TruBridge Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 8, 2024

Key Takeaways

  • Bookings exceeded $20 million for the fourth consecutive quarter, driving year-to-date totals to $68 million.
  • Organic Financial Health revenue grew by 5.3% year-over-year, while core CBO bookings increased by double digits this quarter.
  • Adjusted EBITDA rose 42% to $13.8 million, with margins expanding sequentially to 16.5%.
  • Cash flow from operations improved by nearly $9 million year-over-year to approximately $21.8 million, aided by a 5% sequential decline in accounts receivable.
  • The integrated nTrust solution reached 78 clients—up nearly 30% year-over-year—with 22 total sales in 2024 versus 18 in all of 2023, highlighting strong cross-sell momentum.
AI Generated. May Contain Errors.
Earnings Conference Call
TruBridge Q3 2024
00:00 / 00:00

There are 8 speakers on the call.

Operator

Greetings, and welcome to the TruBridge Quarter 3 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Drew Anderson.

Operator

Thank you. You may begin.

Speaker 1

Thank you. Good morning, and welcome to the TruBridge Q3 2024 Earnings Conference Call. Leading today's call are Chris Fowler, President and Chief Executive Officer and Vinay Bassey, Chief Financial Officer. This call may include 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. The company cautions 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.

Speaker 1

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 public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, the most recent annual report on Form 10 ks. The company also cautions investors that the forward looking information provided in this call represents their outlook only as of this date, and they 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.

Speaker 2

Thank you, Drew, and thank you to everyone joining us this morning. As many of you know, we're on a journey. And today, I'm pleased to report that we've reached some of those first milestones we've hoped to achieve. We feel really good about the progress we've made so far and our trajectory as we head into the final months of the year. Before I jump in, I'd like to highlight that going forward we will now refer to our RCM business as financial health and our EHR and patient engagement business as patient care.

Speaker 2

Bookings in the 3rd quarter remained strong building on the trends from the first half of the year and marking our 4th consecutive quarter with more than $20,000,000 in total bookings. Our financial health revenue growth is solid on an organic basis excluding Bugle. Financial health revenue grew 5% and our core CBO business is up by double digits in the quarter. Adjusted EBITDA also increased and margins continue to expand sequentially coming in at 16.5% this quarter. And finally, our cash flow from operations is roughly $22,000,000 year to date, an improvement of almost $9,000,000 compared to last year.

Speaker 2

As I reflect on what we've accomplished in the Q3, I'll highlight progress on our integration of YUGAL, momentum and interest for our interest solution and updates to our analytics offering. We've made steady progress on our integration of the Bugle acquisition. And as of the end of the quarter, we have more than 30% of our CBO and EVO customers now supported by our team in India. Through the end of the year, we will monitor and adjust the operations around this first wave of customers. By the end of 2025, we expect to double the number of customers that are supported by our workforce in India to 60%.

Speaker 2

In addition to accommodate the increased customer transitions, we will have more than 500 employees in India by the end of this year and nearly 700 by the end of 2025 supporting our CBO clients. While we are pleased with our progress so far this year, we remain laser focused on stabilizing the operations and expect to yield significant margin improvement in 2025. I recently visited our office in India with other members of management to meet with our newest team members. Our goals for this trip were to build excitement about being part of TruBridge, celebrate our success to date and align on what's next. India is a very competitive market for talent.

Speaker 2

So it's important that our new team members are engaged, view themselves as part of a larger team and clearly see how they directly impact and contribute to our success. I'm proud to say that our integration efforts have helped us to maintain a lower than average employee attrition rate in India. Moving on to nTrust, our integrated financial health and patient care solution, we continue to gain traction in the market and our customer count now stands at 78 clients, up nearly 30% year over year and signaling our success in these efforts. In the quarter, we added 1 net new client and closed 5 contracts with existing patient care clients. As we look at our success in the year so far, we are selling at a faster pace in 2024 with 22 sales year to date compared to 18 for the entirety of last year.

