Great. Welcome, everybody. My name is Scott Schoenhaus. I'm the Healthcare Technology Analyst here at KeyBanc. Pleasure to have TruBridge Inc here. We have Chris Fowler, CEO, and Vinay Bassi, CFO. Gentlemen, thank you for joining me on this fireside chat.
Thanks for having us.
Maybe, Chris, maybe give a brief introduction on yourselves and anyone that's new to the story, maybe a little bit of background on TruBridge and the rebranding you guys did last year.
Yeah, you bet. Vinay, you want to start with the introduction, and then I'll introduce myself and answer the questions.
Perfect. Perfect. Thank you. Thank you, Scott, for giving us the opportunity. I'm Vinay Bassi. I'm the CFO of TruBridge. I joined TruBridge around 15 months back. I'm a newbie in January 2024. Before TruBridge, I was CFO of the Audience Measurement Division of Nielsen and had various finance roles. Before that, for 15 years, I was an M&A guy at Avaya at Nielsen. Before that, I was a banker at Citigroup Investment Banking.
Thanks. Chris Fowler, CEO, President of TruBridge. May will be 25 years for me with the organization. A bit of a lifer. I've enjoyed a wonderful career here and excited about the opportunity we have in front of us. A little bit of setup. TruBridge, we are a healthcare company focused on the rural community and the market. We serve that market with two distinct businesses. We have an EHR that was really the kind of the legacy of CPSI prior to TruBridge, and then our RCM business, which started internally, grew organically in the late 1990s, really kind of got going in the early 2000s, and then has been fueled with some acquisitions towards the last six or seven years.
To your question, Scott, around the brand, CPSI has been around since 1979 and, again, had a great name as it related to just the EHR portion of the business, really focused on that rural setting from a healthcare perspective. As we continue to grow our RCM business and continue to spread the breadth of what we do, we felt like there was an opportunity for us to take a name and kind of freshen that up a little bit. Also, as we've started to turn on the acquisition machine, really starting in 2017, we did start creating a bit of a brand soup. We felt like there was an opportunity for us to really kind of harness everything under one name.
From a brand awareness standpoint and just the return on that dollar from the investment, we felt like consolidating under TruBridge was the right thing to do. We really kind of shot off with that in February of last year and have seen some great excitement around us having that new brand, a little bit fresher name that comes along with it, and allowing us to tell the new story of who we are. We'll continue to really kind of champion behind the name TruBridge and continue to deliver the services and technology that we have.
Great. Maybe pivoting off that, Chris, let's talk about your growth strategy here. You're clearly a dominant player, or you're really targeting the rural regional areas of the United States. Maybe talk about how you win new logos. Talk about your growth strategy.
Sure.
Because I know it's multi-pronged.
Yeah. It's a pretty simple approach. Obviously, everybody strives for simplicity, right? Because that obviously makes it maybe a little more attainable to get to. Again, if you look at the two distinct parts of the business, the EHR side, I would say, is our stable, been there for 40 years, 40-plus years. We do think that there's opportunity for us to grow, but there's not this huge windfall of greenfield opportunity that's out there. Everybody's got one. Our job there is to continue to maximize the value for our current customers and making sure that as we bring opportunities, we're bringing those to bear to our customer base and continuing to expand the wallet there. On the RCM side, that's really where we see that opportunity for some outsized growth. You've got 80% of all providers and hospitals that are still doing the billing themselves.
We feel like over the next five to seven years, there's really going to be a shift in the pendulum of that being something that's outsourced. Just the increase in the complexity and then the challenge from a labor perspective. It's not the core of the business for providers, right? They're in the business of taking care of patients. They're not in the business of collecting dollars. That's something that we wake up every day thinking about. I think it lines up nicely for us to be able to support them in their mission. Now, on the RCM side, there's really two vehicles or two lanes that we're going down to achieve that growth. One, back into that EHR customer base, right? That 80% holds true there as well. About 80% of our customers on our EHR are still running their own business office.
There is a value in us continuing to support and invest on the EHR side because we now have that account and we have a deeper relationship and opportunity to sell a little bit easier. We have the rest of the world under 400 beds where we see opportunity, again, as we have opportunity to continue to grow beyond just the EHR customer base.
Got it. Makes sense. I would be remiss not to ask what your viewpoint or if you're seeing any impacts from the Trump administration on your customer base.
