Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     

CROSS COUNTRY HEALTHCARE, INC.

(CCRN)
  Report
Delayed Nasdaq  -  04:00 2022-09-23 pm EDT
27.17 USD   -0.40%
09/22Cross Country Healthcare Executive Named Most Influential HR Executives to Watch
BU
09/21INSIDER SELL : Cross Country Healthcare
MT
09/19CROSS COUNTRY HEALTHCARE INC : Change in Directors or Principal Officers (form 8-K)
AQ
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisionsFunds 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

CROSS COUNTRY HEALTHCARE INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/04/2022 | 09:36am EDT
The purpose of the following Management's Discussion and Analysis (MD&A) is to
help facilitate the understanding of significant factors influencing the
quarterly operating results, financial condition, and cash flows of the Company.
Additionally, MD&A also conveys our current expectations of the potential impact
of known trends, events, or uncertainties that may impact future results. MD&A
is provided as a supplement to, and should be read in conjunction with, our 2021
Form 10-K (including Part I, Item 1A, "Risk Factors"), our financial statements
and the accompanying notes to our financial statements, as well as the Risk
Factors contained herein.

Business Overview


We provide total talent management services, including strategic workforce
solutions, contingent staffing, permanent placement, and consultative services
for healthcare customers across the continuum of care, by recruiting and placing
highly qualified healthcare professionals in virtually every specialty and area
of expertise. In addition to clinical roles such as school nurses, speech
language, and behavioral therapists, we place non-clinical professionals such as
teachers, substitute teachers, and other education specialties at educational
facilities across the nation. Our diverse customer base includes both public and
private acute care and non-acute care hospitals, outpatient clinics, ambulatory
care facilities, single- and multi-specialty physician practices, rehabilitation
facilities, Program of All-Inclusive Care for the Elderly (PACE) programs,
urgent care centers, local and national healthcare systems, managed care
providers, public and charter schools, correctional facilities, government
facilities, pharmacies, and many other healthcare providers. Through our
national staffing teams, we offer our workforce solutions and place clinicians
on travel and per diem assignments, local short-term contracts, and permanent
positions. In addition, we continually evaluate opportunities to acquire
companies that would complement or enhance our business, like Selected and WSG.

Our workforce solutions include managed service programs (MSPs), recruitment
process outsourcing (RPO), project management, and other outsourcing and
consultative services as described in Item 1. "Business" in our 2021 Form 10-K.
By utilizing the solutions we offer, customers are able to better plan their
personnel needs, optimize their talent acquisition and management processes,
strategically flex and balance their workforce, have access to quality
healthcare personnel, and provide continuity of care for improved patient
outcomes. We have a history of investing in diversity, equality, and inclusion
as a key component of the organization's overall corporate social responsibility
program, closely aligned with our core values to create a better future for our
people, communities, and our stockholders.

The operating results of our business segments are regularly reviewed by the chief operating decision maker.


?  Nurse and Allied Staffing - Nurse and Allied Staffing represented
approximately 97% of our total revenue in the second quarter of 2022. The Nurse
and Allied Staffing segment provides workforce solutions and traditional
staffing, including temporary and permanent placement of travel nurses and
allied professionals, as well as per diem and contract nurses and allied
personnel. We also provide clinical and non-clinical professionals on short-term
and long-term assignments to clients such as local and national healthcare
plans, managed care providers, public and charter schools, correctional
facilities, skilled nursing facilities, and other non-acute settings. In
addition, Nurse and Allied Staffing provides retained search services for
healthcare professionals, as well as contingent search and recruitment process
outsourcing services. We provide flexible workforce solutions to our healthcare
customers through diversified offerings designed to meet their unique needs,
including: MSP, RPO, and consulting services.

? Physician Staffing - Physician Staffing represented approximately 3% of our total revenue in the second quarter of 2022. Physician Staffing provides physicians in many specialties, as well as certified registered nurse anesthetists,

                                       24
--------------------------------------------------------------------------------

nurse practitioners, and physician assistants as independent contractors on temporary assignments throughout the United States.

Summary of Operations


For the quarter ended June 30, 2022, revenue from services increased 127%
year-over-year to $753.6 million, due to continued growth in both our Nurse and
Allied Staffing and our Physician Staffing segments. Volumes were stronger as we
continued to experience high demand across a wide range of specialties spanning
the healthcare continuum, with the highest number of professionals on assignment
across our businesses. In the second quarter of 2022, revenue decreased 4%
sequentially, primarily as a result of average bill rates declining in the
mid-single digits as expected, partly offset by an increase in billable hours.
Net income attributable to common stockholders in the second quarter of 2022 was
$52.9 million, as compared to $11.5 million in the prior year.

