Allscripts Healthcare Solutions (MDRX), a leading player in the health care information technology (“HCIT”) market, reported third quarter adjusted (excluding one-time items other than stock-based compensation expense) earnings per share of 21 cents surpassing the Zacks Consensus Estimate of 20 cents. Reported net income for the quarter was $21 million (or 11 cents per share) compared with just $1.4 million (or 1 cent per share) in the year-ago period.
Revenues
Allscripts reported revenues of $368.8 million in the third quarter, beating the Zacks Consensus Estimate of $364 million. Adjusted revenues were $371.4 million, up 13% year over year. Bookings came to $266.8 million, an increase of 34% on a sequential basis.
Segment-wise Data
Reported revenues consisted of System Sales, Professional Services, Maintenance and Transaction Processing, which contributed 17%, 17.7%, 29.9% and 35.4%, respectively, to sales in the reported quarter.
Margin
Adjusted gross margin was 45.7% of sales in the reported quarter, lower than 48.9% in the prior-year period. Adjusted operating margin was 20.3% of sales, higher than 19.1% in the year-ago quarter.
Balance Sheet
As of September 30, 2011, Allscripts had cash and marketable securities of $86.5 million and $337.6 million of outstanding borrowings.
Outlook
The company adjusted its guidance for 2011. It expects adjusted revenues in a range of $1,455 million to $1,460 million (earlier $1,440 million to $1,450 million) for fiscal 2011. Adjusted operating margin is still projected at about 21%. Adjusted earnings per share are forecast between 91 cents and 93 cents (earlier 88 and 90 cents).
The health care information technology market is competitive and price sensitive. Among others, Allscripts faces strong competition from Cerner Corp. (CERN), Quality Systems (QSII) and Athenahealth (ATHN).
However, optimism about the growth prospects of select HCIT service providers is high under the Obama Administration, which passed the Stimulus package in May 2009, aimed at increasing the use of electronic health record (“EHR”) systems by medical practitioners.
The company has widened its user base after its mergers with Misys and Eclipsys and increased cross-selling opportunities. We believe that Allscripts is well positioned in the fast growing business of selling EHR/EMR to physician practices as well as inpatient settings.
The acquisition of Eclipsys provides the company with an acute care product for sale in concert with its ambulatory services. We opine that acute and ambulatory care will continue to converge in future and that Allscripts is well positioned to provide integrated clinical applications that will permit health care providers to satisfy HITECH Act requirements and eventually comply with an outcomes-based reimbursement system.
Strong bookings currently taking place, with both ambulatory and acute products doing well, may indicate that the Eclipsys products are popular in the market and that cross-selling synergies are for real. Currently, we are Neutral on Allscripts.
ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
CERNER CORP (CERN): Free Stock Analysis Report
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis Report
QUALITY SYS (QSII): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment