CPSI (2019 - Q3)

Greetings, and welcome to the CPSI Third Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, November 5, 2019.I would now like to turn the conference over to Drew Anderson. Please go ahead. Unidenti

Thank you. Good afternoon, and welcome to the CPSI Third Quarter 2019 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 provision 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. Boyd Douglas, President and Chief Executive Officer of CPSI. Please go ahead, sir.

Thank you, Drew. Good afternoon, everyone. And thank you for joining us. Joining me on the call today is Matt Chambless, our Chief Financial Officer. 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 any questions you may have.I'm very pleased with our third quarter results which included solid performance across bookings, revenue and earnings, despite having faced headwinds from extended decision-making timeframes and lack of urgency among new and existing customers this year, we achieved a very nice conversion of our sales pipeline across all of CPSI's businesses this period. We are encouraged by this pickup in pipeline activity and are increasingly optimistic that we have turned a corner in terms of sales sluggishness.Our bookings for the quarter totaled $23.6 million with core CPSI bookings representing $13.4 million and TruBridge bookings of $10.2 million. $4.6 million of TruBridge bookings during the quarter came from contracts outside of our core EHR client base which reinforces our confidence that the new-- the net new market opportunity for TruBridge services is meaningful. We are especially pleased with the significant new contract win with a large healthcare organization that brought TruBridge on board to clean up its accounts receivable.While these types of AR clean up contracts typically aren't recurring in nature and can create some lumpiness in our revenue, we believe these contracts are critical first step in establishing important relationships and creating a meaningful track record in this larger hospital market segment. As we begin to engage with new customers in this segment, it will help position us to take advantage of further, long-term upmarket opportunities for TruBridge.We also had success during the quarter cross-selling TruBridge into our EHR client base. During the quarter, four clients converted from the traditional license model to interest, our SaaS model that combines TruBridge business office outsourcing services with our EHR system, support and maintenance. These contracts represented $2 million in bookings in the third quarter. We also saw strong cross sales of TruBridge services including insurance follow-up, revenue cycle management, medical coding and private pay services into our EHR base.We believe that in time cross sales from our TruBridge offerings into our acute EHR client base will replace the strong add-on sales, we've enjoyed in previous years from the meaningful use packages. Before I say a few words about our revenue and earnings results, I'd also like to highlight another Q3 bright spot which was our post acute business where we saw another decent increase in bookings this quarter. As mentioned last quarter, we believe this improvement is a result of our ongoing development efforts focused on enhancing the user experience and workflow and our post acute product of American HealthTech.We are pleased to see these development efforts begin to show signs of acceptance from these customers and prospects, while post acute bookings represent a small percentage of total bookings, this $1.1 million of post acute bookings in the third quarter represents a 26% increase from the third quarter of 2018 and a 62% increase year-to-date over 2018.Turning to revenue. Our third quarter revenue was $68.7 million which came in ahead of our expectations due to the strong conversion of system implementation backlog and higher patient volume this quarter from a number of our TruBridge clients. These two areas of strong results helped to balance a delay in some expected top-line growth attributed to get real help. Our recently acquired patient engagement solutions offering. Deployment delays in a couple of Canadian provinces for get real help defer this revenue to a future quarter.Our strong third quarter revenue along with continued management of operational costs led to in line EBITDA results of $12.2 million for the quarter. We enjoyed strong cash flow in the third quarter while we continue to aggressively delever the balance sheet which will result in more dry powder for future acquisitions. Year-to-the strength in our cash flows has enabled a net reduction in our debt of $10.4 million and that includes the $11 million of additional borrowings for the acquisition of Get Real Help in the second quarter of this year.Before I turn the call over to Matt to discuss the financials, I would like to conclude by saying that I'm very pleased with this quarter's result, and that we are cautiously optimistic as we head into the final quarter of 2019. We are encouraged by the strength of our sales pipeline in each business. Of note in early October, we signed a little over a $2 million EHR system contract in the Caribbean. This international deal represents a significant win and our continued efforts to execute on the opportunity in English-speaking countries outside of the US.Furthermore, we remain confident in the long-term growth opportunity of TruBridge and continue to maintain strong retention rates about existing EHR client base.With that I will turn the call over to Matt.

