Company Launches Transformation Initiative with Goal of
Highlights for Fourth Quarter 2020:
Total revenues for the quarter ended
Total revenues for the year ended
Commenting on the Company’s financial performance for the fourth quarter of 2020,
“Looking forward, the Company expects to achieve three-year annual organic recurring revenue growth of 5% to 8%. The continued growth of
CPSI will hold a live webcast to discuss fourth quarter 2020 results today,
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 global pandemic related to the novel coronavirus COVID-19 (including the rate of spread, duration and geographic coverage of the COVID-19 pandemic, the rate and extent to which the virus mutates, the status of testing capabilities, the development, distribution, and efficacy of vaccines for COVID-19 or any mutant strains and the development and effectiveness of therapeutic remedies), which has decreased our hospital customers’ patient volumes and negatively impacted our variable revenues, and could negatively impact our gross margins and income, as well as our 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; overall business and economic conditions affecting the healthcare industry, including the 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 Medicare and Medicaid reimbursement rates and qualifying technological standards; changes in customer purchasing priorities, capital expenditures and demand for information technology systems; saturation of our target market and hospital consolidations; 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; our substantial indebtedness, and our ability to incur additional indebtedness in the future; our potential inability to generate sufficient cash in order to meet our debt service obligations; restrictions on our current and future operations because of the terms of our senior secured credit facilities; market risks related to interest rate changes; competition with companies that have greater financial, technical and marketing resources than we have; 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; 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; failure to properly manage growth in new markets we may enter; misappropriation of our intellectual property rights and potential intellectual property claims and litigation against us; changes in accounting principles generally accepted in
Condensed Consolidated Statements of Income | ||||||||||||||||
(In '000s, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||||
Sales revenues: | ||||||||||||||||
System sales and support | $ |
36,657 |
|
$ |
41,475 |
|
$ |
152,954 |
|
$ |
165,352 |
|
||||
|
30,192 |
|
|
29,163 |
|
|
111,534 |
|
|
109,282 |
|
|||||
Total sales revenues |
|
66,849 |
|
|
70,638 |
|
|
264,488 |
|
|
274,634 |
|
||||
Costs of sales: | ||||||||||||||||
System sales and support |
|
17,460 |
|
|
19,102 |
|
|
69,361 |
|
|
73,872 |
|
||||
|
14,781 |
|
|
14,956 |
|
|
58,881 |
|
|
56,617 |
|
|||||
Total costs of sales |
|
32,241 |
|
|
34,058 |
|
|
128,242 |
|
|
130,489 |
|
||||
Gross profit |
|
34,608 |
|
|
36,580 |
|
|
136,246 |
|
|
144,145 |
|
||||
Operating expenses: | ||||||||||||||||
Product development |
|
8,265 |
|
|
