Good afternoon, everyone, and welcome to the Cross Country Healthcare's Earnings Conference Call for the Fourth Quarter 2025. Please be advised that this call is being recorded, and a replay of the webcast will be available on the company's website. Details for accessing the audio replay can be found in the company's earnings release issued this afternoon. At the conclusion of the prepared remarks, I will open the lines for questions. I would now like to turn the call over to Josh Vogel, Cross Country Healthcare's Vice President of Investor Relations. Thank you, sir. You may go ahead.

Thank you, and good afternoon, everyone. I'm joined today by our Chairman of the Board and Chief Executive Officer, Kevin Clark; as well as Bill Burns, our Chief Financial Officer; Marc Krug, Group President of Delivery; and Amiee Hawkins, Chief Solutions and Operations Officer. Today's call will include a discussion of our financial results for the fourth quarter of 2025 as well as our outlook for the first quarter of 2026. A copy of our earnings press release is available on our website at crosscountry.com. Please note that certain statements made on this call may constitute forward-looking statements. These statements reflect the company's beliefs based upon information currently available to it. 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 2024 annual report on Form 10-K and quarterly reports on Form 10-Q as well as in other filings with the SEC. The company does not intend to update guidance or any of its forward-looking statements prior to the next earnings release. Additionally, we 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 those calculated in accordance with U.S. GAAP. More information related to these non-GAAP financial measures is contained in our press release. With that, I will now turn the call over to our Chief Executive Officer, Kevin Clark.

Good afternoon, and thank you for joining us. As you know, 2025 was a challenging year for Cross Country Healthcare. The pending merger introduced uncertainty for our employees and our customers, which weighed on our growth during the year. With that process now behind us, we have improved momentum and a renewed focus across the organization. However, what did not change was the strength of our client relationships, the quality of our clinicians or the financial strength of our balance sheet. I stepped back into the CEO role with a clear objective: restore momentum, sharpen execution and position the company to grow faster than the market again. As reflected in the recent Becker's article on Cross Country, we are advancing a strategy built on operational rigor, technology-powered workforce solutions and disciplined capital allocation to drive long-term shareholder value. We enter 2026 with no debt and a significant amount of cash, providing us the flexibility to invest in growth initiatives that generate durable returns. Our priorities are straightforward. Simply put, we must expand our market share within large health systems, capture new logos across our divisions, improve operational efficiency and speed to fill and leverage technology as a differentiator. I am confident that this will be a year of execution and acceleration. The opportunity in front of us is meaningful and with disciplined execution and renewed commercial focus, we expect to return to revenue and earnings growth by the end of 2026. Now turning to our business performance. I'll start with discussing the markets we serve and the actions we are taking to achieve growth in 2026 and beyond. Looking at the health care staffing market and travel in particular, we believe that the industry has stabilized and is poised for growth in 2026. With stability in both demand and in…

Thanks, Kevin, and good afternoon, everyone. It's great to be speaking with you all again and to share some insights on our results as well as the business. Since we've not held quarterly earnings calls throughout the past year due to the merger, I'll spend a bit of time focusing on the full year in addition to the most recent quarter. As noted in today's press release, consolidated revenue for the fourth quarter was $237 million, down 5% sequentially and 24% over the prior year, while full year revenue was $1.05 billion, down 22% from the prior year. The majority of the decline for both the quarter and the year stems from the prolonged period of normalizing contingent utilization by clients across our core Nurse and Allied businesses, most notably Travel, Nurse and Allied. I'll go into the segments in more depth in just a few minutes, but we're pleased to see a slow turning in those businesses as we enter 2026, pointing to a return to a more normal cycle for contingent labor. Gross profit for the quarter was $48 million, which represented a gross margin of 20.3%. Gross margin was down 10 basis points sequentially, but up 30 basis points over the prior year. Throughout the year, gross margin was relatively stable, ranging between 20% and 20.4%, with the majority of the fluctuation stemming from mix shifts across the portfolio, which partially muted the continued margin pressure within travel. Moving down the income statement. Selling, general and administrative expense was $51 million for the quarter, up 9% sequentially and down 8% over the prior year. Full year SG&A was $200 million compared with $233 million in the prior year, down 14%. SG&A for the quarter and the year included nonrecurring severance costs related to the recent CEO change.…

[Operator Instructions] First question from Trevor Romeo with William Blair.

