Cross Country Healthcare announces Q3 results
Cross Country Healthcare today announced financial results for the third quarter ended September 30, 2013.
Third quarter financial results
• Consolidated revenue was $108.0 million a decrease of 4% from $112.3 million last year.
• Adjusted EBITDA from continuing operations (see table titled "Reconciliation of Non-GAAP Financial Measures") increased to $2.9 million, or 2.7% of revenue, from $1.0 million, or 0.9% of revenue, in the prior year quarter.
• Income from continuing operations before income taxes was $0.8 million, compared with a loss from continuing operations of $2.0 million, in the prior year quarter.
• Income from continuing operations was $1.5 million, or $0.05 per diluted share, compared with $0.7 million, or $0.02 per diluted share, in the prior year.
• Cash flow from operations was $7.2 million. At the end of the quarter, the Company had $32.5 million in cash and cash equivalents, $0.3 million of debt and $26.6 million of availability under its credit facility.
Cross Country Healthcare President and CEO William J. Grubbs commented, "I am pleased with our progress this quarter especially with regards to pricing and cost management which has led to improved profitability. In addition, there are encouraging trends in our nursing position count and book to bill ratio that should help us get the company on a growth path in coming quarters."
Third quarter operating performance
Third quarter consolidated revenue was $108.0 million, a decrease of 4% from the same quarter last year, and 2% sequentially. The Company's consolidated gross margin was 26.1%, up 160 basis points from the same quarter last year and 100 basis points sequentially. The margin improvement was due to a combination of lower field insurance costs in our staffing businesses and a continued expansion of the bill/pay spread in our nurse and allied staffing business segment. The Company generated $7.2 million in cash flow from operations during the third quarter of 2013, compared with $1.9 million in the third quarter of 2012.
Revenue from the nurse and allied staffing business segment was down 3% from the same quarter last year, and essentially flat sequentially. Contribution income in this segment was $5.2 million, up from $2.5 million in the same quarter last year. The increase in segment contribution income was primarily due to lower insurance costs, a decrease in selling, general and administrative expenses and improved bill/pay spreads, as well as lower housing costs compared to the prior year quarter.
Revenue from the physician staffing business decreased 4% both year over year and sequentially due to lower volume, partially offset by pricing improvement. Contribution income was $2.2 million, down from $3.1 million in the same quarter last year. The decrease was primarily due to a $0.7 million accrual for certain sales taxes in the third quarter of 2013, based on revised estimates of the liability.
Revenue from the other human capital management services business segment was $9.1 million, down 7% from the same quarter last year and 11% sequentially. Contribution income was $0.1 million, up from $0.03 million in the same quarter last year.
Selling, general and administrative expenses in the third quarter were $25.5 million, down 5% from the same quarter last year and 4% sequentially.
Consolidated net income in the third quarter was $0.9 million or $0.03 per diluted share. Income from continuing operations in the third quarter was $1.5 million or $0.05 per diluted share, including a net tax benefit of $0.6 million, primarily related to discrete items. Income from continuing operations in the third quarter of 2012 was $0.7 million or $0.02 per diluted share.
At September 30, 2013, the Company had $32.5 million in cash and cash equivalents and $0.3 million of debt related primarily to capital lease obligations.
The following statements are based on current management expectations. Such statements are forward-looking and actual results may differ materially. These statements do not include the potential impact of any future mergers, acquisitions or other business combinations, any impairment charges or valuation allowances, or any material legal or restructuring charges. For the fourth quarter of 2013, the Company expects:
• Revenue to be in the $107 million to $110 million range.
• Gross profit margin to be approximately 25% to 25.5%.
• Adjusted EBITDA margin from continuing operations to be in the 1% to 2% range. Adjusted EBITDA, a non-GAAP financial measure, is defined in the accompanying financial statement tables.
• Earnings per diluted share from continuing operations to be in the range of $0.00 to $0.02.