CPSI Announces Third Quarter 2022 Results

Rhea-AI Summary

CPSI reported third quarter 2022 revenues of $82.8 million, up from $70.1 million year-over-year. GAAP net income was $2.2 million, or $0.15 per diluted share, compared to $2.7 million, or $0.19 per diluted share in Q3 2021. Adjusted EBITDA was $13.3 million, with cash from operations at $11.1 million, significantly up from $1.3 million in the same period last year. Nine-month totals showed revenues at $243.4 million and net income at $13.4 million. Net debt increased to $124.8 million from $98.1 million.

Positive

• 18% revenue growth year-over-year driven by the acquisition of Healthcare Resource Group.
• TruBridge segment sales increased by 30% sequentially, with tripled sales pipeline.
• Operational cash flow improved to $11.1 million from $1.3 million year-over-year.

Negative

• GAAP net income decreased from $2.7 million to $2.2 million year-over-year.
• Net debt increased to $124.8 million compared to $98.1 million in the previous year.
• Cash provided by operations decreased for the nine-month period from $34.5 million to $30.2 million.

Highlights for Third Quarter 2022:

• Revenues of $82.8 million;
• GAAP net income of $2.2 million and non-GAAP net income of $8.2 million;
• GAAP earnings per diluted share of $0.15 and non-GAAP earnings per diluted share of $0.57;
• Adjusted EBITDA of $13.3 million;
• Bookings of $20.5 million;
• Cash provided by operations of $11.1 million; and
• Net debt of $124.8 million.

MOBILE, Ala.--(BUSINESS WIRE)-- CPSI (NASDAQ: CPSI), a healthcare solutions company, today announced results for the third quarter and nine months ended September 30, 2022.

Total revenues for the third quarter ended September 30, 2022, were $82.8 million, compared with total revenues of $70.1 million for the prior-year quarter. GAAP net income for the quarter ended September 30, 2022, was $2.2 million, or $0.15 per diluted share, compared with $2.7 million, or $0.19 per diluted share, for the quarter ended September 30, 2021. Cash provided by operations for the third quarter of 2022 was $11.1 million, compared with $1.3 million for the prior-year quarter. Net debt at September 30, 2022, was $124.8 million compared to $98.1 million at September 30, 2021.

Total revenues for the nine months ended September 30, 2022, were $243.4 million, compared with total revenues of $206.6 million for the prior-year period. GAAP net income for the nine months ended September 30, 2022, was $13.4 million, or $0.91 per diluted share, compared with $13.0 million, or $0.89 per diluted share, for the nine months ended September 30, 2021. Cash provided by operations for the first nine months of 2022 was $30.2 million, compared with $34.5 million for the prior-year period.

Matt Chambless, chief financial officer of CPSI, commented, “We were pleased to deliver 18% revenue growth year-over-year, which was driven largely by the contribution from Healthcare Resource Group, Inc., which we acquired in March. Our TruBridge segment once again saw outstanding cross-selling traction, as we increased TruBridge sales to the CPSI customer base by 30% sequentially and tripled our pipeline over the prior-year period. We are also thrilled to appoint new leaders of our business units who will propel CPSI toward its next chapter. This new alignment of our leadership team will more effectively support our core EHR base with value-added tools for revenue cycle management and patient engagement that will help our customers thrive in an uncertain and evolving healthcare environment.”

CPSI will hold a live webcast to discuss third quarter 2022 results today, Tuesday, November 1, 2022, at 4:30 p.m. Eastern time. A 30-day online replay will be available approximately one hour following the conclusion of the live webcast. To listen to the live webcast or access the replay, visit the Company’s website, www.cpsi.com.

