Cross Country Healthcare, Inc. (CCRN) Earnings Call Transcript & Summary

All right. Good morning, everyone, and welcome to Cross Country Healthcare's First Investor Day. My name is Josh Vogel, Vice President of Investor Relations. And before we begin, a few housekeeping items, please review the safe harbor language on the screen behind me. And following our presentation, we will conclude the day with a question-and-answer session. [Operator Instructions] Also, I'd like to note that today's presentation will be available on the Investor Relations page of the Cross Country website and in Form 8-K filed with the SEC. After the event's conclusion, a video webcast replay will also be available on our Investor Relations website. And with that, let's begin. [Presentation]

Good morning. On behalf of the Cross Country team, I'm excited to welcome you to our inaugural Investor Day, which marks a significant journey in our 36-year history. Today, we will share a compelling road map and a plan of how we are delivering long-term sustainable and increasingly profitable growth. I would like to begin by recognizing the vision, legacy and leadership of our Chairman of the Board and Co-Founder, Kevin Clark. Kevin is the inspiration and true champion of our purpose-driven culture. He created our tapestry of foundation of integrity, transparency and ethical conduct to do the right thing for our people, for our clients, for our professionals, our communities and our shareholders while making a meaningful difference. And Kevin led Cross Country to a significant rise in market capitalization during his tenure as CEO. Thank you, Kevin. Whether you know us well or you're new to the Cross Country story, our goal is to deepen your understanding of who we are and what we do. Cross Country is a high-performance tech-enabled workforce solutions firm. It is through that lens that I will tell our story. As CEO, I've been focused on 3 powerful principles since taking the helm 6 months ago, specifically evolving and elevating our suite of capabilities, evolving and elevating the way we are leveraging our technology, evolving and elevating our sales organization. Evolving and elevating how we deliver on our promise to bring quality care to our clients. Evolving and elevating on how we engage and nurture our relationships with our health care and education professionals. And evolving and elevating our business for accelerated growth, higher efficiency and greater value creation. And the proof is in our execution, the results, the numbers, the return on investment and the momentum we're generating. As you'll see today, Cross Country is executing on a winning strategy that differentiates us in the marketplace, a winning strategy that answers the question, "Why invest in Cross Country?" That strategy is simply stated is we're focusing our leadership to pursue vast and growing traditional and new market segments. We're leveraging leading-edge technology, creating a winning culture, a best-in-class sales organization and an unrivaled delivery capability to win, and we will win. Let me take a deeper dive into our market opportunity, share our current momentum and why we are optimistic about our industry leadership and profitable growth aspirations. It starts with an ocean of opportunity. The health care and education markets alone, according to the Staffing Industry Analysts, will represent an impressive $31 billion market opportunity in 2023 for Cross Country. Now we all know the SIA numbers are traditionally a bit conservative, potentially creating an even larger addressable market. As a matter of fact, as many people might be aware, the SIA just updated their numbers again last night. Unfortunately, after we finished our deck. We currently hold roughly an 8% share in this growing market. The significant work we have done on enhancing our sales team will and has already shown accelerated MSP wins. Additionally, we are entering the high-margin vendor-neutral market with the launch of our Intellify product. It's our cloud-based workforce management solution, which gives us access to greater than 40% of the addressable market, which we traditionally have not participated in. And to give that some context, 94% of all health care CEOs rank workforce as their #1 priority today. Why? We believe that health systems spend more than $1 trillion annually on labor, more than half of all health care costs. But first, let's review the state of the business. We are a digitally transformed innovative enterprise, with diverse capabilities to help clients solve their most pressing labor challenges. Cross Country has never been healthier, with significant availability under our lines of credit and a historic low leverage ratio. We have a record outstanding superior execution. Cross Country is operating at a very different level with a backdrop of strong demand and relatively stable bill rates. We are fundamentally a different company with a winning strategy and a winning equation of success with a healthy balance sheet, strong cash flow and liquidity. We have a focused merger and acquisition strategy designed to follow the patient across the continuum of care from pre-acute to acute to post-acute, spanning the health care and education segments. In the last year, we acquired Workforce Solutions Group, a leading provider in home health segment, serving a critical role in caring for our aging population. They manage the complexities of sourcing, recruiting and employing health care professionals to meet the needs of patients requiring care in the home or in the community versus going into a nursing home. WSG is on track to be a $100 million annualized line of business, representing a 30% growth since we acquired them a year ago. And we've expanded our services in the education market with the acquisition of Selected, a cloud-based matching and hiring talent platform that pairs educators with schools based on mutually shared preferences to ensure a tailored and long-term fit. This SaaS-based subscription model expanded our tech capabilities in the education space and built on Cross Country's educator-led, student-driven and solutions-oriented offering. Our track record for profitability is equally impressive as we have met or exceeded guidance and consensus for 12 of the last 14 quarters. This is a good time for me to also update you on what I've been focusing on in the 5 months since I've been in this role as CEO. Last month, we announced a share repurchase program of $100 million. And as of today, we have already repurchased roughly 3% of shares outstanding. You may have seen the press release last evening, announcing our new acquisition of Mint Physician Staffing, a leading temporary locum tenens agency dedicated to placing qualified physicians, nurse practitioners and physician assistants; and Lotus Medical Staffing, a leading locums and permanent agency specializing in anesthesiologists and CRNAs, both which will significantly bolster our locums portfolio. I'm excited to announce that later in the presentation, you will be hearing from Bill Burns, our Chief Financial Officer. And he will be raising our guidance for the third quarter, and he will be unveiling our new 2023 minimum full year guidance. Based on our current trajectory and momentum, we are aspirationally setting our sights on the path to becoming a $3 billion revenue company and a $300 million adjusted EBITDA company within the next several years. I know you'll agree that these are compelling signals that we are delivering long-term sustainable and increasing profitability and growth, further supporting why we believe our stock is undervalued. Now that you have an understanding of the progress we have made, I'd like now to introduce you to our winning strategy, which encompasses 5 pillars. Starting with leadership, which is the foundation of our success as an organization. When I refer to leadership, it really starts with what Cross Country has built, a leading brand and a thought leader, an industry leader in delivering quality, instilling trust, confidence and value. A source of pride is our industry leadership in clinical excellence, where we have what we believe is an unrivaled 95% on time onboarding start rate and a clinical cancellation rate of less than 0.5% of 1%. We are built on a foundation of integrity, transparency and ethical conduct. And we are committed to doing business the right way. And speaking of leaders, today, you will meet some of our talented executives who share our winning strategy, key members that represent the strategic evolution that drives how we win with superior execution. This team is a compelling mix of industry leaders and top functional professionals with an impressive track record of success. Next is technology, which represents the biggest area of growth and innovation at Cross Country. Those who follow us know we are making significant investments to generate greater levels of efficiencies and productivity while leveraging expanded scale, enhancing value for our health care clients, our health care professionals and our own teams. Two examples of our innovative technology are Intellify, a workforce management platform and a game changer that is truly state-of-the-art versus older and existing platforms in the market, helping our clients more effectively manage and solve their most challenging people needs through data and analytics advice and insights. And Gateway, our career job portal for health care professionals, enabling job seekers to find the next right job more simply and easily through real-time frictionless experiences on their terms. Boldly, I will say to you today that our vision for the future is for Cross Country to continue to evolve towards being a Service as a Platform provider. Shifting to people and culture. It's the heartbeat of a firm. We're becoming the destination of choice for employees. We are committed to focusing on recruiting, training and engaging the top talent in the industry. A key imperative is cultivating internal talent, driving increased satisfaction, investing in our staff and enabling them to be more productive, faster and earlier in their careers. We are proud of our robust and diverse culture, where we have proof that we are creating optimum working environments, leading to employee satisfaction. The fourth winning element is sales. This is the lifeblood to fueling our growth. With the arrival of Dan White, as our Chief Commercial Officer, the sales organization has gone through a remarkable transformation. Bringing in talented professionals allowed the organization for peak performance, implementing best practices and of course, we're leveraging technology. With a differentiated go-to-market approach and armed with a more diversified portfolio, we have evolved into a best-in-class consultative and indispensable partner for our clients, offering advice and creative solutions addressing the entire workforce ecosystem versus only contingent labor, resulting in early impressive wins and a robust pipeline for the near future. Prior to the pandemic, our MSP spend under management had an annual run rate of about $450 million. And now, we are on a $2 billion-plus trajectory. I'm enormously proud to say our pipeline of MSP relations and relationships has never been more robust. The final piece of our winning delivery and strategy is our world-class delivery capability, fulfilling our promises and strengthening our relationships with clients through our digital high-tech, high-touch approach. We're focused on elevating and creating a differentiated experiences for our professionals through every touch point of their career journey. From interactions with our recruiters, to white-glove service from our dedicated concierge teams, to our leading digital ecosystem like our own candidate portal gateway, to the launch of our new state-of-the-art website designed to help professionals more easily find and apply for potential jobs. In fact, since we launched our news website, we've had a 100% increase in unique visitors. The other critical component is speed to market, getting quality professionals to work faster at the patient's bedside or in the classrooms. Through a sophisticated recruitment marketing ecosystem, we engage and capture professionals better than anyone. In fact, our unmatched lead generation engine in the last year has generated 78% more leads for all of our lines of businesses and 190% more leads specifically to our travel lines of business, fueling our recruiters with a steady pipeline of quality professionals to meet demand. Our winning strategies are the foundation of who Cross Country is today. And you will hear through this presentation a story of preparation, of speed, of quality execution, of retention and of scalability. Embedded in everything we do is the drive for continuous improvement in our people, our processes and our technologies. Let me recap the value that we provide. First, for our clients, both direct and managed, Cross Country brings them the health care talent, technology and advice they need to serve their patients and communities. Secondly, we bring value to health care, education and home care professionals seeking to secure career and/or job opportunities in the marketplace in the easiest, fastest and most frictionless manner possible, earning their loyalty and referrals as -- with our successful placements. And of course, we create value through our people, offering meaningful work, career opportunities for advancement and a progressive robust culture. It's critically important that we provide them with the tools, technologies, inspiration and process so that they are equipped to deliver best-in-class service to our health care clients and to our health care professionals. As you will see, we are building on this foundation of quality and trust to make Cross Country the preeminent technology-led workforce management company in the segments we serve. And so this is the road map for today. Let's get started and hear specifics on our long-term winning strategy. Come on up, Bill Burns, the floor is yours.