Speaker 2

Our interest sales are not all created equal. Remember that the contract value is based on the volume of each facility and we are focusing our efforts on getting more customers onto this solution and we anticipate some variation in revenue as we continue to sign the new contracts. We touched on our analytics offering earlier this year when it was launched and as an update, we're pleased with the uptake so far. Today, our offerings leverages customers' data to provide insights on how they can better run their businesses. Early users have benefited from dashboards that are making it easier for them to improve clinical outcomes with their chronic care population and our solutions have identified bottlenecks in the revenue cycle allowing our clients to address root cause problems to reduce collection times.

Speaker 2

This has added value to the existing installed base, gives potential EHR customers another reason to buy and enhances the experience with our RCM solutions. We launched analytics in the Q2 and continue to invest and gain interest with our sales and our marketing efforts. Early feedback from customers has been tremendous and we believe this opportunity will contribute to our revenue growth over the next few years. Before I turn the call over to Vinay, I'll spend a few minutes on changes to our Board of Directors and our management team. Last month, we announced that Denise Warren will be stepping down off of our Board to pursue the role of Chairman of Brookdale Senior Living.

Speaker 2

I want to take this opportunity to publicly thank Denise and express how much we have enjoyed working alongside her for many years. We wish her the best in all her new endeavors. To fill her seat, we announced the election of Amy O'Keefe to our Board. Amy brings invaluable financial and operational expertise to TruBridge. Her appointment reaffirms our commitment to building a strong engaged Board to guide us towards our next stage.

Speaker 2

From an executive leadership perspective, we are elevating the roles of our business unit general managers making it so they will now report directly to me. When I assume the role of CEO 2 years ago, we purposely evolved and expanded the scope of our 2 business units and feel this is a natural time to make this transition. In the beginning, we felt they could benefit from the additional support of a COO and David Dye took on the responsibility to guide and develop them. We have been planning for this transition for some time now and feel that the GMs have evolved and are ready to take this step. The role of COO will be eliminated on December 31, but David will remain a member of our Board until his term is completed next year.

Speaker 2

David has made a true impact on our company over the past 34 years and is a key factor in us getting to where we are today. In a world where everything is measured and scored, it is next to impossible to truly measure the impact David has had on our organization. I've had the pleasure to work for him and with him for most of my tenure. I will cherish his leadership, his mentorship and his friendship that he has shown and he will truly be missed. I'm proud of our team's continued progress this quarter.

Speaker 2

We've delivered consistent results building on the momentum from the first half of our year. Our focus on our financial health business continues to drive growth and we're seeing encouraging traction with our nTrust solution. The strength of our bookings and our pipeline gives us confidence in our outlook for the remainder of the year and beyond. As always, I want to thank our dedicated employees for their hard work and our customers for their continued trust in TruBridge. We look forward to closing out 2024 on a strong note and carrying this positive momentum into the New Year.

Speaker 2

With that, I'll turn it over to Vinay.

Speaker 3

Thank you, Chris, and thank you all for joining our call this morning. Today, I'm going to update you on the financial initiatives we have been working on, run through the Q3 results and close by discussing guidance for the rest of the year. Our Q3 financial results continue to demonstrate the strength of our underlying business and the progress we are making against our financial objectives. Our first priority was to improve cash flows and working capital management. We continued to make progress in this area in the Q3.

Speaker 3

In Q3, we generated $10,100,000 of cash flow from operations, an improvement of $7,000,000 versus the prior year. This brings our year to date total to $21,800,000 versus $13,300,000 in the 1st 3 quarters of last year. Our accounts receivable balance is down 5% sequentially and DSOs continue to improve consistently and are down approximately 8 days from quarter 1. 2nd, we are optimizing the business and expanding profitability. We made meaningful progress on this front.

Speaker 3

We successfully completed the cost rationalization actions identified in Q2 'twenty four with 4 with a reduction of expenses by $5,000,000 this year beginning in April, which equates to approximately $8,000,000 of savings on a full year basis. Further, we continue to focus on expense management, including labor and vendors. This step This includes steps in transitioning the RCM offshore services, balancing the savings and customer satisfaction. As a result, our adjusted EBITDA margin has increased to 16.5% this quarter, an improvement of approximately 4.70 basis points compared to the prior year and 165 basis points sequentially. 3rd, we are increasing the quality of our reported earnings.

