Results
Trubridge Inc.
11/07/2025 | Press release | Distributed by Public on 11/07/2025 11:22
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
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Management's Discussion and Analysis of Financial Condition and Results of Operations.
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The following discussion and analysis of our financial condition and results of operations is intended to be read together with the unaudited condensed consolidated financial statements and related notes appearing elsewhere herein.
This discussion and analysis contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified generally by the use of forward-looking terminology and words such as "expects," "anticipates," "estimates," "believes," "intends," "plans," "potential," "may," "continue," "should," "will" and words of comparable meaning. Without limiting the generality of the preceding statement, all statements in this report relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and future financial results are forward-looking statements. We caution investors that any such forward-looking statements are only predictions and are not guarantees of future performance. Certain risks, uncertainties and other factors may cause actual results to differ materially from those projected in the forward-looking statements. These risks include:
Risks Related to Our Industry
•saturation of our target market and hospital consolidations;
•unfavorable economic or market conditions that may cause a decline in spending for information technology and services;
•significant legislative and regulatory uncertainty in the healthcare industry;
•exposure to liability for failure to comply with regulatory requirements;
Risks Related to Our Business
•transition to a subscription-based recurring revenue model and modernization of our technology;
•competition with companies that have greater financial, technical and marketing resources than we have;
•potential future acquisitions that may be expensive, time consuming, and subject to other inherent risks;
•our ability to attract and retain qualified personnel in a global workforce;
•disruption from periodic restructuring of our sales force;
•slower than anticipated development of the market for Financial Health services;
•our potential inability to manage our growth in the new markets we may enter;
•our potential failure to effectively implement a new enterprise resource planning software solution;
•exposure to numerous and often conflicting laws, regulations, policies, standards or other requirements through our domestic and international business activities;
•potential litigation against us and investigations;
•our use of offshore third-party resources;
•competitive and litigation risk related to the use of artificial intelligence;
Risks Related to Our Products and Services
•potential failure to develop new products or enhance current products that keep pace with market demands;
•exposure to claims if our products fail to provide accurate and timely information for clinical decision-making;
•exposure to claims for breaches of security and viruses in our systems;
•undetected errors or problems in new products or enhancements;
•our potential inability to convince customers to migrate to current or future releases of our products;
•failure to maintain our margins and service rates;
•increase in the percentage of total revenues represented by service revenues, which have lower margins;
•exposure to liability in the event we provide inaccurate claims data to payors;
•exposure to liability claims arising out of the licensing of our software and provision of services;
•dependence on licenses of rights, products and services from third parties;
•a failure to protect our intellectual property rights;
•exposure to significant license fees or damages for intellectual property infringement;
•service interruptions resulting from loss of power and/or telecommunications capabilities;
Risks Related to Our Indebtedness
•our potential inability to secure additional financing on favorable terms to meet our future capital needs;
•substantial indebtedness that may adversely affect our business operations;
•our ability to incur substantially more debt;
•pressures on cash flow to service our outstanding debt;
•restrictive terms of our credit agreement on our current and future operations;
Risks Related to Our Common Stock and Other General Risks
•changes in and interpretations of financial accounting matters that govern the measurement of our performance;
•the potential for our goodwill or intangible assets to become impaired;
•quarterly fluctuations in our financial results due to various factors;
•volatility in our stock price;
•failure to maintain effective internal control over financial reporting;
•inherent limitations in our internal control over financial reporting;
•vulnerability to significant damage from natural disasters;
•exposure to market risk related to interest rate changes;
•potential material adverse effects due to macroeconomic conditions;
•we do not anticipate paying dividends on our common stock; and
•actions of activist stockholders against us could be disruptive and costly, or potentially cause uncertainty about the strategic direction of our business.
Information concerning these risks and other factors that could cause differences between forward-looking statements and future actual results is discussed under the heading "Risk Factors" in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024.
Background
During much of the Company's history, our strategy, operations, and financial results have been largely associated with developments in the electronic health record ("EHR") industry. With the rapid maturity of the EHR industry and the increasing prevalence of and demand for outsourced revenue cycle management ("RCM") services and complementary solutions, we've seen our strategy, operations, and financial results naturally evolve to become more heavily associated with RCM, with Financial Health revenues comprising 64% of our consolidated revenue for 2024. In recognition of this significant shift in strategic focus, Computer Programs and Systems, Inc. changed its corporate name to TruBridge, Inc. on March 4, 2024. Contemporaneous with this name change, the former wholly-owned subsidiaries Evident, LLC, TruBridge, LLC, and TruCode, LLC were merged into the parent company, while the former wholly-owned subsidiary Rycan Technologies, Inc. was merged into its parent and another wholly-owned subsidiary, Healthland Holding Inc. With these changes, the Company's remaining legal structure includes TruBridge, Inc., the parent company, with Viewgol, LLC ("Viewgol"), TruBridge Healthcare Private Limited, iNetXperts, Corp. d/b/a Get Real Health, Healthcare Resource Group, Inc. ("HRG"), Healthland Holding, Inc. ("HHI"), and Healthland, Inc. as its wholly-owned direct and indirect subsidiaries.