Yeah. Man, if we could predict what was going to happen here, I'd probably be on an island somewhere. I think the thing that we all know is that we don't know exactly what's going to happen. The information that we're getting from our advisors and as we're trying to stay as close as we can to what's going on in Washington, I think that our end of the market, I'm not going to say is 100% safe. If you think about maybe what they're going after from a waste, fraud, and abuse, one of the things that we're hearing is that reimbursement parity is an area of focus, meaning that if you're receiving a procedure, the same procedure should pay the same reimbursement regardless of what care setting or where you are, right? Right now, that's not the case.
As I think about that, the rural community market is on the bottom end of that reimbursement already. To take them down any farther, I think, would be devastating to our market. I think more realistically, there's the opportunity to see that upper-end reimbursement be impacted is one step. The second part is how you think about coverage. Is Medicaid a program that's under fire from an expansion standpoint or just who's covered today? There's a bit of a wait and see. The good news is, I think, that any changes that would be made, I think, would happen at the soonest, probably effective October 1 of this year. It would be something that would be layered in over a 5-10 year period.
If you're hearing what they're saying, any of these programs are going to have a pretty long tail on how they would put them in. There is time for our hospitals to kind of have an opportunity to respond to the changes and be prepared. That said, I do think that there is a hesitation right now to do anything for fear of what's going on. Long-term, I don't think we're going to be impacted. Short-term, I do think it could create a little bit of choppiness from a sales perspective.
Yeah. Understandable. Let's move on to your margins. You've been driving some operating efficiencies and executing on them. Let's talk about where you've taken margins and expectations or opportunities ahead, team.
Yeah. Thank you. Thank you, Scott. That's a great question. Since I joined in 2024, Scott, we have put a few things in place: rigor on identifying inefficiencies wherever they exist. One. Second, having an ROI-based concept to the maximum extent we can. It's not just on ROI on big projects, but if we are in making an investment in certain areas, even if it's marketing, trying to figure out, "Hey, how do I get my return on investment?" In 2024, you would see that our overall margins, EBITDA, adjusted EBITDA, improved from around 12% to all the way to 20%. It was fueled by a few things other than revenue growth, obviously, was a contributor.
During the early part of Q2, we identified, I would say, the lowest hanging or the middle-level hanging fruits on operating efficiencies, where we tried to identify roughly $8 million run rate of savings from people and non-people costs. I'll give you an example. When I looked at G&A, when I joined, I had a small amount. This was a token, small amount that we were spending in getting benchmarks. I said, "Hey, we don't need to spend that. We can get benchmarks from a lot of places." Those mindset change and yielding that across the organization, we were expecting $8 million of savings on a run rate and $5 million in a year. What I explained in my earnings call, we achieved slightly more than that in the year. We did $6 million because it was maniacal focus.
We wanted to make sure every identified idea was finished and booked. If there was a slippage, something else took it over. That was a big driver for one of the margins questions. Other pieces are continued focus on vendor savings. We are looking at vendor. This is some of my own training, having lived in past companies where every vendor needs to justify why we use it, how we use getting the optimal. Still, there is some room more for that in 2025 and going forward, but that has been a focus area. Lastly, what Chris mentioned in RCM, growing global offshore. We initially did partners through partners, and then we have built a captive base of a few hundred people.
That is another, I would, while we can call it an operating efficiency, this is also the way our change in our business model to get benefits to not just us, but to shareholders as well as customers. Some of all this was the biggest contributor where we saw a 12% margin going to 20%. Just to connect the dot with what I have said in 2025, fourth quarter of 2025 is where we had told that we would like to touch 20% of that. That is one of the drivers for us that more global offshore savings, revenue growth, and some additional inefficiency plays that we find, we will continue optimizing it. This was shown not just in the adjusted EBITDA.
I will also point out our CapEx, which is the other piece, has also taken a drastic reduction from a $22 million run rate in 2023 to around $17-$18 million. That sums up the operating efficiency play where we ran a program for lowest middle-hanging fruit, global offshore, and continuous focus of justifying ROI for every investment we make.
That's great. Maybe pivoting off of the CapEx commentary, Vinay, can you remind us your leverage ratio, where it currently sits, how much you plan to obviously improve this through EBITDA expansion, but maybe pay down some debt?
Absolutely.
Yeah.