Thanks, John, and welcome, everyone, to our first-ever Investor Day. We're so thrilled to be able to share with you today a bit more about Cross Country, the markets we serve, how we intend to continue growing the company and deliver impressive results that will drive shareholder value. As John mentioned a moment ago, the 2 largest contingent labor markets that we serve today include health care and education, representing an impressive $31 billion market opportunity. And as SIA just updated that, is now over $50 billion. So it's about a 67% increase from what we had expected. I ask that you keep that in mind as we go through the presentation. According to the Staffing Industry Analysts' previous estimates, the 2 markets were projected to be about $31 billion in 2023. And looking at Cross Country's performance in 2022, we estimate that we have roughly an 8% share of those large and growing markets. As we dive a little deeper, you'll see that on the left side of the chart here, the healthcare staffing market actually breaks into several submarkets, covering travel and per-diem nursing as well as allied specialties and locum tenens. With the impact from the pandemic fueling rising demand and higher bill rates, the market has nearly doubled in size in 2021 and is projected to come down just a bit in '22 and 2023, primarily on the normalizing of the bill rates. I'll go into more detail on that dynamic in just a moment. But on the right side, you see a slightly different view of the marketplace, one that shows how we believe the market is segmented by the nature of the client relationships. We estimate that some 80% of the market currently operates through either a managed service program or a vendor-neutral offering, and that roughly 20% is contracting directly with the vendors. Under those assumptions, there's some $10 billion to $15 billion plus in spend that runs through a vendor-neutral offering, a part of the market that was previously only accessible to Cross Country as a sub-vendor to one of the programs. Well, that's all set to change. With the launch of Intellify, we're positioning the company to access the entire market opportunity. And I'll get into a little more detail on how we -- how that could play out a little bit later in the presentation. As I mentioned a moment ago, COVID has played a pretty big role in the market with volatile swings in demand and rapid rises in bill rates. And that effect was most evident in the travel nurse market. What's not immediately clear though is that the growth did not come from bill rates alone. In fact, if you were to apply an average bill rate to the market across the last several years, you'd quickly see that the primary driver has been the rise in the number of clinicians which peaked in 2021, but projected to be well above pre-pandemic levels for the future. And from a bill rate perspective, we've seen increasing stability in recent weeks amidst the pervasive labor shortages in the health care sector. As we called out in our last earnings call, travel bill rates are expected to decline sequentially for the third quarter in the mid-teens. However, the sequential decline for the fourth quarter is not expected to be as severe as we now anticipate a more modest sequential decline in the high single to low double-digit range. As a result, we believe bill rates will settle in roughly 35% higher than pre-COVID rates heading into 2023, which equates to an annual compound growth rate of about 8% relative to those pre-pandemic rates. Now looking at this chart, the point we find most interesting is that when you calculate the average number of FTEs in the marketplace using bill rate trends, you see that the clinicians on assignment are expected to be up nearly 65% and likely higher with the new estimates relative to the pre-pandemic years, which represents a compound annual growth rate of about 13%. There are a number of factors that come into play for a clinician to decide to accept one of these contingent roles, which, of course, includes compensation, but it also includes the lifestyle and the freedom to choose when and where you want to work. When we look at our data, we've actually grown the travelers on assignment faster than the market, driven in large part by the improved productivity of our recruiters as well as the investments in capacity. The fastest growth has come from younger travelers with a tenfold increase in the number of travelers under the age of 26, followed closely by the rise in the number of millennials. And I won't spend too much time on this next slide. But suffice it to say, contingent labor is here to stay. And as we've all heard, systems have seen a dramatic increase in the reliance on contingent staff relative to the pre-pandemic periods, with some systems reporting contingent labor usage in the double digits relative to the total labor hours. Though expected to moderate somewhat, it's likely to remain well above those prepandemic levels for the foreseeable future. And the crucial point here is that the labor shortages are only getting worse, with the number of openings nearly 3x the number of hires, and that gap widening in recent years. And as of today, demand for travel assignments remains elevated and is up nearly 16% for Cross Country relative to the start of the quarter. And that still doesn't include the impact from anticipated orders that we'll have from recent wins. I'd like to spend just a couple of minutes giving a sense of how we transform the company and what has allowed us to execute so well across so many fronts. If I had to summarize the last 3 years, I'd say that 2019 was about leadership, culture, getting the technology road map correct as well as improving our balance sheet. And when we look at 2020, we're already -- we were already making significant investments in capacity and advancing our technology initiatives, which allowed us to pivot the entire workforce to be remote and still delivered unprecedented levels. 2020 saw the release of our new applicant tracking system, which has had a tremendous impact on our productivity. And in 2021, we continue to make those investments in our people, but our focus on technology began to shift to be more externally facing as we embarked on several client and candidate-facing initiatives. When we look at Cross Country today, we are a digitally transformed innovative enterprise with broad capabilities to help clients solve complex labor challenges across the continuum of care. And from a balance sheet perspective, I don't think we've ever been healthier with a significant availability under our lines of credit and historically low leverage. I'll speak to our capital allocation strategies a little later in the presentation. And if I were to say, what has allowed us to be so successful these last few years, well, it comes down to our ability to execute. Marc and Amiee will talk about this just a little bit later, but with the capacity investments and our sustained productivity improvements, we're simply faster. And the market -- in this market, as John pointed out, speed is critical. Add to the mix, the deep client relationships that we fostered throughout the pandemic by being flexible and responsive as well as our clinical excellence and we believe that's a winning formula. Our transformation is evidenced by our proven ability to execute, with double-digit revenue growth for the last 7 quarters, and we have met or exceeded, in most cases, exceeded guidance and consensus for 13 of the last 14 quarters. Our track record on profitability is equally impressive as we've now seen 7 straight quarters of high single to low double-digit adjusted EBITDA margins. And we again met or exceeded consensus and guidance for 12 of the last 14 quarters. Now we're frequently asked whether we're taking share in the market and looking back to some of the data points, we feel we have grown more rapidly on an organic basis relative to the industry. And with respect to companies, well, we only have one publicly traded competitor, which we understand is not the market, but we've outpaced their growth on an organic basis for the last 6 quarters. It's the ability to execute that is once again allowing us to outperform for the third quarter. And as a result, we're raising our third quarter guidance. Though the quarter is not yet finished, we now expect third quarter revenue to be between $615 million and $625 million, with an adjusted EBITDA between $58 million and $63 million and EPS of $0.90 to $1. The majority of the driver for the increase is related to the volume and bill rates have tracked fairly closely to our expectations. And because of the continued strong performance as well as the impact from the leveling bill rates, we're also raising our exit run rate for the fourth quarter. We now expect to exit the year north of $550 million a quarter, which is 10% higher than the previous estimates. And looking ahead to 2023, we are now establishing full year minimum guidance for both revenue and adjusted EBITDA. We feel confident that with the organic growth across our lines of business as well as the impact from tuck-in acquisitions like Mint and Lotus, that we'll be well positioned to manage through future bill rate volatility and deliver revenues above $2.2 billion and deliver adjusted EBITDA in excess of $200 million. In a short while, I'll come back to step through some of the more of the drivers for our business as well as our capital allocation strategy. But now let me hand things over to Susi Ball, our General Counsel and Chief Administrative Officer, to take us through some of the insights into our leadership in the marketplace. Susi?

