Good morning, ladies and gentlemen, and welcome to the Cross Country Healthcare Conference Call for the Third Quarter of 2016. This call is being simultaneously webcast live. A replay of this call will also be available until November 17, 2016, and can be accessed either on the company’s website or by dialing 800-369-7443 for domestic calls and 203-369-3271 for international calls and by entering the passcode 2016. I will now turn the call over to Bill Grubbs, Cross Country Healthcare’s Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, everyone. Before we review the Safe Harbor statement, I wanted to say a couple of things first. As you know we announced a few weeks ago that Bill Burns, our Chief Financial Officer was taking a medical leave natural [ph]. I am pleased to say that he is recovering well. He is in good spirit. We don’t have a specific date to his return, although we are expecting it to be before year-end. Although, I ask Bill to focus completely on his recovery. I am sure he is listening in today. So on behalf of the Board of Directors, our executive team and all of our employees, I would like to publically send him good wishes for a speedy recovery. Filling in for Bill Burns today are two members of our finance team. Chris Pizzi is our Vice President of Finance, Corporate Controller, Treasurer and Acting Chief Financial Officer while Bill Burns is away. Also with me is Athos Michaelides, Vice President, Financial Planning & Analysis. He is also part of our M&A team and he is actively involved with Investor Relations. So with those introductions today let me turn the call over to Athos to take the floor.

Thank you, Bill. This call will include a discussion of third quarter results for 2016 as disclosed in our press release and will also include a discussion of our financial outlook for the fourth quarter and full year 2016. After our prepared remarks, you will have an opportunity to ask questions. Our press release is available on our website at www.crosscountryhealthcare.com. Before we begin, we need to remind you that certain statements made on this call may constitute forward-looking statements. As noted in our press release, forward-looking statements can vary materially from actual results and are subject to known and unknown risks, uncertainties, and other factors, including those contained in the company’s 2015 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as well as in other filings with the SEC. I would encourage all of you to review the risk factors listed in these documents. The company undertakes no obligation to update any of its forward-looking statements. Also, comments during this teleconference reference non-GAAP financial measures, such as adjusted EBITDA or adjusted earnings per share. 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 U.S. GAAP. More information related to these non-GAAP financial measures is contained in our press release. In order to facilitate a better understanding of the underlying trends, we will refer to pro forma information on this call, giving effect to acquisitions and divestitures as though the transactions had occurred at the start of the periods impacted. As a reminder, we divested our education and seminar business during the third quarter of 2015 and completed the acquisition of Mediscan in October 2015. With that, I’ll now turn the call over to our CEO, Bill Grubbs.

Thank you, Athos and thank you everyone for joining us this morning. For the past two quarters, I have been saying that I feel as good about the business as I felt since I started with the company. I stated on both occasions that our turnaround efforts and initiatives were starting to come together nicely and we were seeing that with improved pricing and MSP wins, but we had not yet seen it in our revenue number. Well, let me reiterate my statements for the third quarter. I feel as good about the company today as I felt since I started. All of our hard work we put in over the past few years is coming together, we're seeing in pricing, MSP wins and we're now starting to see it in our revenue growth. I am very pleased with our progress. So, let's get into the revenue results because it does need some clarification, obviously $215 million of revenue is well above the $200 million to $205 million guidance number. The performance was due to two factors. A significant volume of project business in the quarter above our normal levels; and two, organic growth from our recruiter investment and candidate sourcing initiative coming in faster and stronger than anticipated. I'll touch on the project revenue first. So let me step back just a minute. We generally don't do a huge amount of premium rate business because we don't think that in the best interest of our customers or sustainable for long periods of time. But we do have some project level in most quarters which we define as shorter assignment with premium rate. We don't usually call it out and it's just embedded within our numbers. But this quarter was higher than normal. So we think it's important for you…

Thank you, Bill. As you just heard our third quarter performance was strong, led by improved pricing and the project business. We are beginning to see strong levels of demand in our largest segment resulting from our candidate attraction initiative. As a result our revenue, gross profit margin, adjusted EBITDA margin and adjusted EPS for the quarter all came in at or above the upper end of our guidance range. Turning to the financial results. Total revenue for the quarter was $215 million, up 10% percent from the prior year and 8% sequentially. The year-over-year increase was driven entirely by growth in our Nurse and Allied and Staffing business, which includes the impact from the Mediscan acquisition that closed in October 2015. Mediscan has continued to perform well with revenue growing by 13% on pro forma basis over the prior year. The sequential increase was driven by growth in our Nurse and Allied and Physician Staffing businesses. Gross profit margin for the quarter was 27.1%, up 80 basis points from the prior year and down 40 basis points sequentially. Moving down the income statement. SG&A expense for the quarter was $45.9 million or 21% of revenue, representing an increase of 17% over the prior year and 3% sequentially. The year-over-year and sequential increases were mainly due to the investments we are making in our business such as increasing the marketing spend to attract more candidates, increasing the number of recruiters and continue to bolster our workforce solutions team. These investments are gaining traction and we believe will continue to contribute to revenue growth in the fourth quarter and into 2017. Adjusted EBITDA for the quarter was $13.1 million, representing a 7% increase over the prior year and 19% increase over the prior quarter. Adjusted EBITDA margin for the quarter was…

Thank you. [Operator Instructions] Our first question is from Tobey Sommer from SunTrust. Your line is open.

Thank you. Bill, kind of want to ask a question about cash flow and capital deployment. You've done a lot of heavy lifting, transforming the company and now you're -- we're more visibly seeing the effects of that. Where do you see, you know, your utilization of cash kind of fueling or pushing that transformation further? Thanks.

Yeah, I think the cash we would like to use it mostly for acquisitions. If we don't do a deal by the end of this year -- this will be the first year we haven't done a deal -- and we've been very pleased with all the deals done out before, the Allied acquisition in December 2013, the MSN acquisition in 2014, the Mediscan acquisition last year, have all proven to be very beneficial for us. We're active in the market. We're looking -- I think you guys probably know by now that, you know, we're not going to do a deal just to do a deal, so we haven't found anything we like at this point, but chances are we will use the positive cash flow and our availability to do an acquisition.

Are there particular areas that that you could highlight or would you prefer not to do at this point.

No. No. I can tell you. I wouldn't mind adding onto our public and charter school business, I think special education and healthcare professionals in the school setting is a growing area and underserved and I think we could take market share in that area. We're still a little bit under scale in our Allied offering from a market share perspective, so I wouldn't mind getting more local Allied that we only have Allied in 25 to 30 of our 70 branches and always try to grow that organically or buy something that can help around that out a little bit. I think if we continue to see stability and improvement in Physician Staffing, I wouldn't mind doing something on the Physician Staffing side as well. And then we're looking at a couple of bolt-ons to some of our workforce solutions areas that we think could benefit our relationship with our customer

Could you maybe discuss good signs or positive signs that maybe you're seeing in Physician Staffing that could point to a bottoming in a turn or is it really -- there any numbers are forward-looking indicators or is it mostly esprit de corps and level of effort that's encouraging it.

It's a little bit of both. We have seen -- we obviously track a lot of different numbers. We have seen their weekly days book improved over the last four to six-week. And that's what they actually book is that week, but it could be, you know, a month out, two months out, three months out. And so the fact that they're starting to book at a higher level is obviously a positive financial trends that we'll catch up in time. But we do expect that they will have less of a declining revenue in Q4 that the way it has to start. It doesn't go from negative 20% to positive 5% or 10% in one month or the other. So we will see I think a lessening of the decline in revenue in Q4. And more importantly as you said it's kind of a esprit de corps thing I just see a change in the attitude. We do tracking of their productivity every day and I see the emails going back and forth and people are getting excited about what's happening. I've got emails about the new leadership and how the team is pleased with it. It always starts with the people and the people on Board, the revenue will come later.

Switching gears to the Nurse business, could you talk about -- a little bit more about demand in pricing, any signs and we're not quite in the 2017, but any signs on the durability of that from your perspective?

Certainly, demand -- I know the hospital results for a little bit mixed last quarter. Some pretty strong results and some not so strong. We have not seen a dent in our demand and as I said in the written script we passed an all-time high in orders we have. And I think that's the indicative of strong market and some of the wins that we've had, but we have not been a drop-off in demand at all. Pricing will be somewhat different. I thought in Q2 that we might be a little bit of topping off of our price, obviously that didn't happen and accelerated even more in Q3. But as we go into next year -- and I think pricing will hold pretty decent in Q4 from what we saw in Q3, maybe a little bit of drop-off, but not much. But as we get into 2017, especially when we start lapping Q2 and Q3 which was strong pricing quarters for us, I don't think we'll be able to maintain this year-over-year pricing increase. It will start to soften a little bit as we get into those hard cost next year.

