Computer Programs and Systems, Inc.

Thank you. Good afternoon and welcome to the CPSI first quarter 2022 earnings conference call. During this conference call, we may make 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. We caution 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 our public releases and reports filed with the Securities and Exchange Commission, including but not limited to our most recent annual report on Form 10-K. We also caution investors that the forward-looking information provided in this call represents our outlook only as of this date, and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. At this time, I will turn the call over to Mr. Boyd Douglas, President and Chief Executive Officer. Please go ahead, sir.

Thank you, Drew. Good afternoon, everyone, and thank you for joining us today. After my brief comments, I will hand the call over to Matt Chambliss, our Chief Financial Officer, who will provide the detail regarding our first quarter results. Then Chris Fowler will share his opening thoughts before the three of us, along with David Dye, our Chief Growth Officer, We'll take your questions. I'll begin by noting how exceptionally pleased we are with the strong start to the year. Matt will go into the details, but I would like to highlight a few key takeaways from the past quarter. Total revenues of $77.9 million were impressive, but particularly encouraging is the quality of those revenues as the revenue mix increasingly leans towards recurring revenue, which now makes up roughly 92% of total revenues. Adjusted EBITDA of $16.2 million is very close to a company record. Third, a particularly strong start from our recently acquired RCM Solutions business, HRG, and our RCM teams are off and running in terms of the HRG integration. Lastly, We have an all-time high sales pipeline across all business lines. Central to the notable first quarter results is the performance from TrueBridge in terms of both financial performance and bookings. A key factor that led to the impressive first quarter revenue performance of $77.9 million included better than expected patient volumes for TrueBridge hospital customers. In addition, The momentum and ease surrounding the integration of the HRG business enabled the combined talented sales teams to execute on the opportunities for growth in both cross sales into our EHR base and the net new market. While there is a lot of work remaining this year, we are very encouraged by the first quarter results and remain steadfast in our determination to deliver on our three-year plan to provide outsized shareholder returns and $80 million in adjusted EBITDA in 2024. We will continue building a solid foundation to support core growth, margin optimization, and tangible upside growth through digital innovation. And now, before I hand the call over to Matt, I would like to make a few personal comments regarding the announcement yesterday of my retirement as CEO and President of CPSI. As you can imagine, I've given the decision to retire a great deal of thought and consideration over the past 18 months or so. It was very important to me that the timing be right for both me personally and for the company. As all of you know, CPSI is near and dear to me as I have thoroughly enjoyed every bit of my 34-year career here at the company. It has been both an honor and a privilege to be fortunate enough to be the CEO for the past 16 years. We have had a tremendous amount of success over the years but I would be remiss to not give full credit where it belongs, to our fantastic and thoughtful senior leadership team and the 2,500 employees that make CPSI great. Our employee base undoubtedly makes CPSI the great company that it is today, and to all of them, I'm truly grateful for all they have done for me and for our company. CPSI's positive impact on healthcare has been a true team effort, and I'm particularly proud of all that we have accomplished together. Additionally, David, Chris, and Matt deserve a special shout out as all three of them have been great partners, friends, and leaders over the years. With that being said, the timing is right. The company is on a solid foundation and has a very exciting future ahead. I'm thrilled that my good friend and longtime business partner, Chris Fowler, has been named the new president and CEO of CPSI. The board conducted a comprehensive evaluation of internal and external candidates and unanimously chose Chris to be my successor. There is no doubt that the company is in great hands with Chris as CEO as we continue with the transformation that we started 18 months ago. In closing, I would like to thank all of our clients for the unwavering drive and determination to deliver the highest quality of care to the patients in their respective communities. The challenges they have faced over the past two years are unprecedented, but time and again, they have risen to the occasion and delivered high-quality, compassionate care to the patients they serve. CBSI would not be in the position we are in today without the feedback, advice, partnerships, and relationships that we have formed with our clients over the past 40 years. And for that, I am truly grateful. With that being said, I'll turn the call over to Matt for comments on the financials.

