Q3 2021 Cross Country Healthcare Inc Earnings Call

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As a country health care Dot Com. Please note that certain statements made on this call may constitute forward looking statements. These statements reflect the company's current beliefs based on information currently available to it as noted in our press release forward looking statements can very materially from actual results in our subject to known and unknown risks uncertainties and other factors, including those contained in the company's 2020.

Annual report on Form 10-K, and quarterly reports on Form 10-Q, as well as in other filings with the SEC.

The company does not intend to update guidance or any of its forward looking statements. Prior to the next earnings release. Additionally, we referenced non-GAAP financial measures such as adjusted EBITDA or just it earnings per share such non-GAAP financial measures are provided us additional information and should not be considered a substitute for or superior to measures calculated in accordance with U S gap.

More information related to these non-GAAP an interim measures is contained in our press release also during this call. We may refer to pro forma or Normalised numbers pretending to our most recent acquisition as though the results were included or excluded from periods presented with that I'll now turn the call over to our co founder and Chief Executive Officer, Kevin Clark.

Thanks, Bill and thank you to everyone for joining us. This afternoon as we reported today, our third quarter results once again exceeded expectations, achieving yet another milestone for our company with consolidated revenue of 374.9 million and adjusted EBITDA of more than 30 million.

Equally as impressive from a year to date perspective, we have surpassed the 1 billion dollar Mark for consolidated revenue and achieved more than $80 million in adjusted EBITDA and our fourth quarter is expected to be even stronger with year over year in sequential growth and all.

Major lines of business in particular, the number of nurse and Allied clinicians on travel assignments is expected to more than double in the fourth quarter over the prior year.

This historic performance is being driven by solid execution across our entire organization I do not believe however that we are simply riding the COVID-19 wave of higher Bill rates I believe our growth is also being fueled by the many actions we have taken over the past two years to digitally transform our <unk>.

Company and improve the operational effectiveness of the entire organization.

It changes and improvements we have made have allowed us to quickly respond to the record level of demand that we are continuing to see across a wide range of specialties.

Such as operating room emergency room, pediatrics, labor and delivery and medical surgical services, which are not directly related to our clients COVID-19 needs. It all begins with our people and it's because of their dedication and willingness to embrace change that we are able to deliver such strong performance.

I am so incredibly proud of our entire team for bringing a record number of clinicians to the bedside. During this extraordinary time in both our companies and our nation's history.

As we move through the third quarter. It became apparent that the Delta variant would continue to drive both higher demand and bill rates Bill will get into the numbers in more detail, but as we called out on the last earnings call. We had expected bill rates for our travel division to decline sequentially in the high single to low.

Double digit range instead average bill rate rose slightly over the third quarter and are expected to rise again in the fourth quarter.

Covid is certainly playing a role in the rising bill rates with regional spikes in demand related to the Delta variant as well as the impact from states and healthcare system enacting vaccination mandates, which is further stressing and already tight supply environment.

However, COVID-19 is only part of the story in the higher bill rates growing need in non COVID-19 assignments, coupled with greater numbers of clinicians, leaving the bedside due to factors such as burnout or retirement are also contributing to the increase in bill rates, although the number of new Covid.

Aces and hospitalizations from the Delta variant are on the decline we continued to see demand near all time highs with tens of thousands of openings across the nation and all specialties and across all of our divisions to give you some context entering the fourth quarter, we have seen the number of unique facility.

He is requesting travelers double since the first quarter and our total travel orders have nearly tripled over that same time frame given.

Given the broader market conditions of the continued high demand and a very tight labor market. We expect rates will trend down in 2022, but more slowly than we had anticipated last quarter and likely more slowly than the pace at which they increased.

Throughout the pandemic cross country has led the way and partnering with our clients to deliver flexible solutions aimed at solving their immediate and long term challenges.

Many have shared their deep appreciation for our support in delivering clinician and for providing data industry insights and market analytics to guide their decision on the appropriate rates necessary to attract clinicians one of our core values is to act ethically and responsibly in all that we do.

And it has been especially important to have the greatest transparency possible with our clients.

We are in this for the long term and while Covid has negatively impacted all of us in so many ways. We are viewed it as an opportunity to build long lasting relationships with our clients.

We will continue to do what is right for our nation, our clients and the patients they treat as well as our shareholders by preserving protecting and building the value and integrity of our business.

In addition, our approach to the market continues to fuel our pipeline for new business with both existing and new clients say.

Sales activity in the third quarter, what's the strongest we have seen since the pandemic began securing numerous new direct clients, including several competitor accounts. In addition to new direct staffing contracts. We have also secured a record number of new recruitment process outsourcing.

<unk> as clients seek to rebuild their permanent staff looking.

Looking ahead, our pipeline for managed service programs remains robust and I believe that we are well positioned to continue to win a number a sizeable programs, which will further grow or spend under management. We have made significant investments in this part of our organization and I feel we now have one of the most.

Talented incredible sales team in the market, who are able to clearly articulate cross countries value proposition.

From a candidate perspective, it is clear that cross country present, a unique value proposition driven by competitive compensation packages attractive opportunities and a commitment to the highest level of service.

Our brand is resonating in the marketplace in a big way one data point. We're sharing is the number of first time travelers with cross country has more than doubled and currently makes up more than 40% of new weekly travel assignments.

As clinicians specifically millennials continue to embrace the flexibility and personal control that come from being on temporary assignment. We believe that cross country is well positioned to capitalize on this emerging trend our commitment to excellent service, along with ensuring diversity and inclusion.

Have resulted in cross country, receiving a number of recent awards as one of the top staffing companies for women and award for Best Places to work and five top workplace awards from enter gauge, including an award for top diversity equity and inclusion program.

Turning to the businesses, let me just spend a moment on our segments, our largest segment of nurse an ally more than doubled over the prior year and was up more than 13% sequentially. Both driven primarily by an increase in the number of billable hours and professionals on assignment again I want to re.

Reiterate that the continued growth is a direct function of the improved productivity stemming from the changes we've implemented over the past two plus years, the digital transformation of the organization and the continued investments we have made an incremental revenue producers throughout 2021, we look forward to me.

Aching continued progress as we continue to execute against our strategic plan.

Our local business, which has been re imagined through the introduction of our marketplace candidate App and restructured with the elimination of redundant organizational infrastructure and its office footprint is making solid progress and recently has experienced some of the strongest performance weeks.

Since the pandemic started this business has performed better than expected with third quarter revenue up 11% over the prior year and we are expecting continued sequential weekly revenue growth throughout the fourth quarter.

As expected the education business declined sequentially due to the impact from summer holidays. However, similar to our other lines of business outperformed relative to our guidance and the prior year with the started a new school year. We are excited at the prospect of this business to continue its return to pre COVID-19 growth <unk>.

<unk> <unk>.

Also contributing to the third quarter, where the results from our most recent acquisition of workforce solutions group, which closed in June of this year as a reminder, W. S. G expands our footprint in the home care market and aligns with our strategy of following the patient by delivering quality clinicians across the entire.

Continuum of care.

In addition to traditional staffing Ws G offers manage service outsourcing arrangements for Msos, which function similarly to our management service programs, except that they provide clinical support in home health.

On a pro forma basis W. S. G continues to experienced significant growth with revenue up more than 75% and a gross margin several hundred basis points above the segment average <unk>.

Looking ahead, we continue to expect above average growth, having recently implemented to new MSL programs and with an active pipeline for future opportunities.

With respect to our integration we are taking steps to ensure we maximize the cross selling and fulfillment opportunities across the organization by leveraging the full complement of resources across country, including tapping into our extensive database. This.

This acquisition also expand our go to market strategy and expand service offerings to our clients from an operational perspective integration efforts remain on track to be largely completed by the end of this year.

We are also encouraged by the turnaround in trajectory of the local tenant's business as it continues to recover from the impact of Covid Locums revenue was up 20% sequentially and 14% over the prior year with the majority of the growth coming from an increase in volume from primary care physician.

<unk> and nurse practitioners.

Are managed service programs are Msp's continues to represent.

A significant portion of our business, representing 48% of consolidated revenue for the quarter total spend under management was nearly a billion dollars up 6% of the prior quarter and our capture rate was approximately 69%.

Given the combination of strong demand and a proven ability to execute we have continued to make significant investments in our business. Both in additional resources as well as in technology from a resource perspective, we have grown our organizations head count by nearly 30% in 2021.

With more than 90% and revenue producing rolls.

The majority of these resources are ramping quickly and I believe we now have a deeper bench of revenue producers than at any time in the company's history.

From a technology perspective, we continue to make solid progress with enhancing and further deploying our applicant tracking system or Ats with further deployments scheduled over the coming quarters. In addition to the Ats, we continue to make significant investments in both client and candidate facing tools.

From the candidate perspective, we are continuing to build out a complete self service portal that candidates can use across the entire engagement lifecycle.

Overall I am highly encouraged by the progress we have made in just a couple of years to digitally transform this company positioning this company as the innovative leader.

Looking ahead, our fourth quarter guidance to another points to another record quarter in the company's history, we expect consolidated revenue between 580 and $590 million, representing sequential growth of $55 to 57%.

Practically all lines within nursing allies are anticipated to grow sequentially. Most of the growth is expected across travel nurse, an alloy and although average bill rates for the travel business are projected to be up 25% to 30%. The majority of the sequential growth is expected from a continued rise.

An hour's work as we continued to take market share and expand the head count on assignment.

From a profitability perspective, we anticipate adjusted EBITDA to be between 63 and $68 million, representing an adjusted EBITDA margin of between 11, and 11, 5% well above the 8% achieved this quarter.

As we look beyond the fourth quarter, we expect headwinds from declining rates in 2022, and the pullback in demand for certain specialties, such as respiratory therapist. However, we also expect to see continued volume growth across our portfolio as we continue to grow our market share.

Although we don't provide guidance beyond the next quarter I believe that given our current level of production our revenue run rate for the first two quarters in 2022 shot should remain higher than our third quarter.

Finally, we across country recognized the disparities certain communities face and health outcomes due to their racial makeup and ethnicity. The pandemic has certainly highlighted these challenges and marginalized communities. We are especially proud that our recent acquisition of workforce solutions group, but.

Typically targets these underserved communities and is making a positive impact by providing an opportunity for patients across every spectrum to live a healthy life.

I want to thank our thousands of healthcare professionals and our corporate employees, who promote health equity every day I couldn't be more proud of the work they are doing now.

Now, let me turn the call over to Bill to walk us through the results in more detail Bill.

Thanks, Kevin as Kevin mentioned, we once again exceeded expectations for both revenue and adjusted EBITDA as the company continues on its trajectory of solid execution across multiple fronts, our ability to attract in place candidates coupled with favorable bill rates is leading to our fourth quarter, not just being the strongest quarter of the year, but in our history I'll speak to the.

Guidance in just a moment, but first let me review our results for the third quarter.

Consolidated revenue was $374.9 million up 93% over the prior year and 13% sequentially, while average bill rates have increased over the prior year and sequentially. The majority of the growth has come from an increase in billable hours across our entire portfolio.

Looking at the segments revenue for nursing Allied was $356.1 million, representing an increase of 101% over the prior year and 13% sequentially within.

Within the segment the travel nursing Allied businesses with a primary drivers for the growth on a sequential basis. The hours for these two businesses were approximately 10% while the increase in average bill rate was in the low single digits.

As we came into the quarter. So let's look to continue the downward trend we've seen throughout much of the first half but.

But as we progress through August and into September we saw continued spikes and urgent needs related to the Delta variant and later to the needs to backfills pertaining to the vaccination mandates.

This upward trend is expected to continue into the fourth quarter before peaking late November or early December.

