TruBridge, Inc. (TBRG) Q4 2017 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the CPSI Fourth Quarter and Year-End 2017 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded, Thursday, February 8, 2018. I will now turn the conference over to Boyd Douglas, President and Chief Executive Officer of CPSI. Please go ahead, sir. John Boyd Douglas - Computer Programs & Systems, Inc.: Thank you, George. Good afternoon, everyone, and thank you for joining us. During this conference, 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 risk, 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, Chief Financial Officer; Chris Fowler, 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. Our fourth quarter of 2017 concluded with solid results, especially as it relates to revenue and earnings, as adjusted EBITDA and non-GAAP EPS were at their highest levels since the acquisition of Healthland and its affiliates two years ago. A significant portion of our Q4 revenues were associated with meaningful use theory (2:25) due to the majority of our clients staying on track with their MU3 implementation schedule. This has driven sales of our MU3 package and we are on track to see a number of clients begin attestation in the first quarter of 2018. In addition, we wrapped up 2017 with strong cash flow of $5.3 million that helps put our financial operations in a steady position as we move into 2018. Speaking of MU3, I want to address the current language and the continuing resolution for the budget proposal in regards to advancing stages of meaningful use. The proposed language removes a requirement that CMS make meaningful use standards more stringent over time. We do not anticipate that the proposed legislation will have an impact on the MU3 portion of the meaningful use program. We view this as positive for our Company as we will then be able to focus our future development efforts on new software and enhancements that our customers desire as opposed to software that will be needed to comply with further federal mandates. We enjoyed nearly an 11% growth in annual bookings due in part to our momentum with replacing competitive community EHRs and an impressive number of returning clients. Also contributing to our booking success is the demand that we are seeing for our TruBridge revenue cycle management solution that consist of both services and software. And in 2017, we closed these two of our largest contracts in the Company's history for our TruBridge revenue cycle management solution. We believe we will continue to see this trend for TruBridge RCM as more and more clients are looking to outsource this complex function that is so critical to their financial success. As mentioned in the press release this afternoon, we are very proud to have launched the CPSI Rural ACO program powered by Caravan Health. We see this as an example of an innovative community health care solution beyond IT and as an example – I'm sorry, and we look forward to bringing more solutions like this to the market in the future. This ACO program is aimed at helping rural providers transition to a value-based care model by minimizing the upfront costs and providing the ongoing tools and training needed to achieve cost savings while increasing revenue. Chris will share more on this in a bit. But partnering with Caravan Health brings us confidence in helping the performance to payment in rural settings, where providers are very committed and driven to improve the health of their community. A sluggish cadence of product enhancements for American HealthTech, particularly in the couple of years leading up to our acquisition, has created significant headwinds to our growth plans in our post-acute business. By making significant investment in the development of the AHT product, we have a clear path towards overcoming those headwinds, but the additional development investment and disappointing revenue trajectory over the past few years have resulted in a non-cash goodwill impairment charge of $28 million during the quarter which Matt will touch on later in this call. Moving to the corporate governance front, we are excited about a number of advancements that we have recently announced. Significantly, we have enhanced the breadth of talent and experience on our board by welcoming three new directors to support CPSI and our expanded scale and scope. During the fourth quarter, we increased the size of the board from 7 to 10 directors and appointed Dr. Regina Benjamin, Glenn Tobin and Denise Warren to the board. Dr. Benjamin served as the United States Surgeon General from 2009 to 2013 and is currently a Director of Diplomat Pharmacy, Kaiser Foundation Hospitals and Health Plan and ConvaTec. Dr. Tobin most recently served as Executive Vice President at the Advisory Board Company. He also served as Executive Vice President and Chief Operating Officer at Cerner Corporation from 1998 to 2003. Ms. Warren currently serves as the Executive Vice President and Chief Operating Officer of WakeMed Health & Hospitals, a 919-bed healthcare system with multiple facilities in the Raleigh, North Carolina area. She has more than 30 years of experience in operations, finance and executive management and has an extensive track record working with both public and private equity companies. These new board members bring a high caliber of talent and a valuable set of experience and knowledge, and I look forward to working with them toward our continued growth and success. The second advancement in our corporate governance last quarter was the designation of an independent director to serve in a lead capacity on our board. The board elected Charlie Huffman, a director of the Company since 2004, as the Lead Independent Director. With his experience serving as chair of the audit committee and his accounting expertise, we are very fortunate to have Charlie in this expanded role as he provides great leadership and brings a deep understanding of our business, history and vision. These governance changes that I've highlighted are modifications that we see as a positive adjustment and are representative of our Company's evolution over the past two years. We have experienced growth on many levels, and I speak for all of us when I say that we couldn't be more excited about the future for CPSI and our family of companies. With that, I'll turn the call over to Matt for a look of the financials. Matt J. Chambless - Computer Programs & Systems, Inc.: Thanks, Boyd, and good afternoon, everyone. Our story for the fourth quarter centers around the continuing themes of successful execution of the federal government's meaningful use program and continued momentum of the growth agent that is TruBridge. These themes worked in tandem to elevate revenues to all-time highs and profitability metrics such as non-GAAP EPS and adjusted EBITDA to their highest point since our acquisition of Healthland two years ago despite elevated operating expenses. In total, quarterly revenues were up 16% sequentially and 21% over last year. Adjusted EBITDA, which now excludes NOL utilization, increased 38% from the prior quarter and 74% over last year. Non-GAAP EPS increased 46.5% sequentially, 80% over the fourth quarter of last year. Recurring revenues showed a 2.7% sequential growth and 2.2% (8:54) growth over the fourth quarter of last year. Strength in operating cash flows combined with our recently adjusted capital allocation strategy resulted in net payments against bank debt in the quarter of nearly $3.5 million. This brings total 2017 net repayments of bank debt to over $12 million, which is roughly twice the required term loan amortization, providing clear evidence of our commitment to reducing our leverage on an expedited basis. Expenses for the quarter were heavily impacted by the recognition of roughly $3.2 million of costs associated with the cash bonus plans for our employees, including management. This represents the full amount of such awards