Allscripts Healthcare Solutions
), a leading player in the health care information technology
(HCIT) market, reported fourth-quarter 2012 adjusted (excluding
one-time items other than stock-based compensation expense)
earnings per share of 8 cents, missing the Zacks Consensus
Estimate of 17 cents. For 2012, adjusted earnings per share of 49
cents missed the Zacks Consensus Estimate of 57 cents.
Reported net loss was $24.3 million (or loss of 14 cents per
share) in the fourth quarter compared with net income of $26
million (or 14 cents per share) in the prior-year quarter.
Revenues were $350.9 million, down 9.6% year over year in the
fourth quarter, trailing the Zacks Consensus Estimate of $367
million. Adjusted revenues came in at $368 million, down 5.4% on
a year-over-year basis. For 2012, revenues were $1,446.3 million,
approximately flat on a y/y basis.
Backlog was $2.8 billion in the fourth quarter. Bookings in
the reported quarter were $180.7 million, a decrease of
Total revenues consisted of System Sales ($29.1 million, down
53.4%), Professional Services ($68.9 million, down 3.4%),
Maintenance ($122.6 million, up 7.9%) and Transaction Processing
($147.1 million, up 4.5%), which constituted 7.9%, 18.7%, 33.3%
and 40% respectively, of total revenues in the fourth
Adjusted gross margin decreased to 41.7% of sales in the
reported quarter, lower than 45.5% in the prior-year quarter.
Adjusted EBITDA was 14.5% below 24.6% a year ago. Adjusted
operating margin was 8.3% of sales, lower than 20.2% in the
Allscripts exited the fourth quarter with cash and cash
equivalents of $105.7 million, down 33.7% on a year-over-year
basis. The company had long term debt of $362.7 million, up
12.4%. Cash flow from operations was $58.1 million in the
The board concluded assessment of strategic alternatives in
late Dec 2012. Subsequently, the company is preparing to reform
the delivery of health care on a worldwide basis.
The health care information technology market is competitive
and price sensitive. Among others, Allscripts faces strong
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
are shrinking, the replacement market is growing.
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.
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 opportunities
vis-à-vis its peers. Its mergers with Misys and Eclipsys has
expanded opportunities and reach in practice management (PM) and
EHR markets substantially 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. The stock carries a Zacks Rank #4
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