Thanks, Boyd, and good afternoon, everyone. On today's call, I'll provide a high-level overview of the quarter, including some additional detail on bookings performance and a brief walk through our first quarter financial results. But before we dive in, I'd like to take this opportunity to say what a pleasure it's been to work alongside Boyd these past several years. His clarity of focus, strategic vision, and dedication to serving the needs of all stakeholders is chief among many reasons CPSI is well-positioned for success in the years ahead. Between yesterday's announcement around Boyd's retirement, our acquisition of HRG in early March, and today's announcement of the refinancing of our credit facilities, we've had a lot of headline-grabbing events over the past several weeks. Not to be outdone, this quarter's stellar financial results shouldn't be crowded out from that headline. Coupled with one month of HRG activity, the resiliency of our customer base during the pandemic's last gasp continues to provide organic momentum that has TrueBridge soaring to new heights, driving near record metrics across the board and furthering our excitement for the organic growth potential of TrueBridge and our ability to accelerate that growth with responsible M&A execution. Speaking of M&A, this quarter's results included one month of activity for HRG with revenues of $3.8 million and adjusted EBITDA of $600,000. Full quarter pro forma results for HRG were $10.1 million of revenues and $1.1 million of adjusted EBITDA, putting HRG on track for the expected $40 million of revenues and $5.2 million of adjusted EBITDA that we stated in the press release announcing the acquisition. Our other recent acquisition, Truecode, contributed $3.4 million of revenues absent purchase accounting adjustments and adjusted EBITDA of $1.8 million, both down slightly from the first quarter of 2021's pre-acquisition amounts as customer conversions from term licenses to SAS arrangements injected some timing noise into revenue recognition. Before we dive into the details, we'd like to call your attention to some enhanced disclosures in the earnings release. A couple of quarters ago, we began disclosing the recurring versus non-recurring revenue mix within our EHR businesses to provide more clarity around the shifting revenue mix. Beginning with today's earnings release, we've added a table breaking out the adjusted EBITDA contributions from each of our three reporting segments, TrueBridge, acute care EHR, and post-acute care EHR. We think you'll find these disclosures valuable and informative. giving investors a better grasp of where we are and what the future may hold. Moving on to bookings, the addition of HRG added considerable talent to our TrueBridge sales force and is expected to accelerate our ability to generate meaningful revenue growth from outside of our EHR base, a target cohort we label as TrueBridge's net new market. HRG contributed $2.9 million to the quarter's bookings since the date of acquisition, adding to successful execution from our existing sales teams and driving overall bookings to a 31% sequential increase and a 132% improvement over the first quarter of 2021's levels. You may recall that the first quarter of 2021's bookings were anemic and made for a particularly easy comparative as the pandemic attacked bookings and created a stingy decision environment, the likes of which we hadn't seen before. Truebridge bookings increased 38% sequentially in nearly threefold over the first quarter of 2021's amount, as HRG drove net new Truebridge bookings to $4.4 million, compared to well below $1 million during the first and fourth quarters of 2021. Sustained performance in this net new TrueBridge market has a real potential to accelerate growth above and beyond the expectations we laid out when we announced our multi-year growth strategy in February of 2021. The organic growth plan we've been executing against has a heavy reliance on cross-sell success with an initial target of $60 million in incremental annual cross-sell revenues by the end of 2024 compared to a target of only $25 million from the net new TrueBridge market. With nearly 4,000 hospitals across the US with 200 beds or less, the total net new market size for TrueBridge is nearly four times the size of our cross-sale base. So the potential upside from this initiative is enormous. System sales and support bookings increased 24% sequentially and 68% compared to the first quarter of 2021. The year-over-year improvement can be mostly attributed to a vastly improved sales climate with more normalized decision timeframes, while the improvement over the fourth quarter of 2021 has been mostly the product of improved add-on sales to existing EHR customers. The net new EHR environment continues to be dominated by SAS license models, with the first quarter of 2022 marking the fifth consecutive quarter with a 100% SAS mix for new hospital EHR contract signings. Including add-on bookings, SAS bookings made up 59% of total system sales and support bookings during the past quarter, compared to 54% in the fourth quarter of 2021 and 31% in the first quarter of last year. Turning to the financials, HRG's $3.8 million revenue contribution drove total revenues to their second highest level in company history surpassed only by the fourth quarter of 2017, when more than $12 million in non-recurring MU3 revenue created a momentary revenue spike. The past quarter showed a 5% sequential increase in revenues, while the combined $7.2 million in revenues from HRG and Truecode drove top-line growth over the first quarter of last year to 14.5%. And while total revenues didn't quite eclipse our prior record, The quality of our revenues continues to improve as the revenue mix tilts more heavily towards recurring revenue sources. Recurring revenues made up 92% of total revenues during the past quarter, increasing 4% sequentially and 16% over the first quarter of 2021. Organic recurring revenue growth was 5.6% over the same period from a year ago. Similar to the top line performance, our profitability metrics of adjusted EBITDA and non-GAAP net income were at near record levels as well. Adjusted EBITDA improved 13% sequentially and 37% over the first quarter of 2021, with adjusted EBITDA margins expanding to 20.7%. Adjusting for the HRG and True Code acquisitions, organic EBITDA growth was 9% sequentially and 16% over the first quarter of 2021. Similar to adjusted EBITDA, non-GAAP net income increased 15% sequentially and 28% over the first quarter of 2021. Looking deeper at our segments, TrueBridge revenues