Press Release
CPSI Announces First Quarter 2017 Results
Company Announces Quarterly Cash Dividend of
Highlights for First Quarter 2017:
-
Revenues of
$64.1 million ; -
Quarterly bookings of
$23.5 million ; -
12-month backlog of
$239.5 million ; -
GAAP earnings of
$0.02 per diluted share and non-GAAP earnings of$0.29 per diluted share; -
GAAP net income of
$246,000 and Adjusted EBITDA of$9.5 million ; -
Cash provided by operations of
$9.7 million ; and -
Quarterly dividend of
$0.20 per share.
CPSI (NASDAQ: CPSI), a community healthcare solutions company, today announced results for the first quarter ended March 31, 2017.
The Company also announced that its Board of Directors has declared a
quarterly cash dividend of
Total revenues for the first quarter ended
“Our first quarter of 2017 reflects our continued progress in delivering
long-term results,” said
“The number of scheduled implementations for 2017 remains on track, having already surpassed the number scheduled in 2016. One factor contributing to lower implementation revenue for the first quarter was the delay, at the clients’ request, of two scheduled implementations from the first quarter to the second quarter of this year. With those two rescheduled installations, we now have 11 sites slated to go live during the second quarter and eight additional sites slated in the third quarter. From a revenue perspective, we expect the remainder of the bookings from the previous two quarters and the associated implementation revenue to be recognized over the next three quarters of 2017,” added Douglas.
Commenting on the Company’s financial performance for the quarter,
“On the cost side, there is continued opportunity to capture cost
synergies as an outcome of the Healthland integration. We entered 2017
with a
“We also implemented right-sizing efforts to our cost structure across
our family of companies. During the first quarter we announced a
Voluntary Early Retirement Program for employees. The results of this
program to date have been a decrease in annual salaries of approximately
“With acute system sales efforts successfully filling our Thrive implementation schedule, TruBridge resuming the growth trends that have characterized this business since its formation, and a continued focus on smart cost saving measures, we are excited about the path we have set to drive long-term profitability and growth,” said Chambless.
Douglas added, “We are looking forward to our annual client conference
taking place later this month, where we will have well over 1,000
attendees from across our family of companies. Leaders and end-users
from both the acute and post-acute world will come together to share
ideas, challenges and opportunities that will have a positive impact on
the health of their communities. Partnering with our clients in these
efforts guides our business, and we have made great strides in launching
innovative solutions that support our shared vision of creating
healthier, financially stronger and more vital communities. With the
recent launch and momentum behind the
CPSI will hold a live webcast to discuss first quarter 2017 results
today,
About CPSI
CPSI is a leading provider of healthcare IT solutions and services for
rural and community hospitals and post-acute care facilities. Founded in
1979, CPSI is the parent of five companies –
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified generally by the use of forward-looking terminology and words
such as “expects,” “anticipates,” “estimates,” “believes,” “predicts,”
“intends,” “plans,” “potential,” “may,” “continue,” “should,” “will” and
words of comparable meaning. Without limiting the generality of the
preceding statement, all statements in this press release relating to
estimated and projected earnings, margins, costs, expenditures, cash
