Saturday, November 25, 2006

Computer Programs & Systems

Computer Programs and Systems (CPSI) has an incredibly generic name that sounds like a circa-1960 course at college. However, this is a company with a far from generic or prosaic record. This is a business focused on delivering healthcare information services.

I believe that this business has a strong competitive moat given its focus on small community hospitals. One of the important characteristics of businesses with a competitive moat is "serious" profitability. This business has a return on capital of 42% over the last twelve months.

As an experiment, I have written a more complete overview of the business as a series of links to files. You will find a discussion of changing economics of reimbursement, some discussion of street expectations, as well as links to a Wall Street Transcript interview with a portfolio manager who has a position in the security. As well, I have provided a couple of spreadsheets of ratio analysis that demonstrate the improving profitability that this company has experienced.

I look forward to your comments regarding this somewhat different approach to providing blog information.

CPSI Outline:

CPSI Financial Data:

CPSI Ratios & Analytics:

Disclaimer: Neither I nor my family have a current position in any of the securities mentioned. Some clients do own a current position in CPSI and in MCK.


At 11:40 AM, Blogger Wade said...

I share your interest in the stock. However when I looked at it I saw one question and I wonder if you have given it some thought. To wit, like other software companies graduating from a 'shrink-wrapped product' to a 'subscription service' they can suffer quarters and years of decling profits; eventhough the long-term outlook may be strengthening. The lates two quarterly results for CPSI smack of just this issue.


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