Allscripts Healthcare Solutions, Inc.
) has extended its relationship with North Shore-LIJ Health
System, a large healthcare system serving the New York
metropolitan area. The five-year outsourcing contract to manage
North Shore-LIJ's IT services is expected to generate $400
million of revenues for Allscripts.
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Allscripts has implemented the Sunrise Clinical Manager,
Enterprise Electronic Health Record (EHR) and Care Management in
North Shore-LIJ's network. In addition, the leading player in the
health care information technology (HCIT) market has joined
forces with North Shore-LIJ to set up an Innovation Lab to
develop advanced technology solutions and tools to cater to the
region's healthcare market.
Allscripts' recurring revenues reflect its ability to retain its
existing client base. Recently, the company won several new
clients such as Liberty Hospital, Salford Royal NHS Foundation
Trust and UK-based ProMedica, among others.
However, Allscripts lost significant market share in 2012 due to
a number of factors, such as, failed strategic initiatives,
overhauling of top management and a significant fall in bookings.
As Allscripts is no longer a take-over candidate, as per the
reversal of their strategic plan, growth of the company under a
new management remains uncertain. Further, a potentially
challenging selling environment, higher R&D investment, legal
expenses along with client support and infrastructure investments
raise concerns for Allscripts.
The stock carries a Zacks Rank #4 (Sell) based on declining
estimates. We remain disappointed with management's outlook for
2013. The HCIT market is competitive and price sensitive. Among
others, Allscripts faces strong competition from
Quality Systems Inc.