CPSI(US:CPSI)2024-08-14 20:13Revenue Performance - Revenue cycle management (RCM) revenues comprised 57% of the company's consolidated revenue for 2023[130]. - Total revenues for the first six months of 2024 were $168.0 million, a decrease of 2% from $170.9 million in the same period of 2023[147]. - RCM revenues increased by $10.8 million, or 11%, in the first six months of 2024, primarily due to the acquisition of Viewgol, which contributed $9.9 million[166]. - Total EHR revenue for the first six months of 2024 was $60.831 million, down from $74.464 million in the same period of 2023, representing a decrease of $13.633 million, or 18%[183]. - RCM segment revenues increased by $10.755 million, or 11%, to $107.146 million for the first six months of 2024 compared to $96.391 million in the same period of 2023[183]. Customer Retention and Growth - The company achieved a retention rate of 92.1% for its Acute Care EHR customers in 2023, with rates consistently in the mid-to-high 90th percentile since 2019[136]. - The annualized retention rate for the first half of 2024 was reported at 95.0%[136]. - The company aims to enhance its recurring revenue base to stabilize revenues and cash flows, focusing on customer retention and demand for subscriptions[137]. - The transition to a subscription-based recurring revenue model is a key component of the company's long-term growth strategy[127]. Financial Performance and Costs - Net loss for the first six months of 2024 was $7.6 million, a decrease of $7.8 million compared to the prior-year period[147]. - Net loss for the second quarter of 2024 was $5.0 million, compared to a net loss of $2.8 million in the second quarter of 2023[165]. - General and administrative expenses decreased by $0.2 million, or 1%, compared to the second quarter of 2023, driven by reductions in non-recurring severance costs[160]. - General and administrative expenses increased by $4.8 million, or 14%, compared to the first six months of 2023, driven by stock compensation and the acquisition of Viewgol[175]. - Total costs of revenue (exclusive of amortization and depreciation) decreased to 51% of revenues during the second quarter of 2024, down from 52% in the second quarter of 2023[155]. Tax and Cash Flow - The effective tax rate for the three months ended June 30, 2024, decreased to 29.6% from 36.8% in the same period of 2023[164]. - Effective tax rate for the first six months of 2024 improved to 32.9% from 141.2% in the same period of 2023, largely due to the R&D tax credit[179]. - Net cash provided by operating activities increased by $1.5 million, from $10.2 million for the six months ended June 30, 2023, to $11.7 million for the six months ended June 30, 2024, primarily due to improved working capital management[190]. - Net cash provided by investing activities increased by $23.3 million, with $11.1 million provided during the six months ended June 30, 2024, compared to $12.2 million used during the same period in 2023, mainly due to the sale of AHT which resulted in a net cash inflow of $21.4 million[191]. Debt and Financing - As of June 30, 2024, the company had $181.5 million in principal amount of indebtedness outstanding under credit facilities, with cash and cash equivalents of $7.7 million[188]. - The company made a draw of $41.0 million on the revolving credit facility for the Viewgol acquisition, leaving a remaining borrowing capacity of $40.6 million[189]. - As of June 30, 2024, the company had $58.1 million in principal amount outstanding under the term loan facility and $123.4 million under the revolving credit facility, with an average interest rate of 8.42%[195]. - The company had $181.5 million of outstanding borrowings under credit facilities as of June 30, 2024, with a potential annual interest expense change of approximately $1.9 million for a 100 basis point change in interest rates[207]. Market and Strategic Initiatives - The healthcare IT sector is anticipated to continue attracting investment due to its potential to improve safety, efficiency, and compliance with regulatory requirements[139]. - The company is implementing margin optimization initiatives, including organizational realignment and expanded use of offshore resources[144]. - The company expects additional pressure on margins due to the integration and ramp-up of Viewgol, acquired in October 2023[145]. - RCM bookings increased by $2.1 million, or 8%, in the first six months of 2024 compared to the same period in 2023, while cross-sell bookings decreased by $3.9 million, or 24%[203]. - EHR bookings increased by $2.5 million, or 34%, during the second quarter of 2024 compared to the second quarter of 2023, with Acute Care EHR bookings increasing by $3.1 million[204]. Regulatory and Legislative Risks - The company faces risks related to significant legislative and regulatory uncertainty in the healthcare industry[126]. - The company is required to maintain a minimum fixed charge coverage ratio of 1.25:1.00, which was amended to 1.15:1.00 for fiscal quarters ending March 31, 2024, through December 31, 2024[199].