Greetings, and welcome to the CPSI Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dru Anderson. Thank you Dru. You may begin.

Good afternoon, and welcome to the CPSI fourth quarter and year-end 2021 earnings conference call. During this conference call, we may make statements regarding future operating plans, expectations and performance that constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution you that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance. Actual results might differ materially from those expressed or implied by such forward-looking statements, as a result of known and unknown risks, uncertainties and other factors, including those described in our public releases and reports filed with the Securities and Exchange Commission, including, but not limited to our most recent annual report on Form 10-K. We also caution investors that the forward-looking information provided in this call represents our outlook only as of this 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. At this time, I will turn the call over to Mr. Boyd Douglas, President and Chief Executive Officer. Please go ahead sir.

Thank you, Dru. Good afternoon everyone, and thank you for joining us today. After my comments, I will hand the call over to Matt Chambless, our Chief Financial Officer, who will provide additional color regarding our fourth quarter results. At the conclusion of our prepared comments, the two of us along with David Dye, our Chief Growth Officer; and Chris Fowler, our Chief Operating Officer will be available to take your questions. 2021 marks the completion of the first 12 months of our multi-year strategy to increase shareholder returns and achieve $80 million in adjusted EBITDA in 2024. Throughout the year, we focused on three equally important components of the plan: core growth, margin optimization and tangible upside growth through digital innovation. While 2021 continued to present unprecedented challenges across the health care industry, resulting in labor shortages, delayed buying decisions and operational disruptions, TruBridge had a strong performance in the fourth quarter and the CPSI team executed very well against our set KPIs. These include: TruBridge cross-sells into our EHR client base, upmarket TruBridge wins, EHR customer retention and margin expansion as we execute our cost optimization efforts. Before I cover the KPIs related to our progress with the growth of the TruBridge business, I think, it's worth noting that we reached a critical milestone in CPSI's life cycle. For the first time in our history, TruBridge quarterly revenues surpassed revenues from our EHR business. With TruBridge's growth profile, we expect TruBridge to make up the majority of our revenues for years to come setting the tone for a transformational shift that should see us no longer viewed as merely a tried and true player in the mature EHR landscape, but a bona fide option in the growth area that is RCM solutions and services. First, an integral element…

Thanks, Boyd and good afternoon everyone. On today's call, I'll provide a high-level overview of the quarter, including some additional detail on bookings performance, a brief walk through our fourth quarter financial results and our outlook for 2022. Before we dive into the details, the fourth quarter showed somewhat mixed results. While bookings disappointed versus internal expectations after a superb third quarter, actual results on both the top and bottom lines continue to reflect TruBridge's operational excellence. Organically, TruBridge revenues grew by 18% over the fourth quarter of 2020, with further inorganic growth coming from our acquisition of TruCode in May of 2021. TruCode continues to perform according to plan with a quarterly revenue contribution of $3.2 million absent purchase accounting adjustments and $1.6 million of incremental EBITDA. Full year contributions since the acquisition are $7.8 million in revenues, absent purchase accounting adjustments and $3.9 million of EBITDA. On a pro forma basis including pre-acquisition amounts, TruCode generated revenues of $13.4 million during 2021 along with EBITDA of $6 million. Moving on to bookings. The explosive growth we saw in the third quarter set the bar really high. But unfortunately not all of that momentum carried over into the fourth quarter. Total bookings were down 47%, against last quarter's near-record performance and 27% below the fourth quarter of 2020. System sales and support bookings were down 49% sequentially and 26% compared to the fourth quarter of 2020, due to a slow pace for net new acute care EHR decisions. You may recall that the third quarter's net new hospital EHR bookings were more than double our quarterly average from the past couple of years. While we weren't able to maintain that pace in the fourth quarter, net new hospital EHR bookings were still more than double the pace from the…

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question comes from Jeff Garro with Piper Sandler. Please proceed with your question.

Hi. Good afternoon, and thanks for taking the question. Start with a few on the demand side. And recognize the milestone of TruBridge hitting a majority of revenue in the quarter. I know that's been a goal for some time. So nice to see that achieved. But on the demand side for TruBridge, if we exclude TruCode and Get Real Health, the way I see it TruBridge bookings are down for both FY 2020 and FY 2019, but I certainly heard a lot of optimism on the pipeline. So I was hoping that you can reflect on TruBridge kind of that core TruBridge, RFP volume and win rate for the year and then how you would expect those to trend in FY 2022?

Hi, Jeff. David Dye here. We are very confident in the pipeline with TruBridge standalone, in other words without Get Real Health and without TruCode pipeline entering 2022 was at an all-time high. We have certainly increased our marketing efforts there. It is legitimate to blame COVID for at least some of the lack of execution in 2021 in terms of delaying decisions. Our win rate was consistent with what it had been in previous years. So you combine those things with where we see the pipeline right now, the activity that we're seeing the fact that we're -- generally speaking, there are still a few exceptions. We are able now to: one, participate in conferences. which have done a great deal for us in generating leads in the past in particular in the up market; and two, to travel on site and meet with the business office managers and the CFOs, et cetera, face-to-face. We're particularly confident as we enter 2022 from a TruBridge bookings standpoint.

Thanks. That helps. And then maybe to hit the other segment on the demand side. Acute EHR go-live down year-over-year. Some of that seems to be maybe a disruption in the fourth quarter. I know you had expected that then and were a little bit short of that. I imagine Omicron might have started to factor in there. But just if we look bigger picture demand on the acute EHR side, what's an appropriate go-forward expectation for annual go-lives?

Yes. Approximately 20 per year, Jeff, in terms of net new acute go-lives per year.

Got it. That makes sense. And one more for me a bigger picture question. Interesting to hear the remarks on the move to the public cloud. So, a few things there. Curious how you expect to avoid any disruption to clients? And then if you could give some broad remarks on the potential benefits assuming some financial to CPSI, and then the benefits whether they're technical or financial to your clients as well?

Can you ask that last part again, Jeff?

Yes. Just on the pending migration to the public cloud, how you're going to avoid disruption to clients. And then what benefits are -- from that will accrue to CPSI as well as to your clients?

Okay. Thanks for that. This is Chris. So, the strategy of how we're moving into the cloud is fairly similar to the approach we've taken with application development over the last several years, as we've developed our applications into the cloud again over the last few years, our notes, our patient data console. And so, the ability for us to migrate app at a time and allow our customers to be in multiple environments should minimize that disruption into where it's a big fork over from an on-prem or from a private cloud into the public cloud. So, being very systematic and thoughtful about that approach making sure from a technical standpoint that the scalability is there and making sure that we've delivered that prior to pushing too much into the cloud. As far as the go-forward benefits, obviously, it allows us to have our data in a position to where we can exploit the technology that is becoming available more rapidly and allow us to let our customers get the benefit of that. So, as we're seeing the trends whether it be from a telehealth standpoint, whether it be some clinical application that's out there that we're not focused on developing internally, allows us to bring that to our customers faster and then also as we think about it from a competitive standpoint too.

And I'll just add on to that. From a technical point of view, it's going to relieve us. For close to 40 years now, we've done all of the technical work ourselves from operating system level on up. And by moving to the cloud, a lot of those lower-level operations can be turned over to the third party, and then we can concentrate on what it is that we do best which is write applications for the end users. So, that's certainly a technical benefit for us.

And Jeff, one more addition here. As we innovate and as other folks out there innovate, whether it's on the front door or in the EHR space or from patient-facing applications, et cetera, our -- as we're in the public -- our EHR system sits in the public cloud, our customers are going to be able to take advantage of that innovation much more easily than they've been able to in the past.

Thanks, and I appreciate all the comments. So, I’ll jump back in the queue.

Thank you. Our next question is from George Hill with Deutsche Bank. Please proceed with your question.

Yeah. Good afternoon, guys and thanks for taking the question. I guess Boyd and Dave, I guess looking forward to 2022 when you talk about the outlook for TruBridge, can you kind of parse out how much you're thinking about the utilization recovery kind of driving procedure volumes and billing versus kind of new footprints and new customer wins?

Yes. Hey, George. This is Chris. I would say if you look at the back half of 2021, you saw a pretty nice rebound from a utilization standpoint. We're seeing that stabilize, maybe a still slight uptick in that. As we are like everybody else is kind of watching how COVID continues to impact, knock on wood we haven't seen any negative impact to the utilization on the elective side. Obviously, there's been a bit of a bolus as we think about outpatient utilization for the care for COVID. So I would say from an existing customer same-store growth, we're probably looking at that being neutral to maybe slightly positive. So, from a growth standpoint, really pressing on the new business aspect.

Okay. That's helpful. And then I guess if I could just follow-up with one on labor. It seems to be a topic everybody is talking about on everybody's earnings call. I guess clearly your clients are seeing labor as a pressure point to increase and drive partnership to TruBridge. I guess could you talk about what you guys are seeing from a labor aspect and if it's impacting your ability to retain or like declines have confident kind of making the transition given the labor challenges everywhere?

Yes. Obviously, we're dealing with the same thing everybody else is. Luckily for us, I guess you would say, we were moving pretty fast on the offshore and also automation fronts. And so that was a lever we were able to pull harder on to accelerate some opportunities there to be able to alleviate some of that pressure. Obviously, as we continue to do that provides scale for us with the staff that we have, with that talented staff that we have internally and allows them to do more for more customers. And so, while -- having a CBO model allows us to be able to manage that problem probably easier than any one hospital can do so. So for us, we're thinking of it as an opportunity to drive growth definitely.

Okay. And maybe I'll sneak in one last quick one. One of your competitors, which had been working on penetrating the small hospital space, caught themselves in a transaction with a big multi-vertical technology vendor. I know it's early, but any early observations to note in the competitive environment about customers being more willing to look at CPSI or maybe some of their customers in the small hospital space that worry about the acquisition might create opportunities for you guys?

Well, we're certainly hopeful that it does create opportunity, George. I do think just to be honest, it's too early to say that we've seen a change since that's been announced in terms of the sales cycle or the demand or who we're competing against. I think probably three months from now we'll be in a better position and certainly six months a much better position to answer that question. Obviously, who you're referring to here has always been a credible competitor and we expect that will continue regardless of the acquisition. They obviously -- it's going to create some interesting challenges for them. They've got to change gears and navigate a cloud platform strategy, et cetera. So, we'll be obviously keenly interested in how that transpires but we'll probably have more color in three months.

That’s what I though. I appreciate the color guys. Thank you.

Thank you. Our next question comes from Donald Hooker with KeyBanc. Please proceed with your question.

Great. Yes, I was going to ask about George's question as well. But maybe can you just expand? I mean the retention rate looks really strong. Can you talk about the competitive environment kind of beyond maybe Cerner and some of the other challengers in the field? It sounds like you're doing really well with the retention.

Yes. Thanks Donald. Not a whole lot of change there frankly. I mean from a competitive environment standpoint we see and are given opportunities in particular when the -- in terms of the big three when hospitals are looking for perhaps something that's a little bit lower from a cost standpoint and certainly with our new cloud solution. And as you've seen we've been 100% SaaS now for more than a year. That's something that we can reduce their overall cost of ownership from an HR standpoint. So that's where we see opportunities there. And then beyond that, is the same what we call the vulnerable vendors that are out there the ones that have anywhere from 40 to 80 customers that, as a result of the 21st century CARES Act and the upcoming legislation are just -- the fact that they want a more robust clinical EHR solution that brings us to the market.

Okay. And then in terms of the bookings you mentioned, it was a little bit behind plan in the quarter. I don't know, if you're willing to do this, but what -- can you share with us, what sort of is planned? You laid out an $80 million EBITDA target for '24. Kind of what are you thinking in terms of sort of bookings that you need to get there in terms of cross-selling and whatnot? What is the right quarterly bookings for CPSI generally?

Yes. So Don, we'd rather not guide on quarterly bookings or annual bookings. We haven't done that in the past. And part of the reason for that is that bookings have some complexities involved in them and not all bookings are created equal. So there are many paths to get to a certain number, but not all of those paths are as high quality as the others. So we want to sit on the sidelines there and not provide a quantitative number on bookings.

Okay. That’s certainly fair. Thank you.

Thank you. Our next question is from Joy Zhang with SVB Leerink. Please proceed with your question.

Hi guys, thank you for taking my question. I'm glad to hear that there is greater uptake of Get Real Health in the Canadian market. So, I was wondering if you can provide more color around what's driving this uptick in sales. And is it from greater cross-selling into the provincial governments, or is it from more sign-ups and overall greater engagement within the population?

Yes. Hey Joy. This simply is just more cross-selling into the existing spaces currently in Alberta and Saskatchewan. COVID has been a positive there in terms of the population in those provinces wanting to have the application in order to view test results vaccination proof et cetera. So -- but we do have opportunities through our relationship in Canada with telehealth and the other provinces there are additional opportunities. But right now, the growth that you're seeing is from the existing relationships.

That's very helpful. And as a follow-up, I wanted to go back to your comment on freeing up dry powder for M&A. Wondering if you can give us an update on your go-forward M&A philosophy. And assuming that M&A will be in TruBridge, would you be more oriented to smaller technology tuck-ins, or are you looking at more of a roll-up strategy in this space?

Yes. I'll start Joy and then Matt may tag in behind me. Obviously, that's a great question. It's something that we debate and discuss internally back and forth. Obviously, if you look at the last two acquisitions with Get Real Health and then TruCode, a little bit of both of those flavors one kind of more of a technology play, one is more of down the fairway as you would say as we think about how we operationalize that. I think we're kind of making sure that we keep those doors open. I would say from a technology standpoint, we're very focused on making sure we're focused on the gaps that we may be -- or I'd say gaps or opportunities where we can expand the service that we provide as we think about the full business office outsourcing for our customers and then also, at the same time, looking for opportunities to provide scale to those services we provide. So I would say it's equal on either side of how we're thinking about that. I would definitely say that the vast majority of the focus is on TruBridge side.

That’s helpful. Thank you.

Yes, thank you.

Thank you. There are no further questions at this time. I would like to turn the floor back over to management for any closing remarks.

Great. I just want to thank everyone for being on the call today. Clearly, we're excited about how we operated in the fourth quarter. And we're looking forward to 2022 and reaching all of our long-term goals that we have set. So we appreciate your interest in CPSI and we'll talk to you next quarter. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.