Computer Programs & Systems (CPSI) Q2 2022 Earnings Call Transcript

Computer Programs & Systems (CPSI -2.53%)
Q2 2022 Earnings Call
Aug 02, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to CPSI second quarter 2022 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 second quarter 2022 earnings conference call. During this 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.

Chris Fowler -- President and Chief Executive Officer

Thanks, Dru. Good afternoon, everyone, and thank you for joining us on the call. I'm on my 33rd day in my new role as CEO of CPSI, and I'm thrilled to be with you today to discuss our recent performance and future opportunities. Following my comments, Matt will provide a financial update after which the two of us, along with David, look forward to taking your questions.

As you likely saw in our release this afternoon, we had an excellent second quarter, highlighted by revenue and bookings growth. And most importantly, we remain ahead of pace to achieve our previously stated objective of $80 million in EBITDA in 2024. With TruBridge leading the way and representing almost 60% of total CPSI revenue in the quarter, our journey to transform CPSI into a cloud-based digital platform of healthcare services and solutions continues on course. Noticeably, led by both organic TruBridge growth and outperformance of our recent acquisition, HRG, recurring revenue grew 21% year over year and comprised 92% of total CPSI revenue.

TruBridge also achieved outstanding bookings results in the quarter with organic year over year growth of over 50% and incredibly almost 150% when including TruCode and HRG. We are equally excited about our execution during the quarter of TruBridge cross-sells into the Evident Acute Care EHR base which was a near record $7.7 million. TruBridge sales into the large hospital and healthcare system market were also substantially up. And finally, on the bookings highlights, Record TruCode bookings were bolstered by a $1.2 million deal in the enterprise hospital and healthcare systems segment.

We look forward to sharing more details on this contract in the very near future. Operationally, we also had noteworthy high points during the quarter. Our Get Real Health, digital front door solution had a successful go-live in the ambulatory environment of Steward Medical Group. Steward is a domestic health system that includes over 450 clinics in 11 states, and we're also currently on schedule to roll out our solution to their more than 30 acute care facilities in the first half of the fourth quarter.

This implementation showcases our ability to deliver virtual visits, self-registration, appointment scheduling, price transparency and bill pay, patient provider communications, accessible care records for the patient and their loved ones, and several additional facets of a complete digital front door solution. And while Get Real Health has previously had significant success internationally, this domestic installation creates opportunity for us to go after similar prospects in the U.S., and we are in the process of enabling ourselves to have to do just that. Specific to our revenue cycle management and medical record coding services, our hospital and post-acute customers are under considerable pressure from the labor shortage and the rising costs for these skills. While we're not immune to the same challenges, our scale, financial strength, partnerships, leverage of AI and access to in-shore and offshore markets allow us to meet the needs of our client and often compress time frames.

During the quarter, we significantly increased our internal and offshore resources and therefore, decreased the lag time from contract execution to service go live. And this investment will enable us to better meet our customers' short- and long-term needs as the labor crisis likely continues for the foreseeable future. As stated in previous calls, our existing customer bases have over $400 million of TruBridge revenue opportunity. As such, our ability to satisfy and retain is paramount to our continued growth.

The continued adoption of our new cloud-based applications will be central to the success of our retention efforts. With that said, we're very pleased that we are above our goal for both Evident and TruBridge related to retention. I would like to spend some time each quarter on these calls to provide context, updates and performance against CPSI's strategic vision. For our next call in early November, I will have completed my first 100 days as CEO, and I look forward to sharing more details and updates to our long-term vision at that time.

However, I will call out three important items that are already in focus. First, is to identify opportunities for revenue growth acceleration through calculated internal investment in existing products and services and thoughtful M&A. Second, and of course, complementary to the first is to thoroughly and regularly evaluate our capital allocation strategy to ensure that we fully take advantage of our strong balance sheet and cash flows in order to provide maximum shareholder return. And finally, to aggressively accelerate the work already in progress to build and maintain an always evolving culture of innovation and digital transformation at CPSI.

After 22 years of working at CPSI in various positions, my first month as CEO has been indescribably challenging, rewarding and enjoyable. In meetings with leaders of our hospital and post-acute customers, it's clear they continue to work daily in the stress of endless regulatory, economic and competitive pressures and that they need a partner that can provide a platform of services and solutions for their operations, clinicians and patients so that they can solely focus on providing the highest quality of patient care. We will be that partner. And in face-to-face conversations across the country with the employees of CPSI, I've been consistently amazed at the talented team members I encounter, and their determination to meet and exceed our customers' needs.

