Cross Country Healthcare, Inc. (the “Company”) (Nasdaq: CCRN)
today announced financial results for its fourth quarter and full
year ended December 31, 2023.
SELECTED FINANCIAL INFORMATION:
Dollars are in thousands, except per share amounts
Q4 2023
Variance Q4 2023 vs Q4 2022
Variance Q4 2023 vs Q3 2023
Full Year 2023
Variance 2023 vs 2022
Revenue
$
414,035
(34
)
%
(6
)
%
$
2,019,728
(28
)
%
Gross profit margin*
21.9
%
(20
)
bps
(10
)
bps
22.3
%
(10
)
bps
Net income attributable to common
stockholders
$
9,038
(77
)
%
(29
)
%
$
72,631
(61
)
%
Diluted EPS
$
0.26
$
(0.79
)
$
(0.10
)
$
2.05
$
(2.97
)
Adjusted EBITDA*
$
20,592
(64
)
%
(24
)
%
$
144,421
(52
)
%
Adjusted EBITDA margin*
5.0
%
(410
)
bps
(120
)
bps
7.2
%
(360
)
bps
Adjusted EPS*
$
0.29
$
(0.80
)
$
(0.10
)
$
2.23
$
(3.04
)
Cash flows from operations
$
12,074
179
%
(83
)
%
$
248,498
85
%
* Represents amounts that are not
calculated in accordance with U.S. generally accepted accounting
principles (GAAP) and are referred to as non-GAAP measures. Please
refer to the accompanying discussion of how these non-GAAP
financial measures are calculated and used under “Non-GAAP
Financial Measures” and tables reconciling these measures to the
closest GAAP measure, below.
Fourth Quarter and Full Year Business Highlights
- Fourth quarter Revenue exceeded the high end of our guidance
range
- Physician Staffing and Education experienced annual
double-digit year-over-year revenue growth
- Proactively managed our cost structure and drove a full year
adjusted EBITDA margin of over 7%
- Positive cash flow from operations of $12 million for the
quarter and a record year of $249 million
- Repaid $73.9 million on the term loan and paid down the ABL,
ending the year debt-free
- Invested more than $20 million in our core technologies
including Intellify® and XperienceTM
- Repurchased 6.8% of shares outstanding or 2.3 million shares
for $57.6 million in 2023
“We are proud of all we accomplished in 2023, such as
successfully rolling out our vendor neutral offering Intellify® and
driving growth in our non-travel businesses: physician staffing,
education, and homecare,” said John A. Martins, President and Chief
Executive Officer of Cross Country Healthcare. He continued, “For
the coming year, our goal is to capitalize on the investments we
have made in our business by growing our client base and ramping
our recent wins, as well as driving operational efficiency to
expand our margins. With the health and strength of our balance
sheet, we are well positioned to make further strategic investments
and accretive acquisitions to meet the evolving needs of our
clients.”
Fourth quarter consolidated revenue was $414.0 million, a
decrease of 34% year-over-year and 6% sequentially. Consolidated
gross profit margin was 21.9%, down 20 basis points year-over-year
and 10 basis points sequentially. Net income attributable to common
stockholders was $9.0 million compared to $38.8 million in the
prior year and $12.8 million in the prior quarter. Diluted earnings
per share (EPS) was $0.26 compared to $1.05 in the prior year and
$0.36 in the prior quarter. Adjusted earnings before interest,
taxes, depreciation, and amortization (EBITDA) was $20.6 million,
or 5.0% of revenue, as compared with $57.0 million, or 9.1% of
revenue, in the prior year, and $27.2 million, or 6.2% of revenue,
in the prior quarter. Adjusted EPS was $0.29 compared to $1.09 in
the prior year and $0.39 in the prior quarter.
For the year ended December 31, 2023, consolidated revenue was
$2.0 billion, a decrease of 28% year-over-year. Consolidated gross
profit margin was 22.3%, down 10 basis points from the prior year.
