Highlights for Third Quarter 2022:
Revenues of $82.8 million;
GAAP net income of $2.2 million and non-GAAP net income of $8.2 million;
GAAP earnings per diluted share of $0.15 and non-GAAP earnings per diluted share of $0.57;
Adjusted EBITDA of $13.3 million;
Bookings of $20.5 million;
Cash provided by operations of $11.1 million; and
Net debt of $124.8 million.
MOBILE, Ala.–(BUSINESS WIRE)–CPSI (NASDAQ: CPSI), a healthcare solutions company, today announced results for the third quarter and nine months ended September 30, 2022.
Total revenues for the third quarter ended September 30, 2022, were $82.8 million, compared with total revenues of $70.1 million for the prior-year quarter. GAAP net income for the quarter ended September 30, 2022, was $2.2 million, or $0.15 per diluted share, compared with $2.7 million, or $0.19 per diluted share, for the quarter ended September 30, 2021. Cash provided by operations for the third quarter of 2022 was $11.1 million, compared with $1.3 million for the prior-year quarter. Net debt at September 30, 2022, was $124.8 million compared to $98.1 million at September 30, 2021.
Total revenues for the nine months ended September 30, 2022, were $243.4 million, compared with total revenues of $206.6 million for the prior-year period. GAAP net income for the nine months ended September 30, 2022, was $13.4 million, or $0.91 per diluted share, compared with $13.0 million, or $0.89 per diluted share, for the nine months ended September 30, 2021. Cash provided by operations for the first nine months of 2022 was $30.2 million, compared with $34.5 million for the prior-year period.
Matt Chambless, chief financial officer of CPSI, commented, “We were pleased to deliver 18% revenue growth year-over-year, which was driven largely by the contribution from Healthcare Resource Group, Inc., which we acquired in March. Our TruBridge segment once again saw outstanding cross-selling traction, as we increased TruBridge sales to the CPSI customer base by 30% sequentially and tripled our pipeline over the prior-year period. We are also thrilled to appoint new leaders of our business units who will propel CPSI toward its next chapter. This new alignment of our leadership team will more effectively support our core EHR base with value-added tools for revenue cycle management and patient engagement that will help our customers thrive in an uncertain and evolving healthcare environment.”
CPSI will hold a live webcast to discuss third quarter 2022 results today, Tuesday, November 1, 2022, at 4:30 p.m. Eastern time. A 30-day online replay will be available approximately one hour following the conclusion of the live webcast. To listen to the live webcast or access the replay, visit the Company’s website, www.cpsi.com.
About CPSI
CPSI is a leading provider of healthcare solutions and services. Founded in 1979, CPSI is the parent of six companies – Evident, LLC, American HealthTech, Inc., TruBridge, LLC, iNetXperts, Corp. d/b/a Get Real Health, TruCode LLC, and Healthcare Resource Group, Inc. Our combined companies are focused on helping improve the health of the communities we serve, connecting communities for a better patient care experience, and improving the financial operations of our customers. Evident provides comprehensive EHR solutions for community hospitals and their affiliated clinics. American HealthTech is one of the nation’s largest providers of EHR solutions and services for post-acute care facilities. TruBridge focuses on providing business, consulting and managed IT services, along with its complete RCM solution, for all care settings. Get Real Health focuses on solutions aimed at improving patient engagement for individuals and healthcare providers. TruCode provides medical coding software that enables complete and accurate code assignment for optimal reimbursement. HRG provides specialized RCM solutions for facilities of all sizes. For more information, visit www.cpsi.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified generally by the use of forward-looking terminology and words such as “expects,” “anticipates,” “estimates,” “believes,” “predicts,” “intends,” “plans,” “potential,” “may,” “continue,” “should,” “will” and words of comparable meaning. Without limiting the generality of the preceding statement, all statements in this press release relating to the Company’s future financial and operational results are forward-looking statements. We caution investors that any such forward‑looking statements are only predictions and are not guarantees of future performance. Certain risks, uncertainties and other factors may cause actual results to differ materially from those projected in the forward‑looking statements. Such factors may