Company Announces Quarterly Cash Dividend of $0.10 Per
Share
CPSI (NASDAQ: CPSI):
Highlights for Second Quarter 2018:
- Revenues of $67.9 million;
- Recurring revenues up 1% sequentially,
7% year over year;
- 12-month backlog of $267 million;
- Quarterly bookings of $23.5
million;
- GAAP earnings per diluted share of
$0.02 and non-GAAP earnings per diluted share of $0.34;
- GAAP net income of $0.3 million and
non-GAAP net income of $4.7 million;
- Adjusted EBITDA of $8.1 million;
- Cash provided by operations of $4.7
million; and
- Quarterly dividend of $0.10 per
share.
CPSI (NASDAQ: CPSI), a community healthcare solutions company,
today announced results for the second quarter and six months ended
June 30, 2018.
The Company also announced that its Board of Directors has
declared a quarterly cash dividend of $0.10 per share, payable on
August 31, 2018, to stockholders of record as of the close of
business on August 16, 2018.
Total revenues for the second quarter ended June 30, 2018, were
$67.9 million, compared with total revenues of $67.7 million for
the prior-year period. Net income for the quarter ended
June 30, 2018, was $0.3 million, or $0.02 per diluted share,
compared with net income of $1.6 million, or $0.11 per diluted
share, for the quarter ended June 30, 2017. Cash provided by
operations for the second quarter was $4.7 million, compared with
cash provided by operations of $6.2 million for the prior-year
period.
Total revenues for the six months ended June 30, 2018, were
$138.8 million, compared with total revenues of $131.8 million for
the prior-year period. Net income for the six months ended June 30,
2018, was $4.3 million, or $0.31 per diluted share, compared with
$1.8 million, or $0.13 per diluted share, for the six months ended
June 30, 2017. Cash provided by operations for the first six months
of 2018 was $7.8 million, compared with cash provided by operations
of $15.9 million for the prior-year period.
“Our second quarter of 2018 was led again by nice growth from
our services, business consulting and IT business, TruBridge,” said
Boyd Douglas, president and chief executive officer of CPSI. “These
results include a 13% increase in TruBridge services revenue
compared with the second quarter last year and record quarterly
bookings for our Revenue Cycle Management solution. This top line
growth for CPSI was accompanied by the addition of 15 new clients,
which included 11 community hospitals and four skilled nursing
facilities, bringing the total number of new clients to 29 for the
year. While total revenue this quarter was weaker than expected, we
expect to recapture it before year end.”
Commenting on the Company’s financial performance for the
quarter, Matt Chambless, chief financial officer of CPSI, stated,
“As we shared during our first quarter conference call, the
proposed ruling from CMS allows for a 90-day stage 3 meaningful use
(MU3) attestation period in 2019 instead of the full year. This
ruling effectively delayed the need for hospitals to be prepared
for MU3 attestation from the end of 2018 to October 2019, at the
latest. With this relief in timing, it is clear our clients feel
less urgency to install applications purchased before the end of
2018. As a result, much of the remaining revenue associated with
MU3 will extend into 2019. This shift in MU3 revenue recognition
and a delayed new system implementation, along with a period of
naturally higher general and administrative costs, affected both
our top and bottom line results this quarter. However, we view
these as typical dynamics that are not uncommon in an industry
bound by heavy government regulations.”
Douglas added, “Closing out the first half of 2018, we already
have 18 implementations scheduled in the second half of the year,
which has created a very healthy pipeline of revenue and an
expected strong finish for the year. In addition, our continued
efforts of closely managing our combined company operations and
leveraging synergies that enhance our business and support our
clients will help drive efficiencies. Based on the 2018 expense
exit run rate, we expect an estimated $10 million incremental
benefit to our bottom line in 2019, supporting our goal of
returning to 20% EBITDA margins in 2020.”
CPSI will hold a live webcast to discuss second quarter 2018
results today, Thursday, August 2, 2018, 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, their clinics and post-acute care
facilities. Founded in 1979, CPSI is the parent of three
companies – Evident, LLC, TruBridge, LLC 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 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. 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 estimated and projected earnings, leverage ratio, 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; competition with companies that have greater
financial, technical and marketing resources than we have; 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;
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 of America; significant charge to earnings if our
goodwill or intangible assets become impaired; 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
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.
Unaudited Condensed Consolidated
Statements of Income
(In thousands, except per share
data)
Three Months EndedJune
30,
Six Months EndedJune 30,
2018 2017 2018
2017 Sales revenues: System sales and support $ 42,746 $
45,474 $ 88,498 $ 88,897 TruBridge 25,159
22,203 50,290 42,854 Total sales
revenues 67,905 67,677 138,788 131,751 Costs of sales:
System sales and support 19,528 19,753 37,946 39,540 TruBridge
13,531 11,933 26,910
23,520 Total costs of sales 33,059
31,686 64,856 63,060
Gross profit 34,846 35,991 73,932 68,691 Operating
expenses: Product development 9,314 8,414 18,071 16,492 Sales and
marketing 7,518 7,607 15,232 14,734 General and administrative
13,188 12,921 25,552 24,581
Amortization of acquisition-related
intangibles
2,601 2,601 5,203
5,203 Total operating expenses 32,621
31,543 64,058 61,010
Operating income 2,225 4,448 9,874 7,681 Other income
(expense): Other income 194 70 392 140 Interest expense
(1,807 ) (1,938 ) (3,785 ) (3,745 ) Total
other expense (1,613 ) (1,868 ) (3,393 )
(3,605 ) Income before taxes 612 2,580 6,481 4,076
Provision for income taxes 284 993
2,185 2,243 Net income $ 328 $
1,587 $ 4,296 $ 1,833
Net income per common share – basic and
diluted
$ 0.02 $ 0.11 $ 0.31 $ 0.13
Weighted average shares outstanding used
in per common share computations – basic and diluted
13,561 13,420 13,518 13,397
COMPUTER PROGRAMS AND
SYSTEMS, INC.
Condensed Consolidated Balance
Sheets
(In thousands, except per share
data)
June 30,2018
Dec. 31,2017
(Unaudited) ASSETS Current assets: Cash and cash
equivalents $ 1,492 $ 520 Accounts receivable, net of allowance for
doubtful accounts of $3,213 and $2,654, respectively 41,216 38,061
Financing receivables, current portion, net 14,788 15,055
Inventories 1,478 1,417 Prepaid income taxes 651 - Prepaid expenses
and other 6,038 2,824
Total current assets
65,663 57,877 Property and equipment, net 11,042 11,692
Financing receivables, net of current portion 13,025 11,485 Other
assets, net of current portion 1,155 - Intangible assets, net
91,510 96,713 Goodwill 140,449 140,449
Total assets $ 322,844 $ 318,216
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 5,814 $ 7,620 Current portion of long-term debt
5,830 5,820 Deferred revenue 12,300 8,707 Accrued vacation 4,702
3,794 Income taxes payable - 810 Other accrued liabilities
10,160 14,098 Total current liabilities 38,806
40,849 Long-term debt, less current portion 133,151 136,614
Deferred tax liabilities 6,646 4,667
Total liabilities 178,603 182,130 Stockholders’ Equity:
Common stock, $0.001 par value; 30,000 shares authorized; 14,086
and 13,760 shares issued and outstanding 14 14 Additional paid-in
capital 159,770 155,078 Retained earnings (15,543 )
(19,006 ) Total stockholders’ equity 144,241
136,086 Total liabilities and stockholders’ equity $ 322,844
$ 318,216
COMPUTER PROGRAMS AND
SYSTEMS, INC.
