Allscripts Healthcare Solutions, Inc. (Nasdaq: MDRX) (Allscripts)
announced its financial results for the three months ended March
31, 2019.
First Quarter Financial
Highlights
Bookings(1) were $286 million in the first
quarter of 2019. This result compares with $263 million in the
first quarter of 2018 and reflects a record Allscripts bookings
performance in the first quarter. Contract revenue backlog totaled
$4.0 billion as of March 31, 2019.
First quarter 2019 GAAP revenue was $432
million, flat year-over-year. Non-GAAP revenue totaled $433
million, down 1 percent year-over-year.
On a GAAP basis in the first quarter of 2019,
total operating expenses were $171 million, or a 10 percent
decrease year-over-year. Non-GAAP operating expenses totaled $145
million, or a 7 percent decrease year-over-year. Additionally, the
company recorded $10 million of transaction, legal and other costs
in the first quarter of 2019. This compares with $22 million of
such costs in the first quarter of 2018.
GAAP net loss in the first quarter of 2019
totaled $8 million compared with a loss of $40 million in the first
quarter of 2018. Non-GAAP net income in the first quarter of 2019
totaled $27 million compared with $29 million in the first quarter
of 2018.
GAAP loss per share in the first quarter of 2019
was $0.04, compared with a loss of $0.22 in the first quarter of
2018. Non-GAAP diluted earnings per share in the first quarter of
2019 were $0.16, up 7 percent compared with $0.15 in the first
quarter of 2018.
Adjusted EBITDA totaled $72 million in the first
quarter of 2019, compared with $74 million in the first quarter of
2018.
On March 31, 2019, total principal debt
outstanding was $810 million. Net debt was $662 million as of March
31, 2019, which reflects a cash balance of $148 million.
Stock repurchases totaled $65 million in the
first quarter of 2019. Allscripts had $148 million remaining under
its existing stock repurchase program as of March 31, 2019.
“We continue to maintain momentum in our Provider business as we
had a number of key client wins across our solution set. Our
Veradigm business continues to establish itself as one of the
industry leaders in the payer and life sciences end markets,”
commented Paul M. Black, Chief Executive Officer of Allscripts. “We
remain confident in our near and long-term outlook as we expect to
benefit from a number of differentiated growth opportunities in
both our Provider and Veradigm businesses. We will maintain a
disciplined capital deployment approach as we look to drive growth
with our clients and enhance shareholder returns.”
New Reporting Segments
During the first quarter of 2019, we realigned
our segment reporting structure as a result of the divestiture of
our investment in Netsmart on December 31, 2018, the evolution of
the healthcare IT industry and our increased focus on the payer and
life sciences market. The new Provider segment comprises our core
integrated clinical software applications, financial management and
patient engagement solutions targeted at clients across the entire
continuum of care. The new Veradigm segment is primarily focused on
the payer and life sciences market.
2019 Financial Outlook
Allscripts is affirming its prior annual outlook and currently
expects to achieve:
- Full year 2019 bookings(1) between $900 million and $1,000
million
- Full year 2019 non-GAAP earnings per share between $0.65 and
$0.70
- Second quarter 2019 non-GAAP revenue between $445 million and
$455 million
In providing financial guidance, the company does not reconcile
non-GAAP earnings per share and non-GAAP revenue guidance to the
corresponding GAAP financial measures. Allscripts does not provide
guidance for the various reconciling items since certain items that
impact GAAP net income and GAAP revenue such as acquisition-related
deferred revenue adjustments, acquisition-related amortization,
asset impairment charges and transaction, legal and other costs,
any of which may be significant, are either outside of its control
and/or cannot be reasonably predicted.
Please see the “Explanation of Non-GAAP
Financial Measures” at the end of this press release for detailed
information on calculating non-GAAP measures. For a reconciliation
of other non-GAAP items, see the non-GAAP financial reconciliation
tables in this release (Tables 4, 5, 6 and 7).
Conference Call
Allscripts will conduct a conference call today,
Thursday, May 2, 2019, at 4:30 PM Eastern Time to discuss its
earnings release and other information. Participants may access the
conference call via webcast at http://investor.allscripts.com.
Participants also may access the conference call by dialing +1
(877) 269-7756 or +1 (201) 689-7817 (international) and requesting
Conference ID # 13689591.
A replay of the call will be available
approximately two hours after the conclusion of the call, for a
period of four weeks, on the Allscripts Investor Relations website
or by calling +1 (877) 660-6853 or +1 (201) 612-7415 - Conference
ID # 13689591.
Supplemental and non-GAAP financial information
is also available at http://investor.allscripts.com.
Footnotes
- Bookings have been determined on a continuing operations basis,
excluding Netsmart, and reflect the value of executed contracts for
software, hardware, client services, private cloud hosting
services, outsourcing and other subscription-based services.
NOTE: All percentage changes described within this press release
are calculated from full dollar amounts as illustrated in the
accompanying financial statements and Allscripts Supplemental
Financial Data Workbook, posted on the Investor Relations website.
Rounding differences may occur when individually calculating
percentages or totals from rounded amounts included within the
press release body compared to full dollar amounts in the
tables.
About AllscriptsAllscripts
(Nasdaq: MDRX) is a leader in healthcare information technology
solutions that advance clinical, financial and operational results.
