Company Quick10K Filing
Cross Country Healthcare
Price10.64 EPS-2
Shares36 P/E-5
MCap382 P/FCF35
Net Debt61 EBIT-39
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-06
10-K 2020-12-31 Filed 2021-02-25
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8-K 2018-01-25

CCRN 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 ccrn20210331-10qex31x1.htm
EX-31.2 ccrn20210331-10qex31x2.htm
EX-32.1 ccrn20210331-10qex32x1.htm
EX-32.2 ccrn20210331-10qex32x2.htm

Cross Country Healthcare Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin


Washington, DC 20549
 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2021
 Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From _________ to _________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
Incorporation or organization)
file number
(I.R.S. Employer
Identification Number)
6551 Park of Commerce Boulevard, N.W.
Boca Raton, Florida 33487
(Address of principal executive offices)(Zip Code)
(561) 998-2232
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, par value $0.0001 per shareCCRNThe Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 every Interactive Data File required to be submitted 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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
The registrant had outstanding 37,668,729 shares of common stock, par value $0.0001 per share, as of April 30, 2021.

In addition to historical information, this Form 10-Q 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. Forward-looking statements consist of statements that are predictive in nature, depend upon or refer to future events. 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. These factors include, but are not limited to, the following: the potential impacts of the coronavirus pandemic (COVID-19) on our business, financial condition, and results of operations, our ability to attract and retain qualified nurses, physicians and other healthcare personnel, costs and availability of short-term housing for our travel healthcare professionals, demand for the healthcare services we provide, both nationally and in the regions in which we operate, the functioning of our information systems, the effect of cyber security risks and cyber incidents on our business, the effect of existing or future government regulation and federal and state legislative and enforcement initiatives on our business, our clients’ ability to pay us for our services, our ability to successfully implement our acquisition and development strategies, including our ability to successfully integrate acquired businesses and realize synergies from such acquisitions, the effect of liabilities and other claims asserted against us, the effect of competition in the markets we serve, our ability to successfully defend the Company, its subsidiaries, and its officers and directors on the merits of any lawsuit or determine its potential liability, if any, and other factors set forth in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed and updated in our Quarterly Reports on Form 10-Q and other filings 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.
All references to "the Company", “we”, “us”, “our”, or “Cross Country” in this Quarterly Report on Form 10-Q mean Cross Country Healthcare, Inc., and its consolidated subsidiaries.

March 31, 2021
Item 6.




(Unaudited, amounts in thousands)

 March 31,
December 31,
Current assets:  
Cash and cash equivalents$13,488 $1,600 
Accounts receivable, net of allowances of $3,934 in 2021 and $4,021 in 2020
245,489 170,003 
Prepaid expenses5,430 5,455 
Insurance recovery receivable4,752 4,698 
Other current assets575 1,355 
Total current assets269,734 183,111 
Property and equipment, net of accumulated depreciation of $17,774 in 2021 and $17,013 in 2020
13,026 12,351 
Operating lease right-of-use assets9,835 10,447 
Goodwill90,924 90,924 
Trade names, indefinite-lived5,900 5,900 
Other intangible assets, net33,341 34,831 
Other non-current assets19,593 19,409 
Total assets$442,353 $356,973 
Liabilities and Stockholders' Equity
Current liabilities:  
Accounts payable and accrued expenses$59,797 $49,877 
Accrued compensation and benefits53,383 35,540 
Operating lease liabilities - current4,803 4,509 
Other current liabilities3,677 3,497 
Total current liabilities121,660 93,423 
Revolving credit facility96,025 53,408 
Operating lease liabilities - non-current13,978 15,234 
Non-current deferred tax liabilities6,858 6,592 
Long-term accrued claims24,624 25,412 
Other long-term liabilities5,534 7,995 
Total liabilities268,679 202,064 
Commitments and contingencies
Stockholders' equity:  
Common stock4 4 
Additional paid-in capital309,711 310,388 
Accumulated other comprehensive loss(1,286)(1,280)
Accumulated deficit(135,289)(154,737)
Total Cross Country Healthcare, Inc. stockholders' equity173,140 154,375 
Noncontrolling interest in subsidiary534 534 
Total stockholders' equity173,674 154,909 
Total liabilities and stockholders' equity$442,353 $356,973 