For the remainder of 2022, average travel bill rates are anticipated to
experience a mid-teen decline sequentially, as previously discussed. Looking
beyond the third quarter, we anticipate volumes to remain strong, driving
further market share gains despite potential headwinds from changing bill rates
or demand from certain specialties. We remain committed to investing in our
people and technology, doubling our IT project budget for 2022, versus 2021. In
the second quarter of 2022, we launched Intellify, our proprietary Vendor
Management System (VMS), which will be deployed to new and existing MSP clients.

For the three months ended June 30, 2022, cash flow provided by operating
activities was $18.1 million, with net borrowings of $33.5 million on our
senior-secured asset-based credit facility (ABL), and an increase in working
capital stemming from an increase in accounts receivable partly offset by the
timing of disbursements. As of June 30, 2022, we had $0.3 million of cash and
cash equivalents, with a principal balance of $123.9 million outstanding on our
term loan. Borrowing base availability under the ABL was $300.0 million, with
$85.0 million of borrowings drawn under our ABL, and $17.5 million of undrawn
letters of credit outstanding, leaving $197.5 million of excess availability.

In the second quarter of 2022, given positive cash from operations, we made a
$50.0 million optional prepayment on our term loan to reduce interest costs. We
paid a prepayment premium of $0.5 million pursuant to the Term Loan Agreement
and, as a result of the early prepayment, wrote off debt issuance costs of
$1.4 million.

See Results of Operations, Segment Results, and Liquidity and Capital Resources sections that follow for further information.

Operating Metrics


We evaluate our financial condition by tracking operating metrics and financial
results specific to each of our segments. Key operating metrics include hours
worked, days filled, number of contract personnel on a full-time equivalent
(FTE) basis, revenue per FTE, and revenue per day filled. Other operating
metrics include number of open orders, candidate applications, contract
bookings, length of assignment, bill and pay rates, and renewal and fill rates,
number of active searches, and number of placements. These operating metrics are
representative of trends that assist management in evaluating business
performance. Due to the timing of our business process and other factors,
certain of these operating metrics may not necessarily correlate to the reported
U.S. GAAP results for the periods presented. Some of the segment financial
results analyzed include revenue, operating expenses, and contribution income.
In addition, we monitor cash flow, as well as operating and leverage ratios, to
help us assess our liquidity needs.
Business Segment                           Business Measurement
Nurse and Allied Staffing                  FTEs represent the average number of Nurse and
                                           Allied Staffing contract personnel on a full-time
                                           equivalent basis.
                                           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.
Physician Staffing                         Days filled is calculated by dividing the total
                                           hours invoiced during the period, including an
                                           estimate for the impact of accrued revenue, by eight
                                           hours.
                                           Revenue per day filled is calculated by dividing
                                           revenue as reported by days filled for the period
                                           presented.




                                       25
--------------------------------------------------------------------------------

Results of Operations


The following table summarizes, for the periods indicated, selected condensed
consolidated statements of operations data expressed as a percentage of revenue.
Our historical results of operations are not necessarily indicative of future
operating results.
                                                                      Three Months Ended                           Six Months Ended
                                                                           June 30,                                    June 30,
                                                                  2022                  2021                  2022                  2021
Revenue from services                                               100.0  %              100.0  %              100.0  %              100.0  %
Direct operating expenses                                            77.4                  78.1                  77.6                  78.2
Selling, general and administrative expenses                         11.4                  15.2                  10.5                  14.6
Bad debt expense                                                      0.4                   0.1                   0.4                   0.2
Depreciation and amortization                                         0.5                   0.7                   0.4                   0.7

Acquisition and integration-related costs                               -                   0.3                     -                   0.1
Restructuring (benefits) costs                                       (0.2)                  0.2                     -                   0.3

Impairment charges                                                      -                   0.6                   0.1                   0.3
Income from operations                                               10.5                   4.8                  11.0                   5.6
Interest expense                                                      0.5                   0.4                   0.5                   0.3

Loss on early extinguishment of debt                                  0.3                     -                   0.1                     -
Other income, net                                                    (0.1)                 (0.1)                 (0.1)                    -
Income before income taxes                                            9.8                   4.5                  10.5                   5.3
Income tax expense                                                    2.8                   1.0                   3.0                   0.6

Net income attributable to common stockholders                        7.0  %                3.5  %                7.5  %                4.7  %




                                       26
--------------------------------------------------------------------------------

Comparison of Results for the Three Months Ended June 30, 2022 compared to the Three Months Ended June 30, 2021