Speaker 3

The percent of capitalized software in the quarter was 5.2%, down 190 basis points compared to prior year 63 basis points since the Q1. Year to date, up to Q3, total capitalized software was $13,700,000 $4,000,000 lower than previous year, primarily driven by Sunsetting Centric and other lower return on investment projects. We are also focused on rationalizing our real estate footprint. In October 2024, we sold some real estate in Mobile, Alabama for $2,800,000 gross with net proceeds of $2,500,000 As of the end of Q3, we show it as assets held for sale. Finally, our 4th priority was to improve our forecasting and accounting processes.

Speaker 3

It's been a few quarters and I certainly feel we are improving as an organization with additional processes, increased accountability and monthly reviews of results. Since the Q2, we have identified 2 material weaknesses in our internal controls reported in our 10 Q. We have robust plans in action for remediating them and have added new members and external advisors to our finance team. There has been no material impact on our financial statements and we expect the controls to be effective in the next few quarters. Now turning to the Q3 review.

Speaker 3

We delivered solid results demonstrating our continued cost discipline as well as operational initiatives to further enhance our global capabilities and infrastructure. Bookings in the Q3 were $21,000,000 an increase of 40% versus the prior year. Taking a closer look at the growth, Financial Health bookings increased 38% driven by growth in 4, RCM, CBO and V Go and Patient Care bookings increased 43%, primarily driven by growth in add on sales from our existing customer base. Year to date, the total bookings were $68,000,000 an increase of 22% versus the previous year, mainly due to the bookings growth in core RCM and Patient Care. Moving down the P and L, revenue of $83,800,000 in the quarter was up just over 1% compared to last year.

Speaker 3

The divestiture of AHT in January of this year and the impact from Sunsetting Centric by year end was offset by the positive contributions from VOOGLE, which we acquired in the Q4 of last year. Excluding ASP and Centric, revenue in the quarter was up 9% year over year. Financial Health revenue, including Viogul, of $54,300,000 represented 65 percent of total revenue and was up approximately 17% compared to the prior year. Excluding Viogel, Financial Health organic revenue grew 5.3%, primarily driven by double digit growth in our core CBO offering. Patient Care revenue of $29,600,000 decreased 18% compared to last year, primarily due to the contribution from AHT and Centric, which accounted for approximately $6,000,000 net impact in the quarter.

Speaker 3

The efficiencies we are realizing in operations, labor and spending discipline are all becoming apparent as we saw notable improvement in gross margin for both Financial Health and Patient Care. Total gross margins of 49.5% increased 2 50 basis points compared to last year. Financial Health gross margins of 46.2% compared favorably to 41.7% last year, an increase of 450 basis points driven primarily by Fugl and increased revenue growth. We are also starting to see positive impact on margins from the global workforce as we transition and stabilize the work offshore. Patient Care gross margins of 55.4% was also up approximately 160 basis points year over year benefiting from cost rationalization including the work and additional cost actions taken in 20 24.

Speaker 3

Total reported operating expenses of $39,500,000 in the 3rd quarter represented 47.1 percent of revenue compared to 53.3 percent a year ago. The decrease is due to reduction in product development, sales and marketing and G and A, primarily driven by divestiture of AHT, 2024 cost actions, lower non recurring expenses like severance and enhanced expense management, partially offset by increased expenses from Bugam. Adjusted EBITDA in the quarter of $13,800,000 increased 42% compared to last year. Adjusted EBITDA margin in the 3rd quarter of 16 point 5% showed a consistent improvement from 11.4% in the 1st quarter and 14.8% in the 2nd quarter, driven primarily by increased revenue in Financial Health in both core products in Fugl and 2024 cost actions. Moving on to the balance sheet, we ended the quarter with $8,600,000 in cash, up $900,000 sequentially and nearly $5,000,000 since the beginning of the year.

Speaker 3

This increase is a direct result of our intense focus on cash management and process improvements we have implemented since the start of the year. Total net debt at the end of the quarter was $168,000,000 and during the quarter, we paid down another $3,000,000 of principal on our debt, bringing the total year to date payments of $20,000,000 Our leverage ratio has been declining in the past 9 months and is currently in the mid-3s. We reiterate our goal of getting it down to the range of 2.5 times to 3 times through adjusted EBITDA and potential debt repayments. Finally, turning to guidance. For the Q4, we expect revenue to be between $83,500,000 $85,500,000 and adjusted EBITDA between $13,500,000 $14,500,000 With this guidance, we are narrowing our full year revenue guidance to $335,000,000 to $337,000,000 and adjusted EBITDA to $49,000,000 to $50,000,000 which is at the higher end of our previous guidance of $45,000,000 to $50,000,000 The midpoint of the Q4 ranges implies the adjusted EBITDA margin of 16.5%, almost flat to Q3 'twenty four.

Speaker 3

This is driven by a slight uptick expected in our G and A expenses due to increased costs for remediation of internal control weaknesses and additional costs as we step our efforts to collect aged receivables as demonstrated by our improvement in free cash flows. We believe both items are short term in nature and anticipate these expenses return to a more normalized level by mid-twenty 25. In conclusion, I'm pleased with our Q3 results and especially the continuous improvement in the following metrics. Bookings exceeding $20,000,000 for the 4th consecutive quarter Financial Health revenue growth of 16.5% shows continuous improvement each quarter. Year on year growth in Financial Health organic revenue, which excludes VIVIL, was 5.3% and continues to improve each quarter.

Speaker 3

Adjusted EBITDA margins continue to expand over the course of the year as we anticipated from 11.4 percent in Q1 to 16.5% in Q3. Cash flow from operations of $21,800,000 year to date improved $8,500,000 versus prior year and $20,000,000 in total year to date debt repayment incremental to normal amortizations. We have also made notable progress as an organization implementing financial rigor. There is still more work to do, but I feel we are laying the foundation this year to deliver predictable and sustainable growth. With that, let's open the call to questions.

Speaker 3

Julien?

Operator

Thank you. We will now be conducting a question and answer session. And our first question comes from Sean Dodge, RBC Capital Markets.

Speaker 4

Yes, thanks. And congratulations on the great results this quarter. On the bookings, you're making impressive progress in financial health on both new clients and the cross sells. Maybe just on the net new, Chris, is there any kind of characterization you can provide around what these net new clients look like? Are these predominantly smaller hospitals?

Speaker 4

Are you starting to get traction moving up into larger institutions? And then just any kind of broadly any change you're seeing in just kind of the macro demand backdrop on the revenue cycle side?

Speaker 2

Yes. First of all, thanks, Sean, and thanks for the kind words at the top. Yes, it's a great question. And to be honest, I was actually at a hospital earlier this week in Kansas that we recently signed and are going live with the first of the year. It's a 150 bed hospital, not running our EHR.

Speaker 2

And so we are starting to see some momentum into that 100 to 400 bed space. And that's really, I think, where obviously our name is well known in the critical access or in that more and more rural to size. But I think our big opportunity is really seeing that traction take off in that 100 to 400 bed space. From a macro perspective, I would say we're just continuing to see the same trends that we've seen over the past few quarters and that there is continued pressure on the labor from whether it's the talent that knows how to do the billing or just the pressure on the wages that they're having to pay. And then secondly, the continued complexity in the billing as we continue to see a bigger move towards that Medicare Advantage, which is creating a little more complexity, a little more challenge in making sure that the dollars are coming in 1 on time and 2 as they should be.

Speaker 2

So I think that those will continue and continue to kind of push the demand that we're seeing.

Speaker 4

Okay. That's great. And then Vinay, the progress Chris mentioned on the offshoring, if we think about how the savings from that flows through, there's some duplicity initially when you make those transitions in terms of cost. You mentioned starting to see some net savings there in this most recent quarter. But just any kind of update on how we should think about when we start to see those savings flow through more meaningfully and just kind of any quantifications you can provide there?

Speaker 3

Yes. So I would say we have started seeing, I would say, a smaller net savings coming from Q3. I expect the larger ones in Q4. Reason I'm hesitant to give an absolute number right now, Sean, I hope you appreciate it, is because I want to see a more predictability and stabilization. So you are absolutely right.

