Cross Country 2025 Q1 Earnings Misses Targets with Net Income Decline

Cross Country (CCRN) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company's results fell short of expectations, with revenue and net income showing significant declines year over year. The guidance remains focused on a strategic merger with Aya Healthcare, anticipated to enhance productivity and profitability in the coming months. Despite the current financial setbacks, the company maintains a positive outlook due to ongoing investments in technology and workforce efficiency.

Revenue
Cross Country Healthcare witnessed a notable decrease in its total revenue, reporting $293.41 million for Q1 2025, a 22.6% decline from $379.17 million in the same quarter of the previous year. The Nurse and Allied Staffing segment contributed $242.29 million, while Physician Staffing added $51.12 million, collectively forming the total revenue of $293.41 million.

Earnings/Net Income
Cross Country experienced a downturn, posting a loss of $0.02 per share in 2025 Q1, contrasting sharply with a profit of $0.08 per share in 2024 Q1. The net loss amounted to $490,000 in 2025 Q1, marking a significant deterioration of 118.2% compared to the net income of $2.69 million in 2024 Q1. This performance indicates EPS is unfavorable.

Price Action
The stock price of Cross Country has edged up 0.07% during the latest trading day, has edged up 2.14% during the most recent full trading week, and has dropped 4.62% month-to-date.

Post-Earnings Price Action Review
Investors employing the strategy of purchasing CCRN shares after a revenue decrease and holding them for 30 days have historically seen notable returns. Over 25 years, this approach has achieved a Sharpe ratio of 2.11 and an annualized return of 13.0%, surpassing the 9.2% return of a traditional buy-and-hold strategy. Additionally, the maximum drawdown was limited to 20.3%, a substantial improvement compared to the 83% experienced in the buy-and-hold scenario. This suggests the strategy effectively leverages CCRN's potential for rebound post-revenue declines, underscoring the likelihood of mean reversion in the company's stock price.

CEO Commentary
"Our first quarter results reflect solid execution with both Homecare and Physician Staffing business reporting solid year-over-year growth," said John A. Martins, President and Chief Executive Officer of Cross Country Healthcare. He noted that as the market for core nurse and allied services stabilizes, the company is focused on enhancing productivity through investments in AI automation and its cost-effective center of excellence in India, aiming for improved efficiency and profitability. Martins expressed optimism regarding the pending merger with Aya Healthcare, emphasizing a commitment to successfully complete the transaction in the second half of the year.

Guidance
Looking ahead, the company remains focused on driving productivity and efficiency while working towards the successful consummation of the merger transaction with Aya Healthcare in the second half of 2025. The CEO’s remarks indicate a commitment to leveraging technological investments and strategic initiatives in response to market stabilization in the healthcare staffing sector.

Additional News
Cross Country Healthcare has been actively engaging in merger and acquisition activities, notably the pending transaction with Aya Healthcare valued at $18.61 per share, expected to close by September 3, 2025. The deal, subject to stockholder approval and antitrust clearances, will result in CCRN's delisting from Nasdaq. Additionally, Cross Country has obtained all the necessary stockholder approvals for the Aya Healthcare transaction, marking a significant milestone in its strategic growth plan. Furthermore, Susan E. Ball from Cross Country has been recognized on SIA's Global Power 150 Women in Staffing list, highlighting the company's commitment to leadership and diversity within the industry.