Earnings call transcript Q4 2022

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Operator

Greetings and welcome to CPSI Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. And as a reminder, this conference is being recorded.

pleasure to my Dru now is to you, introduce Anderson. It Dru. you, Thank

may You begin.

Dru Anderson

afternoon the Chris welcome XXXX you. Matt and Thank Good Officer. Financial to Chief Officer; call. today's Chambless, Chief and earnings Leading CPSI call President are Fowler, Executive and conference quarter fourth

that call statements Reform of provisions you operating are expectations only company the Securities results Litigation regarding future This of statements plans, that XXXX. performance caution or Harbor and guarantees may not upon the such statements forward-looking Safe include Act reflect The predictions constitute performance. of and and made currently future forward-looking expectations, any pursuant to Private information available management based

of differ expressed reports uncertainties, from most those risks, Exchange recent annual might those such and limited or other results on but factors, forward-looking XX-K. the our in with materially Commission, and and a releases known including, our public not Form including unknown by Actual and result Securities described filed implied statements report as to,

also to after company this update call forward-looking of information as only we that caution or events forward-looking date the of this and outlook their any statements revise no this obligation represents or undertake the provided to date reflect developments in investors call. The

time, Fowler, this over President will Please call I ahead, Chris At sir. now and Mr. Officer. to the turn go Chief Executive

Christopher Fowler

in past to where highlights with I'll thoughts thank envision for us I'll year the from joining you then quarter and everyone review financial going fourth I and of quick share a today Thanks of and my CPSI and the the Dru call on XXXX. this afternoon. some our start operational

XX% offering, delivered of XXXX, total which million, of our TruBridge. RCM the from of derived revenue For quarter was $XX we fourth roughly

predictability the of the and fourth Our and RCM further XX% progress our improving has revenue XXXX, consistency our quarter towards topline. of demonstrating XX% from grew recurring offering

which prior X.X% Matt decrease EBITDA We that quarter, will adjusted the generated $XX on. during over a year, of million in elaborate

bookings XX% the million, were increase XX% quarter for total $XX an of Our sequentially. year-over-year and

our alone customer sequentially with quarter is of growth RCM EHR recent from strength bookings and fourth bookings from Cross-selling deeper, strategy, base level the into RCM a year. the X.X times foundation year-over-year is last this up our our increased at solution in cross-sell XX% bucket particularly bookings so alone from pleasing. the Looking XX% of

more net As revenue into providing RCM to basis. quarterly going metric believe under a this dominant are be the on our will We and start more of our transparency provide business to track our patient business, contract NPR continues themes a health into meaningful we evolve to or progress. to

share improving this TruBridge also After strives is of more metric will strength and scale to there's measure than customers on no call. in a NPR. that our problem Matt all, the bit later arguably hospital better performance solve, to the our about the financial some

On during have offerings. the In to XX operational a go-lives have all RCM the fourth quarter, we our RCM side of we things, things the across business, of highlight. few

ambitious target exit Additionally, as ending offshore rate quadrupling employees than utilization the of more offshore resources continued with we we XXX of with that expansion offshore of XXXX our XXXX.

solutions This an ensure for can to our forward, RCM represents imperative expansion momentum. going but as a scale also margin not opportunity only us strategic our business to abundant continue gain

were on engagement to call. that the patient two touch briefly noted I previous delayed on want our our In contracts business, we

solution rolled out Hurricane Florida, that impacted of our which in We've Health with by are majority now working live the Ian. and was Steward their is hand-in-hand have and first to facilities. we The team, been

the second quarter. regards to the In the implementation anticipate to second international delay, in we happen

we continue delays be optimistic partner Our work conversations governmental as with markets. through in to telecom our these

recognize than solution. our a highlighting worth the for only once revenue a the is different signs solution implementation on engagement patient is the turned business. little when and We solution outpatient that is and up complete our recognition revenue also rest It's of

ramp and patient it's on. steep higher sticky is as a may very once While business, RCM, the not signs as revenue be it in the than RCM margin the it's

adoption continue not Finally, our we our in we're products to of going our realize that. long-term those utilization, business, track than and EHR of fix focus on with more seven utilization and to with but been have customers, years who on Many customers. software our by have us stayed

to past year The success client role we've area. been executive key this in our will this bolstering be

As customer third our of improve experience improve the our less customer has made what our necessary executive overall we a testament investment to to dedication to been. it ratio to client product, to our and satisfaction a with than

Additionally, this opportunity for that $XXX us generating of is workforce increased the investment RCM the capture cross-sells. focused on to triples million the

I my As spring, I minutes this accomplished we of position to I growth. build to so to want spend out past we've and our and upon foundation back why was a looking past accepted to what goal year the When innovation XXXX, close few well-established this take role on at CEO. is the drive excited

almost with that hit mature some of point bumps a very a This us to and way. a is remain solutions. company loyal along acutely we've the customer ago suite a founded XX to comprehensive time critical focused is gotten this years what's and large on acknowledge CPSI to base

growth. towards as Moving forward, but to we pivot we also towards not continue execution, just improve will

One with priorities in beyond. cross-sell this success be was to and paramount to our will relationships year conversion our customers, of XXXX our since my past especially strengthen

as CEOs directly from high CPSI. vision it our end, back and face-to-face to during for of meet been CFOs that many of To and share has my hear them priority as to to XXXX the a possible half clients' with

weekly, strengthen customer and me. client connection executives. to this our senior events getting out team our and includes commitment half dozen the a client-facing been It Through And sites customer has beyond invaluable. extends a regional relationships management our to

satisfaction our ultimately, does only to role, client executive scale, provide redemption. is customer Not and this earlier, mentioned I key the but which

for behind in are pandemic the an high-touch leaning strategy clients. in-person us, With we our to heavily

systems as our and community for teams. know leadership customers. an our people health solutions other trust understanding because for essential solutions success and building have organization to their customers good that our a our each It's as by is important offer getting of our We factor well

After with talking see -- materialize return lately, their with me I'm that sentiment pleased customers reengagement invest offerings. they've the will particularly our as with our they the we shared we that with in clients, into our

impact awareness versus which customer-facing RCM increase in RCM also believe XXXX. raises and offering bookings, our The in real increased our a X.X have XXXX activities times I on of

do coming years. will high consistent Our customer retention better the rate marks achieved prior, strive in even with in to XX% XXXX is years in we've but of we

we've that XXXX with into and view I year put about pieces the we done. helm at a I the the all good place as new work leaders feel

RCM EHR historically business we of efforts. new the beyond focused of part expansion than market, opens a expanding have the hospitals our of up Our beds where XXX less

of are on We a that or our hospitals to laser-focused both of our north than more in to as vision several our of base XXX are market the selling under. solution beds customer representing total criteria, billion. existing US as fit X,XXX addressable There RCM hospitals well that

partners CPSI partner the these hospitals all key very that trusted as like needs. simplify to outsource increasingly to processes revenue growth future to will their to look of It's RCM their cycle RCM our clear is

ahead represent to right foundation the the to revenue. us. I'm to opportunities you total close XX% We've necessary of I By laid seize for we on our of team, We've and our to need. XXXX CPSI, solution has end RCM updating the our that store the added XXXX, to that forward people will see look of and have we feel customers progress. incredibly what our excited the in

Matt now the I'll look a call turn financials. for at over closer to the

Matt Chambless

Thank to thanks and call. you, on Chris the everyone

I'll through minute. year the we numbers footing, solid and shared, on run a in As a Chris ended the just

our jump the financial thinking I and time metrics Before business I how I the to the we're spend and have results, we'll though, assess on share want you the explaining Chris making. into with to progress some evolved

revenue EHR nascent now high-potential reflect slightly and of unit. distinct our see units presentation changed of portion and business TruBridge's we evolution, revenue the RCM the has business, business a streams to our business, within the CPSI; patient that you'll engagement Recognizing combined evolved our notice with post-acute of and over our better three that The half acute RCM representing we've that significant CPSI of growth. meaningfully

NPR CAGR patient year-over-year or as a of we're roughly going increase mentioned, a we of mind, Chris quarterly and or start in billion And comprised from NPR three-year billion XX.X%. that acquisition. $XXX Also, below a on billion net basis. from TruBridge This of contract, HRG the recent to with and year contract, hair $X.X of $X.X providing was revenue billion under at an patient XX% revenue $X the under net ended

NPR with and along of our context the metric To included data help of reference. understand table release years performance, periods your this for XXXX, fiscal each you historical a quarterly for press XXXX, XXXX, in in the of the each XXXX of new past we've with our

new Our be metric. intent to to with complete have an supplement bookings our alone a of growth to as and is scale metric picture provide NPR disclosures more proven this bookings imperfect

is lumpy the CPSI the you population know high-value of characterized you deal that by relatively our If metric is bookings deals. a followed number for small as quite story a while,

the our any usefulness that result weaknesses measure handful end true sales a more for of of oftentimes a deals reflective XX-day of this which timing or measure The can investors. of environment, is is in undermine function a than for strength

continued by in bookings performance RCM title that XX% RCM million, earning growth strong our new business for agent driven and continuously as topic, its with year-over-year best closing net for with up sequentially, the business hospital fourth XXX% out the its CPSI. totaled $XX.X the client were driven year bookings wins. strength On of bookings unit quarter by EHR

increased components while individual times our to as force HRG's a fourth has this EHR bookings from In amount looking last quarter made the prior at bookings strength up bookings, XX%compared X.X the customer of sales to year, competency. the RCM base year of cross-sell outside the core of were of

Turning and Fourth was million remaining compared $X.X statement. revenue to the million, the $XX year. patient made million, engagement revenue contributed million $XX.X EHR $XX of up RCM quarter last million. to income $XX

or came service touchpoint ofXX.X% quarter of growth, were increase margins Our the that shift the to basis of lion's driven gains lines the pulled due bookings RCM share HRG margin gross our down heavy points a in lower fourth mix organic through in gross down. topline revenue XXX business, margins high through from causing for XXXX's services acquisition whether year-over-year

look be expansion. the to key margin our will of acceleration offshore to the As initiative future, we the

Our operating quarter, year. XX% last expenses were a as of as the revenue same percentage in the

million losses as were $XX.X nascent patient our offset business revenues $X.X non-recurring million by gains margin incremental in engagement revenue by the RCM margin gross EBITDA the Adjusted declined. by margin year-over-year. the decreased year-over-year of growth, business Despite gross high

flat, was efforts EBITDA. strategic higher that The number our created public headwinds benefits further cost in while cloud and a end migration result was gross profit investments for

Turning is to Operating $X.X the direct the a rest at the This quarter our collections us and related the low flows unusual of for acquisition. of cash relatively is the to integration with of for issues result associated timing financials. recent were million.

collections quarter, impacted in progress are and improvement the slowdown in negatively in an DSOs fourth The we saw January. but making

just take we're may it we QX the While trend unwind. but fully the quite heading yet, haven't in to until reversed early right direction,

Finally, I'll initial by on XXXX providing some remarks conclude our my outlook. color

million XXXX, EBITDA year $XX expect and be to to in be $XXX million the of full we adjusted $XX $XXX and revenue million between million. range For to

back. be EBITDA how slightly to throughout As and will distributed the be revenue the expected revenue year, weighted toward for is

from benefits And utilization. our Client cost as of Conference of EBITDA a and we our perspective, quarter the in due second National cost fourth heaviest of see in the result generally an to lightest quarter vacation hosting the timing the quarter, is our

to revenue note for more final the XX The had is previously EBITDA growth strategic the returned an target XXXX, on provided but organic now additive that million feel appropriate next over to of One target months, topic with we company guidance. growth. $XX the being acquisitions double-digit

year and our in I the time everything margin good on into a progress perspective, XX% continuing put feel same period. about XXXX Chris adjusted EBITDA and look over and you update place forward margins we to to we From we've very believe can beyond. this achieve

today, Thank you for Operator? open all now for and again joining the we'll line us up questions.

Operator

be now [Operator session. We'll sir. question-and-answer you Instructions] a Thank conducting

Please the our question comes first your Bank. Hill of question. with And Deutsche with from George proceed line

George Hill

you morning Good Can Hi. hear okay? me guys.

Christopher Fowler

Yes, we can.

George Hill

taking questions. Matt and for the Chris thanks Hi.

commentary correctly. The first where I make question point of clarification I sure to your want a heard is

So, the growth, margins expect for XX% to expectation to additive. is organic just that for you M&A composite, return that's the revenue and and TruBridge be guys not adjusted double-digit will with EBITDA

that of thinking perspective? up that frame of kind from of the from did result I And about you your second, thinking like a it can hear how I'd about guess about the I you're to get the And delivery delivery First, timing? right? timing

Matt Chambless

Yes.

So, I'll George, jump being the thanks for in today. on and call there,

revenue right. we that XXXX. the hear to return see is did What growth as returning You we double-digits to for company exit organic

particularly don't being growth. half we So, see across line but returning the obviously get growth see us as XXXX, business RCM sufficient opportunity of that in to enough that we back XXXX, we cards into within pull double-digit for the to the the

George Hill

Okay. that And that there? the implication I is to RCM have approaches you I guess guess business number gets visibility the kind going to growth. kind of accelerate there that XX% talk of you is the could then that about to have you a

we the be goals change these profile that price. as about talked to questions stock because the I of, to of kind margin would kind think of off-shoring asked the delivering I as else upon you expansion? these I dramatically margin And Is anything for looking two think, contributing expansion. And the contributing the should there

Christopher Fowler

Yes, looking again, I go XXXX offshore if we're that think with and by quadruple on year. of you we to you're at number The George. to -- the right end XXX way the exited back it, we're it, employees, this looking

the look you to when and related -- this will obviously XXXX, see So, expense growth out to you exiting is side. continue that

then slingshot It multiplier has we year continue by be It has a go. it XXX end effect. hit the when that really But we at a that of incremental pace, bit as a of and number this effect. will we

effect and quite of honestly, revenue the revenue bit topline. talking side one-time hit this EHR same we basically that from And of a point. now The changes to finally Matt's the bottom of quarters about true is recurring, the this on a all big there. contributions conversion on all been being the slingshot for hitting -- there's of

taking So, XXXX. growth of XXXX, hold a both we we Modest really see as those. but exit that in multiplier effect

Now, you to back-to-back relates the we've of had, put bookings. retention quarters put nice strong we've that the that it on together some the RCM back as

Our pipeline continues to be healthy.

of conversion years. So, real about talked that's the being here for matter several of RCM it's last a market potential that been the the for

George Hill

if a or of coming. you in And helpful. I give that's second feel time maybe that guess in the evolution No, TruBridge I guys like has right, another two. RCM the market, I been long know me it's

health market the of flown and You a going after under you've more guys fragmented have kind of systems, radar by in competed the not in larger the this segment market.

space who love I but I guess like to be there's to the degree recognize to or -- this bit, a this is which kind about that of lot I lot participate in you of talk either hospitals just about visibility, say mom you could either of environment? maybe you going competitive can, you environment. little to anything in-source pricing asked now I'd can and pops kind a and regional of maybe market a

to visibility RCM more vendors outsourcers of the would seeing some kind you back and of and hop that the are I'll traditionally guess then the on space? and I in in attribute kind queue. of we guess I differentiation terms larger

Christopher Fowler

that All little right. a apart break I'll try to bit.

