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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cross Country Health | NASDAQ:CCRN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.65 | -3.90% | 16.02 | 16.02 | 17.72 | 16.95 | 15.83 | 16.95 | 758,531 | 23:05:39 |
Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its fourth quarter and full year ended December 31, 2020.
SELECTED FINANCIAL INFORMATION:
Dollars are in thousands, except per share amounts
Q4 2020
Variance Q4 2020 vs Q4 2019
Variance Q4 2020 vs Q3 2020
Full Year 2020
Variance 2020 vs 2019
Revenue
$
215,606
—
%
11
%
$
836,417
2
%
Gross profit margin*
25.2
%
50
bps
50
bps
24.2
%
(60
)
bps
Net income (loss) attributable to common shareholders
$
4,612
503
%
446
%
$
(12,962
)
78
%
Diluted EPS
$
0.13
$
0.16
$
0.17
$
(0.36
)
$
1.25
Adjusted EBITDA*
$
11,500
39
%
34
%
$
36,322
43
%
Adjusted EPS*
$
0.19
$
0.12
$
0.07
$
0.46
$
0.31
Cash flows from operations
$
1,929
136
%
123
%
$
27,204
391
%
* Refer to accompanying tables and discussion of Non-GAAP financial measures below.
"Our performance in the fourth quarter once again demonstrates our ability to deliver the critical staff and support needed by our clients. We continue to see significantly higher demand from COVID, driving increases in both the number of clinicians on assignments as well as higher bill rates for the first quarter of 2021," said Kevin Clark, Co-founder and CEO for Cross Country Healthcare.
Fourth quarter consolidated revenue was $215.6 million, representing an increase of 11% sequentially and flat with the prior year. Consolidated gross margin was 25.2%, up 50 basis points year-over-year and sequentially. Net income attributable to common shareholders was $4.6 million compared to losses of $1.1 million in the prior year and $1.3 million in the prior quarter. Diluted EPS was $0.13 per share compared to losses of $0.03 per share in the prior year and $0.04 per share in the prior quarter. Adjusted EBITDA was $11.5 million or 5.3% of revenue, as compared with $8.3 million or 3.9% of revenue in the prior year, and $8.6 million or 4.4% of revenue in the prior quarter. Adjusted EPS was $0.19 compared with $0.07 in the prior year and $0.12 in the prior quarter.
For the year ended December 31, 2020, consolidated revenue was $836.4 million, an increase of 2% over the prior year. Consolidated gross margin was 24.2%, down 60 basis points year-over-year. Net loss attributable to common shareholders was $13.0 million, or a net loss of $0.36 per diluted share, compared to a net loss of $57.7 million, or a loss of $1.61 per diluted share in the prior year. Adjusted EBITDA was $36.3 million or 4.3% of revenue, as compared with $25.5 million or 3.1% of revenue in the prior year. Adjusted EPS was $0.46 compared to $0.15 in the prior year.
Full year 2020 results included non-cash impairment charges of $16.2 million, which was comprised of $10.7 million, primarily related to goodwill and customer relationships for the Search business, and $5.5 million related to right-of-use assets and related property and equipment in connection with leases that were vacated during the year. Results for the year ended December 31, 2020 also included $6.1 million in restructuring costs primarily comprised of employee termination costs and lease-related exit costs.
Quarterly Business Segment Highlights
Nurse and Allied Staffing
Revenue was $196.4 million, representing a 3% increase year-over-year and 12% sequentially. Contribution income was $22.3 million, compared to $17.8 million in the prior year and $18.2 million in the prior quarter. Average field contract personnel on a full-time equivalent (FTE) basis were 5,798 as compared with 7,339 in the prior year and 5,403 in the prior quarter. Revenue per FTE per day was $368 compared to $284 in the prior year and $353 in the prior quarter.
Physician Staffing
Revenue was $16.4 million, a decrease of 18% year-over-year and consistent with the prior quarter. Contribution income was $0.9 million, a decrease compared to $1.0 million in the prior year and an increase compared to $0.8 million in the prior quarter. Total days filled were 9,911 as compared with 11,672 in the prior year and 9,682 in the prior quarter. Revenue per day filled was $1,658 as compared with $1,714 in the prior year and $1,699 in the prior quarter.
Search
Revenue was $2.8 million, a decrease of 24% year-over-year and an increase of 23% sequentially. Contribution income was $0.6 million, compared to losses of $0.3 million in both the prior year and the prior quarter.
Cash Flow and Balance Sheet Highlights
Cash flow provided by operations for the quarter was $1.9 million compared to cash flow used in operations of $5.4 million in the prior year and $8.5 million in the prior quarter, with the principal driver being a six day sequential improvement in days' sales outstanding. Cash flow provided by operating activities for the full year was $27.2 million compared to $5.5 million in the prior year.
At December 31, 2020, the Company had $1.6 million in cash and cash equivalents, $53.4 million of borrowings drawn under its asset-based loan facility (ABL), and $18.5 million of letters of credit outstanding. Availability under the ABL is subject to a borrowing base, which was $125.5 million as of December 31, 2020, with $53.6 million available for borrowing as of December 31, 2020.
Outlook for First Quarter 2021
The guidance below applies only to management’s expectations for the first quarter of 2021.
Q1 2021 Range
Year-over-Year Change
Sequential Change
Revenue
$280 million - $295 million
33% - 40%
30% - 37%
Gross Profit Margin*
21.2% - 21.7%
(240) bps - (190) bps
(400) bps - (350) bps
Adjusted EBITDA*
$16.0 million - $18.0 million
247% - 290%
39% - 57%
Adjusted EPS*
$0.32 - $0.37
$0.33 - $0.38
$0.13 - $0.18
* Refer to discussion of Non-GAAP financial measures below.
There remains a high degree of uncertainty regarding the continued impact from COVID-19 on our business. In particular, the outlook above assumes sequential increases in bill rates and the number of clinicians on COVID assignments, and the continued closures of schools in key markets. As a result of the stronger projected performance for both revenue and Adjusted EBITDA, as well as continued uncertainty from the pandemic, the Company continues the use of wider guidance ranges for the first quarter of 2021.
The above estimates are based on current management expectations and, as such, are forward-looking and actual results may differ materially. The above ranges do not include the potential impact of any future divestitures, mergers, acquisitions or other business combinations, changes in debt structure, or future share repurchases. The guidance also reflects the impacts from certain cost actions and actual results may differ depending on timing and further actions it may take. See accompanying Non-GAAP financial measures and tables below.
INVITATION TO CONFERENCE CALL
The Company will hold its quarterly conference call on Wednesday, February 24, 2021, at 5:00 P.M. Eastern Time to discuss its fourth quarter and full year 2020 financial results. This call will be webcast live and can be accessed at the Company's website at www.crosscountryhealthcare.com or by dialing 888-566-1099 from anywhere in the U.S. or by dialing 773-799-3716 from non-U.S. locations - Passcode: Cross Country. A replay of the webcast will be available from February 24th through March 11th at the Company's website and a replay of the conference call will be available by telephone by calling 800-510-0118 from anywhere in the U.S. or 203-369-3808 from non-U.S. locations - Passcode: 2021.
ABOUT CROSS COUNTRY HEALTHCARE
Cross Country Healthcare, Inc. (CCH) is a leader in providing total talent management including strategic workforce solutions, contingent staffing, permanent placement, and consultative services for healthcare customers. Leveraging our 35 years of industry expertise and insight, CCH solves complex labor-related challenges for customers while providing high-quality outcomes and exceptional patient care. As a multi-year Best of Staffing® Award winner, CCH is committed to an exceptionally high level of service to both our clients and our healthcare professionals. CCH was the first publicly traded staffing firm to obtain The Joint Commission Certification, which it still holds with a Letter of Distinction. In February 2021, CCH earned Energage's inaugural 2021 Top Workplaces USA award. CCH has a longstanding history of investing in its diversity, equality, and inclusion strategic initiatives as a key component of the organization’s overall corporate social responsibility program which is closely aligned with its core values to create a better future for its people, communities, the planet, and its shareholders.
Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountryhealthcare.com. Shareholders and prospective investors can also register to automatically receive the Company's press releases, made with the Securities and Exchange Commission (SEC) filings and other notices by e-mail.
NON-GAAP FINANCIAL MEASURES
This press release and accompanying financial statement tables reference non-GAAP financial measures, such as gross profit margin, adjusted EBITDA, and adjusted EPS. Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for, or superior to, financial measures calculated in accordance with U.S. GAAP. Such non-GAAP financial measures are provided for consistency and comparability to prior year results; furthermore, management believes they are useful to investors when evaluating the Company's performance as they exclude certain items that management believes are not indicative of the Company's future operating performance. Pro forma measures, if applicable, are adjusted to include the results of our acquisitions, and exclude the results of divestments, as if the transactions occurred in the beginning of the periods mentioned. Such non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. The financial statement tables that accompany this press release include a reconciliation of each non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure and a more detailed discussion of each financial measure; as such, the financial statement tables should be read in conjunction with the presentation of these non-GAAP financial measures.
FORWARD LOOKING STATEMENTS
In addition to historical information, this press release contains statements relating to our future results (including certain projections and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act, and are subject to the "safe harbor" created by those sections. Forward-looking statements consist of statements that are predictive in nature, depend upon or refer to future events. Words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", "suggests", "appears", "seeks", "will", and "could", and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include, but are not limited to, the following: the potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations, our ability to attract and retain qualified nurses, physicians and other healthcare personnel, costs and availability of short-term housing for our travel healthcare professionals, demand for the healthcare services we provide, both nationally and in the regions in which we operate, the functioning of our information systems, the effect of cyber security risks and cyber incidents on our business, the effect of existing or future government regulation and federal and state legislative and enforcement initiatives on our business, our clients' ability to pay us for our services, our ability to successfully implement our acquisition and development strategies, including our ability to successfully integrate acquired businesses and realize synergies from such acquisitions, the effect of liabilities and other claims asserted against us, the effect of competition in the markets we serve, our ability to successfully defend the Company, its subsidiaries, and its officers and directors on the merits of any lawsuit or determine its potential liability, if any, and other factors set forth in Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, and in our other filings with the SEC. You should consult any further disclosures the Company makes on related subjects in its filings with the SEC.
Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results and readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date of this press release. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors' likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. The Company undertakes no obligation to update or revise forward-looking statements. All references to "we", "us", "our", or "Cross Country" in this press release mean Cross Country Healthcare, Inc. and its subsidiaries.
Cross Country Healthcare, Inc.
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share data)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Revenue from services
$
215,606
$
215,096
$
193,968
$
836,417
$
822,224
Operating expenses:
Direct operating expenses
161,214
161,935
145,965
633,685
618,215
