Benzinga | May 12, 2021 04:17PM EDT

CPSI Announces Acquisition Of Medical Encoder Solutions Provider, TruCode LLC ; Terms Not Disclosed

Acquisition Supports Core Growth Strategy, Expands Complementary Capabilities Across Revenue Cycle Management Solution Offering

TruCode LLC Transaction Highlights:

* 2020 revenues and adjusted EBITDA of $12.5 million and $5.9 million, respectively

* 2021 expected revenues and adjusted EBITDA of $13.3M and $6.3 million, respectively

* 99% of revenues are recurring

* 96.4% customer retention (3-year average)

* 5-year revenue CAGR of 8%

* EBITDA margins of 45%+



MOBILE, Ala.--(BUSINESS WIRE)-- CPSI (NASDAQ:CPSI), a community healthcare solutions company, today announced that it has acquired TruCode LLC ("TruCode"). TruCode is a leading provider of software solutions that enable health providers, consultants, and payors to code more accurately and efficiently and help improve revenue cycle performance. The acquisition was consummated pursuant to a definitive purchase agreement signed on May 12, 2021 and was funded by a combination of cash on hand and additional borrowing capacity under CPSI's revolving credit facility.

Based in Alpharetta, Georgia, TruCode provides configurable, knowledge-based software that gives coders, CDI specialists and auditors the flexibility to code according to their knowledge, preferences and experience. The cloud-based medical coding solution will be bundled with the TruBridge solutions and services to enhance revenue cycle performance for healthcare organizations of all sizes.

Boyd Douglas, president and chief executive officer of CPSI, stated, "Today's acquisition of TruCode is a perfect example of the disciplined approach to M&A we have signaled as part of our multi-pronged capital allocation strategy. TruCode's solutions are a great product fit and complement our existing suite of TruBridge services and solutions, which help eliminate the friction of inefficiency from the hospital revenue cycle. In addition to the cross-sales opportunities within our acute and post-acute customer base, we will also target the white space within the TruBridge and TruCode base to drive additional value for these customers. Greater than 30% of TruCode's revenue is driven by its channel partner program which targets larger hospital and health system customers, representing scalability and real competitive value in that market."

"From a financial standpoint, TruCode's 99% recurring revenue model, customer retention rates in excess of 95%, and Adjusted EBITDA margins in excess of 45% support our strategy of growing a more diverse recurring revenue base and driving margin expansion," stated Matt Chambless, chief financial officer of CPSI. "The impressive margins that TruCode brings to the CPSI family of companies is expected to expand our consolidated EBITDA margins by roughly 130 bps, with the potential for another $1.0 million of adjusted EBITDA from capitalization of software development costs."

Mike Mulligan, co-founder and managing partner of TruCode, said, "CPSI has been a strategic partner of TruCode for the last five years, and together we have achieved great success to the benefit of our mutual customers. Now, with this evolution of our partnership, we're excited about the new value our combined organizations will deliver to our customers, the marketplace and our teams."

Douglas concluded, "We are pleased to welcome TruCode to the CPSI family of companies. This acquisition strengthens our joint commitment to improving the financial health of our combined community hospital, clinic and post-acute customers and other healthcare organizations globally."

CPSI's legal advisor in this transaction was Maynard, Cooper & Gale, P.C. and Mazars USA served as due diligence provider for CPSI. Brentwood Capital Advisors LLC served as exclusive financial advisor to TruCode.

CPSI will hold a conference call and live webcast to discuss the details of this acquisition on Thursday, May 13, 2021, at 9:00 a.m. Central Time, 10:00 a.m. Eastern Time. The number to call for the interactive teleconference is 1-877-407-0890. To listen to the live webcast or access the 30-day online replay, visit the Company's website, www.cpsi.com.