include: the impact of the ongoing COVID-19 pandemic and related economic disruptions which have materially affected CPSI’s revenue and could materially affect CPSI’s gross margin and income, as well as CPSI’s financial position and/or liquidity; federal, state and local government actions to address and contain the impact of COVID-19 and their impact on us and our hospital clients; operational disruptions and heightened cybersecurity risks due to a significant percentage of our workforce working remotely; saturation of our target market and hospital consolidations; unfavorable economic or market conditions that may cause a decline in spending for information technology and services; significant legislative and regulatory uncertainty in the healthcare industry; exposure to liability for failure to comply with regulatory requirements; competition with companies that have greater financial, technical and marketing resources than we have; potential future acquisitions that may be expensive, time consuming, and subject to other inherent risks; our ability to attract and retain qualified client service and support personnel; disruption from periodic restructuring of our sales force; potential inability to properly manage growth in new markets we may enter; exposure to numerous and often conflicting laws, regulations, policies, standards or other requirements through our international business activities; potential litigation against us; our reliance on an international workforce which exposes us to various business disruptions; potential failure to develop new products or enhance current products that keep pace with market demands; failure to develop new technology and products in response to market demands; failure of our products to function properly resulting in claims for medical and other losses; breaches of security and viruses in our systems resulting in customer claims against us and harm to our reputation; failure to maintain customer satisfaction through new product releases free of undetected errors or problems; failure to convince customers to migrate to current or future releases of our products; failure to maintain our margins and service rates; increase in the percentage of total revenues represented by service revenues, which have lower gross margins; exposure to liability in the event we provide inaccurate claims data to payors; exposure to liability claims arising out of the licensing of our software and provision of services; dependence on licenses of rights, products and services from third parties; misappropriation of our intellectual property rights and potential intellectual property claims and litigation against us; interruptions in our power supply and/or telecommunications capabilities, including those caused by natural disaster; general economic conditions, including changes in the financial and credit markets that may affect the availability and cost of credit to us or our customers; potential inability to secure additional financing on favorable terms to meet our future capital needs; our substantial indebtedness, and our ability to incur additional indebtedness in the future; pressures on cash flow to service our outstanding debt; restrictive terms of our credit agreement on our current and future operations; changes in and interpretations of financial accounting matters that govern the measurement of our performance; significant charges to earnings if our goodwill or intangible assets become impaired; fluctuations in quarterly financial performance due to, among other factors, timing of customer installations; volatility in our stock price; failure to maintain effective internal control over financial reporting; lack of employment or non-competition agreement with most of our key personnel; inherent limitations in our internal control over financial reporting; vulnerability to significant damage from natural disasters; market risks related to interest rate changes; and other risk factors described from time to time in our public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, our most recent Annual Report on Form 10-K. Relative to our dividend policy, the payment of cash dividends is subject to the discretion of our Board of Directors and will be determined in light of then-current conditions, including our earnings, our leverage, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our Board of Directors. In the future, our Board of Directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions. We also caution investors that the forward-looking information described herein represents our outlook only as of this date, and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this press release.
Computer Programs and Systems, Inc.
Condensed Consolidated Statements of Income
(In ‘000s, except per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Sales revenues:
TruBridge
$
47,878
$
34,531
$
139,569
$
98,736
System sales and support
34,949
35,560
103,855
107,893
Total sales revenues
82,827
70,091
243,424
206,629
Costs of sales:
TruBridge
26,190
17,377
73,863
50,349
System sales and support
18,619
17,425
52,278
52,250
Total costs of sales
44,809
34,802
126,141
102,599
Gross profit
38,018
35,289
117,283
104,030
Operating expenses:
Product development
7,822
7,700
22,036
22,598
Sales and marketing
7,309
5,200
22,578
15,813
General and administrative
13,458
14,184
41,235
38,322
Amortization of acquisition-related intangibles
4,486
3,674
12,917
10,114
Total operating expenses
33,075
30,758
98,766
86,847
Operating income
4,943
4,531
18,517
17,183
Other income (expense):
Other income
355
123
914
1,160
(Loss) gain on contingent consideration
(589
)
–
992
–
Loss on extinguishment of debt
–
–
(125
)
–
Interest expense
(1,771
)
(825
)
(4,044
)
(2,249
)
Total other income (expense)
(2,005
)
(702
)
(2,263
)
(1,089
)
Income before taxes
2,938
3,829
16,254
16,094
Provision for income taxes
777
1,085
2,904
3,065
Net income
$
2,161
$
2,744
$
13,350
$
13,029
Net income per common share—basic
$
0.15
$
0.19
$
0.91
$
0.89
Net income per common share—diluted
$
0.15
$
0.19
$
0.91
$
0.89
Weighted average shares outstanding used in per common share computations:
Basic
14,365
14,334
14,405
14,276
Diluted
14,365
14,343
14,405
14,303
Computer Programs and Systems, Inc.
Condensed Consolidated Balance Sheets
(In ‘000s, except per share data)
September 30, 2022
(unaudited)
Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents
$
15,558
$
11,431
Accounts receivable, net of allowance for doubtful accounts of $2,565 and $1,826, respectively
45,627
34,431
Financing receivables, current portion, net
5,028
6,488
Inventories
1,754
855
Prepaid income taxes
955
4,599
Prepaid expenses and other
11,890
11,194
Total current assets
80,812
68,998
Property & equipment, net
10,301
11,590
Software development costs, net
23,955
11,644
Operating lease assets
7,999
7,097
Financing receivables, net of current portion
4,227
7,231
Other assets, net of current portion
5,631
3,874
Intangible assets, net
106,486
95,203
Goodwill
198,584
177,713
Total assets
$
437,995
$
383,350
Liabilities & Stockholders’ Equity
Current liabilities
Accounts payable
$
7,476
$
8,079
Current portion of long-term debt
3,141
4,394
Deferred revenue
12,255
11,529
Accrued vacation
6,350
5,262
Other accrued liabilities
16,181
17,163
Total current liabilities
45,403
46,427
Long-term debt, less current portion
137,174
94,966
Operating lease liabilities, net of current portion
6,088
5,505
Deferred tax liabilities
16,372
13,880
Total liabilities
205,037
160,778
Stockholders’ Equity
Common stock, $0.001 par value; 30,000 shares authorized; 14,914 and 14,734 shares issued
15
15
Treasury stock, 354 and 89 shares
(10,824
)
(2,576
)
Additional paid-in capital
192,363
187,079
Retained earnings
51,404
38,054
Total stockholders’ equity
232,958
222,572
Total liabilities and stockholders’ equity
$
437,995
$
383,350
Computer Programs and Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(In ‘000s)
(Unaudited)
Nine Months Ended September 30,
2022
2021
Operating activities:
Net income
$
13,350
$
13,029
Adjustments to net income:
Provision for bad debt
1,202
2,080
Deferred taxes
(3,073
)
2,306
Stock-based compensation
5,284
4,179
Depreciation
1,890
1,641
Loss on extinguishment of debt
125
–
Amortization of acquisition-related intangibles
12,917
10,114
Amortization of software development costs
2,283
527
Amortization of deferred finance costs
242
220
Gain on contingent consideration
(992
)
–
Loss on disposal of PP&E
–
313
Changes in operating assets and liabilities:
Accounts receivable
(6,877
)
1,304
Financing receivables
4,598
5,962
Inventories
(899
)
(67
)
Prepaid expenses and other
(1,982
)
(2,892
)
Accounts payable
(988
)
(2,723
)
Deferred revenue
726
1,414
Other liabilities
(1,239
)
(666
)
Prepaid income taxes
3,644
(2,267
)
Net cash provided by operating activities
30,211
34,474
Investing activities:
Purchase of business, net of cash received
(43,696
)
(59,634
)
Investment in software development
(14,594
)
(6,447
)
Purchases of property and equipment
(134
)
(915
)
Net cash used in investing activities
(58,424
)
(66,996
)
Financing activities:
Treasury stock purchases
(8,248
)
(1,222
)
Proceeds from long-term debt
575
–
Payments of long-term debt principal
(2,687
)
(2,813
)
Proceeds from revolving line of credit
48,000
61,000
Payments of revolving line of credit
(5,300
)
(20,000
)
Net cash provided by (used in) financing activities
32,340
36,965
Net increase in cash and cash equivalents
4,127
4,443
Cash and cash equivalents, beginning of period
11,431
12,671
Cash and cash equivalents, end of period
$
15,558
$
17,114
Computer Programs and Systems, Inc.
