TruBridge, Inc. Q3 FY2024 earnings call

• Bookings in the third quarter remained strong, marking the fourth consecutive quarter with over $20 million in total bookings. Q3 bookings were $21 million, up 40% year-over-year.
• Viewgol integration: Over 30% of CBO and EBO customers now supported by India team; aim to double to 60% of customers supported by India workforce by end of 2025; India workforce to reach nearly 700 by end of 2025.
• nTrust solution: 78 clients, up nearly 30% year-over-year; added 1 net new client and closed 5 contracts with existing patient care clients in Q3.
• Analytics offering: Launched in Q2, gaining traction with dashboards helping improve clinical outcomes for chronic care populations and identify revenue cycle bottlenecks for clients.
• Board and management changes: Denise Warren stepped down from Board; Amy O’Keefe elected to Board; business unit general managers now report directly to CEO, COO role eliminated.

Financial Health (formerly RCM) revenue: on an organic basis, excluding Viewgol, grew 5%, with core CBO business up double-digits. It contributed 65% of total revenue in the third quarter. Patient Care (formerly EHR and patient engagement) revenue decreased 18% year-over-year primarily due to the divestiture of AHT and sunsetting of Centriq, but bookings grew 43% driven by add-on sales from existing customer base.

• Q4 revenue expected to be between $83.5 million and $85.5 million, adjusted EBITDA between $13.5 million and $14.5 million.
• Full year revenue guidance narrowed to $335 million to $337 million, adjusted EBITDA to $49 million to $50 million (higher end of previous guidance).
• Expect mid-2025 for internal control weaknesses remediation to be effective; 2025 expected to yield significant margin improvement.

• Labor market challenges and complexity in billing, particularly with Medicare Advantage, impacting revenue cycle performance.
• Transition to offshore services has initial duplicity of costs, with focus on stabilizing operations and ensuring customer satisfaction.
• Internal control weaknesses identified in 10-Q, with efforts underway to remediate but potential short-term impact on expenses.

Q: On the net new clients in Financial Health, what do they predominantly look like and macro demand backdrop?

A: Net new clients include 150-bed hospitals, starting to see traction in 100-400 bed space; macro demand driven by labor pressure, complexity in billing, and move towards Medicare Advantage.

Q: Update on offshoring savings flow-through?

A: Small net savings seen in Q3, larger expected in Q4; 2025 expected to have significantly higher savings in high single-digit millions run rate.

Q: Competitive environment for patient care and financial health?

A: Patient care side sees competition's new EHR announcements, focus on incremental improvements and efficiency; financial health side focuses on technology leveraging for service delivery.

Q: Headwinds and tailwinds for 2025?

A: Mid to high single-digit revenue growth, a few hundred basis points EBITDA margin increase, with Q4 important for momentum translating to sustainable growth.

Q: Insights into revenue cycle cross-sales process?

A: Customers excited due to belief in TruBridge's focus, partnerships like i2i, and consistent RCM process delivery.

Q: Impact of end market changes on buying decisions?

A: Insulated from election impact, Medicare Advantage change provides opportunity, focus on resource-constrained facilities.

Q: Rationalization opportunities and offshore model for next year?

A: Majority of clients to move to offshore, mix of domestic and offshore initially, continuously evaluate other cost rationalization areas.

Q: Claim denials from MCOs impact on RCM?

A: Proliferation of Medicare Advantage increases denial challenge, TruBridge uses technology to stop denials at root cause and improve acceptance/payment.