At this point demand related specifically to the Delta variant with a vaccine that mandates has declined but our overall travel demand remains well above the prepandemic levels.

And near on her stomach historic highs.

Though we have a limited visibility into when or how quickly rates may start to retreat. We expect that they may come down more slowly than the increased and to hold well above prepandemic levels for the foreseeable future.

A local business continues to recover from the impact of the pandemic and was up 11% over the prior year.

With both rates and volume contributing to the growth.

Average bill rates remained relatively flat this business compared to the second quarter, those still 8% above the prior year.

Also part of the segment, our education business perform better than expected. Despite the anticipated sequential declined from the summer school break.

This business grew 77% over the prior year entirely due to an increase in billable hours as rates remained relatively flat we're.

We're off to a strong start and expect to see double digit year over year growth in the fourth quarter once again.

Our only other segment physician staffing so a double digit growth will sequentially and over the prior year. The growth was broad based across a wide range of specialties, including primary care and hospice as well as advanced practice specialties, such as nurse practitioners.

Gross profit for the quarter was $83.8 million, representing a gross margin of 22.4%, which was up 50 basis points sequentially and down 230 basis points versus the prior year.

As we called out previously gross margin continues to be impacted by the mix of rapid response assignments related to the pandemic as well as the higher than normal compensation costs due to the extremely tight labor market. The sequential improvement was driven by both higher margin for our travel business as well as the favorable impact from the W. S. G acquisition, which has a margin.

Well above the average for the segment.

In general we believe the gross margin will continue to improve especially for the travel business is COVID-19 continues to subside.

Despite the year over year decline in gross margin. The gross profit dollars were up 75% of the prior year further improving our operating leverage.

Total SG&A was $52.8 million for the quarter up 5% sequentially and 30% over the prior year.

Excluding the impact from W. S. G. SG&A was flat sequentially and I have approximately 21% over the prior year.

The primary driver of the year of your increase is related to these investment in revenue producers from higher salaries and commissions earned on the record performance of the company.

With demand remaining strong we expect to continue making investments in revenue producers to fuel continued organic revenue growth in the coming quarters.

There are several other items worth calling out in the income statement we.

We increased our allowance for doubtful accounts by $1.4 million in connection with the growth in a receivable portfolio.

And we incurred approximately $300000 and continued restructuring costs related to the leases exit over the last two years.

Hello, operating income interest expense was $2.2 million, primarily attributable to the carrying costs of our new $100 million subordinated term loan entered in connection with the acquisition of WSJ.

From a balance sheet perspective, we ended the quarter with $800000 in cash and $104 million in outstanding debt, excluding lettuce, a credit, including the subordinated term loan and $4 million in borrowings under our ABL facility.

As of September 30th the company was able to access the full line under the ABL.

From a cash flow perspective, we had to use a cash from operations $3 million due to the investments networking capital associated with the strong sequential growth of our business.

Ah days sales outstanding was 61 days up three days since the start of the year.

The increase in DSO is largely due to the timing of revenue recognized throughout the quarter given the strong sequential monthly growth throughout the third quarter.

Capital expenditures were $1.9 million for the quarter principally related to the continued investments digital transformation.

This brings me to our outlook, we expect consolidated revenue to between to be between 580, and $590 million, representing a 169% to 174% increase over the prior year in between 55 and 57% sequentially the.

The majority of the sequential growth is expected to come from an increase in the number of professionals on assignment as well as a sequential increase in the bill rates for our travel nurse and Allied businesses.

Billable hours for travel nursing Allied are expected to grow by more than 40% over the third quarter as our investments and revenue produced has continued to ramp and we continued to experience improved productivity.

Regarding to a gross margin of between 22.2 and $22 seven per cent, which represents a 20 basis points decline to a 30 basis point improvement on a sequential basis.

Overall gross margins continued to remain lower than the prior year, primarily as a result of margins realize on rapid response orders related to Covid and an incredibly tight labor market.

As a result of the historic organic growth are adjusted EBITDA for the quarter is expected to be between 63 and $68 million, representing an adjusted EBITDA margin of 10.9% to 11.5%.

And are adjusted earnings per share range is one dollar and one cent to one dollar and 11 cents.

Also assumed in this guidance or depreciation and amortization of $2.7 million interest expense of $2.6 million stock based compensation expense of $1.6 million and 37.7 million shares outstanding.

And finally, given our fourth quarter and full year performance, we now expect to fully utilize our federal net operating losses in the current year nearly two years ahead of our projections.

Also as a result of the profitability, we expect to reverse the related $24 million valuation allowance as a credit to our income tax expense line are adjusted EPS guidance excludes this credit and reflects an effective tax rate between 30 and 31%.

And this concludes our prepared remarks at this point, we'd like to open the lines for questions operator.

Thank you we will now begin our question and answer session. If you would like to ask a question over the phone line. Please press star one from your phone and meet your line and take your name and affiliation clearly when prompted if you would like to withdraw your question Press Star too.

One moment and thank you the first question.

Our first question comes from Kevin Fischbeck from Bank of America Securities Urine is open.

Great. Thanks, I guess, it's been awhile since you guys have have done any kind of meaningful deal. So would love to see if he could kind of maybe break out the the revenue growth this quarter and maybe in the in the queue for guidance between kind of what is organic and what is coming from acquisitions.

Yeah sure Kevin.

This is bill burned hopefully you can you hear me uhm.

Talked out on last fall, we had about $5 million of revenue in the second quarter given help late in the quarter of the deal have closed and in the current quarter was a run rate of about $20 million.

Okay, and then it should be and that $20 million range in queue for as well.

Yeah, Yeah, we haven't given specific guidance of that but yes. It was and we are looking towards forward for some sequential growth, but that's.

<unk>, that's a reasonable range.

Okay and is there any reason to believe that that business will act any differently.

I guess, when we think about home health is clearly seems to be an acute staffing issue. There as well you said you have to have the same kind of trends around bill rates, and and and demand or should that act any differently versus the cord nursing Allied business.

Yeah.

Yeah, I mean in terms of Bill right to me, we're not seeing the higher bill rates in that business that we're seeing for example in the travel.

Business or even some of our other segments and you know the story with W. S. G is.

It's a it's the market leader in providing home health care staff to seniors specifically around federally qualified health care centers and pay centers and it's you know growing its footprint a customer's rapidly and it's a wonderful story.

Cause it fighting both.

Diversified staffing services to these health care clinics, and then flew this M S O contract, which we pointed out in our comments earlier.

We provide home health caregivers that followed the patient into the home and manage the care plan now in that segment, Kevin as you know you know to that throughout this pandemic.

If any part of the labor pool is challenge, it's the hourly worker and there's a lot of patient care text and CNA that work by the hour and so the challenge in that business is to keep up with growth and find the supply which does parallel of course, all the other segments as well.

Extremely tight labor cool.

Yeah definitely.

And I guess, maybe last question I appreciate your <unk> your going a little bit.

What you normally do is tourist guidance with that commentary about the first half.

Run rate I guess, so when we think about 22.

Overall did you think of 2022 will be a top line growth year or do you think it would still be down year over year.

You know.

What what we don't know courses, what's gonna take place in terms of Bill right, It's right and what we did call out is in the first half of the year.

You know, we think performance will be above where a Q3 numbers came in.

On a relative basis, yeah, we are seeing the delta variant cycle.

With hospitalizations decreasing but at the same time, we're dealing with vaccination mandates we're a little.

We're careful about the flu season, it looks at the moment like it's not gonna be a you know a severe <unk>.

But you know all of those things or to put this in takes that go into you know our our guidance there what I will tell you is you know look Kevin our strategy is working uhm. The blueprint that we put in place in 2019, our strategic plan is working well and we're surging as the market.

Later again and we we are you know a market leader in a large and growing market is you know it's 20 billion. This you're going to 25 billion next year [noise] and we have a very focused strategy as we talked about following the patient and this continuum of care from wellness to a cute kid output.

Patient.

Home help and we are the only company that can make that statement that we provide that whole continuum repair and so with it so I demand tight labor supply and a very focused strategy and I wanted to just point out quantitatively.

We continue to see huge gains with heart employee productivity all of these things.

Or the new cross country Cross country, and we got it to is growing 100 per cent in queue for in terms of health care clinic.

Clinicians working for the company versus a year ago, we are.

Emerging from this pandemic a much different company a company that's focused.

Italy transformed itself.

Has powered up populated the management team.

Expanded our revenue producers significantly.

We're very excited about our future. So we think there's plenty of demand for us to have a very successful year and well based on the guidance, we gave a cross country healthcare.

Will be on an annual run rate of between two and two and a half billion dollars in the fourth quarter, so lots of momentum here.

Alright, great. Thank you.

Alright next question comes from a G rated from quite credit Suisse. Your line is open.

I guess I'm, just trying to figure out how everybody first of all.

Is the Covid I understand the surge in that was what <unk> wrote, but I guess.

We're surprised a little bit obviously at the strike was continuing even is that surge dynamics comes down.

Is there a way to.

Talk about how many of your placement that you're getting are are going to COVID-19 sort of a hot spot COVID-19 specific assignments versus non COVID-19 and how that will trend going into the fourth quarter and even as you. Maybe early think about first half of next year is there assignments that people.

Okay, and when they were under the gun and Uhm the take of the surge in September and October they just they're going to extend into the fourth quarter because their three month plus assignments and then they'll roll off I guess, just trying to figure out how the placement search day, and so strong even as the surge.

It looks like it's abating pretty quickly.

Well I a J you know I'll start that and I'll ask the team to add some comments. That's it's a key question of course first of all we're seeing demand of course, you know a lot of specialties due to differed dot.

Coming back to the broad market. So to speak is booming in terms of open jobs elective surgery O R. P. L N D.

You know a lot of emergency medicine, we're seeing you know 200% increase in job orders for example on a local television. So we're seeing this board demand come back and there's a shortage across all of these specialties right. So you know that's that's one backed up the second black backdrop.

<unk> to Covid. This quarter, we are some called out there are these boxing nation mandates.

And that's leading to an even tighter supply pockets in the country not every not every state is and every health care system is requiring a vaccination, but many are so we've got you know.

Dates, which are stuck in the business in queue for and and interestingly enough. Some of those vaccination mandates also now include flu shot.

So and then some pockets, we're seeing them actually be delayed or pushed back and then one other comment Lynn I'll throw it over to Buffy and she can talk about what she was hearing from some of our clients, but for example in the pediatric area children's hospitals have a triple threat right now between Covid between winter respiratory.

In August the food health care needs are up a staggering 300% in these facilities. So we're seeing we're seeing all of that and then just briefly before I tried it to Buffy you know our school business is back every Kid is back in school it bodes well that the C. C is approved vaccinations for children because.

All of these schools will ever go.

Go out again, and when you look at this issue about stress and burnout and how much pent up demand. There is four P. T O with a lot of our clients permanent employees.

We're going to be very very busy, but Buffy maybe you can fill in some of that.

Sure. Thank you, Kevin and hope you're well AJ a couple of things we are still seeing some pockets of Covid and then Thanksgiving to COVID-19, but it's much smaller it's much more isolated than it than it has been so really we say a few areas the driving stepping at this point, primarily staffing vacancies within core staff. So.

<unk> health care facilities, obviously, they're seeing burn out and nutrition, but they're also trying to give their core staff. The P. T O that they weren't allowed to have for some time because they were carrying for it and so they are trying to offset bad and submitted vacancies due to their different services and in addition, the hospitals are.

Charting business resumption.

So where they can they are starting to offer out the elected services preventative services interestingly enough if folks have not necessarily met their deductibles. They may differ those over into Q1, which speaks to the second question you had it like my E. C. In January so they're also becoming concerned about cover.