Consolidated Bookings
(In ‘000s)
Three Months Ended
Nine Months Ended
In ‘000s
9/30/2022
9/30/2021
9/30/2022
9/30/2021
TruBridge(1)
$
11,532
$
13,073
$
37,260
$
22,009
System sales and support(2)
9,006
16,249
27,474
32,641
Total
$
20,538
$
29,322
$
64,734
$
54,650
(1)
Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts)
(2)
Generally calculated as the total contract price (for system sales) and annualized contract value (for support).
Computer Programs and Systems, Inc.
Bookings Composition
(In ‘000s, except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
9/30/2022
9/30/2021
9/30/2022
9/30/2021
TruBridge
Net new(1)
$
897
$
4,794
$
9,657
$
6,278
Cross-sell(1)
10,059
2,824
21,872
8,398
Get Real Health
260
5,352
2,568
6,760
TruCode
316
103
3,163
573
System sales and support
Non-subscription sales(2)
4,550
2,929
12,689
10,145
Subscription revenue(3)
3,053
12,437
11,507
19,029
Other
1,403
883
3,278
3,467
Total
$
20,538
$
29,322
$
64,734
$
54,650
(1)
“Net new” represents bookings from outside the Company’s core EHR client base, and “Cross-sell” represents bookings from existing EHR customers. In each case, generally comprised of recurring revenues to be recognized ratably over a one-year period and an average timeframe for commencement of bookings-to-revenue conversion of four to six months following contract execution.
(2)
Represents nonrecurring revenues that generally exhibit a timeframe for bookings-to-revenue conversion of five to six months following contract execution.
(3)
Represents recurring revenues to be recognized on a monthly basis over a weighted-average contract period of five years, with a start date in the next 12 months and an average timeframe for commencement of bookings-to-revenue conversion of five to six months following contract execution.
Computer Programs and Systems, Inc.
Acute Care EHR Net New License Mix
Three Months Ended
Nine Months Ended
9/30/2022
9/30/2021
9/30/2022
9/30/2021
SaaS(1)
6
2
16
8
Perpetual license(2)
–
3
–
7
Total
6
5
16
15
(1)
Exhibit revenue attribution that is recurring in nature.
(2)
Exhibit revenue attribution that is nonrecurring in nature.
Computer Programs and Systems, Inc.
System Sales and Support Revenue Composition
(In ‘000s)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Recurring revenues – system sales and support
Acute Care EHR
$
27,237
$
26,775
$
81,333
$
80,792
Post-acute Care EHR
3,817
4,010
11,504
12,402
Total recurring revenues – system sales and support
31,054
30,785
92,837
93,194
Nonrecurring revenues – system sales and support
Acute Care EHR
3,500
4,351
9,467
13,786
Post-acute Care EHR
395
424
1,551
913
Total nonrecurring revenues – system sales and support
3,895
4,775
11,018
14,699
Total system sales and support revenues
$
34,949
$
35,560
$
103,855
$
107,893
Computer Programs and Systems, Inc.
Adjusted EBITDA – by Segment
(In ‘000s)
Three Months Ended
Nine Months Ended
In ‘000s
9/30/2022
9/30/2021
9/30/2022
9/30/2021
TruBridge
$
8,060
$
6,840
$
27,609
$
20,216
Acute Care EHR
4,584
4,773
13,915
15,650
Post-acute Care EHR
705
624
1,147
2,487
Total
$
13,349
$
12,237
$
42,671
$
38,353
Computer Programs and Systems, Inc.
