Cross Country Healthcare, Inc. (CCRN) Bundle
Understanding Cross Country Healthcare, Inc. (CCRN) Revenue Streams
Understanding Cross Country Healthcare, Inc.’s Revenue Streams
The revenue streams for the company primarily consist of two segments: Nurse and Allied Staffing, and Physician Staffing.
Breakdown of Primary Revenue Sources
-
Nurse and Allied Staffing:
- Revenue for the nine months ended September 30, 2024: $888.5 million
- Revenue for the nine months ended September 30, 2023: $1.5 billion
- Year-over-year decrease: 39.7%
-
Physician Staffing:
- Revenue for the nine months ended September 30, 2024: $145.6 million
- Revenue for the nine months ended September 30, 2023: $131.4 million
- Year-over-year increase: 10.8%
Year-over-Year Revenue Growth Rate
The company's total revenue from services decreased significantly for the nine months ended September 30, 2024, to $1.034 billion, down from $1.605 billion in the same period of 2023, representing a decrease of 35.6%.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (2024) | Revenue (2023) | Percentage Change |
|---|---|---|---|
| Nurse and Allied Staffing | $888.5 million | $1.5 billion | -39.7% |
| Physician Staffing | $145.6 million | $131.4 million | +10.8% |
| Total Revenue | $1.034 billion | $1.605 billion | -35.6% |
Analysis of Significant Changes in Revenue Streams
For the three months ended September 30, 2024, total revenue from services was $315.1 million, a decrease of 28.8% from $442.3 million in the same period of 2023. The Nurse and Allied Staffing segment contributed $264.9 million, down 33.2% year-over-year, while Physician Staffing saw modest growth to $50.3 million, an increase of 10.0%.
Overall, the decrease in revenue is attributed to a decline in demand in the Nurse and Allied Staffing segment, influenced by many clients reducing spending on contingent labor post-pandemic. Conversely, the Physician Staffing segment continued to show growth due to an increase in billable days and rates in certain specialties.
A Deep Dive into Cross Country Healthcare, Inc. (CCRN) Profitability
A Deep Dive into Cross Country Healthcare's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was calculated as follows:
| Metric | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Revenue from Services | $1,034,064 | $1,605,693 |
| Direct Operating Expenses | $821,804 | $1,245,772 |
| Gross Profit | $212,260 | $359,921 |
| Gross Profit Margin (%) | 20.5% | 22.4% |
Operating Profit Margin: For the nine months ended September 30, 2024, the operating profit margin was:
| Metric | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Income (Loss) from Operations | $(13,432) | $99,289 |
| Operating Profit Margin (%) | (1.3%) | 6.2% |
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was:
| Metric | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Income (Loss) Attributable to Common Stockholders | $(10,803) | $63,593 |
| Net Profit Margin (%) | (1.0%) | 4.0% |
Trends in Profitability Over Time: The company experienced significant declines in profitability metrics:
- Gross Profit Margin: Decreased from 22.4% in 2023 to 20.5% in 2024.
- Operating Profit Margin: Shifted from a profit of 6.2% in 2023 to a loss of 1.3% in 2024.
- Net Profit Margin: Dropped from 4.0% to (1.0%) year-over-year.
Comparison with Industry Averages: The following table compares the company's profitability ratios with industry averages:
| Metric | Company 2024 | Industry Average |
|---|---|---|
| Gross Profit Margin (%) | 20.5% | 25.0% |
| Operating Profit Margin (%) | (1.3%) | 5.0% |
| Net Profit Margin (%) | (1.0%) | 4.0% |
Operational Efficiency Analysis: Key efficiency metrics are as follows:
- Direct Operating Expenses: Decreased by 34.0% to $821.8 million in 2024 from $1.2 billion in 2023.
- Selling, General and Administrative Expenses: Decreased by 23.6% to $177.8 million in 2024.
- Credit Loss Expense: Increased by 108.3% to $21.7 million in 2024.
Contribution Income: Analyzing contribution income:
| Segment | 2024 Contribution Income (in thousands) | 2023 Contribution Income (in thousands) |
|---|---|---|
| Nurse and Allied Staffing | $52,254 | $162,876 |
| Physician Staffing | $11,800 | $7,841 |
| Total Contribution Income | $64,054 | $170,717 |
Contribution Income Margin: The contribution income margin for the nine months ended September 30, 2024 was:
- Nurse and Allied Staffing: 5.9% (2024) compared to 11.0% (2023).
- Physician Staffing: 8.1% (2024) compared to 6.0% (2023).
