Good morning ladies and gentlemen and welcome to the Cross Country Healthcare, Inc. Fourth Quarter, and Full Year 2008 Earnings Results Conference Call. (Operator Instructions) I would like to turn the call over to your conference host Mr. Howard Goldman

Good morning and thank you for listening to this conference call, which is also being web cast, and for your interest in the company. With me today are Joe Boshart our President and Chief Executive Officer and Emil Hensel our Chief Financial Officer. On this call we will review our fourth quarter and full year 2008 results for which we distributed our earnings press release after the close of business yesterday. If you do not have a copy, it is available on our web site at www.crosscountryhealthcare.com. Replay information for this call is also provided in the press release. Before we begin I would first like to remind everyone that this discussion contains forward-looking statements. Statements that are predictive in nature, but depend upon or refer to future events or conditions, or that include words such as expects, anticipates, 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 were set forth under the forward-looking statements section of our press release for the fourth quarter of 2008, as well as under the caption Risk Factors in our 10-K for the year ended December 31, 2007 and our SEC filings made during 2008. 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 teleconference might not occur. Cross Country Healthcare does not have a policy of updating or revising forward-looking statements and thus 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. Now I will turn the call over to Joe.

Thank you, Howard, and thank you to everyone listening in for your continued interest in Cross Country Healthcare. As reported in our press release issued last evening, our revenue for the fourth quarter of 2008 was $206 million, up 13% from a year ago and above the high end of our guidance range for the fourth quarter we provided in November. The increase is entirely due to the contribution of the recently acquired MDA physician staffing business. For the fourth quarter of 2008 we recorded a net loss of $161 million owing to non-cash goodwill and other asset impairment charges of $244 million that were substantially due to our annual goodwill impairment testing. Emil will provide more detail on these impairment charges in a moment. Excluding the impairment charges our earnings per diluted share were $0.18 for the quarter. This result exceeded the high end of the guidance range as well. Cash flow for the fourth quarter was $10 million. For the two year ration in the environment for our nurse and allied staffing segment, which it operates in, continued and accelerated during the past three months. Demand as expressed by the number of open orders from our hospital clients is down more than 50% since the start of this year. This is the most difficult environment we’ve seen since the mid 1990’s. We believe the deterioration had several causes including unfavorable credit market conditions for hospitals since the collapse of the auction rate securities market and exacerbated by the bankruptcy filing of Lehman Brothers, which have significantly increased interest expense and reduced profitability for our hospital customers. Most not for profit hospitals have seen material declines in the value of their endowment funds and the dramatic deterioration in the economy and national labor market since the third quarter is…

Thank you Joe and good morning everyone. First I will go over the results for the fourth quarter and full year 2008 and then review our revenue and earnings guidance for the first quarter of 2009 as we provided in the press release issued last evening. Revenue in the fourth quarter came in at $205.9 million, up 13% versus the prior year and 16% sequentially. Fourth quarter revenue was $7 million higher than the upper end of our guidance range reflecting stronger than expected contribution from MDA. On an organic basis fourth quarter was down 13% year-over-year and 5% sequentially as a result of the deteriorating business environment that Joe referred to earlier. Our gross profit margin was 26.4%, up 70 basis points year-over-year, but down 20 basis points sequentially. The year-over-year margin improvement was due primarily to the continued improvement in the bill pay spread and lower professional liability expenses in our travel nurse staffing business, partially offset by higher health insurance, workers comp and travel expenses, as well as a reduction in high margin drug safety related revenues in our clinical trial services segment. SG&A expenses in the fourth quarter were up 23% over the prior year and 17% sequentially due to the acquisition of MDA. SG&A represented 19% of revenue in the fourth quarter, up 150 basis points over the prior year and 20 basis points sequentially, reflecting net of the operating leverage in our nurse and allied staffing business as well as a change in business mix. The non-nurse and allied staffing segments accounted for about 40% of revenues in the fourth quarter as compared to 21% a year ago. These segments operate with a significantly higher SG&A burden than our nurse and allied staffing segment. As Joe indicated, we have taken measure to reduce employee…

(Operator Instructions) Your first question comes from A.J. Rice - Soleil Securities.

Joe, you referenced some headcount reduction as well as expense management reductions in place. Is there any way to flush that out and talk a little more in detail about how much potential savings there could be? I know you mentioned print advertising and internet advertising as well as the place you can get some savings.

Well I guess at a high level, I don’t have the exact numbers in front of me A.J. If you look at the total company head count excluding MDA, which was acquired in September, but on September 1 to the end of February or even into March, we are down roughly 160 headcount, which order of magnitude is roughly a $7 million SG&A salary reduction including benefits. Advertising expense is down more than $0.5 million on a run rate basis year over year. And, of course, there are other discretionary items that we really screwed down that have less impact. But just to send a message to the organization that we’re doing everything we can to maximize the cash flow from this business, such as travel restrictions, we’re going to attend less trade shows, things of that nature.

Right, okay, that gives me a flavor. On the write-down of the goodwill and intangibles, I know a lot of that isn’t amortized, but is there any income statement impacts from that write off in terms of amortization expense that’s going to go away going forward?

There was a very small impact related to a customer relation intangible that we wrote off, but it’s in the order of maybe $100,000.00 or so per year.

Okay and then I know you referenced that you still have availability under the share repurchase program. You did pay down debt nicely in the quarter, are you at a point yet with the bank credit agreement that you can go out and repurchase, or what leverage ratio has to change, if you’re not yet there, to get you to that point?

It is not so much the leverage ratio that is constraining us from repurchases, but the fact that we have a basket of 40 purchases as based on our cumulative net income from the date the credit agreement was put into place. As a result of the impairment charge, absent any waivers from the lenders, we are technically not in the position now to repurchase, because we have a negative basket.

Okay, so if the charge-off counts then I guess it will be quite awhile unless you go back and redo your bank deal or get a waiver.

Or we get a waiver of amendment.

And you know, candidly A.J., even if we didn’t have that restriction we would be totally focused on delivering the balance sheet. It is an unattractive environment at this point. We can’t say that we’ve found the bottom. We think directionally momentum is still negative and as a result we’re really very focused on delevering as we go forward.

All right, thanks a lot.

Your next question comes from James Janesky from Stifel Nicolaus & Company, Inc. James Janesky - Stifel Nicolaus & Company, Inc: First, when you look at the segments in the first quarter would you expect that the nurse and allied segment would be down more on a revenue basis year-over-year than the bookings you experienced late in the fourth quarter meaning higher than 27%?

I think that the booking is a very good indicator as to the revenue performance that we expect for that segment in the first quarter. I think it would be roughly in line with that number. James Janesky - Stifel Nicolaus & Company, Inc. : Okay great, thank you. And, Joe, that number, so let’s just round it up to 30%, the decline seems to be somewhat higher than what some other companies in the space that we talked to are expecting in the first quarter. You’ve always been pretty representative of the industry, you know, down 30% that’s a dramatic decline; do you expect that that is what’s happening within the industry as well?

In fact we’re taking market share. I think you need to look at the performance on a sequential basis. Sequentially our head count is going to be down roughly, order of magnitude, about 15%. We think that most players in the industry are seeing greater reductions. Look, at a high level I think we probably lost share over the last two quarters. We have been very focused on margin, as we saw the environment getting more and more difficult. Again, we are trying to optimize the cash flow from the business to look at the company as a whole and make sure we’re optimizing the value of that business to our overall result. Having said that, we actually have a very good competitive position right now particularly because of our vendor managed accounts which are some of the largest users of travel nurse and allied staff. So, I actually think we have a strong competitive position, but it feels kind of like a pureed victory, because the pie is shrinking fairly rapidly. I hear what you’re saying, but again, on a sequential basis I think I’m very comfortable with our relative performance to the market. Emil, do you have anything you want to add to that?

No, sequentially, based on the information that has been provided by our competitors, it does appear that we are poised to take significant market share in the first quarter. James Janesky - Stifel Nicolaus & Company, Inc.: Okay and Joe, do you see anything on the horizon as 2009 progresses. Possibly, I guess the president is holding a health care summit today that could allow the demand trends in and especially nurse travel, so the booking trends could improve? I mean, the new healthcare package will drive more patients into hospitals, but maybe not the types of patients that necessarily pay their bills, so there could be implications for pricing as well as bad debt expense. I was just wondering what your thoughts are or are we just kind of poised to have a very difficult 2009 for the industry?

