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The front cover is from April of 2020, when Cross Country
Healthcare partnered with Nasdaq to create a public service
announcement in support of healthcare professionals
worldwide. The message was displayed on the Nasdaq
MarketSite Tower in Times Square for two weeks.
The back cover is a collage of photographs our dedicated
Cross Country Healthcare professionals shared with us during
the height of the COVID-19 crisis in 2020.
Dear fellow stockholders,
When I returned as CEO, we implemented a progressive strategy to return the
company to growth and improved profitability, as a leaner, more tech-enabled
organization. Throughout 2020, we executed our turnaround strategy with speed,
purpose and deliberate actions, even amid a global pandemic. Today, we are
better positioned to deliver sustainable, profitable growth, and emerge as the most
modern and sophisticated healthcare workforce solutions and staffing company in
the industry.
OUR TURNAROUND.
We began with a return to our roots as an entrepreneurial, innovative company,
building an exceptional team and embracing technology in new and exciting ways.
The success of our turnaround required that we execute well across multiple
fronts, including:
• Rapidly expanding the number of clinicians on assignment against a backdrop
of rising demand;
• Building and leveraging the best advisory, staffing and leadership team in
the business;
• Taking decisive action to significantly reduce costs, including the closure of
more than 50 brick-and-mortar offices; and
• Furthering our digital transformation strategy and reaching key milestones set
in our five-year strategic plan:
• Completing the implementation of our integrated, cloud-based applicant
tracking system for key segments, laying the foundation for a digital ecosystem
on a single end-to-end platform to improve productivity and candidate
experience;
• Launching our proprietary on-demand mobile app, Cross Country Marketplace,
to our entire local footprint;
• Operationalizing our cloud-based CRM to effectively engage and manage
prospective and existing client relationships;
• Introducing an enterprise business analytics tool to accelerate top and bottom-
line revenue growth through adaptive market positioning, leveraging real-time
AI and machine learning; and
• Entrenching sophisticated digital media strategies to efficiently source, engage
and place high-quality healthcare professionals.
These are among dozens of initiatives that fueled our productivity and enabled
us to outperform financially in 2020, delivering greater shareholder value in an
extraordinarily challenging environment.
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RESPONDING TO GLOBAL CHANGE.
In retrospect, the experiences during 2020 shaped us in ways that made us stronger and brought
out the very best in our team. By harnessing the full potential of Cross Country and working as
ONE, we quickly adapted and assisted our clients to respond to the global pandemic.
Our Response to COVID-19
Throughout the pandemic, we adhered to our core values and beliefs by always striving to do
the right thing for our clients, healthcare professionals, communities and shareholders. Taking a
collaborative approach to problem-solving, we consulted with clients fairly and ethically to ensure
they had all relevant pricing information to make informed talent management decisions.
We established a robust support system for our healthcare workers, providing access to a 24/7
hotline and extensive resources to help them during a difficult and trying time. In addition to the
strategic cost reduction actions we took, senior executives and our board of directors voluntarily
and unanimously agreed to reduce their cash compensation until company performance stabilized
in the fall.
Perhaps most importantly, we delivered on our value proposition, serving as an integral partner
in redistributing healthcare labor supply where it was needed most. This was poignantly
displayed in a video sent to us by one of our valued clients, showing our nurses receiving a
standing ovation as they arrived at the hospital to bring relief to an exhausted staff. Those are
the small wins that delivered big smiles across Cross Country Healthcare and continue to make
us so proud of what we do.
Driving Climate and Social Change.
Events throughout 2020 highlighted issues that continue to threaten our world’s future and
health and prompted us to deepen our commitment to our corporate social responsibility,
diversity and inclusion efforts.
• We continue to strengthen our workforce’s diversity, focusing on the goal of driving diversity
at the middle management level, creating an internal diversity and inclusion committee, and
hosting diversity and inclusion awareness events across the organization.
• With Dr. Janice Nevin, M.D., MPH, appointed to our board during 2020, we have expanded
our board’s diversity, which now comprises 25% female and 13% minority directors.
• Our 2019 Corporate Social Responsibility Report, released in August 2020, highlights our
support for environmental responsibility initiatives, including our new remote workforce
model, which decreases carbon emissions and reduces paper consumption.
One Purpose. One Partner. One Cross Country.
We believe the stage is set
for Cross Country Healthcare
to experience its strongest
year as a public company.
WITH OUR TURNAROUND COMPLETE, FURTHER TRANSFORMATION
FOR THE FUTURE.
We believe the stage is set for Cross Country to experience its strongest year as a public
company, continuing to drive sustainable, profitable growth. The catalyst will be our accelerated
transformation to a technology business driven by a “mobile first” ecosystem that optimizes
client and candidate experiences, rationalizes business operations and streamlines delivery
models. Our evolution requires the continued adoption of AI and machine learning, reimagining
our recruitment processes, effectively mining our data with business intelligence solutions, and
expanding real-time candidate engagement through conversational systems. Because speed is
essential to our customers and professionals, we are investing to become the most automated,
digitally savvy and mobility-oriented company in the industry.
As we anticipate the end of the pandemic this year, I want to take this opportunity to thank our
board members, clients, team members, colleagues, family and friends for their support – and
above all the healthcare professionals who gave more of themselves than anyone could have
expected. Our unwavering commitment to you is to continue working with tenacity, resilience
and conviction to create shared success for all, and to make decisions and allocate capital in
ways to deliver maximum long-term value creation for our shareholders.
Kevin C. Clark, Co-Founder & CEO
2020 Annual Report
Form 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
☑
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-33169
Cross Country Healthcare, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-4066229
(I.R.S. Employer Identification No.)
6551 Park of Commerce Boulevard, N.W.
Boca Raton, Florida 33487
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: (561) 998-2232
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.0001 per share
Trading symbol
CCRN
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
No ☑
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☑
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”
“smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act: Large accelerated filer ☐
Accelerated filer ☑ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting stock held by non-affiliates of the Registrant, based on the closing price of Common
Stock on June 30, 2020 of $6.16 as reported on the Nasdaq Global Select Market, was $217,948,734. This calculation does not
reflect a determination that persons are affiliated for any other purpose.
As of February 17, 2021, 37,512,543 shares of Common Stock, $0.0001 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement, for the 2021 Annual Meeting of Stockholders, which statement will be
filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Report, are incorporated
by reference into Part III hereof.
TABLE OF CONTENTS
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Item 16.
Form 10-K Summary
SIGNATURES
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All references to “we,” “us,” “our,” "the Company," or “Cross Country” in this Report on Form 10-K means Cross Country
Healthcare, Inc., and its consolidated subsidiaries.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Forward-Looking Statements
In addition to historical information, this Form 10-K contains statements relating to our future results (including certain
projections and business trends) that are “forward-looking statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private
Securities Litigation Reform Act of 1995, and are subject to the “safe harbor” created by those sections. Words such as
“expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “suggests”, “appears”, “seeks”, “will”, "could", and
variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve
known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially
different from any future results or performance expressed or implied by these forward-looking statements. Factors that might
cause such differences include, but are not limited to, those discussed in the section entitled “Item 1A - Risk Factors,” and the
other documents that we file from time to time with the Securities and Exchange Commission (SEC).
Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results and
readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions
only as of the date of this filing. There can be no assurance that (i) we have correctly measured or identified all of the factors
affecting our business or the extent of these factors’ likely impact; (ii) the available information with respect to these factors on
which such analysis is based is complete or accurate; (iii) such analysis is correct; or (iv) our strategy, which is based in part on
this analysis, will be successful. The Company undertakes no obligation to update or revise forward-looking statements.
Item 1. Business.
Overview of Our Company
PART I
Cross Country Healthcare, Inc. (Nasdaq: CCRN) is a leader in providing total talent management including strategic workforce
solutions, contingent staffing, permanent placement, and consultative services for healthcare customers. Leveraging our 35
years of industry expertise and insight, we solve complex labor-related challenges for customers while providing high-quality
outcomes and exceptional patient care. As a multi-year Best of Staffing® Award winner, we are committed to an exceptionally
high level of service to both our clients and our healthcare professionals. Our Company was the first publicly traded staffing
firm to obtain The Joint Commission Certification, which we still hold with a Letter of Distinction. In February 2021, Cross
Country Healthcare earned Energage's inaugural 2021 Top Workplaces USA award. We have a longstanding history of
investing in our diversity, equality, and inclusion strategic initiatives as a key component of the organization’s overall corporate
social responsibility program which is closely aligned with its core values to create a better future for its people, communities,
the planet, and its shareholders.
Leveraging national and in-market staffing teams, we place highly qualified healthcare professionals in virtually every specialty
on travel and per diem assignments, local short-term contracts, and permanent positions. Our diverse customer base includes
both public and private acute care and non-acute care hospitals, outpatient clinics, ambulatory care facilities, single and multi-
specialty physician practices, rehabilitation facilities, urgent care centers, public and charter schools, correctional facilities,
government facilities, pharmacies, and many other healthcare providers. By utilizing the solutions we offer, customers are able
to better plan their personnel needs, talent acquisition and management processes, strategically flex and balance their
workforce, access quality healthcare personnel, and provide continuity of care for improved patient outcomes. We believe that
our strategic mix of national and in-market footprint provides a unique value proposition, as we are able engage with a broader
pool of talent and offer customers a more consultative approach relying on our understanding of the local markets they serve.
The healthcare staffing industry continues to evolve, with both healthcare providers and professionals demanding speed and
placing heavier reliance on technology for fulfillment and delivery activities. The US Healthcare Staffing Market Assessment
April 14, 2020 update estimates that in 2018, 16% of aggregate travel nurse revenue reported was billed to a standalone vendor
management system (VMS).
Recognizing this trend, we embarked on a path of digital transformation and innovation across our business with continuous
investments in expanding our technology capabilities both on the candidate engagement and customer facing fronts. Areas of
investment include recruitment and candidate nurturing tools, market analytics, mobile applications and self-serve capabilities,
programmatic advertising, social media, and other technology which we believe will enhance our recruiting capabilities.
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In 2020, we successfully implemented our new applicant tracking system (ATS) for our travel business and launched Cross
Country Marketplace, our proprietary on-demand staffing platform, which is a one-stop, self-service portal for healthcare
professionals that greatly improved the candidate experience. The new ATS is designed to modernize the way our delivery
teams operate while improving the experience of our candidates, and is just one component of our larger technology ecosystem
that will drive greater productivity as well as growth in both revenue and profitability.
We have executed multiple initiatives to enhance our position as a leading, consultative, and strategic partner in the healthcare
industry. Some of our key focus areas included personalizing the candidate experience, delivering a superior customer
experience, infusing technology-enablement to drive efficiencies and increased productivity, and continuing our commitment to
clinical excellence. As part of our growth strategy, we will continue to optimize technologies by upgrading and integrating the
middle and back-office platforms, and bringing our IT infrastructure and business processes onto a single cohesive platform.
We expect these initiatives to drive growth through better operational execution, enhanced productivity, and a world-class client
and candidate experience.
Our goal is to continue to grow shareholder value by continuing to deepen our relationship with current customers and
healthcare professionals, expanding the number and types of new customers we serve, growing the supply and types of
specialties of our healthcare professionals, improving our operating leverage through growth and cost containment, and
strengthening and broadening our market presence. This will require our continued focus on: (i) providing our workforce
solutions offerings to new customers; (ii) expanding the services we provide to our current customers; (iii) further diversifying
our customer base; (iv) improving our capture rate for current managed service programs (defined below) customers; (v)
accessing more candidates; and (vi) continuing to modernize our technologies and processes to optimize our relationships with
our healthcare professionals and customers.
To successfully execute our business strategy, we rely on our experienced and innovative executive and operational teams. Our
executive team has extensive experience in the staffing, workforce solutions, technology services, and healthcare industries. We
also foster a culture of performance, talented leadership, and collegiality that promotes the achievement of both company and
personal goals. Our Co-Founder & Chief Executive Officer, as well as our Executive Vice President of Operations, have been
named to the Staffing Industry Analysts’ 2020 Staffing 100 List of the most notable leaders in the industry, and two other
executives were recently included on Staffing Industry Analysts’ 2019 Global Power 150 - Women in Staffing List that
recognizes the 100 most influential women in the Americas and 50 additional women internationally. One of those executives
was included again in 2020. In 2020, one of our female healthcare leaders became the first locum tenens director elected to the
National Association Medical Staff Services Board of Directors. In addition, our Chief Clinical Officer joined the Joint
Commission’s Healthcare Staffing Advisory Council, a newly formed committee of staffing experts to help evaluate healthcare
organizations.
COVID-19 and Our Business
In many ways, COVID-19 has reinforced our value proposition in the market for offering a flexible, rapid, and cost-effective
means for delivering critical care to millions of Americans across thousands of facilities. Throughout the pandemic, we have
been a leader in supporting our customers and ensuring the health and safety of our employees. As part of our COVID-19
response, we established a cross-functional team to ensure rapid response to our customers’ needs and a set of pricing
guidelines to ensure we could deliver at competitive rates. As a result, we successfully staffed thousands of highly-qualified
professionals on COVID-19 response assignments throughout the year. Our healthcare professionals have exemplified
compassion and dedication while continuing to care for COVID-19 patients on the front lines every day, often times at personal
risk.
The pandemic also drove unprecedented volatility in demand throughout the year with rising needs for critical responders in the
hardest hit states, followed by declines in orders, as many hospitals encountered lower census, worker furloughs, and
mandatory deferrals for elective procedures, as well as school closures. As states gradually reopened and health systems began
resuming normal operations across the nation, demand rebounded, especially for surgical and anesthesia specialties. Given the
uncertainty caused by COVID-19, many hospital systems are seeking greater certainty and flexibility and as a result, we have
generally seen higher bill rates and shorter assignment lengths to provide the critical resources needed. We continue to work
with clients on ensuring competitive bill rates, as well as seeking new ways to deliver our services, such as a heavier reliance on
tele-services for allied specialties, especially for our education clients.
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Corporate Social Responsibility
Our growth strategy integrates corporate social responsibility, designed to solicit engagement with, and involvement of, our key
stakeholders – employees, stockholders, customers, suppliers, and society, to fulfill our responsibility to be good corporate
citizens. Our mission to deliver quality patient care extends to our community and we are committed to action that fosters
positive impacts in the communities we serve. We strive to make connections and contributions in every city where we have
employees, providers, and operations – giving back in meaningful ways based on local community needs. During 2019, we
announced a partnership with a local nursing college to pursue collaborative research and advance educational training
activities to prepare the next generation of caring nurse leaders. As part of this initiative, we sponsored 10 scholarships for
nursing students in 2020. This investment serves to improve the long-term supply of nurses, and enhances our reputational
value to healthcare professionals, the community, and our customers.
Compassion is one of our core values, which is why we participate in numerous events with a variety of non-profit
organizations including the DAISY Foundation. During the year, we also engaged in other investments in our community, such
as our sponsoring and participating in Light the Night benefiting the Leukemia and Lymphoma Society, providing sponsorships
for various healthcare research and funding initiatives, as well as working as a team on other fundraising efforts for charities
such as Breast Cancer Foundation, March of Dimes, American Heart Association, American Red Cross, Humane Society, Make
a Wish Foundation, Ronald McDonald House, and Spirit of Giving Holiday Gift Drive.
Our principles of good environmental practice and sustainability include a dedication to minimizing our corporate carbon
footprint by encouraging telecommuting, carpooling, energy efficiency, and embracing more flexible work policies, including a
virtual work environment. We are eco-conscious when purchasing office materials and minimizing paper consumption, and we
participate in various recycling programs for paper, glass, metals, and most forms of plastic. In 2019, we participated in a tree
planting initiative, which when fully grown, these trees will provide a day’s supply of oxygen for up to 24 people and can be
home to hundreds of species of insects, mammals, and plants. We are committed to conducting business at the highest ethical
standards and having a positive social and environmental impact across our national footprint.
Services
Increasingly, we are called upon by our customers to provide creative and innovative talent sourcing strategies across the
continuum of care. Over the past several years, our workforce solutions have evolved into a total talent management approach
as our customers focus on maintaining high-quality patient outcomes, while improving their total labor management to address
complex financial, compliance, and other challenges in the healthcare industry. As part of the evolution of our services, we
consider the following: (i) solving the immediate and future needs of our customers and expanding our relationships with them;
(ii) enhancing our network of healthcare professionals by improving their experience, and deepening our relationship with
them; (iii) expanding our service offerings to reduce sensitivity to economic cycles; (iv) expanding our expertise with various
healthcare solutions in various geographic areas of the U.S.; (v) continuing to diversify our customer base to enhance our long-
term business prospects; and (vi) enhancing and expanding our technology capabilities to deliver efficient and automated
services to our customer healthcare facilities. Today, our workforce solutions include:
•
•
Managed Service Programs (MSPs). As healthcare providers continue to adopt centralized, outsourced
models for managing contingent labor for both clinical and non-clinical needs, we offer an MSP in which we
manage all or a portion of the customer’s staffing needs. This includes both the placement of our own
healthcare professionals and the utilization of other staffing agencies to fulfill the customer’s staffing needs.
We have been a market leader in this area since launching our first MSP in 2003, and over the years, we have
grown our relationships and matured the generational models of MSPs. Today, we service more than 70
customers across more than 700 facilities, with estimated spend under management of approximately $500
million annually. The benefits to our customers include cost optimization, increased certainty of supply, and
visibility into their labor needs and usage, as well as market insight from our industry expertise on a broad
range of topics.
Internal Resource Pool Consulting & Development (IRP). An IRP is typically set up in conjunction with a
central staffing office to ensure that supplemental staffing needs are first filled through resource pool staff
before utilizing other options, such as agency or overtime. We strategically partner with our customers to
design and deploy, administer and manage an IRP or to optimize an existing IRP to create efficiencies, patient
care, and cost effectiveness by balancing their workforce mix to meet their current needs.
3
•
•
•
Recruitment Process Outsourcing (RPO). Through our RPO services, we offer our customers targeted
recruitment solutions designed to increase core staff while reducing dependency on contract labor. Our RPO
program provides support to replace or complement a customer’s existing internal recruitment functions for
permanent hiring needs, and is delivered to healthcare organizations throughout the country and serves to
provide creative, cost and operationally efficient hiring support and labor optimization, which leads to
improvements in quality of care.
Optimal Workforce Solutions (OWS). OWS provides an outsourced solution to healthcare facilities,
managing staff across a vast range of support areas, including paraprofessionals, patient care associates,
certified nursing assistants, sitters/observation, patient transport, environmental service, food service, linen
distribution, and case management RNs.
Project Management. Periodically, our clients have urgent needs that fall outside the scope of an MSP
arrangement and require a more focused effort to place staff within a very short window. For example, as
healthcare systems continue to upgrade their electronic medical records or encounter a labor disruption, we
can provide comprehensive project management, a deployment of a full staffing plan, and ultimately an
organized volume of quality healthcare professionals during the process so that our customers may continue
to deliver quality care.
Our business consists of three business segments: (i) Nurse and Allied Staffing; (ii) Physician Staffing; and (iii) Search. For
additional information concerning our business segments, see Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Segment Results. Through our business segments, we provide our healthcare customers with a wide
range of solutions as described above and staffing services as set forth below.
(1) Nursing and Allied Staffing. The Nurse and Allied Staffing segment provides workforce solutions and traditional
staffing, including temporary and permanent placement of travel nurses and allied professionals, as well as per diem
and contract nurses and allied personnel. We market our services to hospitals and other customers, as well as reach out
to our healthcare professionals through our Cross Country Nurses®, Cross Country Allied®, Cross Country Medical
Staffing Network®, Cross Country Workforce Solutions®, and Cross Country Education® brands. Our Nurse and Allied
Staffing revenue and contribution income is set forth in Note 18 - Segment Data to the consolidated financial
statements.
A majority of our revenue is generated from staffing registered nurses on long-term travel contract assignments
(typically, 13 weeks in length) at hospitals and health systems. Additionally, we staff registered nurses, licensed
practical nurses, certified nurse assistants, advanced practitioners, pharmacists, and more than 100 specialties of allied
professionals on local per diem and short-term assignments in a variety of clinical and non-clinical settings. We also
provide clinical and non-clinical professionals on long-term assignments to clients such as public and charter schools,
correctional facilities, skilled nursing facilities, and other non-acute settings.
(2) Physician Staffing. Our Physician Staffing segment provides licensed practitioners across a broad array of specialties,
as well as certified registered nurse anesthetists (CRNAs), nurse practitioners (NPs), and physician assistants (PAs)
under our Cross Country Locums® brand on temporary assignments throughout the United States. The diverse list of
clients we serve include healthcare facilities, such as acute and non-acute care facilities, medical group practices,
government facilities, and managed care organizations. We recruit these professionals nationally and place them on
assignments varying in length from several days up to one year. Our Physician Staffing revenue and contribution
income is set forth in Note 18 - Segment Data to the consolidated financial statements.
(3) Search. We serve as a direct-hire talent acquisition partner to healthcare organizations and academic institutions
throughout the nation providing a full suite of prescriptive talent management solutions, including flexible talent
delivery models such as retained, outsourced, and contingent. The revenue and contribution income of our Search
segment is set forth in Note 18 - Segment Data to the consolidated financial statements. Our Cross Country Search®
brand delivers tailored and flexible retained, contingent, and outsourced solutions by employing a team of highly
specialized and tenured professionals that leverage subject matter expertise, leading recruitment technologies, and a
consultative approach to talent acquisition. We recruit and place executive leadership talent for healthcare and
academic institutions through our Cejka Search by Cross Country® brand.
Our Business Model
The recruitment and retention of a sufficient number of qualified healthcare professionals to work temporary assignments on
our behalf is critical to the success of our business. Healthcare professionals choose temporary assignments for a variety of
reasons that include seeking flexible work opportunities, seeking higher compensation, exploring diverse practice settings,
4
building skills and experience by working at prestigious healthcare facilities, working through life and career transitions, and as
a means of access into a permanent staff position all while practicing in the most appreciated and highly altruistic trade.
(1) Our Healthcare Professionals. Our company is well positioned to attract candidates, as nurses and allied
professionals routinely seek a wide range of diverse assignments in attractive locations, with competitive
compensation and benefit packages, scheduling options, as well as a high level of service. In addition, we believe
nurses and allied professionals are confident we will be able to offer them new assignments as they complete their
current assignment. Each of our nurse and allied healthcare professionals is employed by us and is typically paid
hourly wages and any other benefits they are entitled to receive during the assignment period. In addition, our
competitive benefits generally include professional liability insurance, a 401(k) plan, health insurance, reimbursed
travel, per diem allowances, and housing. In response to COVID-19, our Company frequently offers qualified
healthcare professionals compensation during quarantine when they are unable to provide services due to potential
exposure.
Recruiters are an essential element of our Nurse and Allied Staffing business, and are responsible for establishing and
maintaining key relationships with candidates for the duration of their assignments with us. Recruiters match the
supply of qualified candidates with the demand for open orders needed by our customers. While word-of-mouth and
referrals, especially from current and former healthcare professionals we have placed, continue as our leading channel
of access to candidates, we also market our brands through strategic sourcing initiatives including programmatic
strategic sourcing and extensive utilization of social media and mobile applications, which has become an increasingly
important component of our recruitment efforts. In addition to maintaining engaging and intuitive websites to allow
potential applicants to obtain information about our Company and assignment opportunities, we recently deployed
Cross Country Marketplace, as a mobile application to support the candidates throughout their experience with Cross
Country.
Cross Country Locums recruits and contracts with physicians and advanced practice professionals to provide medical
services for its healthcare customers. Each physician or advanced practice professional is an independent contractor
and enters into an agreement with Cross Country Locums to provide medical services at a particular healthcare facility
or physician practice group based on terms and conditions specified by that customer. California is the only state to
mandate that Advanced Practitioners be treated as a W-2 employee. Physicians and advanced practice professionals
are engaged to provide medical services for a healthcare customer ranging from a few days up to a year. We believe
physicians are attracted to us because we offer a wide variety of assignments, competitive fees, medical malpractice
insurance, and a high level of service. Cross Country Locums relies on word-of-mouth and referrals, but also markets
online through programmatic sourcing strategies and through extensive social media campaigns.
(2) Sales and Marketing. We take an enterprise sales approach in marketing our full capabilities across the continuum of
care to hospitals, healthcare facilities, schools, and other organizations across the United States addressing total talent
management needs. We provide flexible workforce solutions to the healthcare and school markets customizing
delivery of diversified offerings meeting the specific needs of each customer.
Our traditional staffing channels include temporary and permanent placement of travel nurses and allied professionals,
local nurses and allied staffing, advanced practitioners, physicians, and substitute teachers through the delivery brands
including Cross Country Nurses®, Cross Country Allied®, Cross Country Medical Staffing Network®, Cross Country
Search®, Cross Country Workforce Solutions®, and Cross Country Education®. Our recruiters leverage the Company’s
extensive databases of clinicians and healthcare professionals, as well as their expertise in their given specialties, to
qualify and place candidates.
(3) Credentialing and Quality Management. We screen all of our candidates prior to placement through our
credentialing departments. Our credentialing processes are designed to ensure that our professionals have the requisite
skillsets required by our customers, as well as the aptitude to meet the day-to-day requirements and challenges they
would typically encounter on assignments where they are placed. The credentialing of our nurse and allied healthcare
professionals is designed to align with the guidelines of The Joint Commission, a national accrediting body, to ensure
quality care. Our Cross Country University division, accredited by the American Nurse Credentialing Center, offers
training, assessment, and professional development to further ensure the quality of the personnel we place on
assignment. Our physician credentialing entity, Credent, is also certified by the National Committee for Quality
Assurance (NCQA).
(4) Payment for Services. We negotiate payment for services with our customers based on market conditions and needs.
We generally bill our nurse and allied employees at an hourly rate which includes all employer costs, including
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payroll, withholding taxes, benefits, professional liability insurance, meals and incidentals, and other requirements, as
well as any travel and housing arrangements, where applicable. Our shared service center processes hours worked by
field employees in the time and attendance systems, which in turn generate the billable transactions to our customers.
Hours worked by independent contractor physicians are reported to our Cross Country Locums office. For our Search
businesses, we typically bill our customers a candidate acquisition fee and we are reimbursed for certain marketing
expenses.
(5) Operations. Our businesses are operated through a relatively centralized business model servicing all assignment
needs of our healthcare professional employees, physicians, and customer healthcare facilities primarily through
operation centers located in Boca Raton, Florida; Woodland Hills, California; and Berkeley Lake, Georgia. In addition
to the key sales and recruitment activities, certain of these centers also perform support activities such as coordinating
housing, payroll processing, benefits administration, billing and collections, travel reimbursement processing,
customer service, and risk management.
(6) Information Systems. Various information systems are utilized to run our customer relationship management,
recruitment, and placement functions based on our different brands. Some of these sophisticated applications are
proprietary and are hosted in Tier 1 hosting facilities while other systems are Software as a Service (SaaS) based and
hosted by our vendor partners. Our systems maintain detailed information about our customer required skillsets and
status which assist us in enabling fulfillment and assignment renewals. Our databases contain an extensive pool of
existing and potential customers and all related recruitment and sales activity. Our financial and human resource
systems are managed on leading enterprise resource planning software suites that manage certain aspects of accounts
payable, accounts receivable, general ledger, billing, and human capital management. All of our systems are managed
by our onshore and offshore Information Technology team. We continue to focus on cybersecurity risks and have
engaged third parties to assist us in monitoring and managing our systems and devices and detecting cyber threats and
stopping breaches.
(7) Risk Management, Insurance, and Benefits. Our risk management program is designed to ensure prompt
notification of incidents by customers, clinicians, and independent contractors, educational training to our employees,
loss analysis, and prompt reporting procedures to reduce our risk of exposure. While we cannot predict the future, we
continuously review facts and incidents associated with professional liability and workers’ compensation claims in
order to identify trends and reduce our risk of loss in the future where possible. We consider assessments provided by
our customers and we work with clinicians and experts from our insurance carriers to determine employment
eligibility and potential exposure.
We provide workers’ compensation insurance coverage, professional liability coverage, and healthcare benefits for our
eligible employed temporary professionals. We record estimates of the ultimate cost of, and reserves for, workers'
compensation and professional liability benefits based on actuarial models prepared or reviewed by an independent
actuary using our loss history as well as industry statistics. In determining our reserves, we include reserves for
estimated claims incurred but not reported. On a quarterly basis, we estimate the healthcare claims that have occurred
but have not been reported based on our historical claim submission patterns. The ultimate cost of workers’
compensation, professional liability, and health insurance claims will depend on actual amounts incurred to settle those
claims and may differ from the amounts reserved for such claims.
The Company maintains a number of insurance policies including general liability, workers’ compensation, fidelity,
employment practices liability, fiduciary, directors and officers, cyber, property, and professional liability policies.
These policies provide coverage subject to their terms, conditions, limits of liability, and deductibles, for certain
liabilities that may arise from our operations. There can be no assurance that any of the above policies will be adequate
for our needs, or that we will maintain all such policies in the future.
Our Geographic Markets and Client Base
In 2020, 2019, and 2018, primarily all of our revenue was generated in the United States, and all of our long-lived assets were
located in the United States and India. We provide our staffing services and workforce solutions in all 50 states. During 2020,
the largest percentage of our revenue was concentrated in California, New York, and Florida. We provide services to public and
private acute care and non-acute care hospitals, outpatient clinics, ambulatory care facilities, single and multi-specialty
physician practices, rehabilitation facilities, urgent care centers, public and charter schools, correctional facilities, government
facilities, retailers, and many other healthcare providers. For the years ended December 31, 2020, 2019, and 2018, no customer
accounted for more than 10% of our revenue.
