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What changed in TruBridge, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TruBridge, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+362 added−387 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-16)

Top changes in TruBridge, Inc.'s 2023 10-K

362 paragraphs added · 387 removed · 245 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

97 edited+32 added−58 removed90 unchanged
Biggest changeThe individual companies align with the reporting segments and contribute towards the combined focus of improving the health of the communities we serve as follows: • The RCM reporting segment includes TruBridge, HRG, and TruCode, and focuses on providing business management, consulting, and managed IT services along with its complete RCM solution for all care settings, regardless of their primary healthcare information solutions provider. • The EHR segment includes Evident and AHT, and provides comprehensive acute and post-acute care EHR solutions and related services for community hospitals, their physician clinics, and skilled nursing and assisted living facilities. • The Patient Engagement segment offers comprehensive patient engagement and empowerment technology solutions through Get Real Health to improve patient outcomes and engagement strategies with care providers.
Biggest changeThese segments contribute towards the combined focus of improving the health of the communities we serve as follows: • The RCM reporting segm ent focuses on providing a complete RCM solution for all care settings, regardless of their primary healthcare information solutions provider along with business management, consulting, managed IT services, analytics and business intelligence. • The EHR segment provides comprehensive acute care solutions and related services for community hospitals, and their physician clinics. • The Patient Engagement segment offers comprehensive patient engagement and empowerment technology solutions to improve patient outcomes and engagement strategies with care providers.
For example, we are affected by the following regulations: • As discussed above, the HIPAA security and privacy standards affect our claims transmission services, since those services must be structured and provided in a way that supports our clients’ HIPAA compliance obligations, and GDPR is applicable to certain of our activities conducted from an establishment in the EU and our operations that are targeting clients and activities within the EU. 19 • The United States Food and Drug Administration (the “FDA”) has determined that certain of our solutions, such as our ImageLink® and Blood Administration ® products, are medical devices that are actively regulated under the Federal Food, Drug and Cosmetic Act, as amended. • The use of our solutions by physicians for electronic prescribing and electronic routing of prescriptions via the Surescripts network to pharmacies is governed by federal and state laws.
For example, we are affected by the following regulations: • As discussed above, the HIPAA security and privacy standards affect our claims transmission services, since those services must be structured and provided in a way that supports our clients’ HIPAA compliance obligations, and GDPR is applicable to certain of our activities conducted from an establishment in the EU and our operations that are targeting clients and activities within the EU. • The United States Food and Drug Administration (the “FDA”) has determined that certain of our solutions, such as our ImageLink® and Blood Administration ® products, are medical devices that are actively regulated under the Federal Food, Drug and Cosmetic Act, as amended. 19 • The use of our solutions by physicians for electronic prescribing and electronic routing of prescriptions via the Surescripts network to pharmacies is governed by federal and state laws.
Compensation and Benefits We compensate employees with competitive wages and benefit programs designed to meet employee needs. Our compensation program is designed to recognize our employees' contributions to service excellence and business results. We use a combination of fixed and variable pay including base salary, bonus, commissions and merit increases which vary across the Company.
Compensation and Benefits We compensate employees with competitive wages and benefit and wellness programs designed to meet employee needs. Our compensation program is designed to recognize our employees' contributions to service excellence and business results. We use a combination of fixed and variable pay including base salary, bonus, commissions and merit increases which vary across the Company.
Our RCM solutions empower providers and caregivers in hospitals, healthcare systems and skilled nursing organizations to accelerate their revenue cycle through a suite of comprehensive, web-based solutions designed to improve financial operations and staff productivity and increase reimbursement. Our RCM products include the following offerings: ◦ Patient Liability Estimates .
Our RCM solutions empower providers and caregivers in hospitals, healthcare systems, clinics and skilled nursing organizations to accelerate their revenue cycle through a suite of comprehensive, web-based solutions designed to improve financial operations and staff productivity and increase reimbursement. Our RCM products include the following offerings: ◦ Patient Liability Estimates .
System Implementation and Training Conversion Services . When a client purchases or leases one of our systems, we convert their existing data to the new system. Our knowledge of hospital data processing, in conjunction with extensive in-house technical expertise, allows us to accomplish this task in a cost effective manner.
System Implementation and Training Conversion Services . When a client purchases or leases one of our systems, we convert their existing data to the new system. Our knowledge of hospital data processing, in conjunction with extensive in-house technical expertise, allows us to accomplish 13 this task in a cost effective manner.
Additionally, we believe that the industry will continue to increase its utilization of third party services 7 that contribute to the achievement of these and other objectives necessary for success in the current environment. We believe these dynamics should allow for future revenue growth for both our information technology solutions and our complementary suite of services.
Additionally, we believe that the industry will continue to increase its utilization of third party services that contribute to the achievement of these and other objectives necessary for success in the current environment. We believe these dynamics should allow for future revenue growth for both our information technology solutions and our complementary suite of services.
In addition, there is a market of small specialty hospitals that focus on discrete medical areas such as surgery, rehabilitation and long-term acute care. The healthcare industry is constantly challenged by changing economic dynamics, increased regulation and pressure to improve the quality of care.
In addition, there is a market of small specialty hospitals that focus on discrete medical areas such as surgery, rehabilitation and long-term acute care. 6 The healthcare industry is constantly challenged by changing economic dynamics, increased regulation and pressure to improve the quality of care.
These companies compete with us directly in our target market of small and midsize 17 hospitals. They offer comparable products and systems that address the needs of hospitals in the markets we serve. Our secondary competitors in the acute care EHR market include N. Harris Computer Corporation and Epic Systems Corporation.
These companies compete with us directly in our target market of small and midsize hospitals. They offer comparable products and systems that address the needs of hospitals in the markets we serve. Our secondary competitors in the acute care EHR market include N. Harris Computer Corporation and Epic Systems Corporation.
Our software applications within Thrive: • provide automated processes that improve clinical workflow and support clinical decision-making; • allow healthcare providers to efficiently input and easily access the most current patient medical data in order to improve quality of care and patient safety; • integrate clinical, financial and patient information to promote efficient use of time and resources, while eliminating dependence on paper medical records; • provide tools that permit healthcare organizations to analyze past performance, model new plans for the future and measure and monitor the effectiveness of those plans; • provide for rapid and cost-effective implementation, whether through the installation of an in-house system or through our Software as a Service ("SaaS") services; and • increase the flow of information by replacing centralized data over which there is limited control with broad-based, secure access by clinical and administrative personnel to data relevant to their functional areas.
Our software applications within TruBridge EHR • provide automated processes that improve clinical workflow and support clinical decision-making; • allow healthcare providers to efficiently input and easily access the most current patient medical data in order to improve quality of care and patient safety; • integrate clinical, financial and patient information to promote efficient use of time and resources, while eliminating dependence on paper medical records; • provide tools that permit healthcare organizations to analyze past performance, model new plans for the future and measure and monitor the effectiveness of those plans; • provide for rapid and cost-effective implementation, whether through the installation of an in-house system or through our Software as a Service ("SaaS") services; and • increase the flow of information by replacing centralized data over which there is limited control with broad-based, secure access by clinical and administrative personnel to data relevant to their functional areas.
Our ability to connect patients 16 to care providers within their community and across communities through our own products and interoperability development, including our membership in the CommonWell Health Alliance, sets us apart from other competitors in our market.
Our ability to connect patients to care providers within their community and across communities through our own products and interoperability development, including our membership in the CommonWell Health Alliance, sets us apart from other competitors in our market.
Dye served as our President and Chief Executive Officer from July 1999 21 to May 2006. He was first elected as a director in March 2002 and served as our Chairman of the Board from May 2006 until April 2019. Mr.
Dye served as our President and Chief Executive Officer from July 1999 to May 2006. He was first elected as a director in March 2002 and served as our Chairman of the Board from May 2006 until April 2019. Mr.
A hospital’s failure to adequately invest in a modern medical information system could result in fewer patient referrals, cost inefficiencies, lower than expected reimbursement, increased malpractice risk and possible regulatory infractions.
A hospital’s failure to adequately invest in a modern medical information system could result 7 in fewer patient referrals, cost inefficiencies, lower than expected reimbursement, increased malpractice risk and possible regulatory infractions.
Furnishing these forms and supplies helps us to achieve our objective of being a one-source solution for a hospital’s complete healthcare information system requirements. • Public Cloud Infrastructure – During 2021, we formed a strategic partnership with Microsoft for Azure cloud hosting and infrastructure services, with the end-goal of migrating all existing internal and client data to Azure’s public cloud and utilizing the related infrastructure solutions to enhance both internal and client-facing processes and services.
Furnishing these forms and supplies helps us to achieve our objective of being a one-source solution for a hospital’s complete healthcare information system requirements. • Public Cloud Infrastructure – In 2021, we formed a strategic partnership with Microsoft for Azure cloud hosting and infrastructure services, with the end-goal of migrating all existing internal and client data to Azure’s public cloud and utilizing the related infrastructure solutions to enhance both internal and client-facing processes and services.
We target hospitals under 100 beds in the United States that we believe are currently using a vendor that we have determined is vulnerable based on a variety of factors. Our goal in the ambulatory market is to aggressively target physician practices in those communities where the local hospital is a current CPSI client.
We target hospitals under 100 beds in the United States that we believe are currently using a vendor that we have determined is vulnerable based on a variety of factors. Our goal in the ambulatory market is to aggressively target physician practices in those communities where the local hospital is a current TruBridge client.
Fowler served as Assistant Director and Director of Business Management Services. Mr. Fowler served as CPSI’s Vice President – Business Management Services from March 2008 until the formation of TruBridge in January 2018, after which time he served as its President. He then served as Chief Operating Officer of the Company from November 2015 through June 2022. David A.
Fowler served as Assistant Director and Director of Business Management Services. Mr. Fowler served as TruBridge’s Vice President – Business Management Services from March 2008 until the formation of TruBridge in January 2018, after which time he served as its President. He then served as Chief Operating Officer of the Company from November 2015 through June 2022. David A.
He also held various healthcare technology leadership roles at nThrive (formerly MedAssets) from March 2010 through August 2019, including Senior Vice President of Internal Analytics, Vice President of Strategic Initiatives, and Vice President of System Strategy and Operations. Company Web Site The Company maintains a web site at http://www.cpsi.com.
He also held various healthcare technology leadership roles at nThrive (formerly MedAssets) from March 2010 through August 2019, including Senior Vice President of Internal Analytics, Vice President of Strategic Initiatives, and Vice President of System Strategy and Operations. Company Web Site The Company maintains a web site at http://www.trubridge.com.
Our principal competitors in the business management, consulting and managed IT services market are Resolution Health, Inc., The Outsource Group Inc., Patient Focus, Inc., Xtend Healthcare Inc., Ensemble Health Partners, and nThrive, Inc. These companies all focus on providing services to the healthcare market, and the services they offer are comparable in socpe to the competing services we offer.
Our principal competitors in the business management, consulting and managed IT services market are Resolution Health, Inc., The Outsource Group Inc., Patient Focus, Inc., Xtend Healthcare Inc., Ensemble Health Partners, and nThrive, Inc. These companies all focus on providing services to the healthcare market, and the services they offer are comparable in scope to the competing services we offer.
Protecting individually identifiable health information and other sensitive data is a critical and essential function of CPSI’s operations and its software solutions. A variety of industry-standard approaches that meet or exceed regulatory requirements such as HIPAA and HITECH are employed.
Protecting individually identifiable health information and other sensitive data is a critical and essential function of TruBridge’s operations and its software solutions. A variety of industry-standard approaches that meet or exceed regulatory requirements such as HIPAA and HITECH are employed.
We are acutely focused on our vision of selling our RCM solution to both our existing customer base, as well as to hospitals of 400 beds or under in the United States. There are approximately 4,700 of these hospitals with fewer than 400 beds.
We are acutely focused on our vision of selling our RCM solution to both our existing customer base, as well as to hospitals of 400 beds or under in the United States. There are approximately 4,600 of these hospitals with fewer than 400 beds.
The collection, use, storage, disclosure, transfer, or other processing of any personal data regarding individuals in the European Union, including personal health data, is subject to the European Union’s General Data Protection Directive (“GDPR”), which became effective on May 25, 2018.
The collection, use, storage, disclosure, transfer, or other processing of any personal data regarding individuals in the European Union, including personal health data, is subject to the European Union’s General Data Protection Directive (“GDPR”), which became effective in May 2018.
Plessner joined CPSI as part of the Get Real Health acquisition in 2019. He served as General Counsel at Get Real Health from 2013 until the 2019 acquisition, at which point he became Corporate Counsel at CPSI. Wes D. Cronkite - Chief Technology and Innovation Officer. Wes D.
Plessner joined TruBridge as part of the Get Real Health acquisition in 2019. He served as General Counsel at Get Real Health from 2013 until the 2019 acquisition, at which point he became Corporate Counsel at TruBridge. Wes D. Cronkite - Chief Technology and Innovation Officer. Wes D.
Dye – Chief Operating Officer. David A. Dye, age 53, was appointed as our Chief Operating Officer on October 10, 2022. Mr. Dye previously served as our Chief Growth Officer since November 2015 and Chief Financial Officer, Secretary and Treasurer from June 2010 until November 2015. Mr.
Dye – Chief Operating Officer. David A. Dye, age 54, was appointed as our Chief Operating Officer on October 10, 2022. Mr. Dye previously served as our Chief Growth Officer since November 2015 and Chief Financial Officer, Secretary and Treasurer from June 2010 until November 2015. Mr.
The eventual migration to Azure, which began during 2022, will benefit customers by removing the burden of maintaining their own on-premise infrastructure while the underlying applications will operate with higher availability and stability, reducing unexpected downtime. This modernized infrastructure will open the door to future innovations and data access as well.
The eventual migration to Azure, which began during 2022 and continued through 2023, will benefit customers by removing the burden of maintaining their own on-premise infrastructure while the underlying applications will operate with higher availability and stability, reducing unexpected downtime. This modernized infrastructure will open the door to future innovations and data access as well.
We believe that we compete favorably with our competitors on these factors. Our principal competitors for RCM solutions include RelayHealth Corp, SSI Group, LLC, Quadax Inc., Change Healthcare Holdings, Inc., Availity, LLC, and Navicure, Inc.
We believe that we compete favorably with our competitors on these factors. Our principal competitors for RCM solutions include RelayHealth Corp, SSI Group, LLC, Quadax Inc., Change Healthcare Holdings, Inc., Availity, LLC, Waystar Technologies, Inc., and Navicure, Inc.
Thrive Within Thrive, we offer a full array of software applications using one fully integrated system designed to streamline the flow of information to the primary functional areas of community hospitals. We intend to continue to enhance our existing software applications and develop new applications as required by evolving industry standards and the changing needs of our clients.
TruBridge EHR Within TruBridge EHR, we offer a full array of software applications using one fully integrated system designed to streamline the flow of information to the primary functional areas of community hospitals. We intend to continue to enhance our existing software applications and develop new applications as required by evolving industry standards and the changing needs of our clients.
Thrive's single database structure permits authorized hospital personnel to simultaneously access appropriate portions of a patient’s record from any point on the system. 10 Our patient management software applications include: Registration, Patient Accounting, Health Information Management, Patient Index, Enterprise Wide Scheduling, Contract Management, and Quality Improvement. • Financial Accounting .
The TruBridge EHR single database structure permits authorized hospital personnel to simultaneously access appropriate portions of a patient’s record from any point on the system. Our patient management software applications include: Registration, Patient Accounting, Health Information Management, Patient Index, Enterprise Wide Scheduling, Contract Management, and Quality Improvement. 10 • Financial Accounting .
