Cross Country Healthcare Reports Second Quarter 2006 Results.BOCA RATON Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , Fla. -- Cross Country Healthcare, Inc. (Nasdaq:CCRN CCRN Critical Care Registered Nurse CCRN Certification In Critical Care Nursing ) today reported revenue of $156.7 million for the second quarter ended June June: see month. 30, 2006, and net income of $4.4 million, or $0.14 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. This compares to revenue of $159.7 million and net income of $1.2 million, or $0.04 per diluted share, in the same quarter of the prior year, which included an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $3.2 million, or $0.10 per diluted share, related to increases in reserves for professional liability claims. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the second quarter of 2006 was $9.9 million. For the six month period ended June 30, 2006, Cross Country Healthcare reported revenue of $316.5 million and net income of $9.0 million, or $0.27 per diluted share. This compares to revenue of $318.5 million and net income of $4.9 million, or $0.15 per diluted share, in the first six months of the prior year, which included the previously mentioned after-tax charge of $3.2 million. Cash flow from operations for the first six months of 2006 was $20.1 million. "We experienced higher bill rates and expansion of the bill-pay spread in our core nurse staffing business during the second quarter that contributed to year over year improvement in our gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. . However, the continuation continuation - continuation passing style of relatively flat hospital admission patterns along with slower applicant Applicant is a sketch written by Harold Pinter. It was originally written in 1959 and was first broadcast on BBC Radio 3 in 1964. Plot Applying for a job, a young man named Mr. activity in the first quarter impacted our staffing volume and booking activity during the second quarter," said Joseph A. Boshart, President and Chief Executive Officer of Cross Country Healthcare, Inc. Healthcare Staffing For the second quarter of 2006, the healthcare staffing business segment (travel and per diem per diem adj. or n. Latin for "per day," it is short for payment of daily expenses and/or fees of an employee or an agent. nurse, travel allied health and clinical trials staffing) generated revenue of $144.9 million, a 2% decline from both the second quarter of the prior year and sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from the first quarter of 2006. The year-over-year decline reflected slightly higher revenue in the travel staffing business due to higher bill rates that was more than offset by lower revenue from per diem staffing and clinical trials staffing. Segment staffing volume declined 6% from the prior year quarter and 3% sequentially from the first quarter of 2006 - travel staffing volume decreased 4% year over year and 3% sequentially. Historically, staffing volume typically declines 2% to 5% sequentially from the first quarter to the second quarter due to seasonal factors. Contribution income (defined as income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before interest, income taxes, depreciation and amortization and corporate expenses not specifically identified to a reporting segment), increased 50% in the second quarter of 2006 to $13.4 million from $9.0 million in the same quarter of 2005, primarily reflecting the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. charge in the second quarter of 2005 related to professional liability claims. Additionally, during the second quarter of 2006, the bill-pay spread in the travel nurse staffing business expanded while health insurance and housing costs increased. For the first six months of 2006, segment revenue declined 1% on a year over year basis to $292.5 million from $295.5 million in the same period a year ago, while contribution income increased 28% to $27.3 million from $21.4 million in the prior year period. Other Human Capital Management Services For the second quarter of 2006, the other human capital management services business segment (education and training and retained search business) generated revenue of $11.8 million, which was essentially flat with revenue of $11.8 million in the same quarter of the prior year. This was due to an increase in revenue from the retained physician and healthcare executive search business that was offset by lower revenue in the education and training business. Segment contribution income increased 10% in the second quarter of 2006 to $2.3 million from the same quarter a year ago, reflecting a substantial improvement for the retained search business that was partially offset by a decline for the education and training business. The retained search business generates a substantially higher contribution margin than the education and training business. For the first six months of 2006, segment revenue increased 4% on a year over year basis to $24.0 million from $23.1 million in the same period a year ago, while contribution income increased 18% to $4.9 million from $4.2 million in the prior year period. Debt Repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan During the second quarter of 2006, the Company reduced its borrowings under its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility by $8.0 million from the end of the prior quarter. At June 30, 2006, the Company had $10.4 million of total debt on its balance sheet, which represented a debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. ratio of 3%. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program Update The Company repurchased 46,000 shares of its common stock during the second quarter of 2006 at an average cost of $17.34 per share. Under its stock repurchase program authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: in November November: see month. 