Earnings call transcript Q1 2023

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Dru Anderson

Good morning and welcome to the CPSI First Quarter 2023 Earnings Conference Call. Leading today's call are Chris Fowler, President and Chief Executive Officer and Matt Chambless, Chief Financial Officer.

This call may include statements regarding future operating plans, expectations and performance that constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cautions you that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance. Actual results might differ materially from those expressed or implied by such forward-looking statements as a result of known and unknown risks, uncertainties and other factors including those described in public releases and reports filed with the Securities and Exchange Commission, including but not limited to the most recent annual report on Form 10-K.

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

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

Christopher Fowler

with us Thank the and call for morning joining reporting and be everyone year first quarter to you I'm you performance us thank today. a full our that Dru, good year achieve the start to pleased sets the solid to expectations. up with

by of First represented ahead came which what in our XX% $XX.X of slightly total driven quarter. in RCM million quarter revenue business, we revenue of the was anticipated and

Our year-over-year was to the that this in a to after business contracts, a basis, stated SaaS us. our transitioning tick will stabilizes we which portion be EHR on belief up which use subsidies previously largely year of meaningful behind of are the our XXXX our revenue believe customers just of end both supports absorbing

for expectations. also million of quarter line with in our Our $XX.X EBITDA adjusted the was

versus which in five also course bookings. were RCM proof On bookings contract, as XX% continue I'm only an bookings full our outlined is RCM-focused shift quarter the year-over-year. of year's front, thrilled X because this of not the this these business, EHR This come years. which that is of important equate a to how the up to of bookings bookings, to RCM year, typically over the RCM we our and earlier underway, revenue increased is ratably we migrate to point report but to quality worth that

for of and while revenue into RCM to contract. a whereas order company's fairly per million year by of EHR to year-over-year use the ability million $X line, equates for worth five-year will of growth $XXX,XXX translate bookings RCM million total a a growth $X goal bookings is flat, example, meaningfully revenue the double-digit our XXXX. in higher-quality is annually, Bottom grew simplified growth To bookings achieve bookings $X

bit the result is a a relationship. existing of XX% solution deeper EHR our forward majority our cases, an loyal bookings, with as solution the RCM RCM base. into customer need easy and Digging they on In the large was knows of their and RCM cross-selling customer these provider given an to choosing CPSI move one the

a million our of bundles four with nearly which solutions. was $X nTrust of being full particular EHR and a us The RCM nTrust, amount small million contract revenue we million signed -- quarter Of which largest hospitals with cross-sell for annual along EHR contract, opportunity. continues a to note, opportunity together $X our for our dollar services longest-standing bookings represent the of with percentage just in meaningful partners. a This cross-sell $XXX the one

deal for EHR another new we Of million be business vendor. outsourcing, label we where a The the full our XX% as RCM will CBO came in working remaining opportunities. roughly Business bookings we particular Office or quarter office alongside which note, signed Central from services, $X of

and existing EHR good solutions of can our another vendor customers range solutions. wide RCM are with Just that agnostic utilized reminder a be by

we reassures pipeline of quarter throughout ago, RCM in and further very the year outlook. bookings have on strong more deliver highly a our first While are lumpy timing, our the than us year year doubling from a ability full and to on our outperformance dependent still our relatively

across forward deepening to industry these the the inside top step filled up towards We the and come leaders We senior two our and reinvigorating this coming teams, the new look engagement another backgrounds. in strong positions These first team numbers, we breadth several the Taking organization the over contributions patient heading as organization. RCM and down. CPSI new from individuals sales a step back including with from integrating CPSI experience organization the quarter, and their sales months. to seeing in extensive experience see members our

week, our reflects on with while our C-suite nearly partnerships National we investment with Client us hosted and Florida building fostering CEO. XXX all-time as believe high. this doubling attendance Conference customers joined see I to customers attendance to an I EHR in Last focus over an as increase pre-COVID turnout year did relations we and took not in our back where in quite And Orlando. we're levels, this

Our the who workforce type issues and highlight events this budget With existing represents solution still client our customers. easy RCM our bring for to also for everyone is conference and attending value like hospitals, customers, EHR rural appreciate I another can prevalent to aren't great our participate. genuinely to opportunity able

have and right This on results of the middle straight the XXXX. for set quarter's financial were foot the us fairway down

current current our the in Our in improvements in to customer positions efforts, our and retention success well us our business, position achieve growing our our guidance. in momentum RCM and market, cross-selling annual

welcome fold. I the turning work sincerely of all their thank Matt, for over team our call want the members dedication our new the hard to all into to mission and members team Before to and

to Matt? you I'll all call turn With throughout year the on review now to our and look forward updating I the that, Matt over the to progress numbers.