Kevin, welcome back. Just wanted to maybe start by following up on your comment, I think, about exiting 2026 at those run rates above $1 billion in revenue and I think 4% to 5% EBITDA margins. So, first on that, I guess, what is your confidence in achieving that goal? And then second, particularly on the margin side, that is quite a bit higher than where you're exiting '25. So maybe you could just help us understand a bit more what needs to happen or what levers you need to pull to get up to those margin levels at the end of the year?

Yes. Thanks, Trevor. It's great to be back. Look, we have a high level of confidence in what we just described in our comments. We have a large pipeline coming out of last year from the sales side, MSP and VMS. We've got what we think is market-leading technology with Intellify. We have a whole house strategy of bringing Intellify across all of our divisions for our customers. We have a terrific balance sheet. As you know, we have cash on hand to invest in the business. We've recently ramped up our revenue producers, and they're driving great results. We're going to see quarter-over-quarter growth with our core business. And our second largest business, we also are very optimistic in the second quarter with our locums business as well. Things are going to come together really great. We think the market has stabilized, and we think we're extremely well positioned I'll also point out that we're excited to celebrate this month our 40th year being in business. For 40 years, Cross Country Healthcare has led this industry with clinical excellence. We are the trusted brand in the marketplace. So when I put all those things together, I personally have never been more excited about the market conditions and our own ability to excel and you take a look at our balance sheet and our positive cash flow, and I think we're poised for a lot of growth this year. Bill, you might want to cover from the margin perspective, a few more comments.

Of course. Trevor, so look, as Kevin said, I think in his comments, we've made a lot of investments to start out the year. We took out several million dollars in cost and redeployed that in revenue producers. So those investments, we do expect -- we're already starting to see return on that investment. So that's part of the growth story sequentially, an improving market backdrop in travel. Our home care business continues to do very, very well. Education is doing well as well. So you look at that the trajectory on the top line. But I would say from a margin perspective, we're not sitting today looking at a very big gross margin expansion, especially from the pay bill side. I think we're still in a very hypercompetitive market when it comes to that. But there will be some margin appreciation, notably as the businesses with the margins that are above the consolidated average, our home care, our physician business and our education business, those will continue to produce a better mix. So the margins will lift up on the gross margin side. But in truth, the opportunity to get to the 4% to 5% that Kevin called out is really about operating leverage. So besides the fact that we're going to get return on the investments, we've got plans to continue to look at offshoring more work to our center of excellence in India. We've got identified actions around automation of activities of the things that we're doing. And candidly, we're not leaving any stone unturned. So I think from the standpoint of how we envision exiting the year, north of $250 million and that 4% to 5% seems very doable.

Great. That was going to be my follow-up on kind of gross margin versus SG&A. So, I appreciate that, too. And then maybe just shifting over to your balance sheet and capital allocation. So having no debt, I think, in this industry seems like a pretty big advantage right now. Maybe specifically thinking about M&A, what kind of opportunities and pipeline do you see out there? I think we've heard from a lot of people in the industry that travel would benefit from consolidation. Are you still maybe more focused on expanding the non-travel businesses? Or would you be more interested in consolidating travel at this point? Or how are you thinking about the acquisition strategy going forward?

Yes, great question. Look, it's a disciplined capital allocation strategy. We're being patient. I will say coming back into the seat and with the termination of the merger, literally, the phone has rung off the hook for the last three months. So we've had a lot of interesting discussions and meetings and so forth. We know that our future path is all through our footprint of customers. So as we look at kind of strategic allocation of our capital and we look at acquisitions, we're not looking at more supply partners or third-party suppliers. But our ability to invest in our technology platform to grow our footprint of clients and our customers that's areas that we're excited. We're also very excited about our home-based staffing division. We think we've had a lot of growth there. We think we'll continue to see a lot of growth. We're looking for accretive tuck-in acquisitions in a division like that. We certainly like the locums area quite a bit. So it's being patient. It's looking at the marketplace. And to the point that you made earlier, it's -- the other thing is some of our competitors are over their skis somewhat in terms of their balance sheet. And we think it's an excellent time for us to be in the market with a strong balance sheet, and we'll look to consolidate where we can.