Thank you, Bill. And I'd also like to add, in addition to some of our colleagues that are here today that are nurses. I'm also a registered nurse. So once a nurse, always a nurse. For those of you that are new to Cross Country, and there are several of you, we want you to understand our leadership and our legacy of success upon which we're executing our winning strategy. Quite simply, we have a strong foundation. We have great relationships with our clients, with our candidates. We have technology, culture and we have a leading executive management team. Let me start with our leading relationships with clients and candidates, and it begins with our rich 36-year history. Over the years, we've built deep trusting relationships with our clients to help them service their communities. And track records matter. That's why many of those clients are still our clients today. And how do we earn the trust of our current clients and our new clients? By delivering on every engagement every day with clinical excellence and integrity. I think the Executive Vice President and Chief Nurse Executive of Northwell Health probably put it best when she said, "A relationship of this length can only succeed if trust is established between the parties." And that is certainly the case for the partnership between Cross Country and Northwell. That's the solid foundation that we're executing on. And in the spirit of continuous improvement, we've recently established a clinical council led by Dr. Hank Drummond, who has his PhD in Nursing and he is a former Chief Nurse Executive. The council provides insight and guidance on national professional standards, on best practices, on public policy and recent trends and those potential impacts to Cross Country and our clients. And they bring a breadth of industry experience to ensure that we continue to excel at clinical excellence, that we support the advancement of the industry and that we're delivering exceptional value add for our clients. We also have more than 50 clinicians on our corporate staff who regularly engage directly with professionals caring for patients at the bedside. Together, our corporate clinicians and focus groups of our professionals provide feedback and insights on our technology and our processes used to ensure quality matches of our clinicians and our clients. And as you heard John mention, we believe we have an unrivaled 95% on-time onboarding start rate and a clinical cancellation rate of less than 0.5%. So as you can see, we have emerged from the worst of the pandemic, stronger, faster and better. That's because when others were uncertain, Cross Country leaned in. And I remember Kevin and various other colleagues, we were in a war room in the early days of COVID, and hospitals and CNOs across the country were calling us, and they were just absolutely panicked. They were asking us for advice on what they should do about certain protocols, how do they streamline processes without impacting quality and how can they use their resources in other ways. I mean they were asking us all kinds of things. And we quickly aggregated information from our clients across the United States, and we shared best practices and insights to ensure that they could deliver care effectively at the bedside. We also set up fair pricing guidelines, and we showed our clients empathy and compassion when they needed it the most. So clinical excellence and integrity, that's how we create leading client relationships, and that's a key differentiator for us in the marketplace. But of course, you can't be a leader with the health care clients without being a leader with candidates. Those are the professionals that are seeking the best opportunities to realize the promise of their careers. They looked to Cross Country to guide them on their career journey, to support them through credentialing and onboarding and to make sure that they're matched on an assignment where they are successful and satisfied. Candidates trust us with their future. And we have a powerful mix of long-term professionals and an emerging group of professionals that are, in fact, new to Cross Country. Nearly 30% of all travelers that are coming to Cross Country are new to Cross Country or they're new to the industry. And nearly 65% of our professionals are now Gen Y or millennials. And you may ask, how are we tracking them? Well, based on a recent study by Truist, Cross Country is the most widely recognized brand in the industry, and we're leveraging our best-in-class marketing technology to reach more candidates as they embrace the gig economy. We've also instituted industry-leading market campaigns to elevate our organization and to position Cross Country as a top destination for candidates who want an easy process, who want great customer service and a plethora of assignment choices. But most importantly, we're meeting candidates where and when they want. Where are we engaging them? Well, this group, they live on social media. So we're on Facebook, we're on Instagram. And in fact, we have developed the largest presence in the healthcare staffing industry on TikTok, which is a growing source of lead generation revenue for us. In less than a year on TikTok, we have grown to over 115,000 followers, and we have 1.1 million views. Every day, we showcase about 150 jobs on a live stream on TikTok. And as you heard John mention, we also launched a new website, which was specifically designed and developed for our professionals to easily find and apply for potential job opportunities. This website delivers a simplified, intuitive user experience as demonstrated by the fact that we've had a 100% increase in unique traffic. We're also enhancing our portal called Gateway to be a seamless, frictionless way for professionals to interact with us in a one-stop shopping environment. As we keep saying, it is all about speed and ease to market. And when are we reaching them? Well, they can engage with us 24/7, 365 days a year through multiple channels and modalities. So essentially, whenever they want. So again, it's all about making it easy for candidates by creating the best experience possible. Now I've talked about our leadership with candidates and clients. Finally, I'd like to talk about Cross Country's leadership team, which is a key pillar of our winning strategy. We have an unrivaled executive team that's delivering on the 3 Es: evolve, elevate and execute. Having worked at 20 -- having worked at Cross Country for 20 years, I can unequivocally tell you that this is the most dynamic, collaborative, driven and accountable team that Cross Country has had. And we're led by John, who has an extremely successful track record in the industry, who is a thought leader in the industry and who has a very clear vision for the future of the company with technology at the forefront. Our blend of long-term cross-country experience with a dynamic influx here in the front row, dynamic influx of talent from the industry puts us in a perfect position to continue executing on our technology, our culture, our delivery and our sales. And now I'd like to turn it over to Phil Noe, our Chief Information Officer, who will talk more about his vision and strategy.

Thank you, Susi. Good morning, everyone. My name is Phillip Noe. And as Susi mentioned, I am the Chief Information Officer here at Cross Country. Earlier, you heard John talk about Cross Country needing to excel in the experiences that it provides to its clients, to its candidates and health care, home care and education professionals and to its own internal employees to enable the highest level of productivity and efficiency. Through that technology strategy, we have achieved that. To better understand on how we've delivered on that promise, let's look at where the industry is today. If you look at the 2 major types of industry players, there's the large-scale traditional staffing agencies that have provided scale through acquisition and organic growth. And they have become such players in the traditional staffing space. This has also created a nonintegrated technology stack, providing an incredible number of inefficiencies and a user experience that can be very disconnected. On the other side, you can see where there are the technology upstarts who have focused on creating platforms to launch and grow their businesses, but they don't typically have the traditional capabilities of a large-scale staffing provider. Cross Country is unique in that we are excelling at both the traditional staffing model and also being the technology disruptor and providing a high-touch user experience. Take a look. [Presentation]

Wow. I hope you are as excited about that future as I am. We are, to be honest. Catching up here. Today, I want to spend some time -- sorry guys, technical difficulties. Can you roll it back? Okay. Thank you. We have shared our road map -- we have shaped our road map on all of these 3 channels and these models, providing for the needs of the client, the candidate and our producers and offering the technology to enable the most efficient and frictionless experience. Today, I want to spend some time explaining how Cross Country has approached this road map in solving these problems. That is innovating a true frictionless and data-driven self-service experience for our candidates, for our clients and professionals. If you look at the candidate journey, you can see in the stage just shown that we've identified the key interaction points of that journey from the candidate's first awareness of Cross Country and then all the way through the onboarding, deployment and then that extended experience of recognition, engagement and retention. From a technology perspective, Cross Country has approached this by deconstructing that journey that John mentioned before and focus on the portions of the workflow that have provided us the best opportunity for making significant impact and leapfrogging what the industry and what our competition is doing. This was the inspiration for us to create our candidate portal, Gateway, with its purpose to remove manual and labor-intensive practices and put the candidates in the driver seat of the experience. Let me show you what makes Gateway unique. We see 8 critical segments of the functionality that are vital to enhancing the experience for the healthcare professional of the future. And those are what is represented here surrounding the image of our native mobile platform. Where I want to focus today is on just a couple of the key ones where we see the biggest opportunity for the return on the investment and improving that experience dramatically. First is leveraging machine learning and artificial intelligence. Let's face it. Many companies talk about this, but they haven't delivered. At Cross Country, we are utilizing our technology to provide real-time matching for candidates to jobs that represent their targeted interests. With our data and analytics, we have in-depth knowledge on the profiles and preferences of all of our professionals. And through our engine, imagine the candidate getting real-time notifications near the end of one assignment about the pay package and location of their next possible assignment, one that specifically aligns to their interest and preferences based on our matching algorithms. That's a powerful bond being created. And because it is a self-service model with automation, we believe that this will improve internal operational productivity by 2x to 3x. Another key element to showcase is our rewards and loyalty program. We've created an environment that enables Cross Country and its clients to attract and maintain the stickiest workforce possible through the incenting of their renewal and redeployments. It similarly provides substantial incentives for referring friends and colleagues through gamification. After all, the most cost-efficient candidate to provide a client is one that we've already credentialed and is ready to travel. Now let's turn our attention to the client experience. Similarly, we have provided a frictionless self-service experience for our clients, arming them with insights, analytics and reporting to more effectively help them manage their workforce. How can Cross Country deliver to our clients the right candidate, at the right time, at the best possible cost? If we look similarly at the client journey from awareness through consideration and all the way through delivery, you see a recurring model of our strategy and how we view it through the lens of the client where Cross Country has similarly deconstructed the journey of our clients to help us focus on what is again closest to our return on our investment. And we saw the biggest opportunities in the delivery phase. Enter Intellify. Truly a game changer, as John referenced. Yes, at its core, its Cross Country's client-facing vendor management system platform. But it was one that was designed with a client-centric mindset as a data-forward analytical engine that allows clients to manage their workforce needs with the highest level of efficiencies regardless of the suppliers that they use. For Intellify, we also identified 8 key functional components of focus that allows us to achieve this goal. I just want to talk about a couple of these again. Probably the most important fact, and you've heard this a little bit before, is that this solution is a vendor-neutral platform, meaning that a client can use this technology as a PaaS or Platform as a Service, where they can run and manage their instance of Intellify with Cross Country as their managed service provider or another supplier or even themselves as that MSP. This enables Cross Country to also provide a tiered service model to its clients to augment this technology whenever and wherever the clients need it. No one else in the industry of our scale is providing this type of service. Those are just 2 of the major investments in our ecosystem that Cross Country has already made. But it's important to understand that the power of each of these platforms would be limited just taken by themselves. At Cross Country, our strategy has been to completely redesign our entire ecosystem from the ground up using a data-centric model that interconnects all the components of that ecosystem. The power of that ecosystem is in its integrated data and service model. This enabled us to have a single technology stack, providing the highest level of analytics and built -- and to continue building additional capabilities on a road map that extends well into the future. Speaking of that future, truly, as John likes to say, "The best is yet to come," as we continuously launch new features and functionality across our ecosystem and across the landscape. We provide for a multigenerational workforce that caters to new graduates, to the tenured travel professional and to that new empty nester. And also through our innovative design, Cross Country will be utilizing this technology across the landscape of our business models that we provide for, from the traditional contingent staffing, locums, per diem, home care, education and beyond. Through the utilization of true self-service and automation, the candidate can move from showing interest in a job to the floor of the client in the shortest time possible. Through the increasing leverage of data insights and analytics, clients are maximizing their workforce management model driving more diverse opportunities for both the client as well as Cross Country. And through fully integrating the end-to-end workflow across our ecosystem, our producers have dramatically increased their capacity and efficiency. That is the future. I'd like to take this opportunity to welcome Colin McDonald up to the stage.

