Computer Programs and Systems, Inc.

Welcome to CPSI Third 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Drew Anderson. Thank you. You may begin.

Good afternoon and welcome to the CPSI third 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 now turn the call over to Mr. Chris Fowler, President and Chief Executive Officer. Please go ahead, sir.

Thank you, Drew. And thanks to everyone for joining us today for our third quarter earnings call. I am joined by our CFO, Matt Chambliss, and also David Dye will be available for Q&A. As you may have read in our recent 8K, David is transitioning into a new role of Chief Operating Officer, which is designed to help streamline the organization and oversee the function of our business units, which I will talk about shortly. First let me begin by saying that we are pleased to deliver third quarter results that are broadly in line with consensus and our expectations. Total revenue for the quarter was $83 million, with roughly 60% of that revenue deriving from TrueBridge. I would like to call out that 94% of TrueBridge's revenue is recurring, demonstrating progress towards our business model weighted towards high visibility and predictability. We generated $13.3 million of EBITDA during the quarter, an increase of 9% over the prior year quarter. Total bookings were $20.5 million, with greater than half of those deriving from TrueBridge, consistent with our pivot towards greater RCM and patient engagement services. This week marks 100 days since I was appointed CEO of CPSI, and I'd like to take a few minutes to share a few observations. Along with our people, we believe that our client base is our greatest asset, And both customer satisfaction and retention are key elements of our growth story. In the last 100 days, I've held countless meetings with customers. What resonates the loudest with them is CPSI's commitment to streamlining workflows and easing the pressure and stress that often come with managing resources and the financial health of their organizations. By working toward those goals, we allow providers to better engage patients in their own healthcare and remove distractions so they can focus on providing quality healthcare and making healthcare more accessible. Our focus going forward is and shall continue to be strengthening relationships with partners and customers, improving the client experience, and delivering innovation and key product enhancements. We want to ensure that CPSI is a trusted business partner to our customers and part of their long-term strategic plan, whether that's streamlining care delivery, augmenting staffing shortages, improving the patient experience, preparing for value-based reimbursement, or all of the above. As such, we are focused on the tremendous cross-sell opportunity for TrueBridge and patient engagement products and services across our in-network base of nearly 1,000 customers. As we've discussed in the past, we estimate the add-on opportunity to be enormous. Demand is robust in this post-COVID environment, as hospital resources are strained and scarce, opening the door to leverage our TrueBridge brand. Hospitals are fighting for every dollar amid low utilization trends and increasing high cost of labor, and CPSI is uniquely positioned to help our customers thrive. As evidence of the bolus of demand we are seeing, our three-month weighted TrueBridge pipeline tripled from 5.6 million in the year-ago quarter to $17.3 million as of 9-30 this year. Similarly, our six-month weighted pipeline exploded from $9 million to nearly $27 million. This is a clear indication of the uptick in demand we are seeing for our services. With respect to the quarter's business highlights, TrueBridge delivered total bookings of $11.5 million. We are pleased to see continued demand for TrueBridge services both in-network meaning inside of our EHR client base, as well as out of network or hospitals that use a non-CPSI EHR. As I mentioned earlier, we see tremendous opportunities for TrueBridge within the CPSI client base, which we estimated between a $300 and $400 million cross-sell opportunity. In fact, cross-sell bookings increased 30% sequentially. RCM-centric services increased represent close to 60% of total CPSI revenue today, compared to roughly 40% of revenue three years ago. To illustrate our progress in this regard, trailing 12 months cross-sell bookings from TrueBridge are 28% higher than pre-pandemic levels, and net new bookings are 31% higher. I would now like to address our Get Real Health business, or GRH, which is the foundation of our patient engagement products and services. While fast growing and rapidly evolving, the still nascent nature of the business led to some volatility during Q3 as we simultaneously invest for growth. Two large customers that are in the early stages of implementation fell behind their scheduled go-live plan. The first is a complex domestic health system in Florida that is comprised of multiple disparate acute care EHRs, and the other is an international telecom company. Combined, we estimate the revenue from these two implementations of $1 to $2 million are pushed out by about six months. To be clear, the delay was not a CPSI issue, and