increased 11% sequentially as HRG added $3.8 million to the top line. Organically, the sequential revenue growth from TrueBridge of only 1% includes a $700,000 decrease in GRH revenues As the timing of patient engagement licenses inject some volatility into the TrueBridge revenue line. We call this out because the timing related decline in GRH revenues clouds up a nice organic growth story for TrueBridge during the first quarter as outside of HRG and GRH revenues increased three and a half percent from the fourth quarter of 2021. On the margin side, relatively lower margin HRG brought gross margins down by 130 basis points to 50.4%. Compared to the first quarter of 2021, TrueBridge revenues increased 36% on the backs of the TrueCode and HRG acquisitions. Organically, TrueBridge revenues grew by 14% over the first quarter of 2021. Gross margins improved 30 basis points from the first quarter of 2021, as margin improvements earned through the TrueCode acquisition and our margin optimization initiatives were mostly offset by the relatively lower margin HRG revenues. Next, system sales and support revenues were down 1% sequentially due to the timing of software subscription renewals, while gross margins expanded 440 basis points due mostly to the timing of certain third-party licenses. Compared to the first quarter of 2021, revenues decreased 4% as a result of the continuing trend in declining non-recurring revenues as we advance recurring revenue licensing models in new EHR arrangements. Despite the top-line pressure from the continued transition to SAS, gross margins remained relatively flat versus the first quarter of 2021. We currently anticipate eight new client facilities going live with our Thrive solution in the second quarter of 2022, and all are expected to go live in a cloud or SaaS environment. Moving on to operating expenses, product development costs were down $700,000 or 9% sequentially and $1.3 million or 16% from the first quarter of 2021 due to increased labor capitalization. Sales and marketing costs increased $900,000 or 14% sequentially and $1.7 million or 33% from the first quarter of 2021 as improved bookings and revenues drove commission costs higher while recent acquisitions brought incremental spend. General and administrative costs increased $1.3 million sequentially due mostly to the seasonal dynamics related to our 401k match expense and the timing of our annual audit. Costs were flat from the first quarter of 2021. Closing out the income statement, our effective tax rate for the quarter decreased to 14% compared to 23% in the fourth quarter and 19% in the first quarter of 2021. We're expecting a full year effective tax rate of around 18%. From a cash flow standpoint, operating cash flows of $11.8 million were down $1.5 million sequentially and $1.9 million from the first quarter of 2021, mostly due to the timing and scale of annual bonus payouts. Like most companies, CPSI pays annual performance bonuses during the first quarter of each year. The pandemic's impact on our 2020 financial performance kept the related payout in early 2021 to a minimal level, whereas successful execution during 2021 led to above-target bonus payouts. Cash outflows related to bonus payments increased to $4.7 million from $200,000 in the first quarter of 2021. On a trailing 12 months basis, operating cash flows have totaled nearly $46 million or 80% of adjusted EBITDA over that timeframe. We're also pleased this afternoon to announce the refinancing of our credit facilities. with the major changes being a $50 million increase in revolver capacity, a step up in maximum leverage following an acquisition, a transition to SOFR as the benchmark rate, and tweaks to the credit agreement's EBITDA measure to better align with how we report adjusted EBITDA to the investing community. These adjustments were in furtherance of our capital allocation strategy, which prioritizes flexibility to have CPSI optimally positioned to opportunistically deploy capital through a combination of M&A, internal investment, and value-based share repurchases. Our recent acquisitions of Truecode and HRG bring pro forma leverage to roughly two times, well below our target of two and a half times, ensuring that we remain well-positioned to respond quickly to other opportunities that may arise. We continue to groom our pipeline of potential M&A opportunities that fit our programmatic M&A strategy and feel there's tremendous opportunity to enhance and supplement TrueBridge service offerings with reasonably valued roll-ups and tuck-ins. Capital allocation decisions generally involve some trade-offs, and as a result, share repurchases were limited to $1.7 million for the quarter and were all related to tax withholdings on employee stock awards. However, we'd like to remind investors that the cadence and volume of our repurchases have been and will continue to be influenced by a number of factors, certainly considering value, but also considering capital needs and availability, potential M&A, cost of replacement capital, and other capital allocation alternatives. These alternatives and priorities in capital allocation are ever-evolving, so a lack of repurchase activity in a given quarter may not reflect our views on the intrinsic value of our stock. Before I turn things over to Chris for a few remarks, I'd like to briefly touch on our guidance and near-term expectations. While the first quarter surpassed our internal expectations, we cautiously believe we'll be giving some of that back in the second quarter. The second quarter will see some seasonal costs as we host our first in-person client conference since 2019. On the top line, it's no sure bet that the record volumes for TrueBridge will extend through the second quarter, and we expect license timing for GRH and TrueCode to cause a slight pullback in those high margin businesses. In short, we're a bit ahead of plan as of March 31st, but expect to be back on target for our year-to-date plan numbers by the end of the second quarter and don't see a need to update or change our 2022 annual guidance at this point. In closing my remarks, I'd like to congratulate Chris Fowler on yesterday's announcement that he'll be taking the reins as CEO in a couple of months. I look forward to continuing to work with Chris in his revised role as we strive to help our customers with products and services that make their jobs easier, continue to build a corporate culture that our team members can take pride in, and provide our valued investors with quality returns. And with that, I'll turn things over to Chris for a few remarks.