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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, 2022
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/fda692eda859cbea00cb5120e2b3c86f-ccrn-20220930_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 37,295,465 shares of common stock, par value $0.0001 per share, as of October 20, 2022.



INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
 
In addition to historical information, this Quarterly Report on 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, 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 overall macroeconomic environment, including increased inflation and interest rates, demand for the healthcare services we provide, both nationally and in the regions in which we operate, the ongoing impacts of the coronavirus pandemic (COVID or 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, 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, including, without limitation, the risk factors set forth in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Form 10-K), 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. Except as may be required by law, 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, 2022
 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,
2022
December 31,
2021
Assets
Current assets:  
Cash and cash equivalents$30,320 $1,036 
Accounts receivable, net of allowances of $12,763 in 2022 and $6,881 in 2021
610,897 493,910 
Prepaid expenses3,952 7,648 
Insurance recovery receivable6,202 5,041 
Other current assets8,646 638 
Total current assets660,017 508,273 
Property and equipment, net of accumulated depreciation of $19,846 in 2022 and $17,729 in 2021
18,556 15,833 
Operating lease right-of-use assets3,249 7,488 
Goodwill113,360 119,490 
Trade names, indefinite-lived5,900 5,900 
Other intangible assets, net40,843 42,344 
Non-current deferred tax assets8,791 11,525 
Non-current insurance recovery receivable20,753 13,998 
Other non-current assets11,043 7,958 
Total assets$882,512 $732,809 
Liabilities and Stockholders' Equity
Current liabilities:  
Accounts payable and accrued expenses$192,032 $109,753 
Accrued compensation and benefits70,947 65,580 
Current portion of debt 4,176 
Operating lease liabilities - current4,489 4,090 
Income tax payable19 7,307 
Current portion of earnout liability7,500 7,500 
Other current liabilities1,803 1,364 
Total current liabilities276,790 199,770 
Long-term debt, less current portion129,755 176,366 
Operating lease liabilities - non-current5,493 10,853 
Non-current deferred tax liabilities237 190 
Long-term accrued claims33,104 25,314 
Non-current earnout liability 9,000 
Other long-term liabilities14,424 13,788 
Total liabilities459,803 435,281 
Commitments and contingencies
Stockholders' equity:  
Common stock4 4 
Additional paid-in capital297,143 321,552 
Accumulated other comprehensive loss(1,373)(1,293)
Retained earnings (accumulated deficit)126,935 (22,735)
Total stockholders' equity422,709 297,528 
Total liabilities and stockholders' equity$882,512 $732,809 

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,
 2022202120222021
Revenue from services $636,098 $374,905 $2,178,391 $1,035,973 
Operating expenses: 
Direct operating expenses492,553 291,111 1,689,647 808,124 
Selling, general and administrative expenses80,216 52,847 243,038 149,518 
Bad debt expense1,101 1,441 6,662 2,411 
Depreciation and amortization3,214 2,680 9,414 7,132 
Acquisition and integration-related costs490 61 530 985 
Restructuring costs2,493 318 1,859 2,391 
Impairment charges3,856  5,597 2,070 
Total operating expenses583,923 348,458 1,956,747 972,631 
Income from operations52,175 26,447 221,644 63,342 
Other expenses (income):  
Interest expense3,498 2,182 10,876 4,049 
Loss on early extinguishment of debt  1,912  
Other income, net(27)(375)(1,119)(616)
Income before income taxes48,704 24,640 209,975 59,909 
Income tax expense13,911 1,207 60,305 5,480 
Net income attributable to common stockholders$34,793 $23,433 $149,670 $54,429 
Other comprehensive income:
Unrealized foreign currency translation loss, net of tax(38)(2)(80)(32)
Comprehensive income$34,755 $23,431 $149,590 $54,397 
Net income per share attributable to common stockholders - Basic$0.94 $0.63 $4.02 $1.49 
Net income per share attributable to common stockholders - Diluted$0.93 $0.62 $3.97 $1.46 
Weighted average common shares outstanding:  
Basic37,101 36,963 37,200 36,593 
Diluted37,492 37,582 37,741 37,276 