we enjoy a very strong partnership with both customers. Today, revenue from GRH makes up low single-digit percent of total revenue, growing exponentially off a small base, and we view it as a huge value add to our customers as they focus on improving the patient experience through digital front door strategies and tools for increasing retention. Last and not least, Evident, our core EHR business, comprises about 40% of CPSI revenue. Evident is a preeminent EHR solution for community hospitals and is operating in a mature market with relatively high rates of penetration. Evident bookings in a post-meaningful use environment declined year over year as we continue to evolve CPSI toward more RCM services, recurring revenue and SaaS as exemplified by our sales leadership promotions that I will discuss shortly. We're proud of our leading 1,000 strong customer base and see our EHR base as an anchor to cross-sell value-added RCM services and higher margin products over time. Against this backdrop of creating more organizational focus to drive growth and profitability, I am thrilled to announce some changes in how we operate the business units, aligning them more closely with our go-to-market strategy. To reflect this new strategic direction, we are strengthening our leadership team as follows. David Dye, who you all know and has worn many hats over the course of his 32-year tenure at CPSI, is transitioning from his role as Chief Growth Officer to Chief Operating Officer, overseeing our three business segments, which will now have dynamic new leadership. First, we are pleased to announce Patrick Murphy as General Manager of our TrueBridge division. Pat has been with TrueBridge since 2011, serving as Director of Revenue Consulting Services, Vice President, and most recently Senior VP of TrueBridge. Pat is uniquely qualified to help us propel TrueBridge to the next chapter in CPSI's evolution. We are pleased to announce the appointment of Christina Hendricks as general manager of our Get Real Health segment. Christina spent 17 years at Get Real Health, spanning project management and program management responsibilities. Most recently, she was vice president of service delivery, and we are grateful to have such a talented leader heading up this division. Third, I am pleased to announce David Harsh as the general manager of our EHR segment covering all acuity. David joins us from Healthmark, where he was Senior VP and General Manager of Patient Engagement. Prior to Healthmark, David spent 20 years at EHR leader Cerner in various roles of increasing responsibility, most recently as VP and General Manager, in which he took what was formerly a flat consumer engagement business and leveraged Cerner's vast EHR footprint to drive double-digit growth. Each of the above-referenced business units will roll up under David Dye as COO to create a holistic view of our businesses, facilitate transparency and alignment with how our customers purchase, and advance our operational excellence. Also included under David's umbrella is business unit support, services and product development, each vital to continue delivering product and service innovation to our clients. There is one additional leadership change that I would like to note Dawn Severance, who came to CPSI by way of the Healthline acquisition in 2016, will be transitioning into the Chief Sales Officer role. Dawn will leverage her wealth of experience in revenue cycle operations to the sales organization, which is sure to help CPSI capitalize on the TrueBridge opportunity. This is a centralized sales function across all business units with the objective of building deeper relationships with our customers driving growth, and continuing to build on our foundation of sales excellence. To review, the three tenets of our long-term plan we are committed to are, one, growing the core. This means net new customer ads as well as increasing wallet share across our existing base. Leveraging our TrueBridge brand of RCM services is integral to unlocking the $400 million potential that we've discussed. We also will continue to support and grow the Evident brand, which is the trusted EHR solution of choice in our market of rural and critical access hospitals. Number two, operational efficiency. Namely, unlocking value through automation and offshoring in the form of driving scale and margin enhancement, enabling CPSI to deliver more value to our customers. And lastly, making key investments in adjacencies that enable CPSI to accelerate growth beyond our core. GetReal Health and our migration into the public cloud are two such examples. Finally, we intend to continue following a measured and disciplined capital allocation strategy. We aim to balance R&D investments to meet the evolving needs of our customers with selective M&A and strategic areas like Truecode and HRG previously. that added value to our solution set, enhancing our brand and creating scale. In summary, I'm incredibly energized and humbled to be a part of this great team and culture. I'm proud of what we've accomplished to date, but even more excited about the journey that lies ahead. With that, I'll turn the call over to Matt for a review of our financial results.