                                                                              Three Months Ended June 30,
                                                                                              Increase               Increase
                                                                                             (Decrease)             (Decrease)
                                                         2022               2021                 $                      %
                                                                                (Amounts in thousands)
Revenue from services                                $ 753,561          $ 331,827          $   421,734                    127.1  %
Direct operating expenses                              583,156            259,237              323,919                    125.0  %
Selling, general and administrative expenses            86,009             50,344               35,665                     70.8  %
Bad debt expense                                         3,192                466                2,726                    585.0  %
Depreciation and amortization                            3,481              2,199                1,282                     58.3  %

Acquisition and integration-related costs                    -                924                 (924)                  (100.0) %
Restructuring (benefits) costs                          (1,114)               835               (1,949)                  (233.4) %

Impairment charges                                           -              1,921               (1,921)                  (100.0) %
Income from operations                                  78,837             15,901               62,936                    395.8  %
Interest expense                                         3,857              1,196                2,661                    222.5  %

Loss on early extinguishment of debt                     1,912                  -                1,912                    100.0  %
Other income, net                                       (1,084)              (204)                (880)                  (431.4) %
Income before income taxes                              74,152             14,909               59,243                    397.4  %
Income tax expense                                      21,258              3,361               17,897                    532.5  %

Net income attributable to common stockholders $ 52,894 $ 11,548 $ 41,346

                    358.0  %



Revenue from services

Revenue from services increased 127.1% to $753.6 million for the three months
ended June 30, 2022, as compared to $331.8 million for the three months ended
June 30, 2021, due to strong performance in both our Nurse and Allied Staffing
and Physician Staffing segments, primarily driven by an increase in the number
of professionals on assignment, as well as higher bill rates in Nurse and
Allied. See further discussion in Segment Results.

Direct operating expenses


Direct operating expenses are comprised primarily of field employee compensation
and independent contractor expenses, housing expenses, travel expenses, and
related insurance expenses. Direct operating expenses increased $323.9 million,
or 125.0%, to $583.2 million for the three months ended June 30, 2022, as
compared to $259.2 million for the three months ended June 30, 2021, as a result
of revenue increases. As a percentage of total revenue, direct operating
expenses decreased to 77.4% compared to 78.1% in the prior year period.

Selling, general and administrative expenses


Selling, general and administrative expenses increased 70.8% to $86.0 million
for the three months ended June 30, 2022, as compared to $50.3 million for the
three months ended June 30, 2021, primarily due to increases in compensation and
benefit expense, as well as marketing and consulting expense and computer
subscription fees. As a percentage of total revenue, selling, general and
administrative expenses decreased to 11.4% for the three months ended June 30,
2022, as compared to 15.2% for the three months ended June 30, 2021.

Depreciation and amortization expense


Depreciation and amortization expense for the three months ended June 30, 2022
was $3.5 million, as compared to $2.2 million for the three months ended
June 30, 2021. The increase is primarily due to the additional amortization of
other intangible assets from the Workforce Solutions Group (WSG) and Selected
acquisitions. See Note 7 - Goodwill, Trade Names, and Other Intangible Assets to
our condensed consolidated financial statements. As a percentage of revenue,
depreciation and amortization expense was 0.5% for the three months ended
June 30, 2022 and 0.7% for the three months ended June 30, 2021.

                                       27
--------------------------------------------------------------------------------

Acquisition and integration-related costs

Acquisition and integration-related costs for the three months ended June 30, 2021 include costs for legal and advisory fees for the WSG acquisition that closed on June 8, 2021. There were no such costs for the three months ended June 30, 2022.

Restructuring (benefits) costs


There was a restructuring benefit of $1.1 million for the three months ended
June 30, 2022, associated with the early termination of one of the Company's
corporate offices which was previously restructured, partially offset by
employee termination costs. Restructuring costs for the three months ended
June 30, 2021 were primarily comprised of employee termination costs and ongoing
lease costs related to the Company's strategic reduction of its real estate
footprint and totaled $0.8 million.

Impairment charges


Non-cash impairment charges totaled $1.9 million for the three months ended June
30, 2021, related to real estate restructuring activities. There were no such
charges for the three months ended June 30, 2022. See Note 9 - Leases to our
condensed consolidated financial statements.

Interest expense


Interest expense was $3.9 million for the three months ended June 30, 2022, as
compared to $1.2 million for the three months ended June 30, 2021, due to higher
average borrowings and a higher effective interest rate. The effective interest
rate on our borrowings was 6.8% and 4.1% for the three months ended June 30,
2022 and 2021, respectively.

Loss on early extinguishment of debt


Loss on early extinguishment of debt for the three months ended June 30, 2022
consists of a prepayment premium and the write-off of debt issuance costs
related to the optional prepayment on our term loan made in the second quarter
of 2022. There were no such expenses for the three months ended June 30, 2021.

Other income, net

For the three months ended June 30, 2022, other income, net includes a $1.1 million gain on lease termination as a result of the early termination of one of our corporate offices.


Income tax expense

Income tax expense totaled $21.3 million for the three months ended June 30,
2022, compared to $3.4 million for the three months ended June 30, 2021. The
increase in income tax expense was primarily driven by federal and state taxes
as in the prior year there was a valuation allowance on substantially all of our
domestic deferred tax assets. See Note 14 - Income Taxes to our condensed
consolidated financial statements.


                                       28
--------------------------------------------------------------------------------

Comparison of Results for the Six Months Ended June 30, 2022 compared to the Six Months Ended June 30, 2021

                                                                                Six Months Ended June 30,
                                                                                                Increase               Increase
                                                                                               (Decrease)             (Decrease)
                                                          2022                2021                 $                      %
                                                                                 (Amounts in thousands)
Revenue from services                                $ 1,542,293          $ 661,068          $   881,225                    133.3  %
Direct operating expenses                              1,197,094            517,013              680,081                    131.5  %
Selling, general and administrative expenses             162,822             96,671               66,151                     68.4  %
Bad debt expense                                           5,561                970                4,591                    473.3  %
Depreciation and amortization                              6,200              4,452                1,748                     39.3  %

Acquisition and integration-related costs                     40                924                 (884)                   (95.7) %
Restructuring (benefits) costs                              (634)             2,073               (2,707)                  (130.6) %

Impairment charges                                         1,741              2,070                 (329)                   (15.9) %
Income from operations                                   169,469             36,895              132,574                    359.3  %
Interest expense                                           7,378              1,867                5,511                    295.2  %

Loss on early extinguishment of debt                       1,912                  -                1,912                    100.0  %
Other income, net                                         (1,092)              (241)                (851)                  (353.1) %
Income before income taxes                               161,271             35,269              126,002                    357.3  %
Income tax expense                                        46,394              4,273               42,121                    985.7  %

Net income attributable to common shareholders $ 114,877 $

 30,996          $    83,881                    270.6  %



Revenue from services

Revenue from services increased 133.3% to $1.5 billion for the six months ended
June 30, 2022, as compared to $661.1 million for the six months ended June 30,
2021, due to strong performance in both our Nurse and Allied Staffing and
Physician Staffing segments, primarily driven by an increase in the number of
professionals on assignment, as well as higher bill rates in Nurse and Allied.
See further discussion in Segment Results.

Direct operating expenses


Direct operating expenses increased $680.1 million, or 131.5%, to $1.2 billion
for the six months ended June 30, 2022, as compared to $517.0 million for the
six months ended June 30, 2021 as a result of revenue increases. As a percentage
of total revenue, direct operating expenses decreased to 77.6% compared to 78.2%
in the prior year period.

Selling, general and administrative expenses


Selling, general and administrative expenses increased 68.4% to $162.8 million
for the six months ended June 30, 2022, as compared to $96.7 million for the six
months ended June 30, 2021, primarily due to increases in compensation and
benefits, as well as marketing and consulting expense and computer subscription
fees, partially offset by decreases in legal expenses. As a percentage of total
revenue, selling, general and administrative expenses decreased to 10.5% for the
six months ended June 30, 2022 as compared to 14.6% for the six months ended
June 30, 2021.

Depreciation and amortization expense


Depreciation and amortization expense for the six months ended June 30, 2022 was
$6.2 million as compared to $4.5 million for the six months ended June 30, 2021.
The increase is primarily due to the additional amortization of other intangible
assets from the WSG and Selected acquisitions. See Note 7 - Goodwill, Trade
Names, and Other Intangible Assets to our condensed consolidated financial
statements. As a percentage of revenue, depreciation and amortization expense
was 0.4% for the six months ended June 30, 2022 and 0.7% for the six months
ended June 30, 2021.




                                       29
--------------------------------------------------------------------------------

Acquisition and integration-related costs


Acquisition and integration-related costs for the six months ended June 30, 2022
include an immaterial amount of legal, professional, and advisory fees for the
Selected acquisition that closed late in the fourth quarter of 2021. Acquisition
and integration-related costs for the six months ended June 30, 2021 include
costs for legal and advisory fees for the WSG acquisition that closed on June 8,
2021.

Restructuring (benefits) costs


There was a restructuring benefit of $0.6 million for the six months ended
June 30, 2022, associated with the early termination of one of the Company's
corporate offices which was previously restructured, partially offset by ongoing
lease costs and employee termination costs. Restructuring costs for the six
months ended June 30, 2021 were primarily comprised of employee termination
costs and ongoing lease costs related to the Company's strategic reduction of
its real estate footprint and totaled $2.1 million.

Impairment charges


Non-cash impairment charges totaled $1.7 million for the six months ended June
30, 2022 and related to real estate activities. Non-cash impairment charges
totaled $2.1 million for the six months ended June 30, 2021 and related to real
estate restructuring activities and the write-off of a discontinued software
development project. See Note 7 - Goodwill, Trade Names, and Other Intangible
Assets and Note 9 - Leases to our condensed consolidated financial statements.

Interest expense


Interest expense was $7.4 million for the six months ended June 30, 2022 as
compared to $1.9 million for the six months ended June 30, 2021, due to higher
average borrowings and a higher effective interest rate. The effective interest
rate on our borrowings was 6.6% for the six months ended June 30, 2022 compared
to 3.1% for the six months ended June 30, 2021.

Loss on early extinguishment of debt

Loss on early extinguishment of debt for the six months ended June 30, 2022 consists of a prepayment premium and the write-off of debt issuance costs related to the optional prepayment on our term loan made in the second quarter of 2022. There were no such expenses for the six months ended June 30, 2021.

Other income, net

For the six months ended June 30, 2022, other income, net includes a $1.1 million gain on lease termination as a result of the early termination of one of our corporate offices.


Income tax expense

Income tax expense was $46.4 million for the six months ended June 30, 2022 as
compared to $4.3 million for the six months ended June 30, 2021. The increase in
income tax expense was primarily driven by federal and state taxes as in the
prior year there was a valuation allowance on substantially all of our domestic
deferred tax assets. See Note 14 - Income Taxes to our condensed consolidated
financial statements.



                                       30
--------------------------------------------------------------------------------

Segment Results

Information on operating segments and a reconciliation to income from operations for the periods indicated are as follows:

                                                Three Months Ended              Six Months Ended
                                                     June 30,                       June 30,
                                               2022           2021            2022            2021
                                                              (amounts in thousands)
Revenue from services:
Nurse and Allied Staffing                   $ 731,443      $ 316,188      $ 1,497,023      $ 629,196
Physician Staffing                             22,118         15,639           45,270         31,872
                                            $ 753,561      $ 331,827      $ 1,542,293      $ 661,068

Contribution income:
Nurse and Allied Staffing                   $  97,567      $  35,284      $   207,668      $  72,701
Physician Staffing                              1,220            562            2,985          1,990
                                               98,787         35,846          210,653         74,691

Corporate overhead                             17,583         14,066           33,837         28,277
Depreciation and amortization                   3,481          2,199        

6,200 4,452


Acquisition and integration-related costs           -            924               40            924
Restructuring (benefits) costs                 (1,114)           835             (634)         2,073

Impairment charges                                  -          1,921            1,741          2,070
Income from operations                      $  78,837      $  15,901      $   169,469      $  36,895


See Note 12 - Segment Data to our condensed consolidated financial statements.


Certain statistical data for our business segments for the periods indicated are
as follows:
                                                    Three Months Ended
                                               June 30,             June 30,                                   Percent
                                                 2022                 2021                Change                Change

Nurse and Allied Staffing statistical
data:
FTEs                                           13,494                  7,578               5,916                    78.1  %

Average Nurse and Allied Staffing revenue
per FTE per day                            $      591             $      454                 137                    30.2  %

Physician Staffing statistical data:
Days filled                                    12,416                  9,775               2,641                    27.0  %
Revenue per day filled                     $    1,781             $    1,600                 181                    11.3  %

                                                     Six Months Ended
                                               June 30,             June 30,                                   Percent
                                                 2022                 2021                Change                Change

Nurse and Allied Staffing statistical
data: (a)
FTEs                                           13,474                  7,096               6,378                    89.9  %
Average Nurse and Allied Staffing revenue
per FTE per day                            $      609             $      486                 123                    25.3  %

Physician Staffing statistical data: (a)
Days filled                                    25,484                 19,244               6,240                    32.4  %
Revenue per day filled                     $    1,776             $    1,656                 120                     7.2  %


See definition of Business Measurements under the Operating Metrics section of our MD&A.



                                       31
--------------------------------------------------------------------------------

Segment Comparison - Three Months Ended June 30, 2022 compared to the Three Months Ended June 30, 2021

Nurse and Allied Staffing


Revenue increased $415.2 million, or 131.3%, to $731.4 million for the three
months ended June 30, 2022, compared to $316.2 million for the three months
ended June 30, 2021, through strong performance driven by volume increases and
higher bill rates.

Contribution income increased $62.3 million, or 176.5%, to $97.6 million for the
three months ended June 30, 2022, compared to $35.3 million for the three months
ended June 30, 2021, driven by increased revenue and lower costs. As
a percentage of segment revenue, contribution income margin was 13.3% for the
three months ended June 30, 2022, compared to 11.2% for the three months ended
June 30, 2021.

The average number of FTEs on contract during the three months ended June 30,
2022 increased 78.1% from the three months ended June 30, 2021, primarily due to
headcount growth in travel nurse and allied, as well as additional headcount
resulting from the WSG acquisition. The average revenue per FTE per day
increased 30.2%, due to the increase in the average bill rates.

Physician Staffing

Revenue increased $6.5 million, or 41.4%, to $22.1 million for the three months ended June 30, 2022, compared to $15.6 million for the three months ended June 30, 2021, primarily due to an increase in volume in both primary care physicians and certified registered nurse anesthetists.


Contribution income was $1.2 million for the three months ended June 30, 2022,
compared to $0.6 million for the three months ended June 30, 2021. As
a percentage of segment revenue, contribution income was 5.5% for the three
months ended June 30, 2022, compared to 3.6% for the three months ended June 30,
2021, driven by higher revenue and lower costs.

Total days filled for the three months ended June 30, 2022 were 12,416, as compared with 9,775 in the prior year. Revenue per day filled was $1,781 as compared with $1,600 in the prior year.

Corporate Overhead


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. Corporate overhead increased to $17.6 million for the three months
ended June 30, 2022, from $14.1 million for the three months ended June 30,
2021, primarily due to increases in compensation and benefit expense, as well as
IT and consulting expense. As a percentage of consolidated revenue, corporate
overhead was 2.3% for the three months ended June 30, 2022 and 4.2% for the
three months ended June 30, 2021.

Segment Comparison - Six Months Ended June 30, 2022 compared to the Six Months Ended June 30, 2021


Nurse and Allied Staffing

Revenue increased $867.8 million, or 137.9%, to $1.5 billion for the six months
ended June 30, 2022, compared to $629.2 million for the six months ended
June 30, 2021, through strong performance driven by volume increases and higher
bill rates.

Contribution income increased $135.0 million, or 185.6%, to $207.7 million for
the six months ended June 30, 2022, compared to $72.7 million for the six months
ended June 30, 2021, driven by increased revenue and lower costs. As
a percentage of segment revenue, contribution income margin was 13.9% for the
six months ended June 30, 2022, compared to 11.6% for the six months ended
June 30, 2021.

The average number of FTEs on contract during the six months ended June 30, 2022
increased 89.9% from the six months ended June 30, 2021, primarily due to
headcount growth in travel nurse and allied, as well as additional headcount
resulting from the WSG acquisition. The average revenue per FTE per day
increased 25.3%, due to the increase in the average bill rates.

Physician Staffing


Revenue increased $13.4 million, or 42.0%, to $45.3 million for the six months
ended June 30, 2022, compared to $31.9 million for the six months ended June 30,
2021, primarily due to an increase in volume in both primary care physicians and
certified registered nurse anesthetists.

                                       32
--------------------------------------------------------------------------------


Contribution income was $3.0 million for the six months ended June 30, 2022,
compared to $2.0 million for the six months ended June 30, 2021. As a percentage
of segment revenue, contribution income was 6.6% for the six months ended
June 30, 2022, compared to 6.2% for the six months ended June 30, 2021, driven
by higher revenue, partially offset by higher direct costs.

Total days filled for the six months ended June 30, 2022 were 25,484, as compared with 19,244 in the prior year. Revenue per day filled was $1,776 as compared with $1,656 in the prior year.

Corporate Overhead


Corporate overhead increased to $33.8 million for the six months ended June 30,
2022, from $28.3 million for the six months ended June 30, 2021, primarily due
to increases in compensation and benefit expense, as well as IT and consulting
expense, partially offset by decreases in legal and accounting expense. As a
percentage of consolidated revenue, corporate overhead was 2.2% for the six
months ended June 30, 2022 and 4.3% for the six months ended June 30, 2021.

Liquidity and Capital Resources


At June 30, 2022, we reported $0.3 million in cash and cash equivalents, $123.9
million of term loan outstanding, at par, and $85.0 million of borrowings drawn
under our ABL. Working capital increased by $141.2 million to $449.7 million as
of June 30, 2022, compared to $308.5 million as of December 31, 2021, primarily
due to an increase in accounts receivable, partially offset by the timing of
disbursements. As of June 30, 2022, our days' sales outstanding, net of amounts
owed to subcontractors, was 66 days, up 10 days year-over-year and up 4 days
sequentially, primarily due to the timing of revenue recognized throughout the
year. As of June 30, 2022, we do not have any off-balance sheet arrangements.

