Q4 2021 Cross Country Healthcare Inc Earnings Call
Good afternoon, everyone welcome to the cross country Healthcare's, earning conference call for the fourth quarter and full year 2021. Please be advised that this call is being recorded and a replay of 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 lines for questions.
This call will also be available through March 19, 2022, and can be accessed either on the companys website or by calling 801 9853 in the United States or 2033693 to six nine outside the United States and by entering the passcode 2022.
At the conclusion of the prepared remarks, I will open the lines 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 our incoming CEO John Martin's currently serving as group President deliberate and Buffy White group President of workforce solutions. Today's call will include a discussion of our financial results for the fourth quarter and full year of 2021 as well as our outlook for the first quarter of 2022.
Copy of our earnings press release is available on our website the 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 upon information currently available to it as noted in our press release forward looking statements can vary materially from actual results.
There are 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 for 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.
Considered substitutes for or superior to.
Circulated in accordance with U S. GAAP more information related to these non-GAAP financial measures is contained in our press release also during this call. We may refer to pro forma normalized numbers for change of our most recent acquisitions as those results were included or excluded from periods.
Presented with that I will 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 fourth quarter and full year results represented yet another historic milestone for both revenue and profitability.
Fourth quarter revenue was nearly triple the prior year and the full year was more than double. This performance is made possible by our amazing team of individuals and their unwavering commitment to our customers clinicians and professionals for me 2021 marks the end of three years since my return to this great come.
And I am so incredibly proud of all that we've accomplished it is clear to me that we are fundamentally a stronger more financially sound company with a proven ability to execute and deliver across many fronts and before I discuss the business I'd like to just spend a moment on some of the ways we have transformed cross.
Country into a growth company with a double digit adjusted EBITDA margins.
When re imagining our go to market strategy, we truly left no stone unturned from consolidating more than 20 disparate brands to significantly investing and hiring and training more than a thousand employees to making significant investments in technology.
Our digital transformation has been bolt significantly improving our productivity and magnifying the return on investment from expanding our workforce throughout everything I am, especially proud that we have remained committed to our core values for integrity quality and clinical excellence.
Turning to the market, we continued to see heightened demand for our services driven by growing needs across virtually every specialty including operating room emergency pediatrics labor and delivery and med surge, which are not necessarily related to COVID-19 and.
In addition to the nationwide patient demand for health care services. Our order volume is also the result of turnover and shortages in core staff at many of our clients.
As the results of our recent nursing survey completed in partnership with Florida Atlantic University's Christine E. Lynn <unk> College of nursing revealed.
37% of nurses identified as being burned out and overworked.
Since the outset of the pandemic, we have taken actions to assist clinicians to cope with these stresses including providing access to a clinical social worker and establishing a hotline, which has received more than 20000 calls since the start of the pandemic.
Our compassionate approach to our professionals has strengthened our ability to attract and retain professionals, which has in turn helped fuel our historic growth.
In the fourth quarter alone, we expanded the number of professionals on assignment by nearly 100% over the prior year with more than two thirds due solely to organic growth, thereby significantly improving our operating leverage.
As we've discussed on previous calls the historic demand combined with an incredibly tight labor market has resulted in rising wages and bill rates throughout the pandemic, though cross country has acted ethically and responsibly by being as transparent as possible and by being sensitive to the pressures.
Placed on our clients one of the ways. We have sought to help our clients is by staffing the most critical position at lower margins absorbing as much of the cost increase as possible and as a result, our consolidated gross margin remains more than 200 basis points below pre pandemic levels.
Many of our clients have shared their deep appreciation for cross countries ability to deliver clinicians and for providing industry insights and market analytics to guide their decisions on the rates necessary to attract clinicians in a recent note from an executive at one of our largest MSP is key highlighted that.
Cross country has been a true partner, helping them navigate complex challenges over the last several years.
They especially appreciate our real time market intelligence to facilitate critical decisions.
I've said this before but cross country is committed to doing what is right for our nation, our clients and the patients they treat which we believe ultimately benefit our shareholders. We believe strongly that our partnership will be remembered long after the pandemic is over.
By leading with a data driven approach our team of client facing professionals are able to credibly provide market insights and develop solutions that address each client's unique needs and challenges.
