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Allscripts Announces First Quarter of 2022 Results

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·13 min read
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  • First quarter GAAP diluted EPS of $0.17; non-GAAP diluted EPS of $0.13

  • Closed the sale of Hospital & Large Physician Practices business segment to Constellation Software

  • Generated $35 million of cash flow from continuing operations in the quarter

CHICAGO, May 05, 2022--(BUSINESS WIRE)--Allscripts Healthcare Solutions, Inc. (Nasdaq: MDRX) (Allscripts) announced its financial results for the three months ended March 31, 2022.

First quarter 2022 Veradigm revenue was $136 million compared with $126 million in the first quarter of 2021. On a consolidated Allscripts basis first quarter 2022 revenue was $143 million compared with $134 million in the first quarter of 2021.

On a GAAP basis in the first quarter of 2022, Veradigm income from operations was $18 million compared with $11 million in the first quarter of 2021. Veradigm Non-GAAP income from operations in the first quarter of 2022 was $26 million compared with $19 million in the first quarter of 2021. On a consolidated basis in the first quarter of 2022, GAAP income from operations was $7 million compared with income from operations in the first quarter of 2021 of $8 million. Non-GAAP income from operations in the first quarter of 2022 was $24 million compared with $16 million in the first quarter of 2021.

Veradigm Adjusted EBITDA totaled $35 million in the first quarter of 2022 compared with $28 million in the first quarter of 2021. On a consolidated Allscripts basis Adjusted EBITDA totaled $34 million in the first quarter of 2022 compared with $26 million in the first quarter of 2021.

Consolidated GAAP net income in the first quarter of 2022 totaled $23 million compared with $9 million in the first quarter of 2021. Non-GAAP net income in the first quarter of 2022 was $16 million compared with $11 million in the first quarter of 2021.

Consolidated GAAP diluted earnings per share in the first quarter of 2022 were $0.17 compared with $0.06 in the first quarter of 2021. Non-GAAP diluted earnings per share in the first quarter of 2022 were $0.13 compared with $0.08 in the first quarter of 2021.

On April 29, 2022, Allscripts amended its Credit Agreement to extend maturity for an additional five years and improve pricing. The amendment consists of a $700 million senior secured revolving facility.

Stock repurchases totaled $50 million in the first quarter of 2022.

"Earlier this week we announced completion of the sale of Allscripts Hospital & Large Physician Practices business to Constellation Software. I firmly believe this transaction enables both companies to fuel their respective future growth strategies and continue to provide additional value to clients, employees, and shareholders," said Paul M. Black, Allscripts Chief Executive Officer. "In the first quarter we delivered solid results, reporting strong year-over-year growth in revenue, gross profit, Adjusted EBITDA, margins and free cash flow."

2022 Financial Outlook(1)

Allscripts is affirming its prior annual outlook and currently expects to achieve:

  • Veradigm revenue growth year-over-year between 6% to 7%

  • Veradigm adjusted EBITDA growth year-over-year between 10% to 15%

  • Free cash flow from continuing operations between $110 million to $120 million.

Conference Call

Allscripts will conduct a conference call today, Thursday, May 5, 2022, at 4:30 PM Eastern Time to discuss its earnings release and other information. Participants may access the conference call via webcast at http://investor.allscripts.com. Participants also may access the conference call by dialing +1 (877) 269-7756 or +1 (201) 689-7817 (international) and requesting Conference ID # 13728930.

A replay of the call will be available approximately two hours after the conclusion of the call, for a period of four weeks, on the Allscripts Investor Relations website or by calling +1 (877) 660-6853 or +1 (201) 612-7415 - Conference ID # 13728930.

Supplemental and non-GAAP financial information is also available at http://investor.allscripts.com.

