Cross Country Healthcare, Inc. (NASDAQ:CCRN) Q1 2018 Earnings Conference Call - Final Transcript

May 03, 2018 • 09:00 am ET


Cross Country Healthcare, Inc. (NASDAQ:CCRN) Q1 2018 Earnings Conference Call - Final Transcript


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Bill Grubbs

each of the quarters. The good news is we continue to grow back from that and we'll continue to do that through Q2 as we go into Q3.

Now moving back to the headwinds in Q4, the premium rate business, as anticipated, we did see another decline in the percentage of our billable hours from premium rate assignments. It was built into our guidance in Q1 and it came in within our expected range which was about a $2 million impact we expect another decline in premium rate business in the second quarter which is also built into our guidance and that's again about a $2 million impact. We may continue to see premium rate business decline for another quarter or two, but it seems to be leveling off and we believe it will not have a major impact in the second half.

In January, we announced a management restructure creating a new Chief Operating Officer role and splitting our Cross Country Staffing business into Travel Nursing and Branch Operations with a new president heading up each business the new structure is designed to give us additional focus on our day-to-day operations and allows us to be more nimble in decision-making. I'm very pleased with the progress being made by the new team, the businesses have responded well to the leadership changes and this renewed focus on operational improvements has sparked several new initiatives that I'm confident will provide efficiencies and productivity improvements.

Turning to the quarter, our Nurse and Allied business grew 1% year-over-year, mostly bolstered by the Advantage RN acquisition. Pro forma growth was negative, mostly due to the headwinds discussed earlier. However, some positive trends exist within the segment. Our travel allied business was up 7% year-over-year. While aided by a small positive impact from the flu season, our underlying trends of travel nursing remain strong, partly through the inclusion in more of our MSPs. Additionally, our DirectEd school business continues to perform well with over 30% year-over-year growth. We expect this business to continue to outperform the market overall.

And lastly our Advantage RN acquisition had another strong quarter, supporting our MSPs by increasing the number of nurses out on billing at our MSPs by more than 60% sequentially after increasing 30% from Q3 to Q4. As we stated before, we believe we can continue to build on this momentum and improve this even further in 2018.

Moving to Physician Staffing, we had slight year-over-year revenue growth driven by strong performance in Advanced Practices. Advanced Practices which includes nurse practitioners and Physician Assistants grew by over 30% year-over-year. We continue to see strong demand in this area and are making investments to ensure we maintain this growth.Contribution income margin for physician staffing also increased year-over-year to 7% and we expect to improve that further with a target contribution margin of 10% as we exit 2018. Physician staffing has seen slight revenue growth year-over-year for two of the last four quarters. Although we believe this business is