10-K: Cross Country Healthcare Faces Revenue Decline Amidst Aya Merger Review

• Cross Country Healthcare, Inc. reported a 33.5% year-over-year decrease in consolidated revenue, totaling $1.3 billion for the year ended December 31, 2024.
• The decline is attributed to reduced billable days and average bill rates in the travel nurse and allied staffing segment.
• This decrease was partially offset by growth in Homecare Staffing, which increased by 12.4%, and the Physician Staffing segment, which rose by 11.4% year-over-year.
• The company experienced a net loss attributable to common stockholders of $14.6 million for 2024, compared to a net income of $72.6 million in the previous year.
• Cash and cash equivalents increased to $81.6 million, up from $17.1 million in the prior year.
• The company repurchased shares under its authorized repurchase plan until November 7, 2024.
• Cash flow provided by operating activities was $120.1 million for the year ended December 31, 2024.
• As of December 31, 2024, there were no borrowings under the Asset-Based Loan Agreement (ABL), with borrowing base availability at $146.9 million.
• The company expects the Aya Merger to close in the second half of 2025, pending regulatory approvals and satisfaction of customary closing conditions.
• The Aya Merger was approved by the Company's stockholders at a special meeting held on February 28, 2025.
• Upon completion of the Aya Merger, it is expected that Cross Country will become a private company and its common stock will no longer trade on Nasdaq.

Score: 4

Explanation: The document presents a mixed picture. While there are some positive aspects like increased cash and growth in specific segments, the overall tone is negative due to the significant revenue decline and net loss. The pending merger adds uncertainty.

• Cash and cash equivalents increased to $81.6 million by the end of 2024.
• Homecare Staffing revenue increased by 12.4% year-over-year.
• Physician Staffing segment revenue increased by 11.4% year-over-year.
• Borrowing base availability under the ABL was $146.9 million as of December 31, 2024.
• The Aya Merger was approved by the Company's stockholders at a special meeting held on February 28, 2025.
• The company's days' sales outstanding, net of amounts owed to subcontractors, was 55 days, down 11 days year-over-year.

• Consolidated revenue decreased by 33.5% to $1.3 billion in 2024.
• Net loss attributable to common stockholders was $14.6 million in 2024, a significant drop from the $72.6 million net income in 2023.
• The Nurse and Allied Staffing segment saw a 37.8% revenue decrease.
• Credit loss expense for the year ended December 31, 2024 was $21.4 million, as compared to $14.6 million for the year ended December 31, 2023.
• The company expects the Aya Merger to close in the second half of 2025, a delay from the previously expected first half of 2025.

• The company's operations and financial results may be affected by pandemics, epidemics, or other public health crises.
• Global economic conditions and the effect of economic pressures could lead to decreases in demand or pricing for the company's services.
• The company may face challenges competing in the marketplace if it is unable to anticipate and quickly respond to changing marketplace conditions.
• The company's customers may terminate or not renew their contracts with the company.
• The company may be unable to recruit and retain enough quality professionals to meet its customers' demands.
• The company is dependent on the proper functioning of its information systems and applications hosted by its vendors.
• The company's financial results could be adversely impacted by the loss of key management or corporate employee turnover.
• The healthcare industry is highly regulated, and any material changes in the political, economic, or regulatory environment could reduce the funds available to purchase the company's services.
• If certain of the company's healthcare professionals are reclassified from independent contractors to employees, the company's profitability could be materially adversely impacted.
• The company could fail to generate sufficient cash to fund its liquidity needs and/or fail to satisfy the financial and other covenants to which it is subject under its existing indebtedness.
• The company may face difficulties integrating its acquisitions into its operations, and its acquisitions may be unsuccessful, involve significant cash expenditures, or expose it to unforeseen liabilities.
• Losses caused by natural disasters, such as hurricanes and fires, the physical effects of climate change, or other unexpected events, could cause the company to suffer material financial losses.
• If provisions in the company's corporate documents and Delaware law delay or prevent a change in control, the company may be unable to consummate a transaction that its stockholders consider favorable.
• There are risks inherent in any transaction that the company enters into, including without limitation the Aya Merger, and there is no assurance that such transaction will be successfully or timely completed or that the company will realize the expected benefits of such transaction.

