CPSI(CPSI) - 2023 Q4 - Annual Report

Financial Performance - Net income for 2022 decreased by $2.6 million to $15.9 million, or $1.08 per share, compared to $18.4 million, or $1.26 per share, for 2021 [294]. - Income before taxes decreased to $18.1 million in 2022, compared to $23.1 million in 2021 [291]. - The effective income tax rate for 2022 was 12%, down from 20% in 2021, due to lowered provision-to-return adjustments and tax-free gains [292]. - Net cash provided by operating activities decreased by $31.3 million from $32.4 million for 2022 to $1.1 million for 2023, largely due to a decrease in net income [311]. Goodwill and Impairment - The company recorded a goodwill impairment charge of $35.9 million in the fourth quarter of 2023, with $21.9 million associated with the Post-acute care EHR reporting unit [287]. - Goodwill impairment charges totaled $2.2 million for the Post-acute care EHR, $6.4 million for the Acute care EHR, and $7.6 million for the Patient Engagement reporting unit, significantly impacting consolidated net income for the year [348]. - As of December 31, 2023, remaining goodwill was $171.9 million, with potential future impairment charges posing a risk to operational results [349]. Revenue and Bookings - Adjusted EBITDA for the RCM segment increased by $7.0 million, or 25%, compared to 2021, driven by a revenue growth of 37% [296]. - EHR bookings during 2023 decreased by $5.0 million, or 13%, primarily due to a challenging decision environment for new Acute Care EHR system arrangements [307]. - Bookings for the Patient Engagement business unit decreased by $0.2 million in 2023 compared to 2022, remaining effectively flat [318]. - RCM bookings increased by $0.9 million, or 2%, in 2023 compared to 2022, with net-new bookings rising by $3.4 million, or 23% [329]. Cash and Borrowing - As of December 31, 2023, the company had cash and cash equivalents of $3.8 million and remaining borrowing capacity of $24.3 million under its revolving credit facility, a decrease from $7.0 million and $86.3 million respectively as of December 31, 2022 [285]. - The company had $199.6 million in outstanding borrowings under credit facilities with Regions Bank as of December 31, 2023 [365]. - A 100 basis point change in interest rates on borrowings would result in an annual change in interest expense of approximately $2.0 million [365]. Credit Agreement and Compliance - As of December 31, 2023, the company was not in compliance with the fixed charge coverage ratio required by the Amended and Restated Credit Agreement, leading to a one-time waiver being provided [314]. - The Fourth Amendment to the Amended and Restated Credit Agreement decreased the required consolidated fixed charge coverage ratio from 1.25:1.00 to 1.15:1.00 for each fiscal quarter ending March 31, 2024, through December 31, 2024 [314]. - The company is permitted to voluntarily prepay credit facilities at any time without penalty, following the removal of mandatory prepayment requirements [316]. Acquisitions - The company completed a $36.7 million acquisition of Viewgol in the fourth quarter of 2023, following a $43.4 million acquisition of HRG in the first quarter of 2022 [312]. - Viewgol, LLC, a wholly-owned subsidiary acquired in 2023, represents 9% of total assets and 1% of revenues in the consolidated financial statements as of December 31, 2023 [361]. Internal Controls - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2023, and believes it maintained effective control [360]. - The company’s internal control over financial reporting received an unqualified opinion based on PCAOB standards as of December 31, 2023 [364]. - The estimated fair value for the RCM reporting unit exceeded its carrying value by 48% as of October 1, 2023 [352]. Financial Instruments - The company has not utilized derivative financial instruments to manage interest rate risks as of December 31, 2023 [341]. Product Development - Product development expenses decreased by $0.9 million, or 3%, as increased costs related to migrating to a public cloud environment were offset by a $5.6 million increase in product development labor capitalization costs [288].