About CPSI

CPSI is a leading provider of healthcare solutions and services. Founded in 1979, CPSI is the parent of six companies – Evident, LLC, American HealthTech, Inc., TruBridge, LLC, iNetXperts, Corp. d/b/a Get Real Health, TruCode LLC, and Healthcare Resource Group, Inc. Our combined companies are focused on helping improve the health of the communities we serve, connecting communities for a better patient care experience, and improving the financial operations of our customers. Evident provides comprehensive EHR solutions for community hospitals and their affiliated clinics. American HealthTech is one of the nation’s largest providers of EHR solutions and services for post-acute care facilities. TruBridge focuses on providing business, consulting and managed IT services, along with its complete RCM solution, for all care settings. Get Real Health focuses on solutions aimed at improving patient engagement for individuals and healthcare providers. TruCode provides medical coding software that enables complete and accurate code assignment for optimal reimbursement. HRG provides specialized RCM solutions for facilities of all sizes. For more information, visit www.cpsi.com.

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; 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; significant legislative and regulatory uncertainty in the healthcare industry; exposure to liability for failure to comply with regulatory requirements; 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; 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; our reliance on an international workforce which exposes us to various business disruptions; 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; 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; 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 Securities and Exchange Commission, including, but not limited to, our most recent Annual Report on Form 10-K. Relative to our dividend policy, the payment of cash dividends is subject to the discretion of our Board of Directors and will be determined in light of then-current conditions, including our earnings, our leverage, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our Board of Directors. In the future, our Board of Directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions. We also caution investors that the forward-looking information described herein represents our outlook only as of this date, and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this press release.

Computer Programs and Systems, Inc.
Condensed Consolidated Statements of Income
(In '000s, except per share data)
(Unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Sales revenues:
TruBridge	$	47,878			$	34,531			$	139,569			$	98,736
System sales and support		34,949				35,560				103,855				107,893
Total sales revenues		82,827				70,091				243,424				206,629
Costs of sales:
TruBridge		26,190				17,377				73,863				50,349
System sales and support		18,619				17,425				52,278				52,250
Total costs of sales		44,809				34,802				126,141				102,599
Gross profit		38,018				35,289				117,283				104,030
Operating expenses:
Product development		7,822				7,700				22,036				22,598
Sales and marketing		7,309				5,200				22,578				15,813
General and administrative		13,458				14,184				41,235				38,322
Amortization of acquisition-related intangibles		4,486				3,674				12,917				10,114
Total operating expenses		33,075				30,758				98,766				86,847
Operating income		4,943				4,531				18,517				17,183
Other income (expense):
Other income		355				123				914				1,160
(Loss) gain on contingent consideration		(589	)			-				992				-
Loss on extinguishment of debt		-				-				(125	)			-
Interest expense		(1,771	)			(825	)			(4,044	)			(2,249	)
Total other income (expense)		(2,005	)			(702	)			(2,263	)			(1,089	)
Income before taxes		2,938				3,829				16,254				16,094
Provision for income taxes		777				1,085				2,904				3,065
Net income	$	2,161			$	2,744			$	13,350			$	13,029
Net income per common share—basic	$	0.15			$	0.19			$	0.91			$	0.89
Net income per common share—diluted	$	0.15			$	0.19			$	0.91			$	0.89
Weighted average shares outstanding used in per common share computations:
Basic		14,365				14,334				14,405				14,276
Diluted		14,365				14,343				14,405				14,303

Computer Programs and Systems, Inc.
Condensed Consolidated Balance Sheets
(In '000s, except per share data)
	September 30, 2022 (unaudited)				Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents	$	15,558			$	11,431
Accounts receivable, net of allowance for doubtful accounts of $2,565 and $1,826, respectively		45,627				34,431
Financing receivables, current portion, net		5,028				6,488
Inventories		1,754				855
Prepaid income taxes		955				4,599
Prepaid expenses and other		11,890				11,194
Total current assets		80,812				68,998
Property & equipment, net		10,301				11,590
Software development costs, net		23,955				11,644
Operating lease assets		7,999				7,097
Financing receivables, net of current portion		4,227				7,231
Other assets, net of current portion		5,631				3,874
Intangible assets, net		106,486				95,203
Goodwill		198,584				177,713
Total assets	$	437,995			$	383,350
Liabilities & Stockholders' Equity
Current liabilities
Accounts payable	$	7,476			$	8,079
Current portion of long-term debt		3,141				4,394
Deferred revenue		12,255				11,529
Accrued vacation		6,350				5,262
Other accrued liabilities		16,181				17,163
Total current liabilities		45,403				46,427
Long-term debt, less current portion		137,174				94,966
Operating lease liabilities, net of current portion		6,088				5,505
Deferred tax liabilities		16,372				13,880
Total liabilities		205,037				160,778
Stockholders' Equity
Common stock, $0.001 par value; 30,000 shares authorized; 14,914 and 14,734 shares issued		15				15
Treasury stock, 354 and 89 shares		(10,824	)			(2,576	)
Additional paid-in capital		192,363				187,079
Retained earnings		51,404				38,054
Total stockholders' equity		232,958				222,572
Total liabilities and stockholders' equity	$	437,995			$	383,350

