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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
———————
FORM 10-Q
———————
 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2020
Or
 Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From _________ to _________
https://cdn.kscope.io/296eddce4c9babaa7e3fe09dcb166ad6-ccrn-20200930_g1.jpg
———————
CROSS COUNTRY HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
———————
Delaware0-3316913-4066229
(State or other jurisdiction of
Incorporation or organization)
Commission
file number
(I.R.S. Employer
Identification Number)
6551 Park of Commerce Boulevard, N.W.
Boca Raton, Florida 33487
(Address of principal executive offices)(Zip Code)
(561) 998-2232
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
———————
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, par value $0.0001 per shareCCRNThe Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:
Large accelerated filer Accelerated filer Non-accelerated filer 
Smaller reporting company  Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
The registrant had outstanding 37,563,384 shares of Common Stock, par value $0.0001 per share, as of October 31, 2020.



INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
 
In addition to historical information, this Form 10-Q 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 the Private Securities Litigation Reform Act of 1995, 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”, “could”, and variations of such words and similar expressions are intended to identify forward-looking statements. These 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: the potential impacts of the coronavirus pandemic (COVID-19) on our business, financial condition, and results of operations, 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 December 31, 2019, as filed and updated in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (SEC).
 
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 filing. 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 "the Company", “we”, “us”, “our”, or “Cross Country” in this Quarterly Report on Form 10-Q mean Cross Country Healthcare, Inc., and its consolidated subsidiaries.



CROSS COUNTRY HEALTHCARE, INC.
 
INDEX
 
FORM 10-Q
 
September 30, 2020
 PAGE
 
 
 
 
 
  
   
   
Item 6.

i


PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)
 September 30,
2020
December 31,
2019
Assets
Current assets:  
Cash and cash equivalents$3,446 $1,032 
Accounts receivable, net of allowances of $3,752 in 2020 and $3,219 in 2019
168,769 169,528 
Prepaid expenses3,348 6,097 
Insurance recovery receivable4,883 5,011 
Other current assets1,995 1,689 
Total current assets182,441 183,357 
Property and equipment, net of accumulated depreciation of $22,130 in 2020 and $23,276 in 2019
12,363 11,832 
Operating lease right-of-use assets10,526 16,964 
Goodwill90,924 101,066 
Trade names, indefinite-lived5,900 5,900 
Other intangible assets, net36,322 44,957 
Other non-current assets19,362 18,298 
Total assets$357,838 $382,374 
Liabilities and Stockholders' Equity
Current liabilities:  
Accounts payable and accrued expenses$48,619 $45,726 
Accrued compensation and benefits39,961 31,307 
Operating lease liabilities - current4,732 4,878 
Other current liabilities3,354 3,554 
Total current liabilities96,666 85,465 
Revolving credit facility56,038 70,974 
Operating lease liabilities - non-current15,762 19,070 
Non-current deferred tax liabilities6,874 7,523 
Long-term accrued claims25,677 26,938 
Contingent consideration 4,867 
Other long-term liabilities7,901 4,037 
Total liabilities208,918 218,874 
Commitments and contingencies
Stockholders' equity:  
Common stock4 4 
Additional paid-in capital309,049 305,643 
Accumulated other comprehensive loss(1,294)(1,240)
Accumulated deficit(159,349)(141,775)
Total Cross Country Healthcare, Inc. stockholders' equity148,410 162,632 
Noncontrolling interest in subsidiary510 868 
Total stockholders' equity148,920 163,500 
Total liabilities and stockholders' equity$357,838 $382,374 

See accompanying notes to the condensed consolidated financial statements
1


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, amounts in thousands, except per share data)

 Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
Revenue from services$193,968 $209,200 $620,811 $607,128 
Operating expenses: 
Direct operating expenses145,965 158,194 472,471 456,280 
Selling, general and administrative expenses40,804 44,407 128,939 136,387 
Bad debt expense946 588 2,383 1,503 
Depreciation and amortization3,247 2,907 10,472 9,448 
Acquisition and integration-related costs (426)77 385 
Restructuring costs2,316 1,607 5,210 2,884 
Legal settlement charges   1,600 
Impairment charges1,071 1,804 16,082 16,306 
Total operating expenses194,349 209,081 635,634 624,793 
(Loss) income from operations(381)119 (14,823)(17,665)
Other expenses (income):  
Interest expense608 1,398 2,219 4,258 
Loss on derivative 1,284  1,284 
Loss on early extinguishment of debt 94  508 
Other income, net(10)(54)(46)(212)
Loss before income taxes(979)(2,603)(16,996)(23,503)
Income tax expense (benefit)169 94 (32)31,840 
Consolidated net loss(1,148)(2,697)(16,964)(55,343)
Less: Net income attributable to noncontrolling interest in subsidiary
186 431 610 1,226 
Net loss attributable to common shareholders$(1,334)$(3,128)$(17,574)$(56,569)
Net loss per share attributable to common shareholders - Basic and Diluted$(0.04)$(0.09)$(0.49)$(1.58)
Weighted average common shares outstanding:  
Basic and Diluted36,176 35,865 36,058 35,797 

See accompanying notes to the condensed consolidated financial statements
2


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, amounts in thousands)

Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
Consolidated net loss$(1,148)$(2,697)$(16,964)$(55,343)
Other comprehensive income (loss), before income tax:  
Unrealized foreign currency translation gain (loss)33 (29)(54)44 
Unrealized loss on interest rate contracts (104) (1,078)
Reclassification adjustment to statement of operations 1,284  1,312 
33 1,151 (54)278 
Taxes on other comprehensive income (loss):
Income tax effect related to unrealized foreign currency translation gain 7  25 
Income tax effect related to unrealized loss on interest rate contracts (325) (571)
Income tax effect related to reclassification adjustment to statement of operations 86  93 
Valuation allowance adjustment 292  513 
 60  60 
Other comprehensive income (loss), net of tax33 1,091 (54)218 
Comprehensive loss(1,115)(1,606)(17,018)(55,125)
Less: Net income attributable to noncontrolling interest in subsidiary186 431 610 1,226 
Comprehensive loss attributable to common shareholders$(1,301)$(2,037)$(17,628)$(56,351)

See accompanying notes to the condensed consolidated financial statements
3


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended September 30, 2020 and 2019
(Unaudited, amounts in thousands)

 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at June 30, 202036,175 $4 $307,985 $(1,327)$(158,015)$427 $149,074 
Vesting of restricted stock2 —  — — —  
Equity compensation— — 1,064 — — — 1,064 
Foreign currency translation adjustment, net of taxes— — — 33 — — 33 
Distribution to noncontrolling shareholder— — — — — (103)(103)
Net (loss) income— — — — (1,334)186 (1,148)
Balances at September 30, 202036,177 $4 $309,049 $(1,294)$(159,349)$510 $148,920 
 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at June 30, 201935,860 $4 $303,795 $(2,335)$(137,503)$727 $164,688 
Exercise of share options2 — — — — — — 
Vesting of restricted stock5 — (13)— — — (13)
Equity compensation— — 982 — — — 982 
Foreign currency translation adjustment, net of taxes— — — (29)— — (29)
Net change in hedging transaction, net of taxes— — — 1,120 — — 1,120 
Distribution to noncontrolling shareholder— — — — — (404)(404)
Net (loss) income— — — — (3,128)431 (2,697)
Balances at September 30, 201935,867 $4 $304,764 $(1,244)$(140,631)$754 $163,647 




















See accompanying notes to the condensed consolidated financial statements
4


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 2020 and 2019
(Unaudited, amounts in thousands)

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, net(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at December 31, 201935,871 $4 $305,643 $(1,240)$(141,775)$868 $163,500 
Vesting of restricted stock306 — (657)— — — (657)
Equity compensation— — 4,063 — — — 4,063 
Foreign currency translation adjustment, net of taxes— — — (54)— — (54)
Distribution to noncontrolling shareholder— — — — — (968)(968)
Net (loss) income— — — — (17,574)610 (16,964)
Balances at September 30, 202036,177 $4 $309,049 $(1,294)$(159,349)$510 $148,920 
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, net(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at December 31, 201835,626 $4 $303,048 $(1,462)$(84,062)$670 $218,198 
Exercise of share options10 — — — — — — 
Vesting of restricted stock231 — (801)— — — (801)
Equity compensation— — 2,517 — — — 2,517 
Foreign currency translation adjustment, net of taxes— — — 43 — — 43 
Net change in hedging transaction, net of taxes— — — 175 — — 175 
Distribution to noncontrolling shareholder— — — — — (1,142)(1,142)
Net (loss) income— — — — (56,569)1,226 (55,343)
Balances at September 30, 201935,867 $4 $304,764 $(1,244)$(140,631)$754 $163,647 

