Table of Contents







UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
☐For the quarterly period ended September 30, 2017.
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            .
Commission file number: 000-49796
COMPUTER PROGRAMS AND SYSTEMS,TRUBRIDGE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware74-3032373
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
6600 Wall54 St. Emanuel Street, Mobile, Alabama3669536602
(Address of Principal Executive Offices)(Zip Code)
(251) 639-8100
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $.001 per shareTBRGThe NASDAQ Stock Market LLC
Common Stock Purchase RightsN/AThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer"filer," "smaller reporting company," and "smaller reporting"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨¨Accelerated filerý
Non-accelerated filer¨
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨☐
Emerging Growth Companygrowth company☐
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐    No  ý
As of November 6, 2017, thereMay 8, 2024, there were 13,756,18915,007,262 shares of the issuer’s common stock outstanding.


COMPUTER PROGRAMS AND SYSTEMS,
1







TRUBRIDGE, INC.
Quarterly Report on Form 10-Q
(For the three and nine months ended September 30, 2017)March 31, 2024)
TABLE OF CONTENTS
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2






PART I
FINANCIAL INFORMATION
Item 1.Financial Statements.
COMPUTER PROGRAMS AND SYSTEMS,TRUBRIDGE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)

March 31,
2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents$4,115 $3,848 
Accounts receivable (net of allowance for expected credit losses of $3,773 and $3,631, respectively)64,218 59,723 
Financing receivables, current portion, net (net of allowance for expected credit losses of $304 and $319, respectively)3,668 3,997 
Inventories980 475 
Prepaid income taxes1,151 1,628 
Prepaid expenses and other current assets17,772 15,807 
Assets of held for sale disposal group— 25,977 
Total current assets91,904 111,455 
Property and equipment, net8,750 8,974 
Software development costs, net41,237 39,139 
Operating lease assets4,672 5,192 
Financing receivables, net of current portion (net of allowance for expected credit losses of $79 and $97, respectively)959 1,226 
Other assets, net of current portion8,331 7,314 
Intangible assets, net86,086 89,213 
Goodwill172,573 171,909 
Deferred tax assets1,905 — 
Total assets$416,417 $434,422 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$11,356 $10,133 
Current portion of long-term debt3,074 3,141 
Deferred revenue9,079 8,677 
Accrued vacation5,429 5,410 
Other accrued liabilities18,226 19,892 
Liabilities of held for sale disposal group— 977 
Total current liabilities47,164 48,230 
Long-term debt, net of current portion181,732 195,270 
Operating lease liabilities, net of current portion2,848 3,074 
Deferred tax liabilities— 1,230 
Total liabilities231,744 247,804 
Stockholders’ equity:
Common stock, $0.001 par value; 30,000 shares authorized; 15,572 and 15,121 shares issued, respectively15 15 
Additional paid-in capital196,346 195,546 
Accumulated other comprehensive gain113 — 
Retained earnings5,616 8,132 
Treasury stock, 613 shares and 572 shares, respectively(17,417)(17,075)
Total stockholders’ equity184,673 186,618 
Total liabilities and stockholders’ equity$416,417 $434,422 
The accompanying notes are an integral part of these condensed consolidated financial statements.


3
 September 30,
2017		 December 31,
2016
Assets   
Current assets:   
Cash and cash equivalents$954
 $2,220
Accounts receivable, net of allowance for doubtful accounts of $2,206 and $2,370, respectively36,159
 31,812
Financing receivables, current portion, net8,642
 5,459
Inventories1,129
 1,697
Prepaid income taxes677
 567
Prepaid expenses and other3,155
 2,794
Total current assets50,716
 44,549
Property and equipment, net11,959
 13,439
Financing receivables, net of current portion10,098
 5,595
Intangible assets, net99,314
 107,118
Goodwill168,449
 168,449
Total assets$340,536
 $339,150
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$10,611
 $6,841
Current portion of long-term debt8,175
 5,817
Deferred revenue8,587
 5,840
Accrued vacation4,600
 3,650
Other accrued liabilities8,919
 8,797
Total current liabilities40,892
 30,945
Long-term debt, net of current portion136,320
 146,989
Deferred tax liabilities6,472
 3,246
Total liabilities183,684
 181,180
Stockholders’ equity:   
Common stock, $0.001 par value; 30,000 shares authorized; 13,756 and 13,533 shares issued and outstanding14
 13
Additional paid-in capital152,932
 147,911
Retained earnings3,906
 10,046
Total stockholders’ equity156,852
 157,970
Total liabilities and stockholders’ equity$340,536
 $339,150






TRUBRIDGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
20242023
Revenues
RCM$53,038 $48,631 
EHR28,022 35,191 
Patient Engagement2,187 2,411 
Total revenues83,247 86,233 
Expenses
Costs of revenue (exclusive of amortization and depreciation)
RCM29,597 27,183 
EHR11,287 16,348 
Patient Engagement875 646 
Total costs of revenue (exclusive of amortization and depreciation)41,759 44,177 
Product development10,689 8,352 
Sales and marketing6,592 6,957 
General and administrative19,396 14,453 
Amortization5,869 5,500 
Depreciation400 499 
Total expenses84,705 79,938 
Operating income (loss)(1,458)6,295 
Other income (expense):
Other income1,422 267 
Interest expense(4,072)(2,669)
Total other income (expense)(2,650)(2,402)
Income (loss) before taxes(4,108)3,893 
Provision (benefit) for income taxes(1,592)809 
Net income (loss)$(2,516)$3,084 
Net income (loss) per common share—basic$(0.17)$0.21 
Net income (loss) per common share—diluted$(0.17)$0.21 
Weighted average shares outstanding used in per common share computations:
Basic14,234 14,136 
Diluted14,234 14,136 
The accompanying notes are an integral part of these condensed consolidated financial statements.


COMPUTER PROGRAMS AND SYSTEMS,
4






TRUBRIDGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)thousands)
(Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Sales revenues:
 
    
System sales and support$44,366
 $44,101
 $133,263
 $141,529
TruBridge22,747
 20,562
 65,601
 61,192
Total sales revenues67,113
 64,663
 198,864
 202,721
Costs of sales:
      
System sales and support18,832
 20,709
 56,621
 65,075
TruBridge12,806
 11,187
 36,326
 33,878
Total costs of sales31,638
 31,896
 92,947
 98,953
Gross profit35,475
 32,767
 105,917
 103,768
Operating expenses:       
Product development9,345
 8,397
 27,588
 23,766
Sales and marketing8,528
 6,894
 23,262
 20,341
General and administrative9,379
 10,631
 33,960
 41,799
Amortization of acquisition-related intangibles2,601
 2,601
 7,804
 7,580
Total operating expenses29,853
 28,523
 92,614
 93,486
Operating income5,622
 4,244
 13,303
 10,282
Other income (expense):       
Other income102
 53
 242
 121
Interest expense(2,062) (1,717) (5,807) (4,828)
Total other income (expense)(1,960) (1,664) (5,565) (4,707)
Income before taxes3,662
 2,580
 7,738
 5,575
Provision for income taxes1,374
 981
 3,617
 3,643
Net income$2,288
 $1,599
 $4,121
 $1,932
Net income per common share—basic$0.17
 $0.12
 $0.30
 $0.15
Net income per common share—diluted$0.17
 $0.12
 $0.30
 $0.15
Weighted average shares outstanding used in per common share computations:       
Basic13,431
 13,327
 13,409
 13,224
Diluted13,431
 13,327
 13,409
 13,224
Dividends declared per common share$0.30
 $0.34
 $0.75
 $1.62
Three Months Ended March 31,
20242023
Net income (loss)$(2,516)$3,084 
Other comprehensive income:
Foreign currency translation adjustment113 — 
Comprehensive income (loss)$(2,403)$3,084 
The accompanying notes are an integral part of these condensed consolidated financial statements.


COMPUTER PROGRAMS AND SYSTEMS,
5






TRUBRIDGE, INC.
CONDENSED CONSOLIDATED STATEMENTSSTATEMENT OF COMPREHENSIVE INCOMESTOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income$2,288
 $1,599
 $4,121
 $1,932
Other comprehensive income, net of tax       
Change in unrealized income with realized income on the Statement of Income

—
 —
 —
 38
Total other comprehensive income, net of tax—
 —
 —
 38
Comprehensive income$2,288
 $1,599
 $4,121
 $1,970
Common StockAdditional Paid-in-CapitalAccumulated Other Comprehensive (Loss) IncomeRetained EarningsTreasury StockTotal Stockholders’ Equity
SharesAmount
Three Months Ended March 31, 2024 and 2023:
Balance at December 31, 202315,121 $15 $195,546 $— $8,132 $(17,075)$186,618 
Net loss— — — — (2,516)— (2,516)
Foreign currency translation adjustment113 113 
Issuance of restricted stock451 — — — — — — 
Stock-based compensation— — 800 — — — 800 
Treasury stock acquired— — — — — (342)(342)
Balance at March 31, 202415,572 $15 $196,346 $113 $5,616 $(17,417)$184,673 
Balance at December 31, 202214,913 $15 $192,275 $— $53,921 $(14,500)$231,711 
Net income— — — — 3,084 — 3,084 
Issuance of restricted stock186 — — — — — — 
Stock-based compensation— — 1,247 — — — 1,247 
Treasury stock acquired— — — — (2,484)(2,484)
Balance at March 31, 202315,099 $15 $193,522 $— $57,005 $(16,984)$233,558 
The accompanying notes are an integral part of these condensed consolidated financial statements.


COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY6
(In thousands)
(Unaudited)
 Common Stock 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Total
Stockholders’
Equity
    
 Shares Amount   
Balance at December 31, 201613,533
 $13
 $147,911
 $10,046
 $157,970
Net income—
 —
 —
 4,121
 4,121
Common stock issued upon exercise of stock options—
 —
 1
 —
 1
Issuance of restricted stock223
 1
 (1) —
 —
Stock-based compensation—
 —
 5,021
 —
 5,021
Dividends—
 —
 —
 (10,261) (10,261)
Balance at September 30, 201713,756
 $14
 $152,932
 $3,906
 $156,852

The accompanying notes are an integral part of these condensed consolidated financial statements.


COMPUTER PROGRAMS AND SYSTEMS,


TRUBRIDGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20242023
Operating Activities:
Net income (loss)$(2,516)$3,084 
Adjustments to net income (loss):
Provision for credit losses500 (352)
Deferred taxes(2,982)572 
Stock-based compensation800 1,247 
Depreciation400 499 
Gain on sale of business(1,250)— 
Amortization of acquisition-related intangibles3,127 4,014 
Amortization of software development costs2,742 1,486 
Amortization of deferred finance costs107 90 
Non-cash operating lease costs675 479 
Changes in operating assets and liabilities:
Accounts receivable(4,112)(3,099)
Financing receivables628 619 
Inventories(505)(398)
Prepaid expenses and other current assets772 (3,187)
Accounts payable1,253 5,605 
Deferred revenue1,006 47 
Operating lease liabilities(583)(499)
Other liabilities(2,573)(971)
Prepaid income taxes477 237 
Net cash provided by (used in) operating activities(2,034)9,473 
Investing Activities:
Sale of business, net of cash and cash equivalents sold21,410 — 
Investment in software development(4,839)(6,233)
Purchase of property and equipment(177)(16)
Net cash provided by (used in) investing activities16,394 (6,249)
Financing Activities:
Payments of long-term debt principal(875)(875)
Proceeds from revolving line of credit15,423 5,000 
Payments of revolving line of credit(27,729)(5,000)
Debt issuance costs(529)— 
Treasury stock purchases(342)(2,484)
Net cash provided by (used in) financing activities(14,052)(3,359)
Increase (decrease) in cash and cash equivalents308 (135)
Change in cash and cash equivalents included in assets sold(41)— 
Cash and cash equivalents at beginning of period3,848 6,951 
Cash and cash equivalents at end of period$4,115 $6,816 
Supplemental disclosure of cash flow information:
Cash paid for interest$6,820 $898 
Cash paid for income taxes$1,000 $— 
The accompanying notes are an integral part of these condensed consolidated financial statements.


7
 Nine Months Ended September 30,
 2017 2016
Operating Activities:   
Net income4,121
 $1,932
Adjustments to net income:   
Provision for bad debt753
 722
Deferred taxes3,226
 3,735
Stock-based compensation5,021
 4,023
Excess tax benefit from stock-based compensation—
 (50)
Depreciation1,945
 2,422
Amortization of acquisition-related intangibles7,804
 7,580
Amortization of deferred finance costs547
 501
Changes in operating assets and liabilities (net of acquired assets and liabilities):   
Accounts receivable(4,358) (1,489)
Financing receivables(8,428) 1,301
Inventories568
 31
Prepaid expenses and other(361) 808
Accounts payable3,770
 (5,095)
Deferred revenue2,748
 (11,365)
Other liabilities1,071
 (6,841)
Prepaid income taxes/income taxes payable(110) (788)
Net cash provided by (used in) operating activities18,317
 (2,573)
Investing Activities:   
Purchases of property and equipment(464) (39)
Purchase of business, net of cash received—
 (162,611)
Sale of investments—
 10,861
Net cash used in investing activities(464) (151,789)
Financing Activities:   
Dividends paid(10,261) (21,845)
Proceeds from long-term debt2,550
 156,572
Payments of long-term debt principal(11,409) (2,344)
Payments of contingent consideration—
 (500)
Proceeds from exercise of stock options1
 1,134
Excess tax benefit from stock-based compensation—
 50
Net cash provided by (used in) financing activities(19,119) 133,067
Decrease in cash and cash equivalents(1,266) (21,295)
Cash and cash equivalents at beginning of period2,220
 24,951
Cash and cash equivalents at end of period$954
 $3,656
Supplemental disclosure of cash flow information:   
Cash paid for interest$5,151
 $4,326
Cash paid for income taxes, net of refund$501
 $654
Supplemental disclosure of non-cash information:   
Fair value of common stock and options issued as consideration for acquisition of HHI$—
 $97,017
Write-off of fully depreciated assets$—
 $2,769
Capital lease obligation$—
 $933

The accompanying notes are an integral part of these condensed consolidated financial statements.


COMPUTER PROGRAMS AND SYSTEMS,


TRUBRIDGE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.     BASIS OF PRESENTATION
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"“SEC”) and include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results.
Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("(“U.S. GAAP"GAAP”) have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 20162023 was derived from the audited consolidated balance sheet at that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of Computer Programs and Systems,TruBridge, Inc. ("CPSI"(“TruBridge” or the "Company"“Company”) for the year ended December 31, 20162023 and the notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2023.
During the third quarter of 2023, we changed the presentation of certain costs previously recorded within the expense captions of "Product development" and "General and administrative" to better comply with the disclosure requirements of Staff Accounting Bulletin Topic 11.B., Miscellaneous Disclosure: Depreciation and Depletion Excluded from Cost of Sales. These changes are summarized as follows:
•Amortization expense associated with capitalized software development costs, previously recorded within the expense caption of "Product development," have been combined with amounts previously recorded within the expense caption "Amortization of acquisition-related intangibles" and reflected in a newly-presented expense caption of "Amortization."
•Depreciation expense previously recorded within the expense caption of "General and administrative" have been reclassified within the newly-presented expense caption of "Depreciation."
•The expense caption previously labelled as "Costs of sales" has been renamed "Costs of revenue (exclusive of amortization and depreciation)," with the previously reported reference to "Gross profit" removed from the current presentation.
The following table provides the amounts reclassified for the three months ended March 31, 2023.
Three Months Ended March 31, 2023
(in thousands)As previously reportedRe-classificationsAs reclassifiedAs currently reported
Costs of revenue (exclusive of amortization and depreciation)
RCM$27,183 $— $27,183 $27,183 
EHR16,348 — 16,348 16,348 
Patient engagement646 — 646 646 
Other expenses
Product development9,836 (1,484)8,352 8,352 
Sale and marketing6,959 (2)6,957 6,957 
General and administrative14,952 (499)14,453 14,453 
Amortization of acquisition-related intangibles4,014 (4,014)— — 
Amortization— 5,500 5,500 5,500 
Depreciation— 499 499 499 


8






Principles of Consolidation
The condensed consolidated financial statements of CPSITruBridge include the accounts of TruBridge, LLC ("TruBridge"), Evident, LLC ("Evident"),the Company and Healthland Holding Inc. ("HHI"), all of which are wholly-owned subsidiaries of CPSI. The accounts of HHI include those of its wholly-owned subsidiaries, Healthland Inc. ("Healthland"), Rycan Technologies, Inc. ("Rycan"), and American HealthTech, Inc. ("AHT").subsidiaries. All significant intercompany balances and transactions have been eliminated.
Presentation
Effective January 1, 2017,
2.     RECENT ACCOUNTING PRONOUNCEMENTS
New Accounting Standards Adopted in 2024

There were no new accounting standards required to be adopted in 2024 that would have a material impact on our consolidated financial statements.
New Accounting Standards Yet to be Adopted

We do not believe that any other recently issued but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.

3.     REVENUE RECOGNITION
Revenue is recognized upon transfer of control of promised products or services to clients in an amount that reflects the consideration we adoptedexpect to receive in exchange for those products and services. We enter into contracts that can include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. The Company employs the 5-step revenue recognition model under ASC 606, Revenue from Contracts with Customers, to: (1) identify the contract with the client, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a revised presentationperformance obligation.
Revenue is recognized net of salesshipping charges and any taxes collected from clients, which are subsequently remitted to governmental authorities.
•Revenue Cycle Management
Our revenue cycle management (“RCM”) business unit provides an array of business processing services (“BPS'’) consisting of accounts receivable management, private pay services, insurance services, medical coding, electronic billing, statement processing, payroll processing, and contract management. Fees are recognized over the period of the client contractual relationship as the services are performed based on the stand-alone selling price (“SSP”), net of discounts. SSP for BPS services is determined based on observable stand-alone selling prices. Fees for many of these services are invoiced, and revenue recognized accordingly, based on the volume of transactions or a percentage of client accounts receivable collections. Payment is due monthly for BPS with certain amounts varying based on utilization and/or volumes.
Our RCM business unit also provides professional IT services. Revenue from professional IT services is recognized as the services are performed based on SSP, which is determined by observable stand-alone selling prices. Payment is due monthly as services are performed.
Lastly, our RCM business unit also provides certain software solutions and related support under Software as a Service (“SaaS”) arrangements and time-based software licenses. Revenue from SaaS arrangements is recognized in a manner consistent with SaaS arrangements for electronic health records (“EHR”) software, as discussed below. Revenue from time-based software licenses is recognized upon delivery to the client (“point in time”) and revenue from non-license components (i.e., support) is recognized ratably over the respective contract term (“over time”). SSP for time-based licenses is determined using the residual approach, while the non-license component is based on cost plus reasonable margin.
•Electronic Health Records
The Company enters into contractual obligations to sell perpetual software licenses, installation, conversion, and related training services, software application support, hardware, and hardware maintenance services to acute care community hospitals and post-acute providers.


9






•Non-recurring Revenues
•Perpetual software licenses and installation, conversion, and related training services are not considered separate and distinct performance obligations due to the proprietary nature of our software and are, therefore, accounted for as a single performance obligation on a module-by-module basis. Revenue is recognized as each module's implementation is completed based on the module's SSP, net of discounts. We determine each module's SSP using the residual method. Fees for licenses and installation, conversion, and related training services are typically due in three installments: (1) at placement of order, (2) upon installation of software and commencement of training, and (3) upon satisfactory completion of monthly accounting cycle or end-of-month operation by application and as applicable for each application. Often, short-term and/or long-term financing arrangements are provided for software implementations; refer to Note 11 - Financing Receivables for further information. EHR implementations include a system warranty that terminates thirty days from the software go-live date, the date which the client begins using the system in a live environment.
•Hardware revenue is recognized separately from software licenses at the point in time it is delivered to the client. The SSP of hardware is cost plus a reasonable margin and revenue is recognized on a gross basis. Payment is generally due upon delivery of the hardware to the client. Standard manufacturer warranties apply to hardware.
•Recurring Revenues
•Software application support and hardware maintenance services sold with software licenses and hardware are separate and distinct performance obligations. Revenue for support and maintenance services is recognized based on SSP, which is the renewal price, ratably over the life of the contract, which is generally three to five years. Payment is due monthly for support and maintenance services provided.
•Subscriptions to third-party content revenue is recognized as a separate performance obligation ratably over the subscription term based on SSP, which is cost plus a reasonable margin, and revenue is recognized on a gross basis. Payment is due monthly for subscriptions to third party content.
•SaaS arrangements for EHR software and related conversion and training services are considered a single performance obligation. Revenue is recognized on a monthly basis as the SaaS service is provided to the client over the contract term. Payment is due monthly for SaaS services provided.
Refer to Note 17 - Segment Reporting for further information, including revenue by client base (acute care or post-acute care) bifurcated by recurring and non-recurring revenue.
•Patient Engagement
The Company enters into contractual obligations to sell perpetual and term-based software licenses, implementation and customization professional services, and software application support services to a variety of healthcare organizations including hospital systems, health ministries, and government and non-profit organizations.
•Non-recurring Revenues
•Perpetual software licenses are sold only to one re-seller client and are considered a separate and distinct performance obligation. Revenue is recognized at the point in time perpetual licenses are delivered to the client, which occurs at the time of sale. The SSP of perpetual licenses is directly observable. Payment is generally due upon delivery of licenses.
•Implementation and customization services are considered a separate and distinct performance obligation. Revenue is recognized over time based on SSP, which is generally directly observable. Payment for professional services is typically due in two installments: (1) upon signature of the agreement and (2) upon customer acceptance of the delivered services.
•Recurring Revenues
•Term-based software licenses are considered a separate and distinct performance obligation. Revenue is recognized based on SSP, which is directly observable, at the point in time the term-based licenses


10






are delivered to the client or upon annual renewal. Payment is generally due upon delivery of licenses or upon annual renewal.
•Software application support services sold with software licenses are separate and distinct performance obligations. The related revenues are recognized based on SSP, which is the renewal price, ratably over the life of the contract, which is generally three to five years. Payment is generally due for the full amount of annual support fees at the beginning of an annual license term.
Refer to Note 17 - Segment Reporting for further information.
Deferred Revenue
Deferred revenue represents amounts invoiced to clients for which the services under contract have not been completed and revenue has not been recognized, including annual renewals of certain software subscriptions and customer deposits for implementations to be performed at a later date. Revenue is recognized ratably over the associatedlife of the software subscriptions as services are provided and at the point-in-time when implementations have been completed.
The following table details deferred revenue for the three months ended March 31, 2024 and 2023, included in the condensed consolidated balance sheets:
(In thousands)Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Beginning balance$8,677 $11,590 
Deferred revenue recorded4,360 6,490 
Less deferred revenue recognized as revenue(3,958)(6,443)
Ending balance$9,079 $11,637 
The deferred revenue recorded during the three months ended March 31, 2024 and 2023 is comprised primarily of the annual renewals of certain software subscriptions billed during the first quarter of each year and deposits collected for future EHR installations. The deferred revenue recognized as revenue during the three months ended March 31, 2024 and 2023 is comprised primarily of the periodic recognition of annual renewals that were deferred until earned and deposits for future EHR installations that were earned during the period.
Costs to Obtain and Fulfill a Contract with a Customer
Costs to obtain a contract include the commission costs related to SaaS and RCM arrangements, which are capitalized and amortized ratably over the expected life of the customer contract. As a practical expedient, we generally recognize the incremental costs of salesobtaining a contract as an expense when incurred if the amortization period of the asset would have been one year or less. Costs to obtain a contract are expensed within the caption “Expenses - Sales and marketing” in ourthe accompanying condensed consolidated statements of income, which we believe is better aligned withincome.
Contract fulfillment costs related to the implementation of SaaS arrangements are capitalized and representativeamortized ratably over the expected life of the amountcustomer contract. Costs to fulfill contracts consist of the payroll costs for the implementation of SaaS arrangements, including time for training, conversions, and profitabilityinstallation that is necessary for the software to be utilized. Contract fulfillment costs are expensed within the caption “Costs of our revenue streams, as well as(exclusive of amortization and depreciation) - EHR” in the way we manage our business, review our operating performanceaccompanying condensed consolidated statements of income.
Costs to obtain and market our products. Specifically:
The Company's sales revenuesfulfill contracts related to SaaS and costs of sales amounts formerlyRCM arrangements are included within the caption "Business management, consulting,“Prepaid expenses and managed IT services"other current assets” and "Other assets, net of current portion" line items on our condensed consolidated balance sheets as shown in the table below for the three months ended March 31, 2024 and 2023:
(In thousands)Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Beginning balance$13,115 $11,557 
Costs to obtain and fulfill contracts capitalized1,703 1,824 
Less costs to obtain and fulfill contracts recognized as expense(1,884)(1,264)
Ending balance$12,934 $12,117 


11






Remaining Performance Obligations
Disclosures regarding remaining performance obligations are now includednot considered material as the overwhelming majority of the Company's remaining performance obligations either (a) are related to contracts with an expected duration of one year or less, or (b) exhibit revenue recognition in the amount to which the Company has the right to invoice.

4.     BUSINESS COMBINATIONS AND DISPOSITIONS
Sale of American HealthTech, Inc.
On January 16, 2024, we entered into a Stock Purchase Agreement (the “Purchase Agreement”), by and among the Company, American HealthTech, Inc. a Mississippi corporation (“AHT”), and Healthland Inc., a Minnesota corporation and an indirect, wholly-owned subsidiary of the Company (“Healthland” and, together with the Company, the “Seller Parties”) and PointClickCare Technologies USA Corp., a Delaware corporation (“Buyer”). The Transaction (hereinafter defined) also closed on January 16, 2024. Under the Purchase Agreement, Buyer purchased from Healthland all of the issued and outstanding capital stock of AHT (the “Transaction”), with AHT becoming a wholly-owned subsidiary of Buyer. Prior to this transaction, results for AHT were reported within our EHR operating segment.

The Purchase Agreement provides for an aggregate purchase price (the “Purchase Price”) of $25 million (the “Base Cash Consideration”), subject to adjustments based on working capital, cash, indebtedness and transaction expenses of AHT. Additionally, pursuant to the Purchase Agreement, a total of approximately $3.75 million was withheld from the Base Cash Consideration at the closing and deposited by Buyer into various escrow accounts with an escrow agent, including $2.5 million as a general indemnity escrow and $1 million as a special indemnity escrow. Based upon the adjustments and the various escrow holdbacks, Buyer paid a net amount of approximately $21.41 million to Healthland at the closing. The Purchase Price was subject to a post-closing true-up. In connection with the closing of the Transaction, Buyer has provided offers of employment to certain key employees of the Company that primarily supported AHT’s business.

The Purchase Agreement contains customary representations, warranties and covenants. The representations and warranties made by the Seller Parties to Buyer cover a broad range of items related to, among other things, the business and financial condition of AHT. Subject to certain exceptions and limitations, the Seller Parties have agreed to indemnify Buyer for certain breaches of representations, warranties and covenants and certain other enumerated items. Such limitations on the Seller Parties’ indemnification obligations are subject to various exceptions for certain fundamental representations, tax representations, special representations, and fraud. Subject to certain exceptions and limitations, Buyer has likewise agreed to indemnify the Seller Parties for certain breaches of representations, warranties and covenants and certain other enumerated items.

As part of the divestiture, as of January 16, 2024 we entered into a transition services agreement with the buyer to assist them in the transition of certain functions, including, but not limited to, information technology, finance and accounting for the period of 18 months accordance with the terms of this agreement. Aside from these customary transition services, there will be no continuing involvement after the disposal.

The Company finalized the accounting for the sale during the three months ended March 31, 2024 and has recorded a $1.25 million gain on sale, which is reflected under the caption "TruBridge" within“Other income” in the condensed consolidated statements of income;operations.
Rycan's sales revenues and costs of sales amounts formerly included within the caption "Systems sales and support" are now included within the caption "TruBridge" within the
The accompanying condensed consolidated statementsbalance sheet as of income;
Healthland's and AHT's sales revenues and costs of salesDecember 31, 2023 includes amounts related to hosting services formerly included withinthis Transaction under the caption "Systems salescaptions "Assets of held for sale disposal group" and support""Liabilities of held for sale disposal group", the details of which are now included within the caption "TruBridge" within the condensed consolidated statementsas follows as of income; and
Certain Rycan expenses formerly included within the caption "General and administrative" are now included within the caption "TruBridge" within the "Costs of sales" section of the condensed consolidated statements of income.
These reclassifications had no effect on previously reported total sales revenues, operating income, income before taxes or net income.

Amounts presented for the three and nine months ended September 30, 2016 have been reclassified to conform to the current presentation. The following table provides the amounts reclassified for the three months ended September 30, 2016:December 31, 2023:


12






(In thousands)As previously reported Reclassifications As reclassified
Sales revenues:     
System sales$47,329
 $(3,228) $44,101
TruBridge17,334
 3,228
 20,562
Costs of sales:     
System sales21,739
 (1,030) 20,709
TruBridge9,973
 1,214
 11,187
Operating expenses:     
General and administrative10,815
 (184) 10,631
The following table provides the amounts reclassified for the nine months ended September 30, 2016:
(In thousands)As previously reported Reclassifications As reclassified
Sales revenues:     
System sales$150,270
 $(8,741) $141,529
TruBridge52,451
 8,741
 61,192
Costs of sales:     
System sales68,968
 (3,893) 65,075
TruBridge29,414
 4,464
 33,878
Operating expenses:     
General and administrative42,370
 (571) 41,799
2.     BUSINESS COMBINATION
(In thousands)
Assets of held for sale disposal group
Accounts receivable, net$3,087 
Financing receivables, net37 
Prepaid expenses34 
Software costs, net3,386 
Intangibles, net11,739 
Goodwill7,694 
Total$25,977 
Liabilities of held for sale disposal group
Accounts payable$178 
Other accrued liabilities576 
Deferred tax liability223 
Total$977 
Acquisition of HHIViewgol, LLC
On January 8, 2016,October 16, 2023, we acquired all of the assets and liabilities of HHI, including its wholly-owned subsidiaries, Healthland, AHT and Rycan. Healthland provided electronic health records ("EHR"Viewgol, LLC (“Viewgol”) and clinical information management solutions, a Delaware limited liability company, pursuant to over 350 hospital customers at the time of acquisition. AHTa Securities Purchase Agreement dated October 16, 2023. Based in Frisco, Texas, Viewgol is a provider of clinicalambulatory RCM analytics and financial solutions incomplementary outsourcing services with an extensive offshore presence we intend to leverage and grow to accommodate the post-acutegrowing demand for RCM services by our pre-existing acute care market, serving over 3,300 skilled nursing facilities at the time of acquisition. Rycan offered SaaS-based revenue cycle management workflow and automation software to over 290 hospital customers at the time of acquisition.customers.
We believe the acquisition of HHI:
strengthened our position in providing healthcare information systems to community healthcare organizations with approximately 1,200 combined hospital customers at the time of acquisition;
introduced CPSI to the post-acute care market; and
expanded the products offered by and capabilities of TruBridge with the addition of Rycan and its suite of revenue cycle management software products.
These factors, combined with the synergies and economies of scale expected from combining the operations of CPSI and HHI, were the basis for the acquisition.
Consideration for the acquisition included cash (net of cash of the acquired entities)entity) of $162.6$37.4 million (inclusive of seller's transaction expenses), 1,973,880 shares. Also included in the acquisition consideration were contingent earnout payments of common stock(i) up to $21.5 million based on the Viewgol business achieving earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of CPSI ("CPSI Common Stock"$6.0 million or more during fiscal year 2024 (the “EBITDA Earnout Amount”), and (ii) up to $10.0 million based on the assumption by CPSInumber of stock optionsproductive agents the Viewgol business hires in India in fiscal year 2024 (the “Offshore Earnout Amount”); provided, however, that became exercisable for 174,972 sharesnone of CPSI Common Stock.the Offshore Earnout Amounts may be earned if the EBITDA Earnout Amount’s minimum EBITDA threshold of $6.0 million is not achieved during fiscal 2024. During the three and nine months ended September 30, 2016,2023, we incurred approximately $0.1$4.7 million and $8.1 million, respectively, of pre-tax acquisition

costs in connection with the acquisition of HHI. We have incurred no such costs during the three and nine months ended September 30, 2017. Acquisition costs are included in general and administrative expenses in our condensed consolidated statements of income.operations.



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(In thousands)
Purchase Price

Cash consideration, net of acquired cash received

$162,611
Fair value of common stock and options issued as consideration97,017
Total consideration

$259,628
Our acquisition of HHIViewgol was treated as a purchase in accordance with Accounting Standards Codification (the "Codification")ASC 805, Business Combinations,, of the Financial Accounting Standards Board ("FASB"), which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. Our allocation of the purchase price was based on management's judgment after evaluating several factors, including a valuation assessment.

The allocationpreliminary estimated fair values of the purchase price paid for HHI wasassets acquired and liabilities assumed as of December 31, 2023, and as updated through March 31, 2024, are as follows:
(In thousands)Purchase Price Allocation as of December 31, 2023Purchase Price Allocation as of March 31, 2024
Acquired cash$1,449 $1,449 
Accounts receivable2,233 2,233 
Prepaid expenses132 132 
Property and equipment1,112 1,112 
Intangible assets17,720 17,720 
Goodwill17,263 17,927 
Accounts payable and accrued liabilities(711)(711)
Contingent consideration(1,044)(1,044)
Net assets acquired$38,154 $38,818 
(In thousands)Purchase Price Allocation
Acquired cash$5,371
Accounts receivable5,789
Financing receivables2,184
Inventories216
Prepaid expenses3,228
Property and equipment1,263
Intangible assets117,300
Goodwill168,449
Accounts payable and accrued liabilities(17,490)
Deferred taxes, net(4,010)
Contingent consideration(1,620)
Deferred revenue(15,681)
Net assets acquired$264,999
In March 2024, the Company estimates an additional $664,000 for working capital adjustments will be paid which is reflected under the caption “Goodwill” in the condensed consolidated balance sheet.

The intangible assets in the table above are being amortized on a straight-line basis over their estimated useful lives. The amortization is included in amortizationunder the caption “Amortization of acquisition-related intangiblesintangibles” in our condensed consolidated statements of income. Of the goodwill acquired, $23.3 million is expected to be tax deductible.operations.

The fair value measurements of tangible and intangible assets and liabilities (including those related to contingent consideration) were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy (see Note 13)16 - Fair Value). Level 3 inputs included, among others, discount rates that we estimated would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, client attrition rates and market comparables.
The
Our condensed consolidated statement of operations as of March 31, 2024 includes net sales of $4.8 million, gross contractual amountprofit of accounts receivable$2.1 million, net income of HHI at the date$0.8 million and adjusted EBITDA of acquisition was $9.4 million.
3.     REVENUE RECOGNITION
The Company recognizes revenue in accordance with U.S. GAAP, the requirements$1.0 million (see note 17 - Segment Reporting for more information regarding, and definition of, the Software topic and Revenue Recognition subtopic of the FASB Codification, and the requirements of the SEC.
The Company's revenue is generated from two sources:
System Salesand Support - the sale of information systems and the provision of system support services. The sale of information systems includes perpetual software licenses, conversion, installation and training services, hardware and peripherals, "Software as a Service" (or "SaaS") services, and forms and supplies. System support services includes software application support, hardware maintenance, and continuing education.

TruBridge - the provision of business management services, which includes electronic billing, statement processing, payroll processing, accounts receivable management, contract management, and insurance services, as well as Internet service provider ("ISP") services and consulting and managed IT services (collectively, "other professional IT services").
System Sales and Support
The Company enters into contractual obligations to sell perpetual software licenses, conversion, installation and training services, hardware and software application support and hardware maintenance services. On average, the Company is able to complete a system installation in three to four weeks. The methods employed by the Company to recognize revenue, which are discussed by element below, achieve results materially consistent with the provisions of Accounting Standards Update ("ASU") 2009-13, Multiple-Deliverable Revenue Arrangements, dueadjusted EBITDA) attributed to the relatively short period during which there are multiple undelivered elements, the relatively small amount of non-software related elements in the system sale arrangements, and the limited number of contracts in-process at the end of each reporting period. The Company recognizes revenue on the elements noted above as follows:Viewgol acquistion.
Perpetual software licenses and conversion, installation and training services – The selling price of perpetual software licenses and conversion, installation and training services is based on management’s best estimate of selling price. In determining management’s best estimate of selling price, we consider the following: (1) competitor pricing, (2) supply and demand of installation staff, (3) overall economic conditions, and (4) our pricing practices as they relate to discounts. The method of recognizing revenue for the perpetual licenses of the associated modules included in the arrangement, and the related conversion, installation and training services over the term the services are performed, is on a module-by-module basis as the related perpetual licenses are delivered and the respective conversion, installation and training services for each specific module are completed, as this is representative of the pattern of provision of these services.
Hardware – We recognize revenue for hardware upon shipment. The selling price of hardware is based on management’s best estimate of selling price, which consists of cost plus a targeted margin.
Software application support and hardware maintenance – We have established vendor-specific objective evidence ("VSOE") of the fair value of our software application support and hardware maintenance services by reference to the price our customers are required to pay for the services when sold separately via renewals. Support and maintenance revenue is recognized on a straight-line basis over the term of the maintenance contract, which is generally three to five years.


14
SaaS services - The Company accounts for SaaS arrangements in accordance with the requirements of the Hosting Arrangement section under the Software topic and Revenue Recognition subtopic of the FASB Codification. The FASB Codification states that the software elements of SaaS services should not be accounted for as a hosting arrangement "if the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty and it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software." Each SaaS contract entered into by the Company includes a system purchase and buyout clause, and this clause specifies the total amount of the system buyout. In addition, a clause is included in the contract which states that should the system be bought out by the customer, the customer would be required to enter into a general support agreement (for post-contract support services) for the remainder of the original SaaS term. Accordingly, the Company has concluded that SaaS customers do not have the right to take possession of the system without significant penalty (i.e., the purchase price of the system), resulting in the determination that these contracts are service contracts for which revenue is recognized when the services are performed.






TruBridge
TruBridge consists of electronic billing, statement processing, payroll processing, accounts receivable management, contract management, and insurance services. While TruBridge arrangements are contracts separate from the system sale and support contracts, these contracts are often executed within a short time frame of each other. The amount of the total arrangement consideration allocated to these services is based on VSOE of fair value by reference to the rate at which our customers renew, as well as the rate at which the services are sold to customers when the TruBridge agreement is not executed within a short time frame of the system sale and support contracts. If VSOE of fair value does not exist for these services, we allocate the arrangement consideration based on third-party evidence ("TPE") of selling price or, if neither VSOE nor TPE is available, estimated selling price. Because the pricing is transaction-based (per unit pricing), customers are billed and revenue is recognized as services are performed.

The Company will occasionally provide ISP and other professional IT services. Depending on the nature of the services provided, these services may be considered software elements or non-software elements. The selling price of services considered to be software elements is based on VSOE of the fair value of the services by reference to the price our customers are required to pay for the services when sold separately. The selling price of services considered to be non-software elements is based on TPE of the selling price of similar services. Revenue from these elements is recognized as the services are performed.
4.5. PROPERTY AND EQUIPMENT
Property and equipment, net was comprised of the following at September 30, 2017March 31, 2024 and December 31, 2016:2023:
(In thousands)March 31,
2024		December 31, 2023
Land$2,848 $2,848 
Buildings and improvements8,487 8,481 
Computer equipment10,241 10,104 
Leasehold improvements631 631 
Office furniture and fixtures618 586 
Automobiles18 18 
Property and equipment, gross22,843 22,668 
Less: accumulated depreciation(14,093)(13,694)
Property and equipment, net$8,750 $8,974 

(In thousands)September 30,
2017		 December 31,
2016
Land$2,848
 $2,848
Buildings and improvements9,432
 9,432
Maintenance equipment802
 802
Computer equipment5,639
 5,174
Leasehold improvements5,007
 5,007
Office furniture and fixtures3,591
 3,591
Automobiles335
 335
 27,654
 27,189
Less: accumulated depreciation(15,695) (13,750)
Property and equipment, net$11,959
 $13,439
5.7.     OTHER ACCRUED LIABILITIES
Other accrued liabilities was comprised of the following at September 30, 2017March 31, 2024 and December 31, 2016:2023:
(In thousands)March 31,
2024		December 31, 2023
Salaries and benefits$9,125 $5,194 
Severance3,359 5,806 
Commissions714 1,185 
Contingent consideration1,044 1,044 
Operating lease liabilities, current portion1,601 1,804 
Other2,383 4,859 
Other accrued liabilities$18,226 $19,892 

(In thousands)September 30,
2017		 December 31,
2016
Salaries and benefits$3,673
 $5,397
Severance1,754
 337
Commissions666
 518
Self-insurance reserves934
 887
Contingent consideration1,192
 1,120
Other700
 538
 $8,919
 $8,797
The accrued contingent consideration depicted above represents the potential earnout incentive for former Rycan shareholders. We have estimated the fair value of the contingent consideration based on the amount of revenue we expect to be earned by Rycan through the year ending December 31, 2018.
6.8.     NET INCOME (LOSS) PER SHARE
The Company presents basic and diluted earnings per share ("EPS"(“EPS”) data for its common stock. Basic EPS is calculated by dividing the net income attributable to stockholders of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is determined by adjusting the net income attributable to stockholders of the Company and the weighted average number of shares of common stock outstanding during the period for the effects of all dilutive potential dilutive common shares, including awards under stock-based compensation arrangements.
The Company's unvested restricted stock awards (see Note 8)10 - Stock-Based Compensation and Equity) are considered participating securities under FASB Codification topic, ASC 260, Earnings Per Share, because they entitle holders to non-forfeitable rights to dividends until the awards vest or are forfeited. When a company has a security that qualifies as a "participating“participating security,"” the FASB Codification requires the use of the two-class method when computing basic EPS. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net income to allocate to common stockholders, income is allocated to both common stock and participating securities based on their respective

weighted average shares outstanding for the period, with net income attributable to common stockholders ultimately equaling net income less net income attributable to participating securities. Diluted EPS for the Company's common stock is computed using the more dilutive of the two-class method or the treasury stock method.


15






The following is a calculation of the basic and diluted EPS for the Company's common stock, including a reconciliation between net income and net income attributable to common stockholders:
Three Months Ended March 31,
(In thousands, except per share data)20242023
Net income (loss)$(2,516)$3,084 
Less: Net (income) loss attributable to participating securities68 (63)
Net income (loss) attributable to common stockholders$(2,448)$3,021 
Weighted average shares outstanding used in basic per common share computations14,234 14,136 
Add: Dilutive potential common shares— — 
Weighted average shares outstanding used in diluted per common share computations14,234 14,136 
Basic EPS$(0.17)$0.21 
Diluted EPS$(0.17)$0.21 
 Three Months Ended Nine Months Ended
(In thousands, except per share data)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Net income$2,288
 $1,599
 $4,121
 $1,932
Less: Net income attributable to participating securities(55) (24) (94) (8)
Net income attributable to common stockholders$2,233
 $1,575
 $4,027
 $1,924
        
Weighted average shares outstanding used in basic per common share computations13,431
 13,327
 13,409
 13,224
Add: Dilutive potential common shares—
 —
 —
 —
Weighted average shares outstanding used in diluted per common share computations13,431
 13,327
 13,409
 13,224
        
Basic EPS$0.17
 $0.12
 $0.30
 $0.15
Diluted EPS$0.17
 $0.12
 $0.30
 $0.15

During 2017,2022, 2023, and 2024, performance share awards were granted to certain executive officers and key employees of the Company that will result in the issuance of time-vesting restrictedcommon stock if the predefined performance criteria are met. The awards provide for an aggregate target of 189,325512,103 shares, none of which none have been included in the calculation of diluted EPS for the three and nine months ended September 30, 2017March 31, 2024 because the related threshold award performance level haslevels have not been achieved as of September 30, 2017.March 31, 2024. See Note 8.10 - Stock-Based Compensation and Equity for more information.

7.
6. SOFTWARE DEVELOPMENT
Software development costs are accounted for in accordance with ASC 350-40, Internal-Use Software. We capitalize incurred labor costs for software development from the time the preliminary project phase is completed until the software is available for general release. Research and development costs and other computer software maintenance costs related to software development are expensed as incurred. We amortize capitalized software value on a straight-line basis over that estimated useful life of five years. If the actual useful life of the asset is determined to be shorter than our estimated useful life, we will amortize the remaining book value over the remaining actual useful life, or the asset may be deemed to be impaired and, accordingly, a write-down of the value of the asset may be recorded as a charge to earnings. Amortization begins when the related software features are placed in service.
Software development costs, net was comprised of the following at March 31, 2024 and December 31, 2023:
(In thousands)March 31,
2024		December 31, 2023
Software development costs$56,188 $51,349 
Less: accumulated amortization(14,951)(12,210)
Software development costs, net$41,237 $39,139 



16






9.     INCOME TAXES
The Company determines the tax provision for interim periods using an estimate of our annual effective tax rate ("ETR"), adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate,ETR, and if our estimated tax rate changes, we make a cumulative adjustment. If a reliable estimate of the annual ETR cannot be made, the actual ETR for the year to date may be the best estimate of the annual ETR.

Our effective tax rate for the three months ended September 30, 2017 remained relatively unchangedMarch 31, 2024 increased to 38.8% from 20.8% for the three months ended September 30, 2016, decreasing slightly to 37.5% from 38.0%.
Our effective tax rate forMarch 31, 2023, with the nine months ended September 30, 2017 decreased to 46.7% compared to 65.3% forlargest contributing factor being the nine months ended September 30, 2016. Duringimpact of the nine months ended September 30, 2016gain recorded on the identificationsale of nondeductible facilitative transaction costs resulted in additional income tax expense of $1.4 million, increasing the period’s effective tax rate by 25.3%. During the nine months ended September 30, 2017, we experienced a shortfall tax expense related to restricted stock of $1.1 million that increasedAmerican HealthTech, Inc. Also impacting the effective tax rate by 14.0% dueis the research and development ("R&D") tax credit. This credit, which is not correlated with taxable income, resulted in an incremental benefit of 24.2% during the first quarter of 2024 over the corresponding benefit during the first quarter of 2023. In periods with taxable income, the benefit from the R&D tax credit serves to reduce income tax expense, thereby lowering the adoption of ASU 2016-09 as detailedeffective tax rate. However, in Note 15.periods with taxable loss, the benefit from the R&D tax credit serves to increase the income tax benefit, thereby increasing the effective tax rate.

8.
10.   STOCK-BASED COMPENSATION AND EQUITY
Stock-based compensation expense is measured at the grant date based on the fair value of the award, and is recognized as an expense over the employee'semployees’ or non-employee director'sdirectors’ requisite service period.

The following table details total stock-based compensation expense for the three and nine months ended September 30, 2017March 31, 2024 and 2016,2023, included in the condensed consolidated statements of income:
Three Months Ended March 31,
(In thousands)20242023
Costs of revenue (exclusive of amortization and depreciation)$36 $181 
Other expenses764 1,066 
Pre-tax stock-based compensation expense800 1,247 
Less: income tax effect(168)(274)
Net stock-based compensation expense$632 $973 
 Three Months Ended Nine Months Ended
(In thousands)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Costs of sales$492
 $285
 $1,235
 $1,058
Operating expenses1,562
 861
 3,786
 2,965
Pre-tax stock-based compensation expense2,054
 1,146
 5,021
 4,023
Less: income tax effect(801) (447) (1,958) (1,569)
Net stock-based compensation expense$1,253
 $699
 $3,063
 $2,454
The Company's stock-based compensation awards are in the form of restricted stock and performance share awards madegranted pursuant to the Company's 2005 Restricted Stock Plan, 2012 Restricted Stock Plan for Non-Employee Directors, and the Amended and Restated 20142019 Incentive Plan (the "Plans""Plan"). As of September 30, 2017, thereMarch 31, 2024, there was $12.1$12.4 million of unrecognized compensation expense related to non-vestedunvested and unearned, as applicable, stock-based compensation arrangements granted under the Plans,Plan, which is expected to be recognized over a weighted-average period of 2.2 years.2.4 years.
Restricted Stock
The Company grants restricted stock to executive officers, certain key employees and non-employee directors under the PlansPlan with the fair value of the awards representing the fair value of the common stock on the date the restricted stock is granted. During the vesting period, recipients of restricted stock are entitled to dividends and possess voting rights. Shares of restricted stock generally vest in equal annual installments over the applicable vesting period, which ranges from one to fivethree years. The Company records expenses for these grants on a straight-line basis over the applicable vesting periods. Shares of restricted stock may also be issued pursuant to the settlement of performance share awards, for which the Company records expenses in the manner described in the "Performance Share Awards" section below.


17






A summary of restricted stock activity (including shares of restricted stock issued pursuant to the settlement of performance share awards) under the PlansPlan during the ninethree months endedSeptember 30, 2017 March 31, 2024 and 20162023 is as follows:
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Shares
Shares
Shares
Unvested restricted stock outstanding at beginning of period
Unvested restricted stock outstanding at beginning of period
Unvested restricted stock outstanding at beginning of period
Granted
Granted
Granted
Vested
Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Vested
Shares Weighted-Average
Grant Date
Fair Value Per Share		 Shares Weighted-Average
Grant Date
Fair Value Per Share
Nonvested restricted stock outstanding at beginning of period184,885
 $54.63
 191,397
 $57.12
Granted222,390
 32.87
 86,984
 52.21
Vested(99,184) 55.75
 (91,038) 57.71
Nonvested restricted stock outstanding at end of period308,091
 $38.56
 187,343
 $54.55
Forfeited
Forfeited
Forfeited
Unvested restricted stock outstanding at end of period
Unvested restricted stock outstanding at end of period
Unvested restricted stock outstanding at end of period
Performance Share Awards
In 2014, theThe Company began to grantgrants performance share awards to executive officers and certain key employees under the Amended and Restated 2014 Incentive Plan, (the "2014 Incentive Plan"). Thewith the number of shares of common stock earned and issuable under theeach award is determined at the end of eacha three-year performance period, based on the Company's achievement of performance goals predetermined by the Compensation Committee of the Board of Directors at the time of grant. These performance share awards include a modifier to the total number of shares earned based on the Company's total shareholder return (“TSR”) compared to a small-cap stock market index. If certain levels of the performance objective are met, the award results in the issuance of shares of restrictedcommon stock corresponding to such level, whichlevel. Performance share awards that result in the issuance of shares of common stock are thennot subject to time-based vesting pursuant to whichat the sharesconclusion of restricted stock vest in equal annual installments over the applicable vesting period, which is generally three years for restricted stock issued pursuant tothree-year performance share awards.

period.
In the event that the Company's financial performance meets the predetermined targettargets for the performance objective,objectives of the performance share awards, the Company will issue each award recipient the number of restricted shares of common stock equal to the target award specified in the individual's underlying performance share award agreement. In the event the financial results of the Company exceed the predetermined target,targets, additional shares up to the maximum award may be issued. In the event the financial results of the Company fall below the predetermined target,targets, a reduced number of shares may be issued. If the financial results of the Company fall below the threshold performance level,levels, no shares willmay be issued. The total number of shares issued for the performance share award may be increased, decreased, or unchanged based on the TSR modifier described above.
The recipients of performance share awards do not receive dividends or possess voting rights during the performance period and, accordingly, the fair value of the performance share awards is the quoted market value of CPSI Common StockTruBridge’s common stock on the grant date less the present value of the expected dividends not received during the relevant period. The TSR modifier applicable to the performance share awards is considered a market condition and therefore is reflected in the grant date fair value of the award. A Monte Carlo simulation has been used to account for this market condition in the grant date fair value of the award.
Expense related to performance share awards is recognized using the accelerated attribution (graded vesting) methodratable straight-line amortization over the period beginning on the date the Company determines that it is probable that thethree-year performance criteria will be achieved and ending on the last day of the vesting period for the restricted stock issued in satisfaction of such awards.period. In the event the Company determines it is no longer probable that the minimum performance level will be achieved, all previously recognized compensation expense related to the applicable awards is reversed in the period such a determination is made.


18






A summary of performance share award activity under the 2014 Incentive Plan during the ninethree months endedSeptember 30, 2017 March 31, 2024 and 20162023 is as follows, based on the target award amounts set forth in the performance share award agreements:
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
SharesWeighted-Average
Grant Date
Fair Value Per Share		SharesWeighted-Average
Grant Date
Fair Value Per Share
Performance share awards outstanding at beginning of period273,791 $33.17 252,375 $31.84 
Granted323,461 10.03 123,406 31.21 
Forfeited or unearned(85,149)37.98 (96,069)26.96 
Performance share awards outstanding at end of period512,103 $18.24 279,712 $33.24 

Stock Repurchases
On September 4, 2020, our Board of Directors approved a stock repurchase program under which we were authorized to repurchase up to $30.0 million of our common stock through September 3, 2022. On July 27, 2022, the Board of Directors extended the expiration date of the stock repurchase program to September 4, 2024. We repurchased 49,789 shares for the three months ended March 31, 2023, and there were no shares repurchased for three months ended March 31, 2024. The approximate dollar value of shares that may yet be repurchased under the stock repurchase program was $16.5 million as of March 31, 2024. Any future stock repurchase transactions may be made through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Any repurchase activity will depend on many factors, such as the availability of shares of our common stock, general market conditions, the trading price of our common stock, alternative uses for capital, the Company’s financial performance, compliance with the terms of our Amended and Restated Credit Agreement and other factors. Concurrent with the authorization of this stock repurchase program in September 2020, the Board of Directors opted to indefinitely suspend all quarterly dividends.
In addition to shares repurchased under the approved stock repurchase program, we purchased 41,000 and 39,716 shares as of March 31, 2024 and 2023, respectively, to fund required tax withholdings. Shares withheld to cover required tax withholdings related to the vesting of restricted stock do not reduce our total share repurchase authority.
Common Stock Rights Agreement
On March 26, 2024, the Company’s board of directors declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock. The dividend was paid to the stockholders of record at the close of business on April 4, 2024. Each Right initially entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one half of a share of common stock, at an exercise price of $28.00 for each one half of a share of common stock (equivalent to $56.00 for each whole share of common stock), subject to certain adjustments. The Rights currently are not exercisable and will only become exercisable upon the occurrence of certain events as described in the Rights Agreement. The Rights will expire prior to the earliest of (i) the close of business on March 25, 2025, or such later date as may be established by the Board prior to the expiration of the Rights; (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement; (iii) the time at which the Rights are exchanged pursuant to the Rights Agreement; and (iv) upon the occurrence of certain transactions (the earliest of (i), (ii), (iii) and (iv) is referred to as the “Expiration Date”). The complete description and terms of the Rights are set forth in the Rights Agreement, dated as of March 26, 2024, by and between the Company and Computershare Trust Company, N.A. as rights agent, as amended by the Amendment to the Rights Agreement dated as of April 22, 2024 (as amended, the “Rights Agreement”). Given the nature of the Rights and their contingent activation, which has been deemed remote, no value is recognized in stockholders’ equity.


19
 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
 Shares Weighted-Average
Grant Date
Fair Value		 Shares Weighted-Average
Grant Date
Fair Value
Performance share awards outstanding at beginning of period77,594
 $49.64
 49,471
 $49.29
Granted189,325
 29.94
 77,594
 49.64
Forfeited or unearned(77,594) 49.64
 (49,471) 49.29
Performance share awards outstanding at end of period189,325
 $29.94
 77,594
 $49.64





9.


11.   FINANCING RECEIVABLES
Short-Term Payment Plans
The Company has sold information and patient care systems to certain healthcare providers under Second Generation Meaningful Use Installment Plans (see below) with maximum contractual terms of three years and expected terms of less than one year and other arrangements requiringprovides fixed monthly paymentspayment arrangements ("short-term payment plans") over terms ranging from three to 12twelve months ("Fixed Periodic Payment Plans").for certain add-on software installations. As a practical expedient, we do not adjust the amount of consideration recognized as revenue for the financing component as unearned income when we expect payment within one year or less. These receivables, collectively referred to as short-term payment plans and included in the current portion of financing receivables, were comprised of the following at September 30, 2017March 31, 2024 and December 31, 2016:2023:
(In thousands)March 31,
2024		December 31, 2023
Short-term payment plans, gross$666 $788 
Less: allowance for losses(33)(39)
Short-term payment plans, net$633 $749 
(In thousands)September 30,
2017		 December 31,
2016
Second Generation Meaningful Use Installment Plans, gross$28
 $3,080
Fixed Periodic Payment Plans, gross3,232
 1,988
Short-term payment plans, gross$3,260
 $5,068
    
Less: allowance for losses(338) (1,796)
Short-term payment plans, net$2,922
 $3,272
Long-Term Financing Arrangements
Sales-Type Leases
Additionally, the Company leasesprovides financing for purchases of its information and patient care systems to certain healthcare providers under sales-type leaseslong-term financing arrangements expiring in various years through 2024.2030. Under long-term financing arrangements, the transaction price is adjusted by a discount rate that reflects market conditions that would be used for a separate financing transaction between the Company and licensee at contract inception, and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. As such, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. As payments are received from the licensee, the Company recognizes a portion of the financing component as interest income, reported as other income in the condensed consolidated statements of income. These receivables typically have terms from two to seven years, bear interest at various rates, and are usually collateralized by a security interest in the underlying assets. Since the Company has a history of successfully collecting amounts due under the original payment terms of these extended payment arrangements without making any concessions to its customers, the Company satisfies the requirement for revenue recognition. The Company’s history with these types of extended payment term arrangements supports management’s assertion that revenues are fixed and determinable and collection is probable. years.
The components of these lease receivables were as follows at September 30, 2017March 31, 2024 and December 31, 2016:2023:
(In thousands)March 31,
2024		December 31, 2023
Long-term financing arrangements, gross$4,660 $5,212 
Less: allowance for expected credit losses(350)(377)
Less: unearned income(316)(361)
Long-term financing arrangements, net$3,994 $4,474 
(In thousands)September 30,
2017		 December 31,
2016
Sales-type leases, gross$19,619
 $8,981
Less: allowance for losses(1,876) (402)
Less: unearned income(1,925) (797)
Sales-type leases, net$15,818
 $7,782
Future minimum lease payments to be received subsequent to September 30, 2017March 31, 2024 are as follows:
(In thousands)
Years Ending December 31,
2024$2,375 
20251,938 
2026206 
202769 
202862 
Thereafter10 
Total minimum payments to be received4,660 
Less: allowance for expected credit losses(350)
Less: unearned income(316)
Receivables, net$3,994 


20
(In thousands) 
Years Ended December 31, 
2017$1,966
20185,080
20194,599
20203,607
20212,553
Thereafter1,814
  
Total minimum lease payments to be received19,619
Less: allowance for losses(1,876)
Less: unearned income(1,925)
  
Lease receivables, net$15,818
  







Credit Quality of Financing Receivables and Allowance for Expected Credit Losses
The following table is a roll-forward of the allowance for financingexpected credit losses for the ninethree months ended September 30, 2017March 31, 2024 and year ended December 31, 2016:
(In thousands)Balance at Beginning of Period Provision Charge-offs Recoveries Balance at End of Period
September 30, 2017$2,198
 $742
 $(726) $—
 $2,214
December 31, 2016$654
 $1,762
 $(218) $—
 $2,198
2023:
(In thousands)Balance at Beginning of PeriodProvisionCharge-offsRecoveriesSale of AHTBalance at End of Period
March 31, 2024$416 $(31)$— $— $(2)$383 
December 31, 2023$549 $(133)$— $— $— $416 
The Company’s financing receivables are comprised of a single portfolio segment, as the balances are all derived from short-term payment plan arrangements and sales-type leasinglong-term financing arrangements within our target market of community hospitals. The Company evaluates the credit quality of its financing receivables based on a combination of factors, including, but not limited to, customer collection experience, current and future economic conditions, the customer’s financial condition, and known risk characteristics impacting the respective customer base of community hospitals, the most notable of which relate to enacted and potential changes in Medicare and Medicaid reimbursement rates as community hospitals typically generate a significant portion of their revenues and related cash flows from beneficiaries of these programs. In addition to specific account identification, the Company utilizes historical collection experience to establish the allowance for expected credit losses. Financing receivables are written off only after the Company has exhausted all collection efforts. The Company has been successful in collecting its financing receivables and considers the credit quality of such arrangements to be good, especially as the underlying assets act as collateral for the receivables.
Customer payments are considered past due if a scheduled payment is not received within contractually agreed upon terms. To facilitate customer collection and credit monitoring efforts, financing receivable amounts are invoiced and reclassified to trade accounts receivable when they become due, with all invoiced amounts placed on nonaccrual status. As a result, all past due amounts related to the Company’s financing receivables are included in trade accounts receivable in the accompanying condensed consolidated balance sheets. The following is an analysis of the age of financing receivables amounts (excluding short-term payment plans) that have been reclassified to trade accounts receivable and were past due as of September 30, 2017March 31, 2024 and December 31, 2016:
(In thousands)
1 to 90 Days
Past Due
 
91 to 180 Days
Past Due
 
181 + Days
Past Due
 
Total
Past Due
September 30, 2017$599
 $80
 $27
 $706
December 31, 2016$228
 $31
 $34
 $293
2023:
(In thousands)1 to 90 Days Past Due91 to 180 Days Past Due181 + Days Past DueTotal Past Due
March 31, 2024$532 $275 $495 $1,302 
December 31, 2023$857 $231 $323 $1,411 
From time to time, the Company may agree to alternative payment terms outside of the terms of the original financing receivable agreement due to customer difficulties in achieving the original terms. In general, such alternative payment arrangements do not result in a re-aging of the related receivables. Rather, payments pursuant to any alternative payment arrangements are applied to the already outstanding invoices beginning with the oldest outstanding invoices as the payments are received.
Because amounts are reclassified to trade accounts receivable when they become due, there are no past due amounts included within financing receivables, or the financing receivables, current portion, net amountor financing receivables, net of current portion in the accompanying condensed consolidated balance sheets.



21






The Company utilizes an aging of trade accounts receivable as the primary credit quality indicator for its financing receivables, which is facilitated by the reclassification of customer payment amounts to trade accounts receivable when they become due. The table below categorizes customer financing receivable balances (excluding short-term payment plans), none of which are considered past due, based on the age of the oldest payment outstanding that has been reclassified to trade accounts receivable:
(In thousands)March 31,
2024		December 31, 2023
Stratification of uninvoiced client financing receivables based on aging of related trade accounts receivable:
Uninvoiced client financing receivables related to trade accounts receivable that are 1 to 90 Days Past Due$984 $1,068 
Uninvoiced client financing receivables related to trade accounts receivable that are 91 to 180 Days Past Due839 1,720 
Uninvoiced client financing receivables related to trade accounts receivable that are 181 + Days Past Due1,348 965 
Total uninvoiced client financing receivables balances of clients with a trade accounts receivable$3,171 $3,753 
Total uninvoiced client financing receivables of clients with no related trade accounts receivable1,173 1,098 
Total financing receivables with contractual maturities of one year or less666 788 
Less: allowance for expected credit losses(383)(416)
Total financing receivables$4,627 $5,223 

12. INTANGIBLE ASSETS AND GOODWILL
The following tables summarize the gross carrying amounts, accumulated amortization and accumulated impairment of identifiable intangible assets with definite lives by major class as of March 31, 2024 and December 31, 2023:
March 31, 2024
(In thousands)Customer RelationshipsTrademarkDeveloped TechnologyNon-Compete AgreementsTotal
Gross carrying amount, beginning of period$116,470 $7,720 $31,900 $1,620 $157,710 
Accumulated amortization(43,031)(5,378)(20,269)(604)(69,282)
Accumulated impairment— (2,342)— — (2,342)
Net intangible assets as of March 31, 2024$73,439 $— $11,631 $1,016 $86,086 
Weighted average remaining years of useful life8.20.08.33.28.2
December 31, 2023
(In thousands)Customer RelationshipsTrademarkDeveloped TechnologyNon-Compete AgreementsTotal
Gross carrying amount, beginning of period$132,170 $12,320 $40,800 $1,400 $186,690 
Intangible assets acquired16,100 — 1,400 220 17,720 
Accumulated amortization(63,686)(6,974)(29,934)(522)(101,116)
Accumulated impairment— (2,342)(2,342)
Held for sale(8,735)(3,004)(11,739)
Net intangible assets as of December 31, 2023$75,849 $— $12,266 $1,098 $89,213 



22






(In thousands)September 30,
2017		 December 31,
2016
Customer balances with amounts reclassified to trade accounts receivable that are:   
1 to 90 Days Past Due$10,571
 $6,167
91 to 180 Days Past Due2,651
 550
181 + Days Past Due719
 273
Total customer balances with past due amounts reclassified to trade accounts receivable$13,941
 $6,990
Total customer balances with no past due amounts reclassified to trade accounts receivable3,753
 1,194
Total financing receivables with contractual maturities of one year or less3,260
 5,068
Less: allowance for losses(2,214) (2,198)
Total financing receivables$18,740
 $11,054
Second Generation Meaningful Use Installment Plans
Beginning inDuring the fourth quarter of 2012, we offered2023, the Company committed to our customers license agreements with payment termsthe Company-wide rebranding and legal entity consolidation initiative that provided us with greater visibility into and control overculminated in the customers' meaningful use attestation process and significantly reduced the maximum timeframe over which customers must satisfy their full payment obligations in purchasing our system (“Second Generation Meaningful Use Installment Plans”). As the overall payment period durationschange of the Second Generation Meaningful Use Installment Plans are consistent with that of our historical system sale financing arrangements, revenues under the Second Generation Meaningful Use Installment Plans are recognized upon installation of our EHR solution. Although these arrangements provide for a maximum payment term of three years, management has determined the expected term for these arrangementsCompany’s corporate name to be less than one year due to (a) historical collection patterns of required EHR incentive payment amounts and (b) the estimated significance of those amounts, the receipt of which is expected to result in minimal or no remaining balance for the related arrangements.“TruBridge, Inc.” on March 4, 2024. As a result allof this initiative, it was expected that certain of the Company’s brand names and related amounts are included as a componenttrademarks would cease to be used, resulting in total trademark impairment recorded during the year ended December 31, 2023 of financing receivables, current portion, net in$2.3 million. Of the accompanying condensed consolidated balance sheetstotal trademark impairment charge, $1.0 million is derived from our RCM segment, $1.2 million is derived from our EHR segment, and as a component of Short-Term Payment Plans within this note.$0.1 million is derived from our Patient Engagement segment.

