Computer Programs and Systems, Inc.
Q3 2012 Earnings Call Transcript

Published: 26 Oct 2012

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Computer Programs & Systems Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, October 26, 2012. I would now to turn the conference over to Boyd Douglas, President and Chief Executive Officer, Computer Programs & Systems. Please go ahead, sir.

[J. Boyd Douglas:]

Thank you, Charlene. Good morning, everyone, and thank you for joining us. 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 risk, 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. Joining me on the call this morning is David Dye, our Chief Financial Officer. David and I have a few minutes of prepared comments and then we'll be happy to take your questions. In the third quarter, we installed our Financial and Patient Accounting System at 8 hospitals and our core clinical departmental applications at 15 facilities. Additionally, 17 hospitals implemented Nursing Point of Care, 13 customers went live with CPOE and 13 facilities implemented physician's documentation. Add-on sales to existing clients were $10.8 million or 23% of total revenue for the quarter. At this time, we expect to install our Financial and Patient Accounting System in 7 facilities in the fourth quarter. We anticipate 12 new installations of our core clinical departmental modules, 15 Nursing Point of Care implementations, installation of 14 CPOE sites and 22 Physician Documentation installations. In Business Management Solutions during the third quarter, we executed 6 new accounts receivable management contracts, 2 of which were for full services and 4 for private pay services. We are very pleased to report that our clients' success with achieving Meaningful Use continues. According to the latest figures released by CMS, 257 CPSI clients have successfully attested for Meaningful Use. This represents an increase of 58 hospitals since our last call. CPSI has more hospitals that have successfully attested under the complete EHR designation than any other vendor including Epic, Cerner, and MEDITECH. Our number of hospital successfully attesting also continues to be significantly above the combined total of our traditional competitors in the rural and community hospital segment such as HMS, Health Plan, NextGen, and Prognosis. Viewed in a different light, 19% of all hospitals who have successfully attested under the complete EHR designation, or roughly 1 in 5, are CPSI clients. I believe the final significant take away from these numbers is that we are, by no means, resting on our laurels with what we have achieved to date. We view the continued success of our clients in achieving and maintaining Meaningful Use status as a long-term commitment from a development, implementation and support perspective. We are confident that the evidence of this commitment as reflected by our hospitals ongoing, and increasing success within the program will be a significant factor competitively for both hospitals adopting EHRs for the first time, and facilities that are looking to replace their current vendor. From a new product perspective, we continue to be pleased with the adoption of our recently released Physician Documentation application. To date, we have successfully installed the applications in 31 facilities. By year end, we are targeted to have 53 hospitals live with the application. Given the challenge of successfully implementing any application that requires significant position interaction with the system, we feel very good about where we are today. We also believe this will prove to be a significant advantage at the point in time that position interprogress notes become required as a component of Meaningful Use, which is already the case as a menu item for Stage 2 and well without a doubt, be required for Stage 3. We saw this with CPOE, where our success with CPOE prior to passage of the stimulus program played a major role in assisting our hospitals and meeting the CPOE objective for Stage 1. Finally, I would like to briefly update you on our ongoing research and development projects. With the transition to our new technology platform complete, our development efforts are now squarely focused on using the new tools supported us in enhancing our end-user experience. First, we have introduced a new client application called ClientWare 5, and will be transitioning all of our applications to this new client over time. We are starting with the position applications first, as we believe, without a doubt, they are our key end-users and will get the most immediate benefit from this effort. To that end, the ClientWare 5 version of our highly successful ChartLink and CPOE applications will be made available to our clients on our next release, version 19. Without going into too much detail, the ClientWare 5 versions of these applications can really be considered a rewrite of the application with more intuitive navigation and displays, as well as new concepts such as user-specific home screen functionality that can be customized to each user's unique requirements. In addition, all recent new development, as well as those projects currently in progress are being done under ClientWare 5. This includes the aforementioned Physician Documentation module, as well as our new emergency department application that will be available on version 19. Also scheduled for the upcoming release under the ClientWare 5 platform are our medical practice EMR application and our enterprise-wide scheduling product. Overall, we remain very confident in our strategy of maintaining a single suite of applications that we consistently enhance and update. This protects our customers investment by keeping their system up-to-date with current technology and ever-evolving end-user demands. It also allows us to focus all of our key resources, development, implementation and support, all in one system. We have no doubt, this is the best long-term strategy for both retaining current clients, as well as winning new clients. At this time, I'm going to turn the call over to David for his comments on the financials.

