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AllScripts (MDRX) Up 18% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for AllScripts Healthcare (MDRX). Shares have added about 18% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is AllScripts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Allscripts  Q1 Earnings and Revenues Miss Estimates

Allscripts Healthcare Solutions  reported first-quarter 2020 adjusted earnings per share  of 9 cents, which missed the Zacks Consensus Estimate of 14 cents by 35.7%. The bottom line also declined 43.8% on a year-over-year basis.

Revenue Details

Revenues totaled $416.7 million, which lagged the Zacks Consensus Estimate by 1.2%. Also, the top line fell 3.5% year over year.

For first-quarter 2020, bookings came in at $205 million, down 28.3% from the prior-year quarter.

Segment Details

The Provider segment consists of the core integrated clinical software applications, financial management and patient engagement solutions targeted at clients across the entire continuum of care. Meanwhile, the new Veradigm segment primarily focuses on the payer and life sciences market.

Software delivery, Support and Maintenance

In the quarter under review, revenues at the segment amounted to $263.6 million on a reported basis, down 4.3% from the year-ago quarter's tally.

Client Services

At this segment, revenues totaled $153.1 million, down 2.2% from the year-ago quarter's figure.

Margins

Gross profit in the first quarter was $157 million, down 9.8% from the year-ago quarter. As a percentage of revenues, gross margin was 37.7%, down 262 basis points (bps) from the year-ago figure.

Adjusted operating loss in the reported quarter was $3 million against a profit of $9.6 million in the year-ago quarter.

Financial Update

The company exited the first quarter of 2020 with cash and cash equivalents totaled $204.3 million, up from $129.6 million at the end of 2019.

At the end of the first quarter, net cash used in operating activities totaled $3.7 million against net cash provided of$5.8 million at the end of 2019.

2020 Guidance

Due to the current uncertainty owing to the COVID-19 pandemic, Allscripts is withdrawing its financial outlook for 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -15.18% due to these changes.

VGM Scores

At this time, AllScripts has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AllScripts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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