Highlights for First Quarter 2021:
Total revenues for the quarter ended
Commenting on the Company’s financial performance for the first quarter of 2021,
“We saw continued pressure on our hospital, nursing home and clinic customers to address the COVID pandemic as their focus turned to vaccinating their communities as quickly as possible while still treating those affected by the surge in COVID cases. These market dynamics and the strain on healthcare leaders in the communities we serve, are reflected in our first quarter bookings results of
“During the first quarter, we also made great strides in creating the culture of innovation necessary for CPSI to achieve its transformation objectives. First, we have relocated our corporate headquarters to a more modern, open space in downtown
CPSI will hold a live webcast to discuss first quarter 2021 results tomorrow,
About CPSI
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 –
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 the Company’s future financial and operational 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: the impact of the ongoing COVID-19 pandemic and related economic disruptions which have materially affected CPSI’s revenue and could materially affect CPSI’s gross margin and income, as well as CPSI’s financial position and/or liquidity; federal, state and local government actions to address and contain the impact of COVID-19 and their impact on us and our hospital clients; operational disruptions and heightened cybersecurity risks due to a significant percentage of our workforce working remotely; significant legislative and regulatory uncertainty in the healthcare industry; exposure to liability for failure to comply with regulatory requirements; saturation of our target market and hospital consolidations; unfavorable economic or market conditions that may cause a decline in spending for information technology and services; general economic conditions, including changes in the financial and credit markets that may affect the availability and cost of credit to us or our customers; potential inability to secure additional financing on favorable terms to meet our future capital needs; our substantial indebtedness, and our ability to incur additional indebtedness in the future; competition with companies that have greater financial, technical and marketing resources than we have; potential future acquisitions that may be expensive, time consuming, and subject to other inherent risks; potential failure to develop new products or enhance current products that keep pace with market demands; failure to develop new technology and products in response to market demands; failure of our products to function properly resulting in claims for medical and other losses; breaches of security and viruses in our systems resulting in customer claims against us and harm to our reputation; failure to maintain customer satisfaction through new product releases free of undetected errors or problems; failure to convince customers to migrate to current or future releases of our products; failure to maintain our margins and service rates; increase in the percentage of total revenues represented by service revenues, which have lower gross margins; exposure to liability in the event we provide inaccurate claims data to payors; exposure to liability claims arising out of the licensing of our software and provision of services; dependence on licenses of rights, products and services from third parties; misappropriation of our intellectual property rights and potential intellectual property claims and litigation against us; interruptions in our power supply and/or telecommunications capabilities, including those caused by natural disaster; our ability to attract and retain qualified client service and support personnel; disruption from periodic restructuring of our sales force; potential inability to properly manage growth in new markets we may enter; exposure to numerous and often conflicting laws, regulations, policies, standards or other requirements through our international business activities; potential litigation against us; pressures on cash flow to service our outstanding debt; restrictive terms of our credit agreement on our current and future operations; changes in and interpretations of financial accounting matters that govern the measurement of our performance; significant charges to earnings if our goodwill or intangible assets become impaired; fluctuations in quarterly financial performance due to, among other factors, timing of customer installations; volatility in our stock price; failure to maintain effective internal control over financial reporting; lack of employment or non-competition agreement with most of our key personnel; inherent limitations in our internal control over financial reporting; vulnerability to significant damage from natural disasters; market risks related to interest rate changes; and other risk factors described from time to time in our public releases and reports filed with the