As a result health systems are increasingly turning to cross country as their trusted partner and our pipeline for new business is growing rapidly.
Throughout 2021, we continued to expand our services with existing clients as well as winning a significant number of new direct staffing customers. In addition, we also signed a record number of the treatment process outsourcing or our Po contracts this year, which augments our clients hiring.
<unk> capabilities and helps them build up their core staff.
And I'm thrilled to see our momentum continued to accelerate having already won a couple of managed service programs in just the first few weeks of the new year.
Managed service programs or MSP remain a significant part of our business, representing nearly 50% of our consolidated revenues.
As of the fourth quarter annualized spend under management was more than $1 5 billion and our capture rate was over 70% remaining well above pre COVID-19 levels.
Let me next touch on our technology initiatives over the last three years, we have significantly ratchet it up tech investments as we work to build one of the most innovative talent platforms in our industry.
Our projects have been extensive and far reaching impacting not only our employees, but our candidates and our clients as well the applicant tracking system that we deployed late last year across the travel business continues to deliver incremental productivity gains with a growing head count on assignment per producer.
We are making solid progress on deploying this technology to our other businesses from a candidate facing perspective, our proprietary tool marketplace continues to evolve with new features and functionality being deployed to improve the candidate experience across the entire engagement lifecycle I am excited.
About our tech roadmap to the coming year and look forward to announcing even more robust tools for use by both clients and candidates and given the success of our technology investments, we are doubling our capex budget for 2022.
Another exciting technology development for cross country has been the acquisition of selected completed in mid December selected is a subscription based SaaS model for schools to recruit permanent educators and special Ed professionals.
As teachers retire or leave the classroom in record numbers amidst the pandemic school space, a severe shortage and millions of students lack certified teachers in the classroom. We believe this acquisition complements our ability to solve the workforce challenges faced by school systems across the country and we will accelerate the <unk>.
Potential for our education business.
Turning to the businesses, our largest segment of nurse and Allied again saw strong sequential and year over year revenue growth with all lines of business reporting an increase in billable hours. The biggest driver was once again travel nurse and allied with billable hours rising 46% sequentially.
As expected average bill rates rose approximately 30% from the third quarter driven by the continued high demand for political positions as well as the spike in cases from the omicron barriers with tens of thousands of openings continuing into the new here, we anticipate average bill rates will rise.
<unk> modestly in the first quarter.
So we believe rates will likely moderate throughout 2022.
As we've called out before compensation costs are the primary determinant in bill rates and with persistent industry wide shortages those costs are not expected to decline rapidly in the near term.
We were also very pleased with the stronger than expected results from our recent acquisition of cross country workforce solutions groups reporting, 15% sequential growth and on a pro forma basis growing by 59% over the prior year.
This business allows us to deliver critical support to some of the neediest populations by delivery professionals to the hull working with some of the nations largest pace proprietors and contributing to nationwide health equity.
That brings me to our outlook, our first quarter guidance points to another record quarter in the company's history with both sequential and year over year growth driven by our ability to attract recruit and place professionals on assignment, we expect consolidated revenue between 740, <unk> and <unk>.
$750 million representing.
Renting sequential growth of 16% to 17% with minimal changes expected in bill rates. The growth is principally driven by continued strong execution and growing the number of professionals on assignment.
The biggest driver of the volume growth continues to be travel nurse and Allied where we expect to reach yet another historic milestone for the number of travelers on assignment.
From a profitability perspective, we anticipate adjusted EBITDA to be between 80 and $85 million, which represents an adjusted EBITDA margin of 11%.
As we look beyond the first quarter, we expect to continue growing our market share by increasing the number of professionals on assignment.
Despite potential headwinds from changing bill rates or demand from certain specialties, such as respiratory therapist, though we don't give full year guidance. We are operating at a much higher level and we believe that our investments in people and technology are providing the foundation for full year revenue growth.
Looking ahead, we believe we will exit the year at a run rate that exceeds $2 billion in annualized revenues and can expect adjusted EBITDA margins to remain in the high single to low double digit range well above the 3% margin experienced in the fourth quarter of 2018 when I rejoin.
