Delaware | 0-33169 | 13-4066229 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Exhibit | Description | ||
99.1 | Press Release issued by the Company on August 5, 2015 |
CROSS COUNTRY HEALTHCARE, INC. | |||
By: | /s/ William J. Burns | ||
William J. Burns | |||
Dated: | August 5, 2015 | Chief Financial Officer |
• | Revenue was $192.6 million, up 57% year-over-year and 4% on a pro forma basis |
• | Adjusted EBITDA was $8.2 million or 4.2% of revenue versus $3.3 million or 2.7% of revenue in the prior year |
• | Reported diluted earnings per share (EPS) was $0.08; Adjusted EPS was $0.10 |
• | Third Quarter Guidance: Revenue of $192 million - $197 million and Adjusted EBITDA margin of 4.2% - 4.7% |
Range | Year-over-Year | ||
Change | |||
Revenue | $192 million - $197 million | 2% - 4% | |
Gross profit margin | 25.2% - 25.7% | 18 - 68 bps | |
Adjusted EBITDA margin | 4.2% - 4.7% | 72 - 122 bps | |
Adjusted EPS | $0.10 - $0.12 | $0.03 - $0.05 |
Cross Country Healthcare, Inc. | ||||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||||
(Unaudited, amounts in thousands, except per share data) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | March 31, | June 30, | June 30, | ||||||||||||||||||
2015 | 2014 | 2015 | 2015 | 2014 | ||||||||||||||||||
Revenue from services | $ | 192,617 | $ | 122,656 | $ | 185,964 | $ | 378,581 | $ | 240,747 | ||||||||||||
Operating expenses: | ||||||||||||||||||||||
Direct operating expenses | 144,254 | 90,220 | 138,927 | 283,181 | 177,861 | |||||||||||||||||
Selling, general and administrative expenses | 40,891 | 29,167 | 41,166 | 82,057 | 58,622 | |||||||||||||||||
Bad debt expense | 131 | 32 | 91 | 222 | 464 | |||||||||||||||||
Depreciation | 989 | 817 | 960 | 1,949 | 1,791 | |||||||||||||||||
Amortization | 983 | 784 | 982 | 1,965 | 1,569 | |||||||||||||||||
Acquisition and integration costs (a) | 40 | 2,747 | 118 | 158 | 3,042 | |||||||||||||||||
Restructuring costs | 1,007 | 755 | — | 1,007 | 755 | |||||||||||||||||
Total operating expenses | 188,295 | 124,522 | 182,244 | 370,539 | 244,104 | |||||||||||||||||
Income (loss) from operations | 4,322 | (1,866 | ) | 3,720 | 8,042 | (3,357 | ) | |||||||||||||||
Other expenses (income): | ||||||||||||||||||||||
Interest expense | 1,772 | 289 | 1,737 | 3,509 | 544 | |||||||||||||||||
Gain on derivative liability | (362 | ) | — | (2,147 | ) | (2,509 | ) | — | ||||||||||||||
Other expense (income), net | 27 | 20 | 43 | 70 | 128 | |||||||||||||||||
Income (loss) before income taxes | 2,885 | (2,175 | ) | 4,087 | 6,972 | (4,029 | ) | |||||||||||||||
Income tax expense (benefit) | 205 | 1,006 | 1,037 | 1,242 | (65 | ) | ||||||||||||||||
Consolidated net income (loss) | 2,680 | (3,181 | ) | 3,050 | 5,730 | (3,964 | ) | |||||||||||||||
Less: Net income attributable to noncontrolling interest in subsidiary | 107 | — | 116 | 223 | — | |||||||||||||||||
Net income (loss) attributable to common shareholders | $ | 2,573 | $ | (3,181 | ) | $ | 2,934 | $ | 5,507 | $ | (3,964 | ) | ||||||||||
Net income (loss) per share attributable to common shareholders - Basic | $ | 0.08 | $ | (0.10 | ) | $ | 0.09 | $ | 0.18 | $ | (0.13 | ) | ||||||||||
Net income (loss) per share attributable to common shareholders - Diluted | $ | 0.08 | $ | (0.10 | ) | $ | 0.05 | $ | 0.13 | $ | (0.13 | ) | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||
Basic | 31,398 | 31,151 | 31,294 | 31,346 | 31,125 | |||||||||||||||||
