TWST: Would you begin with a brief overview of the history and evolution of Cross Country?

Mr. Boshart: Cross Country was founded by two young families in South Florida in 1986, and really purely through organic growth became the industry leader within four years in what was still an emerging market for contract nursing services in acute-care hospitals. That industry was really founded in the late 1970s. So it was a fairly new industry, as it relates to the overall staffing spectrum that was available in this country. The company has always been a very strong organic grower. But we have been supplemented historically by two key transactions, the most important of which was our acquisition of TravCorps at the end of 1999. TravCorps at that time was one of the three largest companies in the space. It was also what we viewed as our leading competitor on the basis of quality. And we spent the year 2000 really focused on integrating the two very high-quality brands that the market recognized, the Cross Country brand and the TravCorps brand into one unified brand, again, to leverage not just the overhead and realize the synergy that you would expect in a merger of that nature, but more importantly, to unleash the productive capacity that's inherent in this business. The companies that compete in the travel nursing market, which it has come to be known, are typically all speaking to many of the same nurses about the same jobs throughout the country. This is not a local business. This is a national business. So we feel it's important, particularly at the high end, where you're talking about brands like United and American, which the market perceives in pretty much the same light, that it wasn't an opportunity to segment the market. So it was important to us to combine the brands and have the recruiters within the company all speaking to different nurses about different jobs. By eliminating this redundancy, we felt we could increase the overall productivity of the company. And our success bore that out. But clearly there was an investment that we made in the latter half of 2000 and early 2001 to get to that point. So we're excited about our positioning. We have by far and away the premier brand in travel nurse staffing.

TWST: How would you describe the competitive landscape today for existing as well as new customers?

Mr. Boshart: We compete in the overall medical staffing market and particularly in the nurse staffing market. The overall medical staffing market is in excess of $7 billion, probably $8 billion in the year 2002. Nurse staffing is generally looked at as a $5 billion-plus market, by far and away, the largest segment of that overall medical staffing market. Additional professional specialties that fall under that umbrella would be physicians, nurse practitioners, allied professionals such as pharmacists and respiratory therapists, radiologic technologists, as well as nurse extenders, such as certified nurse assistants. So again, a very broad spectrum that we compete in. But we are the dominant brand in, by far and away, the largest slice of that pie, which is registered nurse staffing. Within travel nurse staffing, which is probably 25% of the total nurse staffing market, there are two dominant brands ' Cross Country and American Mobile. Travel staffing does compete with local per diem staffing to some extent. Big per diem staffing providers would be RehabCare's StarMed Staffing Division, Medical Staffing Network and IntelliStaff; and NurseFinders. These are all very large players in the per diem staffing space. But at this point, there are only two large players in travel nurse staffing, Cross Country and AMN Healthcare Services, which operates five distinct brands in the marketplace, including American Mobile Nurses. Overall, of the travel staffing opportunity, we variously estimate 65%-75% of the market activity is accounted for by the brands owned by Cross Country and American Mobile.

TWST: Indicators have been showing that there is a shortage of nursing. Do you agree with that?

Mr. Boshart: Absolutely. It is the biggest dynamic in the industry today.

TWST: Is that a trend that's going to be continuing for a while or are there some new developments down the road when you look at the next few years that you want to focus on as well?

Mr. Boshart: We believe that there are two demographic trends, really mega trends that are driving our business. On the demand side, you have an aging population. And again, demographics are pretty inexorable. You can't have the population age more slowly. You're not going to throw open the borders to dramatic increases in immigration. Those just aren't tenable scenarios. And that aging population which we have, there's 75 million baby boomers who are going to reach retirement age over these next two decades (actually have already started reaching retirement age) who are demanding more and more healthcare services. So on the demand side, you have what is clearly a secular increase in demand. And if you look at the government's projections for inpatient hospital admissions - - and that's our core market, by the way, with over 90% of our revenue is generated in the acute-care hospital system ' demand will continue to increase over the next four decades. The other key demographic trend is the aging nurse population. It's actually almost a parallel trend. Nurses have aged, on average, over five years in the last decade. They're actually aging at a more rapid rate than the overall population, because the average age of a new nurse entering the marketplace is over 30 today. A new nurse graduate is, on average, 32 years old. So clearly, it's a second career. And they've lost 10 years of possible employment. So that nursing population is aging, and as the nurses age, on average, they offer less and less hours of service to the hospital employer. In addition, probably for the first time in the 100-year history of nursing, we're actually going to see a decline in the number of licensed nurses in this country over the next five years. It never happened before. If you look at the history of nursing, there have been clear cycles of surplus and shortage. The difference here is the market dynamics which would have caused a cyclical period of shortage have been magnified by these demographic trends I just discussed for you. So just as the demand for healthcare services will be at an all-time high and hospital admissions increase steadily over the next four decades based on the government's projections, the number of licensed nurses in the country is going to decline. So it will exacerbate a nurse shortage that is today a roughly 126,000 shortage of registered nurses in the acute- care sector to as much as a million, based on projections of studies that have been funded by the government. A good study to refer to is Peter Buerhaus out at Vanderbilt University. Buerhaus of their School of Nursing has done probably what is the benchmark study in this area. Now I'm an economist by training. And I believe that markets do respond. It is unlikely we will have a million shortage of registered nurses. But when you look at the demographics, it is difficult to conceive of a scenario in which the problem gets fixed. It is just a very intractable social issue that we face which, as a young baby boomer myself, I despair over. But as the CEO of this company, it creates a really dynamic market environment for us to operate in over the next decade at least.

TWST: As you look ahead to how you would like Cross Country to be positioned down the road, what would you say is the single biggest opportunity to take advantage of near-term in order to help achieve that?

Mr. Boshart: Clearly, increasing our supply of registered nurses, those who are willing to engage in our employment model. And again, just to take a step back, our nurses work under contracts that are typically three months in length. They are typically working away from their home. On average, our nurses are 500 miles from their home. So it's kind of a unique employment scenario. In the quarter ended September, we reported we had 5,000 professionals in the field, the majority of whom were nurses. And the total number of travel nurses working in the entire industry today is on the order of 15,000. That's less than 1% of all nurses working in acute-care hospitals in America. So we believe we have an enormous opportunity to increase our relative share of nurses working at hospitals by making our employment model more and more attractive to nursing professionals. Our wages have increased aggressively over these last several years so our compensation package is very attractive now. We have also become more and more attractive to nurses who really don't want to leave home, but want the security of a company that's going to be able to employ them consistently. One of the key variables that we offer is that we guarantee our nurses on most contracts that they will get paid for the hours in their contract, because our hospital clients give us a parallel guarantee. By comparison, even full-time employees of hospitals often can be called off and not be paid for a shift if the patient census in the hospital is lower than expected. So in a recessionary environment where a nurse's husband may have been laid off, and they are now the primary breadwinner for the family, that becomes a very compelling comparative characteristic of our employment model.

TWST: Do you feel you're as well-positioned as you'd like to be, balance sheet-wise? And are there other internal factors to follow through on the goals you've set?

Mr. Boshart: With the successful IPO we were able to carry out in October, we've deleveraged our balance sheet. However, as a company, we certainly are not afraid of debt. We like debt. We think it's a great tool to build shareholder value if it's used appropriately. We look to maintain debt-to-total capital in the range of 25% to 35%. So we think, given our current balance sheet, we do have a lot of capacity to grow through acquisition, as well as to continue our historically strong organic growth rates. And again, organic growth is the primary driver of our growth historically. I mentioned in the evolution of the company that we were supplemented by two key transactions. Having said that, two-thirds of our growth ' and we've grown at an average annual rate of more than 30% over the last five years ' has been organic. And we expect that ratio to continue. But we will look for attractive, accretive acquisitions as the medical staffing market consolidates and as we continue to supplement what we view as our human capital management services portfolio ' complementary services that we do offer to our healthcare clients, such as consulting services, search and education and training services. These will never be the core activities of the company, but they do supplement our strategy, which is to integrate ourselves more fully with our clients, as well as open up new opportunities for our field professional outside of the acute care sector. Many times, nurses just get burned out. If you understand the dynamics of nursing today, nurses face very high patient loads, and very high patient acuity. It's often that we hear our nurse just say, "I can't go back to the hospital. What else do you have?" And today, because of the array of human capital management services that we have become involved in over the last three to five years, we can offer them jobs working for insurance companies as case management nurses. We can have them working in call centers for pharmaceutical companies as they introduce new drugs to the marketplace. These are very attractive contracts to a nurse who just wants to recharge her batteries and just take a break from the hospital. Historically we would have lost that nurse. Today we can keep those nurses as billable assets of the company, and ultimately get them back to the bedside in the hospital, because that's really why they got into the profession. And we've had great success with that strategy. And we look to expand in that area.

TWST: As you look ahead the next couple of years, what do you expect as far as the rate of gain in sales and earnings?

