Highlights for First Quarter 2021:
- Revenues of $68.0 million;
- GAAP net income of $4.1 million and non-GAAP net income of $9.1
million;
- GAAP earnings per diluted share of $0.28 and non-GAAP earnings
per diluted share of $0.64;
- Adjusted EBITDA of $11.8 million;
- Bookings of $8.7 million;
- Cash provided by operations of $13.7 million; and
- Net debt of $52.9 million
CPSI (NASDAQ: CPSI), a community healthcare solutions company,
today announced results for the first quarter ended March 31,
2021.
Total revenues for the quarter ended March 31, 2021, were $68.0
million, compared with total revenues of $69.8 million for the
prior-year first quarter. GAAP net income for the quarter ended
March 31, 2021, was $4.1 million, or $0.28 per diluted share,
compared with $4.1 million, or $0.28 per diluted share, for the
quarter ended March 31, 2020. Cash provided by operations for the
first quarter of 2021 was $13.7 million, compared with $7.6 million
for the prior-year quarter. Net debt at March 31, 2021, was $52.9
million.
Commenting on the Company’s financial performance for the first
quarter of 2021, Matt Chambless, chief financial officer of CPSI,
stated, “The resiliency of our customers continues to result in
incremental improvement in patient volumes, propelling TruBridge to
another all-time high in quarterly revenues. Our commitment to
develop a more predictable revenue model through expanded recurring
revenue sources continues to transform our business, with recurring
revenues growing 7% from the first quarter of 2020 and making up
roughly 90% of our total revenue. These favorable dynamics,
combined with business process improvements, resulted in revenue
and profitability metrics that surpassed our expectations for the
first quarter.”
“We saw continued pressure on our hospital, nursing home and
clinic customers to address the COVID pandemic as their focus
turned to vaccinating their communities as quickly as possible
while still treating those affected by the surge in COVID cases.
These market dynamics and the strain on healthcare leaders in the
communities we serve, are reflected in our first quarter bookings
results of $8.7 million. However, our pipeline remains healthy, and
we are laser focused on making up this ground and achieving our
annual bookings goal by year end,” added Chambless.
Boyd Douglas, president and chief executive officer of CPSI,
stated, “We are in the early stages of executing on an aggressive,
yet obtainable plan that is intended to enhance shareholder value
over the next three years. With the transformation underway to
drive long-term sustainability and exciting growth for CPSI, the
first quarter of 2021 resulted in strong financial results. As we
modernize our business by increasing efficiencies, we continue to
see solid results in our margin optimization efforts, creating
strong profitability and the ability to invest in additional growth
opportunities.
“During the first quarter, we also made great strides in
creating the culture of innovation necessary for CPSI to achieve
its transformation objectives. First, we have relocated our
corporate headquarters to a more modern, open space in downtown
Mobile, recognizing that new mindsets are easier to develop in
fresh surroundings. In addition, Amaris McComas, chief people
officer, and Wes Cronkite, chief innovation officer, are the newest
members to join our CPSI senior leadership team. I am confident
that Amaris and Wes will have a positive impact as they work to
build out an innovation team for CPSI and our family of companies,”
added Douglas.