[David A. Dye:]

Thanks, Boyd, and good morning, everyone. I have a few comments and then we'll open the call for questions. Our day sales outstanding as of September 30 were 48, up 8 days sequentially and 2 days year-over-year. Depreciation expense for the third quarter was $650,000. Cash collections were $42.7 million for the quarter compared with $46.1 million a year ago. CapEx for the third quarter was $650,000. We expect CapEx of approximately $2 million for the fourth quarter, which includes $1.5 million in buildout expenses for our soon-to-be completed software support office location in Fairhope, Alabama. When this location opens in early February 2013, it will immediately be home to 100-plus software support and implementation professionals. Our employee headcount as of September 30, was 1,441, up 45 over last quarter and 190 year-over-year. At this time, we do not expect to add any additional software support and implementation professionals for the foreseeable future. As I stated on the last call, since the ARRA was enacted in February 2009, our total company workforce has increased by 65%, and our software support and implementation division has more than doubled. This early and aggressive investment in support and installation staff has played a significant role in the industry dominance of our clients' Meaningful Use adoption rate that Boyd mentioned a moment ago. Additionally, we remain uniquely positioned to meet the implementation demands of the remaining Phase I adopters, while simultaneously working with all of our hospital customers to achieve Stage 2 and future stage and new compliance in the years to come. During the third quarter, we installed systems under contracts providing for an aggregate consideration of $2.5 million for which a substantial majority of the consideration will be received and recognized in subsequent periods under hospitals successfully achieving Meaningful Use designation. The total accumulated unrecognized revenue related to such contracts as of September 30, 2012, was approximately $9.4 million. Based on our customer Meaningful Use progress tracking, we expect the majority of this amount to be recognized in the fourth quarter. As Boyd mentioned in his comments, we have 7 implementations scheduled for the fourth quarter for a total of 33 new client hospital installations for the full year 2012. Of the 7 fourth quarter installs, 3 are contracted under Meaningful Use installment base payment plans. Charlene, please open the call for questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of David Larsen with Leerink Swann.

[David Larsen:]

Can you guys clarify how much revenue flowed through this quarter from deferreds or payment deals that were signed in 1Q or 2Q? I think it was about $2.9 million?

[David A. Dye:]

Yes, David. It's $2.9 million, exactly.

[David Larsen:]

All right. And then, I'm just kind of curious, like the system sales seemed actually down sequentially and sort of flat relatively to 1Q and 2Q. If we had $3 million coming through from deferred payment yields, I would've expected an uptick? Is there any -- I mean, am I thinking about that correctly or not?

[David A. Dye:]

That's your analysis, it's just a quarter. We feel pretty good about our system sales going forward, given everything going on with Meaningful Use. So certainly, I understand your logic, but we're not concerned.

[David Larsen:]

Okay. Like in 3Q of '11 last year, there was little -- I think there was a bit of a slowdown, because I think this is the last 90-day period to attest for the fiscal year. Did you see anything like that? Or maybe deals that slipped or anything like that, or not really this time around?

[David A. Dye:]

A little bit, but not nearly as much so as last year. We didn't see the uptick in second quarter that we saw last year, and we didn't see that down quite the trend as a result simply of that date phenomenon that you described. We did not see the reaction this year. A little bit, but not nearly as much.

[David Larsen:]

Okay. And then the majority of the $9.4 million, I think you mentioned would probably get recognized in 4Q, maybe 3 deals under this deferred payment mechanism in 4Q, is that correct?

[David A. Dye:]

Yes.

[Operator:]

And our next question comes from the line of Jamie Stockton with Wells Fargo.

[Stephen Lynch:]

This is Steven with questions for Jamie. I guess my first question is, are the Meaningful Use contingent revenues being triggered by just Medicare incentives?

[David A. Dye:]

No, Medicare and Medicaid.

[Stephen Lynch:]

Okay, all right. My second question is, can you guys give us some color on why maintenance and support revenue was down sequentially?

[David A. Dye:]

Yes. The IT managed services component of that which, generally speaking, consists of one-time projects was down a good bit sequentially, just a timing thing. The support and maintenance total was just pure actual support. I don't know exactly how much, but it was actually up quarter-over-quarter.

[Operator:]

Our next question comes from the line of Bret Jones with Oppenheimer.

[Bret D. Jones:]

Just wanted to ask on the strong bookings, at least they appeared fairly strong this quarter with the increase in the backlog. I was wondering if you could comment on the mix of Meaningful Use contingent deals if that's still holding in that same percentage of about 60% in the hospitals will be deferring their...

[David A. Dye:]

Yes, it sounds like a broken record, Brett. But it really is still holding right at about that 60% range.

[Bret D. Jones:]

Okay, that's great. And then I wanted to ask where is the unrecognized revenue on the balance sheet? I would expect it to be in the deferred revenue, but I only see about $7.1 million?

[David A. Dye:]

It's nowhere.

[Bret D. Jones:]

It's nowhere, but you are -- it is in the backlog, correct?

[David A. Dye:]

No.

[Bret D. Jones:]

Okay, so not even...

[David A. Dye:]

It's in the backlog prior to it being installed at the hospital. I mean, once it's installed, it goes out of backlog. So for example, the 3 implementations in the fourth quarter that are under Meaningful Use implementation plans, they are in the backlog as of September 30. But once they're installed, they go out.

[Bret D. Jones:]

I'm with you. Okay, great. And then I just wanted to make sure, when you said the majority of the $9.4 million you expect to be recognized in the fourth quarter, are you guys sticking with your guidance that you laid out at the beginning of the year?

[David A. Dye:]

Yes, as we stated, when we gave the guidance at the beginning of the year, if we see a material change in any direction that -- we would update and we haven't at this point.

[J. Boyd Douglas:]

Nor have we reaffirmed.

[Operator:]

Our next question comes from the line of George Hill with Citigroup.

[George Hill:]

David, kind of I want to follow-up on, but I guess kind of how we're looking at this from an accounting perspective. If you guys have strong visibility on the $9 million that you're going to collect in Q4, why is that not either in receivables in deferred revenues? Like, I'm just trying to understand the classification here.

[David A. Dye:]

I think, I don't know how much more I can say that I haven't said before. Obviously, this is a unique situation that we're very thoughtful about in conjunction with our auditors. It's not deferred revenue that we haven't received any cash for it, and so which is traditionally where you would see it in deferred revenue. There is some logic in that we've discussed the fact that perhaps, some or all of the components should be in backlog. But you know backlog is not a GAAP number, it's -- and we've continued to give it the way we've always given it in the past, which is we rerun an internal report that tells us and therefore, you, exactly what we have on order at that point in time that's yet to be installed and the revenue that we expect to recognize from that. And then it no longer shows up there because it's already been installed. So I mean, from an accounting slice gap perspective, we feel like we're doing it correctly because we haven't received any cash. In the backlog, we've just continued to give you the number as we've done it since 2002. I don't know if that's a great explanation, but that is the explanation.

[George Hill:]

Yes, and I don't doubt that you guys are accounting for it under the most conservative method. I guess I'm just trying to reconcile how if you've got the visibility, the $9 million how we don't -- just how we don't see that. Like, I mean, you guys are being conservative, but I'm just trying to -- it's basically going to...

[David A. Dye:]

I see your point. And every time, as hospitals continue to get Meaningful Use funds, it just becomes more and more of a foregone conclusion that, that's going to happen. I suppose there's some logic to the fact that there's no guarantee that even though hospitals have attested at this point and so forth, that they'll get the money. I mean, based on past experience, they certainly should and we believe, most certainly will. But I guess, there's that uncertainty as well.

[George Hill:]

Okay. And then just a follow-up question. I guess, David, either for you or for Boyd. If we're starting to look at, it looks like we're starting to see a modest deceleration, very modest and I recognize these are lumpy in the growth of the core base. How should we think about the arc of where we are on the meaningful use adoption cycle by the customer base? And then how should we think about the growth opportunity from here as you guys develop new products and modules with respect to ambulatory and EDA? And I guess, from the perspective that your customer base is different from the Cerner's and the Epic's in the world, I'm trying to figure out what inning in the game are we in with you guys versus where they think they are?