See accompanying notes to the condensed consolidated financial statements
5


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)
 Nine Months Ended
 September 30,
 20202019
Cash flows from operating activities  
Consolidated net loss$(16,964)$(55,343)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization10,472 9,448 
Provision for allowances3,355 2,554 
Deferred income tax (benefit) expense(650)31,456 
Non-cash lease expense2,932 3,799 
Impairment charges16,082 16,306 
Equity compensation4,063 2,517 
Other non-cash costs460 962 
Changes in operating assets and liabilities:
Accounts receivable(2,597)(6,766)
Prepaid expenses and other assets291 1,483 
Accounts payable and accrued expenses10,388 7,797 
Operating lease liabilities(4,394)(4,355)
Other1,837 1,035 
Net cash provided by operating activities25,275 10,893 
Cash flows from investing activities  
Purchases of property and equipment(3,659)(2,042)
Net cash used in investing activities(3,659)(2,042)
Cash flows from financing activities  
Principal payments on term loan (12,500)
Borrowings under revolving credit facility310,965  
Repayments on revolving credit facility(325,900) 
Principal payments on note payable(2,426) 
Cash payments to noncontrolling shareholder(968)(1,142)
Other(854)(1,771)
Net cash used in financing activities(19,183)(15,413)
Effect of exchange rate changes on cash(19)1 
Change in cash and cash equivalents2,414 (6,561)
Cash and cash equivalents at beginning of period1,032 16,019 
Cash and cash equivalents at end of period$3,446 $9,458 

See accompanying notes to the condensed consolidated financial statements
6


CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.    ORGANIZATION AND BASIS OF PRESENTATION

Nature of Business

The accompanying condensed consolidated financial statements include the accounts of Cross Country Healthcare, Inc. and its direct and indirect wholly-owned subsidiaries (collectively, the Company). The condensed consolidated financial statements include all assets, liabilities, revenue, and expenses of Cross Country Talent Acquisition Group, LLC, which is controlled by the Company but not wholly-owned. The Company records the ownership interest of the noncontrolling shareholder as noncontrolling interest in subsidiary. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. These adjustments consisted of all normal recurring items.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by United States generally accepted accounting principles (U.S. GAAP) for complete financial statements. These operating results are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K as filed with the SEC. The December 31, 2019 condensed consolidated balance sheet included herein was derived from the December 31, 2019 audited consolidated balance sheet included in the Company’s Annual Report on Form 10-K.

Certain prior year amounts have been reclassified to conform to the current year presentation on the condensed consolidated statements of operations and statements of cash flows, and as presented in Note 11 - Segment Data.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Management has assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of the current global outbreak of COVID-19 using information that is reasonably available to the Company at the time. Significant estimates and assumptions are used for, but not limited to: (1) the valuation of accounts receivable; (2) goodwill, trade names, and other intangible assets; (3) other long-lived assets; (4) share-based compensation; (5) accruals for health, workers’ compensation, and professional liability claims; (6) valuation of deferred tax assets; (7) legal contingencies; (8) income taxes; and (9) sales and other non-income tax liabilities. Accrued insurance claims and reserves include estimated settlements from known claims and actuarial estimates for claims incurred but not reported. As additional information becomes available to the Company, its future assessment of these estimates, including management's expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact the Company's consolidated financial statements in future reporting periods. Actual results could differ from those estimates.

Restructuring Costs

The Company considers restructuring activities to be programs whereby it fundamentally changes its operations, such as closing and consolidating facilities, reducing headcount, and realigning operations in response to changing market conditions. As a result, restructuring costs on the consolidated statements of operations primarily include employee termination costs and lease-related exit costs.