Speaker 3

As we have recently moved a lot of customers to India, the double barrel is now getting tighter. We are seeing the uptick of stabilization of their revenues of cash collection. So I would say Q4 will be a little more is what I'm expecting. But I think in our guidance in next year is where I would be in a better position to give a more robust number. But I expect 2025 to be significantly better significantly higher, at least in the high single digit millions on a run rate is what I'm expecting by 2025.

Speaker 4

Yes.

Speaker 2

And just to add a little extra color there. So we're obviously laser focused on making sure that the experience for our customer is not impacted in this transition. And so there is that double barrel from a staffing impact and making sure that the transition is as smooth as it can be. And with that said, every time that we do another tranche of customers that we move over, we've learned from our previous one. And so to the point of the expectations going into 2025, we think that that it's only going to improve.

Speaker 2

We're going to see the stabilization of the customers that we've moved over and also our ability to expedite that transition as we go forward.

Speaker 4

Okay. That's helpful color. Thanks and congrats again.

Speaker 2

Thanks, Budd.

Operator

Thank you. Our next question comes from Jeff Garro, Stephens.

Speaker 5

Yes, good morning and thanks for taking the questions. And I think, first of all, congrats to David on a well deserved retirement and really appreciate all of the insights that we've gathered from David on the industry over the years. And on my first question, maybe just to kind of follow-up where you guys and Sean left off. It looks like great progress on financial health gross margins with even more to come. I was hoping you could help us think about resourcing versus client transitions to the offshore model.

Speaker 5

You spoke about doubling clients on the offshore model by the end of next year, but by our math, it looks like you're playing on resources growing by only about 40%. So could you help us think through how much you're resourcing ahead of further transitions versus leverage you're achieving on incremental resources? Thanks.

Speaker 3

So, yes, so think about it in 2 ways. You're right from where we are to the customer base. So there is as you look at, we have to help get the customer experience better. There is an over indexing of some of the people. Double barrel is another one that we are carrying.

Speaker 3

As things stabilize next year, so that extra the incremental high end of higher resources that we go will level out as we go to the next 30%.

Operator

Did I

Speaker 3

answer your question, Dan?

Speaker 5

I appreciate it. Yes. Yes, yes, that helps. And maybe to transition topics, I want to ask about the competitive environment. Some of your peers have either announced new products that will come to market eventually or have announced general availability of some new products, also saw a recent class report out focused on your market segment.

Speaker 5

So I think timely to get an update on how you're seeing the competitive environment. I guess that's a little more focused on patient care, but we certainly welcome your remarks on the Financial Health segment as well.

Speaker 2

Yes. And again, let me first say thank you for the nice comments to David. I tried to drag him on to the call and he said he enjoyed really being a bystander here. So I'll pass on the nice words that you shared. I'm sure he's listening too.

Speaker 2

Yes, I would say on the patient care side, yes, we've seen the announcements from some of our competition about the new EHR. Again, we continue to be focused on how we're making incremental improvements on the EHR as well, how we are taking advantage of like the analytics offering that we're talking about and really focusing on driving the outcomes and driving to efficiency. I think that like what we're seeing is, again, the same pressure that our customers are seeing in the financial health space with the labor market, the same challenges there in the patient care side. And so for us, the focus is on how do we make the software work more for them, so that they're allowed to not spend as much time in the software and more time with their patients. And I think that that's resonating with our customer base.

Speaker 2

And as you've seen our success over this year from a patient care standpoint on the bookings front, I think that we're on the right track there. We continue to differentiate in our implementation and our support models as well. And again, feel confident about what the future looks like there. On the financial health side, similar to that, we think about the leveraging of that technology to really drive the service that we deliver. And so making sure that our efforts are focused on the technology supporting the work that we do, so that we're able to be more efficient and provide scale to our customers too.

Speaker 5

Actually, maybe one follow-up on the patient care side and to tie in the prepared remarks around the success and traction with nTrust and specifically the remark that each contract is not equal. I guess maybe help us parse out whether that comment is more geared towards our modeling of converting bookings to revenue? Or should we be thinking about that as related to your go to market approach to try to capture incremental market share?