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Our Industry
We compete in the U.S. temporary healthcare staffing and workforce solutions markets. Staffing Industry Analysts September
2020 report estimates the healthcare staffing markets had an aggregate market size of $17.3 billion in 2020, of which $6.7
billion was travel nursing, $3.5 billion was per diem nursing, $3.7 billion was allied health, and $3.4 billion was locum tenens
and advanced practitioners. The demand for our services is impacted by many factors, of which we believe the most significant
are the following:
Industry Demand Drivers
Economic Backdrop. In December 2020, according to the U.S. Bureau of Labor Statistics, the total national
unemployment rate was 6.7%, well above the pre-COVID-19 rate of 3.6% from December 2019. Temporary help
employment was down 7.6% from the prior year. However, temporary help services did gain 67,600 jobs for the month
of December 2020. According to the Staffing Industry Analysts “US Staffing Industry Pulse Survey Report” (December
2020), the U.S. is beginning to experience a continued upward trend throughout staffing. In November 2020, travel
nurse staffing reported median year-over-year growth of 32%, life sciences reported growth of 21%, and per diem
nursing was up 10%. It is anticipated that the U.S. staffing industry will continue to recover along with the economy in
2021, and grow 12% to $141.5 billion, according to Staffing Industry Analysts “US Staffing Industry Forecast:
September 2020 Update” (September 10, 2020). This outlook relies on three key assumptions: 1) the spread of
COVID-19 will continue a downward trend, 2) U.S. GDP growth will continue a gradual but steady recovery, and 3) a
COVID-19 vaccine will be widely available in the first half of 2021.
Increased Need for Healthcare and Special Education Services in Schools. The Individuals with Disabilities
Education Act (IDEA), enacted in 1975, mandates that children and youth ages 3-21 with disabilities be provided a free
and appropriate public school education. According to the U.S. Department of Education, National Center for Education
Statistic Report titled “The Condition of Education" (May 19, 2020), in 2018-19, the number of students ages 3-21 who
received special education services under the Individuals with Disabilities Education Act (IDEA) was 7.1 million, or
14% of all public school students. The IDEA requires that these children and young adults receive care from speech
language pathologists, physical therapists, occupational therapists, nurses and other healthcare professionals while at
school. According to the US Government of Education report dated September 28, 2020, no matter what primary
instructional delivery approach is chosen (remote/distance, in-person, hybrid) in response to COVID-19, each child with
disabilities must be provided a free appropriate public education. Based on the foregoing, we believe the demand for
consulting and healthcare staffing services for public schools and charter schools will continue to be strong for agencies
that can provide consulting services, healthcare personnel, technical assistance on policies, implementation, and training
related to children and youth with special needs in or out of school settings.
Healthcare Sector Endured Job Losses in 2020 Owing to COVID-19. The healthcare sector lost 527,000 jobs
between February 2020 and November 2020, and the pace of improvement in the labor market has moderated in recent
months, according to HealthleadersMedia.com, “Healthcare Added 46k Jobs in November” (December 4, 2020).
According to the most recent Bureau of Labor Statistics 10-year projections, overall, employment is expected to grow
3.7%, far outpaced by employment in the healthcare and social assistance industry (14.6%). Five out of the 20 fastest
growing occupations are healthcare related.
Hospitals Seeking Efficiencies Through Various Workforce Solutions. As hospitals look to contingent labor to help
support their staffing needs in the highly volatile COVID-19 environment, they have an increased focus on cost
containment. As a result, certain COVID-19 related hospital orders reflect a shorter length of assignment than the
typical pre-COVID-19 length of approximately thirteen weeks. We believe that the COVID-19 economic impact will
continue to put pressure on hospitals to find innovative solutions in order to better manage their workforce, which
accounts for a large portion of their expenses. As a result, we believe healthcare facilities and providers will continue to
utilize workforce solutions, such as MSP, RPO, IRP, and other talent management tools to help them solve these
problems and maintain their quality of care.
Macro Drivers of Demand. The Affordable Care Act (ACA) increased the number of insured patients over the past
several years, especially in states that expanded Medicaid. In addition, two other long-term macro drivers of our
business, a growing and aging U.S. population, should continue to drive demand for our services. According to the U.S.
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Census Bureau, the number of persons aged 65 and over is expected to increase from 56 million in 2020 to 95 million in
2060, which is important because the utilization of healthcare services is generally higher among older people.
Healthcare Trends Resulting from COVID-19. Virtual care, which gained popularity in 2020 due to the COVID-19
pandemic, will continue to see growth in the next year, according to HealthleadersMedia.com “Business Group on
Health: 5 Healthcare Trends to Follow in 2021” (January 12, 2021). They unveiled key healthcare trends to watch in
2021. Virtual options will improve and include new features such as weight management and care management for
chronic conditions such as diabetes and cardiovascular disease. The pandemic also affected the way healthcare delivery
is operated, including moving lower acuity out of the hospital to free up beds for patients with COVID-19 and other
serious conditions. This trend will continue, and efforts to change healthcare delivery will increase in 2021 to drive
improvements in quality and value. Research from Arizton Advisory & Intelligence projects that the U.S. telehealth
market will reach $25 billion by 2025, growing at an annual rate of 29%, according to HealthleadersMedia.com,
“Analysis Predicts Telehealth in 2021 Will Mitigate Rising COVID-19-Related Costs” (December 10, 2020).
Supply of Nurses. According to the Bureau of Labor Statistics’ Employment Projections 2019-2029, Registered
Nursing (RN) is listed among the top occupations in terms of job growth through 2029. The RN workforce is expected
to grow from 3.0 million in 2019 to 3.3 million in 2029, an increase of 221,900 or 7%. The Bureau also projects the
need for an additional 175,900 new RNs each year through 2029, factoring in nurse retirements and workforce exits.
According to the American Nurses Association “Amid a raging pandemic, the US faces a nursing shortage. Can we
close the gap?” (November 20, 2020), it is projected that 1.1 million nurses will be required to replace nurses who are
retiring and to meet needs by 2022. It is projected that a million nurses are expected to retire between 2020 and 2035.
As a result of the stress caused by COVID-19, many nurses have considered quitting their jobs or leaving the profession
altogether. Also, approximately 73 million baby boomers are aging, many with chronic illnesses that require intensive
levels of care. Another factor influencing demand is the shortage of instructors. According to the American Association
of Colleges of Nursing, more than 80,000 qualified applicants to bachelor and graduate nursing programs were turned
away last year due to factors such as insufficient faculty, clinical sites, or classroom space, and clinical preceptors, as
well as budget constraints. We believe these shortages should have a positive effect on demand for our services as
temporary nurse staffing orders typically increase when nurse vacancy rates rise.
Physician Shortage. According to the Association of American Medical Colleges (AAMC) “The Complexities of
Physician Supply and Demand: Projections From 2018 to 2033” (June 2020), the United States is expected to face a
shortage of physicians. The projections show a shortage ranging between 54,100 and 139,000 by 2033 as demand for
physicians continues to outpace supply, according to AAMC, including shortfalls in both primary and specialty care. In
addition, more than 40% of physicians in the U.S. will be age 65 or over within the next decade. And as the health care
system continues to treat patients during COVID-19, there are growing concerns about physician burnout that suggests
physicians will be more likely to accelerate than delay retirement.
Industry Competition
As one of the largest providers of workforce solutions and healthcare staffing in the U.S., we operate on a national, regional,
and local basis in a highly competitive industry for both healthcare customers and healthcare professionals. In general, we
compete against other national companies, as well as numerous smaller, regional, and local companies.
The principal competitive factors in attracting, retaining, and expanding business with healthcare customers nationally include:
(i) understanding the customer’s work environment; (ii) offering a comprehensive suite of services to assist the customer in
assessing its personnel needs and partnering with customers to design various customizable alternative solutions; (iii) the timely
filling of customers' needs; (iv) price; (v) customer service; (vi) quality assurance and screening capabilities; (vii) risk
management policies; (viii) insurance coverage; and (ix) general industry reputation.
Through our breadth and expertise of value-added workforce solutions that we offer, we have the ability to meet a national shift
towards a more integrated delivery of healthcare which allows us to assist hospitals and health systems turning to lower-cost,
more accessible alternatives, such as outpatient or ambulatory care centers. By offering travel, per diem, and permanent
placement of a variety of healthcare professionals, we are able to present many different types of personnel to hospitals and
health systems at their main campuses and their ambulatory and outpatient facilities.
The principal competitive factors in attracting qualified healthcare professionals for temporary employment include: (i) a large
national pool of desirable assignments; (ii) pay and benefits; (iii) speed of placements; (iv) customer service; (v) quality of
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accommodations; and (vi) overall industry reputation. We focus on retaining healthcare professionals by providing high-quality
customer service, long-term benefits (to employees), and medical malpractice insurance.
From a candidate attraction standpoint, we have an extensive customer base with hospitals and healthcare facilities, and other
healthcare providers, throughout the U.S. As a result, we have a diverse portfolio of assignments for our healthcare
professionals to choose from. Healthcare professionals apply with us through our differentiated nursing, locum tenens, and
allied healthcare recruitment brands. We believe our access to such a large and diverse group of healthcare professionals makes
us more attractive to healthcare institutions and facilities seeking healthcare staffing and workforce solutions in the current
dynamic marketplace. The implementation of our new applicant tracking system for our travel nurse and allied business creates
further operational efficiencies, enhanced productivity, and provides a world-class candidate experience.
Staffing Industry Analysts recognized us as the fifth-largest healthcare staffing firm in the U.S., with 4% market share in 2019.
We rank as the fourth-largest travel nurse staffing firm, the second-largest per diem nurse staffing firm, the fifth-largest allied
healthcare staffing firm, and the ninth-largest locum tenens firm. Some of our traditional competitors in the workforce
solutions, healthcare staffing, and search businesses include: AMN Healthcare Services, Inc., CHG Healthcare Services,
Jackson Healthcare, Aya Healthcare, HealthTrust Workforce Solutions, Medical Solutions, and Witt Kiefer. In recent years,
several technology-enabled companies have entered the market, though at present we believe the current scale is limited.
Seasonality
The number of healthcare professionals on assignment with us is subject to seasonal fluctuations which may impact our
quarterly revenue and earnings. Hospital patient census and staffing needs of our hospital and healthcare facilities fluctuate,
which impact our number of orders for a particular period. Many of our hospital and healthcare facility clients are located in
areas that experience seasonal fluctuations in population during the winter and summer months. These facilities adjust their
staffing levels to accommodate the change in this seasonal demand and many of these facilities utilize temporary healthcare
professionals to satisfy these seasonal staffing needs. Likewise, the number of nurse and allied professionals on assignment may
fluctuate due to the seasonal preferences for destinations of our temporary nurse and allied professionals. In addition, we expect
our Physician Staffing business to experience higher demand in the summer months as physicians take vacations. We also
expect our education and school business to experience lower demand in the summer months when public and charter schools
are closed. This historical seasonality of revenue and earnings may vary due to a variety of factors and the results of any one
quarter are not necessarily indicative of the results to be expected for any other quarter or for any year. In addition, typically,
our first quarter results are negatively impacted by the reset of payroll taxes.
Certifications
The staffing businesses of our brands are certified by The Joint Commission under its Health Care Staffing Services
Certification Program. In addition, Credent Verification and Licensing Services, a subsidiary of MDA, is certified by the
NCQA.
Regulations
Our business is subject to regulation by numerous governmental authorities in the jurisdictions in which we operate throughout
the U.S. Complex federal and state laws and regulations govern, among other things, the licensure of professionals, the payment
of our employees (e.g., wage and hour laws, employment taxes, and income tax withholdings, etc.), and the general operations
of our business, which may be amended from time to time. Future federal and state legislation or interpretations thereof may
require us to change our business practices. Compliance with all of these applicable rules and regulations require a significant
amount of resources. We endeavor to be in compliance with all such rules and regulations.
Human Capital Management
As of December 31, 2020, we had approximately 1,450 corporate employees. During 2020, we employed an average of 6,037
full-time equivalent field employees in Nurse and Allied Staffing, which does not include our Physician Staffing independent
contractors.
Our ability to be successful in our marketplace directly depends on attracting and retaining talented and skilled employees, and
keeping those individuals fully engaged in our business. Through our adoption of a human rights policy guided by the
International Labor Organization’s Declaration of Human Rights and the United Nations’ Guiding Principles on Business and
Human Rights, our goal is to help increase the enjoyment of human rights within the communities in which we operate. This
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policy sets forth our intolerance of discrimination and harassment, our employees’ freedom of association, and the importance
we place on the safety and health of our employees.
Diversity, Equality, and Inclusion. We are committed to maintaining a diverse workplace that respects everyone’s race,
gender, sexual orientation, and physical abilities, as well as diversity of thought. Our diverse workforce is the cornerstone of
our business, as we believe varying perspectives and backgrounds are the only means of solving complex and challenging
business and social issues. As of December 31, 2020, our corporate workforce was comprised of 75% women and 25% men.
Our total corporate workforce is 63% white and 37% non-white. Our diverse team includes 43% millennials, 38% genX, 15%
boomers, and 4% genZ. In 2020, our executive and clinical leadership teams were comprised of 61% women, and 38% of our
Board of Directors is comprised of either women or minorities.
Compensation and Benefits. We are committed to rewarding, supporting, and developing the associates who make it possible
to deliver on our strategy. To that end, we offer a comprehensive total rewards program aimed at the varying health, home-life,
and financial needs of our diverse associates. Our total rewards package includes market-competitive pay, healthcare benefits,
retirement savings plans, paid time off and family leave, various discount programs, and tuition assistance.
Health and Wellness. We are committed to the physical and mental health and well-being of our employees. Among other
things, we provide free biometric healthcare screenings, a 24/7 hotline for healthcare workers who are experiencing emotional
stress, and incentives to employees who achieve specific fitness goals in our corporate cycling program. Our wellness activity
calendar features monthly events and educational sessions to help employees reach and maintain their health and wellness
goals. Additionally, dozens of “Lunch and Learn” sessions are scheduled throughout the year, focused on physical, mental, and
financial wellness topics of interest. We also mark one or more health observances every month, such as heart health, high
blood pressure awareness, men’s health, children’s dental health, and more, which provide additional resources for employees
to educate themselves and their families.
Talent Development. Our mission regarding talent management and development is to support organizational results and
success by employing strategies to attract, engage, develop, and retain employees, and to partner with our leaders to nurture and
grow leadership talent. These investments include providing clear insight into employee performance, creating career paths,
promoting from within whenever possible, maintaining open communication, and offering professional development
opportunities. During 2019, we introduced three new series of career development and over 1,000 employees participated in
these training programs: Leadership Education and Development, Leadership Essentials to Accelerate Performance, and New
Leader Assimilation. We have also embraced the Nursing Now pledge by reinforcing investment in the workforce, continuing
to promote nurses to management roles, and providing guidance and support on best nursing practices through our dedicated
clinical team. Nurse Now is a global campaign aimed at improving health by raising the status and profile of nursing.
Community and Social Impact. We participate in numerous events with a variety of non-profit organizations. Our mission to
deliver quality patient care extends to our community and we are committed to action that fosters positive impact in our
community and around the U.S. Our human resources department develops and implements programs to help our employees
realize their potential through volunteering and supporting our communities. Employees are able to donate to a charity of their
choice directly from their paychecks, either as a one-time donation or ongoing. We have also launched an employee-led council
which encourages employees from a wide variety of backgrounds and of diversity to come together, connect, build
relationships, and have their voices heard.
We have a long-standing commitment to our employees to create a business working environment that fosters engagement
through personal innovation, achievement, wellness, advancement and training/development opportunities, promoting health
and safety, and investments in their communities. These efforts culminate in creating a business culture of achievement and
loyalty that enables us to minimize turnover in our workforce and succeed in competitive and challenging marketplaces.
Additional Information
Financial reports and filings with the Securities and Exchange Commission (SEC), including this Annual Report on Form 10-K,
are available free of charge as soon as reasonably practicable after filing such material with, or furnishing it to, the SEC, on or
through our corporate website at www.crosscountryhealthcare.com. The information found on our website is not part of this
Annual Report on Form 10-K or any other report we file with or furnish to the SEC. The SEC also maintains a website at
www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC.
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Item 1A. Risk Factors.
The following risk factors could materially and adversely affect our future operating results and could cause actual results to
differ materially from those predicted in the forward-looking statements we make about our business. Our risks are identified
primarily through dialogue with our leaders, including a formal Enterprise Risk assessment, industry trends, our experience,
and consideration of the current external market and financial environment. These risk factors are considered in our overall
strategy and execution of operations. Factors we currently consider immaterial and factors we currently do not know may also
materially adversely affect our business or our consolidated results, financial condition, or cash flows.
Business, Economic, and Industry Risks
Our operations and financial results have been and may continue to be negatively affected by the current ongoing
COVID-19 pandemic and could be materially harmed by COVID-19 or the emergence and effects related to any other
pandemics, epidemics, or other public health crisis.
Our operations and financial results have been and may continue to be adversely affected by the ongoing COVID-19 pandemic
and changes in national or global economic conditions related thereto.
During the COVID-19 pandemic, certain of our healthcare professionals have been exposed, diagnosed and or quarantined as a
result of the virus. If, as a result of such risks, our healthcare professionals do not want to, or are not able to provide services, it
could negatively impact our supply and ability to provide staffing services to our customers. In addition, patients have canceled
or deferred elective procedures or otherwise avoided medical treatment resulting in reduced census at our hospital customers.
Additionally, healthcare facilities, such as ambulatory surgi-centers and other outpatient facilities, have been shut down
temporarily. This has resulted in the cancellation of certain of our healthcare professionals (e.g. operating room nurses, physical
therapists, surgeons, advanced practitioners, and many others) working at those facilities or under contract to provide services at
those facilities in the future. In addition, the normal operations of our healthcare facility customers may be disrupted and
impacted in ways that are difficult to predict and their financials could be adversely affected. This would not just negatively
impact our staffing and workforce solutions business, but would also have an adverse effect on our search businesses
(contingent, permanent, and retained) as healthcare customers may delay making decisions for executives, physicians, nurses,
and other full-time staff. In addition to the negative impact on demand from our hospital and healthcare facility customers,
school closures in the wake of the COVID-19 pandemic have had an adverse impact on our school staffing.
The financial impact to our healthcare customers from COVID-19 or any other pandemic, epidemic, outbreak of an infectious
disease or other public health crisis may also impact their ability to pay for our services timely or altogether, including invoices
for services provided prior to such an event that were in process. Such a failure to pay for our services timely or altogether
would have an impact on our collections, resulting in a negative financial impact on our Company.
Finally, while we have disaster plans in place for all of our locations and we are able to operate remotely, the potential
continuation of the COVID-19 pandemic, or the emergence of another pandemic, epidemic, or outbreak is difficult to predict
and could adversely affect our operations. In particular, our operations are headquartered in South Florida and if our employees
are working remotely as a result of a public health crisis during hurricane season and electricity, wi-fi, and other resources are
temporarily restricted or not available, it could negatively impact our operations and financial results.
Decreases in demand or pricing by our clients may adversely affect the profitability of our business.
Among other things, changes in the economy, a decrease or stagnation in the general level of in-patient admissions or out-
patient services at our clients’ facilities, uncertainty regarding or changes to federal healthcare law and the willingness of our
hospital, healthcare facilities and physician group clients to develop their own temporary staffing pools and increase the
productivity of their permanent staff may, individually or in the aggregate, significantly affect demand for our temporary
healthcare staffing services and may hamper our ability to attract, develop and retain clients. When a hospital’s admissions
increase, temporary employees or other healthcare professionals are often added before full-time employees are hired. As
admissions decrease, clients typically reduce their use of temporary employees or other healthcare professionals before
undertaking layoffs of their permanent employees. In addition, if hospitals continue to consolidate in an effort to enhance their
market positions, improve operational efficiency, and create organizations capable of managing population health, demand for
our services could decrease. Decreases in demand or pricing for our services may also affect our ability to provide attractive
assignments to our healthcare professionals.
We may face challenges competing in the marketplace if we are unable to anticipate and quickly respond to changing
marketplace conditions, such as alternative modes of healthcare delivery, reimbursement, and client needs.
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Patient delivery settings continue to evolve, giving rise to alternative modes of healthcare delivery, such as retail medicine,
telemedicine and home health.
Our success is dependent upon our ability to develop innovative workforce solutions and quickly adapt to changing marketplace
conditions and client needs, including making modifications to our technologies and evolving our technology platform that may
differentiate our services and abilities from those of our competitors. The markets in which we compete are highly competitive
and our competitors may respond more quickly to new or emerging client needs and marketplace conditions. The development
of new service lines and business models using advanced technology solutions requires us to be at the forefront of emerging
trends in the healthcare industry. We may face challenges competing in the marketplace if we are unable to quickly adapt our
business model and successfully implement innovative services and solutions to address these changes.
Market disruptions may adversely affect our operating results and financial condition.
Economic conditions and volatility in the financial markets may have an adverse impact on the availability of credit to us and to
our customers and businesses generally. To the extent that disruption in the financial markets occurs, it has the potential to
materially affect our and our customers’ ability to tap into debt and/or equity markets to continue ongoing operations, have
access to cash and/or pay debts as they come due. These events could negatively impact our results of operations and financial
conditions. Although we monitor our credit risks to specific clients that we believe may present credit concerns, default risk or
lack of access to liquidity may result from events or circumstances that are difficult to detect or foresee. Conditions in the credit
markets and the economy generally could adversely impact our business and limit or prohibit us from refinancing our credit
agreements on terms favorable to us or at all when they become due.
We are subject to business and regulatory risks associated with international operations.
We have international operations in India where our Cross Country Infotech, Pvt Ltd. (Infotech) subsidiary is located. Infotech
provides in-house information systems development and support services as well as some back-office processing services. We
have limited experience in supporting our services outside of North America. Operations in certain markets are subject to risks
inherent in international business activities, including: (i) fluctuations in currency exchange rates; (ii) changes in regulations;
(iii) varying economic and political conditions; (iv) overlapping or differing tax structures; and (v) regulations (pertaining to,
among other things, compensation and benefits, vacation, and the termination of employment). Our inability to effectively
manage our international operations or our violation of a regulation could result in increased costs and adversely affect our
results of operations.
Our financial results could be adversely impacted by the loss of key management.
We believe the successful execution of our business strategy and our ability to build upon significant recent investments and
acquisitions depends on the continued employment of key members of our senior management team. If we were to lose any key
personnel, we may not be able to find an appropriate replacement on a timely basis and our results of operations could be
negatively affected. Further, the loss of a significant number of employees or our inability to hire a sufficient number of
qualified employees could have a material adverse effect on our business.
Our clients may terminate or not renew their contracts with us.
Our arrangements with hospitals, healthcare facilities and physician group clients are generally terminable upon 30 to 90 days’
notice. We may have fixed costs, including housing costs, associated with terminated arrangements that we will be obligated to
pay post-termination, thus negatively impacting our profitability. In addition, the loss of one or more of our large clients could
materially affect our profitability.
If our healthcare facility clients increase the use of intermediary organizations it could impact our profitability and our
ability to secure contracts with clients.
We continue to see an increase in the use of intermediary organizations by our clients. These intermediaries typically enter into
contracts with our clients and then subcontract with us and other agencies to provide staffing services, thus interfering to some
extent in our relationship with our clients. Each of these intermediaries charges an administrative fee. In instances where we do
not win new MSP opportunities or where other vendors win this MSP or VMS business with our current customers, the number
of professionals we have on assignment at those clients could decrease. If we are unable to negotiate hourly rates with
intermediaries for the services we provide at these clients which are sufficient to cover administrative fees charged by those
intermediaries, it could impact our profitability. If hospitals fail to pay the intermediaries for our services or those
intermediaries become insolvent or fail to pay us for our services, it could impact our bad debt expense and thus our overall
profitability. We also provide comprehensive MSP and other workforce solutions directly to certain of our clients. While such
contracts typically improve our market share at these facilities, they could result in less diversification of our customer base,
increased liability, and reduced margins.
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Our costs of providing services may rise faster than we are able to adjust our bill rates and pay rates and, as a result, our
margins could decline and our profitability could be adversely impacted.
Costs of providing our services could change more quickly than we are able to renegotiate bill rates in our active contracts and
pay rates with our thousands of healthcare professionals. For example, we offer housing subsidies to our healthcare
professionals or provide actual housing to our healthcare professionals. At any given time, we have approximately 900
apartments on lease throughout the U.S. because we provide housing for certain of our healthcare professionals when they are
on an assignment with us. The cost of subsidizing housing or renting apartments and furniture for these healthcare professionals
may increase faster than we are able to renegotiate our rates with our customers, and this may have a negative impact on our
profitability. In addition, an increase in other incremental costs beyond our control, such as insurance could negatively affect
our financial results. The costs related to obtaining and maintaining professional and general liability insurance, health
insurance and workers’ compensation insurance for healthcare providers has generally been increasing. This could have an
adverse impact on our financial condition unless we are able to pass these costs through to our clients or renegotiate pay rates
with our healthcare providers.
Operational Risks
We are dependent on the proper functioning of our information systems and applications hosted by our vendors, and our
inability to implement new technology systems and infrastructure could cause disruptions to our ability to operate
effectively.
We are dependent on the proper functioning of information systems used to operate our business, including those applications
hosted by our vendors. Critical information systems used in daily operations identify and match staffing resources and client
assignments and perform billing and accounts receivable functions. Additionally, we rely on our information systems in
managing our accounting and financial reporting. These systems are subject to certain risks, including technological
obsolescence. We are currently evaluating the technology platforms of our businesses, and replacing our legacy nurse and allied
applicant tracking system. If our proprietary systems of Software as a Service applications fail, are not successfully
implemented, or are otherwise unable to function in a manner that properly supports our business operations, or if these systems
require significant costs to repair, maintain or further develop or update, we could experience business interruptions or delays
that could materially and adversely affect our business and financial results.
In addition, our information systems are protected through a secure hosting facility and additional backup remote processing
capabilities also exist in the event our primary systems fail or are not accessible. However, the business is still vulnerable to
fire, storm, flood, power loss, telecommunications failures, physical or software break-ins and similar events which may
prevent personnel from gaining access to systems necessary to perform their tasks in an automated fashion. In the event that
critical information systems fail or are otherwise unavailable, these functions would have to be accomplished manually, which
could impact our ability to, among other things, maintain billing and clinical records reliably, to bill for services efficiently and
to maintain our accounting and financial reporting accurately.
We are dependent on third parties for the execution of certain critical functions.
We have outsourced certain critical applications or business processes to external providers, including but not limited to
background screenings of our employees. We exercise care in the selection and oversight of these providers. However, the
failure or inability to perform on the part of one or more of these critical suppliers could cause significant disruptions and
increased costs to our business.
Our collection, use, and retention of personal information and personal health information create risks that may harm our
business.
As part of our business model, we collect, transmit and retain personal information of our employees and contract professionals
and their dependents, including, without limitation, full names, social security numbers, addresses, birth dates, and payroll-
related information. We use commercially available information security technologies to protect such information in digital
format and have security and business controls to limit access to such information. In addition, we periodically perform
penetration tests and respond to those findings. However, employees or third parties may be able to circumvent these measures
and acquire or misuse such information, resulting in breaches of privacy, and errors in the storage, use or transmission of such
information. Privacy breaches may require notification and other remedies, which can be costly, and which may have other
serious adverse consequences for our business, including regulatory penalties and fines, claims for breach of contract, claims
for damages, adverse publicity, reduced demand for our services by clients and/or healthcare professional candidates, harm to
our reputation, and regulatory oversight by state or federal agencies. The possession and use of personal information and data in
conducting our business subjects us to legislative and regulatory burdens. We may be required to incur significant expenses to
comply with mandatory privacy and security standards and protocols imposed by law, regulation, industry standards, or
contractual obligations.
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Cyber security risks and security breaches could adversely affect our business, disrupt operations, and harm our reputation.
Cyber incidents and security breaches can result from deliberate attacks or unintentional events. These incidents can include,
but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive
information, corrupting data, malware, ransomware, or causing operational disruption. The result of these incidents could
include, but are not limited to, disrupted operations, misstated financial data, liability for stolen assets or information, increased
cyber security protection costs, litigation and reputational damage adversely affecting customer or investor confidence. We
have implemented systems and processes to focus on identification, prevention, mitigation and resolution. However, these
measures cannot provide absolute security, and our systems may be vulnerable to cyber-security breaches such as viruses,
hacking, and similar disruptions from unauthorized intrusions. In addition, we rely on third party service providers to perform
certain services, such as payroll and tax services. Any failure of our systems or third party systems may compromise our
sensitive information and/or personally identifiable information of our employees. While we have secured cyber insurance to
potentially cover certain risks associated with cyber incidents, there can be no assurance the insurance will be sufficient to
cover any such liability.
We may be unable to recruit and retain enough quality healthcare professionals to meet our clients’ demands.
We rely significantly on our ability to attract, develop and retain healthcare professionals who possess the skills, experience
and, as required, licensure necessary to meet the specified requirements of our healthcare clients. We compete for healthcare
staffing personnel with other temporary healthcare staffing companies, as well as actual and potential clients such as healthcare
facilities and physician groups, some of which seek to fill positions with either permanent or temporary employees. We rely on
word-of-mouth referrals, as well as social and digital media to attract qualified healthcare professionals. If our social and digital
media strategy is not successful, our ability to attract qualified healthcare professionals could be negatively impacted.
In addition, with a shortage of certain qualified healthcare professionals in many areas of the United States, competition for
these professionals remains intense. Our ability to recruit and retain healthcare professionals depends on our ability to, among
other things, offer assignments that are attractive to healthcare professionals and offer them competitive wages and benefits or
payments, as applicable. Our competitors might increase hourly wages or the value of benefits to induce healthcare
professionals to take assignments with them. If we do not raise wages or increase the value of benefits in response to such
increases by our competitors, we could face difficulties attracting and retaining qualified healthcare professionals. If we raise
wages or increase benefits in response to our competitors’ increases and are unable to pass such cost increases on to our clients,
our margins could decline. At this time, we still do not have enough nurses, allied professionals and physicians to meet all of
our clients’ demands for these staffing services. This shortage of healthcare professionals generally and the competition for
their services may limit our ability to increase the number of healthcare professionals that we successfully recruit, decreasing
our ability to grow our business.
Our labor costs could be adversely affected by a shortage of experienced healthcare professionals and labor union activity.
Our operations are dependent on our ability to recruit and staff quality healthcare professionals. We compete with other
healthcare staffing companies in recruiting and retaining qualified personnel. We may be required to enhance wages and
benefits to our employees, which could negatively impact our profitability. Labor union activity is another factor that could
adversely affect our labor costs or otherwise adversely impact us. To the extent a significant portion of our employee base
unionizes, our labor costs could increase significantly.
If our labor costs increase, we may not be able to raise rates to offset these increased costs. Because a significant percentage of
our revenues consists of fixed, prospective payments, our ability to pass along increased labor costs is constrained. In the event
we are not entirely effective at recruiting and retaining qualified management, nurses and other medical support personnel, or in
controlling labor costs, this could have an adverse effect on our results of operations.
Legal, Tax, and Regulatory Risks
The healthcare industry is highly regulated. Any material changes in the political, economic or regulatory environment that
affect the purchasing policies, practices and operations of healthcare organizations, or that lead to consolidation in the
healthcare industry, could reduce the funds available to purchase our services or otherwise require us to modify our
offerings.
We provide our services to hospitals and health systems which pay us directly. Accordingly, Medicare, Medicaid and insurance
reimbursement policy changes generally do not directly impact us. However, indirectly, our business, financial condition and
results of operations depend upon conditions affecting the healthcare industry generally and hospitals and health systems
particularly. The healthcare industry is highly regulated by federal and state authorities and is subject to changing political,
economic and regulatory influences. Factors such as changes in reimbursement policies for healthcare expenses, consolidation
in the healthcare industry, regulation, litigation and general economic conditions could affect the purchasing practices,
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operations and the financial health of our customers which could have a negative impact on our business. In addition, insurance
companies and managed care organizations seek to control costs by requiring healthcare providers, such as hospitals, to
discount their services in exchange for exclusive or preferred participation in their benefit plans. While not affecting us directly,
future federal and state legislation or evolving commercial reimbursement trends may further reduce or change conditions for
our clients’ reimbursement. Such limitations on reimbursement could reduce our clients’ cash flows, hampering the pricing we
can charge clients and their ability to pay us. Reimbursement changes in government programs, particularly Medicare and
Medicaid, can and do indirectly affect the demand and the prices paid for our services. The impact of any other legislation to
repeal or amend or replace the ACA is uncertain and could adversely affect our business and financial condition.
We operate our business in a regulated industry and modifications, inaccurate interpretations or violations of any applicable
statutory or regulatory requirements may result in material costs or penalties as well as litigation and could reduce our
revenue and earnings per share.
Our industry is subject to many complex federal, state, local and international laws and regulations related to, among other
things, the licensure of professionals, the payment of our field employees (e.g., wage and hour laws, employment taxes and
income tax withholdings, etc.) and the operations of our business generally (e.g., federal, state and local tax laws). If we do not
comply with the laws and regulations that are applicable to our business, we could incur civil and/or criminal penalties as well
as litigation or be subject to equitable remedies.
We are subject to various litigation, claims, investigations, and other proceedings which could result in substantial
judgment, settlement costs, or uninsured liabilities.
We are party to various litigation, claims, investigations, and other proceedings. These matters primarily relate to employee-
related matters that include individual and collective claims, professional liability, tax, and payroll practices. We evaluate these
litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount
of potential losses. Based on these assessments and estimates, if any, we establish reserves and/or disclose the relevant litigation
claims or legal proceedings, as appropriate. These assessments are performed at least quarterly and are based on the information
available to management at the time and involve a significant amount of management judgment. Based on the new information
considered in our reviews, we adjust our loss contingency accruals and our disclosures. We may not have sufficient insurance to
cover these risks. Actual outcomes or losses may differ materially from those estimated by our current assessments which
would impact our profitability. Adverse developments in existing litigation claims or legal proceedings involving our Company
or new claims could require us to establish or increase litigation reserves or enter into unfavorable settlements or satisfy
judgments for monetary damages for amounts in excess of current reserves, which could adversely affect our financial results.
In recent years, healthcare providers have become subject to an increasing number of legal actions alleging malpractice,
vicarious liability, violation of certain consumer protection acts, negligent hiring, negligent credentialing, or related legal
theories. We may be subject to liability in such cases even if our Company's contribution to the alleged injury was minimal or
related to one of our subcontractors or its employees. Many of these actions involve large claims and significant defense costs.
In addition, we may be subject to claims related to torts or crimes committed by our corporate employees or healthcare
professionals that we place on assignment. In most instances, we are required to indemnify clients against some or all of these
risks. A failure of any of our corporate employees or healthcare professional to observe our policies and guidelines, relevant
client policies and guidelines or applicable federal, state or local laws, rules and regulations could result in negative publicity,
payment of fines or other damages.
To protect ourselves from the cost of these types of claims, we maintain professional malpractice liability insurance,
employment practices liability insurance, and general liability insurance coverage with terms and in amounts with deductibles
that we believe are appropriate for our operations. We are partially self-insured for our workers' compensation coverage, health
insurance coverage, and professional liability coverage for our locum tenens providers. If we become subject to substantial
uninsured workers' compensation, medical coverage or medical malpractice liabilities, whether directly or indirectly, our
financial results may be adversely affected. In addition, our insurance coverage may not cover all claims against us or continue
to be available to us at a reasonable cost. If we are unable to pay our self-insured retention portion, pay any uninsured portion,
or maintain adequate insurance coverage, we may be exposed to substantial liabilities.
If applicable government regulations change, we may face increased costs that reduce our revenue and profitability.
The temporary healthcare staffing industry is regulated in many states. For example, in some states, firms such as our nurse
staffing companies must be registered to establish and advertise as a nurse-staffing agency or must qualify for an exemption
from registration in those states. If we were to lose any required state licenses, we could be required to cease operating in those
states. The introduction of new regulatory provisions could also substantially raise the costs associated with hiring temporary
employees. For example, some states could impose sales taxes or increase sales tax rates on temporary healthcare staffing
services. Also, as a result of the COVID-19 pandemic, several states have enacted various legislation to expand the application
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of workers compensation and other benefits to healthcare providers who are exposed to or who contract COVID-19 through
their employment, and certain of our clients are requiring us to provide personal protection equipment to our workers. These
increased costs may not be able to be passed on to clients. In addition, if government regulations were implemented that limited
the amount we could charge for our services, our profitability could be adversely affected. We continuously monitor changes in
regulations and legislation for potential impacts on our business.
We could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions, if
there are further legislative tax changes, or if we are unable to utilize our net operating losses.
We are periodically subject to a number of tax examinations by taxing authorities in the states and countries where we do
business. We also have significant deferred tax assets related to our net operating losses (NOLs) in U.S. federal and state taxing
jurisdictions, which, generally, for U.S. federal and state tax purposes, carry forward for up to twenty years or indefinitely,
depending on the year the NOL was generated. Tax years generally remain subject to examination until three years after NOLs
are used or expire. We expect that we will continue to be subject to tax examinations in the future. We recognize tax benefits of
uncertain tax positions when we believe the positions are more likely than not of being sustained upon a challenge by the
relevant tax authority. We believe our judgments in this area are reasonable and correct, but there is no guarantee that we will
be successful if challenged by a taxing authority. If there are tax benefits, including, but not limited to, the use of NOLs,
expense reimbursements, or other tax attributes, that are challenged successfully by a taxing authority, we may be required to
pay additional taxes, interest, and penalties, or we may seek to enter into settlements with the taxing authorities, which could
require significant payments or otherwise have a material adverse effect on our business, results of operations, and financial
condition.
In addition, U.S. federal, state and local, as well as international, tax laws and regulations are extremely complex and subject to
varying interpretations. Most recently, on March 27, 2020, the former President signed the Coronavirus Aid, Relief, and
Economic Security (CARES) Act into law, which was extended under the Taxpayer Certainty and Disaster Relief Act of 2020,
passed on December 27, 2020. The CARES Act provided for an accelerated refund of prior year Alternative Minimum Tax,
previously deemed refundable over a period of time in the 2017 Tax Act. Further, the CARES Act authorized a refundable tax
credit against an employer’s portion of social security tax. We are not aware of any provision in the CARES Act or any other
pending tax legislation that would have a material adverse impact on our financial performance. There can be no assurance that
the CARES Act, the 2017 Tax Act, or any other legislative changes will not negatively impact our operating results, financial
condition, and future business operations.
Lastly, we may be limited in our ability to utilize our NOLs to offset future taxable income and thereby reduce our otherwise
payable income taxes. Our ability to utilize our NOLs is also dependent, in part, upon us having sufficient future earnings to
utilize our NOLs before they expire. If market conditions change materially and we determine that we will be unable to
generate sufficient taxable income in the future to utilize our NOLs, we could be required to record an additional valuation
allowance. We review the valuation allowances for our NOLs periodically and make adjustments from time to time, which can
result in an increase or decrease to the net deferred tax asset related to our NOLs. If we are unable to use our NOLs or use of
our NOLs is limited, we may have to make significant payments or reduce our deferred tax assets, which could have a material
adverse effect on our business, results of operations, and financial condition.
If certain of our healthcare professionals are reclassified from independent contractors to employees our profitability could
be materially adversely impacted.
Federal or state taxing authorities could re-classify our locum tenens physicians, CRNAs, nurse practitioners, and other
independent contractors as employees, despite both the general industry standard to treat them as independent contractors and
many state laws prohibiting non-physician owned companies from employing physicians (e.g., the “corporate practice of
medicine”). If they were re-classified as employees, we would be subject to, among other things, employment and payroll-
related tax claims, as well as any applicable penalties and interest. Any such reclassification would have a material adverse
impact on our business model for that business segment and would negatively impact our profitability.
If the method for paying locum tenens physicians changes, it could negatively impact our profitability.
The Medicare Access and CHIP Reauthorization Act of 2015 created a new framework for rewarding physicians for providing
higher quality care by establishing two tracks of payment: a merit-based incentive payment system, and Advanced Alternative
Payment Models. If hospitals change the method for paying locum tenens physicians to meet their performance goals or other
criteria for Medicaid or Medicare reimbursements, the profitability of our business could be adversely impacted.
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Risks Relating to Our Indebtedness
We have a level of indebtedness which may have an adverse effect on our business or limit our ability to take advantage of
business, strategic or financing opportunities.
As of December 31, 2020, we had a total principal amount of $53.4 million in debt. Our level of indebtedness increases the
possibility that we may be unable to generate cash sufficient to pay the principal, interest or other amounts due on our
indebtedness. Subject to certain restrictions under our existing indebtedness, we and our subsidiaries may also incur significant
additional indebtedness in the future. This may have the effect of increasing our total leverage. As a consequence of our
indebtedness; (i) demands on our cash resources may increase; (ii) we are subject to restrictive covenants that limit our financial
and operating flexibility. Our ability to generate profitability and maintain cash flow from operations could impact our
compliance with these covenants; and (iii) we may choose to institute self-imposed limits on our indebtedness based on certain
considerations including market interest rates, our relative leverage and our strategic plans. For example, as a result of our level
of indebtedness and the uncertainties arising in the credit markets and the U.S. economy:
- we may be more vulnerable to general adverse economic and industry conditions;
- we may have to pay higher interest rates upon refinancing or on our variable rate indebtedness if interest rates rise, thereby
reducing our cash flows;
- we may find it more difficult to obtain additional financing to fund future working capital, capital expenditures, acquisitions,
and other general corporate requirements that would be in our long-term interests;
- we may be required to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest
on our debt, reducing the available cash flow to fund other investments;
- we may have limited flexibility in planning for, or reacting to, changes in our business or in the industry;
- we may have a competitive disadvantage relative to other companies in our industry that are less leveraged;
- we may be required to sell debt or equity securities or sell some of our core assets, possibly on unfavorable terms, in order to
meet payment obligations; and
- we may not be able to successfully raise capital to execute our mergers and acquisitions strategy.
These constraints could have a material adverse effect on our business.
The interest rates under our ABL Credit Agreement may be impacted by the phase-out of the London Interbank Offered
Rate (LIBOR).
LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a
reference for setting the interest rates on loans globally. We use LIBOR as a reference rate to calculate interest under our ABL
Credit Agreement. In 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it
intends to phase out LIBOR by the end of 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates
Committee, a steering committee comprised of large U.S. financial institutions, identified the Secured Overnight Financing
Rate (SOFR) as the preferred alternative reference rate to U.S. dollar LIBOR and recommended a paced transition plan that
involves the creation of a reference rate based on SOFR by the end of 2021. SOFR is a more generic measure than LIBOR and
considers the cost of borrowing cash overnight, collateralized by U.S. Treasury securities. Given the inherent differences
between LIBOR and SOFR or any other alternative benchmark rate that may be established, there are many uncertainties
regarding a transition from LIBOR. Our ABL Credit Agreement contains a fallback provision providing for alternative rate
calculations in the event LIBOR is unavailable, prior to any LIBOR rate transition. As a result of any changes in the
benchmarking rate, the new rates we incur may not be as favorable to us as those in effect prior to any LIBOR phase-out, and
we may incur higher interest payments.
We could fail to generate sufficient cash to fund our liquidity needs and/or fail to satisfy the financial and other restrictive
covenants to which we are subject under our existing indebtedness, which could adversely affect long term growth and
results of operations.
We currently have sufficient liquidity to operate our business in the normal course. If, however, we were to make an acquisition
or enter into a similar type of transaction, our liquidity needs may exceed our current capacity. In addition, our existing credit
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facilities currently contain financial covenants that require us to operate above a minimum fixed charge coverage ratio and
below a consolidated leverage ratio. Deterioration in our operating results could result in our inability to comply with these
covenants and would result in a default under our credit facility. If an event of default exists, our lenders could call the
indebtedness and we may be unable to renegotiate or secure other financing.
General Business Risks
We may face difficulties integrating our acquisitions into our operations and our acquisitions may be unsuccessful, involve
significant cash expenditures or expose us to unforeseen liabilities.
We continually evaluate opportunities to acquire companies that would complement or enhance our business. These acquisition
opportunities involve numerous risks, including potential loss of key employees or clients of acquired companies; difficulties
integrating acquired personnel and distinct cultures into our business; difficulties integrating acquired companies into our
operating, financial planning and financial reporting systems; diversion of management attention from existing operations; and
assumptions of liabilities and exposure to unforeseen liabilities of acquired companies, including liabilities for their failure to
comply with healthcare and tax regulations. These acquisitions may also involve significant cash expenditures, debt incurrence
and integration expenses that could have a material adverse effect on our financial condition and results of operations. Any
acquisition may ultimately have a negative impact on our business and financial condition.
Losses caused by natural disasters, such as hurricanes and fires, could cause us to suffer material financial losses.
Catastrophes can be caused by various events, including, but not limited to, hurricanes, fires, and other severe weather. The
incidence and severity of catastrophes are inherently unpredictable. With our headquarters and shared services located in South
Florida, we are more vulnerable to possible disruptions from hurricanes and the impacts resulting therefrom, such as tornadoes,
flooding, fuel shortages, and disruption of internet, and telecommunications services. The extent of losses from a catastrophe is
a function of both the total amount of insured exposure and the severity of the event. We do not maintain business interruption
insurance for these events. We could suffer material financial losses as a result of disruptions from hurricanes, fires, and other
catastrophes.
Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures
will be successful in preventing all errors and fraud, or in making all material information known in a timely manner to
management.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure
controls and internal controls will prevent all errors and all fraud. A control system, no matter how well designed and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can
be circumvented by the acts of an individual, by collusion of two or more people, or by management override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over
time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations, misstatements due to error or fraud may occur and not be
detected.
Impairment in the value of our goodwill, trade names, or other intangible assets could negatively impact our net income and
earnings per share.
We are required to test goodwill and intangible assets with indefinite lives (such as trade names) annually, to determine if
impairment has occurred. Long-lived assets and other identifiable intangible assets are also reviewed for impairment whenever
events or changes in circumstances indicate that amounts may not be recoverable. If the testing performed indicates that
impairment has occurred, we are required to record an impairment charge for the difference between the carrying amount of the
goodwill or other intangible assets and the implied fair value of the goodwill or the fair value of the indefinite-lived intangible
asset in the period the determination is made. The testing of goodwill and other intangible assets for impairment requires us to
make significant estimates about our future performance and cash flows, as well as other assumptions. These estimates can be
affected by numerous factors, including changes in economic, industry or market conditions, changes in business operations,
changes in competition or changes in our stock price and market capitalization. Changes in these factors, or changes in actual
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performance compared with estimates of our future performance, could affect the fair value of goodwill, trade names, or other
intangible assets, which may result in an impairment charge. We cannot accurately predict the amount and timing of any
impairment of assets. Should the value of goodwill or other intangible assets become impaired, there could be an adverse effect
on us. At December 31, 2020, goodwill, trade names not subject to amortization, and other intangible assets represented 37% of
our total assets. In 2020. 2019, and 2018, we recorded impairment charges of $10.7 million, $14.5 million, and $22.4 million,
respectively.
If provisions in our corporate documents and Delaware law delay or prevent a change in control, we may be unable to
consummate a transaction that our stockholders consider favorable.
Our certificate of incorporation and by-laws may discourage, delay or prevent a merger or acquisition involving us that our
stockholders may consider favorable. For example, our certificate of incorporation authorizes our Board of Directors to issue up
to 10,000,000 shares of “blank check” preferred stock. Without stockholder approval, the Board of Directors has the authority
to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders
could make it more difficult for a third party to acquire us. Delaware law may also discourage, delay or prevent someone from
acquiring or merging with us.
Stock issuable under our stock incentive plans are presently in effect and sales of this stock could cause our stock price to
decline.
We have registered 3,000,000 shares of common stock for issuance under our 2020 Omnibus Incentive Plan. Shares of
restricted stock outstanding as of February 17, 2021 were 1,335,264. In addition, a target of 545,063 performance stock award
grants were outstanding as of February 17, 2021. See Note 15 - Stockholders' Equity to our consolidated financial statements.
Vested restricted stock and issuance of common stock related to our awards is eligible for resale in the public market without
restriction. We cannot predict what effect, if any, market sales of shares held by any stockholder or the availability of these
shares for future sale will have on the market price of our common stock.
Item 1B. Unresolved Staff Comments.
None.
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Item 2. Properties.
All of our operations are conducted through leased office space and as of December 31, 2020, we actively leased office space in
10 facilities located in 9 states throughout the United States. We also lease office space in a facility located in Pune, India,
which houses certain software development and information technology support. In connection with the continuing
developments from COVID-19, we expedited our restructuring plans and either reduced or fully vacated more than 50 leased
office spaces during the year ended December 31, 2020. See our remaining lease obligations as of December 31, 2020 in Note
10 - Leases to our consolidated financial statements. We continuously evaluate facility needs based on the extent of our service
offerings, the rate of client growth or decline, the geographic distribution of our client base, changing market conditions, and
our long-term goals. As of December 31, 2020, our material leased properties are described below:
Our corporate headquarters is located in Boca Raton, Florida, with approximately 70,000 square feet of office space under lease
through December 2025. The space is occupied by our corporate executive staff, legal, finance, risk management, internal audit,
and information technology teams. Our Nurse and Allied executive staff and operations personnel as well as shared support
functions of human resources, payroll and billing, sales, and marketing also occupy this space.
In Norcross, Georgia we have approximately 42,000 square feet of office space under lease through October 2024. Our
Physician Staffing executive staff and operations personnel occupy approximately 19,000 square feet with the remainder of the
space vacant and available for a sublease which we are currently seeking.
In Creve Coeur, Missouri, we have approximately 27,000 square feet of office space under lease through August 2024. Our
Search executive staff and operations personnel occupy approximately 6,000 square feet with the remainder vacant and
available for a sublease which we are currently seeking.
Item 3. Legal Proceedings.
Information with respect to certain legal proceedings is included in Note 13 to the consolidated financial statements contained
in Item 8. Financial Statements and Supplementary Data, and is incorporated herein by reference.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Our common stock currently trades under the symbol “CCRN” on the Nasdaq Global Select Market (Nasdaq). Our common
stock commenced trading on the Nasdaq National Market under the symbol “CCRN” on October 25, 2001.
The graph below compares the Company to the cumulative 5-year total return of holders of the Company's common stock with
the cumulative total returns of the Nasdaq Composite index and the Dow Jones U.S. Business Training & Employment
Agencies index. The graph assumes that the value of the investment in the Company's common stock and in each of the indexes
(including reinvestment of dividends) was $100 on December 31, 2015 and tracks it through December 31, 2020.
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The stock price performance included in this graph is not necessarily indicative of future stock price performance.
As of February 17, 2021, there were 119 stockholders of record of our common stock. In addition, there were 4,984 beneficial
owners of our common stock held by brokers or other institutions on behalf of stockholders.
We have never paid or declared cash dividends on our common stock. Covenants in our credit agreement limit our ability to
repurchase our common stock and declare and pay cash dividends on our common stock. On February 28, 2008, our Board of
Directors authorized our most recent stock repurchase program whereby we may purchase up to 1.5 million of our common
shares, subject to the terms of our current credit agreement. The shares may be repurchased from time-to-time in the open
market and the repurchase program may be discontinued at any time at our discretion. At December 31, 2020 and 2019, we had
510,004 shares of common stock left remaining to repurchase under this authorization, subject to the limitations of our credit
agreement as described in Note 15 - Stockholders' Equity to our consolidated financial statements.
Item 6. Selected Financial Data.
Part II, Item 6 is no longer required as the Company has adopted certain provisions within the amendments to Regulation S-K
that eliminate Item 301.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with
Item 1. Business, Item 1A. Risk Factors, Forward-Looking Statements and Item 15. Consolidated Financial Statements and the
accompanying notes and other data, all of which appear elsewhere in this Annual Report on Form 10-K.
Management's Discussion and Analysis below generally discusses 2020 and 2019 items and year-to-year comparisons between
2020 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this
21
Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 5, 2020
and such information is incorporated herein by reference.
Business Overview
We provide total talent management services, including strategic workforce solutions, contingent staffing, permanent
placement, and consultative services for healthcare customers. We recruit and place highly qualified healthcare professionals in
virtually every specialty and area of expertise. Our diverse customer base includes both public and private acute care and non-
acute care hospitals, outpatient clinics, ambulatory care facilities, single and multi-specialty physician practices, rehabilitation
facilities, urgent care centers, public and charter schools, correctional facilities, government facilities, pharmacies, and many
other healthcare providers. Through our national staffing teams and network of office locations, we offer our workforce
solutions and we can place clinicians on travel and per diem assignments, local short-term contracts, and permanent positions.
Our workforce solutions include MSPs, IRP, RPO, and other outsourcing and consultative services as described in Item 1.
Business. By utilizing our various solutions, customers can better plan their personnel needs, talent acquisition and management
processes, strategically flex and balance their workforce, access quality healthcare personnel, and provide continuity of care for
improved patient outcomes. We have a longstanding history of investing in our diversity, equality, and inclusion strategic
initiatives as a key component of the organization’s overall corporate social responsibility program which is closely aligned
with its core values to create a better future for our people, communities, the planet, and our shareholders.
We manage and segment our business based on the nature of the services we offer to our customers. As a result, we report three
business segments – Nurse and Allied Staffing, Physician Staffing, and Search.
● Nurse and Allied Staffing – For the year ended December 31, 2020, Nurse and Allied Staffing represented
approximately 91% of our total revenue. The Nurse and Allied Staffing segment provides workforce solutions and
traditional staffing, including temporary and permanent placement of travel nurses and allied professionals, as well as
per diem and contract nurses and allied personnel. We also provide clinical and non-clinical professionals on long-term
assignments to clients such as public and charter schools, correctional facilities, skilled nursing facilities, and other
non-acute settings. We provide flexible workforce solutions to our healthcare customers through diversified offerings
designed to meet their unique needs, including: MSP, OWS, IRP and consulting services.
● Physician Staffing – For the year ended December 31, 2020, Physician Staffing represented approximately 8% of our
total revenue. Physician Staffing provides physicians in many specialties, as well as CRNAs, NPs, and PAs as
independent contractors on temporary assignments throughout the U.S.
● Search – For the year ended December 31, 2020, Search represented approximately 1% of our total revenue. Search
includes retained and contingent search services for physicians, healthcare executives, and other healthcare
professionals, as well as RPO.
Summary of Operations
For the year ended December 31, 2020, revenue from services increased 1.7% year-over-year to $836.4 million, driven by
growth in our largest segment, Nurse and Allied Staffing, due to continued acceleration in demand primarily as a result of a
high volume of COVID-19 assignments, as well as our support of two labor disruptions. As a result of the rise in demand and a
tight labor market, our average travel bill rates increased due to the increases in pay rates required to attract healthcare
professionals. Throughout the pandemic, we have worked with our clients to adjust bill rates, both increasing and decreasing
rates as necessary, to provide critical healthcare professionals. Revenue from Physician Staffing and Search decreased year-
over-year by 8.9% and 28.8%, respectively, for the year ended December 31, 2020, as both segments continued to experience
an adverse impact from COVID-19. Within Physician Staffing, revenue from advanced practices increased, offset by declines
in other physician specialties.
Net loss attributable to common shareholders for the year ended December 31, 2020 was $13.0 million as compared to a net
loss of $57.7 million in the prior year. Profitability in the current year was impacted by $6.1 million of restructuring costs and
$16.2 million of impairment charges. Profitability in the year ended December 31, 2019 was impacted by $3.6 million of
restructuring costs, $16.3 million of impairment charges, $1.6 million of legal settlement charges, $2.0 million loss on early
extinguishment of debt, and $1.3 million loss on derivative.
For the year ended December 31, 2020, we generated cash flow from operating activities of $27.2 million and repaid a net of
$17.6 million on our senior-secured asset-based credit facility (ABL). As of December 31, 2020, we had $1.6 million in cash
22
and cash equivalents, and availability under the ABL of $125.5 million, with $53.4 million of borrowings drawn under our
ABL, and $18.5 million of undrawn letters of credit outstanding, leaving $53.6 million available for borrowing. See Note 8 -
Debt to our consolidated financial statements.
We expect that COVID-19 will continue to have a mixed impact on our business, with rapid changes possible in both demand
and bill rates, and that higher bill rates will likely trend down throughout 2021.
See Results of Operations, Segment Results, and Liquidity and Capital Resources sections that follow for further information.
Operating Metrics
We evaluate our financial condition by tracking operating metrics and financial results specific to each of our segments. Key
operating metrics include hours worked, days filled, number of contract personnel on a full-time equivalent basis (FTE),
revenue per FTE, and revenue per day filled. Other operating metrics include number of open orders, candidate applications,
contract bookings, length of assignment, bill and pay rates, and renewal and fill rates, number of active searches, and number of
placements. These operating metrics are representative of trends that assist management in evaluating business performance.
Due to the timing of our business process and other factors, certain of these operating metrics may not necessarily correlate to
the reported GAAP results for the periods presented. Some of the segment financial results analyzed include revenue, operating
expenses, and contribution income. In addition, we monitor cash flow as well as operating and leverage ratios to help us assess
our liquidity needs.
Business Segment
Nurse and Allied Staffing
Physician Staffing
Business Measurement
FTEs represent the average number of Nurse and Allied Staffing
contract personnel on a full-time equivalent basis.
Average revenue per FTE per day is calculated by dividing the
Nurse and Allied Staffing revenue per FTE by the number of days
worked in the respective periods. Nurse and Allied Staffing revenue
also includes revenue from the permanent placement of nurses.
Days filled is calculated by dividing the total hours invoiced during
the period, including an estimate for the impact of accrued revenue,
by 8 hours.
Revenue per day filled is calculated by dividing revenue as reported
by days filled for the period presented.
23
Results of Operations
The following table summarizes, for the periods indicated, selected consolidated statements of operations data expressed as
a percentage of revenue. Our historical results of operations are not necessarily indicative of future operating results.
Revenue from services
Direct operating expenses
Selling, general and administrative expenses
Bad debt expense
Depreciation and amortization
Acquisition and integration-related costs
Restructuring costs
Legal settlement charges
Impairment charges
Loss from operations
Interest expense
Loss on derivative
Loss on early extinguishment of debt
Other income, net
Loss before income taxes
Income tax expense (benefit)
Consolidated net loss
Less: Net income attributable to noncontrolling interest in subsidiary
Net loss attributable to common shareholders
Year Ended December 31,
2019
2020
100.0 %
75.8
20.8
0.4
1.5
—
0.7
—
1.9
(1.1)
0.3
—
—
—
(1.4)
—
(1.4)
0.1
(1.5) %
100.0 %
75.2
22.1
0.3
1.7
—
0.4
0.2
2.0
(1.9)
0.6
0.2
0.2
—
(2.9)
3.9
(6.8)
0.2
(7.0) %
24
Comparison of Results for the Year Ended December 31, 2020 compared to the Year Ended December 31, 2019
Revenue from services
Direct operating expenses
Selling, general and administrative expenses
Bad debt expense
Depreciation and amortization
Acquisition and integration-related costs
Restructuring costs
Legal settlement charges
Impairment charges
Loss from operations
Interest expense
Loss on derivative
Loss on early extinguishment of debt
Other expense (income), net
Loss before income taxes
Income tax (benefit) expense
Consolidated net loss
Less: Net income attributable to noncontrolling interest in
subsidiary
Year Ended December 31,
Increase
(Decrease)
Increase
(Decrease)
2020
2019
$
%
(Dollars in thousands)
$
836,417 $
822,224 $
633,685
173,809
3,035
12,671
77
6,052
—
618,215
181,959
2,008
14,075
201
3,571
1,600
14,193
15,470
(8,150)
1,027
(1,404)
(124)
2,481
1.7 %
2.5 %
(4.5) %
51.1 %
(10.0) %
(61.7) %
69.5 %
(1,600)
(100.0) %
16,248
16,306
(9,160)
(15,711)
2,890
—
—
280
5,306
1,284
1,978
(68)
(58)
6,551
(2,416)
(1,284)
(1,978)
348
(12,330)
(24,211)
11,881
(0.4) %
41.7 %
(45.5) %
(100.0) %
(100.0) %
511.8 %
49.1 %
(188)
31,732
(31,920)
(100.6) %
(12,142)
(55,943)
43,801
78.3 %
820
1,770
(950)
(53.7) %
77.5 %
Net loss attributable to common shareholders
$
(12,962) $
(57,713) $
44,751
Revenue from services
Revenue from services increased $14.2 million, or 1.7%, to $836.4 million for the year ended December 31, 2020, as compared
to $822.2 million for the year ended December 31, 2019. The increase was due primarily to growth in our Nurse and Allied
Staffing segment, partially offset by declines in our Physician Staffing and Search segments. Revenue growth within Nurse and
Allied was driven primarily by higher demand and bill rates related to COVID-19, which were partially offset by declines in
revenue from education clients, and other specialties impacted by hospitals deferrals of elective procedures and lower census
earlier in the year.
