TWST: Would you begin with an overview of Cross Country Healthcare?

Mr. Boshart: Cross Country Healthcare today is one of the leaders in healthcare staffing throughout the United States. We have a very small presence outside the United States. We provide service primarily to acute care hospitals in every state of the country every year. There are certain markets that represent larger opportunities for us, such as California, New York and Florida, which reflects that our business generally follows the population centers of the country. In addition to nurse staffing services, which is our primary product line, we also provide education and training services, health care executive and physician search and recruitment services, as well as consultant services again focused on acute care hospital clients. Our business has been in existence for roughly 20 years. We have grown at fairly rapid rates over most of that period, although organic growth last year did show a decline in what was a very soft market.

TWST: In addition to the economic traction taking hold at this point in time, we also had a very glowing employment report out this morning. What are the dynamics at this point in time that are playing into Cross Country's performance?

Mr. Boshart: You just highlighted what we think is one of the most important macro trends that impacted our business and that is a very soft labor market over much of the past two to three years. Our business tends to lag the labor markets, and while we would not describe ourselves as being economically sensitive, we are very sensitive to the job market. When there was a true recession in the country in the second half of 2001, the company actually had record results. We had a great deal of momentum that carried through the recession. What hurt our company and the industry as a whole was a jobless recovery that followed that recession. We still had significant job losses for more than a year following the actual onset of recovery and found ourselves impacted by the overall job market. And just to take a step back, we believe there never has been a nursing shortage in this country although much has been written on that dynamic. There has been a shortage of nurses willing to work as many hours as hospitals would like them to work at wages those hospitals are willing to pay. When the job market caused nurses' spouses to be unemployed or under-employed or simply worried about the future, nurses increased the number of hours they are willing to work in a given week, which reduces the amount of unmet patient care needs that our company thrives on. So, clearly as the economy improves and continues improving, we finally see an improving job market where, over time, we expect nurses to begin reducing the average number of hours they work each week. Remember, nurses have continued to age throughout the recent soft period and with nursing being a job function that is physically demanding, aging nurses increasingly become unable keep up with the physical demands of the job. We therefore expect to see a reemergence of a gap between the level of nursing services hospitals need to provide adequate patient care and the willingness of their full time staff to provide that care. So we do expect the demand for our services to increase as we go forward.

TWST: As the demand for your services increases, do you expect that the supply of nurses will also increase?

Mr. Boshart: There has been an up-tick in enrollment at nursing schools nationally, although today the level of enrolments is still well below what the country saw in the mid-1990s. As an employer, we are focused on recruiting nurses and we also want to see enrollments increase. We don't believe enrollments have increased to the level that will be sufficient to meet the projected demand for nursing services five,10,15 years out, but on the margin they are growing enough to provide an adequate pool for us to recruit from.

TWST: There has been a general feeling that there is a shortage of nursing. Where does that theory come from?

Mr. Boshart: If you look at the actual number of licensed nurses, which exceeds 2 million nurses in the country or almost one out of every 100 people in the country is a registered nurse. Many of those are either nurses who aren't working in healthcare settings or potentially not working at all. And if you look at the aggregate demand among acute care hospital companies in America, there are roughly 1.2 to 1.3 million full time equivalent nurses required, which equates to about 1.6 million nurses working in hospitals. So, it looks like there are plenty of nurses and there should be an over supply of nurses working in hospitals. But the reality is that many of these nurses, as I said earlier, about 40% are working part-time hours because they aren't physically able to contribute full time hours or that's just their desire to be a secondary wage earner not requiring full-time income. As such, they are supplementing household income, helping put the kids through school, etc. So, from our perspective, there isn't a shortage in the absolute number of nurses. There was a shortage of nurses that were willing to work enough hours for what the hospitals wanted to pay them. You could ask then, 'Why don't hospitals pay nurses more?' The answer is that nurses represent roughly 25% of a hospital's operating budget and they are relatively fungible. So what you pay that nurse on the margin, that last nurse you hired, effectively sets the wages for all nurses you employ. You cannot pay the last 10 to 15 nurses who you hired 10% to 20% more and not expect that to impact your overall average wage structure. It will. And as a result, hospitals are unwilling to just ramp up wages because their reimbursement is not increasing at some multiple of the rate of inflation. It's increasing in the low single digits and it can't have nurse wages, which account for 25% of their cost, increasing at some multiple of the inflation rate which is driving their reimbursement rates. So what we essentially provide to our hospital clients is a second tier of wages which they can use to fill the 1% to 2% of vacancies that they have and provide adequate patient care without impacting the 98% of their nurses that they employ full time.

TWST: Could you explain the demographic trends that play into the nursing business?

Mr. Boshart: There are two important ones. One is the aging population, as the baby boom generation ages, there is a direct correlation to the intensity of use of acute care services. Unfortunately, I find myself in that group ' I still feel young, but my body does not always agree with me. So you'll find a greater utilization of hospital services as the population ages. And there is no question that the population is aging. Secondly, there is a parallel trend among the professional group of nurses that provides care in the acute care environment and the reason we go a hospital is to be taken care of by a nurse. It's not to be taken care of by a physician or any of the other professionals in that environment. The nurse is the primary driver of patient care satisfaction. So clearly they are the most important professional group and, as this demand is rising nationally, the population of nurses is aging more rapidly than the population as a whole. And again, as I indicated, it's a physically demanding job. As nurses age, they typically provide less and less hours of service. So that's the supply and demand dynamics going in different directions demographically, which will drive an increasing gap in employment of registered nurses in hospitals as we go forward.

TWST: How many nurses are actually in your contract? What sort of employment relationship do you have generally with the nurses?

Mr. Boshart: We typically employ them for a defined contract period. We don't have what's known as bench pay when the nurse is on payroll even when they're not on contract. We send them out only when an order comes in and they are paid only when working on assignment. What drives our business are the orders that we get from our hospitals and that's when we begin recruiting nurses. We have a database that is in excess of 200,000 healthcare professionals. Many of those have filled out very detailed application and employment histories to be eligible so that we can verify that information, verify their professional status. And they can be eligible to fill the vacancies that are presented to us by our hospital clients. During the contract period the nurse is our employee. We don't employ independent contract nurses anywhere in the country. They are always our employees, but their employment status typically is defined by the contract period, which is typically three months. During the contract, we will commit to obviously paying the nurse, providing her an attractive benefit package, and most often housing the nurse while she travels around the country to various hospitals with an attractive apartment that is fully furnished, and the utilities are paid for by us. We try to handle life's details, and other than feeding themselves, the nurses who work for us are generally focused on patient care.

TWST: As I understand, traveling nurses make up a very small population of the total nursing population.

Mr. Boshart: That's correct, but having said that, the professional group of nurses is the largest professional group in the country. So when we talk about 2.7 million licensed nurses and 1.6 million licensed nurses working in hospitals, a small percentage of that, a very thin slice, is a big market opportunity for Cross Country. We think the total travel nursing market is somewhere between 16,000 and 20,000 nurses today. So that's approximately 1% of nurses working in hospitals.

TWST: Could you comment on the other parts of your staffing and how much they actually contribute to your overall revenue stream?

Mr. Boshart: Travel nurse staffing is about 75% of our total revenue. We also are engaged in the per diem nurse staffing market, which is generally a locally delivered service that's typically branch based, and that business represents about 10% of our revenue. And then we have two other healthcare staffing businesses: ClinForce is our clinical trial staffing business that typically provides service to large cap pharmaceutical companies as well as contract research organizations that are engaged in Phase III human clinical trials. That business represents about 5% of our revenue. Our allied health staffing business, comprised of respiratory therapists, rehab professionals and radiology technologists, represents about 5% to 6% of our revenue. Then, in our non-staffing business segment which I mentioned earlier, we have education and training, research and recruitment, and consulting all focused on healthcare, which account for about 8% of our revenue in a given quarter.

TWST: How did the acquisition last year of Med-Staff work for you?

Mr. Boshart: It has been an accretive acquisition. The industry was softer in the second half of 2003 than we expected it to be. So it has modestly under performed our expectations. But it is still strongly accretive and we are very pleased to have had the opportunity to buy the business at a very attractive price. We paid a little over 5 times the trailing EBITDA for the business and as a result we do expect it to continue to be strongly accretive and contribute returns that are in excess of our cost of capital going forward.

TWST: At this point, what is the active client base of Cross Country, and do you provide these services in all 50 states?

Mr. Boshart: We do. No single client represents more than 3% of revenue. So it's a very diverse client base and if you look at the 6,000 acute care hospitals throughout the country, we have contracts with approximately 40% of those hospitals and at any given time are providing service to as many as 1000.

TWST: In a typical hospital, how many nurses are actually employed through services like yours and how many do they employ themselves?

