Cross ntry Healthcare(CCRN) - 2022 Q3 - Quarterly Report

PART I. – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section provides Cross Country Healthcare's unaudited condensed consolidated financial statements for the periods ended September 30, 2022 Condensed Consolidated Balance Sheets Total assets increased to $882.5 million, with stockholders' equity growing to $422.7 million, driven by strong net income Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $30,320 | $1,036 | | Accounts receivable, net | $610,897 | $493,910 | | Total current assets | $660,017 | $508,273 | | Total assets | $882,512 | $732,809 | | Liabilities & Equity | | | | Total current liabilities | $276,790 | $199,770 | | Long-term debt, less current portion | $129,755 | $176,366 | | Total liabilities | $459,803 | $435,281 | | Total stockholders' equity | $422,709 | $297,528 | Condensed Consolidated Statements of Operations Q3 2022 revenue increased 69.7% to $636.1 million, with nine-month revenue growing 110.3% to $2.18 billion Q3 2022 vs Q3 2021 Performance (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Revenue from services | $636,098 | $374,905 | | Income from operations | $52,175 | $26,447 | | Net income | $34,793 | $23,433 | | Diluted EPS | $0.93 | $0.62 | Nine Months 2022 vs 2021 Performance (in thousands, except per share data) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Revenue from services | $2,178,391 | $1,035,973 | | Income from operations | $221,644 | $63,342 | | Net income | $149,670 | $54,429 | | Diluted EPS | $3.97 | $1.46 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased to $422.7 million, driven by $149.7 million in net income, partially offset by stock repurchases - During the third quarter of 2022, the company repurchased and retired 1,014,815 shares of common stock for $24.3 million[12][16][91] - Retained earnings improved from a deficit of $(22.7) million at the end of 2021 to a positive balance of $126.9 million as of September 30, 2022, due to strong profitability[16] Condensed Consolidated Statements of Cash Flows Nine-month operating cash flow was $129.7 million, a significant improvement, with $93.7 million used in financing activities Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $129,730 | $(12,253) | | Net cash used in investing activities | $(6,763) | $(29,360) | | Net cash (used in) provided by financing activities | $(93,674) | $40,869 | | Change in cash and cash equivalents | $29,284 | $(758) | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of accounting policies, significant transactions, and financial statement line items - On October 3, 2022, after the reporting period, the company acquired Mint Medical Physician Staffing, LP and Lotus Medical Staffing LLC[117] - In Q3 2022, the company paid a $7.5 million earnout for the WSG acquisition; in Q2 2022, the earnout liability for the Selected acquisition was reversed[43][38][87] - On August 16, 2022, the Board authorized a new stock repurchase program for up to $100.0 million; as of September 30, 2022, $87.2 million remained available[91][92] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 2022 financial performance, including revenue growth, segment results, liquidity, and capital resources - Q3 2022 revenue increased 70% year-over-year to $636.1 million, driven by an increase in professionals on assignment and volume growth[126] - The company anticipates a high single-digit sequential decline in average travel bill rates for the remainder of 2022[127] - A new stock repurchase program of up to $100.0 million was authorized in Q3 2022, with $24.3 million worth of stock repurchased during the quarter[130] Results of Operations Q3 2022 revenue grew 69.7% to $636.1 million, with nine-month revenue increasing 110.3% to $2.2 billion Comparison of Three Months Ended September 30 (in thousands) | Line Item | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue from services | $636,098 | $374,905 | 69.7% | | Income from operations | $52,175 | $26,447 | 97.3% | | Net income | $34,793 | $23,433 | 48.5% | Comparison of Nine Months Ended September 30 (in thousands) | Line Item | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue from services | $2,178,391 | $1,035,973 | 110.3% | | Income from operations | $221,644 | $63,342 | 249.9% | | Net income | $149,670 | $54,429 | 175.0% | Segment Results Nurse and Allied Staffing revenue grew 71.9% to $612.3 million, driven by increased FTEs and higher revenue per FTE Nurse and Allied Staffing Performance - Q3 2022 vs Q3 2021 | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $612.3M | $356.1M | 71.9% | | Contribution Income | $77.8M | $40.6M | 91.5% | | FTEs | 12,524 | 9,003 | 39.1% | | Avg. Revenue per FTE per day | $526 | $425 | 23.8% | Physician Staffing Performance - Q3 2022 vs Q3 2021 | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $23.8M | $18.8M | 27.0% | | Days filled | 13,219 | 12,187 | 8.5% | | Revenue per day filled | $1,803 | $1,540 | 17.1% | Liquidity and Capital Resources The company reported $30.3 million in cash, $129.7 million in nine-month operating cash flow, and $273.3 million ABL availability - Net cash provided by operating activities was $129.7 million in the first nine months of 2022, compared to $12.3 million used in the same period of 2021, primarily due to strong collections[185] - Financing activities in the first nine months of 2022 used $93.7 million, including $50.4 million in term loan repayments, a $7.5 million contingent consideration payment, and $24.3 million for stock repurchases[186] - The company had $273.3 million of excess availability under its $300.0 million ABL facility as of September 30, 2022[194] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is variable interest rates on its Term Loan and ABL facility, with no material changes since 2021 - A hypothetical 1% change in interest rates would have impacted interest expense by approximately $1.2 million for the nine months ended September 30, 2022[202] Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[205] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[206] PART II. – OTHER INFORMATION Legal Proceedings The company is involved in various ordinary course legal proceedings, with management expecting no material adverse effect on its financials - The company is involved in various legal proceedings related to employee matters, professional liability, and tax practices, which are considered part of the ordinary course of business[105] - Management does not expect the outcome of any outstanding legal matters as of September 30, 2022, to have a material adverse effect on the business[105][209] Risk Factors No material changes to the company's risk factors were reported compared to the 2021 Annual Report on Form 10-K - No material changes to risk factors were reported compared to the 2021 Form 10-K[210] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include certifications from the CEO and CFO under Rule 13a-14(a) and Section 1350, as well as XBRL interactive data files[212] Signatures - The report was signed on November 3, 2022, by William J. Burns, Executive Vice President & Chief Financial Officer[217]