Our next caller is Constantine Davides from Citizens.

I wanted to maybe touch on technology a little bit. In the release, you put in a lot of metrics around Intellify. And then I think you referenced outsourcing Intellify to some other staffing companies. So I wanted to get some color there. And then when you talk about expanding its use to other markets, is that home care, education, locums, just a little bit more detail there? And then how -- what kind of time frame is there to sort of expand that platform into some of those other markets?

Yes. I'll start with the last question. The time frame is 2026. We're excited to have a whole house strategy. We believe with the consolidation of large health care systems, we need to be a provider of solutions, not just for nursing and allied, but also for locums, also for home-based staffing. What our strategy is -- parallels is the continuum of care. The way we have diversified our company is to be wherever we need to be from a talent acquisition perspective, providing solutions to our clients across that continuum of care. So the technology that we've built, we've been building it for the last four years. We're well on our way to diversify that offering across all of the divisions. We already have -- to your point, we have licensed the technology to other companies in our industry. We have also provided a vendor-neutral VMS strategy in this industry in addition to our MSP. We have an existing footprint of locums and VMS for that particular market. So, these other divisions, we will be coming to market later this year, hopefully, sooner than later, and we'll be happy to update you on that. I don't know, Amiee, do you have any additional comments?

Kevin, I would just share that we have a really healthy pipeline around those items all the way through from MSP, VMS to whole house. So, I think, again, I would echo you, more to come early in the year.

Great. And then just a follow-up. Obviously, a lot of strike activity out there in the market. It sounds like you're going to benefit from that somewhat in the first quarter, Bill. I just wonder if you could size that for us. And then I'm just curious, are there any negative effects from all this activity just in the sense of your own ability to staff on behalf of your clients?

Maybe I'll just start, and I'll throw it over to Bill. Look, we've participated in two events, two strike events, two labor disruption events. It's not material for us this quarter. We have a terrific division in CRU48. We're prepared as there's future labor disruption events to participate. We have a strong track record of providing crisis staff historically, and we feel very confident that we could stand up whatever -- one of our clients may require. But I don't know if you want to size more on.

Yes, Constantine, I would just say, look, from a labor disruption perspective, to Kevin's point, we support it to. It's not our core business. We will do it certainly with our clients. These events were not our clients, but we do -- we will support where it makes sense. So we had some labor disruption revenue in the first quarter. It will be in the single millions. That's why Kevin is saying it's not really overall material, and it's not included in those travel metrics we're talking about with the TOA, with our travelers on assignment, excuse me, that is ramping continuously throughout the first quarter and into the second quarter.

Would you like to go to the next question?

Yes, please.

Tobey Sommer with Truist.

I wanted to ask a question about the sequential momentum that you think you have going into 2Q. Is that something you're already seeing in sort of your weekly revenue runs? Or is that a product of putting together the pipeline and the new sales resources and sort of probability weighting and eventual impact from the combination of those two.

Tobey, nice to hear your voice again. Look, I don't want to speak in hypotheticals, but we were under a merger agreement last year and perhaps our results were suppressed because of that process that we were through. So, as we enter 2026, we have a lot of momentum. And this company was poised, I think, for growth because we've seen a stabilization in orders. We have some wonderful clients. If you look at our specific orders, our MSP orders are up from Q4 to Q1 or direct MSP indirect orders, I will say. So if you look at in terms of the way we look at the business, I mean, there's plenty of demand out there. There's also plenty of competition. But this company moving forward in this year is all about sharpened execution, about rigor and discipline about getting the culture right, restoring the momentum coming out of that merger period of time. But Marc, you might want to add some color?

Sure. Tobey, Yes, we are realizing some sequential momentum. And we invested heavily in revenue producers late in the year. We have tweaked our model so they ramp up much faster, and the results are very positive so far. We expect to continue to ramp up and gain momentum.

