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STOCK-BASED COMPENSATION AND EQUITY | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION AND EQUITY | STOCK-BASED COMPENSATION AND EQUITY Stock-based compensation expense is measured at the grant date based on the fair value of the award, and is recognized as an expense over the employees’ or non-employee directors’ requisite service period. The following table details total stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023, included in the condensed consolidated statements of operations:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Costs of revenue (exclusive of amortization and depreciation) | $ | 223 |  |  | $ | 237 |  |  | $ | 489 |  |  | $ | 558 |
Other expenses (including G&A, S&M, and product development) | 1,175 |  |  | 801 |  |  | 3,209 |  |  | 1,604 |
Pre-tax stock-based compensation expense | 1,398 |  |  | 1,038 |  |  | 3,698 |  |  | 2,162 |
Less: income tax effect | (294) |  |  | (228) |  |  | (777) |  |  | (476) |
Net stock-based compensation expense | $ | 1,104 |  |  | $ | 810 |  |  | $ | 2,921 |  |  | $ | 1,686 |
The Company's stock-based compensation awards are in the form of restricted stock and performance share awards granted pursuant to the Company's Amended and Restated 2019 Incentive Plan (the "Plan"). As of September 30, 2024, th ere was $8.9 million of unrecognized compensation expense related to unvested and unearned, as applicable, stock-based compensation arrangements granted under the Plan, which is expected to be recognized over a weighted-average period of 1.9 years. Restricted Stock The Company grants restricted stock to executive officers, certain key employees and non-employee directors under the Plan with the fair value of the awards representing the fair value of the common stock on the date the restricted stock is granted. During the vesting period, recipients of restricted stock are entitled to dividends and possess voting rights. Shares of restricted stock generally vest in equal annual installments over the applicable vesting period, which ranges from one to three years. The Company records expenses for these grants on a straight-line basis over the applicable vesting periods. A summary of restricted stock activity under the Plan during the nine months ended September 30, 2024 and 2023 is as follows:
| Nine Months Ended September 30, 2024 |  | Nine Months Ended September 30, 2023 |  |
| Shares |  | Weighted-Average Grant Date Fair Value Per Share |  | Shares |  | Weighted-Average Grant Date Fair Value Per Share |  |  |  |
Unvested restricted stock outstanding at beginning of period | 343,315 |  |  | $ | 29.08 |  |  | 281,161 |  |  | $ | 32.24 |  |  |  |  |
Granted | 496,546 |  |  | 10.03 |  |  | 210,351 |  |  | 26.44 |  |  |  |  |
Vested | (167,064) |  |  | 30.10 |  |  | (145,529) |  |  | 31.35 |  |  |  |  |
Forfeited | (71,725) |  |  | 22.66 |  |  | (2,668) |  |  | 29.23 |  |  |  |  |
Unvested restricted stock outstanding at end of period | 601,072 |  |  | $ | 14.14 |  |  | 343,315 |  |  | $ | 29.08 |  |  |  |  |
Performance Share Awards The Company grants performance share awards to executive officers and certain key employees under the Plan, with the number of shares of common stock earned and issuable under each award determined at the end of a three-year performance period, based on the Company's achievement of performance goals predetermined by the Compensation Committee of the Board of Directors at the time of grant. These performance share awards include a modifier to the total number of shares earned based on the Company's total shareholder return (“TSR”) compared to a small-cap stock market index. If certain levels of the performance objective are met, the award results in the issuance of shares of common stock corresponding to such level. Performance share awards that result in the issuance of shares of common stock are not subject to time-based vesting at the conclusion of the three-year performance period. In the event that the Company's financial performance meets the predetermined targets for the performance objectives of the performance share awards, the Company will issue each award recipient the number of shares of common stock equal to the target award specified in the individual's underlying performance share award agreement. In the event the financial results of the Company exceed the predetermined targets, additional shares up to the maximum award may be issued. In the event the financial results of the Company fall below the predetermined targets, a reduced number of shares may be issued. If the financial results of the Company fall below the threshold performance levels, no shares may be issued. The total number of shares issued for the performance share award may be increased, decreased, or unchanged based on the TSR modifier described above. The recipients of performance share awards do not receive dividends or possess voting rights during the performance period and, accordingly, the fair value of the performance share awards is the quoted market value of TruBridge’s common stock on the grant date less the present value of the expected dividends