UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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)September 14, 2022
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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(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)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
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:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2).
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. ☐
Item 2.02 Results
of Operations and Financial Condition.
On September 14, 2022, Cross Country Healthcare, Inc. (the “Company”) announced that it is revising its guidance for the third quarter of 2022 with respect
to revenue, Adjusted EBITDA, and Adjusted EPS guidance as follows:
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Prior Guidance
Q3 2022 Range
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Updated Guidance
Q3 2022 Range
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Year-over-Year
Change
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Sequential
Change
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Revenue
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$605 million - $615 million
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$615 million - $625 million
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64% - 67%
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(18)% – (17)%
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Adjusted EBITDA*(1)
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$55.0 million - $60.0 million
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$58.0 million - $63.0 million
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93% -109%
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(31)% - (25)%
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Adjusted EPS*(2)
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$0.85 - $0.95
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$0.90 - $1.00
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$0.29 - $0.39
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($0.50) – ($0.40)
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Remaining guidance will not be revised from what was originally reported.
*Adjusted EBITDA and Adjusted EPS are non-GAAP measures, which represent measures that do not conform to U.S. generally accepted accounting principles
(“GAAP”). 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 GAAP. Management believes these non-GAAP measures 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. Such non-GAAP financial measures may differ materially from the non-GAAP
financial measures used by other companies.
The Company has not provided reconciliations of any forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures
because such reconciliations are not available without unreasonable efforts due to the variability and complexity with respect to the charges and other components excluded from the non-GAAP measures.
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(1)
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Adjusted EBITDA is defined as net income (loss) attributable to common stockholders before interest expense, income tax expense (benefit), depreciation and
amortization, acquisition and integration-related costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on disposal of fixed
assets, gain or loss on lease termination, gain or loss on sale of business, other expense (income), net, equity compensation, and applicant tracking system costs. Adjusted EBITDA should not be considered a measure of financial
performance under GAAP. Management presents Adjusted EBITDA because it believes that Adjusted EBITDA is a useful supplement to net income attributable to common stockholders as an indicator of operating performance. Management uses
Adjusted EBITDA for planning purposes and as one performance measure in its incentive programs for certain members of its management team. Adjusted EBITDA, as defined, closely matches the operating measure as defined by the Company's
credit facilities. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue.
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(2)
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Adjusted EPS is defined as net income (loss) attributable to common stockholders per diluted share before the diluted EPS impact of acquisition and
integration-related costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on sale of business, applicant tracking system
costs, and nonrecurring income tax adjustments. Adjusted EPS should not be considered a measure of financial performance under GAAP. Management presents Adjusted EPS because it believes that Adjusted EPS is a useful supplement to its
reported EPS as an indicator of operating performance. Management believes it provides a more useful comparison of the Company's underlying business performance from period to period and is more representative of the future earnings
capacity of the Company.
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Item 7.01 Regulation
FD Disclosure.
As previously announced, the Company will host its Investor Relations Day today, September 14, 2022, at the IPIC Theatre, 301 Plaza Real, Boca Raton, FL
33432 at 10:00 am Eastern Time, or live via webcast at https://ir.crosscountryhealthcare.com/investor-day. The event will also be available for replay by visiting
the Investor Relations section of the Company’s website at ir.crosscountryhealthcare.com.
Materials used in conjunction with the Investor Relations Day webcast are furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information in
Exhibit 99.1 is presented as of the particular dates referenced therein, and except as may be required by applicable law, the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided therein.
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 7.01, including Exhibit 99.1, is being furnished and shall
not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section. Furthermore, the information in this Item 7.01, including Exhibit
99.1, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be
expressly set forth by specific reference in such filing.
Website addresses are included as inactive textual references only. The information contained on the websites referenced herein is not incorporated into
this Current Report on Form 8-K.
Item 9.01 Financial
Statements and Exhibits
(d) Exhibits
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Exhibit
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Description
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURE
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.
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CROSS COUNTRY HEALTHCARE, INC.
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Dated:
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September 14, 2022
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By:
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/s/ William J. Burns
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William J. Burns
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Executive Vice President & Chief Financial Officer
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Exhibit 99.1
Investor Day 2022 Cross Country Healthcare September 14, 2022
This presentation contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act, and are subject to the "safe harbor" created by those sections.
Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “appears”,“seeks”, “will” 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. Factors that might cause such differences include, but are not limited to, those discussed in the Risk Factors section of our Annual
Report on Form 10-K for the year ended December 31, 2021, and in 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 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. Except as may be required by law, the Company undertakes no obligation to update or revise forward-looking statements. Forward-Looking
Statements
TECHNOLOGY 2 CULTURE 3 GO TO MARKET 4 DELIVERY 5 LEADERSHIP 1 John A. Martins President and
CEO
OUR ROADMAP AND PLAN Long-term, sustainable, profitable growth
EVOLVE ELEVATE EXECUTE
$31B Total addressable staffing market Market Size per Staffing Industry Analysts (SIA), US Staffing
Industry Forecast, May 2022 Update., represents 2023 estimate Employment Projections 2021-2031; US Bureau of Labor Statistics (9/8/2022) 2.6M Healthcare Jobs to be Added by 2031
OUR ROADMAP AND PLAN A digitally transformed, innovative enterprise with diverse capabilities to
help clients solve their most pressing labor challenges
Continuum of Care Home Retail Pharmacy Physician Offices & Clinics Urgent Care
Center Diagnostic Imaging Center Ambulatory Procedure Emergency Department Hospital Inpatient Rehabilitation Outpatient Rehabilitation Extended Care Facility Skilled Nursing Facility Home Health & Hospice Home/PACE
Program Wellness & Fitness Center PACE: Program of All-Inclusive Care for the Elderly
~3% Outstanding shares repurchased in Q3'22 $100M Share repurchase program New $100M share
repurchase plan announced August 16, 2022 Shares Repurchased Through September 12, 2022
Bill Burns Executive Vice President, Chief Financial Officer TECHNOLOGY 2 CULTURE 3 GO TO
MARKET 4 DELIVERY 5 LEADERSHIP 1
Total Addressable Market Healthcare Staffing Market ~$30B* Education Staffing
Market ~$1B* ~$31B ~$2.5B Revenue** ~8% MARKET SHARE*** Cross Country Healthcare * Per SIA, US Staffing Industry Forecast, May 2022 Update., 2023 estimate ** Cross Country Healthcare (CCH) trailing twelve month revenue ending June
2022 *** Based on CCH estimates for 2022 and SIA estimated market size.
The Healthcare Staffing Market $21B 13% CAGR $40B $34B $30B Market Size & Mix per Staffing
Industry Analysts, US Staffing Industry Forecast, May 2022 Update., 2023 estimate Addressable Today & Vendor Management System (VMS) opportunity based on CCH Estimates CAGR: Compound Annual Growth Rate 2023P Addressable - Today VMS
Opportunity
Travel Nursing Evolution through the Pandemic $15B $18B $23B $9B $7B Bill
Rate $ $$ $$$ $$$ $$ 2019 2020 2021 2022 2023 FTEs (in thousands) 50 85 100 80 90 ‘23 vs. Pre-Pandemic CAGR 60% 13% 8% 35% Our Experience: ~3x Total Travelers ~10x age 25 or younger ~3x between ages of 26 -
41 Market Size Staffing Industry Analysts, US Staffing Industry Forecast, May 2022 Update., 2023 estimate FTEs (Full Time Equivalents): Pre-pandemic and Peak FTEs per SIA. 2022 & 2023 represent CCH estimates based on internal bill rate
trends
Contingent Usage Healthcare Job Openings vs. Hires based on JOLTS report from Bureau of Labor
Statistics
Our Success is Built Upon
Proven Ability to Execute REVENUE: 7 Straight Quarters Double Digit Growth 13 out of 14 Quarters
Meeting or Exceeding Guidance & Consensus 6 Straight Quarters Outpaced Revenue growth vs publicly traded peer Adj. EBITDA: 7 Straight Quarters High-Single to low-Double Digit Margin 12 out of 14 Quarters Meeting or Exceed Guidance
& Consensus
Raising Q3 Guidance THIRD QUARTER 2022 ORIGINAL GUIDANCE REVISED GUIDANCE Revenue $605 -
$615M $615M - $625M Adj. EBITDA $55M - $60M $58M - $63M Adj. EPS $0.85 - $0.95 $0.90 - $1.00
Fourth Quarter Revenue Outlook + $50M or 10% Min $550M 2022 exit run rate - Revised 2022 exit run
rate -Prior Min $500M
2023 Minimum Guidance 2023 Full Year $2.2B $200M +9% Revenue Adj. EBITDA AEBITDA %
