Hey, I guess, we can go ahead and get started. Thanks to everyone in the room for joining us here today. My name is Trevor Romeo. I'm the analyst here that covers staffing and human capital services at William Blair. For a complete list of research disclosures and potential conflicts of interest, please see our website at williamblair.com. Today, we're very excited to welcome Cross Country Healthcare to the Growth Stock Conference for the first time, actually. Cross Country is a leading provider of healthcare staffing and workforce management solutions. I'm very pleased to introduce the CEO, John Martins, and the VP of Investor Relations, Josh Vogel. Thanks to both of you for joining us. This will be a formal presentation in this room. There will be a breakout session following in the Burnham A room immediately after this.
So, with that, I'll turn the floor over to John, and then if we have time at the end, we can do some Q&A.
Great! Well, thank you, Trevor, and thank you, William Blair, for having us today. And thank you everyone here for joining us, today. Before I begin, I want to make sure that you are aware of the safe harbor language on these slides. Now, those of you who are not familiar with our organization, Cross Country, we are a tech-enabled workforce solutions and advisory firm, with over 38 years of industry experiences. We were founded in 1986. We specialize in addressing the complex labor-related challenges, enhancing outcomes through high-quality, simplified solutions, and advancing visibility with data-driven insights. We have a comprehensive toolset, that's equipped with cutting-edge technology, that has business intelligence, machine learning, and that spans the entirety of the workforce, from workforce timelines to actually sourcing.
Instead of a traditional 25-minute talk, where you probably guys are gonna experience a lot of them over the next couple of days, we decided that we would talk and demonstrate our technology for you. We think our technology is really the key and heart of who Cross Country is and where we're going as a company. This will also help you provide a clear picture of the value that we deliver to our clients. Excuse me, one second. We have several videos that we're going to take a deep dive into our technology stack that shows you exactly how we make a difference and how we make our sausage. So with that said, let's head over to our first video.
From the moment we take our first breath, we discover a universe of connections, from invisible streams of data flowing across a global cellular network, to cellular structures populating the pathways of the microscopic universe, to roads spanning thousands of miles across the country, coalescing around homes, hospitals, offices and schools. We soon realize the most important connection of all: the human connection. It is that human connection that encourages us in school, binds us in trying times, saves us in trauma, inspires us in recovery, and what brings us home. By empowering the human connection for health and wellbeing, we bring together talent with technology, doctor with patient, student with educator, job seeker with career options, and work with wellness. Whenever, wherever talent meets technology, Cross Country will be at the crossroads, innovating in this rapidly changing world.
When we look at Cross Country today, we're a digitally transformed, innovative enterprise with broad capabilities to help clients solve their labor challenges across the landscape. We look to follow the patient across the continuum of healthcare, from pre-acute to post-acute and to acute care. We also believe that part of spanning to spanning the healthcare continuum is following a patient through these phases. We also think that also brings into account our education business, because when we follow a patient, not only does it go through pre-acute, acute, and post-acute, but it also goes to the education world as well through the K to 12 school districts, where we support children not only with clinicians, but also with special ed teachers, paraprofessionals, and teachers as well. As you can see here, the industry continues to struggle with staffing shortages.
As you can see here, the industry continues to struggle with staffing shortages. If you look at any of the studies out there, you look at a McKinsey study, you look at BLS data, other reports over the past decade, what you'll see is that there's a consensus that there's a shortage of nurses, somewhere between 400,000 nurses and 1 million nurses between now and 2035. And what's the cause of this? Well, we know that we've had a shortage of people of nursing schools, and we've seen some nursing schools start up over the last 20 years, but we've also seen nursing schools starting to decline as well. We've also seen a combination of the economic downturn. We've seen the pandemic and a rising number of retiring nurses who want to leave the field.
