Computer Programs and Systems, Inc. (CPSI)

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Computer Programs & Systems (CPSI)

Q3 2012 Earnings Call

October 26, 2012 9:00 am ET


J. Boyd Douglas - Chief Executive Officer, President and Executive Director

David A. Dye - Chairman, Chief Financial Officer, Vice President of Finance, Treasurer and Secretary


David Larsen - Leerink Swann LLC, Research Division

Stephen Lynch - Wells Fargo Securities, LLC, Research Division

Bret D. Jones - Oppenheimer & Co. Inc., Research Division

George Hill - Citigroup Inc, Research Division

Delroy Warmington - Delwar Capital Management

Frank Sparacino - First Analysis Securities Corporation, Research Division

Alexander Y. Draper - Raymond James & Associates, Inc., Research Division

Sean W. Wieland - Piper Jaffray Companies, Research Division

Caroline LeCates - Lazard Capital Markets LLC, Research Division

Andrew O'Hara

Brian Hoffman

Leo F. Carpio - Caris & Company, Inc., Research Division



Ladies and gentlemen, thank you for standing by. Welcome to the Computer Programs & Systems Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, October 26, 2012.

I would now to turn the conference over to Boyd Douglas, President and Chief Executive Officer, Computer Programs & Systems. Please go ahead, sir.

J. Boyd Douglas

Thank you, Charlene. 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 that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance.

Actual results might differ materially from those expressed or implied by such forward-looking statements as a result of known and unknown 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 most 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 David Dye, our Chief Financial Officer. David and I have a few minutes of prepared comments and then we'll be happy to take your questions.

In the third quarter, we installed our Financial and Patient Accounting System at 8 hospitals and our core clinical departmental applications at 15 facilities. Additionally, 17 hospitals implemented Nursing Point of Care, 13 customers went live with CPOE and 13 facilities implemented physician's documentation. Add-on sales to existing clients were $10.8 million or 23% of total revenue for the quarter.

At this time, we expect to install our Financial and Patient Accounting System in 7 facilities in the fourth quarter. We anticipate 12 new installations of our core clinical departmental modules, 15 Nursing Point of Care implementations, installation of 14 CPOE sites and 22 Physician Documentation installations.

In Business Management Solutions during the third quarter, we executed 6 new accounts receivable management contracts, 2 of which were for full services and 4 for private pay services.

We are very pleased to report that our clients' success with achieving Meaningful Use continues. According to the latest figures released by CMS, 257 CPSI clients have successfully attested for Meaningful Use. This represents an increase of 58 hospitals since our last call. CPSI has more hospitals that have successfully attested under the complete EHR designation than any other vendor including Epic, Cerner, and MEDITECH.

Our number of hospital successfully attesting also continues to be significantly above the combined total of our traditional competitors in the rural and community hospital segment such as HMS, Health Plan, NextGen, and Prognosis.

Viewed in a different light, 19% of all hospitals who have successfully attested under the complete EHR designation, or roughly 1 in 5, are CPSI clients. I believe the final significant take away from these numbers is that we are, by no means, resting on our laurels with what we have achieved to date. We view the continued success of our clients in achieving and maintaining Meaningful Use status as a long-term commitment from a development, implementation and support perspective.

We are confident that the evidence of this commitment as reflected by our hospitals ongoing, and increasing success within the program will be a significant factor competitively for both hospitals adopting EHRs for the first time, and facilities that are looking to replace their current vendor.

From a new product perspective, we continue to be pleased with the adoption of our recently released Physician Documentation application. To date, we have successfully installed the applications in 31 facilities. By year end, we are targeted to have 53 hospitals live with the application.

Given the challenge of successfully implementing any application that requires significant position interaction with the system, we feel very good about where we are today. We also believe this will prove to be a significant advantage at the point in time that position interprogress notes become required as a component of Meaningful Use, which is already the case as a menu item for Stage 2 and well without a doubt, be required for Stage 3.

We saw this with CPOE, where our success with CPOE prior to passage of the stimulus program played a major role in assisting our hospitals and meeting the CPOE objective for Stage 1.

Finally, I would like to briefly update you on our ongoing research and development projects. With the transition to our new technology platform complete, our development efforts are now squarely focused on using the new tools supported us in enhancing our end-user experience.

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