9,178 |
|
|
33,457 |
|
|
36,861 |
|
||||
Sales and marketing |
|
5,661 |
|
|
6,612 |
|
|
24,185 |
|
|
27,774 |
|
||||
General and administrative |
|
11,886 |
|
|
9,012 |
|
|
46,129 |
|
|
43,921 |
|
||||
Amortization of acquisition-related intangibles |
|
2,822 |
|
|
2,866 |
|
|
11,421 |
|
|
11,006 |
|
||||
Total operating expenses |
|
28,634 |
|
|
27,668 |
|
|
115,192 |
|
|
119,562 |
|
||||
Operating income |
|
5,974 |
|
|
8,912 |
|
|
21,054 |
|
|
24,583 |
|
||||
Other income (expense): | ||||||||||||||||
Other income |
|
252 |
|
|
272 |
|
|
1,494 |
|
|
807 |
|
||||
Gain on contingent consideration |
|
- |
|
|
5,000 |
|
|
- |
|
|
5,000 |
|
||||
Loss on extinguishment of debt |
|
- |
|
|
- |
|
|
(202 |
) |
|
- |
|
||||
Interest expense |
|
(730 |
) |
|
(1,425 |
) |
|
(3,562 |
) |
|
(6,694 |
) |
||||
Total other income (expense) |
|
(478 |
) |
|
3,847 |
|
|
(2,270 |
) |
|
(887 |
) |
||||
Income before taxes |
|
5,496 |
|
|
12,759 |
|
|
18,784 |
|
|
23,696 |
|
||||
Provision for income taxes |
|
2,373 |
|
|
1,533 |
|
|
4,538 |
|
|
3,228 |
|
||||
Net income | $ |
3,123 |
|
$ |
11,226 |
|
$ |
14,246 |
|
$ |
20,468 |
|
||||
Net income per common share—basic | $ |
0.22 |
|
$ |
0.78 |
|
$ |
0.98 |
|
$ |
1.43 |
|
||||
Net income per common share—diluted | $ |
0.22 |
|
$ |
0.78 |
|
$ |
0.98 |
|
$ |
1.43 |
|
||||
Weighted average shares outstanding | ||||||||||||||||
used in per common share computations: | ||||||||||||||||
Basic |
|
14,086 |
|
|
13,830 |
|
|
14,038 |
|
|
13,778 |
|
||||
Diluted |
|
14,086 |
|
|
13,830 |
|
|
14,038 |
|
|
13,778 |
|
Condensed Consolidated Balance Sheets | |||||||
(In '000s, except per share data) | |||||||
2020 (unaudited) |
|||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ |
12,671 |
|
$ |
7,357 |
||
Accounts receivable, net of allowance for doubtful accounts of |
|
32,414 |
|
|
38,819 |
||
Financing receivables, current portion, net |
|
10,821 |
|
|
12,032 |
||
Inventories |
|
1,084 |
|
|
1,426 |
||
Prepaid income taxes |
|
1,789 |
|
|
1,337 |
||
Prepaid expenses and other |
|
8,365 |
|
|
5,861 |
||
Total current assets |
|
67,144 |
|
|
66,832 |
||
Property & equipment, net |
|
13,139 |
|
|
11,593 |
||
Software development costs, net |
|
3,210 |
|
|
- |
||
Operating lease assets |
|
6,610 |
|
|
7,800 |
||
Financing receivables, net of current portion |
|
11,477 |
|
|
18,267 |
||
Other assets, net of current portion |
|
2,787 |
|
|
1,771 |
||
Intangible assets, net |
|
71,689 |
|
|
83,110 |
||
|
150,216 |
|
|
150,216 |
|||
Total assets | $ |
326,272 |
|
$ |
339,589 |
||
Liabilities & Stockholders' Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ |
7,716 |
|
$ |
8,804 |
||
Current portion of long-term debt |
|
3,457 |
|
|
8,430 |
||
Deferred revenue |
|
8,130 |
|
|
8,628 |
||
Accrued vacation |
|
5,353 |
|
|
4,301 |
||
Other accrued liabilities |
|
12,786 |
|
|
11,767 |
||
Total current liabilities |
|
37,442 |
|
|
41,930 |
||
Long-term debt, less current portion |
|
73,360 |
|
|
99,433 |
||
Operating lease liabilities, net of current portion |
|
5,092 |
|
|
6,256 |
||
Deferred tax liabilities |
|
10,378 |
|
|
7,623 |
||
Total liabilities |
|
126,272 |
|
|
155,242 |
||
Stockholders' Equity | |||||||
Common stock, |
|
15 |
|
|
14 |
||
|
(1,261 |
) |
|
- |
|||
Additional paid-in capital |
|
181,622 |
|
|
174,618 |
||
Retained earnings |
|
19,624 |
|
|
9,715 |
||
Total stockholders' equity |
|
200,000 |
|
|
184,347 |
||
Total liabilities and stockholders' equity | $ |
326,272 |
|
$ |
339,589 |
Condensed Consolidated Statements of Cash Flows | ||||||||
(In '000s) | ||||||||
(Unaudited) | ||||||||
Twelve Months Ended |
||||||||
2020 |
2019 |
|||||||
Operating activities: | ||||||||
Net income | $ |
14,246 |
|
$ |
20,468 |
|
||
Adjustments to net income: | ||||||||
Provision for bad debt |
|
4,370 |
|
|
2,348 |
|
||
Deferred taxes |
|
2,755 |
|
|
1,011 |
|
||
Stock-based compensation |
|
7,005 |
|
|
9,822 |
|
||
Depreciation |
|
1,790 |
|
|
1,407 |
|
||
Amortization of acquisition-related intangibles |
|
11,421 |
|
|
11,006 |
|
||
Amortization of software development costs |
|
118 |
|
|
- |
|
||
Amortization of deferred finance costs |
|
317 |
|
|
345 |
|
||
Gain on contingent consideration |
|
- |
|
|
(5,000 |
) |
||
Loss on extinguishment of debt |
|
202 |
|
|
- |
|
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
3,667 |
|
|
641 |
|
||
Financing receivables |
|
6,369 |
|
|
3,053 |
|
||
Inventories |
|
342 |
|
|
72 |
|
||
Prepaid expenses and other |
|
(3,519 |
) |
|
(1,474 |
) |
||
Accounts payable |
|
(1,088 |
) |
|
2,542 |
|
||
Deferred revenue |
|
(498 |
) |
|
(2,003 |
) |
||
Other liabilities |
|
2,097 |
|
|
(1,418 |
) |
||
Income taxes payable |
|
(452 |
) |
|
782 |
|
||
Net cash provided by operating activities |
|
49,142 |
|
|
43,602 |
|
||
Investing activities: | ||||||||
Purchase of business, net of cash acquired |
|
- |
|
|
(10,733 |
) |
||
Investment in software development |
|
(3,328 |
) |
|
- |
|
||
Purchases of property and equipment |
|
(3,336 |
) |
|
(1,760 |
) |
||
Net cash used in investing activities |
|
(6,664 |
) |
|
(12,493 |
) |
||
Financing activities: | ||||||||
Dividends paid |
|
(4,338 |
) |
|
(5,729 |
) |
||
|
(1,261 |
) |
|
- |
|
|||
Proceeds from long-term debt |
|
65 |
|
|
- |
|
||
Payments of long-term debt principal |
|
(4,069 |
) |
|
(13,609 |
) |
||
Payments of revolving line of credit |
|
(27,561 |
) |
|
(20,693 |
) |
||
Proceeds from revolving line of credit |
|
- |
|
|
11,000 |
|
||
Payments on capital lease |
|
- |
|
|
(250 |
) |
||
Payments of contingent consideration |
|
- |
|
|
(206 |
) |
||
Proceeds from the exercise of options |
|
- |
|
|
3 |
|
||
Net cash used in financing activities |
|
(37,164 |
) |
|
(29,484 |
) |
||
Net increase in cash and cash equivalents |
|
5,314 |
|
|
1,625 |
|
||
Cash and cash equivalents, beginning of period |
|
7,357 |
|
|
5,732 |
|
||
Cash and cash equivalents, end of period | $ |
12,671 |
|
$ |
7,357 |
|
Consolidated Bookings | ||||||||||||||
(In '000s) | ||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||
In '000s |
|
|
|
|
||||||||||
System sales and support(1) | $ |
11,144 |
$ |
17,638 |
$ |
48,790 |
$ |
52,306 |
||||||
|
10,062 |
|
9,637 |
|
33,238 |
|
27,209 |
|||||||
Total | $ |
21,206 |
$ |
27,275 |
$ |
82,028 |
$ |
79,515 |
||||||
(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 | Twelve Months Ended | ||||||||||||
System sales and support | |||||||||||||
