Computer Programs and Systems, Inc. Announces Third Quarter 2008 Results

MOBILE, Ala.--(Business Wire)--
Computer Programs and Systems, Inc. (NASDAQ: CPSI):

Company Declares Regular Quarterly Dividend of $0.36 Per Share

Highlights:

-- Revenues of $30.4 million for the third quarter;

-- Earnings per diluted share of $0.38;

-- Cash flow from operations of $2.8 million; and

-- Quarterly dividend of $0.36 per share.

Computer Programs and Systems, Inc. (NASDAQ: CPSI), a leading
provider of healthcare information solutions, today announced results
for the third quarter and nine months ended September 30, 2008.

The Company also announced that its Board of Directors has
declared a regular quarterly cash dividend of $0.36 (thirty-six cents)
per share, payable on November 21, 2008, to stockholders of record as
of the close of business on November 6, 2008.

Total revenues for the third quarter ended September 30, 2008,
increased 8.4% to $30.4 million, compared with total revenues of $28.0
million for the prior-year period. Net income for the quarter ended
September 30, 2008, increased 26.8% to $4.1 million, or $0.38 per
diluted share, compared with $3.2 million, or $0.30 per diluted share,
for the quarter ended September 30, 2007. Cash flow from operations
for the third quarter of 2008 was $2.8 million, compared with $4.3
million for the prior-year period.

Commenting on the results, Boyd Douglas, chief executive officer
and president of CPSI, stated, "Our strong performance continued in
the third quarter, driven by demand and the compelling value
proposition we offer our customers. In addition, feedback from the
community hospital marketplace suggests that there is still a high
degree of interest in our products and services in spite of national
economic conditions. As our guidance for the fourth quarter indicates,
we expect a continuation of the positive trends that have contributed
to our strong performance throughout the year. As a result, we remain
confident about the rest of the year and cautiously optimistic about
2009."

Total revenues for the nine months ended September 30, 2008,
increased 7.0% to $87.6 million, compared with total revenues of $81.9
million for the prior-year period. Net income for the nine months
ended September 30, 2008, increased 16.5% to $10.6 million, or $0.98
per diluted share, compared with $9.1 million, or $0.85 per diluted
share, for the nine months ended September 30, 2007. Cash provided
from operations for the nine months ended September 30, 2008, was
$12.3 million, compared with $12.9 million for the same period last
year.

For the fourth quarter of 2008, the Company anticipates total
revenues of $30.5 million to $32.0 million and net income of
approximately $4.5 million to $4.7 million, or $0.41 to $0.43 per
diluted share. CPSI's 12-month backlog as of September 30, 2008, was
$98.9 million, consisting of $23.2 million in non-recurring system
purchases and $75.7 million in recurring payments for support,
outsourcing, ASP and ISP contracts.

A listen-only simulcast and replay of CPSI's third quarter 2008
conference call will be available on-line at www.cpsinet.com and
www.earnings.com on October 24, 2008, beginning at 9:00 a.m. Eastern
Time.

About Computer Programs and Systems, Inc.

CPSI is a leading provider of healthcare information solutions for
community hospitals with over 640 client hospitals in 46 states.
Founded in 1979, the Company is a single-source vendor providing
comprehensive software and hardware products, complemented by complete
installation services and extensive support. Its fully integrated,
enterprise-wide system automates clinical and financial data
management in each of the primary functional areas of a hospital.
CPSI's staff of over 700 technical, healthcare and medical
professionals provides system implementation and continuing support
services as part of a comprehensive program designed to respond to
clients' information needs in a constantly changing healthcare
environment. For more information, visit www.cpsinet.com.

This press release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified generally by the use of forward-looking terminology and
words such as "expects," "anticipates," "estimates," "believes,"
"predicts," "intends," "plans," "potential," "may," "continue,"
"should," "will" and words of comparable meaning. Without limiting the
generality of the preceding statement, all statements in this press
release relating to estimated and projected earnings, margins, costs,
expenditures, cash flows, growth rates and future financial results
are forward-looking statements. We caution investors that any such
forward-looking statements are only predictions and are not guarantees
of future performance. Certain risks, uncertainties and other factors
may cause actual results to differ materially from those projected in
the forward-looking statements. Such factors may include: overall
business and economic conditions affecting the healthcare industry;
saturation of our target market and hospital consolidations; changes
in customer purchasing priorities and demand for information
technology systems; competition with companies that have greater
financial, technical and marketing resources than we have; failure to
develop new technology and products in response to market demands;
fluctuations in quarterly financial performance due to, among other
factors, timing of customer installations; failure of our products to
function properly resulting in claims for medical losses; government
regulation of our products and customers, including changes in
healthcare policy affecting Medicare reimbursement rates;
interruptions in our power supply and/or telecommunications
capabilities and other risk factors described from time to time in our
public releases and reports filed with the Securities and Exchange
Commission, including, but not limited to, our most recent Annual
Report on Form 10-K. We also caution investors that the
forward-looking information described herein represents our outlook
only as of this date, and we undertake no obligation to update or
revise any forward-looking statements to reflect events or
developments after the date of this press release.

