Business Overview and History
Cross Country Healthcare, Inc. (CCRN) is a leading provider of tech-enabled workforce solutions and advisory services in the healthcare industry. With a rich history spanning nearly four decades, the company has evolved from a traditional healthcare staffing firm into a diversified and innovative talent management partner for its customers.
Cross Country Healthcare was founded in 1986 as a market-leading, tech-enabled workforce solutions and advisory firm. The company initially focused on providing temporary staffing of registered nurses and allied healthcare professionals to hospitals and other healthcare facilities. In the early 2000s, Cross Country expanded into physician staffing, offering temporary placements of physicians, certified registered nurse anesthetists, nurse practitioners, and physician assistants.
Over the years, the company has strategically broadened its service offerings to include a wide range of workforce solutions. These now encompass managed service programs (MSPs), vendor management systems (VMS), recruitment process outsourcing (RPO), in-home care staffing, education healthcare staffing, and other technology-driven advisory services. Cross Country Healthcare's expertise helps customers tackle complex labor-related challenges and achieve high-quality outcomes while reducing complexity and improving visibility through data-driven insights.
Throughout its history, Cross Country Healthcare has faced and overcome various challenges, including the 2008-2009 financial crisis, which impacted demand for its services, and the need to continuously invest in and update its technology platforms to meet the evolving needs of its customers. The company's resilience and ability to adapt to changing market conditions have been key factors in its long-term success.
In 2021, Cross Country made a significant move to strengthen its position in the home healthcare and Program of All-Inclusive Care for the Elderly (PACE) markets with the acquisition of Workforce Solutions Group (WSG). This transaction added complementary capabilities in the rapidly growing in-home care and PACE segments, which now account for over 30% of the company's total revenue, up from just 10% at the end of 2021.
More recently, in late 2022, Cross Country bolstered its physician staffing capabilities through the acquisitions of Mint Medical Physician Staffing and Lotus Medical Staffing. These strategic bolt-on acquisitions have expanded the company's locum tenens and advanced practitioner offerings, which now represent approximately 15% of the overall business.
Financial Performance and Trends
Cross Country's financial performance has been impacted by the volatility in the healthcare staffing industry, particularly in its largest segment, Nurse and Allied Staffing, which includes travel nursing and per diem placements. In 2024, the company reported revenue of $1.34 billion, down 33.5% year-over-year, as travel nurse and allied demand and bill rates normalized from pandemic-driven highs. The company also reported a net loss of $14.56 million for the year.
However, the company's strategic diversification efforts have helped to offset some of this cyclical weakness. For example, the Homecare Staffing division reported 13% year-over-year growth in 2024, while the Physician Staffing segment grew revenue by 11.4% over the prior year. These higher-margin, less cyclical business lines now account for a larger proportion of Cross Country's overall revenue mix.
Cross Country operates through two main segments: Nurse and Allied Staffing, and Physician Staffing. The Nurse and Allied Staffing segment, which accounted for approximately 85% of total revenue in 2024, generated $1.15 billion in revenue and $72.6 million in contribution income. This segment provides a wide range of workforce solutions and staffing services, including temporary and permanent placement of travel and local nurses and allied professionals, as well as healthcare leaders within nursing, allied, human resources, and finance.
The Physician Staffing segment, which represented about 15% of total revenue, generated $198.6 million in revenue and $15.4 million in contribution income in 2024. This segment provides physicians, certified registered nurse anesthetists, nurse practitioners, and physician assistants on temporary assignments to various healthcare facilities.
In the most recent quarter, Cross Country reported revenue of $309.94 million, a 25% decrease year-over-year, primarily due to volume and bill rate declines in the Nurse and Allied Staffing segment. This was partially offset by an increase in both volume and average bill rates in the Physician Staffing segment. The company reported a net loss of $3.75 million for the quarter, a 142% decrease year-over-year, mainly due to credit loss expense, legal and other losses, and impairment charges.