Net income attributable to common stockholders was $72.6 million,
or 2.05 per diluted share, compared to $188.5 million, or $5.02 per
diluted share, in the prior year. Adjusted EBITDA was $144.4
million, or 7.2% of revenue, as compared with $301.7 million, or
10.8% of revenue, in the prior year. Adjusted EPS was $2.23
compared to $5.27 in the prior year.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue was $367.2 million, a decrease of 38% year-over-year and
7% sequentially. Contribution income was $33.9 million, a decrease
from $69.9 million in the prior year and $39.2 million in the prior
quarter. Average field contract personnel on a full-time equivalent
(FTE) basis were 9,570 as compared with 12,447 in the prior year
and 9,849 in the prior quarter. Revenue per FTE per day was $414
compared to $510 in the prior year and $434 in the prior quarter.
As expected, volume declined as clients continue to right-size
their needs, and travel bill rates continued to normalize.
Physician Staffing
Revenue was $46.9 million, an increase of 26% year-over-year and
3% sequentially. Contribution income was $1.9 million, an increase
from $1.7 million in the prior year and a decrease from $2.6
million in the prior quarter. Total days filled were 23,578 as
compared with 21,335 in the prior year and 23,004 in the prior
quarter. Revenue per day filled was $1,988 as compared with $1,740
in the prior year and $1,986 in the prior quarter. The
year-over-year increase in revenue was primarily due to an increase
in volume in several specialties.
Cash Flow and Balance Sheet Highlights
Net cash provided by operating activities for the quarter was
$12.1 million. For the year ended December 31, 2023, net cash
provided by operating activities was $248.5 million as compared to
$134.1 million in the prior year.
During the fourth quarter, the Company repurchased and retired a
total of 0.3 million shares of the Company's common stock for an
aggregate price of $6.4 million, at an average market price of
$20.98 per share. As of December 31, 2023, the Company had 34.4
million unrestricted shares outstanding and $77.3 million remaining
for share repurchase.
At December 31, 2023, the Company had $17.1 million in cash and
cash equivalents with no debt outstanding. There were no borrowings
drawn under its revolving senior secured asset-based credit
facility (ABL), and $13.8 million of letters of credit outstanding.
As of December 31, 2023, borrowing base availability under the ABL
was $220.6 million, with $206.8 million of excess availability.
Outlook for First Quarter 2024
The guidance below applies only to management’s expectations for
the first quarter of 2024.
Q1 2024 Range
Year-over-Year
Sequential
Change
Change
Revenue
$370 million - $380 million
(41)% - (39)%
(11)% - (8)%
Adjusted EBITDA*
$13.0 million - $18.0 million
(75)% - (65)%
(37)% - (13)%
Adjusted EPS*
$0.15 - $0.25
$(0.69) - $(0.59)
$(0.14) - $(0.04)
* Refer to discussion of non-GAAP
financial measures and reconciliation tables below.
The above estimates are based on current management expectations
and, as such, are forward-looking and actual results may differ
materially. The above ranges do not include the potential impact of
any future divestitures, mergers, acquisitions, or other business
combinations, changes in debt structure, or future significant
share repurchases.
INVITATION TO CONFERENCE CALL
The Company will hold its quarterly conference call on
Wednesday, February 21, 2024, at 5:00 P.M. Eastern Time to discuss
its fourth quarter and full year 2023 financial results. This call
will be webcast live and can be accessed at the Company's website
at ir.crosscountry.com or by dialing 888-566-1290 from anywhere in
the U.S. or by dialing 773-799-3776 from non-U.S. locations -
Passcode: Cross Country. A replay of the webcast will be available
from February 21st through March 6th on the Company's website and a
replay of the conference call will be available by telephone by
calling 800-391-9851 from anywhere in the U.S. or 203-369-3268 from
non-U.S. locations - Passcode: 4335.
ABOUT CROSS COUNTRY HEALTHCARE
Cross Country Healthcare, Inc. is a market-leading, tech-enabled
workforce solutions and advisory firm with 37 years of industry
experience and insight. We help clients tackle complex
labor-related challenges and achieve high-quality outcomes, while
reducing complexity and improving visibility through data-driven
insights. Diversity, equality, and inclusion is at the heart of the
organization’s overall corporate social responsibility program, and
closely aligned with our core values to create a better future for
its people, communities, and its stockholders.
