Company Overview
TruBridge, Inc. is a healthcare technology and services company that has been revolutionizing the way rural and community hospitals operate for over four decades. Founded in 1979 and headquartered in Mobile, Alabama, TruBridge has established itself as a trusted partner to over 1,500 healthcare organizations across the United States.
History and Evolution
The company’s origins can be traced back to the late 1970s when it was known as Computer Programs and Systems, Inc. (CPSI). Initially, the company focused on providing electronic health record (EHR) solutions tailored for small and rural hospitals. However, as the healthcare industry evolved, TruBridge recognized the growing need for comprehensive revenue cycle management (RCM) services and began to diversify its offerings.
Throughout its history, TruBridge’s strategy, operations, and financial results have been largely associated with developments in the electronic health record (EHR) industry. However, in recent years the company has seen its focus shift more heavily towards revenue cycle management (RCM) services, with RCM revenues comprising 57% of the company’s consolidated revenue in 2023.
In January 2016, TruBridge acquired Healthland Holding Inc., which provided the company an opportunity to expand its EHR solutions and related services for hospitals and their physician clinics. This move allowed TruBridge to expand its footprint and offer a more robust suite of services to its clients, including acute and post-acute care EHR, RCM, and patient engagement solutions. Prior to the sale of its American HealthTech, Inc. (AHT) subsidiary in January 2024, TruBridge also provided post-acute care EHR solutions and related services for skilled nursing and assisted living facilities.
Over the years, TruBridge has continued to adapt and innovate, responding to the ever-changing needs of its healthcare clients. In March 2024, the company underwent a rebranding exercise, changing its name from Computer Programs and Systems, Inc. to TruBridge, Inc. to better reflect its focus on providing comprehensive financial health and patient care solutions.
Challenges and Industry Dynamics
The company has faced some challenges over the years, including turbulence in the U.S. and worldwide economies and financial markets, which have impacted the healthcare industry. TruBridge has also navigated significant changes to provider reimbursement by the U.S. federal government, followed by commercial payers and state governments, as there has been increasing pressure on healthcare organizations to reduce costs and increase quality.
Business Segments
Today, TruBridge operates in two primary business segments: Financial Health and Patient Care. The Financial Health segment provides a wide range of RCM services, including accounts receivable management, private pay services, insurance services, medical coding, and contract management. The Patient Care segment, on the other hand, offers acute and post-acute care EHR solutions, as well as patient engagement technologies.
Competitive Advantage
One of the key strengths of TruBridge lies in its deep understanding of the unique challenges faced by rural and community hospitals. These healthcare providers often grapple with limited resources, workforce shortages, and complex regulatory requirements. TruBridge has tailored its solutions to address these pain points, helping its clients optimize their financial and operational performance.
Financial Health Segment Performance
The company’s Financial Health segment has been a significant driver of growth in recent years. In the third quarter of 2024, TruBridge reported a 17% year-over-year increase in Financial Health revenue, which accounted for 64.7% of the company’s total revenue. This strong performance is a testament to the growing demand for RCM services among TruBridge’s client base, as healthcare organizations seek to streamline their revenue cycle operations and improve their financial health.
The Financial Health segment includes the operations of Viewgol, Healthcare Resource Group (HRG), and Healthland Holding Inc. (HHI). In the third quarter of 2024, Financial Health revenues increased to $54.27 million, driven by the addition of Viewgol, which contributed $5.20 million in revenues. Excluding the impact of Viewgol, Financial Health revenues still grew by 5.4% year-over-year, demonstrating the segment’s underlying organic growth. Recurring Financial Health revenues, which include fees for RCM services, were $53.10 million, or 98% of total Financial Health revenues, highlighting the stability and predictability of this business.
Patient Care Segment Performance
TruBridge’s Patient Care segment has faced some challenges in recent quarters. In the third quarter of 2024, Patient Care revenues decreased by 18% year-over-year to $29.56 million, primarily due to the sale of AHT, which accounted for a $3.90 million decline in revenues. Recurring Patient Care revenues, which include support, maintenance, and SaaS offerings, were $26.58 million, down 19% year-over-year, as customers continued to migrate from perpetual license models to SaaS arrangements. Non-recurring Patient Care revenues, which include installation and implementation services, decreased by 14% year-over-year to $2.98 million.
Despite these challenges, the company has continued to invest in technology enhancements and customer support to ensure its clients receive the best possible service.