Just to clarify, when you say soften, do you mean go down or just the growth rate go down?

The growth rate will go down. It won't be negative, but it won't be as positive.

Okay.

So our overall Nurse and Allied was up about 9% and 9.5%, you know, that may slowdown to 5% or 6% or 4% or 5% or whatever the right number is. But I think it will still have -- still an increase and -- but as not as high. The good news is we are expecting back to volume growth in Nurse and Allied in Q4 and going forward, so that will offset some of that deceleration of the pricing growth.

Okay. Thanks. Last question for me. You've had a lot of momentum in new MSP signing, how long do you think this trend is likely to continue in the space and at the company? Thank you.

I think it had a chance to continue to grow. If the market stays this type, our customers need to find a solution to a more efficient way of finding healthcare professionals. And managed service programs are a great way to do that and I think it’s kind of proven in the marketplace today. And so we still see quite a bit of demand out there. We still have a pretty big pipeline. We obviously have won 18 year-to-date which is a big number for us. So I really don't see it flowing, it's still only 32% of Nurse and Allied that -- our revenue grew so much this quarter to a little bit less than it was last quarter. And I think it can go high as 50% or 60%.

Thank you very much.

Thank you. Our next question is from A.J. Rice from UBS. Your line is open.

Thanks. Maybe a couple questions. First of all, just Bill, explain a little more about what exactly is project revenue? It doesn't seem like it's -- particularly concentrated in a few facility like a strike project or something. What are -- what are we looking at there? It seems like it’s pretty spread out.

It is. It kind of all over the map. We have some of this in every quarter. And as I said before we don't really like to push and promote premium rate business. But we -- to some reason this quarter we just started to get a significant amount of demand where hospitals, you know, said that they were suffering and we have a relationship with them and we try to help them out as best as possible. So we did wrap up and started to deliver on some of those requests. But it's all over the place. It may be that they -- they're opening a new wing and they just can't hire the permanent people fast enough. It may be that they have -- their census is going up and they cut short, could be that they have an increased level of staff turnover or an increased amount of leaves of absence. It could be a variety of things. We do periodically support a strike. We don't have a strike business. We don't plan to have a strike business, but that doesn't come into play every now and then and then some quarters as well. There's really no way to specially say what it's about. It is all over the board. And it was that 75 to 80 different healthcare facilities and over 40 customers. So the reason was different at every single one.

Okay. The Branch business had a nice acceleration. I think you have -- previous two quarters of this year you've been a sort of 5% growth and 8% growth and also sudden 17%, even if you take out the project it is still 13%. Is there anything to call out there? Obviously you got strength across the board, but I am particularly interested in if there's anything on the Branch business to highlight.

We're pretty pleased with the Branch business. It has continued to grow throughout the year. A part of it I think is what we're seeing in the healthcare industry is that shift from large acute care hospitals treating patients to these local ambulatory and -- outpatient facility and also service on a local basis. So these walk-in clinic, physician offices, rehab centers and so on and so forth tend to be delivered on a local basis. And we've been driving to make sure we could take advantage of that, and I think you're seeing that in our Branch numbers. So, yeah, we're pretty pleased that. We did have a little bit of expansion as well of our local Allied business. And local was only -- used only be in about 23 of our 70 branches, I think it's now in 30 of them. So there's a little expansion of our local Allied and we want to do more of that as well.

Okay. And then on the investments we've been making to internet and otherwise social media to get broader access to recruit or to new nurses, that's obviously put pressure on the SG&A line. Is at least as a percent of revenues are we sort of a normalized run rate, or do you think it's going to continue to grow faster than revenues for a while?

That's a good question. I think -- as we grow, we will continue to get leverage. But you're right. This is a different argument that says I don't want to slow down this momentum and I don't think I will slow down the investment just to chase some adjusted EBITDA percentage. I think us configuring to get market share and to keep our momentum in revenue growth going. I don't want to stop that. So it's a little bit hard to tell. I mean, I don’t think it will significantly outpace our revenue growth. I think it is at all. We did it mostly for nursing this quarter -- June onward and we do want to rollout some of the same initiatives to Physician Staffing, Mediscan and our Search business. So there may be a little bit more investment to go into next year, but I don't think the percentage flow will significantly go up from where we are.