We're going to invest substantially in our team, both existing and new, by creating and providing opportunities for continuous learning and personal growth. Needless to say, I'm proud to be at the helm, and I will work enthusiastically alongside them to ensure that our customers and shareholders reap the rewards of our efforts. With that, I'll turn the call over to Matt.

Matt Chambless -- Chief Financial Officer

Thanks, Chris, and good afternoon, everyone. On today's call, I'll provide a high-level overview of the quarter, including some additional detail on book performance and a brief walk through our second quarter financial results. Our growth strategy centers on the harvesting of organic growth opportunities through continued TruBridge expansion, further expanding scale and deepening our offering set through disciplined acquisitions and enhancing revenue and cash flow stability by embracing the transition to SaaS for our EHR customers. Successful across-the-board execution on all three of these fronts has driven total revenues and recurring revenues to never before seen levels for CPSI, while the second quarter's unprecedented TruBridge bookings and strong remaining pipeline indicate this record-setting pace isn't likely to slow anytime soon.

While the story around our top line growth is straightforward, the method by which that growth converts to improved profitability metrics is a more nuanced discussion. Year-over-year EBITDA expansion was constrained during the second quarter by three primary factors, license mix dynamics, intentional investments in sales, and marketing efforts and backlog in terms of health claim severity. First, headwinds related to license mix materialized in the form of decreased, nonrecurring revenues as we continue to detach ourselves from the highly volatile, higher-margin revenue sources. EHR nonrecurring revenues were down $1.4 million from the second quarter of 2021.

Second, the past quarter saw a significant expansion in our sales and marketing costs, increasing $2.4 million from the second quarter of 2021, excluding the impact of M&A. This includes almost $1 million related to our National Client Conference held in person this year for the first time since the onset of the pandemic. This increased investment is necessary to capitalize on the TruBridge growth opportunity and to maintain our recent momentum in bookings. Lastly, the past quarter saw a severe uptick in high-cost employee health claims causing total health claims cost to nearly double, increasing $2 million from the second quarter of 2021, excluding the impact of M&A.

There's no discernible trend or pattern in this flood of high-cost claimants, and we don't expect this level of cost on a normalized go-forward basis. Looking forward on each of these three distinct headwinds, EHR license mix pressures should naturally ease as 2022 comes to a close. Sales and marketing costs should normalize from seasonally high levels in the past quarter, and we don't reasonably expect health claims to continue at this elevated level going forward. Pairing our impressive top line gains with near-term normalization for these cost items, we're well-positioned for future growth in adjusted EBITDA.

Specifically for the third quarter, we expect to see continued momentum in revenue growth that will translate into EBITDA gains. However, EBITDA expansion will be limited as that revenue growth is expected to come from lower margin service revenues. Although we expect some SG&A costs to alleviate in the third quarter, current expectations around product development, labor capitalization will offset much of the reduced SG&A costs. Moving on to the past quarter's results.

88% of the revenue growth over the second quarter of 2021 came from our recent acquisitions of TruCode and HRG. Consolidated adjusted EBITDA decreased $1.1 million over the same time frame despite TruCode and HRG contributing a combined $2.8 million increase in adjusted EBITDA. The second quarter was the first period to include a full quarter's activity from our recent acquisition of HRG, which closed on March 1 of this year. Revenues for HRG totaled $10.8 million for the quarter and $14.6 million since the date of acquisition in early March, with adjusted EBITDA of $1.8 million for the quarter and $2.4 million for the year-to-date.

On a pro forma basis, year-to-date revenues of nearly $21 million and adjusted EBITDA of $3 million have HRG outperforming our initial expectations of $40 million of annual revenue and $5.2 million of annual adjusted EBITDA stated in our initial announcement release. Synergies are also ahead of pace as we've now identified total annual run rate cost synergies of more than $3 million compared to our initial expectations of $2.6 million. Although we'd actioned more than half of those items by the end of the second quarter, we estimate the total expense impact to the second quarter to be less than $300,000. Revenues for TruCode acquired in May 2021 totaled $3.3 million for the quarter and $6.7 million year-to-date absent purchase accounting adjustments, converting to adjusted EBITDA of $1.6 million for the quarter and $3.5 million year-to-date.

