Computer Programs & Systems Inc. (CPSI)
Q3 2008 Earnings Call
October 24, 2008 9:00 am ET
David A. Dye – Chairman
J. Boyd Douglas – Chief Executive Officer, President
Darrell G. West – Chief Financial Officer
Michael S. Jones – Chief Operating Officer and Exec. VP
Jeremy Frazer – William Blair & Company
Jamie Stockton – Morgan Keegan
Thomas Carpenter – Hilliard Lyons
Bret Jones – Leerink Swann
Leo Carpio – Caris & Company
Richard Close – Jefferies & Co.
Previous Statements by CPSI
» Computer Programs & Systems Inc. Q4 2008 Earnings Call Transcript
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» Computer Programs & Systems Inc. Q1 2008 Earnings Call Transcript
Thank you [Chris], good morning everyone and thank you for joining us. During this conference call we may make statements regarding future operating plans, expectations and performance that constitute forward looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
We caution you any such forward looking statements are only predictions and are not guarantees of future performance. Actual results might differ materially from those projected in the forward looking statements as a result of risk, uncertainties and other factors. Including those described in our public releases and reports filed with the Securities and Exchange Commission, including but not limited to our recent annual report on the Form 10-K.
We also caution investors that the forward looking information provided in this call 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 call.
Joining me on the call this morning is Darrell West our Chief Financial Officer. Darrell and I have about five minutes of prepared comments and then we will be glad to take your questions.
In the third quarter we installed our financial and patient accounting system in seven hospitals, our core clinical departmental applications at four facilities, eight hospitals implemented nursing point of care and five customers went live with ImageLink PACS.
Add on sales to existing clients made up 22% of total revenue. At this time we expect to install our financial and patient accounting system at nine facilities in the fourth quarter. We anticipate ten new installations of our core clinical departmental module, nine nursing point of care implementations and six ImageLink installs.
In business management solutions during the third quarter we executed eight new accounts receivable management contracts. One of which was for full accounts receivable services, six for private pay collection and one for insurance follow up services. During the third quarter, revenue from this segment of our business grew 12% year-over-year. Demand for our business management solutions continues to be strong, and we’re very pleased with our operations in this segment of our business.
On the sales front there’s been no significant change in the competitive landscape. Our move to the Linux operating system, CCHIT approval and our full suite of business management services, continue to give us a distinct advantage over our competition.
The current economic and credit conditions that the country is currently experiencing are not having an effect on our operations at this time. Our customers continue to pursue their strategic plans and IT objectives. And as you can tell from our third quarter results and our fourth quarter guidance we are confident that we will finish the year with a strong performance.
We have now completed 98 installations of the Linux operating system at our client sites. We anticipate installing an additional 30 by the end of the fourth quarter. The migration to the Linux operating system continues to go extremely well. And should be signed – should be seen as a sign of our commitment and ability for a valid customer base with the latest technology at an affordable price.
In closing we continue to be extremely pleased with our performance and feel like we’re in a great position within our marketplace. We are expecting a particularly strong fourth quarter and are happy about the momentum as it carries us into 2009.
At this time I would like to turn things over to Darrell for a few comments on the financials.
Thanks Boyd. Our DSOs were 45 days from the third quarter up two days from the second quarter. Cash provided from operations for the quarter was $2.8 million compared with $4.3 million last year.
Free cash flow was $2.6 million for the quarter compared with $4 million for the prior year quarter. We define free cash flow as net cash provided by operating activities less capital expenditures.
CapEx for the quarter was $209,000 compared with $234,000 for the prior year quarter. Depreciation for the quarter was $404,000 compared with $443,000 in the prior year. Cash collections were $29 million for the third quarter, compared with $28.7 million in 2007.
We recognized stock compensation expense of $229,000 in the third quarter of 2008 and anticipate a charge of $229,000 in the fourth quarter. Our effective tax rate for 2008 is 37.8%. Our headcount at quarter end was 863, an increase of three for the quarter.
[Chris] we would like to open the call for questions at this time.
(Operator Instructions) Your first question comes from Corey Tobin – William & Blair Company
Jeremy Frazer – William Blair & Company