Computer Programs and Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(In '000s)
(Unaudited)
	Nine Months Ended September 30,
		2022				2021
Operating activities:
Net income	$	13,350			$	13,029
Adjustments to net income:
Provision for bad debt		1,202				2,080
Deferred taxes		(3,073	)			2,306
Stock-based compensation		5,284				4,179
Depreciation		1,890				1,641
Loss on extinguishment of debt		125				-
Amortization of acquisition-related intangibles		12,917				10,114
Amortization of software development costs		2,283				527
Amortization of deferred finance costs		242				220
Gain on contingent consideration		(992	)			-
Loss on disposal of PP&E		-				313
Changes in operating assets and liabilities:
Accounts receivable		(6,877	)			1,304
Financing receivables		4,598				5,962
Inventories		(899	)			(67	)
Prepaid expenses and other		(1,982	)			(2,892	)
Accounts payable		(988	)			(2,723	)
Deferred revenue		726				1,414
Other liabilities		(1,239	)			(666	)
Prepaid income taxes		3,644				(2,267	)
Net cash provided by operating activities		30,211				34,474
Investing activities:
Purchase of business, net of cash received		(43,696	)			(59,634	)
Investment in software development		(14,594	)			(6,447	)
Purchases of property and equipment		(134	)			(915	)
Net cash used in investing activities		(58,424	)			(66,996	)
Financing activities:
Treasury stock purchases		(8,248	)			(1,222	)
Proceeds from long-term debt		575				-
Payments of long-term debt principal		(2,687	)			(2,813	)
Proceeds from revolving line of credit		48,000				61,000
Payments of revolving line of credit		(5,300	)			(20,000	)
Net cash provided by (used in) financing activities		32,340				36,965
Net increase in cash and cash equivalents		4,127				4,443
Cash and cash equivalents, beginning of period		11,431				12,671
Cash and cash equivalents, end of period	$	15,558			$	17,114

Computer Programs and Systems, Inc. Consolidated Bookings (In '000s)
		Three Months Ended					Nine Months Ended
	In '000s	9/30/2022		9/30/2021			9/30/2022		9/30/2021
	TruBridge(1)	$	11,532	$	13,073		$	37,260	$	22,009
	System sales and support(2)		9,006		16,249			27,474		32,641
	Total	$	20,538	$	29,322		$	64,734	$	54,650
(1)	Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts)
(2)	Generally calculated as the total contract price (for system sales) and annualized contract value (for support).

	Computer Programs and Systems, Inc.
	Bookings Composition
	(In '000s, except per share data)
	(Unaudited)
		Three Months Ended				Nine Months Ended
		9/30/2022		9/30/2021		9/30/2022		9/30/2021
	TruBridge
	Net new(1)	$	897	$	4,794	$	9,657	$	6,278
	Cross-sell(1)		10,059		2,824		21,872		8,398
	Get Real Health		260		5,352		2,568		6,760
	TruCode		316		103		3,163		573
	System sales and support
	Non-subscription sales(2)		4,550		2,929		12,689		10,145
	Subscription revenue(3)		3,053		12,437		11,507		19,029
	Other		1,403		883		3,278		3,467
	Total	$	20,538	$	29,322	$	64,734	$	54,650
(1)	“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.
(2)	Represents nonrecurring revenues that generally exhibit a timeframe for bookings-to-revenue conversion of five to six months following contract execution.
(3)	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.