The answer is in high levels, yes, to all your points. There are things that are going to help the business directionally, if you look at it in isolation. More Medicaid funds for states that are really, really budgetarily constrained right now and are squeezing hospitals, I think would be a positive for us. I think a strong flu season, which we’re starting to hear some noise about a building flu season in certain areas, would be a positive just to see more inpatient counts around the country and even in various geographic areas of the country. And I think that generally the healthcare bill will be helpful to the hospital industry, which as I indicated in my prepared comments, one of the big problems right now is just the sense of hospital operators that they are really cash constrained and their cost of funds is significantly higher than it was six months ago. If you take all of that into consideration, I still think, even with those stronger tail winds to our business, that the head winds are of a dramatically weaker labor market, which I believe is very weak and are potentially getting weaker. I don’t know what the number tomorrow is going to be, but I think it’s going to be very ugly for net job losses in the economy; that will likely encourage nurses that had really cut back on the hours they provided to hospital operators to make themselves available for more shifts, which will lead hospitals to call us less often. So, I think that head wind is likely to be stronger than the potential pick up in tail winds from the items that I mentioned and that you bring up. I hope I’m wrong, but that’s just our expectation currently. James Janesky - Stifel Nicolaus & Company, Inc.: Okay, thanks for the comment.

Your next question comes from Frank Atkins - Suntrust Robinson Humphrey.

Good morning, this is Frank in for Toby. I wanted to know if you could talk a little bit about bill pay rate trends you’re seeing and an end pricing pressure that may or may not be out there.

Well we will continue to see single digit increases in our average bill rate on the order of 2% to 3%; we expect that to continue into the first quarter. Our bill pay spread is continuing to widen, so fundamentally these are obviously positives from a gross profit standpoint and we don’t see any immediate change in the dynamic.

Okay, great and could you talk a little bit about geographic areas of strength and weakness? Last quarter you mentioned Northwest and Midwest as positives with Florida still weak. Do you have any update there?

Frank, I would just say directionally everything has weakened in the context of our prepared comments. It is a weaker environment for us. There are some states in the mid Atlantic, the Northeast are directionally stronger and largely because of our vendor managed accounts in those areas. But, it is a very tough environment across the country right now.

Okay great. I guess you mentioned CapEx some control there. Can you talk about your expectations going into 2009?

Well we ended the year with our CapEx of about $4.7 million I believe was the number and that’s about 6/10 of a percent of revenue. We budgeted a comparable amount for 2009, however, quite frankly, if the environment remains weak we will probably defer some of those expenditures, so we may end up with a number that’s even lower than the 6/10 of a percent of revenue that we achieved in 2008. Keep in mind that historically our CapEx tended to be around 1% of revenue, so we are already in a lower spend rate than our historical average.

Okay, great. Thank you so much.

Your next question comes from Paul Condra from BMO Capital Market.

How much debt did you repay in the current quarter?

We actually made a significant prepayment in our term debt, already, in this quarter over $6 million.

Overall debt was down about $13 million in the first two months of this year. That includes prepayments to the revolver and payments on the revolver as well.

Okay, thank you. My other question is your stock compensation for the quarter?

The equity compensation expense was approximately $300,000.00 in the fourth quarter and about $1.2 million for the year as a whole.

Can you give any expectations for 2009 stock comp?

Yes, we expect our equity compensation to go up versus ’08 and its quite frankly a conscious decision as we will be reducing our annual bonus payments and replacing them with longer term equity grants.

Okay thank you and then my last question is can you go over the earn out provisions for the MDA acquisition?

There is an earn out for MDA. We expect that to be paid in the March/April time frame and it is approximately $6 to $7 million.

Okay, thank you very much.

Your next question comes from David Bachman of Longbow Research.

I have a couple of questions here on the bigger picture and then on the smaller picture. You mentioned taking share and competitors mentioned that as well. Where is that share coming from? Then more broadly, when you have this kind of an industry down turn it really has the potential to sort of reshape the industry moving forward. I was wondering if you could talk about where you see the industry in few years and how it comes out of this down turn.

