PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) The financial statements detail the company's financial position as of June 30, 2021, reflecting asset and liability growth from the TruCode acquisition, and strong revenue and net income increases for the six months ended June 30, 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$393,159** | **$326,272** | | Goodwill | $177,748 | $150,216 | | Intangible assets, net | $102,349 | $71,689 | | **Total Liabilities** | **$181,617** | **$126,272** | | Long-term debt, net | $112,632 | $73,360 | | **Total Stockholders' Equity** | **$211,542** | **$200,000** | Condensed Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Total sales revenues | $136,538 | $129,306 | | Gross profit | $68,738 | $66,220 | | Operating income | $12,651 | $8,877 | | **Net income** | **$10,285** | **$5,854** | | **Net income per share—diluted** | **$0.70** | **$0.41** | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $33,144 | $24,838 | | Net cash used in investing activities | ($64,587) | ($4,512) | | Net cash provided by (used in) financing activities | $37,903 | ($9,015) | - On May 12, 2021, the company acquired TruCode LLC for **$59.8 million** in cash (net of cash acquired) plus a potential contingent earnout payment of up to **$15.0 million**, adding **$37.1 million** in intangible assets and **$27.5 million** in goodwill[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) - During Q2 2021, a change in accounting estimate for capitalizing software development labor costs increased capitalized amounts by approximately **$2.0 million** for the three and six months ended June 30, 2021, with a corresponding decrease to product development costs[24](index=24&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes Q2 2021 revenue growth to increased TruBridge revenues and the TruCode acquisition, while the ongoing shift to SaaS models impacts short-term revenue but strengthens recurring streams, and liquidity remains strong despite a temporary decline in bookings Results of Operations Comparison (Three Months Ended June 30) | (in thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $68,533 | $59,549 | 15.1% | | - System sales and support | $35,967 | $34,724 | 3.6% | | - TruBridge | $32,566 | $24,825 | 31.2% | | Gross Profit | $33,888 | $30,106 | 12.6% | | Operating Income | $7,738 | $2,745 | 181.9% | | Net Income | $6,141 | $1,764 | 248.1% | - The company's strategy focuses on cross-selling TruBridge services into its EHR customer base, expanding TruBridge's market share, and pursuing competitive EHR takeaways, with customer retention rates returning to the **mid-90th percentile range** in 2020 and H1 2021[146](index=146&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk) - The shift to SaaS license models continues, with **68% of new acute care EHR installations in 2020 being SaaS**, up from **43% in 2019**, reducing upfront revenue but increasing long-term recurring revenue[157](index=157&type=chunk) - Total bookings for H1 2021 were **$25.3 million**, a decrease from **$39.3 million** in H1 2020, attributed by management to temporary headwinds including COVID-19 distractions, reorganization transitions, and a focus on lower-value regulatory purchases[232](index=232&type=chunk)[234](index=234&type=chunk) - As of June 30, 2021, the company had **$19.1 million** in cash and **$64.0 million** in remaining borrowing capacity under its revolving credit facility, with total outstanding debt at **$117.2 million**[216](index=216&type=chunk)[217](index=217&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The company's primary market risk stems from interest rate fluctuations on its **$117.3 million** variable-rate debt, with a 100 basis point change impacting annual interest expense by approximately **$1.2 million**, and no derivative instruments are used to manage this risk - The company's main market risk is from interest rate changes on its **$117.3 million** of variable-rate debt outstanding as of June 30, 2021[240](index=240&type=chunk) - A **100 basis point (1%)** change in the interest rate would impact annual interest expense by approximately **$1.2 million**[240](index=240&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded the company's disclosure controls were effective as of June 30, 2021, with ongoing integration of TruCode's policies and controls, and no other material changes to internal control over financial reporting were identified - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[243](index=243&type=chunk) - Following the acquisition of TruCode in May 2021, the company is integrating policies and processes and will continue to evaluate the impact on internal