Cross Country Healthcare Inc
NASDAQ:CCRN
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
9.81
23.52
|
| Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Cross Country Healthcare Inc
You don't have any saved screeners yet
" Good afternoon, everyone. Welcome to Cross Country Healthcare's Earnings Conference Call for the Third Quarter 2024. Please be advised that this call is being recorded and a replay of this webcast will be available on the company's website. Details for accessing the audio replay can be found in the company's earnings release issued this afternoon. At the conclusion of the prepared remarks, I will open the lines for questions.
I would now like to turn the call over to Josh Vogel, Cross Country Healthcare's Vice President of Investor Relations. Thank you, and please go ahead, sir.
Thank you, and good afternoon, everyone. I'm joined today by our President and Chief Executive Officer, John Martins, as well as Bill Burns, our Chief Financial Officer, and Marc Krug, Group President of Delivery. Today's call will include a discussion of our financial results for the third quarter of 2024, as well as our outlook for the fourth quarter.
A copy of our earnings press release is available on our website at crosscountry.com. Please note that certain statements made on this call may constitute forward-looking statements. These statements reflect the company's beliefs based upon information currently available to it. As noted in our press release, forward-looking statements can vary materially from actual results and are subject to known and unknown risks, uncertainties, and other factors, including those contained in the company's 2023 annual report on Form 10-K and quarterly reports on Form 10-Q, as well as other filings with the SEC. The company does not intend to update guidance or any of its forward-looking statements prior to the next earnings release. Additionally, we reference non-GAAP financial measures, such as adjusted EBITDA or adjusted earnings per share.
Such non-GAAP financial measures are provided as additional information and should not be considered substitutes for or superior to those calculated in accordance with U.S. GAAP. More information related to these non-GAAP financial measures is contained in our press release. With that, I will now turn the call over to our Chief Executive Officer, John Martins.
Thanks, Josh, and thank you, everyone, for joining us this afternoon. As you can see in today's press release, our third quarter 2024 revenue and adjusted EBITDA were within our guidance ranges, with revenue at the high end and virtually all lines of business performing in line or better than we anticipated. We are operating in a highly competitive market for both clients and candidates, especially within Travel Nursing & Allied.
Competitors, both large and small, continue to offer relatively high compensation packages to attract candidates, which pressures our bill pay spread and is limiting our ability to normalize our gross margin in the near term. Nonetheless, we remain very well positioned for sustained, long-term profitable growth, given the strength of our current relationships and the momentum we are seeing across the rest of our portfolio, notably in home care, physician staffing, and education. Overall, I believe the market is growing closer to an inflection point for our Travel Nursing & Allied business, even with the challenges around bill and pay rates.
Throughout the third quarter, travel demand was fairly steady and stable bill rates across all core specialties. Coming into the fourth quarter, orders are up roughly 20% over the third quarter, and though order count does not necessarily correlate with production for a variety of reasons, it is encouraging nonetheless. As the market continues to firm up, and with our recent MSP wins, I am increasingly confident that we are approaching an inflection point in regrowing professionals on assignments.
I'd like to highlight some positive trends and recent events across our other businesses. Of note, home care staffing has continued its steady growth, up 13% year-over-year in the third quarter. As highlighted on our last poll, we acquired the business in 2021 and have since doubled the number of PACE programs nationwide, while more than tripling the number of locations we serve.
In the back half of this year alone, we have approximately two dozen contracts in various stages of the sales cycle. We expect this business to be up again in the mid-teens year-over-year in the fourth quarter. Overall, there is a robust pipeline of opportunity for home care staffing as more-and-more individuals want to age in place at home.
We will continue to invest here as we foresee this business remaining one of our strongest performers in 2025 and longer term. Shifting gears, our Physician Staffing, or Locums business, has continued to grow, up 4% sequentially and 10% year-over-year. If you recall, we made two acquisitions in late 2022, which swiftly increased our scale.
Including those deals, our Physician Staffing business has gone from approximately $100 million in full-year 2022 to an annual run rate of more than $200 million in the most recent quarter. Macro conditions for Locums remain strong. In fact, we are expecting to see low to mid-single digit sequential revenue growth for the business in the fourth quarter, which bucks the seasonal trend we typically see coming out of the stronger summer months.