The Company is not including the information contained on or available through its web site as a part of, or incorporating such information into, this Annual Report on Form 10-K. 22
The Company is not including the information contained on or available through its web site as a part of, or incorporating such information into, this Annual Report on Form 10-K. 21
We also expect to see continued health care policy legislation focused on patients, like pricing transparency and the No Surprises Act, which is intended to address unexpected gaps in insurance coverage that result in "surprise medical bills" when patients unknowingly obtain medical services (such as emergency services) from out-of-network providers.
We also expect to see continued health care policy legislation focused on patients, like pricing transparency and the No Surprises Act, which is intended to address unexpected gaps in insurance coverage that result in “surprise medical bills” when patients unknowingly obtain medical services (such as emergency services) from out-of-network providers.
Dye began his career with CPSI in May 1990 as a Financial Software Support Representative and served in various capacities until July 1999. Mr. Dye served as a director of Bulow Biotech Prosthetics, LLC, a company headquartered in Nashville, Tennessee that operates prosthetic clinics in the Southeastern United States, from July 2006 until October 2018. Matt J.
Dye began his career with TruBridge in May 1990 as a Financial Software Support Representative and served in various capacities until July 1999. Mr. Dye served as a director of Bulow Biotech Prosthetics, LLC, a company headquartered in Nashville, Tennessee that operates prosthetic clinics in the Southeastern United States, from July 2006 until October 2018.
Severance, age 53, was appointed as our Chief Sales Officer in November 2022 after serving as Senior Vice President of Sales for TruBridge since January 2021. Ms. Severance joined CPSI as part of the Healthland acquisition in 2016 where she served as Vice President of Sales. Ms.
Severance, age 54, was appointed as our Chief Sales Officer in November 2022 after serving as Senior Vice President of Sales for TruBridge since January 2021. Ms. Severance joined TruBridge as part of the Healthland acquisition in 2016 where she served as Vice President of Sales. Ms.
We continue to partner with our employees to understand how we can better support their health and wellness while allowing them to be their true and authentic selves at work every day.
We continue to partner with our employees, including our people leaders to understand how we can better support their health and wellness while allowing them to be their true and authentic selves at work every day.
According to the American Hospital Association’s AHA Hospital Statistics, 2021 Edition , there are approximately 4,700 community hospitals in the United States that are in our target market of hospitals with fewer than 400 beds, with approximately 2,900 of those having fewer than 100 acute care beds.
According to the American Hospital Association’s AHA Hospital Statistics, 2022 Edition , there are approximately 4,600 community hospitals in the United States that are in our target market of hospitals with fewer than 400 beds, with approximately 2,900 of those having fewer than 100 acute care beds.
Some sales representatives in our services areas are assigned specifically to cross-sell services into our acute care EHR and post-acute care EHR client bases. A significant portion of the compensation for all sales personnel is commission based except for administrative support staff.
Some sales representatives in our services areas are assigned specifically to cross-sell services into our acute care EHR client base. A significant portion of the compensation for all sales personnel is commission based except for administrative support staff.
Cronkite, age 40, was appointed as our Chief Innovation Officer in May 2021 and then was appointed Chief Technology and Innovation Officer in November 2022. Prior to joining CPSI, Mr. Cronkite served as Senior Vice President of Innovation at BrightSpring Health from August 2018 until April 2021.
Cronkite, age 41, was appointed as our Chief Innovation Officer in May 2021 and then was appointed Chief Technology and Innovation Officer in November 2022. Prior to joining TruBridge, Mr. Cronkite served as Senior Vice President of Innovation at BrightSpring Health from August 2018 until April 2021.
Secondary competitors in the RCM space include ARx LLC, Citadel Outsource Group LLC, Patient Matters, LLC, KIWI-TEK, LLC, and Aviacode Inc. TruCode's primary competitors include 3M, Nuance and Optum. Our principal competitors in the acute care EHR market are Cerner Corporation, Medical Information Technology, Inc. ("Meditech"), and MEDHOST, Inc.
Secondary competitors in the RCM space include ARx LLC, Citadel Outsource Group LLC, Patient Matters, LLC, KIWI-TEK, LLC, and Aviacode Inc. The primary competitors for our encoder solutions include 3M, Nuance and Optum. Our principal competitors in the acute care EHR market are Oracle Cerner Corporation, Medical Information Technology, Inc. ("Meditech"), and MEDHOST, Inc.
Severance served as Regional Vice President of Sales for CPSI from 2016 to May 2019 and as Vice President of Sales for TruBridge from May 2019 to January 2021. Kevin Plessner - General Counsel. Kevin Plessner, age 40, was appointed as our General Counsel in January 2022. Mr.
Severance served as Regional Vice President of Sales for TruBridge from 2016 to May 2019 and as Vice President of Sales for TruBridge from May 2019 to January 2021. 20 Kevin Plessner - General Counsel. Kevin Plessner, age 41, was appointed as our General Counsel in January 2022. Mr.
Fowler, age 47, was appointed as our President and Chief Executive Officer, and a member of the Board of Directors on July 1, 2022. Mr. Fowler began his career with CPSI in May 2000 as a Software Support Representative and later as a manager of Financial Software Services. From August 2004 until March 2008, Mr.
Christopher L. Fowler, age 48, was appointed as our President and Chief Executive Officer, and a member of the Board of Directors on July 1, 2022. Mr. Fowler began his career with TruBridge in May 2000 as a Software Support Representative and later as a manager of Financial Software Services. From August 2004 until March 2008, Mr.
As of December 31, 2021, we had a twelve-month backlog of approximately $5 million in connection with non-recurring system purchases and approximately $281 million in connection with recurring payments under support and maintenance and RCM services. Competition The market for our products and services is competitive, and we expect additional competition from established and emerging companies in the future.
As of December 31, 2022, we had a twelve-month backlog of approximately $6 million in connection with non-recurring system purchases and approximately $322 million in connection with recurring payments under support and maintenance and RCM services. Competition The market for our products and services is competitive, and we expect additional competition from established and emerging companies in the future.
To meet these needs, Evident offers customers with online content that can be accessed at any time, scheduled online interactive classroom presentations, on-campus training at our facilities, educational sessions during user group conferences, and scheduled regional training sessions. • Software Releases .
To meet these needs, we offer customers online content that can be accessed at any time, scheduled online interactive classroom presentations, on-campus training at our facilities, educational sessions during user group conferences, and scheduled regional training sessions. • Software Releases .
The American Recovery and Reinvestment Act of 2009 In 2009, the U.S. federal government enacted the American Recovery and Reinvestment Act (the "ARRA"), which included the Health Information Technology for Economic and Clinical Health Act ("HITECH").
The American Recovery and Reinvestment Act of 2009 In 2009, the U.S. federal government enacted the American Recovery and Reinvestment Act (the “ARRA”), which included the Health Information Technology for Economic and Clinical Health Act (“HITECH”).
We provide software applications that support the products described above and are useful to all areas of the hospital. These applications include: ad hoc reporting, automatic batch and real-time system backups, an integrated fax system, archival data repository, document scanning and Microsoft Office integration, and an Application Portal.
We provide software applications that support the products described above and are useful to all areas of the hospital. These applications include: ad hoc reporting, automatic batch and real-time system backups, an integrated fax system, archival data repository, document scanning and Microsoft Office integration, and an Application Portal. Centriq Centriq is a web-based acute-care EHR platform.
Target markets internationally and domestically also include government healthcare and health information exchanges focused on leveraging technology to drive efficient care delivery in addition to citizen portal initiatives. The following table presents our revenues generated from clients located within the U.S. ("Domestic") and all foreign countries, in total ("International").
The target market for our engagement solution also includes government healthcare and health information exchanges focused on leveraging technology to drive efficient care delivery in addition to citizen portal initiatives. 14 The following table presents our revenues generated from clients located within the U.S. ("Domestic") and all foreign countries, in total ("International").
CMS estimates that national health spending is projected to grow at an average annual rate of 5.1% through 2030 and will reach $6.8 trillion in 2030. Hospital expenditures grew by 4.4% to approximately $1.3 trillion in 2021, slower than the 6.2% growth rate in 2020.
CMS estimates that national health spending is projected to grow at an average annual rate of 5.4% through 2031 and will reach $7.0 trillion in 2031. Hospital expenditures grew by 2.2% to approximately $1.5 trillion in 2022, slower than the 4.5% growth rate in 2021.
Margin Optimization These efforts support the core growth efforts as we routinely seek, find and execute on initiatives that modernize our business, increasing our efficiency and resulting in cost savings that allow us to reinvest in additional growth opportunities.
Margin Optimization These efforts support the core growth efforts as we routinely seek, find and execute on initiatives that modernize our business, increasing our efficiency and resulting in cost savings, and thereby allowing us to reinvest in additional growth opportunities and enabling better positioning on pricing elasticity.
As of December 31, 2022, we had a twelve-month backlog of approximately $6 million in connection with non-recurring system purchases and approximately $322 million in connection with recurring payments under support and maintenance and RCM services.
As of December 31, 2023, we had a twelve-month backlog of approximately $9 million in 15 connection with non-recurring system purchases and approximately $328 million in connection with recurring payments under support and maintenance and RCM services.
Our ongoing learning and training offerings also address some of the unique needs of community hospitals - limited resources and staff with cross-department responsibilities and budget and time constraints - all of which require a customized approach to learning and training.
Therefore, ongoing learning and training is a cornerstone to our “total solution” and a key competitive differentiator. Our ongoing learning and training offerings also address some of the unique needs of community hospitals - limited resources and staff with cross-department 11 responsibilities and budget and time constraints - all of which require a customized approach to learning and training.
TruCode is known for its knowledge-based coding methodology, which presents coding guidance and references at the point of coding, helping to improve coding accuracy and productivity. EHR Acute Care Software Systems Through our wholly-owned subsidiary, Evident, we offer healthcare IT solutions designed to cater to the specific needs of community hospital organizations under the software solution platforms Thrive and Centriq.
Our encoder solution is known for its knowledge-based coding methodology, which presents coding guidance and references at the point of coding, helping to improve coding accuracy and productivity. EHR Acute Care Software Systems We offer healthcare IT solutions designed to cater to the specific needs of community hospital organizations under the software solution platform TruBridge EHR.
In addition to our support services, we offer our customers the standard and customized forms that they need for their patient and financial records, as well as the supplies necessary to support the operation of their server and peripheral equipment.
These customers access this information remotely through direct telecommunications connections. • Forms and Supplies . In addition to our support services, we offer our customers the standard and customized forms that they need for their patient and financial records, as well as the supplies necessary to support the operation of their server and peripheral equipment.
Our managed IT services include the following service offerings: Cloud Services, Backup and Recovery, Collaboration and Connectivity, Security Services, Systems Management, and Help Desk. • Encoder Solutions . TruCode by TruBridge develops, sells and supports encoder technology for the hospital, consulting and payer markets.
Our managed IT services include the following service offerings: Cloud Services, Backup and Recovery, Collaboration and Connectivity, Security Services, Systems Management, and Help Desk. • Encoder Solutions . Our encoder technology and services support the hospital, consulting and payer markets.
However, we cannot guarantee that third parties will not assert infringement claims against us with respect to current or future software products or that any such assertion may not require us to enter into royalty arrangements or result in costly litigation.
However, we cannot guarantee that third parties will not assert infringement claims against us with respect to current or future software products or that any such assertion may not require us to enter into royalty arrangements or result in costly litigation. Human Capital As of December 31, 2023, we had 3,219 employees.
Commencing with the fourth quarter of 2022, the Company operates its business in three operating segments, which are also our reportable segments: RCM, EHR, and Patient Engagement.
The Company operates its business in three operating segments, which are also our reportable segments: RCM, EHR, and Patient Engagement.
Over the course of our more than 40-year history, we have developed a significant customer base of community hospitals and skilled nursing facilities.
Over the course of our more than 45-year history, we have developed a significant customer base of community hospitals.
As part of this effort, for each customer covered under our general support agreement, we provide software updates as they become available at no additional cost. We design these enhancements to be seamlessly integrated into each customer’s existing system.
As part of this effort, for each customer covered under our general support agreement, we provide software updates as they become available at no additional cost. We design these enhancements to be seamlessly integrated into each customer’s existing system. The benefit of these enhancements is that each customer, regardless of its original installation date, uses the most advanced software available.
In addition, as part of our incentive plan for executives and certain employees, we provide stock-based compensation to attract, retain and motivate our key leaders.
In addition, as part of our incentive plan for executives and certain employees, we provide stock-based compensation to attract, retain and motivate our key leaders. For further information concerning our equity incentive plans, see Note 9, Stock-based Compensation and Equity.
Our patient engagement efforts continue to focus on the international market through our substantial international partner ecosystem while also initiating penetration of the domestic market. We target hospitals that use competitor EHRs, including upmarket larger hospitals and health systems that support multiple EHRs and data sources around affiliated providers and practices.
Our patient engagement efforts continue to focus on growing the number of registered patient users with existing clients in the international market while also initiating penetration of the domestic market. We target hospitals in the U.S. that use competitor EHRs, including upmarket larger hospitals and health systems that support multiple EHRs and data sources around affiliated providers and practices.
Additionally, leaders participate in monthly business updates that facilitate awareness of current business initiatives, progress and results. These meetings encourage cross-functional collaboration and help ensure that our teams are not working in silos. These efforts have supported our ability to deliver a more consistent message across all our constituencies and thereby improve employee engagement.
These meetings encourage cross-functional collaboration and help ensure that our teams are not working in silos. These efforts have supported our ability to deliver a more consistent message across all our constituencies and thereby improve employee engagement.
We serve the needs of multiple stakeholder groups as customers benefit from the related products and services, our employees benefit from expanded opportunities for development, and our stockholders benefit from the increasing diversity in revenue sources.
We serve the needs of multiple stakeholder groups as customers benefit from the related products and services, our employees benefit from expanded opportunities for development, and our stockholders benefit from the increasing diversity in revenue sources. Our Products and Services RCM We offer RCM services which can be grouped into the following categories: • Revenue Cycle Management Products .
By improving employee satisfaction, retention, and engagement, we also improve our ability to support our customers and protect the long-term interests of our stockholders. To that end, we strive to foster an engaged, diverse, inclusive, safe, purpose-driven culture where employees have equitable opportunities for success.
By improving the employee experience, we also improve the ability to support our customers and protect the long-term interests of our stockholders. To that end, we strive to foster an engaged, purpose-driven culture where employees have an opportunity to achieve professional success.
We capitalized software development costs of approximately $19.1 million, $9.4 million and $3.3 million during the years ended December 31, 2022, 2021 and 2020, respectively. See Note 5 to the consolidated financial statements included herein for additional information on software development costs.
We capitalized software development costs of approximately $23.1 million, $19.1 million and $9.4 million during the years ended December 31, 2023, 2022 and 2021, respectively. See Note 5 to the consolidated financial statements included herein for additional information on software development costs. Product Strategy We have built an enterprise-wide center of excellence for both our product and technology strategy.
Cloud EHR is a "Software as a Service" (or "SaaS") configuration and is a monthly subscription to access and use application software maintained by CPSI in a cloud environment. Under this configuration, a customer is able to obtain access to an advanced EHR without a significant initial capital outlay.
Cloud EHR is a SaaS configuration and is a monthly subscription to access and use application software maintained by TruBridge in a cloud environment. Under this configuration, a customer is able to obtain access to an advanced EHR without a significant initial capital outlay. We store and maintain all Cloud EHR customers’ critical patient and administrative data.
Our software applications within Thrive are grouped for support purposes according to the following general functional categories described below: • Patient Management . Our patient management software enables a hospital to identify a patient at any point in the healthcare delivery system and to collect and maintain patient information throughout the entire process of patient care on an enterprise-wide basis.