Over winter.

And obviously, we have not seen a significant amount of flu activity, we potentially can anticipate seeing that in January as as well I'm also that could pick up in Q1.

That came mandates are probably one of the largest impact and they are driving a lot if not all but a lot of health care facilities are driving the vaccine mandate and those dates were saying October November December four core staff as well as contingent staff some are allowing somebody get exemptions, whether it be religious or medical exemptions uhm.

Not all and if they are allowing those exemptions they will require weekly testing. So we're seeing some variability across all of that but what that says to US is you know.

Low supply at this point, because even that contingent workers are fatigued, but still high bill rates out there because there is such high demand and so as they start to go into the holidays they need to even more critical we are starting to see that assignment links go back to kind of get 11, plus week summer even looking for longer.

To carry them into the queue, one activity and again once we hit January potentially Buffy flu, you'll start to see some of those what was to be preventative services now becoming more in need and a cute and you'll start to see people working down there to doctor Bolton going back to what is your current services.

So I guess everything else, Kevin said, hopefully that added some color.

Sure maybe if I could just follow up on that can you just comment on how you doing on fill rates and maybe how that's turned it over the last few quarters. It sounds like you're getting a number more coalitions willing to take these assignments. So I'm wondering is it keeping up with the demand or are you able to fill more.

<unk> of the orders that you fill a higher percentage of the orders that you get right now versus what you could do a quarter or two ago.

John you Wanna take that.

Sure so yes it.

The demand, especially going into a quarter three has been at historic levels and this is something where we were if you look at what our demand was on this surge compared to the surge of Q4 of last year the amount of jobs really double and so while still right you have to wait till her heart indication to show what we're doing because.

There's just between the vaccine mandates between the the Covid needs [laughter], there were literally there or.

Thousands of openings at certain hospitals.

Certainly hundreds and so we've seen more volume is more clinicians going to these accounts, but the jobs are unprecedentedly high so still rates are a hard indicators just to to see going up just because of the sheer volume jobs.

Alright, maybe the only last question would be on the bill pay spread it sounds like at times in the surge you guys had been willing to try to help your clients out a little bit to take a little bit of a pressure on the on.

The bill pay spread what's happening with respect to that now are you able to hold that or is the dynamics of the market such that you're having to give a little concession admittedly it much elevated rates, but what's what's the trend with bill pay spread.

Yeah, Hey, Julia.

Okay, Kevin sorry, yeah.

Yeah, No I was just gonna say look you know from the very beginning a J, where the one company the market leader that you know put out priced guidelines, we wanted to make sure that we stood by our partners our clients. During this unprecedented pandemic and made sure that we were attracting the supply they.

[noise] need and we were passing on the majority of the Bill right to the health care professional to make sure that we could fill those orders as the pandemic eases. It's Delta variant eases is bill rate is you know this kind of artificial suppression so to speak of approximately.

Two to 300 basis points, we think can bounce back with the broader market. So.

You know we think on it you know I mean, it's a tight supply.

Good place we've done the right thing in terms of standing by our customers. They appreciate it our customers. We have tremendous retention I was just that one of our largest clients about a week ago [noise].

One of the largest health care systems in the country. They were so appreciative of our core values and the ethical stance, we took and I think will be rewarded for many years to come because.

Thing and Bill did you want to make a comment.

Yeah, I mean, you covered I was <unk> I was just gonna say to your point, Kevin throughout the pandemic <unk> when we were sending people into the hotspot specifically around the spikes for.

For Covid, we were certainly looking at ensuring that we were paying what we needed to to get the supply where they had to go regardless what the bill rates were as we're seeing the mix it demand kind of normal I've I'll call. It to a more normal mix, it's still elevated to one of your earlier question I mean, even as we come into this quarter now demand still even though the COVID-19 spikes from Delta are starting to retreat and.

The mask mandate the vaccination <unk> excuse me are are not playing a bigger role or demand still has.

At least two X, where it was a year ago coming into the quarter. So there's plenty of opportunity there and I think is that is that plays itself out we should start to see the margins normalize and pay pay rate went up faster than by a higher percentage than bill right. You know I don't know if it they'll play out exactly in the reverse order that way, but over the longer term, we would expect period some delegates too.

Two more normalized.

Alright, great. Thanks, a lot.

Our next question comes from Brian thing to you live from Jeffries. Your line is open.

Hey, good afternoon, guys and congrats on the quarter. This is Jack southern on for Brian.

Just quickly wanted to touch on what you are seeing in terms of.

Staffers that are nurses that are going on multiple assignments with you or repeat assignments I think we're seeing some industry studies out there showing that.

Nurses that are newer to 10 staffing or travel staffing are are having kind of a better experience or generally more satisfied then.

The nurses in Perm roles, and so just kind of looking for a way to triangulate and track obviously some of that stuff related to bill right, but trying to see a sort of.

Hear what you're seeing on that side of things. So anything in terms of repeat staffers are stickiness of people that are newly jumping on with the cross country would be helpful.

Yeah, Jack that's a great question a couple of different answers first of all a renewal rate is very strong and you know it's been strong throughout the pandemic and we have a lot of our health care clinicians work with us Simon after assignments, but you know I'd say there's too.

Since one you know most of the travel nurse or travel therapists today are millennials millennials are part of this giga constantly and they are embracing the concept of having a flexible contract oh work assignment versus being a permanent employee for all the reasons. They can go when and where.

They want they get paid well and they call. The shots. So that's point number one and that is a mega trend and that's gonna continue for I think many many years, especially in the health care realm.

And and we're seeing that the other the other point is as we called out comments earlier 40 per cent of our new travel assignments or are locked so to speak.

Our first time travelers with cross country healthcare.

And these are experienced tenured nurses that are coming to work a cross country healthcare, they're they're folks that have already been in the travel industry and it's a really important point because.

The point I want to make to you is cross country. You have there is the company to work for again, Okay. It is the number one company that you know.

Women want to work for you know we called out one of the awards <unk>, but what we're seeing is we're seeing the market come to us why because you know we put the strategic planning.

Almost three years ago, we turned around the business with top graded it we've restructured it the candidate experience.

For our health care clinicians is night and day different than it was three years ago, it's extremely dizzy for a job seeker to find a job in minutes or hours versus days, we've compressed the ability to find a job and accelerated the process.

So you know so many things go into I know, yeah, we we call that great guidance for fourth quarter, but we're still warming up the engine to your across country healthcare. This company doesn't want to be second third we might be number one again and that's our mission and our mission is to keep you know we have a lot of competitors that are.

Looking in your rearview mirror, a lot lately, because we're coming on strong and and I can also reflect on you know the great sales quarter. We had with are from our sales organization, we had probably the largest quarter in our company's history of with hundreds of contract wins, okay. So it's fraud.

Based it's across all segments and the one cross country brand is really resonated Oh, John I don't know if you want to add anything from your <unk>.

Oh. Thank you Kevin you response was point on a spot on the only thing I would add uhm for you. Jack is that conditions are looking for and we made things still right and this is why they're continuing to when he was actually looking for the editors pay the looking for the quickest process from the door to the floor their assignments and they're looking for.

For the flexibility and assignment late whether it's a shorter term assignment or lower term assignments and of course, they are still looking for.

Making sure that they have the right location and the way facility, where they weren't where workout, but I think it's key is.

Being able to get the conditions is great that's incredible experience for them.

Getting them to renew with us more and stay with us as a company and it's all about really having a frictionless processed and an easy button to get the <unk> to stay on board and I can imagine it really is a lot of these lineal instead of working now in the industry and they've really been baptized.

In their careers. During this pandemic as you mentioned they came in here first time travelers and they're really enjoying this getting economy. This experience of being able to go and be on demand, where they want to work when they want to work and being able to really call their career and and really make inroads on how they wanted to develop their career.

Okay got it really.

Really really helpful. And then one quick follow up for me just on the volume assumptions for 22 and the commentary there just so I understand it right is that 9000 average providers an assignment that you put up in Q3, a decent base to think about.

Being able to sustain 322, and then back in and it looks like.

With my kind of back of a napkin math somewhere between 20, and 30% productivity gains on your salesforce relative to the prior year, depending on how much you attribute that WSJ uhm is that sticky or you're going to have to bring more staff on.

What's kind of a viewpoint there in order to maintain those volume levels. Thank you.

Oh, you want to comment.

Yeah sure Great question. So the the goal obviously would be look into 2022 is to maintain and grow our headcount. So really what we're looking at is we expect even in the first half rates will will start to trend down okay, and so if it but to Kevin's point as we exit the fourth quarter.

With the level of staffing that will have you know at our clients, we expect that to continue and to grow from that point forward. So cause we're still gaining productivity and we're still having a revenue producers ramp from the significant investments we've made throughout the years like you heard and Kevin script, we've got our workforce by 30% on an organic basis and nine.

Percent of those were revenue producer so we've been hiring all throughout the year and folks are at all stages of tenure. So we'll continue to see productivity gains from that coupled with.

The the productivity side of of just continue to roll out and deploy new technologies.

Got it thanks, and congrats galata quarter guys.

Extra.

Our next question comes from Toby Summer I'm truly security is your line.

[noise]. Thank you I was wondering if you could give us a little bit more granularity into the increase within the sales force itself cause you didn't say, 90% of a 30 per cent increase your overall employees and I understand why you might not Wanna give us the hard number specifically, but if it could be more specific on the growth rate as well as maybe.

US your perspective for how much productivity.

Enhancement, you could get overtime as they get tenure.

Yeah, you're right.

Like God, Kevin [laughter], Okay. Yeah, I'll start building you can comment I told me another good question.

Productivity.

Is a massively compared to where we were before digital transformation and we call that out.

And we continue to get games from the technology that we brought to the organization from a cloud based Ats system to many many other things lots of things that we don't really you know Kendall you Wanna talk about publicly but that we do that's part of our secret sauce and our algorithm. So we.

Are investing $12 million to $15 million a year in capital expenditures, we are improving.

Not just the employee productivity.

City tools, but he called out okay.

It's simpler easy that easier faster to find a job our marketplace technology for example, I'm sure. It contributed to the great results that we saw in our <unk> M. S. N Division for example, this quarter so.

<unk> never finished we're investing significant dollars and we think there's a lot more productivity to gain and then in terms of your question around.

The mix of people look we have grown substantially cross country nurses Division recruiter base, you know as well as cross country Allied but really every single division, we have scaled with more recruiters better training more account managers better training.

Bigger sales organization, you know all of the above so I'll spell it back over to Bill.

Thanks, Kevin Uhm, Yeah. So it's hard to give you a percentage growth in each of the functions, but I can just kind of give you some sense of it spans all types of revenue production producers right. So recruiters chief among them have been the the area, where we've been investing obviously account managers as well.

As well as additional salespeople and other some other revenue producing support roles.

And credentialing and on borders, but the vast majority of it has been in the first two I mentioned the recruiters an account managers.

But it's been pretty broad based on it's not in one particular business. We are investing across the entire portfolio. So we are adding capacity to all lines of business I would say.

Based on typical headcount mix that prepandemic at least.

It's 90% of the overall 30 per cent increase it sounds like it's something.

70, 80% range is that a reasonable estimate on my behalf.

Yeah, I mean for the just for the growth factor alone Yeah, you could probably for the for the sales related.

Rolls.

Yeah, I think so I think that's a reasonable I'm from the perspective of a high level discussion of what the mixture of employment is it's clearly different than it was prepandemic right. When we when we went through the restructuring in early 2020, and we were looking at our cost reduction a lot of the cost reduction.

Can you. Please are all so we've scaled back down and simultaneously as we've seen the market remains robust et cetera. We've made the investment. So it's it's it's certainly part of the growth story here is the capacity of the company has just.

