Greetings, and welcome to the TruBridge Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dru Anderson. Thank you. You may begin.

Thank you. Good morning, and welcome to the TruBridge Third Quarter 2025 Earnings Conference Call. Leading today's call are Chris Fowler, President and Chief Executive Officer; and Vinay Bassi, Chief Financial Officer. This call may include 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. The company cautions 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 public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, the most recent annual report on Form 10-K. The company also cautions investors that the forward-looking information provided in this call represents their outlook only as of this date, and they undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. At this time, I will turn the call over to Mr. Chris Fowler, President and Chief Executive Officer. Please go ahead, sir.

Thank you, Dru, and thank you to everyone for joining us today to discuss our Q3 results. To start the discussion, I want to take a moment to reflect on the meaningful progress we've made to improve the quality of our earnings and our financial performance over the past 7 quarters through our continuous focus on streamlining and improving our operations. Specifically, we have expanded margins, accelerated free cash flow generation and delevered the balance sheet, all while continuing to support our customers with mission-critical solutions that improved financial and operational performance across rural and community hospitals. Vinay will provide a much deeper dive into the details of the success these initiatives have yielded, but I'm very proud of the work we've done and believe we can replicate these efforts in other areas of the business. Turning to the specifics of the quarter. Our bookings came in at $15.5 million on a TCV basis compared to $25.6 million sequentially and $21 million year-over-year. While light from an absolute dollar basis, our focus is on continually improving the quality of bookings, which is more evident when you look at the numbers on a year-to-date basis. As we've mentioned in the past, investments we've made to improve our products, specifically within our Encoder business, have allowed us to win higher-margin deals. Along with positive traction within Encoder, we've seen our percentage of financial health bookings in the 100- to 400-bed space increase from less than 20% in 2024 to more than 30% in 2025. As we continue to succeed in RCM tech and in the 100- to 400-bed space, we create more paths to improve bookings performance quarter-over-quarter and year-over-year. While the bookings performance of Q3 was underwhelming, our fourth quarter sales efforts are off to a strong start. Historically, bookings have…

Thanks, Chris, and good morning, everyone. Let me take a few minutes to highlight some of our financial achievements over the past 2 years, review our third quarter results and then provide additional color on our outlook for the remainder of the year. We have come a long way since I joined in January 2024 with significant improvement on adjusted EBITDA margins, free cash flow and leverage. Specifically, adjusted EBITDA margins are expected to expand approximately 600 basis points from 2023 to year-end. Year-to-date, free cash flow has improved dramatically by $20 million, and we have paid down debt by approximately $35 million, reducing our net leverage position by more than 2 turns, all amidst a complex operational backdrop. As Chris mentioned, since the end of 2023, we have meaningfully improved the quality of our earnings, and we believe we are in significantly better positioned today than just 2 years ago. One of our top priorities was to drive efficiency and cost optimization across the organization. We put in place many process improvements, including an ROI-driven assessment of our spend, clear accountability to the business units and the monthly forecast reviews of the business. Throughout 2024, we implemented cost optimization decisions along with the change in mindset throughout the organization, resulting in an adjusted EBITDA margin of 16.5% for the year, a 340 basis point improvement compared to 13.1% in 2023. In 2025, based on the midpoint of our guidance, we are on track to reach 19% margin for the full year, yielding another 260 basis points increase. Continuing with the same mindset, we have identified and are in process of actioning additional cost optimization opportunities in combination with incremental net savings expected from the global workforce transition. I'm confident that as these actions compound, we will be able to…

[Operator Instructions] Thank you. Our first question comes from the line of Sarah James with Cantor Fitzgerald.

This is Gabie on for Sarah. I had a quick question about bookings coming in at $15.5 million, and I appreciate the fact that they're higher quality bookings. But can you talk about where this landed in terms of your internal initial expectations for bookings in the quarter? And if we should expect the cadence of bookings to be with higher EBITDA margin from here?

Yes. So first of all, Gabie, and please share our congratulations to Sarah as well. Obviously, not the number that we were looking for. I would say we're probably 20% off the number of what we were expecting for the quarter. And again, it wasn't like we saw a negative decision influence on this. It was more of a delayed decision. And I think that, that's showing through in the early success of Q4 and what we're seeing in October. I will say we are being very intentional on the bookings that we're going after on the Patient Care side focused on our conversion to the SaaS model, which is a larger overall booking and does have some more complexity. So it has expanded the buying decision at the customer level. On the Financial Health side, we continue to be optimistic about the opportunity that's out there. We've just got to continue to get these hospitals to see the value and the need for the additional services to come in. As the regulatory landscape settles down a little bit, I do think that the focus on improvement for the RCM side of the house for the hospitals will continue to be a priority and will lead to increased bookings efforts going forward.

And on the margin question that you asked on -- sorry, on the bookings, Gabie, we are seeing an improved quality from a margin also like for example, bookings for our Encoder business, which is like a very high 70%, 80% margin. Year-to-date 2025, the bookings percent for Encoder in the last year to this year has almost doubled. The more we get, the better margin we have. But obviously, the mix of the bookings, obviously, have a bearing, but I think we have seen a trend to be positive.

Okay. Great. And then just one more follow-up on that, if I could. In the conversations where the hospitals are choosing to delay implementation, are you seeing that any commonality and if it's referenced to Medicaid funding cuts coming through One Big Beautiful Bill? Or is the $50 billion rural hospital fund and net benefit coming up at all in your conversations? And could that be a tailwind in '26?

Yes. I think it will be a tailwind. Again, I think the uncertainty is, again, not changing people's decision. It's just delaying them for just a beat. We are seeing that pickup. I think there's also the impact of the vast majority of our hospitals are on a calendar year budget cycle. So you take the impact of the budget process and what they're doing or what they're trying to figure out relative to what the OBBB may have an impact on their next year is creating some delay. But again, as they're shoring up what their spending needs are for '26, we're starting to see those decisions accelerate.

[Operator Instructions] Our next question comes from the line of Jeff Garro with Stephens.

Maybe we'll follow up a little bit on the bookings front and great to hear the mention of October bookings success. It sounds like that kind of reflects timing, maybe some decisions pushing out of Q3. So with that, I was hoping you could discuss kind of the broader pipeline, the state of the pipeline. And then kind of help us level set bookings growth expectations for the year. Just more specifically, if some decisions pushed out from Q3 into Q4, is there enough in the pipeline that kind of pro forma back half of the year could deliver in line with maybe what you were intending or could compare to last year as well if there should be an expectation for overall growth or not?

Yes. First of all, Jeff, thanks for being on the call. Yes. The short answer is I would say, I wouldn't draw a straight line to the second half of the year based on the early success of October kind of covering up the shortfall in Q3 at the very top of it. With that being said, obviously, we are focused on driving as much performance from a bookings perspective into this year as we can. Obviously, Mike has stepped in with guns blazing at the first of October. And while a leadership change can also lead to a little bit of disruption, we're pleased with the continuity and the smooth transition that we've seen from Dawn to Mike and how the team has rallied behind him. So with that said, we're off to a good start. We've got the bookings. We've got the pipeline coverage to cover what we expect for Q4. However, what we could see is a very similar outcome to Q3, which is those bookings continue or those pipeline decisions continue to delay. We try to balance the optimism that we're seeing with making sure that we're setting the right expectations, obviously. So with that said, we're very focused on making sure that we convert on those opportunities to close this year. I think the balance of the rest of this year will also set up how we're looking into going into next year. What is positive as we see the pipeline build is that there is coverage on a lot of fronts. You heard Vinay talk about the Encoder and the success we're seeing there. We're seeing that same optimism build on the Patient Care side with the SaaS bundled opportunities and again, in the Financial Health, both from a cross-sell standpoint and into that net new space. So now it's just a matter of seeing that pipeline convert to those bookings opportunities.

Excellent. I appreciate that. And I want to follow-up on one thing there. On the new sales leadership, just kind of hoping to get a little bit more detail on kind of what's needed. What's the path from here? What's the process for improvement? I want to recognize there have been efforts over the last couple of years to increase quality and consistency of bookings. And I think for the most part, you've had positive returns there. So curious how -- or whether new leadership will need to bring in new tenants and rebuild from the ground up? Or is there a case to be made that Mike can just be an immediate difference maker as you try to convert more of that pipeline to close bookings?

Yes. That's a very fair question. I would say it's probably a mix of both, right? I mean if you look at how we've gone through the other areas where we brought new leadership, I think we want to make sure that we're taking advantage of the talent and the continuity that we have, but also make sure that we're finding the resources and the talent that have been down the road that we're trying to go down. I think the Financial Health organization is a great example of that, where we brought in additional talent and leadership under Merideth that have been a part of a transition to India or operating a successful global environment. So I think that Mike will do the same thing. I think that we're going to make sure that we have the right infrastructure in place for him. I'm excited about also tying together the sales, marketing and the client success function together under him so that we do have that holistic view of a customer, both in the pipeline and all the way through as we onboard them and that we've got single ownership there and accountability to deliver on the fronts that are most important to us, which is the retention and the growth. So a long-winded way of saying. I think that we're going to give Mike the latitude to bring in the team and support him to make sure that we're able to achieve the bookings goals that we've got set for ourselves over the coming years.

Excellent. That helps. One more for me. I want to make sure to hit the retention front. And I'll ask it in part as a housekeeping question, whether you have the recurring backlog number that usually shows up in the 10-Q on hand. And then from a fundamental perspective, I wanted to recognize that that's a bit of a legacy metric, but given the focus on renewals and retention and recurring revenue, I think there's a case to be made that it's as important as ever. So I would appreciate any color on whether you guys are managing to that backlog, I guess, most specifically the recurring backlog metric internally.

Yes. So we do look at the backlog because we run it this way. And that number, obviously, will be in the 10-Q coming up in the next few hours. So on how we do it, just to give you a little color more is on backlog for that number is contracted and noncontracted. Contracted revenue is at a client level, monitored with ins and out to it. And like we said, in like in Financial Health, it's like 95%, 96% is generally how we start the year. Like if you look at our recurring numbers that I see right now, it's 94%, Financial Health is like 95%, 96%. So we have a huge contracted revenue there. But obviously, the ins and out of that is attrition that happens and how the bookings fill in, that gives the impact on the growth rate. But I think the backlog number should be coming out in the 10-Q in the next few hours.

Our next question comes from the line of Gene Mannheimer with Freedom Capital.

Let's see. I just had 2 quick ones. The Patient Care revenue was the best growth we've seen in some time. You called out a combination of SaaS build and nonrecurring. I mean, since that SaaS build is pretty gradual, I'm thinking you recognize some good nonrecurring business in the quarter. Can you tell us what specifically customers are buying in those cases?

Yes. So you're right. There are 2 parts to that. Obviously, SaaS based on a few wins of the past shows up as a double-digit growth. But the nonrecurring part -- and nonrecurring part is the mix of implementation revenues when it gets recognized because sometimes it gets recognized at the time. Then there are other nonrecurring revenues for some regulatory related consulting work and regularly related stuff that we do. So we do see an uptick and some of compared to last year, we saw in this quarter a little bit more. But if you see that swings happen by Q4 of '24 was a much higher number because of these. So the swings on -- other than SaaS continued build on our partner ecosystem that we see on products like Multiview and all implementation, sometimes we do have some hardware sales requested by the customers and some ancillary products.

Okay. Great. That's helpful, Vinay. And my follow-up would be, your comment earlier was encouraging to hear, if I heard it right, 200 bps of EBITDA margin expansion expected next year. I'm thinking that, that's going to be due primarily to continued cost efficiencies? Or should we infer that there could be an acceleration of revenue growth next year?

That's a great question. That's a great question, and I think you guys know me well by now. For me, 200 bps is primarily from the cost optimization first. And that's not just a hope part of it. As you saw last year, it's a continued effort, and it will continue. We did the lowest level last year, which was all that Chris and I and the leadership team could see. And then over the years, we built our next level of optimization with help from internal teams and our adviser, external advisers. And this momentum that we started more in the second half of this year is targeting a little more complex solutions like Patient Care support, tech support, cloud ops and ROI driven on some other products. So that line of sight and the potential that I see next year and at least that DNA, I can say, we have built in there, we are maniacally going to make sure it falls to the bottom line. So that's one of the big drivers for that number along with the benefits that we would see from the global workforce optimization should be there. Now obviously, some implicit scenarios on revenue growth has been built. But as Chris said, it's a little early for us to give that guidance. But from a various scenario analysis we did, we felt getting that 200 bps from our midpoint of our guidance was very achievable. And that is what we felt to share with you because 4 quarters back, we shared that we will be touching 20% in Q4 '25, and that was a good goal for us. So it helped us be laser focused. So at this point, we felt 200 bps over and above was -- we could see a few paths to get there.

Yes. And I think, Gene, I think there's also a trend that we're trying to create here. So if you go back 2 years ago, as Vinay came in, and you're seeing the stability and the financial improvement in the company, that's the first layer of the cake. The second layer is Merideth and her team coming in and stabilizing the Financial Health business and accelerating and delivering on that opportunity for the global transitions, which is going to be the big driver in the margin expansion next year. And then now we brought in Mike to really kind of focus on that upsized opportunity from a sales growth and quality of bookings going forward. So it's the 3 layers of the cake that we've built. We've shown that we can bring that right talent and deliver on the financial excellence. We're delivering on the performance from the financial health and the stabilization of that business. And now we look forward to success on the sales front going forward. So just continuing to replicate a model that seems to work in each of the areas to put it all together to extract the value we think is still ready to unlock in the organization.

Mr. Fowler, we have no further questions at this time. I'd like to turn the floor back over to you for closing comments.

Thank you, and thank you to all for your continued interest in TruBridge, and thanks to all of our team members for their continued efforts at the company and all that they do. And lastly, a very early Happy Veterans Day. We express our gratitude to all those that have served our great country, and hope everyone has a wonderful weekend, and thanks again. Goodbye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.