Greetings and welcome to CPSI Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dru Anderson. Thank you, y ou may begin.
Good afternoon and welcome to the CPSI third quarter 2022 earnings conference call. During this conference call, we may make statements regarding future operating plans, expectations, and performance that constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution you that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance. Actual results might differ materially from those expressed or implied by such forward-looking statements as a result of known and unknown risks, uncertainties, and other factors, including those described in our public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, our most recent annual report on Form 10-K.
We also caution investors that the forward-looking information provided in this call represents our outlook only as of this date, and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. At this time, I will now turn the call over to Mr. Chris Fowler, President and Chief Executive Officer. Please go ahead, sir.
Thank you, Dru. Thanks to everyone for joining us today for our third quarter earnings call. I am joined by our CFO, Matt Chambless, and also David Dye will be available for Q&A. As you may have read in our recent 8-K, David is transitioning into a new role of Chief Operating Officer, which is designed to help streamline the organization and oversee the function of our business units, which I will talk about shortly. First, let me begin by saying that we are pleased to deliver third quarter results that are broadly in line with consensus and our expectations. Total revenue for the quarter was $83 million, with roughly 60% of that revenue deriving from TruBridge. I would like to call out that 94% of TruBridge's revenue is recurring, demonstrating progress towards our business model weighted towards high visibility and predictability.
We generated $13.3 million of EBITDA during the quarter, an increase of 9% over the prior year quarter. Total bookings were $20.5 million, with greater than half of those deriving from TruBridge, consistent with our pivot towards greater RCM and patient engagement services. This week marks 100 days since I was appointed CEO of CPSI, and I'd like to take a few minutes to share a few observations. Along with our people, we believe that our client base is our greatest asset, and both customer satisfaction and retention are key elements of our growth story. In the last 100 days, I've held countless meetings with customers. What resonates the loudest with them is CPSI's commitment to streamlining workflows and easing the pressure and stress that often come with managing resources and the financial health of their organizations.
By working toward those goals, we allow providers to better engage patients in their own healthcare and remove distractions so they can focus on providing quality healthcare and making healthcare more accessible. Our focus going forward is, and shall continue to be strengthening relationships with partners and customers, improving the client experience, and delivering innovation and key product enhancements. We want to ensure that CPSI is a trusted business partner to our customers and part of their long-term strategic plan, whether that's streamlining care delivery, augmenting staffing shortages, improving the patient experience, preparing for value-based reimbursement, or all of the above. As such, we are focused on the tremendous cross-sell opportunity for TruBridge and patient engagement products and services across our in-network base of nearly 1,000 customers. As we've discussed in the past, we estimate the add-on opportunity to be enormous.
Demand is robust in this post-COVID environment as hospital resources are strained and scarce, opening the door to leverage our TruBridge brand. Hospitals are fighting for every dollar amid low utilization trends and increasing high cost of labor, and CPSI is uniquely positioned to help our customers thrive. As evidence of the bolus of demand we are seeing, our three-month weighted TruBridge pipeline tripled from $5.6 million in the year ago quarter to $17.3 million as of September 30 this year. Similarly, our six-month weighted pipeline exploded from $9 million to nearly $27 million. This is a clear indication of the uptick in demand we are seeing for our services. With respect to the quarter's business highlights, TruBridge delivered total bookings of $11.5 million.
We are pleased to see continued demand for TruBridge services, both in-network, meaning inside of our EHR client base, as well as out-of-network for hospitals that use a non-CPSI EHR. As I mentioned earlier, we see tremendous opportunities for TruBridge within the CPSI client base, which we estimated between a $300-$400 million cross-sell opportunity. In fact, cross-sell bookings increased 30% sequentially. RCM-centric services represent close to 60% of total CPSI revenue today, compared to roughly 40% of revenue three years ago. To illustrate our progress in this regard, trailing twelve months cross-sell bookings from TruBridge are 28% higher than pre-pandemic levels, and net new bookings are 31% higher. I would now like to address our Get Real Health business or GRH, which is the foundation of our patient engagement products and services.
While fast-growing and rapidly evolving, the still nascent nature of the business led to some volatility during Q3 as we simultaneously invest for growth. Two large customers that are in the early stages of implementation fell behind their scheduled go-live plan. The first is a complex domestic health system in Florida that is comprised of multiple disparate acute care EHRs, and the other is an international telecom company. Combined, we estimate the revenue from these two implementations of $1 million-$2 million are pushed out by about six months. To be clear, the delay was not a CPSI issue, and we enjoy a very strong partnership with both customers.
