TruBridge, Inc. (TBRG)·Q2 2025 Earnings Summary

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 .

Financial Results

Segment revenue breakdown:

Segment Adjusted EBITDA:

KPIs and mix:

Revenue composition (Q2 2025):

Guidance Changes

Management drivers: “client attrition and the reality of signing larger, more complex deals” prompted narrowing revenue, while offshoring, resource management, and cost optimization supported EBITDA raise .

Earnings Call Themes & Trends

Management Commentary

• CEO: “we are… raising our Adjusted EBITDA range to incorporate the efficiencies realized by our offshoring initiative, our refinement of resource management, and cost optimization” .
• CEO: “we signed a large deal this quarter… addition of three nTrust agreements… implementation… next year” highlighting larger deal wins and longer go-live cycles .
• CFO: “The midpoint of our revised guidance reflects an adjusted EBITDA margin of approximately 18.5%,… we remain confident that we can end the year around 20%” .
• CEO on strategy: encoder outperformance, physical India presence for training/accountability, and leadership hires to enhance offshore service levels .
• CEO on industry role: CMS Interoperability Pledge underscores commitment to secure, real-time data for rural/community providers .

Q&A Highlights

• Efficiency savings pacing: incremental savings from client support modernization starting Q4, vendor optimization, and productivity/resource initiatives; run-rate “low single digit millions” near term, targeting mid-20s EBITDA margin over “couple of years” .
• Policy impacts: “OB3” passage brings planning “certainty,” but potential 2H sales headwinds as hospitals budget; TruBridge assisting on Medicaid eligibility and rural fund engagement .
• Bookings durability and retention: consistent >$20M target supported by balanced mix; Patient Care retention very high-90s; Financial Health net revenue retention in low-90s with expected recovery in 2026 .
• Offshoring model evolution: Viewgol assessment positive; moving from bespoke to standardized workflows to scale and enable automation; physical academy in India to train acute RCM nuance .
• Attrition dynamics: majority of churn insourced by hospitals; maintaining US-based client relationship teams to bridge offshore hesitancy .

Estimates Context

Values retrieved from S&P Global.*

Implications:

• Revenue slight miss reflects CBO attrition and deferred revenue from larger deals; EPS beat driven by mix, margin execution, and cost optimization .

Key Takeaways for Investors

• EPS strength over consensus with improving margin profile; focus on sustaining ~20% adjusted EBITDA margin by YE and mid-20s longer term via offshoring and resource management .
• Top-line growth likely muted near term as larger implementations slip into 2026; watch bookings-to-revenue conversion cadence and CBO renewal metrics .
• Encoder momentum and favorable mix support gross margin; monitor broader Patient Care SaaS bundling and TruBridge Analytics adoption .
• Microsoft Dragon Copilot integration is a tangible near-term AI catalyst for fall; interoperability positioning with CMS may aid commercial narratives with rural/community hospitals .
• Policy overhang (OB3, Medicaid eligibility, tariffs) could weigh on 2H bookings pacing; company is proactively engaging to mitigate impacts .
• Balance sheet/FCF improving: six-month cash from operations $14.5M, leverage down to 2.4x; continued debt paydown enhances flexibility .
• Near-term trading setup: strong EPS/margin beats vs softer revenue trajectory; positive sentiment likely tied to execution on Q3 guide, retention stabilization, and proof-points from AI/product initiatives .