Speaker 2

I think the call out there is really more to say that because we're pricing on a percentage of collections and that's based on the volume at the facility, we have in our market, we obviously have a pretty wide range that we can offer to. So I would say our garden variety hospital may run somewhere in the $10,000,000 to $12,000,000 of net patient revenue. But obviously, there's variance to that. And so it's just to call out that while we're obviously very keen on the revenue, we're as focused on just capturing market share and bringing them into the fold and that may be a $5,000,000 net patient revenue hospital compared to a 15 $1,000,000 And what we don't have visibility into is how they're going to come through in the pipeline and transition. And so there is volatility there and that was the reason for that call out in the prepared remarks.

Speaker 5

Excellent. That helps. And last one for me. I certainly recognize that it's early, but I was hoping you could discuss some headwinds and tailwinds for 2025. And maybe more specifically, why not the organic revenue growth rates that you referenced and to the extent that they're recurring organic revenue growth rates are good run rates to think about on a go forward basis?

Speaker 5

Thanks.

Speaker 3

That's a great question, Jeff. That's what I've been working for a couple of months and we will give you guys the full view by obviously in our guidance thing. But this is I can share the directional view where we are thinking. We are at least directionally looking or trying to look at mid to high single digit revenue growth and few 100 bps a few 100 basis points increase in EBITDA margin with a goal to touch at least a 20% EBITDA margin in 3rd or Q4 of next year, because this is built on the momentum that we will we want to exist. So Q4 becomes an important quarter.

Speaker 3

Obviously, some of these short term upticks of expense will go away, but that's what we expect with the bookings momentum translating laser focus on our internal processes as well as the operational rigor that we have put in and with the offshore margins and success kicking in. That's our current line of thinking. And obviously, we are refining working through our planning cycle right now and we'll share more in the next call.

Speaker 5

Appreciate those insights. Thanks again for taking the questions. Thanks, Jeff.

Operator

Thank you. Our next question comes from Stephanie Davis, Barclays.

Speaker 6

Hey, guys. Thank you for taking my question. And I echo the congrats to David. Hope he's going to enjoy some time off. I was hoping to dig in more to your revenue cycle cross sales, just given it sounds like that's really taken off.

Speaker 6

So could we hear more about insights into the process, what's getting clients excited and over the finish line, since I know sometimes those are more emotional deals to close given how you have to go and change your staff. And maybe how you're orienting the sales team to properly get your arms around this opportunity?

Speaker 2

Yes. Thanks for the kind words for David. And I know time off, but remember we're going to keep him pretty busy on the board as well. So don't get too excited for him. But going to the cross sell, yes, we continue to see the momentum.

Speaker 2

And I think first, it speaks to the belief in our customers in the in our continued focus and delivery on the patient care side on the EHR part of the business for them to want to look to us as the solution on the RCM side. Do think that we have also done a good job of bringing in additional partnerships, I'll reference eye to eye as we think about delivering solutions for our customers around value based care so that they can take advantage of those programs that are out there. But again, it's for what we see, it's about just the day in, day out delivery of that RCM process, the cash collections that need to come in on a consistent basis day after day. And as we've talked about the stress that's placed on our facilities, both from a labor constraint and also the continued complexities of the billing, knowing that there is somebody like TruBridge that's singularly focused on this end of the market that's been doing this for 20 plus years and has shown consistent delivery and results over that period is a confidence for our customers. And again, I do think it helps that it is a connection to the EHR that not only are they getting a highly qualified staff on the collection side, but that partnership with the EHR and the technology gives another level of transparency that they may not be able to find in other solutions that are out there.

Speaker 6

And how does the kind of impact your end market impact some of their buying decisions, just given you're going to have the election probably changes the insured mix at your hospital clients. There's a bit of an M and A friendly environment. And also let's throw in, we've had some weird weather too, right? There could also cause a little bit more disruption considering your client base.

Speaker 2

I didn't hear the last part. What was that, Stephanie?

Speaker 6

The weather and IV shortages, all the disruptions that you could be seeing if you're a critical access hospital.