The company.
Just before handing the call over to bill to take us through the numbers in more detail I'd like to say a few words as this will take my last earnings call as CEO I wanted to thank our shareholders for believing in cross country and I, especially wanted to thank the talented team of leaders and professionals at cross country, who have supported.
And embraced the changes we have made it has been the honor of my lifetime to return as the CEO of the company I Cofounded.
And as I transition to the chairman of the board I am thrilled to be leaving the company in John's very capable hands as the next CEO .
As many of you know I've worked with John for many years in my career and I am confident that under his leadership, we will continue our path of sustained profitable growth.
So I won't be as heavily involved in the day to day activities of running cross country I plan to be a very active chairman along with the rest of the board. We will continue to be focused on ensuring the strategic direction for this company and giving John the support that he needs to execute on our strategic vision with that.
Let me turn the call over to Bill.
Thanks, Kevin.
Again cross country has achieved a historic level of performance significantly exceeding our initial guidance for the quarter driven by our strong execution across all lines of business, while the market dynamics of a tight labor supply in this high demand has increased average bill rates. It's been our continued ability to organically grow the number of professionals on assignment across all of our businesses that has contributed.
Post to our performance as a result fourth quarter consolidated revenue was $647 million.
Representing a 71% sequential increase and a nearly 200% increase over the prior year.
Turning to the segments nurse and Allied reported 621 $624 million of revenue driven by double digit sequential growth from all major this is.
Soon including travel local and Ws Jeep as Kevin has already mentioned the strongest growth was seen by travel nurse and Allied where rates continue to rise as expected with most of the growth coming from more than doubling the number of professionals on travel assignments as we've discussed on previous previous calls <unk> seen continued double digit productivity gains for our.
Producers, coupled with continued investments in new producers necessary to meet the rising demand.
Going ahead, we anticipate a further sequential increase in average travel rates in the low to mid single digits, primarily as a result of mix and regional spikes in demand related to the omicron variants.
In general we anticipate regional softened throughout 2022, starting in the second quarter with continued strong demand and persistent labor shortages reached may remain well above pre COVID-19 rates for the foreseeable future.
Also driving the sequential growth for the segment was the performance from our local business local was on a positive trajectory coming into the quarter and far surpassed our expectations by reporting strong double digit growth both sequentially and over the prior year nearly 30%. This performance was driven by a combination of higher rates and an increase in billable hours and improved mix.
Our education business also reported stronger than expected results with high double digit growth.
<unk> was significantly impacted by Covid and has been recovering steadily since the pandemic first appeared I am pleased to share that this business has returned to pre COVID-19 levels and we are expecting continued strong growth as we integrate our most recent acquisition of selected looking.
Looking ahead, we see robust demand for education business as professionals lead their permanent positions in record numbers due in part to burn out into Tivo for Covid.
Physician staffing our only other segment also reported stronger than expected results growing 23% over the prior year and 8% sequentially bucking the usual seasonal trends for that business.
We're pleased to see this business performed so well with the growth coming from an increase in days filled which has surpassed the volume we saw prior to the pandemic relative to the prior year. The growth has been non COVID-19 specialties, such as primary care and Hospitalists obstetrics and anesthesia.
Gross profit for the quarter was $147 1 million, representing a gross margin of 23%, which was up 65 basis points sequentially and down 225 basis points from the prior year.
Despite the increase in <unk> gross margin continues to be impacted by higher compensation costs, driven by crisis needs in an overall tight labor market.
It's worth noting that despite the margin decline gross profit was up more than $92 million over the prior year driven by the volume growth we've seen across our business. Looking ahead gross margin will likely decline in the first quarter driven by the annual payroll tax reset as well as higher compensation costs pertaining to the spiking cases coming into the new year not covered by increases.
Storage.
Total SG&A was $65 8 million for the quarter up 24% sequentially and 47% over the prior year excluding.
Excluding the impact from WSJ SG&A was up approximately 28% over the prior year.
Primary driver of the year over year increase is related to the investments in revenue producers and variable compensation associated with the record performance of the company.
Since the start of the year, we have steadily invested in our organization.
Spanning our total head count by approximately 45% with more than 90% of the increase supporting the rise in the number of professionals on assignment.