Mr. Boshart: We haven't provided forward guidance. We probably will for the current year, sometime over the next several months. But at this point, as a newly public company, we haven't provided that guidance. But again, our historical growth rates have been in excess of 30%. And lot of that growth was in a market that is less favorable than today. Now I certainly would not commit to a growth rate of that magnitude. But I think we've demonstrated that this is a growth company. We've grown both revenue and earnings at a very aggressive rate and we would expect to continue that going forward, to be an attractive investment opportunity for our shareholders. But we haven't given specific guidance. And when we do, we'll provide that to all prospective investors simultaneously.

TWST: What about the possible risks to growth? What could be some of the bigger hurdles you face down the road?

Mr. Boshart: Really, the primary hurdle we face is obtaining more supply of nurses. If we could fill all the positions we have today, the company would be 5 times as large. So we are very clear on what our mission is, to be the employer of choice to nurses. And I think we are executing on that mission. We continue to grow the company. In the third quarter, our volume statistics were up in double digits. That's our goal, to continue to have strong, organic growth by becoming really the employer of choice through word of mouth. More than 50% of the new nurses that come to work for us, come to work for us through referrals from other nurses that are working for us. So I think that's a testament to the strong brand appeal and really the great service we provide our nurses. They are our employees, but we consider them our clients. And if you ask nurses, the predominant response would be that their current employer does not treat them as a client. It has been a very tough employment environment for nurses over the past decade and I think we stand out as an employer in this environment. Now recognize that hospital employers understand there's a nursing shortage. And they understand that as a whole they've made very critical mistakes in how they've treated nurses over the past 10 years. And they're working very hard to correct those mistakes. In fact, if you look at our pricing, which is growing at low double digits based on what we've reported through three quarters of 2001. Hospitals, on average, in the year 2000 ' I don't have the year 2001 yet ' increased pay to registered nurses across the country by an average of 11%. So we're not running way ahead of what the hospital is realizing in its own recruitment efforts. I'm sure you've read about the very high sign-on bonuses and very attractive recruitment incentives that are being offered to nurses today. Clearly they recognize that it is a very competitive market for nurses, They are becoming a scarce commodity at a time when demand is reaching unprecedented levels.

TWST: Are you confident at this point that all the players are in place, as far as the management team goes, to keep the company moving on the right track?

Mr. Boshart: Absolutely. Most of the core management team that runs the travel nursing division has been together for the past decade. We have brought in executives to assist us in executing our strategy in other areas. For example, within the past year, we brought in an executive to grow our consulting business. Again, we view our consulting division as an opportunity to really gain more credibility and raise the level of contact that we have with our clients. Historically our relationships have been in the recruitment area. The consulting division is typically interacting at the level of the CEO, the senior nurse executive, the CFO, even the board level. We believe those are important relationships to cultivate as we look to offer ultimately, more integrated services, such as vendor management services, covering all their outsourced staffing needs. And I believe at some point in the future, hospitals in this country will outsource their entire nurse staffing activity. It's the reason you go to a hospital. You don't go to a hospital to be taken care of by a physician. You go to a hospital to be taken care of by a registered nurse. It is a critical success factor for the hospital. And therefore, they're reluctant to let go of the control of that process. But at the end of the day, I think most hospitals would agree that nurse recruitment is not a core competency. And we believe it is a core competency for our company. And we believe ultimately as the nursing shortage gains in intensity, that this company will be successful in that area, that we will outsource the nurse staffing of major facilities or even community hospitals in this country, which are struggling more and more to get that nurse at the bedside. And some of the dynamics that are magnifying that problem are that the government's beginning to legislate what they can and can't do as employers. The government's legislating, for example, in California, nurse-to-patient ratios. So if you don't have adequate nurse staff, you're shutting down beds. Other states are looking at legislation to limit the amount of overtime that nurses can work. So these other sources of staffing that hospitals have traditionally looked for are being legislated away, i.e., increasing patient ratios or mandating overtime. That's becoming a less and less legal option for them. So it's a very challenging environment for our hospital clients to recruit and retain nurses in. And we believe we help them in that area. We can't solve their problem. Again, we're not filling all the positions that are posted with us today. So our hospital clients don't look for us today to solve this problem. It's a multi- pronged approach. For example, we are recruiting in foreign countries, typically English-speaking countries, to bring nurses over on green cards. The government is looking at legislation to award nursing scholarships to nurses, to increase enrollments in nursing schools, which declined every year for six years up until the latest year, in which I understand we had a modest rebound in nursing school enrollments. But this is a societal issue that is going to require a lot of solutions. Having said that, we believe in this environment our company will have a very attractive environment to grow in organically.

TWST: Where have you found yourself focusing most of your attention lately as CEO?