I think when you talk about our largest competitor, like I said earlier, looking the numbers it looks like they took share certainly over the last several quarters and again, kind of qualitatively looking at the information that has been provided for the first quarter, we expect to get some share back. But, that may or may not occur depending on how the actual results come out. But, that is our current view of the business. I am sure both of us are taking share from smaller companies that are, in addition to the overall level of job orders declining, they’re also being excluded from more and more accounts as those accounts narrow the number of vendors they work with. Generally the two largest companies continue to be vendors, because they provide the bulk of staff and the hospitals are looking to have their relationships with third party contract labor providers to be more efficient. That generally means working with less companies, so that the small guys are really struggling more on a relative basis, based on everything I’ve heard and seen. I have a relatively high level of confidence in that statement. As we go forward, historically this business is very manageable in the context of as revenue declines, because you’re operating out of one location you can typically scale your expenses to the environment in order to survive. You make a lot less money as a small company in the travel business. I think the per diem business has different dynamics: there is more overhead because of the number of the number of offices that you operate. But, in the travel business you are able to scale your expenses enough to survive. A couple of our subcontractors have sent us notice that they’re getting out of the business, but it is not my expectation to see some of the more significant second tier players exit the business. I think they’ll be able to get through this period and we do expect long-term that it’s going to be a very attractive business. We have to get through this very weak environment regardless of how long it takes to get to that position. I am of a view that the worse it gets in the short term, the better it will be in the long term, because you will see hiring by hospitals decline. Wage increases for nurses will flatten out; probably become negative in real terms over the coming years. That is really consistent with how the industry has operated historically. Therefore enrollments in nursing schools will drop and at some point you will have a very rapidly aging professional RN population not being supplemented by younger nurses entering the profession, which should create a very dynamic and attractive environment for us. That is not what we’re looking at today, but we still believe that’s what we’ll see in the future.

Okay, well that is a helpful longer term perspective. Can you provide an update on the tax advantage sort of initiative that you talked about the end of last year?

Well we’ve implemented that program back in August for assignments that were booked after a certain date in the summer. It progressed extremely well. We have seen a noticeable impact in applicant activity. Our applicant activity was up 20% year-over-year in the fourth quarter. That is unusual, because typically in an environment where demand is weak you tend to see a decrease in applicant activity as nurses are less willing to take travel assignments due to the uncertainty of another job down the road. Despite that, we saw a very substantial increase in our applicant activity; it was up 20% year-over-year. We believe that the primary driver of that is the more attractive compensation plan that we can offer to our nurses.

Okay great, then one last question. Switching to clinical trials, can you provide a little bit more color, remind me, are there certain segments of that clinical trials business that you are better positioned in or have higher levels of competency in? I would like to understand that business better.

At a high level the business is still more than 2/3 just staffing. I mean we staff professionals engaged primarily in Phase 3 trials. That element of the business is actually performing pretty well, the staffing component is. Where it has been more of a struggle year-over-year is in the much smaller piece of the business that is what most people think of the traditional CRO activity, where you’re outsourcing the entire trial on behalf of a biotech or a pharmaceutical company bringing a new compound to market. We were kind of a boutique in that segment. We would be generally working with smaller biotech companies rather than large pharmaceutical companies, which is really the purview of the Covances and PPDs of the world. The biotech companies are becoming cash starved, because it is more and more difficult to raise money. So, they are really looking at what they are willing to spend money at; what kind of compounds they are going to move forward with; what they can move forward with at any time. We have seen, certainly in the fourth quarter, a pull back on the part of those companies. That is the headwind of that business primarily. We are reasonably confident of winning a relatively significant trial that we hope will start in the second quarter. That is important because we have a relatively large trial ending over the summer. In the drug safety aspect of our business, which is in the area of $10 million of revenue, we just won a relatively large contract for that business that we expect to start early in the second quarter. It looked very bleak in the fourth quarter where everybody had gone on a buyers strike in the clinical research area. We are now seeing compounds come back to market. It seems like things have loosened up a little bit. It’s probably not going to be as dynamic as it was for much of the last five years, but it looks like it’s going to be better than it looked in the fourth quarter.

Okay, that’s helpful. Thank you.

At this time we have no further questions.

All right, well we appreciate everyone’s participation in this call and we look forward to updating you on our first quarter results in May. Thank you.

This will conclude today’s conference call.