Cross Country Healthcare announces Q3 revenue of $188.9m
The third quarter includes the results of the Medical Staffing Network ("MSN") acquisition that closed on June 30, 2014.
Revenue was $188.9 million up 75% year-over-year and 54% sequentially
Adjusted EBITDA was $6.6 million or 3.5% of revenue
Cash Flow from Operations was $2.5 million
Fourth Quarter Guidance: Revenue of $187 million - $192 million and Adjusted EBITDA margin of 3.5% - 4.0%
"Our strong results this quarter reflect the excellent progress we have made driving revenue growth and integrating our recent acquisition of MSN. I am particularly pleased with the pro forma year-over-year growth in all three service lines of Nurse and Allied, led by travel nursing, which was up 22%," said William J. Grubbs, president and Chief Executive Officer. "We expect pro forma year-over-year consolidated revenue growth of 8-11% and improved profitability in the fourth quarter led by increasing demand for our Nurse and Allied services, which accelerated throughout the third quarter."
Third quarter consolidated revenue was $188.9 million, an increase of 75% from the same quarter last year, and 54% sequentially. On a pro forma basis, revenue was up 7% from the prior year and 2% sequentially. The Company's consolidated gross profit margin was 25.0%, down 110 basis points from the same quarter last year and 140 basis points sequentially. Adjusted EBITDA (see table titled "Reconciliation of Non-GAAP Financial Measures") was $6.6 million or 3.5% of revenue, as compared with $2.9 million or 2.7% of revenue in the prior year. Loss from continuing operations was $7.5 million or $0.24 per diluted share primarily due to a combination of a $7.3 million non-cash change in the fair value of convertible note derivative liability and $2.4 million of acquisition and integration costs, representing a loss of $0.31 per diluted share. This compared with income from continuing operations of $1.5 million or $0.05 per diluted share in the prior year quarter. Cash flow from operations was $2.5 million during the third quarter of 2014, compared with $7.2 million in the third quarter of 2013. The year-over-year decline in cash flow from operations was primarily attributable to an increase in receivables due to timing of receipts and the impact of sequential growth throughout the quarter.
For the nine months ended September 30, 2014, consolidated revenue was $429.7 million, an increase of 31% from the same period last year. Consolidated gross profit margin was 25.6%, down 20 basis points from the same period last year. Adjusted EBITDA was $10.9 million or 2.5% of revenue, as compared with $6.6 million or 2.0% of revenue in the prior year. Loss from continuing operations was $11.4 million or $0.37 per diluted share, as compared with a loss of $1.3 million or $0.04 per diluted share in the same period last year. Year-to-date loss from continuing operations reflects the $7.3 million non-cash change in the fair value of the convertible note derivative liability, $5.4 million of acquisition and integration costs and $0.8 million of restructuring charges, representing a loss of $0.43 per diluted share, for the year-to-date period ended September 30, 2014.
Quarterly Business Segment Highlights
Nurse & Allied
Revenue from the nurse and allied staffing business segment increased 125% from the same quarter last year, and 79% sequentially. On a pro forma basis revenue was up 12% year-over-year and 3% sequentially. Contribution income in this segment was $12.6 million, up from $5.0 million in the same quarter last year. The year-over-year increase in segment revenue and contribution income came from a combination of robust organic revenue growth and the impact of acquisitions. Average field FTEs increased to 6,396 from 2,241 in the same quarter last year. Revenue per FTE per day was $251 compared to $318 in the same quarter last year reflecting the impact of lower average bill rates of the acquired businesses.
Revenue from the physician staffing business decreased 3% year-over-year and increased 5% sequentially. The year-over-year decrease is primarily due to lower volume, partly offset by the impact of the MSN acquisition. On a sequential basis, the increase is due entirely to the impact of the acquisition of MSN. Contribution income was $1.5 million, down from $2.2 million in the same quarter last year. Total days filled decreased to 22,742 from 24,011 in the same quarter last year. Revenue per day filled decreased to $1,428 from $1,461 in the same quarter last year, reflecting the impact of lower revenue per day filled of the acquired business.
Other Human Capital Management Services
Revenue from the other human capital management services business segment was $9.1 million, essentially flat from the same quarter last year and down 1% sequentially. Contribution income was negative $0.1 million, compared to a positive $0.1 million in the same quarter last year.
Cash Flow and Balance Sheet Highlights
Cash flow provided by operating activities was $2.5 million for the quarter. At September 30, 2014, the Company had $7.7 million in cash and cash equivalents and $58.1 million of debt, excluding the non-cash change in the fair value of convertible note derivative liability of $7.3 million. The Company had $39.7 million of availability under its credit facility at September 30, 2014.
Outlook for Fourth Quarter 2014
The Company also provided its guidance for the fourth quarter of 2014:
$187 million - $192 million
71 - 76%
Gross Profit Margin
25.7% - 26.2%
(50) - 0bps
Adjusted EBITDA margin
3.5% - 4.0%
The estimates above are based on current management expectations and as such are forward-looking and actual results may differ materially. These ranges 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.
INVITATION TO CONFERENCE CALL
The Company will hold its quarterly conference call on Thursday, November 6, 2014, at 9:00 A.M. EST to discuss its third quarter 2014 financial results. This call will be webcast live and can be accessed at the Company's website at www.crosscountryhealthcare.com or by dialing 800-857-6331 from anywhere in the U.S. or by dialing 517-623-4781 from non-U.S. locations - Passcode: Cross Country. From November 6th through November 20th, a replay of the webcast will be available at the Company's website and a replay of the conference call will be available by telephone by calling 800-395-7443 from anywhere in the U.S. or 203-369-3271 from non-U.S. locations - Passcode: 2014.
NON-GAAP FINANCIAL MEASURES
This press release and accompanying financial statement tables reference non-GAAP 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 this press release 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.
ABOUT CROSS COUNTRY HEALTHCARE
Cross Country Healthcare, Inc., headquartered in Boca Raton, Florida, is a national leader in providing healthcare recruiting, staffing and workforce management solutions. With more than 30 years of experience, we are dedicated to placing highly qualified nurses and physicians as well as allied health, advanced practice and case management professionals. We provide both retained and contingent placement services for physicians, as well as retained search services for healthcare executives. We have more than 4,300 active contracts with a broad range of clients, including acute care hospitals, physician practice groups, nursing facilities, rehabilitation and sports medicine clinics, government facilities, as well as nonclinical settings such as homecare and schools. Through our national staffing teams and network of more than 70 branch office locations, we are able to place clinicians for travel and per diem assignments, local short-term contracts and permanent positions. We are a market leader in providing flexible workforce management solutions, which include managed services programs, workforce assessments, internal resource pool consulting and development, electronic medical record transition staffing and recruitment process outsourcing. In addition, we provide education and training programs for healthcare professionals through seminars and e-learning tools.
Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountryhealthcare.com. Shareholders and prospective investors can also register to automatically receive the Company's press releases, SEC filings and other notices by e-mail.