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Computer Programs And Systems, Inc. Announces Third Quarter 2011 Results

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

Highlights:

  • Revenues of $42.0 million;
  • 12-month backlog of $130.7 million;
  • Earnings per diluted share of $0.54;
  • Cash provided by operations of $7.1 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 third quarter and nine months ended September 30, 2011.

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 November 25, 2011, to stockholders of record as of the close of business on November 10, 2011.

Total revenues for the third quarter ended September 30, 2011, increased 2.8% to $42.0 million, compared with total revenues of $40.9 million for the prior-year period. Net income for the quarter ended September 30, 2011, increased 22.5% to $6.0 million, or $0.54 per diluted share, compared with $4.9 million, or $0.45 per diluted share, for the quarter ended September 30, 2010. Cash provided by operations for the third quarter of 2011 was $7.1 million, compared with $5.3 million for the prior-year period.

Total revenues for the nine months ended September 30, 2011, increased 19.1% to $131.3 million, compared with total revenues of $110.2 million for the prior-year period. Net income for the nine months ended September 30, 2011, increased 59.7% to $19.3 million, or $1.75 per diluted share, compared with $12.1 million, or $1.10 per diluted share, for the nine months ended September 30, 2010. Cash provided by operations for the first nine months of 2011 was $24.2 million, compared with $13.9 million for the prior-year period.

For the fourth quarter of 2011, the Company anticipates total revenues of $43 million to $46 million and net income of approximately $6.3 million to $6.7 million, or $0.57 to $0.61 per diluted share. CPSI’s 12-month backlog as of September 30, 2011, was $130.7 million, consisting of $29.8 million in non-recurring system purchases and $100.9 million in recurring payments for support, Business Management Services, ASP and ISP contracts.

A listen-only simulcast and replay of CPSI’s third quarter 2011 conference call will be available on-line at www.cpsinet.com and www.earnings.com on October 28, 2011, 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 45 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 1,200 technical, healthcare, medical and business 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 the effects of the healthcare reform legislation enacted in 2010 and changes in healthcare policy affecting Medicare and Medicaid 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

September 30,

    Nine Months Ended

September 30,

2011     2010 2011     2010
Sales revenues:
System sales $ 15,999 $ 17,482 $ 55,199 $ 42,049
Support and maintenance 17,195 14,980 49,563 43,655
Business management services   8,851   8,451   26,502   24,464
Total sales revenues 42,045 40,913 131,264 110,168
 
Cost of sales:
System sales 10,845 12,591 36,496 33,778
Support and maintenance 6,811 6,161 19,750 17,619
Business management services   4,912   5,104   14,249   13,919
Total cost of sales   22,568   23,856   70,495   65,316
Gross profit 19,477 17,057 60,769 44,852
 
Operating expenses:
Sales and marketing 3,581 3,311 10,372 8,315
General and administrative   6,258   6,068   19,629   17,645
Total operating expenses   9,839   9,379   30,001   25,960
 
Operating income 9,638 7,678 30,768 18,892
Interest income, net   181   222   493   512
Income before taxes 9,819 7,900 31,261 19,404
Provision for income taxes   3,830   3,012   11,982   7,331
Net income $ 5,989 $ 4,888 $ 19,279 $ 12,073
 
Basic earnings per share $ 0.54 $ 0.45 $ 1.75 $ 1.10
Diluted earnings per share $ 0.54 $ 0.45 $ 1.75 $ 1.10
 
Weighted average shares outstanding:
Basic 11,063 10,963 11,024 10,963
Diluted 11,063 10,963 11,024 10,963

 
COMPUTER PROGRAMS AND SYSTEMS, INC.
Condensed Balance Sheets

(In thousands)

    Sept. 30,

2011

    Dec. 31,

2010

(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 11,160 $ 2,940
Investments 16,445 13,402

Accounts receivable, net of allowance for doubtful accounts of $1,830 and $969, respectively

21,234 25,473
Financing receivables, current portion 4,324 3,114
Inventory 2,008 1,783
Deferred tax assets 2,965 2,244
Prepaid income taxes 1,255 102
Prepaid expenses   490     562  
Total current assets 59,881 49,620
 
Financing receivables, long-term 4,347 4,432
Property and equipment 20,847 19,576
Accumulated depreciation   (12,661 )   (10,893 )
Total assets $ 72,414   $ 62,735  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 2,648 $ 2,617
Deferred revenue 4,961 4,469
Accrued vacation 3,345 2,952
Other accrued liabilities   5,514     4,447  
Total current liabilities 16,468 14,485
 
Deferred tax liabilities 1,451 1,786
 
Stockholders’ equity:
Common stock, par value $0.001 per share, 30,000 shares authorized, 11,063 and 10,963 shares issued and outstanding 11 11
Additional paid-in capital 31,263 30,549
Accumulated other comprehensive income 10 59
Retained earnings   23,211     15,845  
Total stockholders’ equity   54,495     46,464  
Total liabilities and stockholders’ equity $ 72,414   $ 62,735  

 
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Other Supplemental Information

(In thousands)

 

The following table summarizes free cash flow for the Company:

 
   

Three Months Ended Sept. 30, 2011

   

Nine Months Ended Sept. 30, 2011

Net cash provided by operating activities $ 7,060 $ 24,199
Purchases of property and equipment   (336 )   (1,007 )
Free cash flow $ 6,724   $ 23,192  
 

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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