Earnings Labs

TruBridge, Inc. (TBRG)

Q4 2016 Earnings Call· Thu, Feb 9, 2017

$25.72

-0.06%

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Transcript

Operator

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CPSI Fourth Quarter and Year End 2016 Earnings Conference Call. During today's conference call, all participants will start in a listen-only mode. Later, we'll conduct a question-and-answer session. A quick reminder, today's conference is being recorded, it's Thursday, February 9, 2017. It is now my pleasure to introduce Boyd Douglas, President and Chief Executive Officer, CPSI. Please go ahead, sir. John Boyd Douglas - Computer Programs & Systems, Inc.: Thank you, David. Good afternoon, everyone, and thank you for joining us. During this conference call, we may make statements regarding future operating plans, expectations, and performance that constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution you that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance. Actual results might differ materially from those expressed or implied by such forward-looking statements as a result of known and unknown risks, uncertainties, and other factors, including those described 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. We also caution investors that the forward-looking information provided in this call represents our outlook only as of this day and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. Joining me on the call today will be Matt Chambless, our Chief Financial Officer; Chris Fowler, our Chief Operating Officer; and David Dye, our Chief Growth Officer. At the conclusion of our prepared comments, we will be available to take any questions that you may have.…

Operator

Operator

Thank you. The first question is coming from the line of Mohan Naidu from Oppenheimer. You may now proceed. Mohan Naidu - Oppenheimer & Co., Inc.: Thanks for taking my questions. I guess, congratulations on the Q4 deal flow here, I think that's very good. Boyd or David, maybe whoever wants to take this, what drove that strong conversion in the quarter? And any details around, are there any upcoming deadlines that clients are looking at or any other drivers that is pushing them to do that? David A. Dye - Computer Programs & Systems, Inc.: Not in particular, Mohan. I really think it's a result of the sales cycle. We started talking positively about the pipeline at the beginning of 2016. It's typically a 9 to 12 month sales cycle. That's consistent with what we experienced and said in the past and I think that that really began to flush out. There were more decisions – our win rate was very high in the fourth quarter, but there were more overall decisions in the fourth quarter. So I think that had more to do with anything else. You could make an argument with stage three lending in 2018 as that may have driven it a little bit, I think that could potentially be accurate, but I think it really is just a – I think as more and more providers begin to use the technology and the dissatisfaction levels rise with those that maybe made investment decision to get to MU for a lesser price point than you would with CPSI or one of the core vendors in the space that as those frustrations mount in those community hospitals, that's I would say more than anything what's driving hospitals to buy CPSI Evident at this point. Mohan Naidu -…

Operator

Operator

Up next we have Rob Munnings from William Blair & Company. You may now proceed. Robert Munnings - William Blair & Co. LLC: Hey, guys. Thanks for taking the questions. Is upper teens to 20% growth for TruBridge in 2017 still the right expectation and how should we think about your ability to expand margins there? Thanks. Matt J. Chambless - Computer Programs & Systems, Inc.: Yeah. So I think the way to think about revenue growth for TruBridge next year is we do think that there's room for modest improvement over what we're able to grow in 2016. But above that, we're going to not be much more specific than that. We do think we can outpace the growth rates that we achieved during 2016, though. And then when it comes to margin improvement, naturally we have to invest in capacity a good bit in advance of when these big ARMs deals that have been signing for the last few quarters and contributing to the large bookings numbers that we've been showing. We have to invest in that human capital in advance. And so, when that revenue starts coming in the door and the capacity is already there, we should see margin improvement get somewhere back up just north of 40%. Christopher L. Fowler - Computer Programs & Systems, Inc.: And Rob, this is Chris. Just a little additional color to that. Some of the specific service lines, for example, medical coding, which is still relatively new for us, as we continue to scale that product, we're seeing opportunities for additional margin increase there. So that'll be something that we just continue to manage the operational efficiency and look at that line by line. Robert Munnings - William Blair & Co. LLC: Okay. Thank you. That's very helpful. And then, I guess, I've another TruBridge question. You've previously mentioned the wind down of ICD-10 and MU2 is having large impacts on the TruBridge revenue. I'm not sure if there's another major event on the horizon. But do you have a set of catalysts in mind besides cross-sell opportunities that will help increase demand for TruBridge? Thanks. Christopher L. Fowler - Computer Programs & Systems, Inc.: Yeah. Sure, Rob. This is Chris again. So, Boyd made reference to and I did as well in the prepared comments around our BI dashboard, which we're opening up with in May. We're very excited about the opportunity of what that'll be able to bring to our customers. And then also with the ACO offering through Caravan, between the two setting up some offerings for our population health management services. Robert Munnings - William Blair & Co. LLC: Okay. Great. Thank you. That's all for me. David A. Dye - Computer Programs & Systems, Inc.: Thank you, Rob.