They changed as we look forward.

So my follow up question would be you.

<unk> margins are great. The revenue growth is very strong.

The balance sheet is underlevered.

What is your appetite and preference as far as acquisitions or is this market.

Just make it difficult to assess.

Assess the durability of potential acquisitions, and they're kind of revenue and profit streams.

Yeah, I mean, Toby that's a good question and you're you're you're kind of right and and what you're asking in terms of first of all our pipeline as strong. We we are looking at a lot of potential targets.

In education in the home care marketplace and Locums. Some technology. So it is a strong pipeline, but to your point valuations are high and you know we'd called out this on the floor, but it took US you know a couple of years or so to to make our first.

<unk>, we wanted to do more but we're very valued based investors, we don't want to overpay for things. So we we have a we have a wonderful corporate development team in a finance dream, you know to be able to really dig in on things. So.

Mm mm mm, where do we have a fantastic balance sheets situation right now we have a wonderful partner Blackstone a wells Fargo, we have a lot of dry powder uhm, so stay tuned.

Thank you.

Our next question comes from Kevin's. Thank you from Barrington Research Your line is open.

Good afternoon, just wondering if you seen any data on how significantly the vaccine mandates or constricting the supply of clinical labor.

Buffy you want to tackle that uhm.

Apparently so there are hi, Kevin hopefully you are doing well there are a lot of hospitals as I mentioned I'm in a lot of facilities that are applying the vaccine mandates across their core staff, but also in any kind of indirect staff coming into the facility.

Many are trying to apply exemptions, whether it be religious or medical exemptions and then offering weekly testing. So that they can continue to bring that supply and this really is impacting not just the clinical side, but the nonclinical. So across the board we are seeing impact some of the dates that some of the health care systems have established for those.

Vaccine mandates have pushed out so that's giving the staff a little more time to make the decision go through that with the vaccines if they choose.

And we're seeing the numbers go up as they start to push out those days, so they're anticipating a higher impact and as the date emerges that that impact from the Kobe the vaccine mandates declines.

But we're also seeing pocket that've, either health care systems, or even by state whether or not nimble than that so I do think that it is short term impact on the supply and in particular, where some of the demand is much higher as Kevin was mentioning and some of the LMB pediatrics, they're still.

Hi demand for ICU, endoscopy et cetera that that's where we're gonna say most of them the supply compression and bill right and Uhm continued nurturing of candidates is gonna play a very big T and not being able to support that.

Health care facilities, and will help me support them through contingent staffing as well as our direct hiring RPM surfaces.

Yeah, and I would just add to Kevin overtime.

Overtime hours for up to 52% over Prepandemic levels. So that's a symptom of this and we're seeing a lot more overtime that we can typically see as well.

Okay, great. Thank you.

Just wanted to ask about your 8% adjusted EBITDA margin go you've obviously achieve that in to the last three quarters here and.

You're targeting a higher than 8% margin in the fourth quarter.

At what point do you say well, we've we've reached that goal and we've reached it a little earlier than expected and.

You know kind of think about what what the next.

Potential margin level or potential target could be.

Yeah, maybe I will tackle that yeah look first of all you know we did reach you know kind of.

8% or better type of result over a year earlier. So we're very proud of the fact that we accelerated you know our trajectory in terms of earnings to you know we are.

On a sustained growth path, we will continue to make investments quarter to quarter to keep this company.

In the forefront at the most innovative company in the industry, so sometimes will invest against profitability and will not necessarily slow and some.

Perfect line going forward, but.

We're bullish we're very bullish on our capability we have.

Step back and look at what we've accomplished were two times the size that we were a year ago and we've got you know 30% more revenue producers, we've got productivity tools that you know are.

Improving our results in high double digits, you know across our enterprise and they're still projects. Yet you know that we are extremely excited about some that will be.

Bringing to market over the next couple of quarters were very excited about where we're going through actually so.

You know.

We we get.

Our job is to grow shareholder value, but this is no longer you know a company that.

Doesn't have a blue.

On its future and.

We're very excited we don't want to see the company trip back from Ah.

Two to two and a half billion dollar run right business you know you're choosing you know these type of numbers. So we're going to work really hard to grow that profitability overtime.

Above these targets.

Okay.

Yeah, Kevin just a couple of other points as you'd think about Kevin earlier comments about the first half kind of maintaining above the Q3 run right I certainly think that certainly implies you know the company can operate at 8%. If our revenue levels are gonna be north of the third quarter run rate that we've talked about I think as the bill pay spreads start.

To normalize in the future.

It really becomes a story or two fold right. The the continued volume growth and expansion. It's obviously this is a substantial increase in volume that we're seeing into the fourth quarter, that's allowing us to target double digits.

Historically, we've said roughly about a third of our gross profit. This is implying nearly 50% of the gross profit is flowing through you have to the bottom line in the fourth quarter. So.

It's possible to start targeting higher margin, but I guess more will need to be born out as to how much how fast we can keep pushing the volume side of things and as we talked about as long as the demand remains where it is we're going to continue to invest we're gonna continue to implement new technologies gained productivity and continue to see the level of of books on assignment grow across the.

The revenue producers.

Uh-huh.

Okay. Thank you that's helpful. Thanks for taking my questions.

Mexico.

Our next question comes from Bill Southerland from Benchmark Company. Your line is open.

Thanks for keeping the lines open for me guys. Good evening I I was wondering if we could just spend a minute on the supply side really just mostly curious.

What year.

What your.

Seeing firsthand, maybe what you anything that you gather.

Gathered industrywide as far as.

The the.

The future of congratulation makes the future of immigration.

No just.

That is there gonna be a supply ketchup and [laughter] in our lifetime No you know either N a M.

What kind of.

Window did you see there thanks [noise].

Yeah pay bill Yeah. That's a good question first of all we're very encouraged that enrollment in bachelor's master's and doctoral nursing programs has increased nearly 6% from 2019 to 2020 and that date is a little bit old I think.

It's probably risen more than that this year I think there is a lot of interest in.

People looking at these heroes that have been on the front line and candidly.

Flexibility in their work environments compensation, a lot of things go into that but we're very encouraged that enrollments you know are stronger.

We have we have seen a fair amount of interest in terms of foreign.

Foreign trained nurses by some of our clients there's more of an appetite so to speak to look at foreign trained nurses as an additional part of the supply Uhm I will say that I also would say that you know what we're seeing through this pandemic I think we're gonna look back and you know pardon me use this phrase.

But I think nursing is at a paradigm shifting moment and you know there. It's it's a it's a.

It it's a profession that there are some exciting new opportunities such as telehealth. For example that work here a couple of years ago that are becoming mainstay. So a lot of those things are attracting we think longer term is supply which will be good to use some of this but you know open it up to John.

See if you have some comments you would also like to make it though.

Hey, this is John Doe.

Thank you for the question and just add Tony briefly is whether it's definitely that's kind of mentioned she silver linings and some opportunity ahead of us in and give any segments to bring in more supply.

What we're looking at if we look at the Ah be August BLS employment data that we're still seeing overall health care employment is down 3.1% from Prepandemic hospitals are still down 1.6% complete endemic or with this study.

That took place over the summer showed that 62% of hospitals have orange vacancies of 7.5%. So I think we do have a long way to go to bring back the supply and it's going to take as an industry for us to partner with our hospitals.

With schools to really create more supply to me.

This need in its demand, especially as we're seeing the nurses that are very down to the team and leading industry.

Alright, Yeah, no way in from a client perspective, you know, they're they're really looking to us to say help us with innovation help us with our core staff retention. So if we can just retained Morris who we have if we can look at how to upscale or those that maybe you can move into more acute positions. If we can.

Reschedule those who may have been out of the bed side for some period of time, because they've been fatigue and bring them back. So we're also looking at not just supply creation, but how we really create that supply that is potentially right in front of us. So shorter term opportunity there, we definitely need to focus on the longer term.

The.

Skilling.

Buffy you in terms of Reskilling would you will have some <unk> would you be providing support.

I'm, sorry about that for a certain group books.

Tenured people that you would want.

<unk>.

Investing.

That's right now and that is the intent. So we have a clinical quality council made up within cross country that is in partnership with a lot of our health care facilities, a lot of external organizations as well as a lot of the school opportunities and looking at just that is how can we help <unk>.

I'm in and reschedule through education through police that thrill partnering different types of innovation in order to again retain and grow their supply that's already there.

Alright.

One one last one if I can this is over to the girl rates again, I don't know if you've had.

A way to do this but have you been able to kind of segment bill of rights associated either where the COVID-19 work itself or with the impact of the mandates currently having a big impact.

<unk> the you know the business that.

Search the traditional.

Rolls related to supporting.

Departments and procedures and so forth.

You know that you know the answer is we do have separate bill rates right for you know.

Rapid response Covid business. For example, four we may have a project that a client.

Gives us in terms of vaccination mandates and that could have pricing, but I think the point.

Is the broad market still has high Bill race, you know, it's it's applied a cardiac cath.

The Orange right now, it's a very very high bill right to find that that registered nurse to find certain pediatric physicians, it's still a high bill so that the supply is constrained across all specialties and we're seeing higher bill rates across all specialties. So.

It has some of it was kind of a network effect across all these different.

Different specialties that we've heard truthful.

Right I mean I <unk>.

Certainly.

I agree that it's not gonna settled back down to where I was just trying to get some idea.

It's such a such a yeah delta here now and Kevin were [noise].

The ring.

But you know one one other point I would just snake is you know the the health care system is being dramatically disrupted by new entrance as well such as Amazon care, Apple, Google who have an eye for change and you know technology also seems like no matter alright, yeah.

Well I mean, no Mad is really you know, they're a direct competitor a day you know they're they're [noise].

You know a a staffing agency, but what you know.

What day, author, mostly Commoditizing at this point, but what I'm, saying is the big companies like Amazon Apple Google or change in health care is being delivered you know they they you know Amazon care as a national business that provides a telehealth model to bring health care to your home so there.

That is a disruptor and that's having it back as well.

Alright, Okay, Josh Thanks, so much.

Thank you though.

Our final question comes from rain Griffin from BMO capital markets. Your line is open.

Hey, good evening, just along the lines of the prior question I was curious what to what extent if any of the nursing stripes impacted your business. Thank you.

Buffy you Wanna talk about Labour disruption.

Oh sure Ryan. Thank you. It's we certainly have seen some activity over this past year and through our crew 48 organization that is one that we heavily lean into any kind of real true crisis staffing around labor disruptions any kind of significant crisis.

Staffing like snake, and cheese et cetera, so the labor disruptions and there has been some activity evidence. This last year, we do anticipate.

For some of that Uhm Union contracting and some of the birth date is coming out that we would see this probably in the first half of the year. So we are tracking unfortunately for asthma are uniquely positioned to support them.

Uhm as we have a division that can quickly mobilize and deploy dedicated resources around it manage the end to end program around it including the logistics. So we feel very ready for what's to come first half of the year.

Great. Thank you.

Ladies and gentlemen, this does conclude the Q&A period, I'll now turn it back over to Kevin Clark for closing remarks.

Thank you Jordan and we look forward to continuing to build shareholder value and we want to thank everyone for joining us. This evening and we look forward to updating you again on our fourth quarter call stay safe everyone and please get your vaccination. Thank you.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may now disconnect.

[noise].

[music].

[music].

[music].

Good afternoon, everyone and welcome to the cross country Healthcare's third quarter 'twenty to 'twenty, One earnings conference call.

Please be advised that this call is being recorded.

