Cross Country Healthcare, Inc. Q3 FY2023 earnings call

• Continued ability to execute in a challenging market. - Travel revenue down 22% QoQ due to lower rates and fewer travelers. - Physician staffing had strong performance, on pace to hit $200M annual run rate. - Intellify proprietary vendor management system has converted over half of MSPs, won new programs, and is being expanded with new features. - Launched Cross Country DAS for bill rate transparency. - Guided Q4 revenue $400M-$410M, adjusted EBITDA $19M-$24M. - Solid cash generation, paid down debt, and repurchased shares.

Consolidated revenue for the third quarter was $442 million. Nursing allied reported revenue of $397 million, down 20% sequentially and 35% from the prior year. Travel Nursing Allied was down 22% sequentially and 39% from the prior year, with bill rates down 8% sequentially and billable hours down 15%. Local or per diem business revenue was down approximately 14% from the prior quarter and 32% from the prior year. Physician staffing reported $46 million in revenue, up 92% over the prior year, excluding the impact from acquisitions. Education and Homecare staffing businesses reported year-over-year growth. Revenue contribution: Nursing allied was the largest segment at $397 million, physician staffing at $46 million, etc.

• Q4 revenue expected between $400 million and $410 million, adjusted EBITDA $19 million to $24 million. - Full-year adjusted EBITDA between $143 million and $148 million, margin above 7%. - 2024 outlook for high single-digit adjusted EBITDA margins due to expected tailwinds from recent wins, growth in higher margin businesses, and technology investments.

• Market competition leading to pay rate compression. - Housing costs impacting margins. - Soft demand affecting traveler numbers. - Industrywide work press and competitive landscape impacting profitability.

Q: Brian Tanquilut asked about seasonality of demand and future demand.

A: John Martins said demand has stabilized, up 30% from April low, and about 7% from August, with winter orders not materializing as expected.

Q: Kevin Fischbeck inquired about SG&A and margin.

A: Bill Burns said SG&A is a key area to squeeze, with efforts to become more efficient, and Intellify wins and business mix contributing to margin improvement.

Q: Trevor Romeo asked about nurse supply and willingness to travel.

A: John Martins said hospitals still have hiring challenges, nurse turnover stable, and renewal rates for travelers are high.

Q: Tobey Sommer asked about EBITDA margin and revenue/gross margin assumptions.

A: Bill Burns said it's a multifaceted approach involving organic growth, gross margin improvement, and SG&A tightening.

Q: Kevin Steinke asked about Intellify wins.

A: John Martins said Intellify wins are competitive takeaways and the offering resonates well in the marketplace.

Q: Bill Sutherland asked about Cross Country DAS monetization and Intellify win dollars.

A: John Martins explained DAS monetization through direct sales and embedding in Intellify, and details on Intellify win dollars to be shared in future calls.