• Revenue: $340 million for Q2 2024, down 10% sequentially and 37% year-over-year.
• Gross Profit: $71 million, with a gross margin of 20.8%.
• SG&A Expense: $60 million, down 5% sequentially and 24% year-over-year.
• Adjusted EBITDA: $14 million, representing a margin of 4.2%.
• Net Income: Adjusted earnings per share of $0.10.
• Cash Flow from Operations: $82 million generated in Q2 2024.
• Cash and Debt: $70 million in cash with no outstanding debt.
• Physician Staffing Revenue: Record $48 million, up 7% year-over-year and 3% sequentially.
• Homecare Staffing Revenue: Up 6% sequentially and 12% year-over-year.
• Share Repurchase: Nearly 1 million shares repurchased for approximately $15 million.
• Q3 2024 Revenue Guidance: Expected between $305 million and $315 million.
• Q3 2024 Adjusted EBITDA Guidance: Expected between $10 million and $13 million.
• Q3 2024 Adjusted EPS Guidance: Expected between $0.08 and $0.12.

• Warning! GuruFocus has detected 4 Warning Sign with CCRN.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cross Country Healthcare Inc (NASDAQ:CCRN) reported second quarter 2024 revenue and adjusted EBITDA near the high end of guidance ranges, indicating strong execution in a challenging environment.
• Travel demand has increased by more than 20% since the start of the second quarter, driven by market recovery and recent MSP wins.
• The company anticipates sequential revenue growth in the fourth quarter, supported by a robust sales pipeline and strong momentum in Locums, Education, and Homecare segments.
• Cross Country Healthcare Inc (NASDAQ:CCRN) has successfully reduced U.S. headcount by more than 20% in 2024, aligning cost structure with demand and enhancing operational efficiency.
• Intellify, the company's client-facing Workforce Solutions platform, has gained significant traction with over 40 clients and 5,500 active users, fueling the sales pipeline and enhancing service delivery.

Negative Points

• Consolidated revenue for the second quarter was down 10% sequentially and 37% year-over-year, primarily due to declines in travel and local assignments in large acute care settings.
• Gross margin decreased by 200 basis points year-over-year, impacted by higher lodging subsidies and insurance costs, which continue to pressure margins.
• The company reported a bad debt expense of $19 million due to a bankruptcy of a single MSP client, affecting financial performance.
• Adjusted EBITDA margin remains constrained at mid-single digits, with challenges in achieving the high single-digit target in the near term.
• The competitive environment remains intense, with many new entrants in the market, posing challenges for smaller and mid-sized companies.

Q & A Highlights

Q: Can you provide more color on the volume outlook and the visibility into future trends? A: John Martins, CEO, explained that demand has been steadily increasing, with a 20% rise since the start of the second quarter. This increase is broad across specialties and not driven by winter needs. Conversations with hospital leaders indicate rising census and acuity levels. Bill Burns, CFO, added that traveler assignments are stable, and weekly production is up 3% compared to the second quarter, suggesting an improving market backdrop.

Q: How are you addressing the competitive landscape and potential market share gains? A: John Martins, CEO, noted that the market remains highly competitive, especially with many new entrants. Cross Country Healthcare is focusing on winning more MSPs and VMS deals and increasing capture rates. The company is leveraging its technology and expertise to outperform competitors and gain market share.

Q: What is the outlook for operating margins in the Nurse and Allied segment? A: Bill Burns, CFO, mentioned that while bill pay spreads have improved slightly, lodging subsidies and insurance costs continue to pressure margins. The company is focusing on improving margins through business mix, operational efficiencies, and leveraging Intellify clients. The fourth quarter is expected to benefit from the return of schools and other seasonal factors.

Q: How are you managing insurance costs that are impacting gross margins? A: Bill Burns, CFO, explained that insurance costs are partly driven by experience and premium rates. The company is seeing elevated healthcare costs due to a declining number of personnel and rising healthcare expenses. Renewals in the third quarter will provide more clarity on future costs.

Q: What is the status of winter needs orders, and how might they impact the fourth quarter? A: John Martins, CEO, stated that the recent demand increase does not include winter needs, and clients are holding off on providing these orders. The company anticipates receiving winter needs closer to September, which could provide upside to fourth-quarter projections if they materialize.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.