We've seen increased burnout and fatigue that's led to higher attrition, and resulting in potentially unsafe nurse-to-patient ratios. And part of what we've seen is that nurses want to leave the bedside to go to other areas of care, not necessarily bedside. And there's more opportunities for them, more now than ever, to not have to be a bedside nurse. There's also another factor contributing to the ongoing shortage of clinicians, and that's the lack of preceptors or clinical educators. And when you look at in acute care settings, and they're not having enough, preceptors or educators, what does that really mean? Well, every hospital can only to intake X amount of new student nurses to become nurses. And if you only have 30 seats and you have no extra educators or preceptors, you can only bring in 30 clinicians.
What happens is, once you are a nurse and you don't go into an acute care setting and you go into a sub-acute setting, a doctor's office, skilled nursing facility, you end up getting a scarlet letter, and that scarlet letter is: I'm not an acute care nurse. And then six months from now, when you go and an opening happens at the hospital, and they're going to have another class, because you are a sub-acute clinician, you go back of the line to become an acute care clinician. They want to take a new nurse grad who has more, who has the education of being towards an acute care, not someone who has work industry experience of a sub-acute.
It seems crazy, so part of it is there is a shortage, but part of it is there's a redeployment. We need to have a redeployment and re-education of sub-acute care nurses into acute care to help alleviate some of the deep problems we have in the shortage of nursing. Can we go to the next slide? Now, let's take a look at the macro perspective. One of the key data points we consider is the Bureau of Labor Statistics JOLTS report, which shows us the number of job openings versus the hires in each industry. For healthcare, as you can see on this chart, the average ratio up until COVID was about 1.5 job openings for every 1 hire. Since 2020, the metric has risen dramatically and remains elevated, roughly elevated.
I think they just released this report, which is, I think, 1.9 today, for the last month was 1.9 to 1, so it's getting a little bit better, but overall average for the last six months is probably about 2.2, 2.3, 1. So we still have a very wide gap from where we were pre-COVID. And, this just really what we, we like to show this data is it really just shows, the additional support to our thesis, to do this thesis of a structural supply and demand imbalance across the healthcare industry. And this is one that's not expected to change near term, midterm, or long-term. And, and as we said, looking towards 2035, you're still gonna have 1 million nurse shortage.
Now, I want to talk a little bit how we're solving these industries and challenges at Cross Country. Let's talk about our supply chain model, which starts with enhancing the candidate Xperience and helping them navigate their careers. The Cross Country Xperience app is at the heart of this model. It offers a user-friendly platform that makes recruitment and retention seamless by providing a wide range of travel and shift-based opportunities, as well as a comprehensive support for clinicians. This is important because when we look at Cross Country, we are high tech, and we've invested over the last three years between $20 million to $30 million in our technology each year of dollars. But high tech is one component of it. You have to be high tech and high touch, and that's what Xperience does.
And so when we make sure that we're building the best tech in the industry, we're also making sure that we, the clinicians, have the ability to outreach to actual clinicians on our side. At Cross Country, we have one of the highest number of clinicians on our corporate staff, at over 60 corporate clinicians, to help clinicians navigate their job and assignments. And so while technology is certainly a key component, especially when we're talking about nurses, we need to make sure that we have a high touch component as well. And this approach goes just beyond simply filling positions. It's about creating meaningful professional connections, as I said, with these nurses, and delivering best-in-class Xperience. Now, let's look at Xperience in action.
Are you looking to take control of your career anywhere, any time you want? Your next adventure is at your fingertips with the Xperience mobile app. The Xperience mobile app lets you manage your travel career from application to completion in the palm of your hand. Discover interesting assignments and even favorite your searches too. Get notifications for the roles you're looking for straight to your phone, then use Quick Apply to apply with just one tap. Not familiar with the climate at your next destination? Use the weather feature to learn what to expect so you can prepare for sunny days or snow-filled nights. View a complete history of your assignments while managing all upcoming tasks.
Even upload your certificates, licenses, and other documentation easily. With an easy-to-use interface, the Xperience app will take you on your next adventure in no time. Your career on your terms. X perience adventure, Xperience life.
