ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended September 30, 2018. | |||||
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 74-3032373 | |||||||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
6600 Wall Street, Mobile, Alabama | 36695 | |||||||
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | ý | |||||||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||||||||||||||||
Emerging growth company | ¨ | |||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. |
Item 1. | Financial Statements. |
September 30, 2018 | December 31, 2017 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $2,203 and $2,654, respectively | |||||||||||
Financing receivables, current portion, net | |||||||||||
Inventories | |||||||||||
Prepaid income taxes | |||||||||||
Prepaid expenses and other | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Financing receivables, net of current portion | |||||||||||
Other assets, net of current portion | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Current portion of long-term debt | |||||||||||
Deferred revenue | |||||||||||
Accrued vacation | |||||||||||
Income taxes payable | |||||||||||
Other accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net of current portion | |||||||||||
Deferred tax liabilities | |||||||||||
Total liabilities | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, $0.001 par value; 30,000 shares authorized; 14,086 and 13,760 shares issued and outstanding, respectively | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Sales revenues: | |||||||||||||||||||||||
System sales and support | $ | $ | $ | $ | |||||||||||||||||||
TruBridge | |||||||||||||||||||||||
Total sales revenues | |||||||||||||||||||||||
Costs of sales: | |||||||||||||||||||||||
System sales and support | |||||||||||||||||||||||
TruBridge | |||||||||||||||||||||||
Total costs of sales | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Product development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Amortization of acquisition-related intangibles | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Other income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Total other income (expense) | ( | ( | ( | ( | |||||||||||||||||||
Income before taxes | |||||||||||||||||||||||
(Benefit) provision for income taxes | ( | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Net income per common share—basic | $ | $ | $ | $ | |||||||||||||||||||
Net income per common share—diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares outstanding used in per common share computations: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Dividends declared per common share | $ | $ | $ | $ |
Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Adoption of accounting standards (Note 2) | — | — | — | ||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
Dividends | — | — | — | ( | ( | ||||||||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | ( | $ |
Nine Months Ended September 30, | |||||||||||
2018 | 2017 | ||||||||||
Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to net income: | |||||||||||
Provision for bad debt | |||||||||||
Deferred taxes | ( | ||||||||||
Stock-based compensation | |||||||||||
Depreciation | |||||||||||
Amortization of acquisition-related intangibles | |||||||||||
Amortization of deferred finance costs | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Financing receivables | ( | ( | |||||||||
Inventories | |||||||||||
Prepaid expenses and other | ( | ( | |||||||||
Accounts payable | ( | ||||||||||
Deferred revenue | |||||||||||
Other liabilities | ( | ||||||||||
Prepaid income taxes/income taxes payable | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Investing Activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Financing Activities: | |||||||||||
Dividends paid | ( | ( | |||||||||
Payments of long-term debt principal | ( | ( | |||||||||
Proceeds from revolving line of credit | |||||||||||
Payments of revolving line of credit | ( | ( | |||||||||
Proceeds from exercise of stock options | |||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid for income taxes, net of refund | $ | $ | |||||||||
(In thousands) | As previously reported | Reclassification | As reclassified | ||||||||||||||
Costs of sales: | |||||||||||||||||
System sales and support | $ | $ | $ | ||||||||||||||
Operating expenses: | |||||||||||||||||
Product development | $ | $ | ( | $ |
(In thousands) | As previously reported | Reclassification | As reclassified | ||||||||||||||
Costs of sales: | |||||||||||||||||
System sales and support | $ | $ | $ | ||||||||||||||
Operating expenses: | |||||||||||||||||
Product development | $ | $ | ( | $ |
Three Months Ended September 30, 2018 | |||||||||||||||||
(In thousands) | As reported | Balances without adoption of ASC 606 | Effect of adoption increase/(decrease) | ||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||||
Revenue: TruBridge | $ | $ | $ | ( | |||||||||||||
Cost of sales: System sales and support | |||||||||||||||||
Gross profit | ( | ||||||||||||||||
Sales and marketing | |||||||||||||||||
Operating income | ( | ||||||||||||||||
Provision for income taxes | ( | ( | ( | ||||||||||||||
Net income | $ | $ | $ | ( |
Nine Months Ended September 30, 2018 | |||||||||||||||||
(In thousands) | As reported | Balances without adoption of ASC 606 | Effect of adoption increase/(decrease) | ||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||||
Revenue: TruBridge | $ | $ | $ | ||||||||||||||
Cost of sales: System sales and support | |||||||||||||||||
Gross profit | ( | ||||||||||||||||
Sales and marketing | |||||||||||||||||
Operating income | ( | ||||||||||||||||
Provision for income taxes | ( | ||||||||||||||||
Net income | $ | $ | $ | ( |
September 30, 2018 | |||||||||||||||||
(In thousands) | As reported | Balances without adoption of ASC 606 | Effect of adoption increase/(decrease) | ||||||||||||||
Condensed Consolidated Balance Sheet | |||||||||||||||||
Prepaid assets and other | $ | $ | $ | ||||||||||||||
Other assets, net of current | |||||||||||||||||
Total assets | |||||||||||||||||
Deferred revenue | |||||||||||||||||
Deferred tax liability | |||||||||||||||||
Total liabilities | |||||||||||||||||
Retained earnings | $ | ( | $ | ( | $ |
(In thousands) | Nine Months Ended September 30, 2018 | ||||
Balance as of January 1, 2018 | $ | ||||
Deferred revenue recorded | |||||
Less deferred revenue recognized as revenue | ( | ||||
Balance as of September 30, 2018 | $ |
(In thousands) | Nine Months Ended September 30, 2018 | ||||
Balance as of January 1, 2018 | $ | ||||
Costs to obtain and fulfill contracts capitalized | |||||
Less costs to obtain and fulfill contracts recognized as expense | ( | ||||
Balance as of September 30, 2018 | $ |
(In thousands) | September 30, 2018 | December 31, 2017 | |||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Computer equipment | |||||||||||
Leasehold improvements | |||||||||||
Office furniture and fixtures | |||||||||||
Automobiles | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ |
(In thousands) | September 30, 2018 | December 31, 2017 | |||||||||
Salaries and benefits | $ | $ | |||||||||
Severance | |||||||||||
Commissions | |||||||||||
Self-insurance reserves | |||||||||||
Contingent consideration | |||||||||||
Other | |||||||||||
Other accrued liabilities | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(In thousands, except per share data) | September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Less: Net income attributable to participating securities | ( | ( | ( | ( | |||||||||||||||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares outstanding used in basic per common share computations | |||||||||||||||||||||||
Add: Dilutive potential common shares | |||||||||||||||||||||||
Weighted average shares outstanding used in diluted per common share computations | |||||||||||||||||||||||
Basic EPS | $ | $ | $ | $ | |||||||||||||||||||
Diluted EPS | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Costs of sales | $ | $ | $ | $ | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Pre-tax stock-based compensation expense | |||||||||||||||||||||||
Less: income tax effect | ( | ( | ( | ( | |||||||||||||||||||
Net stock-based compensation expense | $ | $ | $ | $ |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | ||||||||||||||||||||||
Shares | Weighted-Average Grant Date Fair Value Per Share | Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||||||||||||
Unvested restricted stock outstanding at beginning of period | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Performance share awards settled through the issuance of restricted stock | |||||||||||||||||||||||
Vested | ( | ( | |||||||||||||||||||||
Unvested restricted stock outstanding at end of period | $ | $ |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | ||||||||||||||||||||||
Shares | Weighted-Average Grant Date Fair Value Per Share | Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||||||||||||
Performance share awards outstanding at beginning of period | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Forfeited or unearned | ( | ( | |||||||||||||||||||||
Performance share awards settled through the issuance of restricted stock | ( | ||||||||||||||||||||||
Performance share awards outstanding at end of period | $ | $ |
(In thousands) | September 30, 2018 | December 31, 2017 | |||||||||
Short-term payment plans, gross | $ | $ | |||||||||
Less: allowance for losses | ( | ( | |||||||||
Short-term payment plans, net | $ | $ |
(In thousands) | September 30, 2018 | December 31, 2017 | |||||||||
Long-term financing arrangements, gross | $ | $ | |||||||||
Less: allowance for losses | ( | ( | |||||||||
Less: unearned income | ( | ( | |||||||||
Long-term financing arrangements, net | $ | $ |
(In thousands) | |||||
Years Ended December 31, | |||||
2018 | $ | ||||
2019 | |||||
2020 | |||||
2021 | |||||
2022 | |||||
Thereafter | |||||
Total minimum payments to be received | |||||
Less: allowance for losses | ( | ||||
Less: unearned income | ( | ||||
Receivables, net | $ | ||||
(In thousands) | Balance at Beginning of Period | Provision | Charge-offs | Recoveries | Balance at End of Period | ||||||||||||||||||||||||
September 30, 2018 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
December 31, 2017 | $ | $ | $ | ( | $ | $ |
(In thousands) | 1 to 90 Days Past Due | 91 to 180 Days Past Due | 181 + Days Past Due | Total Past Due | |||||||||||||||||||
September 30, 2018 | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2017 | $ | $ | $ | $ |
(In thousands) | September 30, 2018 | December 31, 2017 | |||||||||
Stratification of uninvoiced client financing receivables based on aging of related trade accounts receivable: | |||||||||||
1 to 90 Days Past Due | $ | $ | |||||||||
91 to 180 Days Past Due | |||||||||||
181 + Days Past Due | |||||||||||
Total uninvoiced client financing receivables balances of clients with a trade accounts receivable | $ | $ | |||||||||
Total uninvoiced client financing receivables of clients with no related trade accounts receivable | |||||||||||
Total financing receivables with contractual maturities of one year or less | |||||||||||
Less: allowance for losses | ( | ( | |||||||||
Total financing receivables | $ | $ |
(In thousands) | Customer Relationships | Trademark | Developed Technology | Total | |||||||||||||||||||
Gross carrying amount as of December 31, 2017 and September 30, 2018 | $ | $ | $ | $ | |||||||||||||||||||
Accumulated amortization as of December 31, 2017 | ( | ( | ( | ( | |||||||||||||||||||
Net intangible assets as of December 31, 2017 | |||||||||||||||||||||||
Accumulated amortization for the nine months ended September 30, 2018 | ( | ( | ( | ( | |||||||||||||||||||
Net intangible assets as of September 30, 2018 | $ | $ | $ | $ | |||||||||||||||||||
Weighted average remaining years of useful life |
(In thousands) | |||||
For the year ended December 31, | |||||
2018 | $ | ||||
2019 | |||||
2020 | |||||
2021 | |||||
2022 | |||||
Thereafter | |||||
Total | $ |
(In thousands) | Acute Care EHR | Post-acute Care EHR | TruBridge | Total | ||||||||||
Balance as of December 31, 2017 | $ | $ | ||||||||||||
Goodwill impairment | $ | |||||||||||||
Balance as of September 30, 2018 | $ | $ | $ | $ |
(In thousands) | September 30, 2018 | December 31, 2017 | |||||||||
Term loan facility | $ | $ | |||||||||
Revolving credit facility | |||||||||||
Capital lease obligation | |||||||||||
Debt obligations | |||||||||||
Less: unamortized debt issuance costs | ( | ( | |||||||||
Debt obligation, net | |||||||||||
Less: current portion | ( | ( | |||||||||
Long-term debt | $ | $ |
(In thousands) | |||||
2018 | $ | ||||
2019 | |||||
2020 | |||||
2021 | |||||
2022 | |||||
Thereafter | |||||
$ |
Fair Value at September 30, 2018 Using | |||||||||||||||||||||||
Carrying Amount at | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||
(In thousands) | 9/30/18 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||
Description | |||||||||||||||||||||||
Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ |
Fair Value at December 31, 2017 Using | |||||||||||||||||||||||
Carrying Amount at | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||
(In thousands) | 12/31/2017 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||
Description | |||||||||||||||||||||||
Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Acute Care EHR | |||||||||||||||||||||||
Recurring revenue | $ | $ | $ | $ | |||||||||||||||||||
Non-recurring revenue | |||||||||||||||||||||||
Total Acute Care EHR revenue | |||||||||||||||||||||||
Post-acute Care EHR | |||||||||||||||||||||||
Recurring revenue | |||||||||||||||||||||||
Non-recurring revenue | |||||||||||||||||||||||
Total Post-acute Care EHR revenue | |||||||||||||||||||||||
TruBridge | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales: | |||||||||||||||||||||||
Acute Care EHR | $ | $ | $ | $ | |||||||||||||||||||
Post-acute Care EHR | |||||||||||||||||||||||
TruBridge | |||||||||||||||||||||||
Total cost of sales | $ | $ | $ | $ | |||||||||||||||||||
Gross profit: | |||||||||||||||||||||||
Acute Care EHR | $ | $ | $ | $ | |||||||||||||||||||
Post-acute Care EHR | |||||||||||||||||||||||
TruBridge | |||||||||||||||||||||||
Total gross profit | $ | $ | $ | $ | |||||||||||||||||||
Corporate operating expenses | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Income before taxes | $ | $ | $ | $ |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Amount | % Sales | Amount | % Sales | Amount | % Sales | Amount | % Sales | |||||||||||||||||||||||||||||||||||||||
INCOME DATA: | |||||||||||||||||||||||||||||||||||||||||||||||
Sales revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
System sales and support: | |||||||||||||||||||||||||||||||||||||||||||||||
Acute Care EHR | $ | 38,907 | 56.1 | $ | 38,761 | 57.8 | $ | 116,297 | 55.9 | $ | 115,285 | 58.0 | |||||||||||||||||||||||||||||||||||
Post-acute Care EHR | 5,518 | 8.0 | 5,605 | 8.4 | 16,626 | 8.0 | 17,978 | 9.0 | |||||||||||||||||||||||||||||||||||||||
Total System sales and support | 44,425 | 64.1 | 44,366 | 66.1 | 132,923 | 63.9 | 133,263 | 67.0 | |||||||||||||||||||||||||||||||||||||||
TruBridge | 24,872 | 35.9 | 22,747 | 33.9 | 75,162 | 36.1 | 65,601 | 33.0 | |||||||||||||||||||||||||||||||||||||||
Total sales revenues | 69,297 | 100.0 | 67,113 | 100.0 | 208,085 | 100.0 | 198,864 | 100.0 | |||||||||||||||||||||||||||||||||||||||
Costs of sales: | |||||||||||||||||||||||||||||||||||||||||||||||
System sales and support: | |||||||||||||||||||||||||||||||||||||||||||||||
Acute Care EHR | 18,086 | 26.1 | 18,163 | 27.1 | 52,812 | 25.4 | 53,667 | 27.0 | |||||||||||||||||||||||||||||||||||||||
Post-acute Care EHR | 1,497 | 2.2 | 1,764 | 2.6 | 4,716 | 2.3 | 5,800 | 2.9 | |||||||||||||||||||||||||||||||||||||||
Total System sales and support | 19,583 | 28.3 | 19,927 | 29.7 | 57,528 | 27.6 | 59,467 | 29.9 | |||||||||||||||||||||||||||||||||||||||
TruBridge | 13,590 | 19.6 | 12,806 | 19.1 | 40,501 | 19.5 | 36,326 | 18.3 | |||||||||||||||||||||||||||||||||||||||
Total costs of sales | 33,173 | 47.9 | 32,733 | 48.8 | 98,029 | 47.1 | 95,793 | 48.2 | |||||||||||||||||||||||||||||||||||||||
Gross profit | 36,124 | 52.1 | 34,380 | 51.2 | 110,056 | 52.9 | 103,071 | 51.8 | |||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Product development | 9,305 | 13.4 | 8,250 | 12.3 | 27,375 | 13.2 | 24,742 | 12.4 | |||||||||||||||||||||||||||||||||||||||
Sales and marketing | 7,546 | 10.9 | 8,528 | 12.7 | 22,778 | 10.9 | 23,262 | 11.7 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 11,220 | 16.2 | 9,379 | 14.0 | 36,772 | 17.7 | 33,960 | 17.1 | |||||||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 2,692 | 3.9 | 2,601 | 3.9 | 7,895 | 3.8 | 7,804 | 3.9 | |||||||||||||||||||||||||||||||||||||||
Total operating expenses | 30,763 | 44.4 | 28,758 | 42.9 | 94,820 | 45.6 | 89,768 | 45.1 | |||||||||||||||||||||||||||||||||||||||
Operating income | 5,361 | 7.7 | 5,622 | 8.4 | 15,236 | 7.3 | 13,303 | 6.7 | |||||||||||||||||||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||
Other income | 201 | 0.3 | 102 | 0.2 | 593 | 0.3 | 242 | 0.1 | |||||||||||||||||||||||||||||||||||||||
Interest expense | (1,829) | (2.6) | (2,062) | (3.1) | (5,615) | (2.7) | (5,807) | (2.9) | |||||||||||||||||||||||||||||||||||||||
Total other income (expense) | (1,628) | (2.3) | (1,960) | (2.9) | (5,022) | (2.4) | (5,565) | (2.8) | |||||||||||||||||||||||||||||||||||||||
Income before taxes | 3,733 | 5.4 | 3,662 | 5.5 | 10,214 | 4.9 | 7,738 | 3.9 | |||||||||||||||||||||||||||||||||||||||
(Benefit) provision for income taxes | (2,016) | (2.9) | 1,374 | 2.0 | 170 | 0.1 | 3,617 | 1.8 | |||||||||||||||||||||||||||||||||||||||
Net income | $ | 5,749 | 8.3 | $ | 2,288 | 3.4 | $ | 10,044 | 4.8 | $ | 4,121 | 2.1 |
Three Months Ended September 30, | |||||||||||
(In thousands) | 2018 | 2017 | |||||||||
Recurring system sales and support revenues (1) | |||||||||||
Acute Care EHR | $ | 27,393 | $ | 27,896 | |||||||
Post-acute Care EHR | 4,515 | 5,059 | |||||||||
Total recurring system sales and support revenues | 31,908 | 32,955 | |||||||||
Non-recurring system sales and support revenues (2) | |||||||||||
Acute Care EHR | 11,514 | 10,865 | |||||||||
Post-acute Care EHR | 1,003 | 546 | |||||||||
Total non-recurring system sales and support revenues | 12,517 | 11,411 | |||||||||
Total system sales and support revenue | $ | 44,425 | $ | 44,366 | |||||||
(1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues. | |||||||||||
(2) Mostly comprised of installation revenues from the sale of our acute care and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model. |
Nine Months Ended September 30, | |||||||||||
(In thousands) | 2018 | 2017 | |||||||||
Recurring system sales and support revenues (1) | |||||||||||
Acute Care EHR | $ | 83,633 | $ | 84,435 | |||||||
Post-acute Care EHR | 14,002 | 15,244 | |||||||||
Total recurring system sales and support revenues | 97,635 | 99,679 | |||||||||
Non-recurring system sales and support revenues (2) | |||||||||||
Acute Care EHR | $ | 32,664 | $ | 30,850 | |||||||
Post-acute Care EHR | 2,624 | 2,734 | |||||||||
Total non-recurring system sales and support revenues | 35,288 | 33,584 | |||||||||
Total system sales and support revenue | $ | 132,923 | $ | 133,263 | |||||||
(1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues. | |||||||||||
(2) Mostly comprised of installation revenues from the sale of our acute care and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
System sales and support (1) | |||||||||||||||||||||||
Acute Care EHR | $ | 10,699 | $ | 20,413 | $ | 44,276 | $ | 59,327 | |||||||||||||||
Post-acute Care EHR | 844 | 833 | 2,625 | 3,871 | |||||||||||||||||||
Total system sales and support | 11,543 | 21,246 | 46,901 | 63,198 | |||||||||||||||||||
TruBridge (2) | 7,302 | 10,632 | 17,492 | 25,925 | |||||||||||||||||||
Total bookings | $ | 18,845 | $ | 31,878 | $ | 64,393 | $ | 89,123 | |||||||||||||||
(1) Generally calculated as the total contract price (for system sales) and annualized contract value (for support). | |||||||||||||||||||||||
(2) Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts). |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Item 3. | Defaults Upon Senior Securities. |
Item 4. | Mine Safety Disclosures. |
Item 5. | Other Information. |
Item 6. | Exhibits. |
3.1 | Certificate of Incorporation (filed as Exhibit 3.4 to CPSI’s Registration Statement on Form S-1 (Registration No. 333-84726) and incorporated herein by reference) | |||||||
3.2 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
101 | Interactive Data Files for CPSI’s Form 10-Q for the period ended September 30, 2018 |
COMPUTER PROGRAMS AND SYSTEMS, INC. | ||||||||||||||
November 6, 2018 | By: | /s/ J. Boyd Douglas | ||||||||||||
J. Boyd Douglas | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||
November 6, 2018 | By: | /s/ Matt J. Chambless | ||||||||||||
Matt J. Chambless | ||||||||||||||
Chief Financial Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Computer Programs and Systems, Inc.; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ J. Boyd Douglas | ||
J. Boyd Douglas | ||
President and Chief Executive Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Computer Programs and Systems, Inc.; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ Matt J. Chambless | ||
Matt J. Chambless | ||
Chief Financial Officer |
/s/ J. Boyd Douglas | ||
J. Boyd Douglas | ||
President and Chief Executive Officer | ||
/s/ Matt J. Chambless | ||
Matt J. Chambless | ||
Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 05, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | COMPUTER PROGRAMS & SYSTEMS INC | |
Entity Central Index Key | 0001169445 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Trading Symbol | CPSI | |
Emerging Growth Company | false | |
Smaller Reporting Company | false | |
Entity Common Stock, Shares Outstanding | 14,085,989 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 2,203 | $ 2,654 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 14,086,000 | 14,086,000 |
Common stock, shares outstanding (in shares) | 13,760,000 | 13,760,000 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Sales revenues: | ||||
Total sales revenues | $ 69,297 | $ 67,113 | $ 208,085 | $ 198,864 |
Costs of sales: | ||||
System sales and support | 19,583 | 19,927 | 57,528 | 59,467 |
TruBridge | 13,590 | 12,806 | 40,501 | 36,326 |
Total costs of sales | 33,173 | 32,733 | 98,029 | 95,793 |
Gross profit | 36,124 | 34,380 | 110,056 | 103,071 |
Operating expenses: | ||||
Product development | 9,305 | 8,250 | 27,375 | 24,742 |
Sales and marketing | 7,546 | 8,528 | 22,778 | 23,262 |
General and administrative | 11,220 | 9,379 | 36,772 | 33,960 |
Amortization of acquisition-related intangibles | 2,692 | 2,601 | 7,895 | 7,804 |
Total operating expenses | 30,763 | 28,758 | 94,820 | 89,768 |
Operating income | 5,361 | 5,622 | 15,236 | 13,303 |
Other income (expense): | ||||
Other income | 201 | 102 | 593 | 242 |
Interest expense | (1,829) | (2,062) | (5,615) | (5,807) |
Total other income (expense) | (1,628) | (1,960) | (5,022) | (5,565) |
Income before taxes | 3,733 | 3,662 | 10,214 | 7,738 |
(Benefit) provision for income taxes | (2,016) | 1,374 | 170 | 3,617 |
Net income | $ 5,749 | $ 2,288 | $ 10,044 | $ 4,121 |
Net income (loss) per common share-basic (in dollars per share) | $ 0.41 | $ 0.17 | $ 0.72 | $ 0.30 |
Net income (loss) per common share-diluted (in dollars per share) | $ 0.41 | $ 0.17 | $ 0.72 | $ 0.30 |
Weighted average shares outstanding used in per common share computations: | ||||
Basic (in shares) | 13,604 | 13,431 | 13,547 | 13,409 |
Diluted (in shares) | 13,604 | 13,431 | 13,547 | 13,409 |
Dividends declared per common share (in dollars per share) | $ 0.10 | $ 0.30 | $ 0.30 | $ 0.75 |
System sales and support | ||||
Sales revenues: | ||||
Total sales revenues | $ 44,425 | $ 44,366 | $ 132,923 | $ 133,263 |
TruBridge | ||||
Sales revenues: | ||||
Total sales revenues | $ 24,872 | $ 22,747 | $ 75,162 | $ 65,601 |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Accumulated Deficit) |
---|---|---|---|---|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Adoption of accounting standards (Note 2) | $ 1,970 | $ 1,970 | ||
Beginning Balance (in shares) at Dec. 31, 2017 | 13,760 | |||
Beginning Balance at Dec. 31, 2017 | 136,086 | $ 14 | $ 155,078 | (19,006) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 10,044 | 10,044 | ||
Issuance of restricted stock (in shares) | 326 | |||
Issuance of restricted stock | 0 | |||
Stock-based compensation | 7,303 | 7,303 | ||
Dividends | (4,211) | (4,211) | ||
Ending Balance (in shares) at Sep. 30, 2018 | 14,086 | |||
Ending Balance at Sep. 30, 2018 | $ 151,192 | $ 14 | $ 162,381 | $ (11,203) |
BASIS OF PRESENTATION |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2017 was derived from the audited consolidated balance sheet at that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of Computer Programs and Systems, Inc. ("CPSI" or the "Company") for the year ended December 31, 2017 and the notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Principles of Consolidation The condensed consolidated financial statements of CPSI include the accounts of TruBridge, LLC ("TruBridge"), Evident, LLC ("Evident"), and Healthland Holding Inc. ("HHI"), all of which are wholly-owned subsidiaries of CPSI. The accounts of HHI include those of its wholly-owned subsidiaries, Healthland Inc. ("Healthland"), Rycan Technologies, Inc. ("Rycan"), and American HealthTech, Inc. ("AHT"). All significant intercompany balances and transactions have been eliminated. Presentation Effective January 1, 2018, our interface services team, which provides the design, development, implementation, and support services for all interfaces for data exchange from the CPSI applications and was previously considered a part of our product development division, has been integrated with our acute care client service team. This transition has worked to create a consistent, personal, and convenient service experience for our clients characterized by transparent communication with prompt resolution. With this change, the payroll and related costs of this group of employees that were formerly included within the caption "Product development" on our condensed consolidated statements of income are now included within the caption "System sales and support - Cost of sales." This reclassification had no effect on previously reported total sales revenues, operating income, income before taxes or net income. Amounts presented for the three and nine months ended September 30, 2017 have been reclassified to conform to the current presentation. The following table provides the amounts reclassified for the three months ended September 30, 2017:
The following table provides the amounts reclassified for the nine months ended September 30, 2017:
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RECENT ACCOUNTING PRONOUNCEMENTS |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS New Accounting Standards Adopted in 2018 In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes prior revenue recognition guidance. This guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2017, which was effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. We adopted this new accounting standard codified as Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, and the related amendments ("new revenue standard") during the first quarter of 2018 and have applied it to all contracts using the modified retrospective method, pursuant to which the cumulative effect of initially applying the new revenue standard is recognized as an adjustment to retained earnings and impacted balance sheet line items as of January 1, 2018, the date of adoption. The comparative previous period information continues to be reported under the accounting standards in effect for that period. We completed an assessment of our systems, data, and processes that are affected by the implementation of this new revenue standard and have concluded that this standard does not significantly alter revenue recognition practices for our system sales and support and TruBridge revenue streams. The impact on our revenue recognition is limited to deferring and amortizing implementation fees over the contract life related to our Rycan revenue cycle management product, in which we previously recognized revenue as implementation was completed. Rycan implementation fees totaled $1.6 million in 2017, less than 1% of our 2017 revenues. The balance sheet impact of the deferred revenue related to these fees was an increase of $1.8 million as of the date of adoption. Also impacting deferred revenue was a decrease of $0.6 million related to previous billings which no longer required deferred recognition as of the date of adoption. In addition to revenue recognition, the new revenue standard impacts our consolidated financial statements with respect to the capitalization of certain commissions and contract fulfillment costs which were previously expensed as incurred. Commissions and contract fulfillment costs related to the implementation of software as a service arrangements are now capitalized and amortized over the expected life of the customer. TruBridge commissions, which are paid up to twelve months in advance, are now capitalized and amortized over the prepayment period. The balance sheet impact of the prepaid assets was an increase of $3.8 million as of the date of adoption. Due to the aforementioned changes in assets and liabilities related to the adoption of the new revenue standard, our deferred tax liability increased $0.6 million as of the date of adoption. In total, the adoption of ASU 2014-09 resulted in a net increase in retained earnings of $2.0 million as of the date of adoption. In accordance with the new revenue standard requirements, the disclosures of the impact of adoption on our condensed consolidated income statements and balance sheet were as follows:
The effects of the changes in balance sheet accounts resulting from the adoption of the new revenue standard are primarily due to the beginning adjustments for adoption mentioned above, accompanied by incremental changes resulting from activity during the period ended September 30, 2018. Refer to Note 3 - Revenue Recognition for more information on period activity. The new revenue standard requirements did not impact our net cash provided by or used in operating, investing, or financing cash flows on our condensed consolidated statements of cash flows, although components within changes in operating assets and liabilities were immaterially impacted by adoption. In August 2016, the FASB issued ASU 2016-15, Classifications of Certain Cash Receipts and Cash Payments, which clarifies cash flow classification for eight specific issues, including debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies. This guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2017, which was effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. The adoption of ASU 2016-15 did not have a material effect on our financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, to assist an entity in evaluating when a set of transferred assets and activities is a business. The guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2017, and will be applied prospectively to any transactions occurring following adoption. The adoption of ASU 2017-01 did not have a material effect on our financial statements. New Accounting Standards Yet to be Adopted In February 2016, the FASB issued ASU 2016-02, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new guidance will require the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2018, which will be effective for the Company as of the first quarter of our fiscal year ending December 31, 2019. The Company is currently evaluating the method of adoption and potential utilization of practical expedients. The estimated impact on the financial statements of implementation of this standard is increased lease assets and lease liabilities in the range of $4 million to $6 million as of the anticipated adoption date, January 1, 2019. We do not believe that any other recently issued but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.
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REVENUE RECOGNITION |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION | REVENUE RECOGNITION Revenue is recognized upon transfer of control of promised products or services to clients in an amount that reflects the consideration we expect to receive in exchange for those products and services. We enter into contracts that can include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. The Company employs the 5-step revenue recognition model under ASC 606 to: (1) identify the contract with the client, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue is recognized net of shipping charges and any taxes collected from clients, which are subsequently remitted to governmental authorities. System Sales and Support The Company enters into contractual obligations to sell perpetual software licenses, installation, conversion, training, hardware and software application support and hardware maintenance services to acute care and post-acute care community hospitals. Non-recurring Revenues • Perpetual software licenses, installation, conversion, and related training are not considered separate and distinct performance obligations due to the proprietary nature of our software and are, therefore, accounted for as a single performance obligation on a module-by-module basis. Revenue is recognized as each module's implementation is completed based on the module's stand-alone selling price ("SSP"), net of discounts. Fees for licenses, installation, conversion, and related training are typically due in three installments: (1) at placement of order, (2) upon installation of software and commencement of training, and (3) upon satisfactory completion of monthly accounting cycle or end-of-month operation by application and as applicable for each application. Often, short-term and/or long-term financing arrangements are provided for software implementations; refer to Note 9 - Financing Receivables for further information. Electronic health records ("EHR") implementations include a system warranty that terminates thirty days from the software go-live date, the date which the client begins using the system in a live environment. • Hardware revenue is recognized separately from software licenses at the point in time it is delivered to the client. The SSP of hardware is cost plus a reasonable margin. Payment is generally due upon delivery of the hardware to the client. Standard manufacturer warranties apply to hardware. Recurring Revenues • Software application support and hardware maintenance services sold with software licenses and hardware are separate and distinct performance obligations. Revenue for support and maintenance services is recognized based on SSP, which is the renewal price, ratably over the life of the contract, which is generally to years. Payment is due monthly for support services provided. • Subscriptions to third party content revenue is recognized as a separate performance obligation ratably over the subscription term based on SSP, which is cost plus a reasonable margin. Payment is due monthly for subscriptions to third party content. • Software as a Service ("SaaS") arrangements for EHR software and related conversion and training services are considered a single performance obligation. Revenue is recognized on a monthly basis as the SaaS service is provided to the client over the contract term. Payment is due monthly for SaaS services provided. Refer to Note 14 - Segment Reporting, for further information, including revenue by client base (acute care or post-acute care) bifurcated by recurring and non-recurring revenue. TruBridge TruBridge provides an array of business processing services ("BPS") consisting of accounts receivable management, private pay services, insurance services, medical coding, electronic billing, statement processing, payroll processing, and contract management. Fees are recognized over the period of the client contractual relationship as the services are performed based on the SSP, net of discounts. Fees for many of these services are invoiced, and revenue recognized accordingly, based on the volume of transactions or a percentage of client accounts receivable collections. Payment is due monthly for BPS with certain amounts varying based on utilization and/or volumes. TruBridge also provides professional IT services. Revenue from professional services is recognized as the services are performed based on SSP. Payment is due monthly as services are performed. Deferred Revenue Deferred revenue represents amounts invoiced to clients for which the services under contract have not been completed and revenue has not been recognized, including annual renewals of certain software subscriptions and customer deposits for implementations to be performed at a later date. Revenue is recognized ratably over the life of the software subscriptions as services are provided and at the point-in-time when implementations have been completed.
The deferred revenue recorded during the nine months ended September 30, 2018 is comprised primarily of the annual renewals of certain software subscriptions billed during the first quarter of each year and deposits collected for future EHR installations. The deferred revenue recognized as revenue during the nine months ended September 30, 2018 is comprised primarily of the periodic recognition of annual renewals that were deferred until earned and deposits for future EHR installations that were deferred until earned. Costs to Obtain and Fulfill a Contract with a Customer Costs to obtain a contract include the commission costs related to SaaS licensing agreements, which are capitalized and amortized ratably over the expected life of the customer. As a practical expedient, we generally recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset would have been one year or less, with the exception of commissions generated from TruBridge sales. TruBridge commissions, which are paid up to twelve months in advance, are capitalized and amortized over the prepayment period. Costs to obtain a contract are expensed within sales and marketing expenses in the accompanying condensed consolidated statements of income. Contract fulfillment costs related to the implementation of SaaS arrangements are capitalized and amortized ratably over the expected life of the customer. Costs to fulfill contracts consist of the payroll costs for the implementation of SaaS arrangements, including time for training, conversion, and installation that is necessary for the software to be utilized. Contract fulfillment costs are expensed within the caption "System sales and support - Cost of sales." Costs to obtain and fulfill contracts related to SaaS arrangements are included within the "Prepaid expenses and other" and "Other assets, net of current portion" line items on our condensed consolidated balance sheets.
Significant Judgments Our contracts with clients often include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine SSP for each distinct performance obligation. We use observable SSP for items that are sold on a stand-alone basis to similarly situated clients at unit prices within a sufficiently narrow range. For performance obligations that are sold to different clients for a broad range of amounts, or for performance obligations that are never sold on a stand-alone basis, the residual method in determining SSP is applied and requires significant judgment. Allocating the transaction price, including estimating SSP of promised goods and services for contracts with discounts or variable consideration, may require significant judgment. Due to the short time frame of the implementation cycle, discount allocation is immaterial as revenue is recognized net of discounts within the same reporting period. In scenarios where the Company enters into a contract that includes both a software license and BPS or other services that are charged based on volume of services rendered, the Company allocates variable amounts entirely to a distinct good or service. The terms of the variable payment relate specifically to the entity’s efforts to satisfy that performance obligation. Significant judgment is required in determining the expected life of a customer, which is the amortization period for costs to obtain and fulfill a contract that have been capitalized. The Company determined that the expected life of the customer is not materially different from the initial contract term based on the characteristics of the SaaS offering. Remaining Performance Obligations Disclosures regarding remaining performance obligations are not considered material as the overwhelming majority of the Company's remaining performance obligations either (a) are related to contracts with an expected duration of one year or less, or (b) exhibit revenue recognition in the amount to which the Company has the right to invoice.
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PROPERTY AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment was comprised of the following at September 30, 2018 and December 31, 2017:
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OTHER ACCRUED LIABILITIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities was comprised of the following at September 30, 2018 and December 31, 2017:
The accrued contingent consideration depicted above represents the potential earnout incentive for former Rycan shareholders, relating to the purchase of Rycan by HHI in 2015. We have estimated the fair value of the contingent consideration based on the amount of revenue we expect to be earned by Rycan through the year ending December 31, 2018 in accordance with the purchase agreement between the parties.
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NET INCOME PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE | NET INCOME PER SHARE The Company presents basic and diluted earnings per share ("EPS") data for its common stock. Basic EPS is calculated by dividing the net income attributable to stockholders of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is determined by adjusting the net income attributable to stockholders of the Company and the weighted average number of shares of common stock outstanding during the period for the effects of all dilutive potential common shares, including awards under stock-based compensation arrangements. The Company's unvested restricted stock awards (see Note 8) are considered participating securities under FASB Codification topic, Earnings Per Share, because they entitle holders to non-forfeitable rights to dividends until the awards vest or are forfeited. When a company has a security that qualifies as a "participating security," the Codification requires the use of the two-class method when computing basic EPS. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net income to allocate to common stockholders, income is allocated to both common stock and participating securities based on their respective weighted average shares outstanding for the period, with net income attributable to common stockholders ultimately equaling net income less net income attributable to participating securities. Diluted EPS for the Company's common stock is computed using the more dilutive of the two-class method or the treasury stock method. The following is a calculation of the basic and diluted EPS for the Company's common stock, including a reconciliation between net income and net income attributable to common stockholders:
During 2018, performance share awards were granted to certain executive officers and key employees of the Company that will result in the issuance of time-vesting restricted stock if the predefined performance criteria are met. The awards provide for an aggregate target of 184,776 shares, none of which have been included in the calculation of diluted EPS for the three and nine months ended September 30, 2018 because the related threshold award performance level has not been achieved as of September 30, 2018. See Note 8 - Stock-based Compensation for more information.
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company determines the tax provision for interim periods using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Our effective tax rate for the three months ended September 30, 2018 was a tax benefit of 54% compared to a tax expense of 38% for the three months ended September 30, 2017. This significant decrease in our effective tax rate was mostly attributable to refined estimates regarding our 2017 and 2018 federal research and development (R&D) tax credit, with such estimates increasing significantly as a result of our implementation of the Internal Revenue Service's "Guidance for Allowance of the Credit for Increasing Research Activities under IRC Section 41 for Taxpayers that Expense Research and Development Costs on their Financial Statements pursuant to ASC 730," commonly referred to as the "ASC 730 Safe Harbor Directive." This Directive provides guidance regarding the examination of certain R&D expenses under ASC 730, Research and Development, and indicates that the IRS will not challenge certain qualified research expenses (QREs) that are a taxpayer's adjusted ASC 730 financial statement R&D costs. With this guidance, taxpayers now have the option to reconcile ASC 730 with the QREs claimed on their tax return by adjusting ASC 730 financial statement R&D costs to arrive at the amount the IRS considers as qualifying for the safe harbor. The implementation of this guidance, including corresponding 2017 provision-to-return and 2018 year-to-date adjustments, resulted in an incremental 71% reduction in our effective tax rate for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. The decrease in our effective tax rate from the ASC 730 Safe Harbor Directive was in addition to the beneficial rate impact of the Tax Cuts and Jobs Act, which reduced our corporate federal rate from 35% to 21% effective at the beginning of 2018. Our effective tax rate for the nine months ended September 30, 2018 decreased to 2% from 47% for the nine months ended September 30, 2017, partially due to the reduction in our corporate federal tax rate from 35% to 21% effective at the beginning of 2018. Additionally, the effective tax rate for the nine months ended September 30, 2017 experienced a shortfall tax expense related to stock-based compensation of $1.1 million that increased the effective rate by 14%. Such shortfall during the nine months ended September 30, 2018 decreased to $0.4 million resulting in an increase in the effective rate of only 4%. Lastly, our implementation of the aforementioned ASC 730 Safe Harbor Directive has significantly increased our estimated R&D tax credits for the 2017 and 2018 tax years, resulting in a further 25% decrease in our effective rate.