Computer Programs and Systems, Inc.
Acute Care EHR Net New License Mix
		Three Months Ended			Nine Months Ended
		9/30/2022	9/30/2021		9/30/2022	9/30/2021
	SaaS(1)	6	2		16	8
	Perpetual license(2)	-	3		-	7
	Total	6	5		16	15
(1)	Exhibit revenue attribution that is recurring in nature.
(2)	Exhibit revenue attribution that is nonrecurring in nature.

Computer Programs and Systems, Inc.
System Sales and Support Revenue Composition
(In '000s)
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Recurring revenues - system sales and support
Acute Care EHR	$	27,237		$	26,775		$	81,333		$	80,792
Post-acute Care EHR		3,817			4,010			11,504			12,402
Total recurring revenues - system sales and support		31,054			30,785			92,837			93,194
Nonrecurring revenues - system sales and support
Acute Care EHR		3,500			4,351			9,467			13,786
Post-acute Care EHR		395			424			1,551			913
Total nonrecurring revenues - system sales and support		3,895			4,775			11,018			14,699
Total system sales and support revenues	$	34,949		$	35,560		$	103,855		$	107,893

Computer Programs and Systems, Inc.
Adjusted EBITDA - by Segment
(In '000s)
	Three Months Ended						Nine Months Ended
In '000s	9/30/2022			9/30/2021			9/30/2022			9/30/2021
TruBridge	$	8,060		$	6,840		$	27,609		$	20,216
Acute Care EHR		4,584			4,773			13,915			15,650
Post-acute Care EHR		705			624			1,147			2,487
Total	$	13,349		$	12,237		$	42,671		$	38,353

Computer Programs and Systems, Inc.
Reconciliation of Non-GAAP Financial Measures
(In '000s)
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
Adjusted EBITDA:	2022			2021			2022				2021
Net income, as reported	$	2,161		$	2,744		$	13,350			$	13,029
Deferred revenue and other acquisition-related adjustments		-			388			109				546
Depreciation expense		622			525			1,890				1,641
Amortization of software development costs		1,024			262			2,283				527
Amortization of acquisition-related intangible assets		4,486			3,674			12,917				10,114
Stock-based compensation		1,864			1,700			5,284				4,178
Severance and other nonrecurring charges		410			1,157			1,671				4,164
Interest expense and other, net		1,416			702			3,255				1,089
Gain on contingent consideration		589			-			(992	)			-
Provision for income taxes		777			1,085			2,904				3,065
Adjusted EBITDA	$	13,349		$	12,237		$	42,671			$	38,353

Computer Programs and Systems, Inc.
Reconciliation of Non-GAAP Financial Measures
(In '000s, except per share data)
(Unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
Non-GAAP Net Income and Non-GAAP EPS:		2022				2021				2022				2021
Net income, as reported	$	2,161			$	2,744			$	13,350			$	13,029
Pre-tax adjustments for Non-GAAP EPS:
Deferred revenue and other acquisition-related adjustments		-				388				109				546
Amortization of acquisition-related intangible assets		4,486				3,674				12,917				10,114
Stock-based compensation		1,864				1,700				5,284				4,178
Severance and other nonrecurring charges		410				1,157				1,671				4,164
Non-operating loss from lease termination (non-cash)		-				313				-				313
Non-cash interest expense		90				73				242				220
Loss on extinguishment of debt		-				-				125				-
After-tax adjustments for Non-GAAP EPS:
Tax-effect of pre-tax adjustments, at 21%		(1,439	)			(1,534	)			(4,273	)			(4,102	)
Tax shortfall (windfall) from stock-based compensation		-				-				(112	)			(84	)
Gain on contingent consideration		589				-				(992	)			-
Non-GAAP net income	$	8,161			$	8,515			$	28,321			$	28,378
Weighted average shares outstanding, diluted		14,365				14,343				14,405				14,303
Non-GAAP EPS	$	0.57			$	0.59			$	1.97			$	1.98