7


Reconciliation of the employee termination costs and lease-related exit costs beginning and ending liability balance is presented below:

Employee Termination CostsLease-Related Exit Costs
(amounts in thousands)
Balance at January 1, 2020$386 $1,223 
Charged to restructuring costs (a)212 20 
Payments(292)(76)
Balance at March 31, 2020306 1,167 
Charged to restructuring costs (a)1,565 535 
Payments(1,096)(170)
Balance at June 30, 2020775 1,532 
Charged to restructuring costs (a)353 1,571 
Payments(668)(256)
Balance at September 30, 2020$460 $2,847 
________________

(a) Aside from what is presented in the table above, restructuring costs in the condensed consolidated statements of operations for the nine months ended September 30, 2020 include: (i) $0.7 million of ongoing lease costs related to the Company's strategic reduction in its real estate footprint which are included as operating lease liabilities - current and non-current in our condensed consolidated balance sheets, (ii) $0.2 million of legal entity reorganization costs, and (iii) $0.1 million of other costs.
The three months ended September 30, 2020 include $0.4 million of ongoing lease costs related to the Company's strategic reduction in its real estate footprint.

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The Company has adopted this guidance prospectively with no material impact on its condensed consolidated financial statements.

Effective January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivable, loans, and other financial instruments. The guidance requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which it is effective. The Company has adopted this guidance using the modified retrospective approach related to its accounts receivable, resulting in no cumulative adjustment to retained earnings and no material impact on its condensed consolidated financial statements. See Note 3 - Customer Contracts.



8


3.    CUSTOMER CONTRACTS
The Company's revenues from customer contracts are generated from temporary staffing services and other services. Revenue is disaggregated by segment in the following table. Sales and usage-based taxes are excluded from revenue.

Three Months ended September 30, 2020
Nurse
And Allied
Staffing
Physician
Staffing
SearchTotal Segments
(amounts in thousands)
Temporary Staffing Services$169,264 $15,753 $ $185,017 
Other Services5,980 699 2,272 8,951 
Total$175,244 $16,452 $2,272 $193,968 
Three Months ended September 30, 2019
Nurse
And Allied
Staffing
Physician
Staffing
SearchTotal Segments
(amounts in thousands)
Temporary Staffing Services$181,640 $19,236 $ $200,876 
Other Services3,334 1,171 3,819 8,324 
Total$184,974 $20,407 $3,819 $209,200 
Nine Months ended September 30, 2020
Nurse
And Allied
Staffing
Physician
Staffing
SearchTotal Segments
(amounts in thousands)
Temporary Staffing Services$547,543 $48,994 $ $596,537 
Other Services14,032 2,511 7,731 24,274 
Total$561,575 $51,505 $7,731 $620,811 
Nine Months ended September 30, 2019
Nurse
And Allied
Staffing
Physician
Staffing
SearchTotal Segments
(amounts in thousands)
Temporary Staffing Services$532,036 $51,217 $ $583,253 
Other Services9,362 3,377 11,136 23,875 
Total$541,398 $54,594 $11,136 $607,128 
Accounts Receivable, net

The timing of revenue recognition, billings, and collections results in billed and unbilled accounts receivable from our customers which are classified as accounts receivable on the condensed consolidated balance sheets and are presented net of allowances for doubtful accounts and sales allowances. Estimated revenue for the Company's employees', subcontracted employees', and independent contractors’ time worked but not yet billed at September 30, 2020 and December 31, 2019 totaled $57.3 million and $46.1 million, respectively.

The allowance for doubtful accounts is established for losses expected to be incurred on accounts receivable balances. Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts are no longer collectible. Judgment is required in the estimation of the allowance and the Company evaluates the collectability of its accounts

9


receivable and contract assets based on a combination of factors. The Company bases its allowance for doubtful account estimates on its historical write-off experience, current conditions, an analysis of the aging of outstanding receivable and customer payment patterns, and specific reserves for customers in adverse condition adjusted for current expectations for the customers or industry. Based on the information currently available, the Company also considered current expectations of future economic conditions, including the impact of COVID-19, when estimating its allowance for doubtful accounts.