your answering own started almost question there. You

I think in still our competition for you're hospital that primarily is fact right market, the today the absolutely in RCM itself. the

referenced that stat. We

billing to XX% go and find are about the still themselves. of from doing and XX% all this can anywhere You hospitals to rag just management any RCM

the really that's main So, competition.

the a And regional We're point, hospital RFPs level. if seeing a themselves, lot predominantly to not player. that not at your it's it of is

in the outbound to drumming an going been of And lot has our of so and opportunities. ability becomes more past, us process much go up a it it -- from

driver inbound really to which the these as the market, increase in part for second here. in on increased What us relates market are we've services kind receiving pricing of labor optimism that the that to pressure think question of we're The the labor information well, going I forward seen requests the is this. on gives leads the your that challenges

so right facility. months let's the XX into driver the concern, ago, coming sure And number was now, probably is the continue pricing make is the cash say, to one let's where that

seen pressure the today. that And is may not we prevalent couple pricing years of so as have a ago

optimistic However, to be will able competitive with at we'll our we as continue that capture the be with we more to be successful we more opportunities are offshore offshore because conversion scale operation.

George Hill

in then last the I'm capital you cash business sneak deployment Okay. business of going would -- accelerates deployment one, to accelerating one And is which as how think accelerates. as about the and of

but balance you're talk about debt deployment on M&A. the some priorities. Would talking got about sheet, love also hear to capital You've you

Matt Chambless

Yes.

when the allocation, is economy that changed last us. set the the So, on George, end day, each But capital thought so is it a is that this in the question repaying my prefaced what decision really the our does determined to capital alternative way comes bit love So, allocation much. obviously, going by question. on haven't looks to I process like, to debt be right? attractive more we of At inflationary an become, by

at same are we lots grow company. are inside the that But And of some to of there inorganically. we think time, still to opportunities investment the to still there think continue opportunities make

to forward, know bit that's the I really there. stay be with knowing answer, out hard alternatives a to are non-answer but not specificity, what going going a So, of it's

Christopher Fowler

would probably and relates maybe it aggressiveness seeing the of us see I'm parts thing business the Yes, are in. there opportunity for only a sorry, investment that George. top different there continue opportunities comment I where I add the that to as of to more only little Matt's to we -- The on thing internal drive is

thought by for opportunity $XXX And of is cross-sell itself not it. market obviously out worth is historically, there growth that in million as call market. EHR it foundation has opportunity everybody But the is about our the the

value in that to remain we've that set. delivering so vigilant got And customer back to

remain have customers, they and in So, that our connection relationship we place.

more so different opportunities got weigh the return we're sure to is Matt's options as are be aggressive options us so. going there going into as us we've for we're for and to we to doing there, at more -- looking the or put make point, product And to that sure that the but to be look to make back

Matt Chambless

follow reinvesting Again, to general sort that number say think would Yes. And the if there. do we that, there give one. have of did some up prioritization, inorganic be are would I in opportunities to we back priority business on

make a product extent that inorganic the from and standpoint, sense from that strategy the service M&A at. it to through So, another that certainly look fits growth opportunity and we'd valuations a delivery be would

Now, all ratio defend we've sure we make pretty and leverage sheet that and our a said, and protect half want years of stuck of that the of times that a few through set that maintain since. we being financial our health two we and target to diligently balance we've we ago,

George Hill

humor you appreciate I me. Guys Thanks lot. a right. All

Christopher Fowler

Thank you, George.

Operator

question Please And our line comes next with your Securities. with from Davis of SVB proceed Stephanie the question.

Stephanie Davis

taking for Thanks questions. I'm guys. my back. Hey

Christopher Fowler

Hey. Welcome back Stephanie.

Stephanie Davis

I an EHR guys left company. you're and you

company. why dig about Talk Now, rev So, these businesses bit to there happened? me cycle What together. first. let's little you're in a a maybe are still

do like keeps together? You've of of got this base. your It needs cross-sell sounds hypergrowth we Why it that splitting the lot Is it one capital it selling a company. outside not up? think up? you're Is

Christopher Fowler

say first hit up market me we've -- and community you on beyond and that. back. the let all, the but Obviously, health second underserved -- Obviously, -- this healthcare. head back have had would traditionally the one. serving Stephanie, to enjoyed, rural rich rural One, welcome Yes. nail tradition you in a we with we of the have I glad back. enjoy have

XXXX. So, since we business have been in that

to is we obviously, predominantly those for do want growth RCM, the company We roots. see, leave forward don't the but being going

provide for continue help market And so does holistically. serve more to opportunity that us the it an segment of to

services able engagement quality not forward. product So, being RCM on going in a only to patient providing and EHR the are we value and but front, and deliver other also

Stephanie Davis

base what that we I to about that could well base as to cross valuable mind, your in question be think guess both and when clients sort with your bit the you see as are little outside rev cycle M&A? existing products dig So, a of would sell of deeper

Christopher Fowler

TruCode, ours a and services service can we're of consolidation following need opportunities at a company So, also strategic back TruBridge almost how then okay. part. offered. if about is five I which I'm one you that you one obviously leverage pure kind a see go you TruBridge our transactions, sorry, HRG wasn't would say years we like-for-like I that a a that to last with of with already it's our but technology to most nice little M&A that more look in. recent -- we're And had and customers and delivered play side. pulling for the was you nod that little on partner thinking

but looking We're at I opportunity TruBridge say, standpoint end. the front way end. front of Where middle the area pretty the -- the would I some a the So, is would have all looking services tech be the the from holistically, suite at very to think end. we're if we may on good from

you that Real the from about what obviously, Get door we're front couple getting standpoint excited there. Health Now, a digital and with

against that's kind internal investment So, plus competing each other. of M&A opportunity

Stephanie Davis

Understood. All one. real this my last promise I is right, one. last

George. you, at Looking

of process as about business. cost tools revenue beyond cycle sense tools any up offshore You structure a grow improve that or makes about and But your you robotic upon could geography? AI lot you your that started thought automation talking also scaling have just

Christopher Fowler

about and initiative. a our very similar is execution We remain bringing offshore about Yes, focused. started we're can biggest we and in time in it processes. started XXX%. not company what we've it's the take And And offshore same the to on with or the remember, in the got world that RPA be to AI we so and the mindful tale earnest

around coming that offshore we've feel And now out our and initiative so nicely see over the hands really got the like scaling years. we

that initiative And that so we're started. to really turning we AI efforts our

can of that building transactional into term, the specifically have. RCM the team team, bots, a a have for better lack deploy focused that We we we is work that internal dedicated services on to an

is the end we've the confidence so we'll be And hope through -- similar what returning of a what we in see perspective, the lot which from we'll XXXX. that an very on EBITDA XXXX is continue margin gives as to seen us that that to execute XX%-plus of that offshore to numbers in

Matt Chambless

Stephanie opportunity Yes. for automation. excited on we we're how for fairly that especially about the the And the there offshore, are for development excited obviously a And little than optimization. equally margin the side. seeing we're early frankly, But game are lever the automation probably of about potential in we're bit earlier in we

We that within still to a to have business them streamlined for be lot automation. candidates processes of TruBridge consolidated need good make and

to that righting early got now. the lot in ball a process-wise opportunities, they're there those really we're take we've So, game very do to but ship internally and of right advantage of

Stephanie Davis

[Indiscernible] Thanks as always.

Christopher Fowler

Thank you, Stephanie.

Operator

at no are to over comments. turn further this would for to questions And any closing like the time. I There back Chris floor

Christopher Fowler

Valentine's buddy. interest continued everybody for has CPSI. I your wonderful and week. Day, Matt, hope everybody Happy Thanks joining a for again today And in Absolutely.

Operator

This conference. concludes today's

may your for you disconnect a day. and time. have Thank You your great participation lines at this

TruBridge (TBRG) 14 Feb 232022 Q4 Earnings call transcript