Our Xperience app revolutionizes how clinicians find jobs through proprietary AI matching technology, much like Uber or a dating app would use it. Similar to how Uber connects passengers with drivers, the Xperience app uses the same advanced algorithms to pair clinicians with assignments that match their skill sets, their preferences, and their availability. The app streamlines the processes for healthcare facilities, providing real-time updates, credentialing, and communication tools. This ensures that we're filling our clients' needs by locating the right fit for the right open positions at the right place and at the right time, and for our clients, at the right cost. Now, let's talk about our client support and what that is, our Intellify product. Intellify, which is Cross Country's proprietary vendor management system, is one of the most powerful workforce optimization platforms in the industry.
I've been in this industry for 20 years, and I can tell you that by far, we believe that our technology is the most advanced in the industry right now, and it's because we lead with analytics and data. Hundreds of healthcare facilities rely on our personalized dashboards for data-driven decision making. These tools help them quickly respond to market changes, staffing needs, and operational changes. In the fast-paced world of healthcare, real-time insights are crucial. With business intelligence and agility through Intellify, our clients achieve significant cost savings by efficiently streamlining and optimizing their workforce. Now, let's show you how Intellify works.
The world of healthcare staffing has transformed dramatically over the past several years, and healthcare leaders unable to quickly adapt are at risk of losing control of their workforce and expenses. Introducing Intellify, a powerful business intelligence-enabled digital platform for managing your entire employee ecosystem. An industry game changer created at the crossroads where talent meets technology. Intellify empowers you to take back control, deploy, manage, and track both in-house and contingent labor, ensuring you always have the right person and the right shift at the right cost. Intellify will transform the way you manage people throughout the employee lifecycle, leveraging state-of-the-art technology to streamline processes and make every step from sourcing to retention more effective, efficient, and transparent. Intellify's customizable SaaS platform features an intuitive visual interface for exceptional ease of use. Perform the majority of tasks without navigating away from your customized home screen.
With reporting and analytics enabled by Power BI. As the healthcare staffing landscape continues to rapidly evolve, Intellify ensures you have the technology to evolve with it. Make smarter decisions daily, increase core staff retention, reduce risk, lower expenses using actionable data. Intellify: better insights, better people, better results.
Intellify is a comprehensive solution for optimizing healthcare ecosystems. Whether you're managing contracts, navigating per diem shifts, coordinating resource pools, or arranging locum tenens placements, Intellify streamlines processes, saving time and resources. The bottom line is everyone talks about AI, machine learning, and business intelligence. We all have data, but the real differentiator is what you do with the data, and that is the Intellify difference. Throughout the pandemic, the healthcare staffing industry saw a movement towards transparency in pay rates for clinicians, but no one ever talked about the transparency of bill rates for hospitals. Cross Country's Data Aggregation Systems, what we call DaaS, is one of the pioneers in our industry, offering transparency in bill rates to help hospitals validate their cost. DaaS was created by a team of data scientists, machine learning engineers, and healthcare veterans at Cross Country.
Our goal was to gather anonymized real-time bill rate data to support real-time staffing decisions at our clients. Our proprietary AI algorithms provide information that's easy to understand and to navigate. Clients can choose to utilize DaaS through Intellify or as a standalone product to check on their incumbent MSPs or VMS, providers. Now let's take a peek at DaaS.
Imagine a tool that provides transparent labor market data, business intelligence, and insights powered by AI that empower you to make faster, informed decisions. When it comes to healthcare staffing, hiring managers may have had limited access to bill rate data or potentially outdated information. Introducing DaaS, a tool that provides accurate labor market data from a robust data set in real time to help you make faster, informed decisions. DaaS generates three vital areas of information: job volume, bill rate ranges, and demand index. These intuitive dashboards will be your guide into AI-driven, transparent market data. DaaS, no more estimating, no more guessing. Now, you know.
