We maintain our Neutral recommendation on
Allscripts Healthcare Solutions
(
MDRX
), a leading player in the health care information technology
(HCIT) market. The company reported third quarter adjusted
(excluding one-time items other than stock-based compensation
expense) earnings per share of 19 cents, beating the Zacks
Consensus Estimate by a penny.
Reported net income dipped 50.8% year over year to $9.4 million
in the quarter (or 5 cents per share).
Revenues were $360.7 million, down 0.8% year over year in the
third quarter, trailing the Zacks Consensus Estimate of $376
million. Adjusted revenues came in at $361 million, down 1.4% on
a year-over-year basis.
Backlog was $2.83 billion in the third quarter. Allscripts inked
one new Sunrise Clinical Manager agreement in the quarter and
also expanded its footprint with other clients.
Bookings in the quarter were $161.9 million, a decrease of 39.3%.
Year-over-year decline in bookings was caused by delay in
purchase decisions as consumers awaited product launches. Another
issue was uncertainty regarding the company's future autonomy.
Total revenues consisted of System Sales ($35.2 million),
Professional Services ($62.7 million), Maintenance ($119.3
million) and Transaction Processing ($143.5 million), which
constituted 9.8%, 17.4%, 33.1% and 39.8% respectively, of total
revenues in the third quarter.
The health care information technology market is competitive and
price sensitive. Among others, Allscripts faces strong
competition from
Cerner
Corp. (
CERN
),
Quality Systems
(
QSII
) and
Athenahealth
(
ATHN
).
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. The Stimulus package
was aimed at increasing the use of electronic health record (EHR)
systems by medical practitioners. While greenfield opportunities
have shrunk, the replacement market is growing.
As a potential takeover target, Allscripts presents a lucrative
opportunity for firms seeking entry into the HCIT industry. It
has a wide user base and enjoys many more opportunities vis-à-vis
its peers. Its mergers with Misys and Eclipsys have expanded
opportunities and reach in practice management (PM) and in
electronic health record (EHR) markets substantially with
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 inpatient settings.
The stock carries a Zacks #3 Rank, which translates into a
short-term Hold rating.
ATHENAHEALTH IN (ATHN): Free Stock Analysis
Report
CERNER CORP (CERN): Free Stock Analysis
Report
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis
Report
QUALITY SYS (QSII): Free Stock Analysis
Report
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