Cross ntry Healthcare(CCRN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2024 was $315 million, down 7% sequentially and 29% year-over-year, primarily due to declines in Travel, Nurse, and Allied segments [30] - Gross profit was$ 64 million, with a gross margin of 20.4%, down 40 basis points sequentially and 160 basis points year-over-year, attributed to bill pay spread compression [31] - Adjusted EBITDA for the quarter was $10 million, representing a margin of 3.3%, reflecting lower revenue and gross margin pressure [34] Business Line Data and Key Metrics Changes - Nurse and Allied reported revenue of$ 265 million, down 9% sequentially and 33% year-over-year, with Travel down 11% sequentially and 41% year-over-year [37] - Home care staffing business grew 4% sequentially and 13% year-over-year, driven by recent PACE program wins [39] - Physician staffing revenue was $50 million, up 10% year-over-year and 4% sequentially, with billable days increasing by 1% sequentially and 6% year-over-year [40] Market Data and Key Metrics Changes - Orders in the Travel, Nurse, and Allied business were up approximately 20% over Q3, indicating a potential market inflection point [10] - The local or per diem business reported better-than-expected results, stabilizing with billable hours declining at a slower pace [38] - The education business was down 6% year-over-year and 37% sequentially, primarily due to school calendar timing [40] Company Strategy and Development Direction - The company aims for sustained long-term profitable growth, focusing on home care, physician staffing, and education as key growth areas [9] - The company is investing in technology, particularly the Intellify platform, to enhance operational efficiencies and client management [19][20] - M&A opportunities are being explored to expand the portfolio and reach within high-growth markets [25][69] Management's Comments on Operating Environment and Future Outlook - Management noted a highly competitive market, particularly in Travel, Nurse, and Allied, with pressures on bill pay spread limiting gross margin normalization [8] - The company anticipates Q4 revenue between$ 300 million and $310 million, reflecting increased stability in travel and steady bill rates [21] - Management expressed confidence in approaching an inflection point for growth in the Travel, Nurse, and Allied business, supported by strong demand in other segments [26] Other Important Information - The company repurchased 800,000 shares for about$ 12 million in Q3, reflecting a commitment to creating shareholder value [24] - The company ended Q3 with $64 million in cash and no outstanding debt, positioning it well for growth initiatives [41] Q&A Session Summary Question: Can you unpack the Q4 revenue guidance? - Management indicated that the sequential decline is primarily due to a labor disruption, estimating a revenue impact between$ 5 million and $10 million [50] Question: What is the outlook for gross margins? - Management noted that margin pressure is mainly from the pay-bill housing spread, particularly in the travel business, and emphasized the need for alignment between clinician pay expectations and bill rates [56][57] Question: What is the status of orders and their quality? - Management confirmed that over 50% of orders are not at market rates, but there is optimism that the gap between orders and clinician pay expectations will close [61][62] Question: What is the growth outlook for home health care staffing? - The home health staffing business is running at over$ 100 million and is expected to grow further, with healthy margins compared to other segments [70][71] Question: What is the current status of MSP contracts? - Management reported that spending under management is between $650 million to$ 700 million, with a capture rate of about 73% [75][79]