CPSI Announces the Refinancing of Credit Facilities to Create Flexibility for More Opportunistic Future Uses of Capital and Provides Update on Current Market Conditions

CPSI (NASDAQ: CPSI), a community healthcare solutions company, today announced the refinancing of its existing credit facilities by entering into an Amended and Restated Credit Agreement (the “2020 Credit Agreement”) between the Company and its syndicated lending partners, with Regions Bank serving as Administrative Agent and Collateral Agent.

Among other changes, the 2020 Credit Agreement:

• Increases the maximum borrowing capacity under the revolving credit facility from $50 million to $110 million, with undrawn amounts available for future borrowings increasing from $34 million to $81 million;
• Decreases the amount outstanding under the term loan facility from $87 million to $75 million, with an accompanying reduction in term loan payments designed to achieve a nearly $6 million decrease in term loan payment commitments over the next twelve months;
• Allows for more advantageous pricing at certain leverage ratios;
• Removes previous absolute-dollar limits on acquisition activity (previously limited to $20 million in any annual period and $50 million over the life of the credit facilities); and
• Leaves relatively unchanged the maximum consolidated leverage ratio, now calculated on a net basis (at 3.5 times Consolidated EBITDA) and the minimum consolidated fixed charge coverage ratio (at 1.25 times Consolidated Fixed Charges).

Commenting on the 2020 Credit Agreement, Matt Chambless, chief financial officer of CPSI, stated, “We entered 2020 with an eye towards amending our credit agreement to create greater flexibility for more diversified and opportunistic uses of capital in the future. Though the onset of the COVID-19 pandemic has created unprecedented challenges for CPSI and the capital markets, the strength of our operations, balance sheet and cash flows has allowed us to continue this refinance effort unimpeded, despite the current macro environment. With the solid support of our lending partners, we have successfully executed on our refinancing goals set forth at the beginning of the year.”

The 2020 Credit Agreement provides CPSI with ample liquidity to broaden its capital allocation strategy. CPSI now has the flexibility to act decisively on strategic tuck-in M&A opportunities, invest in new and existing products and services, and potentially pursue value-driven share repurchases.

Chambless continued, “The primary goal of this refinancing is to position CPSI to be more opportunistic in future capital allocation decisions. However, in keeping with our conservative financing strategy, the improvement in our liquidity is certainly another desirable benefit in the current uncertain economic environment. That said, the confidence in our liquidity that we expressed on our May 5, 2020, quarterly earnings call remains intact, even absent the additional borrowing capacity afforded us by this refinancing. Specifically: