Cross ntry Healthcare(CCRN) - 2024 Q2 - Quarterly Results

Financial Performance Overview Second Quarter 2024 Financial Highlights Cross Country Healthcare reported a challenging Q2 2024, with consolidated revenue declining 37% to $339.8 million, leading to a net loss and significantly reduced Adjusted EBITDA Q2 2024 Financial Performance | Metric | Q2 2024 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Revenue | $339.8 M | (37)% | (10)% | | Gross Profit Margin | 20.8% | (200) bps | 40 bps | | Net (Loss) Income | ($16.1 M) | (175)% | (696)% | | Diluted EPS | ($0.47) | ($1.07) | ($0.55) | | Adjusted EBITDA | $14.2 M | (68)% | (7)% | | Adjusted EBITDA Margin | 4.2% | (400) bps | 20 bps | | Adjusted EPS | $0.10 | ($0.59) | ($0.09) | | Cash Flows from Operations | $82.4 M | (31)% | 1,271% | - CEO John A. Martins noted the results were in line with expectations in a challenging environment for nurse and allied staffing, expressing cautious optimism about nearing an inflection point due to a rise in demand for services[3] - Key operational achievements in Q2 2024 include sequential and year-over-year revenue growth in Physician Staffing and Homecare Staffing, strong operating cash flow of $82.4 million driven by robust collections, and a 7-day year-over-year and 18-day sequential decrease in Days Sales Outstanding (DSO)[3] Six-Month 2024 Financial Highlights For the first six months of 2024, consolidated revenue decreased 38% to $718.9 million, resulting in a net loss of $13.4 million and a 69% decline in Adjusted EBITDA Six-Month Financial Performance | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $718.9 M | $1,163.4 M | (38)% | | Gross Profit Margin | 20.6% | 22.6% | (200) bps | | Net (Loss) Income | ($13.4 M) | $50.8 M | (126)% | | Diluted EPS | ($0.39) | $1.41 | ($1.80) | | Adjusted EBITDA | $29.5 M | $96.6 M | (69)% | | Adjusted EPS | $0.29 | $1.53 | ($1.24) | Business Segment Performance Nurse and Allied Staffing The Nurse and Allied Staffing segment faced significant headwinds in Q2 2024, with revenue declining 41% year-over-year to $291.5 million due to reduced FTEs and average revenue per FTE per day Nurse and Allied Staffing Performance | Metric | Q2 2024 | Q2 2023 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $291.5 M | $495.4 M | $332.2 M | | Contribution Income | $5.8 M | $56.5 M | $27.2 M | | Average FTEs | 8,415 | 11,385 | 9,124 | | Revenue per FTE per day | $377 | $474 | $397 | Physician Staffing The Physician Staffing segment demonstrated strong Q2 2024 performance, with revenue increasing 7% year-over-year to $48.3 million, driven by growth in total days filled and higher revenue per day Physician Staffing Performance | Metric | Q2 2024 | Q2 2023 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $48.3 M | $45.3 M | $47.0 M | | Contribution Income | $4.0 M | $3.5 M | $3.1 M | | Total Days Filled | 24,252 | 23,826 | 23,785 | | Revenue per Day Filled | $1,992 | $1,902 | $1,976 | Financial Position and Cash Flow Balance Sheet and Capital Allocation As of June 30, 2024, the company maintained a robust balance sheet with $69.6 million in cash and no outstanding debt, while continuing its share repurchase program - As of June 30, 2024, the company had $69.6 million in cash and cash equivalents and no debt outstanding[8] - Borrowing availability under the ABL credit facility was $152.9 million, net of letters of credit[8] - In Q2 2024, the company repurchased approximately 980,000 shares of common stock for $14.9 million, at an average price of $15.23 per share, with $56.0 million remaining available for future repurchases[7] Cash Flow Highlights Net cash provided by operating activities was strong at $82.4 million for Q2 2024, marking a substantial sequential improvement due to robust collections and an 18-day sequential DSO improvement Cash Flow Summary | Cash Flow Metric | Q2 2024 | Q2 2023 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $82.4 M | $119.2 M | $6.0 M | - The company experienced an 18-day sequential improvement in days' sales outstanding (DSO), returning to a more historic level of below 60 days[7] Outlook and Other Information Third Quarter 2024 Outlook For Q3 2024, management anticipates revenue between $305 million and $315 million, with Adjusted EBITDA projected between $10.0 million and $13.0 million, indicating continued declines Q3 2024 Guidance | Metric | Q3 2024 Guidance Range | Year-over-Year Change | Sequential Change | | :--- | :--- | :--- | :--- | | Revenue | $305 M - $315 M | (31)% - (29)% | (10)% - (7)% | | Adjusted EBITDA | $10.0 M - $13.0 M | (63)% - (52)% | (29)% - (8)% | | Adjusted EPS | $0.08 - $0.12 | ($0.31) - ($0.27) | ($0.02) - $0.02 | Forward-Looking Statements Future results are subject to various risks and uncertainties, including macroeconomic conditions, demand for healthcare services, personnel retention, competition, and government regulation - Future results are subject to risks including the macroeconomic environment, inflation, interest rates, demand for healthcare services, and the ability to attract and retain qualified healthcare professionals[18] - Other risk factors mentioned include cybersecurity risks, data privacy laws, the use of artificial intelligence, customer ability to pay, and successful implementation of acquisition strategies[18][20] Detailed Financial Statements Consolidated Statements of Operations The Consolidated Statement of Operations for Q2 2024 shows revenue of $339.8 million and a net loss of $16.1 million, primarily driven by a $18.9 million credit loss expense Consolidated Statements of Operations (Thousands) | (In thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue from services | $339,771 | $540,695 | | Total operating expenses | $358,977 | $505,506 | | (Loss) income from operations | ($19,206) | $35,189 | | Net (loss) income | ($16,050) | $21,345 | | Diluted (loss) income per share | ($0.47) | $0.60 | Consolidated Balance Sheets As of June 30, 2024, total assets were $602.9 million, down from year-end 2023 due to decreased accounts receivable, with total liabilities at $163.8 million Consolidated Balance Sheets (Thousands) | (In thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $69,601 | $17,094 | | Accounts receivable, net | $242,333 | $372,352 | | Total current assets | $337,758 | $415,153 | | Total assets | $602,883 | $679,317 | | Total current liabilities | $110,115 | $148,587 | | Total liabilities | $163,821 | $205,924 | | Total stockholders' equity | $439,062 | $473,393 | Summary Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, the company generated $88.4 million in cash from operating activities, resulting in a net increase in cash of $52.5 million for the period Summary Condensed Consolidated Statements of Cash Flows (Thousands) | (In thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $88,412 | $166,113 | | Net cash used in investing activities | ($5,059) | ($7,492) | | Net cash used in financing activities | ($30,846) | ($161,552) | | Change in cash and cash equivalents | $52,507 | ($2,931) | Reconciliation of Non-GAAP Financial Measures For Q2 2024, the GAAP net loss of $16.1 million was reconciled to an Adjusted EBITDA of $14.2 million by adjusting for items such as legal losses, D&A, and restructuring costs - For Q2 2024, Adjusted EBITDA of $14.2 million was derived from a Net Loss of ($16.1 million) by adding back items including interest, taxes, D&A, restructuring costs, and legal/other losses[24] - For Q2 2024, Adjusted EPS of $0.10 was derived from a GAAP Diluted EPS of ($0.47) by adjusting for the per-share impact of restructuring costs, legal losses, and other items, net of tax[24]