Thanks Boyd and good afternoon, everyone. On today's call, I'll provide a high-level overview of the quarter including an update on our recent acquisition of Get Real Health or GRH, some additional detail on bookings performance and major non-financial metrics and a walkthrough of our third quarter financial results. Most notably, the third quarter saw significant improvement bookings which increased 61% sequentially and 25% year-over-year.While the slow pace of decision-making has not fully abated, we're beginning to see a diminishing impact of that constraint on our acute care EHR bookings. Meanwhile TruBridge achieved its second highest bookings performance ever propelled by $4.6 million at bookings from outside our EHR customer base, a market that has become a strategic growth focus for TruBridge. As the trajectory of bookings improves, we are pleased with our continued execution on our profitability initiatives.As a reminder, we identified $10 million of cost savings during 2018 and $3 million during 2019 with all $13 million having been decisions and flowing through our income statement, which is allowed CPSI to not only preserve but to increase profitability in the face of revenue fluctuations. Excluding the impact of GRH expenses included in our measure of adjusted EBITDA have decreased $2.2 million or 4% compared to the third quarter of 2018, and are down $8.5 million or 5% on a year-to-date basis. Despite a 1% decrease in revenues from the third quarter of 2018 and an EBITDA loss from GRH of $700,000, adjusted EBITDA has increased 2% from.Year-to-date perspective revenues are down 2% while adjusted EBITDA has increased 7%. This higher profitability coupled with reduced headwinds from financing receivables has led to significant improvements in our cash flow. With financing receivables contributing a net $800,000 tailwind to cash flow, the third quarter of 2019 saw operating cash flows of $8.1 million, a 15% increase from the third quarter of 2018.On a trailing 12-month basis, we now boast roughly $34.6 million of operating cash flows, compared basis at this time last year. This improved strength and cash flows has allowed us to reduce our bank debt by nearly $17 million over the past 12-months despite funding the $11 million acquisition of GRH with revolver borrowings. Speaking of GRH, we remain excited about the opportunities that this acquisition has created. GRH's products, technologies and relationships in the growing patient engagement market contribute directly to three of CPSI's strategic focuses.Strengthening the EHR platform, expanding TruBridge's capabilities and opening international markets particularly Canada. As a reminder, GRH pre-acquisition was a small and frankly subscale business with a mix of revenues from license, subscriptions and services approximately 40% recurring that can make for lumpy results. We expect that lumpiness to continue, while we integrate the business and build its technologies into new products like TruBridge chronic care management service. GRH acquired on May 3rd of this year contributed in adjusted EBITDA loss of $700,000 to our third quarter results on revenues of $0.5 million, with the year-to-date adjusted EBITDA loss of $1.4 million on $700,000 of revenues.Inclusive of pre-acquisition results, GRH year-to-date has produced revenues of $3.3 million and an EBITDA loss of $900,000 prior to any adjustments related to ASC-606. Because of the lumpy, non recurring revenues, the range of potential outcomes for GRH in 2019 is fairly wide with some large deals in the pipeline that could fall into the fourth quarter of 2019 or the first quarter of 2020. 2018 revenues were $4.5 million and depending on deal timing we could see 2019 amounts range from something similar to double that number. As a result, GRH's EBITDA contribution for the full year could reasonably be slightly negative to moderately positive.Our current expectation is for GRH to perform more towards the slightly negative EBITDA scenario for 2019 with opportunities to significantly increase their contribution depending on the timing and performance of existing pipeline. We continue to look for tuck-in acquisitions like GRH and other opportunities that advance our strategic initiatives such as the partnership with Sunnybrook Health Sciences Center announced in May to create a first made in Canada Hospital information system.Turning to booking performance. As I mentioned earlier, total bookings for the third quarter of $23.6 million increased 61% sequentially and 25% year-over-year. System sales and support bookings saw 15% sequential and 16% year-over-year increase due mostly to strength in non MU3 related add-on bookings for