CPSI
#So, I think we talked about this on the announcement call.
This is <UNK>, and good afternoon, <UNK>.
So we are excited about the opportunity for TruBridge into the Healthland base, much like we were with TruBridge into Evident, and the fact that we have developed that relationship and the trust based on the delivery of the EHR that they are going to believe in the services that we back it with with TruBridge.
So that's a natural cross-sell into that.
In my comments, I also spoke to the enhancement of the Rycan products.
I think there is a huge opportunity for us to bolster that product as well and to create additional efficiencies and opportunities for the TruBridge services.
So, we are excited about that.
And when you look at the Thrive going back in what we have got a deep amount of saturation from the TruBridge standpoint, the Rycan again is an additional opportunity to invest deeper in TruBridge from the Thrive platform.
It is.
It is a best-of-breed clearinghouse product with eligibility and other services inside of it, and mostly it is transactional, so it is depending on the size of the facility.
So, it's a scalable model.
<UNK>, it is kind of interesting on that front.
For the longest time, we were wondering when this whole cloud or SaaS movement was really going to hit in our space and stick, and our results in 2015 have indicated to us so far that trend was here to stay.
But as we stated in our prepared comments, those seven contracts that we have slated for installation in the first quarter of 2016, none of those are under a cloud.
One of them is under a subscription model, so it will be a lower monthly fee so it won't be that big bump in the one quarter, but the first quarter of 2016 so far looks like it is the oddball out there when compared to the last four or five quarters.
No, the NOL is not in that range.
Those are the right buckets, but the NOL impact that we are expecting is going to be somewhere in the $5 million range as far as the utilization, so (multiple speakers) somewhere you are a little bit out of whack in the rest of the places.
We do expect some improvement in CPSI, in the organic improvement in CPSI, just based off of the cost-containment measures that we've taken during 2015 and the improved revenue numbers.
So there will be some improvement there.
On the adjusted EBITDA front, there will also be some transaction costs that will be added back, so our projections right now are including around $4.5 million there, which, give or take, that may move some, but if it moves a bit, it will be neutral to EBITDA.
Stock-based comp addback of $5.4 million, so that ---+ all that, combined with the improvement in operating income just for managing costs and increasing revenue, is how we have gotten to improved CPSI numbers.
If you're trying to get to 2015, I don't have that number in front of me, but you can calculate that from the base of the financials that are in the press release.
I don't have those numbers in front of me right now.
I would be more than happy to follow up afterwards.
Yes, so depreciation on the ---+ for the combined entity for 2016 is probably going to be somewhere between $4.5 million to $5 million.
And then on the CapEx front, probably looking at somewhere just north of $2 million.
Combined, yes.
Sorry, that was just depreciation on the $4.5 million to $5 million.
The amortization, I know, granted this number can move around depending on what happens with the purchase price allocation and how that all shakes up, but right now we are projecting that to land somewhere around $12 million.
Yes, that's the math.
I don't have the exact numbers in front of me, but for the most part the first quarter is going to be pretty low on the synergies, but then second quarter and third quarter, we are going to start building up, and then most of the synergies for 2016 should be captured by the end of the third year.
And that being said, as we go into 2017 we're going to have a much improved exit rate on costs and there will be some additional synergies to grab in 2017, but that's a little bit too far out right now for us to try to guide to.
No, you are thinking about it right, and we were trying to ---+ we were batting it around about whether or not to include that in both places and we decided to just go one route, but just be transparent as possible about it.
And when we look at adjusted EBITDA, what we are really trying to prove there is the cash-generating ability of Company, so really getting to more of a cash gain, cash loss ---+ hopefully not a cash loss ---+ position for the Company in a given period.
But in adjusted EPS, what we're really trying to reflect there is what did the Company organically do during the period, so stripping out any of the nonrecurring impact of the deal there.
And while we do expect to have multiple years that are going to benefit from the NOL utilization, simply because we are capped in a given period due to certain IRS regulations as to how much of that we can use in a given year, we don't foresee that stretching out into beyond the medium term.
So I thought we were ---+ and <UNK> is pulling it up right now, but I was thinking that we were in the 13%, 14% increase into 2016 for TruBridge.
So we were at $63 million final for 2015 and $75 million for 2016.
12%.
12%.
Roughly 12%, 13%, <UNK>.
I think, as someone pointed out earlier on the call, we have struggled with the last couple years with guidance, so obviously we are trying to put a good number out there and there is a lot of potential with TruBridge.
We did see the growth slow down a little bit in the fourth quarter, but at the same time we have picked up an awful lot of prospects with this transaction, so we are trying to balance all those factors and that's where we came up with the 12% to 13%.
So the model for that is we're doing an analysis with the prospects.
As we are finding barriers into doing the full business office management, the cost constraints of the traditional contingency model is sometimes a little much for the hospitals, so what we have done is look at their current performance compared to their expenses to run their business office, and fix the expense, fix the revenue over a quarterly period, and then based on our performance put ourselves in a position for a bonus.
So how we produce on a cash net basis determines what that risk model looks like.
Yes, less than five right now.
Great.
Thank you, Edison.
I want to thank everyone for being on the call today.
We appreciate your time and your interest in CPSI, and I hope everyone has a great Friday and a great weekend.
Thank you.
