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Computer Programs and Systems, Inc. Announces Second Quarter 2009 Results

Computer Programs and Systems, Inc. (NASDAQ: CPSI):

Second Quarter Highlights:

  • Revenues of $30.8 million;
  • Earnings per diluted share of $0.32;
  • Cash provided by operations of $3.7 million; and
  • Quarterly dividend of $0.36 per share.

Computer Programs and Systems, Inc. (NASDAQ: CPSI), a leading provider of healthcare information solutions, today announced results for the second quarter and six months ended June 30, 2009.

The Company also announced that its Board of Directors has declared a regular quarterly cash dividend of $0.36 (thirty-six cents) per share, payable on August 21, 2009, to stockholders of record as of the close of business on August 6, 2009.

Total revenues for the second quarter ended June 30, 2009, increased 11.2% to $30.8 million, compared with total revenues of $27.8 million for the prior-year period. Net income for the quarter ended June 30, 2009, increased 18.4% to $3.5 million, or $0.32 per diluted share, compared with $3.0 million, or $0.28 per diluted share, for the quarter ended June 30, 2008. Cash provided by operations for the second quarter of 2009 was $3.7 million, compared with $5.2 million for the prior-year period.

Commenting on the results, Boyd Douglas, chief executive officer and president of CPSI, stated, “Our strong quarter sustains the positive momentum from our first quarter and puts us on target for an outstanding year. We are pleased with the high rate of demand for our products and fully expect that trend to continue in conjunction with the ongoing national emphasis on expanding the use of information technology in healthcare through financial incentives contained in the ARRA economic stimulus package. In addition, it has also become clear that the adoption of electronic health records will be a key aspect of any of the national healthcare reform plans now being contemplated. As a company, we have taken a proactive approach to preparing for the potential growth associated with these reforms by adding more than 90 new staff members to our implementation and support division this past quarter. We are extremely well positioned, focused on generating both new and recurring revenues, and very excited about the remainder of the year.”

Total revenues for the six months ended June 30, 2009, increased 6.5% to $61.0 million, compared with total revenues of $57.3 million for the prior-year period. Net income for the six months ended June 30, 2009, increased 16.5% to $7.6 million, or $0.69 per diluted share, compared with $6.5 million, or $0.60 per diluted share, for the six months ended June 30, 2008. Cash provided by operations for the first half of 2009 was $7.4 million, compared with $9.5 million for the prior-year period.

For the third quarter of 2009, the Company anticipates total revenues of $31.0 million to $32.5 million and net income of approximately $4.0 million to $4.2 million, or $0.37 to $0.39 per diluted share. CPSI’s 12-month backlog as of June 30, 2009, was $106.3 million, consisting of $22.0 million in non-recurring system purchases and $84.3 million in recurring payments for support, Business Management Services, ASP and ISP contracts.

A listen-only simulcast and replay of CPSI’s second quarter 2009 conference call will be available on-line at www.cpsinet.com and www.earnings.com on July 24, 2009, beginning at 9:00 a.m. Eastern Time.

About Computer Programs and Systems, Inc.

CPSI is a leading provider of healthcare information solutions for community hospitals with over 650 client hospitals in 47 states and the District of Columbia. Founded in 1979, the Company is a single-source vendor providing comprehensive software and hardware products, complemented by complete installation services and extensive support. Its fully integrated, enterprise-wide system automates clinical and financial data management in each of the primary functional areas of a hospital. CPSI’s staff of over 800 technical, healthcare and medical professionals provides system implementation and continuing support services as part of a comprehensive program designed to respond to clients’ information needs in a constantly changing healthcare environment. For more information, visit www.cpsinet.com.

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified generally by the use of forward-looking terminology and words such as “expects,” “anticipates,” “estimates,” “believes,” “predicts,” “intends,” “plans,” “potential,” “may,” “continue,” “should,” “will” and words of comparable meaning. Without limiting the generality of the preceding statement, all statements in this press release relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and future financial results are forward-looking statements. We caution investors that any such forward-looking statements are only predictions and are not guarantees of future performance. Certain risks, uncertainties and other factors may cause actual results to differ materially from those projected in the forward-looking statements. Such factors may include: overall business and economic conditions affecting the healthcare industry; saturation of our target market and hospital consolidations; changes in customer purchasing priorities, capital expenditures and demand for information technology systems; competition with companies that have greater financial, technical and marketing resources than we have; failure to develop new technology and products in response to market demands; fluctuations in quarterly financial performance due to, among other factors, timing of customer installations; failure of our products to function properly resulting in claims for medical losses; government regulation of our products and customers, including changes in healthcare policy affecting Medicare reimbursement rates; changes in accounting principles generally accepted in the United States; general economic conditions, including changes in the financial markets that may affect the availability and cost of credit to us or our customers; interruptions in our power supply and/or telecommunications capabilities and other risk factors described from time to time in our public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, our most recent Annual Report on Form 10-K. We also caution investors that the forward-looking information described herein represents our outlook only as of this date, and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this press release.

