CCRN
Cross Country Healthcare INC
NASDAQ
10-Q: Cross Country Healthcare Reports Q1 2025 Results Amidst Pending Merger with Aya Healthcare
Sentiment:
Quarterly Report
7 May 2025 4:45 PM
Cross Country Healthcare's Q1 2025 results show a revenue decline due to decreased demand in nurse and allied staffing, partially offset by growth in homecare and physician staffing, as the company progresses towards its merger with Aya Healthcare.
Delay expected
The closing of the Aya Merger is expected in the second half of 2025, subject to regulatory approvals, indicating a potential delay due to the FTC's Second Request for additional information.
Worse than expected
Revenue decreased by 22.6% year-over-year.
Net loss attributable to common stockholders was $0.5 million, compared to a net income of $2.7 million in the same period last year.
Summary
- Cross Country Healthcare's Q1 2025 revenue decreased by 22.6% year-over-year to $293.4 million.
- The decline is attributed to lower volume and average bill rates in the Nurse and Allied Staffing segment.
- This was partially offset by a 29.5% increase in Homecare Staffing revenue and an 8.8% increase in Physician Staffing revenue.
- The company reported a net loss attributable to common stockholders of $0.5 million, compared to a net income of $2.7 million in the same period last year.
- Operating cash flow for the quarter was $5.7 million.
- As of March 31, 2025, the company had $80.7 million in cash and cash equivalents and no borrowings under its revolving credit facility.
- The merger with Aya Healthcare is expected to close in the second half of 2025, pending regulatory approvals.
- The company incurred $2.0 million in fees associated with the pending Aya Merger during the first quarter of 2025.
- The Aya Merger was approved by the Company's stockholders at a special meeting held on February 28, 2025.
Sentiment
Score: 5
Explanation: The sentiment is neutral. While revenue and net income have declined, there are positive aspects such as growth in specific segments and the pending merger. The overall outlook is uncertain due to the ongoing regulatory review of the merger.
Positives
- Homecare Staffing revenue experienced a 29.5% year-over-year increase.
- Physician Staffing revenue increased by 8.8% year-over-year.
- Nurse and Allied Staffing margins showed continued improvement exiting the first quarter and into the second quarter of 2025.
- The company has $80.7 million in cash and cash equivalents.
- The company has $133.5 million of availability net of $14.9 million of letters of credit under its ABL.
- The Aya Merger was approved by the Company's stockholders at a special meeting held on February 28, 2025.
Negatives
- Consolidated revenue decreased by 22.6% year-over-year.
- Net loss attributable to common stockholders was $0.5 million, compared to a net income of $2.7 million in the same period last year.
- The Nurse and Allied Staffing segment experienced declines in both volume and average bill rates.
- Contribution income decreased $10.0 million, or 36.6%, to $17.2 million for the three months ended March 31, 2025, as compared to $27.2 million for the three months ended March 31, 2024.
Risks
- The timing to consummate the proposed Aya Merger is uncertain.
- The risk that a condition of closing of the proposed Aya Merger may not be satisfied or that the closing of the proposed Aya Merger might otherwise not occur exists.
- The risk that a regulatory approval that may be required for the proposed Aya Merger is not obtained or is obtained subject to conditions that are not anticipated exists.
- Diversion of management time on transaction-related issues could impact operations.
- Announcements relating to the proposed Aya Merger could have adverse effects on the market price of the common stock of the Company.
- The proposed Aya Merger and its announcement could have an adverse effect on the ability of the Company to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers.
- Unexpected costs, charges or expenses resulting from the Aya Merger could arise.
- Potential litigation relating to the Aya Merger could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto.
- Macroeconomic factors, including increased inflation and interest rates, could adversely affect the company.
- Demand for healthcare services and the company's ability to attract and retain qualified personnel are ongoing risks.
- Cyber security risks and incidents could negatively impact the business.
- Government regulation and legislative initiatives could affect the business.
- The company's ability to successfully implement its acquisition and development strategies is a risk.
Future Outlook
The company expects the Aya Merger to close in the second half of 2025, subject to customary closing conditions, including regulatory approvals. 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.
Management Comments
- Exiting the first quarter and into the second quarter of 2025, Nurse and Allied Staffing margins showed continued improvement.
Industry Context
The healthcare staffing industry is currently experiencing a normalization in demand after a period of high demand during the COVID-19 pandemic. This is reflected in the decline in revenue for the Nurse and Allied Staffing segment. However, certain segments like Homecare Staffing are showing continued growth, indicating a shift in demand towards different types of healthcare services.
Comparison to Industry Standards
- Comparing Cross Country Healthcare's performance to competitors like AMN Healthcare and Team Health, the revenue decline in travel nursing aligns with industry trends of normalization after the pandemic surge.
- However, the growth in Homecare Staffing is a positive sign, reflecting the increasing demand for in-home care services, similar to trends seen in companies like LHC Group and Amedisys.
- The pending merger with Aya Healthcare is a strategic move to consolidate market share, similar to other recent acquisitions in the healthcare staffing industry, such as the acquisition of Envision Healthcare by KKR.
Stakeholder Impact
- Shareholders are impacted by the decline in revenue and net income, as well as the uncertainty surrounding the merger.
- Employees may be affected by cost management measures and potential changes resulting from the merger.
- Customers may experience changes in service offerings and pricing as the company adapts to market conditions and integrates with Aya Healthcare.
- Suppliers and creditors may be impacted by the company's financial performance and the terms of the merger.
Next Steps
- The company will continue to work towards closing the merger with Aya Healthcare in the second half of 2025.
- The company will focus on managing costs and improving margins in the Nurse and Allied Staffing segment.
- The company will continue to invest in and grow its Homecare Staffing and Physician Staffing segments.
Related Party Transactions
- The Company has entered into an arrangement for digital marketing services provided by a firm that is related to a certain member of the Company's Board of Directors.
- The Company provides services to entities that are affiliated with certain members of the Company's Board of Directors.
Key Dates
- December 3, 2024: Cross Country Healthcare entered into a Merger Agreement with Aya Holdings II Inc.
- February 20, 2025: Cross Country Healthcare and Aya Healthcare each received a Second Request from the U.S. Federal Trade Commission (FTC) in connection with the FTCs review of the transactions contemplated by the Merger Agreement.
- February 28, 2025: The Aya Merger was approved by the Company's stockholders at a special meeting.
- March 31, 2025: End of the quarterly period for the Form 10-Q report.
- May 7, 2025: Date of the report.
- Second half of 2025: Expected closing of the Aya Merger, subject to customary closing conditions.
Keywords
healthcare staffing, travel nurse, physician staffing, Aya Healthcare, merger, revenue, financial results, quarterly report, Cross Country Healthcare
CCRN
Cross Country Healthcare INC
NASDAQ
Sector: TBD
Filings with Classifications
Worse than expected
7 May 2025 4:45 PM
Quarterly Report
- Revenue decreased by 22.6% year-over-year.
- Net loss attributable to common stockholders was $0.5 million, compared to a net income of $2.7 million in the same period last year.
Delay expected
7 May 2025 4:45 PM
Quarterly Report
- The closing of the Aya Merger is expected in the second half of 2025, subject to regulatory approvals, indicating a potential delay due to the FTC's Second Request for additional information.
Worse than expected
7 May 2025 4:28 PM
Earnings Release
- Revenue, net income, and adjusted EBITDA were all down year-over-year.
Worse than expected
16 April 2025 4:33 PM
Form 10-K/A Amendment
- The company did not achieve its minimum performance threshold for Company Annual Adjusted EBITDA of $64 million under the Annual Incentive Plan or $50 million pursuant to the additional element added during the year.
- The company slightly exceeded the threshold performance hurdle of $1.33 billion for Company Annual Revenue.
Worse than expected
5 March 2025 4:45 PM
Annual Results
- The company's revenue decreased by 33.5% year-over-year.
- The company experienced a net loss attributable to common stockholders of $14.6 million, compared to a net income of $72.6 million in the previous year.
Delay expected
5 March 2025 4:45 PM
Annual Results
- The company now expects that the Aya Merger will close in the second half of 2025, subject to the satisfaction of other customary closing conditions, including regulatory approvals, a delay from the previously expected first half of 2025.
Worse than expected
5 March 2025 4:25 PM
Earnings Release
- The company's revenue, net income, and adjusted EBITDA all decreased significantly compared to the prior year.
Delay expected
21 February 2025 5:16 PM
Form DEFA14A Filing
- The merger is delayed due to a second request for information from the FTC, pushing the expected closing to the second half of 2025.
Worse than expected
21 February 2025 5:16 PM
Form DEFA14A Filing
- The merger closing is delayed, which is worse than the initially expected timeline.
Worse than expected
21 February 2025 4:58 PM
Current Report (8-K)
- The merger closing is delayed to the second half of 2025 due to the FTC's Second Request.
