Computer Programs and Systems Inc. (CPSI, Financial) filed Quarterly Report for the period ended 2009-06-30.
Computer Programs and Systems Inc has been serving the information technology needs of community healthcare providers for over twenty-seven years. Headquartered in Mobile Alabama the company provides a complete health information and patient care system that encompasses the full spectrum of financial and clinical applications. The CPSI System provides the most comprehensive single-source electronic medical record available and allows the realization of a true enterprise-wide electronic medical record. The Company is a single-source vendor providing comprehensive software and hardware products complemented by complete installation services and extensive support. Its fully integrated enterprise-wide system automates clinical and financial data management in each of the primary functional areas of a hospital. Computer Programs and Systems Inc. has a market cap of $401.3 million; its shares were traded at around $36.62 with a P/E ratio of 24.1 and P/S ratio of 3.4. The dividend yield of Computer Programs and Systems Inc. stocks is 3.9%. Computer Programs and Systems Inc. had an annual average earning growth of 16.5% over the past 5 years.
In the six months ended June 30, 2009, we generated revenues of $61.0 million from the sale of our products and services, as compared to $57.3 million in the six months ended June 30, 2008, an increase of 6.5%. We installed our financial and patient accounting system in 11 new hospitals in each of the first six months of 2009 and 2008. Our net income for the six months ended June 30, 2009 increased 16.5% from the first six months of 2008, principally as a result of the increase in sales. Cash flow from operations decreased 22.7% from the first six months of 2008 due to an increase in financing receivables. While our operating cash flows did decline during the first six months of 2009 compared to the first six months of 2008, we have maintained a strong cash position sufficient to meet our operating requirements and continue our dividends at historic levels. We believe that a strong cash position enables us to compete better in the marketplace and maintain the quality of our customer service and product offerings.
Cost of system sales increased by 17.6%, or $1.3 million, for the comparative three month periods. Gross margin on system sales fell to 12.7% in the second quarter from 14.7% in the same quarter of the prior year. Payroll and related costs increased by 17.0%, or $0.7 million, for the comparative three month periods. This increase is primarily due to salary costs of additional support personnel hired during the first quarter of 2009 in anticipation of an increase in future installations stemming from electronic medical record requirements contained in the American Recovery and Reinvestment Act of 2009 (the ARRA). The training curve of a newly hired employee is generally 6 to 12 months and may depress gross margins on system sales in the short term. The remaining increase was primarily the result of increased travel costs. We had one installation delayed until the third quarter of 2009 for which we incurred some travel and payroll costs during the second quarter of 2009 for pre-training and set-up work.
Cost of support and maintenance increased by 12.7%, or $0.6 million, for the comparative three month periods. The gross margin on support and maintenance revenues decreased to 61.1% from 63.6% in the same quarter of the prior year. The decrease in gross margin was primarily due to a 14.8%, or $0.6 million, increase in payroll and related costs due to the addition of the new personnel in the first quarter of 2009.
Our costs associated with business management services increased by 19.8%, or $0.9 million, for the comparative three month periods. This increase was caused by an increase in temporary labor as we move to utilizing temporary labor agencies for all new business management services employees due to historically high turnover costs. Temporary labor accounted for 22.2% of total labor and related costs for the second quarter of 2009 as compared to 4.2% during the second quarter of 2008. We expect this transition to contract labor services to improve costs and margins in the long term. We also incurred additional temporary labor and other costs in opening the new office in Monroe, Louisiana during the second quarter of 2009. The gross margin on business management services decreased to 40.4% from 40.9% in the same quarter of the prior year. Postage costs also increased $0.1 million quarter to quarter due to a $0.02 postage rate increase in May 2009.
Sales and Marketing Expenses. Sales and marketing expenses increased by 5.7%, or $0.1 million, for the comparative three month periods. The increase is attributable to a $0.1 million increase in salary and commission expense.