This webcast will be available on the company's website details for accessing the audio replay can be found in the company's earnings release issued this afternoon at the conclusion of the prepared remarks I will open the line for questions I would now like to turn the call over to Mr. Bill Burns Cross country Healthcare's, Chief Financial Officer. Thank you and please go ahead Sir.

Thank you and good afternoon, everyone I'm joined today by our co founder and Chief Executive Officer, Kevin Clark as well as Buffy White group President of workforce solutions and services and John Martin's Group President of delivery.

Today's call will include a discussion of our financial results for the third quarter of 2021, and our outlook for the fourth quarter a copy of our earnings release is available on our website at cross country healthcare Dot Com. Please note that certain statements made on this call may constitute forward looking statements. These statements reflect the company's current beliefs based on information currently available to it.

Our press release forward looking statements can vary materially from actual results and are subject to known and unknown risks uncertainties and other factors, including those contained in the company's 2020 annual report on Form 10-K, and quarterly reports on Form 10-Q, as well as in other filings with the SEC. The company does not intend to update guidance or any of its forward looking statements prior to.

The next earnings release. Additionally, we reference non-GAAP financial measures such as adjusted EBITDA or adjusted earnings per share such non-GAAP financial measures are provided as additional information and should not be considered substitutes for or superior to measures calculated in accordance with U S. GAAP.

More information related to these non-GAAP financial measures is contained in our press release.

During this call we may refer to pro forma or normalized numbers pertaining to our most recent acquisition as the results were included or excluded from periods presented.

With that I'll now turn the call over to our co founder and Chief Executive Officer, Kevin Clark.

Thanks, Bill and thank you to everyone for joining us. This afternoon as we reported today, our third quarter results once again exceeded expectations, achieving yet another milestone for our company with consolidated revenue up $374 9 million and adjusted EBITDA of more than 30 million.

Equally as impressive from a year to date perspective, we have surpassed the $1 billion Mark for consolidated revenue and achieved more than $80 million and adjusted EBITDA.

And our fourth quarter is expected to be even stronger with year over year and sequential growth in all major lines of business in particular, the number of nurse and Allied clinicians on travel assignment is expected to more than double in the fourth quarter over the prior year.

This historic performance is being driven by solid execution across our entire organization I do not believe however that we are simply riding the COVID-19 wave of higher Bill rates I believe our growth is also being fueled by the many actions we have taken over the past two years to digitally transform our.

Company and improve the operational effectiveness of the entire organization.

The changes and improvements we have made have allowed us to quickly respond to the record level of demand that we are continuing to see across a wide range of specialties, such as operating room emergency room, pediatrics labor and delivery and medical surgical services, which are not directly related to our clients COVID-19.

Is it all begins with our people and it's because of their dedication and willingness to embrace change that we are able to deliver such strong performance.

I am so incredibly proud of our entire team for bringing a record number of clinicians to the bedside. During this extraordinary time and both our companies and our nation's history as we move through the third quarter. It became apparent that the Delta variant would continue to drive both higher demand and bill rates.

Phil will get into the numbers in more detail, but as we called out on the last earnings call. We had expected bill rates for our travel division to decline sequentially in the high single to low double digit range. Instead average bill rates rose slightly over the third quarter and are expected to rise again in the fourth quarter.

Covid is certainly playing a role in the rising bill rates with regional spikes in demand related to the Delta variant as well as the impact from states and healthcare system enacting vaccination mandates, which is further stressing in already tight supply environment.

However, COVID-19 is only part of the story in the higher bill rates growing needs in non COVID-19 assignments, coupled with greater numbers of clinician, leaving the bed side due to factors such as burnout or retirement are also contributing to the increase in bill rates, although the number of new Covid.

<unk> and hospitalizations from the Delta variant are on the decline we continued to see demand near all time highs with tens of thousands of openings across the nation in all specialties and across all of our divisions to give you some context entering the fourth quarter, we have seen the number of unique facilities.

<unk> requesting travelers double since the first quarter and our total travel orders have nearly tripled over that same timeframe given.

Given the broader market conditions of the continued high demand in a very tight labor market. We expect rates will trend down in 2022, but more slowly than we had anticipated last quarter and likely more slowly than the pace at which they increased.

Throughout the pandemic cross country has led the way and partnering with our clients to deliver flexible solutions aimed at solving their immediate and long term challenges. Many have shared their deep appreciation for our support in delivering clinician and for providing data industry insights and market analytics.

To guide their decision on the appropriate rates necessary to attract clinicians one of our core values is to act ethically and responsibly in all that we do and it has been especially important to have the greatest transparency possible with our clients.

We are in this for the long term and while Covid has negatively impacted all of us in so many ways, we have viewed it as an opportunity to build long lasting relationships with our clients.

We will continue to do what is right for our nation, our clients and the patients they treat as well as our shareholders by preserving protecting and building the value and integrity of our business.

In addition, our approach to the market continues to fuel our pipeline for new business with both existing and new clients.

<unk> activity in the third quarter was the strongest we've seen since the pandemic began securing numerous new direct clients, including several competitor accounts. In addition to new direct staffing contracts. We have also secured a record number of new recruitment process outsourcing.

<unk>.

As clients seek to rebuild their permanent staff looking.

Looking ahead, our pipeline for managed service programs remains robust and I believe that we are well positioned to continue to win a number of sizable programs, which will further grow our spend under management. We have made significant investments in this part of our organization and I feel we now have one of the most.

Talented incredible sales team in the market, who are able to clearly articulate cross countries value proposition.

From a candidate perspective, it is clear that cross country presents a unique value proposition driven by competitive compensation packages attractive opportunities and a commitment to the highest level of service.

Our brand is resonating in the marketplace in a big way one data point. We're sharing is the number of first time travelers with cross country has more than doubled and currently makes up more than 40% of new weekly travel assignments.

As clinicians specifically millennials continue to embrace the flexibility and personal control that come from being on temporary assignment. We believe that cross country is well positioned to capitalize on this emerging trend our commitment to excellent service, along with ensuring diversity and inclusion.

Have resulted in cross country, receiving a number of recent awards as one of the top staffing companies for women and award for Best Places to work and five top workplace awards from enter gauge, including an award for top diversity equity and inclusion program.

Turning to the businesses, let me just spend a moment on our segments, our largest segment of nurse and allied more than doubled over the prior year and was up more than 13% sequentially. Both driven primarily by an increase in the number of billable hours and professionals on assignment.

Again, I want to reiterate that the continued growth is a direct function of the improved productivity stemming from the changes we've implemented over the past two plus years.

Digital transformation of the organization and the continued investments we have made an incremental revenue producers throughout 2021.

We look forward to making continued progress as we continued to execute against our strategic plan.

Our local business, which has been re imagine through the introduction of our marketplace candidate App and restructured with the elimination of redundant organizational infrastructure and its office footprint is making solid progress and recently has experienced some of the strongest performance weeks since.

The pandemic started this business has performed better than expected with third quarter revenue up 11% over the prior year and we are expecting continued sequential weekly revenue growth throughout the fourth quarter.

As expected the education business declined sequentially due to the impact from summer holidays.

However, similar to our other lines of business outperformed relative to our guidance and the prior year with the start of the New school year. We are excited at the prospects for this business to continue its return to pre COVID-19 growth rates also contributing to the third quarter, where the results from our most recent acquisition of workforce solutions.

Group, which closed in June of this year as a reminder, WSJ expands our footprint in the homecare market and aligns with our strategy of following the patient by delivering quality clinicians across the entire continuum of care.

In addition to traditional staffing WSJ offers managed service outsourcing arrangements or msos, which function. Similarly to our managed service programs, except that they provide clinical support in home health.

On a pro forma basis WSJ continues to experience significant growth with revenue up more than 75% and a gross margin several hundred basis points above the segment average.

Looking ahead, we continue to expect above average growth, having recently implemented two new MSR programs and with an active pipeline for future opportunities.

With respect to our integration we are taking steps to ensure we maximize the cross selling and fulfillment opportunities across the organization by leveraging the full complement of resources at cross country, including tapping into our extensive database.

This acquisition also expands our go to market strategy and expanded service offerings to our clients from an operational perspective integration efforts remain on track to be largely completed by the end of this year.

We are also encouraged by the turnaround and trajectory of the locum tenants business as it continues to recover from the impact of Covid.

<unk> revenue was up 20% sequentially and 14% over the prior year with the majority of the growth coming from an increase in volume from primary care physicians and nurse practitioners.

Our managed service programs or MSP continues to represent a significant portion of our business representing 48% of consolidated revenue for the quarter total spend under management was nearly $8 billion up 6% over the prior quarter and our capture rate was approximately.

69%.

Given the combination of strong demand and a proven ability to execute we have continued to make significant investments in our business. Both in additional resources as well as in technology from a resource perspective, we have grown our organization's head count by nearly 30% in 2021.

With more than 90% in revenue producing roles.

The majority of these resources are ramping quickly and I believe we now have a deeper bench of revenue producers and at any time in the company's history.

From a technology perspective, we continue to make solid progress with enhancing and further deploying our applicant tracking system or Ats with further deployments scheduled over the coming quarters.

In addition to the Ats, we continue to make significant investments in both client and candidate facing tools from the candidate perspective, we are continuing to build out a complete self service portal that candidates can use across the entire engagement lifecycle.

Overall I'm highly encouraged by the progress we have made in just a couple of years to digitally transform this company positioning this company as the innovative leader.

Looking ahead, our fourth quarter guidance to another point to another record quarter in the company's history. We expect consolidated revenue between 580 $590 million, representing sequential growth of 55% to 57% while practically all lines.

Within nurse and Allied are anticipated to grow sequentially. Most of the growth is expected across travel nurse and allied and although average bill rates for the travel business are projected to be up 25% to 30%. The majority of the sequential growth is expected from a continued rise in hours worked as.

We continue to take market share and expand the head count on assignment.

From a profitability perspective, we anticipate adjusted EBITDA to be between 63 and $68 million, representing an adjusted EBITDA margin of between 11, and 11, 5% well above the 8% achieved this quarter.

As we look beyond the fourth quarter, we expect headwinds from declining rates in 2022, and the pullback in demand for certain specialties, such as respiratory therapist. However, we also expect to see continued volume growth across our portfolio as we continue to grow our market share.

Although we don't provide guidance beyond the next quarter I believe that given our current level of production our revenue run rate for the first two quarters in 2022 shot should remain higher than our third quarter.

Finally, we are cross country recognize the disparities certain community space and health outcomes due to their ratio makeup and ethnicity. The pandemic has certainly highlighted these challenges in marginalized communities, we are especially proud that our recent acquisition of workforce solutions group.

Typically targets these underserved communities and is making a positive impact by providing an opportunity for patients across every spectrum to live a healthy life.

Wanted to thank our thousands of health care professionals, and our corporate employees, who promote health equity everyday I couldnt be more proud of the work. They are doing now let me turn the call over to Bill to walk us through the results in more detail Bill.

Thanks, Kevin as Kevin mentioned, we once again exceeded expectations for both revenue and adjusted EBITDA as the company continues on its trajectory of solid execution across multiple fronts, our ability to attract and place candidates coupled with favorable bill rates is leading to our fourth quarter, not just being the strongest quarter of the year, but in our history I'll speak to the.

Guidance in just a moment, but first let me review our results for the third quarter.

<unk> revenue was $374 $9 million up 93% over the prior year and 13% sequentially. While average bill rates have increased over the prior year and sequentially. The majority of the growth has come from an increase in billable hours across our entire portfolio.

Looking at the segments revenue for nurse and Allied was $356 1 million.

Representing an increase of 101% over the prior year and 13% sequentially within the segment the travel nurse and Allied businesses were the primary drivers for the growth on a sequential basis. The hours for these two businesses were up approximately 10% while the increase in average bill rates was in the low single digits as.