For 2024, our Physician Staffing business is forecasted to be up in the low double digits year-over-year, driven by continued growth in billable days and higher revenue per day filled. This segment's contribution income also continues to improve, up 15% sequentially and 80% year-over-year due to improved operating leverage from the volume growth, as well as proactive cost management. With our focus on expanding higher margin specialties, we expect these trends will continue in 2025.
Lastly, our education business is performing well, approaching $100 million on an annualized run rate. We expect continued mid to high single digit growth for the foreseeable future in this line of business. This market is another top area of focus for us as we look to expand the business both organically and through potential M&A.
The overall momentum we are experiencing in home care, physician staffing, and education showcases our growing portfolio outside of travel. On an annualized basis, these three businesses now represent approximately 30% of our total revenue, up from roughly 10% at the end of 2021. Even when the traditional Nursing & Allied market resumes a growth trajectory, we expect to continue seeing improved diversification as these assets become larger pieces of the revenue pie.
Turning to our technology, we continue to believe Intellify is a differentiator in the market that will propel our spend under management with new MST and vendor-neutral clients. During the third quarter, we renewed our largest MST customer under a multi-year agreement and have since gone live on Intellify with that customer. Our ability to secure this renewal is a testament to our team and their commitment to fostering strong, long-term partnerships and delivering exceptional value.
By the end of this year, we expect 100% of our clients will be fully converted and running on our Intellify platform. With the client wins we called out in previous quarters and a strong pipeline of opportunity exiting this year, we anticipate the spend under management running through Intellify will continue to climb in 2025.
Now turning to our outlook, we anticipate fourth quarter revenue will be between $300 million and $310 million, which is largely consistent with the third quarter performance, excluding a small labor disruption. Our forecast reflects signs of increased stability and travel, steady bill rates, and ongoing traction in the other lines of business that I highlighted moments ago.
Adjusted EBITDA is expected to come in at $11 million to $13 million, largely reflecting the gross margin pressures I cited, partly offset by expected savings for further cost actions we undertook at the start of the quarter. As stated on prior calls, our goal remains to achieve a high single-digit adjusted EBITDA margin, but we still expect mid-single digits in the near term as we ensure we have sufficient capacity in place to grow once the travel market inflects.
We expect to close out 2024 on a high note with the company positioned for sequential revenue growth and sustained margin improvement in 2025. Additionally, we are focused on creating greater shareholder value by leveraging our strong balance sheet and putting capital to work. As you saw in today's press release, we bought back 800,000 shares in the third quarter for about $12 million.
We also continue to invest in technology, notably on our client and candidate-facing tools, as well as our ERP system. Lastly, we are being very diligent when exploring M&A opportunities, especially for assets that could expand our portfolio and reach within markets where we see the strongest runways for growth. With our debt-free balance sheet, the strategic appointment of capital remains a primary focus, and I look forward to sharing with you our progress on future calls.
In closing, I am increasingly confident that we are nearing an inflection point in travel. Coupled with the momentum in our other lines of business, we have a solid foundation in place for growth and improved profitability as we head into 2025. Of course, none of this is possible without our hardworking employees.
I want to thank you for your steadfast commitment to making Cross Country one of the best places to work. In fact, last quarter we won several Most Loved Workplace Awards, and it always humbles me that you have such a deep pool of talent that has made Cross Country their employer destination of choice. I also want to thank all of our healthcare professionals for your continued dedication and contributions, as well as our shareholders for believing in the company. With that, let me turn the call over to Bill.
Thanks, John, and good afternoon, everyone. As highlighted in our press release, performance for the third quarter was in line with expectations, with revenue near the high end of our guidance range, including a small contribution from a labor disruption. Consolidated revenue for the third quarter of $315 million was down 7% sequentially and 29% over the prior year, driven primarily by the expected declines in Travel Nursing & Allied. I'll get into more details on the segments in just a few minutes.