Our patient management software enables a hospital to identify a patient at any point in the healthcare delivery system and to collect and maintain patient information throughout the entire process of patient care on an enterprise-wide basis.
Industry Dynamics The healthcare industry is the largest industry in the United States economy, comprising approximately 18.3% of the U.S. gross domestic product in 2021 according to the Centers for Medicare and Medicaid Services ("CMS").
See Note 18 to the consolidated financial statements included herein for additional information on our three reportable segments. Industry Dynamics The healthcare industry is the largest industry in the United States economy, comprising approximately 17.3% of the U.S. gross domestic product in 2022 according to the Centers for Medicare and Medicaid Services ("CMS").
As a result of these issues and pressures, we expect ongoing and continued growth in demand for our RCM and related services. The pandemic has also heightened patient interest and demand for digital engagement.
Payors are experiencing staffing issues, similar to hospitals, which is causing delays in authorizations, denials and extended processing times for appeals. As a result of these issues and pressures, we expect ongoing and continued growth in demand for our RCM and related services. The pandemic has also heightened patient interest and demand for digital engagement.
Marketing Strategy Our corporate marketing strategy positions CPSI as a healthcare solutions company serving community healthcare organizations through our family of healthcare information technology companies. With regard to our RCM solutions, we will continue to leverage our proven track record of success in accounts receivable management and private pay collections for community healthcare providers.
We are a healthcare solutions company and we clear the way for care. With regard to our RCM solutions, we will continue to leverage our proven track record of success in accounts receivable management and private pay collections for community healthcare providers.
A core initiative to our growth plan is to maintain a strong retention rate across our EHR base and pursue conservative growth of new EHR clients, as they are critical to driving cross-sales of our RCM solutions.
The hospitals are under increasing financial pressure caused by fluctuating patient volumes, increasing self-pay accounts, and the lingering impact of the COVID-19 pandemic. A core initiative to our growth plan is to maintain a strong retention rate across our EHR base and pursue conservative growth of new EHR clients, as they are critical to driving cross-sales of our RCM solutions.
Customers can also use the Internet to directly access our support system. • National Client Conference . All of our customers have the opportunity to attend our annual National Client Conference. CPSI hosts this conference to provide educational sessions, product demonstrations, and one-on-one time with application experts.
All of our customers have the opportunity to attend our annual National Client Conference. TruBridge hosts this conference to provide educational sessions, product demonstrations, and one-on-one time with application experts. The conference also allows important time for networking among customers and TruBridge staff across all business platforms.
We seek to be an employer of choice to attract and retain top talent in order to deliver a one-of-a-kind service and to fully leverage the strengths of our workforce to exceed customer expectations and meet our growth objectives.
We have not experienced any work stoppages and we consider our relations with our employees to be good. We seek to attract, develop, and retain top talent in order to deliver a one-of-a-kind service experience while fully leveraging the strengths of our workforce to exceed customer expectations and meet our growth objectives.
These new regulatory demands increase regulatory risks and compliance burdens for CPSI and our clients, but also pose opportunities for CPSI to provide additional value-added products and services to our target market.
This transformation brings about new and increased data needs, resulting in additional regulatory demands for data that patients find useful in decision-making. These new regulatory demands increase regulatory risks and compliance burdens for TruBridge and our clients, but also pose opportunities for TruBridge to provide additional value-added products and services to our target market.
These foundational instruments have accelerated the pace of innovation, which has also created additional marketplace opportunities for our customers. • By deploying solutions such as robotic process automation, we continuously strive to optimize user workflows for our clinical and financial solutions, increasing efficiencies and delivering modern user experiences. • By investing in new patient engagement and communication solutions, we have improved staff, provider and patient interactions and increased patient participation in their healthcare experience.
For example: • Through data normalization efforts and the creation of both a unified clinical interoperability solution with our TruBridge Unify product technology and a modern data lakehouse solution for financial insights through TruBridge Analytics, we have accelerated the pace of innovation, allowing our customers to recognize this value. • By deploying solutions such as robotic process automation, we continuously strive to optimize user workflows for our clinical and financial solutions, increasing efficiencies and delivering modern user experiences. • By investing in new patient engagement and communication solutions, we have improved staff, provider and patient interactions and increased patient participation in their healthcare experience.
The benefit of 12 these enhancements is that each customer, regardless of its original installation date, uses the most advanced software available. Through this process, we can keep our customers up-to-date with the latest operational innovations in the healthcare industry as well as with changing governmental regulatory requirements.
Through this process, we can keep our customers up-to-date with the latest operational innovations in the healthcare industry as well as with changing governmental regulatory requirements.
Year ended December 31, (In thousands) 2022 2021 2020 Sales revenues: Domestic $ 320,443 $ 274,521 $ 257,883 International (1) 6,205 6,108 6,605 $ 326,648 $ 280,629 $ 264,488 (1) International sales revenues are related to the Caribbean nation of St. Maarten, the islands of Turks and Caicos, Canada, England, Australia, the United Arab Emirates and the Netherlands.
Year ended December 31, (In thousands) 2023 2022 2021 Sales revenues: Domestic $ 333,048 $ 320,443 $ 274,521 International (1) 6,387 6,205 6,108 $ 339,435 $ 326,648 $ 280,629 (1) International sales revenues are related to the Caribbean nation of St.
Core modules include: Accounts Payable, General Ledger, Payroll, Financial Management, Trust Funds, and Enterprise Management. Acute Care Support and Maintenance Services After EHR installation, we provide software application support, hardware maintenance, continuing education and related services pursuant to a support agreement using our collaborative support model.
Acute Care Support and Maintenance Services After EHR installation, we provide software application support, hardware maintenance, continuing education and related services pursuant to a support agreement using our collaborative support model. The following describes services provided to customers using the TruBridge EHR: • Total System Support .
Health Information Security and Privacy Practices HIPAA is a federal law governing the use, disclosure, transmission and storage of certain individually identifiable health information, referred to as "protected health information," and that was enacted for the purpose of, among other things, protecting the privacy and security of protected health information.
Our principal competitors in the patient engagement market include Relay Health, Get Well Network/Healthloop, Apollo Care Connect, Bridge Patient Portal, eClinicalWorks Patient Portal, Influence Health, and InteliChart. 16 Health Information Security and Privacy Practices Health Insurance Portability and Accountability Act (“HIPAA”) is a federal law governing the use, disclosure, transmission and storage of certain individually identifiable health information, referred to as "protected health information," and that was enacted for the purpose of, among other things, protecting the privacy and security of protected health information.
In order to minimize the impact of a system problem, we train our customer service personnel to be technically proficient, courteous and prompt. Because a properly functioning information system is crucial to a hospital’s operations, our support teams are available 24 hours per day to assist customers with any problem that may arise.
Because a properly functioning information system is crucial to a hospital’s operations, our support teams are available 24 hours per day to assist customers with any problem that may arise. Customers can also use the Internet to directly access our support system. • National Client Conference .
Leveraging work collaboration tools and other technologies, the ability to hire remote employees has supported our efforts to expand our internal talent and welcome employees from diverse backgrounds and geographies, creating deeper team collaboration and a more engaging client experience.
We continue to focus on working in a predominantly remote environment, which supports our efforts to expand our internal talent and welcome employees from diverse backgrounds and geographies, creating deeper team collaboration and a more engaging client experience.
Sales Staff We have dedicated sales organizations in all three business units: RCM, EHR, and patient engagement. Many of our sales personnel are hired from within the Company and have previous experience in client support roles. We believe this experience positions them to more effectively sell our products and services within our target markets.
Maarten, the islands of Turks and Caicos, the British Overseas Territory of Anguilla, Canada, England, Australia, the United Arab Emirates and the Netherlands. Sales Staff We have dedicated sales organizations in all three business units: RCM, EHR, and patient engagement. Many of our sales personnel are hired from within the Company and have previous experience in client support roles.
Executive Officers The executive officers of CPSI serve at the pleasure of the Board of Directors. Set forth below is a list of the current executive officers of CPSI and a brief explanation of each individual’s principal employment during the last five years. Christopher L. Fowler – President and Chief Executive Officer. Christopher L.
These regulations and related risks are described in more detail below under “Risk Factors” beginning on page 22 of this Annual Report. Executive Officers Set forth below is a list of the current executive officers of TruBridge and a brief explanation of each individual’s principal employment during the last five years. Christopher L. Fowler – President and Chief Executive Officer.
We provide hardware, technical and software support for all aspects of our system, which gives us the flexibility to take the necessary course of action to resolve any issue. Unlike our competitors who use third-party services for hardware and software support, we provide a single, convenient and efficient resource for all of our customers’ system support needs.
Unlike our competitors who use third-party services for hardware and software support, we provide a single, convenient and efficient resource for all of our customers’ system support needs. In order to minimize the impact of a system problem, we train our customer service personnel to be technically proficient, courteous and prompt.
Any of these companies as well as other technology or healthcare companies could decide at any time to specifically target hospitals within our target market. Our principal competitors in the post-acute care EHR market are PointClickCare Corporation and MatrixCare, Inc. These companies compete with us directly in our target market of long-term post-acute care facilities.
Any of these companies as well as other technology or healthcare companies could decide at any time to specifically target hospitals within our target market.
We offer a wide array of benefits including comprehensive health and welfare insurances, a 401(K) plan with employer-match, generous time-off, paid parental leave, identity theft insurance, and financial support. We provide emotional well-being services through our medical carrier, Neuro580, and associated Employee Assistance Program. In addition, our financial education tools offer employees resources to reach their personal financial goals.
Included is a 401(k) plan with employer-match, generous time-off, company paid short term disability, basic life insurance, parental leave policy that pays 6 weeks to those adding to their family, identity theft insurance, and financial planning support. We provide emotional well-being services 18 through our medical carrier, Neuro580, and associated Employee Assistance Program.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe limited number of hospitals with fewer than 200 acute care beds in our general target market for our acute care product and service offerings has resulted in an ever narrowing market for new system installations and add-on sales which could materially and adversely impact our business, financial condition and operating results. 23 Our primary objectives are to increase the market share of our RCM services, aggressively pursue competitive and vulnerable EHR replacement opportunities, and differentiate our products and services on a client experience basis that enables us to sell a broader set of services into a loyal base of clients that are our advocates.
Biggest changeThe limited number of hospitals with fewer than 200 acute care beds in our general target market for our acute care product and service offerings has resulted in an ever narrowing market for new system installations and add-on sales which could materially and adversely impact our business, financial condition and operating results.
The United States Food and Drug Administration (the "FDA") has determined that certain of our solutions, such as our ImageLink ® and Blood Administration ® products, are medical devices that are actively regulated under the Federal Food, Drug and Cosmetic Act, as amended.
The United States FDA has determined that certain of our solutions, such as our ImageLink ® and Blood Administration ® products, are medical devices that are actively regulated under the Federal Food, Drug and Cosmetic Act, as amended.
The credit agreement governing our term loan facility and revolving credit facility includes covenants restricting, among other things, our ability to: • incur additional debt; 36 • incur liens and encumbrances; • pay dividends on our equity securities or payments to redeem, repurchase or retire our equity securities; • enter into restrictive agreements; • make investments, loans and acquisitions; • merge or consolidate with any other person; • dispose of assets; • enter into sale and leaseback transactions; • engage in transactions with our affiliates; and • materially alter the business we conduct.
The credit agreement governing our term loan facility and revolving credit facility includes covenants restricting, among other things, our ability to: • incur additional debt; • incur liens and encumbrances; • pay dividends on our equity securities or payments to redeem, repurchase or retire our equity securities; • enter into restrictive agreements; • make investments, loans and acquisitions; • merge or consolidate with any other person; • dispose of assets; 36 • enter into sale and leaseback transactions; • engage in transactions with our affiliates; and • materially alter the business we conduct.
However, they will sometimes compete with us directly or, more commonly, a larger health system who uses a system provided by one of these competitors will offer it to a smaller hospital as part of a merger or alliance. We also face competition from providers of practice management systems, general decision support and database systems, and other segment-specific applications.
However, they will sometimes compete with us directly or, more commonly, a larger health system who uses a system provided by one of these competitors will offer it to a smaller hospital as part of a merger or alliance. 26 We also face competition from providers of practice management systems, general decision support and database systems, and other segment-specific applications.
Alternatively, if they are insufficient or are not sustained long enough to bring inflation to lower, more acceptable levels, our customers’ ability or willingness to spend on healthcare information technology may be impacted for a prolonged period of time. If a recession occurs, economies weaken, or inflationary trends continue, our business and operating results could be materially adversely affected. 41
Alternatively, if they are insufficient or are not sustained long enough to bring inflation to lower, more acceptable levels, our customers’ ability or willingness to spend on healthcare information technology may be impacted for a prolonged period of time. If a recession occurs, economies weaken, or inflationary trends continue, our business and operating results could be materially adversely affected.
Covered entities under HIPAA, which include healthcare organizations such as our clients, and our claims processing, transmission and submission services, are required to comply with the privacy standards, transaction regulations and security regulations. Moreover, HITECH and associated regulatory requirements extend many of the HIPAA obligations, formerly imposed only upon covered entities, to business associates as well.
Covered entities under HIPAA, which include healthcare organizations such as our clients, and our claims processing, transmission and submission services, are required to comply with the privacy standards, transaction regulations and security regulations. Moreover, HITECH and 24 associated regulatory requirements extend many of the HIPAA obligations, formerly imposed only upon covered entities, to business associates as well.
As a result, we may not be able to realize the expected benefits that we seek to achieve from the acquisitions, which could also affect our ability to service our debt obligations. In addition, we may be required to spend additional time or money on integration that otherwise would be spent on the development and expansion of our business.
As a result, we may not be able to realize the expected 27 benefits that we seek to achieve from the acquisitions, which could also affect our ability to service our debt obligations. In addition, we may be required to spend additional time or money on integration that otherwise would be spent on the development and expansion of our business.
We are increasingly dependent upon licenses for some of the technology used in our products as well as other products and services from third-party vendors, and the costs of these licenses have increased in recent years. Most of these arrangements can be continued/renewed only by mutual consent and may be terminated for any number of reasons.
We are increasingly dependent upon licenses for some of the technology used in our products as well as other products and services from third-party vendors, and the costs of these licenses have increased in recent years. Most of these arrangements can 33 be continued/renewed only by mutual consent and may be terminated for any number of reasons.
This may lead to our loss of services and maintenance revenues and future business from customers that continue to operate prior versions of our products or choose to no longer use our products. Failure to maintain our margins and service rates for implementation services could have a material adverse effect on our operating performance and financial condition.
This may lead to our loss of services and maintenance revenues and future business from customers that continue to operate prior versions of our products or choose to no longer use our products. 32 Failure to maintain our margins and service rates for implementation services could have a material adverse effect on our operating performance and financial condition.
In addition, the insurer could disclaim coverage as to any future claim. Breaches of security and viruses in our systems could result in client claims against us and harm to our reputation causing us to incur expenses and/or lose clients. In the course of our business operations, we compile and transmit confidential information, including patient health information.
In addition, the insurer could disclaim coverage as to any future claim. 31 Breaches of security and viruses in our systems could result in client claims against us and harm to our reputation causing us to incur expenses and/or lose clients. In the course of our business operations, we compile and transmit confidential information, including patient health information.
This provision and others included in the final rule create a potentially lengthy list of certification and maintenance of certification requirements that developers of EHRs and other health IT products have to meet in order to maintain approved federal government certification status. Meeting and maintaining this certification status could require additional development costs.
This provision and others included in the final rule create a potentially lengthy list of certification and maintenance of certification requirements that developers of EHRs and other health IT products 25 have to meet in order to maintain approved federal government certification status. Meeting and maintaining this certification status could require additional development costs.
