Computer Programs & Systems Inc. (CPSI)
Q4 2008 Earnings Call
January 30, 2009 9:00 am ET
J. Boyd Douglas – Chief Executive Officer, President
Darrell G. West – Chief Financial Officer
Jamie Stockton – Morgan Keegan
Thomas Carpenter – Hilliard Lyons
[Winston Coates] for Bret Jones – Leerink Swann
Corey Tobin – William Blair & Company
Previous Statements by CPSI
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(Operator Instructions) As a reminder, this conference is being recorded, Friday, January 30, 2009. It is now my pleasure to introduce Boyd Douglas, President and Chief Executive Officer. Please go ahead sir
J. Boyd Douglas
Thank you [France], good morning everyone and thank you for joining us. During this conference call, we 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 that 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 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 Darryl West, our Chief Financial Officer. Darryl and I have a few minutes of prepared comments and then we'll be glad to take your questions.
In the fourth quarter, we installed our financial and patient accounting system in nine hospitals, our core clinical departmental applications at ten facilities, nine hospitals implemented nursing point-of-care, and five customers went live with ImageLink PACS.
Add on sales to existing clients made up 20% of total revenue. For the year, add on sales to existing clients was 21.4% of total revenue.
At this time we expect to install our financial and patient accounting system at seven facilities in the first quarter. We anticipate ten new installations of our core clinical departmental modules, eight nursing point-of-care implementations, and seven ImageLink installs.
In business managements solutions during the fourth quarter, we executed 13 new accounts receivable management contracts, three of which were for full accounts receivable services, nine for private pay collections, and one for insurance follow up services.
During the fourth quarter, revenue from this segment of our business grew 18% year-over-year. For the entire year, revenue from the accounts receivable management services grew 14.9%. Demand for our business management solutions continues to be strong, and we're very pleased with our operations in this division of our company.
On the sales front, there have been no significant changes in the competitive landscape. We continue to be excited about our position in the community hospital marketplace. The current economic crisis that is paralyzing our country continues to have little impact on our operations.
As you can tell from our guidance, we do not anticipate a material impact from the crisis as we enter the first quarter of 2009. Our customers continue to pursue their strategic plans and IT objectives, and we are hopeful that we can continue our strong performance throughout the coming year.
In closing, we are excited about our recent performance and feel like we are in a great position within our marketplace. We're expecting another strong quarter and are happier about our momentum as we enter the new year.
At this time I would like to turn things over to Darryl for a few comments on the financials.
Darryl G. West
Thanks Boyd. Our day's sales outstanding were 45 days for the fourth quarter, which was the same as DSOs in the third quarter. Cash provided from operations from the quarter was $3.4 million, compared with $6.2 million in the previous year.
Free cash flow was $3 million, compared with $5.9 million for the prior year quarter. We define free cash flow as net cash provided by operating activities, less capital expenditures. Capital expenditures for the quarter were $329,000, compared with $332,000 for the prior year quarter. We recorded depreciation expense in the quarter of $442,000, compared with $480,000 in the prior year.
Cash collections remain strong at $29.1 million for the fourth quarter, compared with $28.5 million in the fourth quarter of 2007.
We recognized stock compensation expense of $229,000 in the fourth quarter of 2008, and anticipated charge of $229,000 in the first quarter of 2009.
We anticipate an effective tax rate for 2009 to be 39%. In the fourth quarter, our effective tax rate was 35.9%, which was down significantly from our historical levels. This decrease was related to, additional, I guess, renewed Katrina credits that were passed as part of the TARP Legislation.
That legislation went back and retroactively allowed hiring credits in the Katrina go zone, back to August of 2007. So in the fourth quarter, we recognized the benefit of that for the past eight – 16 months. That legislation does continue throughout 2009, and we expect that to have our rate, effective tax rate at 39%.