As we came into the quarter Bill rates look to continue the downward trend we had seen throughout much of the first half but.

But as we progress through August and into September we saw continued spikes and urgent needs related to the Delta variant and later to the needs to backfill pertaining to the vaccination mandates.

Its upward trend is expected to continue into the fourth quarter before peaking late November or early December.

At this point demand related specifically to the delta variant or the vaccination and mandates has declined but our overall travel demand remains well above the pre pandemic levels.

And near our her stomach historic highs.

Though we have limited visibility into when or how quickly rates may start to retreat. We expect that they may come down more slowly than the increased and to hold well above pre pandemic levels for the foreseeable future.

Our local business continues to recover from the impact of the pandemic and was up 11% over the prior year.

With both rates and volume contributing to the growth.

Average bill rates remained relatively flat this business compared to the second quarter, though still 8% above the prior year.

Also part of this segment, our education business performed better than expected. Despite the anticipated sequential decline from the summer school break.

This business grew 77% over the prior year entirely due to an increase in billable hours as rates remained relatively flat.

We're off to a strong start and expect to see double digit year over year growth in the fourth quarter once again.

Our only other segment physician staffing saw double digit growth both sequentially and over the prior year.

The growth was broad based across a wide range of specialties, including primary care and hospice as well as advanced practice specialties, such as nurse practitioners.

Gross profit for the quarter was $83 8 million, representing a gross margin of 22, 4%, which was up 50 basis points sequentially and down 230 basis points versus the prior year.

As we've called out previously gross margin continues to be impacted by the mix of rapid response assignments related to the pandemic as well as the higher than normal compensation costs due to the extremely tight labor market <unk>.

The sequential improvement was driven by both higher margin for our travel business as well as the favorable impact from the WSJ acquisition, which has a margin well above the average for the segment in.

In general we believe the gross margin will continue to improve especially for the travel business as Covid continues to subside.

Despite the year over year decline in gross margin. The gross profit dollars were up 75% over the prior year further improving our operating leverage.

Total SG&A was $52 $8 million for the quarter up 5% sequentially and 30% over the prior year.

Excluding the impact from WSJ, SG&A was flat sequentially and up approximately 21% over the prior year.

The primary driver of the year over year increase is related to the investment in revenue producers from higher salaries and commissions earned on the record performance of the company.

With demand remaining strong we expect to continue making investments in revenue producers to fuel continued organic revenue growth in the coming quarters.

There are several other items worth calling out in the income statement we.

We increased our allowance for doubtful accounts by $1 $4 million in connection with the growth in our receivable portfolio.

And we incurred approximately $300000 in continued restructuring costs related to the leases exit over the last two years.

Below operating income interest expense was $2 $2 million, primarily attributable to the carrying cost of our new $100 million subordinated term loan entered in connection with the acquisition of WSJ.

From a balance sheet perspective, we ended the quarter with $800000 in cash and $104 million in outstanding debt, excluding letters of credit, including the subordinated term loan and $4 million in borrowings under our ABL facility.

As of September 30, the company was able to access the full line under the ABL.

From a cash flow perspective, we had a use of cash from operations of $3 million due to the investments in networking capital associated with the strong sequential growth of our business.

Our days sales outstanding was 61 days up three days since the start of the year.

The increase in DSO was largely due to the timing of revenue recognized throughout the quarter given the strong sequential monthly growth throughout the third quarter.

Capital expenditures were $1 9 million for the quarter principally related to the continued investments in our digital transformation.

This brings me to our outlook, we expect consolidated revenue to between to be between 580, and $590 million, representing a 169% to 174% increase over the prior year and between 55% and 57% sequentially.

The majority of the sequential growth is expected to come from an increase in the number of professionals on assignment as well as the sequential increase in the bill rates for our travel nurse and Allied businesses.

Billable hours for travel nurse and Allied are expected to grow by more than 40% over the third quarter as our investments in revenue producers continued to ramp and we continue to experience improved productivity.

We're guiding to a gross margin of between 22, 2% and 22, 7%, which represents a 20 basis point decline to a 30 basis point improvement on a sequential basis.

Overall gross margins continue to remain lower than the prior year, primarily as a result of margins realized on rapid response orders related to Covid and an incredibly tight labor market.

As a result of the historic organic growth our adjusted EBITDA for the quarter is expected to be between 63% and $68 million representing.

Representing an adjusted EBITDA margin of 10 nine to 11, 5%.

And our adjusted earnings per share range is $1.01 to $1 11.

Also assumed in this guidance are depreciation and amortization of $2 7 million.

Interest expense of $2 6 million stock based compensation expense of $1 $6 million and 37 7 million shares outstanding.

And finally, given our fourth quarter and full year performance, we now expect to fully utilize our federal net operating losses in the current year nearly two years ahead of our projections.

Also as a result of the profitability, we expect to reverse the related $24 million valuation allowance as a credit to our income tax expense line. Our adjusted EPS guidance excludes this credit and reflects an effective tax rate of between 30 and 31%.

And this concludes our prepared remarks at this point, we'd like to open the lines for questions operator.

Thank you we will now begin our question and answer session.

Like to ask a question over the phone lines. Please press star one from your phone on mute your line speak your name and affiliation clearly when prompted if he would like to withdraw your question Press Star two.

One moment and thank you the first question.

Our first question comes from Kevin Fischbeck from Bank of America Securities. Your line is open.

Great. Thanks.

I guess, it's been a while since you guys have done any kind of meaningful deal. So.

With us, particularly could kind of maybe break out the revenue growth this quarter and maybe in that.

The Q4 guidance between kind of what is organic and what is coming from acquisitions.

Yes sure Kevin.

This is bill Burns hopefully you can hear me.

As we talked out on last call we had about five.

$5 million of revenue in the second quarter, given how late in the quarter. The deal had closed in the current quarter was a run rate of about $20 million.

Okay.

That $20 million range in Q4 as well.

Yes, we havent given specific guidance to that but yes, we are looking towards forward for some sequential growth but.

That's a reasonable range.

Okay and is there any reason to believe that that business will act any differently.

I guess, when we think about home health is clearly seems to be an acute.

Staffing issue there as well.

You have to have the same kind of trends around bill rates and and in demand or would that act any differently.

Christmas the core nurse and Allied business.

Yeah.

Yes, I mean in terms of.

Bill rates and we're not seeing the higher bill rates in that business that we're seeing for example in the travel.

Or some of our other segments.

And the story with WSJ is it's a it's the market leader in providing.

Home health care staff to seniors.

Cyclically around federally qualified health care centers.

Pes centers and.

Growing its footprint of customers rapidly and it's a wonderful story, because it's providing both.

<unk> staffing services to these healthcare clinics and then through this <unk> contract, which we pointed out in our comments earlier.

We provide home health caregivers.

Follow the patient into the home.

Managed care plan now in that segment Kevin.

As you know.

Throughout this pandemic.

If any part of the labor pool is.

<unk>.

Hourly workers and Theres, a lot of patient care tax in CNS that work by the hour and so the challenge in that business is to keep up with growth and find the supply.

Does parallel of course.

All the other segments as well.

Normally tight labor pool.

Yeah definitely.

And I guess, maybe last question I appreciate youre doing a little bit.

Beyond what you normally do as far as guidance with that commentary about the first half run rate I guess, though when we think about 2022.

Overall do you think that 2022 will be a topline growth year or do you think it will still be down year over year.

You know what what we don't know of courses.

Whats going to take place in terms of bill rates right and what we did call out is in the first half of the year.

We think performance will be above where our Q3 numbers came in.

On a on a relative basis, we are seeing the delta variant cycle.

With hospitalizations decreasing but at the same time, we're dealing with.

Vaccination mandates.

We're a little.

No.

We're careful about the flu season, it looks at the moment like it's not going to be.

A severe flu season.

But all of those things are the puts and takes that go into.

Our guidance there what I will tell you is look Kevin our strategy is working.

Blueprint that we put in place in 2019, our strategic plan is working well and were surging as the market leader again.

And we will.

We are a market leader in a large and growing market as you know it's $20 billion. This year growing to 25 billion next year.

And we have a very focused strategy.

We talked about following the patient in this continuum of care from wellness to acute care to outpatient.

Home health and we are the only company that can make that statement, but we provide that whole continuum of care.

And so what the soaring demand tight labor.

Supply.

Very focused strategy and I wanted to just point out quantitatively.

We continue to see huge gains with our employee productivity all of these things.

Are the new cross country Cross country as we've guided to is growing 100% and Q4.

In terms of health care clinics.

Clinicians working for the company versus a year ago, we are.

Emerging from this pandemic a much different company a company that's focused.

Digitally transformed itself.

Has powered up top graded the management team.

Expanded our revenue producers.

Significantly.

We're very excited about our future. So we think there's plenty of demand for us to have a very successful year and based on the guidance we gave.

Cross country healthcare.

We will be on an annual run rate of between $2 and $2 $5 billion in the fourth quarter, so lots of momentum here.

Okay, great. Thank you.

Our next question comes from a J Rice from credit Suisse. Your line is open.

I guess I'm, just trying to figure out.

First of all.

As the Covid.

I understand the surge and that was what that ROE, but I guess.

We're surprised a little bit obviously, the strength is continuing even as that surge dynamic.

Comes down.

Is there a way to talk about how many of your placements that youre getting are going to COVID-19.

Hotspot COVID-19 specific assignments versus non COVID-19.

How that will trend going into the fourth quarter and even as you maybe early to think about first half of next year.

Is there a assignments that people took an when.

When they were under the gun and.

The CAGR of the surge in September and October is it just theyre going to extend into the fourth quarter because there are three months plus.

Assignments, and then they'll roll off I guess, just trying to figure out how the placements are staying so strong even as the surge.

It looks like it's abating pretty quickly.

Well hi.

Hi, a J I'll start that and I'll ask the team to add some comments because it's a key question of course first of all we're seeing demand across.

A lot of specialties.

Due to deferred.

Coming back to the broad market so to speak.

Is booming in terms of open jobs elective surgery or peds LNG.

You know a lot of emergency medicine, we're seeing 200% increase in job orders for example on our Locums Division.

We're seeing this broad.

Demand come back and there is a shortage across all of these specialties right. So.

You know that's that's one back up a second.

Backdrop.

Addition to Covid.

This quarter, we are as we've called out are these vaccination mandates.

It's leading to an even tighter supply for pockets in the country.

Not every state is.

And every health care system is requiring a vaccination, but many are.

So we've got you know.

The mandates which are affecting the business in Q4.

Interestingly enough some of those vaccination mandates also now include slingshot.

So and then.

Some pockets, we're seeing them actually be delayed or pushed back and then one other comment and then I'll throw it over to Buffy and she can talk about what he's hearing from some of our clients, but for example in the pediatric area children's hospitals.

Have a triple threat right now between Covid between winter respiratory and August deferred health care needs are up a staggering 300% in these facilities.

So we're seeing we're seeing all of that and then just briefly before I turn it to Buffy.

Our school business is back every Kid is back in school it bodes well that the.

CEC is approved vaccinations for children, because although these schools wherever.

Go out again.

And when you look at this issue about stress some burn out and how much pent up demand there is.

PTO, there's a lot of our clients permanent employees.

We're going to be very very busy, but Buffy maybe you can fill in some of that.

Sure. Thank you, Kevin and hope you're well a J.

A couple of things we are still seeing some pockets of COVID-19 and sensors, given the COVID-19, but it's much smaller it's much more isolated than it is than it has been so really we see a few areas, but driving staffing at this point, primarily staffing vacancies within core staff, So health care facilities, obviously, theyre seeing burn out and attrition.