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COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Condensed Statements of Operations
(in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
--------- -------- -------- --------
Sales revenues:
System sales $10,742 $9,774 $29,856 $28,356
Support and maintenance 13,398 12,687 39,617 37,595
Business management services 6,213 5,531 18,149 15,951
--------- -------- -------- --------
Total sales revenues 30,353 27,992 87,622 81,902

Cost of sales:
System sales 8,675 7,820 23,792 22,765
Support and maintenance 4,862 4,933 14,432 14,996
Business management services 3,522 3,400 10,747 9,753
--------- -------- -------- --------
Total cost of sales 17,059 16,153 48,971 47,514
--------- -------- -------- --------
Gross profit 13,294 11,839 38,651 34,388

Operating expenses:
Sales and marketing 2,175 2,614 6,564 6,996
General and administrative 4,986 4,493 15,747 14,150
--------- -------- -------- --------
Total operating expenses 7,161 7,107 22,311 21,146
--------- -------- -------- --------

Operating income 6,133 4,732 16,340 13,242
Interest income, net 244 294 740 842
--------- -------- -------- --------
Income before taxes 6,377 5,026 17,080 14,084
Provision for income taxes 2,284 1,798 6,489 4,995
--------- -------- -------- --------
Net income $4,093 $3,228 $10,591 $9,089
========= ======== ======== ========

Basic earnings per share $0.38 $0.30 $0.98 $0.85
========= ======== ======== ========
Diluted earnings per share $0.38 $0.30 $0.98 $0.85
========= ======== ======== ========

Weighted average shares
outstanding:
Basic 10,777 10,719 10,759 10,689
Diluted 10,796 10,757 10,777 10,736
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COMPUTER PROGRAMS AND SYSTEMS, INC.
Condensed Balance Sheets
(in thousands)

Sept. 30, Dec. 31,
2008 2007
----------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $12,506 $11,806
Investments 11,577 11,352
Accounts receivable, net of allowance for
doubtful accounts of $731 and $949,
respectively 14,907 14,334
Financing receivables, current portion 1,926 1,735
Inventory 1,586 1,450
Deferred tax assets 1,497 1,394
Prepaid income taxes 508 -
Prepaid expenses 488 506
----------- ---------
Total current assets 44,995 42,577

Financing receivables, long-term 1,784 2,322
Property and equipment 12,916 12,130
Accumulated depreciation (7,990) (6,621)
----------- ---------
Total assets $51,705 $50,408
=========== =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,294 $1,717
Deferred revenue 4,583 3,581
Accrued vacation 2,359 2,112
Income taxes payable - 542
Other accrued liabilities 3,176 3,507
----------- ---------
Total current liabilities 12,412 11,459

Deferred tax liabilities 170 571

Stockholders' equity:
Common stock, par value $0.001 per share,
30,000 shares authorized, 10,884 and 10,807
shares issued and outstanding 11 11
Additional paid-in capital 26,602 24,658
Accumulated other comprehensive (loss) income (47) 45
Retained earnings 12,557 13,664
----------- ---------
Total stockholders' equity 39,123 38,378
----------- ---------
Total liabilities and stockholders' equity $51,705 $50,408
=========== =========
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COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Other Supplemental Information
(In thousands)

The following table summarizes free cash flow for the Company:
----------------------------------------------------------------------

Three Months Ended Nine Months Ended
Sept. 30, 2008 Sept. 30, 2008
------------------ -----------------
Net cash provided by operating
activities $2,813 $12,328
Purchases of property and
equipment (209) (786)
------------------ -----------------
Free cash flow $2,604 $11,542
================== =================

Free cash flow is a non-GAAP financial measure which CPSI defines as
net cash provided by operating activities less purchases of property
and equipment. The most directly comparable GAAP financial measure
is net cash provided by operating activities. The Company believes
free cash flow is a useful measure of performance and uses this
measure as an indication of the financial resources of the Company
and its ability to generate cash.
*T

Computer Programs and Systems, Inc.
Darrell G. West
Vice President-Finance and Chief Financial Officer
251-639-8100

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