This was, I would say, a great point and a great effort by the whole team of TruBridge for 2024. We were over four times levered at the beginning of 2024. We were happy to report by the end of 2024, we were under three. It was a significant improvement in leverage. It certainly came from improvement of profitability, but it played a smaller part. We repaid $23 million of debt from cash generated. A lot of that cash improvement came from improvement in working capital. My collections processes, I personally run it with my team. We saw a 10-day improvement in DSO. Still some room to go, so laser-focused on that. To answer your question, from over four to under three in 2024, and our goal, or our near-term goal, or the next milestone is to be in the $2.5 million range.
That would come more from improved profitability and obviously as we get cash. As I had mentioned, our capital allocation strategy will be more about paying debt till we reach that stage and for organic CapEx.
Two and a half times, not $2.5 million, right? Just.
No, two and a half times. Sorry if I said that.
Great. Awesome. Chris, you mentioned about your acquisition strategy over the last several years, but maybe we could touch more on your recent acquisition of Viewgol.
Yep.
How is the integration going? Maybe what are the capabilities it has? Why did you do what was the strategic rationale? All that.
Yeah. Just a reminder, this was an acquisition at the end of 2023. We were really looking at a couple of things here. At the top of the list was, to Vinay's point, the global workforce transformation that we were undertaking. We were leveraging partners to do this, but that was almost like a testbed of, "Okay, ultimately, if this is successful, this is something that we're going to want to do ourselves and we're going to want to have our own captive." We started out with a, "Let's go find somebody that's already built out an operation that we can accelerate what we're trying to do versus starting from the ground and building it up on our own." That was number one.
Number two, and this was a little bit of, I guess, luck, you would say, that we had been trying to figure out what role we're going to play in the ambulatory space. By that meaning, we're seeing the trends of care continuing to step outside of the four walls of the hospital. Just as a bit of a future-proofing, we needed to start building some core competency on the ambulatory side. Viewgol's founders came from NextGen. They were almost 100% ambulatory-focused, had built a core technology that then turned into a services business. We felt like it was a second nice lever that now we've got some competency from a sales, from an operations standpoint around the ambulatory offerings and opportunities.
Lastly, to that technology piece, the world of analytics and insights is really one that we've got to continue to improve there and be able to deliver that information to our customers so they can make the best decisions for them. I think we're very excited with the technology that Viewgol had and how we can integrate that into our acute operations to be able to continue to provide better information, better insights, and also ultimately better decisions and outcomes for our customers with that. Really a three-prong approach there on what the benefits were. It was the end of 2023. We did have an earnout that carried us through the 2024 period. Integration was a little in earnest over that 2024 period. We really hit the ground in 2025 running.
We brought in a new GM for our financial health business, Meredith Wilson, and consolidating the ViewGol business with our legacy financial health, legacy RCM platform. Early stages, right? We're in the first quarter of 2025, but so far the integration, we're very pleased with how that's progressing right now.
Great. Maybe let's pivot. I mean, you mentioned sort of the caution or the conservatism baked around the new Trump administration and then potential impacts on the hospital environment. Maybe talk about what you're seeing for the selling, what your expectations are for the selling season this year, what you're maybe also we can talk here about your really high client retention levels and your expanded offerings. Maybe that's a three-part question. Maybe say, given that we're in a kind of a transitionary environment with the new Trump administration and people just don't know, and they're maybe pausing on activities, maybe talk about where your expectations are for the year.
Yeah. I think it's a good opportunity for us to talk about sort of how we see the next couple of years, really.
Yeah. Perfect.
If you take 2024, and I guess now that it's in the books, Vinay and I can sort of tongue-in-cheek say '24 was the road to redemption for TruBridge, right? We had made some really nice transitional or transformational changes in 2023. I think we maybe set some expectations a little higher than we should have, knowing that we were going through this kind of monumental change as well. We needed to reset kind of the financial foundation and just the base of the company. I think there's still improvements that we're making, and Vinay's team continues to work on that. '24 was really that reestablishing kind of the base foundation, the financial health of the business. '25 is really about operational excellence, right?
When you talk about that retention, it's making sure that we're delivering the promise that we've made to our customers, both on the EHR and on the RCM side, and that they're seeing the value in our products and our services and that we are looked at as a valued partner. I think that leads into the growth that we want to get to. If we can continue to see our retention inch up, every point that it inches up is a little less pressure that we have to put on sales, right, to see that growth. That also gives the opportunity when we do put the pressure on sales and they start performing more than they are today, that we see that kind of double-barrel effect of growth because we're not refilling the top to then start the growth.