10.     INTANGIBLE ASSETS AND GOODWILL
Our purchased definite-lived intangible assets as of September 30, 2017 are summarized as follows:
(In thousands)Customer Relationships Trademark Developed Technology Total
Gross carrying amount$82,300
 $10,900
 $24,100
 $117,300
Accumulated amortization(11,303) (1,469) (5,214) (17,986)
Net intangible assets$70,997
 $9,431
 $18,886
 $99,314
Weighted average remaining years of useful life11 14 7 10
The following table represents the remaining amortization of definite-lived intangible assets as of September 30, 2017:March 31, 2024:
(In thousands)
For the year ended December 31,
2024$9,379 
202512,190 
202611,517 
202710,497 
202810,203 
Thereafter32,300 
Total$86,086 
(In thousands) 
For the year ended December 31, 
2017$2,601
201810,406
201910,112
202010,106
202110,066
Due thereafter56,023
Total$99,314
The following table sets forth the change in the carrying amountvalue of our goodwill balances by reportable segment for the ninethree months ended September 30, 2017:March 31, 2024:
(In thousands)RCMEHRPatient EngagementTotal
Gross value at December 31, 2023$79,084 $126,665 $9,767 $215,516 
Accumulated impairment— (28,307)(7,606)(35,913)
Held for sale— (7,694)— (7,694)
Carrying value at December 31, 202379,084 90,664 2,161 171,909 
Purchase price adjustment (Viewgol)664 — — 664 
Gross value at March 31, 202479,748 118,971 9,767 208,486 
Accumulated impairment— (28,307)(7,606)(35,913)
Carrying value as of March 31, 2024$79,748 $90,664 $2,161 $172,573 
(In thousands)Acute Care EHRPost-acute Care EHRTruBridgeTotal
Balance as of December 31, 2016$97,095
$57,570
$13,784
$168,449
Goodwill acquired—
—
—
—
Balance as of September 30, 2017$97,095
$57,570
$13,784
$168,449

Goodwill is evaluated for impairment annually on October 1, or more frequently if indicators of impairment are present or changes in circumstances suggest that impairment may exist. AsDuring the three months ended March 31, 2024, our share price experienced a sustained decline resulting in a decrease in our market capitalization. This decline in share price was identified as a triggering event requiring a quantitative assessment for goodwill impairment in each of September 30, 2017, thereour reporting units.

Our reporting units assessed for impairment of goodwill include: RCM (formerly the “TruBridge” reporting unit), EHR, and Patient Engagement (formerly a component of our former “TruBridge” reporting unit). We continue to monitor each reporting unit for interim impairment indicators and believe that the estimates and assumptions used in calculations are reasonable as of March 31, 2024. By using a combination of the income and market valuation approaches. Under the income approach, we used a discounted cash flow model, which utilizes present values of cash flows to estimate fair value. Our forecasted cash flows reflected conditions as of March 31, 2024, and reflected management’s anticipated business outlook for each reporting unit, which requires the use of estimates. The market approach applied selected trading multiples of companies comparable to the respective reporting units to the Company’s financial measures. The income approach was given significantly more weight in determining the fair values. These quantitative evaluations of the fair values of each of our reporting units resulted in no impairment to goodwill.as of March 31, 2024. Should the fair value of any of our reporting units fall below its carrying amount because of reduced operating performance, market declines, and other adverse factors, goodwill impairment charges may be necessary in future period.


11.
23






13. LONG-TERM DEBT
Long-term debt was comprised of the following at September 30, 2017March 31, 2024 and December 31, 2016:
(In thousands)September 30, 2017 December 31, 2016
Term loan facility$117,187
 $121,875
Revolving credit facility29,050
 33,000
Capital lease obligation641
 861
Debt obligations146,878
 155,736
Less: unamortized debt issuance costs(2,383) (2,930)
Debt obligation, net144,495
 152,806
Less: current portion(8,175) (5,817)
Long-term debt$136,320
 $146,989
2023:
(In thousands)March 31,
2024		December 31, 2023
Term loan facility$63,000 $63,875 
Revolving credit facility123,416 135,723 
Debt obligations186,416 199,598 
Less: unamortized debt issuance costs(1,610)(1,187)
Debt obligation, net184,806 198,411 
Less: current portion(3,074)(3,141)
Long-term debt$181,732 $195,270 
As of September 30, 2017,March 31, 2024, the carrying value of debt approximated the fair value due to the variable interest rate, reflectingwhich reflected the market rate.
Credit Agreement
In conjunction with our acquisition of HHI onHealthland Holding Inc. ("HHI") in January 8, 2016, we entered into a syndicated credit agreement on the same date (the "Previous Credit Agreement"), with Regions Bank ("Regions") serving as administrative agent, which provided for a $125 million term loan facility (the "Previous Term Loan Facility") and a $50 million revolving credit facility. On June 16, 2020, we entered into an Amended and Restated Credit Agreement that increased the aggregate principal amount of our credit facilities to $185 million, including a $75 million term loan facility (the "Previous Revolving Credit Facility"). The cash portion of the purchase price for HHI was partially funded by the $125and a $110 million borrowed under the Previous Term Loan Facility and $25 million borrowed under the Previous Revolving Credit Facility. As described in Note 16, on October 13, 2017,revolving credit facility. On May 2, 2022, we entered into a SecondFirst Amendment (the "First Amendment") to the Previous Credit Agreement to refinance and decreasethat increased the aggregate committed sizeprincipal amount of our credit facilities to $230 million, which includes a $70 million term loan facility and a $160 million revolving credit facility. In addition, the interest rate provisions of the First Amendment reflect the transition from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") as the new benchmark interest rate for each loan.
Each of our credit facilities.
The Previous Term Loan Facility borefacilities continues to bear interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the Adjusted LIBORSOFR rate for the relevant interest period, subject to a floor of 0.50%, (2) an alternate base rate determined by reference to the greater of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus one half of one percent per annum and (c) the one-month LIBORone month SOFR rate, subject to the aforementioned floor, plus one percent per annum, or (3) a combination of (1) and (2). InterestThe applicable margin range for SOFR loans and the letter of credit fee ranges from 1.8% to 3.0%. The applicable margin range for base rate loans ranges from 0.8% to 2.0%, in each case based on the outstanding principal of the Previous Term Loan Facility was payable on the last day of each month, in the case of each base rate loan, and on the last day of each interest period (but no less frequently than every three months), in the case of LIBOR loans. Company's consolidated net leverage ratio.
Principal payments werewith respect to the term loan facility are due on the last day of each fiscal quarter beginning June 30, 2022, with quarterly principal payments of approximately $0.9 million through March 31, 2016,2027, with the remainder due at maturity on January 8, 2021 (the "Previous Maturity Date"). May 2, 2027 or such earlier date as the obligations under the Amended and Restated Credit Agreement, as amended by the First Amendment, become due and payable pursuant to the terms of such agreement. Any principal outstanding under the revolving credit facility is due and payable on the maturity date.
Anticipated annual future maturities of the Previous Term Loan Facility, Previous Revolving Credit Facility,term loan facility and capital lease obligation wererevolving credit facility are as follows as of September 30, 2017:March 31, 2024:
(In thousands)
2024$2,625 
20253,500 
20263,500 
2027176,791 
$186,416 
(In thousands) 
2017$1,638
20189,690
201912,750
202015,625
2021107,175
Thereafter—
 $146,878
Borrowings under the Previous Revolving Credit Facility bore interest at a rate similar to that of the Previous Term Loan Facility, with interest payment dates similar to that of the Previous Term Loan Facility. The Previous Revolving Credit Facility included a $5 million swingline sublimit, with swingline loans bearing interest at the alternate base rate plus the applicable margin. Any principal outstanding under the Previous Revolving Credit Facility was due and payable on the Previous Maturity Date.
The Previous Term Loan Facility and amounts borrowed under the Previous Revolving Credit Facility wereOur credit facilities are secured pursuant to a Pledgethe Amended and SecurityRestated Credit Agreement, dated January 8, 2016,as of June 16, 2020, among the parties identified as Obligorsobligors therein and

Regions, as collateral agent, (the “Security Agreement”), on a first priority basis by a security interest in substantially all of the tangible and intangible assets (subject to certain exceptions) of the Company and certain subsidiaries of the Company, as guarantors (collectively, the “Subsidiary Guarantors”), including certain registered


24






intellectual property and the capital stock of certain of the Company’s direct and indirect subsidiaries. Our obligations under the PreviousAmended and Restated Credit Agreement wereare also guaranteed by the Subsidiary Guarantors.
The Previous Credit Agreement providedFirst Amendment provides incremental facility capacity of $50$75 million, subject to certain conditions. The PreviousAmended and Restated Credit Agreement, includedas amended by the First Amendment, includes a number of restrictive covenants that, among other things and in each case are subject to certain exceptions and baskets, imposedimpose operating and financial restrictions on the Company and the Subsidiary Guarantors, including the ability to incur additional debt; incur liens and encumbrances; make certain restricted payments, including paying dividends on itsthe Company's equity securities or payments to redeem, repurchase, or retire itsthe Company's equity securities;securities (which are subject to our compliance, on a pro forma basis to give effect to the restricted payment, with the fixed charge coverage ratio and consolidated net leverage ratio described below); enter into certain restrictive agreements; make investments, loans and acquisitions; merge or consolidate with any other entity;person; dispose of assets; enter into sale and leaseback transactions; engage in transactions with its affiliates; and materially alter the business it conducts. In addition,we conduct. The First Amendment requires the Company was required to comply withmaintain a minimum fixed charge coverage ratio and a maximum consolidated leverage ratioof 1.25:1.00 throughout the duration of such agreement. Under the Previous Credit Agreement.First Amendment, the Company is required to comply with a maximum consolidated net leverage ratio of 3.50:1.00. Further, under the First Amendment, in connection with any acquisition by the Company exceeding $25 million, the Company may elect to increase the maximum permitted consolidated net leverage ratio for the fiscal quarter in which the acquisition occurs and each of the following three fiscal quarters by 0.50:1.00 above the otherwise permitted maximum. If the consolidated net leverage ratio is less than 2.50:1.00, there is no limit on the amount of incremental facilities. The PreviousAmended and Restated Credit Agreement also containedcontains customary representations and warranties, affirmative covenants and events of default. On March 10, 2023, the calculation of the fixed charge coverage ratio was amended to specifically exclude from the definition of fixed charges the Company's share repurchases conducted during the third and fourth quarters of 2022.
As of September 30, 2023, we were not in compliance with the fixed charge coverage ratio required by the Amended and Restated Credit Agreement. On November 8, 2023, the Company and the subsidiary guarantors entered into a Waiver with Regions Bank, as administrative agent, and various other lenders, which provided for a one-time waiver of this failure as an event of default. As of December 31, 2023, the Company was similarly not in compliance with the fixed charge coverage ratio required by the Amended and Restated Credit Agreement, and a one-time waiver was provided in conjunction with the Fourth Amendment to the Amended and Restated Credit Agreement (described below). Any failure by us to comply with this or another covenant in the future may result in an event of default. There can be no assurance that we will be able to continue to comply with this covenant or obtain amendments to avoid future covenant violations, or that such amendments will be available on commercially acceptable terms.
The Previous Credit Agreement requiredFirst Amendment removed the Company to mandatorily prepayrequirement of mandatory prepayment of the Previous Term Loan Facility and amounts borrowed under the Previous Revolving Credit Facilitycredit facilities with (i) 100% of net cash proceeds from certain sales and dispositions, subject to certain reinvestment rights, (ii) 100% of net cash proceeds from certain issuances or incurrences of additional debt, (iii) 50% of net cash proceeds from certain issuances or sales of equity securities, subject to a step down to 0% if the Company’s consolidated leverage ratio was no greater than 2.50:1.0, and (iv) beginning with the fiscal year ending December 31, 2016, 50% of excess cash flow (minus certain specified other payments), subject to a step down to 0% of excess cash flow ifgenerated during the Company’s consolidated leverage ratio was no greater than 2.50:1.0.prior fiscal year. The Company wasis permitted to voluntarily prepay the Previous Term Loan Facility and amounts borrowed under the Previous Revolving Credit Facilitycredit facilities at any time without penalty, subject to customary “breakage” costs with respect to prepayments of LIBORSOFR rate loans made on a day other than the last day of any applicable interest period.
Credit Facility Third Amendment
On January 16, 2024, the Company entered into a Third Amendment (the “Third Amendment”) to the Amended and Restated Credit Agreement, dated as of June 16, 2020, by and among the Company; the Subsidiary Guarantors; Regions Bank, as administrative agent and collateral agent; and various other lenders from time to time. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Credit Agreement.
The Third Amendment modified the term “Consolidated EBITDA” to provide that the following amounts will be added back to Consolidated Net Income: (i) the reasonably expected value of all earn-out consideration in connection with any Permitted Acquisition, provided that the aggregate amount of fees and out-of-pocket expenses incurred in connection with anticipated Permitted Acquisitions which are not consummated during any period of four fiscal quarters ending on or after the Closing Date will not exceed the greater of $7 million and 10% of Consolidated EBITDA; (ii) any fees, costs or expenses related to the implementation of cost savings, operating expense reductions and synergies related to Permitted Acquisitions, restructurings and other initiatives; and (iii) costs and expenses related to the previously disclosed U.S. Securities and Exchange Commission investigation that occurred during the fiscal year ended December 31, 2023, in an aggregate amount not to exceed $1.25 million. Additionally, the Third Amendment (y) removed from the maximum aggregate amount of fees and expenses that can be added back to Consolidated Net Income any losses resulting from any Asset Sales or Involuntary Disposition and (z) increased the maximum amount of fees and expenses that can be added back to Consolidated Net Income related to savings initiatives, Equity Transactions, the incurrence of Indebtedness and amendments to the Credit Documents from 10% to 15% of Consolidated EBITDA (determined prior to giving effect to such adjustments).


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Credit Facility Fourth Amendment
On February 29, 2024, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement, by and among the Company; the Subsidiary Guarantors; the Administrative Agent; and various other lenders. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Credit Agreement.
The Fourth Amendment modified the term “Consolidated EBITDA” to provide that the additional following amounts will be added back to Consolidated Net Income: (i) costs and expenses related to the voluntary early retirement program during the fiscal year ending December 31, 2023; and (ii) fees, costs and expenses in categories identified to the Administrative Agent to the extent incurred during the fiscal year ending December 31, 2024, in an aggregate amount not to exceed $7.25 million. Additionally, the modified definition of “Consolidated EBITDA” limits the amount of pro forma “run rate” cost savings, operating expense reductions and synergies (collectively, “Savings”) related to the Viewgol acquisition that can be added back to Consolidated Net Income to an aggregate amount not to exceed $6.6 million; however, Savings related to the Viewgol acquisition are not subject to the cap of 15% of Consolidated EBITDA that otherwise applies to Savings related to Permitted Acquisitions, restructurings or cost savings initiatives.
Finally, the Consolidated Fixed Charge Coverage Ratio covenant was decreased from 1.25:1.00 to 1.15:1.00 for each fiscal quarter ending March 31, 2024 through and including December 31, 2024. As of September 30, 2017, weDecember 31, 2023, the Company was not in compliance with the Consolidated Fixed Charge Coverage Ratio required by the Credit Agreement, and the Fourth Amendment provides for a one-time waiver of this failure as an event of default. We believe that we were in compliance with all debtthe covenants contained in such agreement as of March 31, 2024.
14.   OPERATING LEASES
The Company leases office space in various locations in Alabama, Pennsylvania, Maryland, Mississippi, and Washington. These leases have terms expiring from 2024 through 2029 but do contain optional extension terms. Leases with an initial term of 12 months or less are not recorded on the Previous Credit Agreement.balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
On April 30, 2023, the company terminated its lease agreement for approximately 12,500 square feet of office space in Plymouth, Minnesota. Pursuant to a Termination of Lease Agreement dated April 18, 2023, the Company paid $1.1 million to the landlord as consideration for the early termination. In connection with the lease termination, the Company derecognized the assets and liabilities associated with the operating lease and recorded a $0.1 million loss on the disposal of leasehold improvement.
12.Supplemental balance sheet information related to operating leases was as follows:
(In thousands)March 31,
2024		December 31,
2023
Operating lease assets:
Operating lease assets$4,672 $5,192 
Operating lease liabilities:
Other accrued liabilities1,6011,804
Operating lease liabilities, net of current portion2,848 3,074 
Total operating lease liabilities$4,449 $4,878 
Weighted average remaining lease term in years3.94
Weighted average discount rate4.1%4.2%
Because our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. We used the incremental borrowing rate on January 1, 2019, for operating leases that commenced prior to that date.


26






The future minimum lease payments payable under these operating leases subsequent to March 31, 2024 are as follows:
(In thousands)
2024$1,326 
20251,063 
20261,025 
2027706 
2028462 
Thereafter231 
Total lease payments4,813 
Less imputed interest(364)
Total$4,449 
Total lease expense for the three months ended March 31, 2024 and 2023 was $0.5 million and $0.6 million, respectively.
Total cash paid for amounts included in the measurement of lease liabilities within operating cash flows from operating leases for the three months ended March 31, 2024 and 2023 was $0.5 million and $0.6 million, respectively.

15.  COMMITMENTS AND CONTINGENCIES
From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. Management does not believe it is reasonably possible that such matters will have a material adverse effect on the Company’s financial statements. The Company recorded a liability of $1.0 million related to contingent consideration for Viewgol's former equity holders as of December 31, 2023 and March 31, 2024.
13.16.  FAIR VALUE
The FASB Codification topic, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands financial statement disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The FASB Codification does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. The FASB Codification requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.







The accruedAt March 31, 2024, we measured the fair value of contingent consideration depicted belowthat represents the potential earnout incentive for Viewgol’s former Rycan shareholders, relating to the purchase of Rycan by HHI in 2015.equity holders. We have estimated the fair value of thethese contingent consideration based on the amountprobability of revenue we expectViewgol meeting EBITDA targets (subject to be earned by Rycan through the year ending December 31, 2018.certain pro-forma adjustments).

The following table summarizes the carrying amountsamount and fair values of certain liabilities at September 30, 2017:
   Fair Value at September 30, 2017 Using
 Carrying Amount at Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
(In thousands)9/30/2017 (Level 1) (Level 2) (Level 3)
Description       
Contingent consideration$1,192
 $—
 $—
 $1,192
Total$1,192
 $—
 $—
 $1,192
The following table summarizes the carrying amounts and fair values of certain liabilities at December 31, 2016:
   Fair Value at December 31, 2016 Using
 Carrying Amount at Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
(In thousands)12/31/2016 (Level 1) (Level 2) (Level 3)
Description       
Contingent consideration$1,120
 $—
 $—
 $1,120
Total$1,120
 $—
 $—
 $1,120
The carrying amounts of other financial instruments reported in the consolidated balance sheets for current assets and current liabilities approximate their fair values becausevalue of the short-term nature of these instruments.contingent consideration at March 31, 2024:

Fair Value at March 31, 2024 Using
(In thousands)Carrying Amount at March 31, 2024Quoted Price in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Description
Contingent consideration$1,044 $— $— $1,044 
Total$1,044 $— $— $1,044 
14.


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17.  SEGMENT REPORTING
Our chief operating decision makers ("CODM"(“CODM”) utilizeidentifies the following three operating segments "Acute Care EHR"“RCM”, "Post-acute Care EHR"“EHR”, and "TruBridge",“Patient Engagement”. These segments represent the components of the Company for which separate financial information is available that is utilized on a regular basis by the CODM in assessing segment performance and in allocating the Company's resources. Management evaluates the performance of the segments based on our three distinct business units with unique market dynamicsrevenues and opportunities. Revenues and costsadjusted EBITDA. The Company previously evaluated the performance of sales are primarily derived from the provision of services and sales of our proprietary software, and our CODMsegments based on segment gross profit. Management believes adjusted EBITDA is a useful measure to assess the performance and liquidity of these three segments at the gross profit level. OperatingCompany as it provides meaningful operating results by excluding the effects of expenses and items such as interest, income tax, capital expenditures and total assets are managed at a consolidated level and thusthat are not included in ourreflective of its operating segment disclosures.business performance. Our CODM group is comprised of the Chief Executive Officer, Chief Growth Officer, Chief Operating Officer, and Chief Financial Officer. Accounting policies for each of the reportable segments are the same as those used on a consolidated basis.
AsAdjusted EBITDA consists of January 1, 2017,GAAP net income (loss) 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; and (ix) the provision (benefit) for income taxes. There are no intersegment revenues to be eliminated in computing segment revenue.
The CODM do not evaluate operating segment formerly identified as "TruBridge, Rycan, and Other Outsourcing" is now identified as "TruBridge".segments nor make decisions regarding operating segments based on assets. Consequently, we do not disclose total assets by reportable segment.
The following table presents a summary of the revenues and gross profitsadjusted EBITDA of our three operating segments for the three and nine months ended September 30, 2017March 31, 2024 and 2016:2023:
Three Months Ended March 31,
(In thousands)20242023
Revenues by segment:
RCM$53,038 $48,631 
EHR
Recurring revenue
Acute EHR25,910 27,613 
Post-acute EHR582 3,906 
Total recurring EHR revenue26,492 31,519 
Non-recurring revenue
Acute EHR1,449 3,292 
Post-acute EHR81 380 
Total non-recurring EHR revenue1,530 3,672 
Total EHR revenue$28,022 $35,191 
Patient Engagement2,187 2,411 
Total revenues$83,247 $86,233 
Adjusted EBITDA by segment:
RCM$6,396 $7,898 
EHR2,929 6,157 
Patient Engagement129 588 
Total adjusted EBITDA$9,454 $14,643 


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 Three Months Ended September 30, Nine Months Ended September 30,
(In thousands)2017 2016 2017 2016
Revenues:       
Acute Care EHR$38,761
 $37,596
 $115,285
 $121,090
Post-acute Care EHR5,605
 6,505
 17,978
 20,439
TruBridge22,747
 20,562
 65,601
 61,192
Total revenues$67,113
 $64,663
 $198,864
 $202,721
        
Costs of sales:       
Acute Care EHR$17,068
 $18,056
 50,821
 57,519
Post-acute Care EHR1,764
 2,653
 5,800
 7,556
TruBridge12,806
 11,187
 36,326
 33,878
Total costs of sales$31,638
 $31,896
 $92,947
 $98,953
        
Gross profit:       
Acute Care EHR$21,693
 $19,540
 64,464
 63,571
Post-acute Care EHR3,841
 3,852
 12,178
 12,883
TruBridge9,941
 9,375
 29,275
 27,314
Total gross profit$35,475
 $32,767
 $105,917
 $103,768
        
Corporate operating expenses$(29,853) (28,523) (92,614) (93,486)
Other income102
 53
 242
 121
Interest expense(2,062) (1,717) (5,807) (4,828)
Income before taxes$3,662
 $2,580
 $7,738
 $5,575
The following table reconciles net income to adjusted EBITDA:
Three Months Ended March 31,
(In thousands)20242023
Net income (loss), as reported$(2,516)$3,084 
Depreciation expense400 499 
Amortization of software development costs2,742 1,486 
Amortization of acquisition-related intangibles3,127 4,014 
Stock-based compensation800 1,247 
Severance and other non-recurring charges3,844 1,104 
Interest expense4,072 2,669 
Gain on sale of AHT(1,250)— 
Other(173)(269)
Provision (benefit) for income taxes(1,592)809 
Total adjusted EBITDA$9,454 $14,643 
15.     RECENT ACCOUNTING PRONOUNCEMENTS
New Accounting Standards Adopted in 2017

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The amended guidance requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The requirement replaces the current lower of cost or market evaluation. Accounting guidance is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail method. The amended guidance was effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The

amended guidance is to be applied prospectively and early adoption was permitted. The adoption of ASU 2015-11 did not have a material effect on our financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and the classification of awards on the statement of cash flows. This guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2016, which was effective for the Company asCertain of the first quarteritems excluded or adjusted to arrive at adjusted EBITDA are described below:
•Amortization of our fiscal year ending December 31, 2017. The adoption of ASU 2016-09 hadacquisition-related intangibles - Acquisition-related amortization expense is a material effect on our financial statements in the period of adoption and is disclosed in Note 7 of the financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, that removes step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new guidance, a goodwill impairment is now the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. Entities continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2019 with early adoption permitted for any goodwill impairment tests performed after January 1, 2017. The guidance is to be applied prospectively.

We have elected to early adopt ASU 2017-04 and the guidance will be applied for all goodwill impairment tests performed after January 1, 2017. The adoption of ASU 2017-04 may have a material impact on our financial statements if one or more of our reporting unit's carrying value exceeds its fair value at the time of impairment assessment.
New Accounting Standards Yet to be Adopted
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenuenon-cash expense arising from contracts with customers and supersedes the most current revenue recognition guidance. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2017, which is effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. Although we have not fully completed the assessment of our systems, data, and processes that will be affected by the implementation of this standard, we currently anticipate that this standard will not significantly alter revenue recognition practices for our system sales and support and TruBridge revenue streams but may have a material impact on our consolidated financial statements with respect to the capitalization of certain commissions and contract fulfillment costs which are currently expensed as incurred. We intend to adopt this standard using the modified retrospective method, in which the cumulative effect of initially applying the guidance will be recognized as an adjustment to retained earnings or impacted balance sheet line items as of January 1, 2018, the date of adoption.

In February 2016, the FASB issued ASU 2016-02, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new guidance will require the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under U.S. GAAP. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2018, which is effective for the Company as of the first quarter of our fiscal year ending December 31, 2019. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.

In August 2016, the FASB issued ASU 2016-15, Classifications of Certain Cash Receipts and Cash Payments, which clarifies cash flow classification for eight specific issues, including debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceedsprimarily from the settlementacquisition of insurance claims, and proceedsintangibles in connection with acquisitions or investments. We exclude acquisition-related amortization expense from settlement of corporate-owned life insurance policies. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2017, which is effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, to assist an entity in evaluating when a set of transferred assets and activities is a business. The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017, and should be applied prospectively to any transactions



occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.

We do notadjusted EBITDA because we believe that any other recently issued but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.
16.     SUBSEQUENT EVENTS
Credit Agreement Amendment
On October 13, 2017, the Company entered into a Second Amendment (the "Amendment") to the Previous Credit Agreement to refinance and decrease the aggregate committed size of the credit facilities from $175 million to $162 million, which includes a $117 million term loan facility and a $45 million revolving credit facility (collectively, the "Amended Facilities"). In addition to decreasing the aggregate size of the credit facilities, the Amendment:

•extends the maturity date of the credit facilities;
•increases the maximum consolidated leverage ratio with which the Company must comply;
•decreases the interest rates for LIBOR rate loans and base rate loans and the letter of credit fee;
•decreases the commitment fee; and
temporarily increases the percentage of excess cash flow (minus certain specified other payments) that must be used to prepay the credit facilities.

Dividend

On November 2, 2017, the Company announced a dividend for the fourth quarter of 2017 in(i) the amount of $0.10 per share, payable on December 1, 2017,such expenses in any specific period may not directly correlate to stockholdersthe underlying performance of recordour 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.
•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 adjusted EBITDA 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 closetiming and valuation of grants of new stock-based awards, including grants in connection with acquisitions.
•Severance and other non-recurring charges - Non-recurring charges relate to certain severance and other charges incurred in connection with activities that are considered non-recurring. We exclude non-recurring expenses (primarily related to costs associated with our recent business on November 16, 2017.transformation initiative and non-recurring lease termination costs) and transaction-related costs from adjusted EBITDA 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.

•Other – Other charges consist of a miscellaneous of items such as interest income, service charges, other (income)/loss, and foreign currency (gain)/loss. We exclude these other charges from adjusted EBITDA 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.


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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes appearing elsewhere herein.

This discussion and analysis 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 report relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates 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;Risks Related to Our Industry
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•unfavorable economic or market conditions including changesthat may cause a decline in spending for information technology and services;
•significant legislative and regulatory uncertainty in the financialhealthcare industry;
•exposure to liability for failure to comply with regulatory requirements;
Risks Related to Our Business
•transition to a subscription-based recurring revenue model 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 termsmodernization of our senior secured credit facilities;technology;
market risks related to interest rate changes;
our ability to successfully integrate the businesses of Healthland Inc., American HealthTech, Inc., and Rycan Technologies, Inc. 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;
•potential future acquisitions that may be expensive, time consuming, and subject to other inherent risks;
•our ability to attract and retain qualified personnel;
•disruption from periodic restructuring of our sales force;
•slower than anticipated development of the market for RCM services;
•our potential inability to manage our growth in the new markets we may enter;
•our operations could be significantly disrupted due to the ongoing implementation of a new enterprise resource planning software solution;
•our operations could be significantly disrupted if we do not effectively implement a new enterprise resource planning software solution;
•exposure to numerous and often conflicting laws, regulations, policies, standards or other requirements through our international business activities;
•potential litigation against us and investigations;
•our use of an international workforce and offshore third-party resources;
•pandemics and other public health crises and related economic disruptions;
•competitive and litigation risk related to the use of artificial intelligence;
Risks Related to Our Products and Services
•potential failure to develop new products or enhance current technology and products in response tothat keep pace with market demands;
failure of•exposure to claims if our products fail to function properly resulting inprovide accurate and timely information for clinical decision-making;
•exposure to claims for losses;
breaches of security and viruses in our systems resultingsystems;
•undetected errors or problems in customer claims against us and harmnew products or enhancements;
•our potential inability to convince customers to migrate to current or future releases of our reputation;products;
•failure to maintain customer satisfaction through new product releasesour margins and service rates;
•increase in the percentage of total revenues represented by service revenues, which have lower margins;
•exposure to liability in the event we provide inaccurate claims data to payers;
•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;
•a failure to protect our intellectual property rights;
•exposure to significant license fees or enhancements freedamages for intellectual property infringement;
•service interruptions resulting from loss of undetected errors or problems;
interruptions in our power supply and/or telecommunications capabilities, including those caused by natural disaster;capabilities;

Risks Related to Our Indebtedness
•our potential inability to secure additional financing on favorable terms to meet our future capital needs;


30






•substantial indebtedness that may adversely affect our business operations;
•our ability to attract and retain qualified and key personnel;incur substantially more debt;
failure•pressures on cash flow to properly manage growth in new markets we may enter;service our outstanding debt;
misappropriation•restrictive terms of our intellectual property rightscredit agreement on our current and potential intellectual property claimsfuture operations;

Risks Related to Our Common Stock and litigation against us;Other General Risks
•changes in and interpretations of financial accounting principles generally accepted inmatters that govern the United Statesmeasurement of America;our performance;

significant charge to earnings if•the potential for our goodwill or intangible assets to become impaired; and
•quarterly fluctuations in quarterlyour financial performanceresults due to among other factors, timing of customer installations.various factors;
•volatility in our stock price;
•failure to maintain effective internal control over financial reporting;
•inherent limitations in our internal control over financial reporting;
•vulnerability to significant damage from natural disasters;
•exposure to market risk related to interest rate changes; and
•potential material adverse effects due to macroeconomic conditions.
Additional information concerning these and other factors that could cause differences between forward-looking statements and future actual results is discussed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016.2023 and our subsequent Quarterly Reports on Form 10-Q.
Background
CPSIDuring much of the Company's history, our strategy, operations, and financial results have been largely associated with developments in the electronic health record ("EHR") industry. With the rapid maturity of the EHR industry and the increasing prevalence of and demand for outsourced revenue cycle management ("RCM") services and complementary solutions, we've seen our strategy, operations, and financial results naturally evolve to become more heavily associated with RCM, with RCM revenues comprising 57% of our consolidated revenue for 2023. In recognition of this significant shift in strategic focus, Computer Programs and Systems, Inc. changed its corporate name to TruBridge, Inc. on March 4, 2024. Contemporaneous with this name change, the former wholly-owned subsidiaries Evident, LLC, TruBridge, LLC, and TruCode, LLC were merged into the parent company, while the former wholly-owned subsidiary Rycan Technologies, Inc. was merged into its parent and another wholly-owned subsidiary, Healthland Holding Inc. With these changes, the Company's remaining legal structure includes TruBridge, Inc., the parent company, with Viewgol, LLC ("Viewgol"), iNetXperts, Corp. d/b/a Get Real Health, Healthcare Resource Group, Inc. ("HRG"), and Healthland Holding Inc. as its wholly-owned subsidiaries.
Founded in 1979, TruBridge is a leading provider of healthcare solutions and services for community hospitals, their clinics and other healthcare systems and post-acute care facilities. Founded in 1979, CPSI offers our products and services through four companies - Evident, LLC ("Evident"), TruBridge, LLC ("TruBridge"), Healthland Inc. ("Healthland"), and American HealthTech, Inc. ("AHT").systems. 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.
The Company operates its business in three operating segments, which are also our reportable segments: RCM, EHR, and Patient Engagement. The individual contributions of each of our four wholly-owned subsidiariescompanies align with the reporting segments and contribute towards thisthe combined focus areof improving the health of the communities we serve as follows:
Evident provides comprehensive electronic health record ("EHR"•The revenue cycle management (“RCM”) solutions and services for community hospitals, including those solutions previously sold under the CPSI name as well as an expanded range of offerings targeted specifically at community healthcare organizations.
TruBridgereporting segment focuses exclusively on providingproviding business management, consulting, and managed IT services along with its revenue cycle management ("RCM"complete RCM solution for all care settings, regardless of their primary healthcare information solutions provider.
•The electronic healthcare record (“EHR”) product, Rycan, whichsegment provides RCM workflowcomprehensive acute care EHR solutions and automation softwarerelated services for community hospitals, their physician clinics, and skilled nursing and assisted living facilities. Prior to our sale of American HealthTech, Inc. in January 2024, our EHR segment also provided post-acute care EHR solutions and related services for skilled nursing and assisted living facilities.
•The Patient Engagement segment offers comprehensive patient engagement and empowerment technology solutions through Get Real Health to improve patient outcomes and engagement strategies with care providers.
Our companies currently support community hospitals and other healthcare systems and skilled nursing organizations.
Healthland provides integrated technology solutions and services to small rural and critical access hospitals.
AHT is one of the nation's largest providers of financial and clinical technology solutions and services for post-acute care facilities.
The combined company currently supports approximately 1,300 acute care facilities and over 3,300 post-acute care facilities with a geographically diverse customerpatient mix within the domestic rural and community healthcare market. Our customers primarily consist of ruraltarget market for our RCM, EHR, and Patient Engagement solutions includes community hospitals with 300 or fewer than 400 acute care beds with hospitals having 100and their clinics, as well as independent or fewer beds comprising approximately 95%small to medium sized chains of skilled nursing facilities. 98% of our acute care hospital EHR customer base.base is comprised of hospitals with fewer than 100 beds.
We operate in three reportable segments: (1) Acute Care EHR, (2) Post-acute Care EHR and (3) TruBridge.


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See Note 14 above17 - Segment Reporting of the condensed consolidated financial statements included herein for additional information on our segment reporting.three reportable segments.

Acute Care EHR

Our Acute Care EHR segment consists of acute care software solutions and support sales generated by Evident and Healthand.

Post-acute Care EHR

Our Post-acute Care EHR segment consists of post-acute care software solutions and support sales generated by AHT.

TruBridge

Our TruBridge segment primarily consists of business management, consulting and managed IT services sales generated by TruBridge and the sale of Rycan's revenue cycle management workflow and automation software.
Management Overview
Historically we have primarily sought revenue growth through sales of healthcare IT systems and related servicesStrategy
Our core strategy is to existing and new customers within our target market, a strategy that has resulted in a ten-year compounded annual growth rate in legacy revenues (i.e., revenues related to our legacy Evident and TruBridge operations) of approximately 4.5% as of the end of our most recently completed fiscal year. Important to our potential for continuedachieve meaningful long-term revenue growth is our ability to sell new and additional products andby cross-selling RCM services tointo our existing EHR customer base, including cross-sellingexpanding RCM market share with sales to new community hospitals and larger health systems, and pursuing competitive EHR takeaway opportunities presented within the acquisition of HHI.acute care markets. We believe that as our combined customer base grows, the demand for additional products and services, including business management, consulting and managed IT services, willmay also continueseek to grow supporting furtherthrough acquisitions of businesses, technologies or products if we determine that such acquisitions are likely to help us meet our strategic goals.

The opportunity to cross-sell RCM services is greatest within our Acute Care EHR customer base. As such, retention of existing Acute Care EHR customers is a key component of our long-term growth strategy by protecting this base of potential RCM customers, while at the same time serving as a leading indicator of our market position and stability of revenues and cash flows.
increasesWe determine retention rates by reference to the amount of beginning-of-period Acute Care EHR recurring revenues that have not been lost due to customer attrition from our production environment customer base. Production environment customers are those that are using our applications to document live patient encounters, as opposed to legacy environment customers that have view-only access to historical patient records. Since 2019, these retention rates have consistently remained in recurring revenues.the mid-to-high 90th percentile ranges. Specifically, we achieved retention rates of 92.1% in 2023, 98.2% in 2022 and 94.9% in 2021. The annualized retention rate in the first three months of 2024 was 91.1%, as EHR product consolidation has led to an increase in attrition from our non-flagship products. We also expecthave increased customer retention efforts by enhancing support services, investing in tooling and instrumentation to driveproactively monitor for potential disruptions, and deploying in-application experience software that delivers application-specific insights while using our products.
As we pursue meaningful long-term revenue growth from new product development thatby leveraging RCM as a growth agent, we may generate from our research and development activities.
January 2016 marked an important milestone for CPSI, as we announced the completion of our acquisition of HHI, the first major acquisitionare placing ever-increasing value in the Company's history. With this acquisition, CPSI now has a presence in approximately 1,300 acute care facilities and over 3,300 post-acute care facilities, adding significantly tofurther developing our already substantialsignificant recurring revenue base to further stabilize our revenues and furthercash flows. As such, maintaining and growing recurring revenues are key components of our long-term growth strategy, aided by the aforementioned focus on customer retention. This includes a renewed focus on driving demand for subscriptions for our existing technology solutions and expanding the footprint for RCM services beyond our ability to generate organic recurringEHR customer base.
While the combination of revenue growth through additional cross-selling opportunities now available within the combined company. We believe that the addition of HHI and its clients and products will enhance our ability to grow our business and compete in the markets that we serve.
Our business model is designed such that, as revenue growth materializes, earnings and profitability growth are naturally bolstered through increased future margin realization. Once a hospital has installed our solutions, we continue to provide support services to the customer on an ongoing basis and make available to the customer our broad portfolio of business management, consulting, and managed IT services. The provision of these services typically requires fewer resources than the initial system installation, resultingoperating leverage results in increased overall gross margins.
Wemargin realization, we also look to increase margins through specific cost containment measures where appropriate. For example, during 2016appropriate as we instituted several changes related to our employee benefits offerings, including a spousal carve-out for healthcare benefits. Additionally, during the first quarter of 2017 we instituted a one-time, voluntary severance program offering those employees meeting certain predetermined criteria severance packages involving continuing periodic cash payments and healthcare benefits for varying periods, depending upon the individual's years of service with the Company. Lastly, the acquisition of HHI in January of 2016 presents us with additional opportunitiescontinue to leverage theopportunities for greater operating efficiencies of the combined entity in order to drive further earnings and profitability growthefficiencies. However, in the future.immediate future, we anticipate incremental margin pressure from the continued client transition from perpetual license arrangements to “Software as a Service” (“SaaS”) arrangements as described below.
Industry Dynamics
Turbulence in the U.S. and worldwide economies and financial markets impacts almost all industries. While the healthcare industry is not immune to economic cycles, we believe it is more significantly affected by U.S. regulatory and national health projects than by the economic cycles of our economy. Additionally, healthcare organizations with a large dependency on Medicare and Medicaid populations, such as rural and community hospitals, have been affected by the challenging financial condition of the federal government and many state governments and government programs. Accordingly, we recognize that prospective hospital customers often do not have the necessary capital to make investments in information technology. Additionally, in response to these challenges, hospitals have become more selective regarding where they invest capital, resulting in a focus on strategic spending that generates a return on their investment. Despite these challenges, we believe healthcare information technology is often viewed as more strategically beneficial to hospitals than other possible purchases because the technology offers the possibility of a quick return on investment. Information technology also plays an important role in healthcare by improving safety and efficiency and reducing costs. Additionally, we believe most hospitals recognize that they must invest in healthcare information technology to meet current and future regulatory, compliance and government reimbursement requirements.
initiatives. In recent years, there have been significant changes to provider reimbursement by the U.S. federal government, followed by commercial payers and state governments. There is increasing pressure on healthcare organizations to reduce costs and increase quality while replacing the fee-for-service reimbursement model in part by enrolling in an advanced payment model.model that incentivizes high-quality, cost effective-care via value-based reimbursement. This pressure could further encourage adoption of healthcare IT and increase demand for business management, consulting, and managed IT services, as the future success of these healthcare providers is greatly dependent upon their ability to engage patient populations and to coordinate patient care across a multitude of settings, while optimizing operating efficiency along the way.
Additionally, healthcare organizations with a large dependency on Medicare and Medicaid populations, such as community hospitals, have been affected by the challenging financial condition of the federal government and many state governments and government programs. Accordingly, we recognize that prospective hospital clients often do not have the necessary capital to make investments in information technology while those with the necessary capital have become more selective in their investments. Despite these challenges, we believe healthcare IT will be an area of continued investment due to its unique potential to improve safety and efficiency and reduce costs while meeting current and future regulatory, compliance and government reimbursement requirements.