Thank you, Phil. Good morning. My name is Colin McDonald. I am Cross Country's Chief Human Resources Officer. Today, I'm going to elaborate on the story of evolve, elevate and execute, and what this means to our people and to our culture. We are Cross Country, guided by our core values, how we conduct our business, how we treat our employees, how we serve our customers is what defines us. Our values are tied to the growth and culture of our organization. These values are instilled in all our team members, current and future. We are connected, providing an effortless experience with simplicity and ease of use. We are accountable, operating with the highest level of integrity and respect. We are compassionate, nurturing relationships with those we serve. We are driven, delivering proven quality services and excellence. We are entrepreneurial fostering creativity that encourages innovation and fun. I was talking to Josh, the Head of our Investor Relations. And I said, Josh, what are investors interested in when they hear about human resources and culture? And Josh said to me, show them the money and show them the numbers. So guess what? I'm going to show you the numbers. Throughout the story, I'll draw your attention to specific stats and facts and validate why these numbers are essential to how Cross Country has evolved, elevated and engaged. These numbers illustrate the measurable impact our people and our culture has on the business. Our HR strategy has been focused in 3 critical areas: recruit, train and engage. Our people and our culture have evolved through the recruitment and training of unprecedented numbers of employees to Cross Country, making us the destination of choice by attracting world-class talent. And we're retaining that top talent by offering competitive benefits and compensation. Let's take a look at some of the numbers. In 2021, we hired over 1,100 new employees, a new record for Cross Country. How are we accomplishing these incredible hiring numbers? By creatively engaging our future employees to a variety of tactics, employee referrals, employee brand campaigns, social marketing and much, much more. And once they join us, they're not leaving. We have historic attrition rate of 20%, and it's dropping. And our new employees are more experienced and more productive sooner than ever before. With our investment in technology, such as our new applicant tracking system, we can onboard new employees faster and make them more productive within their first 90 days. For example, we've generated $350 million in revenue from our first-year travel recruiters over the last 12 months, and 42% of all new hires are coming from our sector. We're proactively ensuring that our employee selection process identifies employees who'll be the best fit and have the best chance of success through the introduction of tools such as the predictive index that we implemented last year, where we have retained 81% through its use. And we can leverage the tool as a foundation for coaching, career development and mentoring of current employees so we're effectively recruiting and selecting talent. But that -- but what we are doing -- what are we doing to retain them? Well, according to Gartner 2022 survey, turnover across all industries is likely to jump nearly 20% this year from pre-pandemic numbers. While another Gartner survey revealed 52% of employees report that flexible work policies will impact whether they stay at their organizations. In fact, 16% of employees are willing to quit their current job if required to work fully on site. Cross Country's answer, evolving to a 100% hybrid workforce, enabling us to cultivate the best talent, but more importantly, allowing our employees to have the optimum work-life balance, job satisfaction and have them work where they are most productive. How have we elevated our people and culture to ensure employees continue to grow, be more productive and stay with us? By institutionalizing best-in-class practices for succession planning, career development, promotional opportunity. For example, 68% of our Directors completed our voluntary talent review and succession planning program, ensuring our next generation of leaders are identified and in the pipeline. Similarly, all our employees and leaders can access our on-demand corporate training through our new learning management system. There are over 200 available training courses and programs, including career and leadership development for our employees to access. These initiatives have resulted in a 36% increase in promotions year-to-date in comparison to 2021. On the flip side, 87% of our employees are predicted as a low flight risk using our internal business intelligence, BI system. You have heard my colleagues talk about the red threads of the 3 Es: evolve, elevate and execute. Execute is a great word. But personally, when I think of culture, I tend to think of it as Engage, meaning how we engage with each other and our communities. A key component to how we engage is through our corporate social responsibility program. And in keeping with our core values, Cross Country is committed to creating a better future for our communities by supporting local and national nonprofit organizations through financial contributions and in-kind services. I'm proud to showcase key highlights of our CSR initiative. First, let's talk about ESG. We received ISS' highest quality score for -- one, for governance; and improved ISS quality scores of, one, for social matters; and two, for environmental issues. Next, amongst so many other awards, Cross Country earned Energage award for 2021 Top Workplace for diversity, equality and inclusion. According to a 2020 Glassdoor survey, 76% of job seekers' and employees' poll said a diverse workforce was an important factor for them when evaluating job opportunities and companies. We know that more than 3 out of 4 workers prefer diverse companies. At Cross Country, we walk the talk. We have 42% minority employees. That is the highest level over the past 3 years. 78% of our workforce are female. Our recent employee survey states that 87% of our employees believe Cross Country is committed to diversity, and 88% of employees believe that Cross Country respects individuals and values their differences. We are also actively committed to ensuring everyone has a voice. In 2022, Cross Country Healthcare launched 3 inaugural employee resource groups: Cross Country Parents, LGBTQIA+ and Allies Group, and Cross Country Grooming. These groups are created around common identities and interests to provide a supportive setting for community, education and advocacy. I hope you'll all agree that the initiatives and the numbers I just walked you through demonstrate that our people and culture are the heartbeat of the company and a key catalyst to fueling Cross Country's growth and value. How incredibly powerful was that? But don't take my word for it. Let's hear the voices of our employees and the answer to why they're at Cross Country. [Presentation]

