Company Announces Quarterly Cash Dividend of $0.30 Per
Share
CPSI (NASDAQ: CPSI):
Highlights for Second Quarter 2017:
- Revenues of $67.7 million;
- Record quarterly bookings of $33.7
million;
- Record quarterly TruBridge bookings of
$8.7 million;
- GAAP earnings of $0.11 per diluted
share and non-GAAP earnings of $0.43 per diluted share;
- GAAP net income of $1.6 million and
Adjusted EBITDA of $13.2 million; and
- Quarterly dividend of $0.30 per
share.
CPSI (NASDAQ: CPSI), a community healthcare solutions company,
today announced results for the second quarter and six months ended
June 30, 2017.
The Company also announced that its Board of Directors has
declared a quarterly cash dividend of $0.30 per share, payable on
September 1, 2017, to stockholders of record as of the close of
business on August 17, 2017. This dividend is consistent with
the Company’s previously announced variable dividend policy.
Total revenues for the second quarter ended June 30, 2017, were
$67.7 million, compared with total revenues of $68.4 million for
the prior-year second quarter. Net income for the quarter ended
June 30, 2017, was $1.6 million, or $0.11 per diluted share,
compared with $2.0 million, or $0.15 per diluted share, for the
quarter ended June 30, 2016. Cash provided by operations for the
second quarter of 2017 was $6.2 million, compared with cash used by
operations of $9.3 million for the prior-year second quarter.
Total revenues for the six months ended June 30, 2017, were
$131.8 million, compared with total revenues of $138.1 million for
the prior-year period. Net income for the six months ended June 30,
2017, was $1.8 million, or $0.13 per diluted share, compared with
$0.3 million, or $0.03 per diluted share, for the six months ended
June 30, 2016. Cash provided by operations for the first six months
of 2017 was $15.9 million, compared with cash used by operations of
$8.5 million for the prior-year period.
“Consistent performance in our company bookings and consecutive
quarterly growth in our revenue cycle and services solutions mark
the mid-point of 2017 with a sense of steadiness for CPSI,” said
Boyd Douglas, president and chief executive officer of CPSI. “This
quarter, we experienced another record-setting bookings value of
$33.7 million, and we saw the expected increase in demand of add-on
sales coming to fruition from our expanded client base. Our focus
on creating healthier, financially stronger and more vital
communities is spearheading our path for growth. With the
announcement of our partnership with Caravan Health and the CPSI
Rural ACO program earlier this year, this journey promises to be
exciting as we expect a meaningful impact for the communities
participating in eight CPSI ACOs at the start of next year.”
Commenting on the Company’s financial performance for the
quarter, Matt Chambless, chief financial officer of CPSI, stated,
“The combination of a strong implementation schedule and continued
momentum behind TruBridge’s suite of services resulted in our first
period of sequential quarterly revenue growth and the best quarter
of gross margin performance since bringing Healthland and American
HealthTech into our family of companies. The strong top-line
performance allowed for our highest operating margin over the past
four quarters, despite a heavy quarter for operating expenses.
“While we are certainly proud of our strong system sales and
support revenues this quarter, a greater precursor of things to
come has been the success of TruBridge. Posting sequential revenue
growth of 7.5%, TruBridge continues to execute on its potential as
a growth agent for CPSI, and yet another quarter of record bookings
suggests that the TruBridge offerings are resonating in our
market.”
Douglas added, “With the settling of the foundational elements
in our business, we are able to solidify our continued investment
in product development across our acute and post-acute businesses.
Improving provider adoption and addressing new market dynamics,
driven by the need to provide value-based care across care
settings, remain integral to our strategy.”
CPSI will hold a live webcast to discuss second quarter 2017
results today, Thursday, August 3, 2017, 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
for community hospitals plus other healthcare systems and
post-acute care facilities. Founded in 1979, CPSI is the parent of
four companies – Evident, LLC, TruBridge, LLC, Healthland Inc. and
American HealthTech, 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 and services for community hospitals.
TruBridge focuses on providing business, consulting and managed IT
services along with its RCM product, Rycan, providing revenue cycle
management workflow and automation software to hospitals, other
healthcare systems, and skilled nursing organizations. Healthland
provides integrated technology solutions and services to small
rural and critical access hospitals. American HealthTech is one of
the nation’s largest providers of financial and clinical technology
solutions and services for post-acute care facilities. For more
information, visit www.cpsi.com, www.evident.com,
www.trubridge.com, www.healthland.com, or www.healthtech.net.
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 estimated and projected earnings, margins, costs, expenditures,
cash flows, growth rates, the Company’s level of recurring and
non-recurring revenue and backlog, the Company’s shareholder
returns and future financial 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: overall
business and economic conditions affecting the healthcare industry,
including the potential effects of the federal healthcare reform
legislation enacted in 2010, and implementing regulations, on the
businesses of our hospital customers; government regulation of our
products and services and the healthcare and health insurance
industries, including changes in healthcare policy affecting
Medicare and Medicaid reimbursement rates and qualifying
technological standards; changes in customer purchasing priorities,
capital expenditures and demand for information technology systems;
saturation of our target market and hospital consolidations;
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; our substantial indebtedness, and our
ability to incur additional indebtedness in the future; our
potential inability to generate sufficient cash in order to meet
our debt service obligations; restrictions on our current and
future operations because of the terms of our senior secured credit
facilities; market risks related to interest rate changes; our
ability to successfully integrate the businesses of Healthland,
American HealthTech and Rycan with our business and the inherent
risks associated with any potential future acquisitions; our
ability to remediate a material weakness in our internal control
over financial reporting; competition with companies that have
greater financial, technical and marketing resources than we have;
failure to develop new or enhance current technology and products
in response to market demands; failure of our products to function
properly resulting in claims for 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 or enhancements free of undetected
errors or problems; interruptions in our power supply and/or
telecommunications capabilities, including those caused by natural
disaster; our ability to attract and retain qualified customer
service and support personnel; failure to properly manage growth in
new markets we may enter; misappropriation of our intellectual
property rights and potential intellectual property claims and
litigation against us; changes in accounting principles generally
accepted in the United States; fluctuations in quarterly financial
performance due to, among other factors, timing of customer
installations; 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 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.
Unaudited Condensed Consolidated
Statements of Income
(In thousands, except per share
data)
Three Months Ended June
30, Six Months Ended June 30,
2017 2016 2017
2016 Sales revenues: System sales and support $ 45,474 $
47,719 $ 88,897 $ 97,428 TruBridge 22,203
20,696 42,854 40,630 Total sales
revenues 67,677 68,415 131,751 138,058 Costs of sales:
System sales and support 18,859 21,886 37,789 44,153 TruBridge
11,933 11,616 23,520
22,903 Total costs of sales 30,792
33,502 61,309 67,056
Gross profit 36,885 34,913 70,442 71,002 Operating
expenses: Product development 9,308 8,179 18,243 15,369 Sales and
marketing 7,607 6,717 14,734 13,447 General and administrative
12,921 12,130 24,581 31,168
Amortization of acquisition-related
intangibles
2,601 2,624 5,203
4,979 Total operating expenses 32,437
29,650 62,761 64,963
Operating income 4,448 5,263 7,681 6,039 Other income
(expense): Other income 70 69 140 68 Interest expense (1,938
) (1,642 ) (3,745 ) (3,110 ) Total other
expense (1,868 ) (1,573 ) (3,605 )
(3,042 ) Income before taxes 2,580 3,690 4,076 2,997
Provision for income taxes 993 1,694
2,243 2,664 Net income $ 1,587 $
1,996 $ 1,833 $ 333
Net income per common share – basic and
diluted
$ 0.11 $ 0.15 $ 0.13 $ 0.03
Weighted average shares outstanding used
in per common share computations:
Basic 13,420 13,317 13,397 13,171 Diluted 13,420 13,365 13,397
13,227
COMPUTER PROGRAMS AND SYSTEMS,
INC.
Condensed Consolidated Balance
Sheets
(In thousands, except per share
data)
June 30,
2017
Dec. 31,
2016
(Unaudited) ASSETS Current assets: Cash and cash
equivalents $ 1,741 $ 2,220 Accounts receivable, net of allowance
for doubtful accounts of $2,566 and $2,370, respectively 34,655
31,812 Financing receivables, current portion, net 5,899 5,459
Inventories 1,075 1,697 Prepaid income taxes 758 567 Prepaid
expenses and other 3,808 2,794 Total current assets
47,936 44,549 Property and equipment, net 12,485 13,439
Financing receivables, net of current portion 9,093 5,595
Intangible assets, net 101,915 107,118 Goodwill 168,449
168,449 Total assets $ 339,878 $ 339,150
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 11,429 $ 6,841 Current portion of long-term debt
7,389 5,817 Deferred revenue 8,564 5,840 Accrued vacation 4,604
3,650 Other accrued liabilities 10,079 8,797 Total
current liabilities 42,065 30,945 Long-term debt, less
current portion 136,011 146,989 Deferred tax liabilities
5,166 3,246 Total liabilities 183,242 181,180
Stockholders’ equity: Common stock, $0.001 par value; 30,000 shares
authorized; 13,756 and 13,533 shares issued and outstanding,
respectively 14 13 Additional paid-in capital 150,878 147,911
Retained earnings 5,744 10,046 Total stockholders’
equity 156,636 157,970 Total liabilities and
stockholders’ equity $ 339,878 $ 339,150
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Condensed Consolidated
Statements of Cash Flows
(In thousands)
Six Months Ended
June 30,
2017 2016 Operating activities: Net
income $ 1,833 $ 333 Adjustments to net income: Provision for bad
debt 473 451 Deferred taxes 1,920 1,748 Stock-based compensation
2,967 2,877 Excess tax benefit from stock-based compensation - (244
) Depreciation 1,419 1,740 Intangible amortization 5,203 4,979
Amortization of deferred finance costs 365 330 Changes in operating
assets and liabilities: Accounts receivable (3,013 ) (2,564 )
Financing receivables (4,241 ) (574 ) Inventories 622 (10 ) Prepaid
expenses and other (1,014 ) 242 Accounts payable 4,588 (4,260 )
Deferred revenue 2,724 (8,573 ) Other liabilities 2,236 (5,825 )
Prepaid income taxes (191 ) 868 Net cash
provided by operating activities 15,891 (8,482 ) Investing
activities: Purchases of property and equipment (465 ) (39 )
Purchase of business, net of cash received - (162,611 ) Sale of
investments - 10,861 Net cash used in
investing activities (465 ) (151,789 ) Financing activities:
Dividends paid (6,135 ) (17,244 ) Proceeds from long-term debt -
156,572 Payments of long-term debt (9,771 ) (1,562 ) Proceeds from
stock option exercise 1 1,134 Excess tax benefit from stock-based
compensation - 244 Net cash provided by
(used in) financing activities (15,905 ) 139,144 Net
decrease in cash and cash equivalents (479 ) (21,127 ) Cash
and cash equivalents, beginning of period 2,220
24,951 Cash and cash equivalents, end of period $
1,741 $ 3,824
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Other Supplemental
Information
Consolidated Bookings
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
System sales and support(1) $ 24,998 $ 18,294 $ 41,953 $ 37,718
TruBridge(2) 8,699 5,896 15,293 9,381
Total $ 33,697 $ 24,190 $ 57,246 $ 47,099
(1) Generally calculated as the total
contract price (for system sales) and annualized contract value
(for support).
(2) Generally calculated as the total
contract price (for non-recurring, project-related amounts) and
annualized contract value (for recurring amounts).