Diluted (b) | 32,040 | 31,151 | 35,454 | 35,508 | 31,125 | |||||||||||||||||
Cross Country Healthcare, Inc. | ||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measure | ||||||||||||||||||||||
(Unaudited, amounts in thousands) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | March 31, | June 30, | June 30, | ||||||||||||||||||
2015 | 2014 | 2015 | 2015 | 2014 | ||||||||||||||||||
Adjusted EBITDA (c): | ||||||||||||||||||||||
Consolidated net income (loss) attributable to common shareholders | $ | 2,573 | $ | (3,181 | ) | $ | 2,934 | $ | 5,507 | $ | (3,964 | ) | ||||||||||
Depreciation | 989 | 817 | 960 | 1,949 | 1,791 | |||||||||||||||||
Amortization | 983 | 784 | 982 | 1,965 | 1,569 | |||||||||||||||||
Interest expense | 1,772 | 289 | 1,737 | 3,509 | 544 | |||||||||||||||||
Income tax expense (benefit) | 205 | 1,006 | 1,037 | 1,242 | (65 | ) | ||||||||||||||||
Acquisition and integration costs (a) | 40 | 2,747 | 118 | 158 | 3,042 | |||||||||||||||||
Restructuring costs | 1,007 | 755 | — | 1,007 | 755 | |||||||||||||||||
Gain on derivative liability | (362 | ) | — | (2,147 | ) | (2,509 | ) | — | ||||||||||||||
Other expense (income), net | 27 | 20 | 43 | 70 | 128 | |||||||||||||||||
Equity compensation | 840 | 90 | 376 | 1,216 | 542 | |||||||||||||||||
Net income attributable to noncontrolling interest in subsidiary | 107 | — | 116 | 223 | — | |||||||||||||||||
Adjusted EBITDA | $ | 8,181 | $ | 3,327 | $ | 6,156 | $ | 14,337 | $ | 4,342 | ||||||||||||
Adjusted EPS: (d) | ||||||||||||||||||||||
Reported diluted EPS | $ | 0.08 | $ | (0.10 | ) | $ | 0.05 | $ | 0.13 | $ | (0.13 | ) | ||||||||||
Acquisition and integration costs (a) | — | 0.05 | — | — | 0.06 | |||||||||||||||||
Restructuring costs | 0.02 | 0.01 | — | 0.02 | 0.01 | |||||||||||||||||
Gain on derivative liability | (0.01 | ) | — | (0.04 | ) | (0.05 | ) | — | ||||||||||||||
Valuation allowance on adjusted items | 0.01 | 0.04 | (0.02 | ) | (0.02 | ) | 0.05 | |||||||||||||||
Adjustment for change in dilutive shares (d) | — | 0.01 | 0.04 | 0.04 | — | |||||||||||||||||
Adjusted EPS (d) | $ | 0.10 | $ | 0.01 | $ | 0.03 | $ | 0.12 | $ | (0.01 | ) | |||||||||||
Weighted average common shares outstanding - diluted | 32,040 | 31,151 | 35,454 | 35,508 | 31,125 | |||||||||||||||||
Adjustment to diluted shares (d) | — | 3,734 | (3,521 | ) | (3,521 | ) | — | |||||||||||||||
Adjusted weighted average common shares - diluted | 32,040 | 34,885 | 31,933 | 31,987 | 31,125 | |||||||||||||||||
Cross Country Healthcare, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited, amounts in thousands) | ||||||||
June 30, | December 31, | |||||||
2015 | 2014 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 8,679 | $ | 4,995 | ||||
Accounts receivable, net | 120,621 | 113,129 | ||||||
Income taxes receivable | 207 | 307 | ||||||
Prepaid expenses | 6,697 | 6,073 | ||||||
Insurance recovery receivable | 4,196 | 5,624 | ||||||
Other current assets | 1,020 | 1,055 | ||||||
Total current assets | 141,420 | 131,183 | ||||||
Property and equipment, net | 11,197 | 12,133 | ||||||
Trade names, net | 38,201 | 38,201 | ||||||
Goodwill, net | 90,647 | 90,647 | ||||||
Other identifiable intangible assets, net | 31,858 | 33,823 | ||||||
Debt issuance costs, net | 1,068 | 1,257 | ||||||
Other non-current assets | 17,263 | 17,889 | ||||||
Total assets | $ | 331,654 | $ | 325,133 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 26,301 | $ | 27,314 | ||||
Accrued employee compensation and benefits | 34,251 | 28,731 | ||||||
Current portion of long-term debt and capital lease obligations | 3,104 | 3,607 | ||||||
Sales tax payable | 2,797 | 2,573 | ||||||
Deferred purchase price | 2,207 | — | ||||||
Deferred tax liabilities | 1,740 | 1,981 | ||||||
Other current liabilities | 2,760 | 2,790 | ||||||
Total current liabilities | 73,160 | 66,996 | ||||||
Long-term debt and capital lease obligations | 68,655 | 70,467 | ||||||
Non-current deferred tax liabilities | 19,692 | 18,038 | ||||||
Long-term accrued claims | 28,749 | 32,068 | ||||||
Long-term deferred purchase price | — | 2,333 | ||||||
Other long-term liabilities | 4,850 | 4,899 | ||||||
Total liabilities | 195,106 | 194,801 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock | 3 | 3 | ||||||
Additional paid-in capital | 248,218 | 247,467 | ||||||
Accumulated other comprehensive loss | (1,136 | ) | (1,118 | ) | ||||
Accumulated deficit | (110,967 | ) | (116,474 | ) | ||||
Total Cross Country Healthcare, Inc. stockholders' equity | 136,118 | 129,878 | ||||||
Noncontrolling interest | 430 | 454 | ||||||
Total stockholders' equity | 136,548 | 130,332 | ||||||
Total liabilities and stockholders' equity | $ | 331,654 | $ | 325,133 |
Cross Country Healthcare, Inc. | |||||||||||||||||||||||
Segment Data (e) | |||||||||||||||||||||||
(Unaudited, amounts in thousands) | |||||||||||||||||||||||
Three Months Ended | Year-over-Year | Sequential | |||||||||||||||||||||
June 30, | % of | June 30, | % of | March 31, | % of | % change | % change | ||||||||||||||||
2015 | Total | 2014 | Total | 2015 | Total | Fav (Unfav) | Fav (Unfav) | ||||||||||||||||
Revenue from services: | |||||||||||||||||||||||
Nurse and Allied Staffing (f) | $ | 152,677 | 79 | % | $ | 83,233 | 68 | % | $ | 149,112 | 80 | % | 83 | % | 2 | % | |||||||
Physician Staffing (f) | 29,794 | 16 | % | 30,232 | 25 | % | 27,347 | 15 | % | (1 | )% | 9 | % | ||||||||||
Other Human Capital Management Services | 10,146 | 5 | % | 9,191 | 7 | % | 9,505 | 5 | % | 10 | % | 7 | % | ||||||||||
$ | 192,617 | 100 | % | $ | 122,656 | 100 | % | $ | 185,964 | 100 | % | 57 | % | 4 | % | ||||||||
Contribution income: (g) | |||||||||||||||||||||||
Nurse and Allied Staffing (f) | $ | 12,515 | $ | 6,708 | $ | 10,602 | 87 | % | 18 | % | |||||||||||||
Physician Staffing (f) | 2,228 | 1,818 | 2,116 | 23 | % | 5 | % | ||||||||||||||||
Other Human Capital Management Services | 747 | (232 | ) | 602 | 422 | % | 24 | % | |||||||||||||||
15,490 | 8,294 | 13,320 | 87 | % | 16 | % | |||||||||||||||||
Unallocated corporate overhead | 8,149 | 5,057 | 7,540 | (61 | )% | (8 | )% | ||||||||||||||||
Depreciation | 989 | 817 | 960 | (21 | )% | (3 | )% | ||||||||||||||||
Amortization | 983 | 784 | 982 | (25 | )% | — | % | ||||||||||||||||
Acquisition and integration costs (a) | 40 | 2,747 | 118 | 99 | % | 66 | % | ||||||||||||||||
Restructuring costs | 1,007 | 755 | — | (33 | )% | (100 | )% | ||||||||||||||||
Income (loss) from operations | $ | 4,322 | $ | (1,866 | ) | $ | 3,720 | 332 | % | 16 | % | ||||||||||||
Six Months Ended | Year-over-Year | ||||||||||||||||||||||
June 30, | % of | June 30, | % of | % change | |||||||||||||||||||
2015 | Total | 2014 | Total | Fav (Unfav) | |||||||||||||||||||
Revenue from services: | |||||||||||||||||||||||
Nurse and Allied Staffing (f) | $ | 301,789 | 80 | % | $ | 163,963 | 68 | % | 84 | % | |||||||||||||