   

COMPUTER PROGRAMS AND SYSTEMS, INC.

Unaudited Condensed Statements of Operations

(in thousands, except per share data)

 
Three Months Ended

June 30,

Six Months Ended

June 30,

2009   2008 2009   2008
Sales revenues:
System sales $ 9,721 $ 8,458 $ 19,338 $ 19,114
Support and maintenance 13,820 13,133 27,654 26,219
Business management services   7,306   6,161   13,991   11,936
Total sales revenues 30,847 27,752 60,983 57,269
 
Cost of sales:
System sales 8,482 7,215 16,289 15,117
Support and maintenance 5,380 4,772 10,321 9,570
Business management services   4,358   3,640   8,240   7,225
Total cost of sales   18,220   15,627   34,850   31,912
Gross profit 12,627 12,125 26,133 25,357
 
Operating expenses:
Sales and marketing 2,252 2,129 4,328 4,389
General and administrative   5,040   5,287   10,182   10,761
Total operating expenses   7,292   7,416   14,510   15,150
 
Operating income 5,335 4,709 11,623 10,207
Interest income, net   239   230   472   495
Income before taxes 5,574 4,939 12,095 10,702
Provision for income taxes   2,033   1,948   4,529   4,205
Net income $ 3,541 $ 2,991 $ 7,566 $ 6,497
 
Basic earnings per share $ 0.32 $ 0.28 $ 0.69 $ 0.60
Diluted earnings per share $ 0.32 $ 0.28 $ 0.69 $ 0.60
 
Weighted average shares outstanding:
Basic 10,962 10,829 10,934 10,827
Diluted 10,962 10,843 10,937 10,845

   

COMPUTER PROGRAMS AND SYSTEMS, INC.

Condensed Balance Sheets

(in thousands, except per share data)

 
June 30,

2009

Dec. 31,

2008

(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,269 $ 11,744
Investments 14,575 11,846
Accounts receivable, net of allowance for doubtful accounts of $886 and $628, respectively 14,946 15,601
Financing receivables, current portion 3,046 2,357
Inventory 1,837 1,374
Deferred tax assets 1,539 1,332
Prepaid income taxes 392 319
Prepaid expenses   532     501  
Total current assets 46,136 45,074
 
Financing receivables, long-term 3,109 2,980
Property and equipment 13,002 12,080
Accumulated depreciation   (8,160 )   (7,267 )
Total assets $ 54,087   $ 52,867  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,619 $ 1,830
Deferred revenue 3,438 3,728
Accrued vacation 2,496 2,297
Other accrued liabilities   3,610     3,997  
Total current liabilities 11,163 11,852
 
Deferred tax liabilities 501 456
 
Stockholders’ equity:
Common stock, par value $0.001 per share, 30,000 shares authorized, 10,973 and 10,894 shares issued and outstanding 11 11
Additional paid-in capital 29,189 27,007
Accumulated other comprehensive income 39 56
Retained earnings   13,184     13,485  
Total stockholders’ equity   42,423     40,559  
Total liabilities and stockholders’ equity $ 54,087   $ 52,867  

   

COMPUTER PROGRAMS AND SYSTEMS, INC.

Unaudited Other Supplemental Information

(In thousands)

 

The following table summarizes free cash flow for the Company:

 

Three
Months
Ended
June 30,
2009

Six
Months
Ended
June 30,
2009

Net cash provided by operating activities $ 3,695 $ 7,350
Purchases of property and equipment   (594 )   (922 )
Free cash flow $ 3,101   $ 6,428  
 

Free cash flow is a non-GAAP financial measure which CPSI defines as net cash provided by operating activities less purchases of property and equipment. The most directly comparable GAAP financial measure is net cash provided by operating activities. The Company believes free cash flow is a useful measure of performance and uses this measure as an indication of the financial resources of the Company and its ability to generate cash.

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