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BASIS OF PRESENTATION | 9 Months Ended
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Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated balance sheet at that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of Computer Programs and Systems, Inc. ("CPSI" or the "Company") for the year ended December 31, 2022 and the notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Commencing with the fourth quarter of 2022, the Company realigned its reporting structure due to certain organizational changes. As a result, the Company changed its three reportable segments from (i) TruBridge, (ii) Acute Care Electronic Health Record ("EHR"), and (iii) Post-acute Care EHR to (i) Revenue Cycle Management ("RCM"), (ii) EHR, and (iii) Patient Engagement. All prior segment information has been recast to reflect the Company's new segment structure and current period presentation. Refer to Note 17 - Segment Reporting for more information. Additional changes to the presentation of amounts within our condensed consolidated statements of income are as follows: •During the first quarter of 2023, we identified certain costs related to the implementation of our cloud strategy and our security operations center that were recorded within the caption "Costs of revenue (exclusive of amortization and depreciation) - EHR" on our condensed consolidated statements of income, that we determined do not solely contribute to the production of EHR products and services, but support the overall business. Consequently, effective January 1, 2023, certain costs related to the implementation of our cloud strategy, which were formerly included within the caption "Costs of revenue (exclusive of amortization and depreciation) - EHR," have been recorded as components of "Product development" expenses. In addition, certain costs related to the Company's security operations center, which were formerly included within the caption "Costs of revenue (exclusive of amortization and depreciation) - EHR," have been recorded as components of "General and administrative" expenses. Additionally, immaterial travel costs were reclassified from within the caption "Costs of revenue (exclusive of amortization and depreciation) - RCM" to "Product development" expenses. Amounts presented for the three and nine months ended September 30, 2022 have been reclassified to conform to the current presentation. •In addition, during the first quarter of 2023, we refined our operating expense allocation methodology to more accurately distribute the appropriate share of costs among operating segments. Amounts presented for the three and nine months ended September 30, 2022 have been reclassified and are reflective of the current operating expense methodology in order to conform to the current presentation. •During the third quarter of 2023, we changed the presentation of certain costs previously recorded within the expense captions of "Product development" and "General and administrative" to better comply with the disclosure requirements of Staff Accounting Bulletin Topic 11.B., Miscellaneous Disclosure: Depreciation and Depletion Excluded from Cost of Sales. These changes are summarized as follows: ◦Amortization expense associated with capitalized software development costs, previously recorded within the expense caption of "Product development," have been combined with amounts previously recorded within the expense caption "Amortization of acquisition-related intangibles" and reflected in a newly-presented expense caption of "Amortization." ◦Depreciation expense previously recorded within the expense caption of "General and administrative" have been reclassified within the newly-presented expense caption of "Depreciation." ◦The expense caption previously labelled as "Costs of sales" has been renamed "Costs of revenue (exclusive of amortization and depreciation)," with the previously reported reference to "Gross profit" removed from the current presentation. The following table provides the amounts reclassified and the impact of applying the current operating expense allocation methodology for the three and nine months ended September 30, 2022.
| Three Months Ended September 30, 2022
(in thousands) | As previously reported |  | Re-classifications |  | As reclassified |  | Impact of operating expense allocations |  | As currently reported
Costs of revenue (exclusive of amortization and depreciation) |  |  |  |  |  |  |  |  |
RCM | $ | 25,289 |  |  | $ | — |  |  | $ | 25,289 |  |  | $ | — |  |  | $ | 25,289 |
EHR | 18,619 |  |  | (874) |  |  | 17,745 |  |  | (642) |  |  | 17,103 |
Other expenses |  |  |  |  |  |  |  |  |
Product development | 7,822 |  |  | (477) |  |  | 7,345 |  |  | 642 |  |  | 7,987 |
General and administrative | 13,458 |  |  | (295) |  |  | 13,163 |  |  | — |  |  | 13,163 |
Amortization of acquisition-related intangibles | 4,486 |  |  | (4,486) |  |  | — |  |  | — |  |  | — |
Amortization | — |  |  | 5,510 |  |  | 5,510 |  |  | — |  |  | 5,510 |
Depreciation | — |  |  | 622 |  |  | 622 |  |  | — |  |  | 622 |
| Nine Months Ended September 30, 2022
(in thousands) | As previously reported |  | Re-classifications |  | As reclassified |  | Impact of operating expense allocations |  | As currently reported
Costs of revenue (exclusive of amortization and depreciation) |  |  |  |  |  |  |  |  |
RCM | $ | 71,068 |  |  | $ | — |  |  | $ | 71,068 |  |  | $ | — |  |  | $ | 71,068 |
EHR | 52,278 |  |  | (2,169) |  |  | 50,109 |  |  | (1,945) |  |  | 48,164 |
Other expenses |  |  |  |  |  |  |  |  |
Product development | 22,036 |  |  | (1,084) |  |  | 20,952 |  |  | 1,945 |  |  | 22,897 |
General and administrative | 41,235 |  |  | (920) |  |  | 40,315 |  |  | — |  |  | 40,315 |
Amortization of acquisition-related intangibles | 12,917 |  |  | (12,917) |  |  | — |  |  | — |  |  | — |
Amortization | — |  |  | 15,200 |  |  | 15,200 |  |  | — |  |  | 15,200 |
Depreciation | — |  |  | 1,890 |  |  | 1,890 |  |  | — |  |  | 1,890 |
Principles of Consolidation The condensed consolidated financial statements of CPSI include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

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