2002, the Company can purchase up to an additional 149,272 shares. In May 2006, the Company's Board of Directors authorized a new stock repurchase program whereby the Company may repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to an additional 1.5 million of its common shares, subject to the constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. of the Company's current credit agreement. The new stock repurchase authorization The right or permission to use a system resource; the process of granting access. See access control. will commence upon the completion of the previously authorized stock Authorized Stock The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. This figure is usually listed in the capital accounts section of the balance sheet. repurchase program. Under these authorizations, the shares may be repurchased from time-to-time in the open market and may be discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: at any time at the discretion of the Company. At June 30, 2006, the Company had approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 32.1 million shares outstanding. Guidance For The Third Quarter of 2006 The following statements are based on current management expectations. Such statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and actual results may differ materially. These statements do not include the potential impact of any future mergers, acquisitions or other business combinations (other than the previously announced pending acquisition of the assets of Metropolitan Research Associates, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and Metropolitan Research Staffing Associates, LLC (collectively "Metropolitan Research")), repurchases of the Company's common stock, or pending legal matters. Based on the present industry dynamics, Cross Country Healthcare expects revenue in the third quarter of 2006 to be in the $160.5 million to $163.0 million range and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. per diluted share to be in the range of $0.13 to $0.15, subject to the completion and timing of the pending Metropolitan Research acquisition. Quarterly Conference Call Cross Country Healthcare will hold a conference call on Tuesday Tuesday: see week. , August 8th at 9:00 a.m. Eastern Time to discuss its second quarter 2006 financial results. This call will be webcast live by Thomson Financial Thomson Financial A major provider of information, analytical tools, and consulting services to the financial community. The firm, a division of Thomson Corporation, is best known to investors for its First Call segment, which publishes consensus earnings and may be accessed at the Company's web site at www.crosscountry crosscountry , crosscountry race n → cross-country m inv .com or by dialing 888-395-6878 from anywhere in the U.S. or by dialing 210-234-0001 from non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. locations - Passcode: Cross Country. A replay of the webcast will be available through August 22nd. A replay of the conference call will be available by telephone from August 8th through August 22nd by calling 866-511-1890 from anywhere in the U.S. or by calling 203-369-1945 from non-U.S. locations. About Cross Country Healthcare Cross Country Healthcare, Inc. is a leading provider of healthcare staffing services in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The Company has a national client base of approximately 3,000 hospitals, pharmaceutical companies and other healthcare providers. Copies of this and other news releases as well as additional information about Cross Country Healthcare can be obtained online at www.crosscountry.com. Shareholders and prospective investors can also register at the corporate web site to automatically receive the Company's press releases, SEC filings and other notices by e-mail. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", "suggests" and similar expressions are forward-looking statements. These 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by these forward-looking statements. These factors include: our ability to attract and retain qualified nurses and other healthcare personnel, costs and availability of short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. apartment leases for our travel nurses, 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 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, 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 on the merits adj. referring to a judgment, decision or ruling of a court based upon the facts presented in evidence and the law applied to that evidence. A judge decides a case "on the merits" when he/she bases the decision on the fundamental issues and considers of any lawsuit lawsuit: see procedure; tort. or determine its potential liability, if any, and other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005. In addition, there can be no assurances that the Metropolitan Research acquisition will be completed. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed in this press release might not occur. While it is our intention to update its guidance quarterly, it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements.
Cross Country Healthcare, Inc.
Condensed Consolidated Statements of Income (a)
(Unaudited, amounts in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
% %
2006 2005 Change 2006 2005 Change
--------- --------- -------- --------- --------- -------
Revenue from
services $ 156,697 $ 159,724 (2%) $ 316,531 $ 318,529 (1%)
Operating
expenses:
Direct
oper-
ating
expenses 120,455 128,439 (6%) 242,900 252,664 (4%)
Selling,
general
and
admin-
istrative
expenses 26,816 26,562 1% 54,989 52,086 6%
Bad debt
expense 150 36 317% 22 438 (95%)
Depre-
ciation 1,383 1,215 14% 2,705 2,345 15%
Amorti-
zation 356 356 0% 712 712 0%
--------- --------- --------- ---------
Total
operating
expenses 149,160 156,608 (5%) 301,328 308,245 (2%)
--------- --------- --------- ---------
Income from
operations 7,537 3,116 142% 15,203 10,284 48%
Other expenses:
Interest
expense,
net 320 952 (66%) 706 1,869 (62%)
--------- --------- --------- ---------
Income from
continuing
operations
before
income taxes 7,217 2,164 234% 14,497 8,415 72%
Income tax
expense 2,793 838 233% 5,610 3,257 72%
--------- --------- --------- ---------
Income from
continuing
operations 4,424 1,326 234% 8,887 5,158 72%
Discontinued
operations,
net of
income taxes 9 (77) (112%) 116 (273) (142%)
--------- --------- --------- ---------
Net income $ 4,433 $ 1,249 255% $ 9,003 $ 4,885 84%
========= ========= ========= =========
Net income/
(loss) per
common share
- basic:
Income
from
contin-
uing
oper-
ations $ 0.14 $ 0.04 $ 0.28 $ 0.16
Discon-
tinued
oper-
ations,
net of
income
taxes 0.00 (0.00) 0.00 (0.01)
--------- --------- --------- ---------
Net income $ 0.14 $ 0.04 $ 0.28 $ 0.15
========= ========= ========= =========
Net income/
(loss) per
common share -
diluted:
Income
from
contin-
uing
oper-
ations $ 0.14 $ 0.04 $ 0.27 $ 0.16
Discon-
tinued
oper-
ations,
net of
income
taxes 0.00 (0.00) 0.00 (0.01)
--------- --------- --------- ---------
Net income $ 0.14 $ 0.04 $ 0.27 $ 0.15
========= ========= ========= =========
Weighted
average
common
shares
outstanding
- basic 32,092 32,253 32,109 32,230
Weighted
average
common
shares
outstanding
- diluted 32,726 32,775 32,773 32,728
(a) The prior period has been reclassified to conform to the 2006
presentation.
