Greetings, and welcome to the CPSI First Quarter 2019 earnings conference call. [Operator instructions] As a reminder, this conference is being recorded, Thursday, May 2, 2019. I would now like to turn the call over to Mr. Boyd Douglas, President and Chief Executive Officer of CPSI. Please go ahead.

Thank you, Ash. 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's 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 date, 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. At the conclusion of our prepared comments, the two of us, along with David Dye, our Chief Growth Officer; and Chris Fowler, Chief Operating Officer, will be available to take any questions you may have. Our first-quarter revenue and earnings were relatively aligned with expectations and we're also in line with typical first-quarter results. While overall bookings were disappointing in this quarter, we remain encouraged due to a few key factors. First, the length of the sales cycle has elongated due to the fact that there are fewer impending regulatory deadlines impacting the urgency of a decision. With that in mind, while we did not close as many deals as we would have…

Thanks, Boyd, and good afternoon, everyone. A stubborn decision environment drove light bookings this quarter, but should not obscure from what was fundamental a strong quarter for CPSI. Perhaps most importantly, we view the lightness in bookings this quarter as a short-term blip caused by a momentary lack of urgency in decision-making. That thesis is supported by our internal measures of our pipeline. We show pipeline growth from 12/31/18 to 03/31/19 that outpaces the sequential decline in bookings. Secondly, our efforts to right size our cost structure appear to have been effectively timed, allowing CPSI to preserve profitability in the face of revenue fluctuations, with nearly all profitability metrics continuing to outperform respective metric averages since our acquisition of Health Plan and leading to a 5% year-over-year growth in non-GAAP EPS, despite a slight decrease in revenues. While on the subject of cost containment, we're pleased to announce that to date we have decisioned and actioned all $10 million of the cost savings identified during 2018, and those benefits have begun to flow through our income statement beginning in the first quarter. We continuously turn the microscope around on ourselves to find ways to further optimize our resources, and we're excited to announce that those efforts have resulted in an additional $3 million of annual savings identified during 2019, with the potential for more to come. Again, the entire $3 million has been decisioned and actioned and benefits are expected to begin flowing through the financials as early as the second quarter of this year. At a high level, the income statement was slightly mixed versus the prior year, with revenue down slightly while the aforementioned focus on resource allocation allow for adjusted EBITDA to effectively hold steady, with EPS expanding organically. Sequential declines in revenues and profitability were as…

[Operator instructions] Our first question comes from the line of Donald Hooker with KeyBanc. Your line is open. Please proceed with your question.

Great. Good afternoon. So this Get Real acquisition, I was sort of scribbling down numbers as you were talking. Did you guys give a revenue number? Some sort of revenue guidance number or historical numbers so we can sort of think how that might flow into the P&L, top and bottom line?

Don, this is Matt. As we said in our prepared remarks, there are -- given the explosive growth that we're seeing internationally and the demand for patient engagement solutions and the number of deals in the pipeline right now that are still in flux both in terms of volume and in the license dynamics, it makes it very difficult for us to really pinpoint a number for guidance. So that's the best we can say right now is that we do expect GRH to be accretive to EBITDA for 2019, and we can provide further updates on the next call.

Okay. And then maybe higher level. I mean I guess there have been some positive sort of reimbursement commentary from CMS for rural healthcare providers, which I think is good news I'm sure for you guys ultimately and so far that it probably helps your clients. Just wondering if you guys had any feedback from your client base as to kind of how CMS rules might benefit them?

Yes. It's been limited so far because that news is relatively new. But certainly we view it the same way you view it. It looks like it is going to help them, and we're certainly excited about that because they certainly are struggling and have been for a while, so that should bring some relief to them.

Okay. And then maybe just last question for me and then I'll yield the floor. In terms of the Get Real acquisition, how does this fit into, like, your broader, sort of, movement in the pop health. When I think about your partnership with Caravan with some of the dashboard work you've done, can you give kind of a broader perspective on your route strategy and how this sort of plugs into that?

Yes. Donald, this is Chris. I think that this fits exactly into the population health strategy. I mean so the future is around patient engagement, watching the healthcare become more distributive. And as we move toward value-based care, we've got to have tool and technology that allows us to create patient loyalty with our rural community hospitals. And we 100% believe that Get Real Health is the missing link for that. So this is the -- we historically have developed our own but obviously this is something that we need to accelerate -- we felt the need to accelerate our technology portfolio and this was a perfect solution for that.

Okay. Great. Thank you.

Our next question comes from the line of Mike Ott with Oppenheimer. Your line is open. Please proceed with your question.

Good afternoon. thanks for taking my question. Wonder if there was any bookings contribution this quarter from nTrust, I believe it was roughly $3 million last quarter?

Yes. There was not. We were pleasantly surprised, Mike, by the contribution in the fourth quarter this year and we were disappointed in the first quarter this year. There are -- do continue to be significant interest opportunities in the pipeline. There do continue to -- we do continue to have regular discussions with our clients. We've got a clientwide webinar next week. It will be a major topic of discussion at our previously mentioned user conference in May. So we do think it continues to be a very significant opportunity going forward. But there was zero contribution in the first quarter.

All right. And then on the $3 million incremental cost savings, are there any specific areas or line items that you've targeted for those?

I think generally we would say that that's mostly going to come out of opex, not so much out of cost of sales.

Okay. And then on the increase in competitive takeaways, much less aggressive competitive environment. It was read that Pena Sp [ph] is going to pull back from the sales on their hospital efforts. Is there more than that or can you confirm that?

We are not seeing Pena Sp in any net new deals. Correct.

All right. Thanks very much.

You bet. Thanks, Mike.