Susan Ball Executive Vice President, Chief Administrative Officer and General
Counsel LEADERSHIP 1 TECHNOLOGY 2 CULTURE 3 GO TO MARKET 4 DELIVERY 5
“A relationship of this length can only succeed if trust is established between the parties and that is
certainly the case for Northwell’s partnership with Cross Country Healthcare.” - EVP and Chief Nurse Executive of Northwell Health
<0.5% Clinical cancellation rate 95% Onboarding On-time start rate Internal Metrics – YTD
2022
Phillip Noe Chief Information Officer LEADERSHIP 1 TECHNOLOGY 2 CULTURE 3 GO TO
MARKET 4 DELIVERY 5
Our Industry Today Growing by Acquisitions Lack an Integrated Tech
Stack STAFFING Tech-focusedSolutions Lack Staffing Industry Experience TECHNOLOGY Strong Weak Strong Weak TRADITIONAL HEALTHCARE STAFFING TECH DISRUPTORS PROBLEM PROBLEM
THE BENEFIT Speed and accuracy across the entire professional and client experience.
A Frictionless, Simple Candidate Experience OUR GATEWAY PORTAL EVOLVE ELEVATE EXECUTE
Digital Credentialing Wallet Candidate Loyalty Machine Learning/Artificial Intelligence Real Time
Notifications Instant Interviews Quick Extensions Job Offers Pay Package Quotes GATEWAY CANDIDATE PORTAL
A Frictionless, Simple Client Experience OUR INTELLIFY VMS
Integration and Partnership Machine Learning/Artificial Intelligence Customer Data Smart
Schedule Vendor Neutral Talent Forecasting OUR INTELLIFY CLIENT PORTAL Client Needs Time to Market
Implementing self service automation Improving producer efficiency and capacity Leveraging data and
analytics to improve decision making
Colin McDonald Chief Human Resources Officer LEADERSHIP 1 TECHNOLOGY 2 CULTURE 3 GO TO
MARKET 4 DELIVERY 5
Train Recruit Engage
We are: Connected Accountable Compassionate Driven Entrepreneurial
1,100+ Most employees hired in a single year ~20% Average attrition rate $350M Revenue from
first-year travel recruiters over the last 12 months Metrics for CCH corporate employees only (2021-2022)
42% New hires from healthcare and staffing industry 81% Number of employees
retained 100% Employees work where they are most productive Metrics for CCH corporate employees only (2021-2022)
36% Increase in promotions YTD compared to 2021 87% Employees predicted as a low flight risk using
our internal Business Intelligence (BI) system Metrics for CCH corporate employees only (2021-2022)
42% Employees identifying as minorities 87% Employees who believe CCH is committed to
diversity 88% Employees whobelieve the company respects individuals and values their differences 78% Female employees Metrics for CCH corporate employees only (2021-2022)
Dan White Chief Commercial Officer LEADERSHIP 1 TECHNOLOGY 2 CULTURE 3 GO TO
MARKET 4 DELIVERY 5
$84M New MSP contracts signed in 2022 $70M MSP verbal awards in contracting for Q3'22
A Tech-Enabled Workforce Platform IntellifyTM is our proprietary Vendor Management System (VMS) that
automates the process of finding, scheduling and managing staff via one centralized platform
OUR WORKFORCE PLATFORM Talent Offerings Managed Service Program (MSP) Recruitment Process
Outsourcing Internal Resource Pool Int’lNursing Sabbatical Program Registered Nurse Residency Upskilling Motivate/Engage/Retain Interim Leadership Locums Nurse & Allied Nurse & Allied Non- Clinical Physician
Search Executive Search Non-Clinical
Marc Krug Group President, Delivery LEADERSHIP 1 TECHNOLOGY 2 CULTURE 3 GO TO
MARKET 4 DELIVERY 5 Amiee Hawkins SVP Enterprise Operations
CASE STUDY 1 700+ professionals mobilized in <2 weeks Onsite regulatory audit: 100% no
deficiencies 5% converted to perm staff 209 positions filled 500+ unique candidates sourced Average 1.7 days to submission CASE STUDY 2 CCH Internal Data for specific clients
1 2 3 4 5 6 Source the right professional for the opportunity Transparency in
compensation Customer success with exceptional service to our professionals and clients Continuous engagement throughout the professional and client lifecycle Speed and purpose: speed to partner, speed to support, and speed to