Cross Country Healthcare, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
June 30, Dec. 31,
2006 2005
--------- ---------
Assets
Current assets:
Cash and
cash
equiv-
alents $ 58 $ -
Accounts
receivable,
net 97,144 107,787
Deferred tax
assets 6,703 7,642
Income taxes
receivable 4,483 2,752
Other current
assets 14,229 22,571
--------- ---------
Total current
assets 122,617 140,752
Property and
equipment,
net 17,495 16,477
Trademarks,
net 15,499 15,499
Goodwill,
net 302,854 302,854
Other
identifiable
intangible
assets, net 4,678 5,390
Debt issuance
costs, net 633 689
--------- ---------
Total assets $ 463,776 $ 481,661
========= =========
Liabilities and
Stockholders'
Equity
Current
liabilities:
Accounts
payable and
accrued
expenses $ 7,700 $ 12,082
Accrued
employee
compensation
and
benefits 36,709 47,940
Current
portion
of long-
term
debt 2,288 5,483
Other
current
liabilities 4,685 4,378
--------- ---------
Total current
liabilities 51,382 69,883
Non-current
deferred tax
liabilities 37,032 32,546
Long-term debt 8,144 19,946
--------- ---------
Total
liabilities 96,558 122,375
Commitments and
contingencies
Stockholders'
equity:
Common stock 3 3
Additional
paid-in
capital 254,269 255,340
Retained
earnings 112,946 103,943
--------- ---------
Total
stockholders'
equity 367,218 359,286
--------- ---------
Total liabilities
and stockholders'
equity $ 463,776 $ 481,661
========= =========
Cross Country Healthcare, Inc.
Segment Data (a) (b)
(Unaudited, amounts in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
% %
2006 2005 Change 2006 2005 Change
--------- --------- -------- --------- --------- -------
Revenue from
unaffiliated
customers:
Healthcare
staffing $ 144,927 $ 147,897 (2%) $ 292,527 $ 295,452 (1%)
Other human
capital
management
services 11,770 11,827 (0%) 24,004 23,077 4%
--------- --------- --------- ---------
$ 156,697 $ 159,724 (2%) $ 316,531 $ 318,529 (1%)
========= ========= ========= =========
Contribution
income (c):
Healthcare
staffing $ 13,435 $ 8,969 50% $ 27,309 $ 21,384 28%
Other human
capital
management
services 2,327 2,112 10% 4,916 4,161 18%
--------- --------- --------- ---------
15,762 11,081 42% 32,225 25,545 26%
Unallocated
corporate
overhead 6,486 6,394 1% 13,605 12,204 11%
Depreciation 1,383 1,215 14% 2,705 2,345 15%
Amortization 356 356 0% 712 712 0%
Interest
expense, net 320 952 (66%) 706 1,869 (62%)
--------- --------- --------- ---------
Income from
continuing
operations
before income
taxes $ 7,217 $ 2,164 234% $ 14,497 $ 8,415 72%
========= ========= ======== =========
Cross Country Healthcare, Inc.
Financial Statistics
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
------------------- -------------------
Net cash
provided
by operating
activities
(in
thousands) $ 9,872 $ 6,326 $ 20,101 $ 9,652
FTEs (d) 5,240 5,556 5,333 5,583
Weeks worked
(e) 68,120 72,228 138,658 145,158
Average
healthcare
staffing
revenue
per FTE
per week (f) 2,128 2,048 2,110 2,035
(a) Segment data provided is in accordance with FASB Statement 131.
(b) Certain 2005 quarterly amounts have been reclassified to conform
to 2006 presentation.
(c) Defined as income from continuing operations before interest,
income taxes, depreciation, amortization and corporate expenses
not specifically identified to a reporting segment. Contribution
income is a financial measure used by management when assessing
segment performance.
(d) FTEs represent the average number of contract staffing personnel
on a full-time equivalent basis.
(e) Weeks worked is calculated by multiplying the FTEs by the number
of weeks during the respective period.
(f) Average healthcare staffing revenue per FTE per week is calculated
by dividing the healthcare staffing revenue by the number of weeks
worked in the respective periods. Healthcare staffing revenue
includes revenue from permanent placement of nurses.
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