Footnote

(1)

In providing financial guidance, the company does not reconcile Adjusted EBITDA and free cash flow to the corresponding GAAP financial measures. Allscripts does not provide guidance for the various reconciling items since certain items that impact GAAP net operating income and operating cash flow such as acquisition-related amortization, and transaction and other costs, any of which may be significant, are outside of its control and/or cannot be reasonably predicted. Please see the "Explanation of Non-GAAP Financial Measures" at the end of this press release for detailed information on calculating non-GAAP measures. For a reconciliation of other non-GAAP financial measures, see the non-GAAP financial reconciliation tables in this release (Tables 4, 5, 6, 8 and 10).

NOTE: All percentage changes described within this press release are calculated from full dollar amounts as illustrated in the accompanying financial statements posted on the Investor Relations website. Rounding differences may occur when individually calculating percentages or totals from rounded amounts included within the press release body compared to full dollar amounts in the tables.

About Allscripts
Allscripts (Nasdaq: MDRX) is a leader in healthcare information technology solutions that advance clinical, financial and operational results. Our innovative solutions connect people, places and data across an Open, Connected Community of Health™. Connectivity empowers caregivers to make better decisions and deliver better care for healthier populations. To learn more, visit www.allscripts.com, Twitter, YouTube and It Takes A Community: The Allscripts Blog.

© 2022 Allscripts Healthcare, LLC and/or its affiliates. All Rights Reserved.
Allscripts, the Allscripts logo, and other Allscripts marks are trademarks of Allscripts Healthcare, LLC and/or its affiliates. All other products are trademarks of their respective holders, all rights reserved. Reference to these products is not intended to imply affiliation with or sponsorship of Allscripts Healthcare, LLC and/or its affiliates.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our 2022 outlook, the disposition of Hospitals and Large Physician Practices Business, our profitability initiatives, our strategic priorities and our client outcomes. These forward-looking statements are based on the current beliefs and expectations of Allscripts management, only speak as of the date that they are made and are subject to significant risks and uncertainties. Such statements can be identified by the use of words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," "look forward," "pipeline" and similar terms. Actual results could differ significantly from those set forth in the forward-looking statements, and reported results should not be considered an indication of future performance or events.

Certain factors that could cause our actual results to differ materially from those described in the forward-looking statements include, but are not limited to: our ability to achieve the margin targets associated with our margin improvement initiatives within the contemplated time periods, if at all; the magnitude, severity and duration of the COVID-19 pandemic, including the impacts of the pandemic, along with the impacts of our responses and the responses by governments and other businesses to the pandemic, on our business, our employees, our clients and our suppliers; security breaches resulting in unauthorized access to our or our clients’ computer systems or data, including denial-of-services, ransomware or other Internet-based attacks; the failure by Practice Fusion to comply with the terms of the settlement agreements with the U.S. Department of Justice (the "DOJ"); the costs and burdens of compliance by Practice Fusion with the terms of its settlement agreements with the DOJ; additional investigations and proceedings from governmental entities or third parties other than the DOJ related to the same or similar conduct underlying the DOJ’s investigations into Practice Fusion’s business practices; our ability to recover from third parties (including insurers) any amounts paid in connection with Practice Fusion’s settlement agreements with the DOJ and related inquiries; the expected financial results of businesses acquired by us; the successful integration of businesses acquired by us; the anticipated and unanticipated expenses and liabilities related to businesses acquired by us, including the civil investigation by the U.S. Attorney’s Office involving our Enterprise Information Solutions business; other risks associated with investments and acquisitions; risks associated with disposition of the Hospitals and Large Physicians Practices Business, our failure to compete successfully; consolidation in our industry; current and future laws, regulations and industry initiatives; increased government involvement in our industry; the failure of markets in which we operate to develop as quickly as expected; our or our customers’ failure to see the benefits of government programs; changes in interoperability or other regulatory standards; our ability to maintain and expand our business with existing clients or effectively transition clients to newer products; the effects of the realignment of our sales, services and support organizations; market acceptance of our products and services; the unpredictability of the sales and implementation cycles for our products and services; our ability to manage future growth; our ability to introduce new products and services; our ability to establish and maintain strategic relationships; risks associated with investments and acquisitions; the performance of our products; our ability to protect our intellectual property rights; the outcome of legal proceedings involving us; our ability to hire, retain and motivate key personnel; performance by our content and service providers; liability for use of content; price reductions; our ability to license and integrate third-party technologies; risks related to global operations; variability of our quarterly operating results; risks related to our outstanding indebtedness; changes in tax rates or laws; business disruptions; our ability to maintain proper and effective internal controls; and asset and long-term investment impairment charges. Additional information about these and other risks, uncertainties, and factors affecting our business is contained in our filings with the Securities and Exchange Commission, including under the caption "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Qs. We do not undertake to update forward-looking statements to reflect changed assumptions, the impact of circumstances or events that may arise after the date of the forward-looking statements, or other changes in our business, financial condition or operating results over time.