Comparatively, TruCode contributed just $1.6 million of revenues and $0.6 million of adjusted EBITDA to both the quarterly and year-to-date results from a year ago. Expanding on Chris' earlier comments on bookings, the second quarter saw the continuation of the first quarter's momentum as a record TruBridge performance drove total bookings to increase $3.4 million or 17% sequentially and $7.2 million or 44% above the second quarter of 2021. Specific to TruBridge, bookings increased sequentially by $5.4 million or 53% propelled by strong cross-sell performance and large client wins for purchase and product. TruCode wins are particularly gratifying as this quarter's bookings once at full run rate, representing more than 20% increase in revenues with 50% EBITDA margins.

Compared to the second quarter of 2021, elevated cross-sell and TruCode bookings were met with considerable growth in bookings from outside of our EHR base, a target cohort we label as TruBridge's net new market. TruBridge net new bookings increased $3.4 million to more than 4x the same number from a year ago, acquisition of HRG has added considerable talent to our TruBridge sales force. System sales and support bookings decreased $2 million, both sequentially and from the second quarter of 2021. The net new decision environment continues to be dominated by SaaS license models with the second quarter marketing the sixth consecutive quarter with a 100% SaaS mix for new hospital EHR contract signings.

Turning to the financials. HRG's $10.8 million revenue contribution drove the second quarter to record levels of total and recurring revenues, both increasing 6% sequentially and 21% from the second quarter of 2021. Organic total revenue growth was 2.5% from the second quarter of 2021 while organic recurring revenue growth was 5% over the same stretch. Recurring revenues made up 92% of total revenues during the past quarter.

These top line improvements were met with the three distinct headwinds that I discussed earlier, resulting in adjusted EBITDA declines of $3 million or 18% sequentially and $1.1 million or 8% from the second quarter of last year. Non-GAAP net income decreased $3 million or 26% sequentially and $2.2 million or 21% from the second quarter of last year as increased interest expense and effective tax rates further widened the profitability gaps. Looking deeper at our segments, TruBridge revenues increased 13% sequentially as the inclusion of a full quarter of HRG activity added an incremental $7 million to the top line. Our TruBridge reported amounts include revenues from our Get Real Health and TruCode subsidiaries, and we cautioned on last quarter's earnings call that license timing would cause a slight pullback in both of these high-margin businesses.

Combined Get Real Health and TruCode revenue decreased by $900,000 or 16% from the first quarter. We also cautioned on the last call on hospital patient volumes, which are the primary driver of TruBridge revenues, were likely to pull back from their first quarter record levels. These same-store declines caused revenues from outside of HRG, Get Real Health and TruCode to decrease by $600,000 or 2%. Compared to the second quarter of 2021, TruBridge revenues increased by 49% on the backs of the TruCode and HRG acquisitions.

Organically, TruBridge revenue grew by 11% over the second quarter of 2021. From a gross margin perspective, the injection of HRG revenues tilted the revenue mix more toward lower-margin, service-intensive revenue streams, driving gross margins to decrease to 46% during the past quarter compared to 50% during the first quarter and 47% during the second quarter of 2021. Next, system sales and support revenues were down 2% sequentially due to continued retention challenges in our post-acute segment. Compared to the second quarter of 2021, revenues decreased $1.8 million or 5% as we continue to advance recurring revenue models and new EHR arrangements, placing significant pressure on nonrecurring revenues.

Declining revenues resulted in gross margins decreasing to 15% during the second quarter of 2022 compared to 52% in the previous quarter and 51.5% during the second quarter of 2021. Moving on to operating expenses. Product development costs were flat sequentially, while increased costs associated with our public cloud strategy drove a $600,000 or a 10% increase over the second quarter of 2021. Sales and marketing costs increased $1.2 million or 17% sequentially as the resumption of our in-person National Client Conference introduced nearly $1 million of incremental costs.