But they're also trying to give their core staff the PTO that they weren't allowed to have for some time because they were carrying for it.

And so they are trying to offset that in some of the vacancies due to their different services.

In addition, the hospitals are starting business resumption.

So where are they can they are starting to offer out the elective services preventative services.

Interestingly enough if folks have not necessarily met their deductibles. They may defer those over into Q1, which speaks to the second question. You had is what might you see in January.

Theyre also becoming concerned about coverage over winter and obviously, we have not seen a significant amount of flu activity.

Potentially can anticipate seeing that in January as most of that could pick up in Q1. The vaccine mandates are probably one of the largest impacts and they are driving a lot of not all but a lot of the health care facilities are driving the vaccine mandates and those dates were seeing October November December for core staff as well as.

Staff, some are allowing somebody get exemptions, whether it be religious or medical exemption not all and if they are allowing those exemptions. They will require weekly testing. So we're seeing some variability across all of that but what that says to US is you know.

No supply at this point, because even the contingent workers are fatigued.

But still high bill rates out there because there is such high demand.

And so as we start to go into the holidays. The needs are even more critical we are starting to see that assignment lengths go back to kind of the 11 plus week summer even looking for longer to carry them into the Q1 activity and again once we hit January potentially we'll see flu youll start to see some of those well.

To be preventative services now becoming more in need in acute.

And youll start to see people working down their deductibles and going back for those deferred services.

So I agree with everything else, Kevin said, hopefully that added some color.

Sure, maybe if I could just follow up on that.

Can you just comment on how youre doing on fill rates and maybe how that's trended over the last few quarters. It sounds like youre getting a number of more coalitions willing to take these assignments. So I'm wondering is that keeping up with the demand or are you able to fill more of the orders that you fill a higher percentage of the orders that you get.

Right now versus what you could do a quarter or two ago.

John you want to take that.

Sure. So yes it is.

Demand, especially going into quarter three has been at historic levels and this is something where we were if you look at what our demand was on this surge compared to the surge of Q4 of last year the amount of the obviously nearly double and so.

So well still rates you have to wait till have already indications to show what we're doing because there is just between the vaccine mandates between.

The COVID-19 needs.

There were literally there or.

The openings of certain hospitals.

Hundreds and so we've seen more volume and more information is going to these accounts.

The jobs were unprecedentedly high fill rates or a hard indicators just to see.

Just because of the sheer volume jobs.

Alright, maybe one last question would be on the bill pay spread it sounds like at times in the surge you guys have been willing to try to help your clients out a little bit to take a little bit of a pressure on the on the bill pay spread whats happening with respect to that now.

Are you able to hold that or.

Is the dynamics of the market is such that you are having to give a little concession admittedly it much.

Elevated rates, but.

What's the trend with bill pay spread.

Hey, Jay.

Kevin sorry.

Yeah, No I was just going to say look you know from the very beginning a J.

We're the one company the market leader debt.

Put out price guidelines, we wanted to make sure that we stood by our partners our clients.

During this unprecedented pandemic and made sure that we were attracting the supply they need and we're passing on the majority of the bill rate to the health care professional.

To make sure that we could fill those orders as the pandemic eases as Delta variant eases as bill rates fees.

This kind of artificial suppression so to speak of approximately two to 300 basis points, we think can bounce back.

With the broader market so.

We think it's a tight supply.

Good place.

We've done the right thing in terms of standing by our customers. They appreciate it our customers. We have tremendous retention I was just at one of our largest clients about a week ago, one of the largest health care systems in the country. There are so appreciative of our core values and the ethical stance we took.

And I think we'll be rewarded for many years to come because.

Is the right thing and Bill did you want to make a comment.

Yeah.

But I was just I was just going to say to your point Kevin throughout the pandemic. When we were sending people into the hotspot specifically around the spikes.

Covid, we were certainly looking at ensuring that we were paying what we needed to to get the supply where they had to go regardless of what the bill rates were as we're seeing the mix of demand kind of normalize I'll call. It to a more normal mix, it's still elevated to one of your earlier question I mean, even as we come into this quarter now demand is still even though the COVID-19 spikes from delta or started to retreat and the <unk>.

Mass mandate the vacs instrument, it's excuse me are not playing a bigger role our demand still is.

At least two X, where it was a year ago coming into the quarter. So there's plenty of opportunity there and I think as that as that plays itself out we should start to see the margins normalize and pay pay recently went up faster and by a higher percentage than bill rates.

Don't know if it they'll play out exactly in the reverse order that way, but over the longer term, we would expect periods and bill rates to more normalized.

Alright, great. Thanks, a lot.

Our next question comes from Brian <unk> from Jefferies. Your line is open.

Hey, good afternoon, guys and congrats on the quarter. This is Jack on for Brian.

Just quickly.

Wanted to touch on what Youre seeing in terms of.

Pat.

Staffers that our nurses that are going on multiple assignments with you or repeat assignments I think we're seeing some industry studies out there showing that.

So is that are newer to 10 staffing our travel staffing.

Or are having kind of a better experience or generally more satisfied than.

The nurses in Perm roles, and so just kind of looking for a way to triangulate and track. Obviously some of that is related to bill rate, but trying to see a sort of.

Here, what youre seeing on that side of things.

Anything in terms of repeat staffers are stickiness of people that are newly jumping on with cross country would be helpful.

Okay.

Yes, Jack it's a great question a couple of different answers first of all our renewal rate.

Is very strong and it's been strong throughout the pandemic and we have a lot of our health care clinicians work with us Simon after assignments, but I'd say, there's two points one.

Most of the travel nurse or travel therapists today are millennials millennials are part of this gig economy and they are embracing the concept of having.

Our flexible contract.

Oh work assignment versus being a permanent employee for all the reasons. They can go when and where they want to get paid well.

And they call the shots. So that's point number one and that is a mega trend. That's been continue for I think many many years.

Especially in the health care realm.

And we're seeing that the other the other point is as we called out in our call.

Comments earlier, 40% of our new travel assignments are locked so to speak.

Our first time travelers with cross country healthcare and these are experienced tenured nurses that are coming to work across country healthcare. There are folks that have already been in the travel industry and it's a really important point because the point I'd want to make to you is cross country healthcare needs the company to work for.

Again, okay. It is the number one company that women want to work for.

We called out one of the awards in recent months, but what we're seeing is we're seeing the market come to us why because we put the strategic planning.

Almost three years ago, we turned around the business with top graded it we've restructured it the candidate experience for our health care clinicians.

Is night and day different than it was three years ago, it's extremely well see for a job seeker to find a job in minutes or hours versus days, we've compressed the ability to find a job and accelerated the process.

So.

So many things go into I know, we called that great guidance for fourth quarter, but were still warm enough to be engines here at cross country healthcare. This company doesn't want to be second third we might be number one again and that's our mission and our mission is to keep.

We have a lot of competitors that are looking in the rearview mirror a lot lately, because we're coming on strong and I can also reflect on.

The great sales quarter, we had with our from our sales organization, we had probably the largest quarter in our company's history of hundreds of contract wins. Okay. So it's broad based it's across all segments.

In the one cross country brand is really resonating well John I don't know if you want to add anything from your perspective.

Right.

Thank you Kevin Your response was pointing on a spot on the only thing I'd add.

Jack is that clinicians are looking for and we mean things still right and this is why they're continuing to renew with us youre looking for competitive pay but looking forward the quickest process from the door before their assignments and theyre looking for the flexibility in assignment lengths, whether it's a shorter term assignment or longer term assignments and of course there.

Looking for.

Making sure that they have the relocation and the way it is simply what they were working on but I think it's key is.

Able to get the commission that incredible experience for them.

He is getting them to renew with us more and stay with us as a company and it's all about really having a frictionless process and an easy button to get the questions to stay on board and as Kevin mentioned it really is a lot of these millennials that are working now in the industry and they've really been baptised.

During this pandemic as you mentioned they came in here first time travelers and they're really enjoying this getting economy. This experience of being able to go in the on demand where they want to work when they want to work and being able to really call their career and really make inroads on how they wanted to develop their career.

Yeah.

Okay got it.

Really really helpful. And then one quick follow up for me just on the volume assumptions for 'twenty, two and the commentary there just so I understand it right is that 9000 average providers on assignment that you put up in Q3, a decent base to think about.

Being able to sustain through 'twenty, two and then <unk>.

In.

It looks like.

With my kind of back of the napkin math somewhere between 20, and 30% productivity gains on your sales force relative to the prior year, depending on how much you would attribute that WSJ and is that sticky or you're going to have to bring more staff on.

What's kind of the viewpoint there in order to maintain those volume levels. Thank you.

Bill you want to comment.

Yes sure Great question. So the the goal obviously as we look into 2022 is to maintain and grow our head count. So really what we're looking at is we expect even in the first half rates will start to trend down okay, and so but to Kevin's point as we exit the fourth quarter with.

With the level of <unk>.

Staffing that we'll have.

At our clients, we expect that to continue and to grow from that point forward. So because were still gaining.

Our activity and we're still having a revenue producers ramp from the significant investments we've made throughout the year as you heard in Kevin's script, we've grown our workforce by 30% on an organic basis and 90% of those were revenue producers. So we've been hiring all throughout the year and folks are at all stages of 10 years. So we will continue to see productivity gains from that.

Coupled with the.

Yes.

Productivity side, just continuing to roll out and deploy new technologies.

Got it thanks, and congrats again on the quarter guys.

Thanks, Jeff.

Our next question comes from Tobey Sommer from true Securities. Your line is open.

Thank you I was wondering if you could give us a little bit more granularity into the increase within the sales force itself. Because you did say, 90% of a 30% increase overall employees.

I understand why you might not want to give us the hard numbers, specifically, but if you could be more specific on the growth rate as well as maybe Kent.

Give us your perspective for how much productivity.

Enhancements you could get over time as they get tenure.

Okay.

Yes, Youre right.

Go ahead Kevin.

Okay, Yeah, I'll start and you can comment probably another good question.

Our productivity.

Is up massively compared to where we were before our digital transformation and we've called that out.

And we continue to get gains.

From the technology that we brought to the organization from our cloud based Ats system to many many other things lots of things that we don't really.

And candidly you want to talk about publicly but that we do that as part of our secret sauce and our algorithm. So we.

Our investing $12 million to $15 million a year in capital expenditures.

We are improving.

Not just the employee productivity tools, but as we called out, earning making it simpler easy easier faster to find a job or marketplace.

Technology for example, I'm sure contributed to the great results that we saw in our per Diem MSN.

MSN Division for example, this quarter so.

We're never finished.

Testing significant dollars and we think there is a lot more productivity gain.

And then in terms of your question around.

The mix of people.

Look we have grown substantially a cross.

Cross country nurses Division recruiter base.

You know as well as cross country Allied but really every single division, we have scaled with more recruiters better training more account managers better training big.

Bigger sales organization.

All of the above so I'll throw it back over to Bill.

Thanks, Kevin.

Yes, so it's hard to give you a percentage growth in each of the functions, but I can just kind of give us some sense of it spans all types of revenue production producers right. So recruiters chief among them is the area, where we've been investing obviously account managers as well.

As well as additional salespeople and other some other revenue producing support roles.

Credentialing and on borders but.

Vast majority of it has been in the first two I mentioned, the recruiters and account managers.

But it's been pretty broad based and it's not in one particular business. We are investing across the entire portfolio. So we are adding capacity to all lines of business I would say.

Based on typical head count mix that pre.

Pre pandemic at least.

It's 90% of our overall, 30% increase it sounds like it's something.

In the 70% to 80% range is that a reasonable estimate on my behalf.

I mean for the just for the growth factor alone yet for the sales related.