Delay expected
21 February 2025 4:58 PM
Current Report (8-K)
- The merger between Cross Country Healthcare and Aya Healthcare is now expected to close in the second half of 2025 due to a second request for information from the FTC.
Delay expected
22 January 2025 4:27 PM
Merger Announcement
- The applicable waiting period under the HSR Act was extended to 11:59 p.m Eastern Time on February 20, 2025.
Better than expected
6 January 2025 10:30 PM
Schedule 13D Filing
- The increase in beneficial ownership by a prominent investment firm like Magnetar Capital is generally viewed as a positive signal by the market, indicating confidence in the company's prospects or valuation.
Better than expected
3 January 2025 6:42 PM
Beneficial Ownership Amendment
- The document indicates an increase in beneficial ownership by a significant institutional investor (Magnetar), which is generally perceived as a positive signal of confidence in the company's future prospects.
- Magnetar's stake has grown to 7.20%, indicating a substantial and growing commitment to the company.
Better than expected
4 December 2024 5:16 PM
Merger Announcement
- The acquisition price represents a significant premium for Cross Country shareholders, indicating a better than expected outcome for them.
Better than expected
4 December 2024 4:50 PM
Merger Announcement
- The acquisition includes a substantial premium of 67% and 68% over recent trading prices, indicating a better than expected outcome for shareholders.
Better than expected
4 December 2024 8:50 AM
Merger Announcement
- The acquisition price represents a significant premium of 67% to Cross Country's closing price on December 3, 2024, indicating a better than expected outcome for shareholders.
Worse than expected
7 November 2024 3:59 PM
Quarterly Report
- The company's revenue decreased by 28.8% year-over-year, indicating a worse performance compared to the previous year.
- Net income attributable to common stockholders decreased significantly from $12.8 million to $2.6 million year-over-year, indicating a worse performance compared to the previous year.
- The Nurse and Allied Staffing segment experienced a 33.2% revenue decline, indicating a worse performance compared to the previous year.
Worse than expected
6 November 2024 4:28 PM
Quarterly Report
- The company's revenue, net income, and adjusted EBITDA all decreased significantly year-over-year, indicating worse than expected results.
- The company's gross profit margin also declined, further contributing to the worse than expected results.
Worse than expected
1 August 2024 10:15 AM
Quarterly Report
- The company's revenue decreased by 37% year-over-year.
- The company reported a net loss of $16.1 million compared to a net income of $21.3 million in the same period last year.
- The Nurse and Allied Staffing segment experienced a significant revenue decline of 41.2%.
Worse than expected
31 July 2024 4:26 PM
Quarterly Report
- The company's revenue, net income, and adjusted EBITDA all decreased significantly year-over-year, indicating worse than expected results.
Worse than expected
9 May 2024 4:05 PM
Current Report
- The company is expecting a $20 million bad debt charge, which is a negative impact on their financials.
Worse than expected
2 May 2024 7:12 AM
Quarterly Report
- The company's revenue decreased by 39% year-over-year, indicating a significant downturn in performance.
- Net income attributable to common stockholders decreased substantially from $29.4 million to $2.7 million, reflecting a significant decline in profitability.
Worse than expected
1 May 2024 4:27 PM
Quarterly Report
- The company's revenue, net income, and adjusted EBITDA all decreased significantly year-over-year, indicating worse than expected results.
- The company's gross profit margin also declined, further indicating worse than expected results.
- The company's diluted EPS and adjusted EPS were also significantly lower than the prior year, indicating worse than expected results.
Worse than expected
1 April 2024 8:00 AM
Proxy Statement
- The company did not achieve its threshold performance hurdles for Company Annual Adjusted EBITDA or Company Annual Revenue in Fiscal 2023, resulting in no awards for the Objective Bonus component for NEOs.
- The company's Fiscal 2023 Adjusted EBITDA margin of 7.2% was below the performance hurdle of 7.5%.
Worse than expected
22 February 2024 6:05 PM
Annual Results
- The company's revenue decreased by 28% year-over-year, indicating worse than expected results.
- Net income attributable to common stockholders decreased significantly, indicating worse than expected results.
Worse than expected
21 February 2024 4:24 PM
Quarterly Report
- The company's revenue, net income, and adjusted EBITDA all decreased significantly year-over-year, indicating worse than expected results.
- The company's guidance for Q1 2024 also indicates a continued decline in financial performance.
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