Benchmark Reiterates Hold Rating on Cross Country Healthcare (CCRN)

Benchmark analyst Bill Sutherland reiterated a Hold rating and {REMOVEPT} price target on Cross Country Healthcare (NASDAQ: CCRN).

The analyst commented, "CCRN reported a 3Q revenue and AEBITDA miss, with AEBITDA down 13% q/q on lower revenue with a margin of 2.6%, down 20 bps q/q. The stock sold off 14% and now trades at a 42% discount to the Aya Healthcare’s cash offer of $18.61/sh. There has been deal uncertainty since the FTC issued a second request in February that was not quieted by CCRN’s announcement on Sept 5th that it and Aya had “substantially complied” with FTC’s second request, that the HSR waiting period was set to expire Nov. 17th, and that the deal end date had been extended to Dec 3rd. Now, as a result of the Federal government shutdown, the HSR waiting period is expected to expire after the Dec. 3rd end date, at which point either party can terminate the agreement. The two companies are currently in discussions to move the end date beyond Dec. 3rd and probably into next year. It remains to be seen what the FTC’s response eventually will be and whether there will be conditions such as divesting some assets to make the deal acceptable in the FTC’s view. Meanwhile, Cross Country’s volumes have continued to decline sequentially this year, similar to industry trends. We think valuation is likely to become an issue if the two parties do agree extend the deal end date. At the original $18.61 deal price, CCRN is trading at FY25 and FY26 EV/AEBTIDA multiples of 17.7x and 20.6x, respectively, more than twice the comparable multiples for AMN (AMN – Hold). At last night’s close, the respective multiples are 9.0x and 10.5x as compared to AMN at 7.1x and 9.1x, respectively. If the deal were to be ended (breakup fee is $20M), we think there’s potential downside risk to CCRN’s valuation from these levels. "

For an analyst ratings summary and ratings history on Cross Country Healthcare click here. For more ratings news on Cross Country Healthcare click here.

Shares of Cross Country Healthcare closed at $10.87 yesterday.

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