Mixed Bag from Allscripts in 4Q - Analyst Blog

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Allscripts Healthcare Solutions ( MDRX ), a leading player in the health care information technology ("HCIT") market, reported fourth quarter adjusted (excluding one-time items other than stock-based compensation expense) earnings per share of 21 cents trailing the Zacks Consensus Estimate of 22 cents but ahead of the year-ago earnings per share of 20 cents.

For fiscal 2011, adjusted earnings per share of 81 cents matched the Zacks Consensus Estimate.

Reported net income for the quarter was $26 million (or 14 cents per share) compared with a net loss of $6.2 million (or 3 cents per share) in the year-ago quarter. Despite the earnings beat, the stock lost 5.68% and ended at $20.25 in after hours trading on February 16. 

Revenues

Allscripts reported sales of $388.2 million in the fourth quarter, beating the Zacks Consensus Estimate of $378 million. Adjusted revenues were $389.2 million, up 15% year over year. Bookings came to $327.4 million, an increase of 26% year over year.

For fiscal 2011, the company reported revenues of $1449.1 million, trailing the Zacks Consensus Estimate of $1,452 million. Adjusted revenues were $1,470 million, up 13% year over year. Bookings amounted to $1,051 million, up 17%.

Segment-wise Data

Reported revenues consisted of System Sales, Professional Services, Maintenance and Transaction Processing, which constituted 17%, 18.3%, 28.4% and 36.3%, respectively, of total revenues in the reported quarter.  

Margin

Adjusted gross margin was 45.5% of sales in the reported quarter, lower than 49.5% in the prior-year quarter. Adjusted operating margin was 20.2% of sales, lower than 20.6% in the year-ago quarter.

Balance Sheet

As of December 31, 2011, Allscripts had cash and marketable securities of $159.5 million and $367 million of outstanding borrowings.  

Other

On May 5, 2011, the company announced a stock repurchase program amounting to $200 million. As of December 31, 2011, Allscripts had repurchased about $51 million of shares.

Outlook

The company issued its guidance for 2012. It expects adjusted revenues in a range of $1,620 million to $1,650 million. Adjusted operating margin is projected at about 21% to 22%. Adjusted earnings per share are forecast between $1.06 and $1.10. The Zacks Consensus Estimates are earnings per share of 98 cents on sales of $1,615 million.

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 is high under the Obama Administration, which passed the Stimulus package in May 2009, aimed at increasing the use of electronic health record ("EHR") systems by medical practitioners.

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/EMR to physician practices as well as inpatient settings.

The acquisition of Eclipsys provides the company with an acute care product for sale in concert with its ambulatory services. We opine that acute and ambulatory care will continue to converge in future and that Allscripts is well positioned to provide integrated clinical applications that will permit health care providers to satisfy HITECH Act requirements and eventually comply with an outcomes-based reimbursement system.  

Strong bookings currently taking place, with both ambulatory and acute products doing well, may indicate that the Eclipsys products are popular in the market and that cross-selling synergies are for real. Our Outperform recommendation is supported by a short-term Zacks #2 Rank (Buy).


 
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ATHN , CERN , MDRX , QSII

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