Reconciliation of Non-GAAP Financial Measures
(In ‘000s)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
Adjusted EBITDA:
2022
2021
2022
2021
Net income, as reported
$
2,161
$
2,744
$
13,350
$
13,029
Deferred revenue and other acquisition-related adjustments
–
388
109
546
Depreciation expense
622
525
1,890
1,641
Amortization of software development costs
1,024
262
2,283
527
Amortization of acquisition-related intangible assets
4,486
3,674
12,917
10,114
Stock-based compensation
1,864
1,700
5,284
4,178
Severance and other nonrecurring charges
410
1,157
1,671
4,164
Interest expense and other, net
1,416
702
3,255
1,089
Gain on contingent consideration
589
–
(992
)
–
Provision for income taxes
777
1,085
2,904
3,065
Adjusted EBITDA
$
13,349
$
12,237
$
42,671
$
38,353
Computer Programs and Systems, Inc.
Reconciliation of Non-GAAP Financial Measures
(In ‘000s, except per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
Non-GAAP Net Income and Non-GAAP EPS:
2022
2021
2022
2021
Net income, as reported
$
2,161
$
2,744
$
13,350
$
13,029
Pre-tax adjustments for Non-GAAP EPS:
Deferred revenue and other acquisition-related adjustments
–
388
109
546
Amortization of acquisition-related intangible assets
4,486
3,674
12,917
10,114
Stock-based compensation
1,864
1,700
5,284
4,178
Severance and other nonrecurring charges
410
1,157
1,671
4,164
Non-operating loss from lease termination (non-cash)
–
313
–
313
Non-cash interest expense
90
73
242
220
Loss on extinguishment of debt
–
–
125
–
After-tax adjustments for Non-GAAP EPS:
Tax-effect of pre-tax adjustments, at 21%
(1,439
)
(1,534
)
(4,273
)
(4,102
)
Tax shortfall (windfall) from stock-based compensation
–
–
(112
)
(84
)
Gain on contingent consideration
589
–
(992
)
–
Non-GAAP net income
$
8,161
$
8,515
$
28,321
$
28,378
Weighted average shares outstanding, diluted
14,365
14,343
14,405
14,303
Non-GAAP EPS
$
0.57
$
0.59
$
1.97
$
1.98
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with accounting principles generally accepted in the United States of America, or “GAAP.” However, management believes that, in order to properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures that are prepared in accordance with GAAP. These items result from facts and circumstances that vary in frequency and impact on continuing operations. Management uses these non-GAAP financial measures in order to evaluate the operating performance of the Company and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management’s ability to make useful forecasts. In addition, management understands that some investors and financial analysts find these non-GAAP financial measures helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.
As such, to supplement the GAAP information provided, we present in this press release and during the live webcast discussing our financial results the following non‑GAAP financial measures: Adjusted EBITDA, Non-GAAP net income, and Non-GAAP earnings per share (“EPS”).
We calculate each of these non-GAAP financial measures as follows:
Adjusted EBITDA – Adjusted EBITDA consists of GAAP net income as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) depreciation expense; (iii) amortization of software development costs; (iv) amortization of acquisition-related intangible assets; (v) stock-based compensation; (vi) severance and other non‑recurring charges; (vii) interest expense and other, net; (viii) gain on contingent consideration; and (ix) the provision for income taxes.
Non-GAAP net income – Non-GAAP net income consists of GAAP net income as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) amortization of acquisition-related intangible assets; (iii) stock-based compensation; (iv) severance and other non-recurring charges; (v) non-operating loss from lease termination (non-cash); (vi) non-cash interest expense; (vii) loss on extinguishment of debt and (viii) the total tax effect of items (i) through (vii).
Contacts
Tracey Schroeder
Chief Marketing Officer
[email protected]
(251) 639-8100