earned for the entire fiscal year, with the timing volatility impacted by interim performance for the first nine months of the year versus pro rata targets and other requirements under the respective plans, including compliance with debt covenants. These costs are spread throughout our various cost categories within cost of sales and operating expenses. Bad debt estimates and health claims were also significant detractors from the quarter's profitability as we'll touch on later. We also had a couple of unusual non-recurring expense items during the fourth quarter that you've no doubt noticed in the earnings release. The first and less significant item is a $1.3 million loss on debt extinguishment as October's amendment to our credit agreement resulted in a partial write-off of some previously deferred debt issuance costs. Second, accounting rules required us to take a $28 million non-cash charge to GAAP earnings for goodwill impairment related to our post-acute business. This business is comprised solely of the operations of American HealthTech, which was acquired in the Healthland transaction and accounted for 8.7% of our consolidated revenues for 2017. While we still feel strongly that AHT has the potential to drive further growth for CPSI in the future, we feel that a multi-year development investment is necessary to realize that potential and place AHT Solutions at the forefront of the competitive landscape, reversing the recent declining trend in related bookings and non-recurring revenues and stave off potential attrition down the road. Looking at the balance sheet, you'll see a clear continuation of the theme we highlighted on our last earnings call where market dynamics for our hospital EHR business have clearly shifted away from the upfront payment models of the past to longer-term financing arrangements, whether it be SaaS or financed perpetual license sales. This theme's impact on our balance sheet was furthered by the high volume of MU3 products delivered during the quarter with nearly all of those items financed under 12-month payment terms, with the total result being a $7.8 million increase in total financing receivables during the quarter. Consolidated bookings of $19.8 million were admittedly light during the quarter, particularly when stacked up against the tough comps resulting from the tremendous bookings results of the previous four quarters, during which overall bookings hit record numbers twice and TruBridge reached record levels three times. Our bookings numbers are heavily influenced by low-volume, high-value deals which naturally subject us to periodic volatility when looking at three-month snapshots. Despite the lightness in the fourth quarter, bookings finished the year 10.5% higher than 2016. Of the $14.3 million in system sales and support bookings, roughly $1.5 million is included in our fourth quarter revenues. $12.1 million represents non-subscription sales that should trickle into revenue over the next 12 months with an average lag between booking and install of five to six months. $600,000 represents EHR subscription revenue to be recorded over a weighted average period of five years with a start date in the next 12 months and similar to our non-subscription sales and average lag between booking and install of five to six months. Our $5.5 million of bookings from TruBridge are mostly made up of recurring revenues to be recorded over a one year-period starting in the next four to six months. As for our Thrive implementation schedule, seven customer sites went live with our Thrive financial and patient accounting systems compared to nine in the third quarter and falling short of the 10 planned as of last earnings call as three implementations were pushed to 2018. As for licensing mix, none of this quarter's seven go lives were under a cloud or subscription model compared to one out of nine during the third quarter. At this time, we expect five new client facilities to go live with our Thrive financial and patient accounting systems in the first quarter of 2018, with one expected to go live in a cloud environment. Our employee head count as of December 31 was roughly 2,049 (13:55) which is essentially flat with September 30 numbers. Moving on to the income statement, system sales and support revenue saw a $10.6 million or 24% sequential increase, which is nearly all attributed to increased nonrecurring revenues related to our MU3 products. Year-over-year system sales and support revenue saw a $10.9 million or 25% increase for the same reason. On the cost side, system sales and support margins improved to 64.8% from the third quarter's 57.6%, as the increased nonrecurring revenues were met with costs that were essentially flat, with the only meaningful sequential movement in cost being approximately $1 million related to the aforementioned bonus impact. Year-over-year increased nonrecurring revenues resulted in margins improving nearly 8.5 basis points from 56.3%. TruBridge revenue is increasing nominally or only $300,000 and 1.4% from the third quarter as nonrecurring revenues decreased nearly $600,000. TruBridge recurring revenue however, posted a $900,000 or 4.3% sequential increase behind continued strong demand for our accounts receivable management and coating services, slightly offset by seasonal declines in our private pay collection volumes. This strong demand also drove the year-over-year total Trubridge revenue increase of $2.7 million or 13% with nonrecurring revenues decreasing $0.5 million and recurring revenues increasing $3.1 million or more than 16%. TruBridge margins were flat year-over-year and saw a slight sequential decline from 43.7% to 42.3%, with over 80% of the sequential cost increase due to the aforementioned bonus impact. Excluding this bonus impact, margins improved to 44.1% for the fourth quarter of 2017, compared to last quarter's 43.7% and 42.3% in the fourth quarter of 2016. Product development costs increased $800,000 or 8.9% sequentially with bonus impact accounting for roughly $0.5 million of the increase. Year-over-year costs are up $1.3 million as we've expanded our development resources over the past 12 months to deliver our commitments to improving provider adoption, clinical workflow and increasing the integration of our acute and post-acute EHR products. Sales and marketing costs increased both sequentially and year-over-year mostly as the impact of MU3 products on non-recurring revenues drove commissions to elevated levels. Commission expense increased $900,000 sequentially or nearly 31%. The year-over-year impact was even more pronounced, increasing $2.4 million or 148%. General and administrative costs increased $3.6 million or 38% from the third quarter, with the largest contributing factor being a $2.4 million increase in estimated bad debt expense due to the combined effects of severe collectability determinations related to a handful of customers and increased balance sheet risk arising from the aforementioned expansion and financing receivables. Health claims also increased $1.7 million or 53% behind both increased volumes and severity. Year-over-year G&A costs increased $1.9 million or 17%, with the largest contributing factors being a $1.1 million increase in estimated bad debt expense and the $0.7 million bonus impact. Interest expense showed little movement either sequentially or year-over-year as underlying rate increases on our variable rate debt have been mitigated by pay downs of principal. The quarter's effective tax rate of negative 1.5% is mostly due to goodwill impairment not having a tax effect. This goodwill impairment impact on our effective rate was offset by a $1.9 million tax benefit, resulted from the remeasuring of our overall deferred tax liability to reflect lower federal tax rates arising from recent tax reform for a combined downward impact on our effective rate of 36%. With the newly-revised federal rate, we anticipate a normalized effective tax rate of 21% to 23% going forward. As we sat here one year ago, we expressed our confidence that revenue growth was in the cards, which should translate into improved profitability and cash flows. As you can see from our 2017 annual results, that confidence translating into meaningful growth in revenues, adjusted EBITDA, and non-GAAP EPS. Now, with our eye towards 2018, our expectation is that these arrows will continue to point upward as we feel well-positioned to capitalize on a healthy replacement market and as recent TruBridge bookings continue to fully convert to revenue and continued long-term growth prospects for TruBridge continue to be significant. These factors, coupled with continued execution on our MU3 initiatives and the strength of our significant recurring revenue base, which again makes up nearly 80% of total annual revenues and a continued focus on maintaining our historical success at customer retention have us excited for what 2018 has to offer. And with that, I'll now turn things over to Chris Fowler, our Chief Operating Officer. Christopher L. Fowler - Computer Programs & Systems, Inc.: Thank you, Matt, and good afternoon, everyone. As we have covered on previous calls, TruBridge continues to experience healthy sales and revenue growth each quarter. That growth is primarily coming from cross-sell efforts into our client base across the CPSI family of companies. However, 13% of TruBridge revenue is associated with clients outside of our current base. We believe this will be a growing trend for TruBridge as the interest in outsourcing, either all or just a portion of the revenue cycle function continues to rise. I'm also pleased to share that TruBridge entered 2017 on an exciting note, when our RCM product, formerly known as Rycan was awarded the Peer Reviewed by HFMA designation. HFMA's peer review process is an objective third-party evaluation of business solutions used in the healthcare workplace. The rigorous 11-step process includes a panel review comprising current customers, prospects who have not made a purchase, and industry experts. This is a considerable milestone for TruBridge as only a very small fraction of RCM companies have been awarded this designation. As the engine that fuels the growth of crucial service offerings both within and outside the CPSI current client base, we continue to dedicate the resources needed to support the success of TruBridge well into the future. I'd like to touch on the progress we've made with our business intelligence dashboard. We now have 20 clients live on the BI Dashboard services. Development is complete on new clinical panels for ED, radiology, and chronic care management. We also expect the clinical panels for lab to be complete later this month. Integrated into our development process is the input and testing bar pilot sites so we can have assurance that what we deliver will meet the needs and expectations of our clients. We have begun development on the next wave of financial panels which will be focused on 25 HFMA MAP keys and also Cash Forecasting. The 25 HFMA MAP keys are industry standard metrics or KPIs used to track an organization's revenue cycle performance using objective, consistent calculations. The Cash Flow Forecasting panels and correlating TruBridge services will help organizations increase and expedite cash flow by linking the data to hospital volume, thus giving an accurate depiction of business office performance compared to collectible cash. As Boyd mentioned earlier, we are very proud to have launched the CPSI Rural ACO program powered by Caravan Health. As of January 1, the program is officially underway and will run for three years. The program is made up of four ACOs which include nearly 30 hospitals from the CPSI client base and a third that are non-CPSI clients. With approximately 28,000 covered lives, these hospitals are positioned to jumpstart population health programs in their community and produce both quality and financial wins. Based on Caravan's health care – based on Caravan Health's experience and proven results, we estimate savings of $163 per member per year, which will yield approximately $14 million worth of savings of these hospitals. Over the next three years, we will take the experiences and learnings from this program and integrate them into our TruBridge service offerings to further our efforts in helping hospitals transition successfully to value-based care. Finally, over the course of 2017, we have reinforced our commitment to furthering secure interoperability and effective health data exchange. 15% of our Evident client base is live on the CommonWell network and are able to leverage the type of scalable exchange that will help break down the barriers that have existed when it comes to sharing patient health data between care providers. Also, CPSI has been a founding member of CommonWell since 2013 where Scott Schneider, CPSI Executive Vice President, currently serves as the board chair. We look forward to the additional exchange locations, which will be supplied by CommonWell connections to care quality implementers. In addition to our efforts for CommonWell, we've made significant investments to ensure that the patient data our solutions generate and depend upon has high availability. Our development strategy across our product lines leverages an expanding common set of micro services which allow us to scale out to thousands of connections to third parties going live each year. And with that, I'll turn the call over to David. David A. Dye - Computer Programs & Systems, Inc.: Thanks, Chris. As Boyd stated, our sales efforts over the last year are now producing meaningful top and bottom line growth. We expect this growth to continue for the full year 2018. Our bookings in the fourth quarter were weak compared to previous record quarters, as well as our expectations. The quarter did not include any of the large TruBridge deals that we have had in recent quarters and add-on sales to our EHR-base were light. However, we did sign seven net new hospital clients in the quarter. Looking forward, Evident system sales in 2018 are off to a good start as we have executed four new acute EHR contracts so far, and expect several more in the quarter. The development efforts that Chris described with our business intelligence offering are translating into an increasing add-on sales pipeline that we expect to grow throughout 2018. And our TruBridge pipelines include several larger hospital RCM opportunities outside of the CPSI EHR customer base that we believe will close in the first half of this year. Our TruBridge top line revenue performance for the fourth quarter was below expectations, due largely to timing issues with Rycan implementation and training fees and business intelligence license fees. Based on our 2017 TruBridge bookings which were up 41% year-over-year, we expect solid growth for TruBridge in 2018, and we are confident that TruBridge will eclipse the $100 million revenue milestone for the full year. The core of our long-term growth strategy into 2019 and beyond centers on recurring revenue and customer retention. Our customer retention rate for Evident clients for 2017 stands at 96%, and for Healthland, 93%. Our AHT retention rate for 2017 was 96%, and 95% of total TruBridge revenue is recurring. So as that business continues to grow, it noticeably improves our CPSI recurring revenue makeup. As Matt stated, 2017 recurring revenue as a percentage of total CPSI revenue was approximately 80%. We expect this recurring revenue percentage to be in excess of 80% in 2018 and to continue to grow. We also believe the acute care EHR system replacement market will be robust for the next several years, as hospitals look to upgrade from legacy and underperforming solutions. As such, we are confident in our growth outlook for 2018 and excited about the potential for 2019 and beyond. And, George, if you would please open the call for questions.

