TruBridge - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered resilient execution: revenue of $85.7M was roughly flat YoY (-$1.1M below consensus), while non-GAAP EPS of $0.54 materially beat Street ($0.29), and adjusted EBITDA of $13.7M was slightly ahead of the prior-year midpoint; consensus comparisons marked with asterisks and sourced from S&P Global*.
• Bookings remained strong: $25.6M TCV (+10% YoY) and $19.6M ACV (+13% QoQ), with recurring revenue at 95% of total, reinforcing visibility and mix quality.
• Guidance recalibration: FY25 revenue range narrowed to $345–$350M (lowered upper bound), while FY25 adjusted EBITDA raised to $62–$67M (midpoint implies ~18.5% margin); Q3 guide set at $85–$87M revenue and $14–$16M adjusted EBITDA.
• Key stock-reaction catalysts: significant EPS beat versus consensus, improved margin trajectory (gross margin and offshoring efficiencies), encoder outperformance, and Microsoft Dragon Copilot integration slated for fall launch; near-term revenue growth tempered by CBO attrition and longer implementation cycles deferring larger deal revenue into 2026.

What Went Well and What Went Wrong

What Went Well

• Strong bookings and mix: Q2 TCV bookings of $25.6M (+10% YoY) and ACV bookings of $19.6M (+13% QoQ), with balanced contributions across Financial Health and Patient Care.
• Margin execution and product outperformance: FH gross margin at 46% (+150 bps YoY) and Patient Care gross margin at 62% (+400 bps YoY); encoder solution cited as “overperforming and delivering higher gross margins,” supporting favorable revenue mix.
• Management conviction and actions: “we are also raising our Adjusted EBITDA range to incorporate the efficiencies realized by our offshoring initiative, our refinement of resource management, and cost optimization,” underscoring sustainable margin improvement.

What Went Wrong

• Top-line at the lower end and below consensus: Q2 revenue of $85.7M came in towards the low end and was ~$1.0M below Street; management attributed to slightly lower CBO retention and delayed revenue recognition from larger, more complex deals.
• Near-term operating cost timing: Q2 adjusted EBITDA down sequentially vs Q1 due to seasonal costs (user conference and rescheduled sales kickoff), Q1-to-Q2 revenue timing reversal (~$1M), and annual COLA plus investments in Financial Health.
• Policy uncertainty and potential demand headwinds: hospitals cautious amid “OB3” legislation and tariffs/macro, with possible second-half headwinds as budgeting shifts; management working with clients on Medicaid eligibility impacts and rural fund avenues.

Transcript

Operator (participant)

Greetings, and welcome to the TruBridge Q2 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Drew Anderson. Please go ahead.

Dru Anderson (Senior Partner)

Thank you. Good morning, and welcome to the TruBridge Second Quarter twenty twenty five Earnings Conference Call. Leading today's call are Chris Fowler, President and Chief Executive Officer and Vinay Bhase, 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.

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.

Chris Fowler (President, CEO & Director)

Thank you, Drew, and thank you, everyone, for joining us this morning to discuss our Q2 results. We made steady progress towards our long term goals with bookings, profitability, and cash flow standing out as bright spots in the quarter. Before I dive into the results, I'm excited to share that last week, I had the honor of representing TruBridge at the White House for the CMS HealthTech Ecosystem event, where we officially signed the CMS Interoperability Framework Pledge. This is an important milestone for us, and it really speaks to our ongoing commitment to empowering rural and community health care providers to keep care local. For over forty five years, TruBridge has delivered solutions designed to help providers remain independent and focus on what matters most, their patients.

By reinforcing our focus on interoperability and modern data infrastructure, we're working to make real time secure patient data accessible anytime and anywhere it's needed. This not only protects patient privacy, but it also gives patients and providers the tools they need to improve outcomes and enhance the health care experience. I'm proud of the impact of our work that our work is having in the communities we serve, and I'm encouraged about what we can achieve together as we work to move health care technology innovation forward. As we continue to advance through our transformation, progress isn't always a straight line and can sometimes involve delays, but we remain confident in achieving our long term objectives. A key factor contributing to our confidence is our work with a third party consultant building upon our existing efforts to enhance on three main areas across the enterprise.

