TruBridge, Inc.

Greetings and welcome to the TrueBridge Q2 earnings conference call. At this time, all participants are in listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to your host, Drew Anderson. Please go ahead.

Thank you. Good morning, and welcome to the TrueBridge Second Quarter 2025 Earnings Conference Call. Leading today's call are Chris Fowler, President and Chief Executive Officer, and Vinay Bhasi, 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. The company also cautions investors that the forward-looking information provided in this call represents their outlook only as of this date, and they 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 thank you, everyone, for joining us this morning to discuss our Q2 results. We've made steady progress towards our long-term goals with bookings, profitability, and cash flow standing out as bright spots in the quarter. Before I dive into the results, I'm excited to share that last week, I had the honor of representing TrueBridge at the White House for the CMS Health Tech Ecosystem event, where we officially signed the CMS Interoperability Framework Pledge. This is an important milestone for us, and it really speaks to our ongoing commitment to empowering rural and community healthcare providers to keep care local. For over 45 years, TrueBridge has delivered solutions designed to help providers remain independent and focus on what matters most, their patients. By reinforcing our focus on interoperability and modern data infrastructure, we're working to make real-time, secure patient data accessible anytime and anywhere it's needed. This not only protects patient privacy, but it also gives patients and providers the tools they need to improve outcomes and enhance the healthcare experience. I'm proud of the impact of our work that our work is having in the communities we serve. And I'm encouraged about what we can achieve together as we work to move healthcare technology innovation forward. As we continue to advance through our transformation, progress isn't always a straight line and can sometimes involve delays. But we remain confident in achieving our long-term objectives. A key factor contributing to our confidence is our work with a third-party consultant building upon our existing efforts to enhance on three main areas across the enterprise. One, improvement of operations. Two, driving efficiencies. And three, unlocking the value of our existing customer base. We will elaborate a bit on these initiatives today and keep you updated on our progress going forward. With that, let's move on to our review of the quarter and outlook for the remainder of the year. Bookings came in at a $25.6 million on a TCV basis. compared to $22 million sequentially and $23 million year-over-year. Revenue of $85.7 million came in towards the lower end of expectations, while adjusted EBITDA of $13.7 million came in slightly ahead of the midpoint. Now that we are halfway through the year and with more visibility into the second half, we are taking a refreshed look at our guidance. We're lowering the top end of our revenue range and raising our adjusted EBITDA range as well. On the revenue side, there are two key factors driving our adjustment to guidance, CBO client retention and delayed revenue recognition from bookings. First, client retention in the CBO side of our financial health business was slightly lower than we had originally forecasted at the start of the year. Our North Star remains client delight, and we continue to take steps to improve client satisfaction back to our historical levels and beyond. At the beginning of the year, we identified 60 of our CBO clients up for renewal to use as a proxy for these efforts. In the quarter, we signed 12 of 15, bringing our year-to-date total to 21 of 26. With respect to this group of clients, we expect renewals to remain in this range in the back half of 2025, but with significant improvement in 2026 based on our performance. The first half of this year has been used to build a thorough and strategic plan, and now in the second half of the year, we will turn our attention to operationalizing this plan, fully recognizing that this is going to be a multi-quarter journey. To that end, I'd like to walk you through some of the steps. First, we have significantly enhanced our resource management efforts for CBO, primarily by aligning people and work through a refined resource model that corrects misalignments, ensures the right resources are in the right place, and allows us to prioritize client work more efficiently. As a result, we instituted a temporary pause in Q2 in our global hiring efforts to right-sizing staffing needs while continuing to invest in our people through training programs that enhance our acute RCM talent. We were able to offset the savings impact of this decision with savings from other efficiencies in the financial health business unit associated with resource management and productivity. Second, to supplement our remote workforce strategy, we are moving forward with establishing a physical presence in India to standardize our workflow align with industry best practices, and ensure capacity to ramp at our desired pace. We are in the final stages of planning and are targeting an opening in 2026. Once operational, enhanced training and greater accountability through in-office presence will drive continued improvements in productivity, quality, client satisfaction, and retention. Our plans include increasing the global workforce for this office with the initial focus on the CBO and EBO businesses. This