Certainly. Our first question is from the line of Jamie Stockton with Wells Fargo. Please go ahead with your question.

Yes. Thanks. Good evening, guys. I guess maybe first, Matt, and I'm sure you anticipated this, but the strength in system sales, should everyone basically interpret that as, hey, we signed some MU3 deals historically, that ultimately got delivered in Q4 and triggered revenue rec and that's why there was real bolus of system sales in Q4? Matt J. Chambless - Computer Programs & Systems, Inc.: Yes, Jamie. You're hitting it spot on. Throughout the year, we've been generating bookings for our MU3 products, really starting in the first quarter and starting to finally convert those into meaningful revenue in the fourth quarter. So you're right.

Just so that people model somewhat appropriately going forward, even though I know you guys aren't giving explicit guidance, is this going to be kind of a new seasonal pattern where there will be another bolus in Q4 of 2018, potentially, or is it going to be more spread out, just because it seemed to be so concentrated in Q4 of 2017? Just anything around that would be great. Matt J. Chambless - Computer Programs & Systems, Inc.: Yes. So our expectation right now, without getting into too much detail in numbers, is that there will be a bit of an MU3 pullback in the first quarter, and we'll start seeing it pick back up late second quarter and into the third quarter with kind of a tail in Q4 of next year. So you'll almost see something sort of like a bell-shaped curve throughout the year.