See accompanying notes to the condensed consolidated financial statements

(Unaudited, amounts in thousands, except per share data)

 Three Months Ended
 March 31,
Revenue from services$329,241 $210,064 
Operating expenses: 
Direct operating expenses257,776 160,461 
Selling, general and administrative expenses46,327 45,881 
Bad debt expense504 539 
Depreciation and amortization2,253 3,296 
Acquisition and integration-related costs 77 
Restructuring costs1,238 564 
Impairment charges149  
Total operating expenses308,247 210,818 
Income (loss) from operations20,994 (754)
Other expenses (income): 
Interest expense671 867 
Other income, net(37)(31)
Income (loss) before income taxes20,360 (1,590)
Income tax expense912 178 
Consolidated net income (loss)19,448 (1,768)
Less: Net income attributable to noncontrolling interest in subsidiary
Net income (loss) attributable to common shareholders$19,448 $(2,089)
Net income (loss) per share attributable to common shareholders - Basic$0.54 $(0.06)
Net income (loss) per share attributable to common shareholders - Diluted$0.53 $(0.06)
Weighted average common shares outstanding: 
Basic36,181 35,873 
Diluted37,034 35,873 

See accompanying notes to the condensed consolidated financial statements

(Unaudited, amounts in thousands)

Three Months Ended
 March 31,
Consolidated net income (loss)$19,448 $(1,768)
Other comprehensive loss, before income tax: 
Unrealized foreign currency translation loss(6)(78)
Taxes on other comprehensive loss:
Income tax effect related to unrealized foreign currency translation loss  
Other comprehensive loss, net of tax(6)(78)
Comprehensive income (loss)19,442 (1,846)
Less: Net income attributable to noncontrolling interest in subsidiary 321 
Comprehensive income (loss) attributable to common shareholders$19,442 $(2,167)

See accompanying notes to the condensed consolidated financial statements

Three Months Ended March 31, 2021 and 2020
(Unaudited, amounts in thousands)

 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
Balances at December 31, 202036,177 $4 $310,388 $(1,280)$(154,737)$534 $154,909 
Vesting of restricted stock318 — (2,026)— — — (2,026)
Equity compensation— — 1,349 — — — 1,349 
Foreign currency translation adjustment, net of taxes— — — (6)— — (6)
Net income— — — — 19,448  19,448 
Balances at March 31, 202136,495 $4 $309,711 $(1,286)$(135,289)$534 $173,674 
 Common StockAdditional
Paid-In Capital
Accumulated Other
Comprehensive Loss, net
(Accumulated Deficit) Retained EarningsNoncontrolling Interest in SubsidiaryStockholders’ Equity
Balances at December 31, 201935,871 $4 $305,643 $(1,240)$(141,775)$868 $163,500 
Vesting of restricted stock221 — (635)— — — (635)
Equity compensation— — 927 — — — 927 
Foreign currency translation adjustment, net of taxes— — — (78)— — (78)
Distribution to noncontrolling shareholder— — — — — (544)(544)
Net (loss) income— — — — (2,089)321 (1,768)
Balances at March 31, 202036,092 $4 $305,935 $(1,318)$(143,864)$645 $161,402 

See accompanying notes to the condensed consolidated financial statements

(Unaudited, amounts in thousands)