According to the staffing industry analysts, the US healthcare staffing market is roughly a $50 billion industry. In healthcare staffing, there are three main ways which you obtain staff. 20% is you have a direct contract with travel staffing agencies, 40%, roughly, is through a vendor management tool or vendor-neutral technology, and the other 40% is through MSPs or master service providers. If you look at the market, all these programs have one thing in common: they all rely and utilize technology. Intellify is one of the most significant developments in Cross Country's history, and it effectively doubles our total addressable market by giving us opportunity to capture not just the MSP space, which we've been capturing for 25 years, but also allows us to enter into the vendor-neutral or VMS space.
Now we want to take a look and show you what is that vendor-neutral opportunity for us. We believe that we can capture up to 8% of the market, or at least $1 billion in spend under management for vendor-neutral offerings over the next couple of years. This translates into higher revenue and higher margins, and let me explain the economics of that... There are two ways to earn revenue from a vendor-neutral offering. The first one comes from our share of fulfillment, which we believe conservatively should be about 20% in a vendor-neutral offering. In context, we have, our share is about, 65% to 75% in an MSP model. The second revenue stream off the vendor-neutral system are the fees that are funded by the vendors who participate in the program.
It can also come as a direct license from the client if they're using our flow pool management technology or some of our other technologies, such as DaaS. These fees, including the fees funded by the vendors, have nearly a 100% flow through to gross profit and are very similar to a SaaS-based product in terms of profitability. So you're looking somewhere at about 60% to 70% EBITDA on these in the technology fees. As I hope we've demonstrated to you today, Cross Country leverages best-in-class technology and a dedicated team of clinicians to deliver unparalleled workforce optimization solutions. Our robust portfolio serves a diverse clientele, ensuring that they benefit from the efficiencies and the effectiveness of staffing resources. As a visionary in the industry, Cross Country is paving the way towards a future of workforce management.
Now, before we dive into any Q&A that you may have, I'd like to take a moment and highlight our strong financial position. At the end of the first quarter, our balance sheet showed no debt and over $200 million in available capital, which is a testament to our financial strength. We have a comprehensive capital allocation strategy that emphasizes a really balanced approach. This includes investing in key areas for growth, particularly in technology, as well as exploring and executing on potential M&A opportunities and, of course, share repurchases. Over the past two years, we've bought back 4 million shares for nearly $100 million. In closing, at Cross Country, our strength lies in the harmonious integration of our people, our processes, and our culture, all of which are interconnected by our cutting-edge technology.
The ecosystem is designed to bring candidates and clients together in a seamless, frictionless manner, enhancing the overall Xperience for all of our stakeholders. When we look at what we do, we look at us being a supply chain, and our goal is to move clinicians through that supply chain by eliminating waste in an effective digital way to get them to our clients. We do that by leveraging our data-driven insights, our best practices, streamlining operational efficiencies, reducing costs, and ultimately, what we want to do is making sure that we're improving patient outcomes. The relentless focus on process improvement allows us to respond swiftly to how the market's changing and our clients' needs. Underpinning all of this is our advanced technology. This technology edge not only enhances our service delivery, but also sets us apart from our competitors.
We possess the capabilities and the financial strength to become an even larger force in the market that we serve over the next several years. Our strong financial position allows us to invest in strategic initiatives, pursue growth opportunities, and deliver sustainable value to our shareholders. Looking ahead, we're excited about the opportunities on the horizon, and we remain committed to driving innovation and excellence in all that we do. I look forward to updating you all on the progress and achievements when we meet again. With that, I'd be happy to take some questions.
Okay, great. Well, thanks, John. That was really helpful. I love the videos to help us visualize some things a little bit better. I'll handle a few questions here, and then there'll be a breakout session after. I think that's probably the most efficient way to do this here.
Sure.
Yeah, first, maybe we could hit on just overall demand trends. I mean, you know, I think the key question for a lot of people in this market's been this industry-wide demand reset we've been on the past two years, post-pandemic. It's been a lot deeper than a lot of people would have thought, I think. As you just kind of look across the client base today, two years later from the peak, where do hospitals stand now in terms of normalizing their contract labor? And, you know, along with that, I know, I think the last earnings call you mentioned, maybe six weeks or so of stable demand leading up to the call. If you have any new data points to share or just any thoughts on the current demand environment, that'd be really great.