Speaker 2

Yes. I will say this. I mean, we obviously keep an ear to the ground of what's going on in Washington. And I don't want to get too far on a limb here, but our customers have been insulated for the most part and I don't foresee a lot of impact to them negatively based on the election. There may be a little bit of additional emphasis that is applied to the Medicare Advantage plan.

Speaker 2

So that changed to more of that commercial process and the value based care model. I honestly think that gives us even more of an opportunity than the traditional fee for service model that we're in today. Again, when you're looking at the facilities that we're doing this for, they're constrained from a resource standpoint and are focused on the task at hand day to day. Sometimes don't have the opportunity to lift their heads up and kind of see the bigger field and what's coming around the corner. And I think that's where we can really step in and make sure that based on our size, our scale that we're able to deliver that for them.

Speaker 2

So I think the changes that are coming or that will continue to come, I think will only benefit our ability to be able to capture the market from an RCM standpoint.

Speaker 6

I'm glad you can give them an open hand. Last one out of me, I can't let Vinay fill us out. Are there any other rationalization opportunities next year? I mean, you're moving a lot of your client service offshore. Is this a near term cost opportunity?

Speaker 6

Are you planning on maintaining more of this hybrid model as you go forward?

Speaker 3

So I think it will be there will be majority of our customers will move to offshore, but it will be we will have a mix of domestic as well as offshore, if that was your question. But increasingly, I think our focus will be to moving the customers more to offshore resources. And now on the cost rationalization, I would say, I would always in my seat, I would be wrong to say I always feel there will be more opportunities, but I want to be realistic. I want to cross the second hurdle, get it under the bag, get the process and the DNA in the company go to the next level after that. But I would say we continuously evaluate other areas where things will be, but I just want to make sure we make this a global success for us.

Speaker 2

Yes. And just to add on to that, I mean, it is a journey. I mean, but at the we have to remind ourselves that we want to continue to grow the business and we want to deliver to our customers. And so we've got to be mindful against short term gains for the long term success. And so to Vinay's point, I think what we've laid out this year and what we've accomplished shows the new discipline in the organization to continue to look for those incremental adjustments and improvements and that we're not done.

Speaker 2

We're going to continue to turn over the rocks and make sure that we're operating as efficiently as we can with a mindset on that client delight at the very top of the at the very top of the house.

Speaker 6

Super helpful. Thank you guys.

Speaker 3

Thank you, Stephanie.

Operator

Thank you. And our last question comes from George Hill, Deutsche Bank.

Speaker 7

Hi, good morning. It's Maxi on for George. Thanks for taking the question. So we are hearing a lot about increases in claim denials from MCOs. Are you guys seeing similar trends?

Speaker 7

And is it impacting RCN business at all? And how can TruBridge help clients with that, the non appeal process? Thank you.

Speaker 2

Yes. Thank you very much. Yes, I mean, it's something that we've always seen. And again, as we see that proliferation of the Medicare Advantage plans and that continue to grow, obviously that challenge is only going to increase. And as I said earlier, I think that provides an opportunity for us to be able to help our customers even more.

Speaker 2

I think what differentiates us again is the fact that we manage and run and invest in our own technology and use that for our customers. And so as we identify process opportunity to have that root cause impact on where those denials are starting and being able to implement new technology to be able to stop the problem where it starts, so that when the claims are submitted that we have a higher rate of acceptance and payment. And so we'll continue to drive that for our customers.

Speaker 7

Thanks. That's very helpful. And just a quick follow-up on Stephanie's question. Could you give us an update on how much of your EHR customer base is currently also using our RCM solutions? Just wanted to assess how much white space is left for cross sells?

Speaker 7

Thank you.

Speaker 2

Yes. So we currently have 78 customers that are running our nTrust solution where that's the combination of both the EHR and the RCM services. Got

Operator

it. Thank you. Okay. Looks like there are no further questions at this time. I would like to turn the floor back to Chris Fowler for closing remarks.

Speaker 2

Thanks, Julian, and thanks everybody for waking up with us this morning. We appreciate your interest in TruBridge and hope everybody has a wonderful weekend. Thank you all.

Operator

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time.

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