Acquisitions

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Selected

On December 16, 2021, the Company purchased and acquired substantially all of the assets and assumed certain liabilities of Selected, Inc. for a purchase price of $3.5 million in cash, subject to adjustment, and $1.5 million in shares (or 59,429 shares) of the Company's common stock. The transaction was treated as a purchase of assets for income tax purposes. The acquisition has not been fully integrated as of December 31, 2021.

The sellers are also eligible to receive up to an additional $1.5 million in earnout cash consideration, based on Selected's revenues for each of the twelve-month periods ending on the first and second anniversaries of the first day after the closing date. The liability of $1.5 million is included in non-current earnout liability on the consolidated balance sheets. See Note 11 - Fair Value Measurements.

The acquisition of Selected, Inc. primarily consists of a Software as a Service, subscription-based recruiting and talent matching platform. The acquisition was not significant and has been accounted for using the acquisition method of accounting. Selected's results of operations, since the date of acquisition, are included in the Cross Country Education business unit within the Nurse and Allied Staffing business segment, and are not material.

The Company has not completed its valuation of assets acquired and liabilities assumed. Any necessary adjustments will be finalized within one year from the date of acquisition. As a result, $6.5 million has been recorded as goodwill on the Company's consolidated balance sheet. Associated acquisition-related costs incurred were immaterial and have been included in acquisition and integration-related costs on the Company's consolidated statements of operations for the year ended December 31, 2021. See Note 5 - Goodwill, Trade Names, and Other Intangible Assets.

Cross Country Workforce Solutions Group

On June 8, 2021, the Company purchased and acquired substantially all of the assets and assumed certain liabilities of Workforce Solutions Group, Inc. for a purchase price of $25.0 million in cash and $5.0 million in shares (or 307,730 shares) of the Company's common stock. The parties agreed to a final net working capital reduction of $1.1 million which was received in the fourth quarter of 2021. The transaction was treated as a purchase of assets for income tax purposes.

The sellers are also eligible to receive an earnout based on the business' performance through three years after the acquisition date that could provide up to an additional $15.0 million in cash. The current portion of the liability of $7.5 million is included in current portion of earnout liability and the non-current portion of $7.5 million is included in non-current earnout liability on the consolidated balance sheets. See Note 11 - Fair Value Measurements.

The business has been branded Cross Country Workforce Solutions Group (WSG) and primarily works with local and national healthcare systems and managed care providers to coordinate in-home care services for participants. WSG also provides a range of consulting and talent management solutions to its healthcare clients, including home care staffing, recruitment process outsourcing, contingent workforce evaluation, and talent acquisition.

The following table is an estimate of the assets acquired and liabilities assumed on June 8, 2021:


	(amounts in thousands)
Cash and cash equivalents	$	957
Accounts receivable	11,991
Other current assets	59
Property and equipment	10
Right-of-use assets	1,078
Goodwill	22,066
Other intangible assets	14,200
Total assets acquired	50,361
Accounts payable and accrued expenses	3,562
Accrued compensation and benefits	1,387
Lease liability - current	316
Lease liability - non-current	762
Earnout liability	15,000
Total liabilities assumed	21,027
Net assets acquired	$	29,334

The Company assigned a value to other identifiable intangible assets of $14.2 million in customer relationships with a weighted average estimated useful life of 11.5 years. Substantially all of the accounts receivable acquired have been collected as of December 31, 2021.

The remaining excess purchase price over the fair value of net assets acquired of $22.1 million was recorded as goodwill on the Company's consolidated balance sheet. Associated acquisition-related costs incurred were $1.0 million and have been included in acquisition and integration-related costs on the Company's consolidated statement of operations for the year ended December 31, 2021. See Note 5 - Goodwill, Trade Names, and Other Intangible Assets.

The acquisition was not significant and has been accounted for using the acquisition method of accounting. WSG's results of operations, since the date of acquisition, are included in the Nurse and Allied Staffing business segment, and are not material. The pro-forma impact on the Company's consolidated revenue from services and net income, including the pro forma effect of events that are directly attributable to the acquisition, was not significant.

Advantage

Effective July 1, 2017, the Company acquired all of the assets of Advantage RN, LLC and its subsidiaries (collectively, Advantage). Included in the amount paid at closing were two escrow accounts, the first was $14.5 million which related to tax liabilities and the second was $7.5 million which was to cover any post-close liabilities. On July 28, 2017, $7.3 million related to the tax liabilities was released from escrow. On April 3, 2019, $4.3 million related to the tax liabilities was disbursed to pay

taxes and the remaining $2.9 million was released from escrow to the seller. In the first quarter of 2019, $7.0 million related to the post-close liabilities was released from escrow. In the fourth quarter of 2021, the remaining $0.5 million was released from escrow and returned to the buyer.

Mediscan

On October 30, 2015, the Company completed the acquisition of all of the membership interests of New Mediscan II, LLC, Mediscan Diagnostic Services, LLC, and Mediscan Nursing Staffing, LLC (collectively Mediscan). In connection with the Mediscan acquisition, the Company assumed two contingent purchase price liabilities for a previously acquired business, one that was payable annually based on certain performance criteria for the years 2016 through 2019, and a second performance criteria related to 2019 payable in three equal installments. Payments related to the years 2016 through 2018 were limited to $0.3 million annually and the 2019 year was uncapped. During the year ended December 31, 2019, the Company paid $0.3 million related to the year 2018. In the first quarter of 2020, the total earnout amount related to both 2019 performance criterion of $7.4 million was determined, and the Company paid $0.1 million on the first earnout related to the year 2019. The remaining $7.3 million, related to the second earnout, was converted to a subordinated promissory note payable.

Pursuant to the note payable, the first two installments of $2.4 million each were paid in the second quarter of 2020 and in the first quarter of 2021. The third installment of $2.5 million is to be paid, together with interest at a rate of 2% per annum, accruing from April 1, 2020, on January 31, 2022. As of December 31, 2021, the note payable balance is included in current portion of debt on the consolidated balance sheets.