Acquisition Supports Core Growth Strategy, Expands
Complementary Capabilities Across Revenue Cycle Management Solution
Offering
TruCode LLC Transaction Highlights:
- 2020 revenues and adjusted EBITDA of $12.5 million and $5.9
million, respectively
- 2021 expected revenues and adjusted EBITDA of $13.3M and $6.3
million, respectively
- 99% of revenues are recurring
- 96.4% customer retention (3-year average)
- 5-year revenue CAGR of 8%
- EBITDA margins of 45%+
CPSI (NASDAQ: CPSI), a community healthcare solutions company,
today announced that it has acquired TruCode LLC (“TruCode”).
TruCode is a leading provider of software solutions that enable
health providers, consultants, and payors to code more accurately
and efficiently and help improve revenue cycle performance. The
acquisition was consummated pursuant to a definitive purchase
agreement signed on May 12, 2021 and was funded by a combination of
cash on hand and additional borrowing capacity under CPSI’s
revolving credit facility.
Based in Alpharetta, Georgia, TruCode provides configurable,
knowledge-based software that gives coders, CDI specialists and
auditors the flexibility to code according to their knowledge,
preferences and experience. The cloud-based medical coding solution
will be bundled with the TruBridge solutions and services to
enhance revenue cycle performance for healthcare organizations of
all sizes.
Boyd Douglas, president and chief executive officer of CPSI,
stated, “Today’s acquisition of TruCode is a perfect example of the
disciplined approach to M&A we have signaled as part of our
multi-pronged capital allocation strategy. TruCode’s solutions are
a great product fit and complement our existing suite of TruBridge
services and solutions, which help eliminate the friction of
inefficiency from the hospital revenue cycle. In addition to the
cross-sales opportunities within our acute and post-acute customer
base, we will also target the white space within the TruBridge and
TruCode base to drive additional value for these customers. Greater
than 30% of TruCode’s revenue is driven by its channel partner
program which targets larger hospital and health system customers,
representing scalability and real competitive value in that
market.”
“From a financial standpoint, TruCode’s 99% recurring revenue
model, customer retention rates in excess of 95%, and Adjusted
EBITDA margins in excess of 45% support our strategy of growing a
more diverse recurring revenue base and driving margin expansion,”
stated Matt Chambless, chief financial officer of CPSI. “The
impressive margins that TruCode brings to the CPSI family of
companies is expected to expand our consolidated EBITDA margins by
roughly 130 bps, with the potential for another $1.0 million of
adjusted EBITDA from capitalization of software development
costs.”
Mike Mulligan, co-founder and managing partner of TruCode, said,
“CPSI has been a strategic partner of TruCode for the last five
years, and together we have achieved great success to the benefit
of our mutual customers. Now, with this evolution of our
partnership, we're excited about the new value our combined
organizations will deliver to our customers, the marketplace and
our teams.”
Douglas concluded, “We are pleased to welcome TruCode to the
CPSI family of companies. This acquisition strengthens our joint
commitment to improving the financial health of our combined
community hospital, clinic and post-acute customers and other
healthcare organizations globally.”
CPSI’s legal advisor in this transaction was Maynard, Cooper
& Gale, P.C. and Mazars USA served as due diligence provider
for CPSI. Brentwood Capital Advisors LLC served as exclusive
financial advisor to TruCode.
CPSI will hold a conference call and live webcast to discuss the
details of this acquisition on Thursday, May 13, 2021, at 9:00 a.m.
Central Time, 10:00 a.m. Eastern Time. The number to call for the
interactive teleconference is 1-877-407-0890. To listen to the live
webcast or access the 30-day online 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
concerning the business outlook, anticipated profitability,
revenues, expenses, leverage or other items of future financial
performance, and potential product or services growth, of TruCode
or CPSI, together with other statements regarding TruCode and CPSI
that are not historical facts, are forward-looking statements. We
caution investors that any such forward-looking statements are only
predictions reflecting the best judgment of CPSI based upon
currently available information and are not guarantees of future
performance. Certain risks, uncertainties and other factors may
cause CPSI’s actual results, performance or plans with respect to
TruCode to differ materially from any future results, performance
or plans expressed or implied by such forward-looking statements.
Such factors may include: risks associated with business
acquisition transactions, such as the risk that TruCode will not be
integrated successfully, that such integration may be more
difficult, time-consuming or costly than expected or that the
expected benefits of the acquisition will not occur; unexpected
costs, liabilities, charges or expenses resulting from the
acquisition of TruCode; risks related to future opportunities and
plans for CPSI and TruCode following the acquisition, including
uncertainty of the expected financial performance and results of
CPSI following the closing of the acquisition; any disruptions from
the acquisition, making it more difficult to conduct business as
usual or maintain relationships with customers, employees or
suppliers; the inability to retain key personnel; and the
possibility that if CPSI does not achieve the perceived benefits of
the acquisition as rapidly or to the extent anticipated by
financial analysts or investors, the market price of CPSI’s common
stock could decline; 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. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210512005932/en/
Tracey Schroeder Chief Marketing Officer
Tracey.schroeder@cpsi.com (251) 639-8100
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