Gross profit for the quarter was $64 million, which represented a gross margin of 20.4%. Gross margin was down 40 basis points sequentially and 160 basis points over the prior year, primarily as a result of bill pay spread compression in our travel business. Year-over-year margin compression also reflects the impact from higher burdens such as health and workers' comp within Nursing & Allied. Specific to the bill pay spread in travel, it's worth noting that overall pay rates continued to decline faster than bill rates, but the cost of housing and benefits continues to mask that trend.
Moving down the income statement. Selling general and administrative expense was $54 million, down 10% sequentially and 22% over the prior year. The majority of the decrease relates to lower salary and benefit costs associated with the reductions in headcount taken since early 2023, as well as deficiencies realized from the ongoing leverage of certain operational and middle office processes in our offshore location.
As previously mentioned, we've been proactive in managing our costs in order to align with the broader market while preserving capacity and funding investments in parts of the business where we're seeing opportunities for organic growth. Coming into the fourth quarter, we reduced our investment in headcount by another 4%, which will drive approximately $2 million per quarter in savings. As a percent of revenue, SG&A was 17% for the quarter, down approximately 50 basis points sequentially.
Adjusted EBITDA of $10 million for the quarter represented a margin of 3.3%, reflecting the decline in operating leverage from lower revenue and the gross margin pressure. Heading into the fourth quarter, we believe that our adjusted EBITDA margin will be closer to 4% as we continue to manage costs and as our higher margin education business benefits from the return to school. Interest expense was $550,000, related primarily to the carrying costs for our AVL and fees related to outstanding letters of credit.
Given our significant cash position, we recognize nearly a $1 million in interest income in the quarter and expect similar interest income again for the fourth quarter, depending on capital allocation decisions. I'll go more detail in just a few minutes. And finally, on the income statement, income tax expense was $800,000, net of some discrete items recognized in the quarter, representing an effective tax rate of 24.6%. Our overall performance resulted in adjusted earnings per share of $0.12, which was at the high end of the guidance range, primarily as a result of several factors, including lower stock compensation, the impact from discrete tax benefits, as well as fewer shares outstanding.
Turning to the segments, Nursing & Allied reported revenue of $265 million, down 9% sequentially and 33% from the prior year. Travel, our largest business in Nursing & Allied, was down 11% sequentially and 41% from the prior year, driven primarily by a decline in professionals on assignment and to a lesser extent the normalization in bill rates.
As John highlighted, the travel staffing market continues to show signs of nearing an inflection, with orders rising again as we enter the fourth quarter and open order rates remaining stable. Our local or per diem business reported better than expected results as a result of the labor disruption that we mentioned a moment ago. Similar to travel, our local business has been impacted by the broader market softness, though it continues to stabilize with billable hours declining at a slower pace than we've experienced in prior quarters.
Also within Nursing & Allied, our home care staffing business was up 4% sequentially and 13% over the prior year. Fueled by a number of recent PACE program wins, we believe this business is poised for continued organic growth. Education was down 6% from the prior year and 37% sequentially, due solely to the timing of school calendars.
Finally, physician staffing reported $50 million in revenue, which was up 10% over the prior year and 4% sequentially. Billable days were up 1% sequentially and 6% over the prior year, with price and favorable links accounting for the rest of the increases.
Turning to the balance sheet. We ended the third quarter with $64 million in cash and no outstanding debt. With the help of our balance sheet and strong cash flow, we remain well positioned to fund growth initiatives and execute on our capital allocation strategy. Before turning to cash flows, I just want to note that you'll see a small non-cash correction to the 2023 balance sheet contained in the press release. During the quarter, we discovered that a revenue elimination entry was not recorded in prior years, prior to 2023, and as a result, a liability was understated.
As I said, this was a non-cash event and had no effect on clients, contractors, or clinicians. From a cash flow perspective, we generated $7.5 million in cash from operations during the quarter and $96 million for the nine months. Our DSO this quarter was 61 days, in line with our stated goal of 60 days.
One other comment on cash from ops, I'd like to make is that given the new ERP system we are implementing is cloud based, the majority of the capitalized costs are treated as an outflow on cash from operations. Excluding the ERP project, cash flow from operations would have been approximately $10 million for this quarter. Cash used in investing activities was $1 million, primarily reflecting capitalized technology investments to expand functionalities and features for Intellify.