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EHR License Model Preferences
Much of the variability in our periodic revenues and profitability has been and will continue to be due to changing demand for different license models for our technology solutions, with variability in operating cash flows further impacted by the financing decisions within those license models. Our technology solutions are generally deployed in one of two license models: (1) perpetual licenses, for which the related revenue is recognized effectively upon installation, and (2) “Software as a Service” or “SaaS” arrangements, including our Cloud Electronic Health Record (“Cloud EHR”) offering, which generally result in revenue being recognized monthly as the services are provided over the term of the arrangement.
The overwhelming majority of our historical EHR installations have been under a perpetual license model, but new customer demand has dramatically shifted towards a SaaS license model in the past several years. SaaS license models made up only 12% of annual new acute care EHR installations in 2018, increasing to 100% during 2023 and the first three months of 2024. These SaaS offerings are attractive to our clients because this configuration allows them to obtain access to advanced software products without a significant initial capital outlay. We expect this trend to continue for the foreseeable future, with the resulting impact on the Company’s financial statements being reduced EHR revenues in the period of installation in exchange for increased recurring periodic revenues (reflected in EHR revenues) over the term of the SaaS arrangement. This naturally places downward pressure on short-term revenue growth and profitability metrics, but benefits long-term revenue growth and profitability which, in our view, is consistent with our goal of delivering long-term shareholder value.
For customers electing to purchase our technology solutions under a traditional perpetual license, we have historically made financing arrangements available to customers on a case-by-case basis, depending uponon the various aspects of the proposed contract and customer attributes. These financing arrangements have comprised the majority of our perpetual license installations over the past several years, and include other short-term payment plans and longer-term lease financing through us or third-party financing companies. We have seen an increased demand forThe aforementioned shift in customer preference towards SaaS arrangements has significantly reduced the frequency of new financing arrangements since 2015for customer purchases under a perpetual license. When combined with scheduled payments on existing financing arrangements, the reduced frequency of new financing arrangements has resulted in a substantial reduction in financing receivables during 2023 and expect this trend to continue. the first three months of 2024.
For those customersperpetual license clients not seeking a financing arrangement, the payment schedule of the typical contract is structured to provide for a scheduling deposit due at contract signing, with the remainder of the contracted fees due at various stages of the installation process (delivery of hardware, installation of software and commencement of training, and satisfactory completion of a monthly accounting cycle or end-of-month operation by and as applicable for, each respective application)application, as applicable).
WeMargin Optimization Efforts
Our core growth strategy includes an element geared towards margin optimization by identifying opportunities to further improve our cost structure by executing against initiatives related to organizational realignment, expanded use of offshore resources and the use of automation to increase the efficiency and value of our associates' efforts.
Initial organizational realignment efforts began during 2021, when we committed to a reduction in force intended to more effectively align our resources with business priorities. Other related initiatives include our ongoing implementation of the Scaled Agile Framework® throughout our EHR product development, implementation and support functions to enhance cohesion, time-to-market and customer satisfaction. This framework is a set of organization and workflow patterns intended to guide enterprises in scaling lean and agile practices and promote alignment, collaboration, and delivery across large numbers of agile teams.
The remaining margin optimization initiatives of expanded utilization of offshore resources and automation have also historically made our software applications available to customers through "Software as a Service" or "SaaS" configurations, including our Cloud Electronic Health Record ("Cloud EHR") offering. These offerings are attractive to some customers because this configuration allows them to obtain access to advanced software products without a significant initial capital outlay. Although the broader enterprise software marketplace has been experiencing an increasing trend of SaaS arrangements in the past few years, this trend has been slower to develop within our market for new system installations and add-on sales to existing customers. However, we experienced a substantial increase in the prevalence of such arrangements

within our system sales arrangements in 2015, a trend which continued in 2016commenced and, to date, in 2017have provided meaningful efficiencies to our operations, particularly within RCM. As a service organization, RCM's cost structure is heavily dependent upon human capital, subjecting it to the complexities and risks associated with this resource. Chief among these complexities and risks is the ever-present pressure of wage inflation, which has recently become a reality as national and international economies recover from the economic downturn caused by the COVID-19 pandemic and has compelled the Company to make compensation adjustments that are outside of historical norms. Prior to our October 2023 acquisition of Viewgol, we were solely reliant upon third party partnerships for offshore resources, increasing both the execution risk of this initiative and the related cost of scaling this labor force. With Viewgol as a subsidiary, we have greatly enhanced our control over the resource availability for this initiative and we expect to continue forachieve impressive per-unit cost efficiencies. However, in the foreseeable future. Unlike our historical perpetual license arrangements under which the related revenue is recognized effectively upon installation, the SaaS arrangements result in revenue being recognized monthly as the services are provided over the term of the arrangements. As a result, the effect of this trendnear-term, we expect to see additional pressure on the Company's financial statements is reduced system sales revenues during the period of installation in exchange for increased recurring periodic revenues (reflected in system sales and support revenues) over the term of the SaaS arrangements.
American Recovery and Reinvestment Act of 2009
While ongoing financial challenges facing healthcare organizations have impacted and are expected to continue to impact the rural and community hospitals that comprise our target market, we believe that the financial incentives and penalties offered by the American Recovery and Reinvestment Act of 2009 (the "ARRA") for the adoption of qualifying EHRs have increased and will continue to support demand for healthcare information technology and will have a positive impact on our business prospects through at least 2018. As of September 30, 2017, incentive payments totaling over $37 billion have been made to aid healthcare organizations in modernizing their operations through the acquisition and wide-spread use of healthcare information technology. Eligible hospitals could begin receiving these incentive payments in any year from 2011 through 2015, but the total incentive payment is decreased for hospitals that started receiving payments in 2014 and later. Additionally, reimbursements under Medicare have been reduced for those eligible healthcare providers that did not begin to demonstrate meaningful use of an EHR by October 1, 2014.
The financial incentives and penalties offered by the ARRA have resulted in an accelerated adoption of EHRs and increased EHR penetration within the rural and community healthcare market, thereby significantly narrowing the market for new system installations of our solutions. While we believe that the expanded requirements for continued compliance with meaningful use rules have resulted in an expanded replacement market for EHRs, it is uncertain whether revenues generated from this replacement market will be sufficient to offset the impacts of the overall accelerated adoption and increased penetration of EHRs within our target market. As a result, our system sales revenues and profitability may be materially and adversely affected during the short-term.
Similarly, these financial incentives and penalties have accelerated the purchases of incremental applications by our existing customers to remain in compliance with existing meaningful use regulations. Consequently, our penetration rates within our existing customer base for our current menu of applications have increased significantly under the ARRA, thereby significantly narrowing the market for add-on sales to existing customers, particularly for those applications required for meaningful use stage two compliance. On August 2, 2017, the Centers for Medicare and Medicaid Services (“CMS”) announced a final rule that effectively delays the requirement for stage three compliance from the first day of 2018margins due to the first dayintegration and ramp-up of 2019. While we believe that the stage three requirements provide a significant opportunity for add-on sales revenues through 2018, the delay by CMS is expected to delay some of the contract revenues we previously anticipated and there is a risk of further delays or reductions in the regulatory requirements imposed on hospitals, which could have an adverse effect on our revenues.Viewgol.
Although we are pursuing other strategic initiatives designed to result in system sales revenue growth in the future in the form of selective expansion into English-speaking international markets, selective expansion within the 100 to 300 bed hospital market, and continued development of new software applications such as our Business Intelligence solution which provides community hospital leaders valuable insight into financial, operational, and clinical data, there can be no guarantee that such initiatives will prove successful or will benefit the Company in a sufficiently timely fashion to offset the short-term effects of the aforementioned narrowing markets.

Health Care Reform
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, collectively referred to as the "Health Reform Laws." This sweeping legislation implemented changes to the healthcare and health insurance industries from 2010 through 2015, requiring substantially all U.S. citizens and legal residents to have qualifying health insurance coverage starting in 2014 and providing the means by which it will be made available to them. The Health Reform Laws have had little direct impact on our internal operation and do not appear to have had a significant impact on the businesses of our hospital customers to date. However, we have not been able to determine at this point whether the ultimate impact will be positive, negative or neutral; it is likely that the Health Reform Laws will affect hospitals differently depending upon the populations they service. Rural and community hospitals typically service higher uninsured populations than larger urban hospitals and rely more heavily on Medicare and Medicaid for reimbursement. It remains to be seen whether the increase in the insured populations for rural and community hospitals, as well as the increase in Medicare and Medicaid reimbursements under the ARRA for hospitals that implement EHR technology, will be enough to offset cuts in Medicare and Medicaid reimbursements contained in the Health Reform Laws or as a result of33



sequestration or other federal legislation.



We believe healthcare reform initiativesthat our efforts towards margin optimization are well-timed, enabling a rapid response to actual or expected wage inflation in order to preserve RCM gross margins, but we cannot guarantee that these efforts will continue during the foreseeable future. If adopted, some aspectsfully eliminate any related margin deterioration.
In addition to wage inflation, we are a party to contracts with certain third-party suppliers and vendors that allow for annual price adjustments indexed to inflation. While we continually seek to proactively manage controllable expenses, inflationary pressure on costs has led to, and could lead to, erosion of previously proposed reforms, such as further reductions in Medicare and Medicaid payments, could adversely affect the businesses of our customers and thereby harm our business.margins.
Results of Operations
Despite impressive growth in revenues from our TruBridge services, which management views asDuring the primary agent for long-term revenue growth for CPSI, revenue challenges faced by our system sales and support operations have resulted in decreased total revenues as, during the ninefirst three months ended September 30, 2017,of 2024, we generated revenues of $198.9$83.2 million from the salessale of our products and services, compared to $202.7 million during the nine months ended September 30, 2016, a decrease of 1.9%. This decrease in revenues is primarily attributed to (1) the challenging environment early in 2017 for add-on sales within our acute care EHR customer base, (2) the exhaustion of migration revenue opportunities for Healthland customers moving from the legacy Classic platform to Healthland’s flagship Centriq platform, (3) the revenue impact of 2016 attrition within the Healthland customer base, and (4) decreased installation volumes of AHT’s post-acute care EHR solution. Despite the decrease in total revenues, our net income for the nine months ended September 30, 2017 increased 113.3% due to the realization of acquisition-related synergies over the trailing twelve months and the lack of any significant transaction-related costs during the first nine months of 2017. This improved profitability, coupled with more cash-advantageous changes in working capital, resulted in an improvement in cash flow from operations, increasing from cash used in operations of $2.6$86.2 million during the first ninethree months of 20162023, a decrease of 3% that is due to cash provideddecreased revenues in our EHR segment partially offset by operationsinorganic growth in RCM due to the acquisition of $18.3Viewgol. Net income (loss) decreased by $5.6 million to a net loss of $2.5 million during the first ninethree months of 2017.

2024 from the prior-year period due to the combined effects of (i) increased severance costs associated with strategic efforts to right-size headcount, (ii) increased non-recurring charges largely related to executive leadership reorganization costs and rebranding efforts, (iii) increased interest expense due to acquisition-fueled growth in long-term debt and a rising interest rate environment, (iv) increased costs related to our strategy to migrate to a public cloud environment in order to increase business agility and improve security, and (v) increased amortization of capitalized software development costs.
The following table sets forth certain items included in our results of operations for the three and nine months ended September 30, 2017March 31, 2024 and 2016,2023, expressed as a percentage of our total revenues for these periods:
Three Months Ended March 31,
20242023
(In thousands)Amount% SalesAmount% Sales
INCOME DATA:
Revenues
RCM$53,038 63.7 %$48,631 56.4 %
EHR28,022 33.7 %35,191 40.8 %
Patient Engagement2,187 2.6 %2,411 2.8 %
Total revenues83,247 100.0 %86,233 100.0 %
Expenses
Costs of revenue (exclusive of amortization and depreciation)
RCM29,597 35.6 %27,183 31.5 %
EHR11,287 13.6 %16,348 19.0 %
Patient Engagement875 1.1 %646 0.7 %
Total costs of revenue (exclusive of amortization and depreciation)41,759 50.2 %44,177 51.2 %
Product development10,689 12.8 %8,352 9.7 %
Sales and marketing6,592 7.9 %6,957 8.1 %
General and administrative19,396 23.3 %14,453 16.8 %
Amortization5,869 7.1 %5,500 6.4 %
Depreciation400 0.5 %499 0.6 %
Total expenses84,705 101.8 %79,938 92.7 %
Operating income (loss)(1,458)(1.8)%6,295 7.3 %
Other income (expense):
Other income1,422 1.7 %267 0.3 %
Interest expense(4,072)(4.9)%(2,669)(3.1)%
Total other income (expense)(2,650)(3.2)%(2,402)(2.8)%
Income (loss) before taxes(4,108)(4.9)%3,893 4.5 %
Provision (benefit) for income taxes(1,592)(1.9)%809 0.9 %
Net income (loss)$(2,516)(3.0)%$3,084 3.6 %


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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
(In thousands)Amount % Sales Amount % Sales Amount % Sales Amount % Sales
INCOME DATA:               
Sales revenues:               
System sales and support:               
Acute Care EHR$38,761
 57.8 % $37,596
 58.1 % $115,285
 58.0 % $121,090
 59.7 %
Post-acute Care EHR5,605
 8.4 % 6,505
 10.1 % 17,978
 9.0 % 20,439
 10.1 %
Total System sales and support44,366
 66.1 % 44,101
 68.2 % 133,263
 67.0 % 141,529
 69.8 %
TruBridge22,747
 33.9 % 20,562
 31.8 % 65,601
 33.0 % 61,192
 30.2 %
Total sales revenues67,113
 100.0 % 64,663
 100.0 % 198,864
 100.0 % 202,721
 100.0 %
Costs of sales:               
System sales and support:               
Acute Care EHR17,068
 25.4 % 18,056
 27.9 % 50,821
 25.6 % 57,519
 28.4 %
Post-acute Care EHR1,764
 2.6 % 2,653
 4.1 % 5,800
 2.9 % 7,556
 3.7 %
Total System sales and support18,832
 28.1 % 20,709
 32.0 % 56,621
 28.5 % 65,075
 32.1 %
TruBridge12,806
 19.1 % 11,187
 17.3 % 36,326
 18.3 % 33,878
 16.7 %
Total costs of sales31,638
 47.2 % 31,896
 49.3 % 92,947
 46.8 % 98,953
 48.8 %
Gross profit35,475
 52.9 % 32,767
 50.7 % 105,917
 53.3 % 103,768
 51.2 %
Operating expenses:               
Product development9,345
 13.9 % 8,397
 13.0 % 27,588
 13.9 % 23,766
 11.7 %
Sales and marketing8,528
 12.7 % 6,894
 10.7 % 23,262
 11.7 % 20,341
 10.0 %
General and administrative9,379
 14.0 % 10,631
 16.4 % 33,960
 17.1 % 41,799
 20.6 %
Amortization of acquisition-related intangibles2,601
 3.9 % 2,601
 4.0 % 7,804
 3.9 % 7,580
 3.7 %
Total operating expenses29,853
 44.5 % 28,523
 44.1 % 92,614
 46.6 % 93,486
 46.1 %
Operating income5,622
 8.4 % 4,244
 6.6 % 13,303
 6.7 % 10,282
 5.1 %
Other income (expense):               
Other income102
 0.2 % 53
 0.1 % 242
 0.1 % 121
 0.1 %
Interest expense(2,062) (3.1)% (1,717) (2.7)% (5,807) (2.9)% (4,828) (2.4)%
Total other income (expense)(1,960) (2.9)% (1,664) (2.6)% (5,565) (2.8)% (4,707) (2.3)%
Income before taxes3,662
 5.5 % 2,580
 4.0 % 7,738
 3.9 % 5,575
 2.8 %
Provision for income taxes1,374
 2.0 % 981
 1.5 % 3,617
 1.8 % 3,643
 1.8 %
Net income$2,288
 3.4 % $1,599
 2.5 % $4,121
 2.1 % $1,932
 1.0 %

Three Months Ended September 30, 2017March 31, 2024 Compared with Three Months Ended September 30, 2016March 31, 2023
Revenues. Revenues
Total revenues for the three months ended September 30, 2017 increased 3.8%, or $2.5March 31, 2024 decreased by $3.0 million compared to the three months ended September 30, 2016.March 31, 2023.
System sales and supportRCM revenues consisting of the Acute Care EHR and Post-acute Care EHR segments, increased by 0.6%$4.4 million, or 9%, compared to the first quarter of 2023 due to the acquisition of Viewgol, which increased RCM revenue by $4.7 million. Revenues excluding Viewgol decreased by $0.3 million. The decline was driven by customer attrition and was partially offset by new contracts. Recurring RCM revenues were $51.7 million, or $0.397.5% of total RCM revenues.
EHR revenues decreased by $7.2 million, fromor 20%, compared to the three months ended September 30, 2016. System salesfirst quarter of 2023, and support revenues were comprised of the following forduring the three months ended September 30, 2017 and 2016:respective periods:
Three Months Ended March 31,
(In thousands)20242023
Recurring EHR revenues (1)
Acute Care EHR$25,910 $27,613 
Post-acute Care EHR582 3,906 
Total recurring EHR revenues26,492 31,519 
Non-recurring EHR revenues (2)
Acute Care EHR1,449 3,292 
Post-acute Care EHR81 380 
Total non-recurring EHR revenues1,530 3,672 
Total EHR revenues$28,022 $35,191 
(1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues.
(2) Mostly comprised of installation revenues from the sale of our acute care and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model.
 Three Months Ended
(In thousands)September 30, 2017 September 30, 2016
Recurring system sales and support revenues (1)
$32,954
 $34,459
Non-recurring system sales and support revenues (2)
11,412
 9,642
Total system sales and support revenue$44,366
 $44,101
    
(1) Mostly comprised of support and maintenance, subscriptions, and SaaS revenues.

   
    
(2) Mostly comprised of installation revenues from the sale of our acute and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model.
   
Nonrecurring Acute CareRecurring EHR system sales and support revenues increased $2.7decreased by $5.0 million, or 32.5%16%, primarily as Evident’s new installation and add-on revenues increased $2.8 million, partially offset by a $0.1 million decrease in Healthland's nonrecurring revenue. Related to Evident’s new system installation volumes, we went live with our Thrive EHR solution at nine new hospital clients during the three months ended September 30, 2017 (one of which was under a Cloud EHR arrangement, under which the related costs are all captured in the period of installation with the resulting revenue recognized ratably over the contractual term as the services are provided) compared to five during the three months ended September 30, 2016 (three of which were under a Cloud EHR arrangement), with a resulting revenue increase of $0.5 million. Evident’s add-on sales increased by $2.3 million due to installations related to meaningful use stage three compliance. These increases were partially offset by a decrease in nonrecurring Post-acute Care EHR revenues of $0.9 million, or 62%, compared with the three months ended September 30, 2016.
Recurring Acute Care EHR system sales and support revenues decreased $1.5 million, or 5.1%. Our recently acquired Healthland customer base contains a heavy concentration of calendar year-end support and maintenance renewal terms. As a result, the majority of the revenue impact related to Healthland attrition through 2016 customer support terminations did not materialize until the first quarter of 2017.2023. The decrease is driven by the sale of American HealthTech, Inc. in January of 2024, which caused a decrease in Post-acute Care EHR recurring revenues remained relatively flatof $3.3 million. Acute Care EHR revenues decreased by $1.7 million primarily as a result of a decline in support revenues due to customer migration to SaaS arrangements and attrition of customers using our Centriq platform which is set to be sunset at the end of 2024.
Non-recurring EHR revenues decreased by $2.1 million, or 58%, compared to the three months ended September 30, 2016.
TruBridgefirst quarter of 2023. The consequence of our continued focus on increasing recurring revenues increased 10.6%, or $2.2has been the de-emphasizing of nonrecurring, perpetual license sales. In addition, $0.3 million from the three months ended September 30, 2016. Our hospital customers operate in an environment typified by rising costs and increased complexity and are increasingly seeking to alleviate themselves of the ever-increasing administrative burdendecrease is attributable to the sale of operating their ownour Post-acute EHR business office functions, resulting in an expanded customer base for our accounts receivable management services (increasing 8.5%January 2024.
Patient Engagement revenues decreased by $0.2 million, or 9%, or $0.5 million). Our insurance services revenues increased 11.3%, or $0.5 million, as our recent acquisitioncompared to the prior year period due the renewal timing of HHI exposes Rycan’s solutions to a broaderannual licenses.
Costs of Revenue (exclusive of amortization and more robust sales channel. Our IT managed services revenues have increased 11.5%, or $0.3 million, as we continue to see increasing demand for remote hosting for our acutedepreciation)
Total costs of revenue (exclusive of amortization and post-acute care EHR solutions. Our medical coding services have increased 83.6%, or $0.8 million, as new key customers have been added. Our new data analytics service generated $0.1depreciation) decreased by $2.4 million compared to none in 2016.
Costs of Sales. Total costs of sales decreased by 0.8%, or $0.3 million, from the thirdfirst quarter of 2016.2023. As a percentage of total revenues, costs of salesrevenue (exclusive of amortization and depreciation) decreased from 49.3% into 50% of revenues during the thirdfirst quarter of 20162024 compared to 47.2% in51% during the thirdfirst quarter of 2017.2023.
Costs of Acute Care EHR system sales and support decreasedassociated with our RCM revenues increased by 5.5%, or $1.0 million, from the three months ended September 30, 2016 primarily due to decreased payroll costs of $0.7$2.4 million, or 6.3%9%, as the realization of HHI acquisition synergies over the trailing twelve months have resulted in a decrease in associated headcount. In additioncompared to the payroll synergies realized, non-payroll costsfirst quarter of sales related to Healthland decreased $1.7 million, or 47.7%, partially offset by a $1.1 million, or 143.2%, increase in Evident travel costs related to installations and a $0.2 million, or 77.7%, increase in stock compensation attributable to employees in the Acute Care EHR segment. As a result, the gross margin on Acute Care EHR system sales and support increased to 56.0% in the three months ended September 30, 2017 from 52.0% in the three months ended September 30, 2016.

Costs of Post-acute Care EHR system sales and support decreased by 33.5%, or $0.9 million, from the three months ended September 30, 2016, primarily due to decreased payroll costs of $0.6 million, or 37.2%, as the realization of HHI acquisition synergies over the trailing twelve months have resulted in a decrease in associated headcount. Decreases of $0.1 million each in third party software costs, hardware costs, and travel costs are due to the decreased installation volume mentioned above. Gross margin on Post-acute Care EHR systems sales and support increased to 68.5% in the three months ended September 30, 2017, from 59.2% in the three months ended September 30, 2016.
Our costs associated with TruBridge increased 14.5%, or $1.6 million, in the three months ended September 30, 2017 with the largest contributing factor being an increase in payroll and related costs of 17.4%, or $1.2 million,2023, as a result of adding more employees duringincreased costs of sales from Viewgol of $2.6 million. Costs associated with revenues excluding Viewgol decreased by $0.2 million primarily due to the trailing twelve monthsincreased utilization of offshore labor resources.
Costs associated with our EHR revenues decreased by $5.1 million, or 31%, compared to the first quarter of 2023, primarily due to (i) the sale of American HealthTech, Inc. in orderJanuary 2024, which decreased payroll and software costs, (ii) our vendor savings initiative which led to supportsoftware expense reductions, and develop our growing customer base and increase capacity in advance of anticipated future increases in demand. The gross margin on these services decreased to 43.7% in the three months ended September 30, 2017 from 45.6% in the three months ended September 30, 2016(iii) headcount reduction as a result of our voluntary early retirement program in 2023.