our acute care EHR segment. In terms of net new acute care EHR bookings, the impact of the elongated decision time frames that we've mentioned on the past couple of earnings calls seems to be lessening somewhat, leading to a $700,000 or 19% sequential increase in related bookings.But we are still seeing headwinds against the prior year comparatives with net new acute care EHR bookings lagging the third quarter of 2018 by $1.9 million or 31%. TruBridge posted stellar bookings for the quarter that certainly bodes well for the resumption of significant growth for this segment increasing roughly 231% sequentially and 40% above the third quarter of 2018. This segment's $10.2 million of bookings marked the second highest in TruBridge history second only to the $10.6 million in bookings from the third quarter of 2017.This near record bookings performance was driven primarily by $4.6 million of bookings from customers outside of our traditional EHR customer base with GRH contributing less than $400,000 to the period's bookings. Of the $13.4 million in system sales and support bookings, roughly $800,000 is included in our third quarter revenues. $6.4 million represents non subscription sales that should trickle into revenue over the next 12-months, with an average lag between book and install of five to six months. $6.1 million represents EHR subscription revenue to be recorded over a weighted average period of five years with a start date in the next 12- months and similar to our non subscription sales, an average lag between booking and installs of five to six months.Our $10.2 million bookings from TruBridge include $2.5 million of one-time AR work down bookings that would largely expect to capture in revenues during the third and fourth quarters. The remaining $7.7 million of bookings are nearly all comprised of recurring revenues to be recorded over a one-year period starting in the next four to six months. As for key non financial metrics, five customer sites went live with our Thrive acute care product compared to six in the previous quarter and six in the third quarter of 2018.As for licensing mix, one of this periods go live was under a cloud or subscription model compared to three during the second quarter of 2019 and none in the third quarter of 2018. The five Thrive go-lives during the third quarter marked one less than we had anticipated as customer driven delays have shifted one of these implementations to the fourth quarter of 2019.At this time, we expect 15 new client facilities to go live with our Thrive solution in the fourth quarter of 2019 with 9 expected to go live in a cloud environment. These cloud implementations include a four hospital LTAC chain. Our employee headcount as of September 30th was roughly 1,931, a roughly 1% decrease from June 30th.Turning to the financial results for the period. TruBridge posted results that were up 4.5% sequentially and 11% over the third quarter of 2018. Strong volumes for our accounts receivable management services drove the sequential increase with GRH contributing $0.5 million in TruBridge revenues during the quarters, and increase of $400,000 over second quarter amounts. Excluding GRH, TruBridge revenues increased 3% sequentially and 9% year-over-year. Compared to the third quarter of 2018, our accounts receivable management services revenue increased $1.2 million or 14%, while the continued strong bookings performance during the trailing 12-months for our TruBridge RCM solution resulted in another strong showing by our insurance services division with revenues increasing $700,000 or 9%.Demand for our hosting services drove IT managed services revenues to a $400,000 or 12% increase. As we've highlighted all year, the trailing 12- months for TruBridge have seen some operational decisions made by a few of our larger customers that decrease their related patient volumes and consequently had a negative impact on our revenues for the quarter. These operational decisions were primarily related to the curtailment of lab services and closure of certain underperforming locations, creating $600,000 of headwinds against TruBridge revenue growth for the quarter.Without these headwinds, TruBridge would have posted 12% organic growth over the third quarter of 2018. These customer decisions and the related volume declines will fully anniversary during the fourth quarter so we don't expect these headwinds to have nearly the same impact on next quarter's comparative results. TruBridge gross margins expanded to a record 49% during the third quarter of 2019 compared to 47% during the second quarter and 45% for the third quarter of 2018. As a side note, GRH contributed $400,000 TruBridge cost of sales for the period, absent the impact of GRH, TruBridge gross margins were 50% for the third quarter.Next, system sales and support revenues increased $1.3 million sequentially with non MU3 add-on sales within our acute care EHR segment increasing $1.7 million to $6.3 million compared to $5.1 million average over the previous eight quarters. Year-over-year quarterly revenues were down $3.4 million mostly due to MU3- related revenues decreasing $1.9million as we near the end of this non-recurring opportunity. Net new acute care EHR implementation revenues decreased $1.8 million despite the right go lives remaining flat at six in each period as licensed mix and lower average contract value put pressure on revenues.Our cost of system sales and support increased $1.1 million or 6% sequentially as our cost of third-party software and content increased $800,000 due to one-time charges resulting from a vendor audit. Note that these one-time charges are not included in the adjustment for non recurring charges in our measure of adjusted EBITDA and non-GAAP net income. Despite these one-time charges for third-party software and content, year-over-year costs decreased $800,000 or 4% as recent cost savings initiatives have yielded improved payroll efficiency.These one-time charges also pressured gross margins with system sales and support margins for the third quarter of 2019 arriving at 54% compared to 55% in the second quarter. Year-over-year revenue declines outpaced costs improvement resulting in margins deteriorating from 56% to 54%. Absent these one-time charges, gross margins for system sales and support would have been 56%. Product development costs were essentially flat sequentially and year-over-year. GRH product development costs of $400,000 were largely offset by improved payroll efficiency and lower contract development costs.Sales and marketing costs decreased $400,000 sequentially and $900,000 year-over-year as decreased commission, marketing program costs and payroll costs more than offset the $300,000 year-over-year increase in sales and marketing from GRH.General administrative costs decreased $1.1 million sequentially with GRH making up only $200,000 at the quarter's expenses. As we mentioned on our previous earnings call, we hosted our Annual National Client Conference in San Antonio in May resulting in a $1 million of user group cost for the second quarter compared to only $300,000 of such cost during the third quarter. Bad debt expense decreased nearly $800,00 behind improved collectability, while severance and other non-recurring charges decreased $600,000.These cost decreases when combined with other cost containment efforts more than offset the sequential $1.8 million increase in employee health costs, driven by severe claims activity during the third quarter. Year-over-year costs have decreased $200,000 as a combined $1 million decrease in bad debt and severance and other non recurring charges was largely offset by increased employee health costs driven by severe claims activity. Despite the severe claims activity during the third quarter of 2019, year-to-date employee health costs have decreased $3.9 million or 36% from prior year amounts due to plan design changes intended to drive down cost, while still providing competitive benefits to our employees and their families.Lastly on the income statement, our effective tax rate during the quarter was 4%, a significant reduction from the 22.2% effective tax rate during the second quarter of 2019. The third quarter benefited from provision to return adjustments related to R&D credits claimed on our 2018 federal tax return which benefited the period's effective tax rate by 9%. Conversely tax shortfalls from stock based compensation and non-deductible costs associated with the GRH acquisition increased the effective tax rate during the second quarter by nearly 8% for combined 17% swing in effective tax rate. Normalized for these discrete items, we expect an effective tax rate of 16% to 17% for the next 12-months.In closing, our third quarter results reflect the progress we've made in both strategically growing our bookings pipeline and improving our cost structure and cash generation. The size and the mix of our third quarter bookings suggest that the pace of decision-making in the market is quickening. And the sources of opportunities are growing and diversifying. Between cross-sell opportunities within our loyal and sticky customer base, TruBridge's expansion beyond our EHR customer base; GRH and our nascent international presence, we are excited about our prospects for delivering profitable growth to our shareholders.And with that we'd like to open up the line for questions.

