CPSI announces the acquisition of Healthcare Resource Group, Inc.
Business Combination Leverages Strength of Leading Revenue Cycle Management Service Providers
Highlights of the Healthcare Resource Group, Inc. transaction:
Revenue and adjusted EBITDA of $33.8 million and $3.6 million, respectively, for 2021
2022 forecasted revenue and adjusted EBITDA of $40.1 million and $5.2 million, respectively (pre-synergies)
Synergies to provide an additional estimated margin improvement of $2.6 million to the 2022 exit rate cost structure for the combined company
91% of revenue is recurring
77 customers representing medium to large hospitals in 28 states
MOBILE, Alabama, March 01, 2022–(BUSINESS WIRE)–CPSI (NASDAQ: CPSI), a healthcare solutions company, today announced the acquisition of Healthcare Resource Group, Inc. (“HRG”). Based in Spokane, Washington, HRG is a leading provider of customized revenue cycle management (“RCM”) solutions and consulting services that enable hospitals and clinics to improve efficiency, profitability and patient satisfaction. Founded in 1994, HRG has approximately 400 employees, serving 77 healthcare clients, primarily located in the Pacific Northwest and Southwest, including academic medical centers, tribal organizations and independent hospitals over of 200 beds.
The acquisition was completed pursuant to a definitive purchase agreement signed on March 1, 2022 and was financed with a combination of cash on hand and additional borrowing capacity under CPSI’s revolving credit facility.
The combination of HRG and TruBridge, a subsidiary of CPSI, will more effectively meet the growing demand from healthcare organizations to outsource revenue cycle operations. Healthcare providers face myriad challenges in managing billing and payment complexities, as well as recruiting and retaining qualified RCM staff. With a team of professional and experienced consultants, HRG joins the TruBridge team with a shared commitment to meet this critical demand and improve the financial performance of healthcare organizations of all sizes.
Boyd Douglas, President and CEO of CPSI, said, “We are pleased to announce the merger of these two leading RCM service providers. Their Peer Reviewed by HFMA® RCM solutions provide us with significant opportunities to leverage our combined scale and expand our In addition to the TruBridge RCM product suite, we are excited about the opportunity to sell other solutions to HRG customers, including TruCode Encoder, our medical coding encoder solution. We will also leverage our gains in artificial intelligence and offshoring to create additional efficiencies for HRG.”
“HRG is a great strategic fit for CPSI, and this transaction supports our goal of making accretive acquisitions that complement our growth strategy with a stable customer base and a high mix of recurring revenue,” said Matt Chambless, CPSI’s Chief Financial Officer. “The scalability of our combined RCM solutions and efficiencies will help expand margins. We also expect to benefit from additional operational synergies as we integrate HRG into the CPSI family.”
Steven McCoy, Managing Director of HRG, added, “We look forward to joining CPSI in capitalizing on the expected continued growth opportunity in the healthcare RCM outsourcing market. CPSI and TruBridge have a long and favorable reputation in the healthcare marketplace, and we share a common culture of working closely with our customers to deliver measurable results and exceed expectations. We believe our combined companies will provide unique opportunities to leverage our collective expertise with proven solutions and exceptional service that will benefit more healthcare organizations.
CPSI will host a conference call and live webcast to discuss the details of this acquisition on Wednesday, March 2, 2022 at 9:00 a.m. Eastern Time. The number to call for the interactive teleconference is 877-407-0890. To listen to the live webcast or access the 30-day online replay, visit the Company’s website, www.cpsi.com.
CPSI’s legal advisor in this transaction was Maynard, Cooper & Gale, PC and Brentwood Capital Advisors LLC served as exclusive financial advisor to HRG.
CPSI is a leading provider of healthcare solutions and services for community hospitals, their clinics and post-acute care facilities. Founded in 1979, CPSI is the parent company of five companies – Evident, LLC, American HealthTech, Inc., TruBridge, LLC, iNetXperts, Corp. d/b/a Get Real Health and TruCode LLC. Our combined companies are focused on improving the health of the communities we serve, connecting communities for a better patient care experience, and improving our customers’ financial operations. Evident provides comprehensive EHR solutions to community hospitals and their affiliated clinics. American HealthTech is one of the nation’s largest providers of EHR solutions and services for post-acute care facilities. TruBridge is focused on providing commercial, consulting and managed IT services, as well as its complete RCM solution, for all care environments. Get Real Health focuses on solutions to improve patient engagement for individuals and healthcare providers. TruCode provides medical coding software that enables complete and accurate code assignment for optimal reimbursement. For more information, visit www.cpsi.com.
This press release 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 terminology and words forward-looking such as “expects”, “anticipates”, “estimates”, “believes”, “predicts”, “intends”, “projects”, “potential”, “may”, “continues”, “should”, “will” and similar words. meaning. Without limiting the generality of the foregoing statement, all statements in this press release regarding business prospects, expected profitability, revenues, expenses, leverage or other elements of future financial performance, and potential growth of HRG’s or CPSI’s products or services, and other statements about HRG and CPSI that are not historical facts are forward-looking statements. We caution investors that these forward-looking statements are only predictions reflecting CPSI’s best judgment based on information currently available and are not guarantees of future performance. Certain risks, uncertainties and other factors could cause CPSI’s actual results, performance or plans regarding HRG to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These factors may include: the risks associated with business acquisition transactions, such as the risk that HRG will not be successfully integrated, that such integration will be more difficult, longer or more costly than expected or that the benefits expected from the acquisition do not materialize; any unforeseen costs, liabilities, charges or expenses resulting from the acquisition of HRG; risks relating to future opportunities and plans for CPSI and HRG after the acquisition, including uncertainty about the financial performance and expected results of CPSI after closing of the acquisition; any disruptions to the acquisition, making it more difficult to conduct business as usual or maintain relationships with customers, employees or suppliers; inability to retain key personnel; and the possibility that if CPSI does not realize the perceived benefits of the Acquisition as quickly or as expected by financial analysts or investors, the market price of CPSI’s common stock could decline; and other risk factors described from time to time in our public announcements 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 described herein represents our outlook only as of that date, and we undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this press release.
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