And Tobey, this is Bill. I just would add. We're sitting here in March. Obviously, these are 13-week assignments. We have a pretty good lens certainly into the first four to six weeks of Q2. So we've got a pretty good optimistic view that, that is going to continue on that trajectory. We obviously are following our production weekly and are able to forecast that out.

Thank you for that answer. In terms of what you're seeing and what you think the market is like, how would you compare and contrast your own experience? And I understand contextually, we've got the merger agreement towards the end of last year and maybe some latent ability to perform better. But I'd love to hear whether you're saying that the market is, in fact, turning or this is really just market stabilization and you're performing a little bit better?

Well, I definitely can say we're performing better than we were last year. And our goal is, from a historical perspective is to grow above the market averages. And I think everybody that works in this company feels that way. But I think some of the strategic decisions we've made, some of the operating leverage that we have from our center of excellence, for example, in India, some of the technology that we've deployed in the company and are deploying, we are AI-first technology platform for our client side, but we're also an AI-first company from the delivery perspective. So we're clearly managing the business better. But as I said earlier, direct orders, MSP orders are up quarter-over-quarter. I think we've seen stabilization of bill rates. Average bill rates now are around $90 to $95. We didn't get the typical bump up in Allied Health this winter, which means that we won't see a step back in the second quarter. So we'll see a consistent quarter-over-quarter improvement in both Allied and Travel Nursing. So, I think, I can't speak for the rest of the industry, but we're very optimistic. We're very excited about this company. We're very excited about the position that we have and our ability to execute for our customers and grow our market share this year and get back to a trend line where we are outperforming the industry averages.

If I could ask two brief ones. What are you hearing from customers about the prospective and prior changes to federal funding within the health care system? And I guess, the subsidies on the exchanges come to mind in terms of sort of current stuff and then Medicaid in nine months or a year. And does your fourth quarter revenue level that you kind of outlined, does that include any kind of strike revenue at this point? Or would that be considered sort of core revenue at this stage?

I can take the latter part, Tobey, this is Bill. The fourth quarter revenue does not have labor disruption in it of any significant level at all. The numbers I called out a moment ago really reflect the first quarter guidance.

Yes. I mean in terms of the first part, I mean, we haven't noticed anything unusual in the marketplace. We're looking at certain segments like that don't really answer your question. But I think, for example, with foreign trained nurses, the backlog is slowly clearing. So we're keeping an eye on retrogression. It still exists because of annual visa caps, but we think that there's a greater appetite for international nurse candidates as well. So we're seeing different things. I think nationally, we're seeing kind of a broad usage of contingent labor. I think health care systems are getting smarter. Obviously, there is a cost environment that is tight. And that's why we excel because we are not a staffing company. We are a technology company that provides staffing, and we can help our customers with solutions, whether that's building their own talent pool, managing their -- managing that talent pool with our IRP technology or helping them either in a vendor-neutral situation or as a primary supplier.

[Operator Instructions] Our next caller is Kevin Steinke with Barrington Research.

I wanted to start off first by asking about your comments on the sequential progression in revenue as we move throughout 2026. Are you just -- they're referring to that you expect the year-over-year rate of change in revenue to improve in each quarter as we move forward, and we should still expect a typical sequential revenue pullback in the third quarter just due to education staffing?

Yes, Kevin, this is Bill. I guess our lens right now, as you look at Q3 and Q4 into the back half is we're looking at sequential growth across all the quarters, even as the education business pulls back that's predicated on continued growth in the other lines of business, travel, home-based staffing, et cetera. So our lens is right now that we're going to see sequential progression all throughout. When do we get to year-over-year growth? We're expecting that in the back half. Is it Q3 or is it Q4? I think a little bit to be seen there, but I would hazard a guess it's going to be hopefully -- well, I shouldn't say hazard guess. I'll say we're looking at Q3 as the quarter we get back to year-over-year growth is our target, but that's going to be close. So we'll see if it's in Q3 or Q4. But we're on that right trajectory, and it's really about continuing getting the return on the investments we've made this year.

Okay. That's helpful. And you expressed some optimism about locums, physician staffing moving forward. But specific to the fourth quarter, was there anything that you saw impact that business?