Compared to the second quarter of 2021, sales and marketing costs increased $2.9 million or 55% as resource expansion and other intentional investments in future growth added to the incremental client conference costs. General and administrative costs increased $1.7 million from the first quarter, driven mostly by volatility in health claims. Health claims were also the primary culprit in the $3.8 million increase over the second quarter of 2021 with the addition of HRG and other resource claims causing further G&A burden. Closing out the income statement, our effective tax rate for the quarter increased to 20% compared to 14% in both the first quarter of 2022 and the second quarter of 2021.

We continue to expect a full year effective tax rate of around 18%. From a cash flow standpoint, operating cash flows of $7.3 million were down $4.5 million sequentially as net income decreased to $5 million and were down $12.1 million from the second quarter of 2021's record levels as net receivables expanded $6.3 million due mostly to onetime integration disruptions while net receivables contracted by $5.6 million during the second quarter of 2021. This integration-driven receivables expansion drove trailing 12-month operating cash flows as a percentage of adjusted EBITDA to decrease to 60% as of June 30, 2022, compared to 80% at the end of the first quarter. As the past quarter's temporary disruptions are behind us, we expect that conversion rate to increase going forward.

In conjunction with last quarter's earnings release, we also announced the refinancing of our credit facilities with the major changes being a $50 million increase in revolver capacity, a step-up in max leverage following an acquisition, transition to SOFR as the benchmark rate and tweaks to the credit agreement's EBITDA measure to better align with how we report adjusted EBITDA to the investing community. These adjustments were in furtherance of our capital allocation strategy, which prioritizes flexibility to have CPSI optimally positioned to opportunistically deploy capital through a combination of M&A, internal reinvestment and value-based share repurchases. Our recent acquisitions of TruCode and HRG bring pro forma leverage to roughly 2.1x EBITDA, well below our target of 2.5x, 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 that fit our programmatic M&A strategy and feel there's tremendous opportunity to enhance and supplement TruBridge service offerings with recently valued rollups and tuck-ins.

Our largest nonoperating uses of capital during the second quarter were internal reinvestments in the form of capitalized software development costs of $4.4 million and $2.6 million of share repurchases. Nearly all of the quarter's share repurchases placed in the final month of the quarter, resulting in minimal impact to our weighted average shares outstanding and related EPS metrics for the quarter. We'd like to remind investors that 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 the level of repurchase activity in a given quarter may not reflect our views on the intrinsic value of our stock.

To close things out, we're proud of our top line successes of late and the resiliency of our business to absorb headwinds and achieve strong bottom line metrics. As we continue to execute on our strategy for top line growth and amplify efficiency through increased automation and offshoring, our view on CPSI's long-term margin trajectory is up and to the right. And with that, we'd like to open the line up for questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Jeff Garro with Piper Sandler. Please proceed with your question.

Jeff Garro -- Piper Sandler -- Analyst

Yeah. Good afternoon. Thanks for taking the question. I want to ask about the drivers of booking success in the TruBridge part of the business.

Just curious whether -- you're seeing that it's a catch-up in decision-making, benefits of the combination with HRG maybe related to the labor environment? Or is there some other key factor that's driving the success there?

David Dye -- Chief Growth Officer

Jeff, David here. I would say it's more of the latter too. Certainly, and Matt mentioned this in his commentary, certainly, it's the acquisition of HRG. We've got some sales talent that came from that and they were already doing, and they continue to do a really good job, closing deals, particularly in the enterprise space, which is the larger hospitals and health systems, which we didn't really have a great market into before, and it's much improved with the acquisition of HRG.

And it's certainly the fact that there's labor challenges in both the small and community hospital environment and in the larger hospitals and health systems as well. And they're calling us on oftentimes and saying, hey, can we have somebody to begin with some coding, and we just lost two coders in the next 15 or 30 days, and we're able to meet those needs.

Jeff Garro -- Piper Sandler -- Analyst

Great. That's super helpful. And maybe move on to touch on the three focus items that Chris mentioned and maybe an inference on those. It sounds a little bit like greater focus on growth than margin expansion.

So curious if you have any thoughts on areas that will need continued investment to capture more of the exciting growth opportunities ahead.

Chris Fowler -- President and Chief Executive Officer

Yeah. I think that really feeds into the first question, Jeff, as it relates to the continued interest in the TruBridge services based on where the market is right now. Obviously, we have been talking over the last several quarters about our initiatives related to offshoring and automation. Those are obviously the two big levers for us to pull to continue to expand margins on the TruBridge side.

