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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 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) Delaware 74-3032373 (State or Other Jurisdic ...