We maintain our Neutral rating for
Allscripts Healthcare Solutions, Inc.
). Its second quarter earnings per share of 13 cents missed the
Zacks Consensus Estimate by a penny. 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
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Revenues came in at $370.0 million, up 3.7% year over year in the
second quarter, surpassing the Zacks Consensus Estimate of $369
Bookings in the quarter were $194.1 million, a decrease of 20.6%.
Bookings have again fallen in the second quarter of 2012 as clients
wait for clarity on product updates and product integration. We
believe that the weakness in bookings may be specific to the
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 2009. Part of the Stimulus package is aimed
at increasing the use of EHR systems by medical practitioners.
While greenfield opportunities are currently shrinking, the
replacement market is growing.
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 to physician practices as well as inpatient settings.
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 #2 Rank, which translates into a
short-term Buy rating.