Direct operating expenses
Direct operating expenses are comprised primarily of field employee compensation and independent contractor expenses,
housing expenses, travel expenses, and related insurance expenses. Direct operating expenses increased $15.5 million, or 2.5%,
to $633.7 million for the year ended December 31, 2020, as compared to $618.2 million for the year ended December 31, 2019.
As a percentage of total revenue, direct operating expenses increased to 75.8% compared to 75.2% in the prior year period,
reflecting a change in the mix of business, primarily as the higher compensation of COVID-19 assignments were generally
priced at a lower average margin.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased $8.2 million, or 4.5%, to $173.8 million for the year ended
December 31, 2020, as compared to $182.0 million for the year ended December 31, 2019, primarily driven by reductions in
headcount and lower rent expense due to the closure of a significant number of offices, associated with our cost reduction
program, as well as lower consulting expenses. These reductions were partially offset by increases in equity compensation
25
expense, IT expenses relating to our digital transformation, and legal fees, as well as additional compensation expense related to
the short-term incentive plan. As a percentage of total revenue, selling, general and administrative expenses were 20.8% and
22.1% for the years ended December 31, 2020 and December 31, 2019, respectively.
Depreciation and amortization expense
Depreciation and amortization expense in the year ended December 31, 2020 decreased to $12.7 million as compared to $14.1
million for the year ended December 31, 2019. Amortization expense in both years included accelerated amortization of trade
names associated with our rebranding initiatives, partially offset by lower depreciation expense related to fully amortized assets
that have not been replaced. See Note 5 - Goodwill, Trade Names, and Other Intangible Assets to our consolidated financial
statements. As a percentage of revenue, depreciation and amortization expense was 1.5% for the year ended December 31, 2020
and 1.7% for the year ended December 31, 2019.
Restructuring costs
Restructuring costs for the years ended December 31, 2020 and 2019 were primarily comprised of employee termination costs
and ongoing lease costs related to the Company's strategic reduction of its real estate footprint, as well as reorganization costs
as part of our planned costs savings initiatives for the year ended December 31, 2020. Restructuring costs totaled $6.1 million
and $3.6 million for the years ended December 31, 2020 and 2019, respectively.
Legal settlement charges
here were no legal settlement charges for the year ended December 31, 2020. Legal settlement charges totaled $1.6 million for
the year ended December 31, 2019 related to the resolution of a medical malpractice lawsuit in excess of carrier limits, as well
as a 2019 California wage and hour class action settlement agreement. T
Impairment charges
Impairment charges totaled $16.2 million for the year ended December 31, 2020. These were comprised of $10.7 million of
impairment, primarily related to goodwill and other intangible assets of our Search and Nurse and Allied businesses, and $5.5
million related to right-of-use assets and related property and equipment in connection with leases that were vacated during the
year. During the year ended December 31, 2019, in connection with our restructuring activities, we ceased using leased space
which resulted in impairment charges related to our right-of-use assets of $1.2 million and $0.6 million of impairment related to
property and equipment. In addition, as part of evolving our go-to-market strategy, in the second quarter of 2019, we eliminated
certain brands across all of our segments as part of our rebranding initiatives and, as a result, $14.5 million of indefinite-lived
trade names related to Nurse and Allied Staffing were written off as impairment charges. See Note 5 - Goodwill, Trade Names,
and Other Intangible Assets and Note 10 - Leases to our consolidated financial statements.
Interest expense
Interest expense totaled $2.9 million for the year ended December 31, 2020 and $5.3 million for the year ended December 31,
2019, due to lower average borrowings and a lower effective interest rate. The effective interest rate on our borrowings was
3.5% and 5.1% for the years ended December 31, 2020 and 2019, respectively.
Loss on derivative
There were no charges related to loss on derivative for the year ended December 31, 2020. We incurred a loss on derivative of
$1.3 million for the year ended December 31, 2019 which was paid to terminate an interest rate hedge related to our term loan
that was subsequently refinanced in October 2019. See Note 8 - Debt and Note 9 - Derivative to our consolidated financial
statements.
Loss on early extinguishment of debt
There were no charges related to loss on early extinguishment of debt for the year ended December 31, 2020. Loss on early
extinguishment of debt totaled $2.0 million for the year ended December 31, 2019. The loss related to write-off and
extinguishment costs of $1.5 million related to the refinancing of our debt in the fourth quarter of 2019, and the write-off of
debt issuance costs of $0.5 million in the prior quarters related to optional prepayments on our term loan made in the first and
second quarters as well as optional reductions in borrowing capacity under our prior revolving credit facility. See Note 8 - Debt
to our consolidated financial statements.
26
Income tax (benefit) expense
Income tax benefit totaled $0.2 million for the year ended December 31, 2020, compared to income tax expense of $31.7
million for the year ended December 31, 2019. The effective tax rate was 1.5% and negative 131.1%, including the impact of
discrete items, for the years ended December 31, 2020 and 2019, respectively. The effective tax rate in 2020 was impacted by
the additional valuation allowance on deferred tax assets, impairment of indefinite-lived intangibles, and international and state
taxes. The effective tax rate in 2019 was impacted by the initial establishment of a valuation allowance on the majority of our
deferred tax assets, impairment of indefinite-lived intangibles, and international and state taxes. See Note 14 - Income Taxes to
our consolidated financial statements.
27
Segment Results
Information on operating segments and a reconciliation to loss from operations for the periods indicated are as follows:
Revenue from services:
Nurse and Allied Staffing
Physician Staffing
Search
Contribution income (loss):
Nurse and Allied Staffing
Physician Staffing
Search
Corporate overhead
Depreciation and amortization
Acquisition and integration-related costs
Restructuring costs
Legal settlement charges
Impairment charges
Loss from operations
Year Ended December 31,
2019
2020
(amounts in thousands)
757,949 $
67,934
10,534
836,417 $
75,293 $
3,619
(1,124)
77,788
51,900
12,671
77
6,052
—
16,248
(9,160) $
732,815
74,605
14,804
822,224
64,353
2,758
(823)
66,288
46,246
14,075
201
3,571
1,600
16,306
(15,711)
$
$
$
$
In 2019, as part of our rebranding efforts, we merged our permanent search recruitment brands. As a result, for the year ended
December 31, 2018 $1.7 million of revenue and $0.2 million of contribution income were reclassified from Nurse and Allied
Staffing to Search to conform to the current period presentation. See Note 18 - Segment Data.
Certain statistical data for our business segments for the periods indicated are as follows:
Year Ended December 31,
2020
2019
Change
Percent
Change
Nurse and Allied Staffing statistical data:
FTEs
6,037
7,113
Average Nurse and Allied Staffing revenue per FTE per day
$
343
$
282
$
(1,076)
61
Physician Staffing statistical data:
Days filled
Revenue per day filled
38,987
1,742
$
44,381
1,681
$
(5,394)
61
$
(15.1) %
21.6 %
(12.2) %
3.6 %
See definition of Business Measurements under the Operating Metrics section of our Management's Discussion and Analysis.
Segment Comparison - Year Ended December 31, 2020 compared to the Year Ended December 31, 2019
Nurse and Allied Staffing
Revenue increased $25.1 million, or 3.4% to $757.9 million for the year ended December 31, 2020, from $732.8 million for the
year ended December 31, 2019.
28
Contribution income for the year ended December 31, 2020, increased $10.9 million or 17.0%, to $75.3 million from $64.4
million in year ended December 31, 2019. As a percentage of segment revenue, contribution income margin increased to 9.9%
for the year ended December 31, 2020 from 8.8% for the year ended December 31, 2019.
The average number of FTEs on contract during the year ended December 31, 2020 decreased 15.1% from the year ended
December 31, 2019. Average revenue per FTE per day increased approximately 21.6% in the year ended December 31, 2020
compared to the year ended December 31, 2019.
Physician Staffing
Revenue decreased $6.7 million, or 8.9% to $67.9 million for the year ended December 31, 2020, compared to $74.6 million for
the year ended December 31, 2019.
Contribution income for the year ended December 31, 2020, increased $0.8 million or 31.2% to $3.6 million compared to $2.8
million in the year ended December 31, 2019. As a percentage of segment revenue, contribution income was 5.3% for the year
ended December 31, 2020 and 3.7% for the year ended December 31, 2019.
Total days filled decreased 12.2% to 38,987 in the year ended December 31, 2020, compared to 44,381 in the year ended
December 31, 2019. Revenue per day filled was $1,742 for the year ended December 31, 2020 and $1,681 for the year ended
December 31, 2019.
Search
Revenue for the year ended December 31, 2020, decreased $4.3 million, or 28.8%, to $10.5 million from $14.8 million in the
year ended December 31, 2019.
Contribution loss was $1.1 million for the year ended December 31, 2020, compared with $0.8 million for the year ended
December 31, 2019.
Corporate overhead
Corporate overhead includes unallocated executive leadership and other centralized corporate functional support costs such as
finance, IT, legal, human resources, and marketing, as well as public company expenses and corporate-wide projects. Corporate
overhead increased to $51.9 million for the year ended December 31, 2020, from $46.2 million for the year ended
December 31, 2019. As a percentage of consolidated revenue, unallocated corporate overhead was 6.2% for the year ended
December 31, 2020, and 5.6% for the year ended December 31, 2019.
Transactions with Related Parties
See Note 17 - Related Party Transactions to our consolidated financial statements.
Liquidity and Capital Resources
At December 31, 2020, we had $1.6 million in cash and cash equivalents and $53.4 million of borrowings drawn under our
ABL. Working capital decreased by $8.2 million to $89.7 million as of December 31, 2020, compared to $97.9 million as of
December 31, 2019, primarily due to the timing of disbursements and increased compensation accruals. As of December 31,
2020 and 2019, our days' sales outstanding, net of amounts owed to subcontractors, was 58 days. As of December 31, 2020, we
do not have any off-balance sheet arrangements.
Our operating cash flow constitutes our primary source of liquidity, and historically, has been sufficient to fund our working
capital, capital expenditures, internal business expansion, and debt service. This includes our commitments, both short-term and
long-term, of interest expense on our ABL credit facility, payments on our promissory note payable, and operating lease
commitments, as well as any settlements on uncertain tax positions, and future principal payments on our ABL credit facility.
Although there is uncertainty related to the anticipated impact of COVID-19 on our future results, we expect to meet our future
needs from a combination of cash on hand, operating cash flows, and funds available through the ABL. See debt discussion
which follows.
29
Cash Flow Comparisons
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Net cash provided by operating activities during the year ended December 31, 2020 was $27.2 million compared to $5.5 million
during the year ended December 31, 2019, primarily due to stronger collections and the timing of disbursements.
Net cash used in investing activities during the year ended December 31, 2020 was $4.6 million compared to $2.9 million in the
year ended December 31, 2019. Net cash used in both periods was for capital expenditures, primarily related to the project to
replace our applicant tracking system.
Net cash used in financing activities during the year ended December 31, 2020 was $22.0 million, compared to $17.6 million
during the year ended December 31, 2019. During the year ended December 31, 2020, we used cash to repay borrowing on our
ABL of $17.6 million, $2.4 million to pay our note payable, and $2.0 million for other financing activities. During the year
ended December 31, 2019, we used cash to repay borrowing on our ABL and make optional debt prepayments on our prior
senior credit facility of $12.9 million, $2.1 million to pay debt issuance costs and other debt-related fees and expenses, and $2.6
million for other financing activities.
Debt
2019 ABL Credit Agreement
As more fully described in Note 8 - Debt to our consolidated financial statements, effective October 25, 2019, our prior senior
credit facility entered into in August 2017 was replaced by a $120.0 million ABL Credit Agreement (Loan Agreement), which
provides for a five-year senior secured revolving credit facility. On June 30, 2020, we amended the Loan Agreement, which
increased the current aggregate committed size of the ABL from $120.0 million to $130.0 million. All other terms, conditions,
covenants, and pricing of the Loan Agreement remain the same.
As of December 31, 2020, the interest rate spreads and fees under the Loan Agreement were based on LIBOR plus 2.00% for
the revolving portion of the borrowing base and LIBOR plus 4.00% on the Supplemental Availability. The Base Rate (as
defined by the Loan Agreement) margins would have been 1.00% and 3.00%, respectively, for the revolving portion and
Supplemental Availability, respectively. The LIBOR and Base Rate margins are subject to monthly pricing adjustments,
pursuant to a pricing matrix based on our excess availability under the revolving credit facility. In addition, the facility is
subject to an unused fee, letter of credit fees, and an administrative fee. The Loan Agreement contains various restrictions and
covenants, including a covenant to maintain a minimum fixed charge coverage ratio. We were in compliance with the fixed
charge coverage ratio covenant as of December 31, 2020. Availability under the ABL is subject to a borrowing base, which was
$125.5 million at December 31, 2020, with $53.4 million of borrowings drawn as well as $18.5 million of letters of credit
outstanding, leaving $53.6 million available for borrowing.
Note Payable
As of December 31, 2020, the current portion of the subordinated promissory note payable, made in connection with the
Mediscan acquisition, in the amount of $2.4 million is included in other current liabilities and the long-term portion of $2.5
million is included in other long-term liabilities on the consolidated balance sheets.
See Note 8 - Debt to our consolidated financial statements.
Stockholders' Equity
See Note 15 - Stockholders' Equity to our consolidated financial statements.
Critical Accounting Policies and Estimates
We have identified the following critical accounting policies that affect the more significant judgments and estimates used in
the preparation of our consolidated financial statements. The preparation of our consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that
affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and
liabilities. We evaluate our estimates on an on-going basis, including those related to asset impairment, accruals for self-
insurance, allowance for doubtful accounts and sales allowances, taxes and other contingencies, and litigation. We state our
30
accounting policies in the notes to the audited consolidated financial statements for the year ended December 31, 2020,
contained herein. These estimates are based on information that is currently available to us and on various assumptions that we
believe to be reasonable under the circumstances. Actual results could vary from those estimates under different assumptions
or conditions.
We believe that the following critical accounting policies affect the more significant judgments and estimates used in the
preparation of our consolidated financial statements:
Goodwill, trade names, and other intangible assets
Our business acquisitions typically result in the recording of goodwill, trade names, and other intangible assets, and the
recorded values of those assets may become impaired in the future. The determination of the value of such intangible assets
requires management to make estimates and assumptions that affect our consolidated financial statements. For intangible assets
purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values.
As more fully described in Note 2 - Summary of Significant Accounting Policies, we assess the impairment of goodwill of our
reporting units and indefinite-lived intangible assets annually, or more often if events or changes in circumstances indicate that
the carrying value may not be recoverable.
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of
assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each
reporting unit. Significant judgments are required to estimate the fair value of reporting units including estimating future cash
flows, and determining appropriate discount rates, growth rates, company control premium, and other assumptions. Changes in
these estimates and assumptions could materially affect the determination of fair value for each reporting unit. See Note 5 -
Goodwill, Trade Names, and Other Intangible Assets, where impairment testing in 2020, 2019, and 2018 is more fully
described.
Indefinite-lived intangible assets related to our trade names were not amortized but instead tested for impairment at least
annually, or more frequently should an event or circumstances indicate that a reduction in fair value may have occurred. We
perform testing of indefinite-lived intangible assets, other than goodwill, at the asset group level using the relief from royalty
method. If the carrying value exceeds the fair value, an impairment loss is recorded for that excess.
There can be no assurance that the estimates and assumptions made for purposes of the annual impairment test will prove to be
accurate predictions of the future. Although management believes the assumptions and estimates made are reasonable and
appropriate, different assumptions and estimates could materially impact the reported financial results.
In addition, we are required to test the recoverability of long-lived assets, including identifiable intangible assets with definite
lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In testing for
potential impairment, if the carrying value of the asset group exceeds the expected undiscounted cash flows, we must then
determine the amount by which the fair value of those assets exceeds the carrying value and determine the amount of
impairment, if any.
See Note 10 - Leases and Note 11 - Fair Value Measurements for further discussion of impairment testing.
Risk and Uncertainties
The calculation of fair value used in these impairment assessments included a number of estimates and assumptions that
required significant judgments, including projections of future income and cash flows, long-term growth rates, the identification
of appropriate market multiples, royalty rates, and the choice of an appropriate discount rate. See Note 5 - Goodwill, Trade
Names, and Other Intangible Assets. In addition, deterioration of demand for our services, deterioration of labor market
conditions, reduction of our stock price for an extended period, or other factors as described in Item 1A. Risk Factors, may
affect our determination of fair value of goodwill, trade names, or other intangible assets. This evaluation can also be triggered
by various indicators of impairment which could cause the estimated discounted cash flows to be less than the carrying amount
of net assets. If we are required to record an impairment charge in the future, it could have an adverse impact on our results of
operations. Under the current credit agreement an impairment charge will not have an impact on our liquidity. As of
December 31, 2020, we had total goodwill, intangible assets not subject to amortization, and other intangible assets of $131.7
million or 36.9% of our total assets.
31
Health, workers' compensation, and professional liability expense
We maintain accruals for our health, workers’ compensation, and professional liability claims that are partially self-insured and
are classified as accrued compensation and benefits on our consolidated balance sheets. We determine the adequacy of these
accruals by periodically evaluating our historical experience and trends related to health, workers’ compensation, and
professional liability claims and payments, based on actuarial models, as well as industry experience and trends. If such models
indicate that our accruals are overstated or understated, we will adjust accruals as appropriate. Healthcare insurance accruals
have fluctuated with increases or decreases in the average number of temporary healthcare professionals on assignment as well
as actual company experience and increases in national healthcare costs. As of December 31, 2020 and 2019, we had $3.9
million and $3.6 million accrued, respectively, for incurred but not reported health insurance claims. Corporate and field
employees are covered through a partially self-insured health plan. Workers’ compensation insurance accruals can fluctuate
over time due to the number of employees and inflation, as well as additional exposures arising from the current policy year. As
of December 31, 2020, and 2019, we had $12.4 million and $11.8 million accrued for case reserves and for incurred but not
reported workers’ compensation claims, net of insurance receivables, respectively. The accrual for workers’ compensation is
based on an actuarial model which is prepared or reviewed by an independent actuary semi-annually. As of December 31, 2020,
and 2019, we had $5.8 million and $6.7 million accrued, respectively, for case reserves and for incurred but not reported
professional liability claims, net of insurance receivables. The accrual for professional liability is based on actuarial models
which are prepared by an independent actuary semi-annually.
Revenue recognition
We recognize revenue from our services when control of the promised services is transferred to our customers, in an amount
that reflects the consideration we expect to receive in exchange for the service. We have concluded that transfer of control of
our staffing services, which represents the majority of our revenues, occurs over time as the services are provided, which is
consistent with revenue recognition under the prior guidance.
The following is a description of the nature, amount, timing and uncertainty of revenue and cash flows from which we generate
revenue.
Temporary Staffing Revenue
Revenue from temporary staffing is recognized as control of the services is transferred over time, and is based on hours worked
by our field staff. We recognize the majority of our revenue at the contractual amount we have the right to invoice for services
completed to date. Generally, billing to customers occurs weekly, bi-weekly, or monthly and is aligned with the payment of
services to the temporary staff. Accounts receivable includes estimated revenue for employees’ and independent contractors’
time worked but not yet invoiced. At December 31, 2020 and December 31, 2019, our estimate of amounts that had been
worked but had not been billed totaled $48.3 million and $46.1 million, respectively, and are included in accounts receivable in
the consolidated balance sheets.
Other Services Revenue
We offer other optional services to our customers that are transferred over time including: MSPs providing agency services (as
further described below in Gross Versus Net Policies), RPO, other outsourcing services, and retained search services, as well as
separately billable travel and housing costs, which in total amount to less than 5% of our consolidated revenue for the years
ended December 31, 2020, 2019, and 2018. Generally, billing and payment terms for MSP agency services is consistent with
temporary staffing as the customers are similar or the same. Revenue from these services are recognized based on the
contractual amount for services completed to date which best depicts the transfer of control of services.
For our RPO, other outsourcing, and retained search services, revenue is generally recognized in the amount to which the entity
has a right to invoice which corresponds directly with the value to the customer. We do not, in the ordinary course of business,
offer warranties or refunds.
Gross Versus Net Policies
We record revenue on a gross basis as a principal or on a net basis as an agent depending on the contracted arrangement, as
follows:
• We have certain contracts with acute care facilities to provide comprehensive MSP solutions. Under these contract
arrangements, we use our nurses primarily, along with those of third party subcontractors, to fulfill customer orders. If
a subcontractor is used, we invoice our customer for these services, but revenue is recorded at the time of billing, net
32
of any related subcontractor liability. The resulting net revenue represents the administrative fee charged by us for our
MSP services.
•
Revenue from our Physician Staffing business is recognized on a gross basis as we believe we are the principal in the
arrangements.
Allowances
We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make
required payments, which results in a provision for bad debt expense. We determine the adequacy of this allowance based on
historical write-off experience, current conditions, an analysis of the aging of outstanding receivable and customer payment
patterns, and specific reserves for customers in adverse conditions adjusted for current expectations for the customers or
industry. Based on the information currently available, we also considered current expectations of future economic conditions,
including the impact of COVID-19, when estimating our allowance for doubtful accounts. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be
required. We write off specific accounts based on an ongoing review of collectability as well as our past experience with the
customer. In addition, we maintain a sales allowance for billing-related adjustments which may arise in the ordinary course and
adjustments to the reserve are recorded as contra-revenue. As of December 31, 2020 and 2019, our total allowances were $4.0
million and $3.2 million, respectively.
Contingent liabilities
We are subject to various litigation, claims, investigations, and other proceedings that arise in the ordinary course of our
business. These matters primarily relate to employee-related matters that include individual and collective claims, professional
liability, tax, and payroll practices. Our healthcare facility clients may also become subject to claims, governmental inquiries
and investigations, and legal actions to which we may become a party relating to services provided by our professionals. We
record a liability when available information indicates that a loss is probable and an amount or range of loss can be reasonably
estimated. Significant judgment is required to determine both the probability of loss and the estimated amount. At least
quarterly, we review our accrual and/or disclosures to reflect the impact of negotiations, settlements, rulings, advice of legal
counsel, or new information. However, losses ultimately incurred could materially differ from amounts accrued. See Note 13 -
Contingencies.
Income taxes
We account for income taxes in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. As of December 31, 2020, we have deferred tax assets related to certain
federal, state, and foreign net operating loss carryforwards of $20.5 million. But for those net operating loss carryforwards with
an indefinite carryover, the carryforwards will expire as follows: federal between 2032 and 2040, state between 2021 and 2040,
and foreign between 2021 and 2025.
As of December 31, 2020 and 2019, we had valuation allowances on our deferred tax assets of $37.5 million and $37.3 million,
respectively. As of June 30, 2019, management assessed the available positive and negative evidence to estimate whether
sufficient future taxable income will be generated to permit use of its existing deferred tax assets. A significant piece of
objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended June 30, 2019. On the
basis of this evaluation, an additional valuation allowance of $36.0 million was recorded in the second quarter ($35.8 million of
which was recorded as income tax expense and $0.2 million as a reduction of other comprehensive income) to reduce the
portion of the deferred tax asset that is not more likely than not to be realized. The Company intends to maintain a valuation
allowance until sufficient positive evidence exists to support its reversal. The December 31, 2020 and 2019 valuation allowance
applied to all domestic deferred tax assets other than certain deferred tax assets expected to be realized. See Note 14 - Income
Taxes to our consolidated financial statements.
We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be
realized. In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history,
expected future earnings, carryback and carryforward periods, and tax strategies. We consider all positive and negative
evidence to estimate if sufficient future taxable income will be generated to realize the deferred tax asset. We consider
cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions
33
regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to
manage our business, which includes restructuring and other initiatives. In the event that actual results differ from these
estimates, or we adjust these estimates in future periods for current trends or changes in our estimating assumptions, we may
modify the level of the valuation allowance which could materially impact our business, financial condition, and results of
operations.
We are subject to income taxes in the U.S. and certain foreign jurisdictions. Significant judgment is required in determining our
consolidated provision for income taxes and recording the related deferred tax assets and liabilities. In the ordinary course of
our business there are many transactions and calculations where the ultimate tax determination is uncertain. Accruals for
unrecognized tax benefits are provided for in accordance with the Income Taxes Topic of the FASB ASC. An unrecognized tax
benefit represents the difference between the recognition of benefits related to exposure items for income tax reporting purposes
and financial reporting purposes. The entire portion of the unrecognized tax benefit is classified as a component of other long-
term liabilities in the consolidated balance sheets. As of December 31, 2020, total unrecognized tax benefits recorded was $6.9
million. We reserve for interest and penalties on exposure items, if applicable, which is recorded as a component of the overall
income tax provision.
We are regularly under audit by tax authorities. Although the outcome of tax audits is always uncertain, we believe that we have
appropriate support for the positions taken on our tax returns and that our annual tax provision includes amounts sufficient to
pay any assessments. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing
authorities may differ materially from the amounts accrued for each year.
Recent Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements.
Seasonality
See Item 1. Business.
Inflation
We do not believe that inflation had a significant impact on our results of operations for the periods presented. On an ongoing
basis, we seek to ensure that billing rates reflect increases in costs due to inflation. In addition, we attempt to minimize any
residual impact on our operating results by controlling operating costs.
34
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Interest Rate Risk
We are exposed to interest rate risk associated with our debt instruments which have interest based on variable rates. As of
December 31, 2020, we are exposed to the risk of fluctuation in interest rates relating to our ABL Credit Agreement (ABL)
entered into on October 25, 2019. Our ABL charges us interest at a rate based on either LIBOR or Base Rate (as defined in the
ABL Credit Agreement) plus an applicable margin.
A 1% change in interest rates on our variable rate debt would have resulted in interest expense fluctuating approximately
$0.6 million and $0.9 million, respectively, for the years ended December 31, 2020 and 2019, excluding the impact of the
interest rate swap agreement. Considering the effect of our interest rate swap agreement in a 1% change in interest rates on our
variable rate debt would have resulted in interest expense fluctuating approximately $0.4 million for the year ended December
31, 2019.
See Item 1A, Risk Factors under “The interest rates under our ABL Credit Agreement may be impacted by the phase-out of the
London Interbank Offered Rate (LIBOR)” for a discussion of the interest rate risk related to the potential phase-out of LIBOR in
2021.
Foreign Currency Risk
We have minor exposure to the impact of foreign currency fluctuations. Approximately 1% of selling, general and
administrative expenses are related to certain software development and information technology support provided by our
employees in Pune, India. Changes in foreign currency exchange rates impact translations of foreign denominated assets and
liabilities into U.S. dollars and future earnings and cash flows from transactions denominated in different currencies. We have
not entered into any foreign currency hedges.
Our international operations transact business in their functional currency. As a result, fluctuations in the value of foreign
currencies against the U.S. dollar have an impact on reported results. Expenses denominated in foreign currencies are translated
into U.S. dollars at monthly average exchange rates prevailing during the period. Consequently, as the value of the U.S. dollar
changes relative to the currencies of our non-U.S. markets, our reported results vary.
Fluctuations in exchange rates also impact the U.S. dollar amount of stockholders’ equity. The assets and liabilities of our non-
U.S. subsidiaries are translated into U.S. dollars at the exchange rate in effect at the end of a reporting period. The resulting
translation adjustments are recorded in stockholders’ equity, as a component of accumulated other comprehensive loss,
included in other stockholders’ equity in our consolidated balance sheets.
Item 8. Financial Statements and Supplementary Data.
See Item 15 – Exhibits, Financial Statement Schedules of Part IV of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
35
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our "disclosure controls and procedures" (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the
period covered by this report. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective. Disclosure controls and procedures are designed to ensure that
information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized, communicated to management, including the Chief Executive Officer and the Chief Financial Officer, and
reported within the time periods specified in the SEC's rules and forms. The disclosure controls and procedures are designed to
ensure that information required to be disclosed by us in reports required under the Exchange Act of 1934, as amended, is
accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, in
order to allow timely decisions regarding any required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during 2020 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material
impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to
the COVID-19 pandemic.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined
in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act). Our internal control system is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to
the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31,
2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission, or COSO, in the Internal Control-Integrated Framework (2013 framework).
Based on its evaluation, management concluded that, as of December 31, 2020, our internal control over financial reporting is
effective based on the specific criteria.
Attestation Report of Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their report which appears in Part IV, Item 15 of
this report.
Item 9B. Other Information.
None.
36
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
Information with respect to directors, executive officers and corporate governance is included in our Proxy Statement for the
2021 Annual Meeting of Stockholders (Proxy Statement) to be filed pursuant to Regulation 14A with the SEC not later than
120 days after the close of the fiscal year covered by this Annual Report and such information is incorporated herein by
reference.
Item 11. Executive Compensation.
Information with respect to executive compensation is included in our Proxy Statement to be filed with the SEC not later than
120 days after the close of the fiscal year covered by this Annual Report and such information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.