Yes. I don't know that there's any one specific thing. It seemed to be a broader pullback across some of our larger specialties. We do have -- we concentrate in primary care, hospitalist, emergency medicine, anesthesia. Those were the ones that we saw the pullback. What was started in the third quarter is just a handful of clients was a little bit more widespread in the fourth quarter. But again, I do want to stress, we don't know how much of this is due to disruption or distraction from the merger because we've started to see the production, the weekly production already turn this year as we come into 2026. So the indications are that business is poised to start seeing sequential growth as we get into the second quarter.

Okay. Great. Just lastly, you talked about the center of excellence in India and how that's helping drive cost savings. Can you maybe just give us some perspective on how that center of excellence has progressed over the last year in terms of capacity, what kind of work you're doing there and how much more capacity you have there that you want to build out there?

Look, I would say I think Cross Country has done an excellent job, as Bill pointed out in his comments, reducing our headcount by 21% over the past year. We've moved a substantial number of our business process and functions to that center of excellence in Pune, India. We now have approximately between 700 and 800 employees that work there, and it's across everything from strategic sourcing and delivery to shared services to payroll and billing to IT and engineering. So we -- it's a full suite of employees that we have got a phenomenal culture there. We're very proud of the team, and they're very excited to be a part of our story, and they give us great net operating leverage. But Amiee, do you want to maybe add? You were just there recently.

I was just there, Kevin, thanks. I think it's -- clearly, you hit it on all fronts, but I think it's also important to note that they're doing a fantastic job of automation as well. So as we continue to automate there and move additional pieces offshore, we just continue to see better and better results.

Our next caller is Bill Sutherland with Benchmark Company.

I wondered if you were starting to look at an AI strategy across the enterprise. I'm sure you are. Kind of where do you think you can apply it in the next year or two?

Yes. Bill, yes, great question. We're infusing AI and Agentic AI throughout the enterprise. So we have an enterprise-wide strategy. In particular, we're leveraging Agentic AI in the way that we provide delivery and recruitment. So our processes there are becoming more and more automated. We're leveraging AI technology in our locums business, for example, around the credentialing component. We think there's an opportunity. One of the things we talked about in our earlier comments is delivery speed and accelerating. And so a lot of what we're doing strategically is accelerating our ability to deliver candidates at the right moment for our customers wherever 24/7. So we're leveraging that technology almost in every part of the company, and we're constantly evaluating new tools and business processes that we want to automate. And I think it also goes back to why I think I'm very excited about the market environment we're in. We believe as a innovation company, a technology-led company that over time, we can take a tremendous amount of cost out of our company, and we could see our margins -- our EBITDA margins grow over time by getting operating leverage from technology. So, we employ a lot of people, both here in the U.S. and offshore, as I mentioned, in the IT area. And we are -- we'll continue to invest. And again, that also speaks to our strong balance sheet and our ability to leverage the cash that we have on hand to invest. We have a robust technology budget, whether it's projects that we have underway or CapEx.

Got it. And looking at the home and education businesses, can -- is there a way to give us a sense of their relative size. They keep moving the needle pretty nicely. And I'm not sure kind of what percent of the business they are now.

Yes, sure. I can give you that. This is Bill Burns. So home-based staffing is run rating north of $140 million annualized right now. And we -- as we said, we continue to see mid-single-digit kind of sequential growth, double-digit year-over-year growth on that business. And education, just we had a slight pullback as we came into the fourth quarter this year. So I'd say it's run rate at about $75 million on an annual basis.

Okay. And that growth there is probably going to resume this year, Bill?

Yes.

Okay. The international side, do you guys have a pipeline that you're kind of nurturing right now?

We don't. We partner with others, but it's an area of opportunity that perhaps we will invest in downstream because we think it's an opportunity for us to have another important part of the supply chain figured out for our customers.

Ladies and gentlemen, this concludes the Q&A period. I'll now turn the call back over to Kevin Clark for closing remarks.

Thank you, operator. I'd like to thank everyone for participating in today's call, and we look forward to updating you on our progress on the next call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.