Founded in 1979, TruBridge is a leading provider of healthcare technology solutions and services for rural and community hospitals, their clinics and other healthcare systems. 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 two operating segments, which are also our reportable segments: Financial Health and Patient Care. The individual subsidiaries align with the reporting segments and contribute towards the combined focus of improving the health of the communities we serve as follows:
•The Financial Health reporting segment focuses on providing business management, consulting, and managed IT services along with its complete RCMsolution for all care settings, regardless of their primary healthcare information solutions provider. This reporting segment includes the operation of Viewgol, TruBridge Healthcare Private Limited, HRG, HHI, and Healthland.
•The Patient Caresegment provides comprehensive acute care EHRsolutions and related services for hospitals and their physician clinics. The Patient Care segment also offers comprehensive patient engagement and empowerment
technology solutions through the Get Real Health entity to improve patient outcomes and engagement strategies with care providers.
Our companies currently support rural and community hospitals and other healthcare systems with a geographically diverse patient mix within the domestic healthcare market. Our target market for our Financial Health and Patient Care solutions includes rural and community hospitals with fewer than 400 acute care beds and their clinics, as well as independent or small to medium-sized chains of skilled nursing facilities. Most of our Patient Care customer base is comprised of hospitals with fewer than 100 beds.
See Note 17 - Segment Reporting of the condensed consolidated financial statements included herein for additional information on our two reportable segments.
Management Overview
Strategy
Our core strategy is to achieve meaningful long-term revenue growth by cross-selling Financial Health services into our existing Patient Care customer base, expanding Financial Health market share with sales to new hospitals and larger health systems, and pursuing competitive Patient Care takeaway opportunities in the acute care markets. 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 Financial Health services into our Patient Care customer base. Therefore, retention of our existing Patient Care customers is a key component of our long-term growth strategy by protecting this base of potential Financial Health customers, while at the same time serving as a leading indicator of our market position and stability of revenues and cash flows.
We determine net revenue retention rates by reference to the amount of Patient Care recurring revenues that have not been lost due to customer attrition from our production environment customer base in the current year period compared to the same period in the prior year. Production environment customers are those that are using our applications to document live patient encounters, as opposed to legacy environment customers that have view-only access to historical patient records. Since 2019, these retention rates have consistently remained in the mid-to-high 90 percent ranges. The retention rate for Patient Care in the last twelve months was 93.8% (the retention rate for the flagship TruBridge EHR product was 96.5%). 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.
As we pursue meaningful long-term revenue growth by leveraging Financial Health as a growth agent, we are placing ever-increasing value in further developing our already significant recurring revenue base to further stabilize our revenues and cash flows. Therefore, maintaining and growing recurring revenues are key components of our long-term growth strategy, aided by the aforementioned focus on customer retention. This includes a renewed focus on driving demand for subscriptions for our existing technology solutions and expanding the footprint for Financial Health services beyond our Patient Care customer base.
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.
Artificial Intelligence
We see both the value and risk of generative AI being leveraged in healthcare delivery and are committed to ensuring our client population is not left behind as this rapidly advancing technology is being implemented and adopted. We are active members of TRAIN (Trustworthy and Responsible AI Network), representing our customers alongside large Integrated Delivery Networks ("IDN") and health systems to help shape the governance and controls to implement AI safely, as well as allowing us a broad view of what is happening in the arena of healthcare in order to keep pace with the developments in the areas of denials management, AI assisted coding, Gen AI chart summarization and more. We are planning to release our first denials prediction model to the public during the first quarter of 2026. Within our innovation team, several pilots are unfolding to drive value for our clients from this technology. We also have several strategic partners we are in discussions with in order to integrate their solutions into our ecosystem.
Industry Dynamics
Turbulence in the U.S. and worldwide economies and financial markets impacts almost all industries. While the healthcare industry is not immune to economic cycles, we believe it is more significantly affected by U.S. regulatory and national health initiatives. In recent years, there have been significant changes to provider reimbursement by the U.S. federal government, followed by commercial payers and state governments. There is increasing pressure on healthcare organizations to reduce costs and increase quality while replacing the fee-for-service reimbursement model in part by enrolling in an advanced payment model that incentivizes high-quality, cost-effective care via value-based reimbursement. This pressure could further encourage adoption of healthcare IT and increase demand for business management, consulting, and managed IT services, as the future success of these healthcare providers is greatly dependent upon their ability to engage with patient populations and to coordinate patient care across a multitude of settings, while optimizing operating efficiency along the way.
Additionally, the revenues of many of the Company's customers are highly reliant on Medicare, Medicaid and third-party payers' reimbursement funding rates. New legislation or additional changes in existing regulations could directly impact the governmental reimbursement programs in which the customers participate. Healthcare organizations with a large dependency on Medicare and Medicaid populations have been affected by the challenging financial condition of the federal government and many state governments and government programs.
We recognize that prospective hospital clients often do not have the necessary capital to make investments in information technology while those with the necessary capital have become more selective in their investments. Despite these challenges, we believe healthcare IT will be an area of continued investment due to its unique potential to improve safety and efficiency and reduce costs while meeting current and future regulatory, compliance, and government reimbursement requirements.
On July 4, 2025, H.R. 1, or the "One Big Beautiful Bill Act" ("OBBBA"), was signed into law in the U.S., which is expected to impact healthcare providers in the U.S., including us, primarily through changes to Medicaid and the Affordable Care Act, which could lead to reduced funding, increased regulatory burdens and potential shifts in patient populations among payer types and utilization. Supplemental federal and state guidance is expected to be issued in order to implement the various provisions of the OBBBA, many of which have effective dates in 2027 and 2028. Additionally, the OBBBA contains a broad range of tax reform provisions affecting businesses. The OBBBA reduced the Company's 2025 expected current tax liability as a result of the ability to deduct domestic research and development expenses, resulting in a current tax benefit for each of the three and nine months ended September 30, 2025.
The federal government entered a partial shutdown effective October 1, 2025. Although Medicare and Medicaid reimbursement generally remains available through a shutdown, our customers, which are largely rural hospitals, may experience delays in payment for services rendered and other effects related to government agencies operating at reduced capacity. We have not experienced any material impacts to our operations or financials but continue to monitor the impacts, if any, of this shut-down.
Patient Care License Model Preferences
Much of the variability in our periodic revenues and profitability has been and will continue to be due to changing demand for different license models for our technology solutions, with variability in operating cash flows further impacted by the financing decisions within those license models. 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.
The overwhelming majority of our historical Patient Care installations have been under a perpetual license model, but customer demand has dramatically shifted towards a SaaS license model in the past several years. SaaS license models made up only 12% of annual new Patient Care installations in 2018, increasing to 100% during 2022 and through the first nine months of 2025. 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. We expect this trend to continue for the foreseeable future, with the resulting impact on the Company's consolidated financial statements being reduced Patient Care revenues in the period of installation in exchange for increased recurring periodic revenues (reflected in Patient Care revenues) over the term of the SaaS arrangement. This naturally places downward pressure on short-term revenue growth and profitability metrics, but benefits long-term revenue growth and profitability which, in our view, is consistent with our goal of delivering long-term shareholder value.
For customers electing to purchase our technology solutions under a traditional perpetual license, we have historically made financing arrangements available on a case-by-case basis, depending on the various aspects of the proposed contract and customer attributes. These financing arrangements have comprised the majority of our perpetual license installations over the
past several years, and include short-term payment plans and longer-term lease financing through us or third-party financing companies. The aforementioned shift in customer preference and the Company's turn towards SaaS arrangements has significantly reduced the frequency of new financing arrangements for customer purchases under a perpetual license. 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 2024and the first nine months of 2025.
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. Specifically, since 2021, we have implemented a reduction in force intended to more effectively align our resources with business priorities and the Scaled Agile Framework® throughout our EHR product development, implementation and support functions to enhance cohesion, time-to-market and customer satisfaction. This framework is a set of organization and workflow patterns intended to guide enterprises in scaling lean and agile practices and promote alignment, collaboration, and delivery across large numbers of agile teams.
Additionally, margin optimization initiatives of expanded utilization of offshore resources and automation have commenced and, to date, have provided meaningful efficiencies to our operations, particularly within the Financial Health business. As a service organization, Financial Health's cost structure is heavily dependent upon human capital, subjecting it to the complexities and risks associated with this resource. Chief among these complexities and risks is the ever-present pressure of wage inflation, which has compelled the Company to make compensation adjustments that are outside of historical norms. Prior to our October 2023 acquisition of Viewgol, we were solely reliant upon third-party partnerships for offshore resources, increasing both the execution risk of this initiative and the related cost of scaling this labor force. With Viewgol as a subsidiary, we have greatly enhanced our control over the resource availability for this initiative and we have achieved and expect to continue to achieve meaningful per-unit cost efficiencies.
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 Financial Health profitability, but we cannot guarantee that these efforts will fully eliminate any related margin deterioration. Our operating results have been, and may continue to be, adversely affected by continued inflation, especially if we are unable to pass on increased costs of labor, materials, supplies and equipment, and potential tariffs to our customers.
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 rates. While we continually seek to proactively manage controllable expenses, inflationary pressure on costs has led to, and could lead to, erosion in margins.
Results of Operations
During the first nine months of 2025, we generated revenues of $259.0 million from the sale of our products and services, compared to $254.4 million during the first nine months of 2024, an increase of 2% due to increased revenues across both of our reporting segments. Net income increased by $24.0 million to net income of $8.6 million during the first nine months of 2025, compared to net loss of $15.4 million during the first nine months of 2024. The increase was primarily driven by (i) revenue growth; (ii) reduction in costs due to the global offshore initiative and labor cost optimization; (iii) lower non-recurring and severance costs; (iv) lower depreciation and amortization, including $2.9 million of accelerated amortization of software development costs associated with the sunset of one of the Company's products in the second quarter of 2024.
The following table sets forth certain items included in our results of operations for the three and nine months ended September 30, 2025 and 2024, expressed as a percentage of our total revenues for these periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | Amount | % Sales | Amount | % Sales | Amount | % Sales | Amount | % Sales | |||||||||||||||||||||||||||||||||||||||
| INCOME DATA: | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial Health | $ | 54,501 | 63.3 | % | $ | 54,672 | 64.5 | % | $ | 164,918 | 63.7 | % | $ | 162,620 | 63.9 | % | |||||||||||||||||||||||||||||||
| Patient Care | 31,605 | 36.7 | % | 30,028 | 35.5 | % | 94,125 | 36.3 | % | 91,796 | 36.1 | % | |||||||||||||||||||||||||||||||||||
| Total revenues | 86,106 | 100.0 | % | 84,700 | 100.0 | % | 259,043 | 100.0 | % | 254,416 | 100.0 | % | |||||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Costs of revenues (exclusive of amortization and depreciation) | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial Health | 29,335 | 34.1 | % | 29,185 | 34.5 | % | 85,835 | 33.1 | % | 89,051 | 35.0 | % | |||||||||||||||||||||||||||||||||||
| Patient Care | 12,713 | 14.8 | % | 13,184 | 15.6 | % | 36,996 | 14.3 | % | 38,421 | 15.1 | % | |||||||||||||||||||||||||||||||||||
| Total costs of revenues (exclusive of amortization and depreciation) | 42,048 | 48.8 | % | 42,369 | 50.0 | % | 122,831 | 47.4 | % | 127,472 | 50.1 | % | |||||||||||||||||||||||||||||||||||
| Product development | 8,171 | 9.5 | % | 7,735 | 9.1 | % | 24,530 | 9.5 | % | 26,629 | 10.5 | % | |||||||||||||||||||||||||||||||||||
| Sales and marketing | 5,673 | 6.6 | % | 5,944 | 7.0 | % | 19,123 | 7.4 | % | 20,351 | 8.0 | % | |||||||||||||||||||||||||||||||||||
| General and administrative | 19,416 | 22.5 | % | 19,376 | 22.9 | % | 56,957 | 22.0 | % | 57,651 | 22.7 | % | |||||||||||||||||||||||||||||||||||
| Amortization | 6,487 | 7.5 | % | 6,183 | 7.3 | % | 18,901 | 7.3 | % | 21,158 | 8.3 | % | |||||||||||||||||||||||||||||||||||
| Depreciation | 243 | 0.3 | % | 279 | 0.3 | % | 846 | 0.3 | % | 1,079 | 0.4 | % | |||||||||||||||||||||||||||||||||||
| Total expenses | 82,038 | 95.3 | % | 81,886 | 96.7 | % | 243,188 | 93.9 | % | 254,340 | 100.0 | % | |||||||||||||||||||||||||||||||||||
| Operating income | 4,068 | 4.7 | % | 2,814 | 3.3 | % | 15,855 | 6.1 | % | 76 | - | % | |||||||||||||||||||||||||||||||||||
| Other (expense) income : | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (3,003) | (3.5) | % | (4,033) | (4.8) | % | (9,450) | (3.6) | % | (12,348) | (4.9) | % | |||||||||||||||||||||||||||||||||||
| Other income (expense) | 287 | 0.3 | % | (376) | (0.4) | % | 566 | 0.2 | % | 1,139 | 0.4 | % | |||||||||||||||||||||||||||||||||||
| Total other expense | (2,716) | (3.2) | % | (4,409) | (5.2) | % | (8,884) | (3.4) | % | (11,209) | (4.4) | % | |||||||||||||||||||||||||||||||||||
| Income (loss) before taxes | 1,352 | 1.6 | % | (1,595) | (1.9) | % | 6,971 | 2.7 | % | (11,133) | (4.4) | % | |||||||||||||||||||||||||||||||||||
| (Benefit from) provision for income taxes | (4,250) | (4.9) | % | 7,553 | 8.9 | % | (1,670) | (0.6) | % | 4,257 | 1.7 | % | |||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 5,602 | 6.5 | % | $ | (9,148) | (10.8) | % | $ | 8,641 | 3.3 | % | $ | (15,390) | (6.0) | % | |||||||||||||||||||||||||||||||
Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024
Revenues
Total revenues for the three months ended September 30, 2025 increased by $1.4 million compared to the three months ended September 30, 2024.
| Three Months Ended September 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Recurring revenues | |||||||||||
| Financial Health | $ | 53,514 | $ | 53,513 | |||||||
| Patient Care | 27,425 | 27,052 | |||||||||
| Total recurring revenues | 80,939 | 80,565 | |||||||||
| Non-recurring revenues | |||||||||||
| Financial Health | 987 | 1,159 | |||||||||
| Patient Care | 4,180 | 2,976 | |||||||||
| Total non-recurring revenues | 5,167 | 4,135 | |||||||||
| Total revenues | $ | 86,106 | $ | 84,700 | |||||||
Financial Health revenues decreased by $0.2 million compared to the third quarter of 2024. The decrease in revenue was driven by customer attrition, partially offset by increased revenue generated from new bookings. Recurring Financial Health revenues of $53.5 million, or 98% of total Financial Health revenues, were flat compared to the prior year period, as increased revenue from new bookings was offset by customer attrition. Non-recurring Financial Health revenues decreased by $0.2 million, primarily from fewer short-term consulting projects compared to the prior year period.
Patient Care revenues increased by $1.6 million, or 5%, compared to the third quarter of 2024, primarily due to an increase in revenue from EHR installations, new SaaS contracts, and migrations to SaaS arrangements, partially offset by the impact from the sunset of our Centriq product. Centriq revenue accounted for $0.9 million in the third quarter of 2025, compared to $1.8 million in the third quarter of 2024. Patient Care revenue excluding Centriq was $30.7 million in the third quarter of 2025, up 9% from $28.2 million in the third quarter of 2024. Recurring Patient Care revenues, which represented 87% of total Patient Care revenues, increased by $0.4 million, or 1%, compared to the third quarter of 2024, primarily due to an increase in SaaS revenue from migration to SaaS arrangements and new bookings. Non-recurring Patient Care revenues increased by $1.2 million compared to the third quarter of 2024, due to the timing of installations compared to the prior year period.
Costs of Revenues (exclusive of amortization and depreciation)
Total costs of revenues (exclusive of amortization and depreciation) decreased by $0.3 million compared to the third quarter of 2024. As a percentage of total revenues, costs of revenues (exclusive of amortization and depreciation) decreased to 49% of revenues during the third quarter of 2025 compared to 50% of revenues during the third quarter of 2024.
Costs associated with our Financial Health revenues increased by $0.2 million, or 1%, compared to the third quarter of 2024, primarily driven by a modest increase in vendor spend supporting revenue growth.
Costs associated with our Patient Care revenues decreased by $0.5 million, or 4%, compared to the third quarter of 2024, primarily due to a reduction in travel and software costs.
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 $0.4 million, or 5%, compared to the third quarter of 2024, primarily due to investments supporting the Encoder business and an increase in cloud expense.
Sales and Marketing
Sales and marketing costs decreased by $0.3 million, or 5%, compared to the third quarter of 2024, primarily driven by lower commissions due to the product mix of bookings.
General and Administrative
General and administrative expenses increased by $0.04 million, or 0.2%, compared to the third quarter of 2024. This change was primarily driven by increased professional service fees, partially offset by a decrease in severance costs and bad debt expense.
Amortization & Depreciation
Combined amortization and depreciation expense increased by $0.3 million, or 4%, compared to the third quarter of 2024, driven by capitalized software amortization.
Total Other Expense
Total other expense decreased by $1.7 million during the third quarter of 2025 compared to the third quarter of 2024. The decrease was driven by a reduction in interest expense due to a decrease in the outstanding balance of the revolving credit facility and a reduction in the interest rate.
Income (Loss) Before Taxes
As a result of the foregoing factors, income (loss) before taxes increased by $2.9 million, to income before taxes of $1.4 million in the third quarter of 2025 compared to a loss before taxes of $1.6 million in the third quarter of 2024.
(Benefit from) Provision for Income Taxes
Our effective tax rate for the three months ended September 30, 2025 was (314.3)%, compared to (473.5)% for the three months ended September 30, 2024. The Company recognized $4.3 million of benefit for the three months ended September 30, 2025. On July 4, 2025, H.R. 1, or the "One Big Beautiful Bill Act" ("OBBBA") was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The OBBBA reduced the Company's 2025 expected current tax liability as a result of the ability to deduct domestic research and development expenses, resulting in a current tax benefit for the three months ended September 30, 2025. The estimated effects of the OBBBA are reflected in the third quarter provision. In addition, there was a decrease related to the windfall tax benefit from the restricted shares vested year to date, as well as a benefit arising from a change in estimate related to finalizing the 2024 tax returns
Net Income (Loss)
As a result of the foregoing factors, net income (loss) for the third quarter of 2025 increased by $14.8 million to net income of $5.6 million, or $0.37 per basic and diluted share, compared to a net loss of $9.1 million, or $(0.61) per basic and diluted share, for the third quarter of 2024.
Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024
Revenues
Total revenues for the nine months ended September 30, 2025 increased by $4.6 million, or approximately 2%, compared to the nine months ended September 30, 2024.
| Nine Months Ended September 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Recurring revenues | |||||||||||
| Financial Health | $ | 162,100 | $ | 158,426 | |||||||
| Patient Care | 82,988 | 82,730 | |||||||||
| Total recurring revenues | 245,088 | 241,156 | |||||||||
| Non-recurring revenues | |||||||||||
| Financial Health | 2,818 | 4,194 | |||||||||
| Patient Care | 11,137 | 9,066 | |||||||||
| Total non-recurring revenues | 13,955 | 13,260 | |||||||||
| Total revenues | $ | 259,043 | $ | 254,416 | |||||||
Financial Health revenues for the nine months ended September 30, 2025 increased by $2.3 million, or 1%, compared to the first nine months of 2024, primarily driven by year over year growth from new bookings, partially offset by customer attrition. Recurring Financial Health revenues were $162.1 million, or 98% of total Financial Health revenues, which increased by $3.7 million compared to the prior year period as increased revenue from new bookings was offset by customer attrition. Non-recurring Financial Health revenue decreased by $1.4 million, primarily from fewer short-term consulting projects compared to the prior year period.
Patient Care revenues for the nine months ended September 30, 2025 increased by $2.3 million, or 3%, compared to the first nine months of 2024, primarily due to an increase in revenue from EHR installations and SaaS revenue from new contracts, partially offset by the divestiture of AHT and the impact from the sunset of our Centriq product. Centriq and AHT combined revenue accounted for $2.8 million in the first nine months of 2025, compared to $6.7 million in the first nine months of 2024. Patient Care revenue excluding Centriq and AHT was $91.3 million in the first nine months of 2025, up 7% from $85.1 million in the first nine months of 2024. Recurring Patient Care revenues, which represent 88% of total Patient Care revenues, increased by $0.3 million, or 0.3%, compared to the first nine months of 2024, primarily due to migration to SaaS arrangements partially offset by a decline in revenue as a result of the Centriq sunset. Non-recurring Patient Care revenues increased by $2.1 million compared to the first nine months of 2024, due to an increase in installation revenue from new contracts.
Costs of Revenues (exclusive of amortization and depreciation)
Total costs of revenues decreased by $4.6 million compared to the first nine months of 2024. As a percentage of total revenues, costs of revenue decreased to 47% of revenues during the first nine months of 2025 compared to 50% during the first nine months of 2024.
Costs associated with Financial Health revenues decreased by $3.2 million, or 4%, compared to the first nine months of 2024, primarily driven by a reduction in domestic labor costs as a result of the transition to the global workforce and the effects of the 2024 cost optimization initiative.
Costs of Patient Care revenues decreased by $1.4 million, or 4%, compared to the first nine months of 2024, primarily due to lower software and offshore costs.
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 decreased by $2.1 million, or 8%, compared to the first nine months of 2024, primarily due to labor savings as a result of the 2024 cost optimization initiative.
Sales and Marketing
Sales and marketing costs decreased by $1.2 million, or 6%, compared to the first nine months of 2024, primarily driven by lower commissions due to the product mix of bookings, partially offset by higher marketing program costs.
General and Administrative
General and administrative expenses decreased by $0.7 million, or 1%, compared to the first nine months of 2024. This change was primarily driven by a decrease in severance and other nonrecurring costs, including costs related to the integration of Viewgol and TruBridge rebranding, partially offset by increased payroll, professional service fees, and other administrative expenses.
Amortization & Depreciation
Combined amortization and depreciation expense decreased by $2.5 million, or 11%, compared to the first nine months of 2024, primarily due to $2.9 million of accelerated amortization of software development costs associated with the sunset of one of the Company's products in the second quarter of 2024, partially offset by increased capitalized software amortization.
Total Other Expense
Total other expense decreased to $8.9 million during the first nine months of 2025, compared to $11.2 million during the first nine months of 2024. This decrease was driven by a reduction in interest expense due to a decrease in outstanding debt balances and a lower interest rate, partially offset by a $1.2 million gain recognized on the sale of AHT during the first quarter of 2024.
Income (Loss) Before Taxes
As a result of the foregoing factors, income before taxes increased by $18.1 million, to income before taxes of $7.0 million in the first nine months of 2025 compared to a loss before taxes of $11.1 million in the first nine months of 2024.
(Benefit from) Provision for Income Taxes
Our effective tax rate for the nine months ended September 30, 2025, was (24.0)%, compared to 38.2% for the nine months ended September 30, 2024. The Company recognized $1.7 million of benefit for the nine months ended September 30, 2025. On July 4, 2025, H.R. 1, or the "One Big Beautiful Bill Act" ("OBBBA") was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The OBBBA reduced the Company's 2025 expected current tax liability as a result of the ability to deduct domestic research and development expenses, resulting in a current tax benefit for the nine months ended September 30, 2025. The estimated effects of the OBBBA are reflected in the third quarter provision. In addition, there was a decrease related to the windfall tax benefit from the restricted shares vested year to date, as well as a benefit arising from a change in estimate related to finalizing the 2024 tax returns.
Net Income (Loss)
Net income for the first nine months of 2025 increased by $24.0 million to net income of $8.6 million, or $0.58 per basic and diluted share, compared to a net loss of $15.4 million, or $(1.04) per basic and diluted share, for the first nine months of 2024.
Supplemental Segment Information
Our reportable segments have been determined in accordance with ASC 280 - Segment Reporting. We have two reportable operating segments: Financial Health and Patient Care. We evaluate each of our two operating segments based on segment revenues and segment Adjusted EBITDA (as defined below).
"Adjusted EBITDA" consists of GAAP net income (loss) as reported and adjusts for (i) depreciation expense; (ii) amortization of software development costs; (iii) amortization of acquisition-related intangibles; (iv) stock-based compensation; (v) severance and other non-recurring charges; (vi) interest expense and other income; (vii) gain on sale of AHT; (viii) gain on disposal of property and equipment; (ix) change in fair value of contingent consideration; and (x) the provision for (benefit from) income taxes. The segment measurements provided to and evaluated by the chief operating decision maker ("CODM") are described in Note 17 - Segment Reporting of 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.
The following table presents a summary of the revenues and Adjusted EBITDA of our two operating segments for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenues by segment: | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial Health | $ | 54,501 | $ | 54,672 | $ | (171) | 0 | % | $ | 164,918 | $ | 162,620 | $ | 2,298 | 1 | % | |||||||||||||||||||||||||||||||
| Patient Care | 31,605 | 30,028 | 1,577 | 5 | % | 94,125 | 91,796 | 2,329 | 3 | % | |||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 86,106 | $ | 84,700 | $ | 1,406 | 2 | % | $ | 259,043 | $ | 254,416 | 4,627 | 2 | % | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA by segment: | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial Health | $ | 8,872 | $ | 9,964 | $ | (1,092) | (11) | % | $ | 27,244 | $ | 24,970 | $ | 2,274 | 9 | % | |||||||||||||||||||||||||||||||
| Patient Care | 7,400 | 4,728 | 2,672 | 57 | % | 21,001 | 13,490 | 7,511 | 56 | % | |||||||||||||||||||||||||||||||||||||
| Total Adjusted EBITDA | $ | 16,272 | $ | 14,692 | $ | 1,580 | 11 | % | 48,245 | 38,460 | 9,785 | 25 | % | ||||||||||||||||||||||||||||||||||
Segment Revenues
Refer to the corresponding discussion of revenues for each of our reportable segments previously provided under the Revenuesheading of this Management's Discussion and Analysis. There are no intersegment revenues to be eliminated in computing segment revenue.
Segment Adjusted EBITDA - Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024
Financial Health Adjusted EBITDA decreased by $1.1 million, or 11%, compared to the third quarter of 2024, primarily due to customer attrition and increased product development costs, partially offset by a reduction in domestic labor costs as a result of the transition to the global workforce.
Patient Care Adjusted EBITDA increased by $2.7 million, or 57%, compared to the third quarter of 2024, primarily due to an increase in installation and SaaS revenues, and a decrease in software and product development expenses, partially offset by the impact of the sunset of our Centriq product.
Segment Adjusted EBITDA - Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024
Financial Health adjusted EBITDA increased by $2.3 million, or 9%, compared to the first nine months of 2024. This increase was due to year over year growth from new bookings and a reduction in domestic labor costs as a result of the transition to the global workforce, partially offset by increased product development and administrative costs.
Patient Care adjusted EBITDA increased by $7.5 million, or 56%, compared to the first nine months of 2024. This increase was primarily a result of an increase in installation and SaaS revenues and a decrease in software and product development expenses, partially offset by increased administrative costs.
Liquidity and Capital Resources
Sources of Liquidity
As of September 30, 2025, the aggregate principal amount of our credit facilities was $230.0 million, which included a $70.0 million term loan facility and a $160.0 million revolving credit facility. As of September 30, 2025, we had $165.2 million in principal amount of indebtedness outstanding under the credit facilities.
As of September 30, 2025, we had cash and cash equivalents of $19.9 million and remaining borrowing capacity under the revolving credit facility of $48.6 million, compared to $12.3 million of cash and cash equivalents and $43.6 million of remaining borrowing capacity under the revolving credit facility as of December 31, 2024. We believe that these funding sources, taken together with the future operating cash flows of the combined entity, provide adequate resources to fund ongoing
cash requirements for the next twelve months and beyond. We cannot provide assurance that our actual cash requirements will not be greater than we expect as of the date of filing of this Form 10-Q. If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the next twelve months, we may be required to obtain additional sources of funds through additional operational improvements, capital market transactions, asset sales or financing from third parties, a combination thereof or otherwise. We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms. 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. 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.
During February 2024, the Company used a portion of the proceeds received from the sale of AHT to repay $7.0 million of the outstanding balance of the revolving credit facility. Since the first quarter of 2024, the Company has made incremental payments totaling $15.0 million on the credit facilities, including an incremental payment of $5.0 million on the revolving credit facility during the nine months ended September 30, 2025.
Operating Cash Flow Activities
Net cash provided by operating activities increased by $6.3 million to $28.1 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $21.8 million for the nine months ended September 30, 2024. This increase in cash flows provided by operations was primarily due to the aforementioned increase in net income, partially offset by the increase of income tax payments, accounts receivable, and deferred revenue.
Investing Cash Flow Activities
Net cash (used in) provided by investing activities decreased by $16.7 million, to cash used in investing activities of $10.9 million during the nine months ended September 30, 2025, compared to cash provided by investing activities of $5.8 million during the nine months ended September 30, 2024. This decrease was primarily the result of the sale of AHT, which resulted in a net cash inflow of $21.4 million during the nine months ended September 30, 2024, partially offset by a decrease in investments in software development.
Financing Cash Flow Activities
During the nine months ended September 30, 2025, our financing activities were a net use of cash in the amount of $9.6 million, as long-term debt principal payments of $23.0 million and $1.9 million used to repurchase shares of our common stock, which are treated as treasury stock, were partially offset by $15.4 million in borrowings from our revolving line of credit. Financing activities were a net use of cash in the amount of $22.9 million during the nine months ended September 30, 2024, as long-term debt principal payments of $45.7 million and $0.4 million used to repurchase shares of our common stock, which are treated as treasury stock, were partially offset by $23.8 million in borrowings from our revolving line of credit.
Credit Agreement
As of September 30, 2025, we had $53.8 million in principal amount outstanding under the term loan facility and $111.4 million in principal amount outstanding under the revolving credit facility. Each of our credit facilities continues to bear interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the Adjusted SOFR rate for the relevant interest period, subject to a floor of 0.50%, (2) an alternate base rate determined by reference to the greater of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus one half of one percent per annum and (c) the one month SOFR rate, subject to the aforementioned floor, plus one percent per annum, or (3) a combination of (1) and (2). The applicable margin for SOFR loans and the letter of credit fee ranges from 1.8% to 3.0%. The applicable margin for base rate loans ranges from 0.8% to 2.0%, in each case based on the Company's consolidated net leverage ratio. As of September 30, 2025, the revolving credit facility had an average interest rate of 6.92%.
Principal payments with respect to the term loan facility are due on the last day of each fiscal quarter beginning June 30, 2022, with quarterly principal payments of approximately $0.9 million through March 31, 2027, with maturity on May 2, 2027 or such earlier date as the obligations under the Amended and Restated Credit Agreement, as amended by the First Amendment, become due and payable pursuant to the terms of such agreement. Any principal outstanding under the revolving credit facility is due and payable on the maturity date.
Our credit facilities are secured pursuant to the Amended and Restated Credit Agreement, dated as of June 16, 2020, among the parties identified as obligors therein and Regions, as collateral agent, on a first priority basis by a security interest in substantially all of the tangible and intangible assets (subject to certain exceptions) of the Company and certain subsidiaries of the Company, as guarantors (collectively, the "Subsidiary Guarantors"), including certain registered intellectual property and the capital stock of certain of the Company's direct and indirect subsidiaries. Our obligations under the Amended and Restated Credit Agreement are also guaranteed by the Subsidiary Guarantors. Refer to Note 13 of the condensed consolidated financial statements included herein for additional detail regarding our credit facilities.
Backlog
Backlog consists of revenues we reasonably expect to recognize over the next twelve months under existing contracts. The revenues to be recognized may relate to a combination of one-time fees for system sales and recurring fees for support and maintenance and RCM services. As of September 30, 2025, we had a twelve-month backlog of approximately $4.0 million in connection with non-recurring system purchases and approximately $321.0 million in connection with recurring payments under support and maintenance and RCM services. As of September 30, 2024, we had a twelve-month backlog of approximately $8.0 million in connection with non-recurring system purchases and approximately $320.0 million in connection with recurring payments under support and maintenance and RCM services.
Bookings
Bookings are a key operational metric used by management to assess the relative success of our sales generation efforts, and were as follows for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
|
Financial Health(1)
|
$ | 9,507 | $ | 12,496 | $ | 35,992 | $ | 40,346 | |||||||||||||||
|
Patient Care(2)
|
5,996 | 8,454 | 27,105 | 27,464 | |||||||||||||||||||
| Total bookings | $ | 15,503 | $ | 20,950 | $ | 63,097 | $ | 67,810 | |||||||||||||||
|
(1)Generally calculated as the annual contract value
|
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|
(2)Generally calculated as the total contract value for system sales and SaaS, and annual contract value for maintenance and support
|
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Financial Health
Financial Health bookings during the third quarter of 2025 decreased by $3.0 million, or 24%, from the third quarter of 2024, driven by delays in customer decisions in net-new bookings, which decreased by $4.5 million, or 79%, excluding Viewgol. This was partially offset by an increase in cross-sell bookings of $0.7 million, or 11%, and an increase in Viewgol bookings of $0.8 million during the third quarter of 2025 compared to the prior year quarter.
Financial Health bookings during the first nine months of 2025 decreased by $4.4 million, or 11%, from the first nine months of 2024. Net-new bookings decreased by $6.9 million, or 37%, partially offset by an increase in cross-sell bookings of $2.4 million, or 13%, excluding Viewgol. Viewgol bookings increased by $0.1 million during the first nine months of 2025, compared to the prior year period.
Patient Care
Patient Care bookings decreased during the third quarter of 2025 by $2.5 million, or 29%, compared to the third quarter of 2024. This was primarily due to net-new bookings decreasing by $1.7 million, or 95%, and cross-sell bookings decreasing by $0.7 million, or 11%, mainly due to delays in customer decisions.
Patient Care bookings decreased during the first nine months of 2025 by $0.4 million, or 1%, compared to the first nine months of 2024. This was primarily due to cross-sell bookings decreasing by $4.8 million, or 25%, partially offset by net-new bookings increasing by $4.5 million, or 54%.
"Net-new bookings" represent bookings from outside the Company's core client base, and "cross-sell bookings" represent bookings from existing customers. In each case, such bookings are generally comprised of recurring revenues to be recognized ratably over a one-year period and an average timeframe for bookings-to-revenue conversion of four to six months following contract execution.
Annual Contract Value
Effective January 2025, the Company will be providing bookings on an Annual Contract Value ("ACV") basis in addition to the reported bookings amounts, which has historically represented a mix of ACV and Total Contract Value ("TCV") for Patient Care. This new methodology of reporting total bookings at ACV represents the newly contracted revenue that is expected to be recognized over a twelve-month period. Over the course of 2025, the Company will be providing total bookings under both methodologies for year-over-year comparability before fully transitioning to ACV in 2026.
The table below represents bookings using the ACV methodology for the three and nine months ended September 30, 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| (In thousands) | 2025 | 2025 | |||||||||
| Financial Health | $ | 9,507 | $ | 35,992 | |||||||
| Patient Care | 5,545 | 16,026 | |||||||||
| Total bookings | $ | 15,052 | $ | 52,018 | |||||||
Reported bookings may be subject to adjustments and potential cancellations prior to the satisfaction of the obligations to our customers. Our metrics may vary significantly from period to period for reasons unrelated to our operating performance and may differ from similarly titled measures presented by other companies.
Critical Accounting Policies and Estimates
Our Management Discussion and Analysis is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make subjective or complex judgments that may affect the reported financial condition and results of operations. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported values of assets, liabilities, revenues, expenses and other financial amounts that are not readily apparent from other sources. Actual results may differ from these estimates and these estimates may differ under different assumptions or conditions. We continually evaluate the information used to make these estimates as our business and the economic environment changes.
In our Annual Report on Form 10-K for the year ended December 31, 2024, we identified our critical accounting policies and estimates related to revenue recognition, allowance for credit losses, business combinations, including purchased intangible assets, software development costs, and estimates. There have been no significant changes to these critical accounting policies during the nine months ended September 30, 2025.
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