One, operation, improvement of operations, two, driving efficiencies, and three, unlocking the value of our existing customer base. We will elaborate a bit on these initiatives today and keep you updated on our progress going forward. With that, let's move on to our review of the quarter and outlook for the remainder of the year. Bookings came in at a $25,600,000 on a TCV basis compared to $22,000,000 sequentially and $23,000,000 year over year. Revenue of $85,700,000 came in towards the lower end of expectations, while adjusted EBITDA of $13,700,000 came in slightly ahead of the midpoint.

Now that we are halfway through the year and with more visibility into the second half, we are taking a refresh look at our guidance. We're lowering the top end of our revenue range and adjust and raising our adjusted EBITDA range as well. On the revenue side, there are two key factors driving our adjustment to guidance, CBO client retention and delayed revenue recognition from bookings. First, client retention in the CBO side of our financial health business was slightly lower than we had originally forecasted at the start of the year. Our North Star remains client delight, and we continue to take steps to improve client satisfaction back to our historical levels and beyond.

At the beginning of the year, we identified 60 of our CBO clients up for renewal to use as a proxy for these efforts. In the quarter, we signed 12 of 15, bringing our year to date total to 21 of 26. With respect to this group of clients, we expect renewal to remain renewals to remain in the range in this range in the back half of 2025, but with significant improvement in 2026 based on our performance. The first half of this year has been used to build a thorough and strategic plan. And now in the second half of the year, we will turn our attention to operationalizing this plan, fully recognizing that this is going to be a multi quarter journey.

To that end, I'd like to walk you through some of the steps. First, we have significantly enhanced our resource management efforts for CBO primarily by aligning people and work through a refined resource model that corrects misalignments, ensures the right resources are in the right place, and allows us to prioritize client work more efficiently. As a result, we instituted a temporary pause in q two in our global hiring efforts to rightsizing staffing needs while continuing to invest in our people through training programs that enhance our acute RCM talent. We were able to offset the savings impact of this decision with savings from other efficiencies in the financial health business unit associated with resource management and productivity. Second, to supplement our remote workforce strategy, we are moving forward with establishing a physical presence in India to standardize our workflow, align with industry best practices, and ensure capacity to ramp at our desired pace.

We're in the final stages of planning and are targeting an opening in 2026. Once operational, enhanced training and greater accountability through in office presence will drive continued improvements in productivity, quality, client satisfaction, and retention. Our plan include our plans include increasing the global workforce for this office with the initial focus on the CVO and EBO businesses. This is another testament to our commitment to streamlining operations and strengthening our team dynamics, both of which we believe will benefit meaningfully from a physical location in India. And third, we completed several leadership leadership hires focused on offshore service levels.

First, our new head of services for financial health brings fifteen years of experience from in the health care outsourcing services in the RCM industry. This new role will ensure our services successfully support our clients' financial health through the delivery of consistent revenue cycle operations. We also brought on a new head of India who joins us with more than twenty five years of leadership experience in The US health care sector, specializing in RCM operations, data analytics, and business transformation. With our new leaders on board, we have lifted the temporary pause. They will focus on enhancing client service quality, driving operational efficiency, and establishing strong in office capabilities and support long term client retention.

Now that we have identified client retention as our area of opportunity and laid out a tangible plan to tackle this head on, I feel confident that we will begin to make headway on improving this metric. The second factor affecting our revenue outlook is our success in bookings and more sizable deals. We've mentioned in the past that as we move upstream into larger hospitals and as we sell more of our integrated interest solution, these larger sized deals take much longer to implement than what we have seen historically with smaller hospitals. While this sort of positive improvement is encouraging, it doesn't come without growing pains. In our experience, deals that were over $1,000,000 in recurring revenue took approximately six months to go live compared to deals under that $1,000,000 mark, which went live in between one and two months.

Said succinctly, some of the meaningful deals we've signed in q one and q two won't start contributing revenue until 2026. For example, we're ex incredibly pleased to share that we signed a large deal this quarter, which expanded an existing partnership through the addition of three entrust agreements. Implementation is not scheduled to go live until next year, but their decision to add three hospitals following a competitive process was based on the positive experience they've had with us to date as well as the risk sharing model of our nTrust package. Turning now to our profitability expectations for the year. Our revised EBITDA outlook now reflects an EBITDA margin of 18.5% at the midpoint of the range, up from 17% in our previous guidance.