And good morning, everybody. I'm Dan White, and I too am Cross Country. I am Cross Country's Chief Commercial Officer. And I know some of you know me. But for those of you who don't, I have -- I am not new to health care or workforce solutions. I spent the last 30 years of my career helping clients of all sizes and across many industries improve business outcomes with various workforce solutions, and about 1/3 of that time has been in the health care staffing market. Health care has gotten under my skin. It's really become more of a calling for me, actually. But you might ask why Cross Country now? So for me, it's about 3 things. It's about our strategy, it's about our team, and it's also about that wonderful culture you just witnessed. Colin was spot on. The culture, team and strategy that Cross Country offers me an opportunity to operate at the very top of my game, to be my very best and to deliver to our clients and the industry more right when they need it most. I have known and respected John for years. In fact, we're sort of kindred spirits, in a way, having been grounded in technology early in our careers, and now with an intense passion for health care. So when I heard he had become CEO, I knew Cross Country would have a very high performance customer and employee-centric culture. And that combination is pretty rare. So that's why I joined Cross Country. I like to win, and this is where we're winning. So let's talk about how we're winning and the powerful growth story that we have here at Cross Country. For those of you who are new to health care staffing or workforce solutions, our traditional relationships come in kind of 2 flavors: direct staffing relationships and managed service relationships. In a direct relationship, we have an opportunity to fill a position. In contrast, in a managed service relationship, we have an obligation to fill their orders. It's kind of an exclusive BPO-like relationship, where we bring in technology, process improvement, a mature supplier panel, in addition to our own great delivery teams, to fill all of their contingent labor needs over a 3- to 5-year period. Obviously, the second approach is far more strategic and consultative. And as John mentioned in his opening remarks, our transformation has been, evolve, elevate and execute. So I used that approach when I joined in April. Our first task was to assess our people, organization, sales processes and results, which we did in about 30 days. That consisted of both our new client sales teams, or hunters, in sales terms, and our program management teams, or our farmers. We started with our hunters first. We found that most -- we had mostly junior salespeople selling everything we had to offer by geography. We were seeing some success, but not nearly what I'm accustomed to. At the 60-day mark, we had evolved. We had organized into smaller, high-performing teams built on Lean 6 Sigma principles with inside and outside sales roles. We added some of the best talent in the industry with existing personal brands and intimate client relationships very fast. In addition, we revised our sales compensation structure to incent the behavior we need to see. And I'm happy to say that all of the teams have embraced these challenges that we've implemented thus far and are thriving. Today, we've elevated to a more consultative approach to solve problems with clients rather than just selling at clients. Those teams are also focused distinctly in direct third-party and MSP business solutions, segmented by size and geography. So we can provide solutions that clients are looking for very quickly and respond to their specific needs. We also narrowed our third-party relationships to just 2 deeper relationships, where our commitment is valued and exclusivity and other preferences are rewarded. These partners, our prospects, and our team members, are more focused and engaged, and our rapid results speak to our very high execution. Prior to the pandemic, as John said earlier, our MSP spend under management was around $450 million. As we shared in our recent Q2 earnings call, the same quarter as our transformation, I might add, we added $84 million in new MSP contracts. We currently have an additional $70 million in MSP relationships at verbal award and in contracting. And I'm enormously proud to say the pipeline of our MSP relationships has never been this robust. Now turning to our program management teams or our farmers, if you will. I found that we had been doing what you might expect during a pandemic, focused entirely on meeting unprecedented demand and being great stewards of their finances. Here, the results were equally impressive, nearly 5x growth in spend under management from 2019 to present. And while clearly the growth has been impacted by higher COVID bill rates, it's also very clear, as Bill pointed out earlier, that our volume growth and our add-on service penetration in many of our strategic accounts has fueled this transformation. Our assessment of program management also was quick. We had grown so rapidly that our organization structure and leadership had not kept up. As such, we were simply focused on meeting client demand or customer service. So our evolution here had been very similar as well, bring in more senior experienced leadership with consultative approaches to solve the business problems. We've doubled our VP level talent and added considerable bench strength underneath them in the past 2 quarters. In addition to evolving our people and our organization, we've also improved our business intelligence, capability and upgraded our sales operation's organization. And in collaboration with our finance and delivery teams, we are streamlining our CRM capability processes and developing dynamic dashboards that provide visibility and insights into our improved results real time. Phil and others have spoken to you about our new technology, Intellify. It, like our overall approach, is customer-centric. The user experience starts with analytics and insights that better inform workforce decisions for our clients. In fact, we have 5 clients scheduled to go live on Intellify in Q3. Another 5 clients scheduled for Q4. And I'm really proud to say that all of our newly signed clients will be implemented on this terrific platform. As such, Intellify is a critical first step to our journey for Cross Country and our clients. I am really proud of our accomplishments so far and excited about the results we're seeing. We've attracted some of the best talent in the industry to communicate our renewed vision and strategy, and we're executing very well. But we're also just getting started. Many others have already spoken about our outstanding culture and values. I share an entrepreneurial spirit with many of my colleagues and our leaders. Our vision is bold. Our strategy is differentiated. And like them, I came here for growth. And as Bill mentioned, we enjoy a very large total addressable market of $30 billion, maybe $50 billion in contingent labor alone. And to give you some context about this, 94% of CEOs in health care rank workforce as their #1 priority today. And as John mentioned earlier, we believe that health systems spend more than $1 trillion annually on labor, more than half of their costs. So given the leadership focus on workforce challenges and the need for financial improvement, we have more than enough room to grow. Our customers also want to have choices. 1/3 of that TAM we just talked about is made up of vendor-neutral programs, representing $500 million in higher-profit revenue potential into which Cross Country can now grow and compete. And we're seeing early signs of this same interest in our sales funnel. New products, new markets, new growth, this is the new Cross Country. But Gartner tells us that clients don't buy from you or even renew your business with you based purely on customer service. That's just table stakes. They stay with you because you help them grow their business. So we need to do more. We need to become an essential partner to our clients. With the investments we're making in our technology platform, in our people and culture and our delivery, I am very confident that we are that partner. When I speak with health system CEOs and they ask me what we do or how we're different, or even how Cross Country could help them, I say this, "You and your leadership focus every single day on the patient experience. And if there's anything that we've learned in the last 2.5 years, it's that the patient experience will be no better than the caregiver experience. We focus there. We innovate there so you don't have to." So for me and the many colleagues that have been recruited here, now is a fabulous and exciting time to be at Cross Country. For those of you who know me, my word is everything. And when I make a promise to a client, it's personal, and I take it personally. Our ability to deliver has been a big part of my attraction to Cross Country. So I'm going to ask Marc and Amiee to join the stage and talk more about how we keep those promises.

Thanks, Dan. Perfect transition into delivery. We, alongside our phenomenal business line leaders, are responsible for delivering to our clients and professionals. As John mentioned, we live our 5 strategic pillars. We have embedded these pillars into our world-class delivery ecosystem. This ecosystem enables our teams to move with speed, precision and purpose. To illustrate this, Amiee Hawkins, our Senior Vice President of Enterprise Operations, will walk you through a couple of case studies, how we earn the trust of our clients and candidates by delivering on a daily basis. Amiee?

Thank you, Marc, and good morning, everyone. Let me take you through 2 real examples that showcase our ability to deliver day in and day out at an exceptional level. The pandemic has been a true test of our ever-evolving delivery ecosystem, pushing us to deliver even faster and with leading outside-of-the-box solutions. In September of 2020, our MSP client, an academic medical center in the Midwest, called us in a panic. There was a labor disruption, and they had an ongoing EMR conversion all during the height of COVID. They needed to fill more than 700 open positions in less than 2 weeks. With core staff extremely fatigued, patient sense is skyrocketing, and the always delicate balance needed to support patient care. Our teams quickly mobilized to create a customized solution. Our real-time solution included: sourcing, onboarding, logistics, quality management, scheduling and so much more. By taking on these responsibilities, we help the client remain focused on patient care. Delivering quality professionals to the bedside was a priority on day 1. As Susi said, we have a less than 0.5 of 1% clinical cancellation rate, a 95% onboarding on time start rate. And this allowed us to confidently accept the challenge to deploy 700-plus professionals in under 2 weeks while keeping quality at our core. We leveraged our always-on professional sourcing and match technology to drive outcomes needed within the first 48 hours, tapping into our database, algorithms and self-service candidate portal to engage professionals in real time. As our production team worked around the clock to identify, secure and deploy the professionals needed, our operations team worked to implement an on-site command center, technology enablement for scheduling and time keeping and on-site workflows. This will help for streamlined and efficient management of the engagement. In fact, in the face of this perfect storm, we executed flawlessly, and the client was thrilled, all while continuing to deploy professionals nationwide at other health care facilities at a record pace. As you can see, using our technology, people and process, we made it happen. We mobilized and deployed 700-plus professionals in under 2 weeks. The hospital completed its EMR conversion successfully, and we reacclimated their returning core staff. During the strike, on-site regulatory state audit was conducted, and we achieved 100% compliance with no deficiencies. And the best, 5% of professionals converted to system-wide permanent positions, leaving the hospital better equipped as we return to normal delivery services. Now let me walk you through a much different event that continues to highlight our leading delivery capabilities. Let's turn to another client in the Southeast. During the height of COVID, the client was managing 31 direct vendors on its own to try and fill all of its needs and was very unsuccessful. The Chief Nursing Officer called us and desperately needed dozens of ICU nurses within 3 days. In this unprecedented supply-constrained environment, we secured dozens of hard-to-find specialized ICU nurses who were cleared to start in less than 72 hours. The hospital was so appreciative of our efforts that they continued to provide Cross Country with exclusive orders within the first 60 days, resulting in 209 positions filled, sourcing of 500 unique candidates and with an average of 1.7 days to candidate submission. In case studies 1 and 2 and so many other instances, we're able to successfully respond based on our tried and true 70-30 MSP model. This model allows Cross Country to capture 70% at our MSPs. That leaves 30% of Cross Country's professionals available to be deployed at new clients and other urgent engagements. The remaining 30% of open positions at our MSPs are filled by our vendor network. This client was so happy with the delivery capabilities that we have since been awarded an MSP contract, and we are currently implementing Intellify, our premier technology, within this program. As you've heard, COVID need us better, stronger and faster. And these examples are just 2 of the many situations that demonstrate our ability to customize solutions with our ever-evolving technology and resources to deliver prompt quality care to the bedside. Marc will now share how technologies has improved our productivity.

Wow, talking about delivery. Dan said it best, we have both opportunities and obligations. And by leveraging our technology, we ensure our obligations are met every time. While technology and people are the largest parts of our world-class delivery ecosystem, let's dive a bit deeper into how our delivery model employs 6 tenets across all streams to drive successful and scalable outcomes: source the right professional for the right opportunity; transparency in compensation; customer success with exceptional service to our professionals and clients; continuous engagement throughout the professional and client life cycle; speed and purpose: speed to partner, speed to support, speed to deliver; and retention, from first contact to lifelong partnership. Using our 6 tenets, as mentioned, in parallel to our digital high-touch model has given us the leverage and scale to continue driving productivity to new heights. Here are a few highlights. The average recruiter recognizes their first placement in 1.5 weeks in the seat in our travel nursing business, 1.5 weeks. Before evolution, that same recruiter historically took up to 4 months to achieve their first placement. Current travel recruiter productivity is double from what it was before our digital transformation. As Amiee shared, leveraging our technology and best practices, we believe we are leading the industry with 95% on-time, onboarding starts. You've heard about our technology from Phil, our sales from Dan, the number of new people we've hired, trained, decreased attrition rate and our culture from Colin. All this culminates in our successful delivery story and how we can deliver for our clients. As John mentioned, Cross Country Healthcare today is a story of preparation, speed, quality execution, retention and scalability. Embedded in everything we do is continuous improvement in people, process and technologies. We are excited about our ability to scale. Our road map to an even better candidate experience is in place and evolving over time. This, combined with the monumental impact we know our technology will have for our clients, gives us great enthusiasm as we look to 2023 and beyond. [Presentation]