controls[244](index=244&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in routine litigation but is not currently engaged in any claims deemed material to its financial condition or results of operations - The company is not currently involved in any legal proceedings that are expected to have a **material impact** on its financial condition[247](index=247&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020, have occurred - No **material changes** to the risk factors disclosed in the company's 2020 Form 10-K have occurred[248](index=248&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During Q2 2021, the company repurchased **5,331 shares** under its stock repurchase program, with approximately **$28.2 million** remaining available for future repurchases Equity Securities Repurchases (Q2 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2021 | 5,331 | $29.77 | | May 2021 | 0 | $0 | | June 2021 | 0 | $0 | | **Total** | **5,331** | **$29.77** | - As of June 30, 2021, approximately **$28.2 million** remained available for share repurchases under the existing program, which runs through September 3, 2022[249](index=249&type=chunk)[250](index=250&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including the TruCode acquisition agreement and required certifications from the CEO and CFO

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Non-accelerated filer ¨ Smaller reporting company ☐ FORM 10-Q ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-49796 COMPUTER PROGRAMS AND SYSTEMS, INC. (Exact Name of Registrant as Specified in Its Ch ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file number: 000-49796 COMPUTER PROGRAMS AND SYSTEMS, INC. (Exact Name of Registrant as Specified in Its Charter) | --- | --- | |----------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |----------------------------------------------------------------------------------------------|---------------------------------------------| | | | | C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |----------------------------------------------------------------------------------------------|-------------------------------------------------------| | | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |----------------------------------------------------------------------------------------------|-------------------------------------------------------| | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file number: 000-49796 COMPUTER PROGRAMS AND SYSTEMS, INC. (Exact Name of Registrant as Specified in Its Charter) | --- | --- | |----------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |----------------------------------------------------------------------------|-------------------------------------------------------| | | | | Commissi ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) The unaudited condensed consolidated financial statements and accompanying notes detail the company's financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Total Assets | $345,091 | $327,746 | | Total Liabilities | $177,932 | $167,963 | | Total Stockholders' Equity | $167,159 | $159,783 | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) | Metric (in thousands) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Sales Revenues | $66,156 | $67,905 | $135,297 | $138,788 | | Gross Profit | $34,535 | $34,846 | $71,650 | $73,932 | | Operating Income | $3,616 | $2,225 | $9,663 | $9,874 | | Net Income | $1,663 | $328 | $5,107 | $4,296 | | Diluted EPS | $0.12 | $0.02 | $0.36 | $0.31 | [Condensed Consolidated Statement of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) | Metric (in thousands) | June 30, 2019 | December 31, 2018 | | :-------------------- | :------------ | :---------------- | | Total Stockholders' Equity | $167,159 | $159,783 | | Net Income (6 months) | $5,107 | N/A | | Stock-based Compensation (6 months) | $5,127 | N/A | | Dividends (6 months) | $(2,858) | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :-------------------- | :--------------------------- | :--------------------------- | | Net Cash from Operating Activities | $17,461 | $7,818 | | Net Cash from Investing Activities | $(11,862) | $(417) | | Net Cash from Financing Activities | $(4,482) | $(6,429) | | Increase in Cash & Equivalents | $1,117 | $972 | | Cash & Equivalents at Period End | $6,849 | $1,492 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) - The notes provide detailed explanations of the company's accounting policies, significant transactions, and financial statement line items, prepared in accordance with **U.S. GAAP** and SEC regulations[23](index=23&type=chunk)[24](index=24&type=chunk) [Note 1. BASIS OF PRESENTATION](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION) - Financial statements consolidate CPSI and its wholly-owned subsidiaries: TruBridge, Evident, Healthland Holding Inc (HHI), and iNetXperts, Corp d/b/a Get Real Health[25](index=25&type=chunk) [Note 2. RECENT ACCOUNTING PRONOUNCEMENTS](index=9&type=section&id=2.