Allscripts Healthcare Solutions, Inc.
) posted adjusted earnings per share of 5 cents in the second
quarter of 2014, up from a penny in the same quarter of 2013. With
this, adjusted earnings beat the Zacks Consensus Estimate of 4
cents by 25%.
On a reported basis, MDRX incurred a net loss of $17.8 million in
the quarter, narrower than the year-ago level of $22.9 million by
22.3%. On a per share basis, net loss declined 30.8% to 9 cents
from 13 cents in the second quarter of 2013.
Allscripts Healthcare Solutions, Inc - Earnings
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Revenues in the second quarter came in at $351.3 million, up 1.9%
from $344.8 million a year ago but fell shy of the Zacks Consensus
Estimate of $353 million. After considering deferred revenues and
other adjustments, revenues stood at $353.8 million, up 1.9% from
$347.1 million in the prior-year quarter.
Revenues from System sales declined 20.4% to $25.8 million and from
Maintenance 2.2% to $113.6 million. On the other hand, revenues
from Professional services increased 5.2% to $62.3 million while
the same from Transaction processing and other rose 9.2% to $149.6
Bookings improved 9.3% to $234.0 million in the quarter from $214.0
million in the second quarter of 2013. Booking growth was driven by
higher client demand for new and enhanced solution functionality
across the entire Allscripts product portfolio by healthcare
systems, hospitals, and ambulatory markets.
The impressive bookings performance in the second quarter reflects
strong Allscripts Sunrise electronic health record ("EHR") platform
sales to new domestic and international clients.
Further, MDRX signed two new Sunrise contracts, including a major
new international client, reaching the total count to 25 new
Allscripts Sunrise client sites since Jan 2013. Contract backlog
continued to expand and grew over $3.3 billion as of Jun 30, 2014.
In the second quarter, adjusted gross profits inched up 1% to
$152.7 million while adjusted gross margin fell 40 basis points
(bps) year over year to 43.2%.
Adjusted operating earnings surged 101.2% to $17.1 million while
adjusted operating margin expanded 240 bps to 4.8%. The upside was
driven by lower operating expenses as operational efficiency
initiatives that commenced last year started to pay off.
MDRX had cash and cash equivalents of $39.3 million as of Jun 30,
2014, down 37.6% from $63.0 million as of Dec 31, 2013. Long-term
debt (including capital lease obligations) declined a marginal 0.5%
to $558.8 million from $561.5 million as of Dec 31, 2013. However,
long-term debt to capitalization ratio increased 20 bps to 30.1%
from 29.9% as of Dec 31, 2013.
For the first six months ended Jun 30, 2014, cash flow from
operating activities deteriorated 24.6% to $38.3 million from $50.8
million in the same period of 2013. Capital expenditure decreased
62.1% to $17.3 million from $45.7 million in the first half of
We are impressed with the company's strong year-over-year rise in
adjusted earnings, which beat the estimates. In the second quarter
of 2014, revenues and adjusted EBITDA improved from the
year-earlier quarter for the first time after a span of over two
MDRX signed several contracts with new and existing clients during
the quarter reflecting strong demand for its population health
management solutions and managed IT services offerings,
specifically remote hosting and outsourcing.
However, we remain concerned about the company's liquidity position
which seems to be deteriorating as hinted by a declining cash
balance and a wider long-term debt to capitalization ratio.
Presently, MDRX carries a Zacks Rank #4 (Sell). Better-ranked
stocks include Accuray Inc. (
) in the medical instruments industry and Merge Healthcare Inc. (
) and Omnicell, Inc. (
) in the medical information systems industry. While Accuray sports
a Zacks Rank #1 (Strong Buy), both Merge Healthcare and Omnicell
carry a Zacks Rank #2 (Buy).
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