Copies of this and other press releases, as well as additional
information about the Company, can be accessed online at
ir.crosscountry.com. Stockholders and prospective investors can
also register to automatically receive the Company's press
releases, filings with the Securities and Exchange Commission
(SEC), and other notices by e-mail.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying financial statement
tables reference non-GAAP financial measures, such as gross profit
margin, adjusted EBITDA, and adjusted EPS. 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 United States generally accepted
accounting principles (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 future
operating performance. Pro forma measures, if applicable, are
adjusted to include the results of our acquisitions, and exclude
the results of divestments, as if the transactions occurred in the
beginning of the periods mentioned. 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 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.
In addition, forward-looking adjusted EBITDA and adjusted EPS
for fiscal 2023 exclude potential charges or gains that may be
recorded during the fiscal year, including among other things, the
potential impact of any future divestitures, mergers, acquisitions,
or other business combinations, changes in debt structure, or
future significant share repurchases. We have not attempted to
provide reconciliations of such forward-looking non-GAAP earnings
guidance to the comparable GAAP measure, as permitted by Item
10(e)(1)(i)(B) of Regulation S-K, because the impact and timing of
these potential charges or gains is inherently uncertain and
difficult to predict and is unavailable without unreasonable
efforts. In addition, the Company believes such reconciliations
would imply a degree of precision and certainty that could be
confusing to investors. Such items could have a substantial impact
on GAAP measures of our financial performance.
FORWARD LOOKING STATEMENTS
In addition to historical information, this press release
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 and/or 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, 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 customers’ 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, 2022, as filed and updated in
our Quarterly Reports on Form 10-Q and other filings with the SEC.
You should consult any further disclosures the Company makes on
related subjects in its filings with the 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 press release. 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 press
release mean Cross Country Healthcare, Inc. and its consolidated
subsidiaries.
Cross Country Healthcare,
Inc.
Consolidated Statements of
Operations
(Unaudited, amounts in
thousands, except per share data)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2023
2022
2023
2023
2022
Revenue from services
$
414,035
$
628,218
$
442,291
$
2,019,728
$
2,806,609
Operating expenses:
Direct operating expenses
323,546
489,276
344,932
1,569,318
2,178,923
Selling, general and administrative
expenses
67,566
81,367
69,627
300,391
324,935
Bad debt expense
4,165
2,947
2,355
14,562
9,609
Depreciation and amortization
4,471
3,162
4,540
18,347
12,576
Restructuring costs
863
2
348
2,553
1,861
Legal settlement charges
—
—
—
1,125
—
Impairment charges
—
—
186
719
5,597
Total operating expenses
400,611
576,754
421,988
1,907,015
2,533,501
Income from operations
13,424
51,464
20,303
112,713
273,108
Other expenses (income):
Interest expense
586
3,515
669
8,094
14,391
Loss on early extinguishment of debt
—
1,816
—
1,723
3,728
Other (income) expense, net
(131
)
(217
)
134
2
(1,336
)
Income before income taxes
12,969
46,350
19,500
102,894
256,325
Income tax expense
3,931
7,559
6,688
30,263
67,864
Net income attributable to common
stockholders
$
9,038
$
38,791
$
12,812
$
72,631
$
188,461
Net income per share attributable to
common stockholders - Basic
$
0.26
$
1.06
$
0.37
$
2.07
$
5.09
Net income per share attributable to
common stockholders - Diluted
$
0.26
$
1.05
$
0.36
$
2.05
$