[J. Boyd Douglas:]

I'm not sure where they think they are. First of all, back to your first point about to being modestly off, we certainly don't concern ourselves with quarter-to-quarter and think that's just the natural fluctuations of our marketing and system sales. Next year, is the final year where you can still get 100% of your Stage 1 Meaningful Use funds. So one would think that the laggards out there that haven't done anything yet would do something between now and July of next year, which would point to, obviously, an increase in system sales. If that happens and if they go actually for the funds and want to get 100%, I mean -- I guess the million-dollar question is who knows how important that is? Or if they're fine being the hospitals fine waiting for another year, then they'll only get 75% of that part's year. But that may work better for their facility because of things specific to any individual facility. As far as what inning we're in, that's anybody's guess as well. I think we've talked about that plenty of times. My personal opinion is we're probably in the fifth inning or so.

[Operator:]

Our next question comes from the line of Del Warmington with Delwar account.

[Delroy Warmington:]

Yes, if I may, I'd like to ask a question about your -- the landscape in terms of competitors. One of your few major competitors is having some problems and I'm not too sure exactly if you think there's going to maybe change over the next 24 months will they anticipate? Because I'm talking about Allscripts and such. And I think I'm not too sure exactly how do you see them, and do you anticipate to see more of them in the future?

[David A. Dye:]

We've never seen much of Allscripts. We didn't see them when they were Eclipse's before the acquisition much at all. I mean, we certainly saw them 1 to 2 times a year, maybe, and perhaps that continues at most. But they're just in a different category of hospital size than we are.

[Operator:]

[Operator Instructions] Our next question comes from the line of Frank Sparacino with First Analysis.

[Frank Sparacino:]

Just wanted to follow up on Boyd, I think you were talking about on the product side. Obviously, Physician Documentation should be ramping nicely in the next couple of years. Beyond that, you talked a little bit about a new ED application, but I'm just curious in the product pipeline what you would call out in terms of maybe meaningful revenue streams over the next couple of years and new areas that you're going into as well?

[J. Boyd Douglas:]

Well, certainly, those 2 are the 2 large ones. And then as far as for new software, I don't know if there's anything yet. Certainly, we'll see what Stage 3 holds for us. I mean, so far, there's been something. So hopefully, there'll be something out there that we write to generate some revenue from. So I don't have it. We don't have anything else really on the horizon at this point for software sake. Certainly, what we're doing with our services and Business Management Services and all, we continue to expand that. So we're looking at expanding those services as well.

[Frank Sparacino:]

Boyd, is it too early to say where you think the price point would be for ED application and what the size of the opportunity would be relative with to what we've seen with CPOE and perhaps, Physician Documentation?

[J. Boyd Douglas:]

Yes. Our best guess, not really marketing it yet, so we're not real sure what the market will bear. But our estimate right now is probably around $125,000 per hospital. And as far as penetration, in the foreseeable future and in the next 3, 4 years, maybe 50% of our hospitals would want that. We've got quite a few out there that already have something. And so as that rolls around and they look at evaluating those systems, hopefully, we'd be able to get a seat at the table and try to sell those sites where we currently got an interface. But then, obviously, as hospitals grow and their emergency departments grow, we certainly anticipate there being a need there.

[Frank Sparacino:]

Okay. And maybe lastly, just -- I think you talked a little bit about this. Obviously, you had a good year in terms of new installations. If you look at the current sales pipeline, well that's just that new client activity again in 2013 at healthy levels?

[David A. Dye:]

Yes. I think at this point, and it goes back to what Boyd said a second ago about how desperate people become to achieve 100% of the funds available for Phase I Meaningful Use. I think at this point, our expectations that the levels would be about the same, at least as they were this year and if there's a mad dash that it could increase from that. As you know, it's a pretty abbreviated sales cycle in the small hospital marketplace anyway. And then when you have a period of compression because of last-minute decisions like we have Y2K, then people can enter the market and make decisions very quickly. So it remains to be seen. But those are our general feelings at this point.

[Operator:]

Our next question comes from the line of Andy Draper with Raymond James.

[Alexander Y. Draper:]

Just a question in terms of customer attitude right now, one of the things we noticed we were -- I was at MD&A and talking to doctors, I felt like there's sort of a deer in the headlights because of all the different regulatory changes, potential HCOs selling buying, what are we going to do. Well, I mean, there's clearly a little bit of a pause in that market. I know you guys are more in the hospital market, Boyd and David, but my sense is that really small hospitals can sometimes act more like doctors and be more reactionary and support more towards long term. I'm just curious about your thoughts. Have you seen any behavioral change around the election, all the regulatory changes coming. Is that change either accelerate it or decelerate it? Or the people actually pretty much the same as they've done in the last 12 months?

