Allscripts Healthcare Solutions
), a leading player in the health care information technology
(HCIT) market, reported second quarter adjusted (excluding one-time
items other than stock-based compensation expense) earnings per
share of 13 cents, missing the Zacks Consensus Estimate by a
Reported net income for the quarter was $8.0 million (or 4 cents
per share) compared with a net income of $15.9 million (or 8 cents
per share) in the prior-year quarter.
Revenues came in at $370.0 million, up 3.7% year over year in
the second quarter, surpassing the Zacks Consensus Estimate of $369
million. Adjusted revenues were $370.7 million, up 2%. Bookings in
the quarter were $194.1 million, a decrease of 20.6%.
The company inked two new Sunrise Clinical Manager agreements in
the second quarter. Allscripts also expanded its footprint with one
of its larger clients.
Total revenues consisted of System Sales ($46.6 million),
Professional Services ($67.4 million), Maintenance ($113.9 million)
and Transaction Processing ($142.1 million), which constituted
12.6%, 18.2%, 30.8% and 38.4%, respectively, of total revenues in
the second quarter.
Adjusted gross margin declined to 42.7% of sales in the reported
quarter, lower than 48.9% in the prior-year quarter. Selling,
general and administrative expenses were $92.3 million, down 9.1%
year over year while research and development expenditure came to
$38.2 million, up 54%. Adjusted operating margin was 13.8% of
sales, lower than 20.5% in the year-ago quarter.
Allscripts ended the second quarter with cash and cash
equivalents of $120.4 million, up 4.1% on a year-over-year basis.
The company had long-term debt of $420.9 million, up 9.5%. Cash
flow from operations was $58.8 million, up 12.4%.
Allscripts continues to expect adjusted revenues in the range of
$1,480 million to $1,520 million. Adjusted operating margin is
projected at about 16% to 17%. However, the company revised its
forecast for earnings per share in the range of 77 cents to 83
cents compared to its prior guidance in the range of 74 cents to 80
The health care information technology market is competitive and
price sensitive. Among others, Allscripts faces strong competition
However, optimism about the growth prospects of select HCIT
service providers remains high under the Obama administration,
which passed a Stimulus package in May 2009. Part of the Stimulus
package is aimed at increasing the use of electronic health record
(EHR) systems by medical practitioners.
The company has widened its user base after its mergers with
Misys and Eclipsys and increased cross-selling opportunities.
We believe that Allscripts is well positioned in the fast growing
business of selling EHR/EMR to physician practices as well as
We are of the opinion that acute and ambulatory care will
continue to converge in future. Also, that Allscripts is positioned
to provide integrated clinical applications for health care
providers to satisfy HITECH Act requirements and eventually comply
with an outcomes-based reimbursement system.
We have a long-term Neutral recommendation on Allscripts. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
ATHENAHEALTH IN (ATHN): Free Stock Analysis
CERNER CORP (CERN): Free Stock Analysis Report
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis
QUALITY SYS (QSII): Free Stock Analysis Report
To read this article on Zacks.com click here.