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STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense is measured at the grant date based on the fair value of the award, and is recognized as an expense over the employee's or non-employee director's requisite service period. The following table details total stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017, included in the condensed consolidated statements of income:
The Company's stock-based compensation awards are in the form of restricted stock and performance share awards granted pursuant to the Company's 2012 Restricted Stock Plan for Non-Employee Directors and Amended and Restated 2014 Incentive Plan (the "Plans"). As of September 30, 2018, there was $15.6 million of unrecognized compensation expense related to unvested stock-based compensation arrangements granted under the Plans, which is expected to be recognized over a weighted-average period of 2.0 years. Restricted Stock The Company grants restricted stock to executive officers, certain key employees and non-employee directors under the Plans with the fair value of the awards representing the fair value of the common stock on the date the restricted stock is granted. Shares of restricted stock generally vest in equal annual installments over the applicable vesting period, which ranges from to years. The Company records expenses for these grants on a straight-line basis over the applicable vesting periods. Shares of restricted stock may also be issued pursuant to the settlement of performance share awards, for which the Company records expenses in the manner described in the "Performance Share Awards" section below. A summary of restricted stock activity (including shares of restricted stock issued pursuant to the settlement of performance share awards) under the Plans during the nine months ended September 30, 2018 and 2017 is as follows:
Performance Share Awards The Company grants performance share awards to executive officers and certain key employees under the Amended and Restated 2014 Incentive Plan. The number of shares of common stock earned and issuable under each award is determined at the end of each one-year or three-year performance period, based on the Company's achievement of performance goals predetermined by the Compensation Committee of the Board of Directors at the time of grant. The three-year performance share awards include a modifier to the total number of shares earned based on the Company's total shareholder return ("TSR") compared to an industry index. If certain levels of the performance objective are met, the award results in the issuance of shares of restricted stock or common stock corresponding to such level. One-year performance share awards are then subject to time-based vesting pursuant to which the shares of restricted stock vest in equal annual installments over the applicable vesting period, which is generally years. Three-year performance share awards result in the issuance of shares of common stock that are not subject to time-based vesting at the conclusion of the three-year performance period if earned. In the event that the Company's financial performance meets the predetermined targets for the performance objectives of the one-year and three-year performance share awards, the Company will issue each award recipient the number of shares of restricted stock or common stock, as applicable, equal to the target award specified in the individual's underlying performance share award agreement. In the event the financial results of the Company exceed the predetermined targets, additional shares up to the maximum award may be issued. In the event the financial results of the Company fall below the predetermined targets, a reduced number of shares may be issued. If the financial results of the Company fall below the threshold performance levels, no shares will be issued. The total number of shares issued for the three-year performance share award may be increased, decreased, or unchanged based on the TSR modifier described above. The recipients of performance share awards do not receive dividends or possess voting rights during the performance period and, accordingly, the fair value of the one-year performance share awards is the quoted market value of CPSI's common stock on the grant date less the present value of the expected dividends not received during the relevant period. The TSR modifier applicable to the three-year performance share awards is considered a market condition and therefore is reflected in the grant date fair value of the award. A Monte Carlo simulation has been used to account for this market condition in the grant date fair value of the award. Expense of one-year performance share awards is recognized using the accelerated attribution (graded vesting) method over the period beginning on the date the Company determines that it is probable that the performance criteria will be achieved and ending on the last day of the vesting period for the restricted stock issued in satisfaction of such awards. Expense of three-year performance share awards is recognized using ratable straight-line amortization over the three-year performance period. In the event the Company determines it is no longer probable that the minimum performance level will be achieved, all previously recognized compensation expense related to the applicable awards is reversed in the period such a determination is made. A summary of performance share award activity under the 2014 Incentive Plan during the nine months ended September 30, 2018 and 2017 is as follows, based on the target award amounts set forth in the performance share award agreements:
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCING RECEIVABLES | FINANCING RECEIVABLES Short-Term Payment Plans The Company provides fixed monthly payment arrangements ("short-term payment plans") over terms ranging from to months for meaningful use stage three and other add-on software installations. As a practical expedient, we do not adjust the amount of consideration recognized as revenue for the financing component as unearned income when we expect payment within one year or less. These receivables, included in the current portion of financing receivables, were comprised of the following at September 30, 2018 and December 31, 2017:
Long-Term Financing Arrangements Additionally, the Company provides financing for purchases of its information and patient care systems to certain healthcare providers under long-term financing arrangements expiring in various years through 2025. Under long-term financing arrangements, the transaction price is adjusted by a discount rate that reflects market conditions that would be used for a separate financing transaction between the Company and licensee at contract inception, and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. As such, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. As payments are received from the licensee, the Company recognizes a portion of the financing component as interest income, reported as other income in the condensed consolidated statements of income. These receivables typically have terms from two to seven years. The components of these receivables were as follows at September 30, 2018 and December 31, 2017:
Future minimum payments to be received subsequent to September 30, 2018 are as follows:
Credit Quality of Financing Receivables and Allowance for Credit Losses The following table is a roll-forward of the allowance for financing credit losses for the nine months ended September 30, 2018 and year ended December 31, 2017:
The Company’s financing receivables are comprised of a single portfolio segment, as the balances are all derived from short-term payment plan arrangements and long-term financing arrangements within our target market of community hospitals. The Company evaluates the credit quality of its financing receivables based on a combination of factors, including, but not limited to, customer collection experience, economic conditions, the customer’s financial condition, and known risk characteristics impacting the respective customer base of community hospitals, the most notable of which relate to enacted and potential changes in Medicare and Medicaid reimbursement rates as community hospitals typically generate a significant portion of their revenues and related cash flows from beneficiaries of these programs. In addition to specific account identification, the Company utilizes historical collection experience to establish the allowance for credit losses. Financing receivables are written off only after the Company has exhausted all collection efforts. Customer payments are considered past due if a scheduled payment is not received within contractually agreed upon terms. To facilitate customer collection and credit monitoring efforts, financing receivable amounts are invoiced and reclassified to trade accounts receivable when they become due, with all invoiced amounts placed on nonaccrual status. As a result, all past due amounts related to the Company’s financing receivables are included in trade accounts receivable in the accompanying condensed consolidated balance sheets. The following is an analysis of the age of financing receivables amounts (excluding short-term payment plans) that have been reclassified to trade accounts receivable and were past due as of September 30, 2018 and December 31, 2017:
From time to time, the Company may agree to alternative payment terms outside of the terms of the original financing receivable agreement due to customer difficulties in achieving the original terms. In general, such alternative payment arrangements do not result in a re-aging of the related receivables. Rather, payments pursuant to any alternative payment arrangements are applied to the already outstanding invoices beginning with the oldest outstanding invoices as the payments are received. Because amounts are reclassified to trade accounts receivable when they become due, there are no past due amounts included within financing receivables or financing receivables, net of current portion, in the accompanying condensed consolidated balance sheets. The Company utilizes an aging of trade accounts receivable as the primary credit quality indicator for its financing receivables, which is facilitated by the reclassification of customer payment amounts to trade accounts receivable when they become due. The table below categorizes customer financing receivable balances (excluding short-term payment plans), none of which are considered past due, based on the age of the oldest payment outstanding that has been reclassified to trade accounts receivable:
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INTANGIBLE ASSETS AND GOODWILL |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Our purchased definite-lived intangible assets as of September 30, 2018 and December 31, 2017 are summarized as follows:
The following table represents the remaining amortization of definite-lived intangible assets as of September 30, 2018:
The following table sets forth the change in the carrying amount of goodwill by segment for the nine months ended September 30, 2018:
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LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt was comprised of the following at September 30, 2018 and December 31, 2017:
As of September 30, 2018, the carrying value of debt approximates the fair value due to the variable interest rate, which reflects the market rate. Credit Agreement In conjunction with our acquisition of HHI in January 2016, we entered into a syndicated credit agreement (the "Previous Credit Agreement") with Regions Bank ("Regions") serving as administrative agent, which provided for a $125 million term loan facility (the "Previous Term Loan Facility") and a $50 million revolving credit facility (the "Previous Revolving Credit Facility"). On October 13, 2017, we entered into a Second Amendment (the "Second Amendment") to refinance and decrease the aggregate principal amount of the credit facilities from $175 million to $162 million, which included a $117 million term loan facility (the "Amended Term Loan Facility") and a $45 million revolving credit facility (the "Amended Revolving Credit Facility" and, together with the Amended Term Loan Facility, the "Amended Credit Facilities"). On February 8, 2018, we entered into a Third Amendment (the "Third Amendment") to the credit agreement (as amended, the "Amended Credit Agreement") to increase the aggregate principal amount of the Amended Credit Facilities from $162 million to $167 million, which includes the $117 million Amended Term Loan Facility and a $50 million Amended Revolving Credit Facility. Each of the Amended Credit Facilities continues to bear interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the Adjusted LIBOR rate for the relevant interest period, (2) an alternate base rate determined by reference to the greater of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus one half of one percent per annum and (c) the one month LIBOR rate plus one percent per annum, or (3) a combination of (1) and (2). The applicable margin range for LIBOR loans and the letter of credit fee ranges from 2.0% to 3.5%. The applicable margin range for base rate loans ranges from 1.0% to 2.5%, in each case based on the Company's consolidated leverage ratio. Principal payments with respect to the Amended Term Loan Facility are due on the last day of each fiscal quarter beginning December 31, 2017, with quarterly principal payments of approximately $1.46 million through September 30, 2019, approximately $2.19 million through September 30, 2021 and approximately $2.93 million through September 30, 2022, with maturity on October 13, 2022 or such earlier date as the obligations under the Amended Credit Agreement become due and payable pursuant to the terms of the Amended Credit Agreement (the "Amended Maturity Date"). Any principal outstanding under the Amended Revolving Credit Facility is due and payable on the Amended Maturity Date. Anticipated annual future maturities of the Amended Term Loan Facility, Amended Revolving Credit Facility, and capital lease obligation are as follows as of September 30, 2018:
The Amended Credit Facilities are secured pursuant to a Pledge and Security Agreement, dated January 8, 2016, among the parties identified as obligors therein and Regions, as collateral agent, on a first priority basis by a security interest in substantially all of the tangible and intangible assets (subject to certain exceptions) of the Company and certain subsidiaries of the Company, as guarantors (collectively, the “Subsidiary Guarantors”), including certain registered intellectual property and the capital stock of certain of the Company’s direct and indirect subsidiaries. Our obligations under the Amended Credit Agreement are also guaranteed by the Subsidiary Guarantors. The Amended Credit Agreement, as amended by the Third Amendment, provides incremental facility capacity of $50 million, subject to certain conditions. The Amended Credit Agreement includes a number of restrictive covenants that, among other things and in each case subject to certain exceptions and baskets, impose operating and financial restrictions on the Company and the Subsidiary Guarantors, including the ability to incur additional debt; incur liens and encumbrances; make certain restricted payments, including paying dividends on the Company's equity securities or payments to redeem, repurchase or retire the Company's equity securities (which are subject to our compliance, on a pro forma basis to give effect to the restricted payment, with the fixed charge coverage ratio and consolidated leverage ratio described below); enter into certain restrictive agreements; make investments, loans and acquisitions; merge or consolidate with any other person; dispose of assets; enter into sale and leaseback transactions; engage in transactions with affiliates; and materially alter the business we conduct. The Amended Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.25:1.00 throughout the duration of such agreement. Under the Amended Credit Agreement, the Company is required to comply with a maximum consolidated leverage ratio of 3.95:1.00 through December 31, 2017 and 3.50:1.00 from January 1, 2018 and thereafter. The Amended Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default. We believe that we were in compliance with the covenants contained in the Amended Credit Agreement as of September 30, 2018. The Amended Credit Agreement requires the Company to mandatorily prepay the Amended Credit Facilities with (i) 75% of excess cash flow (minus certain specified other payments) during each of the fiscal years ending December 31, 2017 and December 31, 2018 and (ii) 50% of excess cash flow (minus certain specified other payments) during the fiscal year ending December 31, 2019 and thereafter. The Company is permitted to voluntarily prepay the Amended Credit Facilities at any time without penalty, subject to customary “breakage” costs with respect to prepayments of LIBOR rate loans made on a day other than the last day of any applicable interest period. The excess cash flow mandatory prepayment requirement under the Amended Credit Agreement resulted in a $7.3 million prepayment on the Amended Term Loan Facility during the first quarter of 2018 related to excess cash flow generated by the Company during 2017. This mandatory prepayment was funded by drawing down on the Amended Revolving Credit Facility, as excess cash flow generated by the Company during 2017 was primarily used to voluntarily prepay amounts due under the Amended Revolving Credit Facility.
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COMMITMENTS AND CONTINGENCIES |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESFrom time to time, the Company is involved in routine litigation that arises in the ordinary course of business. Management does not believe it is reasonably possible that such matters will have a material adverse effect on the Company’s financial statements. |
FAIR VALUE |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUEFASB Codification topic, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands financial statement disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Codification does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. The Codification requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. The accrued contingent consideration depicted below represents the potential earnout incentive for former Rycan shareholders, relating to the purchase of Rycan by HHI in 2015. We have estimated the fair value of the contingent consideration based on the amount of revenue we expect to be earned by Rycan through the year ending December 31, 2018 in accordance with the purchase agreement between the parties. The following table summarizes the carrying amounts and fair value of the contingent consideration at September 30, 2018:
The following table summarizes the carrying amounts and fair value of the contingent consideration at December 31, 2017:
The carrying amounts of other financial instruments reported in the consolidated balance sheets for current assets and current liabilities approximate their fair values because of the short-term nature of these instruments.
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SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING Our chief operating decision makers ("CODM") utilize three operating segments, "Acute Care EHR," "Post-acute Care EHR" and "TruBridge," based on our three distinct business units with unique market dynamics and opportunities. Revenues and cost of sales are primarily derived from the provision of services and sales of our proprietary software, and our CODM assess the performance of these three segments at the gross profit level. Operating expenses and items such as interest, income tax, capital expenditures and total assets are managed at a consolidated level and thus are not included in our operating segment disclosures. Our CODM group is comprised of the Chief Executive Officer, Chief Growth Officer, Chief Operating Officer, and Chief Financial Officer. Accounting policies for each of the reportable segments are the same as those used on a consolidated basis. The following table presents a summary of the revenues and gross profits of our three operating segments for the three and nine months ended September 30, 2018 and 2017:
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SUBSEQUENT EVENTS |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSOn November 1, 2018, the Company announced a dividend for the fourth quarter of 2018 in the amount of $0.10 per share, payable on November 30, 2018, to stockholders of record as of the close of business on November 15, 2018. |
BASIS OF PRESENTATION (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2017 was derived from the audited consolidated balance sheet at that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of Computer Programs and Systems, Inc. ("CPSI" or the "Company") for the year ended December 31, 2017 and the notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
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Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements of CPSI include the accounts of TruBridge, LLC ("TruBridge"), Evident, LLC ("Evident"), and Healthland Holding Inc. ("HHI"), all of which are wholly-owned subsidiaries of CPSI. The accounts of HHI include those of its wholly-owned subsidiaries, Healthland Inc. ("Healthland"), Rycan Technologies, Inc. ("Rycan"), and American HealthTech, Inc. ("AHT"). All significant intercompany balances and transactions have been eliminated.
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Presentation | Presentation Effective January 1, 2018, our interface services team, which provides the design, development, implementation, and support services for all interfaces for data exchange from the CPSI applications and was previously considered a part of our product development division, has been integrated with our acute care client service team. This transition has worked to create a consistent, personal, and convenient service experience for our clients characterized by transparent communication with prompt resolution. With this change, the payroll and related costs of this group of employees that were formerly included within the caption "Product development" on our condensed consolidated statements of income are now included within the caption "System sales and support - Cost of sales."
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Revenue Recognition | REVENUE RECOGNITION Revenue is recognized upon transfer of control of promised products or services to clients in an amount that reflects the consideration we expect to receive in exchange for those products and services. We enter into contracts that can include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. The Company employs the 5-step revenue recognition model under ASC 606 to: (1) identify the contract with the client, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue is recognized net of shipping charges and any taxes collected from clients, which are subsequently remitted to governmental authorities. System Sales and Support The Company enters into contractual obligations to sell perpetual software licenses, installation, conversion, training, hardware and software application support and hardware maintenance services to acute care and post-acute care community hospitals. Non-recurring Revenues • Perpetual software licenses, installation, conversion, and related training are not considered separate and distinct performance obligations due to the proprietary nature of our software and are, therefore, accounted for as a single performance obligation on a module-by-module basis. Revenue is recognized as each module's implementation is completed based on the module's stand-alone selling price ("SSP"), net of discounts. Fees for licenses, installation, conversion, and related training are typically due in three installments: (1) at placement of order, (2) upon installation of software and commencement of training, and (3) upon satisfactory completion of monthly accounting cycle or end-of-month operation by application and as applicable for each application. Often, short-term and/or long-term financing arrangements are provided for software implementations; refer to Note 9 - Financing Receivables for further information. Electronic health records ("EHR") implementations include a system warranty that terminates thirty days from the software go-live date, the date which the client begins using the system in a live environment. • Hardware revenue is recognized separately from software licenses at the point in time it is delivered to the client. The SSP of hardware is cost plus a reasonable margin. Payment is generally due upon delivery of the hardware to the client. Standard manufacturer warranties apply to hardware. Recurring Revenues • Software application support and hardware maintenance services sold with software licenses and hardware are separate and distinct performance obligations. Revenue for support and maintenance services is recognized based on SSP, which is the renewal price, ratably over the life of the contract, which is generally to years. Payment is due monthly for support services provided. • Subscriptions to third party content revenue is recognized as a separate performance obligation ratably over the subscription term based on SSP, which is cost plus a reasonable margin. Payment is due monthly for subscriptions to third party content. • Software as a Service ("SaaS") arrangements for EHR software and related conversion and training services are considered a single performance obligation. Revenue is recognized on a monthly basis as the SaaS service is provided to the client over the contract term. Payment is due monthly for SaaS services provided. Refer to Note 14 - Segment Reporting, for further information, including revenue by client base (acute care or post-acute care) bifurcated by recurring and non-recurring revenue. TruBridge TruBridge provides an array of business processing services ("BPS") consisting of accounts receivable management, private pay services, insurance services, medical coding, electronic billing, statement processing, payroll processing, and contract management. Fees are recognized over the period of the client contractual relationship as the services are performed based on the SSP, net of discounts. Fees for many of these services are invoiced, and revenue recognized accordingly, based on the volume of transactions or a percentage of client accounts receivable collections. Payment is due monthly for BPS with certain amounts varying based on utilization and/or volumes. TruBridge also provides professional IT services. Revenue from professional services is recognized as the services are performed based on SSP. Payment is due monthly as services are performed. Deferred Revenue Deferred revenue represents amounts invoiced to clients for which the services under contract have not been completed and revenue has not been recognized, including annual renewals of certain software subscriptions and customer deposits for implementations to be performed at a later date. Revenue is recognized ratably over the life of the software subscriptions as services are provided and at the point-in-time when implementations have been completed.