We're just growing right off of what we did the year before. It is super important that we continue to find solutions and services for our installed customer base that they see value in so that they, one, stay a customer, first and foremost, that they stay a customer. Two, that we have those offerings for them that allows us to expand that wallet, that they see value in, whether it's our analytics, whether it's our partnership on the ERP side with Multiview, whether it's additional RCM services that we're bringing in, we've got a full suite, a full portfolio of opportunities to expand that customer base.
On the new sales front, being able to find those opportunities where either it's a new logo on the RCM that we're bringing in and creating that long-term value, or the EHR business where we're able to pair the RCM with the EHR and provide something a little differentiated that not anybody else really in the market is putting out there right now.
That's a super great context and sort of comprehensive strategy color. Chris, I want to drill in. You talked about your sales team. I want to ask about the changes you've made there and how that's impacting the business.
Yeah. Again, keep it simple to make it where it's executable. In the past, our sales targets have been strictly dollar-based. What that leads to is maybe we hit the dollar that we're looking for, but we don't get the mix that we need, right? By that, we're not as intentional as saying we definitely are seeing the traction on the services side, but that's a lower-margin business in some of the technology that we have.
I think we've got to be intentional and mindful to say, "We need to make sure that of your book that you've got to go get this year, X amount of that needs to come in the shape of these products and these services." Creating almost that unit economics for the sales team, that it's not just about the end dollar that they're selling on a year, but that there's a bit of a map to how you got to get there. I think that's creating a nice partnership between the business and the sales team because now that the sales has to go sell all the things that we have, all the things have to be working like they need to, right? They're now putting pressure on operations to make sure that our services and our products are where they need to be.
On the flip side, we've created that with the GMs, with Meredith and David, and then even deeper into the organization, almost a mini GM concept where we've got owners of each of those business lines so that now they feel responsible and have that desire to go make sure that their business is growing. I think it's just the connectivity and the intentionality of saying, "Let's make sure that we're getting the mix in the bookings that we're looking for so that the quality of it has the impact that we need it to.
Maybe let's talk about nTrust. You've seen good traction there. Maybe what your strategy around that offering is and why you're seeing so much traction.
Yeah. It is something that hits both our existing customer base and from a net new perspective. Again, for those that are unfamiliar, nTrust is our combination of our EHR and our RCM services together. I think what makes it unique is that no longer is there a fixed fee associated with the EHR. We are putting the entire business at risk and putting it that we are in lockstep with our customer, that utilization needs to be high, and so that we are kind of dialed into that to make sure that they are helping them as they can to make sure that utilization is where it needs to be. We have to deliver on the collections on the back end. If we are not delivering on that, it does not just hurt one half of the business. It hurts all of us.
This is an all-in effort to make sure that we are truly that partner with our customer. One of the benefits for our installed base that we're seeing with this as well is the conversion of the model of a licensed model with support and maintenance to a SaaS offering, right? Now we've got a little more predictability and smoothness in the revenue and how we have visibility into that. Virtually all of our net new systems, whether they're part of an nTrust or just the system itself, are in that SaaS model. Our focus really is converting our legacy base to the SaaS format.
Super helpful. Vinay, maybe this is a question for you.
Sure.
I think you've made improvements in your financial forecasting. Maybe walk us through those changes that have allowed for better visibility in the model. Also, maybe we can discuss the 2025 guidance, what's driving the top and bottom-end ranges in that and giving your better visibility into forecasting.
No, that's a great question, Scott. As you know, forecasting is a longer process. What we had tried, and I picked my first set of puzzles to solve, was revenue, people, vendor. On the revenue part, and this was not just finance or my FP&A, it is trying to build the pipes back to the business. What we have been doing over the past few quarters is getting a good connection and to help us understand the past few quarters and then help us forecast the future. First is on contracted revenue. While we have contracted, as you know, our core business is driven by volume. Just having a good line of sight of by customer, what is the revenue projection going to be? What was the past kind of thing? That's a good indicator for us to have a little more confidence.