 Three Months Ended
 March 31,
Cash flows from operating activities  
Consolidated net income (loss)$19,448 $(1,768)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization2,253 3,296 
Provision for allowances1,095 881 
Non-cash lease expense622 1,191 
Equity compensation1,349 927 
Other non-cash costs629 174 
Changes in operating assets and liabilities:
Accounts receivable(76,581)3,846 
Prepaid expenses and other assets568 (736)
Accounts payable and accrued expenses26,507 11,066 
Operating lease liabilities(1,115)(1,467)
Other298 (248)
Net cash (used in) provided by operating activities(24,927)17,162 
Cash flows from investing activities  
Purchases of property and equipment(1,186)(962)
Net cash used in investing activities(1,186)(962)
Cash flows from financing activities  
Borrowings under revolving credit facility148,016 107,274 
Repayments on revolving credit facility(105,400)(110,600)
Cash paid for shares withheld for taxes(2,026)(635)
Principal payments on note payable(2,425) 
Cash payments to noncontrolling shareholder (544)
Net cash provided by (used in) financing activities38,004 (4,599)
Effect of exchange rate changes on cash(3)(34)
Change in cash and cash equivalents11,888 11,567 
Cash and cash equivalents at beginning of period1,600 1,032 
Cash and cash equivalents at end of period$13,488 $12,599 

See accompanying notes to the condensed consolidated financial statements



Nature of Business

The accompanying condensed consolidated financial statements include the accounts of Cross Country Healthcare, Inc. and its direct and indirect wholly-owned subsidiaries (collectively, the Company), as well as Cross Country Talent Acquisition Group, LLC, which was a joint venture controlled by the Company but not wholly-owned. Effective December 31, 2020, the sole professional staffing services agreement held by this joint venture was terminated and, as a result, the Company expects to dissolve Cross Country Talent Acquisition Group, LLC during fiscal 2021. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. These adjustments consisted of all normal recurring items.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by United States generally accepted accounting principles (U.S. GAAP) for complete financial statements. These operating results are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K as filed with the SEC on February 25, 2021 (2020 Form 10-K). The December 31, 2020 condensed consolidated balance sheet included herein was derived from the December 31, 2020 audited consolidated balance sheet included in the 2020 Form 10-K.

Certain prior year amounts have been reclassified to conform to the current year presentation. See condensed consolidated statements of cash flows, Note 3 - Revenue Recognition, and Note 11 - Segment Data.


Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed 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: (1) the valuation of accounts receivable; (2) goodwill, trade names, and other intangible assets; (3) other long-lived assets; (4) share-based compensation; (5) accruals for health, workers’ compensation, and professional liability claims; (6) valuation of deferred tax assets; (7) legal contingencies; (8) income taxes; and (9) 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.

Accounts Receivable, net

The timing of revenue recognition, billings, and collections results in billed and unbilled accounts receivable from customers which are classified as accounts receivable on the condensed consolidated balance sheets and are presented net of allowances for doubtful accounts and sales allowances. Estimated revenue for the Company employees', subcontracted employees', and independent contractors’ time worked but not yet billed at March 31, 2021 and December 31, 2020 totaled $92.2 million and $48.3 million, respectively.

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 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 opening balance of the allowance for doubtful accounts is reconciled to the closing balance for expected credit losses as follows:
Three Months Ended
March 31,
Allowance for Doubtful Accounts(amounts in thousands)
Balance at beginning of period$3,416 $2,406 
Bad Debt Expense504 539 
Write-Offs, net of Recoveries(699)(349)
Balance at end of period3,221 2,596 

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 of business and adjustments to the reserve are recorded as contra-revenue. The balance of this allowance as of March 31, 2021 and December 31, 2020 was $0.7 million and $0.6 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 revenue for the three months ended March 31, 2021 and 2020, or the accounts receivable balance as of December 31, 2020. However, one Nurse and Allied Staffing customer represented approximately 12% of the Company's accounts receivable balance as of March 31, 2021.

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 on the condensed consolidated statements of operations primarily include employee termination costs and lease-related exit costs.

Reconciliation of the employee termination costs and lease-related exit costs beginning and ending liability balance is presented below:
Employee Termination CostsLease-Related Exit Costs
(amounts in thousands)
Balance at January 1, 2021$499 $2,687 
Charged to restructuring costs (a)
824 46 
Balance at March 31, 2021979 2,526 
(a) Aside from what is presented in the table above, restructuring costs in the condensed consolidated statements of operations for the three months ended March 31, 2021 include $0.4 million 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 condensed consolidated balance sheets. Other costs were immaterial for the three months ended March 31, 2021.