Selling, general and administrative expenses
44,870
45,572
40,804
173,809
181,959
Bad debt expense
652
505
946
3,035
2,008
Depreciation and amortization
2,199
4,627
3,247
12,671
14,075
Acquisition and integration-related costs
—
(184
)
—
77
201
Restructuring costs
842
687
2,316
6,052
3,571
Legal settlement charges
—
—
—
—
1,600
Impairment charges
166
—
1,071
16,248
16,306
Total operating expenses
209,943
213,142
194,349
845,577
837,935
Income (loss) from operations
5,663
1,954
(381
)
(9,160
)
(15,711
)
Other expenses (income):
Interest expense
671
1,048
608
2,890
5,306
Loss on derivative
—
—
—
—
1,284
Loss on early extinguishment of debt
—
1,470
—
—
1,978
Other expense (income), net
326
144
(10
)
280
(68
)
Income (loss) before income taxes
4,666
(708
)
(979
)
(12,330
)
(24,211
)
Income tax (benefit) expense
(156
)
(108
)
169
(188
)
31,732
Consolidated net income (loss)
4,822
(600
)
(1,148
)
(12,142
)
(55,943
)
Less: Net income attributable to noncontrolling interest in subsidiary
210
544
186
820
1,770
Net income (loss) attributable to common shareholders
$
4,612
$
(1,144
)
$
(1,334
)
$
(12,962
)
$
(57,713
)
Net income (loss) per share attributable to common shareholders - Basic and Diluted
$
0.13
$
(0.03
)
$
(0.04
)
$
(0.36
)
$
(1.61
)
Weighted average common shares outstanding:
Basic
36,177
35,869
36,176
36,088
35,815
Diluted
36,778
35,869
36,176
36,088
35,815
Cross Country Healthcare, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited, amounts in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Adjusted EBITDA:a
Net income (loss) attributable to common shareholders
$
4,612
$
(1,144
)
$
(1,334
)
$
(12,962
)
$
(57,713
)
Interest expense
671
1,048
608
2,890
5,306
Income tax (benefit) expenseb
(156
)
(108
)
169
(188
)
31,732
Depreciation and amortization
2,199
4,627
3,247
12,671
14,075
Acquisition and integration-related costsc
—
(184
)
—
77
201
Restructuring costsd
842
687
2,316
6,052
3,571
Legal settlements and feese
600
—
837
2,998
1,600
Impairment chargesf
166
—
1,071
16,248
16,306
Loss on derivativeg
—
—
—
—
1,284
Loss on early extinguishment of debth
—
1,470
—
—
1,978
Loss on disposal of fixed assets
364
—
—
364
—
Other expense (income), net
(38
)
144
(10
)
(84
)
(68
)
Equity compensation
1,340
879
1,064
5,403
3,396
Applicant tracking system costsi
690
323
444
2,033
2,030
Net income attributable to noncontrolling interest in subsidiary
210
544
186
820
1,770
Adjusted EBITDAa
$
11,500
$
8,286
$
8,598
$
36,322
$
25,468
Adjusted EPS:j
Numerator:
Net income (loss) attributable to common shareholders
$
4,612
$
(1,144
)
$
(1,334
)
$
(12,962
)
$
(57,713
)
Non-GAAP adjustments - pretax:
Acquisition and integration-related costsc
—
(184
)
—
77
201
Restructuring costsd
842
687
2,316
6,052
3,571
Legal settlements and feese
600
—
837
2,998
1,600
Impairment charges (excluding rebranding impacts)f
166
—
1,071
16,248
1,804
Rebranding impairments and accelerated amortizationf
—
1,978
938
3,075
17,379
Loss on derivativeg
—
—
—
—
1,284
Loss on early extinguishment of debth
—
1,470
—
—
1,978
Applicant tracking system costsi
690
323
444
2,033
2,030
Nonrecurring income tax adjustments
(18
)
(428
)
—
295
35,247
Tax impact of non-GAAP adjustments
(2
)
—
(20
)
(992
)
(2,044
)
Adjusted net income attributable to common shareholders - non-GAAP
$
6,890
$
2,702
$
4,252
$
16,824
$
5,337
Denominator:
Weighted average common shares - basic, GAAP
36,177
35,869
36,176
36,088
35,815
Dilutive impact of share-based paymentsk
601
472
228
340
251
Adjusted weighted average common shares - diluted, non-GAAP
36,778
36,341
36,404
36,428
36,066
Reconciliation:
Diluted EPS, GAAP
$
0.13
$
(0.03
)
$
(0.04
)
$
(0.36
)
$
(1.61
)
Non-GAAP adjustments - pretax:
Acquisition and integration-related costsc
—
(0.01
)
—
—
—
Restructuring costsd
0.02
0.02
0.06
0.16
0.10
Legal settlements and feese
0.02
—
0.03
0.09
0.05
Impairment charges (excluding rebranding impacts)f
—
—
0.03
0.45
0.05
Rebranding impairments and accelerated amortizationf
—
0.05
0.03
0.09
0.48
Loss on derivativeg
—
—
—
—
0.04
Loss on early extinguishment of debth
—
0.04
—
—
0.05
Applicant tracking system costsi
0.02
0.01
0.01
0.05
0.06
Nonrecurring income tax adjustments
—
(0.01
)
—
0.01
0.98
Tax impact of non-GAAP adjustments
—
—
—
(0.03
)
(0.05
)
Adjusted EPS, non-GAAPj
$
0.19
$
0.07
$
0.12
$
0.46
$
0.15
Cross Country Healthcare, Inc.