See accompanying notes to the condensed consolidated financial statements
2


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended September 30, 2022 and 2021
(Unaudited, amounts in thousands)
 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at June 30, 202237,523 $4 $320,000 $(1,335)$92,142 $ $410,811 
Equity compensation— — 1,491 — — — 1,491 
Stock repurchase and retirement(1,015)— (24,348)— — — (24,348)
Foreign currency translation adjustment, net of taxes— — — (38)— — (38)
Net income— — — — 34,793 — 34,793 
Balances at September 30, 202236,508 $4 $297,143 $(1,373)$126,935 $ $422,709 
 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at June 30, 202136,962 $4 $316,644 $(1,310)$(123,741)$534 $192,131 
Vesting of restricted stock2 — — — — — — 
Equity compensation— — 1,771 — — — 1,771 
Foreign currency translation adjustment, net of taxes— — — (2)— — (2)
Dissolution of noncontrolling interest— — — — — (324)(324)
Distribution to noncontrolling shareholder— — — — — (210)(210)
Net income— — — — 23,433 — 23,433 
Balances at September 30, 202136,964 $4 $318,415 $(1,312)$(100,308)$ $216,799 



























See accompanying notes to the condensed consolidated financial statements
3






CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 2022 and 2021
(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 December 31, 202137,024 $4 $321,552 $(1,293)$(22,735)$ $297,528 
Vesting of restricted stock499 — (5,267)— — — (5,267)
Equity compensation— — 5,206 — — — 5,206 
Stock repurchase and retirement(1,015)— (24,348)— — — (24,348)
Foreign currency translation adjustment, net of taxes— — — (80)— — (80)
Net income— — — — 149,670 — 149,670 
Balances at September 30, 202236,508 $4 $297,143 $(1,373)$126,935 $ $422,709 
 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
SharesDollars
Balances at December 31, 202036,177 $4 $310,388 $(1,280)$(154,737)$534 $154,909 
Vesting of restricted stock479 — (2,230)— — — (2,230)
Equity compensation— — 5,257 — — — 5,257 
Foreign currency translation adjustment, net of taxes— — — (32)— — (32)
Acquisition of WSG308 — 5,000 — — — 5,000 
Dissolution of noncontrolling interest— — — — — (324)(324)
Distribution to noncontrolling shareholder— — — — — (210)(210)
Net income— — — — 54,429 — 54,429 
Balances at September 30, 202136,964 $4 $318,415 $(1,312)$(100,308)$ $216,799 

See accompanying notes to the condensed consolidated financial statements
4


CROSS COUNTRY HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)
 Nine Months Ended
 September 30,
 20222021
Cash flows from operating activities  
Consolidated net income$149,670 $54,429 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization9,414 7,132 
Provision for allowances10,016 3,836 
Deferred income tax expense2,797 2,797 
Non-cash lease expense1,437 1,866 
Impairment charges5,597 2,070 
Loss on early extinguishment of debt1,912  
Equity compensation5,206 5,257 
Other non-cash costs64 833 
Changes in operating assets and liabilities:
Accounts receivable(127,003)(122,887)
Prepaid expenses and other assets1,236 (259)
Income taxes(13,220)759 
Accounts payable and accrued expenses87,156 36,675 
Operating lease liabilities(3,817)(4,592)
Other(735)(169)
Net cash provided by (used in) operating activities129,730 (12,253)
Cash flows from investing activities  
Acquisitions, net of cash acquired (24,470)
Purchases of property and equipment(6,763)(4,890)
Net cash used in investing activities(6,763)(29,360)
Cash flows from financing activities  
Proceeds from term loan 100,000 
Principal payments on term loan(50,438)(250)
Debt issuance costs(3,159)(4,573)
Borrowings under Senior Secured Asset-Based revolving credit facility1,275,808 288,467 
Repayments on Senior Secured Asset-Based revolving credit facility(1,275,808)(337,876)
Cash paid for shares withheld for taxes(5,267)(2,230)
Principal payments on note payable(2,426)(2,426)
Stock repurchase and retirement(24,348) 
Payment of contingent consideration(7,500) 
Other(536)(243)
Net cash (used in) provided by financing activities(93,674)40,869 
Effect of exchange rate changes on cash(9)(14)
Change in cash and cash equivalents29,284 (758)
Cash and cash equivalents at beginning of period1,036 1,600 
Cash and cash equivalents at end of period$30,320 $842 

See accompanying notes to the condensed consolidated financial statements
5


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). In the opinion of management, all adjustments necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. All such adjustments consisted of all normal recurring items, including the elimination of all intercompany transactions and balances.

Cross Country Talent Acquisition Group, LLC was a joint venture controlled but not wholly-owned by the Company. Effective December 31, 2020, the sole professional staffing services agreement held by this joint venture was terminated and, as a result, the Company dissolved Cross Country Talent Acquisition Group, LLC in the third quarter of 2021.

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) 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 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, 2022.

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, 2021 included in the 2021 Form 10-K. The December 31, 2021 condensed consolidated balance sheet included herein was derived from the December 31, 2021 audited consolidated balance sheet included in the 2021 Form 10-K.

Certain prior year amounts have been reclassified to conform to the current year presentation. See the condensed consolidated balance sheets and statements of cash flows.



6


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 global COVID pandemic using information that is reasonably available to the Company at the time. Significant estimates and assumptions are used for, but not limited to: (i) the valuation of accounts receivable; (ii) goodwill, trade names, and other intangible assets; (iii) other long-lived assets; (iv) revenue recognition; (v) accruals for health, workers’ compensation, and professional liability claims; (vi) valuation of deferred tax assets; (vii) legal contingencies; and (viii) income taxes. 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.

Risks and Uncertainties

The Company’s future results of operations and liquidity could be materially adversely affected by macroeconomic factors contributing to delays in payments from clients and inflationary pressure, uncertain or reduced demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its clients.

The Company is also subject to additional risks and uncertainties due to the ongoing COVID pandemic. The extent of the impact on the Company’s business is highly uncertain and difficult to predict.

Accounts Receivable, net

The timing of revenue recognition, billings, and collections results in billed and unbilled accounts receivable from 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 employees', subcontracted employees', and independent contractors’ time worked but not yet billed at September 30, 2022 and December 31, 2021 totaled $161.2 million and $140.0 million, respectively.

The Company generally does not require collateral and mitigates its credit risk by performing credit evaluations and monitoring at-risk accounts. 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 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, when estimating its allowance for doubtful accounts.


7


The opening balance of the allowance for doubtful accounts is reconciled to the closing balance for expected credit losses as follows:
20222021
(amounts in thousands)
Balance at January 1$6,087 $3,416 
Bad Debt Expense2,369 504 
Write-Offs, net of Recoveries(365)(699)
Balance at March 318,091 3,221 
Bad Debt Expense3,192 466 
Write-Offs, net of Recoveries(426)(358)
Balance at June 30$10,857 $3,329 
Bad Debt Expense1,101 1,441 
Write-Offs, net of Recoveries(593)(138)
Balance at September 30$11,365 $4,632 

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 of business and adjustments to the reserve are recorded as contra-revenue. The balance of this allowance as of September 30, 2022 and December 31, 2021 was $1.4 million and $0.8 million, respectively.

The Company’s contract terms typically require payment between 30 to 60 days from the date of invoice and are considered past due based on the particular negotiated contract terms. The majority of the Company's customers are U.S. based healthcare systems with a significant percentage in acute-care facilities. No single customer accounted for more than 10% of the Company’s revenue for the three and nine months ended September 30, 2022 and 2021, or the accounts receivable balance as of September 30, 2022 and December 31, 2021.

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 (benefits) costs on the condensed consolidated statements of operations primarily include employee termination costs and lease-related exit costs.

Reconciliation of the employee termination costs and lease-related exit costs (benefits) beginning and ending liability balance is presented below:
Employee TerminationLease-Related
(amounts in thousands)
Balance at January 1, 2022$160 $2,423 
Charged to restructuring(a)
 389 
Payments and adjustments(160)(192)
Balance at March 31, 2022 2,620 
Charged to restructuring(a)
200 (1,379)
Payments (202)
Balance at June 30, 2022$200 $1,039 
Charged to restructuring(a)
735 1,755 
Payments(24)(254)
Balance at September 30, 2022$911 $2,540 
________________
(a) Restructuring costs in the condensed consolidated statements of operations for the nine months ended September 30, 2022 include a benefit of $1.4 million in the second quarter of 2022 associated with the early termination of the lease for one of the Company's corporate offices which was previously restructured.