Condensed Consolidated Statements of Income | ||||||||
(In '000s, except per share data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
2021 |
|
2020 |
||||||
Sales revenues: | ||||||||
System sales and support | $ |
36,366 |
|
$ |
41,186 |
|
||
|
31,639 |
|
|
28,571 |
|
|||
Total sales revenues |
|
68,005 |
|
|
69,757 |
|
||
Costs of sales: | ||||||||
System sales and support |
|
17,376 |
|
|
18,587 |
|
||
|
15,779 |
|
|
15,057 |
|
|||
Total costs of sales |
|
33,155 |
|
|
33,644 |
|
||
Gross profit |
|
34,850 |
|
|
36,113 |
|
||
Operating expenses: | ||||||||
Product development |
|
8,429 |
|
|
8,271 |
|
||
Sales and marketing |
|
5,301 |
|
|
6,997 |
|
||
General and administrative |
|
13,149 |
|
|
11,847 |
|
||
Amortization of acquisition-related intangibles |
|
3,057 |
|
|
2,866 |
|
||
Total operating expenses |
|
29,936 |
|
|
29,981 |
|
||
Operating income |
|
4,914 |
|
|
6,132 |
|
||
Other income (expense): | ||||||||
Other income |
|
814 |
|
|
362 |
|
||
Interest expense |
|
(627 |
) |
|
(1,179 |
) |
||
Total other income (expense) |
|
187 |
|
|
(817 |
) |
||
Income before taxes |
|
5,101 |
|
|
5,315 |
|
||
Provision for income taxes |
|
957 |
|
|
1,225 |
|
||
Net income | $ |
4,144 |
|
$ |
4,090 |
|
||
Net income per common share—basic | $ |
0.29 |
|
$ |
0.28 |
|
||
Net income per common share—diluted | $ |
0.28 |
|
$ |
0.28 |
|
||
Weighted average shares outstanding used in per common share computations: | ||||||||
Basic |
|
14,159 |
|
|
13,904 |
|
||
Diluted |
|
14,221 |
|
|
13,904 |
|
Condensed Consolidated Balance Sheets | ||||||||
(In '000s, except per share data) | ||||||||
(unaudited) |
||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ |
18,016 |
|
$ |
12,671 |
|
||
Accounts receivable, net of allowance for doubtful accounts of |
|
33,793 |
|
|
32,414 |
|
||
Financing receivables, current portion, net |
|
9,710 |
|
|
10,821 |
|
||
Inventories |
|
1,342 |
|
|
1,084 |
|
||
Prepaid income taxes |
|
2,188 |
|
|
1,789 |
|
||
Prepaid expenses and other |
|
7,833 |
|
|
8,365 |
|
||
Total current assets |
|
72,882 |
|
|
67,144 |
|
||
Property & equipment, net |
|
13,079 |
|
|
13,139 |
|
||
Software development costs, net |
|
4,009 |
|
|
3,210 |
|
||
Operating lease assets |
|
9,030 |
|
|
6,610 |
|
||
Financing receivables, net of current portion |
|
10,460 |
|
|
11,477 |
|
||
Other assets, net of current portion |
|
2,998 |
|
|
2,787 |
|
||
Intangible assets, net |
|
68,632 |
|
|
71,689 |
|
||
|
150,216 |
|
|
150,216 |
|
|||
Total assets | $ |
331,306 |
|
$ |
326,272 |
|
||
Liabilities & Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ |
6,742 |
|
$ |
7,716 |
|
||
Current portion of long-term debt |
|
3,457 |
|
|
3,457 |
|
||
Deferred revenue |
|
8,833 |
|
|
8,130 |
|
||
Accrued vacation |
|
5,306 |
|
|
5,353 |
|
||
Other accrued liabilities |
|
16,394 |
|
|
12,786 |
|
||
Total current liabilities |
|
40,732 |
|
|
37,442 |
|
||
Long-term debt, less current portion |
|
67,496 |
|
|
73,360 |
|
||
Operating lease liabilities, net of current portion |
|
7,527 |
|
|
5,092 |
|
||
Deferred tax liabilities |
|
11,436 |
|
|
10,378 |
|
||
Total liabilities |
|
127,191 |
|
|
126,272 |
|
||
Stockholders' Equity | ||||||||
Common stock, |
|
15 |
|
|
15 |
|
||
|
(2,324 |
) |
|
(1,261 |
) |
|||
Additional paid-in capital |
|
182,656 |
|
|
181,622 |
|
||
Retained earnings |
|
23,768 |
|
|
19,624 |
|
||
Total stockholders' equity |
|
204,115 |
|
|
200,000 |
|
||
Total liabilities and stockholders' equity | $ |
331,306 |
|
$ |
326,272 |
|
Condensed Consolidated Statements of Cash Flows | ||||||||
(In '000s) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
2021 |
|
2020 |
||||||
Operating activities: | ||||||||
Net income | $ |
4,144 |
|
$ |
4,090 |
|
||
Adjustments to net income: | ||||||||
Provision for bad debt |
|
938 |
|
|
999 |
|
||
Deferred taxes |
|
1,058 |
|
|
1,065 |
|
||
Stock-based compensation |
|
1,034 |
|
|
2,358 |
|
||
Depreciation |
|
553 |
|
|
420 |
|
||
Amortization of acquisition-related intangibles |
|
3,057 |
|
|
2,866 |
|
||
Amortization of software development costs |
|
73 |
|
|
38 |
|
||
Amortization of deferred finance costs |
|
73 |
|
|
86 |
|
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
(2,183 |
) |
|
(88 |
) |
||
Financing receivables |
|
1,994 |
|
|
(4 |
) |
||
Inventories |
|
(258 |
) |
|
62 |
|
||
Prepaid expenses and other |
|
321 |
|
|
(1,079 |
) |
||
Accounts payable |
|
(974 |
) |
|
206 |
|
||
Deferred revenue |
|
703 |
|
|
(821 |
) |
||
Other liabilities |
|
3,576 |
|
|
(2,732 |
) |
||
Income taxes payable |
|
(399 |
) |
|
128 |
|
||
Net cash provided by operating activities |
|
13,710 |
|
|
7,594 |
|
||
Investing activities: | ||||||||
Investment in software development |
|
(872 |
) |
|
(921 |
) |
||
Purchases of property and equipment |
|
(493 |
) |
|
(2,120 |
) |