All right. That's great. And then maybe just one other one. I don't know if Boyd or David or whoever wants to take this, but just from a competitive standpoint, I mean, obviously you guys, I think, have been working hard to deliver and retain your client base over the last year or two. Allscripts has closed the McKesson deal. Theoretically, they're going to come a little more into the market with the Paragon product. Is there anything that's changing from a competitive dynamic standpoint? If you could touch on that, that'd be great. John Boyd Douglas - Computer Programs & Systems, Inc.: Yes. I guess, Jamie, it really depends on the timeframe we're describing. If it's the last three to six months, I would say no. We haven't seen any increase yet from Allscript/Paragon product, and I don't know if we will. There weren't a whole lot of Paragon customers sort of in our target market of under 100 beds. We would think of most of them more in that sort of Meditech market of 100 to 400 beds. Obviously, the degree to which they may play in our space remains to be seen. But certainly – as we've described in the last, I think, few calls, it's been a change, the last year or two from the last 30 years where it used to be us, Healthland, MEDHOST and Meditech. And now, on most deals, it's us and Cerner, occasionally an epic tie-in with a tertiary facility in Athena. It remains to be seen how much we're going to see – we haven't seen a lot of Meditech recently. Obviously, they've announced their web-based cloud solution recently. So that remains to be seen how much we'll see of that as well. But I think the short answer to your question is we haven't seen a whole lot of change in the last three to six months.

All right. That's great. Thank you. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, Jamie.

Our next question is from the line of Jeff Garro with William Blair & Company. Please go ahead with your question. Jeff R. Garro - William Blair & Co. LLC: Yes. Good afternoon, guys, and thanks for taking the questions. I was hoping to dig more into the revenue outlook. And looking at bookings up 10.5% year-over-year and the backlog up 8%, trying to get a sense if those growth rates are good indicators of the type of revenue growth we can expect in 2018? Matt J. Chambless - Computer Programs & Systems, Inc.: Yes. So we think revenue growth in 2018, it's certainly what we're seeing but we would expect it at muted levels. John Boyd Douglas - Computer Programs & Systems, Inc.: And I think focused – the way we see the pipeline with new businesses – at this point our expectation is that we can sign more new business in 2018 than we did in 2017 because it's pretty robust. But with all of those bookings that we did in 2017, three out of four quarters were record TruBridge quarters. The vast majority of that stuff has started as of January 2018 at work. So we're looking for a pretty good growth year there from TruBridge in 2018, which as we pointed out I think a few times on the call is recurring revenue that we should see in 2019 and beyond. Jeff R. Garro - William Blair & Co. LLC: Great. That's helpful. Trying to dig in a little bit further on the segment level, it sounds like you've signed a lot of new Trubridge business here in 2017 and have got a lot of it implemented. But you – on the last call, you did set an expectation of close to 20% growth for TruBridge and you're a little bit short of that. So trying to figure out if you've created enough of the base at the end of 2017 and early in 2018 to achieve that type of level of growth over the next couple of quarters. John Boyd Douglas - Computer Programs & Systems, Inc.: Yes. We're really comfortable in 2018 with the mid-teens and we'd like to see that 20%. I think that's achievable, but we're comfortable with mid-teens. Jeff R. Garro - William Blair & Co. LLC: Great. And then last question for me, switching a little bit to the financing model and the balance sheet. Can you maybe discuss what's driving your customers to choose the different type of financing models and how you guys create value that helps them improve their finances to ultimately then pay you guys and create ultimately a healthier balance sheet. Matt J. Chambless - Computer Programs & Systems, Inc.: Yes. So, Jeff, I think part of what's at play here is the competitive landscape has shifted somewhat due to some disruptiveness caused by new entrants into our marketplace that have now created a bit more of a pressure and more of a demand for financing arrangements that don't require the initial capital outlay that we've seen in the past, which is really being driven mostly we see from market factors and competitive factors. But at the same time, we have to mention that the financial stability, the hospitals themselves are things that we take into consideration on a case-by-case basis. But we would say that it's mostly competitive. Jeff R. Garro - William Blair & Co. LLC: Understood. Thanks for taking the questions. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, Jeff.

Our next question is from the line of David Larsen with Leerink Partners. Please go ahead.

Hey, guys. Congratulations on a fantastic revenue beat. Can you talk a bit about the rural ACO market and your ACO solution, what kind of traction you're seeing from that and what types of new products you bring to the market? Thanks. Christopher L. Fowler - Computer Programs & Systems, Inc.: Hi, David. Yes, we're just kind of getting started with it. Obviously, we started in January. Our hope is that we'll be able to see some success with it this first year and potentially start another three-year program next year or the year following. The Population Health models and services are obviously where we see opportunity developing out of the ACO, helping hospitals with their wellness programs and just that patient engagement around that process, and making the patient population of these hospitals a little more proactive.

Is all of that revenue flowing through the TruBridge line item on the P&L? Christopher L. Fowler - Computer Programs & Systems, Inc.: As it relates to the ACO program?

Yes. John Boyd Douglas - Computer Programs & Systems, Inc.: So as it relates to ACO program, our plan right now is for that to be below the line and not included in operating. Does that make sense?

Okay. John Boyd Douglas - Computer Programs & Systems, Inc.: On a net basis.

Okay. Yes. That's very helpful. And then can you just remind me, which vendors are you taking share from? So with these competitive wins, which vendors are you displacing typically? John Boyd Douglas - Computer Programs & Systems, Inc.: Yes. David, we typically, I think, stay away from name-calling on these calls.