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - Adopted ASU 2016-02 (Leases) on January 1, 2019, increasing lease assets and liabilities by **$4.9 million**, with no significant impact on net earnings or cash flows[26](index=26&type=chunk) - ASU 2016-13 (Financial Instruments-Credit Losses) will be effective in **Q1 2020**; its impact is currently under evaluation[27](index=27&type=chunk) [Note 3. REVENUE RECOGNITION](index=9&type=section&id=3.%20REVENUE%20RECOGNITION) - Revenue recognition follows **ASC 606**, based on a 5-step model for identifying contracts, performance obligations, transaction price, allocation, and recognition[29](index=29&type=chunk)[31](index=31&type=chunk) - System sales and support include non-recurring (perpetual software licenses, installation, hardware) and recurring (software application support, hardware maintenance, SaaS arrangements) revenue streams[32](index=32&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk) - TruBridge revenue from business processing services (BPS) and professional IT services is recognized as services are performed, often based on transaction volume or percentage of collections[38](index=38&type=chunk)[39](index=39&type=chunk) Deferred Revenue (in thousands) | Metric | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | | Beginning balance | $10,201 | $9,937 | | Deferred revenue recorded | $10,116 | $11,700 | | Deferred revenue acquired | $430 | — | | Less deferred revenue recognized as revenue | $(10,630) | $(9,337) | | Ending balance | $10,117 | $12,300 | Costs to Obtain and Fulfill Contracts (in thousands) | Metric | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | | Beginning balance | $3,017 | $3,775 | | Costs to obtain and fulfill contracts capitalized | $2,752 | $1,562 | | Less costs to obtain and fulfill contracts recognized as expense | $(2,292) | $(2,125) | | Ending balance | $3,477 | $3,212 | [Note 4. BUSINESS COMBINATION](index=13&type=section&id=4.%20BUSINESS%20COMBINATION) - Acquired Get Real Health on May 3, 2019, for **$10.8 million cash** (net of acquired cash) plus a contingent earnout of up to **$14.0 million**[48](index=48&type=chunk)[49](index=49&type=chunk) - Get Real Health contributed approximately **$0.2 million in revenue** and a pre-tax loss of **$0.7 million** to CPSI's consolidated statement of operations for the three months ended June 30, 2019[53](index=53&type=chunk) Preliminary Purchase Price Allocation (in thousands) | Asset/Liability | Allocation | | :-------------- | :--------- | | Acquired cash | $159 | | Accounts receivable | $364 | | Prepaid expenses | $107 | | Property and equipment | $365 | | Operating lease asset | $1,285 | | Intangible assets | $7,800 | | Goodwill | $9,420 | | Accounts payable and accrued liabilities | $(594) | | Deferred taxes, net | $(1,192) | | Operating lease liability | $(1,285) | | Contingent consideration | $(5,000) | | Deferred revenue | $(430) | | Net assets acquired | $10,999 | Pro Forma Financial Information (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Pro forma revenues | $66,501 | $68,462 | $136,885 | $140,257 | | Pro forma net income (loss) | $815 | $(811) | $4,053 | $2,491 | | Pro forma diluted EPS | $0.06 | $(0.06) | $0.30 | $0.18 | [Note 5. PROPERTY AND EQUIPMENT](index=14&type=section&id=5.%20PROPERTY%20AND%20EQUIPMENT) Property and Equipment, Net (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :------- | :------------ | :---------------- | | Land | $2,848 | $2,848 | | Buildings and improvements | $7,866 | $7,752 | | Computer equipment | $3,503 | $2,766 | | Leasehold improvements | $1,734 | $1,198 | | Office furniture and fixtures | $1,943 | $1,938 | | Automobiles | $18 | $18 | | Property and equipment, gross | $17,912 | $16,520 | | Less: accumulated depreciation | $(6,380) | $(5,645) | | Property and equipment, net | $11,532 | $10,875 | [Note 6. OTHER ACCRUED LIABILITIES](index=14&type=section&id=6.%20OTHER%20ACCRUED%20LIABILITIES) Other Accrued Liabilities (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :------- | :------------ | :---------------- | | Salaries and benefits | $5,685 | $8,722 | | Severance | $972 | $992 | | Commissions | $755 | $830 | | Self-insurance reserves | $1,042 | $1,017 | | Contingent consideration | $5,000 | $206 | | Other | $565 | $452 | | Operating lease liabilities, current portion | $1,263 | — | | Total other accrued liabilities | $15,282 | $12,219 | [Note 7. NET INCOME PER SHARE](index=16&type=section&id=7.