5.02
Weighted average common shares
outstanding:
Basic
34,481
36,455
34,954
35,158
37,012
Diluted
34,685
36,926
35,152
35,476
37,536
Cross Country Healthcare,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(Unaudited, amounts in
thousands)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2023
2022
2023
2023
2022
Adjusted EBITDA:a
Net income attributable to common
stockholders
$
9,038
$
38,791
$
12,812
$
72,631
$
188,461
Interest expense
586
3,515
669
8,094
14,391
Income tax expenseb
3,931
7,559
6,688
30,263
67,864
Depreciation and amortization
4,471
3,162
4,540
18,347
12,576
Acquisition and integration-related
costs
—
196
13
59
726
Restructuring costsc
863
2
348
2,553
1,861
Legal fees and settlementsd
—
—
—
1,125
—
Impairment chargese
—
—
186
719
5,597
Loss on disposal of fixed assets
44
19
43
87
44
Loss on early extinguishment of debtf
—
1,816
—
1,723
3,728
(Gain) loss on lease terminationg
—
(231
)
96
104
(1,325
)
Other income, net
(175
)
(4
)
(5
)
(189
)
(55
)
Equity compensation
1,166
2,187
1,433
6,579
7,393
System conversion costsh
668
14
425
2,326
455
Adjusted EBITDAa
$
20,592
$
57,026
$
27,248
$
144,421
$
301,716
Adjusted EBITDA margina
5.0
%
9.1
%
6.2
%
7.2
%
10.8
%
Adjusted EPS:i
Numerator:
Net income attributable to common
stockholders
$
9,038
$
38,791
$
12,812
$
72,631
$
188,461
Non-GAAP adjustments - pretax:
Acquisition and integration-related
costs
—
196
13
59
726
Restructuring costsc
863
2
348
2,553
1,861
Legal fees and settlementsd
—
—
—
1,125
—
Impairment chargese
—
—
186
719
5,597
System conversion costsh
668
14
425
2,326
455
Loss on early extinguishment of debtf
—
1,816
—
1,723
3,728
Tax impact of non-GAAP adjustments
(400
)
(519
)
(208
)
(2,167
)
(3,198
)
Adjusted net income attributable to common
stockholders - non-GAAP
$
10,169
$
40,300
$
13,576
$
78,969
$
197,630
Denominator:
Weighted average common shares - basic,
GAAP
34,481
36,455
34,954
35,158
37,012
Dilutive impact of share-based
payments
204
471
198
318
524
Adjusted weighted average common shares -
diluted, non-GAAP
34,685
36,926
35,152
35,476
37,536
Reconciliation:
Diluted EPS, GAAP
$
0.26
$
1.05
$
0.36
$
2.05
$
5.02
Non-GAAP adjustments - pretax:
Acquisition and integration-related
costs
—
0.01
—
—
0.02
Restructuring costsc
0.02
—
0.01
0.07
0.05
Legal fees and settlementsd
—
—
—
0.03
—
Impairment chargese
—
—
0.01
0.02
0.15
System conversion costsh
0.03
—
0.01
0.07
0.01
Loss on early extinguishment of debtf
—
0.05
—
0.05
0.10
Tax impact of non-GAAP adjustments
(0.02
)
(0.02
)
—
(0.06
)
(0.08
)
Adjusted EPS, non-GAAPi
$
0.29
$
1.09
$
0.39
$
2.23
$
5.27
Cross Country Healthcare,
Inc.
Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
December 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
17,094
$
3,604
Accounts receivable, net
372,352
641,611
Income taxes receivable
6,898
10,915
Prepaid expenses
7,681
11,067
Insurance recovery receivable
9,097
7,434
Other current assets
2,031
1,042
Total current assets
415,153
675,673
Property and equipment, net
27,339
19,662
Operating lease right-of-use assets
2,599
3,254
Goodwill
135,430
163,268
Other intangible assets, net
54,468
44,723
Deferred tax assets
5,954
7,092
Insurance recovery receivable
25,714
23,058
Cloud computing
5,987
4,460
Other assets
6,673
6,649
Total assets
$
679,317
$
947,839
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$
85,333
$
185,507
Accrued compensation and benefits
52,297
72,605
Operating lease liabilities
2,604
4,132
Earnout liability
6,794
7,500
Other current liabilities
1,559
1,896
Total current liabilities
148,587
271,640
Debt
—
148,735
Operating lease liabilities
2,663
4,880
Accrued claims
34,853
35,881
Earnout liability
5,000
18,000
Uncertain tax positions
10,603
7,646
Other liabilities
4,218
3,838
Total liabilities
205,924
490,620
Commitments and contingencies
Stockholders' equity:
Common stock
4
4
Additional paid-in capital
236,417
292,876
Accumulated other comprehensive loss
(1,385
)
(1,387
)
Retained earnings
238,357
165,726
Total stockholders' equity
473,393
457,219
Total liabilities and stockholders'
equity
$
679,317
$
947,839
Cross Country Healthcare,
Inc.