Moreover, our failure to offer products acceptable to our 31 target market could require us to make significant capital investments and incur higher operating costs to redesign our products, which could negatively affect our financial condition and operating results. Our products assist clinical decision-making and related care by capturing, maintaining and reporting relevant patient data.
Moreover, our failure to offer products acceptable to our target market could require us to make significant capital investments and incur higher operating costs to redesign our products, which could negatively affect our financial condition and operating results. Our products assist clinical decision-making and related care by capturing, maintaining and reporting relevant patient data.
Defects or errors discovered in our products could cause delays in product introductions and shipments 32 and unexpected service disruptions, result in increased costs and diversion of development resources, require design modifications, decrease market acceptance or client satisfaction with our products, cause a loss of revenue, result in legal actions by our clients and cause increased insurance costs.
Defects or errors discovered in our products could cause delays in product introductions and shipments and unexpected service disruptions, result in increased costs and diversion of development resources, require design modifications, decrease market acceptance or client satisfaction with our products, cause a loss of revenue, result in legal actions by our clients and cause increased insurance costs.
Under some circumstances, we agree to indemnify our clients for some types of infringement claims that may arise from the use of our products. 34 Interruptions in our power supply and/or telecommunications capabilities could disrupt our operations, cause us to lose revenues and/or increase our expenses.
Under some circumstances, we agree to indemnify our clients for some types of infringement claims that may arise from the use of our products. Interruptions in our power supply and/or telecommunications capabilities could disrupt our operations, cause us to lose revenues and/or increase our expenses.
Indicators that are considered include significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry, or economic trends, or a significant decline in the Company's stock price and/or market capitalization for a sustained 37 period of time.
Indicators that are considered include significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry, or economic trends, or a significant decline in the Company's stock price and/or market capitalization for a sustained period of time.
The loss of clients due to inadequate client service and support would negatively impact our ability to continue to grow our business. 29 We periodically have restructured our sales force, which can be disruptive. We continue to rely heavily on our direct sales force.
The loss of clients due to inadequate client service and support would negatively impact our ability to continue to grow our business. We periodically have restructured our sales force, which can be disruptive. We continue to rely heavily on our direct sales force.
As a result, we believe that interim period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Further, our historical operating results are not necessarily indicative of future performance for any particular period.
As a result, we believe that interim period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future 38 performance. Further, our historical operating results are not necessarily indicative of future performance for any particular period.
Additionally, any such failure of 25 our billing and collection services to comply with these laws and regulations could adversely affect demand for our services and could force us to expend significant capital, research and development, and other resources to address the failure.
Additionally, any such failure of our billing and collection services to comply with these laws and regulations could adversely affect demand for our services and could force us to expend significant capital, research and development, and other resources to address the failure.
If our products and services do not accommodate CMS mandates at any future date, 27 clients may cease to use those products and services that are not compliant and may choose alternative vendors and products that are compliant. This could adversely impact future revenues.
If our products and services do not accommodate CMS mandates at any future date, clients may cease to use those products and services that are not compliant and may choose alternative vendors and products that are compliant. This could adversely impact future revenues.
Federal and state statutes and regulations have granted broad enforcement powers to regulatory agencies to investigate and enforce compliance with these privacy and security laws and regulations. Federal and state enforcement personnel have 26 substantial funding, powers and remedies to pursue suspected or perceived violations.
Federal and state statutes and regulations have granted broad enforcement powers to regulatory agencies to investigate and enforce compliance with these privacy and security laws and regulations. Federal and state enforcement personnel have substantial funding, powers and remedies to pursue suspected or perceived violations.
Because a significant 38 percentage of our expenses are relatively fixed, a variation in the timing of systems sales, implementations and installations can cause significant variations in operating results from quarter to quarter.
Because a significant percentage of our expenses are relatively fixed, a variation in the timing of systems sales, implementations and installations can cause significant variations in operating results from quarter to quarter.
Higher interest rates and volatility in financial markets could lead to additional economic uncertainty or recession. Increased inflation rates 40 have increased our and our suppliers’ operating costs, including labor costs.
Higher interest rates and volatility in financial markets could lead to additional economic uncertainty or recession. Increased inflation rates have increased our and our suppliers’ operating costs, including labor costs.
Our target market of community hospitals typically serve higher uninsured populations than larger urban hospitals and rely more heavily on Medicare and Medicaid for reimbursement.
Our target market of community hospitals typically serve higher uninsured populations than larger urban hospitals and rely 22 more heavily on Medicare and Medicaid for reimbursement.
One or more of these factors could have an adverse effect on our operations globally or in one or more countries or regions, which could have an adverse effect on our business, financial condition and results of operations. 30 We face the risks and uncertainties that are associated with investigations and litigation against us, which may adversely impact our marketing, distract management and have a negative impact upon our business, results of operations and financial condition.
One or more of these factors could have an adverse effect on our operations globally or in one or more countries or regions, which could have an adverse effect on our business, financial condition and results of operations. 29 We face the risks and uncertainties that are associated with investigations and litigation against us, which may adversely impact our marketing, distract management and have a negative impact upon our business, results of operations and financial condition.
We expect increased competition that could cause us to lose clients, lower our prices to remain competitive and, consequently, experience lower revenues, revenue growth and profit margins. 28 We recently completed the acquisitions of TruCode and HRG, and we may engage in future acquisitions.
We expect increased competition that could cause us to lose clients, lower our prices to remain competitive and, consequently, experience lower revenues, revenue growth and profit margins. We recently completed the acquisitions of TruCode, HRG and Viewgol, and we may engage in future acquisitions.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under such instruments; • make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; 35 • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that are less highly leveraged and therefore able to take advantage of opportunities that our indebtedness prevents us from exploiting; and • limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other purposes.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under such instruments; • make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that are less highly leveraged and therefore able to take advantage of opportunities that our indebtedness prevents us from exploiting; and • limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other purposes. 35 Any of the above listed factors could have a material adverse effect on our business, prospects, results of operations and financial condition.
We may be required to record a significant charge to earnings if our goodwill or intangible assets become impaired. We are required under U.S. generally accepted accounting principles ("U.S. GAAP") to test our goodwill for impairment annually or more frequently if indicators for potential impairment exist.
We may be required to record additional significant charges to earnings if our goodwill or intangible assets become impaired. We are required under U.S. generally accepted accounting principles ("U.S. GAAP") to test our goodwill for impairment annually or more frequently if indicators for potential impairment exist.
Our business could also be negatively impacted to the extent that our hospital clients continue to face tight capital and credit markets and other disruptions resulting from the COVID-related economic recession or cuts in Medicare and Medicaid funding. Hospitals may modify, delay or cancel plans to purchase our software systems or services.
Our business could also be negatively impacted to the extent that our hospital clients continue to face tight capital and credit markets and other disruptions resulting from the deteriorating macroeconomic conditions or cuts in Medicare and Medicaid funding. Hospitals may modify, delay or cancel plans to purchase our software systems or services.
A one hundred basis point change in interest rate on our borrowings outstanding as of December 31, 2022 would result in a change in interest expense of approximately $1.4 million annually. Macroeconomic conditions could have a materially adverse impact on our business, financial condition, or results of operations.
A one hundred basis point change in interest rate on our borrowings outstanding as of December 31, 2023 would result in a change in interest expense of approximately $2.0 million annually. 40 Macroeconomic conditions could have a materially adverse impact on our business, financial condition, or results of operations.
If we are unable to maintain effective internal control over financial reporting, or if our independent auditors determine that we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.
If we are unable to maintain effective internal control over financial reporting, or if our independent auditors determine that we have any additional material weaknesses in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the Securities and Exchange Commission (“SEC”) or other regulatory authorities.
Given the highly-regulated nature of our industry, we have been and may, from time to time, be subject to subpoenas, requests for information, or investigations from various government agencies. We use offshore third-party partners in India, Panama, the Philippines and Kenya that expose us to risks that could have a material adverse effect on our operating costs.
Given the highly-regulated nature of our industry, we have been and may, from time to time, be subject to subpoenas, requests for information, or investigations from various government agencies. Our use of offshore labor resources could expose us to risks that could have a material adverse effect on our operating costs.
Among others, these risks include: • data protection and privacy regulations regarding access by government authorities to customer, partner, or employee data; • data residency requirements (the requirement to store certain data only in and, in some cases, also to access such data only from within a certain jurisdiction); • conflict and overlap among tax regimes; • possible tax constraints impeding business operations in certain countries; • expenses associated with the localization of our products and compliance with local regulatory requirements; • discriminatory or conflicting fiscal policies; • operational difficulties in countries with a high corruption perception index; • difficulties enforcing intellectual property and contractual rights in certain jurisdictions; • country-specific software certification requirements; • compliance with various industry standards; and • market volatilities or workforce restrictions due to changing laws and regulations resulting from political decisions (e.g.
Among others, these risks include: • data protection and privacy regulations regarding access by government authorities to customer, partner, or employee data; • data residency requirements (the requirement to store certain data only in and, in some cases, also to access such data only from within a certain jurisdiction); • conflict and overlap among tax regimes; • possible tax constraints impeding business operations in certain countries; • expenses associated with the localization of our products and compliance with local regulatory requirements; • discriminatory or conflicting fiscal policies; • operational difficulties in countries with a high corruption perception index; • difficulties enforcing intellectual property and contractual rights in certain jurisdictions; • country-specific software certification requirements; • the difficulty of managing and staffing our international operations and the increased travel, infrastructure and legal compliance costs associated with multiple international locations; • differing labor and employment regulations, especially where foreign labor laws are more advantageous to employees as compared to the U.S.; • compliance with various industry standards; and • market volatilities or workforce restrictions due to changing laws and regulations resulting from political decisions (e.g.
The interest rate for the outstanding debt under our term loan facility and revolving credit facility as of December 31, 2022 was 6.39%.
The interest rate for the outstanding debt under our term loan facility and revolving credit facility as of December 31, 2023 was 8.48%.
Although these third parties generally indemnify us against claims that their technology infringes on the proprietary rights of others, such indemnification is not always available for all types of intellectual property.
Although these third parties generally indemnify us against claims that their technology infringes on the proprietary rights of others, such indemnification is not always available for all types of intellectual property. Often such third-party indemnifiers are not well capitalized and may not be able to indemnify us in the event that their technology infringes on the proprietary rights of others.
If our power generators fail during any power outage or if our telecommunications lines are severed or impaired for any reason, those clients would be unable to access their mission critical data causing an interruption in their operations. In such event our remote access clients and/or their patients could seek to hold us responsible for any losses.
Those clients access this data remotely through telecommunications lines. If our power generators fail during any power outage or if our telecommunications lines are severed or impaired for any reason, those clients would be unable to access their mission critical data causing an interruption in their operations.
Any one or more of such factors could directly or indirectly cause our actual financial condition and operating results to vary materially from our past or anticipated future financial condition or operating results.
Any one or more of such factors could directly or indirectly cause our actual financial condition and operating results to vary materially from our past or anticipated future financial condition or operating results. RISKS RELATED TO OUR INDUSTRY There are a limited number of hospitals in our target market.
There can be no assurance that we will be able to continue to comply with this covenant or obtain amendments to avoid future covenant violations, or that such amendments will be available on commercially acceptable terms.
Any failure by us to comply with this or another covenant in the future may result in an event of default. There can be no assurance that we will be able to continue to comply with this covenant or obtain amendments to avoid future covenant violations, or that such amendments will be available on commercially acceptable terms.
As of December 31, 2022, we had approximately $141.1 million in principal amount of indebtedness, which includes $67.4 million under our term loan facility and $73.7 million borrowed under our revolving credit facility. We also had $86.3 million of unused commitments under our revolving credit facility as of December 31, 2022.
As of December 31, 2023, we had approximately $199.6 million in principal amount of indebtedness, which includes $63.9 million under our term loan facility and $135.7 million borrowed under our revolving credit facility. We also had $24.3 million of unused commitments under our revolving credit facility as of December 31, 2023.
This impairment charge had a significant negative effect on our consolidated net income for the year ended December 31, 2017. Any future impairment charges could have a material adverse impact on our results of operations. There are inherent uncertainties in management's estimates, judgments and assumptions used in assessing recoverability of goodwill and intangible assets.
Any future impairment charges could have a material adverse impact on our results of operations. There are inherent uncertainties in management's estimates, judgments and assumptions used in assessing recoverability of goodwill and intangible assets.
Defending such infringement claims, regardless of their validity, could result in significant cost and diversion of resources. We are dependent on our licenses of rights, products and services from third parties, disruptions of which may cause us to discontinue, delay or reduce product shipments.
We are dependent on our licenses of rights, products and services from third parties, disruptions of which may cause us to discontinue, delay or reduce product shipments.
Our future financial results will depend in part on our ability to profitably manage our business in new markets that we may enter. We are engaging in the strategic identification of, and competition for, growth and expansion opportunities in new markets or offerings.
If we are unable to manage our growth in the new markets we may enter, our business and financial results could suffer. Our future financial results will depend in part on our ability to profitably manage our business in new markets that we may enter.
Although the Biden administration promises to prioritize public health by fortifying and expanding implementation of such laws and legislation, we cannot predict what effect, if any, such additional proposals or healthcare reforms might have on our business, financial condition and results of operations. 24 As existing regulations mature and become better defined, we anticipate that these regulations will continue to directly affect certain of our products and services, but we cannot fully predict the effect at this time.
Although the Biden administration promises to prioritize public health by fortifying and expanding implementation of such laws and legislation, we cannot predict what effect, if any, such additional proposals or healthcare reforms might have on our business, financial condition and results of operations.
In order to successfully execute on these future initiatives, we will need to, among other things, manage changing business conditions and develop expertise in areas outside of our business's traditional core competencies. Difficulties in managing future growth in new markets could have a significant negative impact on our business, financial condition and results of operations.
We are engaging in the strategic identification of, and competition for, growth and expansion opportunities in new markets or offerings. In order to successfully execute on these future initiatives, we will need to, among other things, manage changing business conditions and develop expertise in areas outside of our business's traditional core competencies.
While we have successfully implemented the use of ICD-10 codes within our products and services, the possibility exists for similar future mandates by CMS.
Claims for services must use ICD-10 codes for medical diagnosis and inpatient procedures or they will not be paid. While we have successfully implemented the use of ICD-10 codes within our products and services since their initial mandate in 2015, the possibility exists for similar future mandates by CMS.
On March 10, 2023, the calculation of the fixed charge coverage ratio was amended to specifically exclude from the definition of fixed charges the Company's share repurchases conducted during the third and fourth quarters of 2022. Any failure by us to comply with this or another covenant in the future may result in an event of default.
On March 10, 2023, the calculation of the fixed charge coverage ratio was amended to specifically exclude from the definition of fixed charges the Company's share repurchases conducted during the third and fourth quarters of 2022. As of September 30, 2023, we were not in compliance with the fixed charge coverage ratio required by the credit agreement.
Our business in these countries is subject to numerous risks inherent in international business operations.
Our subsidiary, Viewgol, provides RCM analytics and complementary outsourcing services in India. Our business in these countries is subject to numerous risks inherent in international business operations.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, also could restrict our future access to the capital markets. 39 We do not have employment or non-competition agreements with most of our key personnel, and their departure could harm our future success.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, also could restrict our future access to the capital markets. 39 As a result of the inherent limitations in our internal control over financial reporting, misstatements due to error or fraud may occur and not be detected.
ICD-10 codes affect medical diagnosis and inpatient procedure coding for everyone covered by HIPAA, not just those who submit Medicare or Medicaid claims. Claims for services must use ICD-10 codes for medical diagnosis and inpatient procedures or they will not be paid.
CMS requires all providers, payors, clearinghouses and billing services to utilize patient codes for reporting medical diagnosis and inpatient procedures, referred to as ICD-10 codes when submitting claims for payment. ICD-10 codes affect medical diagnosis and inpatient procedure coding for everyone covered by HIPAA, not just those who submit Medicare or Medicaid claims.
Our subsidiary, Get Real Health, sells patient engagement technology to hospital systems and government agencies in Canada, Australia, England, the United Arab Emirates and the Netherlands, directly and through resellers, and Evident has had limited sales of EHR software to government agencies in Canada and the Caribbean.
Our international business activities and processes expose us to numerous and often conflicting laws, regulations, policies, standards or other requirements, and to risks that could harm our business, financial condition and results of operations. 28 Our subsidiary, Get Real Health, sells patient engagement technology to hospital systems and government agencies in Canada, Australia, England, the United Arab Emirates and the Netherlands, directly and through resellers, and we have had limited sales of EHR software to government agencies in Canada and the Caribbean.
Standards adopted by the National Council for Prescription Drug Programs and regulations adopted by the Centers for Medicare and Medicaid Services ("CMS") related to "EPrescribing and the Prescription Drug Program" set forth implementation standards for the transmission of electronic prescriptions.
Standards adopted by the National Council for Prescription Drug Programs and regulations adopted by the CMS related to "EPrescribing and the Prescription Drug Program" set forth implementation standards for the transmission of electronic prescriptions. These standards are detailed and broad, and 23 cover not only routing transactions between prescribers and pharmacies, but also electronic eligibility, formulary and benefits inquiries.
This would have adverse consequences for our clients who depend on us for system support, business management, and managed IT and professional services. Any such interruption in operations at our facilities could damage our reputation, harm our ability to retain existing clients and obtain new clients, and result in lost revenue and increased insurance and other operating costs.
Any such interruption in operations at our facilities could damage our reputation, harm our ability to retain existing clients and obtain new clients, and result in lost revenue and increased insurance and other operating costs. 34 We also have clients for whom we store and maintain computer servers containing critical patient and administrative data.
Often such third- 33 party indemnifiers are not well capitalized and may not be able to indemnify us in the event that their technology infringes on the proprietary rights of others. As a result, we may face substantial exposure if technology we license from a third party infringes on another party’s proprietary rights.
As a result, we may face substantial exposure if technology we license from a third party infringes on another party’s proprietary rights. Defending such infringement claims, regardless of their validity, could result in significant cost and diversion of resources.
Any of the above listed factors could have a material adverse effect on our business, prospects, results of operations and financial condition. Furthermore, our interest expense could increase if interest rates increase because our debt bears interest at floating rates, which could adversely affect our cash flows.
Furthermore, our interest expense could increase if interest rates increase because our debt bears interest at floating rates, which could adversely affect our cash flows.
Tests of our products may not detect bugs or errors because it is difficult to simulate our clients’ wide variety of computing environments. Despite extensive testing, from time to time we have discovered defects or errors in our products.
Despite extensive testing, from time to time we have discovered defects or errors in our products.
Any of these companies, as well as other technology or healthcare companies could decide at any time to specifically target hospitals within our target market. Our principal competitors in the post-acute care EHR market are PointClickCare Corporation and MatrixCare, Inc. These companies compete with us directly in our target market of long-term post-acute care facilities.
Any of these companies, as well as other technology or healthcare companies could decide at any time to specifically target hospitals within our target market. Our principal competitors in the patient engagement market include Relay Health, Get Well Network/Healthloop, Apollo Care Connect, Bridge Patient Portal, eClinicalWorks Patient Portal, Influence Health, and InteliChart.
New products that we introduce or enhancements to our existing products may contain undetected errors or problems that could affect client satisfaction and cause a decrease in revenues. Highly complex software products such as ours sometimes contain undetected errors or failures when first introduced or when updates and new versions are released.
Highly complex software products such as ours sometimes contain undetected errors or failures when first introduced or when updates and new versions are released. Tests of our products may not detect bugs or errors because it is difficult to simulate our clients’ wide variety of computing environments.
We would also potentially lose those clients, and our reputation could be harmed.
In such event our remote access clients and/or their patients could seek to hold us responsible for any losses. We would also potentially lose those clients, and our reputation could be harmed.
Future restructuring of our sales force could occur, and if so we may again experience the adverse transition issues associated with such restructuring. If we are unable to manage our growth in the new markets we may enter, our business and financial results could suffer.
Future restructuring of our sales force could occur, and if so we may again experience the adverse transition issues associated with such restructuring. The markets for our RCM service offering may develop more slowly than we expect. Our success depends, in part, on the willingness of healthcare organizations to implement integrated solutions for the areas in which we provide services.
For example, we recorded a goodwill impairment charge of $28.0 million in the fourth quarter of 2017 relating to our Post-acute Care EHR reporting unit, which consists soley of AHT, which we acquired in January 2016 as part of our acquisition of HHI.
We recorded a goodwill impairment charge of $35.9 million in the fourth quarter of 2023, $21.9 million of which was associated with our Post-acute care EHR reporting unit, $6.4 million of which was associated 37 with our Acute care EHR reporting unit and $7.6 million of which was associated with our Patient Engagement reporting unit.
Removed
RISKS RELATED TO OUR INDUSTRY The widespread outbreak of an illness or any other communicable disease, or any other public health crisis, such as the COVID-19 pandemic, and the governmental and societal responses thereto, could adversely affect our business, results of operations, and financial position.
Added
Our primary objectives are to increase the market share of our RCM services, aggressively pursue competitive and vulnerable EHR replacement opportunities, and differentiate our products and services on a client experience basis that enables us to sell a broader set of services into a loyal base of clients that are our advocates.
Removed
Widespread outbreaks of disease or other public health crises, such as the COVID-19 pandemic, and responses thereto have in the past and may in the future cause harm to us, our employees, customers, vendors, and financial institutions, which could have a material adverse effect on our results of operations, financial condition, and cash flows.
Added
As existing regulations mature and become better defined, we anticipate that these regulations will continue to directly affect certain of our products and services, but we cannot fully predict the effect at this time.
Removed
The impacts may include, but would not be limited to: • Disruption to operations due to the unavailability of employees due to illness, quarantines, risk of illness, travel restrictions, vaccination mandates, or other factors that limit the availability of our existing or potential workforce; • Limitations to the availability of our key personnel due to travel restrictions and access restrictions to our customers' facilities; • Elevated employee turnover which may impact our performance and /or increase payroll expense and recruiting-related expenses; • New or additional measures required by national, state, or local governments to combat COVID-19, such as a COVID-19 vaccine mandate, may impact the availability of our employees and/or increase operating costs; • Decreased patient volumes which could impact the financial health of our customers and thereby increase our associated credit risk with customers and increase pressure to modify our contractual terms; and • Significant disruption of global financial markets, which could negatively impact our or our customers' ability to access capital in the future.
Added
The HHS may impose penalties for information blocking that has occurred after September 1, 2023, and the ONC and the HHS proposed a rule on November 1, 2023 listing certain disincentives for actors that conduct information blocking. Standards for Submission of Healthcare Claims .
Removed
The further spread of COVID-19, and the requirements to take action to help limit the spread of the virus, could impact the resources required to carry out our business as usual and may have a material adverse effect on our results of operations, financial condition, and cash flows.
Added
Some organizations may be reluctant or unwilling to implement our solutions for a number of reasons, including failure to perceive the need for improved revenue cycle operations, lack of knowledge about the potential benefits our solutions provide, concerns over the cost of using an external solution, or as a result of investments or planned investments in internally developed solutions, choosing to continue to rely on their own internal resources.
Removed
The extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted.
Added
Difficulties in managing future growth in new markets could have a significant negative impact on our business, financial condition and results of operations. We are currently in the process of implementing a new enterprise resource planning (“ERP”) software solution. If we do not effectively implement this project, or any future associated updates, our operations could be significantly disrupted.
Removed
Such developments may include the ongoing geographic spread of the virus, the severity of the disease, the duration of the outbreak and the type and duration of actions that may be taken by various government authorities in response to the outbreak and the impact on the United States and the global economy.
Added
We are in the process of implementing of a new ERP software solution.
Removed
Any of these developments, individually or in aggregate, could materially impact our business and our financial results and conditions.
Added
This project requires us to migrate and reconfigure all of our current system processes, transactions, data and controls to a new cloud-based platform and is expected to have a significant impact on our business processes, sales pipeline management, customer relationship management, financial reporting, information systems and internal controls.
Removed
Additionally, concerns over the economic impact of the COVID-19 pandemic have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact our stock price and may adversely impact our ability to access capital, at all or on reasonable terms.
Added
This implementation process is expected to require significant change management, meaningful investment in capital and personnel resources and coordination of software and system providers and internal business teams.
Removed
To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described herein. There are a limited number of hospitals in our target market.
Added
We may experience difficulties as we manage these changes and transition to this new ERP solution, including loss or corruption of data, delayed sales, delayed financial reporting, decreases in productivity as our personnel implement and become familiar with the new systems and processes, unanticipated expenses (including increased costs of implementation and costs of conducting business) and lost revenue.
Removed
These standards are detailed and broad, and cover not only routing transactions between prescribers and pharmacies, but also electronic eligibility, formulary and benefits inquiries.
Added
Once implemented, this cloud-based ERP solution will be eligible for periodic updates from the vendor. Although we will conduct design validations and user testing, these updates may cause delays in transacting our business due to system challenges, limitations in functionality, inadequate change management or process deficiencies in the production and use of the system.
Removed
Standards for Submission of Healthcare Claims . Effective October 2015, CMS mandated the use of new patient codes for reporting medical diagnosis and inpatient procedures, referred to as the ICD-10 codes. CMS requires all providers, payors, clearinghouses and billing services to utilize these ICD-10 codes when submitting claims for payment.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease the remainder of our facilities in various locations in the United States, including: Mobile, Alabama; Pottsville, Pennsylvania; Glenwood, Minnesota; Plymouth, Minnesota; Ridgeland, Mississippi; Spokane, Washington and Rockville, Maryland. The terms of the se leases generally range in length from one to twelve years, and all of the leases contain options to incrementally extend the lease period.
Biggest changeWe lease the remainder of our facilities in various locations in the United States, including: Mobile, Alabama; Pottsville, Pennsylvania; Glenwood, Minnesota; Ridgeland, Mississippi; Spokane, Washington and Rockville, Maryland. The terms of 43 these leases generally range in length from one to twelve years, and all of the leases contain options to incrementally extend the lease period.
Removed
During 2021, we had one lease which expired and the Company did not renew: Monroe, Louisiana. Additionally, on July 28, 2021, the Company terminated its lease agreement for approximately 45,000 square feet of office space in Fairhope, Alabama. During 2022, we had one lease in Pottsville, Pennsylvania which expired and the Company extended for a three-year term.
Added
During 2023, the Company terminated its lease agreement for approximately 12,500 square feet of office space in Plymouth, Minnesota.
Removed
We also had one lease in Marshall, Minnesota that expired in normal course during 2022.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−2 removed2 unchanged
Biggest changeSee Note 16 – Commitments and Contingencies included in the notes to our audited financial statements included elsewhere in the Annual Report on Form 10-K. On November 2, 2022, the Company received a subpoena from the U.S.
Biggest changeSee Note 16 – Commitments and Contingencies included in the notes to our audited financial statements included elsewhere in the Annual Report on Form 10-K.
Removed
Securities and Exchange Commission (the “SEC”) primarily relating to certain accounting matters, including, but not limited to those relating to revenue recognition and impairment testing of goodwill, during the period from May 1, 2019 to the date of the subpoena.
Removed
The Company is cooperating in providing documents and information to the SEC in connection with the subpoena and intends to continue to do so. The Company cannot predict the timing or outcome of this investigation.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCPSI’s common stock is listed on the NASDAQ Global Select Market under the symbol "CPSI." Dividends On November 2, 2017, the Company announced that our Board of Directors adopted a fixed dividend policy for the payment of quarterly dividends, and on September 4, 2020, our Board of Directors opted to indefinitely suspend all quarterly dividends.
Biggest changeTruBridge’s common stock is listed on the NASDAQ Global Select Market under the symbol "TBRG." Prior to March 4, 2024, TruBridge's common stock was listed under the symbol “CPSI.” Dividends On September 4, 2020, our Board of Directors opted to indefinitely suspend all quarterly dividends.
On July 27, 2022, the Board of Directors extended the expiration date of the stock repurchase program to September 4, 2024. Any future stock repurchase transactions may be made through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the securities Exchange Act of 1934, as amended. 43
On July 27, 2022, the Board of Directors extended the expiration date of the stock repurchase program to September 4, 2024. Any future stock repurchase transactions may be made through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the securities Exchange Act of 1934, as amended. 45
Our Board of Directors will take into account such matters as general business conditions, capital needs, our financial results, available liquidity and such other factors as our Board of Directors may deem relevant in future dividend declarations. Additionally, the terms of our Credit Agreement restrict our ability to pay dividends.
Our Board of Directors will take into account such matters as general business conditions, capital needs, our financial results, available liquidity and such other factors as our Board of Directors may deem relevant in future dividend declarations. Additionally, the terms of our Credit Agreement restrict our ability to pay dividends and make share repurchases.
This number does not include the number of beneficial owners whose shares are held in "street" names by broker-dealers and other institutions who hold shares on behalf of their clients. As of March 9, 2023, there were 14,530,201 shares of common stock outstanding.
This number does not include the number of beneficial owners whose shares are held in “street” names by broker-dealers and other institutions who hold shares on behalf of their clients. As of March 11, 2024, there were 14,507,776 shares of common stock outstanding.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for CPSI Common Stock As of March 9, 2023, there were approximately 103 registere d holders of our common stock, as provided to us by our transfer agent.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for TruBridge Common Stock As of March 11, 2024, there were approximately 77 registered holders of our common stock, as provided to us by our transfer agent.
Purchases of Equity Securities The following table summarizes our repurchase of equity securities during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (a) October 1, 2022 - October 31, 2022 42,000 $ 29.27 42,000 $ 20,332,714 November 1, 2022 - November 30, 2022 42,345 $ 28.79 42,345 $ 19,113,761 December 1, 2022 - December 31, 2022 44,037 $ 27.83 44,037 $ 17,888,286 Total 128,382 $ 28.62 128,382 (a) On September 4, 2020, our Board of Directors approved a stock repurchase program under which we may repurchase up to $30.0 million of our common stock through September 3, 2022.
Purchases of Equity Securities The following table summarizes our repurchase of equity securities during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (a) October 1, 2023 - October 31, 2023 — $ — — $ 16,471,896 November 1, 2023 - November 30, 2023 — $ — — $ 16,471,896 December 1, 2023 - December 31, 2023 — $ — — $ 16,471,896 Total — $ — — (a) On September 4, 2020, our Board of Directors approved a stock repurchase program under which we may repurchase up to $30.0 million of our common stock through September 3, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+48 added−63 removed73 unchanged
Biggest changeCorresponding to this decreased profitability, net cash provided by operating activities decreased by $15.3 million, from $47.7 million provided by operations during 2021 to $32.4 million provided by operations for 2022, as the aforementioned increase in revenue coupled with delayed client cash collections resulted in a significant expansion of accounts receivable. 47 Results of Operations The following table sets forth certain items included in our results of operations for each of the three years in the period ended December 31, 2022, expressed as a percentage of our total revenues for these periods: Year ended December 31, 2022 2021 2020 (In thousands) Amount % Sales Amount % Sales Amount % Sales INCOME DATA: Sales revenues: RCM $ 179,870 55.1 % $ 131,242 46.8 % $ 107,431 38.3 % EHR 139,823 42.8 % 143,109 51.0 % 152,954 54.5 % Patient engagement 6,955 2.1 % 6,278 2.2 % 4,103 1.6 % Total sales revenues 326,648 100.0 % 280,629 100.0 % 264,488 100.0 % Costs of sales: RCM 97,010 29.7 % 66,015 23.5 % 57,461 21.7 % EHR 71,347 21.8 % 70,664 25.2 % 69,361 26.2 % Patient engagement 3,856 1.2 % 3,068 1.1 % 1,420 0.5 % Total costs of sales 172,213 52.7 % 139,747 49.8 % 128,242 48.5 % Gross profit 154,435 47.3 % 140,882 50.2 % 136,246 51.5 % Operating expenses: Product development 30,926 9.5 % 30,389 10.8 % 33,457 12.6 % Sales and marketing 27,131 8.3 % 21,978 7.8 % 22,835 8.6 % General and administrative 56,192 17.2 % 50,022 17.8 % 47,479 18.0 % Amortization of acquisition-related intangibles 17,403 5.3 % 13,786 4.9 % 11,421 4.3 % Total operating expenses 131,652 40.3 % 116,175 41.4 % 115,192 43.6 % Operating income 22,783 7.0 % 24,707 8.8 % 21,054 8.0 % Other income (expense): Other income 1,178 0.4 % 1,529 0.5 % 1,494 0.6 % Gain on contingent consideration 565 0.2 % — — % — — % Loss on extinguishment of debt (125) — % — — % (202) (0.1) % Interest expense (6,320) (1.9) % (3,160) (1.1) % (3,562) (1.3) % Total other income (expense) (4,702) (1.4) % (1,631) (0.6) % (2,270) (0.9) % Income before taxes 18,081 5.5 % 23,076 8.2 % 18,784 7.1 % Provision for income taxes 2,214 0.7 % 4,646 1.7 % 4,538 1.7 % Net income $ 15,867 4.9 % $ 18,430 6.6 % $ 14,246 5.4 % 2022 Compared to 2021 Revenues Total revenues for the year ended December 31, 2022 increased by $46.0 million, or 16%, compared to the year ended December 31, 2021.
Biggest changeCorresponding to this decreased profitability, net cash provided by operating activities decreased by $31.3 million, from $32.4 million provided by operations during 2022 to $1.1 million provided by operations for 2023 . 49 Results of Operations The following table sets forth certain items included in our results of operations for each of the three years in the period ended December 31, 2023, expressed as a percentage of our total revenues for these periods: Year ended December 31, 2023 2022 2021 (In thousands) Amount % Sales Amount % Sales Amount % Sales INCOME DATA: Revenues: RCM $ 193,929 57.1 % $ 179,870 55.1 % $ 131,242 46.8 % EHR 138,063 40.7 % 139,823 42.8 % 143,109 51.0 % Patient engagement 7,443 2.2 % 6,955 2.1 % 6,278 2.2 % Total revenues 339,435 100.0 % 326,648 100.0 % 280,629 100.0 % Expenses Costs of revenue (exclusive of amortization and depreciation) RCM 110,192 32.5 % 97,024 29.7 % 66,015 23.5 % EHR 62,048 18.3 % 65,661 20.1 % 66,698 23.8 % Patient engagement 3,628 1.1 % 3,856 1.2 % 3,068 1.1 % Total costs of revenue (exclusive of amortization and depreciation) 175,868 51.8 % 166,541 51.0 % 135,781 48.4 % Product development 37,246 11.0 % 31,898 9.8 % 32,809 11.7 % Sales and marketing 28,049 8.3 % 27,131 8.3 % 21,978 7.8 % General and administrative 76,153 22.4 % 54,965 16.8 % 48,481 17.3 % Amortization 24,522 7.2 % 20,887 6.4 % 14,717 5.2 % Depreciation 1,946 0.6 % 2,443 0.7 % 2,156 0.8 % Goodwill impairment 35,913 10.6 % — — % — — % Trademark impairment 2,342 0.7 % — — % — — % Total expenses 382,039 112.6 % 303,865 93.0 % 255,922 91.2 % Operating income (loss) (42,604) (12.6) % 22,783 7.0 % 24,707 8.8 % Other income (expense): Other income 745 0.2 % 1,178 0.4 % 1,529 0.5 % Gain on contingent consideration — — % 565 0.2 % — — % Loss on extinguishment of debt — — % (125) — % — — % Interest expense (12,521) (3.7) % (6,320) (1.9) % (3,160) (1.1) % Total other income (expense) (11,776) (3.5) % (4,702) (1.4) % (1,631) (0.6) % Income (loss) before taxes (54,380) (16.0) % 18,081 5.5 % 23,076 8.2 % Provision (benefit) for income taxes (8,591) (2.5) % 2,214 0.7 % 4,646 1.7 % Net income (loss) $ (45,789) (13.5) % $ 15,867 4.9 % $ 18,430 6.6 % 2023 Compared to 2022 Revenues Total revenues for the year ended December 31, 2023 increased by $12.8 million, or 4%, compared to the year ended December 31, 2022.
As such, retention of existing Acute Care EHR customers is a key component of our long-term growth strategy by protecting this base of potential RCM customers, while at the same time serving as a leading indicator of our market position and stability of revenues and cash flows.
As such, retention of our existing Acute Care EHR customers is a key component of our long-term growth strategy by protecting this base of potential RCM customers, while at the same time serving as a leading indicator of our market position and stability of revenues and cash flows.
Post-acute EHR non-recurring revenues increased by $0.7 million, or 56%, compared to 2021 due to a temporarily beneficial shift in license mix. Patient Engagement revenues increased by $0.7 million, or 11%, compared to 2021 as escalating demand for patient engagement solutions continues to propel organic growth for Get Real Health's products and services.
Post-acute care EHR non-recurring revenues increased by $0.7 million, or 56%, compared to 2021 due to a temporarily beneficial shift in license mix. Patient Engagement revenues increased by $0.7 million, or 11%, compared to 2021 as escalating demand for patient engagement solutions continues to propel organic growth for Get Real Health's products and services.
(2) Mostly comprised of installation revenues from the sale of our acute and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model. Recurring EHR revenues remained flat with a $0.2 million, or 0.2%, decrease in 2022 compared to 2021.
(2) Mostly comprised of installation revenues from the sale of our acute and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model. Recurring EHR revenues remained essentially flat with a $0.2 million, or 0.2%, decrease in 2022 compared to 2021.
The segment measurements provided to and evaluated by the chief operating decision makers ("CODM") are described in Note 18 to the consolidated financial statements. These results should be considered in addition to, and not as a substitute for, results reported in accordance with GAAP.
The segment measurements provided to and evaluated by the chief operating decision makers ("CODM") are described in Note 18 to the condensed consolidated financial statements. These results should be considered in addition to, and not as a substitute for, results reported in accordance with GAAP.
Acquisition costs are expensed as incurred and recorded in general and administrative expenses. Measurement period adjustments relate to adjustments to the fair value of assets acquired 58 and liabilities assumed based on information that we should have known at the time of acquisition.
Acquisition costs are expensed as incurred and recorded in general and administrative expenses. Measurement period adjustments relate to adjustments to the fair value of assets acquired and liabilities assumed based on information that we should have known at the time of acquisition.
There can be no assurance that our bookings or backlog will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable. 57 Critical Accounting Policies and Estimates General Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
There can be no assurance that our bookings or backlog will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable. 59 Critical Accounting Policies and Estimates General Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Although we believe that our approach to estimates and judgements regarding revenue recognition is reasonable, actual results could differ and we may be exposed to increases or decreases in revenue that could be material. Allowance for Credit Losses Trade accounts receivable are stated at the amount the Company expects to collect and do not bear interest.
Although we believe that our approach to estimates and judgments regarding revenue recognition is reasonable, actual results could differ and we may be exposed to increases or decreases in revenue that could be material. Allowance for Credit Losses Trade accounts receivable are stated at the amount the Company expects to collect and do not bear interest.
Sales a nd Marketing Sales and marketing costs increased by $5.2 million, or 23%, compared to 2021. 2022 marked the return of our in-person National Client Conference, which had migrated to virtual-only since the onset of the COVID-19 pandemic, resulting in incremental expense of $1.1 million.
Sales and Marketing Sales and marketing costs increased by $5.2 million, or 23%, compared to 2021. 2022 marked the return of our in-person National Client Conference, which had migrated to virtual-only since the onset of the COVID-19 pandemic, resulting in incremental expense of $1.1 million.
Recent Accounting Pronouncements There were no new accounting standards required to be adopted in 2022 that had a material impact on our consolidated financial statements, and we do not believe that any recently issued but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements There were no new accounting standards required to be adopted in 2023 that had a material impact on our consolidated financial statements, and we do not believe that any recently issued but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.
Although the Company currently has no obligations related to planned acquisitions, the Company's strategy includes the potential for future acquisitions, which may be funded thorough draws on the credit facilities or the use of the other sources of liquidity described above.
Although the Company currently has no obligations related to planned acquisitions, the Company's strategy includes the potential for future acquisitions, which may be funded through draws on the credit facilities or the use of the other sources of liquidity described above.
We believe that our efforts towards margin optimization are well-timed, enabling a rapid response to actual or expected wage inflation in order to preserve RCM gross margins, but we cannot guarantee that these efforts will fully eliminate any related margin deterioration.
We believe that our efforts towards margin optimization are well-timed, enabling a rapid response to actual or expected wage inflation in order to preserve RCM profitability, but we cannot guarantee that these efforts will fully eliminate any related margin deterioration.
When combined with scheduled payments on existing financing arrangements, the reduced frequency of new financing arrangements has resulted in a substantial reduction in financing receivables during 2022.
When combined with scheduled payments on existing financing arrangements, the reduced frequency of new financing arrangements has resulted in a substantial reduction in financing receivables during 2023.
While the combination of revenue growth and operating leverage results in increased margin realization, we also look to increase margins through specific cost containment measures where appropriate as we continue to leverage opportunities for greater operating efficiencies.
While the combination of revenue growth and operating leverage is expected to result in increased margin realization, we also look to increase margins through specific cost containment measures where appropriate as we continue to leverage opportunities for greater operating efficiencies.
General and Administrative General and administrative expenses increased by $6.2 million , or 12%, compared to 2021, mostly due to volatility in employee health claims coupled with an expanding employee base that resulted in a $4.1 million increase in employee benefits cost.
General and Administrative General and administrative expenses increased by $6.5 million, or 13%, compared to 2021, mostly due to volatility in employee health claims coupled with an expanding employee base that resulted in a $4.1 million increase in employee benefits cost.
Adjusted EBITDA consists of GAAP net income as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) depreciation expense; (iii) amortization of software development costs; (iv) amortization of acquisition-related intangible assets; (v) stock-based compensation; (vi) severance and other non-recurring charges; (vii) interest expense and other, net; (viii) gain on contingent consideration; and (ix) the provision for income taxes.
Adjusted EBITDA consists of GAAP net income (loss) as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) depreciation expense; (iii) amortization of software development costs; (iv) amortization of acquisition-related intangible assets; (v) stock-based compensation; (vi) severance and other non-recurring charges; (vii) interest expense and other, net; (viii) impairment of goodwill; (ix) impairment of trademark intangibles; (x) (gain) loss on contingent consideration; and (xi) the provision (benefit) for income taxes.
There are no intersegment revenues to be eliminated in computing segment revenue. Segment Adjusted EBITDA - Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 RCM adjusted EBITDA increased by $6.0 million, or 20%, compared to 2021.
There are no intersegment revenues to be eliminated in computing segment revenue. Segment Adjusted EBITDA - Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 RCM adjusted EBITDA increased by $7.0 million, or 25%, compared to 2021.
As part of our annual goodwill impairment test, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We test annually for impairment as of October 1. 60 As part of our annual goodwill impairment test, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Management Overview Strategy Our core strategy is to achieve meaningful long-term revenue growth by cross-selling RCM services into our existing EHR customer base, expanding RCM market share with sales to new community hospitals and larger health systems, and pursuing competitive EHR takeaway opportunities in the acute and post-acute markets.
Management Overview Strategy Our core strategy is to achieve meaningful long-term revenue growth by cross-selling RCM services into our existing EHR customer base, expanding RCM market share with sales to new community hospitals and larger health systems, and pursuing 46 competitive EHR takeaway opportunities.
The segment measurements provided to and evaluated by the CODM are described in Note 18 to the consolidated financial statements. These results should be considered in addition to, and not as a substitute for, results reported in accordance with GAAP.
The segment measurements provided to and evaluated by the chief operating decision makers ("CODM") are described in Note 18 to the condensed consolidated financial statements. These results should be considered in addition to, and not as a substitute for, results reported in accordance with GAAP.
Accordingly, we are exposed to fluctuations in interest rates on borrowings under our credit facilities. A one hundred basis point change in interest rate on our borrowings outstanding as of December 31, 2022 would result in a change in interest expense of approximately $1.4 million annually. We did not have investments as of December 31, 2022.
Accordingly, we are exposed to fluctuations in interest rates on borrowings under our credit facilities. A one hundred basis point change in interest rate on our borrowings outstanding as of December 31, 2023 would result in a change in interest expense of approximately $2.0 million annually. We did not have investments as of December 31, 2023.
Margin Optimization Efforts Our core growth strategy includes an element geared towards margin optimization by identifying opportunities to further improve our cost structure by executing against initiatives related to organizational realignment, expanded use of offshore partnerships and the use of automation to increase the efficiency and value of our associates' efforts.
Margin Optimization Efforts Our core growth strategy includes margin optimization by identifying opportunities to further improve our cost structure by executing against initiatives related to organizational realignment, expanded use of offshore resources and the use of automation to increase the efficiency and value of our associates' efforts.
Our hospital clients operate in an environment typified by rising costs and increased complexity and are increasingly seeking to alleviate themselves of the ever-increasing administrative burden of operating their own business office functions.
Organic revenue growth materialized in 2022 as our hospital clients operate in an environment typified by rising costs and increased complexity and are increasingly seeking to alleviate themselves of the ever-increasing administrative burden of operating their own business office functions.
We generated revenues of $326.6 million from the sale of our products and services during 2022, compared to $280.6 million during 2021, an increase of 16% that is due to the combination of inorganic growth through our recent acquisitions of TruCode and HRG and organic growth as RCM solutions continue to gain traction in the domestic healthcare landscape.
We generated revenues of $339.4 million from the sale of our products and services during 2023, compared to $326.6 million during 2022, an increase of 4% that is due to the combination of inorganic growth through our recent acquisitions of HRG and Viewgol and organic growth as RCM solutions continue to gain traction in the domestic healthcare landscape.
Goodwill is not amortized but is evaluated for impairment annually or more frequently if indicators of impairment are present or changes in circumstances suggest that impairment may exist. We test annually for impairment as of October 1.
Goodwill is not amortized but is evaluated for impairment annually or more frequently if indicators of impairment are present or changes in circumstances suggest that impairment may exist.
Concurrent with the authorization of this stock repurchase program, the Board of Directors opted to indefinitely suspend all quarterly dividends. Credit Agreement As of December 31, 2022, we had $67.4 million in principal amount outstanding under the term loan facility and $73.7 million in principal amount outstanding under the revolving credit facility.
Concurrent with the authorization of this stock repurchase program, the Board of Directors opted to indefinitely suspend all quarterly dividends. Credit Agreement As of December 31, 2023, we had $63.9 million in principal amount outstanding under the term loan facility and $135.7 million in principal amount outstanding under the revolving credit facility.
We believe that our cash and cash equivalents of $7.0 million as of December 31, 2022, the future operating cash flows of the combined entity, and our remaining borrowing capacity under the revolving credit facility of $86.3 million as of December 31, 2022, taken together, provide adequate resources to fund ongoing cash requirements for the next twelve months and beyond.
