Computer Programs and Systems, Inc.

EHR solutions to the post-acute care market. As part of the agreement, we will be PCC's exclusive partner for complete business office services. We are not including anything at this time materially in our forecast as the post-acute market is lagging behind the acute care market in terms of converting to the outsourced model. Second, our integration of UGLE is progressing as expected. As a reminder, early in the fourth quarter, we acquired Bugle with the aim of bringing our globalized workforce in-house rather than continuing to rely on third-party outsourcing. We split the initial integration plan into two tracks. One, getting our offshore resources to scale for existing customers, and two, bringing on the new customers. For existing customers, we went account by account to map out a plan for the ramp. And for our new customers, we are planning to staff them with the appropriate mix from the initial go-live. It's important to note that as we ramp up our global capacity over the course of 2024, we will likely experience a little margin pressure early on, but we expect that to reverse as the year progresses. Longer term, our goal is to achieve a workforce comprised of 70% offshore and 30% US-based employees. While we work through this transition, it remains a top priority to maintain the same quality of service for all of our customers. As we look forward into 2024, our entire organization is committed to returning to growth and realizing the operational leverage that our global workforce can achieve. We believe that our dedication to embracing technology and modernizing our infrastructure is key to our ability to consistently deliver best-in-class solutions to our customers. This is exactly why we continue to use AI to automate the RCM process wherever possible and utilize the cloud to improve capabilities and enhance our services. This commitment to leveraging technology has and will continue to be a top priority within our organization. As we've acknowledged in the past, we are in the midst of a transformation. 2023 was focused primarily on our people and ensuring we have the right team in place to take advantage of the growth opportunities for this year and beyond. In 2024, while we'll still continue to invest in our people, our focus will be on capital allocation. For example, making sure our investments in technology have a sharp focus on ROI to ensure our investments closely align with our strategic aim. With that, I'm very excited to hand it over to our new CFO, Vinay Bassey, Vinay brings a skill set that is already proving to be a huge asset to our organization. His extensive experience across the board, he has extensive experience across the board, but particularly in offshore operations and has been and will continue to be extremely beneficial to our team during this transformational time. Vinay, can you take us through the numbers? Thank you, Chris, for the introduction.

Before I review our fourth quarter results, and our initial 2024 outlook, I want to share with you all a bit about why I joined CPSI. Most of my working years have been focused in technology and services, primarily telecom communications at Avaya and media at Nielsen. CPSI is an extension of that journey where I'm excited to join a company operating in healthcare technology and services. During the interview process, I was impressed with Chris and his commitment to transform the company. I was fully aware of the missteps in 2023 performance, but the company's strong mode of RCN growth within the EHR customer base, coupled with strategic acquisitions and divestitures, reinforced my confidence that the team is focused on transforming the company. My own experience in building a strong team, enforcing fiscal discipline, and leading with a data-driven approach were at the forefront of my decision to join CPSI to be part of its next chapter. Some of my areas of focus for the near term include, first, getting a thorough understanding of the key business drivers that serve as a leading indicator for forecasting, including bookings conversion and increasing trajectory of offshore resources while meeting customer service level agreements. Second, building a strong finance team built on principle of a fact-based, forward-looking approach and closely linked with the business. I believe This will help in improving forecasting and fiscal discipline going forward. Third, taking a fresh look at capital allocation and capex with a return on investment mindset. We have invested in many projects to date and we will be reviewing those efforts to prioritize the ones that will benefit us near term. Fourth, Continuing the cost optimization initiatives that directly impact EBITDA. And last, ensuring the successful integration of Google. Now, let's jump into the numbers. Total bookings in the quarter came in at $26 million. RCM bookings at $14.2 million made up about 54% of the total. which represents an increase 5.9% from 2022. Total revenue for the fourth quarter of $85.9 million compares to 83.2 million a year ago. RCM comprised 59% of the total revenue and crossed the 50 million threshold for the first time. Let me provide additional color on revenue. vehicle contributed approximately 3.8 million dollars in about two and a half months in q4 further rtm excluding vehicle showed growth of 3.3 percent compared to q4 22. ehr showed a decline primarily due to the impact of sunsetting the centric platform in the quarter we reported cost of revenue of $43.7 million, which yielded a gross margin of 49.1% compared to 46.5% a year ago. The improvement in margins came primarily from savings associated with our voluntary employment retirement program and lower bonus accrual due to the 2023 performance. In the fourth quarter, reporting Reported operating expenses, excluding goodwill and trademark impairment, as a percent of total revenue was 53.2% compared to 41.4% a year ago. The increase was primarily from severance expense and other one-time items, including fees incurred for M&A activities. On an apples-to-apples basis, excluding these one-time items, operating expense as a percent of revenue would have been 45.2%, driven primarily by vehicle and increased investments in sales and marketing, technology, including the cloud migration, as well as aging receivables. With all that taken into consideration, adjusted EBITDA for the quarter came out to $12 million compared to $13.2 million a year ago. Adjusted EBITDA margin of 14% in the quarter decreased 190 basis points over year due to the impact from increased investments in sales and marketing, cloud, some Microsoft licenses, and technology resources for future growth, and was partially offset by the benefit from our savings associated with our voluntary employment retirement program and lower bonus accrual in 2023. We ended the year with a cash balance of 3.8 million and a net debt of 194.5 million. Operating cash flow for the year was 1 million, versus $32.4 million in 2022. The reason for decline was primarily a result of lower adjusted EBITDA, higher interest expense from funding the vehicle acquisition, severance, and other one-time items. Lastly, in connection with the company's disposition of EHT in January 2024 and other factors, management is finalizing certain line items in the financial statements, primarily related to the amount of goodwill impairments and the final numbers will be included in our 10-K filing. Moving on to our guidance. First, in an effort to improve our transparency, we will begin providing guidance for the upcoming quarter starting today. For the first quarter, we expect revenue to be in the range of $82 million to $84 million. Adjusted EBITDA to be between 8.5 to 9.5.

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