Cross ntry Healthcare(US:CCRN)2023-02-23 04:04Financial Data and Key Metrics Changes - Consolidated revenue for Q4 2022 was $620 million, approximately 5% above the upper end of guidance, while adjusted EBITDA was $57 million, representing a 9.1% margin [7][20][40] - Total selling, general and administrative (SG&A) expenses were $81 million, up 1% sequentially and 23% year-over-year, with SG&A as a percentage of revenue at 12.9%, an increase of over 250 basis points from the prior year [10][21] - Adjusted earnings per share for the quarter was $1.09, up slightly over the third quarter and well above the upper end of guidance [21] Business Line Data and Key Metrics Changes - Nurse and Allied reported revenue of $591 million, a decline of 5% year-over-year and 3% sequentially, primarily due to a 3% drop in average bill rates and a 2% decrease in volume [11][22] - The local business experienced a slight sequential decline, while other lines such as locums, education, and homecare showed growth, with locums up nearly 8% sequentially [18][22] - Physician staffing revenue was $37 million, representing an 84% increase year-over-year and 56% sequentially, with organic growth of 28% excluding acquisitions [46] Market Data and Key Metrics Changes - More than 50% of revenue comes from Managed Service Providers (MSPs), with approximately 15% of total spend under management migrated to the Intellify platform as of December [8][19] - The company noted a higher than normal level of client attrition but stated that the pipeline for new opportunities has never been stronger [8][19] - The market for staffing is projected at $50 billion, with 40% being MSP, 40% vendor-neutral, and 20% direct clients [82] Company Strategy and Development Direction - The company is focused on expanding its digital transformation and enhancing its technology offerings, including the launch of Intellify and Gateway [16][40] - Strategic investments are being made in technology initiatives, personnel, and tuck-in acquisitions to bolster and diversify the portfolio [17][40] - The company aims to maintain a high single-digit to low double-digit EBITDA margin while growing higher-margin businesses [80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong pipeline and the ability to adapt to changing market conditions [8][19] - The company anticipates continued pressure on orders and bill rates but believes that the persistent labor shortage will sustain demand [41][42] - For Q1 2023, revenue is expected to be between $590 million and $600 million, with adjusted EBITDA between $44 million and $49 million [48] Other Important Information - The company repurchased 1.4 million shares, or roughly 4% of outstanding shares, as part of a $100 million share repurchase program [17][24] - The company ended the quarter with $4 million in cash and $151 million in outstanding debt, maintaining a low leverage ratio of less than 0.5x [23] Q&A Session Summary Question: What is the expectation for bill rates and how will the company adjust infrastructure? - Management indicated that bill rates are expected to normalize and that they utilize sophisticated capacity modeling to adjust resources as needed [26][27] Question: What would prompt a larger adjustment to infrastructure? - Management noted that natural attrition and capacity metrics would guide decisions on backfilling roles, allowing for adjustments without overreacting [36][60] Question: How is the company addressing client attrition and competition in the market? - Management highlighted that while there has been client attrition, the company has a strong pipeline and is well-positioned to win new business as contracts come up for bid [78][82]