The opening balance of the allowance for doubtful accounts is reconciled to the closing balance for expected credit losses as follows:

Allowance for Doubtful Accounts(amounts in thousands)
Balance at January 1, 2020$2,406 
Bad Debt Expense539 
Write-Offs, net of Recoveries(349)
Balance at March 31, 20202,596 
Bad Debt Expense898 
Write-Offs, net of Recoveries(532)
Balance at June 30, 20202,962 
Bad Debt Expense946 
Write-Offs, net of Recoveries(800)
Balance at September 30, 2020$3,108 

In addition to the allowance for doubtful accounts, the Company maintains a sales allowance for billing-related adjustments which may arise in the ordinary course and adjustments to the reserve are recorded as contra-revenue. The balance of this allowance as of September 30, 2020 and December 31, 2019 was $0.6 million and $0.8 million, respectively.

4.    COMPREHENSIVE LOSS
 
Total comprehensive loss includes net income or loss, foreign currency translation adjustments, and net change in derivative transactions, net of any related deferred taxes and valuation allowance. Certain of the Company’s foreign subsidiaries use their respective local currency as their functional currency. In accordance with the Foreign Currency Matters Topic of the FASB ASC, assets and liabilities of these operations are translated at the exchange rates in effect on the balance sheet date. Income statement items are translated at the average exchange rates for the period. The cumulative impact of currency fluctuations related to the balance sheet translation is included in accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets and was an unrealized loss of $1.3 million at September 30, 2020 and December 31, 2019.
 
The income tax impact related to components of other comprehensive loss for the three and nine months ended September 30, 2020 and 2019 is reflected on the condensed consolidated statements of comprehensive loss.


10


5.    EARNINGS PER SHARE

The following table sets forth the components of the numerator and denominator for the computation of the basic and diluted earnings per share:
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
(amounts in thousands, except per share data)
Numerator:
Net loss attributable to common shareholders - Basic and Diluted$(1,334)$(3,128)$(17,574)$(56,569)
Denominator:
Weighted average common shares - Basic36,176 35,865 36,058 35,797 
Effect of diluted shares:
     Share-based awards (a)    
Weighted average common shares - Diluted36,176 35,865 36,058 35,797 
Net loss per share attributable to common shareholders - Basic and Diluted$(0.04)$(0.09)$(0.49)$(1.58)
________________

(a) Due to the net loss for the three and nine months ended September 30, 2020 and 2019, 227,821, 252,810, 317,905, and 177,449 shares, respectively, were excluded from diluted weighted average shares. For the three and nine months ended September 30, 2020 and 2019, no tax benefits were assumed for the potentially dilutive shares due to the Company's net operating loss position.


11


6.    GOODWILL, TRADE NAMES, AND OTHER INTANGIBLE ASSETS

The Company had the following acquired intangible assets:

 September 30, 2020December 31, 2019
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(amounts in thousands)
Intangible assets subject to amortization:      
Databases$30,530 $14,559 $15,971 $30,530 $12,269 $18,261 
Customer relationships33,538 13,295 20,243 49,758 26,596 23,162 
Non-compete agreements304 196 108 320 161 159 
Trade names   4,500 1,125 3,375 
Other intangible assets, net$64,372 $28,050 $36,322 $85,108 $40,151 $44,957 
Intangible assets not subject to amortization:      
Trade names, indefinite-lived  $5,900   $5,900 


In the third quarter of 2020, fully amortized intangible assets of $15.0 million related to customer relationships and $4.5 million related to trade names, along with the related accumulated amortization, were removed from the table above. As of September 30, 2020, estimated annual amortization expense is as follows:

Years Ending December 31:(amounts in thousands)
2020$1,491 
20215,963 
20225,933 
20235,875 
20245,238 
Thereafter11,822 
 $36,322 





















12


The changes in the carrying amount of goodwill by segment are as follows: 

Nurse
And Allied
Staffing
Physician
Staffing
SearchTotal
(amounts in thousands)
Balances as of December 31, 2019
Aggregate goodwill acquired$346,130 $43,405 $21,750 $411,285 
Sale of business  (9,889)(9,889)
Accumulated impairment loss(259,732)(40,598) (300,330)
Goodwill, net of impairment loss86,398 2,807 11,861 101,066 
Changes to aggregate goodwill in 2020
Impairment charges  (10,142)(10,142)
Reclassification of API goodwill24  (24) 
Balances as of September 30, 2020
Aggregate goodwill acquired346,130 43,405 21,750 411,285 
Sale of business  (9,889)(9,889)
Accumulated impairment loss(259,732)(40,598)(10,142)(310,472)
Reclassification of API goodwill24  (24) 
Goodwill, net of impairment loss$86,422 $2,807 $1,695 $90,924 

Goodwill, Trade Names, and Other Intangible Assets Impairment

The Company tests reporting units’ goodwill and intangible assets with indefinite lives for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The Company performs quarterly qualitative assessments of significant events and circumstances such as reporting units’ historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including COVID-19, and macro-economic developments, to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of reporting units or intangible assets is less than their carrying value. If indicators of impairments are identified a quantitative impairment test is performed.