This is driven by factors in both financial health and patient care. First, in financial health, we see further efficiencies in our global offshoring initiative. Since Meredith has come on board, she has taken a metrics driven approach and implemented productivity enhancements and performance based incentives, which we expect will yield incremental savings in the second half. Second, we have taken steps to improve our resource management process. Specifically, we have implemented a more robust model for tracking supply versus demand of resources by functional area, and as I mentioned above, have adjusted our hiring approach and incentive programs.

Not only does this make us more efficient, it provides opportunity for cost savings, but it also helps ensure we have the right levels of staffing to best serve our customers. And lastly, we are seeing a favorable revenue mix with our encoder solution overperforming and delivering higher gross margins. Lastly, in patient working to enhance and streamline our operations, particularly in client support. As a result, we expect some savings beginning in the fourth quarter. I wanna close my comments today with some of the ways we're innovating, specifically leveraging AI both internally to drive efficiency and externally to enhance the client experience we're able to deliver.

Internally, we recently released an AI solution for our patient care clean our patient care client support team. We believe that it will help our patient care support team respond in a timely manner and more importantly, with a standardized approach, ensuring all our clients receive the same high quality experience. Externally, as we announced in May at our national client conference, we are collaborating with Microsoft to in integrate Microsoft Dragon Copilot into our EHR solution. Providers that use TruBridge will be empowered by advanced secure speech recognition and AI capabilities designed to support the unique needs of our rural and community health care clients. Our goal with this collaboration between our two technologies is to enhance care delivery, financial stability, and operational efficiency for thousands of hospitals and health care systems across the country.

I believe this collaboration will be welcomed by our clients when the integrated solution becomes available later this fall, and I'm thrilled for TruBridge to be partnering with Microsoft to bring cutting edge solutions to our clients. As I hand the call over today, I'd like to reiterate that I am pleased with the progress we continue to make across the company. We feel that our bookings growth validates the value we offer clients, and our improving margin profile is a sign that we are on the right track. We will always continue to refine and optimize our approach, but I firmly believe that the actions we are taking today are the best way to set us set us up to deliver sustainable and durable growth down the road. Now with that, I'll turn the call over to Vinay for a deeper dive into the financials. Vinay?

Vinay Bassi (CFO)

Thank you, Chris, and good morning, everyone. Let me take a few minutes to walk through our second quarter financial results, share the progress we are making on key financial initiatives, and provide additional color to Chris' update on our outlook for the remainder of the year. We have made notable progress in working capital improvement and on increasing free cash flow conversion. For the 2025, we generated $14,500,000 in cash flow from operations, an increase of 2,800,000.0 compared to the first six months of the prior year. Year to date, free cash flow, which we define as cash flow from operations less CapEx, was 5,500,000.0, up 3,400,000.0 compared to the 2024.

Accounts receivable in the second quarter improved 5%, and DSO improved by four days compared to the prior year. We expect to continue to improve in this area, but this year, anecdotally, we are still seeing our clients holding cash given the ongoing external policy uncertainty. From a leverage standpoint, we ended the quarter at 2.4 times, an improvement from 3.9 times a year ago, and marking the second consecutive quarter, net leverage has been below 2.5 times. During the quarter, we paid down 1,000,000 in incremental principal, bringing the total debt payments to 32,500,000.0 since January 2024, including 5,000,000 in normal amortization payments. Our profitability profile continues to improve as we realize the efficiencies and leverage that are inherent in our business.

In q two, we delivered an adjusted EBITDA margin of 16% compared to 15.7% last year. This q two also carried expenses related to our annual user conference and the sales kickoff meeting that was rescheduled from q one. We continue to work on identifying additional areas of cost efficiency in client support and vendor relationship as well as optimizing our global offshore initiatives. The midpoint of our revised guidance reflects an adjusted EBITDA margin of approximately 18.5%, which is up 200 basis points compared to the previous year, and we remain confident that we can end the year around 20%. Finally, we are making continuous progress on our financial stability, accounting processes, and forecasting accuracy.