%20NET%20INCOME%20PER%20SHARE) - Unvested restricted stock awards are considered participating securities, requiring the use of the **two-class method** for EPS calculation[61](index=61&type=chunk) Basic and Diluted EPS (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to common stockholders | $1,601 | $320 | $4,913 | $4,152 | | Basic EPS | $0.12 | $0.02 | $0.36 | $0.31 | | Diluted EPS | $0.12 | $0.02 | $0.36 | $0.31 | | Weighted average shares outstanding (Basic) | 13,794 | 13,561 | 13,725 | 13,518 | | Weighted average shares outstanding (Diluted) | 13,794 | 13,561 | 13,725 | 13,518 | [Note 8. INCOME TAXES](index=17&type=section&id=8.%20INCOME%20TAXES) - Effective tax rate for Q2 2019 decreased to **22.1%** from 46.4% in Q2 2018, benefiting from increased R&D tax credits and the absence of a prior-year state income allocation adjustment[67](index=67&type=chunk) - Effective tax rate for H1 2019 decreased to **22.9%** from 33.7% in H1 2018, due to increased R&D tax credits and decreased tax shortfalls related to stock-based compensation[68](index=68&type=chunk) [Note 9. STOCK-BASED COMPENSATION](index=17&type=section&id=9.%20STOCK-BASED%20COMPENSATION) - As of June 30, 2019, **$14.9 million** of unrecognized compensation expense related to unvested stock-based compensation is expected to be recognized over a weighted-average period of **1.9 years**[70](index=70&type=chunk) Stock-Based Compensation Expense (in thousands) | Metric | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Pre-tax stock-based compensation expense | $2,691 | $2,753 | $5,127 | $4,692 | | Net stock-based compensation expense | $2,099 | $2,147 | $3,999 | $3,660 | Restricted Stock Activity (Shares) | Metric | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | | Unvested restricted stock outstanding at beginning of period | 475,132 | 309,195 | | Granted | 133,936 | 148,841 | | Performance share awards settled | 138,566 | 177,395 | | Vested | (221,775) | (153,424) | | Unvested restricted stock outstanding at end of period | 525,859 | 482,007 | Performance Share Award Activity (Shares) | Metric | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :----- | :--------------------------- | :--------------------------- | | Performance share awards outstanding at beginning of period | 184,776 | 189,325 | | Granted | 110,310 | 184,776 | | Adjusted for actual performance, net of forfeitures | 44,189 | (11,930) | | Performance share awards settled | (138,566) | (177,395) | | Performance share awards outstanding at end of period | 200,709 | 184,776 | [Note 10. FINANCING RECEIVABLES](index=20&type=section&id=10.%20FINANCING%20RECEIVABLES) - Provides short-term payment plans (3-12 months) and long-term financing arrangements (2-7 years) for software installations[81](index=81&type=chunk)[82](index=82&type=chunk) Financing Receivables, Net (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :------- | :------------ | :---------------- | | Short-term payment plans, net | $3,615 | $5,369 | | Long-term financing arrangements, net | $27,824 | $28,953 | | Total financing receivables, net | $31,439 | $34,322 | Allowance for Financing Credit Losses (in thousands) | Metric | June 30, 2019 | December 31, 2018 | | :----- | :------------ | :---------------- | | Balance at Beginning of Period | $2,567 | $3,244 | | Provision | $165 | $1,691 | | Charge-offs | $(370) | $(2,368) | | Balance at End of Period | $2,362 | $2,567 | Future Minimum Payments to be Received (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2019 | $6,110 | | 2020 | $10,667 | | 2021 | $7,679 | | 2022 | $5,397 | | 2023 | $2,498 | | Thereafter | $1,489 | | Total minimum payments | $33,840 | [Note 11. INTANGIBLE ASSETS AND GOODWILL](index=24&type=section&id=11.%20INTANGIBLE%20ASSETS%20AND%20GOODWILL) - Goodwill is evaluated for impairment annually on **October 1**, or more frequently if indicators of impairment are present[94](index=94&type=chunk) Net Intangible Assets (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :------- | :------------ | :---------------- | | Customer Relationships | $61,754 | $62,824 | | Trademark | $8,083 | $8,287 | | Developed Technology | $19,150 | $15,115 | | Total Net Intangible Assets | $88,987 | $86,226 | Goodwill by Segment (in thousands) | Segment | December 31, 2018 | Acquired | June 30, 2019 | | :------ | :---------------- | :------- | :------------ | | Acute Care EHR | $97,095 | — | $97,095 | | Post-acute Care EHR | $29,570 | — | $29,570 | | TruBridge | $13,784 | $9,420 | $23,204 | | Total Goodwill | $140,449 | $9,420 | $149,869 | [Note 12. LONG-TERM DEBT](index=26&type=section&id=12.