Matt Chambless

and Thanks, interest. thank for continued Chris, your all you

our and the our shared largely in first was line on details additional results. quarter provide expectations, Chris some with I'll As

the that from patient was the threshold. and reached time up RCM billion quarter, $X Net this our revenue $X clients we've marking billion year-over-year X.X% first

shared, of real XX% bookings RCM up efforts million grew the flat is RCM $XX that total bookings making Chris were bookings. with XX% relatively cross-selling as year-over-year, story of total while Next,

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

able a revenue mix mix of are our quarter offset the margins will scale. gross shift basis year-over-year first as more potential our at we of traction. gross We to where gained our offshoring points RCM declines offerings shifts margin from be XX% Our for once service-oriented result that initiative XXX believe decreased

the XXXX, oversee to For staying fourth around overall in before but scale gross in shows as sustained the at we increasing reach and we EHR quarter rest XX% modest improvement. margins XX% business of offshore the

accommodate $XX.X benefits and of consistent recent million by is Our EBITDA operating was revenue XX% year-over-year. decreased investments year. percentage $X.X elevated result and which The both to million Adjusted primarily year-over-year with a costs expenses as the in quarter, relatively of of were decline last growth. a generate

growth accommodate ongoing Azure in RCM to business. space building services CPSI investments growth include our RCM forefront internal our migration, to branding marketing and the and of infrastructure the Specific of to continued investment areas necessary bring the of out

Turning to rest million. of the financials, were quarter operating the $X.X flows cash for the

XXXX last relatively the result associated second end at We're flow our the our trending in recent regards a integration of was quarter, our quarter. issues, collections-related mentioned cash of these right progress timing direction issues in resolution full in continue to acquisition. the anticipate we to low I As direct with the of and on

officially remarks my outlook. by XXXX our conclude reiterating I'll Finally,

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

quarter it an gets EBITDA, OpEx. the to friendly extra adjusted As dose relates a that second of reminder

the which for that's Conference, incremental Chris to held half the of EBITDA resulting National and second half EBITDA our OpEx, $X an being was back full perspective, of second will skew quarter. $X.X see this half efforts. our Client adjusted in good From the in XX% roughly quarter mentioned down towards a year first XX% sequentially a to May, in the from in globalization due the million and adjusted year, million first

remain our were year Oxford with offshoring RCM in as this first the XXX started progress. quarter, on the by goal end We XXX XXX the of team year. at of on track we update our an the members in of close of and and Finally,

All factors guidance. included of year our in these are full

we're year. comfortable the position To in-line feel about and of this pleased quarter remarks today, close the our with for remainder out

follow we along this as us Thank you open business. evolve for We'd continuing the to all like now Karen? joining and to questions. call your to

Operator

We'll go take Please you. our question first SVB. Stephanie Stephanie. from Instructions] Davis Thank ahead [Operator from

Stephanie Davis

taking for I thought the up. cycle ramped which on a few business, I've Thanks rev questions. guys. Hi got my

think understand more saw the first us the you bookings, just bookings? cadence larger rev does about one, your the with it becomes lumpiness when we see As we cycle convert historical help of of cycle quickly. license will Can rev So your smoothing versus we mix rather to sales? revenues the bigger,

Christopher Fowler

in, obviously net-new side. the filling that. us pipeline, focused very First EHR but about in Stephanie. a I the morning on still both side. the that going the coming our and dependent in of I think of to on top Thanks on much be that so decisions cohort answer think what EHR we're we tell is time early. we're wish all, Wow, we're for is question, to for really see had the do on now good to right What I excited we're great joining cross-sell, do buyer the on way up and going seeing also our I

I on, smoothness flowing build to steady which, that that's again, really the create and to just from very continuing much is going having thing we're that can say focused healthy, So that we're the very only top, see us up.

thought wait we'll about but that we say could kind would lay see be that's I and of how little So out would my that that see, bit better. a something

Stephanie Davis

billion a out of per let's bookings you We've What question have frame net maybe differently. that year? quarter. revenue bit this little now on-boarding And patient of built sort capacity of as got $X

Christopher Fowler

we has set at doing -- to in. So set the as onboard We ability a our sales we perspective, and as year. bought of budget look on out to the make from do planning at the what from we're the our team operations is beginning going that sure it we're obviously

into when what to year to in So and hit the book with to we the about number the build need year, throughout lockstep that. we're is then operations going next think

come we in shape. as these good numbers the in across year, we're So see

operations that's to able demand offshore, be of process. the why we the see market move to that. as to expand we're going to global important to this capitalize Now to And such that part pick the an up, continue is our

So...

Matt Chambless

into answer the gets planning couple of the capacity And we the back part our of call, convert growth of quarter dovetails by nicely to bookings expectation with resume think we or solutions, that to that over over revenues order seven there on double-digit live the the next RCM what $XX of need roughly the customers it it we with so. years, right earnings last to million on Yes. worth fourth bring next quarters XXXX. Stephanie, And into mentioned that the and we in the will that, achieve have

-- take you right quick math bookings you so that's this in came we do there. is if if kind the you'll And at of capacity where see cadence. And quarter, It's and are look that that that, now. where

Christopher Fowler

portion, looking a where we're difference when had bit Matt the dollar From of roughly your other part dollars -- start booking And the too, deals. a opportunities is into the EHR in talking, opportunities And we of little cohorts. was million our of chance, while those I've be multiple to net-new, the several hundred see EHRs, $XXX,XXX. size question, at Stephanie, when more anywhere move from another thousands the X average could size that to the is the different just think this the about and in we

seeing of swing visibility those, don't a ton opportunities So come those there's wide in. a start which in until we we have

-- And always that opportunities itself. it pipeline, lot. think steady out some But I be on so the think again, will lumpiness we flow to by based into as that we'll think I more of come there's to the see level see start I going

Stephanie Davis

then in-person, business, like super about clients. That's out. Last I high-touch with talking And quarter, the doesn't helpful. on the you have, feel your approach just so it one were last left EHR more

about So bring that, and an on little your customers I'd can key a it bit love love update hear up. that to the I'd more pain points

Christopher Fowler

Yes.

for much executive our client was scaled our week, with along rollout our get customers. which, continue with we're was in we to seeing to in-person front agile of -- a new I the at opportunity engaged opportunities another it more our client role of to of where move there the good conference us customers. So last model,

from satisfaction. level also for of which XX% increase to is first to definitely EHR quarter higher in feel XXXX that good a leading and leading XXXX engagement, a our level there. higher really of that a trending is We to saw NPS about direction the our we're So of

That's staffing that the hospitals, for for from for fronts, lab that their business they've the got I the would in for nurses, it's on say are dietary, for with. unfortunately. -- all our the every providers, struggling a position hospital and pain office the the techs, what they're that's points for

value-based more to I of Medicare much it's care, shift on think it's the front, hospitals much I'll and EHR say, the to, for the the Advantage more our shift plan.

is macro payer the need now more bit pressure collections able that complexities to -- operate say that So to facilities. their they're they that, a in dollars on seeing get be the little to

the say are I two just pain and just any those the that So on biggest based changing. is to position and dollars is how the points in again, talent facility would that's, collection of the access landscape then

Stephanie Davis

questions. Got now. it taking go and for Thanks I'm good my to

Christopher Fowler

Stephanie. day. Thanks Have great a

Operator

Jeff Please Thank Garro from ahead question Stephens. Jeff. you. And next we'll go take from our

Jeffrey Garro

on the questions. Conference. hear data there NPS and improvement. mentioned to National on the I morning you a hi. more also a Yes, great taking for on Good point little to want Client ask attendance Great guys. just Thanks

I imagine those spend the that with of the together. time you services RCM clients and walking the gives some So to have benefits all you EHR leeway when integrating software opportunity? much client satisfaction Client I'm at cross-selling Conference to and how spending time translate time improved the curious But kind you're into was of on how that able spent National the through