Table 1

Allscripts Healthcare Solutions, Inc.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

March 31,

December 31,

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

$82.8

$132.5

Restricted cash

1.3

1.3

Accounts receivable, net

170.5

171.6

Contract assets

55.1

63.5

Prepaid expenses and other current assets

56.2

60.5

Assets held for sale

1,174.7

1,125.1

Total current assets

$1,540.6

$1,554.5

Fixed assets, net

9.3

9.8

Software development costs, net

78.3

74.7

Intangible assets, net

158.3

149.7

Goodwill

520.2

506.6

Deferred taxes, net

6.1

0.0

Contract assets - long-term

19.2

28.2

Right-of-use assets - operating leases

16.8

18.3

Other assets

81.4

83.4

Total assets

$2,430.2

$2,425.2

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$15.5

$5.3

Accrued expenses

61.8

54.5

Accrued compensation and benefits

18.0

31.1

Deferred revenue

106.5

120.7

Current operating lease liabilities

6.0

6.1

Liabilities related to assets held for sale

439.0

380.3

Total current liabilities

646.8

598.0

Long-term debt

377.1

350.1

Deferred revenue

3.6

1.8

Deferred taxes, net

0.0

16.6

Long-term operating lease liabilities

15.2

16.8

Other liabilities

34.4

33.8

Total liabilities

$1,077.1

$1,017.1

Total stockholders’ equity

$1,353.1

$1,408.1

Total liabilities and stockholders’ equity

$2,430.2

$2,425.2

Table 2

Allscripts Healthcare Solutions, Inc.

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

(Unaudited)

Three Months Ended March 31,

2022

2021

Revenue:

Provider

$118.7

$111.2

Payer & Life Sciences

24.0

22.5

Total Revenue

142.7

133.7

Cost of revenue:

Provider

57.0

58.7

Payer & Life Sciences

12.2

12.1

Total cost of revenue

69.2

70.8

Gross profit

73.5

62.9

Selling, general and administrative expenses

41.3

32.2

Research and development

23.4

20.6

Amortization of intangible and acquisition-related assets

2.2

2.4

Income (loss) from operations

6.6

7.7

Interest expense, net (a)

(2.1

)

(3.1

)

Other

(0.4

)

0.8

Income (loss) before income taxes

4.1

5.4

Income tax (provision) benefit

14.4

(1.1

)

Income (loss) from continuing operations, net of tax

18.5

4.3

Income (loss) from discontinued operations

(5.0

)

5.9

Gain (loss) on sale of discontinued operations

0.0

0.6

Income tax (provision) from discontinued operations

9.4

(1.7

)

Income (loss) from discontinued operations, net of tax

4.4

4.8

Net Income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders

$22.9

$9.1

Diluted earnings per Common Share:

Income (loss) from continuing operations, net of tax

$18.5

$4.3

Plus: Interest expense, net of tax, associated with 0.875% Convertible Senior Notes

$0.5

$0.0

Income (loss) from continuing operations, net of tax after the effect of assumed conversions