Information with respect to beneficial ownership of our common stock is included in our Proxy Statement to be filed with the
SEC not later than 120 days after the close of the fiscal year covered by this Annual Report and such information is
incorporated herein by reference.
With respect to equity compensation plans as of December 31, 2020, see table below:
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a)
Weighted-average
exercise price of
outstanding options,
warrants and
rights (b)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)) (c) (1)
— $
None
— $
—
N/A
—
2,874,588
N/A
2,874,588
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved
by security holders
Total
(1) For Performance Stock Awards issued under the 2020 Omnibus Incentive Plans, we consider the expected number of shares
that may be issued under the award to be outstanding. When the number of Performance Stock Awards have been determined,
we true up the actual number of shares that were awarded and return any unawarded shares into shares available for issuance.
Performance Stock Awards will be issued under the 2020 Omnibus Incentive Plan beginning March 31, 2021. See Note 15 -
Stockholders' Equity to our consolidated financial statements.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information with respect to certain relationships and related transactions, and director independence is included in our Proxy
Statement to be filed with the SEC not later than 120 days after the close of the fiscal year covered by this Annual Report and
such information is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
Information with respect to the fees and services of our principal accountant is included in our Proxy Statement to be filed with
the SEC not later than 120 days after the close of the fiscal year covered by this Annual Report and such information is
incorporated herein by reference.
37
Item 15. Exhibits, Financial Statement Schedules.
PART IV
(a) Documents filed as part of the report.
(1) Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019, and 2018
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2020, 2019,
and 2018
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020, 2019, and 2018
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018
Notes to Consolidated Financial Statements
(2) Financial Statements Schedule
Schedule II – Valuation and Qualifying Accounts for the Years Ended December 31, 2020, 2019, and 2018
(3) Exhibits
38
No.
3.1
3.2
3.3
4.1
4.2 #
4.3 #
4.4
10.1 #
10.2
10.3
10.4
10.5 #
10.6 #
10.7
10.8 #
10.9
10.10
10.11
10.12
10.13
EXHIBIT INDEX
Description
Amended and Restated Certificate of Incorporation of the Registrant (Previously filed as an exhibit to the
Company’s Registration Statement on Form S-1/A, Commission File No. 333-64914, and incorporated by reference
herein.)
Certificate of Correction to Amended and Restated Certificate of Incorporation of the Registrant (Previously filed
as an exhibit to the Company's Form 10-K for the year ended December 31, 2017 and incorporated by reference
herein.)
Amended and Restated By-laws of the Registrant (Previously filed as an exhibit to the Company's Form 10-Q for
the quarter ended June 30, 2018 and incorporated by reference herein.)
Form of specimen common stock certificate (Previously filed as an exhibit to the Company’s Registration
Statement on Form S-1/A, Commission File No. 333-64914, and incorporated by reference herein.)
2014 Omnibus Incentive Plan - Restricted Stock Agreement Form (Previously filed as an exhibit to the Company’s
Form 10-Q for the quarter ended June 30, 2014 and incorporated by reference herein.)
2014 Omnibus Incentive Plan - Performance Share and Restricted Stock Agreement Form (Previously filed as an
exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2014 and incorporated by reference herein.)
Description of the Company's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(Previously filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2019 and incorporated
by reference herein.)
Cross Country, Inc. Deferred Compensation Plan (Previously filed as an exhibit to the Company’s Form 10-K for
the year ended December 31, 2002, and incorporated by reference herein.)
Lease Agreement between Cornerstone Opportunity Ventures, LLC and Cejka Search, Inc., dated February 2, 2007
(Previously filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2006 and
incorporated by reference herein.)
Second Amendment to Lease Agreement by and between Meridian Commercial Properties Limited Partnership and
Cross Country Healthcare, Inc., dated February 17, 2007 (Previously filed as an exhibit to the Company’s Form 10-
K for the year ended December 31, 2006 and incorporated by reference herein.)
First Amendment to Lease Agreement dated as of September 1, 2007, by and between Cornerstone Opportunity
Ventures, LLC and Cejka Search, Inc. (Previously filed as an exhibit to the Company’s Form 10-Q for the quarter
ended September 30, 2008 and incorporated by reference herein.)
Form of Non-Employee Directors’ Restricted Stock Agreement under Cross Country Healthcare, Inc. 2007 Stock
Incentive Plan (Previously filed as an exhibit to the Company’s 8-K dated May 15, 2007 and incorporated by
reference herein.)
Form of Stock Appreciation Rights Agreement under Cross Country Healthcare, Inc. 2007 Stock Incentive Plan
(Previously filed as an exhibit to the Company’s Form 8-K dated October 15, 2007 and incorporated by reference
herein.)
Lease Agreement, dated July 18, 2013, between Peachtree II and III, LLC and MDA Holdings, Inc. (Previously
filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2013 and incorporated by reference
herein.)
Amended and Restated Executive Severance Plan of Cross Country Healthcare, Inc. (Previously filed as an exhibit
to the Company’s Form 8-K dated May 28, 2010 and incorporated by reference herein.)
Fourth Amendment to Lease Agreement by and between Granite Meridian LLC and Cross Country Healthcare,
Inc., dated September 29, 2015 (Previously filed as an exhibit to the Company’s Form 8-K dated October 2, 2015
and incorporated by reference herein.)
Ninth Amendment to Lease Agreement by and between Mainstreet CV North 40, LLC and Cross Country
Healthcare, Inc., dated September 29, 2015 (Previously filed as an exhibit to the Company’s Form 8-K dated
October 2, 2015 and incorporated by reference herein.)
Lease Agreement by and between Mainstreet CV North 40, LLC and Cross Country Healthcare, Inc., dated
September 29, 2015 (Previously filed as an exhibit to the Company’s Form 8-K dated October 2, 2015 and
incorporated by reference herein.)
Asset Purchase Agreement between Mediscan, Inc. and Direct Ed Solutions, Inc. and Mihal Spiegel, dated August
19, 2014 (Previously filed as an exhibit to the Company's Form 8-K dated November 3, 2015 and incorporated by
reference herein.)
Third Amendment to Lease Agreement between RNSI City Place Owner, LLC and Cejka Search, Inc., dated
December 2, 2015 (Previously filed as an exhibit to the Company's Form 10-KA for the year ended December 31,
2015 and incorporated by reference herein.)
39
No.
10.14
10.15
10.16
10.17
10.18 #
10.19 #
10.20 #
10.21 #
10.22 #
10.23 #
10.24
10.25
10.26 #
10.27 #
10.28 #
EXHIBIT INDEX (CONTINUED)
Description
Tenth Amendment to Lease agreement between Mainstreet CV North 40, LLC and Cross Country Healthcare,
Inc., dated September 19, 2016 (Previously filed as an exhibit to the Company’s Form 10-Q for the quarter ended
September 30, 2016 and incorporated by reference herein.)
Amendment to Lease agreement between Mainstreet CV North 40, LLC and Cross Country Healthcare, Inc.,
dated September 19, 2016 (Previously filed as an exhibit to the Company’s Form 10-Q for the quarter ended
September 30, 2016 and incorporated by reference herein.)
Asset Purchase Agreement, dated June 13, 2017, among Cross Country Healthcare, Inc., as Buyer, Advantage RN,
LLC, Advantage On Call, LLC, Advantage Locums, LLC, and Advantage RN Local Staffing, the Seller Parties,
and Seller Representative (Previously filed as an exhibit to the Company's Form 8-K dated June 13, 2017 and
incorporated by reference herein.)
Fourth Amendment to Lease Agreement between RNSI City Place Owner, LLC and Cejka Search, Inc., dated
May 31, 2017 (Previously filed as an exhibit to the Company's Form 10-Q for the quarter ended September 30,
2017 and incorporated by reference herein.)
Cross Country Healthcare, Inc. Executive Nonqualified Excess Plan Adoption Agreement (Previously filed as an
exhibit to the Company's Form 10-K dated December 31, 2017 and incorporated by reference herein.)
Employment Agreement between Cross Country Healthcare, Inc. and Kevin C. Clark, dated January 16, 2019
(Previously filed as an exhibit to the Company's Form 8-K dated January 16, 2019 and incorporated by reference
herein.)
Amendment and Restatement to Employment Agreement, dated January 31, 2019, by and between Cross Country
Healthcare, Inc. and William J. Burns (Previously filed as an exhibit to the Company's Form 8-K dated January
31, 2019 and incorporated by reference herein)
Offer Letter, dated as of March 11, 2019, between Stephen Saville and Cross Country Healthcare, Inc. (Previously
filed as an exhibit to the Company's Form 8-K dated April 16, 2019 and incorporated by reference herein.)
Offer Letter between Cross Country Healthcare, Inc. and Buffy White, dated March 6, 2019 (Previously filed as
an exhibit to the Company's Form 10-Q for the quarter ended September 30, 2019 and incorporated by reference
herein.)
Relocation Agreement between Cross Country Healthcare, Inc. and Buffy White, dated May 21 2019 (Previously
filed as an exhibit to the Company's Form 10-Q for the quarter ended September 30, 2019 and incorporated by
reference herein.)
ABL Credit Agreement, dated October 25, 2019, by and among Cross Country Healthcare, Inc. and certain of its
domestic subsidiaries as borrowers, certain of its domestic subsidiaries as guarantors, the Lenders referenced
therein, and Wells Fargo Bank, as agent (Previously filed as an exhibit to the Company's Form 8-K dated October
28, 2019 and incorporated by reference herein.)
Amendment No. 1 to ABL Credit Agreement, dated as of June 30, 2020, by and among Cross Country Healthcare,
Inc. and certain of its domestic subsidiaries as borrowers or guarantors, PNC Bank, N.A., as lender, and Wells
Fargo Bank, N.A., as administrative agent, collateral agent, and lender (Previously filed as an exhibit to the
Company's Form 8-K dated June 30, 2020 and incorporated by reference herein.)
Form of Non-Employee Directors' Restricted Stock Agreement under Cross Country Healthcare, Inc. 2020 Stock
Incentive Plan (Previously filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2020
and incorporated by reference herein.)
Offer Letter by and between Cross Country Healthcare, Inc. and John Martins (Previously filed as an exhibit to the
Company's Form 8-K dated January 25, 2021 and incorporated by reference herein.)
Employment Agreement by and between Cross Country Healthcare, Inc. and John Martins (Previously filed as an
exhibit to the Company's Form 8-K dated January 25, 2021 and incorporated by reference herein.)
*10.29 # Revised Offer Letter by and between Cross Country Healthcare, Inc. and Susan E. Ball, dated as of February 22,
2021
*10.30 # Amendment and Restatement to Employment Agreement, dated February 22, 2021, by and between Cross
*14.1
*21.1
*23.1
Country Healthcare, Inc. and William J. Burns
Code of Ethics, revised November 17, 2020
List of subsidiaries of the Registrant
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
40
EXHIBIT INDEX (CONTINUED)
Description
Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 by Kevin C. Clark, Co-Founder, Chief Executive Officer, Director (Principal Executive Officer)
Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 by William J. Burns, Executive Vice President, Chief Financial Officer (Principal Accounting and Financial
Officer)
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, by Kevin C. Clark, Co-Founder, Chief Executive Officer, Director (Principal Executive Officer)
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, by William J. Burns, Executive Vice President, Chief Financial Officer (Principal Accounting and
Financial Officer)
Description
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Calculation Linkbase Document
PRE XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
No.
*31.1
*31.2
**32.1
**32.2
No.
*101.INS
*101.SCH
*101.DEF
*101.LAB
*101.CAL
*101.PRE
104
________________
# Represents a management contract or compensatory plan or arrangement
* Filed herewith
** Furnished herewith
41
Item 16. Form 10-K Summary.
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
CROSS COUNTRY HEALTHCARE, INC.
By:
/s/ Kevin C. Clark
Name: Kevin C. Clark
Title: Co-Founder & Chief Executive Officer
Principal Executive Officer
Date: February 25, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons in
the capacities indicated and on the dates indicated:
Signature
Title
Date
/s/ Kevin C. Clark
Kevin C. Clark
Co-Founder & Chief Executive Officer
(Principal Executive Officer)
February 25, 2021
/s/ William J. Burns
William J. Burns
Executive Vice President & Chief Financial Officer
(Principal Accounting and Financial Officer)
February 25, 2021
/s/ W. Larry Cash
W. Larry Cash
/s/ Thomas C. Dircks
Thomas C. Dircks
/s/ Gale Fitzgerald
Gale Fitzgerald
/s/ Darrell S. Freeman, Sr.
Darrell S. Freeman, Sr.
Director
Director
Director
Director
/s/ Janice E. Nevin, M.D., MPH
Janice E. Nevin, M.D., MPH
Director
/s/ Mark Perlberg
Mark Perlberg
/s/ Joseph A. Trunfio, Ph.D.
Joseph A. Trunfio, Ph.D.
Director
Director
42
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Cross Country Healthcare, Inc.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019, and 2018
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2020, 2019, and 2018
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020, 2019, and 2018
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018
Notes to Consolidated Financial Statements
Financial Statement Schedule
Page
F- 2
F- 5
F- 6
F- 7
F- 8
F- 9
F- 10
Schedule II – Valuation and Qualifying Accounts for the Years Ended December 31, 2020, 2019, and 2018
II- 1
Schedules not filed herewith are either not applicable, the information is not material or the information is set forth in the
consolidated financial statements or notes thereto.
F- 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Cross Country Healthcare, Inc.
Opinion on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Cross Country Healthcare, Inc. and subsidiaries (the
"Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive (loss)
income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related
notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have
audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.
Change in Accounting Principle
The Company changed its method of accounting for leases in the year ended December 31, 2019 due to the adoption of
Accounting Standard Update (ASU) 2016-02, Leases (Topic 842), which was adopted prospectively using the transition
method.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
F- 2
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Goodwill — Refer to Notes 2 and 5 to the consolidated financial statements
Critical Audit Matter Description
The goodwill balance relating to the Company’s Search reporting unit at December 31, 2019 and December 31, 2020 was $11.9
million and $1.7 million, respectively. During the second quarter of 2020, management identified indicators of impairment and
performed a quantitative analysis of the fair value of the Search reporting unit which indicated the carrying value exceeded the
fair value. The Company recorded an impairment charge of $10.2 million. The Company’s qualitative assessment during the
fourth quarter of 2020 concluded that it was not more likely than not that the fair value of the Search reporting unit had dropped
below its carrying value as of the annual measurement date and, therefore, no further impairment was recognized. The
determination of the fair value of the Search reporting unit requires management to make significant estimates and assumptions
related to forecasts of future revenues, operating costs, the discount rates and the long-term growth rates. Changes in these
assumptions could have a significant impact on the fair value of reporting unit.
We identified the valuation of goodwill for the Search reporting unit as a critical audit matter because of the significant
estimates and assumptions management makes relating to the Search reporting unit’s forecasted revenues, operating costs, the
discount rate and the long-term growth rates. Performing audit procedures to evaluate the reasonableness of management’s
estimates and assumptions related to the Search reporting unit cash flow forecasts required a high degree of auditor judgment
and an increased extent of effort, including the need to involve our fair value specialists.
F- 3
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasted revenue, operating costs, the discount rate and the long-term growth rate for the
Search reporting unit included the following, among others:
•
•
Tested effectiveness of controls over management’s goodwill impairment evaluation, including those over
management’s review of revenue and operating cost projections.
Evaluated management’s revenue and operating cost projections by:
1. Assessing the inherent risk in management’s projections by performing sensitivity analyses of significant
assumptions.
2. Performing a retrospective review of management’s forecasting accuracy by comparing actual results to
management’s historical forecasts, including any updates to the forecast as a result of current market conditions.
3. Comparing management’s estimates of revenue growth rates, and operating cost levels used in management’s
projections to publicly available information, such as third-party industry reports, press releases and analyst
reports, macroeconomic information, including considerations related to current market conditions.
4. Examining internal communications between management and the Board of Directors to identify any
contradictory information.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate and long-term
growth rates as follows:
1. Discount rate – (a) Tested the source information underlying the determination of the discount rates and the
mathematical accuracy of the calculation; and (b) Developed a range of independent estimates and compared
those to the discount rates selected by management.
2. Long-term growth rates – (a) Compared the long-term growth rate to applicable industry growth rates from third-
party sources forecasted as of the testing date and (b) Compared the long-term growth rate to projected real GDP
growth and expected inflation from third-party economic forecast data.
/s/ Deloitte & Touche LLP
Boca Raton, Florida
February 25, 2021
We have served as the Company's auditor since 2015.
F- 4
CROSS COUNTRY HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except for share data)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowances of $4,021 in 2020 and $3,219 in 2019
Prepaid expenses
Insurance recovery receivable
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Trade names, indefinite-lived
Other intangible assets, net
Other non-current assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses
Accrued compensation and benefits
Operating lease liabilities - current
Other current liabilities
Total current liabilities
Revolving credit facility
Operating lease liabilities - non-current
Non-current deferred tax liabilities
Long-term accrued claims
Contingent consideration
Other long-term liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
Common stock—$0.0001 par value; 100,000,000 shares authorized; 36,177,279 and 35,870,560
shares issued and outstanding at December 31, 2020 and 2019, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total Cross Country Healthcare, Inc. stockholders' equity
Noncontrolling interest in subsidiary
Total stockholders' equity
Total liabilities and stockholders' equity
See accompanying notes.
F- 5
December 31,
2020
2019
1,600 $
170,003
5,455
4,698
1,355
183,111
12,351
10,447
90,924
5,900
34,831
19,409
356,973 $
49,877 $
35,540
4,509
3,497
93,423
53,408
15,234
6,592
25,412
—
7,995
202,064
1,032
169,528
6,097
5,011
1,689
183,357
11,832
16,964
101,066
5,900
44,957
18,298
382,374
45,726
31,307
4,878
3,554
85,465
70,974
19,070
7,523
26,938
4,867
4,037
218,874
4
310,388
(1,280)
(154,737)
154,375
534
154,909
356,973 $
4
305,643
(1,240)
(141,775)
162,632
868
163,500
382,374
$
$
$
$
CROSS COUNTRY HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
Revenue from services
Operating expenses:
Direct operating expenses
Selling, general and administrative expenses
Bad debt expense
Depreciation and amortization
Acquisition and integration-related costs
Restructuring costs
Legal settlement charges
Impairment charges
Total operating expenses
Loss from operations
Other expenses (income):
Interest expense
Loss on derivative
Loss on early extinguishment of debt
Other expense (income), net
Year Ended December 31,
2019
2018
2020
$
836,417 $
822,224 $
816,484
633,685
173,809
3,035
12,671
77
6,052
—
16,248
845,577
(9,160)
2,890
—
—
280
(12,330)
(188)
(12,142)
820
(12,962) $
618,215
181,959
2,008
14,075
201
3,571
1,600
16,306
837,935
(15,711)
5,306
1,284
1,978
(68)
(24,211)
31,732
(55,943)
1,770
(57,713) $
606,921
180,230
2,204
11,780
3,048
2,758
—
22,423
829,364
(12,880)
5,654
—
79
(418)
(18,195)
(2,478)
(15,717)
1,234
(16,951)
Loss before income taxes
Income tax (benefit) expense
Consolidated net loss
Less: Net income attributable to noncontrolling interest in subsidiary
Net loss attributable to common shareholders
$
Net loss per share attributable to common shareholders - Basic and diluted
$
(0.36) $
(1.61) $
(0.48)
Weighted average common shares outstanding:
Basic and diluted
36,088
35,815
35,657
See accompanying notes.
F- 6
CROSS COUNTRY HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(amounts in thousands)
Consolidated net loss
Other comprehensive (loss) income, before income tax:
Unrealized foreign currency translation (loss) gain
Unrealized loss on interest rate contracts
Reclassification adjustment to statement of operations
Taxes on other comprehensive (loss) income:
Income tax effect related to unrealized foreign currency translation gain (loss)
Income tax effect related to unrealized loss on interest rate contracts
Income tax effect related to reclassification adjustment to statement of
operations
Valuation allowance adjustment
Other comprehensive (loss) income, net of tax
Year Ended December 31,
2020
2019
2018
$
(12,142) $
(55,943) $
(15,717)
(40)
47
—
—
(40)
—
—
—
—
—
(40)
(1,078)
1,312
281
26
(571)
93
511
59
222
(153)
(420)
186
(387)
(31)
(107)
48
—
(90)
(297)
Comprehensive loss
(12,182)
(55,721)
(16,014)
Less: Net income attributable to noncontrolling interest in subsidiary
820
1,770
1,234
Comprehensive loss attributable to common shareholders
$
(13,002) $
(57,491) $
(17,248)
See accompanying notes.
F- 7
CROSS COUNTRY HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(amounts in thousands)
Common Stock
Shares
Dollars
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Noncontrolling
Interest in
Subsidiary
Stockholders’
Equity
Balances at December 31, 2017
35,838 $
4 $ 305,362 $
(1,166) $
(67,111) $
630 $
237,719
Exercise of share options
Vesting of restricted stock and
performance stock awards
Equity compensation
Stock repurchase and retirement
Foreign currency translation
adjustment, net of taxes
Net change in hedging
transaction, net of taxes
Distribution to noncontrolling
shareholder
Net (loss) income
21
199
—
(432)
—
—
—
—
Balances at December 31, 2018
35,626
Exercise of share options
Vesting of restricted stock
Equity compensation
Foreign currency translation
adjustment, net of taxes
Net change in hedging
transaction, net of taxes
Distribution to noncontrolling
shareholder
Net (loss) income
14
231
—
—
—
—
—
Balances at December 31, 2019
35,871
Vesting of restricted stock
Equity compensation
Foreign currency translation
adjustment, net of taxes
Distribution to noncontrolling
shareholder
Net (loss) income
306
—
—
—
—
—
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
4
—
—
—
—
—
—
(889)
3,575
(5,000)
—
—
—
—
—
—
—
—
(121)
(175)
—
—
303,048
(1,462)
—
(801)
3,396
—
—
—
—
—
—
—
47
175
—
—
—
—
—
—
—
—
—
(16,951)
(84,062)
—
—
—
—
—
—
(57,713)
305,643
(1,240)
(141,775)
(658)
5,403
—
—
—
—
—
(40)
—
—
—
—
—
—
(12,962)
—
—
—
—
—
—
(1,194)
1,234
670
—
—
—
—
—
(1,572)
1,770
868
—
—
—
(1,154)
820
—
(889)
3,575
(5,000)
(121)
(175)
(1,194)
(15,717)
218,198
—
(801)
3,396
47
175
(1,572)
(55,943)
163,500
(658)
5,403
(40)
(1,154)
(12,142)
Balances at December 31, 2020
36,177 $
4 $ 310,388 $
(1,280) $
(154,737) $
534 $
154,909
See accompanying notes.
F- 8
CROSS COUNTRY HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Cash flows from operating activities
Consolidated net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Year Ended December 31,
2019
2018
2020
$
(12,142) $
(55,943) $
(15,717)
12,671
4,269
(932)
3,547
16,248
—
5,403
990
(4,745)
(2,083)
7,239
(5,872)
2,611
27,204
—
—
(4,615)
(4,615)
—
(2,426)
—
—
(81)
—
420,334
(437,900)
(1,153)
—
(784)
(22,010)
14,075
3,243
31,159
4,989
16,306
1,978
3,396
513
(6,642)
(1,574)
(1,308)
(5,820)
1,170
5,542
—
—
(2,940)
(2,940)
(83,876)
—
5,000
(5,000)
(2,058)
76,640
71,934
(77,600)
(1,573)
—
(1,066)
(17,599)
(11)
10
568
1,032
1,600 $
(14,987)
16,019
1,032 $
11,780
5,974
(3,410)
—
22,423
79
3,575
3,679
2,820
(2,514)
(7,095)
—
(597)
20,997
(1,930)
(151)
(4,597)
(6,678)
(16,124)
—
—
—
(308)
—
—
—
(1,194)
(5,000)
(1,141)
(23,767)
(70)
(9,518)
25,537
16,019
2,666 $
612 $
4,554 $
555 $
6,340
1,043
Depreciation and amortization
Provision for allowances
Deferred income tax (benefit) expense
Non-cash lease expense
Impairment charges
Loss on early extinguishment of debt
Equity compensation
Other non-cash costs
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Operating lease liabilities
Other
Net cash provided by operating activities
Cash flows from investing activities
Acquisitions, net of cash acquired
Acquisition-related settlements
Purchases of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Principal payments on term loan
Principal payments on note payable
Borrowings under revolving credit facility
Repayments on revolving credit facility
Debt issuance costs
Proceeds under Senior Secured Asset-Based revolving credit facility
Borrowings under Senior Secured Asset-Based revolving credit facility
Repayments on Senior Secured Asset-Based revolving credit facility
Cash payments to noncontrolling shareholder
Stock repurchase and retirement
Other
Net cash used in financing activities
Effect of exchange rate changes on cash
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Interest paid
Income taxes paid
$
$
$
See accompanying notes.
F- 9
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
1. Organization and Basis of Presentation
Nature of Business
Cross Country Healthcare, Inc. (the Company) was incorporated in Delaware on July 29, 1999 as a business providing travel
nurse and allied health staffing services. As of December 31, 2020, the Company provides total talent management services,
including strategic workforce solutions, contingent staffing, permanent placement and other consultative services for healthcare
clients. The Company recruits and places qualified healthcare professionals in virtually every specialty and area of expertise. Its
diverse client base includes both clinical and nonclinical settings, servicing both public and private acute care and non-acute
care hospitals, outpatient clinics, ambulatory-care centers, single and multi-specialty physician practices, urgent care centers,
both public schools and charter schools, rehabilitation and sports medicine clinics, correctional facilities, government facilities,
and many other healthcare providers.
The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned
subsidiaries. The consolidated financial statements include all assets, liabilities, revenue, and expenses of Cross Country Talent
Acquisition Group, LLC, which is controlled by the Company but not wholly owned. The Company records the ownership
interest of the noncontrolling shareholder as noncontrolling interest in subsidiary. Effective December 31, 2020, the sole
professional staffing services agreement held by this joint venture was terminated. The Company expects to dissolve Cross
Country Talent Acquisition Group, LLC in the first quarter of 2021. All intercompany transactions and balances have been
eliminated in consolidation.
Certain prior year amounts have been reclassified to conform to the current year presentation. See consolidated statements of
operations, statements of cash flows, Note 7 - Balance Sheet Details, Note 14 - Income Taxes, and Note 18 - Segment Data.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles
(U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts in the consolidated
financial statements and accompanying notes. Management has assessed various accounting estimates and other matters, including
those that require consideration of forecasted financial information, in context of the unknown future impacts of the current global
outbreak of COVID-19 using information that is reasonably available to the Company at the time. Significant estimates and
assumptions are used for, but not limited to: (i) the valuation of accounts receivable; (ii) goodwill, trade names, and other
intangible assets; (iii) other long-lived assets; (iv) share-based compensation; (v) accruals for health, workers’ compensation, and
professional liability claims; (vi) valuation of deferred tax assets; (vii) legal contingencies, (viii) income taxes; and (ix) sales and
other non-income tax liabilities. Accrued insurance claims and reserves include estimated settlements from known claims and
actuarial estimates for claims incurred but not reported. As additional information becomes available to the Company, its future
assessment of these estimates, including management's expectations at the time regarding the duration, scope and severity of the
pandemic, as well as other factors, could materially and adversely impact the Company's consolidated financial statements in future
reporting periods. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all investments with original maturities of three months or less to be cash and cash equivalents. Interest
income on cash and cash equivalents was immaterial for the year ended December 31, 2020, $0.2 million for the year ended
December 31, 2019, and $0.4 million for the year ended December 31, 2018 is included in other income, net, in the consolidated
statements of operations.
Accounts Receivable, Allowance for Doubtful Accounts, and Concentration of Credit Risk
Accounts receivable potentially subject the Company to concentrations of credit risk. The Company generally does not require
collateral and mitigates its credit risk by performing credit evaluations and monitoring at-risk accounts. The allowance for doubtful
accounts is established for losses expected to be incurred on accounts receivable balances. Accounts receivable are written off
F- 10
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
against the allowance for doubtful accounts when the Company determines amounts are no longer collectible. Judgment is required
in the estimation of the allowance and the Company evaluates the collectability of its accounts receivable and contract assets based
on a combination of factors. The Company bases its allowance for doubtful account estimates on its historical write-off experience,
current conditions, an analysis of the aging of outstanding receivable and customer payment patterns, and specific reserves for
customers in adverse condition adjusted for current expectations for the customers or industry. Based on the information currently
available, the Company also considered current expectations of future economic conditions, including the impact of COVID-19,
when estimating its allowance for doubtful accounts.
The following table reconciles the opening balance of the allowance for doubtful accounts to the closing balance for expected
credit losses:
Allowance for Doubtful Accounts
(amounts in thousands)
Balance at January 1, 2020
Bad Debt Expense
Write-Offs, net of Recoveries
Balance at March 31, 2020
Bad Debt Expense
Write-Offs, net of Recoveries
Balance at June 30, 2020
Bad Debt Expense
Write-Offs, net of Recoveries
Balance at September 30, 2020
Bad Debt Expense
Write-Offs, net of Recoveries
Balance at December 31, 2020
$
$
2,406
539
(349)
2,596
898
(532)
2,962
946
(800)
3,108
652
(344)
3,416
In addition to the allowance for doubtful accounts, the Company maintains a sales allowance for billing-related adjustments
which may arise in the ordinary course and adjustments to the reserve are recorded as contra-revenue. The balance of this
allowance as of December 31, 2020 and December 31, 2019 was $0.6 million and $0.8 million, respectively.
The Company’s contract terms typically require payment between 30 to 60 days from the date of invoice and are considered past
due based on the particular negotiated contract terms. The majority of the Company's customers are U.S. based healthcare systems
with a significant percentage in acute-care facilities. No single customer accounted for more than 10% of the Company’s accounts
receivable balance as of December 31, 2020 and 2019, or revenue for the years ended December 31, 2020, 2019, and 2018.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over
the estimated useful lives of the assets, which generally range from three to ten years. Leasehold improvements are depreciated
over the shorter of their estimated useful life or the term of the individual lease. On an annual basis, the Company reviews its
property and equipment listings and disposes of assets that are no longer in use.