flows, growth rates, the Company's level of recurring and
non-recurring revenue and backlog, the Company’s shareholder returns and
future financial results are forward-looking statements. We caution
investors that any such forward-looking statements are only predictions
and are not guarantees of future performance. Certain risks,
uncertainties and other factors may cause actual results to differ
materially from those projected in the forward-looking statements. Such
factors may include: overall business and economic conditions affecting
the healthcare industry, including the potential effects of the federal
healthcare reform legislation enacted in 2010, and implementing
regulations, on the businesses of our hospital customers; government
regulation of our products and services and the healthcare and health
insurance industries, including changes in healthcare policy affecting
COMPUTER PROGRAMS AND SYSTEMS, INC. |
|||||||||||
Three Months Ended March 31, |
|||||||||||
2017 | 2016 | ||||||||||
Sales revenues: | |||||||||||
System sales and support | $ | 43,423 | $ | 49,709 | |||||||
TruBridge | 20,652 | 19,934 | |||||||||
Total sales revenues | 64,075 | 69,643 | |||||||||
Costs of sales: | |||||||||||
System sales and support | 18,655 | 22,267 | |||||||||
TruBridge | 11,863 | 11,287 | |||||||||
Total costs of sales | 30,518 | 33,554 | |||||||||
Gross profit | 33,557 | 36,089 | |||||||||
Operating expenses: | |||||||||||
Product development | 8,934 | 7,190 | |||||||||
Sales and marketing | 7,127 | 6,730 | |||||||||
General and administrative | 11,661 | 19,038 | |||||||||
Amortization of acquisition-related intangibles | 2,601 | 2,355 | |||||||||
Total operating expenses | 30,323 | 35,313 | |||||||||
Operating income | 3,234 | 776 | |||||||||
Other income (expense): | |||||||||||
Other income | 70 | (1 | ) | ||||||||
Interest expense | (1,807 | ) | (1,468 | ) | |||||||
Total other income (expense) | (1,737 | ) | (1,469 | ) | |||||||
Income (loss) before taxes | 1,497 | (693 | ) | ||||||||
Provision for income taxes | 1,251 | 970 | |||||||||
Net income | $ | 246 | $ | (1,663 | ) | ||||||
Net income per common share – basic and diluted | $ | 0.02 | $ | (0.13 | ) | ||||||
Weighted average shares outstanding used in per common share computations: |
|||||||||||
Basic | 13,374 | 13,025 | |||||||||
Diluted | 13,374 | 13,025 |
COMPUTER PROGRAMS AND SYSTEMS, INC. |
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March 31, 2017 |
Dec. 31, 2016 |
||||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 1,888 | $ | 2,220 | |||||
Accounts receivable, net of allowance for doubtful accounts of $2,120 and $2,370, respectively |
32,909 | 31,812 | |||||||
Financing receivables, current portion, net | 4,707 | 5,459 | |||||||
Inventories | 1,217 | 1,697 | |||||||
Prepaid income taxes | 934 | 567 | |||||||
Prepaid expenses and other | 2,948 | 2,794 | |||||||
Total current assets | 44,603 | 44,549 | |||||||
Property and equipment, net | 12,721 | 13,439 | |||||||
Financing receivables, net of current portion | 6,025 | 5,595 | |||||||
Intangible assets, net | 104,517 | 107,118 | |||||||
Goodwill | 168,449 | 168,449 | |||||||
Total assets | $ | 336,315 | $ | 339,150 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 7,768 | $ | 6,841 | |||||
Current portion of long-term debt | 6,603 | 5,817 | |||||||
Deferred revenue | 9,743 | 5,840 | |||||||
Accrued vacation | 4,250 | 3,650 | |||||||
Other accrued liabilities | 7,718 | 8,797 | |||||||
Total current liabilities | 36,082 | 30,945 | |||||||
Long-term debt, less current portion | 139,750 | 146,989 | |||||||
Deferred tax liabilities | 4,370 | 3,246 | |||||||
Total liabilities | 180,202 | 181,180 | |||||||
Stockholders’ equity: | |||||||||