Recently Adopted Accounting Pronouncements

Effective January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The guidance requires either a prospective, retrospective, or modified retrospective approach depending on the amendment. The Company prospectively adopted this guidance with no material impact on its consolidated financial statements.

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. Sales and usage-based taxes are excluded from revenue.
Three Months ended March 31, 2021
And Allied
Total Segments
(amounts in thousands)
Temporary Staffing Services$305,975 $15,406 $321,381 
Other Services7,033 827 7,860 
Total$313,008 $16,233 $329,241 
Three Months ended March 31, 2020
And Allied
Total Segments
(amounts in thousands)
Temporary Staffing Services$184,949 $17,160 $202,109 
Other Services6,934 1,021 7,955 
Total$191,883 $18,181 $210,064 
In the first quarter of 2021, the Company modified its reportable segments and, as a result, will disclose the following two reportable segments - Nurse and Allied Staffing and Physician Staffing beginning in the first quarter of 2021. Other Services in the amount of $3.6 million included in the previously-reported Search segment have been reclassified to Nurse and Allied Staffing for the three months ended March 31, 2020. See Note 11 - Segment Data.

Total comprehensive income (loss) includes net income or loss and foreign currency translation adjustments, net of any related deferred taxes. 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 condensed consolidated balance sheets and was an unrealized loss of $1.3 million at March 31, 2021 and December 31, 2020.
The income tax impact related to components of other comprehensive income (loss) for the three months ended March 31, 2021 and 2020 is reflected in the condensed consolidated statements of comprehensive income (loss).



The following table sets forth the components of the numerator and denominator for the computation of the basic and diluted earnings per share:
Three Months Ended
March 31,
(amounts in thousands, except per share data)
Net income (loss) attributable to common shareholders - Basic and Diluted$19,448 $(2,089)
Weighted average common shares - Basic36,181 35,873 
Effect of diluted shares:
     Share-based awards (a)
Weighted average common shares - Diluted37,034 35,873 
Net income (loss) per share attributable to common shareholders - Basic$0.54 $(0.06)
Net income (loss) per share attributable to common shareholders - Diluted$0.53 $(0.06)
(a) Due to the net loss for the three months ended March 31, 2020, 454,920 shares were excluded from diluted weighted average shares due to their anti-dilutive effect.



The Company had the following acquired intangible assets:
 March 31, 2021December 31, 2020
(amounts in thousands)
Intangible assets subject to amortization:      
Databases$30,530 $16,085 $14,445 $30,530 $15,322 $15,208 
Customer relationships33,538 14,719 18,819 33,538 14,007 19,531 
Non-compete agreements304 227 77 304 212 92 
Trade names      
Other intangible assets, net$64,372 $31,031 $33,341 $64,372 $29,541 $34,831 
Intangible assets not subject to amortization:      
Trade names, indefinite-lived  $5,900   $5,900 

As of March 31, 2021, estimated annual amortization expense is as follows:
Years Ending December 31:(amounts in thousands)


The changes in the carrying amount of goodwill by reportable segment are as follows:
 Nurse and
Allied Staffing
(amounts in thousands)
Balances as of December 31, 2020
Aggregate goodwill acquired$367,880 $43,405 $411,285 
Sale of business(9,889) (9,889)
Accumulated impairment loss(269,874)(40,598)(310,472)
Goodwill, net of impairment loss88,117 2,807 90,924 
Balances as of March 31, 2021
Aggregate goodwill acquired367,880 43,405 411,285 
Sale of business(9,889) (9,889)
Accumulated impairment loss(269,874)(40,598)(310,472)
Goodwill, net of impairment loss$88,117 $2,807 $90,924 
In the first quarter of 2021, the Company modified its reportable segments and, as a result, now discloses the following two reportable segments - Nurse and Allied Staffing and Physician Staffing. In the table above, goodwill balances and activity previously reported in the Search segment have been reclassified to Nurse and Allied Staffing.

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.

As of March 31, 2021, the Company performed a qualitative assessment of each of its reporting units and determined it was not more likely than not that the fair value of its reporting units dropped below their carrying value. 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 March 31, 2021 will prove to be accurate predictions of future performance.

For its long-lived assets and definite-lived intangible assets, the Company reviews for impairment whenever events or changes
in circumstances indicate the carrying amount may not be recoverable. During the three months ended March 31, 2021, the Company wrote off a discontinued software development project, resulting in an immaterial impairment charge.

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 recognized accelerated amortization related to the trade name of $2.9 million throughout 2020. Total accelerated amortization resulting from the changes in the estimated remaining life of the trade name was $0.7 million, or $0.02 per share for the three months ended March 31, 2020.

7.    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 and entered into an ABL Credit Agreement (Loan Agreement). The Loan Agreement provides 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 (First Amendment), 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 remained the same.
On March 8, 2021, the Company amended its Loan Agreement (Second Amendment), which increased the current aggregate committed size of the ABL from $130.0 million to $150.0 million, increased certain borrowing base sub-limits, and decreased both the cash dominion event and financial reporting triggers. These amendments were treated as modifications 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. At March 31, 2021, availability under the ABL was $150.0 million and the Company had $96.0 million of borrowings drawn, as well as $18.5 million of letters of credit outstanding related to workers' compensation and professional liability policies, leaving $35.5 million available for borrowing. The balances drawn are presented as revolving credit facility on the condensed consolidated balance sheets and as of March 31, 2021 and December 31, 2020 had a weighted average interest rate of 2.46% and 2.73%, respectively.
As of March 31, 2021, 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 March 31, 2021. Obligations under the ABL are secured by substantially all the assets of the borrowers and guarantors, subject to customary exceptions.
Note Payable
In the first quarter of 2020, the Company entered into a note payable of $7.3 million related to contingent consideration assumed as part of a prior period acquisition, payable in three installments. The second installment of $2.4 million was paid in the first quarter of 2021, leaving a note payable balance of $2.5 million at March 31, 2021 which is included in other current liabilities on the condensed consolidated balance sheets.

8.    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 a lessee that may include options to extend or terminate early. Some 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.

Beginning in the second quarter of 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 table below presents the lease-related assets and liabilities included on the condensed consolidated balance sheets:
Classification on Condensed Consolidated Balance Sheets:March 31, 2021December 31, 2020
(amounts in thousands)
Operating lease right-of-use assets$9,835 $10,447 
Operating lease liabilities - current$4,803 $4,509 
Operating lease liabilities - non-current$13,978 $15,234 

March 31, 2021December 31, 2020
Weighted-average remaining lease term3.9 years4.1 years
Weighted average discount rate6.36 %6.32 %

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 on the condensed consolidated balance sheets as of March 31, 2021:
Years Ending December 31:(amounts in thousands)
Total minimum lease payments21,245 
Less: amount of lease payments representing interest(2,464)
Present value of future minimum lease payments18,781 
Less: operating lease liabilities - current(4,803)
Operating lease liabilities - non-current$13,978 

Other Information

The table below provides information regarding supplemental cash flows:
Three Months Ended
March 31,
(amounts in thousands)
Supplemental Cash Flow Information:
Cash paid for amounts included in the measurement of operating lease liabilities$1,637 $1,835 
Right-of-use assets acquired under operating lease$ $500 

The components of lease expense are as follows:
Three Months Ended
March 31,
(amounts in thousands)
Amounts Included in Condensed Consolidated Statements of Operations:
Operating lease expense$914 $1,523 
Short-term lease expense$849 $1,845 
Variable and other lease costs$468 $574 


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 condensed 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 March 31, 2021, 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.

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 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; and (ii) deferred compensation liability included in other long-term liabilities.

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.