Yes, I think so I think that's a reasonable I mean from the perspective of a high level discussion on what the mix of employment is it's clearly different than it was pre pandemic right. When we went through the restructuring in early 2020, and we were looking at our cost reduction.

The cost reduction.

Revenue per user roles. So we've scaled back down and simultaneously as we've seen the market remains robust etcetera. We've made the investments. So it's it's certainly part of the growth story here is the capacity of the company has just.

Completely changed as we look forward.

So.

My follow up question would be.

Margins are great. The revenue growth is very strong.

The balance sheet is under Levered.

What is your appetite and preference as far as acquisitions or is this market.

Just make.

Make it difficult to assess.

Assess the durability of potential acquisitions, and they're kind of revenue and profit streams.

Yeah.

Tobey that's.

Good question, and you're kind of right in what you're asking in terms of first of all our pipeline is strong we were looking at a lot of potential targets in education in the home care marketplace and Locums some technology.

So it is a strong pipeline, but to your point.

<unk> are high and we've called out this on the cohort but.

It took us.

You know a couple of years or so to make our first acquisition.

We wanted to do more but we're very value based investors, we don't want to overpay for things.

So we have a we have a wonderful corporate development team and our finance team to be able to really dig in on things. So you know look.

Where do we have a fantastic.

Balance sheet situation right now we have a wonderful partner Blackstone of Wells Fargo.

A lot of dry powder.

So stay tuned.

Thank you.

Our next question comes from Kevin Spanky from Barrington Research. Your line is open.

Good afternoon, just wondering if you've seen any data on how significantly the vaccine mandates are.

And strict and the supply of clinical labor.

Buffy you want to tackle that.

Certainly so there are hi, Kevin hopefully youre doing well.

There are a lot of hospitals as I mentioned and a lot of facilities that are applying the vaccine mandates across their core staff, but also.

Any kind of indirect staff coming into the facilities.

We are trying to apply the exemptions, whether it'd be religious or medical exemptions and then offering weekly testing. So that they can continue to bring that supply in this really is impacting not just the clinical side, but the non clinical so across the board. We are seeing impacts some of the data that some of the health care systems have established for those.

Vaccine mandates have pushed out so.

So that's giving the staff a little more time to make the decision go through that with the vaccines if they choose.

And we're seeing the numbers go up as they start to push out those dates. So they are anticipating a higher impact and as the data emerge is that that impact from the Kobe. The vaccine mandates declines, but we're also seeing pockets of either health care systems or even by state where theyre not mandating that so I do think that.

It is.

A short term impact on the supply.

And in particular, where some of the demand is much higher as Kevin was mentioning in some of the LNG pediatrics, there's still high demand for ICU endoscopy et cetera that that's where we're going to see most of the.

The supply compression and bill rates.

Continued nurturing of candidates is going to play a very big key and not being able to support the.

Health care facilities, and will help to support them through contingent staffing as well as our direct hiring rpm's surfaces.

Yeah, and I would just add to Kevin I mean overtime.

Overtime hours were up 52%.

Over pre pandemic levels. So that's a symptom of this.

And we're seeing a lot more overtime than we would typically see as well.

Okay, great. Thank you.

Just wanted to ask.

<unk>.

Sure.

8% adjusted EBITDA margin goal, you've obviously achieved that in two of the last three quarters here and.

You're targeting a higher than 8% margin in the fourth quarter.

At what point do you say well we've reached that goal and we've reached it a little earlier than expected and.

Kind of think about what the next.

Potential margin level or potential target could be.

Yeah, maybe bill and I will tackle that.

Look first of all.

We did reach.

8%.

Sent or better type of result over a year earlier. So we're very proud of the fact that we accelerated.

Our trajectory in terms of earnings.

Two.

We are.

On a sustained growth path, we will continue to make investments quarter to quarter to keep this company.

In the forefront as the most innovative company in the industry. So sometimes we'll invest against profitability and will not necessarily slow in some.

Perfect line going forward, but.

We're bullish we're very bullish on our capability we have.

If you step back and look at what we've accomplished we're two times the size that we were a year ago and we've got <unk>.

30% more revenue producers, we've got productivity tools that are.

Improving our results in high double digits.

Across our enterprise and there is still projects yet that we are extremely excited about some that will be.

Bringing to market over the next couple of quarters, we're very excited about where we're going directionally. So.

We we get that.

Job is to grow shareholder value, but this is no longer.

Company debt.

It doesn't have a blueprint on its future and we're very excited we don't want to see the company drift back from us.

Two to $2 5 billion run rate business.

Achieving.

These type of numbers, so we're going to work really hard to grow that profitability over time.

Above these targets.

Okay.

Yeah, Kevin just a couple of other points as you think about Kevin earlier comments about the first half kind of maintaining above the Q3 run rate I, certainly think that certainly implies the company can operate at 8%. If our revenue levels are going to be north of the third quarter run rate that we've talked about.

As the bill pay spreads start to normalize in the future.

It really becomes a story of two fold right the continued volume growth and expansion.

It obviously does.

Substantial increase in volume that we're seeing into the fourth quarter, that's allowing us to target double digits.

Historically, we've said roughly about a third of our gross profit. This is implying nearly 50% of the gross profit is flowing through the <unk>.

Bottom line in the fourth quarter so.

It is possible to start targeting higher margin, but I guess more of a need to be borne out as to how much how fast we can keep pushing the volume side of things and as we talked about as long as the demand remains where it is we're going to continue to invest we're going to continue to implement new technologies gain productivity and continue to see the level of <unk>.

Books on assignment grow across the revenue producers.

Okay. Thank you that's helpful. Thanks for taking the questions.

Thanks, Kevin.

Our next question comes from Bill Sutherland from Benchmark Company. Your line is open.

Thanks for keeping the lines open for me guys.

Good evening.

I was wondering if we could just spend a minute on the supply side.

Really just mostly curious.

What year.

What you are.

Seeing firsthand, maybe what you.

Anything that you.

Gathered.

Industry wide as far as.

The.

The future of congratulation rates the future of immigration.

Just.

Okay.

Is there going to be a supply catching up.

In our lifetime.

In a M.

What kind of.

Window do you see there.

Yeah, Hey, Bill.

Yeah. It's a good question first of all we're very.

Very encouraged that enrollment in bachelor's master's and doctoral nursing programs has increased nearly 6% from 2019 to 2020 and that data is a little bit old I think.

It's probably risen more than that this year I think there is a lot of interest in.

People looking at these heroes that had been on the front line and candidly the flexibility in their work environments compensation a lot of things go into that but we're very encouraged that enrollments.

Our stronger.

We have we have seen a fair amount of interest in terms of.

Foreign trained nurses by some of our clients.

There is more of an appetite so to speak to look at and trained nurses as an additional <unk>.

Part of the supply.

I will say that I also would say that what we're seeing through this pandemic I think we're going to look back and pardon me use this phrase, but I think there are some is at a paradigm shifting moment and.

There.

It's a.

Is it as a profession that.

There are some exciting new opportunities such as Telehealth. For example that were here a couple of years ago that are becoming mainstay. So a lot of those things are attracting we think longer term of supply.

Which will be good to use some of this but.

Open it up to John or Buffy if you have some comments you would also like to make the bill.

Hey, this is John Bill.

Thank you for the question and I'd, just add Tony briefly as well there is definitely as Kevin mentioned.

Silver linings, and some opportunity ahead of us in different segments to bring in more supply.

What we're looking at if we look at the August BLS employment data, but we're still seeing overall healthcare employment is down three 1% from pre pandemic hospitals are still down one 6% from pre pandemic.

This study.

That took place over the summer.

So does that 62% of hospitals has are in vacancies.

Seven 5%.

I think we do have a long way to go to bring back the supply and it's going to take that as an industry for us to partner with our hospitals.

With schools to really create more supply to meet this.

This need and its demand, especially as we're seeing the nurses that are referred to as the team and leading industry.

Alright, yes, I'll weigh in from a client perspective, they're they're really looking to us to say help us with innovation help us with our core.

Core staff retention. So if we can just retain Morris, who we have if we can look at how to upskill or those that you can move into more acute position. If we can we scale those who may have been out of the bed side for some period of time, because they've been fatigue and bring them back. So we're also looking at not just the.

<unk> creation, but how we really create the supply that is potentially right in front of us.

Shorter term opportunity there, we definitely need to focus on the longer term.

Yes.

On that scaling.

Buffy you are in terms of re skilling.

Would you all have some would you be providing support.

Or I'm, sorry about that for a certain group books.

Tenured people.

You would.

One of <unk>.

Investor.

That's right that is the intent. So we have a clinical quality council made up within cross country that is in partnership with a lot of our health care facilities a lot of external organizations.

As well as a lot of these school opportunities and looking at just that is how can we help come in and we scale through education through pre sac through partnering.

Different types of innovation in order to again retain and grow the supply that's already there.

Alright.

One last one if I can.

This is over to the bill rates again, I don't know if you've had.

A way to do this but have you been able to kind of segment growth rates associated either with.

Covid work itself or with.

The impact of the mandates currently having a big impact.

<unk>.

You know the business.

Serves the traditional.

Roles related to supporting departments and procedures and so forth.

Uh huh.

The answer is we do have separate bill rates right for.

Rapid response Covid business for example.

Four we may have a project.

Is that a client.

Gives us in terms of vaccination mandates and that could have.

Pricing, but I think the point.

As the broad market still has high build rates.

To find a cardiac cath.

Are in right now.

It's a very very high bill rate defined net debt.

Registered nurse.

To find certain pediatric physicians, it's still a high bill rate. So the supply is constrained across all specialties, and we're seeing higher bill rates across all specialties.

It has somewhat of a kind of a network effect across all these different.

Different.

Specialties that we are tripling.

Right.

I certainly agree that it's not going to settle back down to where it was just trying to get some idea.

Such a <unk>.

Delta here now given where the.

Right.

No.

One other point I would just make is the health care system is being dramatically disrupted by new entrants as well such as Amazon care, Apple, Google Whoever Eni for change and.

Technology also things like know Mary outright yeah.

Well I mean, no Matt is really they're a direct competitor.

They're there.

A staffing agency, but what.

What they offer.

Mostly commoditized at this point, but what I'm, saying is the big companies like Amazon Apple, Google or changes in health care is being delivered.

Amazon care is a national business.

That provides a telehealth model.

To bring health care to your home so that is a disruptor.

That's having impact as well.

Alright, Okay guys. Thanks, so much.

Sure.

Thank you and our final.

Question comes from Ryan Griffin from BMO capital markets. Your line is open.

Hey, good evening, just along the lines of the prior question I was curious what to what extent if any of the nursing strike impacted your business. Thank you.

Buffy you wanted to talk about labor disruption.

Oh sure Ryan. Thank you. It's we certainly have seen some activity over this past year.

And through our accrued 48 organization that is one that we heavily lean into any kind of real true crisis staffing around labor disruptions.

Any kind of significant crisis staffing like vacancies et cetera, so the labor disruptions.

It has been some activity over this last year, we do anticipate.

For some of the Union contracting and.

Some of the data coming out that we would see this probably in the first half of the year. So.

So we are tracking that unfortunately for us we're uniquely positioned to support them.

As we have a division that.

Ken quickly mobilized and we up deploy dedicated resources around it manage the end to end program around it including a logistics. So we feel very ready for what's to come first half of the year.

Great. Thank you.

Ladies and gentlemen, this does conclude the Q&A period, I'll now turn it back over to Kevin Clark for closing remarks.

Thank you Jordan and we look forward to continuing to build shareholder value and we want to thank everyone for joining us. This evening and we look forward to updating you again on our fourth quarter call stay safe everyone and please get your vaccination. Thank you.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may now disconnect.