CCRN 2014.12.31-Q4 Press Release


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported)
March 4, 2015
 
Cross Country Healthcare, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
0-33169
13-4066229
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
6551 Park of Commerce Blvd., N.W., Boca Raton, FL 33487
(Address of Principal Executive Office) (Zip Code)

(561) 998-2232

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions :

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 





Section 2 – Financial Information
Item 2.02     Results of Operations and Financial Condition
(a)  On March 4, 2015, Cross Country Healthcare, Inc. (“the Company”) issued a press release announcing results for the fourth quarter and full year ended December 31, 2014, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K. This information is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.

Section 7 – Regulation FD
Item 7.01     Regulation FD Disclosure
Incorporated by reference is a press release issued by the Company on March 4, 2015, which is attached hereto as Exhibit 99.1. This information is being furnished under Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.
Section 9 – Financial Statements and Exhibits
Item 9.01     Financial Statements and Exhibits
(d) Exhibits

 
Exhibit
 
Description
 
 
 
 
 
99.1
 
Press Release issued by the Company on March 4, 2015
 





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
CROSS COUNTRY HEALTHCARE, INC.
 
 
 
 
 
 
 
 
 
 
By:
/s/ William J. Burns
 
 
 
William J. Burns
Dated:
March 4, 2015
 
Chief Financial Officer





CCRN 2014.12.31-Q4 PR Exhibit 99.1

EXHIBIT 99.1

CROSS COUNTRY HEALTHCARE ANNOUNCES FOURTH QUARTER AND FULL YEAR
2014 FINANCIAL RESULTS

BOCA RATON, Fla., March 4, 2015--Cross Country Healthcare, Inc. (NASDAQ: CCRN) today announced financial results for the fourth quarter and full year ended December 31, 2014.

FOURTH QUARTER FINANCIAL HIGHLIGHTS:

Revenue was $188.1 million, up 72% year-over-year and 8% on a pro forma basis*

Adjusted EBITDA was $6.2 million or 3.3% of revenue

Adjusted net income attributable to common shareholders per diluted share was $0.03

FULL YEAR FINANCIAL HIGHLIGHTS:

Revenue was $617.8 million, up 41% year-over-year

Adjusted EBITDA was $17.2 million or 2.8% of revenue

Adjusted net income attributable to common shareholders per diluted share was $0.09

* See discussion of Non-GAAP financial measures

William J. Grubbs, Chief Executive Officer, said, “2014 was a transformational year for Cross Country Healthcare with both organic and acquisition growth, improved profitability, expansion of our branch footprint, additions to our workforce solutions portfolio, and an increase in market share.  We expect to reach our goal of an Adjusted EBITDA margin in excess of 5% in the fourth quarter of 2015 and 8%, on a run-rate basis, during 2017.”

Grubbs continued, “Throughout the fourth quarter, demand for our services remained strong and resulted in pro forma year-over-year revenue growth of 8.4%, accelerating from 6.8% in the third quarter. Excluding a non-cash adjustment for unamortized insurance premiums, our underlying Adjusted EBITDA would have been 3.8% of revenue, up from 3.5% in the third quarter.”
 
Fourth quarter consolidated revenue was $188.1 million, an increase of 72% from the same quarter last year and essentially flat sequentially. On a pro forma basis, revenue was up 8% from the prior year. The Company's consolidated gross profit margin was 25.3%, down 90 basis points from the same quarter last year and up 30 basis points sequentially. Adjusted EBITDA was $6.2 million or 3.3% of revenue, as compared with $1.8 million or 1.6% of revenue in the prior year quarter (see table titled “Reconciliation of Non-GAAP Financial Measures”). Net loss attributable to common shareholders was $20.2 million or $0.65 per diluted share primarily due to a combination of a $10.0 million ($9.1 million after taxes) trade name impairment charge, $9.4 million non-cash change in the fair value of convertible note derivative liability, and $2.5 million of acquisition and integration costs. This compared with a net loss of $52.6 million or $1.69 per diluted share in the prior year quarter. Adjusted net income attributable to common shareholders for the fourth quarter of 2014 was $0.03 per diluted share.

1



For the year ended December 31, 2014, consolidated revenue was $617.8 million, an increase of 41% from the same period last year. On a pro forma basis, revenue was up 5% year-over-year. Consolidated gross profit margin was 25.5%, down 40 basis points from the prior year. Adjusted EBITDA was $17.2 million or 2.8% of revenue, as compared with $8.4 million or 1.9% of revenue in the prior year. Net loss attributable to common shareholders was $31.8 million or $1.02 per diluted share, as compared with a loss of $52.0 million or $1.68 per diluted share in the prior year. Year-to-date results reflect the impact from the $10.0 million ($9.1 million after taxes) non-cash trade name impairment charge, the $16.7 million non-cash change in the fair value of the convertible note derivative liability, $8.0 million of acquisition and integration costs, and $0.8 million of restructuring charges. Adjusted net income attributable to common shareholders was $0.09 per diluted share for 2014.

Quarterly Business Segment Highlights
 
Nurse and Allied Staffing
Revenue from Nurse and Allied Staffing increased 112% from the same quarter last year and decreased 1% sequentially. On a pro forma basis revenue was up 11% year-over-year. Contribution income in this segment was $11.1 million, up from $4.8 million in the same quarter last year. The year-over-year increase in segment revenue and contribution income was attributed to robust organic growth and the impact of acquisitions. Average field FTEs increased to 6,325 from 2,487 in the same quarter last year. Revenue per FTE per day was $252 compared to $303 in the same quarter last year reflecting the impact of lower average bill rates of our recent acquisitions.

Physician Staffing
Revenue from Physician Staffing increased 1% from the same quarter last year and decreased 4% sequentially. The year-over-year increase is due to the impact of the MSN acquisition. Contribution income was $2.6 million, up from $1.9 million in the same quarter last year. Total days filled decreased to 20,767 from 21,020 in the same quarter last year. Revenue per day filled increased to $1,454 from $1,412 in the same quarter last year reflecting higher average prices.

Other Human Capital Management Services
Revenue from the Other Human Capital Management Services increased 14% from the same quarter last year and sequentially. Contribution income was $0.6 million, compared to a negative $0.1 million in the same quarter last year.

Cash Flow and Balance Sheet Highlights

Cash flow used in operating activities was $1.0 million for the quarter and $4.1 million for the full year. The use of cash in the full year was primarily due to: $6.1 million of acquisition and integration costs and $2.5 million used to fund working capital of our allied healthcare staffing acquisition (working capital was not acquired with this acquisition). At December 31, 2014, the Company had $5.0 million in cash and cash equivalents and $57.4 million of debt, excluding the full year non-cash change in the fair value of convertible note derivative liability of $16.7 million. The Company had $39.7 million of availability under its credit facility at December 31, 2014.


2


Outlook for First Quarter 2015

The Company also provided its guidance for the first quarter of 2015:
 
Range
 
Year-over-Year
Change
 
 
 
 
Revenue
$185 million - $190 million
 
57%-61%
 
 
 
 
Gross Profit Margin
25.0% - 25.5%
 
(80) - (30) basis points
 
 
 
 
Adjusted EBITDA Margin
3.2% - 3.7%
 
230 - 280 basis points

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 Thursday, March 5, 2015, at 9:00 a.m. Eastern Time to discuss its fourth quarter and full year 2014 financial results. This call will be webcast live and can be accessed at the Company's website at www.crosscountryhealthcare.com or by dialing 800-857-6331 from anywhere in the U.S. or by dialing 517-623-4781 from non-U.S. locations - Passcode: Cross Country. From March 5th through March 19th, a replay of the webcast will be available at the Company's website and a replay of the conference call will be available by telephone by calling 800-395-7443 from anywhere in the U.S. or 203-369-3271 from non-U.S. locations - Passcode: 2015.

ABOUT CROSS COUNTRY HEALTHCARE

Cross Country Healthcare, Inc., headquartered in Boca Raton, Florida, is a national leader in providing healthcare recruiting, staffing, and workforce management solutions. With more than 30 years of experience, we are dedicated to placing highly qualified nurses and physicians as well as allied health, advanced practice, and case management professionals. We provide both retained and contingent placement services for physicians, as well as retained search services for healthcare executives. We have more than 6,000 active contracts with a broad range of clients, including acute care hospitals, physician practice groups, nursing facilities, rehabilitation and sports medicine clinics, government facilities, as well as nonclinical settings such as homecare and schools. Through our national staffing teams and network of more than 70 branch office locations, we are able to place clinicians for travel and per diem assignments, local short-term contracts, and permanent positions. We are a market leader in providing flexible workforce management solutions, which include managed services programs, workforce assessments, internal resource pool consulting and development, electronic medical record transition staffing, and recruitment process outsourcing. In addition, we provide education and training programs for healthcare professionals through seminars and e-learning tools.

Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountryhealthcare.com. Shareholders and prospective investors can also register to automatically receive the Company's press releases, SEC filings and other notices by e-mail.

3



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 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 December 31, 2013, and our other Securities and Exchange Commission filings made prior to the date hereof.

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

4


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. and its subsidiaries.

5



Cross Country Healthcare, Inc.
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share data)
 
 
Three Months Ended
 
 
Year Ended
 
December 31,
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
December 31,
 
2014
 
 
2013
 
 
2014
 
 
2014
 
2013
 
 
 
 
 
Revenue from services
$
188,134

 
 
$
109,179

 
 
$
188,944

 
 
$
617,825

 
$
438,311

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Direct operating expenses
140,493

 
 
80,617

 
 
141,667

 
 
460,021

 
324,851

Selling, general and administrative expenses
41,538

 
 
26,945

 
 
40,858

 
 
141,018

 
106,117

Bad debt expense
295

 
 
309

 
 
257

 
 
1,016

 
1,078

Depreciation
1,070

 
 
934

 
 
1,005

 
 
3,866

 
3,886

Amortization
995

 
 
610

 
 
1,011

 
 
3,575

 
2,294

Acquisition and integration costs (a)
2,532

 
 
473

 
 
2,383

 
 
7,957

 
473

Restructuring costs
85

 
 

 
 

 
 
840

 
484

Legal settlement charge

 
 

 
 

 
 

 
750

Impairment charges (b)
10,000

 
 
6,400

 
 

 
 
10,000

 
6,400

Total operating expenses
197,008

 
 
116,288

 
 
187,181

 
 
628,293

 
446,333

(Loss) income from operations
(8,874
)
 
 
(7,109
)
 
 
1,763

 
 
(10,468
)
 
(8,022
)
Other expenses (income):
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange (gain) loss
(14
)
 
 
22

 
 
(11
)
 
 
49

 
(132
)
Interest expense
1,784

 
 
215

 
 
1,832

 
 
4,160

 
849

Change in fair value of convertible note derivative liability
9,363

 
 

 
 
7,308

 
 
16,671

 

Loss on early extinguishment and modification of debt (c)

 
 

 
 

 
 

 
1,419

Other income
(32
)
 
 
(36
)
 
 
(51
)
 
 
(30
)
 
(119
)
Loss from continuing operations before income taxes
(19,975
)
 
 
(7,310
)
 
 
(7,315
)
 
 
(31,318
)
 
(10,039
)
Income tax expense
112

 
 
45,612

 
 
169

 
 
216

 
44,211

Loss from continuing operations
(20,087
)
 
 
(52,922
)
 
 
(7,484
)
 
 
(31,534
)
 
(54,250
)
Income from discontinued operations, net of income taxes (d)

 
 
338

 
 

 
 

 
2,281

Consolidated net loss
(20,087
)
 
 
(52,584
)
 
 
(7,484
)
 
 
(31,534
)
 
(51,969
)
Less: Net income attributable to noncontrolling interest in subsidiary
131

 
 

 
 
118

 
 
249

 

Net loss attributable to common shareholders
$
(20,218
)
 
 
$
(52,584
)
 
 
$
(7,602
)
 
 
$
(31,783
)
 
$
(51,969
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) income per share attributable to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
(0.65
)
 
 
$
(1.70
)
 
 
$
(0.24
)
 
 
$
(1.02
)
 
$
(1.75
)
Discontinued operations

 
 
0.01

 
 

 
 

 
0.07

Net loss
$
(0.65
)
 
 
$
(1.69
)
 
 
$
(0.24
)
 
 
$
(1.02
)
 
$
(1.68
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted (loss) income per share attributable to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
(0.65
)
 
 
$
(1.70
)
 
 
$
(0.24
)
 
 
$
(1.02
)
 
$
(1.75
)
Discontinued operations

 
 
0.01

 
 

 
 

 
0.07

Net loss
$
(0.65
)
 
 
$
(1.69
)
 
 
$
(0.24
)
 
 
$
(1.02
)
 
$
(1.68
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
31,264

 
 
31,085

 
 
31,245

 
 
31,190

 
31,009

Diluted
31,264

 
 
31,085

 
 
31,245

 
 
31,190

 
31,009

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross Country Healthcare, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited, amounts in thousands)
 
 
Three Months Ended
 
 
Year Ended
 
December 31,
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
December 31,
 
2014
 
 
2013
 
 
2014
 
 
2014
 
2013
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from operations
$
(8,874
)
 
 
$
(7,109
)
 
 
$
1,763

 
 
$
(10,468
)
 
$
(8,022
)
Depreciation
1,070

 
 
934

 
 
1,005

 
 
3,866

 
3,886

Amortization
995

 
 
610

 
 
1,011

 
 
3,575

 
2,294

Acquisition and integration costs (a)
2,532

 
 
473

 
 
2,383

 
 
7,957

 
473

Restructuring costs
85

 
 

 
 

 
 
840

 
484

Legal settlement charge

 
 

 
 

 
 

 
750

Impairment charges (b)
10,000

 
 
6,400

 
 

 
 
10,000

 
6,400

Equity compensation
429

 
 
465

 
 
416

 
 
1,387

 
2,100

Adjusted EBITDA (e)
$
6,237

 
 
$
1,773

 
 
$
6,578

 
 
$
17,157

 
$
8,365

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
Adjusted Net Income attributable to common shareholders per Diluted Share:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders per diluted share (f)
$
(0.65
)
 
 
$
(1.69
)
 
 
$
(0.24
)
 
 
$
(1.02
)
 
$
(1.68
)
Acquisition and integration costs (a)
0.05

 
 
0.01

 
 
0.05

 
 
0.15

 
0.01

Restructuring costs

 
 

 
 

 
 
0.02

 
0.01

Legal settlement charge

 
 

 
 

 
 

 
0.01

Impairment charges (b)
0.29

 
 
0.12

 
 

 
 
0.29

 
0.13

Change in fair value of convertible note derivative liability
0.18

 
 

 
 
0.14

 
 
0.32

 

Loss on early extinguishment and modification of debt (c)

 
 

 
 

 
 

 
0.03

Valuation allowance on deferred tax assets (g)
0.15

 
 
1.56

 
 
0.12

 
 
0.32

 
1.56

Adjustment for change in dilutive share count (f)
0.01

 
 

 
 

 
 
0.01

 
0.01

Adjusted net income attributable to common shareholders per diluted share
$
0.03

 
 
$0.00
 
 
$
0.07

 
 
$
0.09

 
$
0.08

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross Country Healthcare, Inc.
 
 
 
 
 
 
 
 
Consolidated Balance Sheets
 
 
 
 
 
 
 
 
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
 
December 31,
 
 
 
 
 
 
 
 
 
2014
 
 
2013
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
4,995

 
 
$
8,055

 
 
 
 
 
 
 
 
Accounts receivable, net
113,129

 
 
60,750

 
 
 
 
 
 
 
 
Income taxes receivable
307

 
 
538

 
 
 
 
 
 
 
 
Prepaid expenses
6,073

 
 
6,163

 
 
 
 
 
 
 
 
Insurance recovery receivable
5,624

 
 
3,886

 
 
 
 
 
 
 
 
Indemnity escrow receivable

 
 
3,750

 
 
 
 
 
 
 
 
Other current assets
1,055

 
 
793

 
 
 
 
 
 
 
 
Total current assets
131,183

 
 
83,935

 
 
 
 
 
 
 
 
Property and equipment, net
12,133

 
 
6,170

 
 
 
 
 
 
 
 
Trade names, net
38,201

 
 
42,301

 
 
 
 
 
 
 
 
Goodwill, net
90,647

 
 
77,266

 
 
 
 
 
 
 
 
Other identifiable intangible assets, net
33,823

 
 
26,198

 
 
 
 
 
 
 
 
Debt issuance costs, net
1,257

 
 
464

 
 
 
 
 
 
 
 
Non-current insurance recovery receivable
16,825

 
 
10,914

 
 
 
 
 
 
 
 
Non-current security deposits
1,064

 
 
997

 
 
 
 
 
 
 
 
Total assets
$
325,133

 
 
$
248,245

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
27,314

 
 
$
10,272

 
 
 
 
 
 
 
 
Accrued employee compensation and benefits
28,731

 
 
19,148

 
 
 
 
 
 
 
 
Current portion of long-term debt and capital lease obligations
3,607

 
 
8,483

 
 
 
 
 
 
 
 
Sales tax payable
2,573

 
 
2,404

 
 
 
 
 
 
 
 
Deferred tax liabilities
1,981

 
 
535

 
 
 
 
 
 
 
 
Other current liabilities
2,790

 
 
4,063

 
 
 
 
 
 
 
 
Total current liabilities
66,996

 
 
44,905

 
 
 
 
 
 
 
 
Long-term debt and capital lease obligations
70,467

 
 
93

 
 
 
 
 
 
 
 
Non-current deferred tax liabilities
18,038

 
 
16,849

 
 
 
 
 
 
 
 
Long-term accrued claims
32,068

 
 
18,303

 
 
 
 
 
 
 
 
Long-term deferred purchase price
2,333

 
 

 
 
 
 
 
 
 
 
Long-term unrecognized tax benefits
889

 
 
4,013

 
 
 
 
 
 
 
 
Other long-term liabilities
4,010

 
 
3,415

 
 
 
 
 
 
 
 
Total liabilities
194,801

 
 
87,578

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
3

 
 
3

 
 
 
 
 
 
 
 
Additional paid-in capital
247,467

 
 
246,325

 
 
 
 
 
 
 
 
Accumulated other comprehensive loss
(1,118
)
 
 
(970
)
 
 
 
 
 
 
 
 
Accumulated deficit
(116,474
)
 
 
(84,691
)
 
 
 
 
 
 
 
 
Total Cross Country Healthcare, Inc. stockholders' equity
129,878

 
 
160,667

 
 
 
 
 
 
 
 
Noncontrolling interest
454

 
 

 
 
 
 
 
 
 
 
Total stockholders' equity
130,332

 
 
160,667

 
 
 
 
 
 
 
 
Total liabilities and stockholders' equity
$
325,133

 
 
$
248,245

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross Country Healthcare, Inc.
Segment Data (h)
(Unaudited, amounts in thousands)
 
 
Three Months Ended
 
Year-over-Year
 
Sequential
 
December 31,
% of
 
December 31,
% of
 
September 30,
% of
 
% change
 
% change
 
2014
Total
 
2013
Total
 
2014
Total
 
Fav (Unfav)
 
Fav (Unfav)
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services:
 
 
 
 
 
 
 
 
 
 
 