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Costs associated with our Patient Engagement revenues were effectively flat, increasing by only $0.2 million compared to the aforementioned headcount increases to support a growing customer base.first quarter of 2023.
Product Development Costs.
Product development costsexpenses consist primarily of compensation and other employee-related costs (including stock-based compensation) and infrastructure costs incurred, but not capitalized, for new product development and product enhancements. Product development costs increased 11.3%by $2.3 million, or 28%, compared to the first quarter of 2023, primarily due to a decrease in capitalizable projects such as the sunsetting of Centriq compared to 2023 and increased costs related to our strategy to migrate to a public cloud environment. Centriq is a web-based acute-care EHR platform. We are discontinuing support and services of the Centriq platform as of December 31, 2024.Many of the clients that used Centriq have already migrated to the TruBridge EHR platform.
Sales and Marketing
Sales and marketing costs decreased by $0.4 million, or 5%, compared to the first quarter of 2023, driven by reduced payroll and marketing program costs.
General and Administrative
General and administrative expenses increased by $4.9 million, or 34%, compared to the first quarter of 2023. The increase was partially driven by the acquisition of Viewgol resulting in $0.9 million from the three months ended September 30, 2016,of incremental expense. The increase was further driven by (i) an increase in non-recurring severance costs of $1.7 million, (ii) an increase in non-recurring expenses of $1.1 million related to executive transformation and rebranding efforts, (iii) and increased bad debt reserve of $0.7 million as a result of increased headcount dedicated to functionality additionsaged receivables.
Amortization & Depreciation
Combined amortization and enhancements across the product lines, as well as integration across product lines.
Sales and Marketing Expenses. Sales and marketingdepreciation expense increased 23.7%by $0.3 million, or 5%, or $1.6 million, from the three months ended September 30, 2016, with the largest contributing factor being a $1.6 millionas increasing capitalized software development asset balances resulted in an increase in commission expense resulting from the aforementioned increase in Evident’s new system implementation volumes, including Cloud EHR arrangements and related revenues and continued bookings growth for TruBridge.amortization.
General and Administrative Expenses. General and administrative expenses decreased 11.8%, or $1.3 million, from the three months ended September 30, 2016, mostly as our three separate national user conferences held during the second and third quarters of 2016 were combined into a single national user conference across our entire customer base for 2017. This newly combined conference took place during the second quarter of 2017, resulting in a decrease in related expenses of $0.6 million for the three months ended September 30, 2017. Additionally, there was a $0.6 million decrease in employee health claims, a $0.3 million decrease in legal and accounting expense, and a $0.3 million decrease in utility expenses. These were partially offset by a $0.5 million increase in costs associated with the employer match portion of our defined contribution retirement plan resulting from changes to plan design to achieve better distribution of employer match throughout the year.
Amortization of Acquisition-Related Intangibles. Amortization expense associated with acquisition-related intangible assets remained relatively unchanged from the third quarter of 2016.
Total Operating Expenses. As a percentage of total revenues, total operating expenses increased to 44.5% in the third quarter of 2017 compared to 44.1% in the third quarter of 2016.
Total Other Income (Expense).
Total other income (expense)expense increased from expense of $1.7$0.3 million during the three months ended September 30, 2016first quarter of 2024 compared to the first quarter of 2023, The change was driven by an increased in interest expense $1.4 million offset by gain on sale of $2.0 million during the three months ended September 30, 2017, as market conditions have resulted in increasedAHT of $1.3 million. Interest expense was effected by interest rates paid on our variable-rate debt obligations.rate environment and a higher level of funded debt.
Income (Loss) Before Taxes. Taxes
As a result of the foregoing factors, income (loss) before taxes increaseddecreased by 41.9%, or $1.1$8.0 million, fromto a loss before taxes of $4.1 million in the three months ended September 30, 2016.first quarter of 2024 compared to income before taxes of $3.9 million in the first quarter of 2023.
Provision (Benefit) for Income Taxes.Taxes
Our effective income tax ratesrate for the three months ended September 30, 2017 and 2016 were 37.5% and 38.0%, respectively.
Net Income. Net incomeMarch 31, 2024 increased to 39.4% from 20.8% for the three months ended September 30, 2017 increasedMarch 31, 2023, with the largest contributing factor being the impact of the gain recorded on the sale of American HealthTech, Inc. Also impacting the effective tax rate is the research and development (“R&D”) tax credit. This credit, which is not correlated with taxable income, resulted in an incremental benefit of 24.2% during the first quarter of 2024 over the corresponding benefit during the first quarter of 2023. In periods with taxable income, the benefit from the R&D tax credit serves to reduce income tax expense, thereby lowering the effective tax rate. However, in periods with taxable loss, the benefit from the R&D tax credit serves to increase the income tax benefit, thereby increasing the effective tax rate.
Net Income (Loss)
Net income (loss) for the first quarter of 2024 decreased by $0.7$5.6 million to a net incomeloss of $2.3$(2.5) million, or $0.17$(0.17) per basic and diluted share, compared with net income of $1.6$3.1 million, or $0.12$0.21 per basic and diluted share, for the first quarter of 2023.
Supplemental Segment Information
Our reportable segments have been determined in accordance with ASC 280 - Segment Reporting. We have three months ended September 30, 2016. Netreportable operating segments: RCM, EHR, and Patient Engagement. We evaluate each of our three operating segments based on segment revenues and segment adjusted EBITDA.


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Adjusted EBITDA consists of GAAP net income represented 3.4%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 revenuesoftware 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) impairment of goodwill; (ix) impairment of trademark intangibles; (x) (gain) loss on contingent consideration; and (xi) the provision (benefit) for income taxes. The segment measurements provided to and evaluated by the chief operating decision makers (“CODM”) are described in Note 17 - Segment Reporting of the condensed consolidated financial statements. These results should be considered in addition to, and not as a substitute for, results reported in accordance with GAAP.
The following table presents a summary of the revenues and adjusted EBITDA of our three operating segments for the three months ended September 30, 2017,March 31, 2024 and 2023:
Three Months Ended March 31,Change
20242023$%
(In thousands)
Revenues by segment:
RCM$53,038 $48,631 $4,407 9 %
EHR28,022 35,191 (7,169)(20)%
Patient Engagement2,187 2,411 (224)(9)%
Adjusted EBITDA by segment:
RCM$6,396 $7,898 $(1,502)(19)%
EHR2,929 6,157 (3,228)(52)%
Patient Engagement129 588 (459)78 %
Segment Revenues
Refer to the corresponding discussion of revenues for each of our reportable segments previously provided under the Revenues heading of this Management's Discussion and Analysis. There are no intersegment revenues to be eliminated in computing segment revenue.
Segment Adjusted EBITDA - Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
RCM adjusted EBITDA decreased by $1.5 million, or 18%, compared to 2.5% of revenue for the three months ended September 30, 2016.
Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016
Revenues. Total revenues for the nine months ended September 30, 2017 decreased 1.9%, or $3.9 million, compared to the nine months ended September 30, 2016.

System sales and support revenues, consisting of the Acute Care EHR and Post-acute Care EHR segments, decreased by 5.8%, or $8.3 million, from the nine months ended September 30, 2016. System sales and support revenues were comprised of the following for the nine months ended September 30, 2017 and September 30, 2016:
 Nine Months Ended
(In thousands)September 30, 2017 September 30, 2016
Recurring system sales and support revenues (1)
99,679
 103,194
Non-recurring system sales and support revenues (2)
33,584
 38,335
Total system sales and support revenue$133,263
 $141,529
    
(1) Mostly comprised of support and maintenance, subscriptions, and SaaS revenues.

   
    
(2) Mostly comprised of installation revenues from the sale of our acute and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model.
   
Nonrecurring Acute Care EHR system sales and support revenues decreased $2.2 million, or 6.6%, as Evident’s new installation and add-on revenues increased $0.8 million, or 3.5%, partially offset by a decrease in the market for Healthland migrations from the legacy Classic platform to Healthland’s flagship Centriq platform. Related to Evident’s new system installation volumes, we went live with our Thrive EHR solution at 22 new hospital clients during the nine months ended September 30, 2017 (three of which were under a Cloud EHR arrangement) compared to 16 new hospital clients during the nine months ended September 30, 2016 (four of which were under a Cloud EHR arrangement), with a resulting revenue increase of $1.2 million. Evident’s add-on sales decreased by $0.4 million due to lower installation volumes of Emergency Department Information Systems and Thrive Provider EHR, partially offset by an increase in installations related to meaningful use stage three compliance. Platform migration opportunities for Healthland customers moving from Classic to Centriq are naturally decreasing over time as we have completed most migrations for this finite population, resulting in a $3.0 million, or 36.0%, decrease in nonrecurring revenues from our Healthland operations as we completed seven migrations and one new installation during the nine months ended September 30, 2016, compared to one migration and two new installations in the nine months ended September 30, 2017. These decreased installation revenues at Evident and Healthland have been coupled with decreased installations of AHT’s post-acute care EHR solution, resulting in a $2.6 million, or 48.4%, decrease in related revenues.
Recurring Acute Care EHR system sales and support revenues decreased $3.6 million, or 4.1%. Our recently acquired Healthland customer base contains a heavy concentration of calendar year-end support and maintenance renewal terms. As a result, the majority of the revenue impact related to Healthland attrition through 2016 customer support terminations did not materialize until the first quarter of 2017. Recurring Post-acute Care 2023. Gross margin was relatively flat during the first three months of 2024, when compared to the first three months of 2023, while expanding operating costs contributed to the downward pressure on adjusted EBITDA.
EHR system sales and support revenues have increased $0.1adjusted EBITDA decreased by $3.2 million, or 0.7%52%, fromcompared to the nine months ended September 30, 2016.
TruBridgefirst quarter of 2023. The primary driver of the decrease in adjusted EBITDA was declining revenues increased 7.2%, or $4.4of $7.2 million frompartially driven by the nine months ended September 30, 2016. The current environment has resultedsale of American HealthTech, Inc. in an expanded customer base for our private pay services (increasing 2.7%, or $0.3 million) and accounts receivable management services (increasing 6.2%, or $1.1 million). Our insurance services revenues have increased 11.8%, or $1.6 million, as our recent acquisition of HHI exposes Rycan’s solutionsJanuary 2024 which led to a broaderrevenue decrease of $3.6 million. Support and more robust sales channel. Our IT managed servicesinstallation revenues have increased 16.0%, or $1.1accounted for a further decrease of $3.6 million as we continue to see increasing demand for remote hosting for our acute and post-acute care EHR solutions. Our medical coding services have increased 39.1%, or $1.1 million, as new key customers have been added. These increases have been partially offset by a 17.6%, or $0.6 million, decrease in consulting revenues as ICD-10 related projects have decreased based on the related regulatory compliance deadline passing and decreased implementations of our Computerized Practitioner Order Entry (“CPOE”) and Physician Documentation applications have limited the related consulting opportunities.
Costs of Sales. Total costs of sales decreased by 6.1%, or $6.0 million, from the nine months ended September 30, 2016. As a percentage of total revenues, costs of sales decreased from 48.8% in the nine months ended September 30, 2016 to 46.7% in the nine months ended September 30, 2017.
Costs of Acute Care EHR system sales and support decreased by 11.6%, or $6.7 million, from the nine months ended September 30, 2016, primarilyrevenue due to the realizationshift to SaaS arrangements and lower installation volume.
Patient Engagement adjusted EBITDA decreased to $0.1 million from $0.6 million, primarily driven by a reduction of planned HHI acquisition synergies over the trailing twelve months coupled with naturally declining Healthland installation volumes, as previously discussed. As a result, the gross margin on Acute Care EHR system salesrevenue of $0.2 million and support increased to 55.9%lower margins in the ninefirst three months ended September 30, 2017 from 52.5% in the nine months ended September 30, 2016.

Costs of Post-acute Care EHR system sales and support decreased by 23.2%, or $1.8 million, from the nine months ended September 30, 2016, primarily due to decreased payroll costs of $1.0 million, or 23.6%, as the realization of HHI acquisition synergies over the trailing twelve months have resulted in a decrease in associated headcount. Decreases of $0.4 million in hardware costs and $0.2 million in travel and third party software costs each are due to the decreased installation volume mentioned above. Gross margin on Post-acute Care EHR systems sales and support increased to 67.7% in the nine months ended September 30, 2017 from 63.0% in the nine months ended September 30, 2016.2024.
Our costs associated with TruBridge increased 7.2%, or $2.4 million, with the largest contributing factor being an increase in payroll and related costs of 11.4%, or $2.4 million, as a result of adding more employees during the trailing twelve months in order to support and develop our growing customer base and increase capacity in advance of anticipated future increases in demand. The gross margin on these services remained flat at 44.6% in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.
Product Development Costs. Product development costs consist primarily of compensation and other employee-related costs (including stock-based compensation) and infrastructure costs incurred, but not capitalized, for new product development and product enhancements. Product development costs increased 16.1%, or $3.8 million, from the nine months ended September 30, 2016, as a result of increased headcount dedicated to functionality additions and enhancements across the product lines, as well as integration across product lines.
Sales and Marketing Expenses. Sales and marketing expense increased 14.4%, or $2.9 million, from the nine months ended September 30, 2016, with the largest contributing factor being a $2.5 million increase in commission expense resulting from the aforementioned increase in Evident’s new system implementation volumes and related revenues, including Cloud EHR arrangements, and continued bookings growth for TruBridge. Adding to the increased commission expense was an approximately $0.4 million increase in marketing program expenses due to more aggressive marketing of our family of community healthcare companies as we continue to mature our brand positioning after the HHI acquisition.
General and Administrative Expenses. General and administrative expenses decreased 18.8%, or $7.8 million, from the nine months ended September 30, 2016, primarily due to $8.1 million in HHI transaction costs incurred during the nine months ended September 30, 2016 with no such costs during the nine months ended September 30, 2017.
Amortization of Acquisition-Related Intangibles. Amortization expense associated with acquisition-related intangible assets increased by 3.0%, or $0.2 million, from the nine months ended September 30, 2016. This is due to seven additional days of amortization during the nine months ended September 30, 2017 due to the closing date of the HHI acquisition.
Total Operating Expense. As a percentage of total revenues, total operating expenses increased to 46.6% in the nine months ended September 30, 2017 compared to 46.1% in the nine months ended September 30, 2016.
Total Other Income (Expense). Total other income (expense) increased from expense of $4.7 million during the nine months ended September 30, 2016 to expense of $5.6 million during the nine months ended September 30, 2017, as market conditions have resulted in increased interest rates paid on our variable-rate debt obligations.
Income Before Taxes. As a result of the foregoing factors, income before taxes increased by 38.8%, or $2.2 million, from the nine months ended September 30, 2016.
Income Taxes.Our effective tax rate for the nine months ended September 30, 2017 decreased to 46.7% compared to 65.3% for the nine months ended September 30, 2016. During the nine months ended September 30, 2016, the identification of nondeductible facilitative transaction costs resulted in additional income tax expense of $1.4 million, increasing the period’s effective tax rate by 25.3%. During the nine months ended September 30, 2017, we experienced a shortfall tax expense related to restricted stock of $1.1 million that increased the effective tax rate by 14.0% due to the adoption of ASU 2016-09 as detailed in Note 15.
Net Income. Net income for the nine months ended September 30, 2017 increased by $2.2 million to a net income of $4.1 million, or $0.30 per basic and diluted share, compared with net income of $1.9 million, or $0.15 per basic and diluted share, for the nine months ended September 30, 2016. Net income represented 2.1% of revenue for the nine months ended September 30, 2017, compared to 1.0% of revenue for the nine months ended September 30, 2016.
Liquidity and Capital Resources
Sources of Liquidity
As of September 30, 2017,March 31, 2024, the aggregate principal amount of our principal sources of liquidity consisted of cash and cash equivalents of $1.0credit facilities to $230 million, and our remaining borrowing capacity under the Previous Revolving Credit Facility (as defined below) compared to $2.2 million of

cash and cash equivalents as of December 31, 2016. As noted previously, we completed our acquisition of HHI in January 2016. In conjunction with the acquisition, we entered intowhich included a syndicated credit agreement (the "Previous Credit Agreement"), described further below, with Regions Bank ("Regions") serving as administrative agent, which provided for a $125$70 million term loan facility (the "Previous Term Loan Facility") and a $50$160 million revolving credit facility (the "Previous Revolving Credit Facility" and, together with the Previous Term Loan Facility, the "Previous Credit Facilities"). The cash portion of the purchase price for our acquisition of HHI was primarily funded by the $125 million Previous Term Loan Facility and $25 million borrowed under the Previous Revolving Credit Facility.facility. As of September 30, 2017,March 31, 2024, we had $146.2$186.4 million in principal amount of indebtedness outstanding under the Previous Credit Facilities.credit facilities.
On October 13, 2017,As of March 31, 2024 we entered into a Second Amendment (the "Amendment") to the existing Credit Agreement (the "Amended Credit Agreement"), dated as of January 8, 2016, to refinance and decrease the aggregate committed size of the credit facilities from $175 million to $162 million, which includes a $117 million term loan facility (the "Amended Term Loan Facility") and a $45 million revolving credit facility (the "Amended Revolving Credit Facility" and, together with the Amended Term Loan Facility, the "Amended Facilities").
We believe that ourhad cash and cash equivalents of $1.0$4.1 million and remaining borrowing capacity under the revolving credit facility of $36.6 million, compared to $3.8 million of cash and cash equivalents and $24.3 million of remaining borrowing capacity under the revolving credit facility as of September 30, 2017,December 31, 2023. We believe that these funding sources, taken together with the future operating cash flows of the combined entity, and our remaining borrowing capacity under the Amended Revolving Credit Facility of $14.8 million as of October 13, 2017 (our remaining borrowing capacity prior to the Amendment was $20.9 million as of September 30, 2017), taken together, provide adequate resources to fund ongoing cash requirements for the next twelve months.months and beyond. We cannot provide assurance that our actual cash requirements will not


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be greater than we expect as of the date of filing of this Form 10-Q. If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the next twelve months, we may be required to obtain additional sources of funds through additional operational improvements, capital market transactions, asset sales or financing from third parties, a combination thereof or otherwise. We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms. Aside from normal operating cash requirements, obligations under our Credit Agreement (as discussed below) and operating leases, and opportunistic uses of capital in share repurchases and business acquisition transactions, we do not have any material cash commitments or planned cash commitments. Although the Company currently has no obligations related to planned acquisitions, the Company's strategy includes the potential for future acquisitions, which may be funded through draws on the credit facilities or the use of the other sources of liquidity described above.
On October 16, 2023, we made a draw of $41.0 million on the revolving credit facility in connection with the closing of the Viewgol acquisition, leaving a remaining $40.6 million of available borrowing capacity under the revolving credit facility as of that date. A portion of the proceeds from the draw, together with available cash on hand, was used by TruBridge to make the various required payments at the closing of the acquisition. During February of 2024, the Company used a portion of the proceeds received from the sale of American HealthTech, Inc. to repay $7.0 million of the outstanding balance of the revolving credit facility.
Operating Cash Flow Activities
Net cash provided by operating activities increased $20.9decreased by $11.5 million from $2.6$9.5 million provided by operations for the three months ended March 31, 2023 to $(2.0) million used in operations for the ninethree months ended September 30, 2016 to $18.3 millionMarch 31, 2024. The decrease in cash flows provided by operations for the nine months ended September 30, 2017. This increase is primarily due to the aforementioned $2.2 million increasedecrease in net income and more cash-advantageous changes in working capital. During the first nine months of 2016, we invested heavily in improving the working capital of the HHI entities post-acquisition in order to normalize the aging of vendor payables and improve acquired vendor relationships, resulting in a combined cash outflow of $11.9 million during the first nine months of 2016. Comparatively, the timing of vendor payments during the first nine months of 2017 resulted in expansion of these liabilities and a resulting benefit to cash flows of $4.8 million, for a total beneficial swing in cash flows from these working capital components of $16.8 million.
Additionally, our acquisition of HHI in January 2016 included significant deferred revenue balances, the amortization of which benefited revenues during the first nine months of 2016 with no corresponding cash benefit. Conversely, deferred revenue balances grew during the nine months ended September 30, 2017 due to a high volume of advance billings for third party subscriptions, providing cash benefits with no related revenue impact. These deferred revenue dynamics alone resulted in a $14.1 million improvement in cash flows as displayed in the condensed consolidated statement of cash flows.
These cash flow improvements have been partially offset by an increasing level of customer financing arrangements for the purchase of our EHR systems. The first nine months of 2017 saw financing receivables expand by $8.4 million compared to a $1.3 million contraction during the first nine months of 2016.slower collection activity on accounts receivable.
Investing Cash Flow Activities
Net cash used inprovided by investing activities decreased to $0.5increased by $22.6 million, inwith $16.4 million provided during the ninethree months ended September 30, 2017 from $151.8March 31, 2024, compared to $6.2 million used during the ninethree months ended September 30, 2016. We utilizedMarch 31, 2023. The increase in cash (netprovided by investing activities is primarily the result of the sale of American HealthTech, Inc. which resulted in a net cash acquired)inflow of $162.6$21.4 million forin the acquisition of HHI during the ninethree months ended September 30, 2016, partially offset by sales ofMarch 31, 2024 coupled with a decrease in investments in available-for-sale securities of $10.9 million during this period. We do not anticipate the need for significant capital expenditures during the remainder of 2017.software development.
Financing Cash Flow Activities
During the ninethree months ended September 30, 2017,March 31, 2024, our financing activities usedwere a net cashuse of $19.1 million, as we paid $11.4 million in long term debt principal and we declared and paid dividendscash in the amount of $10.3 million.$14.1 million, as $15.4 million in borrowings from our revolving line of credit were offset by long-term debt principal payments of $28.6 million and $0.3 million used to repurchase shares of our common stock, which are treated as treasury stock. Financing activities were a net use of cash flow activities provided $133.1in the amount of $3.4 million during the ninethree months ended March 31, 2023, as $2.5 million was used to repurchase shares of our common stock, which are treated as treasury stock, while long-term debt principal payments totaled $0.9 million.
On September 30, 2016, primarily due4, 2020, our Board of Directors approved a stock repurchase program to the proceedsrepurchase up to $30.0 million in aggregate amount of the aforementioned credit facilityCompany's outstanding shares of $156.6 million partially offset by $21.8 million cash paidcommon stock through open market purchases, privately-negotiated transactions, or otherwise in dividends.

We believe that paying dividends is an effective waycompliance with Rule 10b-18 under the Securities Exchange Act of providing an investment return1934, as amended. On July 27, 2022, our Board of Directors extended the expiration of the stock repurchase program to our stockholders and a beneficial useSeptember 4, 2024. These shares may be purchased from time to time throughout the duration of our cash. However, the declaration of dividends by CPSIstock repurchase program depending upon market conditions. Our ability to repurchase shares is subject to compliance with the terms of our Amended and Restated Credit Agreement andAgreement. Concurrent with the discretionauthorization of ourthis stock repurchase program, the Board of Directors which may decideopted to change or terminate the Company's dividend policy at any time. The fixed dividend declared on November 2, 2017, which decreased the dividend to $0.10 per share, marks a change from the Company's previous variable dividend policy, announced on August 4, 2016. The revised dividend policy, along with improved pricing under the Amended Credit Facilities, are consistent with our goal of achieving a target leverage ratio of 2.5x in 2018. Our Board of Directors will continue to take into account such matters as general business conditions, capital needs, our financial results and such other factors as our Board of Directors may deem relevant.indefinitely suspend all quarterly dividends.