Okay. And my last question on the seasonal pick up that you sometime see in Florida and others places where there's seasonal pattern of utilization. I'm assuming you've got some visibility on what that looks like now. Are you seeing sort of a normal seasonal pickup, below, above, how would you describe that aspect of your business?

It’s a little bit hard to tell because demand is still high right now that it map normal trend. And because we're now driving more candidate flow, you know, we are probably going to block our normal trend of -- the normal drop off in seasonality from Q3 to Q4, that's going to be mitigated somewhat this year. So I think, yes, we're seeing normal seasonal trend, but we're blocking them a little bit because of new wins, candidate attraction and just a significant amount of demand overall.

Okay. All right. Thanks a lot

Yeah.

Thank you. Our next question is from Bill Sutherland from Emerging Growth Equities. Your line is open.

Thanks. Good morning. Bill, just one last question on this special project business, did it continue into October?

Yes. We will have $3 million or $4 million of project business in the fourth quarter as well.

And what do you think kind of baseline level that business has been just quarter-in, quarter-out $1 million or $2 million?

Yeah, probably under $1 million. We probably do under $1 million of project business every quarter. So there is a baseline there that we tend to have, but it just really accelerated over the last four months -- actually three months August, September and October. But that's kind of offset though and I haven't said what the numbers are, but somebody -- I am surprised -- doesn’t ask me yet. Our electronic medical record business actually was significantly lower in this quarter. We only did about $400,000 which is down $4 million sequentially and $3 million year-over-year. So I'm pretty pleased that we actually made up for that headwind with normal business and then obviously the project business helped to offset that as well.

So that begs the question EMRs kind of at a run rate now, do you think?

At 400, no. Maybe for the fourth quarter it will not improve a whole lot. But we do have a couple of projects early next year that may bump it up again. We used to run $2 million to $3 million a quarter. We ran $4.5 million in the second quarter. I don't think it will get back to $4 million or $5 million, but it may bump back up to $1 million or $2 million a quarter. It's not that they go away I don't think. It’s just slow down. We had a couple of projects, they got pushed out a little bit and that gave us the headwind this quarter.

Got it. And the decline in the contribution margin at Physician Staffing quarter, I think I see a pretty meaningful drop here, I've got my numbers right.

Yeah. I don't have -- Chris can look up. I don’t have numbers right upfront my head…

It looks like actually you're comping against a tough margin, I mean very high margin last year.

It could be. But generally what would happen is with declining revenue you're going to have a little bit of deleverage. And then we're also because we have new management -- we are putting investment back into this business. So I’m happy to offset a little bit of the contribution, so I can get this engine back to growth again. So, you'll see a little bit of deleveraging and a little bit of investment.

Okay. And then there's a lot of numbers on -- you guys gave out on the price, you know, reported versus without project. So just a clarification Nurse and Allied the pro forma growth and revenue was about in line with price improvement, is that -- so basically neutral volume?

Yeah, volume -- our revenue growth in legacy Nurse and Allied, take Mediscan out of it, was predominantly driven by price.

Okay. Just want to get a clarification on that. And then finally…

It was 11.3% on a reported basis from a price perspective, but revenue grew by 12.5%.

Okay. 1% volume.

Yeah.

And then last, on the investment in IT and so forth. Are you largely done this year and then would you see those annualized savings mostly starting next year, or will take some time?

Well, this was -- the restructuring costs in this quarter were about cost savings. The IT project was about changing our legacy system that would eventually get us to some efficiencies, but those efficiencies were when projected come in 2018, anyway. But I think it's worth talking about the IT a little bit weak, you've kind of gone to a point where we've gone through our process mapping we have gone through the gap analysis, we've gone through our business requirements. And we're at a point now where I've actually put the project on hold. All the work that we've done that I just described will still be useful to us down the road. But between our internal resources, external resources and some competing priorities related to candidate sourcing and candidate attraction initiatives, I put IT -- we place the project on hold for a little while because I need to get these other things that I want to make sure that we have a sufficient level of resources on this project. So we probably won't incur ongoing costs in that project for two to three quarters going forward. We want some in Q4, but probably not only that part of 2017.

Okay. That's it for me. Thank you.

Okay.

Thank you. Our next question is from Mr. Randy Reece - Avondale Partners. Your line is open.

Good morning.

Good morning.

I wanted to dig in a little bit about your candidate sourcing improvement trajectory, if you could give us a little bit of an idea of how much qualitatively thing have improved in terms of applicant flow? And just how -- what percentage of the business those improvements touch and what the next step will be?