[Operator instructions] The next question comes from the line of Gene Mannheimer with Dougherty & Company. Your line is open. Please proceed with your question.

Thanks. Good afternoon. A few for me. Understand you're not giving guidance on Get Real Health revenue, but can you at least share the trailing revenue number from that asset so we can get price to revenue on the acquisition?

Gene, as stated, the explosive environment there right now and the opportunities we see in the pipeline for 2019 really make the 2018 number not really a relevant data point, so we're not in the position really to provide that right now.

All right. So it sounds like it'll be a meaningful uptick from what it was, based on your comments?

Yes. That's the expectation. And it's a hot space right now and the demand that we're seeing, not just domestically but internationally certainly has us encouraged.

Okay. All right, good. With respect to the bookings decline, I know you made the remark that pipeline growth is very strong during the quarter, but I mean what gives you the confidence that this urgency will return to the marketplace, driving a faster conversion to your pipeline, what makes you feel, like, bookings are going to pick up?

Gene, I don't know that urgency is the proper word or in the thought that actual urgency will return. The confidence is that in our win rate for the quarter and the fact that deals didn't just disappear, they just didn't execute. And the fact that net of the fact that we were obviously significantly lower than we would have expected to be during the quarter, the pipeline still increased significantly, that's encouraging. From a sales circle perspective, obviously the hospitals that are in the pipeline aren't going to be looking forever. Most of them are in a dedicated decision-making process. They're not window shopping. So that's the reason why we feel confident in the pipeline.

Okay. And with respect to the TruBridge then, I noticed -- I noted the growth was only about 3% year on year, while I thought your goal was to drive growth more in the double digits, if not low to mid-teens on an annual basis. Can you help reconcile that for us?

Yes. So -- this is Chris, Gene. From a year over year, looking at our core growth or looking at the customers that we had on the arms and the medical coding service, we saw shrinkage of about 8%. And that's related to some closing business lines and some closures of facilities and some of the larger deals that we've booked and installed over the last several years. So it's a bit of a new phenomenon for us to see an existing customer's volume drive that much change in the revenue growth. But as we continue to have some success in the larger markets, we're going to have some swing like that. So notwithstanding that core growth, if we net -- net of the core services for arms and coding year over year, we'd have been right at 10% growth from Q1 '18 to this year. So again, that's something that is new to us, but obviously we'll be tracking it and keeping a finger on. And as it relates to the 15% growth for the year, obviously with the performance for this quarter and then the light booking set, that makes that number a little tough to get to. So we're looking more into the upper single digits for growth for TruBridge this year.

All right. Very helpful. Thank you.

Our next question comes from the line of Stephanie Demko with Citi. Your line is open. Please proceed with your question.

Hi. This is Joy on for Stephanie. With regards to bookings, how should we think about the time line for converting your bookings to revenue? And with that in mind, does the 1Q miss has a follow-on impact in 2019, 2020?

Yes. So Joy, this is Matt. We generally state in our opening commenting both on the system sales cycle and on the TruBridge side, we usually see a lag of about four months to six months between just signing of the booking and when the related implementation takes place, so you're looking at perhaps a two-quarter lag. So it does provide some headwinds, which we spoke to in the opening commentary toward revenues in Q2 and the previously stated growth goal for TruBridge for 2019.

Got it. Thanks.

Our next question comes from the line of David Larsen with SVB Leerink. Your line is open. Please proceed with your question.

Hi. Good afternoon. This is Westley on for Dave. I just wanted to follow up quickly on the adjusted EBITDA profile and the accretion that you're expecting from the Get Real Health acquisition. And I guess you've previously mentioned that 20% is a healthy EBITDA margin profile? I was just wondering if that was without giving any guidance kind of still what you're viewing as a healthy profile and how maybe the severance numbers can be expected moving forward?

Yes. So as far as the margin profile for our business, we still think that, that 20% number is a good number and that's kind of our medium-term target that we're shooting for. So 20% is the goal that we have in mind. As far as the GRH's contribution to that, again, just reiterate that there are a lot of moving parts there that economically make a ton of sense and gets us excited. But as far as how the GAAP plays out, where rev rec takes place, it really makes it difficult to pinpoint what the exact EBITDA contribution for 2019 is going to be, aside from saying that we do believe that it's going to be accretive for the year.

Okay. Great. And then just one more follow, I guess you guys referenced that there were two pushed installs in the first quarter. I was just wondering what the reason for those two are?

Yes. So the reasons are the same as they generally have been for the past couple of years, whether it's a start-up facility or it's a client facility that hasn't gotten their CMS provider number yet, so these are both client requested delays in their implementation. So again, key thing to remember, they have not rolled all [indiscernible] implementation calendar, they've just moved back.

Okay. Thank you.

You're welcome.

We have a follow-up from the line of Donald Hooker with KeyBanc. Your line is now open. Please proceed with your question.

Great. Just a couple, if you don't mind. In terms of the MU3 bonuses, does it kind of throws of our models from the outside? What are the remaining bonuses that we should expect? You said $2.4 million in the first quarter, what should that be in Q2 and Q3, roughly? I mean, how much is left?

Yes. So we think that the overall size of the remaining opportunity is somewhere in the ballpark of, say, $4 million. And I'd expect the overwhelming majority of that to fall in Q3 at this point.

Okay. And then maybe last one, can you share with us the recurring software support revenue in the quarter? I guess that'll be in your Q.

Yes, it'll be in the Q. Yes, so just be on the lookout for that in the Q.

[Operator instructions] There appear to be no further questions queued up over the phone line at this time.

Great. Thanks, Ash, and thanks, everyone, for joining the call today. I hope everyone has a great evening. Thank you.

That does conclude the conference call for today, we thank you all for your participation, and ask that you please disconnect your line.