Christopher Fowler

their absolutely mean we and mission two There's aspects Jeff. actually customers benefit and that so and first is that's our not so of using providing leveraging that it thanks, best all, a there them and One, are good Yes, this. what really want to to is its sure care. -- that EHR is hindrance make a to our for morning, I tool patient it's

other run available, And a them for live is be be also not actually focus education using may that's what so to to that make able a in now the the the there great little out amount it opportunities of are better. and energy facility to see some software enablement see right and of applications they progress their

leads that have looking happy other they to turn of they're happier all i.e., customer, they're RCM look that when with if Obviously, to, be a it's front, for we able us like that. And when natural so them feel a to the to EHR, right? to issues, hopefully, -- the deliver

a much putting them understand one, happy the sure they and very improvements we're the into So all the that make make with investments EHR, front. step all

into sure RCM can making it's understand secondly, they how then And we the that fold that.

very much they're upfront, so we the sell, So net it's total but of much many with years a a in week. hard not to little benefit we so -- customers, that these win it's relationship the like education feel show them of the is that the continuing over have of with CPSI built

Jeffrey Garro

about Makes signed was in sense. $X quarter. And million the deal the want also that ask to I nTrust

ultimately that and and Just kind what the drove did curious go there the with And for there details background that how long more the take decision of why, it for on model? play how to out? to

Christopher Fowler

Yes.

little that to acquisition a think a they to the right less hospitals. I five months on to with system it's was say turned four close and of the time a around not consolidated a four, -- maybe an X was And it And a length actually it time. of search. single made one physician-owned into which -- started system, CPSI a -- it's hospital took of So bit want deal. this I hospital

just at also business, for those not war but to went we keep the to EHR So the hospitals. RCM four

aligned fact a to RCM the is fact using again, the no I that percentage and both that meaning with that organization of operating adopting them together, couple collections, of and -- that successfully we the the able that the of factor their to and we EHR final those part EHR service, the with it's there satisfied fact and think were led success the fully that collecting relationship. very all it us all to was and being were was dollars this exciting successfully, us was the

Jeffrey Garro

the the working hear to to well about there. Great one the last me. business TruBridge I ask want from pipeline. One sides together two of

comps had rest have the the but there, the of also cross-sell things. some side I year tough You of positive some coming you know comments on

with far convert know in going help well you then pipeline that you So HRG the I build leaders bring and kind it integration and to maybe that discuss help of is so the also that to and could new sales. ongoing

Christopher Fowler

think we're them size the is come about Yes. some Again, to the you're that Also but that. scientific about us that we're Again, approach right, of the over the being several systematic what we months the have able do excited to relationships coming little hopefully, we're the into leader hard being tough that just been sales team. and seeing I that up, there we're last that's sales definitely deals the and approach putting off to in pay diversity the comps of HRG is leverage that and more in and a pipeline, some see new the and putting going work the the of

again, sales we versus team our we on front, base exiting are members that customer the XX have had on year. last And EHR now XX focused that

on And with of is their relationships so something customers coming that will process, out to up be that's hand of seeing and that think and we're speed there that that this we quarter. members through team those but that getting their transition

the nice the pipeline excitement doing you things when up of it around we all put so excitement year. the the show and doesn't And that to work starts that into we a feel team that the half those the really translates that back is together, see in like pipeline, the see in

Jeffrey Garro

Thanks taking questions. the for again

Christopher Fowler

Jeff. this Thanks bet. up You for being morning

Operator

Hill go George Deutsche from comes ahead. Bank. [Operator Instructions] The from next question Please

George Hill

and got a myself. few thanks Chris questions. I've taking and guess morning the for Good Matt Yes. I

And think guys offshoring you love of kind there I I around to I'd how that. The risk about know about you're and think first is guess one the execution initiatives. managing how the

Christopher Fowler

question, good Super George. good morning Yes.

