HEALTHCARE STAFFING EDUCATION & TRAINING SEARCH

Transcription

1 HEALTHCARE STAFFING EDUCATION & TRAINING SEARCH May 2007

2 This presentation contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as expects, anticipates, intends, plans, believes, estimates, and similar expressions are 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 the following: our ability to attract and retain qualified nurses and other healthcare personnel; costs and availability of short-term leases for our travel nurses; 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 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; the effect of liabilities and other claims asserted against us; the effect of competition in the markets we serve, and other factors set forth under the caption Risk Factors in the Company's 10-K for the year ended December 31, 2006, as well as in its 10-Q for the period ended March 31, In addition, any guidance with respect to future financial performance provided by the Company during its quarterly earnings conference calls expressly states that such management expectations are forward-looking statements and do not include the potential impact of any future mergers, acquisitions and other business combinations, the repurchase of its Common Stock, or pending legal matters. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed on this presentation might not occur. Specifically, while it is Cross Country Healthcare s intention to update its financial guidance quarterly, it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements.

3 Our Mission Build the nation s leading provider of Staffing and Other Human Capital Management services to the Healthcare Industry.

4 Investment Highlights Demographic Story: Long-term demand for healthcare services at a time of an unprecedented nursing shortage Trend toward outsourced labor in healthcare Strong revenue visibility Strong cash flow and low CapEx No direct third party or government reimbursement risk Proven record of financial performance Strong, experienced management team

5 Cross Country Overview Leading national healthcare staffing provider 20 years of history in the industry National client base of approximately 4,000 hospitals, pharmaceutical companies and other healthcare providers A vast majority of Honor Roll hospitals in annual ranking by US News & World Report Certified JCAHO healthcare staffing company Approximately 93% of revenue from healthcare staffing and 7% from non-staffing businesses 70% of total revenue from travel nurse staffing Strong and Diverse Client Relationships No client represents more than 4% of revenue

6 Industry Growth Drivers Fundamental growth drivers Continued scarcity and aging of nursing professionals Aging population demanding more hospital services State and Federal legislation re: nurse staffing levels and mandatory overtime Hospitals desire for outsourcing to provide variable cost structure Nursing professionals desire for job flexibility and better working conditions Current market environment Improved labor dynamics Continued pricing power Strengthening supply environment Sluggish hospital admission trends The U.S. temporary healthcare staffing industry is projected to be $11.2 billion in revenue in 2007 with travel nurse staffing expected to grow by 8% year over year

7 Demand for Healthcare Staffing Increasing demand for healthcare services due to aging of baby boomers Greater utilization of outsourced labor Higher construction spending U.S. Healthcare Staffing Market Growth in Hospital Admissions Revenue ($ in billions) $7.2 $8.9 $11.1 $10.2 $9.8 $10.0 $10.5 $11.2 (mm) P Annual Growth Rates (P) Travel Nursing 6% 8% Per Diem Nursing -1% 1% Locum Tenens 12% 13% Allied Health/Other 9% 10% Sources: Staffing Industry Analysts, Inc. and HCFA.

8 Hospital Use Of Temporary Staff / Travelers Use Of Temporary Staff / Traveler By Number of Staff Beds Use Of Temporary Staff / Traveler By Location 90% 80% 80% 70% 60% 50% 40% 70% 60% 50% 40% 30% 30% 20% 20% 10% 10% 0% % Urban Suburban Rural Source: American Organization of Nurse Executives

9 Hospital Construction Projects By Phase In 2005 Entire Acute-Care Hospitals Completed Projects Beds ,705 Broke Ground Projects Beds 1 Designed Projects Beds , ,755 Acute-Care Expansions 390 7, , ,450 Acute-Care Renovations 1,115 6, ,053 1,275 9,203 1 Beds are new or replacement Approximately 956,000 staffed beds in all U.S. hospitals Sources: Modern Healthcare 3/13/06, American Hospital Association

10 Healthcare Occupations With Largest Job Growth Medical Secretaries 63,000 Pharmacy Technicians 74,000 Dental Assistants 114,000 Licensed Practical/Vocational Nurses 124,000 Physicians & Surgeons 136,000 Medical Assistants 202,000 Personal & Home-Care Aides 287,000 Nursing Aides, Orderlies & Attendants 325,000 Home Health Aides 350,000 Registered Nurses 703, , , , , , , ,000 Number of New Jobs Created Source: U.S. Bureau of Labor Statistics

11 Nursing Supply Average Age of Registered Nurses NCLEX Exam Participants (Thousands) This situation will continue to deteriorate: Average age of RNs continues to increase: 34% are age & 28% are age Average age of new RNs is 30+ and only 9% are under age 30 High degree of correlation between increase in NCLEX exam takers and increase in applicant activity of RNs seeking travel assignments Sources: National Sample Survey of Registered Nurses, Fitch, Inc., and Health Resources and Services Administration

12 Supply Is The Key To Success Target Pool Of Potential Travel Nurses 5-Year Moving Average of U.S. Trained Nurses Passing NCLEX Exam (First-Time & Repeat) 450, , , , , , , ,000 50, E 2006E Source: National Council of State Boards of Nursing

13 New RNs vs. Retiring RNs New Entrants and Losses from the Licensed Pool of RNs for Selected Periods 400, , , , , , , ,000 New Entrants Losses Source: Projected Supply, Demand and Shortages of Registered Nurses: HRSA, July 2002

14 Significant Outsourcing Opportunity Amount Type Duration Approx. 92% of RN Staffing in Hospitals Direct Hire Full/Part Time Employee Approx. 8% of RN Staffing in Hospitals is Outsourced Travel 33% Per Diem 66% Permanent 8-26 Weeks 1-3 Shifts/ Week Use of Temporary Workers Increases Contract Labor as Pct. Of Personnel Expense 4.7% 5.5% 6.3% 6.9% 8.0% 8.1% Total acute care hospital spending on nursing services was approximately $60-$65 billion in 2002 Hospital contract labor as a percentage of personnel expenses increased 72% from 1997 to 2002 Source: Shoemaker and Howell, Trends in the Use of Contract Labor Among Hospitals, 8/20/04

15 Nurse Staffing Models Office Network Assignment Length Transactional Intensity Availability Recruiting Activity Candidate EBITDA Margin Estimates Per Diem Decentralized; local offices in each major market Daily shift work High 24x7 availability to candidates and clients Local customers; local candidate pool Wide range of ages; married candidates; full- and part-time 6% to 10% Travel Centralized; few offices for nationwide coverage 13 weeks or longer Low 4 to 6 weeks lead time on orders Nationwide customers; national candidate pool Primarily younger, unmarried candidates; full-time 8% to 12% 2006 Nurse Staffing Industry Revenue: Approximately $6.3 Billion Travel 33% Per Diem 66% Source: Staffing Industry Analysts, Inc. and Company Reports

16 Strategic Initiatives Obtain exclusive or preferred provider status with client hospitals Leverage Cross Country s quality reputation The Joint Commission Target new sources of eligible nurses Leverage #1 brand Med-Staff NovaPro Cross Country Local Assignment America Manage internal recruitment capacity

17 Exclusive / Preferred Provider Relationships Suite Of Staffing Solutions Education Assessments Technology Interview Servicing Vendor Management (Fixed-Term) Vendor Management (Flexible) Developing an orientation plan to ensure the RN s success. Leveraging technology to manage staffing needs and vendor relationships. Utilizing the Clinical Liaison Team (RNs) to reference, screen, and interview candidates. Reducing costs and improving efficiencies by consolidating staffing providers. Increasing revenue and guaranteeing workforce supply.

18 Different Strategies for Different Facilities Identifying the right mix of services based on a hospitals unique needs and total temporary staffing utilization. Total Temporary Staffing Spend $10 M $5 M $3 M $2 M $1 M $500 K Technology Solution Low Primary Provider Vendor Management Single-Source Interview Servicing High Complexity of Implementation

19 Cross Country Recruitment Cross Country TravCorps Flagship brand recruits travel nurses and allied healthcare professionals Industry leading and single largest brand NovaPro Markets to experienced travel nurse looking to customize compensation package Cross Country Local Targets nurses interested in contract assignments within 50 miles of their home Assignment America Recruits registered nurses for long-term contracts from English-speaking foreign countries (Canada, UK, Ireland, New Zealand and Australia) Med-Staff Large recruiter and provider of travel nurses and per diem temporary healthcare professionals

20 Most Recognized Travel Staffing Brand Name Unaided awareness more than 3x greater than any other travel nursing brand 10% of hospital based nurses are very familiar with the Cross Country TravCorps brand Travel Staffing Company Brand Awareness Among Hospital Based Nurses 40% 30% 31% 20% 10% 10% 9% 7% 7% 6% 6% 6% 4% 4% 3% 2% 0% Brand A Brand B Brand C Brand D Unaided Brand Awareness % Very Familiar Source: Study conducted for Cross Country by The Brand Institute in January 2002.

21 Strong Referral Network/Extensive Database of Professionals REFERRALS ADS WEB Over 50% Proprietary Database of More than 200,000 Professionals Thousands of Healthcare Professionals Applied in 2005 Includes Candidate Work History, Geographic Preferences, etc. RECRUITER Establish Initial Dialogue with Candidates and Maintains Relationships Works with Candidates Throughout the Placement Process on First and Subsequent Assignments

22 Financial Highlights Strong operating and free cash flow Conservative balance sheet High revenue and earnings visibility Minimal capital investment requirements Proven record of successfully integrating acquisitions

23 Financial Information (Amounts in $000, except per share data) Revenue Net Income Diluted EPS Operating Cash Flow 2000 $368 $4.6 $0.20 $ $504 $8.7 $0.34 $ $626 $29.8 $0.88 $ $673 $25.8 $0.79 $ $654 $20.7 $0.63 $ $645 $14.8 $0.45 $ $655 $16.6 $0.51 $32.9 CAGR +10.1% +23.8% +16.9% +19.0%

24 Revenue Growth Drivers Revenues ($ in millions) TravCorps $ % 7-year CAGR 7.5% 7-year Organic CAGR Heritage $14.9 NovaPro $25.5 ClinForce Med-Staff $28.3 $7.5 $82.1 $54.7 Metropolitan Research $ Organic Growth $0.6 $(8.7) $(73.7) $(35.1) $88.7 $92.9 $63.1 Annual Revenue $655.2 $127.8 $333.6 Acquired Organic $193.8 $193.8 Base

25 Key Healthcare Staffing Metrics Full-Time Equivalents (FTE s) 4,167 4,816 5,535 5,917 5,756 5,573 5,416 Avg./Revenue/FTE/Week $1,619 $1,865 $2,046 $2,069 $2,045 $2,068 $2,160

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