The estimated fair value of the Company’s financial assets and liabilities measured on a recurring basis is as follows: 
Fair Value Measurements
 March 31, 2021December 31, 2020
(amounts in thousands)
Financial Assets:
(Level 1)
Deferred compensation asset$1,204 $1,156 
Financial Liabilities:
(Level 1)  
Deferred compensation liability$2,553 $2,475 

Items Measured at Fair Value on a Non-Recurring Basis:

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.


Other Fair Value Disclosures:
Financial instruments not measured or recorded at fair value in the condensed 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 paid the second installment on its note payable in the first quarter of 2021. The remaining balance is included in other current liabilities on the condensed 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.

The carrying amounts and estimated fair value of the Company’s significant financial instruments that were not measured at fair value are as follows:
 March 31, 2021December 31, 2020
Financial Liabilities:(amounts in thousands)
(Level 2)    
Note Payable$2,426 $2,426 $4,851 $4,851 
Senior Secured Asset-Based Loan$96,025 $96,025 $53,408 $53,408 

Concentration of Credit 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.

Stock Repurchase Program
During the three months ended March 31, 2021 and 2020, the Company did not repurchase any shares of its common stock. As of March 31, 2021, the Company has 510,004 shares of common stock under the current share repurchase program available to repurchase, subject to certain conditions in the Company's 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 following table summarizes restricted stock awards and performance stock awards activity issued under the 2017 Plan and the 2020 Plan (Plans) for the three months ended March 31, 2021:
Restricted Stock AwardsPerformance Stock Awards
 Number of
Grant Date
Fair Value
Number of Target
Grant Date
Fair Value
Unvested restricted stock awards, January 1, 20211,345,819 $7.04 548,151 $7.64 
Granted384,871 $12.49 160,416 $12.49 
Vested(479,793)$7.34  $ 
Forfeited(37,814)$6.95 (125,523)$10.24 
Unvested restricted stock awards, March 31, 20211,213,083 $8.65 583,044 $8.41 

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.

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 on and subsequent to 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.

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. In the first quarter of 2021, it was determined that the performance stock awards that were granted in 2018 were not earned and, accordingly, those shares were forfeited.

During the three months ended March 31, 2021, $1.3 million was included in selling, general and administrative expenses related to share-based payments, and a net of 317,605 shares of common stock were issued upon the vesting of restricted stock.

During the three months ended March 31, 2020, $0.9 million was included in selling, general and administrative expenses related to share-based payments, and a net of 221,492 shares of common stock were issued upon the vesting of restricted stock.


In the first quarter of 2021, the Company modified its disclosures of reportable segments to better align with its management structure and to reflect how the operating results are regularly reviewed by the chief operating decision maker. As a result, the two reportable segments now are Nurse and Allied Staffing and Physician Staffing, and the results of the Search segment have been consolidated within Nurse and Allied Staffing for all periods presented. The Company’s segments offer services 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, managed services programs (MSP) services, education healthcare services, and outsourcing services. In addition, Nurse and Allied Staffing provides retained search services for healthcare professionals, as well as contingent search and recruitment process 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 United States.

●    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 United States at various healthcare facilities, such as acute and non-acute care facilities, medical group practices, government facilities, and managed care organizations.

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.

Information on operating segments and a reconciliation to income (loss) from operations for the periods indicated are as follows:
Three Months Ended
March 31,
 (amounts in thousands)
Revenue from services:  
Nurse and Allied Staffing$313,008 $191,883 
Physician Staffing16,233 18,181 
$329,241 $210,064 
Contribution income:
Nurse and Allied Staffing$37,417 $13,822 
Physician Staffing1,428 631 
38,845 14,453 
Corporate overhead (a)
14,211 11,270 
Depreciation and amortization2,253 3,296 
Acquisition and integration-related costs 77 
Restructuring costs1,238 564 
Impairment charges149  
Income (loss) from operations$20,994 $(754)
(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).

As a result of modifying the Company's reportable segments, revenue in the amount of $3.6 million and contribution loss in the amount of $