CPSI 2017 Annual Report

We are proud to report a solid performance for CPSI in 2017, as we consolidated our operations following the 2016 acquisition of Healthland and its affiliates, and focused on a strategic direction to build greater value across the CPSI family of companies. Our results for the year, and the momentum we are building in the marketplace, reflect consistent execution in our evolution as a community healthcare solutions company. Even with considerable headwinds and constant changes surrounding the healthcare industry, we affirmed our leadership position with a shared vision across our family of companies to meet our primary objectives - to build healthy communities and deliver value to our shareholders. Since inception, CPSI has enjoyed a favorable reputation as a trusted partner to community hospitals across the United States, providing innovative technology solutions and services that support our client s’ success. Our family of companies is focused on improving the overall health of the communities we serve, connecting healthcare communities for a better patient experience, and improving the financial operations of our clients. As we look back at 2017, we are proud of the continued affirmation that we are meeting these objectives. Today, more than 4,300 acute and post-acute care facilities nationwide employ solutions from the CPSI family of companies. As the healthcare industry transitions its focus from electronic health record (EHR) implementation to optimization, value-based reimbursement, care coordination and interoperability, our strategy is to remain at the forefront of helping our clients navigate through and respond to these changes. We reported total revenues of $276.9 million for 2017, up 3.6 percent compared with 2016. Notably, nearly 80 percent of our revenues were recurring in nature, providing greater financial stability and visibility going forward. Our sales were propelled by strong consolidated annual bookings of $108.9 million, a 10.5 percent increase over 2016. Our continued execution with EHR system sales and impressive momentum with the business management, consulting, and managed information technology (IT) services and revenue cycle management (RCM) solutions provided by TruBridge were the key drivers of our revenue growth. During the fourth quarter, we recorded a non-cash goodwill impairment charge of $28.0 million related to our post-acute care business, American HealthTech (AHT). While we remain confident that AHT has the potential to drive further growth for CPSI, we believe a multi-year development investment is necessary to realize that potential. Inclusive of this one-time accounting charge, we reported a GAAP net loss of $17.4 million for 2017. Non-GAAP net income for the year was $23.8 million, or $1.77 per diluted share, compared with $22.6 million, or $1.71 per diluted share, last year. (See the back of this report for a reconciliation of each of non-GAAP net income and non-GAAP earnings per share to its GAAP equivalent.) For 2017, cash provided by operations was $23.6 million compared with $2.1 million in 2016. The strength in operating cash flows resulted in net repayments of bank debt of over $12.0 million in 2017, nearly double the requirements of our term loan repayment obligation. This action is commensurate with our commitment to reducing our overall leverage on an expedited basis. TO OUR SHAREHOLDERS: