The Company's condensed consolidated financial statements present a consolidation of all its operations. This discussion supplements the detailed information presented in the condensed consolidated financial statements and notes thereto which should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K, filed for the year ended December 31, 2008, and is intended to assist the reader in understanding the financial results and condition of the Company.

Overview

We are a diversified leader in healthcare staffing services. We offer a comprehensive suite of staffing and outsourcing services to the healthcare market, which together include being a leading provider of nurse and allied staffing services in the United States; a national provider of multi-specialty locum tenens (temporary physician staffing) services; a provider of clinical trials services to global pharmaceutical and biotechnology customers; and a provider of other human capital management services focused on healthcare, including education and retained search.

We have a diversified revenue mix across business sectors and healthcare customers. For the quarter ended June 30, 2009, our nurse and allied staffing business segment represented approximately 53% of our revenue and is comprised of travel and per diem nurse staffing and travel allied health staffing. Travel nurse staffing represented approximately 41% of our total revenue and 77% of our nurse and allied staffing business segment revenue. Other nurse and allied staffing services include the placement of per diem nurses and allied healthcare professionals, such as radiology technicians, rehabilitation therapists and respiratory therapists. Our physician staffing business segment represented approximately 27% of revenue in the second quarter of 2009 and consists of temporary physician staffing services (locum tenens). Our clinical trials services business segment represented approximately 13% of our revenue and consists of service offerings that include traditional staffing, as well as clinical trials management, drug safety monitoring and regulatory services to pharmaceutical and biotechnology customers. Our other human capital management services business segment represented approximately 7% of our revenue and consists of education and training and retained search services.

For the quarter ended June 30, 2009, our revenue was $149.0 million, and net income was $2.3 million, or $0.07 per diluted share. Cash flow provided by operating activities for the first six months of 2009, was $50.4 million and was primarily used to repay debt. During the six months ended June 30, 2009, we also used cash on hand and paid our earnout obligations of $7.5 million related to our recent acquisitions. We ended the quarter with total debt of $93.0 million and $11.5 million of unrestricted cash, resulting in a ratio of debt, net of unrestricted cash, to total capitalization of 24.3% as of June 30, 2009.

In general, we evaluate the Company's financial condition and operating results by revenue, contribution income (see Segment Information), and net income. We also use measurement of our cash flow generation and operating and leverage ratios to help us assess our financial condition. In addition, we monitor several key volume and profitability indicators such as number of open orders, contract bookings, number of FTEs and bill rate per hour of service provided.

In varying degrees, each of our businesses faced a challenging environment during the quarter, with the impact of the recession being most severe on our travel nursing business and least severe on our physician staffing business.

Nurse and Allied Staffing

The current environment for our nurse and allied staffing services reflects both hospital admission trends that have been largely flat since the first quarter of 2003 and a deteriorating national labor market resulting in higher levels of unemployment that translates into more uninsured people and fewer people with commercial health insurance coverage. Average demand for our travel nurse staffing services in the second quarter of 2009, as expressed by the number of open orders from our hospital and healthcare facility customers, declined approximately 53% since the beginning of 2009. Despite this difficult operating environment, we were able to improve our margins through continued expansion of the bill-pay spread and a moderation of housing expenses. Our hospital clients have been increasingly reluctant to commit to contract nurses, most often citing low patient census and budget reductions as factors for their hesitation. In addition, the dramatic deterioration in the economy and national labor markets since the third quarter of 2008 is likely encouraging full and part-time nurses to work more hours directly for hospitals,

Physician Staffing

We believe the demand for temporary physician staffing services has weakened year over year as physicians on staff at hospital and practice groups appear to be delaying plans for retirement due, in part, to the current economic environment and its impact on their net worth. We believe a reduction in the number of elective surgeries has also reduced staffing needs in the surgical and anesthesia specialties, in particular.

Clinical Trials Services

Our clinical trials services business has also experienced weakened demand from its customers. The environment for clinical trials services has been weak during the past three quarters stemming from a slow-down in the start of new clinical trials caused largely by financial market conditions along with uncertainty concerning research and development activities following recent pharmaceutical and biotechnology company mergers and acquisitions. Pharmaceutical and biotechnology customers have become less willing to use temporary staffing and out-sourcing services to meet their clinical trials objectives. We believe this is driven by an effort to reduce expenses at all levels to conserve cash in the current economic environment. This includes research efforts, which effectively delay the start of some clinical projects. However, we have recently seen improved access to capital markets by biotechnology companies, in particular, which we believe is a positive sign for this business. We believe there are a sufficient number of trials being planned that represent growth opportunities for this business both on a domestic and international basis.

Results of Operations

The following table summarizes, for the periods indicated, selected condensed
consolidated statements of income data expressed as a percentage of revenue:

                                        Three Months Ended             Six Months Ended
                                             June 30,                      June 30,
                                       2009            2008          2009           2008

Revenue from services                   100.0 %         100.0 %       100.0 %        100.0 %
Direct operating expenses                72.6            73.3          73.5           74.1
Selling, general and
administrative expenses                  22.0            18.8          20.8           18.4
Bad debt expense                          0.1               -           0.0            0.1
Depreciation and amortization             2.3             1.4           2.1            1.4
Income from operations                    3.0             6.5           3.6            6.0
Foreign exchange loss (gain)              0.1            (0.0 )         0.0           (0.0 )
Interest expense, net                     1.0             0.3           1.0            0.3
Income before income taxes                1.9             6.2           2.6            5.7
Income tax expense                        0.4             2.5           1.0            2.2
Net income                                1.5 %           3.7 %         1.6 %          3.5 %


Acquisitions

MDA Holdings, Inc.

On September 9, 2008, we consummated the acquisition of substantially all of the assets of privately-held MDA Holdings, Inc. and its subsidiaries and all of the outstanding stock of a subsidiary of MDA Holdings, Inc. (collectively, MDA). We paid $115.9 million in cash at closing, which included $3.6 million as an estimated net working capital adjustment which was subject to final adjustments. Of the cash paid at closing, approximately $8.7 million was being held in escrow to cover any post-closing liabilities (Indemnification Escrow) and $0.3 million was being held in escrow to cover any net working capital adjustments (Net Working Capital Escrow). During the fourth quarter of 2008, approximately $1.6 million of the Indemnification Escrow was released to us and recorded to goodwill as a reduction in purchase price. Also during the fourth quarter of 2008, we finalized the net

The transaction also includes an earnout provision based on 2008 and 2009 performance criteria. This contingent consideration is not related to the sellers' continued employment. Any earnout payments are allocated to goodwill as additional purchase price, in accordance with FASB Statement No. 141, Business Combinations. In the second quarter of 2009, we paid $6.7 million, related to the 2008 performance.

Our senior secured revolving credit was amended and restated as of September 9, 2008 (Credit Agreement) to keep in place an existing $75.0 million revolving loan facility and provide for a 5 year $125.0 million term loan facility with Wachovia Capital Markets, LLC and certain of its affiliates, Banc of America Securities LLC and certain other lenders. The proceeds from the term loan were used to fund the acquisition, pay financing related fees, and pay certain acquisition expenses. The remainder of the proceeds was used to reduce our borrowings under our revolving loan facility.

Headquartered in Norcross, Georgia, MDA provides multi-specialty locum tenens (temporary physician staffing) and allied staffing services to the healthcare industry in all 50 states. MDA is a leading provider of locum tenens staffing solutions. MDA has an in-house NCQA-certified Credentials Verification Organization which verifies critical credentials prior to physician assignments. It also offers its physicians occurrence-based malpractice coverage, as compared to less desirable claims-made policies offered by its main competitors. The acquisition of MDA solidifies our position as a leading national provider of healthcare staffing solutions. We expect to benefit from a more diversified revenue stream as physicians are viewed as revenue generators by its hospital clients, as compared to nurses, who represent a cost center. We are also able to offer a more comprehensive suite of services for our healthcare clients and recognize there may be some potential synergies with our physician search business.

