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Allscripts (MDRX) Q2 Earnings Top Estimates, Revenues Lag

Zacks Equity Research

Allscripts Healthcare Solutions, Inc. MDRX reported second-quarter 2019 adjusted earnings per share (EPS) of 17 cents, which beat the Zacks Consensus Estimate by 6.3%. However, the bottom line declined 10.5% on a year-over-year basis.

On a non-GAAP basis, revenues totaled $445 million, which missed the Zacks Consensus Estimate by 0.7%. The top line also fell 0.9% year over year. However, on a reported basis, revenues amounted to $444.5 million in the quarter, reflecting year-over-year improvement of 0.7%.

Bookings came in at $276 million, significantly up by 30.8% from the prior-year quarter’s tally.

Segment Details

In a bid to focus on the payer and life sciences market and evolution of the healthcare IT industry, the company realigned its segment reporting structure by divesting its investment in Netsmart on Dec 31, 2018.

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 $285 million on a reported basis, up 0.2% from the year-ago quarter's tally.

Client Services

At this segment, revenues totaled $159.5 million, up 1.6% from the year-ago quarter's figure.

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

 

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

Allscripts Healthcare Solutions, Inc. price-consensus-eps-surprise-chart | Allscripts Healthcare Solutions, Inc. Quote

Margins

Gross profit in the second quarter was $184.1 million, up 6% from the year-ago quarter's level. As a percentage of revenues, gross margin was 41.4%, up 210 bps from the year-ago figure.

Adjusted gross profit amounted to $196.4 million, down 4.8% year over year. Adjusted gross margin was 44.1%, down 180 bps from the prior-year quarter.

Adjusted operating income in the quarter was $44.8 million, down 6.5% year over year. Adjusted operating margin was 10.1%, as a percentage of revenues, down 60 bps from the prior-year quarter.

Financial Update

As of Jun 30, 2019, cash and cash equivalents totaled $138.9 million, down 20.3% from 2018-end level.

Net cash from operating activities for the three months ended Jun 30, 2019, amounted to ($7.7) million, against $8.2 million from the prior-year quarter.

Guidance Revised

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

For the third quarter of 2019, adjusted revenues are expected between $445 million and $455 million. The Zacks Consensus Estimate is pegged at $450.1 million, within management’s guided range.

Full-year bookings are anticipated between $1.05 billion and $1.10 billion (up from the previously guided range of $900 million and $1 billion).

Summing Up

Allscripts ended the second 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 second-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.

Meanwhile, the company witnessed a contraction in operating margin in the reported 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 #2 (Buy).

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks which reported solid results this earning season are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%.

Baxter delivered second-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, outpacing the Zacks Consensus Estimate of $1.03 billion.

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