Headquartered in Chicago, IL, Allscripts Healthcare Solutions, Inc. MDRX, a leading global provider of information technology and services to healthcare organizations, recently announced the acquisition of Core Medical Solutions to expand its offerings in Australia.
We note that Allscripts represents a negative year-to-date return of almost 30.8%, wider than the Zacks categorized Medical Information System sub-industry’s return of roughly -27.6% and the S&P 500’s return of almost 7.9%. In fact, after the last quarter’s mixed performance, shares lost 8.7%.
In fact, the estimate revision trend seems unfavorable for the stock with seven estimates moving down in the last one month and three moving north. Notably, the current year estimates for the stock slipped by a penny to 42 cents per share over the last month.
However, we are positive about the recent alliance with Core Medical. Notably, shares of Allscripts gained almost 1.72% to close at $10.65 following the news.
Coming back to the deal, Adelaide-based Core Medical is a leading provider of EMR (electronic medical record) solutions throughout Australia and is known for its BOSSnet clinical information system. Notably, the company has a strong foothold in Victoria and Western Australia.
Per management, Allscripts is going to leverage from Core Medical’s huge clientele and solid foothold to fortify its position in the Australian healthcare markets. However, Core Medical will have its base in Adelaide, South Australia, and will operate as a subsidiary of Allscripts.
Our Take
A report by ‘strategy&’ reveals that Australia has been rated sixth in the world, in terms of healthcare efficiency in 2014, up from the position of seventh in 2013.
In fact, another study by Deloitte found that health care spending in Australia is projected to reach a worth of $186.3 billion by 2018, up from $172 billion in 2013. Banking on these prospects, Allscripts is well positioned to gain significant traction in the niche markets, in our view.
Allscripts has a long-term expected earnings growth of 16.5% and an earnings yield of 3.9%, better than the industry average of 1.06%.
The company has been progressing well with its Sunrise and CareInMotion platforms. Of the other developments, the recent partnership with Holston Medical Group to introduce early adopter genomics is notable.
Zacks Rank & Key Picks
Currently, Allscripts has a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader medical sector include Addus HomeCare Corporation ADUS, LHC Group, Inc. LHCG and IDEXX Laboratories, Inc. IDXX. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of almost 57.3%.
LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 19.8% in the last three months.
IDEXX Laboratories has a long-term expected earnings growth rate of 14.96%. The company posted a promising one-year return of 62.56%.
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