TruBridge(TBRG) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The third quarter saw total bookings of $29.3 million, the highest since 2017, representing a 77% increase from Q2 2021 and a 37% improvement over Q3 2020 [25] - Total revenue showed a 2% sequential increase and a 3% increase compared to Q3 2020, with recurring revenues reaching an all-time high of 91.3% of total revenues [28] - Adjusted EBITDA decreased by 14% sequentially but grew by 6% compared to Q3 2020, while non-GAAP net income decreased by 21% sequentially and 9% year-over-year [30] Business Line Data and Key Metrics Changes - TruBridge revenues increased by 24% year-over-year, with organic growth driven by improved patient volumes and new business wins [21] - System sales and support revenue saw a slight sequential decrease, with overall revenues down 12% compared to Q3 2020 due to a shift towards a greater SaaS mix [33] - TruBridge bookings for the quarter reached $13.1 million, more than doubling bookings from Q2 2021 and 68% higher than Q3 2020 [27] Market Data and Key Metrics Changes - The sales environment improved significantly, leading to explosive bookings growth, particularly for Get Real Health's patient engagement solutions [20] - The company reported that 100% of net new hospital EHR contract signings in 2021 have been SaaS, compared to an average of around 50% in 2019 and 2020 [26] - The retention rate for EHR clients remained above 95% year-to-date, indicating strong client loyalty [13][52] Company Strategy and Development Direction - The company is focused on a three-year growth strategy that emphasizes a shift towards a more SaaS-oriented business model, aiming for long-term shareholder value through recurring revenues [12][23] - The acquisition of TruCode is expected to deliver value as planned, contributing to both top and bottom lines [17] - The company is investing heavily in talent and technology to expand offerings and enhance client insights [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges posed by the pandemic, particularly regarding labor pressures in rural hospitals [60] - The company expressed optimism about future growth driven by digital innovation and the evolving market around patient engagement [17] - Management expects the trend of SaaS deals to continue, with all new hospital EHR implementations in Q4 2021 expected to be in a cloud or SaaS environment [34][46] Other Important Information - The company experienced a significant increase in operating cash flows, although Q3 marked the lowest point since Q2 2016 due to working capital consumption [39] - The effective tax rate for the quarter increased to 28%, driven by provision to return adjustments [38] - The company did not repurchase any shares during the quarter, indicating a focus on capital flexibility for future opportunities [45] Q&A Session Summary Question: Get Real Health bookings and expansion in Europe - Management clarified that the Netherlands deal was an expansion of an existing relationship, with significant future booking opportunities anticipated [49][50] Question: Competitive environment and pricing power - Management noted improved pricing power and a favorable competitive environment, particularly with the absence of certain competitors [55] Question: Labor pressures in rural hospitals - Management indicated that rural hospitals face greater labor challenges due to their smaller workforce, impacting operational capabilities [61] Question: Impact of COVID on demand normalization - Management acknowledged that part of the third quarter's success was due to pent-up demand from earlier in the year, with a positive outlook for the pipeline [65] Question: Subscription revenue expectations - Management reported a nearly 50% increase in SaaS EHR subscription revenues compared to Q3 last year, with a 100% SaaS mix for new hospital EHR deals in 2021 [74] Question: Margin expansion expectations - Management indicated that margin expansion may not be linear due to the ongoing transition to SaaS, with potential headwinds expected in the near term [78]