Allscripts Healthcare Solutions Earnings Continue to Fall

Zacks

Allscripts Healthcare Solutions, Inc. (MDRX) posted a significant 55.6% fall in adjusted earnings per share to 4 cents for the fourth quarter of 2013 from 9 cents in the same quarter of 2012 and met the Zacks Consensus Estimate.

Adjusted net earnings dropped 48.7% to $7.7 million from $15.0 million in the fourth quarter of 2012. On a reported basis, MDRX incurred a loss of $20.6 million or 12 cents per share compared with $24.3 million or 14 cents in the fourth quarter of 2012 due to flat revenues and higher selling, general and administrative expenses.

For full year 2013, adjusted earnings per share plunged 76.0% to $21.4 million or 12 cents from $88.6 million or 50 cents in the prior year. However, earnings per share in the year were higher than the Zacks Consensus Estimate of 11 cents.

Revenues

Revenues in the quarter were flat at $351.0 million but surpassed the Zacks Consensus Estimate of $343 million. After considering deferred revenues and other adjustments, revenues stood at $353.6 million, down 3.9% from the prior-year quarter. The decrease can be attributable to lower revenues generated from all the operating segments, except Maintenance.

Revenues declined 5.2% to $27.6 million from System sales, 11.2% to $61.2 million from Professional services, and 3.4% to $142.1 million from Transaction processing and other, but rose 13.5% to $120.1 million from Maintenance.

For full year 2013, revenues ebbed 5.1% to $1,373.1 million, which was in line with the Zacks Consensus Estimate. Excluding deferred revenues and other adjustments, revenues stood at $1,382.9 million, down 5.6% from the prior-year.

Bookings

Bookings surged 52.0% to $274.0 million in the quarter from $181.0 million in the fourth quarter of 2012. About 42% of total bookings in the quarter were derived from Allscripts’ Population Health Management solutions.

MDRX signed two new Sunrise contracts, one with Dameron Hospital Association and the other with Guam Regional Medical City. Contract backlog continued to expand. It grew 21% to $3.4 billion as of Dec 31, 2013.

For the full year 2013, bookings increased 23.0% to $902 million. MDRX added nearly 800 new clients in the year.

During the year, MDRX renewed and expanded acute, ambulatory and population health management partnerships with clients including Phoenix Children's Hospital, North Shore-LIJ Health System, PIH Health, HealthCare Partners, New York Presbyterian Hospital, and multiple other academic medical centers, multi-specialty physician groups and integrated delivery systems.

Margins

In the fourth quarter, adjusted gross profits slid 2.9% to $155.6 million while adjusted gross margin fell 140 basis points (bps) year-over-year to 44.3%. Adjusted operating profit declined 12.2% to $15.8 million while adjusted operating margin fell 60 bps to 4.5%.

In 2013, adjusted gross profits slid 8.6% to $597.6 million while adjusted gross margin fell 170 bps to 43.5% from the year-ago level. Adjusted operating profit plunged 70.0% to $40.0 million while adjusted operating margin fell 630 bps to 2.9%.

Financial Position

MDRX had cash and cash equivalents of $63.0 million as of Dec 31, 2013, down 39.4% from $104.0 million as of Dec 31, 2012. Long-term debt (including capital lease obligations) rose 27.0% to $561.5 million as of Dec 31, 2013 compared with $442.0 million as of Dec 31, 2012. Consequently, long-term debt to capitalization ratio increased 430 bps to 29.9% from 25.6% as of Dec 31, 2012.

In 2013, cash flow from operating activities significantly reduced to $81.0 million from $222.6 million in 2012. Capital expenditure decreased 7.5% to $74.1 million compared with $80.1 million a year ago.

Our Take

Allscripts Healthcare Solutions, a Zacks Rank #3 (Hold) stock, is a leading provider of clinical software and information solutions for physicians. The company serves approximately 180,000 physician practices, 1,500 hospitals, and 10,000 post acute care facilities. It had 5,500 employees with facilities in 24 U.S. states, Canada, India, The Philippines and Middle East.

Some better-ranked stocks that are currently performing well in the medical information systems industry include Computer Programs & Systems Inc. (CPSI), athenahealth, Inc. (ATHN), and Omnicell, Inc. (OMCL). Computer Programs & Systems carries a Zacks Rank #1 (Strong Buy), while both athenahealth and Omnicell carry a Zacks Rank #2 (Buy).
 

Read the Full Research Report on OMCL
Read the Full Research Report on ATHN
Read the Full Research Report on MDRX
Read the Full Research Report on CPSI


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