With demand remains strong we expect to continue making investments in revenue producers to fuel continued organic revenue growth in the coming quarters.
There are several items worth calling out on the income statement.
Below operating income interest expense was $2 $8 million.
Primarily attributable to the carrying cost of $175 million subordinated term loan.
As a reminder, we initially entered the debt agreement in connection with the acquisition of WSJ and subsequently increase the facility by $75 million to fund an increase in net working capital as we grow the business and finally, our tax provision was a net credit due to discrete items recorded during the quarter, including $24 million from the release of the valuation allowance on deferred tax assets.
And net operating losses, excluding the impact from discrete items, our effective tax rate for the quarter was approximately 28%.
From a balance sheet perspective, we ended the quarter with $1 million in cash and $184 million of debt outstanding, including 175 million subordinated term loan and 9 million in borrowings under our ABL facility.
As of December 31, the company is able to access the full line under our ABL, which we believe sufficient to fund continued organic growth.
From a cash flow perspective, we had a use of cash from operations of $73 million due.
Due to the investment in net working capital associated with the $264 million and sequential revenue growth.
Our days sales outstanding was 58 days down three days over the prior quarter and flat over the prior year.
Capital expenditures were $2 $3 million for the quarter, bringing the full year spend to $7 million.
It's worth noting that only about half of our total project spend qualify for capitalization under GAAP.
In 2021 for example, we spent more than $9 million on projects to develop enhance and deploy the tools that are shaping our digital future.
Brings me to our outlook.
Expect consolidated revenue to between <unk> between 740 $750 million, representing a 125% to 128% increase over the prior year and between 16 and 17% sequentially. The majority of the sequential growth is expected to come from an increase in the number of professionals on assignment with billable hours anticipated to rise more than <unk>.
14%.
You are guiding to a gross margin of between 21, five and 22%, which represents a 100 to 150 basis point decline on a sequential basis overall gross margin remains below pre COVID-19 levels, primarily as a result of margins realized on rapid response orders related to Covid and an incredibly tight labor markets.
As a result of the historical organic growth our adjusted EBITDA for the quarter was expected to be between 80 and $85 million, reflecting a margin of 11%.
And our adjusted earnings per share range is $1 38 to $1 48.
Also assumed in this guidance are depreciation and amortization of $2 7 million interest.
Interest expense of $3 5 million stock based compensation expense of $1 $6 million and an effective tax rate of 30% and $37 7 million shares outstanding.
This concludes our prepared remarks and at this point, we'd like to open the lineup for questions operator.
Absolutely if you would like to ask a question at this time. Please press star one on your phone and be sure. Your line is muted again to ask a question. Please press star one.
Our first question comes from a J Rice with credit Suisse. Go ahead. Please your line is open.
Sure. Thanks, Hi, everybody.
Best wishes, Kevin and John and the new roles and at all.
So let me just a couple of different things here I understand what youre doing with the gross margin.
And working with the customers that have these super high Bill rates in this tight environment do you think as your bill rate expectations come down.
Over the course of this year, you'll see that gross margin.
Recover.
Or is any of this in your mind are permanent.
A tightening of the bill pay spread.
Yeah, Hey, a J and thanks for the night the kind wishes.
We do think that we will see gross margin recover as the crisis staffing eases across our client base.
And we are kind of forecasting call it.
A bill rate assumption that is north of where we were pre COVID-19 , but is somewhere between 30 and 35%.
Lower than where we are today, but over that period of time, we think that will be one factor that will improve our gross margin as we kind of get back to kind of historical norms. The other thing I want to point out is that we have all lines of business are growing and growing dynamically. So we have other lines of business that have high.
Your margin and we think that will help blend our margin.
A better place so, yes, hey, Jason Thanks for the question so.
The gross margin I think overtime, we will certainly start to come back as bill rates come down I don't think it will move in harmony, where bill rates and pay rates are going to are going to align exactly that way I think there is a possibility bill rates could come down a little bit faster than some of the compensation rates, but to Kevin's point I think the mix improvement we expect to continue seeing from growth I can.