Mr. Boshart: About $60 billion is spent annually on nurse staffing by hospitals and about 10% of that is outsourced, probably even a little less today. Over the past 18 to 24 months, our industry experienced a softening of demand and that has resulted in a drop in the amount that's outsourced. But we think about somewhere between $5 and $6 billion is currently outsourced to third party providers. And if you look at that pie, about 75% is provided by per diem staffing providers and 25% is provided by travel nurse staffing providers. In numbers, that represents approximately 15,000 plus nurses on travel contracts at any given time.

TWST: How important are the nurses who come from foreign countries to a company such as yours?

Mr. Boshart: If our travel nursing business is a thin slice of the nursing profession, our foreign recruited nurses are an even thinner slice. But it's a very attractive business opportunity. We are able to recruit very well trained nurses to this country and bring them in on long-term contracts, typically 18 months to 24 months, which gives us even more of an annuity stream for the nurses who we have on contract. So I think it's a small piece of our business, but an important piece going forward.

TWST: When you reported your earnings on May 5, you made a statement that the healthcare staffing segment experienced a 15% year-over-year decline, excluding the acquisition of Med-Staff. So at this point, given the traction that the economy is taking hold, do you expect this number to improve or do you expect the comparable numbers to improve as you look ahead?

Mr. Boshart: We haven't provided guidance for 2004, but have for one quarter out. We do expect a strengthening job market and a recovery in the psychology of nurses to give them the confidence to come back to us as an employer. There was some concern that we would not be able to consistently employ those nurses who wanted full-time employment. But demand has picked up from the year-ago period and, as we said on our call, it's up about 50% and we think it has sustained that level of year-over-year improvement. We believe that it has improved the psychology of nurses interested in travel assignments, encouraged them to come back to us and encouraged nurses that are working more hours than they desire to cut back on their employment. And we believe we can ' in the long term ' grow revenue by 15% to 20% per year. If you look back over the last 10 years, we have grown revenue more than 25% per year.

TWST: As you look ahead what is the strategy for Cross Country?

Mr. Boshart: We are very focused on the demand side of our business to integrate Cross Country much deeper into the nurse acquisition processes of our hospital clients by obtaining exclusive or preferred provider status. So as we develop a vendor management relationship and employ other services that we have developed in the past year to 18 months, we feel we can decommoditize the relationship to a much greater extent than what existed in the late 1990s and 2000 even 2001. We think that's a great opportunity for us as the industry strengthens to really dominate serving the needs and the nursing demand of some of the largest users of nurse staffing services in the country, which will put us in much better competitive position than we were two years ago.

TWST: As far as your business mix is concerned, do you expect that to remain the same?

Mr. Boshart: Essentially, going forward we will probably see a growth in the relative mix our per diem nurse staffing services, but we think five years from now we will still be perceived primarily as a travel nurse staffing company.

TWST: Would you share with us a little more detail about the earnings that you reported on May 5?

Mr. Boshart: I think we had a high level of disclosure. We obviously grew revenue, but we are disappointed that net income was down a little over 30% year-over-year. An annual decline in income is something we haven't seen in many years. In fact, that's the first year in the past 10 that we were unable to grow earnings per share. We do expect to turn that around in the future, but we haven't committed at this point to when that might occur. We did see organic declines in volume in our nurse staffing businesses, but importantly, we saw year-over-year growth in our ClinForce clinical trial staffing business and in our education and seminar business, which if you go back a couple of years those businesses softened before the nurse staffing business did. So as we see those businesses strengthen, it gives us some confidence that our nurse business is getting closer to a rebound and that obviously is the far more important driver of overall growth going forward. We are increasingly optimistic, but we have maintained a cautious posture with investors and we don't encourage them to look for a near-term inflection point in this business but we do have increasing optimism that a turn may occur in the second half of 2004.

TWST: Other than the economy, what could the obstacles to success be for you? What worries you the most?

Mr. Boshart: That's really a primary obstacle. A business that is driven by demographics has excellent characteristics. So as long as the job market continues to recover we think the prospects for this business are very good going forward.

TWST: Have you been able to integrate your management team post the acquisition of Med-Staff to your satisfaction and do you have the team in place now to accomplish all of your goals?

Mr. Boshart: We believe we have a very deep and very experienced management team. Med-Staff is essentially integrated. We said at the time of the acquisition that we intended to maintain Med-Staff as a differentiated recruitment brand. So it will not be completely integrated into our core Cross Country TravCorps brand, but we have taken costs out of the business and there is opportunity for additional savings in the future. There are still synergies that are somewhat untapped, but we think the greater synergies, which we would not want to commit to just because they are obviously on the come, are revenue synergies. But as you open up far greater, diverse opportunities to the recruiters that work for Med-Staff, we think they can increase their productivity and drive stronger topline performance in the future and we have not yet tapped that opportunity fully, but are on the process of doing so.

TWST: How does the balance sheet look from your perspective? Do you foresee any major changes in the near term?

Mr. Boshart: We are leveraged to a degree because of the Med-Staff acquisition. We ended the first quarter of 2004 with roughly 21% debt- to-total capitalization. Our optimum comfort zone is somewhere in the 25% to 40% range. So we are actually below the level of leverage that we think is optimum. We think given the softness in the market that we experienced past year, it was prudent to focus the very strong cash flow that we have been able to generate on debt repayment, which we have done for the past two quarters. And I'd directionally condition investors that that would likely be our continued focus, but we still have a roughly 500,000 share repurchase authorization from our board, and we have been, and expect to continue to be, opportunistic in share repurchases. So as you look at our strong cash flow, the third obvious alternative is another acquisition, and I certainly wouldn't rule that out, but I would rank our priorities as debt repayment, share repurchase, and then acquisitions as they present themselves.

TWST: How about your dividend policy? Does the company have one?

Mr. Boshart: We have considered a dividend because of our very strong free cash flow. Cash generated is typically greater than the company needs to create the opportunity for the growth in the future, but we don't feel that's what our current shareholder base is really looking for, and we believe they want us more focused on share repurchases than a dividend. Although that may change in the future and we have ruled out a dividend in the short term. We will revisit the issue from time to time in the future.

TWST: Do you feel that your business is a little difficult to understand for Wall Street?

Mr. Boshart: Our industry is relatively new to Wall Street. I think the business is actually a pretty straight forward business, but because we have been a public company for a little less than three years, and we are one of the first pure-play healthcare staffing companies, we don't feel that the investing public really has any sense of perspective on this business. I've been leading this company for roughly 11 years and in 10 of those 11 years we grew earnings, and I have every reason to be optimistic about the future. But the investing public has only seen two full years and one of those two years was relatively soft. If you look at the stock price today, we are trading around our IPO price in October 2001. So without doubt I would say that there is a growing level of understanding. I think there was some concern that hospitals didn't want to use our service at all and would stop using it. As I said earlier, hospitals can't afford to pay 10% to 20% more for the last couple of hires that they need to be fully staffed and would rather bring in a contract nurse so as not to disrupt their wage structure. Clearly, we have volatility in the market when circumstances are such that nurses are willing and desirous to work more hours per person and directly for hospital employers, but we don't expect that to be the long-term dynamic. I feel confident that our business will exhibit strong growth characteristics in the future.

TWST: How do you get your message out to the financial markets, the shareholders and potential shareholders?

Mr. Boshart: We participate in numerous investor conferences such as this. We think we are a very open, transparent organization as to the reality of our market, where we think we are and where we think we are heading. And we think ultimately the performance of the company needs to speak for itself and we think that's what will ultimately attract investors back to the company and to the industry.

TWST: When speaking directly to the investors what would be the key investment messages that you are trying to get across?

Mr. Boshart: I think first and foremost that the very strong free cash flow characteristics of this company need to be appreciated. We generated over $50 million in cash flow from operations last year that equated to more than $1.50 per share. The vast majority of the cash flow was free. There are not significant capital investments that we need to make in order to increase our capacity to grow the business going forward. This is also a growth business. We've shown strong organic growth in the past. And this is still a very fragmented market, and one that we clearly can continue to grow through acquisitions in the future as well. But primarily this is an organic growth story, and as the company resumes organic growth there is tremendous leverage opportunity on the overhead that we have. This will, in turn, improve EBITDA margins and operating profit margins in the future and we think as a result we will be a very, very attractive investment vehicle for the next five to 10 years.

TWST: Any other points of discussion you wish to bring in that I may have left out?

Mr. Boshart: I guess there is one comment I would make and that is that we feel the business is in a transitional phase between one that is characterized as demand constrained and one that is supply constrained. Anyone who has followed this industry historically will recognize a supply constrained environment as a much more attractive operating environment for the companies in this industry than is a demand constrained environment. And we as a company have executed a strategy and continue to execute a strategy that will integrate Cross Country much more deeply in to our customer buying process, which will allow us to take disproportionate market share as the industry recovers and grows at more attractive rates in the future.

TWST: Thank you. (WT)

JOSEPH A. BOSHART President & CEO Cross Country Healthcare, Inc. 6551 Park of Commerce Boulevard Boca Raton, FL 33487 (561) 998-2232 (561) 998-8533 ' FAX www.crosscountry.com

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