[David A. Dye:]

Sandy, they're acting pretty much the same. In that among the hospitals that haven't already moved towards Meaningful Use, you could perhaps make an argument, not because of anything that we've seen or heard, but that they would mirror the physician marketplace. And I agree with you that the actual ambulatory market regarding physician adoption of this stuff is very skittish at this point. It seems to us just from our experience in the marketplace and from what we hear, it seems as though that marketplace is having the same reaction that the hospital did to CPOE 7 or 8 years ago. I think the products could be perfect and it would still be very difficult for physician acceptance. And that'll come around just as it did with CPOE. But not -- we certainly, I think to this point had been somewhat surprised that the number of hospitals that appear to be, that are left, that -- I mean, certainly there's going to be hundreds of hospitals that don't get 100% of the money that's available. And a couple of years ago, we probably wouldn't have thought that would have been the case. We still very much believe that all of them will, prior to 2015, prior the penalty phase. I don't know it that answers your question, but that's our general thoughts.

[Operator:]

Our next question comes from the line of Sean Wieland with Piper Jaffray.

[Sean W. Wieland:]

I just want to get my head wrapped around the deferred payment plan and how that's going to impact the model. So it was $2.9 million in the current quarter, and it's $9.4 million as what you're thinking in the fourth quarter, did I hear that right?

[David A. Dye:]

No, no. $9.4 million -- yes, $2.9 million is correct for the third. $9.4 million is outstanding based on new hospital implementations that have been done in 2012 where the revenue has been pushed out into future periods. I don't think all of it will get recognized in the fourth quarter. I think the majority of it will. Obviously, we track all of our clients. But certainly, our new client is in implementations and we're keeping up on a weekly basis with where they are in regards to their Meaningful Use process, which is why we feel confident in the majority of that. I don't think it'll be all.

[Sean W. Wieland:]

Okay. And then the remainder, so the majority of that comes in the fourth quarter and then the remainder would come in at some point in 2013 or early '13?

[David A. Dye:]

I would say it's extremely likely that whatever is left will happen in the first quarter 2013.

[Sean W. Wieland:]

Okay. And it was 0 last quarter, correct? And $450,000 in the first quarter?

[David A. Dye:]

The amount that we've recognized?

[Sean W. Wieland:]

Yes, yes.

[David A. Dye:]

That's correct, Sean.

[Sean W. Wieland:]

And so this is pretty much all profit, right?

[David A. Dye:]

About 90%, yes.

[Sean W. Wieland:]

Okay. So then that leads me into the next question, that why didn't we see greater performance on the EBITDA line with this big contribution?

[David A. Dye:]

We continue to do new hospital implementations where we're sending 60 people out of town for a month to do this stuff and we're paying for airfares and rental cars and salaries and everything else. I mean, it's an expensive proposition. I think as hopefully, the numbers are much bigger number in the fourth quarter, you would definitely see a bigger translation straight to the bottom.

[Sean W. Wieland:]

Okay and so, is it -- am I not -- I mean, you're not putting a finer point on the guidance for Q4, is there any reason for that? Because as of right now, it's kind of a range that as you could drive a truck through. Can you kind of lean us one way or the other?

[David A. Dye:]

No. I mean, we said that was going to be our policy at the beginning of the year, and we're sticking to it.

[Operator:]

Our next question comes from the line of Caroline LeCates with Lazard Capital Markets.

[Caroline LeCates:]

Just one more question on the contingent payment. The $3 million this quarter, was that considered an early pull-through for next quarter? And would then maybe, this $2.5 million this quarter will likely be recognized next quarter, or is that something that could get pushed out to early in 2013? Just kind of trying to understand the mechanics.

[J. Boyd Douglas:]

Yes, the $2.5 million, I don't think any of it will be recognized in the fourth quarter, because they don't have enough time to get everything installed up to and including CPOE and actually attest and have the 90-day period and then get the money. So I would be more -- it probably would begin in the second quarter of next year that we'd start to recognize some of the 2.5 from this quarter. And then we're going to have additional several million in the fourth quarter that probably won't get recognized until probably at least the third quarter of next year. In answer to the first part of your question, yes, some of the revenue we recognized in this quarter was -- I mean, we expected to maybe have a little bit and I think, an early -- some attested perhaps slightly more aggressively than we thought, but only slightly.