Today, revenue from GRH makes up low single-digit % of total revenue, growing exponentially off a small base, and we view it as a huge value add to our customers as they focus on improving the patient experience through digital front door strategies and tools for increasing retention. Last and not least, Evident, our core EHR business, comprises about 40% of CPSI revenue. Evident is the preeminent EHR solution for community hospitals and is operating in a mature market with relatively high rates of penetration. Evident bookings in a post-meaningful use environment declined year-over-year as we continue to evolve CPSI toward more RCM services, recurring revenue, and SaaS, as exemplified by our sales leadership promotions that I will discuss shortly.
We're proud of our leading 1,000-strong customer base and see our EHR base as an anchor to cross-sell value-added RCM services and higher-margin products over time. Against this backdrop of creating more organizational focus to drive growth and profitability, I am thrilled to announce some changes in how we operate the business units, aligning them more closely with our go-to-market strategy. To reflect this new strategic direction, we are strengthening our leadership team as follows. David Dye, who you all know and has worn many hats over the course of his 32-year tenure at CPSI, is transitioning from his role as Chief Growth Officer to Chief Operating Officer, overseeing our three business segments, which will now have dynamic new leadership. First, we are pleased to announce Patrick Murphy as General Manager of our TruBridge division.
Pat has been with TruBridge since 2011, serving as Director of Revenue Consulting Services, Vice President, and most recently, Senior VP of TruBridge. Pat is uniquely qualified to help us propel TruBridge to the next chapter in CPSI's evolution. Second, we are pleased to announce the appointment of Christina Hendricks as General Manager of our Get Real Health segment. Christina spent 17 years at Get Real Health, spanning project management and program management responsibilities. Most recently, she was Vice President of Service Delivery and we are grateful to have such a talented leader heading up this division. Third, I am pleased to announce David Harse as the General Manager of our EHR segment, covering all acuities. David joins us from HealthMark, where he was Senior VP and General Manager of Patient Engagement.
Prior to HealthMark, David spent 20 years at EHR leader Cerner in various roles of increasing responsibility, most recently as VP and General Manager, in which he took what was formerly a flat consumer engagement business and leveraged Cerner's vast EHR footprint to drive double-digit growth. Each of the above-referenced business units will roll up under David A. Dye as COO to create a holistic view of our businesses, facilitate transparency and alignment with how our customers purchase and advance our operational excellence. Also included under David's umbrella is business unit support, services and product development, each vital to continue delivering product and service innovation to our clients. There is one additional leadership change that I would like to note. Dawn Severance, who came to CPSI by way of the Healthland acquisition in 2016, will be transitioning into the Chief Sales Officer role.
Dawn will leverage her wealth of experience in revenue cycle operations to the sales organization, which is sure to help CPSI capitalize on the TruBridge opportunity. This is a centralized sales function across all business units with the objective of building deeper relationships with our customers, driving growth, and continuing to build on our foundation of sales excellence. To review, the three tenets of our long-term plan we are committed to are, one, growing the core. This means net new customer adds, as well as increasing wallet share across our existing base. Leveraging our TruBridge brand of RCM services is integral to unlocking the $400 million potential that we've discussed. We also will continue to support and grow the Evident brand, which is the trusted EHR solution of choice in our market for rural and critical access hospitals. Number two, operational efficiency.
Namely, unlocking value through automation and offshoring in the form of driving scale and margin enhancement, enabling CPSI to deliver more value to our customers. Lastly, making key investments in adjacencies that enable CPSI to accelerate growth beyond our core. Get Real Health and our migration into the public cloud are two such examples. Finally, we intend to continue following a measured and disciplined capital allocation strategy. We aim to balance R&D investments to meet the evolving needs of our customers with selective M&A in strategic areas like TruCode and HRG previously, that added value to our solution set, enhancing our brand and creating scale. In summary, I'm incredibly energized and humbled to be a part of this great team and culture. I'm proud of what we've accomplished to date, but even more excited about the journey that lies ahead.
With that, I'll turn the call over to Matt for a review of our financial results.
Thanks Chris and thank you all for your continued interest in our evolving story. Today, I would like to comment on our bookings trends, review our third quarter results, and then conclude by addressing our outlook for the remainder of the year. With respect to bookings, total CPSI bookings of $20.5 million were down 30% versus the third quarter of 2021, and the main driver of that decline was acute care EHR bookings that fell by 48%. This wasn't entirely unexpected, as we forecasted bookings to be down relative to a tough comp in the year ago period, and we note that quarterly bookings and system sales are volatile by nature. Offsetting this, we are pleased that the momentum we are seeing in TruBridge sales continued in the third quarter.
