Thank you for standing by and welcome to the Cross Country Healthcare Second Quarter 2013 Earnings Conference Call. Participants will be on a listen-only mode until the question-and-answer portion. (Operator Instructions) Today’s conference is also being recorded. If you have any objections, please disconnect at this time. I would like to turn the meeting over to Emil Hensel, Chief Financial Officer of Cross Country Healthcare. Sir, you may begin.

Good morning and thank you for listening to our conference call which is also being webcast and for your interest in the company. With me today is Bill Grubbs, our Chief Executive Officer. On this call, we will review our second quarter 2013 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 website at www.crosscountryhealthcare.com. Replay information for this call is also provided in the press release. Before we begin, I’d first like to remind everyone that this discussion 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, believes, appears, 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 and performance expressed or implied by these forward-looking statements. These factors were set forth under the forward-looking statement section of our press release for the second quarter of 2013, as well as under the caption, Risk Factors in our 10-K for the year ended December 31, 2012 and our other SEC filings. 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. Also, our remarks during this teleconference reference non-GAAP financial measures. Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for, or superior to financial measures calculated in accordance with US GAAP. More information related to these non-GAAP financial measures is contained in our press release. And now, I’ll turn the call over to Bill.

Thank you, Emil and thank you to everyone who is listening for your interest in Cross Country Healthcare. As you are all aware, I’ve been Chief Executive at Cross Country for about a month now having succeeded Joe Boshart who retired at the beginning of July after serving as CEO for 20 years. First, let me again publicly thank Joe not only for his 20 years of service but for the three months of time he gave to me to ensure a smooth transition. It was extremely helpful and would be beneficial for the company going forward. I’m sure you join me in wishing Joe well in retirement. Now, let’s review the quarter. As reported on our press release, our revenue for the second quarter of 2013 was $111 million, up 2% from the prior year reflecting a 7% improvement in our physician staffing segment that more than offset slight declines in our other two business segments. Net loss in the quarter was $1.5 million or $0.05 per diluted share. Excluding restructuring and legal settlement charges, the net loss would have been $700,000 or $0.02 per diluted share. Our second quarter revenue and earnings were in line with our expectations. In our nurse and allied staffing business, year-over-year revenue was essentially flat. However we reported a decrease sequentially due to normal seasonality, staffing in unexpected demand and a low in staffing of Electronic Medical Records projects also known as EMR projects. Our travel nurse staffing revenue was up 1% year over year due to improved pricing and down 8% sequentially. Our per diem operation revenue was 3% year over year and was down sequentially by 11%. The action to the team in our nurse and allied segment have shown good year-over-year results in two areas, one, a 3% increase in…

Thank you, Bill. Let me first turn to the results for the second quarter. Results in the second quarter – revenue in the second quarter was $111 million, up 2% from the prior year due primarily to the strong performance of our physician staffing business. On the sequential basis, revenue was up slightly with growth in our physician staffing and other human capital management segments essentially offset by revenue decline in our nurse and allied segment. Our gross profit margin was 25.1% up 20 basis points from the prior year down 110 basis points sequentially. The sequential margin decline was due to a favorable professional liability accrual in the first quarter in our nurse and allied segments coupled with an unfavorable professional liability accrual adjustment in the physician staffing segment in the current quarter. SG&A for the current quarter was $26.6 million, down 4% year over year and 2% sequentially. This SG&A expense amount in the current quarter excludes a $750,000 accrual reflecting the agreement and principle to settle a wage in our class action lawsuit in California as well as approximately $400,000 in severance cost related to the restructuring program that Bill mentioned earlier. Equity-based compensation expense was approximately $600,000 in the second quarter, essentially unchanged from the prior quarter and down 20% from the prior year. Adjusted EBITDA from continuing operations as defined in our press release was $1.7 million representing a 1.5% margin. Interest expense over $164,000 was down 72% from the prior year quarter and 41% sequentially reflecting the repayment of our revolver balance from the proceeds of the sale of the clinical trial services business in February. Pre-tax loss from continuing operations was $1.7 million which includes $1.1 million for the aforementioned legal settlement and restructuring charges. The income tax benefit from continuing the operations…

