- 16 февраля 2018, 16:22
- Zacks Investment Research
Allscripts Healthcare Solutions, Inc. MDRX reported fourth-quarter 2017 adjusted earnings of 18 cents per share were in line with the Zacks Consensus Estimate. Adjusted earnings increased 28.6% year over year.
Adjusted revenues grew 27% to $547 million on a year-over-year basis and beat the Zacks Consensus Estimate of $523.4 million.
Solid growth recorded in U.S. Core Solutions and Services, fueled by Sunrise electronic health record platform and Allscripts Revenue Cycle Management Services, buoyed optimism in the fourth quarter.
However, bookings in the fourth quarter were $314 million, down 22.7% on a year-over-year basis.
Allscripts Healthcare Solutions, Inc. Price and Consensus
Software Delivery, Support and Maintenance Revenues
This segment comprises software, hardware, subscription, other transactions, support and maintenance revenues. Revenues in the segment increased 17.1% to $328.7 million year over year.
Client Services Revenues
This segment takes care of recurring managed services and other project-based client services. Client service revenues were up 30.3% on a year-over-year basis to $188.6 million.
Recurring & Non-Recurring Base
Recurring revenues cover subscriptions, recurring transactions, support and maintenance and recurring managed services. Adjusted recurring revenues increased 32% on a year-over-year basis. Notably, the company’s total recurring-revenue mix came in at 79% of net revenues in the fourth quarter.
This segment comprises systems sales and other project-based client services. Adjusted non-recurring revenues at the segment increased 11% on a year-over-year basis.
As a percentage of revenues, Allscripts registered adjusted gross margin of 47.8% in the fourth quarter, compared with 48% in the year-ago quarter. Margins contracted 20 basis points (bps). However, management at Allscripts estimates gross margins to improve in 2018 on the back of the synergies from the recent Enterprise Information Solutions acquisition.
Software gross margin, as a percentage of revenues, decreased 50 bps on a year-over-year basis.
Client service margin in the fourth quarter came in at 16.7% of net revenues, compared to 14.8% in the same period last year.
Adjusted operating expenses in the quarter totaled $186 million, up 27% year over year, thanks to the acquisition of the Enterprise Information Solutions business from McKesson Corporation MCK.
Selling, general & administrative expenses increased 15% to $114 million and research and development expenses rose 50% to $105 million on a year-over-year basis.
For 2018, Allscripts expects adjusted revenues of in the range of $2.15 billion and $2.25 billion, up 17% to 22% on a year-over-year basis. The Zacks Consensus Estimate for revenues for 2018 currently stands at $2.14 billion.
Adjusted EBITDA is expected in the band of $420 million and $460 million, up 12% to 23% year over year.
Adjusted earnings-per-share is expected to be between 72 cents to 82 cents, an increase of 16% to 32% year over year. The Zacks Consensus Estimate for adjusted earnings for 2018 is currently pinned at 77 cents per share.
Allscripts’ solid outlook for 2018 instills investor optimism. Further, the recently-completed acquisition of Practice Fusion, a cloud-based electronic health record, aimed primarily at small, independent physician practices, is likely to drive the company’s inorganic growth. This transaction gave Allscripts the largest US market share in outpatient settings.
Further, the company has entered into an agreement to divest its One Content business to Hyland Software.
The company’s solid growth in U.S. Core Solutions and Services holds promise at the moment. Allscripts Sunrise electronic health record platform and Revenue Cycle Management Services are likely to drive the company’s top line in the quarters to come.
However, the company’s continued reliance on mergers and acquisition activities poses substantial integration risks. Intensifying competition is a major dampener. The company’s products have a long sales-cycle, which involves intensive decision-making at different managerial levels. Allscripts also expects a modest increase in operating expenses to support business growth over the long haul.
Zacks Rank & Key Picks
Allscripts has a Zacks Rank #3 (Hold).
Bio-Rad Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has a long-term expected earnings growth rate of 25%.
PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.
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