Segment Dataj
(Unaudited, amounts in
thousands)
Three Months Ended
Year-over- Year
Sequential
December 31,
% of
December 31,
% of
September 30,
% of
% change
% change
2023
Total
2022
Total
2023
Total
Fav (Unfav)
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
367,155
89
%
$
591,090
94
%
$
396,595
90
%
(38
)%
(7
)%
Physician Staffing
46,880
11
%
37,128
6
%
45,696
10
%
26
%
3
%
$
414,035
100
%
$
628,218
100
%
$
442,291
100
%
(34
)%
(6
)%
Contribution income:k
Nurse and Allied Staffing
$
33,901
$
69,941
$
39,226
(52
)%
(14
)%
Physician Staffing
1,947
1,686
2,576
15
%
(24
)%
35,848
71,627
41,802
(50
)%
(14
)%
Corporate overheadl
17,090
16,803
16,412
(2
)%
(4
)%
Depreciation and amortization
4,471
3,162
4,540
(41
)%
2
%
Restructuring costsc
863
2
348
NM
(148
)%
Impairment chargese
—
—
186
—
%
100
%
Other costs
—
196
13
100
%
100
%
Income from operations
$
13,424
$
51,464
$
20,303
(74
)%
(34
)%
Year Ended
Year-over- Year
December 31,
% of
December 31,
% of
% change
2023
Total
2022
Total
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
1,841,428
91
%
$
2,700,383
96
%
(32
)%
Physician Staffing
178,300
9
%
106,226
4
%
68
%
$
2,019,728
100
%
$
2,806,609
100
%
(28
)%
Contribution income:k
Nurse and Allied Staffing
$
196,777
$
355,447
(45
)%
Physician Staffing
9,788
5,508
78
%
206,565
360,955
(43
)%
Corporate overheadl
71,049
67,087
(6
)%
Depreciation and amortization
18,347
12,576
(46
)%
Restructuring costsc
2,553
1,861
(37
)%
Legal settlement chargesd
1,125
—
(100
)%
Impairment chargese
719
5,597
87
%
Other costs
59
726
92
%
Income from operations
$
112,713
$
273,108
(59
)%
Other costs include acquisition and
integration-related costs. NM - Not meaningful
Cross Country Healthcare,
Inc.
Summary Condensed Consolidated
Statements of Cash Flows
(Unaudited, amounts in
thousands)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2023
2022
2023
2023
2022
Net cash provided by operating
activities
$
12,074
$
4,320
$
70,311
$
248,498
$
134,050
Net cash used in investing activities
(2,875
)
(37,111
)
(3,408
)
(13,775
)
(43,874
)
Net cash (used in) provided by financing
activities
(6,416
)
6,075
(53,273
)
(221,241
)
(87,599
)
Effect of exchange rate changes on
cash
10
—
(2
)
8
(9
)
Change in cash and cash equivalents
2,793
(26,716
)
13,628
13,490
2,568
Cash and cash equivalents at beginning of
period
14,301
30,320
673
3,604
1,036
Cash and cash equivalents at end of
period
$
17,094
$
3,604
$
14,301
$
17,094
$
3,604
Cross Country Healthcare,
Inc.
Other Financial Data
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2023
2022
2023
2023
2022
Revenue from services
$
414,035
$
628,218
$
442,291
$
2,019,728
$
2,806,609
Less: Direct operating expenses
323,546
489,276
344,932
1,569,318
2,178,923
Gross profit
$
90,489
$
138,942
$
97,359
$
450,410
$
627,686
Consolidated gross profit marginm
21.9
%
22.1
%
22.0
%
22.3
%
22.4
%
Nurse and Allied
Staffing statistical data:
FTEsn
9,570
12,447
9,849
10,831
12,980
Average Nurse and Allied Staffing revenue
per FTE per dayo
$
414
$
510
$
434
$
462
$
565
Physician Staffing
statistical data:
Days filledp
23,578
21,335
23,004
92,504
60,038
Revenue per day filledq
$
1,988
$
1,740
$
1,986
$
1,927
$
1,769
(a)
Adjusted EBITDA, a non-GAAP financial
measure, is defined as net income (loss) attributable to common
stockholders before interest expense, income tax expense (benefit),
depreciation and amortization, acquisition and integration-related
(benefits) costs, restructuring (benefits) costs, legal fees and
settlements, 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
system conversion costs. Adjusted EBITDA is not and 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.