Physician Staffing (f) | 57,141 | 15 | % | 58,831 | 24 | % | (3 | )% | |||||||||||||||
Other Human Capital Management Services | 19,651 | 5 | % | 17,953 | 8 | % | 9 | % | |||||||||||||||
$ | 378,581 | 100 | % | $ | 240,747 | 100 | % | 57 | % | ||||||||||||||
Contribution income: (g) | |||||||||||||||||||||||
Nurse and Allied Staffing (f) | $ | 23,117 | $ | 12,697 | 82 | % | |||||||||||||||||
Physician Staffing (f) | 4,344 | 2,549 | 70 | % | |||||||||||||||||||
Other Human Capital Management Services | 1,349 | (66 | ) | NM | |||||||||||||||||||
28,810 | 15,180 | 90 | % | ||||||||||||||||||||
Unallocated corporate overhead | 15,689 | 11,380 | (38 | )% | |||||||||||||||||||
Depreciation | 1,949 | 1,791 | (9 | )% | |||||||||||||||||||
Amortization | 1,965 | 1,569 | (25 | )% | |||||||||||||||||||
Acquisition and integration costs (a) | 158 | 3,042 | 95 | % | |||||||||||||||||||
Restructuring costs | 1,007 | 755 | (33 | )% | |||||||||||||||||||
Income (loss) from operations | $ | 8,042 | $ | (3,357 | ) | 340 | % | ||||||||||||||||
NM-Not meaningful. |
Cross Country Healthcare, Inc. | ||||||||||||||||||||||
Other Financial Data | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | March 31, | June 30, | June 30, | ||||||||||||||||||
2015 | 2014 | 2015 | 2015 | 2014 | ||||||||||||||||||
Net cash provided by (used in) operating activities (in thousands) | $ | 5,727 | $ | 3,703 | $ | 270 | $ | 5,997 | $ | (5,531 | ) | |||||||||||
Nurse and Allied Staffing statistical data: | ||||||||||||||||||||||
FTEs (f) (h) | 6,607 | 3,190 | 6,454 | 6,531 | 3,155 | |||||||||||||||||
Average Nurse and Allied Staffing revenue per FTE per day (f) (i) | $ | 254 | $ | 287 | $ | 257 | $ | 255 | $ | 287 | ||||||||||||
Physician Staffing statistical data: | ||||||||||||||||||||||
Days filled (f) (j) | 18,339 | 20,377 | 17,413 | 35,752 | 40,500 | |||||||||||||||||
Revenue per day filled (f) (k) | $ | 1,623 | $ | 1,468 | $ | 1,587 | $ | 1,606 | $ | 1,456 |
(a) | On June 30, 2014, the Company acquired substantially all of the operating assets and certain liabilities of MSN. For the three and six months ended June 30, 2015, $0.1 million and $0.2 million, respectively, of acquisition and integration costs were related to this acquisition. For the three and six months ended June 30, 2014, $2.4 million 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 three and six months ended June 30, 2014, $0.3 million and $0.6 million, respectively, of acquisition and integration costs were related to this acquisition. The results of MSN have been included in the Company's consolidated statements of operations since its date of acquisition. |
(b) | When applying the if-converted method to our Convertible Notes for the three months ended March 31, 2015 and six months ended June 30, 2015, 3,521,126 shares related to the Convertible Notes, issued in June 2014 in conjunction with the MSN acquisition, are included in diluted weighted average shares because their effect was dilutive. For the three months ended June 30, 2015 and 2014, and the six months ended June 30, 2014, the effect of the Convertible Notes was anti-dilutive. |