Cash used in financing activities included the repurchase of more than 800,000 shares at an aggregate cost of $12 million. With the decline in our receivables, we have a borrowing base of approximately $150 million under our $300 million ABL. And though, we will purchase some shares under our 10b5-1 plan in the fourth quarter, we'll likely seek to preserve the bulk of our available cash to fund strategic investments.
This brings me to our outlook for the fourth quarter. Guiding to revenue are between $300 million and $310 million, representing a sequential decline of 2% to 5%. This range reflects the labor disruption in the third quarter that is not expected to recur, as well as the return to school impact from our education business.
The travel and local businesses are expected to see low to mid-single-digit declines in billable hours and a modest improvement in bill rates. We're guiding to an adjusted EBITDA range of between $11 million and $13 million, representing an adjusted EBITDA margin of approximately 4%. Adjusted earnings per share is expected to be between $0.10 and $0.14, based on an average share count of approximately 32.4 million shares. Also assumed in our guidance is a gross margin of 21%, net interest income of $300,000, depreciation and amortization of $5 million, stock-based compensation of $1.4 million, and a tax provision of approximately $2 million.
And that concludes our prepared remarks, and we'd now like to open the lines for questions. Operator?
Yes, the phone lines are now open for questions. [Operator Instructions]. The first question in the queue is from Trevor Romeo with William Blair. Your line is now open.
First one, I just kind of wanted to unpack the Q4 revenue guidance a little bit. I think, Bill, you had a few comments a minute ago, but they were a little fast, so I just wanted to make sure we heard everything there. Sounds like you'll have a pickup in the education business coming out of the summer break. You also expect the strong non-travel businesses to, you know, those trends to continue. It sounds like there was also a small labor disruption. I'm not sure if you called out the dollar amount. But could we kind of just drill down, I guess, on the sequential trend you're expecting in sort of the core travel business?
And then, any thoughts that you kind of have on what Q1 could maybe look like based on the current demand would be super helpful as well?
This is Bill. Thanks for the question. Look, with regards to the fourth quarter, I guess, the main reason for the sequential step down is the labor disruption that we mentioned. We didn't give out a specific number, but it's in the single millions. I'll say, it's ranging between $5 million and $10 million.
It's probably closer to $5 million or $6 million in terms of revenue impact. So when you strip that out, the revenue for the fourth quarter would be going down sequentially. Implicit in the guidance when you take out the labor disruption is that our travel business goes down low, mid, single digits sequentially, almost entirely on volume.
But that's going to be almost entirely offset by the return to the school business, which will be up nearly 70% sequentially. So it's a pretty big step up, as you might imagine, as they go back into session. The other businesses are expected to do fairly well as well, as well with home care up in the low to mid-single digits sequentially and local tenants similarly up low, mid-single digits sequentially.
And I really am not going to give any kind of comment to the first quarter at this point. It's a little too far out to say, but I think you heard the prepared remarks that we are encouraged about that demand continues to inch forward. It's not off to the races but it's certainly in a better place than even at the start of the quarter.
It's still moving in the right direction. Bill rates have remained stable, but it so much depends on the quality of the order. So even though orders are up, it doesn't always translate to production. As you can imagine, there's usually a basket of orders that just don't have the market rates to attract the clinicians.
And then I guess a follow-up on gross margins, I guess. Again, I think this quarter was a bit below your guidance coming in. You talked about several comments, I think, in the prepared remarks about competitive behaviors and such. But I guess, what do you think at this point the industry needs to see for some of that pressure to abate going forward? Do you think a demand inflection would be enough? Do you think the industry kind of needs to consolidate or something else? Any thoughts there would be really helpful? Thanks.
It's Bill again. I'll start and I'm sure John will have some comments. Look, I mean, almost the entire margin pressure that we experienced sequentially in Q3 versus Q4 was in the pay bill housing spread and it was predominantly in our travel business. As I said, the market's hyper-competitive. The bill rates are stable. So, what we're seeing now is just pressure on the compensation side. So, that's put a little bit more pressure on the gross margin for us. As to, how that evens out over time, I mean, maybe, John, you've got some color.