Our education business, which is doing fantastic at this moment back to its double digit growth rate. So they've historically had a margin over 30%. So we expect that will continue growth in other lines like our RPM business is also seeing.
Fantastic growth with high double digit margin so.
The long term is yes, the margins, we do anticipate even within the travel business will start to inch forward, though it's a little hard to see exactly how that plays out in the second and third quarters. This year.
Okay.
I just might ask you mentioned market share and I guess I would wonder on the one hand, obviously I'm sure everyone's scrambling to meet the demand that's out there on the other hand, you've improved your sourcing of candidates.
So do you believe across the board you've picked up.
<unk> share are you having to skew more of your placements to your MSP accounts and some of the non MSP.
Is there an opening for other competitors to come in and do you think that's permanent or just give us some flavor for what's happening in the competitive landscape and how you think you fared in the midst of all this.
Well look we don't have visibility across our entire industry. There's so many private companies out there.
We do have visibility with the one other publicly traded.
<unk> that we have and if you look at our growth rate in the fourth quarter of 197% you can compare that to theirs of 116%. So I'd say vis vis that particular Pierre.
We're growing at a faster clip.
So we believe market share is improving we've had a significant year of 2021 in terms of customer wins with national accounts direct contracts in MSP.
As we called out in our comments earlier, we now have over $1 $5 billion in MSP under management.
We think you know look the digital transformation all of the steps that we've put in place across people processes and technology.
Our accelerating our ability to win market share versus our competition.
Maybe John you want to add some thoughts there as well.
Yes, sure. Thank you Kevin and thank you Egypt, the nice comments.
Obviously, but what I would say on in terms of how we are really.
Expanding our capacity is really important part of our story so as Kevin mentioned with all of our technology investments that we've done over the last several years, we've really seen a larger productivity gain in our producers, which is giving us more capacity and that's only one part of the story. The other part of the story is we really revamped our Portland network or sub vendor or supplier partner network.
That also helps us fulfill our MSP.
So we've added capacity internally with our own producers and we've added capacity to with our partner network and really engaging with strategic partnerships with these organizations to help Hillary msp's need and so what this allows us to do is to add excess capacity beyond fuel, where MSP, but to go out there and to use that capacity to.
New accounts in the market.
Okay, great. Thanks, so much.
Our next question comes from Tobey Sommer with true Securities Go ahead. Please your line is open.
Thanks.
What revenue level do you think is required to sustain.
High single digit or low double digit EBITDA margin.
Hey, Tobey its bill.
As Kevin mentioned in his prepared remarks, we think we exit this year somewhere in that 2 billion run rate so call it $500 million a quarter and at that level of revenue. We think the high single low double digit margins are sustainable.
For what we've been seeing and so yes.
We anticipate declines in bill rates volume continued growth on other parts of the business for cross education across Locums in our local business.
So that's how we envision that playing out that that level of revenue at that run rate would support us being a nine to call it 11% EBITDA company.
And from that level in the fourth quarter.
No one is perfect visibility this is Ben.
The dynamic seems like an understatement to describe the market trends and changes.
But.
At this point would you consider that to be a base level from which you could grow or are you just kind of looking out into that fourth quarter, and saying Hey, we can imagine this happening based on the.
Anticipated trends.
Yes, we certainly do model out past the fourth quarter of next of this year.
But it is hard to glimpse exactly how that's going to play out I think.
There'll be certain lines of business that will continue growth I think regardless, what bill rates do from that point forward. We would continue to expect volume growth across all lines, including travel.
Yes at those bill rates, they could potentially on the travel side.
Small another mid single low double digit kind of decline from that point forward, but I think overall the marketplace is supporting the bill rate. The labor supply issues are just not going away and so we anticipate that the compensation costs will remain which is why we're doing all that we can to support our clients with a comprehensive suite of solutions.
And helping them build up their core staff as well so they can reduce reliance on contingent.
Okay.
And if you look at your strategic positioning in the MSP market.
Are there opportunities for you to broaden the offering through partnerships to include.
More than clinical profession professionals that would I dunno differentiate yourself versus other MSP providers.
Well, that's a great question, Tobey and I'll start and I'll have Buffy White also respond but look we.
