8-K: Cross Country Healthcare Reports Q3 2025 Results Amid Merger Delay

Cross Country Healthcare announced third quarter 2025 financial results, reporting a revenue decline and net loss, while providing an update on its pending merger with Aya Healthcare which faces delays due to a government shutdown.

Summary

• Consolidated revenue for Q3 2025 was $250.1 million, a 21% decrease year-over-year and 9% sequentially.
• The company reported a net loss attributable to common stockholders of $4.8 million, compared to a net income of $2.6 million in the prior year.
• Diluted EPS was a net loss of $0.15, down from a net income of $0.08 in Q3 2024.
• Adjusted EBITDA was $6.5 million, or 2.6% of revenue, a 37% decrease year-over-year.
• Cash flows provided by operations significantly increased to $20.1 million for the quarter, up 169% year-over-year and 377% sequentially.
• Homecare Staffing revenue grew more than 29% over the prior year.
• Selling, general and administrative (SG&A) expenses continued a sequential decline, attributed to leveraging the company's low-cost center of excellence in India.
• The company maintains a healthy balance sheet with $99.1 million in cash on-hand and no debt as of September 30, 2025.
• Cross Country Healthcare has won, expanded, and renewed over $400 million in contract value, primarily with Managed Service Program clients.
• The pending merger with Aya Healthcare faces a delay as the U.S. Federal Trade Commission (FTC) review's HSR waiting period has been extended beyond the December 3, 2025 end date due to a government shutdown.
• Discussions are ongoing with Aya Healthcare regarding an extension of the merger end date.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While the company reported results in line with expectations, showed strong cash flow, a healthy balance sheet, and growth in Homecare Staffing, the overall revenue and profitability metrics declined significantly year-over-year. The major uncertainty and delay surrounding the critical Aya Healthcare merger due to the government shutdown introduce substantial risk and overshadow some of the operational positives.

Positives

• Homecare Staffing revenue grew more than 29% over the prior year, demonstrating strong performance in this segment.
• Selling, general and administrative (SG&A) expenses continued a sequential decline, indicating effective cost management and leverage of the India center of excellence.
• The company boasts a healthy balance sheet with $99.1 million in cash on-hand and no debt as of September 30, 2025.
• Net cash provided by operating activities for the quarter was $20.1 million, a substantial increase of 169% year-over-year and 377% sequentially, reflecting strong cash generation.
• Successfully won, expanded, and renewed over $400 million in contract value, predominantly across Managed Service Program clients, highlighting client retention and growth.
• Continued investment in leading proprietary technology platforms such as Intellify and xPerience.

Negatives

• Consolidated revenue decreased by 21% year-over-year to $250.1 million, and 9% sequentially.
• Net loss attributable to common stockholders was $(4.8) million, a significant decline compared to a net income of $2.6 million in the prior year.
• Diluted EPS was a net loss of $(0.15), down from a net income of $0.08 in the prior year.
• Adjusted EBITDA decreased by 37% year-over-year to $6.5 million, with the adjusted EBITDA margin falling to 2.6% from 3.3% in the prior year.
• Nurse and Allied Staffing revenue decreased by 24% year-over-year and 10% sequentially to $202.0 million.
• Physician Staffing revenue decreased by 4% year-over-year and 3% sequentially to $48.1 million.

Risks

• The timing to consummate the proposed Aya Merger is uncertain.
• There is a risk that a condition of closing of the proposed Aya Merger may not be satisfied or that the closing might otherwise not occur.
• The merger may not be completed on the terms or in the time frame expected due to factors such as delays in obtaining regulatory approvals, specifically due to the U.S. government shutdown that began in October 2025.
• Diversion of management time on transaction-related issues and disruption of management time from ongoing business operations due to the proposed Aya Merger.
• Any announcements relating to the proposed Aya Merger could have adverse effects on the market price of the common stock.
• The proposed Aya Merger and its announcement could have an adverse effect on the ability to retain customers, key personnel, and maintain relationships with suppliers and customers.
• The occurrence of any event, change, or other circumstance or condition that could give rise to the termination of the Merger Agreement, including circumstances requiring the company to pay a termination fee.
• There is a risk that competing offers for the company will be made.
• Unexpected costs, impairments, fees, charges, or expenses could result from the Aya Merger.
• Potential litigation relating to the Aya Merger could be instituted against the parties or their respective directors, managers, or officers.
• Worldwide economic or political changes that affect the markets served could impact demand for services and profitability.
• Effects from global pandemics, epidemics, or other public health crises.
• Changes in marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, and customer needs.
• Disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, cyber-security vulnerabilities, foreign currency volatility, swings in consumer confidence and spending, costs of providing services, retention of key employees, and outcomes of legal proceedings, claims, and investigations.