Sure. I'll start with the current demand environment, and I think we're at an inflection point in the travel nurse and travel allied world right now. As we've called out the earnings call, which was, what, May 3rd? That we had about six weeks of data that demand was relatively flat. If we look at demand, demand really is the leading indicator to see when volumes will go up. Once we can get demand stabilized, we'll see volumes also stabilize, and we can build off of that. I would say over the last four weeks, we continue to see that stabilization in demand, but we're at an inflection point.
That inflection point is the traditional cyclical nature of the travel nurse industry would be a lower Q2 demand volumes, and then demand volumes starting to increase in July and August for the flu season, winter needs. That will be where the clinicians will be on assignment from September, starts from September through January, on assignment till March. So if we start seeing an increase, and usually it's about, about 20% increase in what your average orders are, if we can see that increase happening in July and August, we'd feel very comfortable back to the cyclical nature of the industry. Now, if we don't see that, and we just see a modest, a modest increase in demand, we would still be very, we'd be very encouraged that the demand is moving back.
Now, what we're hearing from hospitals, and I think, you know, some of the publicly traded companies, hospitals have said it as well, is they're very comfortable now with where demand is right now, and so we don't anticipate most hospitals to reduce demand from where the levels are now. Now, of course, there are some hospitals that have done a great job in getting to reducing demand, and they're at the right level, and there are some hospitals that probably have a little ways to go. But overall, we think it's pretty encouraged that we're seeing a stabilization right now.
Great! That makes a lot of sense. I think kind of along those lines, one of the things we saw in the last few years was a lot of the CFOs at these hospitals really kinda jump in and, you know, put their foot down on the spending for contract labor because it did increase so much. Are you still seeing the finance organizations of your clients as involved at this point, or are you kind of seeing the decision making flow back toward the clinical side a bit?
Yeah, it was over the last year, you would see, hospital CFOs and large hospital systems approve every single travel order, and that's on a, you know, $40,000 total aggregate cost for one traveler over a 13-week contract, and a CFO would approve that. Over the last 3 to 6 months, we've seen that not have such an impact, where now the decision making is going back to the nursing side.
Great. Another one I wanted to hit on was, Intellify, which you did a great job of, of highlighting with the videos and such. But in terms of the commercial opportunity, I know you've, you know, you guys have announced several wins, both kind of on the vendor-neutral side and the provider-led MSP side in the last few quarters. Just any thoughts on kinda how big that opportunity can be, and, and what you can kinda do to continue gaining some momentum with the, with the technology platform?
We definitely think it's a billion-dollar opportunity in spend under management with Intellify over the next several years. And it's a matter of just investing, which we have done in more on our sales side. Getting out there, getting in front of clients, getting exposure for Intellify. Like with any technology product, you have to get out in front of clients, show them technology, and the feedback we get is incredible on the feedback from Intellify and the technology. It really is... Again, I've been in this industry for 20 years, dealing with technology. I started my career as a software developer for UPS, and there's nothing like this technology in the industry.
That doesn't mean someone can't copy it, and in a year from now, I'll be here saying, "Yeah, the industry caught up to us." But that's why we continue to invest in technology, because we know that's why we bring out products like DaaS, and there's other products that we're developing right now to make sure that we're always one step ahead of the industry.
Yeah, makes sense. Oh, sure.
Intellify, how have your win rates trended at the five risks?
Yeah, so we've definitely picked up on our win rates. We don't, we don't give that number out publicly, but our win rates have, have gone up. But I'll tell you even a better story is that we're now getting to more finals than we've ever had, and that's the story. And sometimes there's reasons you don't win in a final. There's an incumbent, they're just there, they have a great relationship. People giving big rebates back, whatever it is, our, our competitors. There's reasons why, but what gets me excited is we've never been to more finals than we have now.
