Allscripts (MDRX) Q4 Earnings Lag Estimates, Bookings Up Y/Y

Allscripts Healthcare Solutions, Inc. MDRX reported fourth-quarter 2018 adjusted earnings per share (EPS) of 20 cents, which missed the Zacks Consensus Estimate by a penny. However, the bottom line improved 11.1% on a year-over-year basis.

On a non-GAAP basis, revenues totaled $538.4 million, which fell short of the Zacks Consensus Estimate by 4.5%. The top line also inched down 1.5% year over year. On a reported basis, revenues amounted to $442.3 million in the quarter, reflecting a 1.4% increase year over year.

Bookings came in at $531 million, significantly up by 69.1% from the prior-year quarter’s tally.

The stock carries a Zacks Rank #3 (Hold).

2018 at a Glance

Full-year revenues, on a non-GAAP basis, grossed $2.13 billion, up 15.6% from 2017. The figure, however, lagged the Zacks Consensus Estimate of $2.15 billion. On a reported basis, revenues came in at $1.75 billion, up 16.8% from 2017.

Adjusted EPS for 2018 was 72 cents, which increased 16.1% from 2017’s figure but missed the Zacks Consensus Estimate by a penny.

Notably, Allscripts reports through two segments — Software delivery, Support and Maintenance, and Client Services.

On a reported basis, 2018 Software delivery, Support and Maintenance revenues summed $1.13 billion (64.5% of net revenues). Meanwhile, Client services revenues were $621.7 million (35.5%).

Allscripts Healthcare Solutions, Inc. Price, Consensus and EPS Surprise

Allscripts Healthcare Solutions, Inc. Price, Consensus and EPS Surprise | Allscripts Healthcare Solutions, Inc. Quote

Segment Details

Software delivery, Support and Maintenance

In the quarter under review, revenues at the segment grossed $289.1 million on a reported basis, up 5.3% from the year-ago quarter's tally.

Client Services

At this segment, revenues totaled $153.2 million, down 5.4% from the year-ago quarter's figure.

Margins

Gross profit in the fourth quarter was $188.1 million, up 6.8% from the year-ago quarter's level. As a percentage of revenues, gross margin was 42.5%, up 210 basis points (bps) from the year-ago figure.

Adjusted gross profit amounted to $253.5 million, down 2.9% year over year. Adjusted gross margin was 47.1%, down 70 bps from the prior-year quarter.

Adjusted operating income in the quarter was $68.1 million, down 10% year over year. Adjusted operating margin was 12.6%, as a percentage of revenues.

Guidance

For 2019, adjusted EPS are expected at the lower end of 65-70 cents. The Zacks Consensus Estimate is pegged at 78 cents, much above the projected range.

For the first quarter of 2019, adjusted revenues are expected between $430 million and $440 million. The Zacks Consensus Estimate is pinned at $560.2 million, well above the guided range.

Full-year bookings are expected between $900 million and $1 billion.

Summing Up

Allscripts ended the fourth quarter on a tepid note. The company continues to gain from the core Software, Delivery, Support and Maintenance units, which delivered solid growth in the quarter. Significant growth in fourth-quarter bookings also buoys optimism. The company’s growth in revenue cycle services along with the recently-closed acquisition of HealthGrid is likely to boost its FollowMyHealth patient engagement platform. These apart, management is optimistic about the collaboration with Microsoft, earlier this year.

On the flip side, the core Client Services unit witnessed a soft fourth quarter. The company also saw a significant contraction in margins in the quarter. Moreover, Allscripts is exposed to integration risks. Intense competition in the niche space is an added concern.

Earnings of MedTech Majors at a Glance

Some better-ranked MedTech stocks that delivered solid quarterly results are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD.

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million exceeded the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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