Okay. So an anticipation of some of the questions I think you’re most likely to pose. I thought I’d talk about my areas of focus going forward. Looking at it broadly, there are initiatives in five areas – sales, expansion of per diem and allied services, cost reallocations, MSPs and acquisitions. Let me get into a little bit of a detail. On the sales front, we did hire a new senior vice president on sales and marketing. She started in June. She has 25 years of experience in the industry including extensive MSP experience. In addition, we’re making investments into our sales organization and restructuring into three different areas. One, enterprise sales across all business lines giving us the capability of providing a full scope of services to our customers. Two, specialize sales resources by business specialty. And three, MSP specific sales. Because we expect us to continue as one of our growth engines but also because the MSP sale is longer, more complex than a staffing sale and need a different approach. We’re also investing into the expansion of our per diem and allied businesses. And although we have a good platform to grow from, we are underweight in both segments and it is strategically important for us to be competitive in all segments of healthcare staffing. So on the expansion of per diem, last year in 2012, we brought in new management and that business had been performing well since that change. So now we’re engaged in expanding our office between now and the end of 2014. That program started in July. As for the expansion of allied, we’re also in a process of putting a new management in that group. This business has been underperforming to date. Specific expansion plans will be developed after a new management…

Thank you. (Operator instructions) And your first question is from Tobey Sommer from SunTrust. Your line is open. Tobey Sommer – SunTrust: Thank you. I was hoping that you could discuss pricing across the various segments in what your expectation is in terms of the trend added in the third quarter.

Sure. I’ll start and Emil can add some comment we have. Pricing has actually been pretty good. Pricing, I’ll start with the physician staffing side. Pricing, from the bill rate perspective was up 3.8% year-over-year and up slightly sequentially from the first quarter. Nurse and allied combined was up – the bill rates were up 3.2% year-over-year. And again, slightly up from the first quarter. And travel nursing in particular was up 3.5% year-over-year and about flat sequentially. We’ve done a pretty good job. The team has done a good job in our renewals of our existing customers as well as existing MSPs in getting price increases as appropriate based on geography and the demand dynamics out there. I’m not sure we can continue to get 3%, 4% increases every quarter going forward. But the team is focused on it and we believe there’s still some room for improvement as we move forward. Tobey Sommer – SunTrust: Thanks. As a follow up, within the physician, was there a positive or a negative impact as a result of specialty mix?

The specialty mix was not a significant factor in the pricing improvement that we saw that Bill referred to earlier. It was primarily – we do an analysis where we do a pro forma adjustment for mix and it was a very minor impact from that. Tobey Sommer – SunTrust: Thanks, Emil. That’s helpful. And I guess you talked about setting a pertinent [ph] independent MSP unit, would that include reporting segments, or at this point continue with their reporting structure that you have?

No, we’ll continue with the reporting structure we have. This is more about just an operational change for us where we can create kind of an umbrella organization representing all of our service lines rather than have it as part of one of the business lines where we’re kind of looking for them to cooperate and work with all the different divisions even though we reported under an existing division. So it’s really more of an internal issue than anything else, but it gives me the visibility and it gives the organization a little bit of independence to represent all of our service lines. We’re seeing these MSP programs, as you know they started out mostly for travel nursing. They expand it into per diem, they expand it into allied and now we’re seeing them expand into the locum tenens area. I think the need for additional services and value-added will continue. So I want to make sure we have that visibility and focus on a standalone unit. Tobey Sommer – SunTrust: Okay. Thanks. And my last question, I’ll get back in the queue. It relates to the temporary low in EMR work. I’m just wondering if you could give a little bit more color about what gives you confidence that we’re going to see that demand and activity reignite. And could you comment on the legs and length of demand that you see for that kind of work kind of beyond 3Q or 4Q but over a longer stretch of time. Thanks.

Yes, sure. I do have confidence. And almost all our discussions with our customers we’re finding that I don’t have a reason for the low or the slowdown in Q2. But certainly, we have won a large EMR project that has just starting to kick in now that will go through the end of 2014. We have another one that we’re in the middle of negotiations on. That would also go through the end of 2014. I have six current EMR projects that are ongoing currently. And so, the deadline is still 2015. I don’t think that deadline is going to change. There’s still a lot of work to be done at a lot of our customer facilities. So between the existing pipeline we have which is pretty good, the existing wins that we know we have now and the ones we’re in negotiation with, I feel pretty good about it going forward. I only have visibility though to 2014, but right now that looks pretty good. Tobey Sommer – SunTrust: Thank you.

The next question comes from Josh Bogel [ph], analyst. Your line is open.

Thank you. Good morning. Just building of some of the earlier questions on MSP. One I was curious, what percent of nurse and allied business is coming from MSP clients today? And was this up or down from a year ago in Q2?

It’s about 35% – maybe a little bit higher than 35% of our nurse and allied business that runs through an MSP today. I think that’s slightly up from last year, but I don’t have that number. Do you have it, Emil?

It wasn’t below 30s.