 
Nurse and Allied Staffing (i)
$
146,707

78
%
 
$
69,254

64
%
 
$
147,518

78
%
 
111.8
 %
 
(0.5
)%
Physician Staffing (i)
31,035

16
%
 
30,848

28
%
 
32,286

17
%
 
0.6
 %
 
(3.9
)%
Other Human Capital Management Services
10,392

6
%
 
9,077

8
%
 
9,140

5
%
 
14.5
 %
 
13.7
 %
 
$
188,134

100
%
 
$
109,179

100
%
 
$
188,944

100
%
 
72.3
 %
 
(0.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Contribution income: (j)
 
 
 
 
 
 
 
 
 
 
 
 
Nurse and Allied Staffing (i) (k)
$
11,130

 
 
$
4,759

 
 
$
12,575

 
 
133.9
 %
 
(11.5
)%
Physician Staffing (i)
2,597

 
 
1,908

 
 
1,478

 
 
36.1
 %
 
75.7
 %
Other Human Capital Management Services
635

 
 
(133
)
 
 
(55
)
 
 
577.4
 %
 
1,254.5
 %
 
14,362

 
 
6,534

 
 
13,998

 
 
119.8
 %
 
2.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated corporate overhead (k)
8,554

 
 
5,226

 
 
7,836

 
 
(63.7
)%
 
(9.2
)%
Depreciation
1,070

 
 
934

 
 
1,005

 
 
(14.6
)%
 
(6.5
)%
Amortization
995

 
 
610

 
 
1,011

 
 
(63.1
)%
 
1.6
 %
Acquisition and integration costs (a)
2,532

 
 
473

 
 
2,383

 
 
(435.3
)%
 
(6.3
)%
Restructuring costs
85

 
 

 
 

 
 
(100.0
)%
 
(100.0
)%
Impairment charges (b)
10,000

 
 
6,400

 
 

 
 
(56.3
)%
 
(100.0
)%
(Loss) income from operations
$
(8,874
)
 
 
$
(7,109
)
 
 
$
1,763

 
 
(24.8
)%
 
(603.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
Year-over-Year
 
 
 
December 31,
% of
 
December 31,
% of
 
 
 
 
% change
 
 
 
2014
Total
 
2013
Total
 
 
 
 
Fav (Unfav)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services:
 
 
 
 
 
 
 
 
 
 
 
 
Nurse and Allied Staffing (i)
$
457,034

74
%
 
$
271,563

62
%
 
 
 
 
68.3
 %
 
 
Physician Staffing (i)
123,306

20
%
 
128,781

29
%
 
 
 
 
(4.3
)%
 
 
Other Human Capital Management Services
37,485

6
%
 
37,967

9
%
 
 
 
 
(1.3
)%
 
 
 
$
617,825

100
%
 
$
438,311

100
%
 
 
 
 
41.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contribution income: (j)
 
 
 
 
 
 
 
 
 
 
 
 
Nurse and Allied Staffing (i) (k)
$
36,326

 
 
$
18,424

 
 
 
 
 
97.2
 %
 
 
Physician Staffing (i)
6,700

 
 
8,939

 
 
 
 
 
(25.0
)%
 
 
Other Human Capital Management Services
514

 
 
746

 
 
 
 
 
(31.1
)%
 
 
 
43,540

 
 
28,109

 
 
 
 
 
54.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated corporate overhead (k)
27,770

 
 
21,844

 
 
 
 
 
(27.1
)%
 
 
Depreciation
3,866

 
 
3,886

 
 
 
 
 
0.5
 %
 
 
Amortization
3,575

 
 
2,294

 
 
 
 
 
(55.8
)%
 
 
Acquisition and integration costs (a)
7,957

 
 
473

 
 
 
 
 
(1,582.2
)%
 
 
Restructuring costs
840

 
 
484

 
 
 
 
 
(73.6
)%
 
 
Legal settlement charge

 
 
750

 
 
 
 
 
100.0
 %
 
 
Impairment charges (b)
10,000

 
 
6,400

 
 
 
 
 
(56.3
)%
 
 
(Loss) income from operations
$
(10,468
)
 
 
$
(8,022
)
 
 
 
 
 
(30.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross Country Healthcare, Inc.
Other Financial Data
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Year Ended
 