Common stock, $0.001 par value, 30,000 shares authorized, 13,536 and 13,533 shares issued and outstanding | 13 | 13 | |||||||
Additional paid-in capital | 149,192 | 147,911 | |||||||
Retained earnings | 6,908 | 10,046 | |||||||
Total stockholders’ equity | 156,113 | 157,970 | |||||||
Total liabilities and stockholders’ equity | $ | 336,315 | $ | 339,150 |
COMPUTER PROGRAMS AND SYSTEMS, INC. |
|||||||||||
Three Months Ended
March 31, |
|||||||||||
2017 | 2016 | ||||||||||
Operating activities: | |||||||||||
Net income | $ | 246 | $ | (1,663 | ) | ||||||
Adjustments to net income: | |||||||||||
Provision for bad debt | 174 | 133 | |||||||||
Deferred taxes | 1,124 | 957 | |||||||||
Stock-based compensation | 1,281 | 1,383 | |||||||||
Excess tax benefit from stock-based compensation | - | (109 | ) | ||||||||
Depreciation | 718 | 852 | |||||||||
Intangible amortization | 2,601 | 2,355 | |||||||||
Amortization of deferred finance costs | 182 | 158 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (801 | ) | (985 | ) | |||||||
Financing receivables | (147 | ) | (895 | ) | |||||||
Inventories | 480 | 557 | |||||||||
Prepaid expenses and other | (154 | ) | 72 | ||||||||
Accounts payable | 927 | 2,878 | |||||||||
Deferred revenue | 3,903 | (4,323 | ) | ||||||||
Other liabilities | (480 | ) | (954 | ) | |||||||
Prepaid income taxes | (367 | ) | 418 | ||||||||
Net cash provided by operating activities | 9,687 | 834 | |||||||||
Investing activities: | |||||||||||
Purchases of property and equipment | - | (32 | ) | ||||||||
Purchase of business, net of cash received | - | (162,198 | ) | ||||||||
Sale of investments | - | 9,729 | |||||||||
Net cash used in investing activities | - | (152,501 | ) | ||||||||
Financing activities: | |||||||||||
Dividends paid | (3,384 | ) | (8,587 | ) | |||||||
Proceeds from long-term debt | - | 146,572 | |||||||||
Payments of long-term debt | (6,635 | ) | (781 | ) | |||||||
Proceeds from stock option exercise | - | 1,097 | |||||||||
Excess tax benefit from stock-based compensation | - | 109 | |||||||||
Net cash provided by (used in) financing activities | (10,019 | ) | 138,410 | ||||||||
Net decrease in cash and cash equivalents | (332 | ) | (13,257 | ) | |||||||
Cash and cash equivalents, beginning of period | 2,220 | 24,951 | |||||||||
Cash and cash equivalents, end of period | $ | 1,888 | $ | 11,694 |
COMPUTER PROGRAMS AND SYSTEMS, INC. |
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Three Months Ended | ||||||||||||||||
March 31, 2017 |
Dec. 31, 2016 |
Sept. 30, 2016 |
June 30, 2016 |
March 31, 2016 |
||||||||||||
System sales and support(1) | $ | 16,955 | $ | 22,861 | $ | 15,727 | $ | 18,294 | $ | 19,424 | ||||||
TruBridge(2) | 6,594 | 7,761 | 5,157 | 5,896 | 3,485 | |||||||||||
Total | $ | 23,549 | $ | 30,622 | $ | 20,884 | $ | 24,190 | $ | 22,909 | ||||||
(1) Generally calculated as the total contract price (for system sales) and annualized contract value (support). |
||||||||||||||||
(2) Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts). |
COMPUTER PROGRAMS AND SYSTEMS, INC. |
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Adjusted EBITDA |
Three Months Ended
March 31, |
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2017 | 2016 | ||||||||||
Net income, as reported | $ | 246 | $ | (1,663 | ) | ||||||
Depreciation expense | 718 | 852 | |||||||||
Amortization of acquisition-related intangible assets | 2,601 | 2,355 | |||||||||
Stock-based compensation | 1,281 | 1,383 | |||||||||
Transaction-related costs | 5 | 7,565 | |||||||||
Non-recurring severance | 397 | - | |||||||||
Interest expense and other, net | 1,737 | 1,469 | |||||||||
Provision for income taxes, plus cash benefits from NOL utilization | 2,543 | 1,260 | |||||||||
Adjusted EBITDA | $ | 9,528 | $ | 13,221 | |||||||
Non-GAAP Net Income and Non-GAAP Earnings Per Share (“EPS”) |