[Operator Instructions]The first question which comes from line of Jamie Stockton with Wells Fargo. Please go ahead.

Hey. Good evening. Thanks for taking my questions. I guess maybe to start the strong TruBridge bookings during the quarter, I guess maybe especially outside the base. A couple questions there. Can you give us any perspective on I mean historically how much have you actually booked outside of the TruBridge base? How should we think about that? I think you said $4.6 million and then maybe I think you guys called out $2.5 million of that were kind of one-time in nature that was going to fall into Q3 and Q4. How much of that was actually in Q3 and how should we think about the ramp in Q4? Thanks.

Hey, Jamie. This is Chris. So I'll take the second part first. I think we recognize about $900,000 in revenue from the one-time deal. On average I would say we've seen closer to the $1 million maybe $1 million to $2 million per quarter in bookings on the outside. I think what's exciting about this quarter is notwithstanding the large one-time deal is that we're starting to see across the spread of services that we offer, and also in different sizes. So we've got a physician clinic, surgical clinic that we've got in bookings, it's about $600,000 of recurring revenue year-over-year.MEDITECH facility that we will start to billing for the first of the year that's about $1.2 million. So we're starting to see some momentum in some different areas that we think we can build.

Okay, that's great. And then maybe just one more, Get Real Health, I think this is the second quarter in a row where you guys have kind of said, hey, the revenue from this business could be lumpy in the near term. A lot of potential outcomes here. Can you just give us a sense for kind of what is the sales pitch that you're going out with, I guess I'd love to just understand from your viewpoint how potential clients are thinking about this and what would get them over the hump that would allow a significant amount of business to flow from that acquisition.

Yes. Jamie, this is David Dye. Good afternoon. I'll hit that on two fronts. So first of all, it's large international opportunities either provincial wide or an entire country typically our opportunities that we've experienced thus far are government based healthcare provinces in Canada and countries in Europe and the Middle East and in Australia / New Zealand where we have active opportunity. And our license in such a way that it's based on the population usage of the portal. So that as it rolls out the ability to recognize the revenue goes up as a result.In particular, the opportunities in Alberta and Saskatchewan, although they've gone well as the rollout and Alberta has occurred, I think we have about 95,000 live active individuals that are live on the portal there in Alberta right now. And it was Saskatchewan did a soft rollout of beginning about two weeks ago. What's been delayed is the provincial wide marketing rollout in both provinces. In Alberta, it was due to a called election that occurred in the spring. And a change in government and there is still a very much an expectation that that will happen in the near term in both provinces.So that's part of the reason why there is an expectation of some increased --some substantially increased revenue and we just have to wait until the large rollout occurs. Domestically, the opportunity right now is around chronic care management and the ability for TruBridge to go out and sell that to our existing customers and to run that program for them. It's-- obviously, it's exciting for our customers and then it gives us an opportunity to increase their revenue and it's exciting for us because we get to charge a percentage of that revenue that we increase.

Your next question comes from the line of Donald Hooker from KeyBanc. Please go ahead.

Great. Good afternoon. So how do we think about gross margins at TruBridge going forward with that big uptick in the quarter? I mean what is it --what is a normal run rate? I think that's the highest gross margin here you had for a long time. Can you walk us through how to think about that kind of in the context of what's going forward?

Yes. Donald, this Chris. I think our traditional margins are going to stay intact. I think that the one-time deal is having a little bit of an impact on that. So notwithstanding the one-time $2.5 million bookings, we will hold pretty -- hopes are pretty much as it relates to margins. So our accounts receivable management will be just north of 30 swinging up our TruBridge RCM being in the mid to high 70s.

Yes. Like for the consolidated TruBridge, should we assume kind of in the mid 40s?

Mid-40s consolidate, yes. Notwithstanding one of these one-time events that we get. We hopefully will see these come in but we're not going to have those projected in the run rate.

