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Allscripts (MDRX) Posts In-Line Q1 Earnings; FY16 View Up

Allscripts Healthcare Solutions Inc. MDRX reported adjusted earnings of 13 cents per share in the first quarter of 2016, which surged 62.5% from the year-ago quarter. Including stock-based compensation expenses, earnings were 9 cents per share which were in line with the Zacks Consensus Estimate.
 

 

Quarter Details

Revenues (including deferred revenues and other adjustments) increased 3.3% on a year-over-year basis to $345.6 million but lagged the Zacks Consensus Estimate of $349 million.

Software delivery, support and maintenance segment revenues increased 0.7% to $229.2 million, while that from the Client services segment improved 8.8% to $116.4 million.

Recurring revenues (subscriptions, recurring transactions, support and maintenance and recurring managed services) increased 5% on a year-over-year basis. Non-recurring revenues, on the other hand, declined 13% year over year.

Bookings increased 7% year over year to $252 million on the back of higher Electronic Health Record (EHR) replacements and increased sales of population health management solutions. The Sunrise EHR platform added two new clients in the quarter under review.

Notably, Software delivery accounted for 44% of the total first-quarter bookings as compared with 63% in the year-ago quarter. Client services accounted for 56% of the total bookings as compared with 37% in the year-ago quarter.

Contract revenue backlog, as of Mar 31, 2016, remained flat on a year-over-year basis at $3.65 billion.

Adjusted gross margin (including stock-based compensation) expanded 460 basis points (bps) on a year-over-year basis to 46.1%. The expansion can be primarily attributed to the cost-curtailment initiatives undertaken by Allscripts and better alignment of the company’s resources with regard to client demand.

Adjusted operating margin (including stock-based compensation) also expanded 440 bps from the year-ago quarter to 9.2%.

Guidance

For full-year 2016, Allscripts forecasts revenues in the range of $1.580 billion to $1.610 billion, up from the earlier guidance of $1.430 billion to $1.460 billion. At mid-point, the current guidance reflects 15% growth.

Allscripts reiterated its adjusted earnings guidance at 55 cents to 62 cents per share.

Adjusted EBITDA is now anticipated in the band of $280–$300 million, up from the earlier guided range of $265–$285 million.

Zacks Rank & Key Picks

Currently, Allscripts has a Zacks Rank #4 (Sell).

Better-ranked stocks in the medical sector are athenahealth ATHN, Quality Seasons QSII and Medidata Solutions MDSO. All the three stocks carry a Zacks Rank #2 (Buy).

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ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
 
QUALITY SYS (QSII): Free Stock Analysis Report
 
MEDIDATA SOLUTN (MDSO): Free Stock Analysis Report
 
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis Report
 
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