Three Months Ended
March 31, |
||||||||||
2017 | 2016 | ||||||||||
Net income, as reported | $ | 246 | $ | (1,663 | ) | ||||||
Pre-tax adjustments for Non-GAAP EPS: | |||||||||||
Amortization of acquisition-related intangible assets | 2,601 | 2,355 | |||||||||
Stock-based compensation | 1,281 | 1,383 | |||||||||
Transaction-related costs | 5 | 7,565 | |||||||||
Non-recurring severance | 397 | - | |||||||||
Non-cash interest expense | 182 | 158 | |||||||||
After-tax adjustments for Non-GAAP EPS: | |||||||||||
Tax-effect of pre-tax adjustments, at 35% | (1,563 | ) | (4,012 | ) | |||||||
Tax-effect of non-deductible transaction-related costs | - | 1,214 | |||||||||
Tax shortfall from stock-based compensation | 764 | - | |||||||||
Non-GAAP net income | $ | 3,913 | $ | 7,000 | |||||||
Weighted average shares outstanding, diluted | 13,374 | 13,025 | |||||||||
Non-GAAP EPS | $ | 0.29 | $ | 0.54 |
COMPUTER PROGRAMS AND SYSTEMS, INC. |
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Three Months Ended | |||||||||||||||||||||
Dec. 31, 2016 |
Sept. 30, 2016 |
June 30, 2016 |
March 31, 2016 |
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Sales revenues: | |||||||||||||||||||||
System sales and support | $ | 44,136 | $ | 44,101 | $ | 47,719 | $ | 49,709 | |||||||||||||
TruBridge | 20,415 | 20,562 | 20,696 | 19,934 | |||||||||||||||||
Total sales revenues | 64,551 | 64,663 | 68,415 | 69,643 | |||||||||||||||||
Costs of sales: | |||||||||||||||||||||
System sales and support | 19,067 | 20,376 | 21,886 | 22,267 | |||||||||||||||||
TruBridge | 11,993 | 11,520 | 11,616 | 11,287 | |||||||||||||||||
Total costs of sales | 31,060 | 31,896 | 33,502 | 33,554 | |||||||||||||||||
Gross profit | 33,491 | 32,767 | 34,913 | 36,089 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||
Product development | 8,855 | 8,397 | 8,179 | 7,190 | |||||||||||||||||
Sales and marketing | 6,853 | 6,894 | 6,717 | 6,730 | |||||||||||||||||
General and administrative | 11,089 | 10,631 | 12,130 | 19,038 | |||||||||||||||||
Amortization of acquisition-related intangibles |
2,602 | 2,601 | 2,624 | 2,355 | |||||||||||||||||
Total operating expenses | 29,399 | 28,523 | 29,650 | 35,313 | |||||||||||||||||
Operating income | 4,092 | 4,244 | 5,263 | 776 | |||||||||||||||||
Other income (expense): | |||||||||||||||||||||
Other income (expense) | 100 | 53 | 69 | (1 | ) | ||||||||||||||||
Interest expense | (1,781 | ) | (1,717 | ) | (1,642 | ) | (1,468 | ) | |||||||||||||
Total other income (expense) | (1,681 | ) | (1,664 | ) | (1,573 | ) | (1,469 | ) | |||||||||||||
Income (loss) before taxes | 2,411 | 2,580 | 3,690 | (693 | ) | ||||||||||||||||
Provision for income taxes | 410 | 981 | 1,694 | 970 | |||||||||||||||||
Net income (loss) | $ | 2,001 | $ | 1,599 | $ | 1,996 | $ | (1,663 | ) | ||||||||||||
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with accounting principles
generally accepted in
As such, to supplement the GAAP information provided, we present in this press release the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP net income, and Non-GAAP earnings per share (“EPS”).
We calculate each of these non-GAAP financial measures as follows:
- Adjusted EBITDA – Adjusted EBITDA consists of GAAP net income (loss) as reported and adjusts for: (i) deferred revenue and other adjustments arising from purchase allocation adjustments related to the Healthland acquisition; (ii) depreciation; (iii) amortization of acquisition-related intangible assets; (iv) stock-based compensation; (v) non-recurrent expenses and transaction-related costs; (vi) interest expense and other, net; and (vii) the provision for income taxes, plus the cash benefits derived from the utilization of net operating loss carryforwards acquired in the Healthland acquisition.