Okay, great. And Bill, you made a comment about MSP clients on the locum tenens front end. Are you starting to see some traction in that market today, or that’s the market you’re looking to get into going forward?

We have one that we’re in an implementation mode right now. We are in discussions with some other customers. So yes, we’re seeing – we’re having a conversation and we are in the middle of implementing one program. I don’t call that momentum yet but I do think there’s an opportunity there, yes.

Okay, great. And I may have missed it. I apologize. But based on your guidance, what were the implied revenue trends for nurse and allied and physician with in terms of the revenue guidance?

The nurse and allied business is projected to be flat, was slightly up sequentially, and the physician staffing business is expected to show low single digit sequentially increasing revenue.

Okay. And what percent of nurse and allied comes from the travel nurse?

The travel – let me just get you the numbers here. The travel nurse accounts for approximately a little less than half of our consolidated revenue and approximately 70% or so of our segments revenue.

Okay. I heard some of your peers talk about the seasonal weakness in travel nurse in Q2 but there was picking up in July back to more seasonal trends. Did you see that as well?

Yes, we saw declines through April in demand. And then May, June and July were all – I mean, every single week was almost as exactly stable at the same demand level all the way through July up until the last couple of weeks. And we have started to see it increase. And I don’t know, Josh, if that’s market or particularly because we’re ramping up some MSP programs and we have a couple of new EMR projects, but we have seen an increase in the last couple of weeks.

Okay. That’s helpful. I jump back in the queue. Thank you.

Sure.

The next question is from A.J. Rice, UBS. Your line is open. A.J. Rice – UBS: Hi, everybody. A couple of questions if I could. First maybe just a little bit more of an understanding, just a pretty specific one on the professional liability claims experience uptick, how big a number was that? I didn’t hear you specifically break that out and maybe a little color about whether that’s likely to recur or whether that’s sort of a one-off thing.

Yes, A.J. This is Emil. The professional liability accrual adjustment that we had in the physician staffing segment was in the $400,000 to $500,000 range. It was somewhat unusual. The nature of the claim development was – have some unusual elements to it, but this is the type of thing that can recur both favorable and non-favorable. There’s some element of statistical and randomness to this. But, yes, the number was in the $400,000 to $500,000 range. And if you recall in the first quarter, we have the $750,000 favorable adjustment in the nurse and allied segment. A.J. Rice – UBS: And are these – is this segment being reviewed every quarter, or is one being reviewed in one quarter and then one in the extra [ph]. How does that work?

We update our accrual analysis for each segment every quarter and we have a comprehensive actuarial review a couple of times a year. A.J. Rice – UBS: Okay. On the – maybe I ask you about the cash balance and obviously the pace of cash flow was good this quarter, I think there was a reference to being open to acquisitions, maybe talk about priorities, is that the priority for cash flow, any thoughts on share repurchase. And then in terms of acquisitions are there particular areas of interest or other attributes that would be something you’d focus on?

Yes, so, I mean, we do have an authorization that’s existing from the board for share repurchases and we will consider that when we get to our board meeting in this next quarter. I think better use of cash would be to get us to grow and get some leverage on our current infrastructure cost, which we definitely need going forward. So I do want to look at, at acquisitions. I think that’s probably we’ll use the cash. My priority would be to right size our allied and per diem we’re underweight in allied and per diem if you go by staffing industry analyst, we have about a 12% market share in travel nursing and we have about a 6% market share in locum tenens, but we only have a 1% market share in per diem and a 1% market share in allied. And so I just don’t compete in those areas as well as I’d like to. So if I have the choice, strategically, I’d make an acquisition in either allied or per diem. But because I need to leverage on our infrastructure, anyway, I would look at any of those four areas as a potential acquisition depending on what’s available in the marketplace. A.J. Rice – UBS: Okay. For a final question, just ask you about locum. One, the per diem businesses you highlighted there. What is the revenue run rate in per diem right now and you mentioned having a target to have that grow fairly significantly over the next 6 to 18 months. What – any willingness to talk about a potential target for that, how much that might be with that timeframe?

I will let Emil give you the run rate for the revenue, but no, I don’t have a potential target if I go starting our thing on [inaudible] I must likely will going to overpay it for something. Acquisitions are somewhat opportunistic depending on what’s there at any given time. But we do have some context and we have some people out there looking and we’ll see what’s available, but I don’t have any particular target in mind. Emil, what’s the run rate?

The revenue run rate is in the low to mid $30 million range annualized. A.J. Rice – UBS: Okay. All right, thanks a lot.

The next question is from Jeff Silber, BMO Capital Markets. Jeff Silber – BMO Capital Markets: Thank you so much. I wanted to focus a little bit on the restructuring plan. In the press release you say that you initiated a restructuring plan to reduce the operating cost. Going forward, how much operating cost you think you’d be able to take out of the model?

We’re not going to cut our way to the right level of profitability, Jeff, as you know. But we’re targeting a number of between $4 million and $5 million. I’d like to get towards the high-end of that if possible. But again, remember, that doesn’t mean we’re going to make another million, million two of extra EBITDA per quarter. I am going to reinvest some of that into some sales resources and some additional staff to help us grow on some of the initiatives I talked about earlier. But the target is $4 million to $5 million. Jeff Silber – BMO Capital Markets: And that would be a target on an annualized basis beginning where, when this year, next year?

No, some we’d already started. We made some changes in June. We’re making changes in July and August. So we’ll see some of that coming this year probably in the $1.5 million, $2 million range this year and then annualize would be next year. Jeff Silber – BMO Capital Markets: Okay, great. That’s helpful. Emil, just a couple modeling questions.

Sure. Jeff Silber – BMO Capital Markets: For capital spending, what should we expect for the rest of the year?

We don’t have any large capital project in the hopper, so I think if you estimate or run a million dollar for the full year, you’ll be pretty close. Jeff Silber – BMO Capital Markets: Okay, great. And I know taxes bounce around a lot, but on a – I guess a quote-unquote normalized basis if we’re modeling out a few year since, what should the company’s normalized tax rate be?

Our tax rate is really distorted right now by their very low pretax profit. So once we start having a more normal level of profitability, I would expect our tax rate to be higher than the statutory rates but not in the – probably in the 50%, 55% range. For the current year, we actually would probably end up with a number that’s in the 35% to 40% range due to some discreet items that we expected in the next couple of quarters. Jeff Silber – BMO Capital Markets: Okay, great. That’s very helpful. Thanks so much.

The next question is from Gary Taylor, Citigroup. Your line is open. Gary Taylor – Citigroup: Hi, good morning. I was just hoping maybe you could elaborate a little bit on your comments around MSP and wanting to create an independent version so to speak versus the imbedded version and maybe I’m just kind of after. What do you think it takes to reposition your MSP offering to be more competitive that does appear to be a place where your primary competitors have a lot of success, winning contracts and gaining share and growing revenue. So what are you looking to do to make your offering more competitive?

Actually, I think it’s already pretty competitive. We have great relationships. We deliver our services really well. We get good feedback from our customers in our quarterly business reviews and in our quality surveys. The issue hasn’t really been whether we’re competitive. The issue has been whether out there selling and winning our market share. So the restructuring of our MSP operation, again, is a bit more internal. I talk about it only because our competitors do talk about their MSP operations quite a bit and it is an area of focus for us. But I believe from a delivery standpoint we’re pretty competitive. Have we been taking our market share? No, so that’s more of a sales focus than it is, a restructuring of our MSP. Our MSP operation performs really well, delivers the services very well and has great customer relationship. This is a sales issue more than it is a delivery issue. Gary Taylor – Citigroup: Is there a rebranding that will be involved or just more of an inserted sales effort across all divisions, I guess?

It’s a bit more of a sales effort. It’s not really rebranding. I mean, we may end up with calling it something different than MSP similar to our competitors where they talk about workforce solutions and other kind of broader-based descriptions of the service. We do offer other services in addition to the MSP, other value-added services around credentialing and interviewing and other value-added services as well. But no, there’s not a rebranding associated with it. We have a competitive offering. We’re quite often – when we do get something, we end up as one of the two finalists most of the time. And I think we win our fair share of what we’re involved with or what we’re bidding on. We’re just not bidding on enough of them. Gary Taylor – Citigroup: Okay, thank you.

The next question comes from Ty Govatos, TG Research. Your line is open. Ty Govatos – TG Research: Question. You’ve talked about the acquisitions. Can we expect any divestments down the road? And when you target $4 million to $5 million in crosscuts, does that assume any divestments?

No, it doesn’t assume any divestments. We don’t have any divestments in mind at this point. We’re happy with the business mix that we have. So no divestitures at this point. The $4 million or $5 million does not include any divestitures, but we’re out there looking at the market for what we can do as an add-on to help us grow. And hopefully strategically, it would be one of the four staffing areas of travel nursing, per diem nursing, locum tenens or allied. Ty Govatos – TG Research: Thanks, very helpful.

And with that, sir, I’m showing no further questions.

Okay, great. So once again, thank you for joining us this morning. And I look forward to updating you with our third quarter results in November. Thank you. Good-bye.