Yeah, I'm not sure I want particularly say exactly how much. But we have increased our candidate flow by multiple. So it's multiple times bigger than it was before. So it's been very successful. We have step -- based on the conversion rates of leads to applications and applications to placement we had set a target that would drive double-digit growth in Nurse and Allied going forward. We're exceeding those targets that we feel very good about the initiatives generating what we want. Right now expecting just Nurse and Allied and we have not rolled it out to the rest of the business, but we plan to do that early in 2017, maybe some of that in the fourth quarter of 2016. So right now it's Nurse and Allied which is, you know, 80% of our business. But we will roll it out to the other businesses as well. It's proven to be a very good initiative for us.

Thank you very much.

Thank you. Our next question is from Mr. Matt Blazei from Lake Street Capital Markets. Your line is open.

Yeah, just one quick question guys. I think you said placing was actually up 4.5% physician. Can you give a volume number there?

Yeah. So, I volume was down -- you have the number, Chris in your script, I think. May not be on a percentage basis. Year-over-year, Matt?

Yes, please.

It was up 5% volume from -- while we are looking at, Matt anything else?

No, that's it. Everything else has been asked. Thank you.

Okay. We will look that up. It was down 19% in revenue year-over-year. So the volume has to be more than that. We will get back to you on that.

All right. Thank you.

Thank you. Our next question is from Joe France from Cantor Fitzgerald. Your line is open.

Thank you, Bill. I just want to follow-up. You highlighted in your formal remarks the MSP wins in the quarter. Could you talk a little bit more about that and tell us what the current pro forma numbers in terms of the contribution to nurse staffing revenue overall?

Yeah, so, MSP revenue in Q3 was 32% of our legacy Nurse and Allied business, if you take Mediscan out and 26% of total Cross Country Healthcare revenue for the quarter. It’s actually down a little bit from last quarter because our revenue growth so much outside of the MSPs, but MSPs continue to grow quite well. Most of this is actually from previous years wins. We don't have a lot of ramp up in -- 18 we've had year-to-date. But the 18 wins year-to-date will more effect next year than they do this year.

That's great. And then the Mediscan acquisition, I had that it's like either the end of October or the first week in November, so basically two-thirds of the last quarter. So are we talking in terms of comp about $6 million or $7 million of revenue and $600,000 or $700,000 of EBITDA?

Yeah, so last year we only had two months of it. So we have about $6.6 million, if I remember correctly. And so this year the base line on a pro forma basis would have been last year would have been about $10.1 million -- $10.2 million and we expected to grow double-digit. It'll grow at 35% year-over-year. So the $10.2 million will end up being $13 million or $14 million in Q4.

But came out there was actually in your numbers last year was you said $6.6 million.

$6.6 million, yes.

That's awesome. Thank you.

Thank you. And our last question is from Mitra Ramgopal – Sidoti. Your line is open.

Yes. Good morning. Just a couple of quick questions. On the MSP wins, if you could give us a sense in terms of the sizes of the contracts you are seeing, and is it mostly from new customers, or are there any competitive win?

It’s mostly new customers. And our average size of MSPs runs about $7 million or $8 million. I would guess these are about -- if you add them all and divide, it about what our average MSP is. So I think average about $7 million or $8 million per MSP.

Okay. Thanks. And also just quickly on the project business I know you'd mentioned a year ago you probably would have been able to handle the business you saw. Do you feel comfortable looking out 2017, for example, if you were to see current levels pickup, do you have a pretty good handle and being able to take the business on?

Yeah, I mean we have a lot of demand. We don't really need to look at. This is more about now starting to be able to deliver on the demand we have. And the fact that we grew faster on our organic growth as well as the project revenue and we were able to deliver all of it. I think it's a good sign that we can now start to take a bit more market share going forward, now that we -- this whole turnaround effort has been about improving processes, getting recruiters onboard, up to speed, increasing the number of candidates that are coming in the door, all of that I think is bodes well, that we will be able to fill higher percentage of the orders we have going forward.

Okay. Thanks, again.

At this time, we have no further question.

Okay. Well, thank you everyone. I appreciate you joining us this morning. And we look forward to updating you with our fourth quarter and full year results in May. Good bye.

A replay of today’s conference will be available through November 17, 2016. You may access the replay by dialing 1-800-395-7443 or 1203-369-3271. Please use the passcode 2016. Thank you for joining. You may now disconnect.s