Got you, super. And then from a free cash flow, it seems like you've had some good progress there which is good to see. There's still a lot of financing receivables on the balance sheet. My understanding was that was part of MU3or a lot of that was part of MU3,if I'm not mistaken. I guess with that program rolling off now are we going to see some of those balances come down and turning the cash flow for you guys?

Yes. Don, so this is Matt. Yes, you're exactly right that a significant portion of those findings to receivables particularly the current portion on the balance sheet are from MU3 and as we continue to work down the collection of those, we should continue to see findings to receivables pulling down. This was the third straight quarter that we saw a positive cash flow from findings to receivables and we do expect that to continue for at least the next 12-months.

Super and then one last one for me. With regards to GRH, I think you have some earnout payments that are based on the EBITDA performance of GRH, so any thoughts there as to maybe a cash outflow with regard to those are announced. I think in early 2020, if I recall.

Yes. So any cash outflow would happen, I believe it has to take place by the middle of March of 2020. And so as of today we build it especially with the delevering steps that we've taken that we're primly positioned to be able to accommodate that with the existing sources of capital between now and then. Even in worse case scenario.

Your next question comes from a line of Jeff Garro with William Blair & Company. Please go ahead.

Yes. Good afternoon. And thanks for taking the questions. Want to ask about bookings and could maybe dive in a little bit more on why things have turned the corner? If you could help kind of bifurcated whether anything's kind of changed in the broader market or if there's something that really specific to CPSI that's helping more of these deals close to finish line and few in the pipeline from here.

Jeff, good afternoon. So first from the EHR perspective, yes, there has been a change. And obviously the fact that Athena health is not actively pursuing any new businesses, change from the market since the beginning of 2016. I mean given that they were certainly one of the major players competitive during that period of time, if you have anywhere from 30% to 50% of your competitions were dropout, that's a positive. And so we're benefiting from that.On the EHR side and we feel that we will continue to benefit from that, obviously, if we take a look at the --obviously ,we had a good quarter, but if we take a look at the way we've started this quarter in the way the pipeline looks on the EHR base going forward, we're really confident in our ability to increase sales they're going forward.Number two on the TruBridge side, especially the TruBridge, we call TruBridge job market or outside of the CPSI EHR base, a couple things. One, we've been actively --more actively working on that over the course of the last 12 to 18 months. We've increased our sales effort there both in terms of marketing and in terms of the number of people on the grounds that are working there. And we also made a change in leadership there, early this year that we think it had a significant, it helped us significantly as well.

Great to hear, that's very helpful. One more from me on the implementation schedule for next quarter. It's nice to see it at a higher level, but would welcome comments from the team on your capacity, your confidence in implementing all 15 and the related margin impact of getting that done.

Yes. As far as the capacity of implementation things, absolutely, we don't have any issues there at all. As Matt mentioned in his prepared comments for this or long-term acute care facility, so they don't require near the implementation staff that a larger full system does. I'll let Matt speak to the margin side of your question.

Yes. So naturally with that pull of an implementation calendar even with it being heavily tilted towards subscription deals, we do expect to see some fairly moderate margin lift for Q4 versus Q3. So it will have a positive impact.

Your next question comes from the line of Stephanie Demko with Citi. Please go ahead.

Hey, guys. Thank you for taking my question. Congrats. So bookings came back in a really meaningful way this quarter and we have the same sort of product suite, so what do you think change in the environment? Was it approaching more distressed hospitals that were really ready to outsource? Was it the local hiring issues that you talked about last quarter or was there something else that just came together?