%20LONG-TERM%20DEBT) - The Amended Credit Facilities include a **$117 million term loan** and a **$50 million revolving credit facility**, bearing interest at a rate based on LIBOR or an alternate base rate plus an applicable margin[96](index=96&type=chunk)[97](index=97&type=chunk) - The company was in compliance with all debt covenants, including a minimum fixed charge coverage ratio of **1.25:1.00** and a maximum consolidated leverage ratio of **3.50:1.00**, as of June 30, 2019[100](index=100&type=chunk) Long-Term Debt (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :------- | :------------ | :---------------- | | Term loan facility | $92,479 | $102,432 | | Revolving credit facility | $38,393 | $29,693 | | Finance lease obligation | $85 | $250 | | Debt obligations | $130,957 | $132,375 | | Less: unamortized debt issuance costs | $(1,134) | $(1,306) | | Debt obligation, net | $129,823 | $131,069 | | Less: current portion | $(7,783) | $(6,486) | | Long-term debt | $122,040 | $124,583 | Anticipated Annual Future Maturities of Debt (in thousands) | Year | Amount | | :--- | :----- | | 2019 | $3,741 | | 2020 | $8,775 | | 2021 | $9,506 | | 2022 | $108,935 | | 2023 | — | | Thereafter | — | | Total | $130,957 | [Note 13. OPERATING LEASES](index=27&type=section&id=13.%20OPERATING%20LEASES) - Total rent expense for the six months ended June 30, 2019, was **$1.3 million**[105](index=105&type=chunk) - Cash paid for operating leases for the six months ended June 30, 2019, was **$0.9 million**[106](index=106&type=chunk) Supplemental Balance Sheet Information Related to Operating Leases (in thousands) | Category | June 30, 2019 | | :------- | :------------ | | Operating lease assets | $6,909 | | Operating lease liabilities, current portion | $1,263 | | Operating lease liabilities, net of current portion | $5,646 | | Total operating lease liabilities | $6,909 | | Weighted average remaining lease term | 7 years | | Weighted average discount rate | 5.2% | [Note 14. COMMITMENTS AND CONTINGENCIES](index=29&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) - Routine litigation is not expected to have a **material adverse effect** on financial statements[107](index=107&type=chunk) [Note 15. FAIR VALUE](index=29&type=section&id=15.%20FAIR%20VALUE) - Fair value measurements are classified into **Level 1** (quoted active market prices), **Level 2** (observable market-based inputs), and **Level 3** (unobservable inputs)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - The fair value of contingent consideration for Get Real Health is estimated at **$5.0 million** based on the probability of meeting EBITDA targets, using Level 3 inputs[113](index=113&type=chunk)[114](index=114&type=chunk) Fair Value of Contingent Consideration (in thousands) | Description | Carrying Amount at 6/30/2019 | Fair Value at June 30, 2019 (Level 3) | | :---------- | :--------------------------- | :------------------------------------ | | Contingent consideration | $5,000 | $5,000 | [Note 16. SEGMENT REPORTING](index=32&type=section&id=16.%20SEGMENT%20REPORTING) - Operates three segments: **Acute Care EHR**, **Post-acute Care EHR**, and **TruBridge**, with performance assessed at the gross profit level[117](index=117&type=chunk) Segment Revenues (in thousands) | Segment | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Acute Care EHR | $34,048 | $37,207 | $71,495 | $77,390 | | Post-acute Care EHR | $5,592 | $5,539 | $11,392 | $11,108 | | TruBridge | $26,516 | $25,159 | $52,410 | $50,290 | | Total Revenues | $66,156 | $67,905 | $135,297 | $138,788 | Segment Gross Profit (in thousands) | Segment | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Acute Care EHR | $17,702 | $19,237 | $38,083 | $42,663 | | Post-acute Care EHR | $4,265 | $3,981 | $8,794 | $7,889 | | TruBridge | $12,568 | $11,628 | $24,773 | $23,380 | | Total Gross Profit | $34,535 | $34,846 | $71,650 | $73,932 | [Note 17. SUBSEQUENT EVENTS](index=32&type=section&id=17.%20SUBSEQUENT%20EVENTS) - Declared a Q3 2019 dividend of **$0.10 per share**, payable August 30, 2019[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The company's strategy, operational results, and financial condition are analyzed, highlighting revenue trends and the Get Real Health acquisition [Background](index=35&type=section&id=Background) - CPSI operates through Evident (Acute Care EHR), AHT (Post-acute Care EHR), TruBridge (business management, RCM, IT services), and Get Real Health (patient engagement, integrated into TruBridge)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - Serves approximately **1,000 acute care** and **3,300 post-acute care facilities**, with 98% of acute care EHR clients having