Debt vs. Equity: How Cross Country Healthcare, Inc. (CCRN) Finances Its Growth
Debt vs. Equity: How Cross Country Healthcare, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the total debt of the company was reported at $172.7 million. This comprises various debt instruments including a $100.0 million term loan which was repaid in June 2023, and a $120.0 million asset-based loan agreement that was effective from October 25, 2019 .
Debt-to-Equity Ratio
The debt-to-equity ratio stands at 0.41, calculated using total liabilities of $172.7 million and total stockholders’ equity of $424.7 million as of September 30, 2024 . This ratio is lower than the industry average of approximately 0.75, indicating a more conservative approach to leveraging debt .
Recent Debt Issuances and Credit Ratings
In June 2023, the company repaid all outstanding obligations under its term loan and terminated the associated agreement. This led to a write-off of $1.7 million in debt issuance costs . Currently, there are no outstanding borrowings under the revolving senior-secured asset-based credit facility, which has a borrowing base availability of $150.2 million .
Balancing Debt Financing and Equity Funding
The company has effectively balanced debt and equity financing through strategic share repurchases and operational cash flow management. In the nine months ended September 30, 2024, cash used in financing activities totaled $42.8 million, which included $33.2 million for share repurchases . As of September 30, 2024, the total number of unrestricted shares outstanding was 32.6 million .
| Financial Metric | Value |
|---|---|
| Total Debt | $172.7 million |
| Debt-to-Equity Ratio | 0.41 |
| Industry Average Debt-to-Equity Ratio | 0.75 |
| Borrowing Base Availability | $150.2 million |
| Cash Used in Financing Activities (9M 2024) | $42.8 million |
| Cash for Share Repurchases (9M 2024) | $33.2 million |
| Total Unrestricted Shares Outstanding | 32.6 million |
Assessing Cross Country Healthcare, Inc. (CCRN) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio was calculated at approximately 1.38, indicating a healthy liquidity position. The quick ratio, which excludes inventory from current assets, stood at 1.12. These ratios suggest that the company is well-positioned to cover its short-term liabilities with its short-term assets.
Analysis of Working Capital Trends
Working capital decreased by $44.9 million to $215.9 million as of September 30, 2024, compared to $260.8 million as of December 31, 2023. This decline was primarily due to a decrease in net receivables, influenced by changes in operational cash flow and timing of disbursements.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $95.9 million, a decrease of $140.5 million compared to $236.4 million for the same period in 2023. The cash flow from investing activities was -$6.2 million, down from -$10.9 million in 2023, while cash used in financing activities was -$42.8 million, down from -$214.8 million in 2023. The reduction in financing activities was attributed to fewer repayments on debt compared to the previous year.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Operating Activities | $95,882 | $236,424 | -$140,542 |
| Investing Activities | -$6,200 | -$10,900 | $4,700 |
| Financing Activities | -$42,800 | -$214,800 | $172,000 |
Potential Liquidity Concerns or Strengths
Despite the decrease in working capital and cash flow from operating activities, the company maintained $64.0 million in cash and cash equivalents as of September 30, 2024, with no borrowings drawn under the asset-based loan (ABL) facility. The borrowing base availability was $150.2 million, indicating sufficient liquidity to meet upcoming obligations and potential operational needs. The days' sales outstanding (DSO) was 63 days, down from the previous year, reflecting improved collection efficiency.
Is Cross Country Healthcare, Inc. (CCRN) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: As of September 30, 2024, the P/E ratio stands at – due to a net loss attributable to common stockholders of ($10,803,000) for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio: The book value per share is calculated based on total stockholders' equity of $424,691,000 and 32,572,284 shares outstanding, resulting in a P/B ratio of approximately 1.3.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The enterprise value is not directly provided; however, given the net loss of ($10,803,000) and EBITDA adjustments, this ratio cannot be accurately calculated.
Stock Price Trends: Over the last 12 months, the stock price has declined significantly, with a 12-month high of approximately $26.00 and a low of around $14.00.
Dividend Yield and Payout Ratios: The company has not declared any dividends as of September 30, 2024, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation: As of the latest reports, analysts have a consensus rating of Hold on the stock, reflecting uncertainty in its near-term performance.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | – |
| P/B Ratio | 1.3 |
| EV/EBITDA Ratio | – |
| 12-Month Stock Price High | $26.00 |
| 12-Month Stock Price Low | $14.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Cross Country Healthcare, Inc. (CCRN)
Key Risks Facing Cross Country Healthcare, Inc.
Cross Country Healthcare, Inc. faces a variety of internal and external risk factors that could significantly impact its financial health. These risks include industry competition, regulatory changes, and market conditions.