The acquisition has been accounted for in accordance with Financial Accounting Standards Board (FASB) Statement No. 141, Business Combinations, using the purchase method. The results of MDA's operations have been included in the consolidated statements of operations since September 1, 2008, the agreed-upon accounting date of the acquisition. MDA's allied staffing services have been included in our nurse and allied staffing business segment. MDA's physician staffing services have been reported as a new business segment, physician staffing, in accordance with FASB Statement No. 131, Disclosure about Segments of an Enterprise and Related Information.

Based on an independent third-party appraisal, we assigned the following values to intangible assets: $46.0 million to trademarks with an indefinite life and not subject to amortization, $21.0 million for customer relations with a useful life of 12 years, $1.1 million to database with a useful life of 9 years, and $1.0 million to noncompete agreements with a weighted average useful life of 4 years. The excess of purchase price over the fair value of net tangible and intangible assets acquired approximated $26.4 million and was recorded as goodwill, which is expected to be deductible for tax purposes. Additional acquisition costs of approximately $0.7 million and $0.6 million are included as goodwill on the consolidated balance sheets at June 30, 2009 and December 31, 2008, respectively.

Assent Consulting

On July 18, 2007, we completed an acquisition of the shares of privately-held Assent Consulting (Assent) for $19.6 million in cash paid at closing, including $1.0 million which was held in escrow to cover any post-closing liabilities. The purchase price was subject to a working capital adjustment that was settled with a payment of $0.5 million to us in the fourth quarter of 2007. This transaction also includes an earnout provision up to a maximum of $4.9 million based on 2007 and 2008 performance criteria. This contingent consideration was not related to the sellers' employment. In the second quarter of 2008, we paid $4.6 million related to 2007 performance satisfying all earnout amounts potentially due to the seller in accordance with the asset purchase agreement. Of this payment, $2.0 million was being held in escrow, subject to forfeiture to us, to the extent a 2008 performance milestone was not achieved. However, based on 2008 performance, the full amount was released to the seller in the first quarter of 2009. The entire payment was allocated to goodwill as additional purchase price, in accordance with FASB Statement No. 141. In addition, in the first quarter of 2009, the escrow of $1.0 million was released to the sellers.

On June 6, 2007, we acquired all of the shares of privately-held AKOS Limited (AKOS), based in the United Kingdom, for a total purchase price of up to £7.2 million, consisting of an up-front payment of £4.0 million and potential earnout payments up to £3.2 million in 2007 and 2008, plus a working capital adjustment. The share purchase agreement also specified an estimated additional payment of £0.5 million, paid at closing, consisting of cash purchased. An additional amount of £0.2 million was paid in the third quarter of 2007, based on changes in net working capital, as defined by the share purchase agreement, and has been allocated to goodwill as additional purchase price.

The consideration for this acquisition was approximately $8.9 million in cash paid at closing, which included $1.0 million for the additional payment and $0.8 million held in escrow to cover any post-closing liabilities. The post-closing working capital adjustment paid by us equated to approximately $0.3 million.

The potential earnout payments were based on 2007 and 2008 performance, as defined by the share purchase agreement and were not related to the sellers' employment. In the first quarter of 2008, we paid £1.1 million (approximately $2.1 million) related to 2007 performance. In the second quarter of 2009, we paid the sellers £0.5 million (approximately $0.7 million) related to 2008 performance. The payments have been allocated to goodwill as additional purchase price, in accordance with FASB Statement No. 141. During the fourth quarter of 2008, all of the funds held in escrow were released to the sellers.

Goodwill and Other Identifiable Intangible Assets

Goodwill and other intangible assets represented 93% of our stockholders' equity as of June 30, 2009. Goodwill and other identifiable intangible assets (including trademarks) from the acquisition of the assets of our predecessor, Cross Country Staffing, a partnership, as well as from subsequent acquisitions were $130.9 million and $95.2 million, respectively, net of accumulated amortization, at June 30, 2009. In accordance with FASB Statement No. 142, goodwill and certain other identifiable intangible assets are not subject to amortization; instead, we review impairment annually. Other identifiable intangible assets, which are subject to amortization, are being amortized using the straight-line method over their estimated useful lives ranging from 1 to 15 years.

FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, requires us to test the recoverability of long-lived assets, including identifiable intangible assets with definite lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In testing for potential impairment under FASB Statement No. 144, if the carrying value of the asset group exceeds the expected undiscounted cash flows, we must then determine the amount by which the fair value of those assets exceeds the carrying value and determine the amount of impairment, if any.

Segment Information

Our nurse and allied staffing business segment primarily provides travel nurse and allied staffing services and per diem nurse services to acute care hospitals. Nurse and allied staffing services are also marketed to public and private healthcare facilities and for-profit and not-for-profit facilities throughout the U.S.

In the third quarter of 2008, we added the physician staffing business segment as a result of our acquisition of MDA. MDA provides multi-specialty locum tenens and allied staffing services to the healthcare industry in all 50 states. MDA's locum tenens business comprises our physician staffing business segment while MDA's allied staffing services have been aggregated with our nurse and allied staffing business segment.

Our clinical trials services business segment provides clinical trials, drug safety and regulatory professionals and services on a contract staffing and outsourced basis to companies in the pharmaceutical, biotechnology and medical device industries, as well as to contract research organizations (CRO) and acute care hospitals conducting clinical research trials in the United States, Canada and Europe.

Our other human capital management services business segment includes the combined results of our education and training and retained search businesses.

                                        Three Months Ended             Six Months Ended
                                             June 30,                      June 30,
                                        2009           2008           2009           2008
(Amounts in thousands)
Revenue from external customers:
Nurse and allied staffing            $   78,582     $  132,665     $  183,611     $  273,331
Physician staffing                       40,747              -         79,005              -
Clinical trials services                 19,403         24,898         40,390         49,767
Other human capital management
services                                 10,314         13,388         21,457         27,104
                                     $  149,046     $  170,951     $  324,463     $  350,202

Contribution income (a):
Nurse and allied staffing            $    7,202     $   13,939     $   17,230     $   26,800
Physician staffing                        4,131              -          7,373              -
Clinical trials services                  2,272          4,412          4,459          8,182
Other human capital management
services                                    329          2,108          1,258          4,503
                                         13,934         20,459         30,320         39,485
Unallocated corporate overhead            6,113          6,942         12,009         13,440
Depreciation                              2,306          1,777          4,611          3,563
Amortization                              1,018            643          2,041          1,316
Income from operations               $    4,497     $   11,097     $   11,659     $   21,166


-------

(a)

We define contribution income as income from operations before depreciation, amortization and other corporate expenses not specifically identified to a reporting segment. Contribution income is a measure used by management to access operations and is provided in accordance with FASB Statement No. 131, Disclosure About Segments of an Enterprise and Related Information.

Three Months Ended June 30, 2009 compared to Three Months Ended June 30, 2008

Revenue from services

Revenue from services decreased $21.9 million, or 12.8%, to $149.0 million for the three months ended June 30, 2009, as compared to $171.0 million for the three months ended June 30, 2008. The decrease was primarily due to a decrease in revenue from our nurse and allied staffing business segment, as well as decreases in our clinical trials services and other human capital management services business segments, which was substantially offset by the added revenue of MDA. Excluding the impact of the MDA acquisition, consolidated revenue from services decreased $64.3 million or 37.6%, reflecting a challenging operating environment for all of our business segments.

Nurse and allied staffing

Revenue from our nurse and allied staffing business segment decreased $54.1 million, or 40.8%, to $78.6 million in the three months ended June 30, 2009, from $132.7 million in the three months ended June 30, 2008, primarily due to lower volume. The decline in staffing volume reflects a weakening national labor market on the demand for our services, as well as the impact of the liquidity crisis on our hospital customers' cost of capital.

