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Computer Programs and Systems, Inc. (CPSI)
Q4 2009 Earnings Call Transcript
January 29, 2010 9:00 am ET
Boyd Douglas – President and CEO
Darrell West – VP, Finance and CFO
Jamie Stockton – Morgan Keegan
Bret Jones – Brean Murray
George Hill – Leerink Swann
Richard Close – Jefferies & Company
Sean Wieland – Piper Jaffray
Gene Mannheimer – Auriga
Corey Tobin – William Blair & Company
Charlie Rasmussen – Insight Capital
Brad Hoover – Sidoti & Company
Previous Statements by CPSI
» Computer Programs & Systems Inc. Q4 2008 Earnings Call Transcript
» Computer Programs & Systems Inc. Q3 2008 Earnings Call Transcript
» Computer Programs and Systems, Inc. Q2 2008 Earnings Call Transcript
I would now like to turn the conference over to Mr. Boyd Douglas, President and Chief Executive Officer. Please go ahead, sir.
Thank you, Kamika. Good morning, everyone and thank you for joining us. During this conference call, we may make status 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 risks, 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 Darrell West, our Chief Financial Officer. Darrell and I have a few minutes of prepared comments and then we will be happy to take your questions.
In the fourth quarter, we installed our financial and patient accounting system in 11 hospitals, our core clinical departmental applications at 11 facilities, 10 hospitals implemented nursing point of care and two customers went live with ImageLink PACS. Add-on sales to existing clients made up 26% 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 nine new installations of our core clinical departmental modules, nine nursing point-of-care and limitations and two ImageLink installs.
In Business Management Solutions during the fourth quarter, we executed 12 new accounts receivable management contracts, two of which were for full business management services and the remaining 10 for partial business management services.
During the fourth quarter, revenue from this segment of our business grew 20% year-over-year. On the sales front, we continue to see movement as a result of the ARRA, especially amongst our existing client base. Demand from current customers for add-on software continues to be strong. For prospective clients, we continue to experience what we believe to be the temporary increase in the length of the sales cycles as hospital executives are assessing the potential financial impact of the stimulus can plan on their facilities.
We continue to be confident that we are in an excellent position within our market to capitalize on the increased demand for software and services as a result of the ARRA. We remain fully committed to meeting all certification requirements that will be required under the ARRA. And we are well prepared to help each and every one of our customers and prospective customers achieve the meaningful use status thus maximizing the financial benefits for which they qualify under the ARRA.
At this time, I would like to turn the call over to Darrell for a few comments on our financials.
Thanks, Boyd. Our DSOs were 53 days for the fourth quarter, which was an increase of eight days from the previous year, but the same as the third quarter. Cash provided by operations for the quarter was $3.4 million compared with $3.4 million from the previous year quarter.
Free cash flow was $3.2 million for the quarter compared with $3 million from the prior year quarter. We define free cash flow as net cash provided by operating activities less capital expenditures. Capital expenditures for the quarter was $183,000 compared with $329,000 for the prior year quarter.
Depreciation for the quarter was $478,000 compared with $442,000 last year. Cash collections were $32.3 million for the fourth quarter, compared with $29.1 million in 2008. We recognized stock comp expense of $229,000 in the fourth quarter and anticipate that same charge of $229,000 in the first quarter of 2010. Our effective tax rate for 2010 is projected to be 39%. Our headcount at quarter end was 1087, an increase of 81 for the quarter.
Kamika, at this time, we’d like to open up the call for questions.
(Operator Instructions) Our first question is from the line of Jamie Stockton with Morgan Keegan. Please proceed with your question.
Jamie Stockton – Morgan Keegan
Good morning, guys. Thanks for taking my questions. I guess, Boyd, the first question is when you look at where earnings came in versus where you got it, what was the difference there in your mind? Were there incremental investments that you decided to make during the quarter that changed the situation or was it hardware as a bigger proponent -- component of system sales? If you could talk about that I would appreciate it.