We believe that our cash and cash equivalents of $3.8 million as of December 31, 2023, our future operating cash flows, and our remaining borrowing capacity under the revolving credit facility of $24.3 million as of December 31, 2023, taken together, provide adequate resources to fund ongoing cash requirements for the next twelve months and beyond.
Estimates The Company uses estimates to record certain transactions and liabilities. These estimates are generally based on management’s best judgment, past experience, and utilization of third party services such as actuarial and other expert services. Because these estimates are subjective and variable, actual results could differ significantly from these estimates.
These estimates are generally based on management’s best judgment, past experience, and utilization of third party services such as actuarial and other expert services. Because these estimates are subjective and variable, actual results could differ significantly from these estimates.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2022, our principal sources of liquidity consisted of cash and cash equivalents of $7.0 million and our remaining borrowing capacity under the revolving credit facility of $86.3 million, compared to $11.4 million of cash and cash equivalents and $79.0 million of remaining borrowing capacity under the revolving credit facility as of December 31, 2021.
Liquidity and Capital Resources Sources of Liquidity 56 As of December 31, 2023, our principal sources of liquidity consisted of cash and cash equivalents of $3.8 million and our remaining borrowing capacity under the revolving credit facility of $24.3 million, compared to $7.0 million of cash and cash equivalents and $86.3 million of remaining borrowing capacity under the revolving credit facility as of December 31, 2022.
Bookings Bookings is a key operational metric used by management to assess the relative success of our sales generation efforts, and were as follows for the years ended December 31, 2022 and 2021, respectively: (In thousands) 2022 2021 RCM (1) $ 48,065 $ 20,333 EHR (2) 38,152 40,873 Patient engagement (1) 3,188 9,007 Total Bookings $ 89,405 $ 70,213 (1) Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts).
Bookings Bookings is a key operational metric used by management to assess the relative success of our sales generation efforts, and were as follows for the years ended December 31, 2023 and 2022, respectively: (In thousands) 2023 2022 RCM (1) $ 48,986 $ 48,065 EHR (2) 33,143 38,152 Patient engagement (1) 2,973 3,188 Total Bookings $ 85,102 $ 89,405 (1) Generally calculated as the total contract price (for non-recurring, project-related amounts) and annualized contract value (for recurring amounts).
(2) Mostly comprised of installation revenues from the sale of our acute and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model. Recurring EHR revenues increased by $3.0 million, or 2%, during 2021.
(2) Mostly comprised of installation revenues from the sale of our acute and post-acute care EHR solutions and related applications under a perpetual (non-subscription) licensing model. Recurring EHR revenues increased by $1.3 million, or 1%, in 2023 compared to 2022.
Adjusted EBITDA consists of GAAP net income as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) depreciation expense; (iii) amortization of software development costs; (iv) amortization of acquisition-related intangible assets; (v) stock-based compensation; (vi) severance and other non-recurring charges; (vii) interest expense and other, net; (viii) gain on contingent consideration; and (ix) the provision for income taxes.
We evaluate each of our three operating segments based on segment revenues and segment adjusted EBITDA. 52 Adjusted EBITDA consists of GAAP net income (loss) as reported and adjusts for (i) deferred revenue purchase accounting adjustments arising from purchase allocation adjustments related to business acquisitions; (ii) depreciation expense; (iii) amortization of software development costs; (iv) amortization of acquisition-related intangible assets; (v) stock-based compensation; (vi) severance and other non-recurring charges; (vii) interest expense and other, net; (viii) impairment of goodwill; (ix) impairment of trademark intangibles; (x) (gain) loss on contingent consideration; and (xi) the provision (benefit) for income taxes.
We may also seek to grow 44 through acquisitions of businesses, technologies or products if we determine that such acquisitions are likely to help us meet our strategic goals. The opportunity to cross-sell RCM services is greatest within our Acute Care EHR customer base.
We may also seek to grow through acquisitions of businesses, technologies or products if we determine that such acquisitions are likely to help us meet our strategic goals. Our growth strategy is heavily dependent on our ability to cross-sell RCM services to our Acute Care EHR customer base.
The following table present a summary of the revenues and adjusted EBITDA of our three operating segments for the years ended December 31, 2021 and 2020.
The following table presents a summary of the revenues and adjusted EBITDA of our three operating segments for the years ended December 31, 2023 and 2022.
A $5.6 million, or 64%, increase in product 49 development labor capitalization pursuant to the aforementioned change in our method of estimating the labor costs incurred in developing software assets requiring capitalization under ASC 350-40, Internal Use Software was offset by increased amortization of the related assets and increased costs associated related to our strategy to migrate to a public cloud environment.
Product development costs decreased by $0.9 million, or 3%, as a $5.6 million increase in product development labor capitalization costs (pursuant to the previously disclosed change in our method of estimating the labor costs incurred in developing software assets requiring capitalization under ASC 350-40, Internal Use Software ) was offset by increased costs related to our strategy to migrate to a public cloud environment.
This increasing demand for services, coupled with the positive impact of improving hospital patient volumes on RCM revenues, resulted in organic revenue growth of $8.1 million, or 7%. 48 EHR revenues decreased by $3.3 million, or 2%, from the year ended December 31, 2021, and were comprised of the following for the years ended December 31, 2022 and 2021: Year ended December 31, (In thousands) 2022 2021 Recurring EHR revenues (1) Acute Care EHR $ 109,340 $ 108,440 Post-acute Care EHR 15,384 16,472 Total recurring EHR revenues 124,724 124,912 Non-recurring EHR revenues (2) Acute Care EHR 13,138 16,939 Post-acute Care EHR 1,961 1,258 Total non-recurring EHR revenues 15,099 18,197 Total EHR revenue $ 139,823 $ 143,109 (1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues.
EHR revenues decreased by $3.3 million, or 2%, from the year ended December 31, 2021, and were comprised of the following for the years ended December 31, 2022 and 2021: Year ended December 31, (In thousands) 2022 2021 Recurring EHR revenues (1) Acute Care EHR $ 109,340 $ 108,440 Post-acute Care EHR 15,384 16,472 Total recurring EHR revenues 124,724 124,912 Non-recurring EHR revenues (2) Acute Care EHR 13,138 16,939 Post-acute Care EHR 1,961 1,258 Total non-recurring EHR revenues 15,099 18,197 Total EHR revenue $ 139,823 $ 143,109 (1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues.
Aside from normal operating cash requirements, obligations under our Credit Agreement (as discussed below) and operating leases (see Note 15 to the consolidated financial statements included herein for further information), and opportunistic uses of capital in share repurchases and business acquisition transactions, we do not have any material cash commitments or planned cash commitments.
Aside from normal operating cash requirements, obligations under our Credit Agreement (as discussed below) and operating leases, and opportunistic uses of capital in share repurchases and business acquisition transactions, we do not have any material cash commitments or planned cash commitments.
As of December 31, 2022, we had $141.1 million in principal amount of indebtedness outstanding under the credit facilities.
As of December 31, 2023, we had $199.6 million in principal amount of indebtedness outstanding under the credit facilities.
We had $141.1 million of outstanding borrowings under our credit facilities with Regions Bank at December 31, 2022.
We had $199.6 million of outstanding borrowings under our credit facilities with Regions Bank at December 31, 2023.
There are no intersegment revenues to be eliminated in computing segment revenue. Segment Adjusted EBITDA - Year Ended December 31, 2021 Compared with Year Ended December 31, 2020 RCM adjusted EBITDA increased by $7.4 million, or 33%, compared to 2020.
There are no intersegment revenues to be eliminated in computing segment revenue. Segment Adjusted EBITDA - Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 RCM adjusted EBITDA decreased by $10.4 million, or 30%, compared to 2022.
Our technology solutions are generally deployed in one of two license models: (1) perpetual licenses, for which the related revenue is recognized effectively upon installation, and (2) “Software as a Service” or “SaaS” arrangements, including our Cloud Electronic Health Record (“Cloud EHR”) offering, which generally result in revenue being recognized monthly as the services are provided over the term of the arrangement.
Our technology solutions are generally deployed in one of two license models: (1) perpetual licenses, for which the related revenue is recognized effectively upon installation, and (2) “Software as a Service” or “SaaS” arrangements, including our Cloud Electronic Health Record (“Cloud EHR”) offering, which generally result in revenue being recognized monthly as the services are provided over the term of the arrangement. 47 The overwhelming majority of our historical EHR installations have been under a perpetual license model, but new customer demand has dramatically shifted towards a SaaS license model in the past several years.
The First Amendment requires the Company to maintain a minimum fixed charge coverage ratio of 1.25:1.00 throughout the duration of such agreement. Under the First Amendment, the Company is required to comply with a maximum consolidated net leverage ratio of 3.75:1.00 for each quarter through March 31, 2023, after which time the maximum consolidated net leverage ratio will be 3.50:1.00.
The First Amendment required the Company to maintain a minimum fixed charge coverage ratio of 1.25:1.00 throughout the duration of such agreement. Under the First Amendment, the Company is required to comply with a maximum consolidated net leverage ratio of 3.50:1.00.
We have three reportable operating segments: RCM, EHR, and Patient Engagement. We evaluate each of our three operating segments based on segment revenues and segment adjusted EBITDA.
Supplemental Segment Information Our reportable segments have been determined in accordance with ASC 280 - Segment Reporting . We have three reportable operating segments: RCM, EHR, and Patient Engagement. We evaluate each of our three operating segments based on segment revenues and segment adjusted EBITDA.
If the consolidated net leverage ratio is less than 2.50:1:00, there is no limit on the incremental facility. The Amended and Restated Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default. We 56 believe that we were in compliance with the covenants contained in such agreement as of December 31, 2022.
If the consolidated net leverage ratio is less than 2.50:1.00, there is no limit on the amount of incremental facilities. The Amended and Restated Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default.
Year Ended December 31, Change 2022 2021 $ % (In thousands) Revenues by segment: RCM $ 179,870 $ 131,242 $ 48,628 37 % EHR 139,823 143,109 (3,286) (2) % Patient engagement 6,955 6,278 677 11 % Adjusted EBITDA by segment: RCM $ 36,242 $ 30,211 $ 6,031 20 % EHR 19,091 23,061 (3,970) (17) % Patient engagement 566 (595) 1,161 195 % Segment Revenues Refer to the corresponding discussion of revenues for each of our reportable segments previously provided under the Revenues heading of this Management's Discussion and Analysis.
Year Ended December 31, Change 2022 2021 $ % (In thousands) Revenues by segment: RCM $ 179,870 $ 131,242 $ 48,628 37 % EHR 139,823 143,109 (3,286) (2) % Patient engagement 6,955 6,278 677 11 % Adjusted EBITDA by segment: RCM $ 35,219 $ 28,265 $ 6,954 25 % EHR 22,507 26,505 (3,998) (15) % Patient engagement (1,827) (2,093) 266 13 % Segment Revenues Refer to the corresponding discussion of revenues for each of our reportable segments previously provided under the Revenues heading of this Management's Discussion and Analysis.
Lowered provision-to-return adjustments resulted in an incremental 3.5% decrease in our effective tax rate for 2022 compared to 2021, while the tax-free gain on contingent consideration and increased Work Opportunity Tax Credits resulted in incremental decreases in our effective tax rate of 2.2% and 1.2%, respectively, for 2022 compared to 2021.
Lowered provision-to-return adjustments resulted in an incremental 3.5% decrease in our effective tax rate for 2022 compared to 2021, while the tax-free gain on contingent consideration and increased Work Opportunity Tax Credits resulted in an incremental decrease in our effective tax rate of 2.2% for 2022 compared to 2021. 55 Net Income Net income for 2022 decreased by $2.6 million to $15.9 million, or $1.08 per basic and diluted share, compared with $18.4 million, or $1.26 per basic and diluted share, for 2021.
The individual companies align with the reporting segments and contribute towards the combined focus of improving the health of the communities we serve as follows: • The RCM reporting segment includes TruBridge, HRG, and TruCode, and focuses on providing business management, consulting, and managed IT services along with its complete RCM solution for all care settings, regardless of their primary healthcare information solutions provider. • The EHR segment includes Evident and AHT, and provides comprehensive acute and post-acute care EHR solutions and related services for community hospitals, their physician clinics, and skilled nursing and assisted living facilities. • The Patient Engagement segment offers comprehensive patient engagement and empowerment technology solutions through Get Real Health to improve patient outcomes and engagement strategies with care providers.
These reporting segments contribute towards the combined focus of improving the health of the communities we serve as follows: • The RCM reporting segment focuses on providing business management, consulting, and managed IT services along with a complete RCM solution for all care settings, regardless of their primary healthcare information solutions provider. • The EHR segment provides comprehensive acute care EHR solutions and related services for community hospitals and their physician clinics.
Since 2019, these retention rates have consistently remained in the mid-to-high 90th percentile ranges and did not materially deviate from this range during 2022. We have increased customer retention efforts by enhancing support services, investing in tooling and instrumentation to proactively monitor for potential disruptions, and deploying in-application experience software that delivers application specific insights while using our products.
We have increased customer retention efforts by enhancing support services, investing in tooling and instrumentation to proactively monitor for potential disruptions, and deploying in-application experience software that delivers application-specific insights while using our products.
Revenue growth of of 37% was partially offset by a 360 basis point decrease in gross margins, as growth materialized from lower-margin, resource-intensive service lines. This decrease in gross margins combined with expanded operating expenses to limit adjusted EBITDA growth despite this dramatic increase in revenues. EHR adjusted EBITDA decreased by $4.0 million, or 17%.
Revenue growth of 37% was partially offset by a 47% increase in costs of revenues (exclusive of amortization and depreciation), as growth materialized from lower-margin, resource-intensive service lines. This direct labor headwind combined with expanded operating expenses to limit adjusted EBITDA growth despite this dramatic increase in revenues.
As of October 1, 2022, the date of our most recent impairment test, our TruBridge reporting unit had a fair value that was substantially in excess of its carrying value, at 154% .
As of October 1, 2023, the date of our most recent impairment test, the estimated fair value for our RCM reporting unit was substantially in excess of its carrying value, exceeding its carrying value by 48%.
Income Before Taxes As a result of the foregoing factors, income before taxes increased to $23.1 million in 2021, compared to $18.8 million in 2020. 53 Provision for Income Taxes Our effective income tax rates for 2021 and 2020 were 20% and 24%, respectively.
Income (Loss) Before Taxes As a result of the foregoing factors, income (loss) before taxes decreased to a loss of $54.4 million in 2023, compared to income of $18.1 million in 2022. Provision (Benefit) for Income Taxes Our effective income tax rates for 2023 and 2022 were 16% and 12%, respectively.
On September 4, 2020, our Board of Directors approved a stock repurchase program to repurchase up to $30.0 million in aggregate amount of the Company's outstanding shares of common stock through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.
During 2022, our financing activities were a net source of cash in the amount of $25.9 million, as $48.0 million in borrowings from our revolving line of credit, used to fund our acquisition of HRG, with cash outflows mostly comprised of long-term debt principal payments of $8.9 million and $11.9 million used to repurchase shares of our common stock. 57 On September 4, 2020, our Board of Directors approved a stock repurchase program to repurchase up to $30.0 million in aggregate amount of the Company's outstanding shares of common stock through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.
During 2021, our financing activities were a net source of cash in the amount of $20.9 million, as $61.0 million in borrowings from our revolving line of credit were partially offset by long-term debt principal payments of $38.8 million and $1.3 million used to repurchase shares of our common stock.
Financing Cash Flow Activities During 2023, our financing activities were a net source of cash in the amount of $55.9 million, as $67.0 million in borrowings from our revolving line of credit (most of which was used to fund our acquisition of Viewgol, with related transaction expenses), were partially offset by long-term debt principal payments of $8.5 million and $2.6 million used to repurchase shares of our common stock, which are treated as treasury stock.