Non-subscription sales(1) | $ |
6,498 |
$ |
10,117 |
$ |
27,500 |
$ |
32,510 |
|||||
Subscription revenue(2) |
|
3,243 |
|
5,972 |
|
16,899 |
|
14,974 |
|||||
Other |
|
1,403 |
|
1,549 |
|
4,391 |
|
4,822 |
|||||
Net new(3) |
|
3,700 |
|
2,523 |
|
10,511 |
|
7,905 |
|||||
Cross-sell(3) |
|
4,970 |
|
5,409 |
|
20,285 |
|
16,988 |
|||||
|
1,392 |
|
1,705 |
|
2,442 |
|
2,316 |
||||||
Total | $ |
21,206 |
$ |
27,275 |
$ |
82,028 |
$ |
79,515 |
|||||
(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 | Twelve Months Ended | ||||||||
|
|
|
|
||||||
SaaS(1) | 3 |
7 |
17 |
12 |
|||||
Perpetual license(2) | - |
6 |
8 |
16 |
|||||
Total | 3 |
13 |
25 |
28 |
|||||
(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 |
|
Twelve Months Ended |
||||||||||||
Adjusted EBITDA: | 2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||
Net income, as reported | $ |
3,123 |
$ |
11,226 |
|
$ |
14,246 |
$ |
20,468 |
|
||||
Depreciation expense |
|
456 |
|
323 |
|
|
1,790 |
|
1,407 |
|
||||
Amortization of software development costs |
|
39 |
|
- |
|
|
118 |
|
- |
|
||||
Amortization of acquisition-related intangible assets |
|
2,822 |
|
2,866 |
|
|
11,421 |
|
11,006 |
|
||||
Stock-based compensation |
|
1,831 |
|
2,524 |
|
|
7,005 |
|
9,822 |
|
||||
Severance and other nonrecurring charges |
|
1,183 |
|
215 |
|
|
1,998 |
|
3,143 |
|
||||
Interest expense and other, net |
|
478 |
|
1,153 |
|
|
2,270 |
|
5,887 |
|
||||
Gain on contingent consideration |
|
- |
|
(5,000 |
) |
|
- |
|
(5,000 |
) |
||||
Provision for income taxes |
|
2,373 |
|
1,533 |
|
|
4,538 |
|
3,228 |
|
||||
Adjusted EBITDA | $ |
12,305 |
$ |
14,840 |
|
$ |
43,386 |
$ |
49,961 |
|
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||
(In '000s, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||
Non-GAAP Net Income and Non-GAAP EPS: | 2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Net income, as reported | $ |
3,123 |
|
$ |
11,226 |
|
$ |
14,246 |
|
$ |
20,468 |
|
||||
Pre-tax adjustments for Non-GAAP EPS: | ||||||||||||||||
Amortization of acquisition-related intangible assets |
|
2,822 |
|
|
2,866 |
|
|
11,421 |
|
|
11,006 |
|
||||
Stock-based compensation |
|
1,831 |
|
|
2,524 |
|
|
7,005 |
|
|
9,822 |
|
||||
Severance and other nonrecurring charges |
|
1,183 |
|
|
215 |
|
|
1,998 |
|
|
3,143 |
|
||||
Non-cash interest expense |
|
75 |
|
|
86 |
|
|
317 |
|
|
345 |
|
||||
Loss on extinguishment of debt |
|
- |
|
|
- |
|
|
202 |
|
|
- |
|
||||
After-tax adjustments for Non-GAAP EPS: | ||||||||||||||||
Tax-effect of pre-tax adjustments, at 21% |
|
(1,241 |
) |
|
|
(1,195 |
) |
|
|
(4,398 |
) |
|
|
(5,106 |
) |
|
Tax shortfall from stock-based compensation |
|
(2 |
) |
|
|
- |
|
|
|
297 |
|
|
|
186 |
|
|
Gain on contingent consideration |
|
- |
|
|
|
(5,000 |
) |
|
|
- |
|
|
|
(5,000 |
) |
|
Non-GAAP net income | $ |
7,791 |
|
$ |
10,722 |
|
$ |
31,088 |
|
$ |
34,864 |
|
||||
Weighted average shares outstanding, diluted |
|
14,086 |
|
|
13,830 |
|
|
14,038 |
|
|
13,778 |
|
||||
Non-GAAP EPS | $ |
0.55 |
|
$ |
0.78 |
|
$ |
2.21 |
|
$ |
2.53 |
|
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/20210209006061/en/
Chief Marketing Officer
Tracey.schroeder@cpsi.com
(251) 639-8100
Source: CPSI