Cross ntry Healthcare(US:CCRN)2020-08-08 01:44Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2020 was $216.8 million, representing a 7% increase year-over-year and a 3% sequential increase, primarily driven by nearly 1,000 nurses on COVID-related assignments [23][24] - Adjusted EBITDA for the quarter was $11.6 million, supported by higher gross profit and approximately $2 million in realized cost savings [23] - Gross profit was $50.7 million with a gross margin of 23.4%, down 20 basis points sequentially due to the mix of business from COVID assignments [29][30] Business Line Data and Key Metrics Changes - The Nurse and Allied segment reported revenue of $198.1 million, up 10% year-over-year, largely due to COVID-related assignments generating over $30 million in incremental revenue [24][9] - The Physician Staffing segment experienced a revenue decline of 7% sequentially, with a 6% year-over-year decrease, primarily due to reduced elective procedures impacting specialties like anesthesiology [28] - Local branch-based business saw a decline of approximately 12% to 13% both sequentially and year-over-year, although some revenue was offset by COVID-19 crisis orders [25] Market Data and Key Metrics Changes - Demand for healthcare professionals has shown significant volatility, with orders initially rising over 20% and then falling sharply by more than 80% as hospitals faced lower census [7] - Recent increases in orders have been noted in states like California, Texas, and Florida, particularly in ICU and surgical specialties [8] Company Strategy and Development Direction - The company is focused on integrating and optimizing operations, with plans to save over $20 million annually through operational efficiencies and right-sizing teams [13][12] - Technology initiatives, including the rollout of Cross Country Marketplace and a new applicant tracking system, are expected to enhance productivity and efficiency [16][17] Management's Comments on Operating Environment and Future Outlook - Management anticipates a sequential revenue decline of 17% to 22% for Q3 2020 due to the wind-down of premium rate COVID assignments and lower demand for physician business [20][40] - Despite current challenges, management remains optimistic about sequential improvement in revenue and profitability for Q4 2020 as the market recovers [21][22] Other Important Information - The company ended the quarter with $6.2 million in cash and $49.1 million in outstanding debt, with strong cash flow from operations of $16.6 million [37][38] - The company has implemented a cost action plan expected to drive gross savings of $20 million to $22 million annually [33] Q&A Session Summary Question: Market recovery in the Northeast and Midwest - Management noted that while strong demand is currently in the South and West, there are signs of recovery in the Northeast and Northwest, with orders increasing sharply from historic lows [47] Question: Nurse turnover rates post-crisis - Management indicated that there is a tight supply of nurses, with local staffing needs increasing due to fatigue among core staff, leading to higher demand for contingent staffing [49][50] Question: Guidance on crisis-related orders - Management confirmed that year-over-year orders are up significantly, driven by COVID, particularly in critical care and telemetry [55] Question: Focus on MSP customers and pricing dynamics - Management highlighted that their MSP business is at an all-time high, with a capture rate improvement to 65%, but noted that order flow remains volatile [59][60] Question: Future technology upgrades and cost savings - Management discussed ongoing technology initiatives, including a new applicant tracking system and plans for middle office integration, which are expected to enhance efficiency and reduce costs [66][72] Question: Adjusted EBITDA margin target - Management reaffirmed the goal of achieving 8% adjusted EBITDA margins by Q4 2022, driven by increased volume, productivity improvements, and cost reductions [76]