Cross Country Healthcare, Inc. Q2 FY2024 earnings call

• Travel demand has been rising, up over 20% since the start of the second quarter, with orders fueled by market bounce-back and MSP wins. Weekly production improving.
• Second quarter revenue and adjusted EBITDA near high end of guidance ranges. Travel revenue on track, average bill rates modestly declined.
• Physician staffing had record revenue. Homecare up double digits year-over-year. Education performed well but down sequentially due to summer break.
• Cost actions: Reduced U.S. headcount by over 20% in 2024, expanded operations in India.
• Technology investment: Intellify platform with over 40 clients, 500 facilities, 5,500 active users. Two new awards with $70M annual spend, first SaaS-based subscription.
• Strong balance sheet, continuing share repurchases and exploring M&A.

Nurse and Allied reported revenue of $292 million, down 12% sequentially and 41% from the prior year. Physician Staffing reported a record $48 million in revenue, which was up 7% over the prior year and 3% sequentially. Homecare Staffing was up 6% sequentially and 12% over the prior year. Education was up 4% from the prior year but down 10% sequentially.

• Third quarter revenue guided between $305 million and $315 million, adjusted EBITDA $10 million to $13 million.
• Anticipate sequential revenue growth in fourth quarter as travel market inflects.
• Outlook for other lines of business like Locums, Homecare, and Education remains strong.

• Competitive landscape with smaller competitors potentially struggling.
• Healthcare cost pressures, including insurance and lodging subsidies impacting margins.
• Impact of a single MSP client bankruptcy affecting bad debt expense, though operations not significantly impacted.

Q: Get more color on volume outlook and visibility into demand.

A: John Martins and Bill Burns discussed improving demand, broad spectrum of specialties, macro data showing job openings to hire ratio, and positive net contract value.

Q: Comments on segment operating margin for nurse and allied.

A: Bill Burns talked about bill pay spreads, mix of business, and healthcare cost normalization. John Martins mentioned nearing end of bill rate declines on renewals.

Q: Thoughts on bill rates and premium for temp vs permanent placements.

A: John Martins said it's a challenging market with margins, and SG&A cost reduction is key.

Q: Clarification on FTEs and segment variances.

A: Bill Burns and John Martins discussed mixed elements of business, positive net contract value, and no big surprises in segment numbers.

Q: Competitive landscape and change in outlook.

A: John Martins said smaller competitors will struggle, market still in process of shakeout.

Q: Bill rate improvement and renewal rates.

A: Bill Burns and Marc Krug discussed bill rates moving in the right direction, renewal rates in the two-thirds range, and nearing end of bill rate declines from renewals.

Q: Cash flow and capital deployment.

A: John Martins discussed DSO improvement, near normalized DSO, and balanced capital allocation including share repurchases, technology investment, and disciplined M&A.

Q: Gross margin improvement and structural constraints.

A: Bill Burns talked about bill pay spreads, mix of business, and healthcare cost renewals impacting gross margin outlook