We are actively working on remediation and strengthening of our accounting processes and internal controls. We are also excited about the selection of KPMG as TruBridge's new independent registered public accountant and look forward to their partnership as we work to remediate and strengthen our key controls. Now turning to our second quarter results. Starting with bookings, as Chris mentioned, we reported 25,600,000.0 on a TCV basis, an increase of 10% year over year. On an annual contract value or ACV basis, which we provide in our press release and 10 q filing for better comparability and improved clarity on revenue potential, bookings were 19,600,000.0 in q two, up 13% sequentially.

Revenue in the quarter of 85,700,000.0 was roughly flat to prior year. However, I'd like to point out approximately 1,000,000 of the year over year variance is primarily due to the sunsetting of the centric product last year. Normalizing for this, revenue would have been up 1% versus prior year. Financial health revenue of 54,300,000.0 was relatively flat and represented 63% of the total revenue. This is largely due to a slightly elevated levels of customer attrition as well as the impact of timing of some revenue in q one as mentioned in last quarter's update.

On an year to date basis, financial health revenue grew 2.3%. Patient care revenue of 31,400,000.0 increased approximately 1.1%. Excluding Centric's contribution from last year's q two, patient care would have grown almost 4%. Gross margins in the quarter of fifty two percent increased two fifty basis points over last year. Financial health gross margins of 46% in q two increased one fifty basis points compared to a year ago and benefited from our offshoring initiative as well as run rate savings from the 2024 cost optimization actions.

Patient care gross margins reached decent high of 62% in q two, increasing 400 basis points year over year, driven primarily by cost optimization from 2425. Moving down the p and l, total operating expenses of 40,800,000.0 primarily represented 48% of total revenue and compared favorably to q two of last year at 2% of total revenue due to cost optimizations effort of the previous year. All of this resulted in q two adjusted EBITDA of 13,700,000.0 with a 16% margin compared to 13,400,000.0 at a 17 15.7% margin in 2024. From a cash and cash equivalent standpoint, we ended q two with 12,300,000.0, up dollar 2,200,000.0 sequentially and 4,600,000.0 year over year. Turning to guidance for the third quarter, we expect revenue to be in the range of 85 to 87,000,000 and adjusted EBITDA to be in the range of 14 to 16,000,000.

For the full year, we are lowering the top end of our revenue range and raising our adjusted EBITDA range as follows. Revenue will be between $3.45 and $350,000,000 at the lower end of our previous range of $3.45 to $360,000,000, and adjusted EBITDA will be between 62 and 67,000,000, up from a previous range of 60 to 66,000,000. Despite the revision in full year revenue guidance as Chris discussed, we have increased the adjusted EBITDA guidance through prudent expense management, labor cost optimization, and resource management. We have made meaningful improvements in several areas during the first half. I believe we are well positioned in the multibillion dollar market we are with plenty of room to run. With that, operator, let's open the call to question.

Operator (participant)

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the And our first question comes from Sarah James with Cantor Fitzgerald.

Sarah James (MD & Equity Analyst - Healthcare Services & HCIT)

Thank you. You mentioned a number of savings and efficiency initiatives. Is there any additional color you can help us with scaling that or or pacing of how that may come on board?

Vinay Bassi (CFO)

Yeah. That's a great question, Sarah. So how I would say I'll just take one step back to explain that. Last year, we did, cost efficiencies. I would characterize that as the low hanging fruit.

That, if you remember, was $89,000,000 on a run rate basis. Some $45,000,000 came in in '24. With, the team settling in and and getting now the benefit of, our third party consultant, we are now cracking a little more complex part of the, puzzles. And, like, for example, one of the areas I mentioned was in client support. We are trying to modernize our client support organization.

So that is one of the areas where we would we were working in the first half on the planning part of it. And in the second half, most likely from the quarter four onwards, start realizing some savings. So that is one example of their so I would say to give you a sizing of it right now from a run rate basis, I see a run rate basis, meaning would be seen in the in in the low single digit millions. But our goal is to find areas which are tougher, but helps us get on a solid footing to our overarching goal or objective that we set up to be in the mid twenties EBITDA margin in the couple of years. So as I had mentioned, these some of these are now complex, which will help us, but with that goal.

And the other part of these are, I would say, vendor optimization, which is, I would say, run of the mill every day, every week. But then the third part is the resource management initiatives, productivity initiatives that will help us. But I would characterize the first target, like, the client support is one of the few that we are trying to get tackle and hopefully add more in our journey to get to the mid twenties EBITDA margin.