It's John. And really, I think what we're seeing, and we've been talking about this for several quarters, but there is, this where the hospitals are looking at a certain bill rate and sometimes that bill rate is not the market rate we need to where the clinician is looking at what their expectation, pay expectation is, which is a little bit higher, right.
So, there's this little chasm in between or this gap that is closing, right, but it's still not there. So, when that gap closes and the pay expectations of the clinicians come down a little bit and potentially we're seeing the bill rates come up on some of those orders that are harder to fill because they're not at market, we'll see that. And I think we'll see that as we see census increase, as we see the flu season hitting a little bit now. We'll start to see that chasm close.
The next question in the queue is from Tobey Sommer with Truist Securities.
This is Jasper Bibb for Tobey. I just wanted to ask, there was a comment about orders up 20% sequentially in the fourth quarter. I think it was. I mean, do you think that's coming in at bill rates sufficient to attract supply at this point or just any overall comments on the quality of orders? Because I know there's a bit of a lag there, but it sounds like FTEs are going to be down sequentially in 4Q. So, maybe not translating into a big bump in volumes near term, it seems like?
That's the way to look at it. And when you look at the orders that we're receiving, over 50% of our orders directionally, over 50%, are not at that right market bill rate. And so, while we're still getting some more orders, it's not really translating on a one-to-one that you're seeing that go.
But it is an encouraging sign because what we've seen happen before is the step-up of orders since actually April, when we were at our low. It takes a little while for the orders to step up. And then once the orders step up, and even though the bill rates aren't at the market rate, eventually the bill rate will step up or the clinician's expectation will go down a little bit. So we do anticipate these to, again, come to an inflection point between the acceptable pay rate for the clinician and the bill rate coming together over the next, say, one month or two month.
And then just to clarify, what did you say, bill rates are doing sequentially into the fourth quarter that was captured in the guide? Maybe I missed that. And you have a fair remark, sir, about answering Trevor's first question.
This is Bill. I think the travel rates are about flat, maybe down plus or minus 1%. There's not a lot of movement going on in the bill rate side.
The next question in the queue is from A.J. Rice with UBS.
Maybe just a few questions here. The pickup in orders, 20%, and what you're guiding for, we're always wondering in the fourth and first quarter, are there seasonal orders that are impacting that, or is that pretty much behind us at this point, and this is really sort of the underlying trend that we can base off of as we project out for where the industry's at and where it's likely to grow?
Well, you know what, A.J., this is John. I would say, when we talk about seasonal needs, I think it's going to change over time. When we used to discuss seasonal needs, those were orders that were out three months to six months, we'd start getting them in the summer months, and they'd go out there.
I think now we're becoming more just in time, and so some of this is partly seasonal needs because we've seen the flu cases rise across the country, but we're also seeing a broad base of increases in all modalities. I'll have Marc Krug give a little bit more color on the different modalities that we're seeing, but right now I'd say, to answer your question, is this the base? It's close to where we think we're going, but there is some seasonal flu specialties that are built in here, but Marc, want to add a little color to that?
It's Marc, A.J. To John's point, in Allied, we have seen respiratory perk up a little bit, but imaging and rehab have also grown over these last few months, indicating it's a little broader. For travel nursing, what's really worth noting is, and I don't remember seeing this, we are seeing an increase in almost every specialty from MedSurg, TELI, ICU, OR, ER, L&D, and PEDs, so it's not really seasonal demand which is driving the increase. It's pretty broad-based.
And I think in the prepared remarks you said, going into the fourth quarter, you'll probably step back a little bit from share repurchase and look to deploy capital strategically. Is that, you think you've got some deals front burner? Is that what we should take those comments to imply, or is there more strategic investments in the business that you're doing internally?