Now that is the candidate experience, and it's amazing to see how our delivery capabilities have driven our performance and help to build the lasting relationships with our clients. I know we've covered a lot already from our growing addressable market and growing demand, to how we're winning and expanding our deep relationships, to our enhanced fulfillment capabilities and, of course, our investments in technology. Let's take a look at how all this translates into our results. And as you've already heard, we're a tech-enabled workforce solutions provider that seeks to place the most highly qualified professionals and clinicians with our clients across a wide range of specialties. And our major lines of business, you see on the screen here, include: Travel, where we send folks on 13-week assignments away from their primary residence; Local, where we fill urgent needs, leveraging a large pool of in-market talent; Locum tenens, which covers both doctors and advanced practitioners; and we also cover the home care market, which we believe has huge growth potential, where firms like CVS are looking to acquire home care giants like Signify Health; and the education market is a natural extension for us, where we staff everything from nurses to therapists to special educators and teachers. And all of these are services available to our clients on a direct basis or through our managed service programs and soon to be our vendor-neutral offerings, which allows us to be the partner of choice for thousands of clients. And when you look at our revenue streams today, the majority of it comes from contingent staffing and more specifically, travel assignments. Over the last several years, we went from a company that was underscaled, with extensive manual processes and outdated technology, to one considerably larger with a larger workforce that are more productive and capable of generating significantly more revenue on a per producer basis. Coming out of the pandemic, we have doubled our capacity and improved our productivity of our revenue producers by more than 50%, which has led to the near tripling of our revenue. And when you look at our client mix, we have very deep, well-diversified relationships, with approximately 85% of our revenue generated from direct clients or managed service programs. And because we're a people business, a relatively small portion of our business does come from supporting other third-party programs, predominantly vendor-neutral programs. And as we look ahead, our goal is to continue to foster these deep relationships with our clients, capturing a larger share of spend under management through both managed service programs as well as through our vendor-neutral program. Thanks to the introduction of our VMS technology, Intellify. When we are successful, we anticipate that roughly 90% of our revenue will come from MSPs, vendor-neutral offerings or these direct contracts. And I mentioned a moment ago, that our revenue comes from several contingent staffing lines of business and that, today, the majority comes from travel assignment for nurse and allied specialties. In looking ahead, we believe that travel assignments will remain the largest part of our business, but likely to comprise closer to 60% of the business relative to the near 80% that it does today. And that's because of the moderation in bill rates as we anticipate organic growth across other parts of the business. And it's worth noting that travel presently has a gross margin below that of our other parts of the business. And so as the mix shifts, we anticipate higher gross margins overall. And the only other point I really want to make on this slide is that the growth in other is actually several revenue streams, including permanent placements, recruitment process outsourcing and the likely technology fees associated with the launch of Intellify. The launch of Intellify is arguably one of the most significant developments for Cross Country in recent years. As our proprietary vendor management system, it not only will reduce our cost of fulfillment at our MSPs by millions of dollars annually, but it opens up a portion of the market that was previously not accessible to us. And to just give you a sense of the potential impact, we're showing a scenario where Cross Country is able to capture roughly 8% of the spend under management across vendor-neutral opportunities, which should translate into higher margins. Now let me explain how we see the economics. Generally, there's 2 ways to earn revenue from a vendor-neutral offering. First, there's the revenue stream from the fees charged to the users of the technology generally paid by vendors who participate in the program, but can also be a license fee from their direct client. And generally, these -- that line of business, that stream of revenue has very high margin profile as there are expected to be minimal ongoing cost for delivery. And the second revenue source comes from Cross Country's share of fulfillment, which we believe could be as high as 20% of the total spend that we manage. Now this is obviously below our MSP cash rate, but we believe it's consistent with other vendor-neutral offerings when you have that program because you can anticipate a bit better about the clients' needs. And together, these are a potentially -- a very large potential area of growth for us and improve profitability, though it's likely to be several years before we realize the full potential of Intellify. And over the last hour or so, we've highlighted many opportunities to further expand our margins. But let me just bring them together. They include robust organic growth in our higher-margin businesses like education, home care or recruitment process outsourcing; the launch of Intellify, which drives both cost savings and opens up new revenue opportunities; and the expansion of our bill pay spreads, especially within travel, as those rates continue to normalize; as well as other operational efficiencies from continued process optimization and automation. Now we're intentionally not sizing these, but we believe that they're going to be the catalyst to achieving sustained double-digit margins for Cross Country. And thanks to our continued strong performance, we're expecting to generate significant cash flows, and we want to ensure that we're redeploying that cash in the most productive, value-enhancing way. And what you see here is intended to solely be a guideline. And of course, business conditions will ultimately dictate our decisions on how best to allocate that capital. But we firmly believe that a well-balanced strategy is the best way to proceed with a primary focus on growing our business, while, of course, servicing our debt and returning capital to our shareholders through opportunistic share repurchases. As John mentioned earlier, this quarter alone, we repurchased more than 1 million shares at an aggregate cost of approximately $25 million under a combination of exhausting the shares authorized under the old plan, as well as dipping into the new $100 million plan announced last month. And over the last several years, Cross Country has performed incredibly well through strong execution and not solely on the tailwinds from rates. And we intend to continue that performance. Yet despite our historic performance, it's not lost on us that we continue to trade at a discount to our historic multiples or those for our industry. So I thought it'd be interesting just to share a graphic that highlights this dynamic. And as you can see, we've exponentially improved our profitability and at the same time, have seen a decline in our trading multiples. And so what we're highlighting here is really the significant opportunity for shareholder value creation just on the normalization of multiples as we, of course, continue to deliver the strong performance in a post-pandemic world. And this dynamic was a key factor in our decision to repurchase as many shares as we did over the last several weeks. And with that, I'm going to hand the call back over to John. Once again, we sincerely appreciate your time today and interest in Cross Country.

Thank you, Bill, and you can tell why I'm so passionate and excited to be here at Cross Country. This morning, we've demonstrated to you why we believe we are undervalued. We have shown you proof of our winning strategy, and the equation is very simple. Our investment in technology plus new opportunities in the sprawling green space, plus a transformed and best-in-class team, plus our world-renowned delivery to market approach, plus talented people and our tapestry of culture, plus our commitment to integrity and transparency, equals unprecedented success. And where is the evidence that this equation works? We've delivered increased shareholder value. We've delivered on growing financial results. We've delivered on executing our strategic plan. We've delivered on being good stewards to our clients. We've delivered on creating attractive job opportunities for our candidates. We've delivered on being the destination of choice for our employees, and we will deliver on our bold vision for the future. We deliver on our promises. At this time, we are here to answer any of your questions, and I'll have Bill Burns join me for a Q&A session. And I think we're going to have a microphone come down because we are live streaming. So the first question, I think, Brian from Jefferies. Thank you. Do we have a mic? That's going to be in the second row first seat, right there. Awesome.

Congratulations. I guess, Bill, I'll throw it at you. You've mentioned $3 billion revenue outlook longer term and $300 million EBITDA. So maybe just walk us through how you're thinking about timeline, and how do we get there, like in terms of growth rates?

Well, actually, I said it. Just to be clear, the CFO did not say it. That's an aspirational goal of ours. We look at where we're at. We look at what we can do. We look at the market segments we're in. We look at the opportunities. And internally, we say where we're going to be this year. We know bill rates are high. We know it's going to come back a little bit. We say where can we go in the next several years? And looking at the different segments of business, looking at the opportunities in front of us, looking at our investments in technologies, the opportunity to enter into new market spaces, we believe that, that $3 billion is an achievable goal, but an aspirational goal as of now.

Yes. And I guess I would just say, we intentionally don't have a time frame to it, but our goal is to get there as quickly as possible. We know rates are going to retreat in 2023 just on an average basis. We think they've leveled off kind of somewhat as we come into the end of the quarter now. And actually, they've ticked up just slightly. So we're looking at the backdrop of the market, but we also know that we have a robust pipeline for M&A tuck-in opportunities. So our goal is to get back to that $3 billion as quick as we can. We've got a couple of questions here.

Maybe just a follow-up on that. Do you guys believe that the 2023 number is a base? Because you talked about bill rates coming down and normalizing, is 2023 kind of the floor? And it's how long from $2.2 billion to $3 billion is just the question in your minds? Or is there any more setback before we could move forward?

No, we believe that is a floor, that $2.2 billion in revenue and the $200 million in EBITDA.

Okay. And then you also mentioned that the pipeline for new relationships is as strong as it's been. Is that a function of the marketplace and COVID making hospitals think differently about it? Or is it about something that you would say you have specifically done as far as reach or client relationships?

I think it's a combination. I think, first of all, bringing on great sales talent is definitely helping propel us to be able to get to clients and have a different sales approach that we probably had previously. So the opportunity is there. But of course, it's a very volatile market coming out of the pandemic. And there's lots of opportunities as clients want different changes and have different opportunities and different solutions than they've had before. And so one thing Phil Noe said is when we're looking at our technology and how our clients can use it, they can utilize it as an MSP, they can utilize it as an EMS, they can utilize it as an internal -- a system for themselves. And so what we're doing now is when we're talking to clients and being more consultative, is meeting the client where they're at now, but also where they need to be in the future.

Can you give any color on like that the win rates on these MSPs? Like -- and maybe how that might have compared to where you were a few years ago, I guess, both on new MSP wins and maybe reprocurements?