Sarah James (MD & Equity Analyst - Healthcare Services & HCIT)

That's very helpful. And one more. Now that o b three or One Big Beautiful Bill has passed, have you had a chance to check-in with your client base and see how they're thinking about budgeting and if it has any impact on the pace of, signing contracts or expanding contracts?

Chris Fowler (President, CEO & Director)

Yeah. Good morning, Sarah, and and and thank you for that question. You know, we have, obviously, since January, knowing that this was, in the air, we have been pulsing our clients. And and I would say I I would characterize the first half of the year as where the uncertainty was, knowing where the the the bill would land or the act would would finally come out. And so I there there was a little bit of pause there.

I think now that there is, I'm gonna put in air quote certainty. Obviously, that this has been passed the law. We'll see how the implementation of it plays out. But now that there is certainty, our our hospitals are starting to plan for that. You know, we are working with them, and some additional resources to help them identify potential impact specifically around the eligibility of the Medicaid population and what that impact for them will be, along with thinking about how we can work with their state agencies to to be a part of, the contribution from the government for the $50,000,000,000, rural health care, fund inside of, inside of the plan.

So I would still say it's a little early, but we are absolutely heads down both internally and with our customers on trying to figure out exactly what the potential impact would be. To your second part of the question around impact on sales, I do suspect that it could have some potential headwind to the second half of the year. We haven't seen that manifest just yet, but you you never know exactly how that's gonna play out. It is definitely something as they're starting in to get into their planning for '26 that that it'll be a way that they approach it. I think long term for us, though, that we see it as an opportunity to take a bigger role in helping our customers kinda navigate, through through what the new landscape looks like and making sure that they are operating as efficiently as they can and delivering the right services for their patients.

Sarah James (MD & Equity Analyst - Healthcare Services & HCIT)

Great. Thank you.

Chris Fowler (President, CEO & Director)

You bet. Thank you, Sarah.

Operator (participant)

Our next question comes from Jeff Garrow with Stephens.

Jeff Garro (Managing Director)

Yeah. Good morning. Thanks for taking the questions. May maybe we'll follow-up on the demand front and and ask specifically about bookings. And and what overall, last couple of years, an effort to deliver more consistent bookings, and and you guys have come through on that end for for the most part.

May maybe one quarter a year with, you know, bookings slipping below 20,000,000. But what what are the the leading indicators and the macro environment telling you right now about your ability to deliver that kind of consistent above 20,000,000 bookings level for the rest of the year?

Chris Fowler (President, CEO & Director)

Yeah. You know, it's a great question, and good morning, Jeff. We continue to feel good about our performance on the bookings front. And the fact that, you know, if you look at it, it's a nice balance between the patient care and the financial health. And then when you go into the financial health, there's a nice balance between both the in our customer base and the the net new market.

So, you know, when you look at it, we're seeing some nice trends in all the area. I think the the the outlier for us is is how the the patient care net new market will continue to to go forward. You know, we had a we had a nice win in this quarter, which got our number up to a a really nice tar a really nice spot. You know, we just don't have the at bats that are that are in that space like we used to to to win. We're winning when we get them, but I think that's the macroeconomic the the macro factor on that side is that the hospitals are still somewhat dug in on the EHR that they're in.

You know, we continue to remain excited about our ability to deliver innovation there coupled with the services on the RCM side to create a different differentiating solution for our end of the market. The the trends on the on the financial health remain the same or remain, you know, remotely the same. And that, you know, we're still seeing the demand, for the need to to help, solidify and and stabilize the the performance of the RCM in the in the customer base. You know, in in this quarter, we also had some nice, expansion deals on the net new side, which has been part of our strategy and how to how to tackle that part of the market. So, you know, start with something small, get our name in, get get a get a deal papered, over execute on that deal, and then continue to expand the relationship that we have.

So, you know, with with that said, you know, we don't know the future, but but still feel pretty good about our ability to continue to perform at the consistent levels we have been.

Jeff Garro (Managing Director)

Excellent. Appreciate all all that detail. And, of course, another part of the growth story is is retention. Would welcome any additional comments there on performance by segment, and, you know, really appreciate the transparency on financial health renewals. You know?