fewer than 100 beds[128](index=128&type=chunk) [Management Overview](index=35&type=section&id=Management%20Overview) - Long-term growth strategy focuses on selling new products/services to existing customers, customer retention, and growing recurring revenues, particularly through **TruBridge services**[130](index=130&type=chunk)[131](index=131&type=chunk) - Aims to increase margins through operating leverage and cost containment, such as integrating acute care product lines and a voluntary severance program[132](index=132&type=chunk)[133](index=133&type=chunk) - Increased prevalence of **SaaS arrangements** for new system installations and add-on sales, shifting revenue recognition to a monthly basis over the contract term[139](index=139&type=chunk) - Financing arrangements, including short-term payment plans and long-term lease financing, are increasingly offered to clients[137](index=137&type=chunk) - The acquisition of Get Real Health strengthens patient engagement solutions and is expected to be **accretive to FY2019 earnings**[140](index=140&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) [Three Months Ended June 30, 2019 Compared with Three Months Ended June 30, 2018](index=38&type=section&id=Three%20Months%20Ended%20June%2030,%202019%20Compared%20with%20Three%20Months%20Ended%20June%2030,%202018) - Acute Care EHR recurring revenues decreased by **$1.3 million (4%)** due to customer attrition, partially offset by new Thrive customer growth[147](index=147&type=chunk) - Non-recurring Acute Care EHR revenues decreased by **$1.9 million**, primarily due to a **$2.7 million decrease** in MU3 installation revenues, despite more new hospital clients[148](index=148&type=chunk) - TruBridge revenue growth was driven by new RCM customer growth (**$0.4 million, 5%**), accounts receivable management services (**$0.6 million, 7%**), and IT management services (**$0.3 million, 10%**)[149](index=149&type=chunk) - Product development expenses remained flat, while sales and marketing expenses decreased by **$0.5 million (7%)** and general and administrative expenses decreased by **$1.1 million (8%)**[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) Key Financials (3 Months Ended June 30, in thousands) | Metric | 2019 | 2018 | Change | % Change | | :----- | :--- | :--- | :----- | :------- | | Total Revenues | $66,156 | $67,905 | $(1,749) | -2.6% | | System Sales & Support Revenue | $39,640 | $42,746 | $(3,106) | -7.3% | | TruBridge Revenue | $26,516 | $25,159 | $1,357 | +5.4% | | Net Income | $1,663 | $328 | $1,335 | +407.0% | | Effective Tax Rate | 22.1% | 46.4% | -24.3% | N/A | [Six Months Ended June 30, 2019 Compared with Six Months Ended June 30, 2018](index=42&type=section&id=Six%20Months%20Ended%20June%2030,%202019%20Compared%20with%20Six%20Months%20Ended%20June%2030,%202018) - Acute Care EHR recurring revenues decreased by **$2.0 million (4%)** due to attrition, while non-recurring revenues decreased by **$3.9 million**, including a **$4.7 million decrease** in MU3 installation revenues[165](index=165&type=chunk)[166](index=166&type=chunk) - TruBridge revenue growth was driven by insurance services (**$1.2 million, 9%**), accounts receivable management (**$1.0 million, 6%**), and IT management services (**$0.6 million, 10%**)[167](index=167&type=chunk) - Product development expenses increased by **$0.5 million (3%)**, while sales and marketing decreased by **$0.7 million (5%)** and general and administrative expenses decreased by **$1.6 million (6%)**[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) Key Financials (6 Months Ended June 30, in thousands) | Metric | 2019 | 2018 | Change | % Change | | :----- | :--- | :--- | :----- | :------- | | Total Revenues | $135,297 | $138,788 | $(3,491) | -2.5% | | System Sales & Support Revenue | $82,887 | $88,498 | $(5,611) | -6.3% | | TruBridge Revenue | $52,410 | $50,290 | $2,120 | +4.2% | | Net Income | $5,107 | $4,296 | $811 | +18.9% | | Effective Tax Rate | 22.9% | 33.7% | -10.8% | N/A | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash provided by operating activities increased by **$9.6 million** to **$17.5 million** for the six months ended June 30, 2019, primarily due to advantageous changes in working capital[185](index=185&type=chunk) - Net cash used in investing activities increased by **$11.4 million** to **$11.9 million**, primarily due to the **$11.0 million** acquisition of Get Real Health[186](index=186&type=chunk) - Net cash used in financing activities was **$4.5 million**, including **$1.4 million** in net long-term debt principal payments and **$2.9 million** in dividends[188](index=188&type=chunk) - The company expects to use additional draws on