8


3.    REVENUE RECOGNITION

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, 2022
Nurse
And Allied
Staffing
Physician
Staffing
Total Segments
(amounts in thousands)
Temporary Staffing Services$592,398 $22,811 $615,209 
Other Services19,872 1,017 20,889 
Total$612,270 $23,828 $636,098 
Three Months ended September 30, 2021
Nurse
And Allied
Staffing
Physician
Staffing
Total Segments
(amounts in thousands)
Temporary Staffing Services$347,115 $18,055 $365,170 
Other Services9,024 711 9,735 
Total$356,139 $18,766 $374,905 
Nine Months ended September 30, 2022
Nurse
And Allied
Staffing
Physician
Staffing
Total Segments
(amounts in thousands)
Temporary Staffing Services$2,053,935 $66,122 $2,120,057 
Other Services55,358 2,976 58,334 
Total$2,109,293 $69,098 $2,178,391 
Nine Months ended September 30, 2021
Nurse
And Allied
Staffing
Physician
Staffing
Total Segments
(amounts in thousands)
Temporary Staffing Services$961,608 $48,534 $1,010,142 
Other Services23,727 2,104 25,831 
Total$985,335 $50,638 $1,035,973 
See Note 12 - Segment Data.

4.    ACQUISITIONS

Selected

On December 16, 2021, the Company purchased and acquired substantially all of the assets and assumed certain liabilities of Selected, Inc. (Selected) for a purchase price of $3.5 million in cash, subject to adjustment, and $1.5 million in shares (or 59,429 shares) of the Company's common stock. The transaction was treated as a purchase of assets for income tax purposes.

The sellers were eligible to receive up to an additional $1.5 million in earnout cash consideration, based on Selected's revenues for each of the twelve-month periods ending on the first and second anniversaries of the first day after the closing date. In the

9


second quarter of 2022, the Company determined that the contingent consideration earnout related to the Selected acquisition would not be achieved for 2022 and 2023 and, as a result, the entire liability was reversed. See Note 10 - Fair Value Measurements.

The Company assigned the following values to other identifiable intangible assets: (i) an immaterial amount to trade names with a weighted average estimated useful life of 2 years; (ii) $1.7 million to software with a weighted average estimated useful life of 5 years; and (iii) $2.9 million to a database, consisting of education professionals, with a weighted average estimated useful life of 5 years, for a total of $4.6 million in definite life intangible assets with a weighted average estimated useful life of 5 years.

The remaining excess purchase price over the fair value of net assets acquired of $0.4 million was recorded as goodwill on the Company's condensed consolidated balance sheets. See Note 7 - Goodwill, Trade Names, and Other Intangible Assets.

The acquisition was not significant and has been accounted for using the acquisition method of accounting. Associated immaterial acquisition-related costs incurred have been included in acquisition and integration-related costs on the Company's condensed consolidated statements of operations for the nine months ended September 30, 2022.

Cross Country Workforce Solutions Group (CCWSG)

On June 8, 2021, the Company purchased and acquired substantially all of the assets and assumed certain liabilities of Workforce Solutions Group, Inc. (WSG) for a purchase price of $25.0 million in cash and $5.0 million in shares (or 307,730 shares) of the Company's common stock. The parties agreed to a final net working capital reduction of $1.1 million, which was received in the fourth quarter of 2021. The transaction was treated as a purchase of assets for income tax purposes.

The sellers are also eligible to receive an earnout based on the business' performance through three years after the acquisition date that could provide up to an additional $15.0 million in cash. In the third quarter of 2022, the Company determined that the contingent consideration earnout was achieved for the 2021 through 2022 period and, as a result, the Company made a $7.5 million earnout payment. The remaining earnout liability's carrying amount of $7.5 million is included in current portion of earnout liability on the condensed consolidated balance sheets. See Note 10 - Fair Value Measurements.

The following table summarizes the fair value of the assets acquired and liabilities assumed on June 8, 2021:

(amounts in thousands)
Cash and cash equivalents$957 
Accounts receivable11,991 
Other current assets59 
Property and equipment10 
Right-of-use assets1,078 
Goodwill22,066 
Other intangible assets14,200 
Total assets acquired50,361 
Accounts payable and accrued expenses3,562 
Accrued compensation and benefits1,387 
Lease liability - current316 
Lease liability - non-current762 
Earnout liability15,000 
Total liabilities assumed21,027 
Net assets acquired$29,334 

The Company assigned a value to other identifiable intangible assets of $14.2 million in customer relationships with a weighted average estimated useful life of 11.5 years.


10


The remaining excess purchase price over the fair value of net assets acquired of $22.1 million was recorded as goodwill on the Company's condensed consolidated balance sheets. See Note 7 - Goodwill, Trade Names, and Other Intangible Assets.

The acquisition was not significant and has been accounted for using the acquisition method of accounting. The pro-forma impact on the Company's consolidated revenue from services and net income, including the pro forma effect of events that are directly attributable to the acquisition, was not significant.