Certainly, over the three years I've been at Cross Country and being in the industry, I haven't seen Cross Country get to this many finals. And so that's a matter of time before those win rates will just continue to go up. What was the other part of that question?
Oh, I was trying to get shots at goal on these, like, three-year contracts, five-year contracts, things you may not have had a chance to win then, now I get a chance because of those contracts.
It's typically three-year contracts. And what's interesting, now that we do have Intellify back and some of the clients, that we were very transparent. During COVID, there was a backlash against staffing industry companies, and we did lose more than our fair share, probably, of... While we picked up market share overall, we did lose more than our fair share of MSPs. Now we're winning those back. But what's interesting is, as organizations that have left us are seeing our technology, we're engaging with talks for them now because they, they realize we're a different company now, especially with our technology.
We have another, audience question.
Question. So why would a nurse choose you as opposed to a competitor or as opposed to going direct to the hospital?
Sure. So we'll start with the direct to the hospital side first. It's limiting if you're a hospital. Now, if you have, HealthTrust is a great example, HCA, they have 180 hospitals. So if you went to a HealthTrust, which is their GPO portion of their staffing arm, if you went to them, you would have a choice of 180 hospitals in, what are they in? 26 or 30 states. But what happens when you want to go to another state? You can't stay with HealthTrust. You'd have to go somewhere else. And so going direct, and that's and they're the biggest, they're the best class A, you know, example. If you go to a hospital that has 3 hospitals in one metro area, you'd be limiting to go there.
So you could go there for an assignment, but then when you're looking for your next assignment, you're gonna have to go and change over to agencies. So that limits there. And so for with Cross Country, why would people choose Cross Country over another organization from the candidate side? It's because not only is it the high tech, and of course, like, I think it was Larry Ellison said, "Even my cat can build an app." It's not about having an app, it's about the high tech and the high touch. And when I say we have over 60 clinicians on staff, well, when you're a clinician traveling by yourself on the road, it's nice to know that you have someone who is in your field, by your side to help you along.
When there is an issue, and if there's a bad outcome at a hospital and you're there, you may have nothing to do with it, but you're under investigation. It's nice that you know you have a nurse that does exactly what you do, an ER nurse, or we have CNOs that are on our staff, former CNOs on our staff, that we have the breadth to help you get through any type of situation, or you just need the reach out. So I think that's our differentiator, is the high tech, high touch.
Maybe time for—w as there another hand in the back?
Yeah, I just see the first addition to the band, and I hope at this point, other partners spend on everything. I think we talked hospitals, we've been in a health utilization environment. If it were to slow down the rest of the year, do you expect that it would be further cuts and cuttings? Do you think that it would take on that maybe, you know, the same position we're seeing the sort of decline? Just curious if there's anything on that.
Yeah. We believe that hospital systems have overcorrected at this point, and so while census are high, admissions are higher, are high right now. We do believe there's an opportunity that even when it slows down, that because they've overcorrected, and if you go and speak to any nurse manager, if you have friends, they're a nurse manager, they work in a hospital, I guarantee you 70% or higher will say, "We're understaffed." And so we believe that this is artificially depressed in terms of the demand in the staffing contingency labor, that they're really... Unfortunately, we don't want it to happen, but there's gonna be bad outcomes happening because they don't have enough, the nurse-patient ratio is right, and then they're gonna have to swing in the other direction.
So we're hoping that they can—w e're hoping we can ease into that, and they can start seeing that they need more contingency labor or more labor in general. We don't care where they get the labor from, we just wanna make sure that there's patient safety at the bedside. But to answer your question, we do believe that with the overcorrection, that it would actually normalize and that we wouldn't see that much of a decrease. And just to be clear, we, you know, we said in our earnings call, we believe that as we see demand stabilize, we believe in the back half of the year, that sequential month-over-month growth, we will have volume growth in the back half of the year.
Okay, I think we're just about out of time. So John, Josh, thanks so much for joining us. This was great.