Cross Country Healthcare, Inc. Q4 FY2023 earnings call

• Overall, pleased with Q4 and full-year 2023 results, especially response to market challenges. - 2023 highlights: Generated $144 million adjusted EBITDA (second best year), $249 million cash flow from operations (record year), debt-free balance sheet, over $20 million in technology investments, repurchased 2.3 million shares. - Rollout of Intellify VMS, rebranding of Xperience app, launch of data aggregation services. - Q4 details: Consolidated revenue $414M above guidance range, adjusted EBITDA $21M within range but affected by doubtful accounts charge. Travel revenue down 12% sequentially. Physician Staffing up 26%, Education up 9%, Homecare flat. - 2024 focus: Expand client base, grow relationships with existing clients, leverage offshore operations and technologies like AI agents and RPA to lower costs and enhance productivity.

Consolidated revenue for the fourth quarter was $414 million, above the high end of guidance. Nurse and Allied segment reported revenue of $367 million, down 7% sequentially and 38% from the prior year. Travel revenue in Q4 was down 12% sequentially. Physician Staffing had 26% year-over-year revenue growth, approaching an annual run rate of $200 million. Education business was up 9% from the prior year. Homecare was flat sequentially and year-over-year but had 5 Homecare MSP wins and 9 programs in implementation. Nurse and Allied's revenue contribution: Nurse and Allied was the largest segment at $367 million, contributing a significant portion to total revenue. Physician Staffing contributed 26% year-over-year growth in Q4, Education contributed 9% year-over-year, and Homecare was flat.

• Q1 2024 guidance: Revenue between $370 million and $380 million, adjusted EBITDA between $13 million and $18 million. - Full-year 2024: Anticipate sequential growth in the back half, focus on expanding client base, leveraging technologies, and pursuing accretive acquisitions.

• Market conditions: Travel demand pullback, gap in expectations between client bill rates and clinician pay rates impacting fill rate and margins. - Labor disruption: Impact on revenue in certain quarters. - Competition: Margin compression due to competitive landscape and need to remain competitive while preserving profitability.

Q: Kevin Fischbeck asked about Q2 sequential growth and industry trends.

A: Bill Burns and John Martins discussed the cyclical nature of the industry, recent wins on MSP and VMS side, and expectations of market demand picking up in the back half Q: Brian Tanquilut inquired about balancing market share maintenance/gains with margins and Locums growth potential A: John Martins and Bill Burns talked about margin pressures due to market softness, efforts to mitigate with Intellify migration and higher margin businesses, and Locums growth requiring acquisitions Q: Trevor Romeo asked about client sentiment on contract labor and Q1 guidance conservatism A: John Martins and Bill Burns discussed client contentment with current labor spend, and Q1 guidance being driven by travel side trends Q: Tobey Sommer explored customer retention, market share, and G&A sizing A: John Martins and Bill Burns provided insights on market share gains via spend under management, and G&A considerations including headcount reductions and technology investments Q: Constantine Davides asked about labor disruption and tech spend migration to Intellify A: Bill Burns and John Martins discussed labor disruption impact, tech spend details, and Intellify migration progress Q: Kevin Steinke asked about margin expansion and 2024 plans A: Bill Burns and John Martins talked about margin expansion goals, driven by higher margin businesses, Intellify conversions, and cost savings efforts Q: Bill Sutherland inquired about contract cycles and India headcount A: John Martins discussed contract cycle trends, and Bill Burns provided insights on India headcount and investment