Cross Country Healthcare Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Trevor Romeo - William Blair - Analyst : Hi, good afternoon. Thanks so much for taking the questions. First one, I just kind of wanted to unpack the Q4 revenue guidance a little bit. I think, Bill, you had a few comments a minute ago, but they were a little fast, so I just wanted to make sure we heard everything there. Sounds like you'll have a pick-up in the education business coming out of the summer break. You also expect the strong non-travel businesses to -- those trends to continue. It sounds like there was also a small labor disruption. I'm not sure if you called out the dollar amount. But could we kind of just drill down on the sequential trend you're expecting in sort of the core travel business? And then, any thoughts that you kind of have on what Q1 could maybe look like based on the current demand would be super helpful as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, CCRN.OQ - Q3 2024 Cross Country Healthcare Inc Earnings Call

Question: Trevor Romeo - William Blair - Analyst : Yeah. Okay. Thanks, Bill. That was really helpful. And then I guess a follow-up on gross margins. Again, I think this quarter was a bit below your guidance coming in. You talked about several comments, I think, in the prepared remarks about competitive behaviors and such. But what do you think at this point the industry needs to see for some of that pressure to abate going forward? Do you think a demand inflection would be enough? Do you think the industry kind of needs to consolidate or something else? Any thoughts there would be really helpful? Thanks.

Question: Jasper Bibb - Truist Securities - Analyst : Hey, guys. This is Jasper Bibb on for Tobey. Thanks for taking our questions. I just wanted to ask, there was a comment about orders up 20% sequentially in the fourth quarter, I think it was. Do you think that's coming in at bill rates sufficient to attract supply at this point or just any overall comments on the quality of orders? Because I know there's a bit of a lag there, but it sounds like FTEs are going to be down sequentially in 4Q, so maybe not translating into a big bump in volumes near term, it seems like.

Question: Jasper Bibb - Truist Securities - Analyst : Got it. And then just to clarify, what did you say bill rates are doing sequentially into the fourth quarter that was captured in the guide? Maybe I missed that. And do you have a fair remark about answering Trevor's first question?

Question: AJ Rice - UBS - Analyst : Hi, everybody. Maybe just a few questions here. The pick-up in orders, 20%, and what you're guiding for, we're always wondering in the fourth and first quarter, are there seasonal orders that are impacting that, or is that pretty much behind us at this point, and this is really sort of the underlying trend that we can base off of as we project out for where the industry's at and where it's likely to grow? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, CCRN.OQ - Q3 2024 Cross Country Healthcare Inc Earnings Call

Question: AJ Rice - UBS - Analyst : Okay. And I think in the prepared remarks you said, going into the fourth quarter, you'll probably step back a little bit from share repurchase and look to deploy capital strategically. Is that -- you think you've got some deals front burner, is that what we should take those comments to imply, or is there more strategic investments in the business that you're doing internally?

Question: AJ Rice - UBS - Analyst : Okay. If I could squeeze one more in, on the home healthcare staffing, I don't know if I've heard you size that. It sounds like that's an area of growth. Can you give us a little more of a perspective on how big that is, what the underlying growth for home care staffing is, and the economic profile of that business? Is it similar to nursing and allied, or does it have other economic dynamics to it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, CCRN.OQ - Q3 2024 Cross Country Healthcare Inc Earnings Call

Question: Bill Sutherland - The Benchmark Company, LLC - Analyst : Thanks. Hey, everybody. I wanted to just get a little more color on MSPs, if we could, where you stand with the dollar value under management, the net growth that you saw in contracts, and where you capture rates coming in? Thanks.

Question: Bill Sutherland - The Benchmark Company, LLC - Analyst : I'm just curious if the capture rate's gone up?

Question: Bill Sutherland - The Benchmark Company, LLC - Analyst : Okay. Got it. Hey, Bill, on education, did you say that the revenue was down year over year?

Question: Constantine Davides - Citizens JMP Securities, LLC - Analyst : Yeah, thanks for taking the questions. Can you guys just comment a bit -- we've had some conflicting industry data points on Locums and just wondering, if you can expand a bit on what's really underpinning growth? And I think John, you called out sort of some unusual seasonal strength in the fourth quarter. Just wondering if you can kind of elaborate on that too.

Question: Constantine Davides - Citizens JMP Securities, LLC - Analyst : Great. That's good color. And I guess what's a reasonable margin target, contribution margin target for that segment? Just sounds like you're expecting the strength to continue in the fourth quarter. And I know you're benefiting from some of the offshoring initiatives, but is that pretty scalable, or do you think you have to sort of add additional resources to continue to drive growth there next year?

Question: Jack Slevin - Jefferies LLC - Analyst : Hey, thanks guys for taking the question. Most of mine are already asked. Just want to throw one in -- sort of similar to some prior stuff, but maybe just picking up on the strength in orders that you've seen this quarter -- and that was their last quarter but sort of that dissonance between that strength and where volumes are ending up, I guess if you look out a little more broadly and the order strength continues, do you feel like it's something possible where we would see a persistence in that gap between where orders are and where volumes are? Or like those would have to sort of come together eventually if we see order growth continue over time? Just trying to get a sense of if this is something that could wash out or if it's sort of a signal to look at on a little bit of a longer-term basis.

Question: Jack Slevin - Jefferies LLC - Analyst : Okay. Got it. That's helpful. And then maybe if I can just squeeze one more in, just looking at it, like the buyback ticking up, I know the commentary that that would probably come down and that you're trying to hold some dry powder for M&A. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, CCRN.OQ - Q3 2024 Cross Country Healthcare Inc Earnings Call I guess maybe more from an academic standpoint, how are you thinking about -- stocks off a little bit; buybacks maybe look a little bit more attractive. How are you thinking about the balance of those two things going forward? Or sort of how much further do we need to see multiples come down in the industry for M&A to sort of be the primary target?