It's a combination, I would say, of looking where the market's at. We believe there'll be a little fourth year M&A market moving forward. We want to make sure we're prepared to be ready and to have that dry powder, if you will, to go out and look at those deals. Of course, we'll always be opportunistic on share purchases out there. And then, of course, just continuing investment in our technologies. We always talk about technology, for us, is so important from our clinician side to our client side and, of course, our ERP project that we have underway as well.
And that really creates a lot of operational efficiencies for our organization, which at the end of the day will help us become more optimized and really help lower our SG&A. So to answer your question, yes, it's all three of those, but we'll be opportunistic with share repurchases. We think M&A will get throughout the year as we move forward and we'll invest in ourselves, especially on the technology side.
On the home healthcare staffing, I don't know if I've heard you size that. It sounds like that's an area of growth. Can you give us a little more of a perspective on how big that is, what the underlying growth for home care staffing is, and the economic profile of that business? Is it similar to Nursing & Allied, or does it have other economic dynamics to it?
This is Bill. Well, I think we've said it before. The home health staffing business, for us, is run rating over $100 million. And in fact, it's making progress with each passing quarter. So as we look at like, where we closed out for the third quarter and implied guidance for the fourth quarter, it'll start to get closer to being $110 million to $120 million, $100 million run rate. And as far as margin profile goes, the gross margins are little bit above are -- certainly the consolidated average and probably one of our better businesses, maybe a little bit below our education businesses but still a very healthy margin for us.
And the next question in the queue comes from Bill Sutherland with The Benchmark Company.
I wanted to just get a little more color on MSPs, if we could, where you stand with the dollar value under management, the net growth that you saw in contracts, and where you capture rates coming in? Thanks.
On the MSP front, Bill, this is John, by the way. Our spender management is between $650 million to $700 million. In fact, we just, this week, signed another small Intellify vendor management system that will be going live in the next 30 days, actually. We'll have a quick implementation on that one.
We're definitely seeing a good traction from our pipeline for MSPs and the VMS side. And we're also seeing, though, it's a little bit of a slower cycle we've seen. As you recall, when we got through the end of the pandemic, what we saw was a lot of turnover with hospitals, with VMS and MSPs. Now we're seeing a lot slower down from us. We just announced, in my prepared remarks, that we just, we signed our largest MSP to a new multi-year deal.
And what we're seeing now is less churn. We have very minimal churn right now, and we're seeing deals happen, but the deals are taking a little bit longer on the MSP and VMS side. And part of that is because the hospitals now are bringing in more stakeholders to make decisions on changing over to new platforms.
And that takes a little bit longer. It used to be one or two stakeholders would be able to make a decision, and now a lot of hospitals are seeing four or five or even six stakeholders from different departments within an organization. So it cycles a little bit longer but with that said, we have a really big pipeline, which we're really excited about. Did I miss some of the part of your question?
I'm just curious, if the capture rate's gone up?
Actually, the capture rate has gone up. Bill, you wanted to cover that?
It's Bill. Capture has moved up a little bit as we see the mix of the accounts continue to change. And remember, our spend under management includes our PACE programs, our home care staffing programs where we staff the PACE programs. So the capture rate there is a bit higher than the overall average. And so as that becomes a bigger part of the mix, we're seeing capture inch forward. I'd say for Q3, our capture was about 73% on that spend that John mentioned.
Bill, on education, did you say that the revenue was down year-over-year?
Yes, we did. It's all about the timing of when schools break and when they go back. So it depends how many school days you actually pick up in the third quarter. And that's really all it comes down to. It's a minor difference in the school calendars year-over-year. It's not a business condition. In fact, I think year-over-year, they'll be up considerably as we move into the fourth quarter.
Just have to look out on a daily basis.
The next question in the queue is from Constantine Davides with Citizens JMP.
Can you guys just comment a bit? We've had some conflicting industry data points on Locums and just wondering, if you can expand a bit on what's really underpinning growth? And I think John, you called out sort of some unusual seasonal strength in the fourth quarter. Just wondering if you can kind of elaborate on that too?
