Allscripts Healthcare Solutions Inc. MDRX recently announced a new share repurchase program worth $150 million. Based on the Nov 30 closing price of $15.23, Allscripts can buy 9.8 million (5.2%) of the total outstanding shares as of Oct 30, 2015. The program will run through Dec 31, 2018.
Allscripts’ last share repurchase program ended in May 2014. The current three-year program will not only help in improving company’s bottom line but will also offset dilution from various equity grants. The company expects to use its cash balance as well as free cash flow to repurchase shares.
Notably, Allscripts had cash and cash equivalents of $91.4 million as of Sep 30, 2015. In the nine months ending Sep 30, the company generated $128.3 million in cash flow from operating activities.
Apart from these, Allscripts amended its Credit Agreement with lenders on Sep 30, 2015. The 2015 Credit Agreement provides for a $250 million senior secured term loan and a $550 million senior secured revolving facility. The company can also use these facilities to repurchase shares, going forward.
Meanwhile, Allscripts reported mixed third-quarter results, with adjusted earnings of 10 cents per share beating the Zacks Consensus Estimate by a couple of cents and also improving from 3 cents reported in the year-ago quarter. The improvement can be attributed to increased bookings and efficient cost control.
Revenues (including deferred revenues and other adjustments) increased 2.6% on a year-over-year basis to $354.5 million, but were marginally below the Zacks Consensus Estimate of $355 million. Contract revenue backlog, as of Sep 30, 2015, increased 4% on a year-over-year basis to $3.6 billion.
Allscripts lowered its revenue outlook for full-year 2015, which is now expected in the range of $1.390–$1.405 billion, as compared to the previously guided range of $1.40–1.43 billion. Adjusted earnings are expected in the band of 45-47 cents per share, as compared to the previous range of 40–50 cents.
We believe that growing adoption of Allscripts’ products and services like Sunrise platform, FollowMyHealth, Touchworks EHR, EPSi and dbMotion will drive market traction, which in turn will boost the top line.
Zacks Rank & Other Key Picks
Allscripts carries a Zacks Rank #2 (Buy).
Other favorably ranked stocks in the same space include Masimo Corp MASI, Natus Medical BABY and Fluidigm FLDM. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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