Computer Programs & Systems (CPSI) Q4 2021 Earnings Call Transcript

Computer Programs & Systems (CPSI -0.88%)
Q4 2021 Earnings Call
Feb 15, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the CPSI fourth quarter earnings conference call. [Operator instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dru Anderson.

Thank you, Dru. You may begin.

Dru Anderson -- Senior Vice President, Corporate Communications

Good afternoon and welcome to the CPSI fourth quarter and year-end 2021 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 turn the call over to Mr. Boyd Douglas, president and chief executive officer. Please go ahead, sir.

Boyd Douglas -- President and Chief Executive Officer

Thank you, Dru. Good afternoon, everyone, and thank you for joining us today. After my comments, I will hand the call over to Matt Chambless, our chief financial officer, who will provide additional color regarding our fourth quarter results. At the conclusion of our prepared comments, the two of us, along with David Dye, our chief growth officer; and Chris Fowler, our chief operating officer, will be available to take your questions.

2021 marks the completion of the first 12 months of our multiyear strategy to increase shareholder returns and achieve $80 million in adjusted EBITDA in 2024. Throughout the year, we focused on three equally important components of the plan: core growth, margin optimization, and tangible upside growth through digital innovation. While 2021 continued to present unprecedented challenges across the healthcare industry, resulting in labor shortages, delayed buying decisions, and operational disruptions, TruBridge had a strong performance in the fourth quarter, and the CPSI team executed very well against our set KPIs. These include: TruBridge cross-sells into our EHR client base, upmarket TruBridge wins, EHR customer retention, and margin expansion as we execute our cost optimization efforts.

Before I cover the KPIs related to our progress with the growth of the TruBridge business, I think it's worth noting that we reached a critical milestone in CPSI's life cycle. For the first time in our history, TruBridge quarterly revenues surpassed revenues from our EHR business. With TruBridge's growth profile, we expect TruBridge to make up the majority of our revenues for years to come, setting the tone for a transformational shift that should see us no longer viewed as merely a tried and true player in the mature EHR landscape, but a bona fide option in the growth area that is RCM solutions and services. First, an integral element of our growth strategy is to improve the execution of cross-selling TruBridge services into our acute and post-acute EHR basis.

Inherent in this cross-sell strategy is the maintenance of a robust EHR client base as they're the target audience of these efforts. I'm pleased to share that we exited 2021 with a 98% retention rate for our acute EHR clients, our highest mark since our acquisition of Healthland in early 2016. With that in mind, TruBridge cross-sell bookings, including our TruCode medical encoder sales of just over $4 million in the fourth quarter, were the highest this year and now stand at $12.8 million year to date. With the established sales relationships we have maintained with our client base and the total cross-sell market opportunity exceeding 400 million in annual revenues, our confidence remains steady in the target of $60 million in incremental annual TruBridge revenues through cross-sell efforts by the end of 2024.

Continuing with TruBridge performance, we have targeted $25 million in incremental annual TruBridge revenues from outside of our EHR base by the end of 2024. Year-to-date sales, including TruCode, were just over $7.4 million. And while the fourth quarter net new TruBridge sales were down compared to recent past quarters, we remain encouraged by generation of interest and the positive pipeline trends as a result of our sales and marketing focus upmarket. 2021 was the beginning of a journey of transformational change within our operations that enabled us to realize a $4.3 million annual run rate in cost savings as we exited 2021.

These cost savings set us up nicely to build on our momentum as we head into 2022, where we anticipate 7 to $9 million in annual run rate savings. With continued focus, through 2023, we expect to realize annual run rate cost savings of $11 million to $15 million as we exit 2023 and enter 2024. The execution of key initiatives such as offshoring, automation of core TruBridge services and the organizational realignment earlier in the year were important contributors to our transformation and to supporting our core growth efforts and increasing efficiencies. In 2021, our operational initiatives helped us to achieve an adjusted EBITDA of $52.7 million and raising EBITDA margins to nearly 19%, their highest level since 2015.

Over the next three years, we will continue to seek to optimize margins, further supporting our 2024 adjusted EBITDA target of $80 million. As we are all acutely aware, the COVID-19 pandemic has created strain across the healthcare market. With the burnout employees have felt, hospitals and other healthcare organizations around the country have struggled to staff their facilities as the omicron variant spread in the fourth quarter. We have seen firsthand the impact that the great resignation is having on hospitals and skilled nursing facilities.