[Caroline LeCates:]

Okay. And then just turning to products, when is version 19 expected to be released? And have you done a beta testing on that, and what's the feedback there?

[David A. Dye:]

It's the middle of next year. And no, we have not done the beta testing. The beta testing will start right at the beginning of next year, probably January time frame, January, February. With general release, probably June, July.

[Operator:]

Our next question comes from the line of Ryan Daniels with William Blair.

[Andrew O'Hara:]

It's Andy O'Hara in for Ryan today. A couple of quick ones on Physician Documentation, with about only 5% of your base on the module right now, I guess, what do you guys expect the ramp to look like over the next 2 years ahead of Stage 2? Do you expect to see a kind of a large spike, right before like what you did with CPOE or sort of a more gradual adoption there?

[David A. Dye:]

I think you'll see something similar to what CPOE -- certainly, a spike going into next year.

[Andrew O'Hara:]

Okay, perfect. And then can you remind us how -- sort of how involved the implementation is maybe versus CPOE?

[David A. Dye:]

They're roughly similar. Certainly, with the number of hospitals, we already had a fair amount of CPOE hospitals before Meaningful Use. So over the next 3 years or so, it'll be more so. We're certainly trying to do it and become more efficient than we are with the CPOE installation. But still, when you're training in multiple doctors, you certainly -- we found it through experience, you got to have somebody right there at their side to help them if they've got a problem. So it still takes, I would say, about the same amount of people that it takes to do a CPOE installation. We're certainly hopeful as well in addition to being more efficient. If you're already familiar with CPOE, it should make the adoption of Physician Documentation easier than it was going with CPOE.

[J. Boyd Douglas:]

Yes, and a good part of that now, Andy, is the setup and the -- the setup of the templates that the doctors use with Physician Documentation. And as we get more and more hospitals installed, and we're able to share that information and have more customized templates available, that should help decrease the resources slightly over time as well.

[Operator:]

Our next question comes from the line of Richard Close with Avondale Partners.

[Brian Hoffman:]

This is Brian sitting in for Richard. Can you talk a bit about the longer-term growth opportunity you see with business outsourcing? Specifically, are you seeing any greater interest from some of your hospitals in transitioning from either just statement in billing or private pay services to becoming fully outsourced?

[David A. Dye:]

Yes, a great question. And I can't put a whole lot of detail in it right now. We're -- it's been noticeable, obviously, that the growth has slowed a little bit over the last couple of years. But we do -- we have been public about the fact that we've got big plans for that division going forward. And without getting into any specifics at this point, we do think there's a lot of opportunity with value going forward, and we're very focused on that. More to come.

[Operator:]

And our last question comes from the line of Leo Carpio with Caris & Company.

[Leo F. Carpio:]

I have a couple of quick questions. Regarding the guidance, can you remind us what's in the guidance and what is excluded from the guidance in terms of the EPS? I'm just wondering if the newly inked deals are part of the guidance that you gave in '12?

[David A. Dye:]

They were part of the guidance as when we gave the guidance at the end of January. We knew that a good many of our new system sales at that point had already been and would continue to be Meaningful Use contingent. So we certainly applied some thoughts there, and some of that amount is definitely, was, and is included in the guidance.

[Leo F. Carpio:]

Okay. And then turning to the political environment in terms of the industry, any concerns from your clients or customers regarding the presidential elections or the fiscal cliff that's coming in January?

[David A. Dye:]

I haven't heard one word of concern. I don't know, Boyd, do you agree?

[J. Boyd Douglas:]

No, I agree. I haven't really heard any concern. We did just come up our user group meeting in September, and certainly, a lot of uncertainty. And certainly, opposite ends of the spectrum as far as who, but I didn't hear any specific concern about one party or the other.

[Operator:]

And there are no further questions at this time. I'll turn the call back over to you.

[J. Boyd Douglas:]

Great. I just want to thank everyone for their interest in CPSI. And I hope everybody has a great weekend. Thank you.

[Operator:]

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.