its Amended Revolving Credit Facility to fund potential earnout payments of up to **$14.0 million** for the Get Real Health acquisition[184](index=184&type=chunk) - A **$7.0 million prepayment** was made on the Amended Term Loan Facility in Q1 2019 from 2018 excess cash flow[196](index=196&type=chunk) Liquidity Position (in millions) | Metric | June 30, 2019 | December 31, 2018 | | :----- | :------------ | :---------------- | | Cash and cash equivalents | $6.8 | $5.7 | | Remaining borrowing capacity (Amended Revolving Credit Facility) | $11.6 | $20.3 | | Indebtedness outstanding (Amended Credit Facilities) | $130.9 | N/A | [Off-Balance Sheet Arrangements](index=46&type=section&id=Off-Balance%20Sheet%20Arrangements) - No off-balance sheet arrangements as of **June 30, 2019**[200](index=200&type=chunk) [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Critical accounting policies include revenue recognition, allowance for doubtful accounts, and allowance for credit losses[203](index=203&type=chunk) - No significant changes to critical accounting policies during the six months ended June 30, 2019[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk.](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The company's primary market risk exposure relates to interest rate fluctuations on its variable-rate debt - Primary market risk is interest rate fluctuations on **$130.9 million** of variable-rate debt under Amended Credit Facilities[204](index=204&type=chunk) - A **100 basis point** change in interest rates would result in an approximate **$1.3 million** annual change in interest expense[204](index=204&type=chunk) - The company does not use derivative financial instruments to manage interest rate risks[205](index=205&type=chunk) [Item 4. Controls and Procedures.](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management confirms the effectiveness of disclosure controls and procedures, noting no material changes in internal controls [Evaluation of Disclosure Controls and Procedures](index=47&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - CEO and CFO concluded that disclosure controls and procedures are **effective** at the reasonable assurance level[207](index=207&type=chunk) [Changes in Internal Control over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - **No material changes** in internal control over financial reporting during Q2 2019[208](index=208&type=chunk) - Ongoing integration of Get Real Health and implementation of controls for new lease accounting standard are being evaluated for impact on internal controls[208](index=208&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings.](index=49&type=section&id=Item%201.%20Legal%20Proceedings.) Routine litigation is not expected to materially impact the company's financial condition or results of operations - No material claims outside the ordinary course of business[211](index=211&type=chunk) [Item 1A. Risk Factors.](index=49&type=section&id=Item%201A.%20Risk%20Factors.) This section refers to the comprehensive risk factor discussion in the company's 2018 Annual Report on Form 10-K - Refer to the Annual Report on Form 10-K for December 31, 2018, for a comprehensive discussion of risk factors[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This item is not applicable to the current report - Not applicable[214](index=214&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This item is not applicable to the current report - Not applicable[215](index=215&type=chunk) [Item 4. Mine Safety Disclosures.](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the current report - Not applicable[216](index=216&type=chunk) [Item 5. Other Information.](index=49&type=section&id=Item%205.%20Other%20Information.) There is no other information to report under this item - None[217](index=217&type=chunk) [Item 6. Exhibits.](index=49&type=section&id=Item%206.%20Exhibits.) This section lists key documents filed with the report, including agreements, governance policies, and certifications - Includes Stock Purchase Agreement for Get Real Health, corporate governance documents, incentive plans, and CEO/CFO certifications[220](index=220&type=chunk) [SIGNATURES](index=51&type=section&id=SIGNATURES) The report is duly signed and certified by the President & CEO and the Chief Financial Officer - Signed by J. Boyd Douglas (President and CEO) and Matt J. Chambless (CFO) on **August 9, 2019**[225](index=225&type=chunk)[226](index=226&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019. ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 000-49796 COMPUTER PROGRAMS AND SYSTEMS, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 74-3032373 (State or Other Juris ...