This is John. And we're seeing a lot of needs. Well, since this is up, we're seeing still a lot of surgeries. We're seeing a lot of anesthesiology needs and CRNA needs. A lot of our advanced practice nurse practitioners are in high demand. And so we're just seeing overall demand pretty high still going into the fourth quarter. And typically, we would have seen a really strong summer months, especially covering for vacations and time off. And then we would see that dip. But we're not seeing a dip, and partly is, again, with Locums, they are revenue generators for the hospitals and healthcare systems. And so -- and there is still that demand that still has not been caught up. And that's really primarily what's driving this demand moving forward.
Constantine, I'll just give you some more color on that. I think as you look at the third quarter performance, we were up roughly 10% year-over-year in Locums, and about 60% of that growth was on volume. And the other 40% was a mix of bill rates and mix of business. Because as you grow in the physician's specialties, they have a higher average bill rate than say, the advanced practitioners like a nurse practitioner might.
And I guess what's a reasonable kind of margin target, contribution margin target for that segment? Just sounds like you're expecting the strength to continue in the fourth quarter. And I know you're benefiting from some of the offshoring initiatives, but is that pretty scalable? Or do you think you have to sort of add additional resources to continue to drive growth there next year?
I think there might be two questions in there. I'll try to take the first one. The margin profile is, it's higher than our consolidated average, but not by a lot, maybe a couple of 100 basis points. You know, John, I don't know if you want to comment about the capacity in the business for growth.
No, we have the capacity in the business for growth. And really when you're looking at your capacity, you're measuring it really on a daily basis to see how much capacity each person has. How many orders do we have? Our producers, how much can they handle? And then what we'll do is we'll look at that formula and then hire based upon that. But right now, we have capacity to continue to grow. But what we want to do is we don't want to leave anything on the table. So what we'll do is we'll look, we'll see where capacity could potentially max out and then start hiring proactively, which we consistently do.
And the final question in the queue is from Jack Slevin with Jefferies.
Most of mine already asked. Just want to throw one in, sort of similar to some prior stuff, but maybe just picking up on the strength in orders that you've seen this quarter and that was their last quarter, but sort of that dissonance between that strength and where volumes are ending up. I guess if you look out a little more broadly and the order strength continues, do you feel like it's something possible where we would see a persistence in that gap between where orders are and where volumes are? Or like those would have to sort of come together eventually if we see order growth continue over time? Just trying to get a sense of if this is something that could wash out or if it's sort of a signal to look at on a little bit of a longer term basis.
No, eventually they have to come together because when the healthcare systems are putting out their needs, they have a need for this clinician. And over time, they have to make sure that those two, the two meet because they need the bodies in there. Otherwise, if they don't have those bodies, what that will lead to is burnout and fatigue of their core staff, or even diverting patients that don't have the number of clinicians they need. So over time, this really has to come closer together between the open orders and the volumes.
And then maybe if I can just squeeze one more in, just looking at it, like the buyback ticking up, I know the commentary that that would probably come down and that you're trying to hold some dry powder for M&A. I guess maybe more from an academic standpoint, how are you thinking about stocks off a little bit, buybacks maybe look a little bit more attractive. How are you thinking about the balance of those two things going forward? Or sort of how much further do we need to see multiples come down in the industry for M&A to sort of be the primary target?
This is Bill again. So I would say a couple of things. First, on the share repurchase, we've got authorization for a little over 40 million, I believe as of September on the share buyback side. So we've got some room to go there without having to go back to the board for any approvals. The 10b5-1 that we mentioned will trade on its own in certain conditions in the market I'm at. And I guess the main reason I was highlighting that we would see hold on to cash in the fourth quarter is we did do a bit more of a buyback in the third quarter.
And so I wanted to make sure that it wasn't signaling that we'll see a repeat of that in the fourth quarter. But also, as you can imagine, as our receivables get converted, it means there's a little bit less availability on the ABL. So we wanted to make sure that we have the firepower to do all the things that John mentioned earlier. But it still means, it doesn't mean we won't be opportunistic. It's just, we wanted to balance that and have optionality.
Ladies and gentlemen, this does conclude the Q&A period. I'll now turn it back over to John Martins for closing remarks.
Thank you, operator. In closing, I'd like to thank everyone for participating in today's call. And we look forward to updating you on the progress of the company on the next call.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.