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01/11 03:08
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several negative trends, including declining revenue in the Nurse and Allied business, increasing DSO, and gross margin underperformance. Despite some optimism about the Locum business and technology investments, the lack of clear guidance and significant challenges in key segments overshadow positive aspects. Q&A further emphasizes demand softness and management's vague responses, leading to a negative sentiment. With no market cap data, the reaction could vary, but the overall sentiment leans negative due to the revenue decline and uncertainties.
Revenue $379 million, down 39% year-over-year, primarily driven by declines in travel and local assignments in large acute care settings.
Gross Profit $77 million, with a gross margin of 20.4%, down 200 basis points year-over-year due to tightening bill pay spreads for travel and local assignments.
SG&A Expense $63 million, down 25% year-over-year, primarily due to lower salary and benefit costs from headcount reductions.
Adjusted EBITDA $15 million, representing an adjusted EBITDA margin of 4%, impacted by lower-than-expected gross margin.
Interest Expense $500,000, down 87% year-over-year, driven by lower average borrowings.
Income Tax Expense $1 million, with an effective tax rate of 27%, slightly lower than expectations due to discrete items.
Nurse and Allied Revenue $332 million, down 43% year-over-year, with Travel Nurse and Allied down 48% year-over-year.
Physician Staffing Revenue $47 million, up 16% year-over-year, driven by higher billable days and revenue per day.
Home Care Staffing Revenue Up mid-single digits year-over-year, reflecting recent wins and program implementations.
Cash from Operations $6 million, impacted by timing of payments for annual incentives and payroll taxes.
Days Sales Outstanding (DSO) 74 days, increased due to a single client, with expectations to return to a goal of 60 days.
Cash Used in Investing Activities $2 million, primarily for technology investments.
Share Repurchases 300,000 shares repurchased during the quarter.
Intellify Technology Platform: Intellify has become a critical component of our value proposition, utilized as both a VMS and MSP, with strong interest in the market.
Home Care Staffing: Home care business was up mid-single digits, staffing over 1,700 FTEs, poised for robust growth in 2024.
Education Business: Education business continued to perform well, up low double digits sequentially, expanding nationwide in more than 20 states.
Market Demand for Travel Assignments: Demand for travel assignments softened further since the end of last year, with expectations of a stronger travel environment emerging in the back half of the year.
Local Services Expansion: Focused on expanding local services deeper into non-acute care settings, remaining a key part of the value proposition.
Headcount Reduction: U.S. headcount down more than 20% since the beginning of the year, with a total reduction of 40% over the last 18 months.
Cost Savings from India Operations: Further leveraging operations in India, yielding millions in annualized cost savings.
ERP System Implementation: Successfully completed the first phase of the ERP system, expected to realize significant efficiencies once the second phase is completed in mid-2025.
M&A Strategy: Looking to close on several accretive acquisitions to diversify the platform and enhance the value proposition.
Technology Investments: Ongoing strategic technology investments, share repurchases, and potential M&A to enhance competitive positioning.
Market Demand Risks: Demand for travel assignments has softened significantly, with a high double-digit decline since the end of 2023, impacting revenue from Nurse and Allied services.
Competitive Pressures: The company faces competitive pressures as health systems reduce reliance on travel staffing, leading to structural staffing shortages and high turnover.
Cost Structure Adjustments: The company has reduced its U.S. headcount by over 20% since the beginning of the year to align with market demand, which may impact operational capacity.
Regulatory and Economic Factors: The company is navigating regulatory challenges and economic factors that affect gross margins, including rising payroll taxes and insurance costs.
Supply Chain Challenges: The local business has experienced a double-digit sequential decline in volume, indicating challenges in maintaining supply chain efficiency.
Technological Investments: While investing in technology, the company faces risks associated with the implementation of new systems, such as the ERP system, which may incur additional costs.
Future Revenue Projections: The company anticipates further declines in revenue for the second quarter, particularly in travel staffing, which could impact overall financial performance.
Technology Investments: Cross Country Healthcare plans to make targeted investments in technology to enhance competitive positioning and operational excellence, including leveraging artificial intelligence and robotic process automation.
M&A Strategy: The company aims to close several accretive acquisitions to diversify its platform, enhance its value proposition, and improve its margin profile.
Intellify Technology: Intellify, the vendor-neutral technology platform, is expected to drive additional business opportunities and has seen strong interest in the market.
Cost Structure Alignment: Actions have been taken to align the cost structure with the demand environment, including a reduction in U.S. headcount by over 20% since the beginning of the year.
Q2 2024 Revenue Guidance: Revenue is anticipated to be between $330 million and $340 million for Q2 2024.
Q2 2024 Adjusted EBITDA Guidance: Adjusted EBITDA is expected to be in the range of $10 million to $15 million for Q2 2024.
Adjusted EBITDA Margin: The goal remains to achieve a high single-digit adjusted EBITDA margin, with expectations of mid-single-digit margins in the near term.
Adjusted EPS Guidance: Adjusted earnings per share is expected to be between $0.10 and $0.20 based on an average share count of approximately 34 million shares.
Share Repurchase Program: Cross Country Healthcare has a $100 million share repurchase plan, and during the first quarter, they repurchased an additional 300,000 shares under both their 10b5-1 trading plan and their 10b-18.
The earnings call reveals several challenges: revenue and gross profit declines, competitive pressures, and margin compression. Despite share repurchases, the financial performance is weak with declining revenue and pressured margins. The Q&A highlights concerns about margin pressures and unclear future guidance, indicating potential uncertainties. The market strategy and financial health ratings are negatively impacted by these factors, leading to an overall negative sentiment.
The earnings call presents a mixed picture: strong cash flow, share repurchases, and positive guidance on demand increase are offset by significant revenue decline, competitive pressures, and a substantial bad debt expense. The Q&A reveals optimism about demand but acknowledges competitive challenges and cost pressures. The neutral rating reflects these balanced positives and negatives, with no strong catalyst for significant stock price movement.
The earnings call highlights several negative trends, including declining revenue in the Nurse and Allied business, increasing DSO, and gross margin underperformance. Despite some optimism about the Locum business and technology investments, the lack of clear guidance and significant challenges in key segments overshadow positive aspects. Q&A further emphasizes demand softness and management's vague responses, leading to a negative sentiment. With no market cap data, the reaction could vary, but the overall sentiment leans negative due to the revenue decline and uncertainties.
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