Okay. John Boyd Douglas - Computer Programs & Systems, Inc.: I would say, there are certainly a few left that are the vendors that really haven't had the staying power post meaningful use that are still out there in some of the smaller hospitals. And then there are some legacy versions of systems that are still out there with vendors that still compete today. And when they're in a situation where they know they need to upgrade to the latest version, in many cases, they offer a competitive situation where they take a look before they just automatically upgrade with that vendor. So those are primarily the situations where we're seeing activity.

Okay. Great thanks again and congrats on a good quarter. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, David.

Our next question is from the line of Sandy Draper with SunTrust. Please go ahead with your question.

Thanks very much. Just a couple of questions. One, I think you, Matt, mentioned and has commented on this before on prior calls, but obviously, if we look year end, a big jump in the – our use of cash flow from financing receivables. Remind is that – are you using that as a way to drive sales or is that just you responding to how customers want to do it? Is that essentially tied to cloud? I'm just trying to remember exactly when you guys are doing the customer financing, where that shows up in the income statement and how it ties the balance sheet and cash flow. Matt J. Chambless - Computer Programs & Systems, Inc.: So Sandy, most of that, so it's kind of broken into two different buckets, both of which are related to our system sales volumes. So one of the things we're seeing is nearly all of our new system installs or net new installs of Thrive are under some sort of long-term finance solution. But then secondly, specifically to our MU3 bundles, nearly all of the MU3 packages are being sold currently under a 12-month payment plan. So revenue is recognized at the time of delivery with the cash flow having a 12-month tail in that case. Does that answer your question?

Yes, that does. Very helpful. And then, I'm not sure if this is for David or Boyd or who does take this, and on the post-acute side, not as much on the actual write-down, I understand that. But I think it was – David, maybe you made the comments about you felt like the investment in the products were getting well set-up. So I guess one is remind me how big of a piece your business post-acute was or sort of is, and then had market been robust, the products just weren't there and now you think the products are there, just sort of help me understand in terms of why it seems like now on the heels of a write-down, you do feel like there's better prospects going forward? Thanks. John Boyd Douglas - Computer Programs & Systems, Inc.: Yes, Sandy. This is Boyd. That business – that piece of business is about 9% of the total revenue of the Company and we've got 3,400 buildings that run that software and we really thought there's an opportunity in that market. And I've said for several quarters now, that's more of a longer-term opportunity. The market is – a lot of those operators are really struggling financially right now. It's our position that with meaningful use in the acute side, the post-acute side at some point, all of those facilities will need or require an EHR. And so we want to position ourselves well. So we feel like while we've got a little bit of time to get it done, we want to go ahead and get it done sooner rather than later, which is why we're making the additional investment at this time to position us well. We've got a great relationship and great support services from that part as a company and the product needs some attention, and frankly, that's something we've been doing around here for over 30 years is writing good software. So we feel like we can do that. And we've got some real good opportunities, 2019 and beyond to start selling that product.

Okay. Great. Thanks so much, Boyd. And one last question and I had to jump off for a second so, just tell me to go back and read the transcripts if you already answered this. And I think this was David, you commented about the replacement market seemed to be pretty good. That actually sort of runs counter to what we've heard. And again, I know you guys operate in 100 bed and below markets are maybe different. But I'm just curious what it is – I mean, you talked about some older systems out there but without a specific catalyst from the government, what do you think is causing customers to be willing to look to make a replacement. because what we hear or I hear at least from a lot of other vendors is there's not – the replacement market we thought was going to be there isn't really moving. So I'm just curious what you're seeing or why you think it may be different in this small hospital market? Thanks. David A. Dye - Computer Programs & Systems, Inc.: Yes. The short answer to your question is doctors. As the, I would say, as the new crop of physicians move in, there's an expectation of the usability and completeness of the software that they use to help treat their patients and either underperforming or the legacy stuff just isn't acceptable to them. So, they're communicating that to their leadership and that's where we're seeing some activity. John Boyd Douglas - Computer Programs & Systems, Inc.: And this is Boyd. I'll just add on to that. With meaningful use, obviously it brought up a lot of new entrants to the market and they don't have the complete system. So, while it was a decent enough system to get them to meaningful use, overall, the end users specifically, as David said, the doctors with the nurses, really all the caregivers as well, they're frustrated with the workflows and the inefficiencies of the software and they're looking for a better and more robust system that really is the complete product suite (42:16) and obviously that's what we offer.

Great. Thanks so much, guys. David A. Dye - Computer Programs & Systems, Inc.: Thanks, Sandy.

Our next question is from the line of Donald Hooker with KeyBanc. Please go ahead.

Hey, good afternoon. So, with regards to MU3, maybe can you just remind us kind of where you are in that purchasing cycle? And I guess, if I think about – I guess, what's the penetration there in terms of sort of hospitals of yours who have adopted your MU3 package versus those who have not and kind of what the penetration could get to ultimately in your view? John Boyd Douglas - Computer Programs & Systems, Inc.: So, Donald, so, right now, bookings life-to-date for MU3 repackages within our customer base are just shy of $27 million and that's making up roughly two-thirds of what we see as being the total opportunity within our customer base. So, that's on the bookings front. Year-to-date, we've had revenue of $14.2 million. So that leaves what?

Okay. John Boyd Douglas - Computer Programs & Systems, Inc.: $15.7 million worth of bookings that are yet to convert to revenue and still a third of the opportunity to go out and grab the sales dependent.

Okay. Great. And then, also interested in that – sort of that BI Dashboard, just generally kind of where you are kind of stepping back, kind of where you are with that kind of penetration-wise and what is a realistic sort of penetration target there? I guess are there particular clients that maybe that's not applicable to or is it really the whole base? Christopher L. Fowler - Computer Programs & Systems, Inc.: Donald, this is Chris. That's a good question you have. We're still rapidly developing those panels and obviously that's driving the value and the interest in the product. But what we're seeing as we're developing the panels is the opportunity for services to spin off of that. So, to your question about certain hospitals that's not being applicable to, we've got to be able to position services from TruBridge that can help those facilities as we identify opportunities via BI, via the Dashboard and be able to actually help them drive some change. And so, I think there's a twofold opportunity. The market is – we barely penetrated the client base with the product. As I said, we have 20 sites installed. So we're very optimistic for 2018 to see that grow and also see some services spin-off of that.

Okay. And then my last question maybe just kind of maybe high-level, your recurring revenues are certainly a large majority of your overall revenues. At what point, would you be comfortable pulling the trigger and giving guidance to your shareholders? David A. Dye - Computer Programs & Systems, Inc.: Yes. Donald, we evaluate that among management and even at the board level from time to time; I would say, on a regular basis, not necessarily quarterly but certainly multiple times per year, and I think due to the volatility that's come because of MU being off and on and with our revenue recognition techniques, our volatility as well, it was decided a year or so ago that we weren't going to pursue – weren't going to continue with guidance, and we're continuing with that path right now. That may change in the future. As I said, we evaluate it on a somewhat regular basis. But right now, there's no plans to do that. John Boyd Douglas - Computer Programs & Systems, Inc.: And, Donald, this is Boyd. One thing that we've added, we've thought about this a lot, and one thing that we actually have thought about is maybe not give full guidance but give guidance on that recurring revenue or something along those lines. So it's something that we talk about at the board level, like David said, and some more under consideration. But I certainly don't – I don't feel comfortable giving any kind of timeframe on that.

Okay. Thank you so much. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, Donald.

Our next question is from the line of Nicholas Jansen with Raymond James & Associates. Please go ahead with your question. Nicholas M. Jansen - Raymond James & Associates, Inc.: Hey, guys. Thanks for the questions. First, Matt, maybe for you in terms of the financing receivables. Are those going to be as big of a drag in 2018, or do we think we've seen the peak there where we'll get our cash flow lift in 2018 associated with some of that coming down? Matt J. Chambless - Computer Programs & Systems, Inc.: I think, we'll continue to see a number of our system sales revenues being financed, and we'll continue to see those numbers flowing into financing receivables. But the dynamic that should start swinging back the other way that will mute that impact to cash flow will actually be the collection of things that have been parked on the balance sheet during 2017. So we will continue to see current period revenues feeding financing receivables. But I think more than anything, 2018 might see a marginal increase, so definitely nowhere near to the magnitude we saw in 2017. Nicholas M. Jansen - Raymond James & Associates, Inc.: That's helpful. And then, my follow-up question just being in terms of your balance sheet capacity, I know you guys changed the covenants back in October. Certainly, cash flow is getting a bit better. Now how do you guys think about appetite for M&A? Is there anything you think about your customer base needing that you currently don't offer? Just your thoughts there, now that the Healthland deal is two years in the rear-view mirror? Thanks. John Boyd Douglas - Computer Programs & Systems, Inc.: Hi, Donald (sic) [Nicholas). This is Boyd. Certainly, it's something that's under consideration. I think one thing that's really been beneficial to us and we've enjoyed is what's happened with Rycan and it certainly showed us the ability to grow maybe a smaller tuck-in type company into our base. So I wouldn't say we're actively looking and have changed our strategy significantly, but we're certainly trying to look and see what's out there. And if we see anything, we want to be in a position to take advantage of it. Nicholas M. Jansen - Raymond James & Associates, Inc.: Thank you.

Our next question is from the line of Mike Ott with Oppenheimer. Please go ahead with your question. Mike Ott - Oppenheimer & Co., Inc.: Good afternoon. Thanks for taking my question. With the lower tax rate, do you yet how you might deploy some of the savings? John Boyd Douglas - Computer Programs & Systems, Inc.: So, Mike, right now I think an important thing for everyone to remember is that with the Healthland transaction, we acquired a considerable amount of net operating losses, and we still think right now that we have about three years' worth of NOLs to work through. So it's going to be some time before we really start seeing meaningful cash savings as a result of recent tax reform. Mike Ott - Oppenheimer & Co., Inc.: Okay. That makes sense. Thanks. And then as a follow-up, was there any common theme for why the three go-lives that's slipped into 2018, why those slipped in? Curious, when, if you know, they'll be landing, will they all fall into 1Q, do you think? John Boyd Douglas - Computer Programs & Systems, Inc.: So, one will land in the end of the first quarter, and the other two will land at the beginning of the second quarter. And the reasons were kind of – they're kind of all related reasons, but slightly different. One is a start-up facility, so we're kind of at the mercy of when they start seeing patients. Another was a facility that's undergoing a change in ownership, and that always can throw wrinkles in our implementation plans. And another was kind of a related issue where it was due to some hospital consolidation that benefited us, and we're just waiting on that legal arrangement to close. Mike Ott - Oppenheimer & Co., Inc.: Okay. Very helpful. Thanks so much. David A. Dye - Computer Programs & Systems, Inc.: Thanks, Mike.

