CPSI Announces the Refinancing of Credit Facilities to Create Flexibility for More Opportunistic Future Uses of Capital and Provides Update on Current Market Conditions
Among other changes, the 2020 Credit Agreement:
Increases the maximum borrowing capacity under the revolving credit facility from
$50 millionto $110 million, with undrawn amounts available for future borrowings increasing from $34 millionto $81 million;
Decreases the amount outstanding under the term loan facility from
$87 millionto $75 million, with an accompanying reduction in term loan payments designed to achieve a nearly $6 milliondecrease in term loan payment commitments over the next twelve months;
- Allows for more advantageous pricing at certain leverage ratios;
Removes previous absolute-dollar limits on acquisition activity (previously limited to
$20 millionin any annual period and $50 millionover the life of the credit facilities); and
- Leaves relatively unchanged the maximum consolidated leverage ratio, now calculated on a net basis (at 3.5 times Consolidated EBITDA) and the minimum consolidated fixed charge coverage ratio (at 1.25 times Consolidated Fixed Charges).
Commenting on the 2020 Credit Agreement,
The 2020 Credit Agreement provides CPSI with ample liquidity to broaden its capital allocation strategy. CPSI now has the flexibility to act decisively on strategic tuck-in M&A opportunities, invest in new and existing products and services, and potentially pursue value-driven share repurchases.
Chambless continued, “The primary goal of this refinancing is to position CPSI to be more opportunistic in future capital allocation decisions. However, in keeping with our conservative financing strategy, the improvement in our liquidity is certainly another desirable benefit in the current uncertain economic environment. That said, the confidence in our liquidity that we expressed on our
Cash on-hand is currently more than
$13 million, compared to approximately $8 millionof cash on-hand at May 5, 2020. No additional borrowings under our revolving credit facility have been made since March 31, 2020.
June 15, 2020, trailing 10-day and 20-day cash collections increased 38% and 2%, respectively, compared to the same periods in 2019. On May 5, 2020, trailing 10-day and 20-day cash collections were up 24% and 3%, respectively, year-over-year.
As of the
May 5, 2020, quarterly earnings call, TruBridgevolumes were roughly 40% below benchmark (pre-COVID-19 levels), having stabilized at that level for multiple weeks. TruBridge Revenue Cycle Management (RCM) volumes have since improved to 20% below benchmark, Medical Coding volumes have improved to nearly even with benchmark, and volumes for our Accounts Receivable Management Services have improved to roughly 30% below benchmark.”
“CPSI’s performance across each of these metrics is either in line with or surpassing our expectations for this point in time given the current situation,” said
CPSI is a leading provider of healthcare solutions and services for community hospitals, their clinics and post-acute care facilities. Founded in 1979, CPSI is the parent of four companies –
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,” “projects,” “targets,” “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 CPSI’s ability to execute on its capital allocation strategy, including completing strategic acquisitions, investing in new and existing products and services, and pursuing share repurchases, and CPSI’s ability to maintain its current level of performance 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: risks related to CPSI’s ability to successfully complete strategic acquisitions and invest in new and existing products and services; risks related to CPSI’s ability to pursue share repurchases, as CPSI’s Board of Directors has not approved and may never approve a share repurchase program and any share repurchases will be subject to then current market conditions and CPSI’s capital position and cash flows, both of which may be materially adversely affected by the COVID-19 pandemic and related economic conditions; risks related to CPSI’s ability to continue to improve its cash on-hand, cash collections and certain
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