Cross Country Healthcare, Inc. (
Q3 2010 Earnings Call
November 02, 2010 10:00 am ET
Howard Goldman - Director, Investor and Corporate Relations
Joe Boshart - President & CEO
Emil Hensel - CFO
Chris Rigg - Susquehanna
Jeff Silber - BMO Capital Markets
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Welcome to the Cross Country Healthcare third quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator Instructions). Today’s conference is being recorded and if you have any objections, you may disconnect at this time.
I would now like to turn the meeting over to Mr. Howard Goldman, Director of Investor and Corporate Relations. Sir, you may begin.
Good morning, and thank you for listening to our conference call, which is also being webcast and for your interest in the company. With me today are Joe Boshart, our President and Chief Executive Officer and Emil Hensel, our Chief Financial Officer. On this call, we will review our third quarter 2010 results, for which we distributed our earnings press release after the close of business yesterday. If you do not have a copy, it is available on our website at www.crosscountryhealthcare.com. Replay information for this call is also provided in the press release.
Before we begin, I’d first like to remind everyone that this discussion contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects, anticipates, believes, estimates and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements.
These factors were set forth under the forward-looking statement section of our press release for the third quarter of 2010, as well as under the caption "Risk Factors" in our 10-K for the year ended December 31, 2009 and our other Securities and Exchange Commission filings made during 2010.
Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed in this teleconference might not occur. Cross Country Healthcare does not have a policy of updating or revising forward-looking statements and thus it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements.
And now, I’ll turn the call over to Joe.
Thank you, Howard, and thank you to everyone listening in. As reported in our press release issued last evening, our revenue for the third quarter of 2010 was $116 million, down 11% from a year ago. Net income was $900,000 down 5% from the year-ago quarter. EPS was $0.03 per diluted share equal to the year-ago quarter. On a sequential basis, revenue was down 2% and net income was down 22% from the second quarter. Cash flow from operations for the third quarter was $1.1 million and our Nurse and Allied Staffing business which represents approximately 50% of our total revenue in the third quarter, momentum is building as we move through the fourth quarter, against the back drop of continued weakness in the National Labor market, demand for our Nurse and Allied Staffing services continues to be well below that of 2-3 years ago. However, even as these levels we should be able to grow our staffing volume from the currently depressed levels.
In the segment we are encouraged by a substantial improvement in demand in most areas of the country since June, and unlike a year ago the rising demand does not appear to be driven by the flu season expectations to any meaningful extent. Part of the momentum we are seeing is the result of our success and wining VMS contracts at large prestigious hospital systems and healthcare facilities throughout the United States at the fastest pace since we began offering our service in 2003.
I am also pleased to note a long standing vendor managed account which left us earlier this year, we engaged us at the end of the September under the same terms that we had with them previously.
With respect to our vendor management service we have adopted a strategy to selectively offer this service to certain healthcare systems large hospitals and healthcare facilities that are geographically diverse and large uses of tempering Nurse and Allied Staffing services. To give you a sense of scale we have more than 500 FTEs’ currently working at our vendor managed accounts. As a result of our continued success in this area I am very optimistic that the sequential momentum we are seeing in the fourth quarter in this segment is likely to continue into the first quarter of 2011.
Turning to our position staffing business, well it has not yet shown signs of rebounding, there are indications that are stabilizing it and more or less following normal seasonal patterns. As such, position staffing revenue was up slightly on a sequential basis from the second quarter but we expect it would be a modest drop in the fourth quarter which is likely to offset the increasing activity in our nurse and allied staffing business during the quarter.
Keeping in mind given the shorter nature of contracts for local tenants, we tend to have less visibility in this business relative to our other staffing businesses. Meanwhile, our clinical staffing business appears to be turning the corner based on improved order levels and recent contract awards. In the fourth quarter we expect segment revenue to show modest year-over-year growth for the first time in two years as we move past the head wins of unfavorable comparison resulting from the phase out of contract research projects in the third quarter of 2009. In addition the pipeline of potential projects in this segment is encouraging as we look to our prospects in future quarters.