Read the The complete Report
Computer Programs and Systems Inc has been serving the information technology needs of community healthcare providers for over twenty-seven years. Headquartered in Mobile Alabama the company provides a complete health information and patient care system that encompasses the full spectrum of financial and clinical applications. The CPSI System provides the most comprehensive single-source electronic medical record available and allows the realization of a true enterprise-wide electronic medical record. The Company is a single-source vendor providing comprehensive software and hardware products complemented by complete installation services and extensive support. Its fully integrated enterprise-wide system automates clinical and financial data management in each of the primary functional areas of a hospital. Computer Programs and Systems Inc. has a market cap of $401.3 million; its shares were traded at around $36.62 with a P/E ratio of 24.1 and P/S ratio of 3.4. The dividend yield of Computer Programs and Systems Inc. stocks is 3.9%. Computer Programs and Systems Inc. had an annual average earning growth of 16.5% over the past 5 years.
Highlight of Business Operations:
While the current economic recession and credit crisis has impacted and could continue to impact the community hospitals that comprise our target market, we believe that the American Recovery and Reinvestment Act of 2009 (the ARRA), which became law on February 17, 2009, will increase demand for healthcare information technology and will have a positive impact on our business prospects. The ARRA includes more than $19 billion in funding to aid healthcare organizations in modernizing their operations through the acquisition and wide-spread use of healthcare information technology. Included in the funding is approximately $17.2 billion in incentives through Medicare and Medicaid reimbursement systems to encourage and assist healthcare providers in adopting and using electronic health records (EHRs). These incentive payments are set to begin as early as 2010 and last through 2015. If an eligible healthcare provider does not begin to demonstrate meaningful use of EHRs by 2015, then reimbursement under Medicare will begin to be reduced.In the six months ended June 30, 2009, we generated revenues of $61.0 million from the sale of our products and services, as compared to $57.3 million in the six months ended June 30, 2008, an increase of 6.5%. We installed our financial and patient accounting system in 11 new hospitals in each of the first six months of 2009 and 2008. Our net income for the six months ended June 30, 2009 increased 16.5% from the first six months of 2008, principally as a result of the increase in sales. Cash flow from operations decreased 22.7% from the first six months of 2008 due to an increase in financing receivables. While our operating cash flows did decline during the first six months of 2009 compared to the first six months of 2008, we have maintained a strong cash position sufficient to meet our operating requirements and continue our dividends at historic levels. We believe that a strong cash position enables us to compete better in the marketplace and maintain the quality of our customer service and product offerings.
Cost of system sales increased by 17.6%, or $1.3 million, for the comparative three month periods. Gross margin on system sales fell to 12.7% in the second quarter from 14.7% in the same quarter of the prior year. Payroll and related costs increased by 17.0%, or $0.7 million, for the comparative three month periods. This increase is primarily due to salary costs of additional support personnel hired during the first quarter of 2009 in anticipation of an increase in future installations stemming from electronic medical record requirements contained in the American Recovery and Reinvestment Act of 2009 (the ARRA). The training curve of a newly hired employee is generally 6 to 12 months and may depress gross margins on system sales in the short term. The remaining increase was primarily the result of increased travel costs. We had one installation delayed until the third quarter of 2009 for which we incurred some travel and payroll costs during the second quarter of 2009 for pre-training and set-up work.
Cost of support and maintenance increased by 12.7%, or $0.6 million, for the comparative three month periods. The gross margin on support and maintenance revenues decreased to 61.1% from 63.6% in the same quarter of the prior year. The decrease in gross margin was primarily due to a 14.8%, or $0.6 million, increase in payroll and related costs due to the addition of the new personnel in the first quarter of 2009.
Our costs associated with business management services increased by 19.8%, or $0.9 million, for the comparative three month periods. This increase was caused by an increase in temporary labor as we move to utilizing temporary labor agencies for all new business management services employees due to historically high turnover costs. Temporary labor accounted for 22.2% of total labor and related costs for the second quarter of 2009 as compared to 4.2% during the second quarter of 2008. We expect this transition to contract labor services to improve costs and margins in the long term. We also incurred additional temporary labor and other costs in opening the new office in Monroe, Louisiana during the second quarter of 2009. The gross margin on business management services decreased to 40.4% from 40.9% in the same quarter of the prior year. Postage costs also increased $0.1 million quarter to quarter due to a $0.02 postage rate increase in May 2009.
Sales and Marketing Expenses. Sales and marketing expenses increased by 5.7%, or $0.1 million, for the comparative three month periods. The increase is attributable to a $0.1 million increase in salary and commission expense.
Read the The complete Report