Consolidated Balance Sheets
(Unaudited, amounts in thousands)
December 31,
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
1,600
$
1,032
Accounts receivable, net
170,003
169,528
Prepaid expenses
5,455
6,097
Insurance recovery receivable
4,698
5,011
Other current assets
1,355
1,689
Total current assets
183,111
183,357
Property and equipment, net
12,351
11,832
Operating lease right-of-use assets
10,447
16,964
Goodwill
90,924
101,066
Trade names, indefinite-lived
5,900
5,900
Other intangible assets, net
34,831
44,957
Other non-current assets
19,409
18,298
Total assets
$
356,973
$
382,374
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses
$
49,877
$
45,726
Accrued employee compensation and benefits
35,540
31,307
Operating lease liabilities - current
4,509
4,878
Other current liabilities
3,497
3,554
Total current liabilities
93,423
85,465
Revolving credit facility
53,408
70,974
Operating lease liabilities - non-current
15,234
19,070
Non-current deferred tax liabilities
6,592
7,523
Long-term accrued claims
25,412
26,938
Contingent consideration
—
4,867
Other long-term liabilities
7,995
4,037
Total liabilities
202,064
218,874
Commitments and contingencies
Stockholders' equity:
Common stock
4
4
Additional paid-in capital
310,388
305,643
Accumulated other comprehensive loss
(1,280
)
(1,240
)
Accumulated deficit
(154,737
)
(141,775
)
Total Cross Country Healthcare, Inc. stockholders' equity
154,375
162,632
Noncontrolling interest in subsidiary
534
868
Total stockholders' equity
154,909
163,500
Total liabilities and stockholders' equity
$
356,973
$
382,374
Cross Country Healthcare, Inc.
Segment Datal
(Unaudited, amounts in thousands)
Three Months Ended
Year-over-Year
Sequential
December 31,
% of
December 31,
% of
September 30,
% of
% change
% change
2020
Total
2019
Total
2020
Total
Fav (Unfav)
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
196,374
91
%
$
191,417
89
%
$
175,244
90
%
2.6
%
12.1
%
Physician Staffing
16,429
8
%
20,011
9
%
16,452
9
%
(17.9
)%
(0.1
)%
Search
2,803
1
%
3,668
2
%
2,272
1
%
(23.6
)%
23.4
%
$
215,606
100
%
$
215,096
100
%
$
193,968
100
%
0.2
%
11.2
%
Contribution income (loss):m
Nurse and Allied Staffing
$
22,265
$
17,849
$
18,233
24.7
%
22.1
%
Physician Staffing
942
1,034
827
(8.9
)%
13.9
%
Search
570
(297
)
(308
)
291.9
%
285.1
%
23,777
18,586
18,752
27.9
%
26.8
%
Corporate overheadn
14,907
11,502
12,499
(29.6
)%
(19.3
)%
Depreciation and amortization
2,199
4,627
3,247
52.5
%
32.3
%
Acquisition and integration-related costsc
—
(184
)
—
(100.0
)%
—
%
Restructuring costsd
842
687
2,316
(22.6
)%
63.6
%
Impairment chargesf
166
—
1,071
(100.0
)%
84.5
%
Income (loss) from operations
$
5,663
$
1,954
$
(381
)
189.8
%
NM
Year Ended
Year-over-Year
December 31,
% of
December 31,
% of
% change
2020
Total
2019
Total
Fav (Unfav)
Revenue from services:
Nurse and Allied Staffing
$
757,949
91
%
$
732,815
89
%
3.4
%
Physician Staffing
67,934
8
%
74,605
9
%
(8.9
)%
Search
10,534
1
%
14,804
2
%
(28.8
)%
$
836,417
100
%
$
822,224
100
%
1.7
%
Contribution income (loss):m
Nurse and Allied Staffing
$
75,293
$
64,353
17.0
%
Physician Staffing
3,619
2,758
31.2
%
Search
(1,124
)
(823
)
(36.6
)%
77,788
66,288
17.3
%
Corporate overheadn
51,900
46,246
(12.2
)%
Depreciation and amortization
12,671
14,075
10.0
%
Acquisition and integration-related costsc
77
201
61.7
%
Restructuring costsd
6,052
3,571
(69.5
)%
Legal settlement chargese
—
1,600
100.0
%
Impairment chargesf
16,248
16,306
0.4
%
Loss from operations
$
(9,160
)
$
(15,711
)
41.7
%
NM-Not meaningful.