The jump in staffing costs and the strain on the mental health of healthcare workers has created a stress on healthcare organizations that has made their ability to maintain safe staffing levels very difficult and even sometimes forcing them to cut back services. These dynamics have contributed to the rethinking of how, when, and where healthcare is delivered. These market priorities are the drivers behind our commitment to improving the healthcare experience for providers and consumers through automation as well as digital innovation, including our digital front door solutions from Get Real Health and the expansion of our RCM offerings to help improve the experience, satisfaction, and trust between consumers and their healthcare providers. Last quarter, we shared that our patient engagement business, Get Real Health, had been selected by a large U.S.-based healthcare system as their digital front door solution.

We are on track with implementing their digital front door and expect it to be live before the end of the first quarter of this year, which will connect into their non-CPSI ambulatory and inpatient EHRs, enabling 12.3 million patients to easily be involved in their own care and wellness. In addition, as we ended the year, our footprint in the Canadian patient engagement market continued to gain momentum as there are now more than 1.8 million digital front door licenses residing primarily in the Canadian provinces of Alberta and Saskatchewan. We expect to have 2 million licenses by the end of the second quarter of this year. With that, I would like to turn the call over to Matt for a deeper dive into our financial results.

Matt Chambless -- Chief Financial Officer

Thanks, Boyd, and good afternoon, everyone. On today's call, I'll provide a high-level overview of the quarter, including some additional detail on bookings performance, a brief walk through our fourth quarter financial results, and our outlook for 2022. Before we dive into the details, the fourth quarter showed somewhat mixed results. While bookings disappointed versus internal expectations after a superb third quarter, actual results on both the top and bottom lines continue to reflect TruBridge's operational excellence.

Organically, TruBridge revenues grew by 18% over the fourth quarter of 2020, with further inorganic growth coming from our acquisition of TruCode in May of 2021. TruCode continues to perform according to plan with a quarterly revenue contribution of $3.2 million absent purchase accounting adjustments and $1.6 million of incremental EBITDA. Full year contributions since the acquisition are $7.8 million in revenues absent purchase accounting adjustments and $3.9 million of EBITDA. On a pro forma basis, including pre-acquisition amounts, TruCode generated revenues of $13.4 million during 2021, along with EBITDA of $6 million.

Moving on to bookings. The explosive growth we saw in the third quarter set the bar really high. But unfortunately, not all of that momentum carried over into the fourth quarter. Total bookings were down 47% against last quarter's near-record performance and 27% below the fourth quarter of 2020.

System sales and support bookings were down 49% sequentially and 26% compared to the fourth quarter of 2020 due to a slow pace for net new acute care EHR decisions. You may recall that the third quarter's net new hospital EHR bookings were more than double our quarterly average from the past couple of years. While we weren't able to maintain that pace in the fourth quarter, net new hospital EHR bookings were still more than double the pace from the first half of 2021. A bright spot for our EHR bookings over the past 18 months or so has been the continued shift toward SaaS and away from the old perpetual license model.

Including add-on sales, SaaS or subscription arrangements made up 54% of the quarter's total EHR bookings. For the quarter and year to date, SaaS arrangements have made up 100% of our net new hospital EHR contract signings after averaging around 50% for 2019 and 2020. By steering more business toward SaaS offerings, we're increasing the prevalence of recurring revenues within our top line mix, leading to enhanced predictability for revenues and cash flows. TruBridge's $7.3 million of bookings were 44% of the third quarter's record pace and were 27% lower than the fourth quarter of 2020.

The third quarter of this year was a banner quarter for Get Real Health's patient engagement solutions, driving record bookings that bested our prior record by more than 20% and making for a particularly tough comp for the fourth quarter. Other than Get Real Health, bookings from outside our EHR base decreased by $4.1 million from the previous quarter and $3 million from the fourth quarter of 2020, a symptom of the growing pains we expect from this initiative as we continue to create scale with the net new business for TruBridge. Cross-sell bookings for TruBridge increased 44% sequentially to arrive at their highest levels of the year, but were 18% below the fourth quarter of 2020's amounts. Looking back at full year bookings.

The drought from the first half of 2021 set us considerably behind plan. While sales momentum improved in the second half, 2021's total system sales and support bookings of nearly $41 million were 16% below 2020 levels, while TruBridge's full year bookings of $29.3 million were 12% down year over year. While overall a down year for bookings, 2021 saw successful execution on our initiative to increase the SaaS mix within net new hospital EHR contracts and the blossoming of Get Real Health as a contender in the patient engagement arena with bookings increasing nearly 270% from 2020 levels. Turning to the financials.

A strong quarter for TruBridge and Get Real Health drove a 5.6% sequential revenue increase and worked in tandem with the recent addition of TruCode to lift the top line by nearly 11% over the fourth quarter of 2020. Recurring revenues increased nearly 7% sequentially and nearly 17% from the fourth quarter of 2020. Excluding the recent TruCode acquisition, organic recurring revenue growth was 11% over the fourth quarter of 2020. Recurring revenues made up 93% of total revenues for the past quarter, compared to 92% in the third quarter and 88% in the fourth quarter of 2020.

On the profitability front, the sequential $3.9 million revenue increase drove adjusted EBITDA and non-GAAP net income to increases over the previous quarter of 17% and 19%, respectively. Compared to the fourth quarter of 2020, declining nonrecurring revenues were a drag on margins, limiting the adjusted EBITDA increase to $2 million or 16% on the $7.2 million revenue gain, still at a healthy 28% incremental EBITDA margin. TruCode's contribution to EBITDA for the quarter was $1.6 million. So organic EBITDA growth over the fourth quarter of 2020 was limited to $400,000 due to the heavy margin impact of the $2.8 million decrease in overall nonrecurring revenues.

For the full year, total revenues of $280.6 million were just north of the midpoint of our guidance range of 275 million to $285 million, which we updated in May following the acquisition of TruCode. Annual revenues grew by $16.1 million or 6% as recurring revenue expansion of $31.2 million or 14% more than doubled the overall decrease in nonrecurring revenues of $15.1 million or nearly 40%. Organically, total revenues grew by $9.1 million or 3.4%, while organic recurring revenue growth was $23.1 million or 10.2%, compared to our expected long-term average organic recurring revenue growth range of 5% to 8%. This revenue growth, coupled with improved labor capitalization rates, drove adjusted EBITDA to a $9.3 million or 21% increase over 2020, with EBITDA margins improving nearly 240 basis points to 18.8% and toward the high end of our expected range of 18 to 19%, which we updated on the second quarter earnings call.

As a percentage of total revenues, recurring revenues increased from less than 86% in 2020 to 92% in 2021. Looking deeper at our segments. TruBridge revenues increased 12% sequentially behind a particularly strong period for Get Real Health's patient engagement solutions and continued momentum for our accounts receivable management service line, driving gross margins to expand 200 basis points to a record high of nearly 52%. Compared to the fourth quarter of 2020, TruBridge revenues increased by over 28%, while gross margins increased 70 basis points, with a $3.1 million contribution from TruCode being the largest driver of the revenue increase.

Organic revenue growth for TruBridge was $5.4 million or 18% compared to the fourth quarter of last year with Get Real Health and accounts receivable management driving the organic growth. Next, system sales and support revenues were relatively flat sequentially as the $1.3 million decrease in nonrecurring revenues slightly outpaced the $900,000 increase in recurring revenues, while the timing of certain third-party licenses brought margins down 330 basis points to 48% from 51% in the third quarter. Compared to the fourth quarter of 2020, overall system sales and support revenues decreased $1.4 million or 4% as the $2 million decrease in nonrecurring revenues outpaced the $600,000 increase in recurring revenues. Gross margins decreased to 48% from the fourth quarter of 2020's 52%.

We currently anticipate eight new client facilities going live with our thrive solution in the first quarter of 2020, and all are expected to go live in a cloud or SaaS environment. Moving on to operating expenses. Product development costs were flat sequentially and decreased $500,000 or 6% from the fourth quarter of 2020 due to increased labor capitalization. As mentioned on previous calls, earlier in 2021, we worked with external subject matter experts to adopt best practices for labor capitalization in an agile software development environment, resulting in higher labor capitalization rates that we feel better reflect the investments we've been making to bring incremental functionality and features to our EHR products.

Sales and marketing costs increased $1 million sequentially and $900,000 over the fourth quarter of 2020 due to increased spend related to our virtual user conference, increased sales travel and marketing program costs. General and administrative costs decreased $2.5 million from the third quarter mostly due to lower benefit costs as employee health claims normalized after a particularly tough third quarter and timing dynamics with our 401k match. G&A costs were down $0.5 million from the fourth quarter of 2020 as bad debt normalized from the fourth quarter of 2020's high levels and nonrecurring charges decrease. Closing out the income statement.

Our effective tax rate for the quarter decreased to 23%, compared to 28% in the third quarter, and 43% in the fourth quarter of 2020. This brings our full year effective tax rate to 20%. From a cash flow standpoint, operating cash flows of $13.3 million rebounded as expected from last quarter's timing-driven, nearly five-year low of $1.3 million. The fourth quarter strength in operating cash flows brought annual amounts to $47.7 million or 91% of adjusted EBITDA over that time frame.

This strength in operating cash flows has allowed CPSI to limit our year-over-year increase in bank debt to $22 million, despite funding the entire $61 million purchase price for TruCode out of revolver proceeds. The decrease in bank debt and the TruCode acquisition make for a nice segue into capital allocation where our strategy prioritizes flexibility to have CPSI optimally positioned to opportunistically deploy capital through a combination of M&A, internal investment, and value-based share repurchases. With our recent acquisition of TruCode, leverage currently sits at 2.1 times, well below our target of 2.5 times EBITDA, ensuring that we remain well positioned to respond quickly to other opportunities that may arise. We continue to groom our pipeline of potential M&A opportunities and feel there's tremendous opportunity to enhance and supplement TruBridge service offerings with reasonably valued tuck-ins.

For this reason, our most significant use of capital in the fourth quarter was to reduce bank debt to free up dry powder for future M&A. Capital allocation decisions generally involve some trade-offs. And as a result, share repurchases were minimal for the quarter. However, we'd like to remind investors the cadence and volume of our repurchases have been and will continue to be influenced by a number of factors, certainly considering value but also considering capital needs and availability, potential M&A, cost of replacement capital, and other capital allocation alternatives.

These alternatives and priorities and capital allocation are ever evolving. So a lack of repurchase activity in a given quarter may not reflect our views on the intrinsic value of our stock. To close out our prepared remarks, we're proud of the progress we've made during 2021, enhancing the top line with a continued focus on growing recurring revenue sources and driving margin expansion as we execute on our cost optimization efforts. Top line growth is expected to continue into 2022 as we execute on TruBridge's opportunities for growth in both the cross-sell and net new markets with incremental margin improvement coming from our joint initiatives of offshoring and automation.

With these winds at our backs, we enter 2022 with a number of exciting initiatives, including the migration of our EHR applications and underlying customer data to the public cloud, and endeavor we'll provide more color on as the year progresses. Our long-term expectation for average annual organic recurring revenue growth remain unchanged at 5% to 8% driven by continued TruBridge growth and the increased prevalence of SaaS EHR arrangements. As for 2022, we anticipate total revenues of $288 million to $298 million, with the midpoint of this range representing roughly 4.5% revenue growth over 2021 with growth from continued organic and inorganic expansion of recurring revenue sources hampered by the continued decline in nonrecurring revenues. This top line growth helps drive certain internal investments, such as our public cloud initiative while also allowing for margin preservation.

As a result, we envision 2022 adjusted EBITDA margins to land in the range of 18.25% to 19.25% with the midpoint of this range in lockstep with 2021's adjusted EBITDA margin. In terms of cash generation, we expect 2022 operating cash flows to represent roughly 80% to 85% of adjusted EBITDA. One year ago, we laid out our vision of leveraging TruBridge as a growth agent and focusing margin optimization initiatives around organizational structure, increased utilization of our offshore networks and innovation through automation. This vision was with a clear target of achieving $80 million of adjusted EBITDA by 2024, eventually maintaining EBITDA margins in excess of 20%.

As we reflect back on the challenges and opportunities that 2021 presented, we're pleased with the progress we've made to date around those goals and look forward to improved execution during 2022 as we continue on our path of innovation and transformation. And with that, we'd like to open up the line for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions]. Our first question comes from Jeff Garro with Piper Sandler. Please proceed with your question.

Jeff Garro -- Piper Sandler -- Analyst

Hi. Good afternoon, and thanks for taking the question. Start with a few on the demand side. And recognize the milestone of TruBridge hitting a majority of revenue in the quarter.

I know that's been a goal for some time. So nice to see that achieved. But on the demand side for TruBridge, if we exclude TruCode and Get Real Health, the way I see it, TruBridge bookings are down for both FY '20 and FY '19, but I certainly heard a lot of optimism on the pipeline. So I was hoping that you can reflect on TruBridge, kind of that core TruBridge RFP volume and win rate for the year and then how you would expect those to trend in FY '22.

David Dye -- Chief Growth Officer

David Dye here. We are very confident in the pipeline with TruBridge stand-alone, in other words, without Get Real Health and without TruCode, pipeline entering 2022, was at an all-time high. We have certainly increased our marketing efforts there. It is legitimate to blame COVID for at least some of the lack of execution in 2021 in terms of delaying decisions.

Our win rate was consistent with what it had been in previous years. So you combine those things with where we see the pipeline right now, the activity that we're seeing, the fact that we're -- generally speaking, there are still a few exceptions. We are able now to: one, participate in conferences, which have done a great deal for us in generating leads in the past, in particular, in the up market; and two, to travel on site and meet with the business office managers and the CFOs, etc., face-to-face. We're particularly confident as we enter 2022 from a TruBridge bookings standpoint.

Jeff Garro -- Piper Sandler -- Analyst

That helps. And then maybe to hit the other segment on the demand side. Acute EHR go-live, down year over year. Some of that seems to be maybe a disruption in the fourth quarter.

I know you had expected that then and were a little bit short of that. I imagine omicron might have started to factor in there. But just if we look bigger picture demand on the acute EHR side, what's an appropriate go-forward expectation for annual go-lives?

David Dye -- Chief Growth Officer

Yes. Approximately 20 per year, Jeff, in terms of net new acute go-lives per year.

Jeff Garro -- Piper Sandler -- Analyst

Got it. That makes sense. And one more for me, a bigger picture question. Interesting to hear the remarks on the move to the public cloud.

So a few things there. Curious how you expect to avoid any disruption to clients. And then if you could give some broad remarks on the potential benefits, assuming some financial to CPSI. And then the benefits, whether they're technical or financial to your clients as well.

Chris Fowler -- Chief Operating Officer

Can you ask that last part again, Jeff?

Jeff Garro -- Piper Sandler -- Analyst

Yes. Just on the pending migration to the public cloud, how you're going to avoid disruption to clients. And then what benefits are -- from that will accrue to CPSI as well as to your clients?

Chris Fowler -- Chief Operating Officer

OK. Thanks for that. This is Chris. So the strategy of how we're moving into the cloud is fairly similar to the approach we've taken with application development over the last several years as we've developed our applications into the cloud, again, over the last few years, our notes, our patient data console.

And so the ability for us to migrate app at a time and allow our customers to be in multiple environments should minimize that disruption into where it's a big fork over from an on-prem or from a private cloud into the public cloud. So being very systematic and thoughtful about that approach, making sure from a technical standpoint that the scalability is there and making sure that we've delivered that prior to pushing too much into the cloud. As far as the go-forward benefits, obviously, it allows us to have our data in a position to where we can exploit the technology that is becoming available more rapidly and allow us to let our customers get the benefit of that. So as we're seeing the trends, whether it be from a telehealth standpoint, whether it be some clinical application that's out there that we're not focused on developing internally, allows us to bring that to our customers faster and then also as we think about it from a competitive standpoint, too.

Boyd Douglas -- President and Chief Executive Officer

And I'll just add on to that. From a technical point of view, it's going to relieve us. For close to 40 years now, we've done all of the technical work ourselves from operating system level on up. And by moving to the cloud, a lot of those lower-level operations can be turned over to the third party, and then we can concentrate on what it is that we do best, which is write applications for the end users.

So that's certainly a technical benefit for us.

David Dye -- Chief Growth Officer

And, Jeff, one more addition here. As we innovate and as other folks out there innovate, whether it's on the front door or in the EHR space or from patient-facing applications, etc., our -- as we're in the public -- our EHR system sits in the public cloud, our customers are going to be able to take advantage of that innovation much more easily than they've been able to in the past.

Jeff Garro -- Piper Sandler -- Analyst

Thanks. I appreciate all the comments. I'll jump back in the queue.

Operator

Thank you. Our next question is from George Hill with Deutsche Bank. Please proceed with your question.

George Hill -- Deutsche Bank -- Analyst

Good afternoon, guys. Thanks for taking the question. I guess, Boyd and Dave, I guess, looking forward to 2022, when you talk about the outlook for TruBridge, can you kind of parse out how much you're thinking about the utilization recovery kind of driving procedure volumes and billing versus kind of new footprints and new customer wins?

Chris Fowler -- Chief Operating Officer

This is Chris. I would say if you look at the back half of 2021, you saw a pretty nice rebound from a utilization standpoint. We're seeing that stabilize. Maybe a still slight uptick in that.

As we are, like everybody else is, kind of watching how COVID continues to impact, knock on wood, we haven't seen any negative impact to the utilization on the elective side. Obviously, there's been a bit of a bolus as we think about outpatient utilization for the care for COVID. So I would say from an existing customer same-store growth, we're probably looking at that being neutral to maybe slightly positive. So from a growth standpoint, really pressing on the new business aspect.

George Hill -- Deutsche Bank -- Analyst

OK. That's helpful. And then I guess if I could just follow up with one on labor. It seems to be a topic everybody is talking about on everybody's earnings call.

I guess, clearly, your clients are seeing labor as a pressure point to increase and drive partnership to TruBridge. I guess, could you talk about what you guys are seeing from a labor aspect and if it's impacting your ability to retain or like declines have confident kind of making the transition given the labor challenges everywhere?

Chris Fowler -- Chief Operating Officer

Yes. Obviously, we're dealing with the same thing everybody else is. Luckily, for us, I guess, you would say, we were moving pretty fast on the offshore and also automation fronts. And so that was a lever we were able to pull harder on to accelerate some opportunities there to be able to alleviate some of that pressure.

Obviously, as we continue to do that, provides scale for us with the staff that we have, with that talented staff that we have internally and allows them to do more for more customers. And so while -- having a CBO model allows us to be able to manage that problem probably easier than any one hospital can do so. So for us, we're thinking of it as an opportunity to drive growth, definitely.

George Hill -- Deutsche Bank -- Analyst

OK. And maybe I'll sneak in one last quick one. One of your competitors, which had been working on penetrating the small hospital space, caught themselves in a transaction with a big multi-vertical technology vendor. I know it's early, but any early observations to note in the competitive environment about customers being more willing to look at CPSI or maybe some of their customers in the small hospital space that worry about the acquisition might create opportunities for you guys?

David Dye -- Chief Growth Officer

Well, we're certainly hopeful that it does create opportunity, George. I do think, just to be honest, it's too early to say that we've seen a change since that's been announced in terms of the sales cycle or the demand or who we're competing against. I think probably three months from now, we'll be in a better position, and certainly six months, a much better position to answer that question. Obviously, who you're referring to here has always been a credible competitor, and we expect that will continue regardless of the acquisition.

They, obviously -- it's going to create some interesting challenges for them. They've got to change gears and navigate a cloud platform strategy, etc. So we'll be obviously keenly interested in how that transpires, but we'll probably have more color in three months.

George Hill -- Deutsche Bank -- Analyst

I appreciate the color, guys. Thank you.

Operator

Thank you. Our next question comes from Donald Hooker with KeyBanc. Please proceed with your question.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Great. I was going to ask about George's question as well. But maybe can you just expand? I mean the retention rate looks really strong. Can you talk about the competitive environment kind of beyond maybe Cerner and some of the other challengers in the field? It sounds like you're doing really well with the retention.

David Dye -- Chief Growth Officer

Yes. Thanks, Donald. Not a whole lot of change there, frankly. I mean from a competitive environment standpoint, we see and are given opportunities in particular, when the -- in terms of the big three when hospitals are looking for perhaps something that's a little bit lower from a cost standpoint and certainly with our new cloud solution.

And as you've seen, we've been 100% SaaS now for more than a year. That's something that we can reduce their overall cost of ownership from an HR standpoint. So that's where we see opportunities there. And then beyond that is the same, what we call the vulnerable vendors that are out there, the ones that have anywhere from 40 to 80 customers that, as a result of the 21st century CARES Act and the upcoming legislation, are just -- the fact that they want a more robust clinical EHR solution, that brings us to the market.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

OK. And then in terms of the bookings, you mentioned it was a little bit behind plan in the quarter. I don't know if you're willing to do this, but what -- can you share with us what sort of is planned? You laid out an $80 million EBITDA target for '24. Kind of what are you thinking in terms of sort of bookings that you need to get there in terms of cross-selling and whatnot? What is the right quarterly bookings for CPSI, generally?

Matt Chambless -- Chief Financial Officer

Yes. So, Don, we'd rather not guide on quarterly bookings or annual bookings. We haven't done that in the past. And part of the reason for that is that bookings have some complexities involved in them and not all bookings are created equal.

So there are many paths to get to a certain number, but not all of those paths are as high quality as the others. So we want to sit on the sidelines there and not provide a quantitative number on bookings.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

OK. That's certainly fair. Thank you.

Operator

Thank you. Our next question is from Joy Zhang with SVB Leerink. Please proceed with your question.

Joy Zhang -- SVB Leerink -- Analyst

Thank you for taking my question. I'm glad to hear that there is greater uptake of Get Real Health in the Canadian market. So I was wondering if you can provide more color around what's driving this uptick in sales. And is it from greater cross-selling into the provincial governments? Or is it from more sign-ups and overall greater engagement within the population?

David Dye -- Chief Growth Officer

Yes. This simply is just more cross-selling into the existing spaces currently in Alberta and Saskatchewan. COVID has been a positive there in terms of the population in those provinces wanting to have the application in order to view test results, vaccination proof, etc. So -- but we do have opportunities through our relationship in Canada with TELUS Health and the other provinces, there are additional opportunities.

But right now, the growth that you're seeing is from the existing relationships.

Joy Zhang -- SVB Leerink -- Analyst

That's very helpful. And as a follow-up, I wanted to go back to your comment on freeing up dry powder for M&A. Wondering if you can give us an update on your go-forward M&A philosophy. And assuming that M&A will be in TruBridge, would you be more oriented to smaller technology tuck-ins? Or are you looking at more of a roll-up strategy in this space?

Chris Fowler -- Chief Operating Officer

Yes. I'll start, Joy, and then Matt may tag in behind me. Obviously, that's a great question. It's something that we debate and discuss internally back and forth.

Obviously, if you look at the last two acquisitions with Get Real Health and then TruCode, a little bit of both of those flavors, one kind of more of a technology play, one is more of down the fairway, as you would say, as we think about how we operationalize that. I think we're kind of making sure that we keep those doors open. I would say from a technology standpoint, we're very focused on making sure we're focused on the gaps that we may be -- or I'd say, gaps or opportunities where we can expand the service that we provide as we think about the full business office outsourcing for our customers and then also, at the same time, looking for opportunities to provide scale to those services we provide. So I would say it's equal on either side of how we're thinking about that.

I would definitely say that the vast majority of the focus is on TruBridge.

Joy Zhang -- SVB Leerink -- Analyst

That's helpful. Thank you.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to management for any closing remarks.

Boyd Douglas -- President and Chief Executive Officer

Great. I just want to thank everyone for being on the call today. Clearly, we're excited about how we operated in the fourth quarter. And we're looking forward to 2022 and reaching all of our long-term goals that we have set.

So we appreciate your interest in CPSI, and we'll talk to you next quarter. Thank you.

Operator

[Operator signoff]

Duration: 42 minutes

Call participants:

Dru Anderson -- Senior Vice President, Corporate Communications

Boyd Douglas -- President and Chief Executive Officer

Matt Chambless -- Chief Financial Officer

Jeff Garro -- Piper Sandler -- Analyst

David Dye -- Chief Growth Officer

Chris Fowler -- Chief Operating Officer

George Hill -- Deutsche Bank -- Analyst

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Joy Zhang -- SVB Leerink -- Analyst

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