Certain software development costs have been capitalized in accordance with the provisions of the Intangibles-Goodwill and
Other/Internal-Use Software Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC). Such costs include charges for consulting services and costs for Company personnel associated with programming, coding,
and testing such software. Amortization of capitalized software costs is included in depreciation expense in the consolidated
statements of operations and begins when the software is ready for use. See Note 6 - Property and Equipment.
F- 11
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
Cloud Computing Arrangements
Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application
development phase in accordance with the Accounting Standards Update (ASU) No. 2018-15, Intangibles—Goodwill and
Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement That Is a Service Contract. In connection with the licensing of software products, the Company has
entered into arrangements in which it does not take possession of the software; rather, the software application resides on the
vendor's or a third party's hardware, and the Company accesses and uses the software on an as-needed basis over the Internet or
via a dedicated line. Therefore, the cloud computing arrangement does not give rise to an intangible asset. Costs are capitalized
in accordance with the Company’s policies for other capitalizable service costs. Amortization is calculated over the contractual
term of the cloud computing arrangement and is included in selling, general and administrative expenses in the consolidated
statements of operations. As of December 31, 2020, the Company has a current asset of $0.4 million, and an immaterial amount
as of December 31, 2019, included in prepaid expenses and a non-current asset of $3.2 million and $0.8 million, respectively,
included in other non-current assets in the consolidated balance sheets that have been capitalized in conjunction with
implementations. Amortization of the cloud computing assets was immaterial for the years ended December 31, 2020 and 2019.
Leases
The Company determines whether an arrangement constitutes a lease at commencement. Operating leases are included in
operating lease right-of-use assets, and operating lease liabilities - current and non-current in the consolidated balance sheets.
Finance leases are included in other non-current assets, other current liabilities, and other long-term liabilities in the
consolidated balance sheets. See Note 10 - Leases.
Right-of-use assets are measured based on the corresponding lease liability adjusted for: (i) payments made to the lessor at or
before the commencement date; (ii) initial direct costs; and (iii) tenant incentives under the lease. Rent expense commences
when the lessor makes the underlying asset available to us. Lease liabilities are measured based on the present value of the total
lease payments not yet paid discounted based on its incremental borrowing rate, as the rate implicit in the lease is not
determinable. The Company estimates its incremental borrowing rate based on an analysis of publicly-traded debt securities of
companies with credit and financial profiles similar to its own. The variable portion of the lease payments is not included in the
right-of-use assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed
when the obligation for those payments is incurred and are included in lease expense in selling, general and administrative
expense in the consolidated statements of operations. Rent expense for operating lease payments is recognized on a straight-line
basis over the lease term. The Company does not assume renewals or early terminations unless it is reasonably certain to
exercise these options at commencement.
As of December 31, 2018, deferred rent related to tenant improvement allowances and other leasehold incentives was included in
other current liabilities and other long-term liabilities in the consolidated balance sheets. These leasehold incentives had been
recorded when realizable as deferred rent and were amortized as a reduction of periodic rent expense, over the term of the
applicable lease. Upon adoption of the Leases Topic of the FASB ASC, these deferred rent credits reduced the beginning
operating right-of-use asset recognized and, consistent with the prior guidance will be recognized as a reduction to future rent
expense over the expected remaining term of the respective leases.
The Company leases apartments for eligible field employees under short-term agreements (typically three to six months), which
generally coincide with each employee’s staffing contract. Costs relating to these leases are included in direct operating expenses
in the consolidated statements of operations.
Business Combinations
The Company applies accounting in accordance with the Business Combinations Topic of the FASB ASC when it acquires control
over a business. Business combinations are accounted for at fair value. The associated acquisition costs are expensed as incurred
and recorded as acquisition and integration costs; noncontrolling interests, if any, are reflected at fair value at the acquisition date;
restructuring costs associated with a business combination are expensed; contingent consideration is measured at fair value at the
acquisition date, with changes in the fair value after the acquisition date affecting earnings; and goodwill is determined as the
excess of the fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired. The
accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired
business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets
F- 12
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
and liabilities acquired. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on
management's estimates and assumptions, including valuations that utilize customary valuation procedures and techniques. If the
actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements
could result in a possible impairment of the intangible assets and goodwill or require acceleration of the amortization expense of
finite-lived intangible assets. The results of the acquired businesses' operations are included in the consolidated statements of
operations of the combined entity beginning on the date of acquisition. See Note 4 - Acquisitions.
Goodwill, Trade Names, and Other Intangible Assets
Goodwill represents the excess of purchase price and related costs over the fair value assigned to the net tangible and identifiable
intangible assets of businesses acquired. Other identifiable intangible assets with definite lives are being amortized using the
straight-line method over their estimated useful lives which have ranged from 3 to 16 years. Goodwill and certain intangible assets
with indefinite lives are not amortized. Instead, in accordance with the Intangibles-Goodwill and Other Topic of the FASB ASC,
these assets are reviewed for impairment annually at the beginning of the fourth quarter, and whenever circumstances change that
would more likely than not reduce the fair value of a reporting unit below its carrying amount.
When reviewed, the Company has the option to first assess qualitative factors to determine whether it is more likely than not that
the fair value of a reporting unit is less than its carrying amount, as a basis for determining whether it is necessary to perform the
quantitative testing. If it is determined that a quantitative test is necessary or more efficient than a qualitative approach, the
Company measures the fair value of its reporting units using a combination of income and market approaches.
The Company performs its annual review on October 1 in accordance with the provisions of ASU 2017-04, Intangibles-Goodwill
and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Under ASU 2017-04, if the reporting unit’s carrying value
exceeds its fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting
unit’s fair value not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, income tax effects from
any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss is
considered, if applicable.
The Company determines its reporting units by identifying its operating segments and any component businesses and aggregates
the component businesses if they have similar economic characteristics. The Company had the following reporting units that it
reviewed for impairment: (1) Nurse and Allied Staffing; (2) Physician Staffing; and (3) Search.
Management considers historical experience and all available information at the time the fair values of its reporting units are
estimated. However, fair values that could be realized in an actual transaction may have differed from those used to evaluate the
potential impairment of goodwill.
Long-lived assets and identifiable intangible assets with definite lives are evaluated for impairment in accordance with the
Property, Plant, and Equipment Topic of the FASB ASC. In accordance with this Topic, long-lived assets and definite-lived
intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not
be recoverable.
Recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset group to the future
undiscounted net cash flow that is expected to be generated by those assets. If such assets are considered to be impaired, the
impairment charge recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Any related impairment losses are recognized in earnings and included in the caption impairment charges in the consolidated
statements of operations. See Note 5 - Goodwill, Trade Names, and Other Intangible Assets.
Debt Discount and Debt Issuance Costs
Stated discounts on proceeds and other fees reimbursed to lenders were treated as a discount associated with the respective debt
instrument and presented in the balance sheet as an offset to the carrying amount of the debt. Discounts were amortized to interest
expense using the effective interest rate method, or a method that approximates the effective interest rate method, over the expected
life of the debt.
Derivative Financial Instruments
F- 13
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
The Company was exposed to interest rate risk due to its outstanding senior secured term loan entered into on August 1, 2017
with a variable interest rate. As a result, the Company had entered into an interest rate swap agreement to effectively convert a
portion of its variable interest payments to a fixed rate. The principal objective of the interest rate swap was to eliminate or
reduce the variability of the cash flows in those interest payments associated with the Company’s long-term debt, thus reducing
the impact of interest rate changes on future interest payment cash flows. The Company had determined that the interest rate
swap qualified as a cash flow hedge in accordance with ASC 815, Derivatives and Hedging. As the critical terms of the hedging
instrument and the hedged forecasted transaction were the same, the Company had concluded that changes in the cash flows
attributable to the risk being hedged were expected to completely offset at inception and on an ongoing basis. Changes in the
fair value of the interest rate swap agreement designated as a cash flow hedge were recorded as a component of accumulated
other comprehensive income (loss), net of deferred taxes, within stockholders’ equity and were amortized to interest expense
over the term of the related debt as the interest payments were made. Interest rate swap payments were included in net cash
provided by operating activities in the consolidated statements of cash flows.
In conjunction with entering into the interest rate swap agreement, the Company early adopted ASU 2017-12, Derivative and
Hedging (Topic 815) to simplify the application of hedge accounting. The Company terminated its interest rate swap agreement
on September 26, 2019. See Note 9 - Derivative.
Sales and Other State Non-income Tax Liabilities
The Company accrues sales and other state non-income tax liabilities based on the Company’s best estimate of its probable liability
utilizing currently available information and interpretation of relevant tax regulations. Given the nature of the Company’s business,
significant subjectivity exists as to both whether sales and other state non-income taxes can be assessed on its activity and how the
sales tax will ultimately be measured by the relevant jurisdictions. The Company makes a determination for each reporting period
whether the estimates for sales and other non-income taxes in certain states should be revised.
Insurance Claims
The Company provides workers’ compensation insurance coverage, professional liability coverage, and healthcare benefits for
eligible employees. The Company records its estimate of the ultimate cost of, and reserves for, workers' compensation and
professional liability benefits based on actuarial models prepared or reviewed by an independent actuary using the Company’s loss
history as well as industry statistics. The healthcare insurance accrual is for estimated claims that have occurred but have not been
reported and is based on the Company’s historical claim submission patterns. Furthermore, in determining its reserves, the
Company includes reserves for estimated claims incurred but not reported as well as unfavorable claims development.
Pursuant to the Other Expenses/Insurance Costs Topic of the FASB ASC, under circumstances such as in the Company’s insured
professional liability and workers' compensation policies, since a right of legal offset does not exist due to the fact that there are
three parties to an incurred claim, the insured, the insurer, and the claimant, the related liability to the claimant should be classified
separately on a gross basis with a separate related receivable from the insurer recognized as being due from insurance carriers.
Accordingly, the Company’s consolidated balance sheets as of December 31, 2020 and 2019 reflect the related short-term
liabilities in accrued compensation and benefits and the related long-term liabilities as long-term accrued claims, and the short-term
receivable portion as insurance recovery receivable and the long-term portion as non-current insurance recovery receivable. See
Note 7 - Balance Sheet Details. The ultimate cost of workers’ compensation, professional liability, and health insurance claims will
depend on actual amounts incurred to settle those claims and may differ from the amounts reserved by the Company for those
claims.
Workers’ compensation benefits are provided under a partially self-insured plan. The Company has letters of credit to guarantee
payments of claims. At December 31, 2020 and 2019, the Company had outstanding approximately $17.0 million and $18.1
million, respectively, of standby letters of credit as collateral to secure the self-insured portion of this plan.
The Company has occurrence-based primary professional liability policies that provide the Company and each working
professional in its nurse and allied healthcare business with coverage. Effective January 1, 2016, the Company has a claims-made
professional liability policy for its physicians and advanced practitioners, with a $0.5 million self-insured retention per claim. Prior
to January 1, 2016, the Company had an occurrence-based professional liability policy for its independent contractor physicians
F- 14
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
and advanced practitioners. At December 31, 2020 and 2019, the Company had outstanding $1.5 million and $1.8 million,
respectively, of standby letters of credit as collateral to secure reimbursement of expenses under the existing plan.
Subject to certain limitations, the Company also has umbrella liability coverage for its working nurses and allied healthcare
professionals. While this umbrella coverage does not extend to professional liability claims against its independent contractor
physicians and advanced practitioners, it does cover claims brought against all of the Company’s subsidiaries for non-patient
general liability.
Revenue Recognition
In the first quarter of 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).
ASU 2014-09 introduced a five-step revenue recognition model in which an entity recognizes revenue when its customer
obtains control of promised goods or services, in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. The standard also requires additional disclosures about the nature, amount,
timing, and uncertainty of revenue and cash flows arising from customer contracts. See Note 3 - Revenue Recognition.
Revenue from the Company’s services is recognized when control of the promised services are transferred to the Company’s
customers, in an amount that reflects the consideration it expects to receive in exchange for the service. The Company has
concluded that transfer of control of its staffing services, which represents the majority of its revenues, occurs over time as the
services are provided.
The following is a description of the nature, amount, timing, and uncertainty of revenue and cash flows from which the
Company generates revenue.
Temporary Staffing Revenue
Revenue from temporary staffing is recognized as control of the services is transferred over time and is based on hours worked
by the Company’s field staff. The Company recognizes the majority of its revenue at the contractual amount the Company has
the right to invoice for services completed to date. Generally, billing to customers occurs weekly, bi-weekly, or monthly and is
aligned with the payment of services to the temporary staff. Accounts receivable includes estimated revenue for employees’ and
independent contractors’ time worked but not yet invoiced. At December 31, 2020 and December 31, 2019, the Company's
estimate of amounts that had been worked but had not been billed totaled $48.3 million and $46.1 million, respectively, and are
included in accounts receivable in the consolidated balance sheets.
Other Services Revenue
The Company offers other optional services to its customers that are transferred over time including: managed service programs
(MSP) providing agency services (as further described below in Gross Versus Net Policies), recruitment process outsourcing
(RPO), other outsourcing services, and retained search services, as well as separately billable travel and housing costs, which in
total amount to less than 5% of its consolidated revenue for the years ended December 31, 2020, 2019, and 2018. Generally,
billing and payment terms for MSP agency services is consistent with temporary staffing as the customers are similar or the
same. Revenue from these services are recognized based on the contractual amount for services completed to date which best
depicts the transfer of control of services. The Company does not, in the ordinary course of business, offer warranties or
refunds.
Gross Versus Net Policies
The Company records revenue on a gross basis as a principal or on a net basis as an agent depending on the contracted
arrangement, as follows:
F- 15
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
Managed Service Programs
The Company has certain contracts with healthcare facilities to provide comprehensive services through its MSPs. Under these
contractual arrangements, the customer’s orders are filled with either one of the Company's healthcare professionals or a third
party's healthcare professionals (subcontractors).
When its healthcare professional is staffed, the Company determined that it acts as a principal in the arrangement, as it is
considered the employer of record. Accordingly, revenue is reported on a gross basis in the consolidated statements of
operations.
Alternatively, the Company determined that it acts as an agent in the arrangement when a subcontracted healthcare professional
is staffed, as the Company does not control the services before they are transferred to the customer. Accordingly, revenue is
reported on a net basis in the consolidated statements of operations. The customer is invoiced for the hours worked by the
subcontracted healthcare professional multiplied by the hourly bill rate. A subcontractor liability, which is recognized as a
reduction of revenue, is established in accrued expenses for the invoiced amount, net of an administrative fee, and is generally
payable after the Company has received payment from its customer. The Company’s administrative fee is calculated as a
percentage of the customer’s invoice and is recognized over time as the services are rendered by the subcontracted healthcare
professional. The Company does not collect or recognize an upfront placement fee.
Physician Staffing
The Physician Staffing business has contracts with its healthcare customers to provide temporary staffing services. The
Company uses independent contractors for these services. The Company determined that it acts as a principal in these
arrangements and, therefore, revenue is reported on a gross basis in the consolidated statements of operations.
See Note 3 - Revenue Recognition for the Company's revenues disaggregated by revenue source. Sales and usage-based taxes
are excluded from revenue.
Contract Costs
All contract fulfillment costs are expensed as incurred to direct operating expenses. With respect to the Revenue from Contracts
with Customers Topic of the FASB ASC, there were no contract assets or material contract liabilities as of December 31, 2020
and 2019.
Practical Expedients and Exemptions
For the Company’s contracts that have an original duration of one year or less, the Company uses the practical expedients and
has elected to recognize any incremental costs of obtaining these contracts as expensed when incurred. Further, the Company
does not disclose the value of unsatisfied performance obligations for: (i) contracts with an original expected length of one year
or less; and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services
performed.
Share-Based Compensation
For the years ended December 31, 2020, 2019, and 2018, the Company granted performance-based stock awards and restricted
stock for a fixed number of common shares to employees. The Company values its restricted stock awards and the fair value of its
performance-based stock awards by reference to its stock price on the date of grant. The Company has elected to recognize
compensation expense on a straight-line basis over the requisite service period of the entire award.
The Company granted performance-based stock awards to certain key personnel pursuant to its 2014 Omnibus Incentive Plan,
amended and restated on May 23, 2017 (2017 Plan), and replaced by the 2020 Omnibus Incentive Plan, effective for awards
granted after May 19, 2020, as described in Note 15 - Stockholders' Equity. Pursuant to the plans, the number of target shares that
vest are determined based on the level of attainment of the targets. If a minimum level of performance is attained for the awards,
restricted stock is issued based on the level of attainment. The Company recognizes performance-based restricted stock as
F- 16
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
compensation expense based on the most likely probability of attaining the prescribed performance and over the requisite service
period beginning at its grant date and through the date the restricted stock vests.
Compensation expense related to share-based payments is included in selling, general and administrative expenses in the
consolidated statements of operations, and totaled $5.4 million, $3.4 million, and $3.6 million during the years ended
December 31, 2020, 2019, and 2018, respectively. See Note 15 - Stockholders’ Equity.
Advertising
The Company’s advertising expense consists primarily of online advertising, internet direct marketing, print media, and
promotional material. Advertising costs are expensed as incurred and totaled $6.2 million, $7.9 million, and $6.7 million, for the
years ended December 31, 2020, 2019, and 2018, respectively.
Restructuring Costs
The Company considers restructuring activities to be programs whereby it fundamentally changes its operations, such as closing
and consolidating facilities, reducing headcount, and realigning operations in response to changing market conditions. As a result,
restructuring costs in the consolidated statements of operations primarily include employee termination costs and lease-related exit
costs.
Effective January 1, 2019, in conjunction with the adoption of ASU No. 2016-02, Leases (Topic 842), certain office locations that
the Company vacated in connection with restructuring activities were included in the measurement of its beginning operating lease
liabilities. Previous accruals related to these locations of $0.3 million have been presented as a reduction to the operating lease
right-of-use assets in the consolidated balance sheets.
Reconciliations of the employee termination costs and lease-related exit costs beginning and ending liability balance is presented
below:
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
Employee
Termination
Costs
Lease-
Related
Exit Costs
Employee
Termination
Costs
Lease-
Related
Exit Costs
Employee
Termination
Costs
Lease-
Related
Exit Costs
Balance at beginning of period
Charged to restructuring costs(a)
Payments
Balance at end of period
________________
$
$
386 $
2,525
(2,412)
1,223
2,190
(726)
$
556 $
127
$
87 $
1,870
(2,040)
1,311
(215)
1,600
(1,131)
499 $
2,687
$
386 $
1,223
$
556 $
441
184
(235)
390
(a) Aside from what is presented in the table above, restructuring costs in the consolidated statements of operations for the years
ended December 31, 2020, 2019, and 2018 include: (i) $1.1 million, $0.2 million, and $0.4 million, respectively, of ongoing
lease costs related to the Company's strategic reduction in its real estate footprint which are included as operating lease
liabilities - current and non-current in our consolidated balance sheets, and (ii) $0.5 million of other costs for the year ended
December 31, 2018. Other costs were immaterial for the years ended December 31, 2020 and 2019. In addition, the year ended
December 31, 2020 includes $0.2 million of legal entity reorganization costs.
Income Taxes
The Company accounts for income taxes under the Income Taxes Topic of the FASB ASC. Deferred income tax assets and
liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities, and are
measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
F- 17
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
The Company recognizes in its financial statements the impact of a tax position if that position is more likely than not of being
sustained on audit, based on the technical merits of the position. The Company recognizes interest and penalties related to
unrecognized tax benefits in the provision for income taxes.
The Company maintains valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not
be realized. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings
history, expected future earnings, carryback and carryforward periods, and tax strategies. The Company considers all positive
and negative evidence to estimate if sufficient future taxable income will be generated to realize the deferred tax asset, and
considers cumulative losses in recent years as well as the impact of one-time events in assessing its pre-tax earnings.
Assumptions regarding future taxable income require significant judgment. The Company's assumptions are consistent with
estimates and plans used to manage its business, which includes restructuring and other initiatives.
In the event that actual results differ from these estimates, or the Company adjusts these estimates in future periods for current
trends or changes in its estimating assumptions, it may modify the level of the valuation allowance which could materially
impact its business, financial condition and results of operations. The Company will continue to assess the realizability of its
deferred tax assets. See Note 14 - Income Taxes.
Comprehensive Loss
Total comprehensive loss includes net income or loss, foreign currency translation adjustments, and net change in derivative
transactions, net of any related deferred taxes and valuation allowance. Certain of the Company’s foreign subsidiaries use their
respective local currency as their functional currency. In accordance with the Foreign Currency Matters Topic of the FASB
ASC, assets and liabilities of these operations are translated at the exchange rates in effect on the balance sheet date. Income
statement items are translated at the average exchange rates for the period. The cumulative impact of currency fluctuations
related to the balance sheet translation is included in accumulated other comprehensive loss in the accompanying consolidated
balance sheets and was an unrealized loss of $1.3 million at December 31, 2020 and 2019.
The income tax impact related to components of other comprehensive loss for the years ended December 31, 2020, 2019, and
2018 is reflected in the consolidated statements of comprehensive loss.
Fair Value Measurements
The Company complies with the provisions of the Fair Value Measurements and Disclosures Topic of the FASB ASC, which
defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value
measurements. The Company’s financial assets and liabilities required to be measured on a recurring basis were its: (i) deferred
compensation asset; (ii) deferred compensation liability; and (iii) contingent consideration liabilities, as of December 31, 2020
and 2019. See Note 11 - Fair Value Measurements.
Earnings Per Share
In accordance with the requirements of the Earnings Per Share Topic of the FASB ASC, basic earnings per share is computed
by dividing net income available to common shareholders (numerator) by the weighted average number of vested unrestricted
common shares outstanding during the period (denominator). Diluted earnings per share gives effect to all dilutive potential
common shares outstanding during the period including stock appreciation rights and options and unvested restricted stock, as
calculated utilizing the treasury stock method.
Recently Adopted Accounting Pronouncements
Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure
requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts
Statement, including the consideration of costs and benefits. The Company has adopted this guidance prospectively with no
material impact on its consolidated financial statements.
F- 18
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
2. Summary of Significant Accounting Policies (continued)
Effective January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326),
Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology under
current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit
loss model for accounts receivable, loans, and other financial instruments. The guidance requires a modified retrospective
approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which
it is effective. The Company has adopted this guidance using the modified retrospective approach related to its accounts
receivable, resulting in no cumulative adjustment to retained earnings and no material impact on its consolidated financial
statements. See Note 2 - Summary of Significant Accounting Policies.
Recent Accounting Pronouncements
On March 12, 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to
contracts, hedging relationships, and other transactions, subject to meeting certain criteria, that reference LIBOR or another
reference rate expected to be discontinued. When elected, the optional expedients for contract modifications must be applied
consistently for all eligible contracts or transactions. The amendments in this update are effective as of March 12, 2020 through
December 31, 2022. As of December 31, 2020, the Company is not impacted by this guidance; however, it will continue to
assess the potential impact on its debt contracts and future hedging relationships, if applicable, through the effective period.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income
Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general
principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic
740 by clarifying and amending existing guidance. For public business entities, the amendments in this update are effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and should be applied either on a
prospective, retrospective, or modified retrospective basis depending on the amendment. Early adoption of the amendments is
permitted. The Company expects to adopt this standard in its first quarter of 2021, with no material impact on its consolidated
financial statements.
3. Revenue Recognition
The Company's revenues from customer contracts are generated from temporary staffing services and other services. Revenue
is disaggregated by segment in the following table. See Note 2 - Summary of Significant Accounting Policies.
Temporary Staffing Services
Other Services
Total
Temporary Staffing Services
Other Services
Total
Year Ended December 31, 2020
Nurse
And Allied
Staffing
Physician
Staffing
Search
Total Segments
(amounts in thousands)
740,441
$
64,819
$
—
$
17,508
3,115
10,534
757,949
$
67,934
$
10,534
$
805,260
31,157
836,417
Year Ended December 31, 2019
Nurse
And Allied
Staffing
Physician
Staffing
Search
Total Segments
(amounts in thousands)
720,393
12,422
732,815
$
$
70,261
4,344
74,605
$
$
—
14,804
14,804
$
$
790,654
31,570
822,224
$
$
$
$
F- 19
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
3. Revenue Recognition (continued)
Year Ended December 31, 2018
Nurse
And Allied
Staffing
Physician
Staffing
Search
Total Segments
(amounts in thousands)
Temporary Staffing Services
Other Services
Total
$
$
705,469
$
76,979
$
—
$
13,144
5,326
15,566
718,613
$
82,305
$
15,566
$
782,448
34,036
816,484
4. Acquisitions
American Personnel
On December 1, 2018, the Company completed the acquisition of American Personnel, Inc. (AP Staffing) for a total purchase
price of $2.0 million, subject to a net working capital adjustment. The Company assigned a total of $0.4 million to definite life
intangible assets with a weighted average estimated useful life of 10 years. The remaining excess purchase price over the fair
value of net assets acquired of $0.7 million was recorded as goodwill, which is not deductible for tax purposes since this was a
stock acquisition. Associated acquisition-related costs incurred were $0.2 million and have been included in acquisition and
integration costs in the consolidated statements of operations for the year ended December 31, 2018.
The acquisition was deemed immaterial and has been accounted for in accordance with the Business Combinations Topic of the
FASB ASC, using the acquisition method of accounting. AP Staffing's results of operations are included in the consolidated
statements of operations since its date of acquisition.
Advantage
Effective July 1, 2017, the Company acquired all of the assets of Advantage RN, LLC and its subsidiaries (collectively,
Advantage) for cash consideration of $86.6 million, net of cash acquired of $2.8 million. The total purchase price of $88.0
million was subject to a net working capital reduction of $0.6 million at the closing and an additional $0.8 million was received
during the third quarter of 2017 as the final adjustment for net working capital. Additionally, $0.6 million of the purchase price
was deferred as of the closing and was due to the seller within 20 months, less any COBRA and healthcare payments incurred
by the Company on behalf of the seller. The Company incurred approximately $0.5 million in COBRA expenses since the
Advantage acquisition and, in February 2019, released to the seller the remaining liability of $0.1 million.
Included in the amount paid at closing were two escrow accounts, the first was $14.5 million which related to tax liabilities and
the second was $7.5 million which was to cover any post-close liabilities. On July 28, 2017, $7.3 million related to the tax
liabilities was released from escrow, leaving a balance of $7.2 million. On April 3, 2019, $4.3 million related to the tax
liabilities was disbursed to pay taxes and the remaining $2.9 million was released from escrow to the seller. In the first quarter
of 2019, $7.0 million related to the post-close liabilities was released from escrow, leaving a balance of $0.5 million to cover
pending post-close liabilities.
Mediscan
On October 30, 2015, the Company completed the acquisition of all of the membership interests of New Mediscan II, LLC,
Mediscan Diagnostic Services, LLC, and Mediscan Nursing Staffing, LLC (collectively Mediscan). In connection with the
Mediscan acquisition, the Company assumed two contingent purchase price liabilities for a previously acquired business, one
that was payable annually based on certain performance criteria for the years 2016 through 2019, and a second performance
criteria related to 2019 payable in three equal installments. Payments related to the years 2016 through 2018 were limited to
$0.3 million annually and the 2019 year was uncapped. During the years ended December 31, 2019 and 2018, the Company
paid $0.3 million related to the years 2018 and 2017. In the first quarter of 2020, the total earnout amount related to both 2019
performance criterion of $7.4 million was determined, and the Company paid $0.1 million on the first earnout related to the
F- 20
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
4. Acquisitions (continued)
year 2019. The remaining $7.3 million, related to the second earnout, was converted to a subordinated promissory note payable.
Pursuant to the note payable, the first installment of $2.4 million was paid in the second quarter of 2020, the second installment
of $2.4 million is payable on January 31, 2021, and the third installment of $2.5 million is to be paid, together with interest at a
rate of 2% per annum, accruing from April 1, 2020, on January 31, 2022. As of December 31, 2020, the current portion of the
note payable in the amount of $2.4 million is included in other current liabilities and the long-term portion of $2.5 million is
included in other long-term liabilities on the consolidated balance sheets.
5. Goodwill, Trade Names, and Other Intangible Assets
The Company had the following acquired intangible assets:
December 31, 2020
December 31, 2019
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
(amounts in thousands)
Accumulated
Amortization
Net
Carrying
Amount
Intangible assets subject to
amortization:
Databases
$
30,530 $
15,322 $
15,208 $
30,530 $
12,269 $
Customer relationships
33,538
14,007
19,531
304
—
212
—
92
—
49,758
320
4,500
26,596
161
1,125
18,261
23,162
159
3,375
$
64,372 $
29,541 $
34,831 $
85,108 $
40,151 $
44,957
$
5,900
$
5,900
Non-compete agreements
Trade names
Other intangible assets, net
Intangible assets not subject
to amortization:
Trade names, indefinite-
lived
During 2020, fully amortized intangible assets of $15.0 million related to customer relationships and $4.5 million related to
trade names, along with the related accumulated amortization, were removed from the table above. As of December 31, 2020,
estimated annual amortization expense is as follows:
Years Ending December 31:
2021
2022
2023
2024
2025
Thereafter
(amounts in thousands)
$
5,963
5,933
5,875
5,238
4,679
7,143
$
34,831
F- 21
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
5. Goodwill, Trade Names, and Other Intangible Assets (continued)
The changes in the carrying amount of goodwill by segment are as follows:
Nurse and
Allied Staffing
Physician
Staffing
Search
Total
(amounts in thousands)
Balances as of December 31, 2019
Aggregate goodwill acquired
$
346,130 $
43,405 $
21,750 $
411,285
Sale of business
Accumulated impairment loss
Goodwill, net of impairment loss
—
—
(259,732)
(40,598)
86,398
2,807
(9,889)
—
11,861
(9,889)
(300,330)
101,066
Changes to aggregate goodwill in 2020
Impairment charges
Reclassification of API goodwill
Balances as of December 31, 2020
Aggregate goodwill acquired
Sale of business
Accumulated impairment loss
Reclassification of API goodwill
—
24
—
—
(10,142)
(10,142)
(24)
—
346,130
—
43,405
—
(259,732)
(40,598)
24
—
21,750
(9,889)
(10,142)
(24)
1,695 $
411,285
(9,889)
(310,472)
—
90,924
Goodwill, net of impairment loss
$
86,422 $
2,807 $
Goodwill, Trade Names, and Other Intangible Assets Impairment
The Company tests reporting units’ goodwill and intangible assets with indefinite lives for impairment annually during the
fourth quarter and more frequently if impairment indicators exist. The Company performs quarterly qualitative assessments of
significant events and circumstances such as reporting units’ historical and current results, assumptions regarding future
performance, strategic initiatives and overall economic factors, including COVID-19, and macro-economic developments, to
determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of
reporting units or intangible assets is less than their carrying value. If indicators of impairments are identified a quantitative
impairment test is performed.