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Reconciliation of Non-GAAP
Financial Measures
(In thousands)
Adjusted EBITDA Three Months
Ended June 30, Six Months Ended
June 30, 2017 2016 2017
2016 Net income, as reported $ 1,587 $ 1,996 $
1,833 $ 333 Deferred revenue and other acquisition-related
adjustments - 1,710 - 1,710 Depreciation expense 701 888 1,419
1,740 Amortization of acquisition-related intangible assets 2,601
2,624 5,203 4,979 Stock-based compensation 1,685 1,494 2,967 2,877
Transaction-related costs 4 453 9 8,018 Non-recurring severance
1,669 - 2,066 - Interest expense and other, net 1,868 1,573 3,605
3,042 Provision for income taxes, plus cash benefits from NOL
utilization 3,122 3,912 5,664 5,172
Adjusted EBITDA $ 13,237 $ 14,650 $ 22,766 $ 27,871
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Reconciliation of Non-GAAP
Financial Measures
(In thousands, except per share
data)
Non-GAAP Net Income and Non-GAAP
Earnings Per Share (“EPS”)
Three Months Ended June 30,
Six Months Ended June 30, 2017
2016 2017 2016 Net
income, as reported $ 1,587 $ 1,996 $ 1,833 $ 333 Pre-tax
adjustments for Non-GAAP EPS: Deferred revenue and other
acquisition-related adjustments
- 1,710 - 1,710 Amortization of acquisition-related intangible
assets 2,601 2,624 5,203 4,979 Stock-based compensation 1,685 1,494
2,967 2,877 Transaction-related costs 4 453 9 8,018 Non-recurring
severance 1,669 - 2,066 - Non-cash interest expense 183 171 365 329
After-tax adjustments for Non-GAAP EPS: Tax-effect of pre-tax
adjustments, at 35% (2,150 ) (2,258 ) (3,714 ) (6,270 ) Tax-effect
of non-deductible transaction-related costs - 256 - 1,470 Tax
shortfall from stock-based compensation 157 -
921 - Non-GAAP net income $
5,736 $ 6,446 $ 9,650 $ 13,446 Weighted
average shares outstanding, diluted 13,420
13,365 13,397 13,227 Non-GAAP
EPS $ 0.43 $ 0.48 $ 0.72 $ 1.02
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 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 (loss)
as reported and adjusts for: (i) deferred revenue and other
adjustments arising from purchase allocation adjustments related to
the Healthland acquisition; (ii) depreciation; (iii) amortization
of acquisition-related intangible assets; (iv) stock-based
compensation; (v) non-recurrent expenses and transaction-related
costs; (vi) interest expense and other, net; and (vii) the
provision for income taxes, plus the cash benefits derived from the
utilization of net operating loss carryforwards acquired in the
Healthland acquisition.
- Non-GAAP net
income – Non-GAAP net income consists of GAAP net income
(loss) as reported and adjusts for (i) deferred revenue and other
adjustments arising from purchase allocation adjustments related to
the Healthland acquisition; (ii) amortization of
acquisition-related intangible assets; (iii) stock-based
compensation; (iv) non-recurring expenses and transaction-related
costs; (v) non-cash charges to interest expense and other; and (vi)
the total tax effect of items (i) through (v). Adjustments to
Non-GAAP net income also includes the after-tax effect of
non-deductible transaction-related costs.
- Non-GAAP
EPS – Non-GAAP EPS consists of Non-GAAP net income, as
defined above, divided by weighted average shares outstanding
(diluted) in the applicable period.
Certain of the items excluded or adjusted to arrive at these
non-GAAP financial measures are described below:
- Deferred revenue
and other adjustments - Deferred revenue and other
adjustments includes acquisition-related deferred revenue
adjustments, which reflect the fair value adjustments to deferred
revenues acquired in business acquisitions. The fair value of
deferred revenue represents an amount equivalent to the estimated
cost plus an appropriate profit margin, to perform services related
to the acquiree’s software and product support, which assumes a
legal obligation to do so, based on the deferred revenue balances
as of the acquisition date. We add back deferred revenue and other
adjustments for non-GAAP financial measures because we believe the
inclusion of this amount directly correlates to the underlying
performance of our operations.
- Amortization of
acquisition-related intangible assets - Acquisition-related
amortization expense is a non-cash expense arising primarily from
the acquisition of intangible assets in connection with
acquisitions or investments. We exclude acquisition-related
amortization expense from non-GAAP financial measures because we
believe (i) the amount of such expenses in any specific period may
not directly correlate to the underlying performance of our
business operations and (ii) such expenses can vary significantly
between periods as a result of new acquisitions and full
amortization of previously acquired intangible assets. Investors
should note that the use of these intangible assets contributed to
revenue in the periods presented and will contribute to future
revenue generation, and the related amortization expense will recur
in future periods.
- Stock-based
compensation - Stock-based compensation expense is a
non-cash expense arising from the grant of stock-based awards. We
exclude stock-based compensation expense from non-GAAP financial
measures because we believe (i) the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of our business operations and (ii) such expenses can
vary significantly between periods as a result of the timing and
valuation of grants of new stock-based awards, including grants in
connection with acquisitions. Investors should note that
stock-based compensation is a key incentive offered to employees
whose efforts contributed to the operating results in the periods
presented and are expected to contribute to operating results in
future periods, and such expense will recur in future periods.
