Allscripts Healthcare Solutions
(
MDRX
), a leading player in the health care information technology
(HCIT) market, 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
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.
Segment-wise Data
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.
Margin
Adjusted gross margin decreased to 43.6% of sales in the reported
quarter, lower than 44.9% in the prior-year quarter. Selling,
general and administrative expenses were $90.4 million, down
almost 2% year over year while research and development
expenditure came to $37.8 million, up 45.4%. Adjusted operating
margin was 13.8% of sales, lower than 19.7% in the year-ago
quarter.
Balance Sheet
Allscripts exited the third quarter with cash and cash
equivalents of $93.7 million, up 10.5% on a year-over-year basis.
The company had long term debt of $386.8 million, up 14.6%. Cash
flow from operations was $31.1 million, down 25.8%.
Outlook
Allscripts retracted its guidance for 2012 as the Board assesses
strategic alternatives due to the considerable interest expressed
by third parties. The stock climbed 6.85% in after-hours trading
to close at $13.10 on November 8.
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.
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 greenfield opportunities
vis-à-vis its peers. Its mergers with Misys and Eclipsys has
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.
We have a long-term 'Neutral' recommendation on Allscripts. The
stock carries a Zacks #4 Rank, which translates into a short-term
Sell rating.
ATHENAHEALTH IN (ATHN): Free Stock Analysis
Report
CERNER CORP (CERN): Free Stock Analysis
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ALLSCRIPTS HLTH (MDRX): Free Stock Analysis
Report
QUALITY SYS (QSII): Free Stock Analysis
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