The Company performed its annual quantitative impairment test of goodwill and its indefinite-lived trade name as of October 1,
2020 and determined that the estimated fair value of its reporting units and its indefinite-lived trade name exceeded their
respective carrying values.
During the second quarter of 2020, due to the increased negative impact and continuing uncertainty of the COVID-19 pandemic
on the business, all reporting units were quantitatively tested. For the Nurse and Allied Staffing and Physician Staffing
reporting units, no impairment was identified as the fair value was substantially in excess of the carrying amount of goodwill.
The Search reporting unit under-performed relative to management’s expectations in the second quarter of 2020. The lower
than expected revenue was driven by: (i) the cancellation or postponement of a significant number of working searches, (ii) the
decision to delay the hiring of new revenue producers, and (iii) the loss of customers, which were mostly related to the negative
impacts of COVID-19. As a result, the quantitative testing of the Search reporting unit resulted in impairment charges of
$10.2 million for its goodwill and $0.3 million for its customer relationships.
In order to determine the fair value of the Search reporting unit, the Company used a combination of an income and market
approach. The weighting was based on the specific characteristics, risks, and uncertainties of the Search reporting unit. The
discounted cash flow that served as the primary basis for the income approach was based on the Company’s discrete financial
forecast of revenue, gross profit margins, operating costs, and cash flows. The Company also considered estimated future
F- 22
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
5. Goodwill, Trade Names, and Other Intangible Assets (continued)
results, economic and market conditions including the timing and duration of COVID-19, as well as the impact of planned
business and operational strategies which impacted management's estimates of future cash flows, the discount rate, and the
estimated long-term growth rate used in the discounted cash flow model. Assumptions used in the market approach were
derived including an analysis of a range of valuation multiples of comparable public companies.
Impairment charges on the consolidated statements of operations include impairment of $10.7 million related to goodwill and
other intangible assets and $5.5 million related to right-of-use assets and related property and equipment, and totaled
$16.2 million for the year ended December 31, 2020.
As part of evolving its go-to-market strategy, in the second quarter of 2019, the Company began eliminating certain brands
across all of its segments. The Company’s rebranding efforts resulted in a $14.5 million write-off of indefinite-lived trade
names related to its Nurse and Allied Staffing business segment, which is presented within impairment charges in the
consolidated statements of operations for the year ended December 31, 2019.
The Company performed its annual quantitative impairment test of goodwill and its indefinite-lived trade name as of October 1,
2019, and determined that the estimated fair value of its reporting units and its indefinite-lived trade name exceeded their
respective carrying values.
The Company performed its annual quantitative impairment test of goodwill and other indefinite-lived intangible assets as of
October 1, 2018. Upon completion of the impairment testing, it was determined that the estimated fair value of the Physician
Staffing reporting unit’s trade name was less than its carrying amount resulting in impairment. For its goodwill impairment
testing, with the exception of its Physician Staffing reporting unit, the estimated fair value of its reporting units exceeded their
respective carrying values.
Projections of revenue, operating costs, and expected cash flows of each reporting unit are inputs into the quantitative testing
for goodwill and intangible assets. The Company reduced its long-term revenue forecast for the Physician Staffing business
segment in the fourth quarter of 2018. The lower than expected revenue was driven by lower booking volumes, partly due to the
loss of customers. In addition, margins of the reporting unit were negatively impacted from continued investments in the
business. As a result, during the fourth quarter of 2018 the Company recorded impairment charges of $5.2 million related to its
trade name and $17.2 million related to goodwill during the fourth quarter.
Although management believes that the Company's current estimates and assumptions utilized in its quantitative testing are
reasonable and supportable, including its assumptions on the impact and timing related to COVID-19, there can be no assurance
that the estimates and assumptions management used for purposes of its qualitative assessment as of December 31, 2020 will
prove to be accurate predictions of future performance.
Intangible Asset Amortization
In connection with its rebranding efforts, the Company made a decision at the end of 2019 to phase out a trade name by the end
of 2020, which as of December 31, 2019 would have been recognized over a weighted average life of 7.5 years. In connection
with this decision, the Company expected accelerated amortization related to the trade name of $2.9 million throughout 2020. In
the second quarter of 2020, the Company further accelerated its rebranding plan and shortened the estimated remaining life of
the trade name. Total accelerated amortization resulting from the changes in the estimated remaining life of the trade name was
$3.1 million, or $0.09 per share, for the year ended December 31, 2020.
In addition, during the year ended December 31, 2019, the amortization of certain finite-lived trade names was accelerated,
which resulted in additional amortization expense related to the Company's Nurse and Allied Staffing and Physician Staffing
segments of $2.1 million and $0.8 million, respectively, which impacted the net (loss) income per share attributable to common
shareholders of $0.08. If the Company had not accelerated the amortization, it would have been recognized over a weighted
average life of 7.8 years. The life of the Physician Staffing trade name had been reclassified from indefinite-lived to definite-
lived in 2018, as noted below.
During the impairment testing as of October 1, 2018, the Company reassessed the Physician Staffing brand's indefinite-life
classification and determined it had characteristics that indicated a definite-life assignment was more appropriate. Effective
October 1, 2018, the trade name, with a carrying value of $1.1 million after impairment charges, that was previously assigned
F- 23
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
5. Goodwill, Trade Names, and Other Intangible Assets (continued)
an indefinite life was assigned a finite life of 3 years. During the three months ended December 31, 2018, the amortization
expense related to this trade name was immaterial.
6. Property and Equipment
The Company's property and equipment consists of the following:
Computer equipment
Computer software
Office equipment
Furniture and fixtures
Construction in progress
Leasehold improvements
Less accumulated depreciation and amortization
_______________
(a) Primarily related to software development.
(b) See Note 2 – Summary of Significant Accounting Policies.
December 31,
Useful Lives
2020
2019
(amounts in thousands)
3-5 years
$
3,644 $
3-10 years
5-7 years
5-7 years
(a) (b)
(b)
17,416
933
2,528
473
4,370
29,364
(17,013)
12,351 $
$
6,070
16,225
1,065
4,101
1,187
6,460
35,108
(23,276)
11,832
F- 24
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
7. Balance Sheet Details
Insurance recovery receivable:
Insurance recovery for health claims
Insurance recovery for workers’ compensation claims
Insurance recovery for professional liability claims
Other non-current assets:
Insurance recovery for workers’ compensation claims
Insurance recovery for professional liability claims
Non-current security deposits
Non-current income tax receivable
Deferred compensation assets
Net debt issuance costs
Finance lease right-of-use assets
Cloud computing asset
Accrued compensation and benefits:
Salaries and payroll taxes
Accrual for bonuses and commissions
Accrual for workers’ compensation claims
Accrual for professional liability claims
Accrual for healthcare claims
Accrual for vacation
Long-term accrued claims:
Accrual for workers’ compensation claims
Accrual for professional liability claims
Other long-term liabilities:
Restructuring
Deferred compensation
Long-term note payable
Long-term unrecognized tax benefits
Other
F- 25
December 31,
2020
2019
(amounts in thousands)
369 $
2,629
1,700
4,698 $
5,352 $
7,763
786
—
1,156
1,063
102
3,187
19,409 $
13,131 $
7,705
7,670
2,499
3,926
609
35,540 $
12,692 $
12,720
25,412 $
2,082 $
2,475 $
2,426
951
61
7,995 $
724
2,513
1,774
5,011
5,317
8,695
969
261
830
1,252
148
826
18,298
13,270
3,566
7,219
2,660
3,610
982
31,307
12,454
14,484
26,938
1,012
2,216
—
701
108
4,037
$
$
$
$
$
$
$
$
$
$
$
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
8. Debt
2019 ABL Credit Agreement
Effective October 25, 2019, the Company terminated its commitments under its prior senior credit facility entered into in
August 2017 (described below) and entered into an ABL Credit Agreement (Loan Agreement), by and among the Company and
certain of its domestic subsidiaries, as borrowers or guarantors, Wells Fargo, PNC Bank N.A., as well as other Lenders (as
defined) from time to time parties thereto. The Loan Agreement provided for a five-year revolving senior secured asset-based
credit facility (ABL) in the aggregate principal amount of up to $120.0 million (as described below), including a sublimit for
swing loans up to $15.0 million and a $35.0 million sublimit for standby letters of credit.
On June 30, 2020, the Company amended its Loan Agreement, which increased the current aggregate committed size of the
ABL from $120.0 million to $130.0 million. All other terms, conditions, covenants, and pricing of the Loan Agreement remain
the same. The amendment was treated as a modification of debt and, as a result, the associated immaterial fees and costs were
included in debt issuance costs and will be amortized ratably over the remaining term of the agreement.
Availability of the ABL commitments is subject to a borrowing base of up to 85% of secured eligible accounts receivable,
subject to adjustment at certain quality levels, plus an amount of supplemental availability, and reducing over time in
accordance with the terms of the Loan Agreement, minus customary reserves, and subject to customary adjustments. Revolving
loans and letters of credit issued under the Loan Agreement reduce availability under the ABL on a dollar-for-dollar basis.
Availability under the ABL will be used for general corporate purposes. Additionally, the facility contains a provision to
increase the aggregate committed size of the facility to $150.0 million. At December 31, 2020, availability under the ABL was
$125.5 million and the Company had $53.4 million of borrowings drawn, as well as $18.5 million of letters of credit
outstanding related to workers' compensation and professional liability policies (see Note 2 - Summary of Significant
Accounting Policies), leaving $53.6 million available for borrowing. The balances drawn are presented as revolving credit
facility on the consolidated balance sheets and as of December 31, 2020 and December 31, 2019 had a weighted average
interest rate of 2.73% and 4.23%, respectively.
The initial amounts drawn on the ABL included funds to repay the Company’s then outstanding borrowings of $75.4 million
under its August 2017 Credit Facility and $1.3 million for the payment of fees, expenses, and accrued interest, as well as to
backstop $21.2 million for outstanding letters of credit. The refinancing was treated as an extinguishment of debt, and, as a
result, the Company wrote-off debt issuance costs of approximately $1.4 million in the fourth quarter of 2019, which is
included with loss on early extinguishment of debt in the consolidated statements of operations.
As of December 31, 2020, the interest rate spreads and fees under the Loan Agreement were based on LIBOR plus 2.00% for
the revolving portion of the borrowing base and LIBOR plus 4.00% on the Supplemental Availability. The Base Rate (as
defined by the Loan Agreement) margins would have been 1.00% and 3.00%, respectively, for the revolving portion and
Supplemental Availability, respectively. The LIBOR and Base Rate margins are subject to monthly pricing adjustments,
pursuant to a pricing matrix based on the Company’s excess availability under the revolving credit facility. In addition, the
facility is subject to an unused line fee, letter of credit fees, and an administrative fee. The unused line fee is 0.375% of the
average daily unused portion of the revolving credit facility.
The Loan Agreement contains various restrictions and covenants applicable to the Company and its subsidiaries, including a
covenant to maintain a minimum fixed charge coverage ratio. The Company was in compliance with this covenant as of
December 31, 2020. Obligations under the ABL are secured by substantially all the assets of the borrowers and guarantors,
subject to customary exceptions.
The Loan Agreement also contains customary events of default. If an event of default under the Loan Agreement occurs and
remains uncured, then the administrative agent or the requisite lenders may declare any outstanding obligations to be
immediately due and payable. In addition, if the Company or any of its subsidiaries becomes the subject of voluntary or
involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Loan
Agreement will automatically become due and payable.
F- 26
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
8. Debt (continued)
Prior Senior Credit Facility
The Company had a prior senior credit facility that included a revolver and term loan. The term loan was payable in quarterly
installments, and the Company had the right at any time to prepay borrowings, in whole or in part, without premium or penalty.
During the years ended December 31, 2019 and 2018, the Company made optional prepayments of $12.5 million and
$10.0 million, respectively, on the term loan.
On October 30, 2018, the Company amended its prior senior credit facility that, among other administrative and clarifying
changes, modified the financial covenants. Fees paid in connection with the amendment were $0.3 million, of which a portion
was classified as deferred issuance costs.
Also, in both the first and third quarters of 2019, the Company amended its prior senior credit facility to reduce the commitment
under the revolving credit facility, among other changes. Each of the amendments were treated as modifications and the fees of
$0.7 million paid to its lenders were classified as debt issuance costs.
As a result of the reduction in borrowing capacity under the revolving credit facility, as well as the reduction in the term loan
due to early prepayments, debt issuance costs of $0.5 million were written off in the year ended December 31, 2019, and an
immaterial amount was written off in the year ended December 31, 2018. The write-offs of debt issuance costs were included as
loss on early extinguishment of debt in the consolidated statements of operations.
In the third quarter of 2019, in contemplation of entering into the Loan Agreement, the Company terminated its interest rate
swap agreement associated with its prior senior credit facility by making a cash payment of $1.3 million. As the interest
payments related to the swap were no longer expected to occur, the unrealized amount of loss that had accumulated in other
comprehensive loss was recognized, resulting in a $1.3 million loss on derivative in the third quarter of 2019. See Note 9 -
Derivative.
Note Payable
On October 30, 2015, in connection with the Mediscan acquisition, the Company assumed two contingent purchase price
liabilities for a previously acquired business, one that was payable annually based on certain performance criteria for the years
2016 through 2019, and a second performance criterion related to 2019 payable in three equal installments. In the first quarter
of 2020, the total earnout amount related to both 2019 performance criteria of $7.4 million was determined, and the Company
paid $0.1 million on the first earnout related to the year 2019. The remaining $7.3 million, related to the second earnout, was
converted to a subordinated promissory note payable. As of December 31, 2020, the current portion of the note payable in the
amount of $2.4 million is included in other current liabilities and the long-term portion of $2.5 million is included in other long-
term liabilities on the consolidated balance sheets. See Note 4 - Acquisitions.
9. Derivative
Interest Rate Swap
In March 2018, the Company entered into an interest rate swap agreement, with an effective date of April 2, 2018 and
termination date of August 1, 2022. No initial investments were made to enter into the agreement. The interest rate swap
agreement required the Company to pay a fixed rate to the respective counterparty of 2.627% per annum on an amortizing
notional amount beginning at $48.8 million (corresponding with the initial term loan payment schedule), and to receive from
the respective counterparty, interest payments based on the applicable notional amounts and 1 month USD LIBOR, with no
exchanges of notional amounts. At initiation, the interest rate swap effectively fixed the interest rate on 50% of the amortizing
balance of the Company’s term debt, exclusive of the credit spread on the debt.
The Company anticipated entering into the asset-based credit facility that closed in October 2019. In contemplation of that, the
Company terminated its interest rate swap agreement by making a cash payment of $1.3 million on September 26, 2019, which
is included in net cash provided by operating activities in the consolidated statements of cash flows. As the forecasted interest
payments related to the swap were no longer expected to occur, the unrealized amount of loss that had accumulated in other
F- 27
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017
9. Derivative (continued)
comprehensive loss was recognized resulting in a $1.3 million loss in the third quarter of 2019, included in loss on derivative in
the consolidated statements of operations.
10. Leases
The Company's lease population of its right-of-use asset and lease liabilities under the Leases Topic of the FASB ASC is
substantially related to the rental of office space. The Company enters into lease agreements as lessee for the rental of office
space for both its corporate and branch locations that may include options to extend or terminate early. Many of these real estate
leases require variable payments of property taxes, insurance, and common area maintenance, in addition to base rent. Certain
of the leases have provisions for free rent months during the lease term and/or escalating rent payments and, particularly for the
Company’s longer-term leases for its corporate offices, it has received incentives to enter into the leases such as receiving up to
a specified dollar amount to construct tenant improvements. These leases do not include residual value guarantees, covenants,
or other restrictions. See Note 2 - Summary of Significant Accounting Policies.
During the year ended December 31, 2020, in connection with the continuing developments from COVID-19, the Company
expedited restructuring plans and either reduced or fully vacated leased office space. The Company is in the process of seeking
to sublet some of the space where possible. The decision and change in the use of space resulted in a right-of-use asset
impairment charge of $4.5 million. This loss was determined by comparing the fair value of the impacted right-of-use assets to
the carrying value of the assets as of the impairment measurement date, in accordance with the Property, Plant and Equipment
Topic of the FASB ASC. The fair value of the right-of-use assets was based on the estimated sublease income for the space
taking into consideration the time period it will take to obtain a subtenant, the applicable discount rate, and the sublease rate.
The Company wrote off a total of $1.0 million of leasehold improvements and other property and equipment related to these
locations. The measurement of the right-of-use asset impairments, using the assumptions described, is a Level 3 fair value
measurement. Similarly, in the third quarter of 2019, the Company ceased use of several facilities which resulted in a right-of-
use asset impairment charge of $1.2 million, included in impairment charges in the consolidated statements of operations. The
Company also wrote off $0.6 million of leasehold improvements and other property and equipment related to these locations.
The table below presents the lease-related assets and liabilities included in the consolidated balance sheets:
Classification on Consolidated Balance Sheets:
December 31, 2020
December 31, 2019
Operating lease right-of-use assets
Operating lease liabilities - current
Operating lease liabilities - non-current
Weighted-average remaining lease term
Weighted average discount rate
$
$
$
(amounts in thousands)
10,447
4,509
15,234
$
$
$
16,964
4,878
19,070
December 31, 2020
December 31, 2019
4.1 years
6.32 %
4.7 years
6.26 %
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the
operating lease liabilities (which do not include short-term leases) recorded in the consolidated balance sheets as of December
31, 2020:
F- 28
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
10. Leases (continued)
Years Ending December 31:
2021
2022
2023
2024
2025
Total minimum lease payments
Less: amount of lease payments representing interest
Present value of future minimum lease payments
Less: operating lease liabilities - current
Operating lease liabilities - non-current
Other Information
The table below provides information regarding supplemental cash flows:
(amounts in thousands)
$
$
5,612
5,456
5,048
3,688
2,717
22,521
(2,778)
19,743
(4,509)
15,234
Supplemental Cash Flow Information:
Cash paid for amounts included in the measurement of operating
lease liabilities
Right-of-use assets acquired under operating lease
The components of lease expense are as follows:
Amounts Included in Consolidated Statements of Operations:
Operating lease expense
Short-term lease expense
Variable and other lease costs
Year Ended
December 31, 2020
December 31, 2019
(amounts in thousands)
7,111 $
1,587 $
7,477
1,229
Year Ended
December 31, 2020
December 31, 2019
(amounts in thousands)
4,874 $
5,217 $
1,919 $
6,592
8,042
2,446
$
$
$
$
$
Operating lease expense, short-term lease expense, and variable and other lease costs are included in selling, general and
administrative expenses, direct operating expenses, and restructuring costs in the consolidated statements of operations,
depending on the nature of the leased asset. Operating lease expense is reported net of sublease income, which is not material.
As of December 31, 2020, the Company does not have any material operating leases which have not yet commenced. The
Company has an immaterial amount of finance lease contracts related to other equipment rentals which are not included in the
above disclosures.
11. Fair Value Measurements
The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value
F- 29
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
11. Fair Value Measurements (continued)
hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
Items Measured at Fair Value on a Recurring Basis:
The Company’s financial assets/liabilities required to be measured on a recurring basis were its: (i) deferred compensation asset
included in other non-current assets; (ii) deferred compensation liability included in other long-term liabilities; and (iii)
contingent consideration liabilities included as other current liabilities and contingent consideration on its consolidated balance
sheets.
Deferred compensation—The Company utilizes Level 1 inputs to value its deferred compensation assets and liabilities. The
Company’s deferred compensation assets and liabilities are measured using publicly available indices, as per the plan
documents.
Contingent consideration liabilities—Potential earnout payments related to the acquisition of Mediscan were contingent upon
meeting certain performance requirements through 2019. As of December 31, 2019, the long-term portion of these liabilities
has been included in contingent consideration, and the short-term portion is included in other current liabilities on the
consolidated balance sheets. The Company utilized Level 3 inputs to value these contingent consideration liabilities as
significant unobservable inputs were used in the calculation of their fair value. As of December 31, 2019, due to the end of the
earnout period, the Company measured the fair value of the liability based on the expected payout related to its Mediscan
acquisition.
The estimated fair value of the Company’s financial assets and liabilities measured on a recurring basis is as follows:
Fair Value Measurements
Financial Assets:
(Level 1)
Deferred compensation asset
Financial Liabilities:
(Level 1)
Deferred compensation liability
(Level 3)
Contingent consideration liabilities
December 31, 2020
December 31, 2019
(amounts in thousands)
$
$
$
1,156
$
830
2,475
$
—
$
2,216
7,300
F- 30
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
11. Fair Value Measurements (continued)
The opening balances of contingent consideration liabilities are reconciled to the closing balances for fair value measurements
of these liabilities categorized within Level 3 of the fair value hierarchy as follows:
December 31, 2018
Payments
Accretion expense
Valuation adjustment
December 31, 2019
Payments
Valuation adjustment
Reclassification to other current and long-term liabilities
December 31, 2020
Items Measured at Fair Value on a Non-recurring Basis:
Contingent Consideration
Liabilities
(amounts in thousands)
$
$
7,689
(279)
500
(610)
7,300
(100)
77
(7,277)
—
The Company's non-financial assets, such as goodwill, trade names, other intangible assets, right-of-use assets, and property
and equipment, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an
impairment charge is recognized.
During 2020, the Company recorded a customer list impairment charge related to the Nurse and Allied Staffing reporting unit,
impairment charges to goodwill and other intangible assets related to the Search reporting unit, and impairment to right-of-use
assets along with related property and equipment in connection with leases that were vacated during the year. During 2019, the
Company recorded impairment charges to trade names related to the Nurse and Allied Staffing reporting unit, and impairment
to right-of-use assets along with leasehold improvements and other property and equipment in connection with leases that were
vacated during the year. As of December 31, 2020 and 2019, these assets were recorded at fair value using Level 3 inputs. See
Note 5 - Goodwill, Trade Names, and Other Intangible Assets and Note 10 - Leases for more information about these fair value
measurements.
Other Fair Value Disclosures:
Financial instruments not measured or recorded at fair value in the consolidated balance sheets consist of cash and cash
equivalents, accounts receivable, and accounts payable and accrued expenses. The estimated fair value of accounts receivable
and accounts payable and accrued expenses approximate their carrying amount due to the short-term nature of these
instruments. The Company’s note payable is included in other current and long-term liabilities on the consolidated balance
sheets. Due to its relatively short-term nature, the carrying value of the note payable approximates its fair value. The carrying
amount of the Company's ABL approximates fair value because the interest rates are variable and reflective of market rates.
F- 31
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
11. Fair Value Measurements (continued)
The carrying amounts and estimated fair value of the Company’s significant financial instruments that were not measured at fair
value are as follows:
December 31, 2020
December 31, 2019
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
(amounts in thousands)
$
$
4,851
53,408
$
$
4,851
53,408
$
$
—
70,974
$
$
—
70,974
Financial Liabilities:
(Level 2)
Note Payable
Senior Secured Asset-Based Loan
Concentration of Risk:
See discussion of credit losses and allowance for doubtful accounts in Note 2 - Summary of Significant Accounting Policies.
Overall, based on the large number of customers in differing geographic areas, primarily throughout the United States and its
territories, the Company believes the concentration of credit risk is limited.
12. Employee Benefit Plans
The Company maintains a voluntary defined contribution 401(k) profit-sharing plan covering all eligible employees as defined
in the plan documents. The plan provides for a discretionary matching contribution, which is equal to a percentage of each
eligible contributing participant’s elective deferral, which the Company, at its sole discretion, determines from year to year.
Contributions by the Company, net of forfeitures, under this plan were $0.5 million, $1.1 million, and $0.8 million for the years
ended December 31, 2020, 2019, and 2018, respectively. Eligible employees who elect to participate in the plan are generally
vested in any existing matching contribution after three years of service with the Company.
The Company maintains a 2003 Deferred Compensation Plan and a 2017 Nonqualified Deferred Compensation Plan, each an
unfunded non-qualified deferred compensation arrangement, intended to comply with Section 409A of the Internal Revenue
Code of 1986, as amended, or the Code. Under the deferred compensation plans, certain designated key employees may elect to
defer the receipt of a portion of their annual base salary, bonus and commission to the deferred compensation plans. Generally,
payments under the deferred compensation plans automatically commence upon a participant’s retirement, termination of
employment, or death during employment. Under certain circumstances described in the deferred compensation plans,
participants may receive distributions during employment. In connection with the 2017 Deferred Compensation Plan, the
Company elected to invest in amounts consistent with the participants' choices of allocations to funds. Participants of the
deferred compensation plans are the Company’s unsecured general creditors with respect to the deferred compensation plan
benefits. The liability for the deferred compensation is included in other long-term liabilities in the consolidated balance sheets
and was $2.5 million and $2.2 million at December 31, 2020 and 2019, respectively.
13. Contingencies
Legal Proceedings
From time to time, the Company is involved in various litigation, claims, investigations, and other proceedings that arise in the
ordinary course of its business. These matters primarily relate to employee-related matters that include individual and collective
claims, professional liability, tax, and payroll practices. The Company establishes reserves when available information indicates
that a loss is probable and an amount or range of loss can be reasonably estimated. For these matters, the Company has
established a liability of $1.0 million as of December 31, 2020. These assessments are performed at least quarterly and are
based on the information available to management at the time and involve a significant management judgment to determine the
probability and estimated amount of potential losses, if any. Based on the available information considered in its reviews, the
Company adjusts its loss contingency accruals and its disclosures as may be required. Actual outcomes or losses may differ
materially from those estimated by the Company's current assessments, including available insurance recoveries, which would
F- 32
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019
13. Contingencies (continued)
impact the Company's profitability. Adverse developments in existing litigation claims or legal proceedings involving the
Company or new claims could require management to establish or increase litigation reserves or enter into unfavorable
settlements or satisfy judgments for monetary damages for amounts in excess of current reserves, which could adversely affect
the Company's financial results. In the second quarter of 2019, the Company recorded $1.6 million in legal settlement charges
related to the resolution of a medical malpractice lawsuit, as well as a 2019 California wage and hour class action settlement
agreement. In October 2019, the Company received a grand jury subpoena directed to Advantage On Call whose assets were
purchased by Cross Country Healthcare, Inc. in 2017. The subpoena relates to an investigation of healthcare staffing services.
The Company has communicated with authorities, provided requested documents, and continues to cooperate with the
investigation. The Company believes the outcome of any outstanding loss contingencies as of December 31, 2020 will not have
a material adverse effect on its business, financial condition, results of operations, or cash flows.
Sales and Other State Non-income Tax Liabilities
The Company's sales and other state non-income tax filings are subject to routine audits by authorities in the jurisdictions where
it conducts business in the U.S. which may result in assessments of additional taxes. The Company accrues sales and other non-
income tax liabilities based on the Company's best estimate of its probable liability utilizing currently available information and
interpretation of relevant tax regulations. Given the nature of the Company's business, significant subjectivity exists as to both
whether sales and other state non-income taxes can be assessed on its activity and how the sales tax will ultimately be measured
by the relevant jurisdictions. The Company makes a determination for each reporting period whether the estimates for sales and
other non-income taxes in certain states should be revised. The expense is included in selling, general and administrative
expenses in the consolidated statements of operations and the liability is reflected in sales tax payable within other current
liabilities in the consolidated balance sheets.
F- 33
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
14. Income Taxes
The components of the Company's loss before income taxes are as follows:
United States
Foreign
Loss before income taxes
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
$
$
(12,998) $
(24,783) $
(18,619)
668
572
424
(12,330) $
(24,211) $
(18,195)
The components of the Company’s income tax (benefit) expense are as follows:
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
$
25 $
(35) $
600
119
744
(138)
(818)
24
(932)
(188) $
499
109
573
17,406
13,799
(46)
31,159
31,732 $
43
620
269
932
(2,137)
(1,277)
4
(3,410)
(2,478)
Current:
Federal
State
Foreign
Total
Deferred:
Federal
State
Foreign
Total
Income tax (benefit) expense
$
F- 34
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
14. Income Taxes (continued)
Deferred income taxes reflect the Company's net tax effect of temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities are as follows:
December 31,
2020
2019
(amounts in thousands)
Deferred Tax Assets:
Accrued other and prepaid expenses
Allowance for doubtful accounts
Intangible assets
Net operating loss carryforwards
Accrued professional liability claims
Accrued workers’ compensation claims
Share-based compensation
Operating lease liabilities
Credit carryforwards
Other
Gross deferred tax assets
Valuation allowance
Deferred Tax Liabilities:
Depreciation
Indefinite-lived intangibles
Operating lease right-of-use assets
Tax on unrepatriated earnings
Other
$
1,600 $
909
27,036
20,536
1,525
3,015
721
4,871
188
—
60,401
(37,472)
22,929
(1,077)
(25,546)
(2,499)
(361)
(38)
(29,521)
(6,592) $
1,557
624
28,889
19,796
1,794
2,839
381
6,108
188
128
62,304
(37,345)
24,959
(224)
(27,609)
(4,312)
(337)
—
(32,482)
(7,523)
Net deferred taxes
$
As of June 30, 2019, the Company assessed the available positive and negative evidence to estimate whether sufficient future
taxable income will be generated to permit realization of its existing deferred tax assets. A significant piece of objective
negative evidence evaluated was the cumulative loss incurred over the three-year period ended June 30, 2019. On the basis of
all evidence evaluated as of June 30, 2019, the Company recorded an additional valuation allowance of $36.0 million ($35.8
million of which was recorded as income tax expense and $0.2 million as a reduction of other comprehensive income) to reduce
the portion of the deferred tax asset that is not more likely than not to be realized. As of December 31, 2020, the Company
maintained a valuation allowance of $37.5 million.