Our msp's are growing across these large health care system enterprises, which now are much more complex than a single hospitals you know it covers everything from.
Outpatient and ambulatory to even home healthcare so.
So we think there's a lot of opportunities across the spectrum of what our customer footprint is.
And.
In terms of in terms of total strategic positioning around non clinical we're seeing these large health care systems asked for our help them support around a variety of non clinical jobs for example, environmental cafeteria financial project management in general.
And in the past.
We have a structurally looked at partnerships to help provide that non clinical opportunity, but we believe that this is an area of opportunity for cross country, but Buffy maybe you want to expand on that what youre seeing in the market.
Yeah, certainly Kevin and Tobey. Thanks for the question, we're seeing an acceleration of conversations in this area and our solutions are accelerating with them. So first of all clients are really focused on better planning better forecasting for what their talent requirements are going to be tighter protocols in place for when they use talent in what ways.
Right. So we're in a unique position, where we can get in there and help them look at their utilization model helped them with predictive analytics on what are they going to need in the future and partner with them based upon market Intel and diagnostics.
Take a look at how they can help them manage their total talent better not just their clinical talent not just their staffing talent, but their total talent across that whole house within the system. So we're seeing a lot of accelerated conversations and we do believe we're uniquely positioned not just by way of the different lines of business.
Awesome staffing offering that we have in addition to RPX search.
Advisory solutions, but also by this broader supplier network that John spoke of that we can bring as part of our solutions to them.
And cross selling within our MSP is really critical across all those different aspects are all the all the different specialties, even beyond clinical as a matter of fact in one of our large MSP is just in the last month I find six amendments that brings an additional offerings to them well beyond the clinical staffing.
We've done historically, so I would I would say youre going to see a lot more of that moving forward.
Perfect ill just ask one other question and I'll get back in the queue.
<unk> done a little bit of M&A, but it doesn't seem like you are spending large sums of money.
What is the in your accumulating a lot of kind of.
Latent cash in terms of receivables so what does the optimal capital structure look like for the firm over time.
Could you sort of define the M&A strategy that you're deploying to to get there because it seems like there.
I would love to find sort of the unifying thread among the activity that you've already had.
Tobey, it's a great question look there's such opportunity we have such a strong balance sheet to the points that you just made.
We targeted tuck in acquisitions last year, we completed two tuck in acquisitions workforce solutions group.
Positioned us in a whole new segment.
Catering to senior and elder care to pay centers and federally qualified health clinics.
Then our subscription based SaaS.
SaaS business for our education, and our ability to electrify our education division by helping school systems Fine candidates. So we're very excited about what we did last year, but the question remains what are we going to do going forward and as we've called out before the segments that we'd like to scale up so to speak are certainly are local.
<unk> business.
Certainly areas like our education business and now our home health care business. These are segments that are attractive to us we look at technology as you know we.
We just pointed out.
So we're in a very very good position.
I always like to say that you know when it came back to cross country three years ago.
It was to transform the company and if Theres a transformational opportunity out there we continue to seek that we just haven't found the right one, but maybe to the financing side.
As you can probably see where just about little north of one times Levered right. Now so we've got a fair amount of firepower, especially on the trailing 12 months EBITDA number we've got out there I think as we look out at 2022 will certainly be revisiting what is the right capital debt structure for US right now as you know we have a subordinated debt piece that's there.
It's a wonderful partner, we're happy to be paired up with them and of course, we have our ABL sitting on top of that but I think looking ahead, we want to make sure that we're getting at the most liquidity that we have to be able to fund those acquisitions, but barring finding that next opportunity to for acquisition, obviously servicing the debt would be an opportunity for us and then of course continuing to tech investments have.
We talked about.
Okay. Thank you.
Yes.
Our next question comes from Kevin Fischbeck with Bank of America Go ahead. Please your line is open.
Hi, guys. This is actually quite <unk> on for Kevin Thanks for taking our question I.
I guess, the first thing just to really double down on this MSP strategy. Thanks for the color.
Thank you Lasse told us in like Q2 that you had 80 to 85 customer relationships can you just give an update on where that number is trending today.
Sure you know we have approximately 100 facilities that represent that $1 5 billion dollar MSP spend as.
As we called out in our prepared remarks earlier, we've had.
Two successful new customer acquisition.
Opportunities so far this year, but we have a very very robust pipeline.
We have become in the last three years once again, the trusted market leader in the marketplace. We've had near perfect client retention. During this pandemic because we've done all the right things are we stood by our clients.
You know with.
A sensible.
<unk> around pricing compensation with market analytics and data analysis all of those things.
Including the fact that our brand is resonating again in the marketplace for nearly 36 years as the market leader in clinical excellence, which is what we've always been known for but Buffy.
Buffy I don't know if you want to add to that at all.
No I think that I mean, you hit on everything I was going to say I think the a couple of things that the retention is significant over the last two years. So they found that we were the ones that we've again.
We have very strong retention of our Mlps I think the other thing around.
I understand the count is very important.
I also think the expansion within the existing MSP that we have is very very important because it means that we have become the trusted advisor for them, they are allowing us to get wider and broader within their health care system and we also count MSP, that's a broader system versus individual facility. So just to kind of call that out a little bit and put it in your question.
Yes.
Okay. Thanks, that's Super helpful. And then I guess one other one on one of your key operating metrics. It looks like revenue per position today has been coming down since I think it surpassed $1 seven K in Q1 of 2021.
But there's actually it looks like it's below where we thought in the second half of 2019. So is it is it the mix of specialties, that's driving that and then along that line like which specialties are lower unit economics.
Hey, Courtney it's as Bill maybe I'll just give you some color and then also I certainly see if John has anything to add but it is a it is a function of mix mix the revenue per per day build is.
If you think about there's two big large buckets, there's physicians and then there's what we call advanced practice specialties, which includes advanced practice start physician assistance <unk>.
<unk>.
And several other cut type of advanced specialties that are not truly positions, but kind of operate like that they have a different bill rate structure or different.
It's a small lower bill rate, but that is also where we've seen the highest demand. So we've seen some of that mix happening, which has brought down the overall average what's interesting though is that in the most recent quarter. The physician side is where we saw the strongest and most robust growth that John any any color you want to give them, perhaps on servicing the volume and demand.
Sure.
Hi, Good evening and thank you Bill, yes demand is definitely up significantly over last year at pre pandemic levels and as Bill has mentioned we are positioned orders right now were up 92% compared to prior year.
But our advanced practice orders and this is where that bill rate X comes in is up 125% compared to prior year as we look a little deeper.
If we look pre COVID-19 position orders are only up 14% over pre COVID-19 , but advanced practice are up 87% over pre COVID-19 and so really what we're seeing is we're seeing more of this advanced practice orders coming in and obviously more of our stills are coming into advanced practice, which is creating that.
That lower average days dollars.
Okay. Thanks, guys that make a lot of sense and I guess, just one last quick follow up on that I mean, I feel like generally in the industry. We're hearing about providers trying to decrease the burden on physicians and trying to rely more on <unk>.
<unk> and advanced position do you think this would be like a long term headwind to pricing.
Alright.
Got it.
Actually it's kind of it's twofold right well, yes. They are.
Physicians Burnouts and retirements, we are seeing more advanced practice practice.
Practitioners coming on board, but we also have seen over the last year.
A slowdown in elective surgeries that are now coming back on board and a lot of other specialties. So I think and so I think as the surgery historically back onboard, which then will have more demand for radiology anesthesiology and pathologist, you'll see we'll see those bill rates increase as well. So I think overall, we should see a balance.
Okay. Thanks, guys Super helpful.
Thank you.
And our last question comes from Brian <unk> with Jefferies. Go ahead. Please your line is open.
Hey, good afternoon and congrats.
Yes, just a quick question everyone's been focused on the demand side, but as we think about supply.
Any kpis that you can share with us that gives you confidence in your ability to sustain supply levels and the attractiveness of cross country versus some of the competitors that are in the market.
Yeah, I mean look hey.
Hey, Brian .
I think we've done a great job over the past three years in advancing the organizations.
<unk> and how it resonates in the marketplace as I mentioned earlier, but also important.
As we now use very sophisticated candidate acquisition strategies that include things like leveraging data mining with artificial intelligence to do job matching to candidates.