Unaudited Condensed Consolidated
Statements of Cash Flows
(In thousands)
Six Months EndedJune 30,
2018 2017 Operating activities: Net
income $ 4,296 $ 1,833 Adjustments to net income: Provision for bad
debt 1,695 473 Deferred taxes 1,404 1,920 Stock-based compensation
4,692 2,967 Depreciation 1,067 1,419 Intangible amortization 5,203
5,203 Amortization of deferred finance costs 173 365 Changes in
operating assets and liabilities: Accounts receivable (4,453 )
(3,013 ) Financing receivables (1,669 ) (4,241 ) Inventories (62 )
622 Prepaid expenses and other (594 ) (1,014 ) Accounts payable
(1,806 ) 4,588 Deferred revenue 2,363 2,724 Other liabilities
(3,030 ) 2,236 Income taxes payable (1,461 ) (191 )
Net cash provided by operating activities 7,818 15,891
Investing activities: Purchases of property and equipment
(417 ) (465 ) Net cash used in investing activities (417 )
(465 ) Financing activities: Dividends paid (2,803 ) (6,135
) Proceeds from long-term debt 7,300 - Payments of long-term debt
(10,926 ) (9,771 ) Proceeds from exercise of stock options -
1 Net cash used in financing activities (6,429
) (15,905 ) Net increase (decrease) in cash and cash
equivalents 972 (479 ) Cash and cash equivalents, beginning
of period 520 2,220 Cash and cash
equivalents, end of period $ 1,492 $ 1,741
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Other Supplemental
Information
Consolidated Bookings
(In thousands)
Three Months EndedJune
30,
Six Months EndedJune 30,
2018 2017 2018
2017 System sales and support(1) $ 17,125 $ 24,998 $ 35,357
$ 41,953 TruBridge(2) 6,371 8,699 10,189
15,293 Total $ 23,496 $ 33,697 $ 45,546 $ 57,246 (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 EndedJune
30,
Six Months EndedJune 30,
2018 2017 2018
2017 Net income, as reported $ 328 $ 1,587 $ 4,296 $ 1,833
Depreciation expense 538 701 1,067 1,419 Amortization of
acquisition-related intangible assets 2,601 2,601 5,203 5,203
Stock-based compensation 2,753 1,685 4,692 2,967
Transaction-related costs - 4 - 9 Non-recurring severance - 1,669 -
2,066 Interest expense and other, net 1,613 1,868 3,393 3,605
Provision for income taxes 284 993 2,185
2,243 Adjusted EBITDA $ 8,117 $ 11,108 $ 20,836 $ 19,345
The performance measure of Adjusted EBITDA, as presented above,
excludes the cash benefits derived from the utilization of net
operating loss carryforwards acquired in the Healthland acquisition
(“NOL Utilization”), which is included as an adjustment to net
income in order to calculate Consolidated EBITDA per the terms of
our credit facility. NOL Utilization was approximately $0.8
million and $1.6 million for the three and six months
ended June 30, 2018, respectively, compared with $2.1
million and $3.4 million for the three and six months
ended June 30, 2017, respectively.
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 EndedJune
30,
Six Months EndedJune 30,
2018 2017 2018
2017 Net income, as reported $ 328 $ 1,587 $ 4,296 $ 1,833
Pre-tax adjustments for Non-GAAP EPS: Amortization of
acquisition-related intangible assets 2,601 2,601 5,203 5,203
Stock-based compensation 2,753 1,685 4,692 2,967
Transaction-related costs - 4 - 9 Non-recurring severance - 1,669 -
2,066 Non-cash interest expense 86 183 172 365 After-tax
adjustments for Non-GAAP EPS: Tax-effect of pre-tax adjustments, at
21% and 35%, respectively (1,142 ) (2,150 ) (2,114 ) (3,714 ) Tax
shortfall from stock-based compensation 32 157
394 921 Non-GAAP net income $
4,658 $ 5,736 $ 12,643 $ 9,650 Weighted
average shares outstanding, diluted 13,561
13,420 13,518 13,397 Non-GAAP
EPS $ 0.34 $ 0.43 $ 0.94 $ 0.72
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) depreciation; (ii) amortization of
acquisition-related intangible assets; (iii) stock-based
compensation; (iv) transaction-related costs; (v) non-recurring
severance; (vi) interest expense and other, net; and (vii) the
provision for income taxes.
- Non-GAAP net
income – Non-GAAP net income consists of GAAP net income
(loss) as reported and adjusts for (i) amortization of
acquisition-related intangible assets; (ii) stock-based
compensation; (iii) transaction-related costs; (iv) non-recurring
severance; (v) non-cash charges to interest expense and other; and
(vi) the total tax effect of items (i) through (v).
- 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:
- 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.
- 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 calculations 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: https://www.businesswire.com/news/home/20180802005855/en/
CPSITracey Schroeder, 251-639-8100Chief Marketing
OfficerTracey.Schroeder@cpsi.com
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