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Saturday, Feb 4, 2023

Staffing Company Sells for $30M

Workforce Solutions Group Inc., a Foothill Ranch provider of in-home care staffing and other related services for national healthcare plans, has been purchased by Florida-based Cross Country Healthcare Inc. (Nasdaq: CCRN).

The purchase price included $25 million in cash and $5 million in shares of Cross Country. Workforce Solutions may also be eligible for an additional $15 million worth of incentives in the next three years. Since the deal was announced June 8, shares of Cross Country have risen more than 6% to around $17.14 and a $671 million market cap.

“I was looking for an organization that would allow our employees to grow and our clients to receive expanded services,” said Pamela Jung, founder and chief executive of Workforce Solutions.

“I felt it was the right time. We’re super excited.”

Cross Country’s West Coast operations will now be headquartered in Foothill Ranch, said Jung, who intends to remain at her home in Coto de Caza.

Sales on Upswing

Boca Rotan-based Cross Country is acquiring a company on a hot revenue growth streak. Workforce Solutions’ sales may grow by 60% this year, according to a Business Journal estimate.  

Cross Country itself saw revenue growth of 1.7% to $836.4 million in 2020 and a loss of $13 million; it has reported annual losses since 2017. Analysts are expecting revenue to climb 35% this year while falling about 17% to $937 million in 2022.

“This acquisition allows us to expand our footprint into the home care business and participate in healthcare in a different way by serving in a critical role in caring for our aging population and others,” Kevin Clark, co-founder and chief executive of Cross Country Healthcare, said in a statement.

Workforce Solutions Group is “a strong entrepreneurial woman-led business,” he added.

The Business Journal in 2017 named Jung as a Women in Business Award honoree.

Future Workforce Model

In the 1990s, Jung worked for several HR firms, including Glendale-based AppleOne and Cincinnati-based StaffMark, before striking out on her own—just before the terrorist attacks on Sept. 11, 2001.

She developed a “workforce of the future model” that included permitting parents to work from their homes and offering childcare services at the office.

“Twenty years ago, you had to be in an office tied to a desk for eight hours,” she recalled. “I focused on moms and dads who could contribute to working five to six hours during the day.

“Nowadays with COVID, everyone is working from home. It’s funny how things have changed.”

Her proudest moment was 2008 when the financial crisis struck, and her company was facing bankruptcy.

“I could not bring myself to do that,” she said. “We came very close to being on the edge. It was such a terrible time in our organization. People just stopped hiring. I felt if I put my head down and focused, we could turn it around.”

At that time, Workforce Solutions was involved in a variety of industries such as banking. Jung decided to focus on healthcare, particularly in providing unskilled caregivers to work at the homes of elderly patients in low-income areas, who then didn’t have to enter retirement homes.

Employee Expansion

Nowadays, Workforce Solutions primarily works with local and national healthcare plans and managed care providers to coordinate in-home care services from about 2,500 caregivers and registered nurses.

The company is currently at 135 employees and may reach 170 this year. It’s expanding in California and states like Michigan and Massachusetts, and is looking at four to five new markets.

Cross Country is known for talent management including strategic workforce solutions, contingent staffing, permanent placement, and consultative services for healthcare customers.

In conjunction with the acquisition, Cross Country entered a $100 million second lien term loan having a six-year maturity, with an interest rate of one-month LIBOR plus 5.75% per annum. The proceeds of the term loan were used to pay the $25 million cash purchase price, as well as costs, fees, and expenses in connection with the transactions.

More Acquisitions? 

Clark, who co-founded Cross Country in 1986, served as its chairman and CEO until 1994. In 2002, he re-entered the healthcare staffing industry to co-found Onward Healthcare, a travel nurse, allied health and per diem staffing company.

Clarke returned to Cross Country in 2019, replacing a CEO who was retiring.

In the news release about Workforce Solutions, Clark said this was his first acquisition since returning to the company.

“It tells me that more acquisitions will transpire over the next year,” Jung said, adding that she’ll be making suggestions on possible deals.

Jung has committed to staying on for another three years.

“It’ll be longer if I’m still having fun,” she said. “I’m very passionate about our business.” 

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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