But but, of course, overall retention is likely much better than, you know, what we get if we we do the math on those renewal conversions as, you know, not all of the book is is up for renewal each quarter. So a a little, more color there on how we should think about, retention trends for the the overall book of business by segment would be helpful.

Chris Fowler (President, CEO & Director)

Yeah. Absolutely. And and Vinay and I may tag team this one. So I'll I'll start with some color. The, let's start with the patient care side.

You know, obviously, you know, really good news on that front, seeing the retention numbers continue to stay strong, and and the renewal rate as well. Happy with the, you know, the the way that that team has delivered over the last several years. Yeah, you remember, we we brought in a new GM there, at the '23. So we're really seeing that transformation take hold, and the delivery into that customer base is is obviously apparent. On the financial health, obviously, you know, the the story is the journey that we're on right now of making sure that we've got our offshore our global operation buttoned up so that the delivery to our customers is is what it always has been.

The the trend is, you know, we look at the metrics, the the the performance driven metrics. We are seeing improvement month over month for those customers, which is leading to better satisfaction, which is going to lead to retention. So, you know, there there was some there was some bumps, obviously, with the conversion from last year that we have, you know, backed up a little bit, remeasured, and and cut again, and now feel, you know, more than confident in the approach that we have going forward to see that retention stabilize and and and eventually improve on the financial health side of the business. I do think it's important to call out that, you know, the the main focus in the RCM business has been on the CBO. Right?

And that's the area that we did transition offshore. And that represents, let's call it, a little less than half of the overall revenue for financial health. So the rest of the business is is, you know, as it was and continue to improve, There is a bright spot in there, and I'd say more than one, but there is a bright spot to call out. The encoder business, which was previously TrueCode, we have made some investments in that product that are are really paying off, and we're seeing some nice momentum both from a booking standpoint and implementation and revenue associated with that. So all in all, you know, again, as I said in the beginning, you know, we knew that this wouldn't be a a a super smooth road, that there would be some bumps in it.

We see the bumps now, and I think we've got a really good plan to to to level this out and see the improvement and and, you know, as we go into '26. Any addition? So I can add a couple of colors. Starting from patient

Vinay Bassi (CFO)

care, Jeff, that's a great question. Retention rates, and you will see it in our 10 Qs coming out today, is in the very high nineties. And it's it's it's a function of, like, what what Chris said, but also building operational and financial discipline, having pricing, cost of living adjustments like we get. Getting that muscle helps us. So that is in the high 90 nineties.

And on the, financial health side, like what Chris said, I'll start with the, encoder piece. It was not a surprise that the bookings are going up because we greenlit an investment last year with an ROI metric, and that is spanning out. So we feel it now, obviously, nothing is like a straight line every quarter, but what we feel is, with Meredith coming in and with her technology background also, the momentum there with the I'll reason I use financial discipline, nothing is, is passed without an ROI objective. So if there are investments needed, we can see growth continuing in the technology side. And on the CBO side, it's the operational piece that now we have resource management tools in to know how it works.

But, obviously, from a I would say, like, a net revenue retention, it's a it it took it's still in the in the low nineties, but a slight decline than what we were expecting. So that is there, but we expect that in '26 with all this settling in and we get the momentum back, we should be able to cover that.

Jeff Garro (Managing Director)

Excellent. Appreciate all that details. Well, may maybe one file follow-up on the financial health side of things. You You know, do you kind of trying to take a little bit of a step back and assess the the Vugal acquisition? My my overall impression is that you're you're probably happy having the the captive effort versus working with a a third party vendor, but maybe a few more, you know, kind of issues to to handle and tackle and remediate than you initially expected.

But we'd we'd love to to kind of get your assessment on, you know, kind of how that that overall has performed relative to to expectations and and maybe an assessment that kind of you know, where you are in the duration of of the journey to yeah. I know there's, you know, never gonna be a perfect endpoint, but, you know, get get to a place where you you feel comfortable accelerating your clientele moving to the the offshore model? Thanks.

Chris Fowler (President, CEO & Director)

Yeah. Again, another another good talking point for us. Yeah. I would say, overall, still very pleased with that acquisition. To your point, you know, we knew that we would need a captive and and and we still believe that this is a good, was a good solution for that.