December 31,
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
December 31,
 
2014
 
 
2013
 
 
2014
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities (in thousands)
$
(1,016
)
 
 
$
(2,900
)
 
 
$
2,475

 
 
$
(4,072
)
 
$
8,659

 
 
 
 
 
 
 
 
 
 
 
 
 
Nurse and Allied Staffing statistical data:
 
 
 
 
 
 
 
 
 
 
 
 
FTEs (i) (l)
6,325

 
 
2,487

 
 
6,396

 
 
4,751

 
2,378

Average Nurse and Allied Staffing revenue per FTE per day (i) (m)
$
252

 
 
$
303

 
 
$
251

 
 
$
264

 
$
313

 
 
 
 
 
 
 
 
 
 
 
 
 
Physician Staffing statistical data:
 
 
 
 
 
 
 
 
 
 
 
 
Days filled (i) (n)
20,767

 
 
21,020

 
 
22,742

 
 
85,457

 
90,881

Revenue per day filled (i) (o)
$
1,454

 
 
$
1,412

 
 
$
1,425

 
 
$
1,436

 
$
1,405


(a)
On June 30, 2014, the Company acquired substantially all of the operating assets and certain liabilities of Medical Staffing Network Healthcare, LLC. For the three months and year ended December 31, 2014, $2.5 million and $7.3 million, respectively, of acquisition and integration costs were related to this acquisition. On December 2, 2013, the Company acquired the operating assets of On Assignment, Inc.’s Allied Healthcare staffing division. For the year ended December 31, 2014, $0.7 million of acquisition and integration costs were related to this acquisition. The results of MSN and the allied healthcare staffing operations have been included in the Company's consolidated statements of operations since their dates of acquisition.
(b)
The fourth quarter of 2014 and 2013, include non-cash impairment charges of $10.0 million ($9.1 million after taxes) and $6.4 million ($3.9 million after taxes), respectively, related to Physician Staffing trade names.
(c)
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.
(d)
The Company sold its Clinical Trial Services business on February 15, 2013. The Clinical Trial Services business was classified as discontinued operations. Discontinued operations in 2013 includes a gain on sale of $4.0 million pretax, or $2.1 million after tax.
(e)
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 charge, impairment charges, and 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.
(f)
The adjustments to net loss attributable to common shareholders have the effect of converting our results from a net loss to net income. Accordingly, the dilutive shares that were excluded from the calculation of net loss per share attributable to common shareholders have been included in the per share calculation to determine the adjusted net income attributable to common shareholders per diluted share. Potentially dilutive shares included in the adjusted per share calculations were (amounts in thousands): 447 and 227 for the three months ended December 31, 2014 and September 30, 2014, respectively; and 335 and 150 for the years ended December 31, 2014 and 2013.
(g)
Includes the impact of establishing a deferred tax asset valuation allowance in the three months and year ended December 31, 2013.
(h)
Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC.
(i)
Effective January 1, 2014, the allied health staffing business of MDA is being reported in Physician Staffing. Prior year amounts have been reclassified to conform to the current period presentation.
(j)
Contribution income is defined as (loss) income from operations before depreciation, amortization, acquisition and integration costs, restructuring costs, legal settlement charge, 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.
(k)
Certain prior year amounts have been reclassified to conform to the current period 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.
(l)
FTEs represent the average number of nurse and allied contract staffing personnel on a full-time equivalent basis.
(m)
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.
(n)
Days filled is calculated by dividing the total hours filled during the period by 8 hours. Effective January 1, 2014, days filled for all periods presented excludes accrued days filled.
(o)
Revenue per day filled is calculated by dividing the actual revenue invoiced by Physician Staffing by days filled for the period presented. Effective January 1, 2014, the applicable revenue for all periods presented excludes permanent placement and accrued revenue.

Cross Country Healthcare, Inc.
William J. Grubbs, 561-237-6202
President and Chief Executive Officer
wgrubbs@crosscountry.com

Source: Cross Country Healthcare, Inc.

6