Cross Country Healthcare Posts 3Q 2009 Results

Cross Country Healthcare, Inc. has reported revenue of $129.6 million in the third quarter ended September 30, a 27 percent decrease from revenue of $178.1 million in the prior year quarter.

In a release on November 2, the Company noted that net income for the third quarter of 2009 was $1.0 million, or $0.03 per diluted share, a decline of 84 percent compared to net income of $6.2 million, or $0.20 per diluted share, in the prior year quarter. On a sequential basis, revenue decreased 13 percent from the second quarter of 2009, while net income decreased 58 percent. Cash flow from operations for the third quarter of 2009 was $19.5 million.

For the nine months ended September 30, the Company generated revenue of $454.1 million and net income of $6.3 million, or $0.20 per diluted share. This compares to revenue of $528.3 million and net income of $18.4 million, or $0.59 per diluted share, in the first nine months of the prior year. Cash flow from operations for the first nine months of 2009 was $69.9 million.

"The improvement in contract bookings activity within our nurse and allied staffing business that we first noted in our second quarter earnings release in August is continuing. Keep in mind that it takes several months for sequential volume growth to materialize after booking trends begin to improve due to the typical three-month contract length and the normal one-month delay from the time a contract is booked to the assignment start," said Joseph A. Boshart, President and Chief Executive Officer of Cross Country Healthcare, Inc. "While it took most of the third quarter to halt the negative momentum of our staffing volume resulting from the extraordinary weakness in demand during the months leading up to this summer, since mid-September our travel staffing volume has increased 6 percent. This improvement in staffing volume has resulted from a significant increase in demand since the spring, with current open order levels for travel nurses six times the levels seen prior to the summer," he said.

Boshart continued, "Our analysis of the increase in demand indicates that it is spread across numerous nursing specialties and suggests the increase is not just related to the H1N1 virus or normal seasonality, which leads us to believe it should be sustainable. While we do not expect our staffing volume to parallel the rapid increase in demand, it does change the constraint on our growth from one of demand to one of supply. So the primary challenge we now face is a more familiar one to us - recruiting enough qualified nurses to meet increasing demand for contract nursing services."

"Our other businesses, which include physician staffing and clinical trials services, are also exhibiting varying degrees of stabilization to the extent that we can say with some confidence that we believe the trough in our business activity will be the second half of 2009. Moreover, as a result of effective margin management, cost controls and a reduction of receivables, our strong cash flow has allowed us to de-lever our balance sheet by $75 million in the past twelve months. During the third quarter alone we reduced our debt outstanding by $24 million," said Boshart.

Debt Repayments

During the third quarter of 2009, the Company reduced borrowings on its debt outstanding by $23.6 million from the end of the prior quarter. At September 30, the Company had $69.5 million of total debt on its balance sheet and a debt, net of cash, to total capitalization ratio of 18.4 percent. At the end of the third quarter of 2009, the Company's debt leverage ratio (as defined in its credit agreement) was 1.7 to 1, which is well under the 2.5 to 1 maximum allowable ratio that became effective September 30, and remains in effect for the duration of the credit agreement, which expires in September 2013. Subsequent to the end of the third quarter, the Company made a $3.0 million optional pre-payment on its term debt as a result of its continued strong cash flow.

Fourth Quarter 2009 Guidance

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 fourth quarter of 2009 to be in the $120 million to $123 million range and earnings per diluted share to be in the range of $0.02 to $0.04. For the full year ended December 31, the Company expects revenue to be in the $574 million to $577 million range and earnings per diluted share to be in the range of $0.22 to $0.24.

Cross Country Healthcare, Inc. is a diversified company engaged in healthcare staffing services.

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