TruBridge bookings were $11.5 million, while down sequentially off a very strong second quarter, our third quarter performance was still impressive amid a seasonally weak summer. We continue to build on the cross-sell opportunity within our CPSI customer base. We're encouraged that cross-sell bookings increased 30% sequentially and greater than 3.5 x those of the third quarter of 2021. To provide some more context, trailing 12-month cross-sell bookings were 28% higher than that of pre-pandemic levels, while net new bookings were 31% greater. These metrics are indicative of a highly satisfied and engaged customer base that has an appetite for additional value-added services from CPSI.
With respect to the third quarter results, total revenue of $82.8 million increased 18% year-over-year and benefited from our acquisition of HRG in March of this year. TruBridge revenue of $47.9 million increased 39% from the prior year quarter and experienced organic growth of 10%. The overall increase was driven primarily by the HRG acquisition as mentioned, as well as the organic expansion of our central business office or CBO service offering. GRH contributed a little over $1 million of revenue in the quarter. TruCode revenue contributed $3.5 million, and HRG revenue contributed $9.9 million in the quarter. These three business lines are currently included in TruBridge divisional results. Both TruBridge and HRG revenues accounted for the majority of the year-over-year growth in the third quarter.
In line with broader health system utilization trends, TruBridge experienced slightly softer volumes than forecasted, and two of our GRH opportunities are not materializing as rapidly as we anticipated, representing under $2 million of revenue impact. That said, TruBridge continues to fuel our growth and represents a significant margin expansion potential. System sales and support revenue of $35 million was relatively flat year-over-year. Breaking out system sales into its recurring and non-recurring components, recurring revenue increased low single digits, while project-based non-recurring revenues declined 18%. This pattern is consistent with our deliberate attempt to move away from a less predictable and volatile non-recurring revenue stream in favor of driving toward a business model with strong elements of predictable and highly visible recurring and SaaS revenue. Turning now to cost of sales.
Gross margin of 45.9% in the quarter represented a decrease of 440 basis points year-over-year, which can be attributed to two primary factors. First, the inclusion of HRG's lower margin services intensive revenue, which was acquired earlier this year. Second, the implementation delays that we experienced at two sites for GRH impacted the top line for that business unit, whose revenue comes at an incremental margin meaningfully higher than that of our corporate average. Moving down the income statement, operating expenses as a percentage of revenue were 39.9% in the quarter and compared favorably to last year at 43.9%.
G&A as a percentage of revenue decreased 400 basis points year-over-year as we saw an improvement in bad debt due to the collections environment continuing to strengthen as our customers emerged from COVID in a better financial position. EBITDA of $13.3 million increased 9% year-over-year and translated to an EBITDA margin of 16.1%, down 140 basis points versus the prior year quarter. This year-over-year margin compression was due to GRH's lower revenue, albeit a higher margin contribution, not being enough to offset the addition of HRG's services-intensive offering. CPSI generated cash flow from operations of $11.1 million during the quarter, which was an increase of nearly 8.5 x year-over-year.
Operating cash flow as a percentage of adjusted EBITDA on a trailing twelve-month basis improved from last quarter at 76%. Last quarter was impacted by integration-driven receivables, and as we work through those, we expect operating cash flow should return to a more normalized level of around 80%. Finally, and consistent with our capital deployment strategy that balances investment, M&A, and stock repurchases to drive shareholder value, we opportunistically took advantage of the depressed markets and stock price to repurchase $4 million of CPSI shares during the third quarter. Turning now to our outlook for the remainder of 2022, we are tracking solidly toward our top-line goals and are pleased to reiterate our revenue guidance of $320 million-$330 million for the full year.
With respect to EBITDA, I would like to call out that slower than expected pickup on patient engagement solutions, as well as the two GRH implementation delays, as mentioned earlier, not only impacted the third quarter, but will have a spillover effect through the end of the year. As such, we're now tracking to an EBITDA margin of 17%-17.5%, below the prior range we provided of 18.25%-19.25%. Importantly, this does not impact our long-term outlook, but rather is a function of some higher margin GRH revenue being delayed until 2023. To wrap up my comments, this quarter represents continued progress in setting the groundwork for steady, disciplined growth and profitability.
We're executing on our long-term strategy of driving growth while at the same time completing and integrating strategic acquisitions to provide value to our customers and shareholders. Thank you again for your interest in CPSI. With that, we'd like to open the call to questions. Operator?
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from George Hill with Deutsche Bank. Please proceed with your question.
Hi, it's Ole Matthiessen for George. Thanks for taking the question. We have been hearing a lot of discussions on some large vendors trying to hide prices in the market. Can you talk about the pricing environment, both for new businesses and renewals, considering the inflationary pressure and the pricing action taken by the large vendors? Thank you.
Yeah. Matthie, I just wanna clarify the question. Did you say hiding pricing and then wanting to understand what impact we're seeing from an inflation standpoint on new contracts and also renewals?