- Non-GAAP net income – Non-GAAP net income consists of GAAP net income (loss) as reported and adjusts for (i) deferred revenue and other adjustments arising from purchase allocation adjustments related to the Healthland acquisition; (ii) amortization of acquisition-related intangible assets; (iii) stock-based compensation; (iv) non-recurrent expenses and transaction-related costs; (v) non-cash charges to interest expense and other; and (vi) the total tax effect of items (i) through (v). Adjustments to Non-GAAP net income also includes the after-tax effect of non-deductible transaction-related costs.
- Non-GAAP EPS – Non-GAAP EPS consists of Non-GAAP net income, as defined above, divided by weighted average shares outstanding (diluted) in the applicable period.
Certain of the items excluded or adjusted to arrive at these non-GAAP financial measures are described below:
- Deferred revenue and other adjustments - Deferred revenue and other adjustments includes acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in business acquisitions. The fair value of deferred revenue represents an amount equivalent to the estimated cost plus an appropriate profit margin, to perform services related to the acquiree’s software and product support, which assumes a legal obligation to do so, based on the deferred revenue balances as of the acquisition date. We add back deferred revenue and other adjustments for non-GAAP financial measures because we believe the inclusion of this amount directly correlates to the underlying performance of our operations.
- Amortization of acquisition-related intangible assets - Acquisition-related amortization expense is a non-cash expense arising primarily from the acquisition of intangible assets in connection with acquisitions or investments. We exclude acquisition-related amortization expense from non-GAAP financial measures because we believe (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. Investors should note that the use of these intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation, and the related amortization expense will recur in future periods.
- Stock-based compensation - Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards. We exclude stock-based compensation expense from non-GAAP financial measures because we believe (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of the timing and valuation of grants of new stock-based awards, including grants in connection with acquisitions. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods, and such expense will recur in future periods.
- Non-recurring expenses and transaction-related costs - Non-recurring expenses relate to certain severance and other charges incurred in connection with activities that are considered one-time. Transaction-related costs are the non-recurring costs related to specific acquisitions (such as the Healthland acquisition). We exclude non-recurring expenses and transaction-related costs from non-GAAP financial measures because we believe (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods.
- Non-cash charges to interest expense and other - Non-cash charges to interest expense and other includes amortization of deferred debt issuance costs. We exclude non-cash charges to interest expense and other from non-GAAP financial measures because we believe these non-cash amounts relate to specific transactions and, as such, may not directly correlate to the underlying performance of our business operations.
- Cash benefits derived from the utilization of net operating loss carryforwards acquired in the Healthland acquisition – A significant portion of the fair value of the assets we acquired in the Healthland acquisition is comprised of federal and state net operating loss carryforwards of the acquired entities. We add utilized amounts in computing adjusted EBITDA to reflect the cash benefit received by the Company from the utilization of these significant assets as such benefits are generally excluded from GAAP measures of financial performance.
- After-tax effect of non-deductible transaction-related costs – Certain transaction costs incurred in the Healthland acquisition are non-deductible for federal income tax purposes as they are considered facilitative costs of the specific transaction. Similar to the treatment of non-recurring expenses and transaction-related costs, we exclude the after-tax effect of non-deductible transaction-related costs from non-GAAP net income because we believe (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods.
Management considers these non-GAAP financial measures to be important indicators of our operational strength and performance of our business and a good measure of our historical operating trends, in particular the extent to which ongoing operations impact our overall financial performance. In addition, management may use Adjusted EBITDA, Non-GAAP net income and/or Non-GAAP EPS to measure the achievement of performance objectives under the Company’s stock and cash incentive programs. Note, however, that these non-GAAP financial measures are performance measures only, and they do not provide any measure of cash flow or liquidity. Non-GAAP financial measures are not alternatives for measures of financial performance prepared in accordance with GAAP and may be different from similarly titled non-GAAP measures presented by other companies, limiting their usefulness as comparative measures. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Additionally, there is no certainty that we will not incur expenses in the future that are similar to those excluded in the calculation of the non-GAAP financial measures presented in this press release. Investors and potential investors are encouraged to review the “Reconciliation of Non-GAAP Financial Measures” above.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504006488/en/
Source: CPSI
CPSI
Tracey Schroeder, 251-639-8100
Chief Marketing Officer