I I will say and obviously said this in the prepared remarks, I think the learning for us over the last year and a half is based on the pace that we wanna go, with our ins with the size of our installed customer base and the need to bring on, new resources at at at a speed, there definitely was a gap in the fact that the the remote workforce just doesn't necessarily lead to that, you know, in in a perfect solution. It doesn't mean that it's a bad, it's a bad part of the business. It just means it needs to have a compliment to it, which is the the academy that we're gonna that we're in the process of standing up. And the the other nuance in that as well is the difference between the the the ambulatory and the acute billing. You know, while I'll say, and I and I've argued this point internally with our team, you know, the the the level of the level of acuity of our hospitals is probably closer to an ambulatory setting than it is to some of the larger facilities.

However, it is still different. And and that's something that we've gotta make sure that our team in India is set up for success, understanding that the nuance and the procedures associated with that. The the last part, I would say, is as we think about, you know, looking backwards to go forward. You know, before we moved to India, we had a very bespoke service and we were client centered on the work, which meant that, you know, we we had a 100 different processes and individual for each each client. As we look to the the new global model, we realize that standardization is the path to scale and the path to what I think is ultimately higher performance and delivery for the customers.

And that has been part of the machine that's being built right now, is making sure that we have that standardization that we've gone back through and that we've thoughtfully got all of our customers lined up right in the new workflows so that we're making sure that the delivery is there. The connection being to to the old model was that we also have a, you know, a a staff that we built up that that does represent client success that is very focused on the the impact and the relationship with the customer married back to the performance that we're delivering with our global team. So you look at all that, you look at the the the new leadership team that we brought you know, kinda in all facets through this, both on the global side and here domestically, you know, revisited the plan with them, with our outside help as well, and feel very confident that as we finish this year and we're seeing that momentum continue, that we'll hit next year running, and see that see that conversion turn back on at full speed in '26.

Jeff Garro (Managing Director)

Excellent.

Chris Fowler (President, CEO & Director)

Thank you, Jeff.

Operator (participant)

Thank you. And our next question comes from Gene Mannheimer with Freedom Capital Markets.

Gene Mannheimer (MD & Senior Research Analyst)

Thank you. Good morning. Thanks for taking the questions, Vinay, Chris. So two things from me. One would be, have have you or would you disclose the name of that third party consultant that that you referenced in your prepared remarks?

And secondly, on the client attrition side, what where where are these clients going? In other words, are they are they going with alternative solutions or insourcing these capabilities? Maybe a little bit of color there. Thank you.

Chris Fowler (President, CEO & Director)

Yeah. Good morning, Gene. Early on the West Coast today, so appreciate you waking up with us. The short answer to question one is is no. We will not.

And and getting into the attrition side, I would say it's a mixed bag, but the vast majority are going back in house. And, you know, to to to be fair to our team, there is a little bit of a dynamic there that, you know, it's it's not always all about the numbers. Sometimes there can be new leadership that comes into a facility that has the desire to bring it in house. I do think that, you know, there there still is in in our end of the market. There's a little bit of hesitation to the offshore model, which I think is where we've gotta be, but where we've been very intentional to make sure that the the relationships with the customer is still US based and that we've got a contingent, and we'll always have a contingent of US workforce, that that helps, kinda bridge that gap.

So the vast majority has gone back to the hospital, which in in my head leaves the door very much open for us to come back and get those customers, again. Go ahead.

Vinay Bassi (CFO)

Just on your first one, obviously, we cannot give the name, but let me tell you, Jean, it's not one person on me. It's a top notch consultant, with the expertise of helping us in the core pieces. So, obviously, as you appreciate naming this stuff, but if these are the best of the best that we could we could get their help.

Gene Mannheimer (MD & Senior Research Analyst)

Great. That's very helpful. Thanks. Thank you, gentlemen.

Chris Fowler (President, CEO & Director)

Thanks, Shane.

Operator (participant)

This now concludes our question and answer session. I would like to turn the floor back over to Chris Fowler for closing comments.

Chris Fowler (President, CEO & Director)

Thank you, Carrie. As always, thank you for everyone and their continued interest in TruBridge, and a special thank you to all of our TruBridge teammates. Without them, this journey would not be possible. So thanks to everyone, and have a great weekend.

Operator (participant)

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.