Operator

Operator

Next question from the line of Gene Mannheimer from Dougherty & Company. Please go ahead. Gene Mannheimer - Dougherty & Company LLC: Thanks. Good afternoon. And good job on the bookings in the quarter. Chris, you had mentioned the new BI product launching in May. Can you share with us any of your early expectations for how the reception will be for that product in your client base, i.e., what percent might adopt in year one, et cetera, and how that might translate? Christopher L. Fowler - Computer Programs & Systems, Inc.: Gene, without giving too many specifics on numbers there, we're very excited about how this is going to be received. This is a project we've been working on in earnest over the last couple of years, but this past – in 2016, we made a decision to partner with Logi, which I think we had a press release for last year, which has given us a completely different direction and speed in which we're able to deliver the solution. And also, it's embedded in the EHR. So I think when you put those things together, it's going to take flight pretty quickly. And just like anything else, it's hard for us to gauge what that interest will be. I think we'll have a better look at that into the third quarter. Gene Mannheimer - Dougherty & Company LLC: All right. Thank you for that. And just on that bookings number, is this the new normal, the $30 million or so, or was there maybe some disproportionate decision-making in Q4 that wouldn't necessarily repeat as we navigate through this year? How do we think about seasonality to bookings and whether this is the new run rate? David A. Dye - Computer Programs & Systems, Inc.: Yeah, Gene. That remains…

Operator

Operator

We have a question from the line of Sean McBride from Robert W. Baird. You may now proceed. Sean P. McBride - Robert W. Baird & Co., Inc. (Broker): Hi. Sean McBride on for Matt Gillmor. Thanks for taking the question. So I wanted to talk about cash flow. So, in the first half of the year, cash flow was relatively weak and it rebounded nicely in the second half. How should we think about what a more normalized cash flow from operations is, considering the above $50 million run rate EBITDA? Matt J. Chambless - Computer Programs & Systems, Inc.: Yeah, Sean, this is Matt. I think the cash flow that we've seen in the last two quarters is more indicative of kind of what new normal is. And now naturally as we can grow revenue during 2017, we should see that improve modestly. But the past two quarters are more indicative of what we expect. The first half of the year, the big story on cash flows for the first six months of 2016 was really a, call it, a ballpark $10 million investment in working capital related to the acquisition. And that was a one-time event and with that clearly in the rearview mirror, the past six months are much more indicative of what we expect going forward. Sean P. McBride - Robert W. Baird & Co., Inc. (Broker): Great. And then, could you comment on how many Healthland Classic hospitals are still left out there that may need to upgrade to Centriq or Thrive? David A. Dye - Computer Programs & Systems, Inc.: Yeah. On the acute care side of that, Rob (sic) [Sean], there's about mid-20s. We still have approximately 50-plus HealthTech hospitals that are running Classic that don't have necessarily need to upgrade for MU3, and we have not announced a support sunset of Classic at this time. Sean P. McBride - Robert W. Baird & Co., Inc. (Broker): Thanks for taking the questions. David A. Dye - Computer Programs & Systems, Inc.: Thanks, Sean.

Operator

Operator

All right. Gentlemen, there appear to be no further questions registered at the moment. I'll turn the call back over to you. John Boyd Douglas - Computer Programs & Systems, Inc.: Great. I just want to thank everyone for their time today and being on the call. And I hope everyone has a great Friday and great weekend. Thank you.

Operator

Operator

Ladies and gentlemen, that will conclude the conference call for today, and thank you for your participation and you may now disconnect your lines. Thank you.