Cross Country Healthcare, Inc. (Nasdaq:CCRN) today reported revenue of $117.8 million in the second quarter ended June 30, 2010, and net income of $1.2 million, or $0.04 per diluted share. This compares to revenue of $149.0 million in the prior year quarter and net income of $2.3 million, or $0.07 per diluted share. Cash flow from operations for the second quarter of 2010 was $13.4 million.
“I continue to believe we have weathered the worst of the down-turn in our operating environment based on recent booking trends and expect to achieve sequential improvement starting in September and continuing into the fourth quarter”
For the six months ended June 30, 2010, the Company generated revenue of $239.2 million and net income of $2.3 million, or $0.07 per diluted share. This compares to revenue of $324.5 million and net income of $5.3 million, or $0.17 per diluted share, in the first six months of the prior year. Cash flow from operations for the first six months of 2010 was $23.7 million.
"I continue to believe we have weathered the worst of the down-turn in our operating environment based on recent booking trends and expect to achieve sequential improvement starting in September and continuing into the fourth quarter," said Joseph A. Boshart, President and Chief Executive Officer of Cross Country Healthcare, Inc. "In our largest segment, nurse and allied staffing, we are especially encouraged by strengthening demand in most areas of the country, and more importantly, we continue to add attractive new hospital systems to our roster of vendor management clients. This should allow us to take an even larger slice of an increasing market opportunity as we move through the second half of this year," added Mr. Boshart.
"Physician staffing revenue was up slightly on a sequential basis from the first quarter. Revenue in our clinical trials services segment increased 4% sequentially due to a continuing rebound in staffing activity that was partially offset by ongoing weakness in our drug safety monitoring, outsourcing and regulatory consulting services. Our gross profit margins for the Company as a whole increased 200 basis points from the prior year quarter and 90 basis points sequentially from the first quarter," he stated.
Nurse and Allied Staffing
For the second quarter of 2010, the nurse and allied staffing business segment (travel and per diem nurse and travel allied staffing) generated revenue of $59.8 million, reflecting a 24% decrease from $78.6 million in the prior year quarter and an 8% sequential decrease from the first quarter of 2010. Contribution income (defined as income from operations before depreciation and amortization and corporate expenses not specifically identified to a reporting segment) decreased 16% in the first quarter of 2010 to $6.1 million from $7.2 million in the same quarter a year ago, but increased 3% sequentially from the first quarter of 2010. The year-over-year decreases in revenue and contribution income reflect the reduced demand for temporary nurse and allied staffing services primarily due to the macroeconomic environment. The sequential increase in contribution income primarily resulted from a reduction in SG&A expenses, as well as the benefits from an improvement in the quality of accounts receivable.
Segment staffing volume decreased 21% from the prior year quarter and decreased 9% sequentially from the first quarter of 2010. The segment revenue per FTE per day for the second quarter of 2010 was $304, a decline of 3% from the prior year quarter, but a slight increase sequentially from the first quarter. The year-over-year decrease reflected a 3% decline in the average hourly bill rate in travel staffing and a 4% decline in the average hourly bill rate in per diem staffing, which typically has a lower average bill rate than travel staffing due to the mix of healthcare professionals.
For the first six months of 2010, segment revenue decreased 32% on a year-over-year basis to $124.5 million from $183.6 million in the same period a year ago, while contribution income decreased 30% to $12.0 million from $17.2 million in the prior year period.
Physician Staffing
For the second quarter of 2010, the physician staffing business segment generated revenue of $31.3 million, a 23% decrease from $40.7 million in the prior year quarter and a slight increase sequentially from the first quarter of 2010. Contribution income decreased 10% in the second quarter of 2010 to $3.7 million from $4.1 million in the same quarter a year ago, but increased 29% sequentially from the first quarter of 2010 due to lower professional liability expense along with a reduction in SG&A expense. Physician staffing days filled for the second quarter of 2010 were 20,657 days, an 18% decrease from the prior year quarter and a 5% increase sequentially from the first quarter of 2010. Revenue per day filled for the second quarter of 2010 was $1,514, a 7% decrease from the prior year quarter and a 5% decrease sequentially from the first quarter of 2010, reflecting a continued unfavorable change in the mix of specialties.
For the first six months of 2010, segment revenue decreased 21% on a year-over-year basis to $62.4 million from $79.0 million in the same period a year ago, while contribution income decreased 11% to $6.6 million from $7.4 million in the prior year period.
The Company believes the lingering effects of the recession and the weak housing market have delayed the retirement plans of many physicians. These factors, along with a reduction in surgeries have resulted in a decrease in demand for temporary physicians, particularly in such specialties as anesthesiology and surgery.
Clinical Trials Services
For the second quarter of 2010, the clinical trials services segment generated revenue of $15.8 million, a decrease of 19% from $19.4 million in the prior year quarter, but a 4% increase sequentially from the first quarter of 2010. Contribution income decreased 25% in the second quarter of 2010 to $1.7 million from $2.3 million in the prior year, but increased 8% sequentially from the first quarter of 2010 due primarily to higher revenue and an associated improvement in operating leverage.
For the first six months of 2010, segment revenue decreased 23% on a year-over-year basis to $31.0 million from $40.4 million in the same period a year ago, while contribution income decreased 26% to $3.3 million from $4.5 million in the prior year period.
Other Human Capital Management Services
For the second quarter of 2010, the other human capital management services business segment (education and training and retained search) generated revenue of $10.9 million, a 6% increase from revenue of $10.3 million in the same quarter in the prior year as well as sequentially from the first quarter of 2010. Segment contribution income increased 143% to $0.8 million in the second quarter of 2010 from $0.3 million in the prior year quarter, but decreased 22% sequentially from the first quarter of 2010. Segment results are primarily due to improved year-over-year revenue and contribution income from the education and training business.
For the first six months of 2010, segment revenue decreased 1% on a year-over-year basis to $21.3 million from $21.5 million in the same period a year ago, while contribution income increased 44% to $1.8 million from $1.3 million in the prior year period.
Debt Outstanding and Credit Facility
At June 30, 2010, the Company had $56.4 million of total debt on its balance sheet and a debt, net of cash, to total capitalization ratio of 15.1%. At the end of the second quarter of 2010, the Company's debt leverage ratio (as defined in its credit agreement) was 2.0 to 1, well below the 2.5 to 1 maximum allowable ratio effective for the duration of the credit agreement.
On May 28, 2010, the Company refinanced its revolving loan credit facility and extended the maturity date by approximately three years to coincide with the September 2013 maturity date of the Company's existing term loan facility. This action had no impact on the interest rate spreads on the term loan. The Company also elected to reduce the aggregate principal amount of the revolving credit facility to $50.0 million. The revolving credit facility will be used to provide ongoing working capital and for other general corporate purposes, including acquisitions.
Guidance for Third Quarter 2010
The following statements are based on current management expectations. Such statements are forward-looking and actual results may differ materially. These statements do not include the potential impact of any future mergers, acquisitions or other business combinations, any impairment charges or valuation allowances, any significant legal proceedings or repurchases of the Company's common stock.
Cross Country Healthcare expects revenue in the third quarter of 2010 to be in the $114 million to $117 million range and earnings per diluted share to be in the range of $0.01 to $0.04.
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