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the United States of America, or “GAAP.” However, management believes that, in order to properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures that are prepared in accordance with GAAP. These items result from facts and circumstances that vary in frequency and impact on continuing operations. Management uses these non-GAAP financial measures in order to evaluate the operating performance of the Company and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management’s ability to make useful forecasts. In addition, management understands that some investors and financial analysts find these non-GAAP financial measures helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

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:

• Adjusted EBITDA – Adjusted EBITDA consists of GAAP net income as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) depreciation expense; (iii) amortization of software development costs; (iv) amortization of acquisition-related intangible assets; (v) stock-based compensation; (vi) severance and other non‑recurring charges; (vii) interest expense and other, net; (viii) gain on contingent consideration; and (ix) the provision for income taxes.
• Non-GAAP net income – Non-GAAP net income consists of GAAP net income as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) amortization of acquisition-related intangible assets; (iii) stock-based compensation; (iv) severance and other non-recurring charges; (v) non-operating loss from lease termination (non-cash); (vi) non-cash interest expense; (vii) loss on extinguishment of debt and (viii) the total tax effect of items (i) through (vii). Adjustments to Non-GAAP net income also include the after-tax effect of the shortfall (windfall) from stock-based compensation and gain on contingent consideration.
• 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 purchase accounting adjustments – Deferred revenue purchase accounting 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.
• Severance and other non-recurring charges – Non-recurring charges relate to certain severance and other charges incurred in connection with activities that are considered one-time. We exclude non-recurring expenses (primarily related to costs associated with our recent business transformation initiative and one-time lease terminations costs) 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-operating loss from lease termination (non-cash) – Non-operating loss from lease termination relates solely to the write-off of the remaining net book value of leasehold improvements and other property and equipment associated with operating leases terminated as a result of specific actions taken during the period. We exclude such non-operating lease termination losses 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 interest expense – Non-cash interest expense includes amortization of deferred debt issuance costs. We exclude non-cash interest expense 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.
• Tax shortfall (windfall) from stock-based compensation – ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, became effective for the Company during the third quarter of 2017 and changes the treatment of tax shortfall and excess tax benefits arising from stock‑based compensation arrangements. Prior to ASU 2016-09, these amounts were recorded as an increase (for excess benefits) or decrease (for shortfalls) to additional paid-in capital. With the adoption of ASU 2016-09, these amounts are now captured in the period’s income tax expense. We exclude this component of income tax expense from non-GAAP financial measures because we believe (i) the amount of such expenses or benefits in any specific period may not directly correlate to the underlying performance of our business operations; and (ii) such expenses or benefits can vary significantly between periods as a result of the valuation of grants of new stock-based awards, the timing of vesting of awards, and periodic movements in the fair value of our common stock.
• Gain on contingent consideration – The purchase agreement for our acquisition of TruCode in 2021 contained contingent consideration, or “earnout,” provisions whereby the previous shareholders of TruCode would receive additional consideration at the conclusion of a one-year period beginning on the acquisition date and ending on the first anniversary of the acquisition date, depending on the achievement of certain profitability targets. After the initial measurement period, U.S. GAAP requires that any adjustments to the estimated fair value of this contingent liability, including upon final determination of amounts due, should be recorded in the relevant period’s earnings. We exclude gains on contingent consideration from non-GAAP financial measures because we believe (i) the amount of such gains in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such gains 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 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/20221101006147/en/

Tracey Schroeder

Chief Marketing Officer

Tracey.schroeder@cpsi.com

(251) 639-8100

Source: CPSI

FAQ

What were CPSI's Q3 2022 revenues?

CPSI reported revenues of $82.8 million for Q3 2022.

How much was CPSI's net income in Q3 2022?

CPSI's GAAP net income for Q3 2022 was $2.2 million.

What is the significance of CPSI's acquisition of Healthcare Resource Group?

The acquisition contributed to CPSI's 18% revenue growth year-over-year.

How did cash from operations perform in Q3 2022 for CPSI?

Cash provided by operations for Q3 2022 was $11.1 million, up from $1.3 million in Q3 2021.

What were the financial highlights for CPSI for the nine months ended September 30, 2022?

CPSI saw revenues of $243.4 million and net income of $13.4 million for the nine-month period.