As of September 30, 2020, the Company performed a qualitative assessment of each of its reporting units and determined it was not more likely than not that the fair value of its reporting units dropped below their carrying value.

During the second quarter of 2020, due to the increased negative impact and continuing uncertainty of the COVID-19 pandemic on the business, all reporting units were quantitatively tested. For the Nurse and Allied Staffing and Physician Staffing reporting units, no impairment was identified as the fair value was substantially in excess of the carrying amount of goodwill.

The Search reporting unit under-performed relative to management’s expectations in the second quarter of 2020. The lower than expected revenue was driven by: (i) the cancellation or postponement of a significant number of working searches, (ii) the decision to delay the hiring of new revenue producers, and (iii) the loss of customers, which were mostly related to the negative impacts of COVID-19. As a result, the quantitative testing of the Search reporting unit resulted in impairment charges of $10.2 million for its goodwill and $0.3 million for its customer relationships.

In order to determine the fair value of the Search reporting unit, the Company used a combination of an income and market approach. The weighting was based on the specific characteristics, risks, and uncertainties of the Search reporting unit. The discounted cash flow that served as the primary basis for the income approach was based on the Company’s discrete financial forecast of revenue, gross profit margins, operating costs, and cash flows. It also considered estimated future results, economic and market conditions including the timing and duration of COVID-19, as well as the impact of planned business and operational strategies. Assumptions used in the market approach were derived including an analysis of a range of valuation multiples of comparable public companies.

13


Impairment charges on the condensed consolidated statements of operations include impairment of $10.7 million related to goodwill and other intangible assets and $5.4 million related to right-of-use assets and related property and equipment, and totaled $16.1 million for the nine months ended September 30, 2020.

Although management believes that the Company's current estimates and assumptions utilized in its quantitative testing are reasonable and supportable, including its assumptions on the impact and timing related to COVID-19, there can be no assurance that the estimates and assumptions management used for purposes of its qualitative assessment as of September 30, 2020 will prove to be accurate predictions of future performance.

As part of evolving its go-to-market strategy, in the second quarter of 2019, the Company began eliminating certain brands across all of its segments. The Company’s rebranding efforts resulted in a $14.5 million write-off of indefinite-lived trade names related to its Nurse and Allied Staffing business segment, which is presented within impairment charges on the condensed consolidated statements of operations for the nine months ended September 30, 2019.

Intangible Asset Amortization

In connection with its rebranding efforts, the Company made a decision at the end of 2019 to phase out a trade name by the end of 2020, which as of December 31, 2019 would have been recognized over a weighted average life of 7.5 years. In connection with this decision, the Company expected accelerated amortization related to the trade name of $2.9 million throughout 2020. In the second quarter of 2020, the Company further accelerated its rebranding plan and shortened the estimated remaining life of the trade name. Total accelerated amortization resulting from the changes in the estimated remaining life of the trade name were $0.9 million, or $0.03 per share, and $3.1 million, or $0.09 per share, for the three and nine months ended September 30, 2020, respectively.

7.    DEBT

2019 ABL Credit Agreement
Effective October 25, 2019, the Company terminated its commitments under its prior senior credit facility entered into in August 2017 (described below) and entered into an ABL Credit Agreement (Loan Agreement). The Loan Agreement provided for a five-year revolving senior secured asset-based credit facility (ABL) in the aggregate principal amount of up to $120.0 million (as described below), including a sublimit for swing loans up to $15.0 million and a $35.0 million sublimit for standby letters of credit.
On June 30, 2020, the Company amended its Loan Agreement, which increased the current aggregate committed size of the ABL from $120.0 million to $130.0 million. All other terms, conditions, covenants, and pricing of the Loan Agreement remain the same. The amendment was treated as a modification of debt and, as a result, the associated fees and costs of $