Allscripts Healthcare Solutions
), 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 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.
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
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%.
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
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
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