For the year ended December 31, 2018, the Company maintained a valuation allowance of $1.2 million on a portion of state net
operating losses not more likely than not realizable.
As of December 31, 2020, the Company had approximately $88.6 million and $136.8 million of federal and state net operating
loss carryforwards, respectively, and an immaterial amount of foreign net operating loss carryforwards. The net operating losses
expire as follows: federal between 2032 and 2040, state between 2021 and 2040, and foreign between 2021 and 2025. As a
result of the 2017 Tax Act, federal and certain state net operating losses generated in 2020, 2019, and 2018 carry forward
indefinitely.
F- 35
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
14. Income Taxes (continued)
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax (benefit) expense is as follows:
Tax at U.S. statutory rate
State taxes, net of federal benefit
Noncontrolling interest
Non-deductible items(a)
Foreign tax expense (benefit)
Valuation allowances
Uncertain tax positions
Officers' compensation
Return to provision
Other
Income tax (benefit) expense
________________
Year Ended December 31,
2019 (b)
2018 (b)
2020
(amounts in thousands)
$
(2,589) $
(5,084) $
(3,821)
135
(172)
544
1
117
1,110
621
87
(42)
(554)
(372)
562
(58)
36,224
400
418
2
194
(543)
(252)
564
180
—
1,629
148
(458)
75
$
(188) $
31,732 $
(2,478)
(a) Includes non-deductible meals and incidentals and other miscellaneous non-deductible items.
(b) Certain amounts in prior periods were reclassified to accommodate additional line items reflecting material activity in the
year ended December 31, 2020.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
Balance at January 1
Additions based on tax positions related to the current year
Additions (reductions) based on tax positions related to prior years
Reductions as a result of a lapse of applicable statute of limitations
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
$
5,792 $
5,412 $
974
125
—
1,283
(498)
(405)
3,807
1,401
204
—
Balance at December 31
$
6,891 $
5,792 $
5,412
Short-term unrecognized tax benefits are included in other current liabilities in the consolidated balance sheets and were
immaterial as of December 31, 2018. There were no short-term unrecognized tax benefits as of December 31, 2020 or 2019.
Long-term unrecognized tax benefits are included in other long-term liabilities in the consolidated balance sheets and were
$1.0 million, $0.7 million, and $0.6 million as of December 31, 2020, 2019, and 2018, respectively. See Note 7 - Balance Sheet
Details. As of December 31, 2020, 2019, and 2018, the Company had unrecognized tax benefits, which would affect the
effective tax rate if recognized, of $7.1 million, $6.0 million, and $5.6 million, respectively.
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. During
the years ended December 31, 2020, 2019, and 2018, interest and penalties were immaterial. The Company has accrued $0.3
million for the payment of interest and penalties at December 31, 2020, 2019 and 2018.
Tax years 2012 through 2019 remain open to examination by certain taxing jurisdictions to which the Company is subject to
tax.
F- 36
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
15. Stockholders’ Equity
Stock Repurchase Program
Under an authorized share repurchase program, during the year ended December 31, 2018, the Company repurchased and
retired 432,439 shares of its Common Stock for $5.0 million, at an average market price of $11.54 per share. During the years
ended December 31, 2020 and 2019, the Company did not repurchase any shares of its Common Stock under this program.
As of December 31, 2020, the Company has 510,004 shares of Common Stock under the current share repurchase program
available to repurchase, subject to certain conditions in the ABL Credit Agreement. The Company may repurchase up to an
aggregate amount not to exceed $5.0 million in any fiscal year, or an unlimited amount if the Company meets certain conditions
as described in its ABL Credit Agreement.
Share-Based Payments
On May 19, 2020, the Company's shareholders approved the Cross Country Healthcare, Inc. 2020 Omnibus Incentive Plan
(2020 Plan), which replaced the 2017 Omnibus Incentive Plan (2017 Plan), and applies to awards granted after May 19, 2020.
The remaining shares available for grant under the 2017 Plan were cancelled and no further awards will be granted under that
plan. The 2020 Plan generally mirrors the terms of the 2017 Plan, and includes the following provisions: (i) an aggregate share
reserve of 3,000,000 shares; (2) annual dollar and share limits of awards granted to employees and consultants, as well as non-
employee directors, based on type of award; (3) awards granted generally will be subject to a minimum one-year vesting
schedule; and (4) awards may be granted under the 2020 Plan until March 24, 2030.
The Company's 2017 Plan and 2020 Plan (Plans) provide for the issuance of stock options, stock appreciation rights, restricted
stock, performance shares, and performance-based cash awards that may be granted with the intent to comply with the
“performance-based compensation” exception under Section 162(m) of the Internal Revenue Code, and other stock-based
awards, all as defined by the Plans, to eligible employees, consultants and non-employee Directors. The Plans include Section
162(m) performance goals so that certain incentive awards granted to certain executive officers of the Company may qualify as
exempt performance-based compensation. However, Section 162(m) of the Internal Revenue Code updated in conjunction with
the 2017 Tax Act in November 2018 limits a publicly-held corporation’s federal tax deduction for compensation paid to
“covered employees” to $1.0 million per year, for non-performance and performance shares.
Restricted stock awards granted under the Company’s Plans entitle the holder to receive, at the end of a vesting period, a
specified number of shares of the Company’s common stock. Share-based compensation expense is measured by the market
value of the Company’s stock on the date of grant. The shares vest ratably over a three year period ending on the anniversary
date of the grant, and vesting is subject to the employee's continuing employment. There is no partial vesting and any unvested
portion is forfeited. Pursuant to the Plans, the number of target shares that are issued for performance-based stock awards are
determined based on the level of attainment of the targets.
The following table summarizes restricted stock awards and performance stock awards activity issued under the 2017 Plan and
the 2020 Plan for the year ended December 31, 2020:
Restricted Stock Awards
Performance Stock Awards
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Number of
Target
Shares
Weighted
Average
Grant Date
Fair Value
Unvested restricted stock awards, January 1, 2020
Granted
Vested
Forfeited
996,794 $
829,023 $
(404,478) $
(75,520) $
Unvested restricted stock awards, December 31, 2020
1,345,819 $
8.54
6.65
8.81
7.71
7.04
364,557 $
286,415 $
— $
(102,821) $
548,151 $
9.66
6.74
—
12.32
7.64
F- 37
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
15. Stockholders' Equity (continued)
Awards granted to non-employee directors under the 2017 Plan prior to the June 2020 grant vest in three equal installments on
the first, second and third anniversaries of the grant date, while restricted shares granted under the 2020 Plan in June 2020 will
vest on the first anniversary of such grant date, or earlier subject to retirement eligibility. In addition, effective in the three
months ended June 30, 2020, the Company implemented modified guidelines that provide for accelerated vesting of restricted
stock grants on the last date of service when a retirement-eligible director retires.
On March 31, 2020, 2019, and 2018, the Company awarded performance stock awards totaling 286,415, 192,939, and 238,328,
respectively. If the minimum level of performance is attained for the 2020, 2019, and 2018 awards, restricted stock will be
issued with a vesting date of March 31, 2023, 2022, and 2021, respectively. The level of attainment will be certified within 30
days of the vest date. During the first quarter of 2020, it was determined that the performance stock awards that were granted in
2017 were not earned and, accordingly, those shares were forfeited.
As of December 31, 2020, the Company had approximately $5.6 million of total unrecognized compensation cost related to
non-vested restricted stock awards which may be adjusted for future changes in forfeitures. The Company expects to recognize
such cost over a weighted average period of 1.72 years. The fair value of shares vested was approximately $2.7 million, $2.6
million, and $2.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.
As of December 31, 2020, the Company had approximately $1.1 million of total unrecognized compensation cost related to
performance stock awards which may be adjusted for future changes in forfeitures. The Company expects to recognize such
cost over a weighted average period of 1.57 years, the remaining service period. The fair value of shares vested was $0.5
million for the year ended December 31, 2018. No shares vested for the years ended December 31, 2020 and 2019.
During the years ended December 31, 2020, 2019, and 2018, the Company did not issue stock options or stock appreciation
rights. The following table represents information about stock options and stock appreciation rights exercised in each year.
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
Total intrinsic value of options exercised
$
1 $
130 $
234
The stock appreciation rights could only be settled with stock or cash, at the discretion of the Committee. The stock
appreciation rights vested 25% per year over a 4 year period and expired after 7 years. The Company’s policy was to issue new
shares from its authorized but unissued balance of common stock outstanding or shares of common stock reacquired by the
Company if stock appreciation rights were settled with stock.
The Company recorded compensation expense for stock options based on the estimated fair value of the options on the date of
grant using the Black-Scholes option-pricing model. Due to the adoption of the 2014 Plan (previously titled the 2007 Stock
Incentive Plan), no further grants have been issued under the Company’s 1999 Plans referred to below.
1999 Stock Option Plan and Equity Participation Plan
On December 16, 1999, the Company’s Board of Directors approved the 1999 Stock Option Plan and Equity Participation Plan
(collectively, the 1999 Plans), which was amended and restated on October 25, 2001 and provided for the issuance of ISOs and
non-qualified stock options to eligible employees and non-employee directors for the purchase of up to 4,398,001 shares of
common stock.
F- 38
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
15. Stockholders' Equity (continued)
The following table summarizes the Company’s activities with respect to all of its share option plans (issued under the 2014
Plan and the 1999 Plan) for the year ended December 31, 2020:
Share options outstanding, January 1, 2020
Granted
Exercised
Forfeited/expired
Share options outstanding and exercisable,
December 31, 2020
Number of
Shares
Option Price
8,000
—
(1,000)
(7,000)
5.21
—
$5.21
$5.21
—
$—
Weighted
Average
Exercise
Price
$5.21
—
$5.21
$5.21
$—
Weighted-
Average
Remaining
Contractual
Life (in
years)
Aggregate
Intrinsic
Value
(amounts
in
thousands)
— $
—
As of December 31, 2020, the Company did not have any share options outstanding.
F- 39
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
16. Earnings Per Share
The following table sets forth the components of the numerator and denominator for the computation of the basic and diluted
earnings per share:
Year Ended December 31,
2020
2019
2018
(amounts in thousands, except per share data)
Numerator:
Net loss attributable to common shareholders - Basic and Diluted
$
(12,962) $
(57,713) $
(16,951)
Denominator:
Weighted average common shares - Basic
36,088
35,815
35,657
Effective of diluted shares:
Share-based awards
Weighted average common shares - Diluted
—
36,088
—
35,815
—
35,657
Net loss per share attributable to common shareholders - Basic and Diluted
$
(0.36) $
(1.61) $
(0.48)
For the years 2020, 2019, and 2018, no tax benefits were assumed for the potentially dilutive shares due to the Company's net
operating loss position.
The following table represents the securities that could potentially dilute net income per share attributable to common
shareholders in the future that were not included in the computation of diluted net income per share attributable to common
shareholders because to do so would have been anti-dilutive for the periods presented.
Share-based awards
17. Related Party Transactions
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
663
335
373
Subsequent to the Company's acquisition of Mediscan on October 30, 2015, Mediscan continued to operate at premises owned,
in part, by the founding members of Mediscan. The Company paid $0.3 million in rent expense for these premises in 2018. In
the fourth quarter of 2018, the Company vacated the premises.
The Company had a 68% ownership interest in Cross Country Talent Acquisition Group, LLC, a joint venture between the
Company and a hospital system. The Company generated revenue providing staffing services to the hospital system of
$16.0 million, $25.0 million, and $19.4 million in 2020, 2019, and 2018, respectively. At December 31, 2020 and 2019, the
Company had a receivable balance of $1.7 million, and a payable balance of $0.2 million and $0.5 million, respectively.
Effective December 31, 2020, the sole professional staffing services agreement held by its joint venture was terminated. The
Company expects to dissolve Cross Country Talent Acquisition Group, LLC in the first quarter of 2021, at which time the
Company will enter into a direct staffing agreement with the hospital system.
The Company has entered into an arrangement for digital marketing services provided by a firm that is related to Mr. Clark, the
Company's Co-Founder and Chief Executive Officer. Mr. Clark is a minority shareholder in the firm's parent company and is a
member of the parent company's Board of Directors. Management believes the terms of the arrangement are equivalent to those
prevailing in an arm's-length transaction and have been approved by the Company through its related party process. The digital
marketing firm manages a limited number of digital publishers covering various Company brands for a monthly management
F- 40
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019
17. Related Party Transactions (continued)
fee. In 2020, the Company incurred $0.2 million in expenses related to these fees, and incurred an immaterial amount in
expenses in 2019. At December 31, 2020 and 2019, the Company had no payable balance due to this entity.
The Company provided services to entities which were affiliated with certain members of the Company’s Board of Directors
through 2019, which it believes were conducted on terms equivalent to those prevailing in an arm's-length transaction. Revenue
related to these transactions was immaterial in both 2019 and 2018. The Company had no accounts receivable due from these
entities at December 31, 2019.
In the first quarter of 2020, the Company entered into a note payable related to contingent consideration assumed as part of a
prior period acquisition. The payees of the note are controlled by an employee of the sellers who remained with the Company.
The note payable has a balance of $4.9 million at December 31, 2020. See Note 4 - Acquisitions.
18. Segment Data
In accordance with the Segment Reporting Topic of the FASB ASC, the Company reports three business segments – Nurse and
Allied Staffing, Physician Staffing, and Search. The Company manages and segments its business based on the services it offers
to its customers as described below:
•
•
•
Nurse and Allied Staffing - Nurse and Allied Staffing provides traditional staffing, recruiting, and value-added total
talent solutions, including: temporary and permanent placement of travel and local branch-based nurse and allied
professionals, MSP services, education healthcare services, and outsourcing services. Its clients include: public and
private acute-care and non-acute care hospitals, government facilities, public schools and charter schools, outpatient
clinics, ambulatory care facilities, physician practice groups, and many other healthcare providers throughout the U.S.
Physician Staffing - Physician Staffing provides physicians in many specialties, as well as certified registered nurse
anesthetists, nurse practitioners, and physician assistants as independent contractors on temporary assignments
throughout the U.S. at various healthcare facilities, such as acute and non-acute care facilities, medical group practices,
government facilities, and managed care organizations.
Search - Search includes retained and contingent search services for physicians, healthcare executives, and other
healthcare professionals, as well as recruitment process outsourcing.
The Company evaluates performance of each segment primarily based on revenue and contribution income. The Company
defines contribution income as income or loss from operations before depreciation and amortization, acquisition and
integration-related costs, restructuring costs, legal settlement charges, impairment charges, and corporate overhead.
Contribution income is a financial measure used by the Company when assessing segment performance and is provided in
accordance with the Segment Reporting Topic of the FASB ASC. The Company does not evaluate, manage, or measure
performance of segments using asset information; accordingly, total asset information by segment is not prepared or disclosed.
The information in the following table is derived from the segments’ internal financial information as used for corporate
management purposes. Certain corporate expenses are not allocated to and/or among the operating segments.
F- 41
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
18. Segment Data (continued)
Information on operating segments and a reconciliation to loss from operations for the periods indicated are as follows:
Revenues from services:
Nurse and Allied Staffing
Physician Staffing
Search
Contribution income (loss):
Nurse and Allied Staffing
Physician Staffing
Search
Corporate overhead(a)
Depreciation and amortization
Acquisition and integration-related costs
Restructuring costs
Legal settlement charges
Impairment charges
Loss from operations
_______________
$
$
$
Year Ended December 31,
2020
2019
2018
(amounts in thousands)
757,949 $
732,815 $
718,613
67,934
10,534
74,605
14,804
82,305
15,566
836,417 $
822,224 $
816,484
75,293 $
64,353 $
3,619
(1,124)
77,788
2,758
(823)
66,288
51,900
12,671
77
6,052
—
16,248
46,246
14,075
201
3,571
1,600
16,306
66,200
4,755
763
71,718
44,589
11,780
3,048
2,758
—
22,423
(12,880)
$
(9,160) $
(15,711) $
(a) Corporate overhead includes unallocated executive leadership and other centralized corporate functional support costs such
as finance, IT, legal, human resources, and marketing, as well as public company expenses and corporate-wide projects
(initiatives).
In the second quarter of 2019, the Company merged its permanent search recruitment brands. As a result, for the year ended
December 31, 2018 $1.7 million of revenue and $0.2 million of contribution income were reclassified from Nurse and Allied
Staffing to Search to conform to the current period presentation.
F- 42
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
19. Quarterly Financial Data (Unaudited)
The following tables contain selected unaudited statements of operations information for each quarter of 2020 and 2019. The
following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the
periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2020
Revenue from services
Gross profit(a)
Consolidated net (loss) income
Net (loss) income attributable to common shareholders
Net (loss) income per share attributable to common shareholders - Basic and Diluted(b)
2019
Revenue from services
Gross profit(a)
Consolidated net loss
Net loss attributable to common shareholders
Net loss per share attributable to common shareholders - Basic and Diluted(b)
________________
(amounts in thousands, except per share data)
$ 210,064 $ 216,779 $ 193,968 $ 215,606
54,392
4,822
4,612
0.13
49,603
(1,768)
(2,089)
(0.06) $
48,003
(1,148)
(1,334)
(0.04) $
50,734
(14,048)
(14,151)
(0.39) $
$
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(amounts in thousands, except per share data)
$ 195,171 $ 202,757 $ 209,200 $ 215,096
53,161
(600)
(1,144)
(0.03)
48,254
(1,376)
(1,767)
(0.05) $
51,006
(2,697)
(3,128)
(0.09) $
51,588
(51,270)
(51,674)
(1.44) $
$
(a) Excludes depreciation and amortization.
(b) The sum of the quarterly per share amounts may not equal amounts reported for year-to-date due to the effects of rounding
and changes in the number of weighted average shares outstanding used in the calculation.
The following items are the most significant items that impact the comparability and presentation of our consolidated data:
•
•
•
•
During the second and third quarters of 2020, the Company recorded impairment charges of $10.5 million and
$0.2 million, respectively, related to goodwill and other intangible assets of the Search business, and during the
second and third quarters, recorded $4.5 million and $0.9 million, respectively, related to ceasing use of certain
leased properties. During the second and third quarters of 2019, the Company recorded non-cash impairment
charges of $14.5 million related to the trade names of Nurse and Allied Staffing, and $1.8 million related to ceasing
use of certain leased properties, respectively. See Note 5 - Goodwill, Trade Names, and Other Intangible Assets.
During the year ended December 31, 2019, the Company accelerated certain finite-lived trade names as part of a
rebranding strategy. This resulted in additional amortization expense related to the Company's Nurse and Allied
Staffing segment in the fourth quarter of $2.0 million, and in the second and third quarters, $0.5 million and $0.3
million, respectively, related to the Physician Staffing segment. Additional amortization expense of $0.7 million,
$1.4 million, and $0.9 million, respectively, related to the Nurse and Allied Staffing segment was recorded in the
first three quarters of 2020.
The Company incurred restructuring costs primarily comprised of employee termination costs, lease-related exit
costs, and reorganization costs as part of planned cost savings initiatives. In the first quarter of 2020, the Company
recorded expenses of $0.6 million, recorded expenses in the second and third quarters of $2.3 million, and recorded
expenses of $0.9 million in the fourth quarter. The Company recorded expenses of $1.2 million, $1.6 million, and
$0.7 million, respectively, in the first, third, and fourth quarters of 2019.
During the second, third, and fourth quarters of 2020, the Company recorded legal fees related to an ongoing legal
matter outside the normal course of operations of $1.6 million, $0.8 million, and $0.6 million, respectively. During
the second quarter of 2019, the Company recorded $1.6 million in legal settlement charges related to the resolution
of a medical malpractice lawsuit and settlement of a wage and hour class action lawsuit.
F- 43
CROSS COUNTRY HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
19. Quarterly Financial Data (Unaudited) (continued)
•
•
•
•
During the fourth quarter of 2019, the Company wrote off debt issuance costs related to a reduction in borrowing
capacity on its prior revolving credit facility and recognized a loss on early extinguishment of debt related to its
refinancing of $1.5 million. See Note 8 - Debt.
The Company incurred applicant tracking system expenses related to its project to replace its legacy system
supporting its travel nurse staffing business. In the first quarter of 2020, the Company recorded costs of $0.5 million,
recorded costs in the second and third quarters of $0.4 million, and recorded costs of $0.7 million in the fourth
quarter. In the first quarter of 2019, the Company recorded expenses of $1.1 million, and recorded costs in each of
the remaining three quarters of $0.3 million.
Income tax expense recorded in the second quarter of 2019 includes $35.8 million of expense related to the
establishment of valuation allowances on the Company's deferred tax assets. See Note 14 - Income Taxes.
The Company terminated an interest rate hedge related to its Term Loan, recording a loss in the third quarter of 2019
of $1.3 million. See Note 9 - Derivative.
F- 44
CROSS COUNTRY HEALTHCARE, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019, AND 2018
Schedule II
Balance at
Beginning
of Period
Charged to
Operations
Write-Offs,
Net of
Recoveries
Other
Changes
Balance at
End
of Period
(amounts in thousands)
$
$
$
$
$
$
3,219
3,705
3,688
37,345
1,189
1,076
$
$
$
$
$
$
4,269
3,243
5,974
118
36,224
113
$
$
$
$
$
$
(3,467) (a) $
(3,729) (a) $
(5,957) (a) $
—
—
—
$
$
$
—
—
—
9
(68)
—
$
$
$
$
$
$
4,021
3,219
3,705
37,472
37,345
1,189
Allowances for Accounts Receivable
Year Ended December 31, 2020
Year Ended December 31, 2019
Year Ended December 31, 2018
Valuation Allowance for Deferred Tax
Assets
Year Ended December 31, 2020
Year Ended December 31, 2019
Year Ended December 31, 2018
________________
(a) Uncollectible accounts written off, net of recoveries.
II- 1
LIST OF SUBSIDIARIES
Exhibit 21.1
Subsidiary
Assignment America, LLC
Cejka Search, Inc.
Credent Verification and Licensing Services, LLC
Cross Country Holdco (Cyprus) Limited
Cross Country Infotech, Pvt. Ltd.
Cross Country Staffing, Inc.
Cross Country Talent Acquisition Group, LLC*
MDA Holdings, Inc.
Medical Doctor Associates, LLC
New Mediscan II, LLC
OWS, LLC
Travel Staff, LLC
* Majority-owned joint venture
Place of Incorporation
Delaware
Delaware
Delaware
Cyprus
India
Delaware
Delaware
Delaware
Delaware
California
Delaware
Delaware
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
We consent to the incorporation by reference in Registration Statement Nos. 333-145484, 333-188519, 333-196639,
333-218557 and 333-238719 on Form S-8 of our report dated February 25, 2021, relating to the consolidated financial
statements of Cross Country Healthcare, Inc. and subsidiaries, and the effectiveness of Cross Country Healthcare, Inc. and
subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Cross Country
Healthcare, Inc. for the year ended December 31, 2020.
/s/ Deloitte & Touche LLP
Boca Raton, Florida
February 25, 2021
I, Kevin C. Clark, certify that:
CERTIFICATION
Exhibit 31.1
1.
I have reviewed this annual report on Form 10-K of Cross Country Healthcare, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 25, 2021
/s/ Kevin C. Clark
Kevin C. Clark
Co-Founder & Chief Executive Officer
(Principal Executive Officer)
I, William J. Burns, certify that:
CERTIFICATION
Exhibit 31.2
1.
I have reviewed this annual report on Form 10-K of Cross Country Healthcare, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 25, 2021
/s/ William J. Burns
William J. Burns
Executive Vice President & Chief Financial Officer
(Principal Accounting and Financial Officer)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Annual Report on Form 10-K of Cross Country Healthcare, Inc. (the Company)
for the year ended December 31, 2020, (the "Periodic Report"), I, Kevin C. Clark, Co-Founder and Chief Executive Officer of
the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that to my knowledge the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that the information contained in the Periodic Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Exhibit 32.1
Date: February 25, 2021
/s/ Kevin C. Clark
Kevin C. Clark
Co-Founder, Chief Executive Officer
(Principal Executive Officer)
The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the
Sarbanes-Oxley Act of 2002.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Annual Report on Form 10-K of Cross Country Healthcare, Inc. (the
"Company") for the year ended December 31, 2020, (the "Periodic Report"), I, William J. Burns, Executive Vice President and
Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to my knowledge the Periodic Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Periodic Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Exhibit 32.2
Date: February 25, 2021
/s/ William J. Burns
William J. Burns
Executive Vice President, Chief Financial Officer
(Principal Accounting and Financial Officer)
The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the
Sarbanes-Oxley Act of 2002.
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BOARD OF DIRECTORS
W. Larry Cash (a)(b)(c)
Retired President,
Financial Services and
Chief Financial Officer
Community Health
Systems
Kevin C. Clark
Co-Founder and
Chief Executive Officer
Cross Country
Healthcare, Inc.
Thomas C. Dircks (d)
Managing Director
Charterhouse Strategic
Partners
Gale Fitzgerald (a)(e)
Retired Principal
TranSpend, Inc.
Darrell S. Freeman,
Sr. (a)(b)
Executive Managing
Director
Zycron
Janice E. Nevin,
M.D., MPH (a)
President and Chief
Executive Officer
ChristianaCare
Health System
Mark Perlberg, JD (b)(e)
Managing Director
Nautic Partners
Joseph A. Trunfio,
PhD (b)(e)
Retired President and
Chief Executive Officer
Atlantic Health System
CORPORATE HEADQUARTERS
Cross Country Healthcare, Inc.
6551 Park of Commerce Blvd.
Boca Raton, FL 33487
Phone: (561) 998-2232 | CrossCountryHealthcare.com
CORPORATE GOVERNANCE
Information concerning our corporate governance practices, including
our Code of Conduct, Code of Ethics, Committee Charters, and
Certification of Financial Statements, is available on our corporate
website at crosscountryhealthcare.com. We also have established
a toll-free phone number and an email address for stockholders to
communicate with our Board of Directors. All such communications will
be forwarded directly to the appropriate party, as applicable.
GOVERNANCE HOTLINE: (800) 354-7197
GOVERNANCE EMAIL: governance@crosscountry.com
FORWARD-LOOKING STATEMENTS
Information concerning forward-looking statements can be found on
page 1 of our Annual Report on Form 10-K for the year ended December
31, 2020, as well as in quarterly and other reports to be filed by us.
STOCKHOLDER INQUIRIES
News releases, U.S. Securities and Exchange Commission (SEC)
filings, annual reports, corporate governance matters and additional
information about Cross Country Healthcare are available on our
corporate investor relations website: ir.crosscountryhealthcare.com at
no cost. Certain exhibits in our Form 10-K for the year ended December
31, 2020 are not included as part of this Annual Report but can be
obtained by referencing this website or the sec.gov website. Current
and prospective investors can also register to automatically receive
our press releases, SEC filings and other notices by email. Information
about the Company can also be obtained by writing or contacting:
William J. Burns, Executive Vice President and Chief Financial Officer
Phone: (561) 237-2555 | (800) 347-2264 | Email: ir@crosscountry.com
EXECUTIVES
Kevin C. Clark
Co-Founder and Chief Executive Officer
Cross Country Healthcare, Inc.
William J. Burns, MBA, CPA
Executive Vice President, Chief Financial Officer
and Principal Accounting Officer
Cross Country Healthcare, Inc.
Daniele Addis, MBA
Senior Vice President, Business Services
Cross Country Healthcare, Inc.
Susan E. Ball, JD, MBA, RN
Executive Vice President, Chief Administrative Officer and
General Counsel and Secretary
Cross Country Healthcare, Inc.
Douglas Bohrer
Senior Vice President, Business Strategy and Process Optimization
Cross Country Healthcare, Inc.
William G. Halnon
Chief Information Officer
Cross Country Healthcare, Inc.
Marc Krug
Division President, Nurse and Allied
Cross Country Healthcare, Inc.
Colin P. McDonald, MS
Senior Vice President, Human Resources
Cross Country Healthcare, Inc.
John Martins
Group President, Nurse and Allied Operations
Cross Country Healthcare, Inc.
Karen Mote
Division President, Locum Tenens
Cross Country Locums
Gerald Purgay
Chief Marketing Officer
Cross Country Healthcare, Inc.
Stephen A. Saville, JD
Group President, Locums, Education and Corporate Development
Cross Country Healthcare, Inc.
Mihal Spiegel
Division President, Education
Cross Country Education
Buffy S. White
Group President, Workforce Solutions
Cross Country Healthcare, Inc.
TRANSFER AGENT
Regular Mail:
Computershare
P.O. Box 50500
Louisville, KY 40233
Phone: (877) 219-7066
Overnight Courier Services:
Computershare
462 South 4th Street
Suite 1600
Louisville, KY 40202
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
1800 North Military Trail, Suite 200
Boca Raton, FL 33431
STOCK LISTINGS
Our common stock trades under the symbol “CCRN” on the Nasdaq
Global Select Market, a market tier of the Nasdaq Stock Market®. Our
common stock commenced trading on the Nasdaq National Market on
October 25, 2001.
(a) Member of the Audit Committee (b) Member of the Compensation Committee (c) Lead Director (d) Chairman of the Board (e) Member of the Governance & Nominating Committee
6551 Park of Commerce Blvd. | Boca Raton, FL 33487
(800) 347-2264 | CrossCountryHealthcare.com