- Non-recurring
expenses and transaction-related costs - Non-recurring
expenses relate to certain severance and other charges incurred in
connection with activities that are considered one-time.
Transaction-related costs are the non-recurring costs related to
specific acquisitions (such as the Healthland acquisition). We
exclude non-recurring expenses and transaction-related costs from
non-GAAP financial measures because we believe (i) the amount of
such expenses in any specific period may not directly correlate to
the underlying performance of our business operations and (ii) such
expenses can vary significantly between periods.
- Non-cash charges
to interest expense and other - Non-cash charges to interest
expense and other includes amortization of deferred debt issuance
costs. We exclude non-cash charges to interest expense and other
from non-GAAP financial measures because we believe these non-cash
amounts relate to specific transactions and, as such, may not
directly correlate to the underlying performance of our business
operations.
- Cash benefits
derived from the utilization of net operating loss carryforwards
acquired in the Healthland acquisition – A significant
portion of the fair value of the assets we acquired in the
Healthland acquisition is comprised of federal and state net
operating loss carryforwards of the acquired entities. We add
utilized amounts in computing adjusted EBITDA to reflect the cash
benefit received by the Company from the utilization of these
significant assets as such benefits are generally excluded from
GAAP measures of financial performance.
- After-tax effect
of non-deductible transaction-related costs – Certain
transaction costs incurred in the Healthland acquisition are
non-deductible for federal income tax purposes as they are
considered facilitative costs of the specific transaction. Similar
to the treatment of non-recurring expenses and transaction-related
costs, we exclude the after-tax effect of non-deductible
transaction-related costs from non-GAAP net income because we
believe (i) the amount of such expenses in any specific period may
not directly correlate to the underlying performance of our
business operations and (ii) such expenses can vary significantly
between periods.
- Tax shortfall
(excess tax benefit) from stock-based compensation – ASU
2016-09, Improvements to Employee Share-Based Payment Accounting,
became effective for the Company during the first quarter of 2017
and changes the treatment of tax shortfall and excess tax benefits
arising from stock-based compensation arrangements. Prior to ASU
2016-09, these amounts were recorded as an increase (for excess
benefits) or decrease (for shortfalls) to additional paid-in
capital. With the adoption of ASU 2016-09, these amounts are now
captured in the period’s income tax expense. We exclude this
component of income tax expense from non-GAAP financial measures
because we believe (i) the amount of such expenses or benefits in
any specific period may not directly correlate to the underlying
performance of our business operations; (ii) such expenses or
benefits can vary significantly between periods as a result of the
valuation of grants of new stock-based awards, the timing of
vesting of awards, and periodic movements in the fair value of our
common stock; and (iii) excluding these amounts assists in the
comparability between current period results and results during
periods prior to the adoption of ASU 2016-09.
Management considers these non-GAAP financial measures to be
important indicators of our operational strength and performance of
our business and a good measure of our historical operating trends,
in particular the extent to which ongoing operations impact our
overall financial performance. In addition, management may use
Adjusted EBITDA, Non-GAAP net income and/or Non-GAAP EPS to measure
the achievement of performance objectives under the Company’s stock
and cash incentive programs. Note, however, that these non-GAAP
financial measures are performance measures only, and they do not
provide any measure of cash flow or liquidity. Non-GAAP financial
measures are not alternatives for measures of financial performance
prepared in accordance with GAAP and may be different from
similarly titled non-GAAP measures presented by other companies,
limiting their usefulness as comparative measures. Non-GAAP
financial measures have limitations in that they do not reflect all
of the amounts associated with our results of operations as
determined in accordance with GAAP. Additionally, there is no
certainty that we will not incur expenses in the future that are
similar to those excluded in the calculation of the non-GAAP
financial measures presented in this press release. Investors and
potential investors are encouraged to review the “Unaudited
Reconciliation of Non-GAAP Financial Measures” above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170803006103/en/
CPSITracey Schroeder, 251-639-8100Chief Marketing Officer
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