19.0

4.3

Income (loss) from discontinued operations, net of tax

4.4

4.8

Adjusted Net Income (loss) earnings per Common Share

$23.4

$9.1

Income (loss) from continuing operations per share - basic

$0.16

$0.03

Income (loss) from discontinued operations per share - basic

$0.04

$0.03

Income (loss) per share - basic

$0.20

$0.06

Adjusted Income (loss) from continuing operations per share - diluted

$0.14

$0.03

Income (loss) from discontinued operations per share - diluted

$0.03

$0.03

Adjusted Income (loss) per share - diluted

$0.17

$0.06

Weighted average common shares outstanding:

Basic

115.9

140.2

Diluted

138.7

149.1

Three Months Ended March 31,

2022

2021

(a) Interest expense, net is comprised of the following for the periods presented:

Interest expense

(1.5

)

(1.3

)

Interest income

0.1

0.1

Non-cash charges to interest expense

(0.6

)

(1.9

)

Interest expense, net

($2.1

)

($3.1

)

Table 3

Allscripts Healthcare Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

Three Months Ended March 31,

2022

2021

Cash flows from operating activities:

Net income (loss)

$22.9

$9.1

Less: Income(loss) from discontinued operations

4.4

4.8

Income (loss) from continuing operations

$18.5

$4.3

Non-cash adjustments to net income (loss):

Depreciation and amortization

14.1

16.2

Non-cash lease expense, net

(3.2

)

(1.8

)

Stock-based compensation expense

6.3

2.8

Deferred Taxes

(17.0

)

4.7

Other (income) loss, net

0.6

0.7

Total non-cash adjustments to net income (loss)

0.8

22.6

Cash impact of changes in operating assets and liabilities:

Assets

31.6

24.2

Liabilities

(16.4

)

(36.0

)

Total cash impact of changes on operating assets and liabilities

15.2

(11.8

)

Net cash provided by (used in) operating activities - Continuing operations

34.5

15.1

Net cash provided by (used in) operating activities - Discontinued operations

34.8

(10.6

)

Net cash provided by (used in) operating activities

69.3

4.5

Cash flows from investing activities:

Capital expenditures

(0.4

)

(0.2

)

Capitalized software

(9.6

)

(8.1

)

Cash paid for business acquisitions, net of cash acquired

(24.1

)

0.0

Sale of businesses and other investments, net of cash divested and distributions received

1.1

1.7

Purchases of equity securities, other investments and related intangible assets, net

0.0

(0.2

)

Cash provided by (used in) investing activities - Continuing Operations

(33.0

)

(6.8

)

Cash provided by (used in) investing activities - Discontinued Operations

(11.2

)

(12.2

)

Net cash provided by (used in) investing activities

(44.2

)

(19.0

)

Cash flows from financing activities:

Taxes paid related to net share settlement of equity awards

(13.3

)

(4.7

)

Credit facility payments

(25.0

)

0.0

Credit facility borrowings, net of issuance costs

25.0

0.0

Repurchase of common stock

(49.7

)

0.0

Intercompany to/from parent/subsidiaries

11.7

28.3

Payment of acquisition and other financing obligations

0.0

(1.5

)

Net cash provided by (used in) financing activities - continuing operations

(51.3

)

22.1

Net cash provided by (used in) financing activities - discontinued operations

(11.7

)

(29.6

)

Net cash provided by (used in) financing activities

(63.0

)

(7.5

)

Effect of exchange rate changes on cash and cash equivalents

0.0

0.0

Net increase (decrease) in cash and cash equivalents

(37.9

)

(22.0

)

Cash, cash equivalents and restricted cash, beginning of period

190.5

537.5

Cash, cash equivalents and restricted cash, end of period

$152.6

$515.5

Less: Cash and cash equivalents and restricted cash included in current assets held for sale

($68.5

)

($60.4

)

Cash, cash equivalents and restricted cash, end of period, excluding assets held for sale

$84.1

$455.1

Table 4

Allscripts Healthcare Solutions, Inc.