In addition to wage inflation, we are a party to contracts with certain third-party suppliers and vendors that allow for annual price adjustments indexed to inflation. While we continually seek to proactively manage controllable expenses, inflationary pressure on costs could lead to erosion of margins.
In addition to wage inflation, we are a party to contracts with certain third-party suppliers and vendors that allow for annual price adjustments indexed to inflation.
Background CPSI is a leading provider of healthcare solutions and services for community hospitals, their clinics and other healthcare systems. Founded in 1979, CPSI is the parent of six companies – Evident, LLC ("Evident"), American HealthTech, Inc. ("AHT"), TruBridge, LLC ("TruBridge"), iNetXperts, Corp. d/b/a Get Real Health ("Get Real Health"), TruCode LLC ("TruCode"), and Healthcare Resource Group, Inc. ("HRG").
With these changes, the Company's remaining legal structure includes TruBridge, Inc., the parent company, with Viewgol, LLC ("Viewgol"), iNetXperts, Corp. d/b/a Get Real Health, Healthcare Resource Group, Inc. ("HRG"), and Healthland Holding Inc. as its wholly-owned subsidiaries. Founded in 1979, TruBridge is a leading provider of healthcare services and solutions for community hospitals, their clinics and other healthcare systems.
(2) Generally calculated as the total contract price (for system sales) including annualized contract value (for support) for perpetual license system sales and total contract price for SaaS sales.
(2) Generally calculated as the total contract price (for system sales) including annualized contract value (for support) for perpetual license system sales and total contract price for SaaS sales. RCM bookings were effectively flat for 2023, increasing only $0.9 million, or 2%, compared to 2022.
Adoption of this standard did not have a material impact on our consolidated financial statements. Although we believe that that our approach to estimates and judgments regarding our allowance for credit losses is reasonable, actual results could differ and we may be exposed to increases or decreases in required allowances that could be material.
Although we believe that that our approach to estimates and judgments regarding our allowance for credit losses is reasonable, actual results could differ and we may be exposed to increases or decreases in required allowances that could be material. Business Combinations, including Purchased Intangible Assets The Company accounts for business combinations at fair value.
On March 10, 2023, the calculation of the fixed charge coverage ratio was amended to specifically exclude from the definition of fixed charges the Company's share repurchases conducted during the third and fourth quarters of 2022. Any failure by us to comply with this or another covenant in the future may result in an event of default.
On March 10, 2023, the calculation of the fixed charge coverage ratio was amended to specifically exclude from the definition of fixed charges the Company's share repurchases conducted during the third and fourth quarters of 2022. 58 As of September 30, 2023, we were not in compliance with the fixed charge coverage ratio required by the Amended and Restated Credit Agreement.
This increasing demand for services, coupled with the aforementioned impact of improving hospital patient volumes on RCM revenues, resulted in revenue increases of $8.6 million, or 21%, for our accounts receivable management services; $5.7 million, or 18%, for our insurance services division; and $1.4 million, or 16%, for our medical coding services.
This increasing demand for services, coupled with the positive impact of improving hospital patient volumes on RCM revenues, resulted in organic revenue growth of $8.1 million, or 7% in 2022.
The remaining margin optimization initiatives of enhanced leveraging of offshore partnerships and automation have commenced and, to date, have provided meaningful efficiencies to our operations, particularly within RCM. As a service organization, RCM's cost structure is heavily dependent upon human capital, subjecting it to the complexities and risks associated with this resource.
As a service organization, RCM's cost structure is heavily dependent upon human capital, subjecting it to the complexities and risks associated with this resource.
Product Development Product development expenses consist primarily of compensation and other employee-related costs (including stock-based compensation) and infrastructure costs incurred, but not capitalized, for new product development and product enhancements. Product development costs increased by $0.5 million, or 2%, compared to 2021.
Increased labor costs related to investments aimed at aggressively addressing increasing demand for patient engagement solutions comprised the majority of the increase. Product Development Product development expenses consist primarily of compensation and other employee-related costs (including stock-based compensation) and infrastructure costs incurred, but not capitalized, for new product development and product enhancements.
Refer to Note 5 to the consolidated financial statements included herein for further discussion of software development. 59 Quantitative and Qualitative Disclosures about Market and Interest Rate Risk Our exposure to market risk relates primarily to the potential fluctuations in the Secured Overnight Financing Rate ("SOFR") which replaced the British Bankers Association London Interbank Offered Rate ("LIBOR") as the new benchmark interest rate for our credit facilities.
Significant estimates included in our financial statements include those for reserves related to uncertain tax positions, bad debt and credit allowances, legal liability exposure or lack thereof, accrued expenses, and (prior to 2023) self-insurance reserves under our health insurance plan. 61 Quantitative and Qualitative Disclosures about Market and Interest Rate Risk Our exposure to market risk relates primarily to the potential fluctuations in the Secured Overnight Financing Rate ("SOFR") which replaced the British Bankers Association London Interbank Offered Rate ("LIBOR") as the new benchmark interest rate for our credit facilities.
RCM revenues increased by $48.6 million, or 37%, compared to 2021 due to acquisition-fueled growth and organic growth of our revenue cycle service offerings. TruCode, acquired in May 2021, contributed $13.8 million of revenue during 2022, compared to only $7.4 million during 2021, which reflected only eight months of activity.
TruCode, acquired in May 2021, contributed $13.8 million of revenue during 2022, compared to only $7.4 million during 2021, which reflected only eight months of activity. Our acquisition of HRG in March 2022 provided further inorganic growth, contributing an estimated $34.1 million of revenue during 2022.
Our combined companies are focused on helping improve the health of the communities we serve, connecting communities for a better patient care experience, and improving the financial operations of our customers. Evident provides comprehensive acute care electronic healthcare record ("EHR") solutions for community hospitals and their affiliated clinics.
Our combined companies are focused on helping improve the health of the communities we serve, connecting communities for a better patient care experience, and improving the financial operations of our customers. The Company operates its business in three operating segments, which are also our reportable segments: RCM, EHR, and Patient Engagement.
These SaaS offerings are becoming increasingly attractive to our clients because this configuration allows them to obtain access to advanced 45 software products without a significant initial capital outlay.
SaaS license models made up only 12% of annual new acute care EHR installations in 2018, increasing to 100% during 2022 and 2023. These SaaS offerings are attractive to our clients because this configuration allows them to obtain access to advanced software products without a significant initial capital outlay.
There can be no assurance that we will be able to continue to comply with this covenant or obtain amendments to avoid future covenant violations, or that such amendments will be available on commercially acceptable terms. The First Amendment removed the requirement that the Company mandatorily prepay the credit facilities with excess cash flow generated during the prior fiscal year.
Any failure by us to comply with this or another covenant in the future may result in an event of default. There can be no assurance that we will be able to continue to comply with this covenant or obtain amendments to avoid future covenant violations, or that such amendments will be available on commercially acceptable terms.
Our costs associated with RCM sales and support increased by $8.6 million, or 15%, in 2021, primarily driven by resource expansion necessitated by the growing customer base and improved patient volumes. The acquisition of TruCode in May 2021 resulted in an additional $1.7 million of costs of sales during 2021.
Costs associated with our RCM revenues increased by $31.0 million, or 47%, in 2022, primarily driven by our recent acquisitions of TruCode and HRG. The remaining cost increases for RCM are organic in nature, caused by resource expansion necessitated by the growing customer base and improved patient volumes.
Investing Cash Flow Activities Net cash used in investing activities decreased from $69.9 million during 2021 to $62.7 million during 2022. Most notably, we completed our $43.4 million acquisition of HRG during the first quarter of 2022. We completed our $59.6 million acquisition of TruCode during the second quarter of 2021.
Most notably, we completed our $36.7 million acquisition of Viewgol during the fourth quarter of 2023. We completed our $43.4 million acquisition of HRG during the first quarter of 2022.
For further details on the potential impact of COVID-19 on our business, refer to "Risk Factors," in Part I, Item 1A. 2022 Financial Overview In the fourth quarter of 2022, the Company made a number of changes to its organizational structure and management system to align the Company's operating model to its strategic initiatives.
While we continually seek to proactively manage controllable expenses, inflationary pressure on costs has led to, and could lead to, erosion of margins. 48 2023 Financial Overview In the fourth quarter of 2022, the Company made a number of changes to its organizational structure and management system to align the Company's operating model to its strategic initiatives.
Year Ended December 31, Change 2021 2020 $ % (In thousands) Revenues by segment: RCM $ 131,242 $ 107,431 $ 23,811 22 % EHR 143,109 152,954 (9,845) (6) % Patient engagement 6,278 4,103 2,175 53 % Adjusted EBITDA by segment: RCM $ 30,211 $ 22,780 $ 7,431 33 % EHR 23,061 21,488 1,573 7 % Patient engagement (595) (881) 286 32 % Segment Revenues Refer to the corresponding discussion of revenues for each of our reportable segments previously provided under the Revenues heading of this Management's Discussion and Analysis.
Year Ended December 31, Change 2023 2022 $ % (In thousands) Revenues by segment: RCM $ 193,929 $ 179,870 $ 14,059 8 % EHR 138,063 139,823 (1,760) (1) % Patient engagement 7,443 6,955 488 7 % Adjusted EBITDA by segment: RCM $ 24,800 $ 35,219 $ (10,419) (30) % EHR 22,900 22,507 393 2 % Patient engagement (124) (1,827) 1,703 93 % Segment Revenues Refer to the corresponding discussion of revenues for each of our reportable segments previously provided under the Revenues heading of this Management's Discussion and Analysis.
We have three reportable operating segments: RCM, EHR, and Patient Engagement. We evaluate each of our three operating segments based on segment revenues and segment adjusted EBITDA.
Supplemental Segment Information Our reportable segments have been determined in accordance with ASC 280 - Segment Reporting . We have three reportable operating segments: RCM, EHR, and Patient Engagement.
Patient engagement bookings decreased by $5.8 million, or 65%, compared to 2021. 2021 bookings were propelled by large international client wins for Get Real Health's patient engagement solutions, while 2022 lacked any such large international client wins. Bookings represent our sales activity during the periods reported above.
Bookings for our nascent Patient Engagement business unit were effectively flat, decreasing by $0.2 million during 2023 compared to 2022. Bookings represent our sales activity during the periods reported above.
The target market for our post-acute care solutions consists of approximately 15,500 skilled nursing facilities that are either independently owned or part of a larger management group with multiple facilities. See Note 18 to the consolidated financial statements included herein for additional information on our three reportable segments.
See Note 18 to the consolidated financial statements included herein for additional information on our three reportable segments.
Net Income Net income for 2022 decreased by $2.6 million to $15.9 million, or $1.08 per basic and diluted share, compared with $18.4 million, or $1.26 per basic and diluted share, for 2021. 50 Supplemental Segment Information Our reportable segments have been determined in accordance with ASC 280 - Segment Reporting .
Net Income (Loss) Net income (loss) for 2023 decreased by $61.7 million to a loss of $45.8 million, or a loss of $3.15 per basic and diluted share, compared with income of $15.9 million, or $1.08 per basic and diluted share, for 2022.
Amortization of Acquisition-Related Intangibles Amortization expense associated with acquisition-related intangible assets increased by $3.6 million, or 26%, primarily due to amortization of intangibles acquired in the TruCode and HRG acquisitions. Total Operating Expenses As a percentage of total revenues, total operating expenses decreased to 40% in 2022 compared to 41% in 2021.
Amortization & Depreciation Combined amortization and depreciation expense increased by $6.5 million, or 38%, in 2022 primarily due to the amortization of intangibles acquired in the TruCode and HRG acquisitions and increased amortization of capitalized software development costs resulting from increases in the related capitalized software development asset balances.
Operating Cash Flow Activities Net cash provided by operating activities decreased by $15.4 million, from $47.7 million for 2021 to $32.4 million for 2022, primarily due to disadvantageous changes in working capital, most notably as it relates to expansion in accounts receivable.
Operating Cash Flow Activities Net cash provided by operating activities decreased by $31.3 million from $32.4 million for 2022 to $1.1 million for 2023, as the Company’s net income (loss) decreased by $61.7 million.
General and Administrative General and administrative expenses increased by $2.5 million, or 5%, compared to 2020, mostly due to $2.5 million in severance costs associated with our 2021 reduction-in-force, an increase of $0.8 million in employee health claims, and the acquisition of TruCode in May 2021, which resulted in $1.1 million of additional general and administrative expenses during 2021 (exclusive of non-recurring transaction-related costs).
General and Administrative General and administrative expenses increased by $21.2 million , or 39%, compared to 2022. Our ongoing implementation of the Scaled Agile Framework® resulted in job displacement for a number of our employees, resulting in an $8.9 million increase in related non-recurring severance costs.
Patient Engagement revenues increased by $2.2 million, or 53%, as a result of increasing demand for Get Real Health's patient engagement solutions and services. Costs of Sales Total costs of sales increased by $11.5 million compared to 2020. As a percentage of total revenues, costs of sales increased to 50% of revenues during 2021 from 48% during 2020.
Costs of Revenue (exclusive of amortization and depreciation) Total costs of revenue (exclusive of amortization and depreciation) increased by $30.8 million compared to 2021. As a percentage of total revenues, costs of revenues (exclusive of amortization and depreciation) increased to 51% of revenues during 2022 from 48% during 2021.
EHR revenues decreased by $9.8 million, or 6%, from the year ended December 31, 2020, and were comprised of the following for the years ended December 31, 2021 and 2020: Year ended December 31, (In thousands) 2021 2020 Recurring EHR revenues (1) Acute Care EHR $ 108,440 $ 105,597 Post-acute Care EHR 16,472 16,272 Total recurring EHR revenues 124,912 121,869 Non-recurring EHR revenues (2) Acute Care EHR 16,939 29,173 Post-acute Care EHR 1,258 1,912 Total non-recurring EHR revenues 18,197 31,085 Total EHR revenue $ 143,109 $ 152,954 (1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues.
RCM revenues increased by $14.1 million, or 8%, compared to 2022, as acquisition-fueled growth from our March 2022 acquisition of HRG and our October 2023 acquisition of Viewgol added to the organic growth of our RCM offerings. 50 EHR revenues decreased by $1.8 million, or 1%, from the year ended December 31, 2022, and were comprised of the following for the years ended December 31, 2023 and 2022: Year ended December 31, (In thousands) 2023 2022 Recurring EHR revenues (1) Acute Care EHR $ 111,276 $ 109,340 Post-acute Care EHR 14,712 15,384 Total recurring EHR revenues 125,988 124,724 Non-recurring EHR revenues (2) Acute Care EHR 10,657 13,138 Post-acute Care EHR 1,418 1,961 Total non-recurring EHR revenues 12,075 15,099 Total EHR revenue $ 138,063 $ 139,823 (1) Mostly comprised of support and maintenance, third-party subscriptions, and SaaS revenues.
EHR bookings during 2022 decreased by $2.7 million, or 7%, compared to 2021, primarily due to a $3.6 million decrease in Acute Care EHR bookings resulting from a challenging decision environment for new Acute Care EHR system sales arrangements.This decrease was partially offset by a $0.9 million increase in Post-acute Care EHR bookings as an improved sales environment worked in tandem with recent product innovations designed to improve the competitive position of our AHT products.
EHR bookings during 2023 decreased by $5.0 million, or 13%, compared to 2022, primarily due to a challenging decision environment for new Acute Care EHR system arrangements, including lower volumes for migration opportunities from Centriq (acquired in our 2016 acquisition of HHI) to Thrive, our flagship hospital EHR product.

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