Liquidity
Despite the top-line decline, Cross Country has maintained a strong balance sheet, ending 2024 with $81.6 million in cash and no outstanding debt. The company has been prudent in its capital allocation, using its robust cash flow to fund strategic acquisitions, technology investments, and opportunistic share repurchases.
As of December 31, 2024, Cross Country had no borrowings drawn under its $300 million asset-based loan (ABL) agreement. The borrowing base availability under the ABL was $146.9 million, with $132 million of availability net of $14.9 million of letters of credit. The company's debt-to-equity ratio stands at 0.009, while its current and quick ratios are both 2.78, indicating a strong liquidity position.
Outlook and Key Initiatives
Looking ahead, Cross Country is focused on several key initiatives to drive future growth and profitability:
1. Continued Expansion in High-Growth Segments: The company is doubling down on its investments in the home healthcare, PACE, and physician staffing markets, which are expected to be the primary growth engines going forward.
2. Technology-Driven Innovation: Cross Country is enhancing its Intellify technology platform to improve customer and candidate experience, increase operational efficiency, and expand its managed services capabilities.
3. Disciplined Capital Allocation: The company will maintain a balanced approach to capital deployment, prioritizing strategic M&A, technology investments, and opportunistic share repurchases to create long-term shareholder value.
For the fourth quarter of 2024, Cross Country expects revenue between $300-$310 million, adjusted EBITDA of $11-$13 million, and adjusted EPS of $0.10-$0.14. The company anticipates a gross margin of around 21% for the quarter. While the company's long-term goal is to achieve a high single-digit adjusted EBITDA margin, they expect mid-single digits in the near term as they ensure capacity for growth.
Risks and Challenges
While Cross Country's diversification strategy has shown promising results, the company still faces several key risks and challenges:
- Volatility in the travel nursing and allied healthcare staffing markets, which remain a significant portion of the business - Intense competition for healthcare professionals and the need to offer competitive compensation packages - Potential regulatory changes that could impact the company's staffing and workforce solutions business - Integration risks associated with future acquisitions and the ability to realize expected synergies - Impacts of pandemics, epidemics, or other public health crises on operations and financial results - Global economic conditions and economic pressures that could lead to decreased demand or pricing for services - Challenges in adapting to changing marketplace conditions, such as alternative modes of healthcare delivery and reimbursement - Dependence on proper functioning of information systems and applications
Industry Trends and Market Position
The healthcare staffing market is estimated to have an aggregate market size of $45 billion in 2024, with travel nursing accounting for $19.6 billion, per diem nursing for $5.4 billion, allied health for $11.1 billion, and locum tenens and advanced practitioners for $8.9 billion. The demand for staffing services is influenced by factors such as the aging U.S. population, the shortage of healthcare professionals, and the increased need for healthcare and special education services in schools.
Cross Country provides its staffing services and workforce solutions in all 50 states, with the largest percentage of revenue concentrated in California, New York, and Florida in recent years. The company's broad geographical presence and diverse service offerings position it well to capitalize on various market opportunities across the healthcare staffing industry.
Human Capital Management
As of December 31, 2024, Cross Country had approximately 1,400 corporate employees and employed an average of 8,210 full-time equivalent field employees in the Nurse and Allied Staffing segment. The company offers a comprehensive total rewards program for its corporate associates, including market-competitive pay, healthcare benefits, retirement savings plans, paid time off and family leave, various discount programs, and tuition assistance.
Cross Country fosters a culture of performance, talented leadership, and collegiality that promotes the achievement of both company and personal goals. Several of the company's executives have been recognized for their leadership and contributions to the industry, underscoring the strength of its management team.
Overall, Cross Country Healthcare has demonstrated its ability to navigate the cyclical nature of the healthcare staffing industry by strategically expanding into higher-growth, less volatile segments. As the company continues to execute on its diversification strategy and technology initiatives, it is well-positioned to deliver long-term value for its shareholders, despite the current challenges in the market.