5.    COMPREHENSIVE INCOME
 
Total comprehensive income includes net income or loss and foreign currency translation adjustments, net of any related deferred taxes, and is included within the accompanying condensed consolidated statements of operations. Certain of the Company’s foreign subsidiaries use their respective local currency as their functional currency. 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 $1.4 million at September 30, 2022 and $1.3 million at December 31, 2021.

6.    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,
2022202120222021
(amounts in thousands, except per share data)
Numerator:
Net income attributable to common stockholders - Basic and Diluted$34,793 $23,433 $149,670 $54,429 
Denominator:
Weighted average common shares - Basic37,101 36,963 37,200 36,593 
Effect of diluted shares:
     Share-based awards391 619 541 683 
Weighted average common shares - Diluted37,492 37,582 37,741 37,276 
Net income per share attributable to common stockholders - Basic$0.94 $0.63 $4.02 $1.49 
Net income per share attributable to common stockholders - Diluted$0.93 $0.62 $3.97 $1.46 

The following table represents the share-based awards that could potentially dilute net income per share attributable to common stockholders in the future that were not included in the computation of diluted net income per share attributable to common stockholders because to do so would have been anti-dilutive for the periods presented.

Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(amounts in thousands)
Share-based awards$ $ 739

11


7.    GOODWILL, TRADE NAMES, AND OTHER INTANGIBLE ASSETS

The Company had the following acquired intangible assets:
 September 30, 2022December 31, 2021
 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$33,430 $21,125 $12,305 $30,530 $18,375 $12,155 
Customer relationships47,738 20,649 27,089 47,738 17,581 30,157 
Non-compete agreements4 3 1 304 272 32 
Trade names30 12 18    
Software1,700 270 1,430    
Other intangible assets, net$82,902 $42,059 $40,843 $78,572 $36,228 $42,344 
Intangible assets not subject to amortization:
Trade names, indefinite-lived  $5,900   $5,900 

As of September 30, 2022, estimated annual amortization expense was as follows:

(amounts in thousands)
Years Ending December 31:
2022$2,020 
20238,051 
20247,399 
20256,840 
20265,632 
Thereafter10,901 
 $40,843 


12


The changes in the carrying amount of goodwill by reportable segment are as follows:
Nurse
And Allied
Staffing
Physician
Staffing
Total
 (amounts in thousands)
Balances as of December 31, 2021  
Aggregate goodwill acquired$396,446 $43,405 $439,851 
Sale of business(9,889) (9,889)
Accumulated impairment loss(269,874)(40,598)(310,472)
Goodwill, net of impairment loss116,683 2,807 119,490 
Changes to aggregate goodwill in 2022
Goodwill acquisition adjustment - Selected (a)
(6,130) (6,130)
Balances as of September 30, 2022
Aggregate goodwill acquired390,316 43,405 433,721 
Sale of business(9,889) (9,889)
Accumulated impairment loss(269,874)(40,598)(310,472)
Goodwill, net of impairment loss$110,553 $2,807 $113,360 
________________
(a) Represents an adjustment to the fair value of the identifiable net assets acquired, with a corresponding offset to goodwill, made during the measurement period related to the acquisition of Selected. See Note 4 - Acquisitions.

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, 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, 2022 and 2021, 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. Although management believes that the Company's current estimates and assumptions utilized in its qualitative testing are reasonable and supportable, including its assumptions on the impact and timing related to COVID, there can be no assurance that the estimates and assumptions management used for purposes of its qualitative assessment as of September 30, 2022 will prove to be accurate predictions of future performance.

For its long-lived assets and definite-lived intangible assets, the Company reviews for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. As of September 30, 2022, the Company performed a qualitative assessment of its trade names and other intangible assets and, as a result, the Company wrote off a discontinued IT project and recorded a $1.9 million impairment charge. During the nine months ended September 30, 2021, the Company wrote off a discontinued software development project, resulting in an immaterial impairment charge.











13


8.    DEBT

The Company's long-term debt consists of the following:
September 30, 2022December 31, 2021
PrincipalDebt Issuance CostsPrincipalDebt Issuance Costs
(amounts in thousands)
Term Loan, interest of 8.83% and 6.50% at September 30, 2022 and December 31, 2021, respectively
$123,875 $(3,320)$174,312 $(5,396)
Senior Secured Asset-Based Loan, interest of 4.58% and 1.60% at September 30, 2022 and December 31, 2021, respectively
9,200 (3,642)9,200 (991)
Note Payable, interest of 2.00% per annum at December 31, 2021