The company expects the Aya Merger to close in the second half of 2025, subject to regulatory approvals and customary closing conditions. Upon completion of the transaction, it is expected that the company will become a private company and its common stock will no longer trade on Nasdaq.

The healthcare staffing industry is evolving, with healthcare providers and professionals demanding speed and technology. The market is highly competitive, especially within travel nurse and allied, and is growing closer to an inflection point. Post-pandemic, there is a need to continue to innovate, improve processes, and expand services to meet the needs of employees, customers and their patients.

• The Staffing Industry Analysts September 2024 report estimates the 2024 healthcare staffing markets had an aggregate market size of $45 billion, of which $19.6 billion was travel nursing, $5.4 billion was per diem nursing, $11.1 billion was allied health, and $8.9 billion was locum tenens and advanced practitioners.
• According to the Staffing Industry Analysts US Staffing Industry Pulse Survey Report (November 2024), travel nurse staffing was down 21% year-over-year.
• Median revenue growth was greatest in locum tenens, up 3%.
• Staffing Industry Analysts US Staffing Industry Forecast: September 2024 Update (September 11, 2024) forecasts moderate continued expansion in the locum tenens segment, in part as bill rates keep edging up, with a moderate decline in the allied healthcare segment and the per diem nurse segment in 2024, followed by a modest expansion in both segments in 2025.
• The travel nurse segment is forecasted to normalize back down to pre-pandemic levels in terms of both volume and bill rates.
• According to the most recent Bureau of Labor Statistics 10-year projections (August 29, 2024), overall, employment is expected to grow 0.4% annually, with the healthcare and social assistance sector having the largest growth in excess of 1.0% annually.
• Within healthcare, healthcare support occupations and healthcare practitioners and technical occupations are projected to be among the fastest growing of all occupational groups, growing 15.2% and 8.6%, respectively, from 2023 to 2033.
• Employment growth in the healthcare and social assistance sector is expected to be driven by the aging population and a higher prevalence of chronic conditions.
• According to the Bureau of Labor Statistics Occupational Outlook Handbook (August 29, 2024), employment of registered nurses is projected to grow 6%, or 197,200, from 2023 to 2033, faster than the average for all occupations.
• The registered nurse workforce is expected to grow from 3.3 million in 2023 to 3.5 million in 2033.
• The Bureau of Labor Statistics also projects the need for an additional 194,500 new registered nurses each year, on average, through 2033, factoring in nurse retirements and workforce exits.
• According to the Bureau of Labor Statistics Occupational Outlook Handbook (August 29, 2024), employment of physicians and surgeons is projected to grow 4% from 2023 to 2033, about as fast as the average for all occupations.
• About 23,600 openings for physicians and surgeons are projected each year, on average, over the decade.
• According to the Association of American Medical Colleges (AAMC) Addressing the Physician Workforce Shortage (March 2024), the United States faces a projected physician shortage of up to 86,000 by 2036.

• Shareholders will be impacted by the revenue decline and net loss, as well as the pending merger.
• Employees may be impacted by the company's cost containment measures and restructuring activities.
• Customers may be impacted by the company's ability to provide services due to the revenue decline and potential changes related to the merger.

• The company expects the Aya Merger to close in the second half of 2025, subject to regulatory approvals and customary closing conditions.
• The company will continue to monitor and manage its business for long-term success and strategically position itself for future growth opportunities in the market.

• June 8, 2021: Cross Country Healthcare entered into the Term Loan Credit Agreement.
• November 18, 2021: Cross Country Healthcare amended the Term Loan Agreement (Term Loan First Amendment).
• April 14, 2023: Cross Country Healthcare amended the Term Loan Agreement (Term Loan Second Amendment).
• June 30, 2023: Cross Country Healthcare repaid all outstanding obligations under the term loan and terminated the Term Loan Agreement.
• September 29, 2023: Cross Country Healthcare amended the Loan Agreement (Sixth Amendment).
• December 3, 2024: Cross Country Healthcare entered into the Merger Agreement with Aya Healthcare.
• February 20, 2025: Cross Country Healthcare and Aya Healthcare each received a request for additional information from the U.S. Federal Trade Commission (FTC).
• February 28, 2025: The Aya Merger was approved by Cross Country Healthcare's stockholders at a special meeting.