-GAAP financial measures, are defined by pretax income, net income and earnings per diluted share before the non-cash impairment charges and a legal settlement charge related to a class action lawsuit (see footnote c above). Adjusted pretax income, Adjusted net income and Adjusted earnings per diluted share should not be considered a measure of financial performance under GAAP and have been provided for consistency and comparability of the 2010 results with the prior periods. Management believes such a measure provides a picture of the Company's results that is more comparable among periods since it excludes the impact of items that may recur occasionally, but tend to be irregular as to timing, thereby distorting comparisons between periods. | ||||||||||||||||||||||||||
(f) Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC. | ||||||||||||||||||||||||||
(g) Defined as income from operations before depreciation, amortization, 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) FTEs represent the average number of nurse and allied contract staffing personnel on a full-time equivalent basis. | ||||||||||||||||||||||||||
(i) Days worked is calculated by multiplying the FTEs by the number of days during the respective period. | ||||||||||||||||||||||||||
(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. | ||||||||||||||||||||||||||
(l) Revenue per day filled is calculated by dividing the applicable revenue generated by the Company's physician staffing segment by days filled for the period presented. | ||||||||||||||||||||||||||
ND - Not determinable | ||||||||||||||||||||||||||
NM - Not meaningful | ||||||||||||||||||||||||||
Director/Investor
& Corporate Relations
hgoldman@crosscountry.com
Source:
News Provided by Acquire Media