Thank you, Stephanie. This is Chris. I'll kind of build on David's answer to Jeff a second ago. I think he touched on the EHR front and then the TruBridge then. I think the third part of that is when we're looking at the nTrust. And how just over the course of the last let's say 6 to 18 months just from an education of both the customer base and from our sales staff of really finding those opportunities to drive the return on investment for the customer. And looking at it from two fronts. One obviously where we have customers that are looking at specific add-on applications that they would like to acquire. That creates an opportunity for us to bring in the interest opportunity, specifically thinking about the emergency department application and also our ambulatory application being the main drivers there.And then secondly from AR performance standpoint, so we have obviously our customer base. We have a lot of smaller hospitals in some remote locations and from an access to talent and ability to deliver quality service on the account receivable management side could be a challenging. So those are the two areas that the sales staff is really zeroed in on being able to speak to adequately to make sure that we're positioning the service and we're really starting to see the uptick in that obviously from a bookings in the third quarter, the Davis point we're off to a good start in the fourth quarter as well.

Understood. That's good to here. So it's more broad-based and you've alluded before to some election uncertainty may be weighing in on this before. So there are certain pockets of solutions that are just really selling like some of the ones you mentioned versus some that are getting paused or are that just off the table?

I don't know if there's necessarily any additional pause going on. I think there was a bit of a lag and again we've seen the pipeline fill up. We've seen some nice decisions be made but we haven't exhausted the pipeline. So I think there was just a little bit of a delay between the regulatory demands and the forced decisions that people were having to make. And that's subsided and people are back to being in a buying mode.

Your next question comes from the line of David Windley with Jefferies. Please go ahead.

Hi, thanks for taking my question. Good afternoon. Kind of follow-ups to the last couple of questions. So heard your comments about Athena kind of vacating your area of the market from a competition standpoint. Wondering if you're seeing any of the same medium to bigger players actually coming down and competing? So any kind of gross new adds to the competitive set, understanding that you kind of run under the radar screen of the biggest players but nonetheless interested in whether you see anybody coming down and kind of replacing that Athena competition.

Certainly not any more so since Athena let the market and we would say it's early right. But we would say at this point potentially less. We believe that some of the larger players were down in our market a little bit more during Athena's entrance. And sort of their near timer there over the course of three years in a desire to compete with them downstream, so that they potentially wouldn't be active upstream down the road someday and now that that threat appears to be gone at least for the time being, we believe we're seeing a little bit less of those players down in our space. But it's a little bit early to declare that that's an absolute.

Okay and then certainly understanding that with less competition should come firmer pricing but wondering there and relative to your comments about a quickening pace of decision-making and more people, more of your target or pipeline being willing to make decisions. I just wondered what the pricing environment feels like right now and if maybe some of that quickening decision making is being incented to be done? Thanks.

Yes. We're seeing -- we're actually seeing, again, this is a short-term observation to this point, but the pricing environment is improving in our favor due to the lessening in competition we believe. That wasn't necessarily reflected over the course of the third quarter because we did sign specialty hospitals and some long-term acute care facilities in that timeframe. But in terms of what we saw from the acute case, acute care area sector in the third quarter what we've seen thus far in the fourth quarter on the pricing environment is notably improving.

Your next question comes from the lien of Donald Hooker with KeyBanc. Please go ahead.

Yes. Just one other kind of housekeeping item. In terms of the MU3 sales in the quarter. I think you said, it was down a $1.9 million year-over-year. So I guess it is about $1.2 million. If I did my quick math here for the third quarter, are we done with those software sales for MU3? Is there kind of reason for revenue there to be recognized in Q4 and 2020?

Yes. Don, you're exactly, right. Q3 revenues from MU3 were $1.2 million; bookings were $600,000. So today throughout the life of this opportunity, we've recognized $32.7 million of bookings with revenue with $32.7 million of bookings. So as of 9/30, we've completely exhausted the backlog there. While there's still some opportunity going forward, we certainly don't expect it to be to be meaningful.End of Q&A

There are no further questions at this time. I'll now turn the call back to your. Please continue with the presentation and/or closing remarks.

Certainly. Just want to thank everyone for being on the call today. And hope you have a great rest of the day. And great rest of the week. Thanks a lot.

That does conclude the conference call for today. We thank you for your participation. And ask that you please disconnect your line.