Cross Country Healthcare, Inc. (the "Company") (Nasdaq: CCRN) today announced financial results for its second quarter ended June 30, 2022.

SELECTED FINANCIAL INFORMATION:

Second Quarter Business Highlights

• Revenue and Adjusted EBITDA exceeded guidance ranges
• Record number of professionals on assignment
• Double-digit year-over-year growth across all lines of business
• Adjusted EBITDA margin of 11.1%
• Launched Intellify, our proprietary Vendor Management System for Managed Service Programs (MSPs)
• Rise in demand throughout the quarter, especially for travel assignments
• $50.0 million optional prepayment on the term loan

“Our second quarter 2022 results reflect continued strong performance that showcases our ongoing success in leveraging technology and our deep relationships to efficiently place professionals across the healthcare continuum. We are emerging from the pandemic as a fundamentally different company, with a comprehensive suite of technologies that position us for long-term, sustained growth across all lines of business,” said John Martins, President and Chief Executive Officer of Cross Country Healthcare. He continued, “We remain committed to our investments in people and technology, and we see a strong demand from both existing and new MSP clients setting up a solid runway for continued growth.”

Second quarter consolidated revenue was $753.6 million, an increase of 127% year-over-year and a decrease of 4% sequentially. Consolidated gross profit margin was 22.6%, up 70 basis points year-over-year and up 40 basis points sequentially. Net income attributable to common stockholders was $52.9 million compared to $11.5 million in the prior year and $62.0 million in the prior quarter. Diluted earnings per share (EPS) was $1.40 compared to $0.31 in the prior year and $1.63 in the prior quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $83.5 million or 11.1% of revenue, as compared with $24.3 million or 7.3% of revenue in the prior year, and $97.4 million or 12.3% of revenue in the prior quarter. Adjusted EPS was $1.40 compared to $0.47 in the prior year and $1.70 in the prior quarter.

For the six months ended June 30, 2022, consolidated revenue was $1.5 billion, an increase of 133% year-over-year. Consolidated gross profit margin was 22.4%, up 60 basis points year-over-year. Net income attributable to common stockholders was $114.9 million, or $3.03 per diluted share, compared to $31.0 million, or $0.84 per diluted share, in the prior year. Adjusted EBITDA was $180.9 million or 11.7% of revenue, as compared with $51.0 million or 7.7% of revenue in the prior year. Adjusted EPS was $3.10 compared to $1.05 in the prior year.

Quarterly Business Segment Highlights

Nurse and Allied Staffing

Revenue was $731.4 million, an increase of 131% year-over-year and a decrease of 4% sequentially. Contribution income was $97.6 million, an increase compared to $35.3 million in the prior year and a decrease compared to $110.1 million in the prior quarter. Average field contract personnel on a full-time equivalent (FTE) basis were 13,494 as compared with 7,578 in the prior year and 13,454 in the prior quarter. Revenue per FTE per day was $591 compared to $454 in the prior year and $628 in the prior quarter. The increase in the average number of FTEs was primarily due to headcount growth in travel nurse and allied, as well as the year-over-year additional headcount resulting from the Workforce Solutions Group (WSG) acquisition in June 2021. In the second quarter of 2022, average bill rates were down in the mid-single digits as expected, but volumes were stronger as we continued to experience high demand across a wide range of specialties spanning the healthcare continuum. A spike in professionals on assignment and volume growth primarily drove the year-over-year revenue improvement.

Physician Staffing

Revenue was $22.1 million, an increase of 41% year-over-year and a decrease of 4% sequentially. Contribution income was $1.2 million, an increase compared to $0.6 million in the prior year and a decrease compared to $1.8 million in the prior quarter. Total days filled were 12,416 as compared with 9,775 in the prior year and 13,068 in the prior quarter. Revenue per day filled was $1,781 as compared with $1,600 in the prior year and $1,772 in the prior quarter. The year-over-year increase in revenue was primarily due to an increase in volume in primary care physicians and certified registered nurse anesthetists. The year-over-year increase in contribution income was driven by higher revenue, partially offset by higher direct costs.

Cash Flow and Balance Sheet Highlights

Cash flow provided by operations for the quarter was $18.1 million, primarily due to the strong net income growth, partly offset by an increase in accounts receivable. Days' sales outstanding, net of amounts owed to subcontractors, was 66 days as of June 30, 2022, up 10 days year-over-year and up 4 days sequentially, primarily due to the timing of revenue recognized throughout the quarter. For the six months ended June 30, 2022, cash flow used in operations was $10.9 million compared to $9.4 million in the prior year.

Given positive cash from operations, the Company made a $50.0 million optional prepayment on its Subordinated Term Loan to reduce interest costs. At June 30, 2022, the Company had $0.3 million in cash and cash equivalents and $123.9 million principal balance on its term loan, with $85.0 million of borrowings drawn under its ABL facility, and $17.5 million of letters of credit outstanding. As of June 30, 2022, borrowing base availability under the ABL was $300.0 million, with $197.5 million of excess availability.

Outlook for Third Quarter 2022

The guidance below applies to management’s expectations for the third quarter of 2022.

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 significant share repurchases.

See accompanying non-GAAP financial measures and tables below.

INVITATION TO CONFERENCE CALL

The Company will hold its quarterly conference call on Wednesday, August 3, 2022, at 5:00 P.M. Eastern Time to discuss its second quarter 2022 financial results. This call will be webcast live and can be accessed at the Company’s website at ir.crosscountryhealthcare.com or by dialing 888-566-1290 from anywhere in the U.S. or by dialing 773-799-3776 from non-U.S. locations - Passcode: Cross Country. A replay of the webcast will be available from August 3rd through August 17th on the Company’s website and a replay of the conference call will be available by telephone by calling 800-814-6746 from anywhere in the U.S. or 203-369-3827 from non-U.S. locations - Passcode: 8322.

ABOUT CROSS COUNTRY HEALTHCARE

Cross Country Healthcare, Inc. is a leading tech-enabled workforce solutions and advisory firm with 36 years of industry experience and insight. We solve complex labor-related challenges for customers while providing high-quality outcomes and exceptional patient care. As a multi-year Best of Staffing^® award winner, we are committed to an exceptionally high level of service to our clients and our homecare, education, and clinical and non-clinical healthcare professionals. Our locum tenens line of business, Cross Country Locums, has been certified by the National Committee for Quality Assurance (NCQA), the leader in healthcare accreditation, since 2001. We are the first publicly traded staffing firm to obtain The Joint Commission Certification, which we still hold with a Letter of Distinction. Cross Country Healthcare is rated as the top staffing and recruiting employer for women by InHerSights, and Certified^TM by Great Place to Work^®. For two consecutive years, we have received the Top Workplaces USA award and were recently recognized as a recipient of the Top Workplaces Award for Innovation and Leadership by Energage. We have a history of investing in diversity, equality, and inclusion as a key component of the organization’s overall corporate social responsibility program, closely aligned with its core values to create a better future for its people, communities, and its stockholders.

Copies of this and other news releases and additional information about the Company can be obtained online at ir.crosscountryhealthcare.com. Stockholders and prospective investors can also register to automatically receive the Company’s press releases, filings with the Securities and Exchange Commission (SEC), and other notices by e-mail.

NON-GAAP FINANCIAL MEASURES

This press release and the 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, 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", "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 potential liabilities, losses, or other exposures in connection with the WSG acquisition, 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, including, without limitation, the risk factors set forth in Item 1A. "Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, 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, and/or (iv) our strategy, which is based in part on this analysis, will be successful. Except as may be required by law, 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.