Allscripts Healthcare Solutions, Inc. (MDRX), a leading player in the health care information technology (:HCIT) market, reported first quarter 2013 adjusted (excluding one-time items other than stock-based compensation expense) earnings per share of 6 cents, missing the Zacks Consensus Estimate of 11 cents.
Reported net loss was $11.6 million (or a loss of 7 cents per share) compared with net income of $5.8 million (or earnings per share of 3 cents) in the year-ago quarter.
Revenues were $347.1 million, down 4.8% year over year in the first quarter, trailing the Zacks Consensus Estimate of $366 million. Adjusted revenues came in at $348 million, down 4.8% on a year-over-year basis.
Bookings in the quarter were $177.7 million, a drop of 8.7%. Year-over-year decline in bookings was partly caused by delay in purchase decisions as consumers awaited product launches. Backlog was $2,744 million at the end of the reported quarter lower than $2,863 million a year ago.
Total revenues consisted of System Sales ($27 million, down 27.4%), Professional Services ($61.1 million, down 14.5%), Maintenance ($117.7 million, down 0.5%) and Transaction Processing ($141.3 million, up 2.6%), which constituted 7.8%, 17.6%, 33.9% and 40.7% respectively, of total revenues in the first quarter.
Adjusted gross margin was 42.5% of adjusted sales in the reported quarter, lower than 45.1% in the prior-year quarter. Selling, general and administrative expenses were $104.2 million, down 7.1% year over year while research and development expenditure came to $51 million, up 41.3%. Adjusted operating margin was 5.1% of adjusted sales, lower than 11.2% in the year-ago quarter.
Allscripts exited the first quarter with cash and cash equivalents of $92.2 million, down 11.3% on a year-over-year basis. The company had long-term debt of $458.6 million, up 26.4%.
Allscripts revealed in the reported quarter that it had taken over Jardogs LLC, a provider of patient engagement offering and dbMotion Ltd., a provider of community-based healthcare offerings. Both entities were privately held.
Jardogs provided a cloud-oriented patient engagement expertise, which facilitated team building among patients, doctors and others. The Jardogs Follow My Health patient engagement system allowed patients to proactively manage their care and empowered buyers to gauge their health condition.
dbMotion has had a strategic relationship with Allscripts since 2009. Allscripts was the biggest user of dbMotion expertise. About 370 inpatient centers and 2,800 freestanding clinics used dbMotion know how. dbMotion made available a system for population health management as well as healthcare coordination and utilized data from disparate sources to create a record for patients.
We are of the opinion that acute and ambulatory care will continue to converge in future. In addition, Allscripts is positioned to provide integrated clinical applications for health care providers to satisfy their requirements and eventually comply with an outcomes-based reimbursement system.
As a potential takeover target, Allscripts presents a lucrative opportunity for firms seeking entry into the HCIT industry. It has a wide user base and enjoys many opportunities vis-à-vis its peers. Its mergers with Misys and Eclipsys have expanded opportunities, reach in practice management (“PM”) and Electronic Health Record (“EHR”) markets substantially, and increased cross-selling opportunities. We believe that Allscripts is well positioned in the fast growing business of selling EHR to physician practices as well as inpatient settings.
The health care information technology market is competitive and price sensitive. Among others, Allscripts faces strong competition from Cerner Corporation (CERN), Quality Systems Inc. (QSII) and Athenahealth, Inc. (ATHN). The stock carries a Zacks Rank #3 (Hold).
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