not received during the relevant period. The TSR modifier applicable to the performance share awards is considered a market condition and therefore is reflected in the grant date fair value of the award. A Monte Carlo simulation has been used to account for this market condition in the grant date fair value of the award. Expense related to performance share awards is recognized using ratable straight-line amortization over the three-year performance period. In the event the Company determines it is no longer probable that the minimum performance level will be achieved, all previously recognized compensation expense related to the applicable awards is reversed in the period such a determination is made. A summary of performance share award activity under the Plan during the nine months ended September 30, 2024 and 2023 is as follows, based on the target award amounts set forth in the performance share award agreements:
| Nine Months Ended September 30, 2024 |  | Nine Months Ended September 30, 2023 |  |
| Shares |  | Weighted-Average Grant Date Fair Value Per Share |  | Shares |  | Weighted-Average Grant Date Fair Value Per Share |  |  |  |
Performance share awards outstanding at beginning of period | 273,791 |  |  | $ | 33.17 |  |  | 252,375 |  |  | $ | 31.84 |  |  |  |  |
Granted | 323,461 |  |  | 10.60 |  |  | 122,071 |  |  | 31.21 |  |  |  |  |
Forfeited or unearned | (116,922) |  |  | 24.95 |  |  | (100,655) |  |  | 27.46 |  |  |  |  |
Performance share awards outstanding at end of period | 480,330 |  |  | $ | 18.60 |  |  | 273,791 |  |  | $ | 33.17 |  |  |  |  |
Stock Repurchases On September 4, 2020, our Board of Directors approved a stock repurchase program under which we were authorized to repurchase up to $30.0 million of our common stock through September 3, 2022. Concurrent with the authorization of this stock repurchase program in September 2020, the Board of Directors opted to indefinitely suspend all quarterly dividends. On July 27, 2022, the Board of Directors extended the expiration date of the stock repurchase program to September 4, 2024. The share repurchase program expired according to its terms on September 4, 2024. We repurchased 49,789 shares during the nine months ended September 30, 2023, and there were no additional shares repurchased during the nine months ended September 30, 2024. In addition to shares repurchased under the approved stock repurchase program, we purchased 46,980 and 39,716 shares during the nine months ended September 30, 2024 and 2023, respectively, to fund required tax withholdings. Shares withheld to cover required tax withholdings related to the vesting of restricted stock did not reduce our total share repurchase authority. Common Stock Rights Agreement On March 26, 2024, the Company’s board of directors declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock. The dividend was paid to the stockholders of record at the close of business on April 4, 2024. The complete description and terms of the Rights are set forth in the Rights Agreement, dated as of March 26, 2024, by and between the Company and ComputerShare Trust Company, N.A. as rights agent, as amended by the Amendment to the Rights Agreement dated as of April 22, 2024 (as amended, the “Rights Agreement”). Each Right initially entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one half of a share of common stock, at an exercise price of $28.00 for each one half of a share of common stock (equivalent to $56.00 for each whole share of common stock), subject to certain adjustments. The Rights currently are not exercisable and will only become exercisable upon the occurrence of certain events as described in the Rights Agreement. The Rights will expire prior to the earliest of (i) the close of business on March 25, 2025, or such later date as may be established by the Board prior to the expiration of the Rights; (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement; (iii) the time at which the Rights are exchanged pursuant to the Rights Agreement; and (iv) upon the occurrence of certain transactions (the earliest of (i), (ii), (iii) and (iv) is referred to as the “Expiration Date”). The Company analyzed the terms governing the Rights under ASC 480, Distinguishing Liabilities from Equity, and concluded that the Rights are a freestanding financial instrument that qualifies for liability classification. Specifically, the provisions within the Rights Agreement provide for scenarios outside of the Company’s control that may require the Company to settle a portion of the Rights in cash, rather than in shares of common stock. The Rights are only exercisable upon the occurrence of certain events, which have not occurred as of the end of the reporting period, and the Company does not consider it likely that these events will occur in the future. As it is not considered likely that these events will occur, the Company considers the likelihood of exercise to be remote and has not ascribed value to the Rights as of September 30, 2024. The Company will continue to monitor the likelihood of exercise in future reporting periods.

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