TruBridge(US:TBRG)2022-05-10 20:05PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of stockholders' equity, and cash flow statements, along with detailed notes explaining the basis of presentation, accounting policies, business combinations, and other financial details for the three months ended March 31, 2022 and 2021 Condensed Consolidated Balance Sheets This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity as of March 31, 2022, and December 31, 2021 | Metric (In thousands) | March 31, 2022 | December 31, 2021 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Cash and cash equivalents | $15,981 | $11,431 | $4,550 | 39.8% | | Total current assets | $80,797 | $68,998 | $11,799| 17.1% | | Total assets | $440,330 | $383,350 | $56,980| 14.9% | | Total current liabilities | $46,735 | $46,427 | $308 | 0.7% | | Total liabilities | $209,578 | $160,778 | $48,800| 30.3% | | Total stockholders' equity | $230,752 | $222,572 | $8,180 | 3.7% | Condensed Consolidated Statements of Income This section outlines the Company's financial performance, presenting revenues, expenses, and net income for the three months ended March 31, 2022, and 2021 | Metric (In thousands, except per share data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total sales revenues | $77,871 | $68,005 | $9,866 | 14.5% | | Gross profit | $39,815 | $34,850 | $4,965 | 14.2% | | Operating income | $8,986 | $4,914 | $4,072 | 82.9% | | Income before taxes | $9,476 | $5,101 | $4,375 | 85.8% | | Net income | $8,113 | $4,144 | $3,969 | 95.8% | | Net income per common share—basic | $0.55 | $0.29 | $0.26 | 89.7% | | Net income per common share—diluted | $0.55 | $0.28 | $0.27 | 96.4% | Condensed Consolidated Statement of Stockholders' Equity This section details changes in the Company's equity, including net income, stock-based compensation, and treasury stock transactions, for the period from December 31, 2021, to March 31, 2022 | Metric (In thousands) | Balance at Dec 31, 2021 | Net Income | Stock-based Compensation | Treasury Stock Acquired | Balance at Mar 31, 2022 | | :-------------------- | :---------------------- | :--------- | :----------------------- | :---------------------- | :---------------------- | | Total Stockholders' Equity | $222,572 | $8,113 | $1,717 | $(1,650) | $230,752 | Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2022, and 2021 | Metric (In thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $11,817 | $13,710 | $(1,893) | | Net cash used in investing activities | $(47,680) | $(1,365) | $(46,315) | | Net cash provided by (used in) financing activities | $40,413 | $(7,000) | $47,413 | | Increase in cash and cash equivalents | $4,550 | $5,345 | $(795) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP, including all necessary recurring adjustments, and consolidate CPSI and its wholly-owned subsidiaries - The Company changed its method of estimating capitalizable labor costs for software development in Q2 2021, moving from an estimated time-equivalent for workload metrics to a distribution of agile workload metrics between capitalizable and non-capitalizable units of work, with this change accounted for prospectively22 - The condensed consolidated financial statements include the accounts of CPSI and its wholly-owned subsidiaries: TruBridge, Evident, Healthland Holding Inc. (including Healthland, Rycan, and American HealthTech), iNetXperts d/b/a Get Real Health, TruCode, and Healthcare Resource Group, Inc.23 2. Recent Accounting Pronouncements No new accounting standards adopted in 2022 or yet to be adopted are expected to have a material impact on the Company's consolidated financial statements - No new accounting standards adopted in 2022 or yet to be adopted are expected to have a material impact on the consolidated financial statements2425 3. Revenue Recognition Revenue is recognized using a 5-step model upon transfer of control, with specific recognition patterns for TruBridge services, system sales, support, and SaaS arrangements - TruBridge provides business processing services (BPS) and professional IT services, with fees recognized over the contractual relationship period based on transaction volume or percentage of client accounts receivable collections2930 - For System Sales and Support, perpetual software licenses, installation, conversion, and training are accounted for as a single performance obligation, with revenue recognized upon module implementation completion, while SaaS arrangements for EHR software and related services are a single performance obligation, with revenue recognized monthly over the contract term35 Deferred Revenue (In thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Beginning balance | $11,529 | $8,130 | | Deferred revenue recorded | $9,263 | $5,847 | | Less deferred revenue recognized as revenue | $(6,661) | $(5,144) | | Ending balance | $14,131 | $8,833 | Costs to Obtain and Fulfill Contracts (In thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Beginning balance | $7,312 | $5,992 | | Costs to obtain and fulfill contracts capitalized | $3,047 | $1,836 | | Less costs to obtain and fulfill contracts recognized as expense | $(1,799) | $(1,475) | | Ending balance | $8,560 | $6,353 | 4. Business Combination The Company acquired Healthcare Resource Group, Inc. (HRG) on March 1, 2022, for $43.4 million cash, adding RCM solutions, and reversed $1.25 million of contingent consideration for the TruCode acquisition due to revised earnings estimates - On March 1, 2022, CPSI acquired Healthcare Resource Group, Inc. (HRG) for $43.4 million cash, enhancing its revenue cycle management (RCM) solutions and consulting services4445 HRG Acquisition Preliminary Purchase Price Allocation (In thousands) | Asset/Liability | Purchase Price Allocation | | :---------------- | :------------------------ | | Intangible assets | $24,200 | | Goodwill | $20,380 | | Net assets acquired | $47,349 | - The HRG acquisition contributed approximately $3.8 million in revenues and $0.5 million in pre-tax net income to CPSI's consolidated statement of operations for the three months ended March 31, 20