CPSI will hold a live webcast to discuss first quarter 2021
results tomorrow, Tuesday, May 11, 2021, at 8:00 a.m. Central Time,
9:00 a.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
four companies – Evident, LLC, American HealthTech, Inc.,
TruBridge, LLC and iNetXperts, Corp. d/b/a Get Real Health. 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. 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;
significant legislative and regulatory uncertainty in the
healthcare industry; exposure to liability for failure to comply
with regulatory requirements; 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; 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; 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;
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; 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; 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 and Quarterly Report on Form 10-Q. 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 March 31,
2021
2020
Sales revenues: System sales and support
$
36,366
$
41,186
TruBridge
31,639
28,571
Total sales revenues
68,005
69,757
Costs of sales: System sales and support
17,376
18,587
TruBridge
15,779
15,057
Total costs of sales
33,155
33,644
Gross profit
34,850
36,113
Operating expenses: Product development
8,429
8,271
Sales and marketing
5,301
6,997
General and administrative
13,149
11,847
Amortization of acquisition-related intangibles
3,057
2,866
Total operating expenses
29,936
29,981
Operating income
4,914
6,132
Other income (expense): Other income
814
362
Interest expense
(627
)
(1,179
)
Total other income (expense)
187
(817
)
Income before taxes
5,101
5,315
Provision for income taxes
957
1,225
Net income
$
4,144
$
4,090
Net income per common share—basic
$
0.29
$
0.28
Net income per common share—diluted
$
0.28
$
0.28
Weighted average shares outstanding used in per common
share computations: Basic
14,159
13,904
Diluted
14,221
13,904
Computer Programs and Systems, Inc. Condensed
Consolidated Balance Sheets (In '000s, except per share
data) March 31, 2021(unaudited) Dec. 31, 2020
Assets Current assets Cash and cash equivalents
$
18,016
$
12,671
Accounts receivable, net of allowance for doubtful accounts of
$2,088 and $1,701, respectively
33,793
32,414
Financing receivables, current portion, net
9,710
10,821
Inventories
1,342
1,084
Prepaid income taxes
2,188
1,789
Prepaid expenses and other
7,833
8,365
Total current assets
72,882
67,144
Property & equipment, net
13,079
13,139
Software development costs, net
4,009
3,210
Operating lease assets
9,030
6,610
Financing receivables, net of current portion
10,460
11,477
Other assets, net of current portion
2,998
2,787
Intangible assets, net
68,632
71,689
Goodwill
150,216
150,216
Total assets
$
331,306
$
326,272
Liabilities & Stockholders' Equity Current
liabilities Accounts payable
$
6,742
$
7,716
Current portion of long-term debt
3,457
3,457
Deferred revenue
8,833
8,130
Accrued vacation
5,306
5,353
Other accrued liabilities
16,394
12,786
Total current liabilities
40,732
37,442
Long-term debt, less current portion
67,496
73,360
Operating lease liabilities, net of current portion
7,527
5,092
Deferred tax liabilities
11,436
10,378
Total liabilities
127,191
126,272
Stockholders' Equity Common stock, $0.001 par value; 30,000
shares authorized; 14,715 and 14,511 shares issued
15
15
Treasury stock, 80 and 47 shares
(2,324
)
(1,261
)
Additional paid-in capital
182,656
181,622
Retained earnings
23,768
19,624
Total stockholders' equity
204,115
200,000
Total liabilities and stockholders' equity
$
331,306
$
326,272
Computer Programs and Systems, Inc. Condensed
Consolidated Statements of Cash Flows (In '000s)
(Unaudited)
Three Months Ended March 31,
2021
2020
Operating activities: Net income
$
4,144
$
4,090
Adjustments to net income: Provision for bad debt
938
999
Deferred taxes
1,058
1,065
Stock-based compensation
1,034
2,358
Depreciation
553
420
Amortization of acquisition-related intangibles
3,057
2,866
Amortization of software development costs
73
38
Amortization of deferred finance costs
73
86
Changes in operating assets and liabilities: Accounts receivable
(2,183
)
(88
)
Financing receivables
1,994
(4
)
Inventories
(258
)
62
Prepaid expenses and other
321
(1,079
)
Accounts payable
(974
)
206
Deferred revenue
703
(821
)
Other liabilities
3,576
(2,732
)
Income taxes payable
(399
)
128
Net cash provided by operating activities
13,710
7,594
Investing activities: Investment in software
development
(872
)
(921
)
Purchases of property and equipment
(493
)
(2,120
)
Net cash used in investing activities
(1,365
)
(3,041
)
Financing activities: Dividends paid
-
(1,435
)
Treasury stock purchases
(1,063
)
-
Payments of long-term debt principal
(937
)
(2,195
)
Payments of revolving line of credit
(5,000
)
(4,000
)
Net cash used in financing activities
(7,000
)
(7,630
)
Net increase in cash and cash equivalents
5,345
(3,077
)
Cash and cash equivalents, beginning of period
12,671
7,357
Cash and cash equivalents, end of period
$
18,016
$
4,280
Computer Programs and Systems, Inc. Consolidated
Bookings (In '000s)
Three Months Ended
In '000s
3/31/2021
3/31/2020
System sales and support(1)
$
6,090
$
9,832
TruBridge(2)
2,687
9,511
Total
$
8,777
$
19,343
(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. Bookings Composition (In '000s, except per share
data) (Unaudited) Three Months Ended 3/31/2021
3/31/2020
System sales and support Non-subscription sales(1)
$
2,997
$
7,491
Subscription revenue(2)
1,907
1,408
Other
1,186
933
TruBridge Net new(3)
462
2,350
Cross-sell(3)
1,589
6,873
Get Real Health
636
288
Total
$
8,777
$
19,343
(1)
Represents nonrecurring revenues that generally exhibit a timeframe
for bookings-to-revenue conversion of five to six months following
contract execution.