deliver Retention from the first contact to a lifelong partnership Our Delivery Model – Six Tenants
1.5 Weeks 3-4 Months CURRENT PREVIOUS Ramp-up Time of New Travel Recruiters Internal Metrics –
2019 through YTD 2022
• Recruiter productivity 2X across our travel business lines • Technology automates non-revenue
generating tasks• 24/7 recruitment model maximizes potential productivity Improving Recruiter Productivity Internal Metrics – 2019 through YTD 2022
Bill Burns Executive Vice President, Chief Financial Officer TECHNOLOGY 2 CULTURE 3 GO TO
MARKET 4 DELIVERY 5 LEADERSHIP 1
What We Do Prior Today PEOPLE PROCESS TECHNOLOGY =
RESULTS +100% +50% 3X Capacity Productivity Revenue x = + + Travel Local Locums Education Home Search MSP / VMS
Strong Client Relationships Revenue by Client Contract Type MSP / MSO, 53% 3rd Party, 15% Direct,
32% MSP / MSO / VMS, 60% 3rd Party, 10% Direct, 30% TODAY FUTURE GOAL Managed Service Program (MSP), Managed Service Offering (MSO), Vendor Management System (VMS)
Expanding Lines of Business TODAY FUTURE GOAL Travel, 79% Other, 2% Local, 10% Home,
4% Education, 2% Locums, 3% Travel, 62% Other, 7% Local, 7% Home, 7% Education, 9% Locums, 8% Improving Diversification Through Growth Across Higher Margin Business
Vendor Neutral Opportunity ~$30B* ~$10B - $15B ~8% Potential CCH
SHARE $1B+ REVENUE MARGIN 20% Capture $200M 20%-25% 80% Subs $50M ~95%+ Total $250M ~40% Expanding Market Opportunity through Technology Scenario for Illustrative Purposes Only Vendor Neutral Opportunity based on CCH
Estimates
Levers for Margin Growth High Single to Low-Double Digits Sustained Double Digits Organic Growth in
Higher Margin Businesses Improved Bill-Pay Spreads Intellify Operational Efficiencies Automation TODAY FUTURE GOAL
Target Annual Free Cash Flow (FCF) Generation >60% of AEBITDA Estimate ~15%-25% of FCF towards Debt
Service Estimate ~5-15% of FCF towards Share Repurchases, depending on share price and valuations Sufficient Liquidity to be Opportunistic Potential to accelerate certain investments Capital Allocation Strategy
The Valuation Gap 3-4x $292M 10-12x <$50M FY ’16 Q2 ’22 Adj. AEBITDA based on trailing four
quarters ending in each period presented Multiple equals Enterprise Value divided by Adj. EBITDA; Enterprise Value equals Market Cap, plus Debt, less cash Multiple AEBITDA FY ’19
Q&A
Non-GAAP Financial Measures This presentation references non-GAAP (Generally Accepted Accounting
Principles) 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. Such non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. The financial statement tables that accompany our press
releases 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. This presentation also references pro-forma information which reflects the impact from acquisitions and divestitures as of the beginning of periods being presented or
compared. Adjusted EBITDA is defined as net income (loss) attributable to common stockholders before interest expense, income tax expense (benefit), depreciation and amortization, acquisition and integration-related costs, restructuring
(benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on disposal of fixed assets, gain or loss on lease termination, gain or loss on sale of business,
other expense (income), net, equity compensation, and applicant tracking system costs. Adjusted Earnings Per Diluted Share (EPS) is defined as net income (loss) attributable to common stockholders per diluted share before the diluted EPS
impact of acquisition and integration-related costs, restructuring (benefits) costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on sale of business, applicant
tracking system costs, and nonrecurring income tax adjustments. Free Cash Flow (FCF) is a non-GAAP financial measure and is defined as cash provided by or used in operations, less capital expenditures.