Cross ntry Healthcare(CCRN) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2019 was $209.2 million, up 3% sequentially and up 4% year-over-year, driven predominantly by growth in the Nurse and Allied segment [20][21] - Adjusted EBITDA for the quarter was $7.3 million, exceeding the high end of guidance, largely due to revenue overachievement [25] - Gross profit margin for the quarter was 24.4%, down 130 basis points year-over-year and 100 basis points sequentially, attributed to tightening bill-pay spreads [22] Business Line Data and Key Metrics Changes - Revenue for the Nurse and Allied segment was $185 million, up 2% sequentially and up 5% year-over-year, with broad-based growth across all service lines [21] - Physician Staffing reported revenue of $20.4 million, down 4% year-over-year but up 13% sequentially, driven by increased volume across specialties [22] Market Data and Key Metrics Changes - Demand for travel nursing increased with orders growing 16% sequentially and over 50% year-over-year, attributed to MSP wins and broader market conditions [11] - Spend under management at MSPs increased 8% sequentially and 11% year-over-year, indicating strong market demand [12] Company Strategy and Development Direction - The company aims to become a leading total talent solutions provider, focusing on evolving the go-to-market approach, reinvigorating corporate culture, and digitally transforming operations [12][13] - A strategic goal includes achieving a high single-digit EBITDA margin over the next few years, with a target of reaching 8% profitability [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand levels, particularly in the travel business, expecting sequential growth in most lines despite holiday impacts [17] - The company is encouraged by favorable market conditions, with a significant year-over-year increase in demand [33] Other Important Information - The company successfully refinanced its senior credit facility to a more flexible $120 million asset-based credit facility, enhancing liquidity for operations and acquisitions [27][28] - The company expects to realize gross savings of $12 million to $13 million annually from cost-saving initiatives [23] Q&A Session Summary Question: Timing for achieving 8% EBITDA margin - Management believes achieving a high single-digit EBITDA margin is possible over the next few years, driven by operating leverage and technology investments [32][34] Question: Outlook for winter orders and demand - Orders are up heading into winter, with a supply-constrained marketplace, although initial activity has been slower than previous years [36][37] Question: Willingness of clients to increase rates - There is upward movement in bill rates, with expectations for continued growth due to high demand [40] Question: M&A strategy and target sectors - The company is looking for acquisition opportunities that can improve margins, particularly in Locums, Allied, Education, and Technology sectors [46] Question: Recruiter headcount and productivity - The company has reached a steady state in recruiter headcount, focusing on improving productivity through training and tools [50][51] Question: IT migration timeline - The first pilot of the new applicant tracking system will roll out soon, with broader implementation expected by late spring [56] Question: Trends in existing accounts vs. new accounts - Existing MSPs show a higher capture rate compared to new ones, with strong opportunities for growth in both [59][61]