Mr. Boshart: Clearly, my role has evolved as the company has grown and gone public. I find myself reaching out to new constituencies, educating new constituencies on our company. Six years ago this industry really didn't show up on the radar. And I think today it's a very attractive area for investors to look at because of our relative insulation from economic variables. I'm not going to tell you we're completely insulated. But I would argue that the trough of the recession was probably the third-quarter of the past year and it was a record quarter for this company. So I think in that context, we do offer an attractive safe haven for investors. So we're getting more attention. But there's a lot of education that needs to go on. We need to educate investors on the great visibility that we have on our revenue because of the forward contracting nature of our business. We need to educate investors that we're not a home care company. We have no third-party reimbursement risk, which is very unusual in the healthcare arena. And we need to educate investors that this is a growth company. And we expect to be a growth company for the foreseeable future. And if I am successful in this education effort, current shareholders of the company will be rewarded very well going forward.

TWST: What would you want long-term investors sitting down with your financial report to focus on primarily?

Mr. Boshart: Probably what they would focus on on any company. We want them to look at the top line, our organic revenue growth. We want them to focus on our EBITDA, which historically has been what management has looked at to indicate our financial success. Obviously, revenue growth is great. Earnings are even better. We have not focused historically on EPS because of the nature in which this company was formed. In the early 1990s, the company was acquired in a leveraged transaction by W.R. Grace & Co. And in 1999, following some transactions in the intervening period, Grace and Nestor Health Care, in the UK, which owned the partnership that held the assets of Cross Country, sold the business to Charterhouse Group International, along with certain members of management. At the end of 1999, we merged with TravCorps, which had been acquired earlier that year in a leveraged transaction by Morgan Stanley Capital Partners. So as a result of these two transactions, a great deal of goodwill was created. So we think it's most representative of our operational success to look at EBITDA. However, with the new accounting rules that go into effect in January, EPS becomes a more relevant standard by which to judge the company as well. And we think, based on the criteria of a growth company, we will be considered a growth company going forward.

TWST: How do you feel about your current stock valuation relative to some of your peers in the space?

Mr. Boshart: I would argue we have only one peer, and that is AMN Healthcare Services, listed on the New York Stock Exchange. And as I look at their valuation versus ours, they are valued at a higher multiple of EBITDA than we are. And while I think they're a terrific company and a great competitor, I would argue that we have significantly less integration risk. Again, that integration of Cross Country and TravCorps was accomplished before we went public. We also have the premier brand in the space. If you call the hospital clients, I believe you would invariably find that Cross Country is considered the premier brand in this space. And I feel that because of those two factors, that it doesn't make sense for our valuation to be at a lower level than theirs. Beyond this comparison, I can't speak to our relative valuation in the overall market. It's not my area of expertise. But if I can compare us to what is our only comparable public company competitor, I would say that we are being afforded a discount that really doesn't make sense in the context of where we believe our market position is.

TWST: Do you think there's any specific misperception regarding Cross Country's game plan or do you think folks in the investment community have a fairly solid understanding of the company's model?

Mr. Boshart: I think they do. Again, I think we had a very successful offering at a very difficult time. So I'm not at all disappointed or frustrated with the shareholders. On an absolute basis, I think the company has performed very well as a public company. And the reality is, both Cross Country and AMN are newly public. So we probably don't have enough track record to have a meaningful discussion. But as we speak, it doesn't make sense to me for Cross Country to be trading at a discount to American Mobile.

TWST: What top two or three reasons would you give the long-term investor to buy today?

Mr. Boshart: Health care has always been perceived as a safe investment sector. But particularly in the latter part of the 1990s, there were a lot of issues related to third-party reimbursement risk that caused this sector to lose favor. We have none of that. This company has demonstrated very consistent ability to grow our top and bottom lines organically. And this company is a cash machine. We have very little capital requirements. Typically our capital investment needs, excluding working capital, are under 1% of revenue in any given year. So we generate a lot of free cash in a typical year. So I would say again, it's a growth company in a great sector that is able to generate free cash for its investors. Today, we have the opportunity to deploy that cash in what I believe are very attractive acquisitions. But I think if you look at those characteristics of the company, I would hope most investors would look at that and say, "This is a terrific investment opportunity."

TWST: Thank you. (AAM)

JOSEPH A. BOSHART President, CEO and Director Cross Country, Inc. 6551 Park of Commerce Boulevard Suite 200 Boca Raton, FL 33487 (561) 998-2232 (800) 347-2264 - TOLL FREE (561) 998-8533 FAX e-mail:

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