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Credit Agreement
As noted above, in conjunction with our acquisition of HHI in January 2016, we entered into the Previous Credit Agreement which provided for the $125 million Previous Term Loan Facility and the $50 million Previous Revolving Credit Facility. As of September 30, 2017,March 31, 2024, we had $117.2$63.0 million in principal amount outstanding under the Previous Term Loan Facilityterm loan facility and $29.1$123.4 million in principal amount outstanding under the Previous Revolving Credit Facility. On October 13, 2017, the Company entered into the Amendment to refinance and decrease the aggregate committed sizerevolving credit facility. Each of theour credit facilities from $175 millioncontinues to $162 million, which includes the $117 million Amended Term Loan Facility and the $45 million Amended Revolving Credit Facility. As of October 13, 2017, we had $117 million in principal amount outstanding under the Amended Term Loan Facility and $30.2 million outstanding under the Amended Revolving Credit Facility. In addition to decreasing the aggregate size of the credit facilities, and as described in more detail below, the Amendment:
•extends the maturity date of the credit facilities to October 13, 2022;
•increases the maximum consolidated leverage ratio with which CPSI must comply;
•decreases the interest rates for LIBOR rate loans and base rate loans and the letter of credit fee;
•decreases the commitment fee; and
temporarily increases the percentage of excess cash flow (minus certain specified other payments ) that must be used to prepay the credit facilities.
Each of the Previous Term Loan Facility and the Previous Revolving Credit Facility (together, the "Previous Facilities") borebear interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the Adjusted LIBORSOFR rate for the relevant interest period, subject to a floor of 0.50%, (2) an alternate base rate determined by reference to the greater of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus one half of one percent per annum and (c) the one month LIBORSOFR rate, subject to the aforementioned floor, plus one percent per annum, or (3) a combination of (1) and (2). The applicable margin ranged from 2.25% to 3.50% for LIBORSOFR loans and 1.25%the letter of credit fee ranges from 1.8% to 2.50%3.0%. The applicable margin for base rate loans ranges from 0.8% to 2.0%, in each case based on ourthe Company's consolidated net leverage ratio (as defined inratio. As of March 31, 2024, the Credit Agreement). Interest on the outstanding principalrevolving credit facility had an average interest rate of the Previous Term Loan Facility and interest on borrowings under the Previous Revolving Credit Facility was payable on the last day of each month, in the case of each base rate loan, and on the last day of each interest period (but no less frequently than every three months), in the case of LIBOR loans. 8.42%
Principal payments onwith respect to the Previous Term Loan Facility wereterm loan facility are due on the last day of each fiscal quarter beginning March 31, 2016,June 30, 2022, with quarterly principal payments of approximately $0.8$0.9 million in 2016, approximately $1.6 million in 2017, approximately $2.3 million in 2018, approximately $3.1 million in 2019 and approximately $3.9 million in 2020,through March 31, 2027, with the remainder due at maturity on January 8, 2021 or such earlier date as the obligations under the Previous Credit Agreement become due and payable pursuant to the terms of the Credit Agreement (the “Previous Maturity Date”).
The Revolving Credit Facility included a $5 million swingline sublimit, with swingline loans bearing interest at the alternate base rate plus the applicable margin. Any principal outstanding under the Previous Revolving Credit Facility was due and payable on the Previous Maturity Date.
Each of the Amended Facilities continues to bear interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the Adjusted LIBOR rate for the relevant interest period, (2) an alternate base rate determined by reference to the greater of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus one half of one percent per annum and (c) the one month LIBOR rate plus one percent per annum, or (3) a combination of (1) and (2). The applicable margin range for LIBOR loans and the letter of credit fee ranges from 2.00% to 3.50%. The applicable margin range for base rate loans ranges from 1.00% to 2.50%, in each case based on the Company's consolidated leverage ratio.
Principal payments with respect to the Amended Term Loan Facility will be due on the last day of each fiscal quarter beginning December 31, 2017, with quarterly principal payments of approximately $1.46 million through September 30, 2019, approximately $2.19 million through September 30, 2021 and approximately $2.93 million through September 30. 2022, with the maturity on October 13, 2022May 2, 2027 or such earlier date as the obligations under the Amended and Restated Credit Agreement, as amended by the First Amendment, become due and

payable pursuant to the terms of the Amended Credit Agreement (the "Amended Maturity Date").such agreement. Any principal outstanding under the Amended Revolving Credit Facilityrevolving credit facility is due and payable on the Amended Maturity Date.maturity date.
Both the Previous Facilities and Amended FacilitiesOur credit facilities are secured pursuant to a Pledgethe Amended and SecurityRestated Credit Agreement, dated January 8, 2016,as of June 16, 2020, among the parties identified as obligors therein and Regions, as collateral agent, (the “Security Agreement”), on a first priority basis by a security interest in substantially all of the tangible and intangible assets (subject to certain exceptions) of the Company and certain subsidiaries of the Company, as guarantors (collectively, the “Subsidiary Guarantors”), including certain registered intellectual property and the capital stock of certain of the Company’s direct and indirect subsidiaries. Our obligations under the Amended and Restated Credit Agreement are also guaranteed by the Subsidiary Guarantors.
The Previous Credit Agreement providedFirst Amendment provides incremental facility capacity of $50$75 million, subject to certain conditions. The Amended and Restated Credit Agreement, provides incremental facility capacity of $45 million, subject to certain conditions. Bothas amended by the Previous and Amended Credit Agreements includeFirst Amendment, includes a number of restrictive covenants that, among other things and in each case subject to certain exceptions and baskets, impose operating and financial restrictions on the Company and the Subsidiary Guarantors, including the ability to incur additional debt; incur liens and encumbrances; make certain restricted payments, including paying dividends on the Company's equity securities or payments to redeem, repurchase, or retire the Company's equity securities (which are subject to our compliance, on a pro forma basis to give effect to the restricted payment, with the fixed charge coverage ratio and consolidated net leverage ratio described below); enter into certain restrictive agreements; make investments, loans and acquisitions; merge or consolidate with any other person; dispose of assets; enter into sale and leaseback transactions; engage in transactions with affiliates; and materially alter the business we conduct. Both the Previous and Amended Credit Agreements requireThe First Amendment requires the Company to maintain a minimum fixed charge coverage ratio of 1.25:1.00 throughout the duration of such agreement. Under the Previous Credit Agreement,First Amendment, the Company wasis required to comply with a maximum consolidated net leverage ratio of 3.50:1.00. Further, under the First Amendment, in connection with any acquisition by the Company exceeding $25 million, the Company may elect to increase the maximum permitted consolidated net leverage ratio for the fiscal quarter in which the acquisition occurs and each of the following three fiscal quarters by 0.50:1.00 through September 30, 2017, 3.00:1.00 from October 1, 2017 through September 30, 2018, andabove the otherwise permitted maximum. If the consolidated net leverage ratio is less than 2.50:1.00 thereafter.1:00, there is no limit on the incremental facility. The Amended and Restated Credit Agreement increased the maximum consolidated leverage ratio with which the Company must comply to 3.95:1.00 through December 31, 2017 and 3.50:1.00 from January 1, 2018 and thereafter. The Previous and Amended Credit Agreements also containcontains customary representations and warranties, affirmative covenants and events of default. On March 10, 2023, the calculation of the fixed charge coverage ratio was amended to specifically exclude from the definition of fixed charges the Company's share repurchases conducted during the third and fourth quarters of 2022.
As of September 30, 2023, we were not in compliance with the fixed charge coverage ratio required by the Amended and Restated Credit Agreement. On November 8, 2023, the Company and the Subsidiary Guarantors entered into a Waiver with Regions Bank, as administrative agent, and various other lenders, which provided for a one-time waiver of this failure as an event of default. As of December 31, 2023, the Company was similarly not in compliance with the fixed charge coverage ratio required by the Amended and Restated Credit Agreement and a one-time waiver was provided in conjunction with the Fourth Amendment described below. On January 16, 2024, the definition of "Consolidated EBITDA" under the Amended and Restated Credit Agreement was modified to allow for more cost exclusions related to acquisitions and other nonrecurring events and to release American HealthTech, Inc. ("AHT") from its obligations as a Subsidiary Guarantor in connection with the closing of our sale of AHT. On February 29, 2024, the definition of “Consolidated EBITDA” was further amended, pursuant to the Fourth Amendment to the Amended and Restated Credit Agreement. The Fourth Amendment decreased the required consolidated fixed charge coverage ratio from 1.25:1.00 to 1.15:1.00 for each fiscal quarter ending March 31, 2024 through and including December 31, 2024. We believe that we were in compliance with the covenants contained in the PreviousAmended and Restated Credit Agreement as of September 30, 2017.March 31, 2024.


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Any failure by us to comply with this or another covenant in the future may result in an event of default. There can be no assurance that we will be able to continue to comply with this covenant or obtain amendments or waivers to avoid future covenant violations, or that such amendments or waivers will be available on commercially acceptable terms.
The Previous Credit Agreement requiredFirst Amendment removed the requirement that the Company to mandatorily prepay the Previous Facilitiescredit facilities with (i) 100% of net cash proceeds from certain sales and dispositions, subject to certain reinvestment rights, (ii) 100% of net cash proceeds from certain issuances or incurrences of additional debt, (iii) 50% of net cash proceeds from certain issuances or sales of equity securities, subject to a step down to 0% if the Company’s consolidated leverage ratio was no greater than 2.50:1.0, and (iv) beginning with the fiscal year ending December 31, 2016, 50% of excess cash flow (minus certain specified other payments), subject to a step down to 0% of excess cash flow if the Company’s consolidated leverage ratio was no greater than 2.50:1.0. The mandatory prepayment requirements remain the same under the Amended Credit Agreement, except that the Company must prepay the Amended Facilities with (i) 75% of excess cash flow (minus certain specified other payments) during each of the fiscal years ending December 31, 2017 and December 31, 2018 and (ii) 50% of excess cash flow (minus certain specified other payments)generated during the prior fiscal year ending December 31, 2019 and thereafter.year. The Company was permitted to voluntarily prepay the Previous Facilities and is permitted to voluntarily prepay the Amended Facilitiescredit facilities at any time without penalty, subject to customary “breakage” costs with respect to prepayments of LIBORSOFR rate loans made on a day other than the last day of any applicable interest period.
Backlog
Backlog consists of revenues we reasonably expect to recognize over the next twelve months under existing contracts. The revenues to be recognized may relate to a combination of one-time fees for system sales and recurring fees for support and maintenance and TruBridgeRCM services. As of September 30, 2017,March 31, 2024, we had a totaltwelve-month backlog of approximately $41.0$11 million in connection with non-recurring system purchases and approximately $219.6$321 million in connection with recurring payments under support and maintenance contracts, Cloud EHR contracts, and TruBridgeRCM services. As of September 30, 2016,March 31, 2023, we had a twelve-month backlog of approximately $16.6$8 million in connection with non-recurring system purchases and approximately $211.7$324 million in connection with recurring payments under support and maintenance contracts and TruBridgeRCM services.
Off-Balance Sheet ArrangementsBookings
We had no off-balance sheet arrangements,
Bookings is a key operational metric used by management to assess the relative success of our sales generation efforts, and were as definedfollows for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
(In thousands)20242023
RCM (1)
$14,391 $12,100 
EHR(2)
8,610 7,271 
Patient Engagement (1)
568 476 
Total bookings$23,569 $19,847 
(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) including annualized contract value (for support) for perpetual license system sales and total contract price for SaaS sales.

RCM

RCM bookings during the first quarter of 2024 increased by Item 303(a)(4)$2.3 million, or 19%, from the first quarter of SEC Regulation S-K,2023 as the relative strength in bookings from healthcare providers utilizing competing EHR products ("net-new") was outpaced by declining bookings from our existing EHR customer base ("cross-sell"). Cross-sell bookings decreased by $0.5 million, or 9%, experiencing uncharacteristically high volatility as the pace of September 30, 2017.prospective sales decisions slowed.
The Company has other lease rights
EHR

EHR bookings increased by $1.3 million during the first quarter of 2024, or 18%, compared to the first quarter of 2023. Acute Care EHR bookings increased by $2.6 million compared to the first quarter of 2023, primarily due to add-on and obligations that it accounts fornew business sales. Post-acute Care EHR bookings declined by $1.3 million due to the sale of AHT in January of 2024.



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Patient Engagement

Patient engagement bookings increased by $0.1 million during the first quarter of 2024 compared to the first quarter of 2023. As a relatively small operator in a still-nascent market, volatility in bookings is expected to remain a characteristic of our patient engagement business as operating leases that may be reclassified as balance sheet arrangements under accounting pronouncements recently finalized by the FASB.industry matures and the business grows to scale.

Critical Accounting Policies and Estimates
Our Management Discussion and Analysis is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make subjective or complex judgments that may affect the reported financial condition and results of operations. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported values of assets, liabilities, revenues, expenses and other financial amounts that are not readily apparent from other sources. Actual results may differ from these estimates and these estimates may differ under different assumptions or conditions. We continually evaluate the information used to make these estimates as our business and the economic environment changes.
In our Annual Report on Form 10-K for the year ended December 31, 2016,2023, we identified our critical accounting policespolicies and estimates related to revenue recognition, allowance for doubtful accounts, allowance for credit losses, business combinations, including valuation of intangible assets and estimates.goodwill, and software development costs. There have been no significant changes to these critical accounting policies during the ninethree months ended September 30, 2017.March 31, 2024.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.
Our exposure to market risk relates primarily to the potential changefluctuations in the Secured Overnight Financing Rate ("SOFR"), which replaced the British Bankers Association London Interbank Offered Rate ("LIBOR"). as the new benchmark interest rate for our credit facilities. We had $146.2$186.4 million of outstanding borrowings under our Previous Facilitiescredit facilities with Regions Bank at September 30, 2017.March 31, 2024. The Previous Term Loan Facilityterm loan facility and Previous Revolving Credit Facility borerevolving credit facility bear interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the Adjusted LIBORSOFR rate for the relevant interest period, subject to a floor of 0.50%, (2) an alternate base rate determined by reference to the greatestgreater of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus one half of one percent per annum and (c) the one month LIBORSOFR rate, subject to the aforementioned floor, plus one percent per annum, or (3) a combination of (1) and (2). Accordingly, we wereare exposed to fluctuations in interest rates on borrowings under the Previous Credit Facilities.credit facilities. A one hundred basis point change in interest rate on our borrowings outstanding under the Previous Credit Facilities as of September 30, 2017March 31, 2024 would have resultedresult in a change in interest expense of approximately $1.4$1.9 million annually.
We did not have investments as of March 31, 2024 and do not utilize derivative financial instruments to manage our interest rate risks.

Item 4.Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the rules and forms promulgated by the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Because of the inherent limitations to the effectiveness of any system of disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that all control issues and instances of fraud, if any, with a company have been prevented or detected on a timely basis. Even disclosure controls and procedures determined to be effective can only provide reasonable assurance that their objectives are achieved.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures arewere effective at the reasonable assurance level.


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Changes in Internal Control over Financial Reporting
As previously disclosed under "Item 9AOn October 16, 2023, we acquired Viewgol, as further described in Note 3 - ControlsRevenue Recognition of the consolidated financial statements. We continue to integrate policies, processes, people, technology and Procedures" inoperations for our Annual Report on Form 10-K forcombined operations, and will continue to evaluate the fiscal year ended December 31, 2016, the Company identified a material weaknessimpact of any related changes to the Company's business combination process. The Company identified deficiencies in its internal controls over review of third-party valuations and properly establishing and accounting for opening balance sheet amounts. The Company has taken actions to remediatefinancial reporting during the material weaknessfiscal year.
Other than the changes related to our internal control over financial reporting. We have made improvements to the design of the related controls, including standardized review procedures over third-party valuations. We intend to supplement our in-house accounting and financial reporting functions with third-party consultants with extensive experience in accounting for complex business combinations. However, as the Company did not complete another acquisition, neither we nor our external auditors tested the operating effectiveness of these newly designed controls.

Successful remediation of the material weaknessViewgol described above, requires review and evidence of the effectiveness of the related internal control processes as part of our periodic assessments of our internal control over financial reporting. As we continue to evaluate and work to enhance our internal control over financial reporting, we may determine that additional measures should be taken to address the material weakness described above or other control deficiencies, or that we should modify the remediation plan.
Except as noted in the preceding paragraphs, there were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended September 30, 2017March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.





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PART II
OTHER INFORMATION
 
Item 1.Legal Proceedings.

From time to time, we arehave been and may again become involved in routine litigation that ariseslegal proceedings arising in the ordinary course of our business. We are not currently involved inpresently a party to any claims outside the ordinary courselitigation or legal proceedings that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, that are material to ouroperating results, financial condition or results of operations.cash flows. See Note 15 – Commitments and Contingencies included in the notes to our condensed consolidated financial statements included elsewhere in this Form 10-Q for information concerning other potential contingencies.

Item 1A.Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016,2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition or operating results. There have been no material changes to the risk factors disclosed in Part 1, "Item 1A. Risk Factors" in our Annual Report on Form 10-K and Part II, "Item 1A. Risk Factors" in our subsequent Quarterly Reports on Form 10-Q other than as described in the risk factor below.
RISKS RELATED TO OUR COMMON STOCK AND OTHER GENERAL RISKS
Our Rights Agreement includes terms and conditions that could discourage a takeover or other transaction that stockholders may consider favorable.
On March 26, 2024, the Company entered into the Rights Agreement (as amended on April 22, 2024, the “Rights Agreement”), by and between the Company and Computershare Trust Company, N.A., as rights agent. Pursuant to the Rights Agreement, the Board of Directors declared a dividend of one right (each, a “Right”) for each share of our common stock outstanding at the close of business on April 4, 2024. Each Right initially entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one half of a share of common stock, at a price of $28.00 for each one half of a share of common stock (equivalent to $56.00 for each whole share of common stock), subject to certain adjustments. Subject to the terms of the Rights Agreement, the Rights will expire on March 25, 2025. Additional information regarding the Rights Agreement is contained in Forms 8-K filed with the SEC on March 26, 2024 and April 23, 2024.
The Rights Agreement will cause substantial dilution to any person or group that acquires beneficial ownership of 15% or more of our common stock without the approval of the Board of Directors. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to discourage any person, entity or group from gaining a control or control-like position in the Company or engaging in other tactics, potentially disadvantaging the interests of the Company’s stockholders, without negotiating with the Board of Directors and without paying an appropriate control premium to all stockholders. The Rights Agreement is similar to plans adopted by other public companies, and it is intended to protect stockholders’ interests, including protecting stockholders from any efforts at negative control (that is, the ability to exercise influence sufficient to control or block certain important corporate actions). The Rights Agreement is intended to position the Board of Directors to fulfill its duties by ensuring that the Board of Directors has sufficient time to make informed judgments that are in the best interests of the Company and its stockholders. Nevertheless, the Rights Agreement may be considered to have certain anti-takeover effects, including potentially discouraging a takeover attempt that stockholders may consider favorable or that could result in a premium over the market price of our common stock. Even in the absence of a takeover attempt, the Rights Agreement may adversely affect the prevailing market price of our common stock if it is viewed as discouraging takeover attempts in the future.


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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.


Not Applicable.Repurchases of Equity Securities

The following table provides information about our repurchases of common stock during the three months ended March 31, 2024:
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(3)
Beginning of Period$16,471,896 
January 1, 2024 - January 31, 2024— — — 16,471,896 
February 1, 2024 -February 29, 2024— $— — 16,471,896 
March 1, 2024 - March 31, 202441,000 8.33 — 16,471,896 
Total41,000 $8.33 — 
(1) We repurchased 41,000 shares during the three months ended March 31, 2024 that were not purchased pursuant to our previously announced stock repurchase program, but were purchased to fund required tax withholdings related to the vesting of restricted stock. Shares withheld to cover required tax withholdings related to the vesting of restricted stock do not reduce our total share repurchase authority.
(2) No shares were purchased during the three months ended March 31, 2024 pursuant to our previously announced stock repurchase program.
(3) On September 4, 2020, our Board of Directors approved a stock repurchase program under which we were authorized to repurchase up to $30.0 million of our common stock through September 3, 2022. On July 27, 2022, the Board of Directors extended the expiration date of the stock repurchase program to September 4, 2024. Any future stock repurchase transactions may be made through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.


Item 3.Defaults Upon Senior Securities.
Not applicable.
 
Item 4.Mine Safety Disclosures.
Not applicable.
 
Item 5.Other Information.


(a) None.

(b) Rule 10b5-1 Trading Arrangements

From time to time, members of the Company's Board of Directors and officers of the Company may enter into Rule 10b5-1 trading plans, which allow for the purchase or sale of common stock under pre-established terms at times when directors and officers might otherwise be prevented from trading under insider trading laws or because of self-imposed blackout periods. Such trading plans are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act and comply with the Company's insider trading policy. During the three months ended March 31, 2024, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.



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Item 6.Exhibits.

Effective as of March 4, 2024, we changed our name to TruBridge, Inc. By operation of law, any reference to “CPSI” in these exhibits should be read as “TruBridge” as set forth in the Exhibit List below.

2.1*
3.1
3.2
3.2
3.3
4.1
4.2
10.1
10.2
10.1
10.3
10.2
10.4
31.1
31.2
32.1
101Interactive Data Files for CPSI’sThe following financial statements from the Company’s Quarterly Report on Form 10-Q for the periodquarter ended September 30, 2017March 31, 2024, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statement of Stockholders' Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Certain annexes and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby agrees to furnish supplementally copies of any of the omitted documents to the SEC upon its request.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TRUBRIDGE, INC.
5/10/2024By:/s/ Christopher L. Fowler
COMPUTER PROGRAMS AND SYSTEMS, INC.Christopher L. Fowler
Date: November 7, 2017By:/s/ J. Boyd Douglas
J. Boyd Douglas
President and Chief Executive Officer
5/10/2024By:/s/ Vinay Bassi
Date: November 7, 2017By:
/S/ Matt J. Chambless
Vinay Bassi
Matt J. Chambless
Chief Financial Officer

Exhibit Index



46
No.Exhibit
3.1
Certificate of Incorporation (filed as Exhibit 3.4 to CPSI’s Registration Statement on Form S-1 (Registration No. 333-84726) and incorporated herein by reference)
3.2
Amended and Restated Bylaws (filed as Exhibit 3 to CPSI’s Current Report on Form 8-K dated October 28, 2013 and incorporated herein by reference)
10.1
Second Amendment, dated as of October 13, 2017, by and among Computer Programs and Systems, Inc., certain of its subsidiaries, as guarantors, certain lenders named therein, and Regions Bank, as administrative agent and collateral agent (filed as Exhibit 10.1 to CPSI’s Current Report on Form 8-K dated October 13, 2017 and incorporated herein by reference)

10.2
Side Letter, dated as of October 26, 2017, related to Second Amendment to Credit Agreement, by and between Regions Bank, as administrative agent and collateral agent, and Computer Programs and Systems, Inc. (filed as Exhibit 10.2 to CPSI’s Amended Current Report on Form 8-K/A dated October 13, 2017 and incorporated herein by reference)

31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101Interactive Data Files for CPSI’s Form 10-Q for the period ended September 30, 2017

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