Allscripts Healthcare Solutions, Inc. (MDRX)
Q3 2010 Earnings Conference Call
November 8, 2010 4:30 PM ET
Seth Frank – VP, IR
Glen Tullman – CEO
Bill Davis – CFO
Atif Rahim – JP Morgan
Corey Tobin – William Blair & Co
Larry Marsh – Barclays Capital
Charles Rhyee – Oppenheimer
Richard Close – Jefferies & Co
Frank Sparacino – First Analysis
Greg Bolan – Wells Fargo Advisors
Bret Jones – Brean Murray, Carret & Company
Gene Mannheimer – Auriga USA
George Hill – Citigroup
Stephen Shankman – UBS
David Larsen – Leerink Swann & Co
Anthony Vendetti – Maxim Group
Previous Statements by MDRX
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Thank you. I would now like to turn the call over to Seth Frank, Vice President of Investor Relations of Allscripts. Please go ahead.
Thank you Tracy. This is Seth Frank, Allscripts’ Vice President of Investor Relations. On the call today are Glen Tullman, our Chief Executive Officer, Bill Davis, our Chief Financial Officer, and Lee Shapiro, our President. To start the call, I’ll read the Safe Harbor statement and then I’ll turn it over to Glen and Bill.
This presentation will contain forward-looking statements within the meaning of Federal Securities laws. Statements regarding future events and developments, the company’s future performance as well as management’s expectation, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties including our ability to achieve the strategic benefits of the merger with Eclipsys and other factors outlined from time to time in our most recent Annual Report on Form-10K, our earnings announcement and other reports we filed with the Securities and Exchange Commission.
These are available at www.sec.gov. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Before I introduce, Glen, just a brief note in our change in fiscal reporting periods. When we closed the Eclipsys merger on August 24, we also changed our fiscal year-end to December 31. Those quarter results are inclusive of Allscripts operations for the three months, ended September 30, 2010 and Eclipsys operations for the period from August 24, 2010 to September 30, 2010.
And now I’d like to introduce Glen Tullman, Chief Executive Officer of Allscripts.
Thanks Seth and thanks to everyone for joining us today. I particularly want to welcome all of our new shareholders, employees and clients of Eclipsys who are listening to the call, our first since the merger. We have some exciting news to share.
During the call today, I’ll cover our third quarter 2010 results, our progress on the merger integration, our competitive advantage and the state of the market. Then I’ll turn the call over to Bill Davis to cover the detailed financial results, our outlook for the remainder of 2010 and our guidance for 2011.
So let’s go ahead and get started. This is an exciting time of change and opportunity in healthcare. The level of interest in our products continues to expand and as a result sales our accelerating. Our merger with Eclipsys represented a strategic move to provide our existing clients with a broader solution and to grow our addressable market for new prospects, a market that McKinsey and Company, recently estimated to be over $45 billion. I am pleased to report that clients and prospects likely expanded choice we now have, whether for a fully integrated offering or a best-of-breed solution that works well with what they have installed.
The real message is that healthcare wants and needs to connect, our connected community of health has captured the imagination of the market and leverages our network of 180,000 physicians in our 50,000 practices, 1,500 hospitals and over 10,000 post-acute and home care organizations. Allscripts is especially attractive to those organizations that are focused on connecting with practices in their communities. Whether affiliated or independent as well as others who are creating accountable care organizations or managing quality and cost across the transitions of care.
Some of you have raised questions about the recent elections. While the recent elections have caused concern about the future of healthcare reform, the good news is that funding for Healthcare IT is a separate issue. Signed in the law in early 2009, and in non-partisan issue with support from both Democrats and Republican are like. So we expect full speed ahead. And the market is coming together faster than anyone could have imagined. You may have seen in the Wall Street Journal earlier today that the percentage of physician practices owned by hospitals has increased from 30% five years ago to 55% today, evidence of how rapidly the market is consolidating.
The bottom line is that our new Allscripts is positioned perfectly for what’s coming in healthcare. The results are already starting to reflect the power of this combined organization. During the quarter, our team delivered on our key financial and operating metrics, in spite of the potential distraction and the extra effort required due to the merger. Total bookings were approximately $216 million, including a $112 million from stand-alone Allscripts. Solid results, we were very pleased with.
On a standalone basis, Allscripts non-GAAP revenue totaled $191.7 million, demonstrating the continuing demand for our solutions. For the combined company, total non-GAAP revenue was $329.1 million for the third quarter, up 12% over the comparable period one year ago and total non-GAAP net income for the quarter was $36.8 million, a 21% increase over the comparable period last year.
I’m also pleased to announce that in September, Allscripts repaid $40 million of debt reflecting a strong cash flow capability of our business. Bill, will get into more detail but we were pleased with our results and I’m really proud of the job our team did staying focused on the quarter as we worked to bring Allscripts and Eclipsys together to form the new Allscripts.