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Allscripts (MDRX) Q1 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research

Allscripts Healthcare Solutions, Inc. MDRX reported first-quarter 2019 adjusted earnings per share (EPS) of 16 cents, which beat the Zacks Consensus Estimate by 14.3%. Further, the bottom line improved 6.7% on a year-over-year basis.

On a non-GAAP basis, revenues totaled $432.6 million, which fell short of the Zacks Consensus Estimate by 1%. The top line also fell 0.6% year over year. On a reported basis, revenues amounted to $432 million in the quarter, reflecting year-over-year decline of 0.4%.

Bookings came in at $286 million, noticeably up by 8.7% from the prior-year quarter’s tally.

Allscripts Healthcare Solutions, Inc. Price, Consensus and EPS Surprise

 

Allscripts Healthcare Solutions, Inc. Price, Consensus and EPS Surprise | Allscripts Healthcare Solutions, Inc. Quote

Segment Details

During the first quarter, the company realigned its segment reporting structure owing to the divestiture of its investment in Netsmart on Dec 31, 2018, emphasis on the payer and life sciences market and evolution of the healthcare IT industry.

The new 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 mainly focuses on the payer and life sciences market.

Software delivery, Support and Maintenance

In the quarter under review, revenues at the segment grossed $275.5 million on a reported basis, down 1.8% from the year-ago quarter's tally.

Client Services

At this segment, revenues totaled $156.5 million, up 2.2% from the year-ago quarter's figure.

Margins

Gross profit in the first quarter was $174.1 million, down 5.8% from the year-ago quarter's level. As a percentage of revenues, gross margin was 40.3%, down 230 bps from the year-ago figure.

Adjusted gross profit amounted to $186.5 million, down 7.6% year over year. Adjusted gross margin was 43.1%, down 330 bps from the prior-year quarter.

Adjusted operating income in the quarter was $41.7 million, down 10.3% year over year. Adjusted operating margin was 9.6%, as a percentage of revenues.

Financial Update

As of Mar 31, 2019, cash and cash equivalents totaled $137.2 million, down 21.2% from 2018-end level.

Net cash from operating activities for the three months ended Mar 31, 2019, amounted to $5.8 million, compared with $58.3 million from the prior-year quarter.

Guidance Reiterated

For 2019, adjusted EPS are expected at the lower end of 65-70 cents. The Zacks Consensus Estimate is pegged at 68 cents, within the projected range.

For the second quarter of 2019, adjusted revenues are expected between $445 million and $455 million. The Zacks Consensus Estimate is pegged at $448.4 million, within management’s guided range.

Full-year bookings are expected between $900 million and $1 billion.

Summing Up

Allscripts ended the first quarter on a mixed note. The company continues to gain from the core Client Services unit, which displayed better performance in the quarter. Significant growth in first-quarter bookings also buoys optimism. The company continues to maintain momentum in its Provider business on the back of key client wins across solution set. The company remains confident about its near and long-term outlook as it anticipates to benefit from a number of differentiated growth opportunities in both its Provider and Veradigm businesses. These apart, management remain optimistic about the collaboration with Microsoft, earlier in 2018.

Meanwhile, the core Software, Delivery, Support and Maintenance units witnessed a soft first quarter. The company also witnessed a significant contraction in margins in the quarter. Moreover, Allscripts is exposed to integration risks. Intense competition in the niche space is an added concern.

Zacks Rank

Currently, Allscripts carries a Zacks Rank #3 (Hold).

Earnings of MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Stryker Corporation SYK, DENTSPLY SIRONA Inc. XRAY and CONMED Corporation CNMD, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Stryker delivered first-quarter 2019 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the Zacks Consensus Estimate.

DENTSPLY reported adjusted earnings per share (EPS) of 49 cents in the first quarter of 2019, beating the Zacks Consensus Estimate of 38 cents. Revenues came in at $946.2 million and surpassed the Zacks Consensus Estimate of $917.1 million.

CONMED posted first-quarter 2019 adjusted earnings per share of 57 cents, which beat the Zacks Consensus Estimate of 54 cents. Revenues were $218.4 million, surpassing the Zacks Consensus Estimate of $213 million.

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