is another testament to our commitment to streamlining operations and strengthening our team dynamics, both of which we believe will benefit meaningfully from a physical location in India. And third, we completed several leadership hires focused on offshore service levels. First, our new head of services for financial health brings 15 years of experience in the healthcare outsourcing services in the RCM industry. This new role will ensure our services successfully support our clients' financial health through the delivery of consistent revenue cycle operations. We also brought on a new head of India who joins us with more than 25 years of leadership experience in the US healthcare sector, specializing in RCM operations, data analytics, and business transformation. With our new leaders on board, we have lifted the temporary pause. They will focus on enhancing client service quality, driving operational efficiency, and establishing strong in-office capabilities and support long-term client retention. Now that we have identified client retention as our area of opportunity and laid out a tangible plan to tackle this head-on, I feel confident that we will begin to make headway on improving this metric. The second factor affecting our revenue outlook is our success in bookings in more sizable deals. We've mentioned in the past that as we move upstream into larger hospitals and as we sell more of our integrated interest solution, these larger size deals take much longer to implement than what we have seen historically with smaller hospitals. While this sort of positive improvement is encouraging, it doesn't come without growing pains. In our experience, Deals that were over $1 million in recurring revenue took approximately six months to go live compared to deals under that $1 million mark, which went live in between one and two months. Said succinctly, some of the meaningful deals we've signed in Q1 and Q2 won't start contributing revenue until 2026. For example, we're incredibly pleased to share that we signed a large deal this quarter, which expanded an existing partnership through the addition of three Entrust Agreements. Implementation is not scheduled to go live until next year, but their decision to add three hospitals following a competitive process was based on the positive experience they've had with us to date, as well as the risk-sharing model of our Entrust Package. Turning now to our profitability expectations for the year, Our revised EBITDA outlook now reflects an EBITDA margin of 18.5% at the midpoint of the range, up from 17% in our previous guidance. This is driven by factors in both financial health and patient care. First, in financial health, we see further efficiencies in our global offshoring initiative. Since Meredith has come on board, she has taken a metrics-driven approach and implemented productivity enhancements, and performance-based incentives, which we expect will yield incremental savings in the second half. Second, we have taken steps to improve our resource management process. Specifically, we have implemented a more robust model for tracking supply versus demand of resources by functional area, and as I mentioned above, have adjusted our hiring approach and incentive programs. Not only does this make us more efficient, it provides opportunity for cost savings, but it also helps ensure we have the right levels of staffing to best serve our customers. And lastly, we are seeing a favorable revenue mix with our encoder solution overperforming and delivering higher gross margins. Lastly, inpatient care is working to enhance and streamline our operations, particularly in client support. As a result, we expect some savings beginning in the fourth quarter. I want to close my comments today with some of the ways we're innovating, specifically leveraging AI both internally to drive efficiency and externally to enhance the client experience we're able to deliver. Internally, we recently released an AI solution for our patient care client support team. We believe that it will help our patient care support team respond in a timelier manner and, more importantly, with a standardized approach, ensuring all our clients receive the same high-quality experience. Externally, as we announced in May at our National Client Conference, we are collaborating with Microsoft to integrate Microsoft Dragon Copilot into our EHR solution. Providers that use TrueBridge will be empowered by advanced secure speech recognition and AI capabilities designed to support the unique needs of our rural and community healthcare clients. Our goal with this collaboration between our two technologies is to enhance care delivery, financial stability, and operational efficiency for thousands of hospitals and healthcare systems across the country. I believe this collaboration will be welcomed by our clients when the integrated solution becomes available later this fall. And I'm thrilled for Truebridge to be partnering with Microsoft to bring cutting edge solutions to our clients. As I hand the call over today, I'd like to reiterate that I am pleased with the progress we continue to make across the company. We feel that our bookings growth validates the value we offer clients, and our improving margin profile is a sign that we are on the right track. We will always continue to refine and optimize our approach, but I firmly believe that the actions we are taking today are the best way to set us up to deliver sustainable and durable growth down the road. Now with that, I'll turn the call over to Vinay for a deeper dive into the financials.