CPSI(US:CPSI)2023-11-09 02:13Financial Data and Key Metrics Changes - Revenue for the third quarter was $84.7 million, approximately $2 million short of expectations, with adjusted EBITDA of $9.7 million, which was below the target due to revenue mix and unexpected vendor expenses [79][88] - Net patient revenue was just shy of $3.5 billion, representing a 17% year-over-year increase [23] - Adjusted EBITDA margin decreased by 440 basis points to 11.8% due to increased operating costs [41] Business Line Data and Key Metrics Changes - RCM (Revenue Cycle Management) represented 56% of total revenue, while EHR (Electronic Health Records) accounted for 42%, and patient engagement made up the remaining 2% [45] - RCM bookings totaled $9.1 million, underperforming compared to internal expectations and year-over-year results [40] - The growth of the RCM business continues to be sluggish, while the EHR business performed slightly better than expected [96] Market Data and Key Metrics Changes - The company is experiencing pressure from hospitals, especially smaller ones, which are under cost pressure related to labor, leading to delays in decision-making for non-clinical spending [83] - The total three-month weighted pipeline increased by 20% from the third quarter of 2022, indicating potential future growth [17] Company Strategy and Development Direction - The acquisition of Viewgol is expected to enhance the company's global workforce strategy and open new markets in ambulatory RCM services [15][16] - The company is focusing on improving operational efficiency and profitability in anticipation of future revenue gains [20][80] - A shift towards a global and outsourced workforce is being implemented to streamline operations and reduce costs [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that revenue has come in slower than anticipated and emphasized the need for operational adjustments to increase profitability [14] - There is confidence in the eventual shift of all providers to an outsourced model, despite current challenges in the sales cycle [30] - The company is lowering its 2023 guidance due to top-line challenges, now expecting revenue between $337 million and $342 million [85][88] Other Important Information - The company is transitioning to Microsoft Dynamics for financial operations, with a planned go-live in September 2024 [36] - The acquisition of Viewgol included upfront cash consideration of $36 million, with additional earn-out incentives based on performance [22] Q&A Session Summary Question: What might catalyze customer prospect decisions from here? - Management discussed the integration plan with Viewgol and the expansion of the partner set to create urgency among prospects [73][75] Question: Can you provide insights on the competitive environment in RCM? - Management noted that competition primarily comes from hospitals themselves, and the focus is on educating them about the benefits of outsourcing [7][8] Question: What are the expectations for 2024? - Management indicated that while they cannot provide specific guidance yet, they are preparing the business to be ready for future opportunities and addressing margin compression [56][52]