Includes things like programmatic.
Advertising, where we use very specific geo targeted algorithms to attract the exact experience in specialty for each of our customers.
We've also as we've also talked about our expanded significantly the number of revenue producers we have.
Triple probably the number of revenue producers that we had just a couple of years ago.
And then all of the employee productivity tools that we've called out for example, our <unk>.
Cloud based applicant tracking software system, where we've seen significant increase in the book of businesses.
Each of our recruiters the other thing I wanted to just point out too is really interesting to us we have 41% of the.
Our nurses and other health care clinicians that were doing business with today are traveling or working for cross country for the very first time.
And that's really significant part of that is you know.
This fundamental shift towards the gig economy.
Part of it is some of the comments I mentioned already in terms of the way we are resonating in the marketplace.
But we think that's it.
It fundamentally.
A huge endorsement.
We're doing things right across country.
We like to think about.
For example.
We've improved things, including.
The speed at which a candidate can find a job. So we can have a job seeker come into our digital ecosystem. We have thousands of health care clinicians using for example marketplace and in a matter of minutes they can.
Look at a shift they can submit their credentials and they can be interviewed the same day, that's a significant improvement in the ability for us to accelerate the conversion of the candidate flow that we have into working.
<unk>.
Yeah, if you look at cross country today I mean.
We have to get that story across in a bigger way.
The company currently has a fairly low p/e multiple relative to you know.
Peers, and others, and we think thats, partly that we need to.
Prove quarter ending quarter out that where a sustained growth company and that we can continue to have the type of results that we've been reporting on in the last.
12 months to 18 months on a consistent basis going forward and finally, I'll just kind of wrap and just say you know look the you know one of the things that's driving.
A lot of the supply dynamics.
With our customers is certainly this a pandemic hangover the pandemic hangover.
He is going to lead to significant utilization.
In the health care system this year.
As people catch up with things like electric care and preventative medicine people haven't gone to their doctors for fear of Covid.
And these large health care systems equally has to prepare for the next pandemic, so they're making investments in people and technology. They are investing in digital.
Digital tools, such as telehealth and.
And consumers are changing the way they.
Embraced care.
Leaning into more low cost sites of care.
For example, virtual with virtual means or a retail clinics et cetera.
So there's a lot going on that's going to drive supply final comment is just I read something interesting.
The other day, a 31% of health care clinicians can work remotely. So if you think about.
Our nurses you can you can have triage nurses work locally you can have medical writers work.
The utilization review so you know.
The health care delivery system is changing its accommodating theres big demand out there as we know and cross country is at the forefront of attracting that supply.
Got it and then last question from me, we talked about here about the home health and your expansion. There is there anything that you need to do to strategize to growth there or any kind of infrastructure that you need to build to gain traction in the home health space.
Yeah, I mean, that's a great question and the answer is yes, with a 59% year over year growth rate.
You know that it's just such a.
Magnificent opportunity for cross country, we are the market leader in providing a senior and elder care to pay centers and federally qualified health clinics around the country.
We leverage the same model this MSP model.
In that business, we refer to it as a managed service outsource agreements, but where we provide all those services.
Providing a variety of health care clinicians to brick and mortar locations, but then we follow those patients back to their home and we have 1700 caregivers that provide care into the home so.
Two to absorb that type of opportunity.
We are going to bring a lot of the technology that we've brought to the travel business into other parts of our business to workforce solutions group in the you know to the extent we.
Having said it enough we are doubling down around our investment in technology. This year. We spent you know order of magnitude about $9 million in 2021 around capital expenditure project projects around it.
And our product organization.
We hope to double that spend this year, because it will help accelerate our business.
Awesome. Thank you guys.
Ladies and gentlemen, this does conclude the Q&A period, I'll now turn it back over to Kevin Clark for closing remarks.
Yes, well, thank you very much and I'd like to thank our shareholders. Our health care clinicians are providers of professionals, our clients our employees our board for their passion and compassion.
We continue to deliver great results.
To do not just our shareholders, but to the bedside into the classrooms. So thank you all we look forward to reporting next quarter on our continued success.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may now disconnect.
Okay.
Yes.
Okay.
Great.