(b)
Income taxes for the 2023 periods
primarily reflected a decrease in book income.
(c)
Restructuring costs were primarily
comprised of employee termination costs, lease-related exit costs,
and reorganization costs as part of planned cost savings
initiatives. Amounts for the year ended December 31, 2022 included
a benefit associated with the early termination of the lease for
one of the Company's corporate offices in the second quarter, which
was previously restructured.
(d)
Legal fees and settlements included legal
settlement charges as presented on the consolidated statements of
operations, as well as legal fees pertaining to non-operational
legal matters outside the normal course of operations, which are
included in selling, general and administrative expenses. For the
year ended December 31, 2023, the Company incurred $1.1 million,
including legal fees, to settle a wage and hour class action
lawsuit.
(e)
Impairment charges of $0.7 million for the
year ended December 31, 2023 were comprised of $0.2 million related
to right-of-use assets and related property in connection with
vacated leases in the third quarter of 2023, and $0.5 million in
the second quarter of 2023 related to the write-off of an IT
project. Impairment charges for the year ended December 31, 2022
were comprised of $3.7 million related to right-of-use assets and
related property in connection with leases vacated during the year,
and $1.9 million primarily related to the write-off of an IT
project in the third quarter of 2022.
(f)
Loss on early extinguishment of debt for
the year ended December 31, 2023 consisted of the write-off of debt
issuance costs related to the payoff and termination of the term
loan on June 30, 2023. Loss on early extinguishment of debt for the
three months and year ended December 31, 2022 consisted of
prepayment premiums and the write-off of debt issuance costs
related to optional prepayments on the term loan in the second and
fourth quarters of 2022.
(g)
The gain on lease termination for the year
ended December 31, 2022 was primarily a result of the early
termination of the lease for one of the Company's corporate
offices, recognized in the second quarter of 2022.
(h)
System conversion costs include ERP system
costs related to the upgrading and integrating of our middle and
back-office platforms, with certain development costs capitalized
and amortized in accordance with the Company's policies, and
applicant tracking system costs related to the Company's project to
replace its legacy system supporting its travel nurse staffing
business.
(i)
Adjusted EPS, a non-GAAP financial
measure, is defined as net income (loss) attributable to common
stockholders per diluted share before the diluted EPS impact of
acquisition and integration-related (benefits) costs, restructuring
(benefits) costs, legal fees and settlements, impairment charges,
gain or loss on derivative, loss on early extinguishment of debt,
gain or loss on sale of business, system conversion costs, and
nonrecurring income tax adjustments. Adjusted EPS is not and 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. Quarterly non-GAAP adjustment may
vary due to rounding.
(j)
Segment data is provided in accordance
with the Segment Reporting Topic of the Financial Accounting
Standards Board Accounting Standards Codification.
(k)
Contribution income is defined as income
(loss) from operations before depreciation and amortization,
acquisition and integration-related (benefits) costs, restructuring
(benefits) costs, legal settlement charges, impairment charges, and
corporate overhead. Contribution income is a financial measure used
by management when assessing segment performance.
(l)
Corporate overhead includes unallocated
executive leadership and other centralized corporate functional
support costs such as finance, IT, legal, human resources, and
marketing, as well as public company expenses and corporate-wide
projects (initiatives).
(m)
Gross profit is defined as revenue from
services less direct operating expenses. The Company's gross profit
excludes allocated depreciation and amortization expense. Gross
profit margin is calculated by dividing gross profit by revenue
from services.
(n)
FTEs represent the average number of Nurse
and Allied Staffing contract personnel on a full-time equivalent
basis.
(o)
Average revenue per FTE per day is
calculated by dividing the Nurse and Allied Staffing revenue,
excluding permanent placement, per FTE by the number of days worked
in the respective periods.
(p)
Days filled is calculated by dividing the
total hours invoiced during the period, including an estimate for
the impact of accrued revenue, by 8 hours.
(q)
Revenue per day filled is calculated by
dividing revenue as reported by days filled for the period
presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220115360/en/
Cross Country Healthcare, Inc. William J. Burns, 561-237-2555
Executive Vice President & Chief Financial Officer
wburns@crosscountry.com
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