||
Net cash used in investing activities |
|
(1,365 |
) |
|
(3,041 |
) |
||
Financing activities: | ||||||||
Dividends paid |
|
- |
|
|
(1,435 |
) |
||
|
(1,063 |
) |
|
- |
|
|||
Payments of long-term debt principal |
|
(937 |
) |
|
(2,195 |
) |
||
Payments of revolving line of credit |
|
(5,000 |
) |
|
(4,000 |
) |
||
Net cash used in financing activities |
|
(7,000 |
) |
|
(7,630 |
) |
||
Net increase in cash and cash equivalents |
|
5,345 |
|
|
(3,077 |
) |
||
Cash and cash equivalents, beginning of period |
|
12,671 |
|
|
7,357 |
|
||
Cash and cash equivalents, end of period | $ |
18,016 |
|
$ |
4,280 |
Consolidated Bookings | ||||||||
(In '000s) | ||||||||
Three Months Ended |
||||||||
In '000s |
|
|
|
|||||
System sales and support(1) | $ |
6,090 |
$ |
9,832 |
||||
|
2,687 |
|
9,511 |
|||||
Total | $ |
8,777 |
$ |
19,343 |
||||
(1) |
Generally calculated as the total contract price (for system sales) and annualized contract value (for support). | |||||||
(2) |
Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts) |
Bookings Composition | ||||||||
(In '000s, except per share data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
System sales and support | ||||||||
Non-subscription sales(1) | $ |
2,997 |
$ |
7,491 |
||||
Subscription revenue(2) |
|
1,907 |
|
1,408 |
||||
Other |
|
1,186 |
|
933 |
||||
Net new(3) |
|
462 |
|
2,350 |
||||
Cross-sell(3) |
|
1,589 |
|
6,873 |
||||
|
636 |
|
288 |
|||||
Total | $ |
8,777 |
$ |
19,343 |
||||
(1) |
Represents nonrecurring revenues that generally exhibit a timeframe for bookings-to-revenue conversion of five to six months following contract execution. | |||||||
(2) |
Represents recurring revenues to be recognized on a monthly basis over a weighted-average contract period of five years, with a start date in the next 12 months and an average timeframe for commencement of bookings-to-revenue conversion of five to six months following contract execution. | |||||||
(3) |
“Net new” represents bookings from outside the Company’s core EHR client base, and “Cross-sell” represents bookings from existing EHR customers. In each case, generally comprised of recurring revenues to be recognized ratably over a one-year period and an average timeframe for commencement of bookings-to-revenue conversion of four to six months following contract execution. |
Acute Care EHR Net New License Mix | ||||||
Three Months Ended | ||||||
SaaS(1) | 2 |
8 |
||||
Perpetual license(2) | 3 |
1 |
||||
Total | 5 |
9 |
||||
(1) |
Exhibit revenue attribution that is recurring in nature. | |||||
(2) |
Exhibit revenue attribution that is nonrecurring in nature. |
Reconciliation of Non-GAAP Financial Measures | |||||||
(In '000s) | |||||||
(Unaudited) | |||||||
Three Months Ended |
|||||||
Adjusted EBITDA: | 2021 |
|
2020 |
||||
Net income, as reported | $ |
4,144 |
|
$ |
4,090 |
||
Depreciation expense |
|
553 |
|
|
420 |
||
Amortization of software development costs |
|
73 |
|
|
38 |
||
Amortization of acquisition-related intangible assets |
|
3,057 |
|
|
2,866 |
||
Stock-based compensation |
|
1,034 |
|
|
2,358 |
||
Severance and other nonrecurring charges |
|
2,193 |
|
|
55 |
||
Interest expense and other, net |
|
(187 |
) |
|
817 |
||
Provision for income taxes |
|
957 |
|
|
1,225 |
||
Adjusted EBITDA | $ |
11,824 |
|
$ |
11,869 |
Reconciliation of Non-GAAP Financial Measures | ||||||||
(In '000s, except per share data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
Non-GAAP Net Income and Non-GAAP EPS: | 2021 |
|
2020 |
|||||
Net income, as reported | $ |
4,144 |
|
$ |
4,090 |
|
||
Pre-tax adjustments for Non-GAAP EPS: | ||||||||
Amortization of acquisition-related intangible assets |
|
3,057 |
|
|
2,866 |
|
||
Stock-based compensation |
|
1,034 |
|
|
2,358 |
|
||
Severance and other nonrecurring charges |
|
2,193 |
|
|
55 |
|
||
Non-cash interest expense |
|
73 |
|
|
86 |
|
||
After-tax adjustments for Non-GAAP EPS: | ||||||||
Tax-effect of pre-tax adjustments, at 21% |
|
(1,335 |
) |
|
(1,127 |
) |
||
Tax shortfall (windfall) from stock-based compensation |
|
(84 |
) |
|
128 |
|
||
Non-GAAP net income | $ |
9,082 |
|
$ |
8,456 |
|
||
Weighted average shares outstanding, diluted |
|
14,221 |
|
|
13,904 |
|
||
Non-GAAP EPS | $ |
0.64 |
|
$ |
0.61 |
|
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 and during the live webcast discussing our financial results 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:
Certain of the items excluded or adjusted to arrive at these non-GAAP financial measures are described below:
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 calculations of the non-GAAP financial measures presented in this press release. Investors and potential investors are encouraged to review the “Unaudited Reconciliation of Non-GAAP Financial Measures” above.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005898/en/
Chief Marketing Officer
Tracey.schroeder@cpsi.com
(251) 639-8100
Source: CPSI