Earnings Labs

TruBridge, Inc. (TBRG)

Q2 2018 Earnings Call· Thu, Aug 2, 2018

$25.73

+0.04%

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Transcript

Operator

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the CPSI Second Quarter 2018 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, August 2, 2018. I'd now like to turn the conference over to Boyd Douglas, President and Chief Executive Officer, CPSI. Please go ahead, sir. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, George. 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 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, our Chief Financial Officer; David Dye, Chief Growth Officer; and Chris Fowler, our Chief Operating Officer. At the conclusion of our prepared comments, we will be available to take any questions that you may have. As noted in our press…

Operator

Operator

Certainly. Our first question is from the line of Stephanie Demko with Citigroup. Please proceed with your question.

Stephanie J. Demko - Citigroup Global Markets, Inc.

Analyst

Hey, guys. Thank you for taking my question. I just want a quick update on the competitive landscape and any changes you may be seeing, given the recent announcement by one of the new entrants that they're taking a more measured approach to the hospital market. David A. Dye - Computer Programs & Systems, Inc.: Yeah. Hi, Stephanie. I would say there's not a whole lot of change from the last quarter. I certainly know what you're referring to, and to borrow from your terminology, which I think you took straight from them, I would say that we are seeing that is the case, that they're probably more selective in the deals that they're going after at this point, yes.

Stephanie J. Demko - Citigroup Global Markets, Inc.

Analyst

All right. Understood. So, no near-term impact to the attrition rate? David A. Dye - Computer Programs & Systems, Inc.: I'm sorry.

Stephanie J. Demko - Citigroup Global Markets, Inc.

Analyst

Is there any near-term impact to the attrition rate, just given there's this more measured approach? David A. Dye - Computer Programs & Systems, Inc.: We certainly continue to and we definitely had in the last quarter several clients that have attempted, at some point, to some degree, to install the system and are definitely looking to either return to us if they were honest or if they were on a competitive system to look at us. So, we've seen the pattern continue there that we've seen for some time.

Stephanie J. Demko - Citigroup Global Markets, Inc.

Analyst

All right. Good. Good to hear. And one follow-up on the competitive side, have you seen any impact from some of the IT standardizations we're seeing in the hospital space or you're more shielded given your smaller hospital focus? David A. Dye - Computer Programs & Systems, Inc.: I would say we're much more shielded given our focus.

Stephanie J. Demko - Citigroup Global Markets, Inc.

Analyst

Sounds good to me. Thank you for taking my questions. David A. Dye - Computer Programs & Systems, Inc.: Thanks, Stephanie.

Operator

Operator

Our next question is from the line of Mike Ott with Oppenheimer. Please proceed with your (00:20:48). Mike Ott - Oppenheimer & Co., Inc.: Hey, guys. Thanks for taking my question. Wonder if you could, first, maybe expand a little bit on the delayed implementation that you discussed heading into 4Q. What led to that? David A. Dye - Computer Programs & Systems, Inc.: There was a customer request that they felt like due to some personal things that they had going on in-site and some interfaces, that they felt it was best to move to later in the year. Mike Ott - Oppenheimer & Co., Inc.: Okay. It makes sense. And then, do you have the confidence that you have the sufficient internal capacity to get done the 18 installs that you're targeting for the second half of this year? David A. Dye - Computer Programs & Systems, Inc.: Yeah. Absolutely. Mike Ott - Oppenheimer & Co., Inc.: Great. John Boyd Douglas - Computer Programs & Systems, Inc.: Now, I'll – So, I'll expand on that for a second. We've been doing new installs for a long time. So obviously, we evolved as the methodology change to do these implementations. But it's definitely more than we've done, I think, as Boyd mentioned, since 2013. But we have a lot of tenure here so we – yes, it's certainly not without its challenges but we do have the capacity. Mike Ott - Oppenheimer & Co., Inc.: Great. Thanks. And then, lastly, if I could, so the $10 million incremental bottomline benefit you're expecting in 2019, I know you mentioned the real estate plans, Boyd. But are there any specific OpEx lines you think might see more leverage as we look into 2019? Matt J. Chambless - Computer Programs & Systems, Inc.: Yeah. Mike, this is Matt. I'd say that of the OpEx lines that we'd expect to see hit the most would likely be in the G&A side, as we reconfigure some of our employee benefits offerings. Mike Ott - Oppenheimer & Co., Inc.: Okay. Very helpful. Thanks, guys. John Boyd Douglas - Computer Programs & Systems, Inc.: Thanks, Mike.

Operator

Operator

Our next question is from the line of Gene Mannheimer with Dougherty & Company. Please proceed with your question. Eugene Mannheimer - Dougherty & Company LLC: Oh, thanks. Good afternoon. Thanks for taking the questions here. With respect to that last comment on the $10 million or so in cost synergies, how much impact does the elimination of those third party developers that you mentioned, Boyd, have on this and where would that show up in the OpEx? Christopher L. Fowler - Computer Programs & Systems, Inc.: Gene, this is Chris. I'll let Matt answer the second half of that. But I would say probably about 15% to 20% of that $10 million would be accounted for in that third party. And where it shows up, I'll let Matt answer that. Matt J. Chambless - Computer Programs & Systems, Inc.: Yeah. And so, Gene, where our third party spend like that shows up is in cost of system sales and support. Eugene Mannheimer - Dougherty & Company LLC: Okay. Got you. Very good. Okay, so on the – with respect to the top of the income statement, clearly, with the MU3 attestation revenue winding down, have you thought or – can you share with us your plan for sort of replacing that revenue in 2019? David A. Dye - Computer Programs & Systems, Inc.: Yeah. I'd say, Gene, it's a combination of new system sales. I mean, obviously, you know how many installs we've been doing and how many we've been selling. So, we've got a significant run rate there. And as I mentioned, we think that the number that we have been selling can continue. We've got a lot of momentum there. So replacing that with more installs, certainly, is one methodology, and then, we expect the remainder to come from TruBridge. The last couple of quarters, we had a more solid quarter from a bookings standpoint with TruBridge this quarter, but we think that that'll get better throughout the rest of the year. We have had some success with getting TruBridge RCM to move upstream in the larger hospitals and we think that that'll grow significantly in the future as well. We are working on some bigger deals with regards to accounts receivable management that we won't necessarily think it will execute on this quarter, but we could in the fourth quarter of this year or the first quarter of next. And so, there's some – we expect the rest of that to be made up for by TruBridge growth. Eugene Mannheimer - Dougherty & Company LLC: Very good. Thank you. David A. Dye - Computer Programs & Systems, Inc.: Thanks, Gene. John Boyd Douglas - Computer Programs & Systems, Inc.: Thank you, Gene.

Operator

Operator

There are no further questions at this time. I will now turn the call back to the presenters for their closing remarks. John Boyd Douglas - Computer Programs & Systems, Inc.: Great. Thank you, George. I want to thank everyone for joining us on the call today. I know we had a lot to talk about and we appreciate you spending the time with us this afternoon. I'd like to close our call today by reiterating that TruBridge continues to be a growth driver for CPSI, with a good deal of opportunity remaining in and outside of the CPSI family of companies. Our strong client retention rate and steady sales execution in the EHR replacement market gives us real confidence for the remainder of 2018 and beyond. We're building long-term value for CPSI as we focus on our clients' success, helping them cerate healthier communities. Thank you, everyone, and have a great evening.

Operator

Operator

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.