The deferred revenue recorded during the nine months ended September 30, 2018 is comprised primarily of the annual renewals of certain software subscriptions billed during the first quarter of each year and deposits collected for future EHR installations. The deferred revenue recognized as revenue during the nine months ended September 30, 2018 is comprised primarily of the periodic recognition of annual renewals that were deferred until earned and deposits for future EHR installations that were deferred until earned. Costs to Obtain and Fulfill a Contract with a Customer Costs to obtain a contract include the commission costs related to SaaS licensing agreements, which are capitalized and amortized ratably over the expected life of the customer. As a practical expedient, we generally recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset would have been one year or less, with the exception of commissions generated from TruBridge sales. TruBridge commissions, which are paid up to twelve months in advance, are capitalized and amortized over the prepayment period. Costs to obtain a contract are expensed within sales and marketing expenses in the accompanying condensed consolidated statements of income. Contract fulfillment costs related to the implementation of SaaS arrangements are capitalized and amortized ratably over the expected life of the customer. Costs to fulfill contracts consist of the payroll costs for the implementation of SaaS arrangements, including time for training, conversion, and installation that is necessary for the software to be utilized. Contract fulfillment costs are expensed within the caption "System sales and support - Cost of sales." Costs to obtain and fulfill contracts related to SaaS arrangements are included within the "Prepaid expenses and other" and "Other assets, net of current portion" line items on our condensed consolidated balance sheets.
Significant Judgments Our contracts with clients often include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine SSP for each distinct performance obligation. We use observable SSP for items that are sold on a stand-alone basis to similarly situated clients at unit prices within a sufficiently narrow range. For performance obligations that are sold to different clients for a broad range of amounts, or for performance obligations that are never sold on a stand-alone basis, the residual method in determining SSP is applied and requires significant judgment. Allocating the transaction price, including estimating SSP of promised goods and services for contracts with discounts or variable consideration, may require significant judgment. Due to the short time frame of the implementation cycle, discount allocation is immaterial as revenue is recognized net of discounts within the same reporting period. In scenarios where the Company enters into a contract that includes both a software license and BPS or other services that are charged based on volume of services rendered, the Company allocates variable amounts entirely to a distinct good or service. The terms of the variable payment relate specifically to the entity’s efforts to satisfy that performance obligation. Significant judgment is required in determining the expected life of a customer, which is the amortization period for costs to obtain and fulfill a contract that have been capitalized. The Company determined that the expected life of the customer is not materially different from the initial contract term based on the characteristics of the SaaS offering. Remaining Performance Obligations Disclosures regarding remaining performance obligations are not considered material as the overwhelming majority of the Company's remaining performance obligations either (a) are related to contracts with an expected duration of one year or less, or (b) exhibit revenue recognition in the amount to which the Company has the right to invoice.
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Net Income Per Share | NET INCOME PER SHARE The Company presents basic and diluted earnings per share ("EPS") data for its common stock. Basic EPS is calculated by dividing the net income attributable to stockholders of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is determined by adjusting the net income attributable to stockholders of the Company and the weighted average number of shares of common stock outstanding during the period for the effects of all dilutive potential common shares, including awards under stock-based compensation arrangements. The Company's unvested restricted stock awards (see Note 8) are considered participating securities under FASB Codification topic, Earnings Per Share, because they entitle holders to non-forfeitable rights to dividends until the awards vest or are forfeited. When a company has a security that qualifies as a "participating security," the Codification requires the use of the two-class method when computing basic EPS. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net income to allocate to common stockholders, income is allocated to both common stock and participating securities based on their respective weighted average shares outstanding for the period, with net income attributable to common stockholders ultimately equaling net income less net income attributable to participating securities. Diluted EPS for the Company's common stock is computed using the more dilutive of the two-class method or the treasury stock method.
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Income Taxes | INCOME TAXESThe Company determines the tax provision for interim periods using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | STOCK-BASED COMPENSATIONStock-based compensation expense is measured at the grant date based on the fair value of the award, and is recognized as an expense over the employee's or non-employee director's requisite service period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | FASB Codification topic, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands financial statement disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Codification does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. The Codification requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data.
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Recent Account Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS New Accounting Standards Adopted in 2018 In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes prior revenue recognition guidance. This guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2017, which was effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. We adopted this new accounting standard codified as Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, and the related amendments ("new revenue standard") during the first quarter of 2018 and have applied it to all contracts using the modified retrospective method, pursuant to which the cumulative effect of initially applying the new revenue standard is recognized as an adjustment to retained earnings and impacted balance sheet line items as of January 1, 2018, the date of adoption. The comparative previous period information continues to be reported under the accounting standards in effect for that period. We completed an assessment of our systems, data, and processes that are affected by the implementation of this new revenue standard and have concluded that this standard does not significantly alter revenue recognition practices for our system sales and support and TruBridge revenue streams. The impact on our revenue recognition is limited to deferring and amortizing implementation fees over the contract life related to our Rycan revenue cycle management product, in which we previously recognized revenue as implementation was completed. Rycan implementation fees totaled $1.6 million in 2017, less than 1% of our 2017 revenues. The balance sheet impact of the deferred revenue related to these fees was an increase of $1.8 million as of the date of adoption. Also impacting deferred revenue was a decrease of $0.6 million related to previous billings which no longer required deferred recognition as of the date of adoption. In addition to revenue recognition, the new revenue standard impacts our consolidated financial statements with respect to the capitalization of certain commissions and contract fulfillment costs which were previously expensed as incurred. Commissions and contract fulfillment costs related to the implementation of software as a service arrangements are now capitalized and amortized over the expected life of the customer. TruBridge commissions, which are paid up to twelve months in advance, are now capitalized and amortized over the prepayment period. The balance sheet impact of the prepaid assets was an increase of $3.8 million as of the date of adoption. Due to the aforementioned changes in assets and liabilities related to the adoption of the new revenue standard, our deferred tax liability increased $0.6 million as of the date of adoption. In total, the adoption of ASU 2014-09 resulted in a net increase in retained earnings of $2.0 million as of the date of adoption. In accordance with the new revenue standard requirements, the disclosures of the impact of adoption on our condensed consolidated income statements and balance sheet were as follows:
The effects of the changes in balance sheet accounts resulting from the adoption of the new revenue standard are primarily due to the beginning adjustments for adoption mentioned above, accompanied by incremental changes resulting from activity during the period ended September 30, 2018. Refer to Note 3 - Revenue Recognition for more information on period activity. The new revenue standard requirements did not impact our net cash provided by or used in operating, investing, or financing cash flows on our condensed consolidated statements of cash flows, although components within changes in operating assets and liabilities were immaterially impacted by adoption. In August 2016, the FASB issued ASU 2016-15, Classifications of Certain Cash Receipts and Cash Payments, which clarifies cash flow classification for eight specific issues, including debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies. This guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2017, which was effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. The adoption of ASU 2016-15 did not have a material effect on our financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, to assist an entity in evaluating when a set of transferred assets and activities is a business. The guidance was effective for fiscal years and interim periods within those years beginning after December 15, 2017, and will be applied prospectively to any transactions occurring following adoption. The adoption of ASU 2017-01 did not have a material effect on our financial statements. New Accounting Standards Yet to be Adopted In February 2016, the FASB issued ASU 2016-02, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new guidance will require the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2018, which will be effective for the Company as of the first quarter of our fiscal year ending December 31, 2019. The Company is currently evaluating the method of adoption and potential utilization of practical expedients. The estimated impact on the financial statements of implementation of this standard is increased lease assets and lease liabilities in the range of $4 million to $6 million as of the anticipated adoption date, January 1, 2019. We do not believe that any other recently issued but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.
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BASIS OF PRESENTATION (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amounts Reclassified | Amounts presented for the three and nine months ended September 30, 2017 have been reclassified to conform to the current presentation. The following table provides the amounts reclassified for the three months ended September 30, 2017:
The following table provides the amounts reclassified for the nine months ended September 30, 2017:
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RECENT ACCOUNTING PRONOUNCEMENTS - (Tables) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | In accordance with the new revenue standard requirements, the disclosures of the impact of adoption on our condensed consolidated income statements and balance sheet were as follows:
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REVENUE RECOGNITION (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Contract with Customer, Asset and Liability | Deferred revenue represents amounts invoiced to clients for which the services under contract have not been completed and revenue has not been recognized, including annual renewals of certain software subscriptions and customer deposits for implementations to be performed at a later date. Revenue is recognized ratably over the life of the software subscriptions as services are provided and at the point-in-time when implementations have been completed.
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Schedule of Capitalized Contract Cost | Costs to obtain and fulfill contracts related to SaaS arrangements are included within the "Prepaid expenses and other" and "Other assets, net of current portion" line items on our condensed consolidated balance sheets.
