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Allscripts (MDRX) Q3 Earnings Beat Estimates, Improve Y/Y

Zacks Equity Research

Allscripts Healthcare Solutions, Inc. MDRX reported third-quarter 2019 adjusted earnings per share (EPS) of 17 cents, which beat the Zacks Consensus Estimate of 16 cents by 6.3%. The bottom line also improved 6.3% on a year-over-year basis.

On a non-GAAP basis, revenues totaled $444.6 million, which missed the Zacks Consensus Estimate by 1.2%. However, the top line climbed 1.1% year over year. Moreover, on a reported basis, revenues amounted to $444.2 million in the quarter, reflecting year-over-year improvement of 2.7%.

Bookings came in at $236 million, significantly up by 19.2% 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 selling its stake 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 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 $284.4 million on a reported basis, up 3.7% from the year-ago quarter's tally.

Client Services

At this segment, revenues totaled $159.8 million, up 0.9% 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 third quarter was $175.3 million, down 1.6% from the year-ago quarter's level. As a percentage of revenues, gross margin was 39.5%, down 170 bps from the year-ago figure.

Adjusted gross profit amounted to $192 million, down 3.9% year over year. Adjusted gross margin was 43.2%, down 220 bps from the prior-year quarter.

Adjusted operating income in the quarter was $44.1 million, down 11.6% year over year. Adjusted operating margin was 9.9%, as a percentage of revenues, down 140 bps from the prior-year quarter.

Financial Update

As of Sep 30, 2019, cash and cash equivalents totaled $129.3 million, down 6.9% sequentially.

Net cash from operating activities for the three months ended Sep 30, 2019, amounted to $35.8 million, soaring 138.7% from the prior-year quarter.

2019 Guidance

For 2019, adjusted EPS outlook is now expected in the range of 67-70 cents. The Zacks Consensus Estimate is pegged at 68 cents, within the projected range.

For fourth-quarter 2019, adjusted revenues are expected between $460 million and $470 million. The Zacks Consensus Estimate is pegged at $462.2 million, within management’s guided range.

The company continues to project full-year bookings between the range of $1.05 billion to $1.10 billion.

Summing Up

Allscripts ended the third quarter on a mixed note. The company continues to gain from the core Client Services unit, which exhibited better performance in the quarter. Significant growth in third-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.

Notably, the company extended its Sunrise platform with Northwell Health through 2027.

Meanwhile, the company witnessed a contraction in both gross and operating margins in the reported quarter. Moreover, Allscripts is exposed to integration risks. Intense competition in the niche space remains a concern.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Third-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported third-quarter 2019 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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