Strategic Initiatives
One of the company’s key strategic initiatives has been the expansion of its nTrust solution, which integrates the company’s Financial Health and Patient Care offerings. This integrated approach allows TruBridge to provide a more seamless and comprehensive suite of services to its clients, helping them improve patient outcomes, enhance operational efficiency, and strengthen their financial performance.
In the third quarter of 2024, TruBridge reported that its nTrust solution had 78 clients, representing a nearly 30% year-over-year increase. This growth underscores the market’s appetite for integrated healthcare technology and services, as well as TruBridge’s ability to deliver innovative solutions that address the evolving needs of its clients.
Financials
TruBridge’s financial performance has shown signs of improvement in recent quarters, despite some challenges. During the third quarter of 2024, the company reported total revenues of $83.83 million, an increase of 1.4% compared to the same period in the prior year. Adjusted EBITDA for the quarter was $13.8 million, representing a 42% year-over-year increase. The company’s adjusted EBITDA margin also expanded to 16.5%, up from 11.4% in the first quarter of 2024, indicating ongoing efforts to optimize its cost structure and improve profitability.
For the most recent fiscal year (2023), TruBridge reported revenue of $339.44 million, with a net loss of $45.79 million. Operating cash flow (OCF) for the year was $1.06 million, while free cash flow (FCF) was negative at $22.35 million.
In the third quarter of 2024, the company reported a net loss of $9.81 million, primarily due to increased amortization of capitalized software development costs and higher interest expense. However, operating cash flow improved to $10.11 million, with free cash flow of $4.80 million.
Liquidity
TruBridge has made significant strides in enhancing its cash flow generation. The company reported $21.8 million in cash flow from operations during the first nine months of 2024, an improvement of $8.5 million compared to the same period in the prior year. This strong cash flow has enabled TruBridge to make strategic investments in its business, while also reducing its debt burden.
As of the most recent quarter, TruBridge had a debt-to-equity ratio of 1.02x, with $3.85 million in cash and cash equivalents. The company has a $230 million credit facility with Regions Bank, consisting of a $70 million term loan and a $160 million revolving credit facility. As of the most recent quarter, TruBridge had $177.7 million in principal debt outstanding. The company also has an available credit line of $24.3 million, a current ratio of 2.31x, and a quick ratio of 2.24x, indicating a stable liquidity position.
COVID-19 Impact and Response
Despite the challenges posed by the COVID-19 pandemic, TruBridge has demonstrated its resilience and adaptability. The company has successfully navigated through this period by implementing cost-saving measures, enhancing its offshore capabilities, and focusing on delivering innovative solutions that address the evolving needs of its clients.
Future Outlook
Looking ahead, TruBridge remains optimistic about its future prospects. The company’s robust pipeline of bookings, which grew by 40% year-over-year in the third quarter of 2024, suggests that demand for its services remains strong. Furthermore, the company’s strategic focus on cross-selling its Financial Health and Patient Care offerings, as well as its continued investment in technology and talent, position it well for future growth and market share expansion.
TruBridge has provided guidance for the fourth quarter of 2024, expecting revenue to be between $83.5 million and $85.5 million, and adjusted EBITDA between $13.5 million and $14.5 million. The midpoint of the Q4 revenue and adjusted EBITDA guidance implies an adjusted EBITDA margin of around 16.5%, which is roughly flat compared to Q3 2024. For the full year 2024, TruBridge has narrowed its revenue guidance range to $335 million to $337 million and expects to be at the higher end of its previous adjusted EBITDA guidance of $45 million to $50 million.
The healthcare IT market, which includes revenue cycle management (RCM) solutions, is expected to grow at a CAGR of 8-10% over the next 5 years. This growth is driven by increasing demand for technology solutions to improve operational efficiency and financial performance of healthcare providers, which aligns well with TruBridge’s offerings and market focus.
Risks and Challenges
TruBridge is not without its risks. The healthcare industry is highly regulated, and the company must navigate a complex regulatory landscape to ensure compliance. Additionally, the company faces competition from other healthcare technology and service providers, which could put pressure on its pricing and margins.
Conclusion
TruBridge, Inc. has demonstrated its ability to adapt and grow in a challenging healthcare environment. With its strong focus on revenue cycle management services, integrated solutions like nTrust, and strategic acquisitions such as Viewgol, the company is well-positioned to capitalize on the growing demand for healthcare IT solutions. While challenges remain, particularly in the Patient Care segment, TruBridge’s improving financial performance, strong cash flow generation, and strategic initiatives provide a solid foundation for future growth. As the company continues to innovate and expand its service offerings, it remains committed to its mission of transforming rural healthcare with innovative solutions.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.