Second part was on understanding the recurring, non-recurring nature. While recurring is okay from contracted, and our contracted is generally within the low 90s, but still, the difference is still a big number that we need. In the non-recurring, figuring out a little bit more to the extent, hey, what were the nature of the drivers? What line of visibility from the business we have? On the revenue side, both on the technology aspect and on the services aspect, contracted, recurring was a big one. The second part on revenue was when we have bookings, as you know, bookings are lumpy. When it happens, it does not happen in 90 days, we get an RCM. It is all case by case, short term, long term.
Having that in the DNA to know when a revenue, when a booking comes in, when does it get greenlit, how is the curve of ramp up? That is what we have been building. The beauty of that is some of this is already built, but we are also testing our accuracy. Like I mentioned in my prepared remarks in the script, we had a couple of million, some quarters we get surprises because these could be, hey, when we have a short-term project that suddenly comes for a quarter kind of a thing. Same is on people, especially with the global offshore resource management is a core part of it, knowing what are ins and out.
Especially in 2024 and 2025, it becomes critical because while we are moving people from US to our global offshore work, just making sure they're done at the right time, right pricing, right timing is captured is another one. The vendor usage part of it. That is the first part of the question that you asked. On the guidance part, while our guidance range, if you see it in the grand scheme, it is low single digits to mid single digits. In RCM, we expect higher growth. In patient care, lower growth. Margin expansions, we expect around 125 basis points in the mid range. All of this is coming from, if you look at the low end, it is how the retention story hangs together, how the bookings hang together. We have tried our best to capture that.
On the high end, if retention picks up the way we are expecting or bookings translate, the administration risks are minimal, and then we do it. That is how it will play on the revenue side. The margin will be obviously revenue growth, but a good portion we are expecting also from our stabilization of our global offshore. We have just started, this is like a 12-15-month-old project. Once it stabilizes, we start getting the benefit. I think those will be the big drivers for the margin expansion.
Great. That's super helpful, Vinay. I guess, Chris, to wrap it up here, anything as you look forward for the next several years here, and it seems like you guys continue to execute on your growth strategy, how would you, I guess, how would you frame it to investors that are looking for technology solutions in healthcare? You have a stable business. You have a good install base. You're adding on more solutions to your install base. You're improving your margins. You're improving your profile here. What do you think the biggest, I don't know, what do you think the biggest pitch to investors that don't know your story is? Because there's a lot of technology solutions, I think, in healthcare that are a bit more choppy than your story. Obviously, you've prosecuted the case of last year was your kind of transition year.
Maybe prosecute why the next few years are really the years to show off your platform.
Yeah. It's a great question. I would say, as we think about it, again, going back to who we are and where we're focused, I think is really where it starts. To me, while there's a, I think there's a perception of risk in the rural and community market. What I would tell you is in my 25 years here, while we've seen hospitals close and you read headlines about the threat of all the hospitals closing, we never hear about those same hospitals reopening. Over the last 10 years, it's very minuscule the number of hospitals that aren't in the market that have actually closed the door. From a stability of market standpoint, I think that's the first thing to, I'm excited about where we are and what we're focused on. Secondly, is nobody else's, right?
Nobody else is singularly focused on this end of the market with the two tools and solutions that we have. Everybody else is in the top end, and this is an also-ran type situation. I think for us, it's the uniqueness of we have the ability to serve this market with both technology and with services. We are a technology company at heart. The services that we provide, we're going to continue to find ways to innovate and make the services that we provide lighter and more efficient so that we continue to see that margin grow and capture that opportunity. We're in a space where there is still tremendous greenfield out in front of us, right? There's 80% of the market that's out there to be converted, which we think is about a $10 billion opportunity, right?
Which is a big number. We're a $350 million company. We don't have to go hit all of that for wild success over the next five years. If half of that unlocks and we get half of that, or we get a half of a half of that, it's still a tremendous growth story for us going forward. To me, there's just so much in front of us. Even though we've been doing this for 45 years, I feel like we're just getting started with the sequel to the version now. We're excited about the team that we've put together, the opportunity we have in front of us. We feel like we've got the strategy laid down. We feel like we've proven ourselves over the last year that we can execute. I think we're going to show that off over the next couple of years.
That's great. We have to end there. That was a perfect ending to our Fireside Chat. Chris, Vinay, thank you so much. Investors, thank you very much as well for listening to our Fireside Chat. If you have any follow-up questions, you can always email me. I am looking forward to staying in touch with both of you and watching the progress.
Absolutely. Thanks so much.
Thank you very much.
Bye-bye.