I was trying to say that some of the large vendors trying to increase price. What they do, they are trying to increase prices by at least 25%-50%.
Yeah. Hey Matthie. David Dye here, t hanks for the question. You know, that's not something that we've seen in our market from at least in the electronic health record market. Then on the TruBridge side as well, I would say that we've seen prices hold steady, if not slightly decreased, you know, as the competitive vendors and ourselves included, continue to offshore more to be more efficient.
Yeah. This is Matt, I'll hop in on the renewal side of that. You know, one of the things that we prided ourselves on, you know, over the years that CPSI has been in existence is, you know, being a long-term partner for our customers. Part of that's including in our contracts, you know, for recurring revenue streams, some language around auto renewals. While there are some levers in place for some, you know, inflationary adjusted increases there, in certain of our contracts, those are capped, you know, say at 3%-5%. We may not be able to recover all of the full, you know, I guess inflation now is somewhere north of 9% or north of 8%. There are measures we can take on the renewal side to reduce that burden.
Thank you, t hat's very helpful.
Our next question comes from Joy Zhang with SVB Securities. Please proceed with your question.
Hey everyone, t hanks for taking my question. My first question is on the Get Real Health delay side. I understand that you mentioned that it's a customer-driven event for both cases. Just wondering if you can provide any color on what's driving that kind of delay, whether that's something isolated to those specific customers, if it's two, and whether it's a read-through to a sort of broader trend that could be happening in your customer base? Thank you.
Yeah. Hey Joy, David here. Yeah, I'll comment on both the delays that both Chris and Matt referenced in their comments. The large domestic delay, which has now gone live, but in large part was due to integration issues with the EHR vendors on both the ambulatory and inpatient side, you know, with the health system. And that has now been resolved, and largely was not on our end. On the international opportunity, it had more to do with the delay and the go-to-market and marketing strategy and the timing of rolling that out, which, again, has now been done. Ended up being all total about six months behind schedule. Also, with the international opportunity was over in Asia Pacific, there was, you know, I would say COVID was a part of it as well.
Hey, Joy this is Chris, I'll add as well. I think it's important, you know, when you're thinking about the segments of business that with the patient engagement and Get Real Health.
Obviously, we're selling to the provider or to the organization, and then they're selling to the patient, for lack of a better term. From an adoption standpoint and revenue recognition, you know, the tail on that's gonna be a little bit longer. You know, as we get farther into the business, we'll have a little more visibility there, and also thinking about how we can take a more active role in the adoption for the patients, for their customers going forward.
Appreciate that color and definitely appreciate the COVID-related craziness in Asia Pacific. Following that, my next question probably is more for Matt. Wondering if you can give some more color on this. I don't know if you mentioned on the earlier prepared remarks, but you guys announced a partnership with i2i Population Health earlier, I think this month or earlier. Wondering, you know, Matt, if you can give any sort of color around, you know, sizing or future revenue contribution, whether that's embedded in this guidance, any color on, you know, what this partnership entails will be great?
Joy, I'll take a stab at that too. David again, I think, you know, incrementally into 2023, I think the opportunity from a revenue contribution standpoint is negligible, probably a couple $ million. It's a rev share agreement. I think long term it's more significant. You know, they're in. You know, there's several reasons why we announced the partnership. They were already in about 25 of our hospitals and in particular in several states that had announced and had begun to execute on, Medicaid, you know, value-based care pilot programs, in particular Colorado and Texas. We had worked with them and had a great partnership from an integration standpoint in sharing our APIs and being completely integrated with that product.
The next step obviously it just made sense from a partnership standpoint. We've had a couple of webinars and a couple more states since, and the uptake and the amount of follow-on demonstrations has been, I would say, phenomenally well-received. I do think it gives. I will also say this is and Chris touched on this in his commentary, and I've been with Chris on a lot of the touring that he's done around the country since he's been CEO and visiting with our customers. You know, they have a need for quality-based reporting and core measures reporting and our system can certainly handle that to some degree, but i2i Population Health can do from a best-of-breed solution is second to none. That's why we went about the partnership.
To add to that, I would also say it's just part of our plan as we're thinking about, you know, continuing to help these our customers and partners be viable financially. You know, they're doing the work already, and how can we help them get more credit for the work they're doing? Finding partners that can facilitate that through the programs with Medicaid and Medicare and even into the commercial payers makes good business sense for us being able to deliver that. Obviously, we have a broader scale and ability to get that through our customer base than i2i Population Health does one at a time.
Super helpful color, t hank you very much.
We have reached the end of our question and answer session. I would now like to turn the floor back over to Chris Fowler for closing comments.
Thank you Maria. Thank you all for joining the call today and thanks for your continued interest in CPSI. Have a great evening.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.