CCRN - Cross Country Healthcare: Down But Not Enough
2024-06-25 10:07:11 ET
Summary
- Cross Country Healthcare has seen a material decline in their share price, down 60% from the high in November 2022 following the travel nurse industry declines.
- There's likely still more softness ahead with Q1 reflecting declining demand yet again, although their Physician Staffing business is offsetting Nurse & Allied declines.
- At today's low-teens share price, I don't think investors are fully compensated for macro and capital allocation risks and should wait for a lower price.
Introduction
Cross Country Healthcare, Inc. ( CCRN ) has been a crummy stock to own over the past 2 decades with pockets of short-term price growth outweighed by continued declines up until 2019. Then COVID hit and travel nursing exploded both in terms of demand and rates, with the reverse happening today. Unsurprisingly, CCRN's share price is following suit, now down 60% from the high in November 2022, leaving me questioning whether there's an opportunity here.
While fundamentally, I do think this is a business that'll likely grow over time - travel nursing and the various other healthcare services they provide have a justifiable place in the market - there are macro, competitive, and capital allocation questions that keep me on the sidelines. That said, there are some internal growth initiatives to counter market trends, however, travel nurse rates remain the bigger question - i.e., how far they ultimately decline before stabilizing. Depending on what you believe here will largely dictate your take on the investment attractiveness.
Nurse & Allied (N&A): Further Softness
For those less familiar, the Nurse & Allied segment encompasses a few things. There's the typical nurse and allied temp labor contracting where they'll connect their clients (hospitals, clinics) with qualified personnel to fill roles, there's the MSP offering where CCRN will layer additional services in handling the clients' staff needs, there's the VMS offering (Intellify) where the CCRN offers a portal for the client to source talent on their own, and then finally, there's some RPO services they'll provide too....
Cross Country Healthcare: Down, But Not Enough