Future Outlook

The company will not host an earnings conference call to review third quarter 2025 financial results, nor will it provide forward-looking guidance, due to the pending merger with Aya Healthcare. The consummation of the Aya Merger is subject to the satisfaction of closing conditions, including FTC review, which has been delayed by a government shutdown. The company and Aya are currently discussing an extension of the merger end date beyond December 3, 2025, but there is no assurance an agreement will be reached. If the merger is completed, the company will become private and its common stock will no longer trade on Nasdaq.

Management Comments

• "Our third quarter results were in line with expectation, reflecting continued momentum in our Homecare Staffing business and further stabilization in core travel and local staffing."
• "As we await the consummation of the pending merger with Aya, we have remained focused throughout 2025 on delivering quality and value to our clients, and as a result we have successfully won, expanded and renewed more than $400 million in contract value, predominantly across Managed Service Program clients."
• "Our strong balance sheet and positive cash flow have allowed us to further invest in our leading proprietary technology platforms such as Intellify and xPerience."

Industry Context

The healthcare staffing industry continues to navigate a dynamic environment, with a notable shift in demand. While core travel and local staffing segments show signs of stabilization, the strong growth in Homecare Staffing suggests a growing demand for in-home healthcare services. The overall revenue decline for Cross Country Healthcare reflects broader industry pressures or a normalization after peak demand periods, but strategic focus on cost control and technology investment positions the company for efficiency. The pending merger with Aya Healthcare, a major player, indicates ongoing consolidation and strategic realignments within the sector to achieve scale and market leadership.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Face uncertainty regarding the Aya Merger's completion and timeline, which could impact share price. If the merger closes, they will receive cash for their shares and the stock will be delisted.
• Employees: Potential for disruption and changes in management focus due to the pending merger. The company's cost-saving initiatives (e.g., India center of excellence) may impact staffing.
• Customers: The company's focus on delivering quality and value, along with winning/renewing over $400 million in contracts, suggests continued service commitment. The merger could lead to changes in service offerings or scale.
• Suppliers: Relationships may be affected by the merger, as the combined entity might re-evaluate supplier agreements.
• Creditors: The company's healthy balance sheet with no debt and strong cash flow from operations indicates a low credit risk profile.

Next Steps

• Continue discussions with Aya Healthcare regarding an extension of the merger end date beyond December 3, 2025.
• Await the expiration of the HSR waiting period for the Aya Merger, which is currently extended due to the government shutdown.
• If the Aya Merger is completed, the company will become a private entity and its common stock will no longer trade on Nasdaq.

Key Dates

Recommendation

The company's Q3 2025 results were in line with expectations, demonstrating strong cash flow generation and a robust balance sheet with no debt. Growth in the Homecare Staffing segment and continued cost control are positive operational indicators. However, the significant year-over-year declines in overall revenue and profitability, coupled with the critical delay and uncertainty surrounding the Aya Healthcare merger due to the government shutdown, introduce substantial risk. The potential for the merger to terminate if an extension is not agreed upon creates a binary outcome. Given the mixed operational performance and the high uncertainty of the merger, a 'hold' recommendation is appropriate, advising investors to await further clarity on the merger's status before making significant investment decisions.

Keywords

Healthcare Staffing, Nurse Staffing, Allied Staffing, Physician Staffing, Homecare Staffing, Workforce Solutions, SEC Filing, Financial Results, Merger, Aya Healthcare, Q3 2025, CCRN, Staffing Industry, Managed Service Program