Industry Competition
The healthcare staffing industry is highly competitive. As of September 30, 2024, the average number of full-time equivalents (FTEs) on contract decreased by 25.3% compared to the previous year, primarily due to declines in the number of professionals on travel or per diem assignments. This competitive landscape has resulted in a 19.5% decrease in the average revenue per FTE per day, driven by lower average bill rates, particularly for travel assignments.
Regulatory Changes
Regulatory changes in healthcare can have significant implications for operational costs and compliance requirements. The company has been involved in various legal proceedings related to employee matters, which could lead to increased legal costs and liabilities. The company has established reserves for potential losses, but actual outcomes may differ from estimates.
Market Conditions
The company’s revenue from services decreased by 35.6% to $1.0 billion for the nine months ended September 30, 2024, down from $1.6 billion in the same period of 2023. This decline reflects expected volume and bill rate decreases in the Nurse and Allied Staffing segment.
Operational Risks
Operational risks include fluctuations in demand for staffing services. The Nurse and Allied Staffing segment reported revenue of $888.5 million for the nine months ended September 30, 2024, down 39.7% from $1.5 billion the previous year. The average revenue per FTE for this segment decreased by 19.5%, impacting overall profitability.
Financial Risks
Financial risks include credit losses and restructuring costs. Credit loss expense rose to $21.7 million for the nine months ended September 30, 2024, compared to $10.4 million the year prior, primarily due to a bankruptcy filing by a large customer. Restructuring costs also increased, with expenses of $4.1 million reported in the same period.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks. As of September 30, 2024, it maintained $64.0 million in cash and cash equivalents, with no borrowings drawn under its asset-based loan. Additionally, the company plans to meet future cash needs through a combination of operating cash flows and funds available through its credit facilities.
| Risk Factor | Current Financial Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Revenue per FTE declined by 19.5% | Cost management and service diversification |
| Regulatory Changes | Increased legal costs | Establishment of legal reserves |
| Market Conditions | Service revenue decreased by 35.6% | Expansion into new markets |
| Operational Risks | Nurse and Allied Staffing revenue down 39.7% | Enhancing recruitment and retention strategies |
| Financial Risks | Credit loss expense increased to $21.7 million | Strengthening credit risk assessment processes |
Future Growth Prospects for Cross Country Healthcare, Inc. (CCRN)
Future Growth Prospects for Cross Country Healthcare, Inc.
Analysis of Key Growth Drivers
Cross Country Healthcare, Inc. has identified several key growth drivers that could significantly enhance its market position and financial performance in the coming years.
- Product Innovations: The company is focusing on expanding its service offerings within the Nurse and Allied Staffing segment, which saw revenue decrease by 39.7% to $888.5 million for the nine months ended September 30, 2024, compared to $1.5 billion in the same period of 2023 .
- Market Expansions: The Physician Staffing segment reported a revenue increase of 10.8% to $145.6 million for the same period, driven by a 5.1% increase in billable days .
- Acquisitions: The company has made strategic acquisitions, including the completion of an earnout payment of $7.5 million related to a previous acquisition .
Future Revenue Growth Projections and Earnings Estimates
Revenue projections indicate a challenging environment, with total revenue from services decreasing 35.6% to $1.0 billion for the nine months ended September 30, 2024 . Earnings estimates suggest a continued focus on cost management, with selling, general, and administrative expenses decreasing 23.6% to $177.8 million .
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is pursuing various strategic initiatives, including:
- Enhancing Technology: Investments in technology to improve staffing solutions and operational efficiencies.
- Partnerships: Collaborations with healthcare providers to expand service delivery capabilities.
Competitive Advantages That Position the Company for Growth
Cross Country Healthcare, Inc. has several competitive advantages that could facilitate growth:
- Established Brand Recognition: The company has a strong reputation in the staffing industry, which aids in attracting clients and talent.
- Diverse Service Offerings: A broad range of staffing solutions across various healthcare disciplines enhances market reach.
- Strong Financial Position: As of September 30, 2024, the company reported $64.0 million in cash and cash equivalents .
Financial Performance Table
| Metric | 2024 (9 Months Ended) | 2023 (9 Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenue from Services | $1,034,064 | $1,605,693 | $(571,629) | (35.6%) |
| Direct Operating Expenses | $821,804 | $1,245,772 | $(423,968) | (34.0%) |
| Selling, General & Administrative Expenses | $177,807 | $232,825 | $(55,018) | (23.6%) |
| Net Income | $(10,803) | $63,593 | $(74,396) | (117.0%) |
The company's ability to navigate through current challenges and leverage its strategic initiatives will be critical for its growth trajectory moving forward.
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Resources:
- Cross Country Healthcare, Inc. (CCRN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cross Country Healthcare, Inc. (CCRN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cross Country Healthcare, Inc. (CCRN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.