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PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment was comprised of the following at September 30, 2018 and December 31, 2017:
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OTHER ACCRUED LIABILITIES (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Accrued Liabilities | Other accrued liabilities was comprised of the following at September 30, 2018 and December 31, 2017:
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NET INCOME PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following is a calculation of the basic and diluted EPS for the Company's common stock, including a reconciliation between net income and net income attributable to common stockholders:
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STOCK-BASED COMPENSATION (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Stock-Based Compensation Expense | The following table details total stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017, included in the condensed consolidated statements of income:
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Summary of Restricted Stock Activity | A summary of restricted stock activity (including shares of restricted stock issued pursuant to the settlement of performance share awards) under the Plans during the nine months ended September 30, 2018 and 2017 is as follows:
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Summary of Performance Share Award Activity | A summary of performance share award activity under the 2014 Incentive Plan during the nine months ended September 30, 2018 and 2017 is as follows, based on the target award amounts set forth in the performance share award agreements:
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FINANCING RECEIVABLES (Tables) |
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Schedule of Components of Short Term Payment Plans | These receivables, included in the current portion of financing receivables, were comprised of the following at September 30, 2018 and December 31, 2017:
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Components of Lease Receivables | The components of these receivables were as follows at September 30, 2018 and December 31, 2017:
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Future Minimum Lease Payments to be Received | Future minimum payments to be received subsequent to September 30, 2018 are as follows:
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Allowance for Financing Credit Losses | The following table is a roll-forward of the allowance for financing credit losses for the nine months ended September 30, 2018 and year ended December 31, 2017:
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Analysis of Age of Financing Receivables Amounts | The following is an analysis of the age of financing receivables amounts (excluding short-term payment plans) that have been reclassified to trade accounts receivable and were past due as of September 30, 2018 and December 31, 2017:
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Schedule of Financing Receivable Credit Quality Indicators | The table below categorizes customer financing receivable balances (excluding short-term payment plans), none of which are considered past due, based on the age of the oldest payment outstanding that has been reclassified to trade accounts receivable:
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INTANGIBLE ASSETS AND GOODWILL (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Definite-lived Intangible Assets | Our purchased definite-lived intangible assets as of September 30, 2018 and December 31, 2017 are summarized as follows:
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Schedule of Remaining Amortization of Definite-lived Intangible Assets | The following table represents the remaining amortization of definite-lived intangible assets as of September 30, 2018:
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Schedule of Changes in the Carrying Amount of Goodwill | The following table sets forth the change in the carrying amount of goodwill by segment for the nine months ended September 30, 2018:
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LONG-TERM DEBT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt was comprised of the following at September 30, 2018 and December 31, 2017:
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Schedule of Annual Future Maturities of the Term Loan Facility and Revolving Credit Facility | Anticipated annual future maturities of the Amended Term Loan Facility, Amended Revolving Credit Facility, and capital lease obligation are as follows as of September 30, 2018:
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FAIR VALUE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | The following table summarizes the carrying amounts and fair value of the contingent consideration at September 30, 2018:
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Carrying Amounts and Fair Values of Certain Assets and Liabilities | The following table summarizes the carrying amounts and fair value of the contingent consideration at December 31, 2017:
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SEGMENT REPORTING (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table presents a summary of the revenues and gross profits of our three operating segments for the three and nine months ended September 30, 2018 and 2017:
|
BASIS OF PRESENTATION - Reclassification (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Costs of sales: | ||||
System sales and support | $ 19,583 | $ 19,927 | $ 57,528 | $ 59,467 |
Operating expenses: | ||||
Product development | $ 9,305 | 8,250 | $ 27,375 | 24,742 |
As previously reported | ||||
Costs of sales: | ||||
System sales and support | 18,832 | 56,621 | ||
Operating expenses: | ||||
Product development | 9,345 | 27,588 | ||
Reclassification | Revised Presentation | ||||
Costs of sales: | ||||
System sales and support | 1,095 | 2,846 | ||
Operating expenses: | ||||
Product development | $ (1,095) | $ (2,846) |
REVENUE RECOGNITION (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |
Deferred revenue recorded | $ 15,847 |
Minimum | |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |
Maintenance contract term | 3 years |
Maximum | |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |
Maintenance contract term | 5 years |
REVENUE RECOGNITION Deferred Revenue (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Change in Contract with Customer, Liability [Roll Forward] | |
Balance as of January 1, 2018 | $ 8,707 |
Deferred revenue recorded | 15,847 |
Less deferred revenue recognized as revenue | (14,669) |
Balance as of September 30, 2018 | $ 11,115 |
REVENUE RECOGNITION Costs to obtain and fulfill contracts (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Capitalized Contract Cost [Roll Forward] | |
Balance as of January 1, 2018 | $ 3,775 |
Costs to obtain and fulfill contracts capitalized | 2,356 |
Capitalized Contract Cost, Amortization | (3,129) |
Balance as of September 30, 2018 | $ 3,002 |
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Salaries and benefits | $ 7,232 | $ 8,432 |
Severance | 1,244 | 1,139 |
Commissions | 738 | 2,416 |
Self-insurance reserves | 1,024 | 1,024 |
Contingent consideration | 615 | 586 |
Other | 580 | 501 |
Other accrued liabilities | $ 11,433 | $ 14,098 |
NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Net income | $ 5,749 | $ 2,288 | $ 10,044 | $ 4,121 |
Less: Net income attributable to participating securities | (197) | (55) | (338) | (94) |
Net income attributable to common stockholders | $ 5,552 | $ 2,233 | $ 9,706 | $ 4,027 |
Weighted average shares outstanding used in basic per common share computations (in shares) | 13,604 | 13,431 | 13,547 | 13,409 |
Add: Dilutive potential common shares (in shares) | 0 | 0 | 0 | 0 |
Weighted average shares outstanding used in diluted per common share computations (in shares) | 13,604 | 13,431 | 13,547 | 13,409 |
Basic EPS (in dollars per share) | $ 0.41 | $ 0.17 | $ 0.72 | $ 0.30 |
Diluted EPS (in dollars per share) | $ 0.41 | $ 0.17 | $ 0.72 | $ 0.30 |
NET INCOME PER SHARE Narrative (Details) - shares |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
|
Earnings Per Share [Abstract] | ||
Aggregate target (in shares) | 184,776 | 184,776 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate percentage | (54.00%) | 38.00% | 2.00% | 47.00% |
Excess tax benefit | $ 0.4 | $ 1.1 | ||
Increase (decrease) in effective tax rate percentage | (71.00%) | 4.00% | 14.00% |
FINANCING RECEIVABLES - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Minimum | |
Loans and Leases Receivable Disclosure [Line Items] | |
Financial receivable lease term | 2 years |
Maximum | |
Loans and Leases Receivable Disclosure [Line Items] | |
Financial receivable lease term | 7 years |
Fixed Periodic Payment Plans | Minimum | |
Loans and Leases Receivable Disclosure [Line Items] | |
Current financing receivable terms | 3 months |
Fixed Periodic Payment Plans | Maximum | |
Loans and Leases Receivable Disclosure [Line Items] | |
Current financing receivable terms | 12 months |
FINANCING RECEIVABLES - Short-Term Payment Plans (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Loans and Leases Receivable Disclosure [Line Items] | ||
Short-term payment plans, net | $ 15,422 | $ 15,055 |
Short-Term Payment Plans | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Short-term payment plans, gross | 7,463 | 9,081 |
Less: allowance for losses | (373) | (638) |
Short-term payment plans, net | $ 7,090 | $ 8,443 |
FINANCING RECEIVABLES - Sales-Type Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Long-term financing arrangements, gross | $ 27,948 | $ 22,968 |
Less: allowance for losses | (1,248) | (2,606) |
Less: unearned income | (2,997) | (2,265) |
Long-term financing arrangements, net | $ 23,703 | $ 18,097 |
FINANCING RECEIVABLES - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
2018 | $ 2,787 | |
2019 | 8,719 | |
2020 | 6,127 | |
2021 | 4,887 | |
2022 | 3,437 | |
Thereafter | 1,991 | |
Total minimum payments to be received | 27,948 | $ 22,968 |
Less: allowance for losses | (1,248) | (2,606) |
Less: unearned income | (2,997) | $ (2,265) |
Receivables, net | $ 23,703 |
FINANCING RECEIVABLES - Allowance for Financing Credit Losses (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Allowance for Credit Losses on Financing Receivables [Roll Forward] | ||
Balance at Beginning of Period | $ 3,244 | $ 2,198 |
Provision | 1,723 | 1,823 |
Charge-offs | (3,346) | (777) |
Recoveries | 0 | 0 |
Balance at End of Period | $ 1,621 | $ 3,244 |
FINANCING RECEIVABLES - Analysis of Age of Financing Receivables Amounts (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 1,954 | $ 1,151 |
1 to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,272 | 980 |
91 to 180 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 268 | 171 |
181 + Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 414 | $ 0 |
INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2018 | $ 2,591 | |
2019 | 10,072 | |
2020 | 10,066 | |
2021 | 10,066 | |
2022 | 10,066 | |
Thereafter | 45,957 | |
Net intangible assets as of December 31, 2017 and June 30, 2018 | $ 88,818 | $ 96,713 |
INTANGIBLE ASSETS AND GOODWILL - Schedule of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 140,449 |
Goodwill impairment | 0 |
Goodwill, ending balance | 140,449 |
Operating Segments | Acute Care EHR | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 97,095 |
Goodwill impairment | 0 |
Goodwill, ending balance | 97,095 |
Operating Segments | Post-acute Care EHR | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 29,570 |
Goodwill impairment | 0 |
Goodwill, ending balance | 29,570 |
Operating Segments | TruBridge | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 13,784 |
Goodwill impairment | 0 |
Goodwill, ending balance | $ 13,784 |
LONG-TERM DEBT - Schedule of long-term debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt obligations | $ 138,918 | $ 144,086 |
Capital lease obligation | 330 | 565 |
Less: unamortized debt issuance costs | (1,393) | (1,652) |
Debt obligation, net | 137,525 | 142,434 |
Less: current portion | (5,807) | (5,820) |
Long-term debt | 131,718 | 136,614 |
Line of credit | ||
Debt Instrument [Line Items] | ||
Debt obligation, net | 138,918 | |
Line of credit | Term loan facility | ||
Debt Instrument [Line Items] | ||
Debt obligations | 103,895 | 115,538 |
Line of credit | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Debt obligations | $ 34,693 | $ 27,983 |
LONG-TERM DEBT - Annual Future Maturities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt obligation, net | $ 137,525 | $ 142,434 |
Line of credit | ||
Debt Instrument [Line Items] | ||
2018 | 1,543 | |
2019 | 6,831 | |
2020 | 8,775 | |
2021 | 9,506 | |
2022 | 112,263 | |
Thereafter | 0 | |
Debt obligation, net | $ 138,918 |
SUBSEQUENT EVENTS (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Nov. 01, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Subsequent Event [Line Items] | |||||
Dividends declared per common share (in dollars per share) | $ 0.10 | $ 0.30 | $ 0.30 | $ 0.75 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends declared per common share (in dollars per share) | $ 0.10 |
Property and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 23,111 | $ 22,293 |
Less: accumulated depreciation | (12,017) | (10,601) |
Property and equipment, net | 11,094 | 11,692 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,848 | 2,848 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 8,247 | 8,240 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,080 | 3,269 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,001 | 5,001 |
Office furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,865 | 2,865 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 70 | $ 70 |
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