Our next question is from the line of Gene Mannheimer with Dougherty & Company. Please go ahead. Eugene Mannheimer - Dougherty & Co. LLC: Thanks. Good afternoon and congrats on a strong finish to the year. I wanted to just ask about those seven hospital wins in the quarter. Did you say whether they included TruBridge or not in those? John Boyd Douglas - Computer Programs & Systems, Inc.: No, those were all net new evident EMR hospital wins. Eugene Mannheimer - Dougherty & Co. LLC: Okay. And so therefore, was there any component of TruBridge in those, or those are strictly software deals? John Boyd Douglas - Computer Programs & Systems, Inc.: Yes. I don't know that any of them were in trust deals. Yes, off the top of my head, we've kind of gone internally, Gene, in terms of thinking about the net new acute care business separately from the TruBridge business because we're getting so much new TruBridge business from outside our EMR customer base. That's a good question that I can get back to you offline. Eugene Mannheimer - Dougherty & Co. LLC: Sure. Okay. I was just curious about the cross-sell there. Matt J. Chambless - Computer Programs & Systems, Inc.: Hi, Gene. Just to add to that, whether or not they included the accounts receivable service, they surely included some services from TruBridge. Eugene Mannheimer - Dougherty & Co. LLC: Okay. Good. And then with respect to new products, you talked about the BI dashboard; you're seeing good progress there. Maybe the emergency department module that was released a couple of years ago, if you can sort of update where we are in the penetration of that and perhaps what new products down the road you might be thinking about that you'll either be showing at (51:56) or be able to share with us at this point. Thanks. John Boyd Douglas - Computer Programs & Systems, Inc.: Yes. ED application is penetrated in just under a half of our current customer base with the rest of them EDs, either they've decided at this point that they don't have enough volume to justify the expense or they're kind of third party ED systems. So, there's still some runway left on that but certainly not as much as there has been in the past. Our lead product right now, as we've discussed, is the BI product. We think that's a product that could eventually reach close to 100% penetration. Matt J. Chambless - Computer Programs & Systems, Inc.: And, Gene, shifting a little bit from products, focusing more on services, right now, we're looking at figuring out how to deliver telehealth via the EHR and a service that would plug into that. The way that we're trying to approach that is being able to deliver a sort of menu for the hospitals so they don't have to juggle both the coordination of the positions and some third-party software. So, we're pretty optimistic about some opportunities there that we'll hopefully see come to light in 2018. Eugene Mannheimer - Dougherty & Co. LLC: Terrific. Thank you, guys. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, Gene.

And we have time for one more question. Our last question will be from the line of Stephanie Davis with Citigroup. Please go ahead.

Hey, guys. Thank you for taking my question. I just want to get an update on the rural ACO traction, kind of maybe the difference you're seeing within the existing client base versus outside of your core client base. And this is a follow up to that, what sort of demand dynamics you're seeing as the market warms up again to the shift to diabetes care? John Boyd Douglas - Computer Programs & Systems, Inc.: So I think something to understand about the ACO program that we've got going on. We opened and closed a window at the second half of last year. So right now, we're not accepting anymore hospitals into the program. And the 27 hospitals that are CPSI hospitals will be part of this for the next three years along with another 15 to 20 hospitals that are not on the CPSI platforms. So from a demand standpoint, I think we're kind of in a wait and see and let us get our feet under us with this program and get some momentum around it. And I would assume, based on our success, obviously with the help of Caravan, that we'll be ramping up additional enrollments maybe towards the end of next year or end of this year. I apologize.

What are your capacity limitations for that, if I may ask, for the end of next year when we think about the next round. Matt J. Chambless - Computer Programs & Systems, Inc.: I don't know if we necessarily have any capacity limitations that we've set so far. Again, we started in January. So from a management standpoint and our ability to coordinate these facilities, we're still trying to get our arms all the way around that. But leaning on our partner a little bit in the beginning and hopefully, we'll start being able to take on more of the lion's share of that. But as we see the success, the hospitals are taking on the ownership of it, I think that will allow us to increase the capacity that we're able to provide.

All right. Makes sense. Thank you, guys. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, Stephanie.

I will now turn the call back to Boyd Douglas for his closing remarks. John Boyd Douglas - Computer Programs & Systems, Inc.: Yes. Certainly, I want to thank everyone for their time today and your interest in CPSI. As you can tell, we're pleased with the fourth quarter and how we ended 2017. We feel like it's given us good momentum moving into 2018, and we're real excited about the prospects for this year. So, thank you for your time, and I hope everyone has a good Friday and a good weekend. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.