Our operating cash flow constitutes our primary source of liquidity and,
historically, has been sufficient to fund our working capital, capital
expenditures, internal business expansion, and debt service. This includes our
commitments, both short-term and long-term, of interest expense on our debt and
operating lease commitments, and future principal payments on our term loan and
our ABL credit facility. We expect to meet our future needs from a combination
of cash on hand, operating cash flows, and funds available through the ABL. See
debt discussion which follows.

We have an effective "shelf" registration statement on Form S-3 on file with the
SEC that enables us, in one or more offerings, to sell up to an aggregate of
5,000,000 shares of common stock. Although we do not have any current plans to
use the shelf registration statement, the proceeds from any offering could be
used for working capital and other general corporate purposes, or to fund
acquisitions of businesses, products, and technologies.

Net cash used in operating activities was $10.9 million in the six months ended
June 30, 2022, compared to $9.4 million in the six months ended June 30, 2021,
primarily due to the continued investment in net working capital associated with
the revenue growth in our business, which resulted in a $215.2 million increase
in receivables since the start of the year.

Net cash used in investing activities was $3.8 million in the six months ended
June 30, 2022, compared to $27.5 million in the six months ended June 30, 2021.
Net cash used in the six months ended June 30, 2022 was for capital
expenditures, primarily related to multiple IT projects. Net cash used in the
six months ended June 30, 2021 included $24.5 million related to the acquisition
of WSG, as well as capital expenditures and the build-out of our corporate
office.
Net cash provided by financing activities during the six months ended June 30,
2022 was $14.0 million, compared to $53.4 million during the six months ended
June 30, 2021. During the six months ended June 30, 2022, we reported net
borrowings of $75.8 million on our ABL, and used cash to repay borrowings of
$50.4 million on our term loan, $2.4 million on our note payable, $5.3 million
for income taxes on share-based compensation, $3.2 million in debt issuance
costs, and an immaterial amount for other financing activities. During the six
months ended June 30, 2021, we reported net borrowings of $100.0 million on our
term loan, and used cash to repay borrowing on our ABL of $37.5 million, $2.4
million on our note payable, $4.5 million of debt issuance costs, $2.2 million
for income taxes on share-based compensation, and an immaterial amount for other
financing activities.







                                       33
--------------------------------------------------------------------------------

Debt

2021 Term Loan Credit Agreement



As more fully described in Note 8 - Debt to our condensed consolidated financial
statements, on June 8, 2021, we entered into a Term Loan Credit Agreement (Term
Loan Agreement), which provides for a six-year second lien subordinated term
loan in the amount of $100.0 million (term loan). The term loan has an interest
rate of one-month London Inter-Bank Offered Rate (LIBOR) plus 5.75% per annum,
subject to a 0.75% LIBOR floor. The term loan was used to pay the cash
consideration, as well as any costs, fees, and expenses in connection with the
WSG acquisition (see Note 4 - Acquisitions to our condensed consolidated
financial statements), with the remainder used to pay down a portion of the
asset-based credit facility.

The borrowings under the Term Loan Agreement generally bear interest at a
variable rate based on either LIBOR or Base Rate (as defined in the Term Loan
Agreement) and are subject to mandatory prepayments of principal payable in
quarterly installments, commencing on September 30, 2021, with each installment
being in the aggregate principal amount of $0.3 million (subject to adjustment
as a result of prepayments) provided that, to the extent not previously paid,
the aggregate unpaid principal balance would be due and payable on the maturity
date. The Term Loan Agreement contains various restrictions and covenants
applicable to the Company and its subsidiaries, including a covenant to maintain
a minimum net leverage ratio. The Company was in compliance with this covenant
as of June 30, 2022. Obligations under the Term Loan Agreement are secured by
substantially all the assets of the borrowers and guarantors under the Term Loan
Agreement, subject to customary exceptions.

On November 18, 2021, we amended the Term Loan Agreement (Term Loan First
Amendment), which provided the Company an incremental term loan in an aggregate
amount equal to $75.0 million. Additionally, the Term Loan First Amendment
increased the aggregate amount of all increases (as defined in the Term Loan
Agreement) to be no greater than $115.0 million. The borrowings will be used
primarily to fund organic growth. Commencing on December 31, 2021, installments
of the mandatory prepayments will be in the aggregate principal amount of $0.4
million. All other terms, conditions, covenants, and pricing of the Term Loan
Agreement remain the same.