(2)
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.
(3)
“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.
Computer
Programs and Systems, Inc. Acute Care EHR Net New License
Mix Three Months Ended 3/31/2021
3/31/2020 SaaS(1)
2
8
Perpetual license(2)
3
1
Total
5
9
(1)
Exhibit revenue attribution that is recurring in nature.
(2)
Exhibit revenue attribution that is nonrecurring in nature.
Computer Programs and Systems, Inc. Reconciliation of
Non-GAAP Financial Measures (In '000s)
(Unaudited)
Three Months Ended March 31,
Adjusted EBITDA:
2021
2020
Net income, as reported
$
4,144
$
4,090
Depreciation expense
553
420
Amortization of software development costs
73
38
Amortization of acquisition-related intangible assets
3,057
2,866
Stock-based compensation
1,034
2,358
Severance and other nonrecurring charges
2,193
55
Interest expense and other, net
(187
)
817
Provision for income taxes
957
1,225
Adjusted EBITDA
$
11,824
$
11,869
Computer Programs and Systems, Inc. Reconciliation of
Non-GAAP Financial Measures (In '000s, except per share
data) (Unaudited)
Three Months Ended March 31,
Non-GAAP Net Income and Non-GAAP EPS:
2021
2020
Net income, as reported
$
4,144
$
4,090
Pre-tax adjustments for Non-GAAP EPS: Amortization of
acquisition-related intangible assets
3,057
2,866
Stock-based compensation
1,034
2,358
Severance and other nonrecurring charges
2,193
55
Non-cash interest expense
73
86
After-tax adjustments for Non-GAAP EPS: Tax-effect of pre-tax
adjustments, at 21%
(1,335
)
(1,127
)
Tax shortfall (windfall) from stock-based compensation
(84
)
128
Non-GAAP net income
$
9,082
$
8,456
Weighted average shares outstanding, diluted
14,221
13,904
Non-GAAP EPS
$
0.64
$
0.61
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)
depreciation expense; (ii) amortization of software development
costs; (iii) amortization of acquisition-related intangible assets;
(iv) stock-based compensation; (v) severance and other
non-recurring charges; (vi) interest expense and other, net; (vii)
gain on contingent consideration; and (viii) the provision for
income taxes.
- Non-GAAP net income – Non-GAAP net
income consists of GAAP net income as reported and adjusts for (i)
amortization of acquisition-related intangible assets; (ii)
stock-based compensation; (iii) severance and other non-recurring
charges; (iv) non-cash interest expense; and (v) the total tax
effect of items (i) through (iv). Adjustments to Non-GAAP net
income also include the after-tax effect of the shortfall from
stock-based compensation.
- 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 software development
costs – Amortization of software development costs is a
non-cash expense resulting from the application of U.S. GAAP to our
product development expenditures, which requires capitalization of
expenditures meeting certain defined criteria which are then
amortized over the estimated useful life of the related assets. We
exclude amortization expense related to capitalized software
development costs from non-GAAP financial measures because we
believe the amount of such expenses in any period may not directly
correlate with the underlying performance of our business
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.
- Severance and other non-recurring
charges– Non-recurring charges relate to certain severance
and other charges incurred in connection with activities that are
considered one-time. 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 interest expense –
Non-cash interest expense includes amortization of deferred debt
issuance costs. We exclude non-cash interest expense 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;
and (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.
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/20210510005898/en/
Tracey Schroeder Chief Marketing Officer
Tracey.schroeder@cpsi.com (251) 639-8100
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