Condensed Non-GAAP Financial Information

(In millions, except per share amounts and percentages)

(Unaudited)

Three Months Ended March 31,

2022

2021

Gross profit, as reported

$73.5

$62.9

Acquisition-related amortization

1.6

1.8

Stock-based compensation expense

0.3

0.3

Total non-GAAP gross profit

$75.4

$65.0

Income (loss) from operations, as reported

$6.6

$7.7

Acquisition-related amortization

3.8

4.2

Stock-based compensation expense

6.9

4.0

Transaction and other

6.6

0.0

Total non-GAAP income from operations

$23.9

$15.9

Adjusted Net Income (loss) earnings per Common Share

$23.4

$9.1

Loss (income) from discontinued operations

5.0

(5.9

)

(Gain) on sale of business, net from discontinued operations

0.0

(0.6

)

Income tax provision from discontinued operations

(9.4

)

1.7

Income (loss) from continuing operations, net of tax after the effect of assumed conversions

$19.0

$4.3

Less: Interest expense, net of tax, associated with 0.875% Convertible Senior Notes

(0.5

)

0.0

Income (loss) from continuing operations, net of tax

$18.5

$4.3

Acquisition-related amortization

3.8

4.2

Stock-based compensation expense

6.9

4.0

Transaction and other

6.6

0.0

Non-cash charges to interest expense and other

0.0

1.3

Tax rate alignment

(19.6

)

(2.6

)

Non-GAAP net income attributable to Allscripts Healthcare Solutions, Inc.

$16.2

$11.2

Non-GAAP effective tax rate

24

%

24

%

Weighted shares outstanding - basic

115.9

140.2

Weighted shares outstanding - diluted

138.7

149.1

Less the net effect of convertible notes and note hedges

(13.6

)

(2.6

)

Non-GAAP Weighted shares outstanding - diluted

125.1

146.5

GAAP Adjusted Income (loss) from continuing operations per share - diluted

$0.17

$0.06

Non-GAAP Income (loss) per share - diluted

$0.13

$0.08

Table 5

Allscripts Healthcare Solutions, Inc.

Non-GAAP Financial Information - Adjusted EBITDA

(In millions, except percentages)

(Unaudited)

Three Months Ended March 31,

2022

2021

Income (loss) from operations, as reported

$6.6

$7.7

Plus:

Depreciation and amortization

13.6

14.4

Stock-based compensation expense

6.9

4.0

Transaction and other

6.6

0.0

Adjusted EBITDA

$33.7

$26.1

Adjusted EBITDA margin (a)

23.6

%

19.5

%

(a) Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.

Table 6

Allscripts Healthcare Solutions, Inc.

Non-GAAP Financial Information - Free Cash Flow

(In millions)

(Unaudited)

Three Months Ended March 31,

2022

2021

Net cash provided by (used in) operating activities - continuing operations

$34.5

$15.1

Cash flows from investing activities:

Capital expenditures

(0.4

)

(0.2

)

Capitalized software

(9.6

)

(8.1

)

Free cash flow

$24.5

$6.8

Table 7

Allscripts Healthcare Solutions, Inc.

Non-GAAP Financial Information from Continuing Operations - Segment Details

(In millions)

(unaudited)

2021

2022

Q1

Q2

Q3

Q4

Total

Q1

Total Veradigm, Non-GAAP

Revenue

126.4

133.4

137.2

155.2

552.2

136.3

Gross profit

60.7

65.7

67.7

86.7

280.8

71.1

Gross margin

48.0%

49.3%

49.3%

55.9%

50.9%

52.2%

Income from operations

19.0

25.2

24.2

42.4

110.8

25.5

Adjusted EBITDA

28.4

35.3

34.5

51.9

150.1

35.2

Adjusted EBITDA margin

22.5%

26.5%

25.1%

33.4%

27.2%

25.8%

Unallocated, Non-GAAP

Revenue

7.3

7.8

7.5

6.0