The average number of nurse and allied staffing FTEs on contract during the three months ended June 30, 2009, decreased 39.5% from the three months ended June 30, 2008. Average nurse and allied staffing revenue per FTEs decreased approximately 2.1% in the three months ended June 30, 2009 compared to the three months ended June 30, 2008, primarily due to a higher mix of per diem staffing operations, which tend to have lower average bill rates than travel staffing, and a shift in mix toward lower skilled professionals within our per diem staffing operations. Excluding per diem staffing operations the average bill rates increased by 0.6%.

Physician staffing

Revenue from our physician staffing business was $40.7 million for the three months ended June 30, 2009, resulting from the acquisition of MDA. On a pro-forma basis, physician staffing revenues decreased 3.8%.

Revenue from clinical trials services decreased $5.5 million, or 22.1%, to $19.4 million in the three months ended June 30, 2009, from $24.9 million in the three months ended June 30, 2008. This decline was primarily due to a decrease in traditional contract staffing volume and a decrease in revenue from a specific drug safety contract.

Other human capital management services

Revenue from other human capital management services for the three months ended June 30, 2009, decreased $3.1 million, or 23.0%, to $10.3 million from $13.4 million in the three months ended June 30, 2008, reflecting a decrease in revenue related to the number of retained searches we performed and lower average seminar attendance.

Direct operating expenses

Direct operating expenses are comprised primarily of field employee and independent contractor compensation expenses, housing expenses, travel expenses and field insurance expenses. Direct operating expenses decreased $17.1 million, or 13.6%, to $108.3 million for the three months ended June 30, 2009, as compared to $125.3 million for three months ended June 30, 2008.

As a percentage of total revenue, direct operating expenses represented 72.6% of revenue for the three months ended June 30, 2009, and 73.3% for the three months ended June 30, 2008. The decrease is primarily due to a widening of our bill-pay spread in our travel staffing operations and lower housing cost as a percentage of revenue; and to a lesser extent a change in the mix of our business segments. Our nurse and allied business segment suffered the greatest revenue decline year over year and has the highest relative direct costs as a percentage of revenue of all of our business segments.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $0.7 million, or 2.1%, to $32.8 million for the three months ended June 30, 2009, as compared to $32.1 million for the three months ended June 30, 2008. The increase in selling, general and administrative expenses was primarily due to additional expenses from the MDA acquisition and severance costs of $0.4 million related to cost reduction efforts; partially offset by lower selling, general and administrative expenses in our organic business segments, primarily our nurse and allied staffing business segment.

Included in selling, general and administrative expenses is unallocated corporate overhead of $6.1 million for three months ended June 30, 2009, compared to $6.9 million for the three months ended June 30, 2008. As a percentage of consolidated revenue, unallocated corporate overhead was 4.1% for the three month periods ended June 30, 2009 and 2008.

As a percentage of total revenue, selling, general and administrative expenses were 22.0% and 18.8%, respectively, for the three months ended June 30, 2009 and 2008, respectively. This increase is primarily due to negative operating leverage.

Bad debt expense

Bad debt expense was $0.2 million for the three months ended June 30, 2009, or 0.1% of consolidated revenue. During the three months ended June 30, 2008, no bad debt expense was recorded due to improved collections.

Contribution income

Contribution income from our nurse and allied staffing segment for the three months ended June 30, 2009, decreased $6.7 million or 48.3%, to $7.2 million from $13.9 million in three months ended June 30, 2008. As a percentage of nurse and allied staffing revenue, segment contribution income was 9.2% for the three months ended June 30, 2009, and 10.5% for the three months ended June 30, 2008. This decrease is primarily due to negative operating leverage; partially offset by a widening of our bill-pay spread and a moderation of housing costs.

Contribution income from physician staffing for the three months ended June 30, 2009, was $4.1 million. As a percentage of physician staffing revenue, contribution income was 10.1%.

Contribution income from clinical trials services for the three months ended June 30, 2009, decreased $2.1 million to $2.3 million, compared to $4.4 million in the three months ended June 30, 2008. As a percentage of clinical trials services revenue, segment contribution income was 11.7% in the three months ended June 30, 2009, compared to 17.7% in the three months ended June 30, 2008, primarily due to negative operating leverage.