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Computer Programs and Systems, Inc. (CPSI)
Q2 2008 Earnings Call
July 25, 2008 9:00 am ET
J. Boyd Douglas - President and Chief Executive Officer
Darrell G. West - Chief Financial Officer
Jeremy Lopez - William Blair & Co.
Bret Jones - Leerink Swann
Robert Dodd - Morgan, Keegan & Co.
Richard Close - Jefferies Financials & Co.
Jeff Schmidt - Sidoti & Co.
Previous Statements by CPSI
» Computer Programs & Systems Inc. Q4 2008 Earnings Call Transcript
» Computer Programs & Systems Inc. Q3 2008 Earnings Call Transcript
» Computer Programs & Systems Inc. Q1 2008 Earnings Call Transcript
J. Boyd Douglas
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 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 Darrell West, our Chief Financial Officer. Darrell and I have a few minutes of prepared comments, and then we’ll be glad to take your questions.
In the second quarter we installed our Financial and Patient Accounting System in five hospitals, our core clinical departmental applications at four facilities, eight hospitals implemented Nursing Point of Care, and three customers went live with Image Linked PACS. Add-on sales to existing clients made up 24% of our total revenue. At this time, we expect to install our Financial and Patient Accounting System at eight facilities in the third quarter. We anticipate five new installations of our core clinical departmental modules, nine Nursing Point of Care implementations, and five Image Linked installs.
In business management solutions during the second quarter we executed seven new accounts receivable management contracts, one of which was for full accounts receivable services, five for private pay collections, and one for insurance followup services. During the second quarter, revenue from this segment of our business grew 15% year over year. Demand for our business management solutions continues to be strong and we are very pleased with our operations in this segment of our business.
On the sales front, there has 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 the distinct advantage over our competition.
We are very pleased to have experienced such a significant turn-around in our marketplace. Our sales pipeline is strong and we expect the increased demand to continue into the third quarter. As I have said many times before, often there is no single catalyst that we can point to which signifies a rebound in our market. This is precisely the case now. There has been no notable change to Medicare or Medicaid reimbursement policies, yet during the last quarter, a record number of HIS purchasing decisions were made.
We are extremely pleased with our sales performance during the last quarter, and we feel that we are positioned quite well to take full advantage of the HIS decisions that we anticipate being made in the third quarter.
I am also happy to report that we now have completed 63 installations of the Linux operating system at our clients’ sites. We anticipate installing an additional 30 by the end of the third quarter. This conversion has gone extremely well, and as you can tell by the numbers, has been a huge success with our customer base and with potential clients.
In summary, I would like to reiterate that we are very pleased with our performance during the second quarter and we are excited about our prospects for the upcoming quarter. We are firing on all cylinders and we are well positioned in our marketplace with our products, services, and most importantly, our industry leading support.
At this time, I would like to turn the call over to Darrell for a few comments on the financials.
Darrell G. West
Our DSOs were 43 days for the second quarter, down 1 day from the first quarter and below our normal range of 45 to 60 days. Cash provided from operations for the quarter was $5.2 million compared with $5.2 million from the previous year. Free cash flow was $4.9 million for the second quarter compared with $4.9 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 $266,000 compared with $308,000 for the prior year quarter. Appreciation for the quarter was $487,000 compared with $528,000 last year. Cash collections were $30.4 million for the second quarter compared with $27.6 million for 2007.
We recognized stock compensation expense of $229,000 in the second quarter and an anticipated charge of $229,000 in the third quarter of 2008. Our effective tax rate is anticipated to be 39.2%. Our headcount at quarter end was 860, a decrease of 27 for the quarter.