And right now, we're laser-focused on making sure that we have the capacity to meet the needs, knowing full well that as we continue to execute on the cost savings side that we'll balance that out down the road. So to that point, we want to make sure that we're in a position to serve the customers and then we'll continue to be focused on the automation and offshoring.

Jeff Garro -- Piper Sandler -- Analyst

Got it. Makes sense. I'll hop back in the queue. Thanks.

Operator

Our next question comes from the line of George Hill with Deutsche Bank. Please proceed with your question.

George Hill -- Deutsche Bank -- Analyst

Yeah. Good afternoon, guys. Thanks for taking the question. Chris, congrats on the first 30 days.

I guess my first question, Chris, is you and I guess talked about kind of an extensive M&A pipeline. I'd be interested if you could talk about kind of which functional segments do you guys think are the most attractive right now, particularly as it relates to servicing the clients that you guys already have from a cross-sell perspective? And then as it relates to the margin weakness, I guess can you talk about how long you expect kind of the negative mix trends to persist?

Chris Fowler -- President and Chief Executive Officer

Yeah. So I'll take the first one, and then I'll let Matt jump in and get in the ring with us on the margin side. As we think about the M&A, if you look -- just look back at the last three deals with Get Real Health, TruCode and HRG, it got a little bit of everything there. And if we focus on the last two, and I think we maybe touched on this on the last call.

The TruCode really points to a nice opportunity for us to cross-sell into our customer base with dollars that they're already spending somewhere else. So it's not that we're introducing something new necessarily versus that we have found an opportunity for us to provide a service or solution to them more efficiently through our ability to bring that in. And then, secondly, with the HRG side, obviously, that was a consolidation play, the services that HRG provided very much overlap with what we do on the TruBridge side. I would say right now, if we're leaning one way or the other, we're probably leaning on that consolidation side.

But at the same time, what we've seen with TruCode and the success -- the early success in the first year we've seen there, obviously, we want to keep our eyes open as we continue to evaluate where those additional drivers are for efficiencies or potential revenue increase opportunities for our customers that they're not realizing right now. So that's really where I would say we're duly focused on the M&A side, and I'll let Matt take the margin question.

Matt Chambless -- Chief Financial Officer

Yeah. So George, we think that the second quarter of this year was really kind of the final -- the final time that the HRG-related pressure on margins was going to come through. And when we think about it, it kind of take a step back, the margin pressure from HRG was really primarily on the gross margin side. When we look at the bottom line, the EBITDA margin impact, we stated in the opening commentary, that HRG on about $11 million of revenue did almost $2 million of EBITDA.

So that's a pretty healthy margin through to EBITDA. So we don't see that really being a drag on EBITDA margins or at least not that much of a drag going forward. What really happened to us here in the past quarter where some more -- either some anomalies or some intentional investments in places like sales and marketing. The sales and marketing suffers a little bit more of intentional spend on our end to try to pull forward growth that we think is reasonably there for TruBridge.

And then, just part of doing business and being self-insured on the health insurance side of things, this kind of claims volatility combined from time to time.

Chris Fowler -- President and Chief Executive Officer

Yeah. And I'll add -- sorry, George, I had one more thing going back to the margin opportunity, especially on the gross margin side with HRG specifically. Just to remind everybody, while we're still getting started on the automation and offshoring, HRG was doing none of that. So the opportunity where we're -- let's say, we're rounding first headed to second, there would be still a [Inaudible].

So there'll be a bit of a lag there, but we think the upside is pretty good.

Matt Chambless -- Chief Financial Officer

Yeah. And there should be -- there should be more upside on the HRG EBITDA margin, particularly as we look forward and we capture more of those synergy opportunities actually in the P&L. We mentioned on -- in the prepared remarks that we've kind of upped our estimate of what the potential synergies are from $2.6 million to $3 million. And we've decisioned roughly half of those items as of 6/30, but the timing of vendor contract renewals and things like that, I mean the P&L impact to the second quarter was limited to somewhere around $300,000.

So there's a lot of upside there.

George Hill -- Deutsche Bank -- Analyst

OK. And maybe just a really quick follow-up -- is like, kind of the benefits issue just sounds like kind of some little adverse selection on your guys' part, I guess. Do you guys have any visibility to win that sunset? And I guess the flip side question is, would you guys even -- like does it even make sense to buy a risk on the benefit side, given that you guys are a public company? Or is that just something you wouldn't even consider?

Matt Chambless -- Chief Financial Officer

Yeah. Well, so first, I'll cover the self-insured versus being more fully insured on the health benefit side. Given our scale, when we look at the long term and long term kind of the view that we have, the prospects of fully ensuring that health claims risk really just doesn't make sense long term financially, but does subject us just some short-term volatility. And although it's unfortunate for the participants in our health plan that were impacted by these incidents, when we take a look at them, we do have visibility, and these were fairly acute diagnosis that caused this kind of uptick and that really was just kind of a rash of bad luck.

These things do happen from time to time. But the encouraging thing for us from a financial standpoint is none of these claims really appear to have kind of a long lingering kind of maintenance tail associated with them. So we do think that these are kind of a onetime bump in the road.

George Hill -- Deutsche Bank -- Analyst

OK. Thanks for the call and I hope your teammates are well. Thank you.

Matt Chambless -- Chief Financial Officer

Thanks, George.

Operator

Our next question comes from the line of Joy Zhang, SVB Securities. Please proceed with your question.

Joy Zhang -- SVB Securities -- Analyst

Hey, guys. Thanks for taking my question, and congrats on Chris again for your first 30 days. Just following up on the TruBridge bookings question, hoping for more granularity on the composition of the new wins. You mentioned in the prepared remarks, there was one enterprise deal, but wondering you're also seeing an increase in average deal size across the new wins at all? Or is that more of a one-off? Any color on how much the new wins is from existing age of customers versus new customers would be helpful.

Matt Chambless -- Chief Financial Officer

Yeah. So Joy, if you -- one of the tables that we provided in the earnings release kind of chose to breakup of the bookings composition, how much was kind of core TruBridge cross-sell versus net new. I believe the enterprise deal that Chris mentioned was on the TruCode side. And again, that's a place where I particularly really excited about those bookings because of the margin pull-through, $2 million worth of bookings at 50% margins is -- that's great news for us.

Joy Zhang -- SVB Securities -- Analyst

Got it. That's helpful. And then, I guess not to be a bummer, but a recession is on the top of mind of a lot of folks. And I recognize that the last recession is kind of impossible comp given the federal safety net that is new for you use.

In my mind, what is the incremental downside to your business, as we flip into a full-fledged recession?

Chris Fowler -- President and Chief Executive Officer

Do you want to start on the credit side.

Matt Chambless -- Chief Financial Officer

Yeah. So we'll start with that, taking a look at capital structure and the potential there, that does impact our thoughts on what our long-term interest rate risks are and what the potential is for rates to actually settle down from where they are right now. So I wouldn't say that it injects more risk on the capital structure side of things. It's just a little bit -- it makes things a little bit hairier for us to navigate through as we think about that risk.

I'll let David and Chris chime in on what they think operationally.

Chris Fowler -- President and Chief Executive Officer

Yeah, I'll jump in here, Joy. I would say, at a worst case, as we continue to see TruBridge take more and more of the revenue side of the house. And obviously, that's contingent on the volumes that our hospitals are seeing. You could see something that would look sort of similar to COVID where from an elective services would be the area where I would think that we have the biggest opportunity to see some hit.

But again, that could also be something that there could be some short-term win to that that people are -- you could look at our claim history over the last quarter that people are hurrying up to get the elective services done. So there might be an up and then a down, as it relates to that. We don't have a crystal ball, just like nobody else does. I would say operationally that would be the biggest risk to the business.

And so, we'll just kind of wait and see.

Joy Zhang -- SVB Securities -- Analyst

Super helpful. Thank you.

Operator

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Matt Chambless -- Chief Financial Officer

Yeah. Thanks, Doug, and thanks, everybody, for joining us today. I hope you have a wonderful rest of your Tuesday and a good rest of your week. Thank you all.

Bye-bye.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Dru Anderson -- Senior Vice President, Corporate Communications

Chris Fowler -- President and Chief Executive Officer

Matt Chambless -- Chief Financial Officer

Jeff Garro -- Piper Sandler -- Analyst

David Dye -- Chief Growth Officer

George Hill -- Deutsche Bank -- Analyst

Joy Zhang -- SVB Securities -- Analyst

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