Yes, it's hard to establish a win rate relative to the prospects that you're going in and talking to. So -- but I would say it definitely feels as though there's tailwinds for where we are right now in terms of -- if I go back in time, I can look back to when we were seeing pretty stable, consistent 1 to 2 wins a quarter. And then in the pandemic, the pipeline kind of dried up a bit as hospitals were really entrenched in looking internally and figuring out their own problems. The opportunity now is that we can get back and accelerate that kind of trajectory.

Tobey Sommer with Truist. Just had a quick follow-up on that. In terms of MSP, no single company kind of wins and retains all their business. It's very difficult from the outside to take gross win dollar volume and plug it into a model and have it flow. So where are you on a net basis in terms of wins and growth in dollars? And then I wanted to get your perspective in terms of vendor-neutral MSPs. Is that -- are those taking share or losing share, from your perspective, over the next several years?

I'll start with the second question. I'll let Bill answer the first question. So it's taking gains. So when we talk about the vendor-neutral VMS, MSP, but really not the MSP, right, it's a vendor choice program for hospitals. That, right now, we estimate, of course, this is not with the new $50 billion number from SIA. On the $30 billion number, we had previously until yesterday at 4:00, we had marked-to-market about a $10 billion to $15 billion vendor-neutral opportunity. And so it will not be trading -- it won't be trading our current MSP client to sort of into vendor-neutral. It will be taking a piece of that $10 billion to $15 billion market and converting that and winning new market share.

I guess I was asking whether you think vendor-neutral as a category is taking share, not the company specifically.

I would say, yes, it's been pretty consistent 50-50, 60-40, it kind of goes back and forth. I think that we're seeing some hospitals wanting to try to do it themselves. And so maybe that's gaining a little traction. We've seen that throughout after 2008, 2009. During the great recession, we've kind of saw that happen. We're seeing a little bit of it happening now, and we're in a position to be able to help those clients do that if they want to. So maybe it's getting a little bit more vendor-neutral, but I think it's pretty much 50-50 split.

Yes. And just speaking to your question about -- okay. Just speaking to your question about the retention versus the wins. I'd say on a year-to-date basis, we've certainly won more than we've lost. Losses tend to be somewhat episodic. But if you look back at our historical trends there. I mean, our attrition has been incredibly, incredibly low, usually single number of programs in a year, like single-digit number of programs in a year that we might have switched to another form. And many times, they will go our vendor-neutral if we do lose them. And in which case, we don't lose all the revenue because we still have clinicians on assignment there. We support, to a degree, those vendor-neutral programs. So it's not a complete loss typically when we do have an attrition.

One more question for me. What do you think the sort of native tech-enabled staffing firms as a category, what do they look like in their 2.0 or 3.0 state, sort of post pandemic as we move to endemic, given the fact that they, generally speaking, don't have customer relationships, don't have at least an established sales force, and, at least to my understanding, is generally aren't particularly profitable?

Yes. It's -- I think you'll see consolidation through that. I think you'll see a lot of them move away. I think there'll be maybe some people who have gone up for people who don't have the technology prowess that Cross Country has built to be a platform for them. But those type of companies really increase prices. And so -- because what they do is, because they work on very low margins to try to gain market share, they have -- they pay the clinicians more money, which then forces bill rates up. And so we see that it's bad for the industry. And we look at it as, as they eventually don't make money, they're trying to use an Uber model, but the problem is the Uber model renewal is losing money. The issue is the market is too big and too fragmented, too many people, for them to gain enough market, for them to continue to lose money and eventually turn it into a profit. So we do think -- our belief is that they will morph into other companies, traditional companies will acquire them or they'll go away.

Kevin Steinke, Barrington Research. Bill, you laid out some of the factors that you thought could get you from high single to low double-digit adjusted EBITDA margin to double digits. I'm just trying to get a sense of how much of a differentiation we should think about between low double-digit versus double-digit, I mean, is kind of mid-teens a reasonable expectation? Or how are you thinking about it?

Yes. I mean we didn't really size it. You're right. We gave kind of a sustained double digits. So I mean anything north of 10% is double. But I'd say in a long-term range, I think we'd probably be looking more in that 12-ish percent kind of range right now based on our current mix of business. That would be my aspirational goal to get us to that sustained 12%. We've seen that over the last few quarters when the operating leverage was there and sufficient to cover our operating costs. I think when Intellify comes along and gets more mature into our offerings, that really can start to have a dramatic effect. We are deploying that across our existing managed service programs today. So we'll start to see savings from that bleed and start coming in, in the fourth quarter in a more meaningful way.

Okay. Great. And then when you think about capturing share in the -- or penetrating the vendor-neutral market, can you speak to Intellify and what the points of differentiation are with that technology that you think will enable you to penetrate vendor-neutral and capture share in that piece of the market?

Sure. And you know what, I'll get Phil, if you want to get mic-ed up, I'll have you answer some of the questions, but I'll start, if you have a mic. But what I'll say is, really, when we built Intellify, we designed it from, I was going to say, from the end to the beginning. So we went to clients and said, "What are you looking for?" And, "What do you want?" And really, what clients wanted and what differentiates us is we start with analytics and data and insights for the client. So they're looking at what do they need next, not, "Hey, you have a body today?" So that's how we designed it and developed it. And you have to remember, most of the technology out there in the vendor-neutral space, the vendor management space, it's old technology. Many of the companies have not updated their technology in years. A couple have, but most haven't. And so we think there's a large opportunity in that space. We also believe that the space is there's only very key players in that vendor-neutral space. And so because you're so vendor -- there's so few players, there's not a lot of choices of companies to go to. And we believe we can create a true vendor choice or true vendor-neutral product that will compete with only the 4 or 5 people that are really competing in the industry. Phil, do you want to add anything else to that?

So I think, how we designed this from the ground up was based on insights and analytics and data forward, right? So that is what has truly allowed it to be different. The transparency with the actual operating metrics are what is front and center. I think the systems that we are looking to replace, they really haven't had any major advancements in what, 5, 6 years. So it's kind of the same old transactional model that's there. And certainly, our core product does that. But it's those insights and analytics that allows them to understand real time, where they are, with their resources, when they're rolling off, when new starts are coming on. So that's all very front and center. It's just very different than just saying, what's the total spend, what's the metrics. It's very focused on those insights.

And look, I mean, there's a real thirst amongst our clients to gain access to this technology, John. I know we don't share client names, but you had an interesting interaction recently where one client offered to kind of be on the cutting edge of helping us develop and deploy new functionality.

More than one client. I've been probably in 3 or 4 client visits in the last month. And every client is looking for new technology. And these are not necessarily our clients. Some of them are clients who want to use technology in a different way. Some of them are our competitors' clients, who were saying, "We need help looking at it differently." And when we look at Intellify, we look at it as a 360-degree product, which is on our road map we've delivered and developed, and some of it is continuous improvement that we'll continue to always develop. You're never done when you're developing software. But part of it is to engage and retain the core staff. When we look at the shortage in health care, we saw all the BLS JOLTS data, which we all know all too well. There is a crisis in the number of nurses shortages we have, and it's not going to be solved anytime soon. And so us, I don't look at Cross Country as a health care staffing company. We are a health care labor company that needs to help and work with hospitals to help find the whole solution. And that whole solution is not contingency labor. Contingency labor at 10% or 12% in the hospital is not good. We need to bring that down to a manageable level for hospitals. Traditionally, that's been about 2% to 4%. So we need to make Intellify much more than just a contingency labor, and we're starting to build into that into the retention and engagement of core staffs so we can keep them and then help them. We also are bringing in programs with clients and they're helping us develop them is how can we help upskill through Intellify and keep and retain clinicians moving to Intellify. So what that means is we have clinicians who are maybe in a subacute care space. How can we help them become acute care clinicians and actually build supply? If we don't help build supply, we're not going to be able to graduate enough nurses in the next several years. International nursing, it's not a panacea. It can help. But there's only 13 million nurses in the world according to WHO, and there's a 28 million nurse shortage worldwide -- or I'm sorry, 28 million nurses are needed to have equilibrium worldwide. So we're going to need several different areas. It's not going to be one golden button that we're going to hit, that's going to solve the problem. And some part of it is Intellify will be part of that solution to help upskill clinicians and retain and engage the core staff. Yes, Brian?

Sorry, some follow-up questions here. Just to that last point you brought up about hospitals and how we need to bring utilization down. So a lot of us here cover the hospitals as well. And they're all talking about trying to bring down utilization and rate, right? So how do you view the tie-in between those comments and the projections that you've laid out, not just for 2023, but for the next few years?

Yes. Well, it's -- when you look at the gap, the shortages that they are, we can cite so many different resources, so many different studies. Vivian Health did a study, I think, in April that showed 65% of nurses are considering retiring in the next 5 years. We've had studies done with the one college of nursing -- at the Houston College of Nursing, where we usually did our study that showed most nurses want to leave the bed side. I mean I think it was like only 5% or 10% want to be retained at the bedside, and that's down from 24% a year ago. So yes, I think the goal is, and this is the craziest part, right? The hospitals want to make sure that they can be less dependent on the contingency labor, we just don't have a supply to do it. We're seeing some hospital systems having more nurses graduate nursing school. The problem is we don't have enough preceptors and educators to go and have them and get them ready to be care nurses. So I think we'll make a dent into that, into the shortage over the next several years, but it's not going to be a significant amount that's going to impact the number of contingency labor and RNs that we're going to need. I think we'd have to think of the delivery care model differently to figure out how to solve this problem long term.

And then just a follow-up to that. As we think about your ability to grow, obviously, supply is the biggest driving factor right now, right? It feels like it's a supply-driven equation. So I know we talked about culture and all these other things that you guys are doing. So how are you thinking about your ability to gain share of the supply of nurses because just as you said, it's a tight market and to some extent, it's shrinking, right?

Speed, speed is key. The faster we can move a clinician from the door to the floor in a frictionless manner, we will gain market share. This will be easy for them to work. It'll be easy for them to do business for Cross Country. So that's really where we're focusing on technology. That's why technology is really the backbone of what we're doing is because we're going to increase the speed at which they can get to the floor, which will allow them to get jobs faster. And when you have a job faster and you know you can go back to Cross Country because you have a job and you go to work within days, not weeks, you're more likely to come back to Cross Country to get your next job.

All right. Last question for me. Obviously, acquisitions announced last night. Maybe you can walk us through the strategy in locums and how you're thinking about that, and what you see the opportunity there is going forward?

Sure. So locums is a market that we're very bullish on. We look at what's happened in the pandemic. Now if we'll recall, the locum space did not have the tailwinds during COVID. As a matter of fact is absent, right? They pretty much shut down. We had surgery shut down. When we look at the amount of deferred -- right now, we have a lot of health care being utilized right now because of all the deferred services, right? Surgeries, everyone knows, right? Surgeries are back online, people waiting to have knee surgeries, elbow surgeries, all type of surgeries. But what we sometimes don't hear as much is the deferred health care that cause chronic issues in chronic diseases. Right now, one of our most needed segments is cardiac care. Any specialty in cardiac care is in high demand. Why? Because people sat for the last 2 years at home, maybe didn't exercise as much, maybe they ate a little too much food, they work from home, and they didn't go to see and have their regular preventative care doctors' appointments, and now those chronic diseases are building. We're anticipating chronic diseases to be in diabetes and other chronic diseases to come through. And so there will be more health care needed, which means more locums will be needed. We always talk about the nurse shortage, but there's been a physician shortage going on for years. And so that's why we felt it was really important for us to grow scale for locums and become a real player in the locums business. The Mint and the Lotus deal, that will add -- that's -- they're on a run rate of about somewhere between $40 million and $50 million in revenue annually that will be added to our base of what we're at. And we're almost at a run rate of $100 million prior to the acquisition.

Tobey Sommer with Truist again. What do you think is the future of the business model with respect to the recruiter within nurse staffing, both travel and local? Could you see there be an evolution where there's sort of a meaningful growth in self-service that isn't involving a recruiter, and recruiters are focused on the hardest to fill jobs for your clients?

Yes, it's pretty much the business plan. But yes, it is. What we're looking at is we believe we can have more capacity, right? You still need the human touch. And one thing we forget something about health care professionals. My mom is a nurse. A lot of nurses, obviously, we know and deal with here in the room, they're very high-touch people. And so while, yes, you can -- we'll be utilizing technology, which we do currently in our per diem business, where people can just go on our app and self-service themselves, we currently can self-submit on our Gateway portfolio. But instead of maybe holding x amount of clinicians per recruiter, you'll double, triple, quadruple the number that they can actually deal with because they don't have to do the actual day-to-day work, but they'll keep the relationship there. And so I think that the role of the recruiter will change in the future. They'll be able to have more of a one to many, and then be able to really give the career coaching advice and will turn into more coaching and career consultants than recruiters.

Do you have any numbers associated with that, some sort of vision out in the future about how much will be sort of low touch or high touch?

I think we stated in the presentation with Phil Noe that we think we can gain a 2x to 3x advantage in the near term as we roll out all our technology.

Okay. Could you comment on the proportion of new nurse supply -- in other words, when you're getting applications for travelers, in particular, how many of them are -- what proportion are new to the industry? I want to get a sense for how that -- how it compares today versus when the pandemic was and cases were at a very high level.

We don't traditionally break that out. We haven't -- and I don't think we just don't track that stat, right, Bill?

We don't know who are new -- sorry, I hope my mic is on. We don't know exactly the percentage of new to travel. We know who are new to us. We know a subset of those who are new to travel. At the peak, I think we were calling out about 40% of our travelers were net new to Cross Country. That numbers waned a little bit, but it's still north of 30%. So we're still seeing -- call it, 1/3, we're still seeing 1/3 of our travelers that are still coming to Cross Country that are net new to us for the first time.

Last question for me. Could you describe in a little bit more detail the revised sales compensation structure, what you've seen in terms of results or hope to see in the future as a result of that?

Sure. Dan, do you want to address that as you're so close to it?

Sure. As I mentioned in my remarks earlier, we had kind of more junior salespeople that were really focused on kind of selling whatever the client might be asking for. And so we've changed the compensation plans to be very focused on direct third-party and MSP, and an MSP relationship versus a direct one. For example, in a direct one, you start and you can start getting orders and filling them right away. And so it's very near-term focused in terms of compensation. In an outsourced relationship, like a managed service program, you have kind of an upfront, "Hey, attaboy, great job in winning this, but this is now a 3- to 5-year term." And so we give them a little bite at the apple quarterly for the duration of that particular relationship. And so it's almost like maybe in another industry like an insurance annuity, right, that's coming to the salesperson. And so this personality, the strategic one, it has a very long-term view of their compensation and the results of it. And the direct one is a very near-term quick hit, get it over with, not strategic kind of a relationship. And so they're just different personalities. And as a result, you compensate them differently. Does that help?

Question about the guidance. Bill, I think you said that the number for next year includes tuck-ins like the ones you just did. Was that to mean that it includes those deals specifically? Or does it mean that it includes...

Yes. No, those deals specifically.

Okay. So there's no new M&A kind of in your...

No, the $2.2 billion should be attainable on an organic basis, including the Mint and Lotus.

Okay. And I might have missed it, but when you gave that today versus future goal, is that an organic way to get to where you're going? Or does that assume how you might apply capital?

Yes, I think it's a great question. I would say that tuck-ins would accelerate the path to get to that optimal mix for the future state. It's achievable organically because we're seeing, like we talked about, double-digit growth in home care, in education. So those businesses are going to grow rapidly as the travel bill rates kind of normalize coming into 2023. So we'll see the mix shift just through that. But yes, if we have other tuck-ins, we can see that mix even play out a little differently.

Okay. Because on that today, the future goal, like the number that's -- the 2 numbers that are growing the most, I guess, education is 4x. I guess, locums, we kind of saw with the deals, but we got home maybe 2x where it was. I guess, first, on the home side, is it more pace type things? Or is it more kind of traditional home care? And then I guess on the education side, why is that growing 4x? That seems the fastest on the PACE.

Sure. So on the home health side, we are the leaders in PACE on MSOs, similar to an MSP, very similar, I should say not exactly. But we are the leader in that, and we'll continue to grow the business through PACE and through our MSOs and PACE and staffing in the home care through PACE. In terms of education, look, we're having the same issue with educators and teachers and the health care workers in education as we are nurses. There's a crisis of shortages of teachers right now. And so that is expected to happen for the next several years. It's also a fragmented business. There's very few companies that have any scale in education, and we believe that we can create scale. We believe there's opportunities, especially with Intellify, to create MSPs within the education business. And so we think there's a lot of green space in education.

I just saw in there that that's an area where we've invested heavily in capacity as well. Just to the point John made about the backdrop of the marketplace. So over the last couple of quarters, we've really added a lot more capacity to that line of business. Now that the pandemic seems to be fading back into more of an endemic and we think schools are more back in person. So I think if we look at the fourth quarter, we're expecting that business to see strong sequential growth and significant year-over-year growth.

Okay. Great. And then I guess one question we get a lot about. We've talked a lot about supply, demand and long term, where this thing goes. I guess a recession. How would you think -- if we end up going into a recession at some point next year, how does that impact your views on supply demand and your ability to grow and get to that $3 billion?

I'll start. I think it depends upon how much unemployment there is, right? I think right now, we're technically in a recession and unemployment, though, is very low. So if inflation continues to go high, we see higher on inflation, yes, that will impact the business. But we really -- there's no road map, right, for this, if another recession hits and how deep it is, especially when we look at Affordable Care Act that was enacted in 2014, millions of more people having insurance. But yes, of course, if it's a deep recession, Kevin, I do think that we would obviously see some pullback in usage from facilities.

But just on the balancing act question, so this is where I think the company has made tremendous strides with developing our internal capacity metrics, more predictive indices, so we can adapt more quickly, I think, than we would have been able to do in the past. We're more centralized than we ever were. Things can scale up and down a little bit. I'm not saying it will be immediate. I mean you could have a recession hit, something could change suddenly, but it might take us a quarter or 2 to rightsize, but we'll be able to make the adjustments along the line -- along the way to ensure that we don't cut too deeply so that we can't grow back on the way up.

All right. Well, again, thank you, everyone, who turned out virtually and to those who joined us at the IPIC Theater today in Boca. This is an exciting time for Cross Country. We have a common purpose, right, and that's to deliver efficiently and effectively on our promise of quality health care, on transparency and forward-thinking innovation. And for those of you who already follow us or meeting us for the first time, we look forward to hearing from you and engaging with you as investors and analysts. And thank you for coming, and we'll see you soon again. Thank you, everyone.