working last and as We super months So this initiative. related stepped to this we've thoughtful has risk knowing for been it a lot be on this. that XX amount been to how of there fronts something of the wanted on a tremendous we into was in

led in operations were that moving one, so to was very And and that intentional very identifying workflows Pat being our offshore; that we selected thoughtful team, do the partners we Murphy, by the in two, work. comfortable

vendors XXX if the this and about think which was get And of XX-month of there offshore, they XXX really think fully the providing some an work, when we months. turned thousands that the size so could long have offshore a about that out have employees employees it time, eight you in to to this are build employees of thousands be scale it, switch and six, you and at

that that say I'd We that was to the at there put risk. we've service the all were to anything wanted not sure created our with more providing jeopardy that we than we And we knew say did customers. that relationships and that make that

over the chosen that perform And we've that to this offshore; again, XX-month selected two, workflows about, that so so now being feel that now to up. partners work we've to one, very ramping intentional confident period feel we the and do in confident that

George Hill

which I single-digit Can more the helpful. -- figures? revenue of Okay. range. RCM to the growth help which growth, and what the is seems between call mid the to RCM RCM the you second very the revenue almost is high yet got bridge accounting question. modest, be growth And gap would growth My me kind NPR in call like noticed kind it, NPR category, That's I an a you've of of XX% The growth, strong. mean I pipeline was that kind

Matt Chambless

Yes.

the first seen as see So you by has are influenced NPR we've or numbers of some the acquisition, quoted quarter. year-over-year that whereas of end the the the NPS of quarter those been for the of XXXX, that revenue growth

factor So as biggest that's acquired. was NPS of probably that the some

George Hill

more...I'm Now, sorry, that's pretty helpful. two And humor with ahead? me go

Matt Chambless

that call NPR we cycle and thing Billing Central measure And solution is in only full call other Office office would going NPR, the that just It's business the the to we're outsourcing for hour solution. was end-to-end what now measuring management revenue George, the out past CBO offerings. when we that service full I

inclusive either. not of TruBridge's software TrueCode subscription the and it's not like So of TruBridge things RCM, inclusive part that's of product a

that So it's of slice outsourcing a business.

Christopher Fowler

the Nothing It's full thing. to modular. got be

George Hill

should is, Is that there ones a have that sense, and EMR we Two any figure. probably known No, highlighted expect makes you reason quick number strong that? that. any pretty should more retention I change one, in guys

Matt Chambless

target And Yes. I expectation no XX%. mean frankly, our real that has there. been we stated

have retention the last been kind side this us the far so for And XX for surprise has positive the year, been our on a probably of EHR And expectations. business outperforming months. things

for target So our positive. EHR while on to see for at the we and stay may the that material full business, we year, headwinds the don't routes retention stick XX% conservative any which developing is side

Christopher Fowler

And I'll George. this, Yes. say

on back big goes -- that million. and to get transformation was that, it of think to we knew RCM cohort part that I a this converting $XXX able to us being really

invested paying money, And of a it's lot think satisfaction I time, we've effort So customer of that the off. into base.

So that. getting I half think they're of

I part. the one think that's

money other deliver the I there a hey, market other EHRs. I on probably things on really switching a just is I've EHR higher looking customer return that and the some could at spend is out think commentary that got general, I it saying, base then would macro in and the think that part

reflected It which for or the the EHR seeing that's the while bit business forward back a So the on in us obviously growth is grow plays positive we why little against lack us we've very thereof end, like and retention. going the have.

Matt Chambless

what's happening know RCM base story customer protecting customer worth that EHR a is happy the we've and keeping to this couple the the for as reiterating of times it's many critical times by is in business. that mentioned it growth on can mostly business, as we the P&L but that Yes. driven call, although base RCM I And

cross-sell earlier targets, are his As and in with shooting for. mentioned scores that's we're Chris happy great comments, customers NPS what high

George Hill

because I tick Jeff to think my there. Stephanie, so helpful. extended your I'll all I pause super off Yes, them you're was questions, looking and commentary, at between going that's

Matt Chambless

George. lot, a Thanks

Operator

And Fowler that for remarks. question. was floor our to turn back closing I'd like Mr. last to the

Christopher Fowler

you Thanks, on us morning. Karen, a we day. as how touch in have great and your to forward look to wonderful forward. of progress hope continue this rest a thanks and everybody Tuesday reporting I and Have we for go joining staying

TruBridge (TBRG) 9 May 232023 Q1 Earnings call transcript