Cross Country Healthcare, Inc.
Summary Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Net cash provided by (used in) operating activities
$
1,929
$
(5,351
)
$
(8,456
)
$
27,204
$
5,542
Net cash used in investing activities
(956
)
(898
)
(1,169
)
(4,615
)
(2,940
)
Net cash (used in) provided by financing activities
(2,827
)
(2,186
)
6,818
(22,010
)
(17,599
)
Effect of exchange rate changes on cash
8
9
19
(11
)
10
Change in cash and cash equivalents
(1,846
)
(8,426
)
(2,788
)
568
(14,987
)
Cash and cash equivalents at beginning of period
3,446
9,458
6,234
1,032
16,019
Cash and cash equivalents at end of period
$
1,600
$
1,032
$
3,446
$
1,600
$
1,032
Cross Country Healthcare, Inc.
Other Financial Data
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2020
2019
2020
2020
2019
Consolidated gross profit margino
25.2
%
24.7
%
24.7
%
24.2
%
24.8
%
Nurse and Allied Staffing statistical data:
FTEsp
5,798
7,339
5,403
6,037
7,113
Average Nurse and Allied Staffing revenue per FTE per dayq
$
368
$
284
$
353
$
343
$
282
Physician Staffing statistical data:
Days filledr
9,911
11,672
9,682
38,987
44,381
Revenue per day filleds
$
1,658
$
1,714
$
1,699
$
1,742
$
1,681
(a)
Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, is defined as net income (loss) attributable to common shareholders before interest expense, income tax (benefit) expense, depreciation and amortization, acquisition and integration-related costs, restructuring costs, legal settlements and fees, impairment charges, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on disposal of fixed assets, gain or loss on sale of business, other expense (income), net, equity compensation, applicant tracking system costs, and includes net income attributable to noncontrolling interest in subsidiary. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Management presents Adjusted EBITDA because it believes that Adjusted EBITDA is a useful supplement to net income attributable to common shareholders as an indicator of operating performance. Management uses Adjusted EBITDA for planning purposes and as one performance measure in its incentive programs for certain members of its management team. Adjusted EBITDA, as defined, closely matches the operating measure typically used in the Company's credit facilities in calculating various ratios. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by the Company's consolidated revenue.
(b)
Income tax expense for the year ended December 31, 2019 includes $35.8 million of expense related to the establishment of valuation allowances on our deferred tax assets in the second quarter.
(c)
Acquisition and integration-related costs include costs for prior acquisitions, costs incurred for potential transactions, and accretion and valuation adjustments related to the contingent consideration liability for the Mediscan acquisition.
(d)
Restructuring costs are primarily comprised of employee termination costs, lease-related exit costs, and reorganization costs as part of planned cost savings initiatives.
(e)
Legal settlements and fees include legal settlement charges as presented on the consolidated statements of operations as well as legal fees pertaining to non-operational legal matters which are included in selling, general and administrative expenses. For the year ended December 31, 2019, we incurred legal settlement charges pertaining to the resolution of a medical malpractice lawsuit in excess of carrier limits as well as a California wage and hour class action settlement. For the year ended December 31, 2020, we incurred $3.0 million in legal fees related to an ongoing legal matter outside the normal course of operations.
(f)
Impairment charges in 2020 of $16.2 million were comprised of $10.7 million primarily related to goodwill and other intangible assets for the Search business and $5.5 million related to right-of-use assets and related property and equipment in connection with leases that were vacated during the year. Impairment charges in 2019 related to trade name impairment of $14.5 million related to Nurse and Allied Staffing resulting from the Company's rebranding initiative and $1.8 million related to the Company's decision to cease use of certain of its leased properties in conjunction with its restructuring plan. Rebranding impairments and accelerated amortization related to finite-lived trade names in connection with the rebranding initiatives.
(g)
Loss on derivative represents the amount paid to terminate an interest rate hedge related to our term loan that was refinanced in October 2019.
(h)
Loss on early extinguishment of debt for the year ended December 31, 2019 consists of write-off and extinguishment costs related to the refinancing of our debt in the fourth quarter of 2019, and the write-off of debt issuance costs in the prior quarters related to optional prepayments on our term loan made in the first and second quarters and an optional reduction in borrowing capacity under our prior revolving credit facility.
(i)
Applicant tracking system costs are related to the Company's project to replace its legacy system supporting its travel nurse staffing business. These costs are reported in selling, general and administrative expenses on the consolidated statement of operations and included in corporate overhead in segment data.
(j)
Adjusted EPS, a non-GAAP financial measure, is defined as net income (loss) attributable to common shareholders per diluted share before the diluted EPS impact of acquisition and integration-related costs, restructuring costs, legal settlements and fees, impairment charges, rebranding impairments and accelerated amortization, gain or loss on derivative, loss on early extinguishment of debt, gain or loss on sale of business, applicant tracking system costs, and nonrecurring income tax adjustments. Adjusted EPS should not be considered a measure of financial performance under GAAP. Management presents Adjusted EPS because it believes that Adjusted EPS is a useful supplement to its reported EPS as an indicator of operating performance. Management believes it provides a more useful comparison of the Company's underlying business performance from period to period and is more representative of the future earnings capacity of the Company.
(k)
Due to the net loss for the three months ended December 31, 2019 and September 30, 2020, and for the years ended December 31, 2020 and 2019, 472, 228, 340, and 251 shares (in thousands), respectively, were excluded from diluted weighted average shares.
(l)
Segment data provided is in accordance with the Segment Reporting Topic of the FASB ASC.
(m)
Contribution income is defined as income (loss) from operations before depreciation and amortization, acquisition and integration-related costs, restructuring costs, legal settlement charges, impairment charges, and corporate overhead. Contribution income is a financial measure used by management when assessing segment performance.
(n)
Corporate overhead includes unallocated executive leadership and other centralized corporate functional support costs such as finance, IT, legal, human resources, and marketing, as well as public company expenses and corporate-wide projects (initiatives).
(o)
Gross profit is defined as revenue from services less direct operating expenses. The Company's gross profit excludes allocated depreciation and amortization expense. Gross profit margin is calculated by dividing gross profit by revenue from services.
(p)
FTEs represent the average number of Nurse and Allied Staffing contract personnel on a full-time equivalent basis.
(q)
Average revenue per FTE per day is calculated by dividing the Nurse and Allied Staffing revenue per FTE by the number of days worked in the respective periods. Nurse and Allied Staffing revenue also includes revenue from the permanent placement of nurses.
(r)
Days filled is calculated by dividing the total hours invoiced during the period, including an estimate for the impact of accrued revenue, by 8 hours.
(s)
Revenue per day filled is calculated by dividing revenue as reported by days filled for the period presented.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210224005831/en/
Cross Country Healthcare, Inc. William J. Burns, 561-237-2555 Executive Vice President & Chief Financial Officer wburns@crosscountry.com
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