Aside from our scheduled payments, on June 23, 2022, we made an optional
prepayment of $50.0 million, and paid a prepayment premium of $0.5 million
pursuant to the Term Loan Agreement. As a result of the early prepayment, debt
issuance costs of $1.4 million were written off in the three months ended June
30, 2022. The prepayment premium and the write-off of debt issuance costs are
included as loss on early extinguishment of debt in the condensed consolidated
statements of operations. We were entitled to determine the application of the
prepayment, which was applied to all future amortization payments, with the
balance applied to the remaining balloon payment in 2027.

2019 Loan Agreement


Effective October 25, 2019, our prior senior credit facility entered into in
August 2017 was replaced by a $120.0 million Loan Agreement, which provides for
a five-year senior secured revolving credit facility. On June 30, 2020, we
amended the Loan Agreement (First Amendment), which increased the current
aggregate committed size of the ABL from $120.0 million to $130.0 million. All
other terms, conditions, covenants, and pricing of the Loan Agreement remained
the same. On March 8, 2021, we amended the Loan Agreement (Second Amendment),
which increased the current aggregate committed size of the ABL from
$130.0 million to $150.0 million, increased certain borrowing base sub-limits,
and decreased both the cash dominion event and financial reporting triggers. On
June 8, 2021, we amended the Loan Agreement (Third Amendment), which permits the
incurrence of indebtedness and grant of security as set forth in the Loan
Agreement and in accordance with the Intercreditor Agreement, and provides
mechanics relating to a transition away from LIBOR as a benchmark interest rate
to a replacement alternative benchmark rate or mechanism for loans made in U.S.
dollars. On November 18, 2021, we amended the Loan Agreement (Fourth Amendment),
whereby the permitted indebtedness (as defined in the Loan Agreement) was
increased to $175.0 million. On March 21, 2022, we amended the Loan Agreement
(Fifth Amendment), which increased the current aggregate committed size of the
ABL from $150.0 million to $300.0 million, extended the credit facility for an
additional five years, increased certain borrowing base sub-limits, and provided
the option for all or a portion of the borrowings to bear interest at a rate
based on the Secured Overnight Financing Rate (SOFR) or Base Rate, at the
election of the borrowers, plus an applicable margin.

As of June 30, 2022, the interest rate spreads and fees under the Loan Agreement
were based on SOFR plus 1.60% for the revolving portion of the borrowing base.
The Base Rate (as defined by the Loan Agreement) margin would have been 0.50%
for the revolving portion. The SOFR and Base Rate margins are subject to monthly
pricing adjustments, pursuant to a pricing matrix based on the Company's excess
availability under the revolving credit facility. In addition, the facility is
subject to an unused line fee, letter of credit fees, and an administrative fee.
The Loan Agreement contains various restrictions and

                                       34
--------------------------------------------------------------------------------

covenants, including a covenant to maintain a minimum fixed charge coverage
ratio. We were in compliance with the fixed charge coverage ratio covenant as of
June 30, 2022. Borrowing base availability under the ABL was $300.0 million at
June 30, 2022, with $85.0 million of borrowings drawn as well as $17.5 million
of letters of credit outstanding, leaving $197.5 million of excess availability.

See Note 8 - Debt to our condensed consolidated financial statements.

Stockholders' Equity

See Note 11 - Stockholders' Equity to our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates remain consistent with those reported in our 2021 Form 10-K.

Transactions with Related Parties

See Note 15 - Related Party Transactions to our condensed consolidated financial statements.

Recent Accounting Pronouncements

See Note 16 - Recent Accounting Pronouncements to our condensed consolidated financial statements.



                                       35

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses

All news about CROSS COUNTRY HEALTHCARE, INC.
09/22Cross Country Healthcare Executive Named Most Influential HR Executives to Watch
BU
09/21INSIDER SELL : Cross Country Healthcare
MT
09/19CROSS COUNTRY HEALTHCARE INC : Change in Directors or Principal Officers (form 8-K)
AQ
09/19Cross Country Healthcare, Inc. Terminates Employment of Buffy S. White as Group Preside..
CI
09/15Barrington Research Raises Price Target for Cross Country Healthcare to $41 From $40, M..
MT
09/15Benchmark Adjusts Price Target on Cross Country Healthcare to $42 From $37, Reiterates ..
MT
09/14SECTOR UPDATE : Health Care Stocks Sagging Just Ahead of Wednesday Close
MT
09/14SECTOR UPDATE : Health Care Stocks Edging Higher
MT
09/14SECTOR UPDATE : Health Care
MT
09/14Cross Country Healthcare Upgrades Q3 Adjusted EPS, Revenue Guidance; Shares Rise
MT
More news
Analyst Recommendations on CROSS COUNTRY HEALTHCARE, INC.
More recommendations