(c) | Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, is defined as net income (loss) attributable to common shareholders before depreciation and amortization, interest expense, income tax expense (benefit), acquisition and integration costs, restructuring costs, legal settlement charge, (gain) loss on derivative liability, impairment charges, other expense (income), net, equity compensation, and net income attributable to noncontrolling interest in subsidiary. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Management presents Adjusted EBITDA because it believes that Adjusted EBITDA is a useful supplement to net income (loss) attributable to common shareholders as an indicator of operating performance. Management uses Adjusted EBITDA as one performance measure in its annual cash incentive program for certain members of its management team. In addition, management monitors Adjusted EBITDA for planning purposes. Adjusted EBITDA, as defined, closely matches the operating measure typically used in the Company's credit facilities in calculating various ratios. Management believes Adjusted EBITDA, as defined, is useful to investors when evaluating the Company's performance as it excludes certain items that management believes are not indicative of the Company's operating performance. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue. |
(d) | Adjusted EPS, a non-GAAP financial measure, is defined as net income (loss) attributable to common shareholders per diluted share (reported EPS) before the diluted EPS impact of acquisition and integration costs, restructuring costs, and gain on derivative liability. 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 earnings capacity of the Company. Adjustments to reported diluted EPS in the three months ended March 31, 2015 and six months ended June 30, 2015 had the effect of changing the impact of applying the if-converted method on our Convertible Notes from being dilutive to being anti-dilutive. For the three months ended June 30, 2014, the adjustments to reported diluted EPS had the effect of converting the net loss to net income. As a result, potentially dilutive shares of 212,880 that were excluded in the unadjusted per share calculation have been included in the adjusted weighted average common shares outstanding - diluted. In addition, the adjustment had the effect of changing the impact of applying the if-converted method on our Convertible Notes from being anti-dilutive to dilutive. |
(e) | Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC. |
(f) | Effective January 1, 2015, the portion of MDA's allied health staffing business with attributes similar to the Nurse and Allied Staffing business is being reported in the Nurse and Allied Staffing segment. Prior period amounts have been reclassified to conform to the current period presentation. |
(g) | Contribution income is defined as income (loss) from operations before depreciation and amortization, acquisition and integration costs, restructuring costs, impairment charges, and corporate expenses not specifically identified to a reporting segment. Contribution income is a financial measure used by management when assessing segment performance. |
(h) | FTEs represent the average number of Nurse and Allied Staffing contract personnel on a full-time equivalent basis. |
(i) | 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. |
(j) | Days filled is calculated by dividing the total hours filled during the period by 8 hours and excludes accrued days filled. |
(k) | Revenue per day filled is calculated by dividing the actual revenue invoiced by Physician Staffing by days filled for the period presented and it excludes permanent placement and accrued revenue. |