Our innovative solutions connect people, places and data across an
Open, Connected Community of Health™. Connectivity empowers
caregivers to make better decisions and deliver better care for
healthier populations. To learn more, visit
www.allscripts.com, Twitter,
YouTube and It Takes A Community: The
Allscripts Blog.
© 2019 Allscripts Healthcare, LLC and/or its affiliates. All
Rights Reserved.Allscripts, the Allscripts logo, and other
Allscripts marks are trademarks of Allscripts Healthcare, LLC
and/or its affiliates. All other products are trademarks of their
respective holders, all rights reserved. Reference to these
products is not intended to imply affiliation with or sponsorship
of Allscripts Healthcare, LLC and/or its affiliates.
For more information
contact:
Investors:Stephen
Shulstein312-386-6735stephen.shulstein@allscripts.com
Media:Concetta
Rasiarmos312-447-2466concetta.rasiarmos@allscripts.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including the statements under “2019 Financial Outlook”.
These forward-looking statements are based on the current beliefs
and expectations of Allscripts management, only speak as of the
date that they are made and are subject to significant risks and
uncertainties. Such statements can be identified by the use of
words such as “future,” “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “predicts,” “will,” “would,”
“could,” “can,” “may,” and similar terms. Actual results could
differ significantly from those set forth in the forward-looking
statements and reported results should not be considered an
indication of future performance. Certain factors that could cause
Allscripts actual results to differ materially from those described
in the forward-looking statements include, but are not limited to:
the expected financial contribution of businesses acquired by us,
including the EIS business, the NantHealth provider/patient
solutions business, Practice Fusion and HealthGrid; the successful
integration of businesses recently acquired by us; the anticipated
and unanticipated expenses and liabilities related to the EIS
business, the NantHealth provider/patient solutions business,
Practice Fusion and HealthGrid, including the investigations by the
U.S. Attorney’s Office involving our EIS business and Practice
Fusion; security breaches resulting in unauthorized access to our
or our clients’ computer systems or data, including
denial-of-services, ransomware or other Internet-based attacks;
Allscripts failure to compete successfully; consolidation in
Allscripts industry; current and future laws, regulations and
industry initiatives; increased government involvement in
Allscripts industry; the failure of markets in which Allscripts
operates to develop as quickly as expected; Allscripts or its
customers’ failure to see the benefits of government programs;
changes in interoperability or other regulatory standards; the
effects of the realignment of Allscripts sales, services and
support organizations; market acceptance of Allscripts products and
services; the unpredictability of the sales and implementation
cycles for Allscripts products and services; Allscripts ability to
manage future growth; Allscripts ability to introduce new products
and services; Allscripts ability to establish and maintain
strategic relationships; risks related to the acquisition of new
businesses or technologies; the performance of Allscripts products;
Allscripts ability to protect its intellectual property rights; the
outcome of legal proceedings involving Allscripts; Allscripts
ability to hire, retain and motivate key personnel; performance by
Allscripts content and service providers; liability for use of
content; price reductions; Allscripts ability to license and
integrate third party technologies; Allscripts ability to maintain
or expand its business with existing customers; risks related to
international operations; changes in tax rates or laws; business
disruptions; Allscripts ability to maintain proper and effective
internal controls; and asset and long-term investment impairment
charges. Additional information about these and other risks,
uncertainties, and factors affecting Allscripts business is
contained in Allscripts filings with the Securities and Exchange
Commission, including under the caption “Risk Factors” in the most
recent Allscripts Annual Report on Form 10-K and subsequent Form
10-Qs. Allscripts does not undertake to update forward-looking
statements to reflect changed assumptions, the impact of
circumstances or events that may arise after the date of the
forward-looking statements, or other changes in its business,
financial condition or operating results over time.
|
Table 1 |
Allscripts Healthcare Solutions,
Inc. |
Condensed Consolidated Balance
Sheets |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$137.2 |
|
|
$174.2 |
|
Restricted cash |
|
|
10.7 |
|
|
|
10.6 |
|
Accounts
receivable, net |
|
|
458.0 |
|
|
|
465.3 |
|
Contract
assets |
|
|
95.1 |
|
|
|
66.4 |
|
Prepaid
expenses and other current assets |
|
|
133.5 |
|
|
|
142.5 |
|
Total
current assets |
|
|
834.5 |
|
|
|
859.0 |
|
Fixed assets, net |
|
|
115.6 |
|
|
|
121.9 |
|
Software development
costs, net |
|
|
219.0 |
|
|
|
209.7 |
|
Intangible assets,
net |
|
|
415.4 |
|
|
|
431.1 |
|
Goodwill |
|
|
1,374.0 |
|
|
|
1,373.7 |
|
Deferred taxes,
net |
|
|
4.9 |
|
|
|
5.0 |
|
Contract assets -
long-term |
|
|
72.0 |
|
|
|
71.9 |
|
Right-of-use assets -
operating leases |
|
|
97.4 |
|
|
|
0.0 |
|
Other assets |
|
|
109.6 |
|
|
|
109.2 |
|
Total
assets |
|
$3,242.4 |
|
|
$3,181.5 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$80.6 |
|
|
$73.2 |
|
Accrued
expenses |
|
|
108.8 |
|
|
|
107.0 |
|
Accrued
compensation and benefits |
|
|
61.5 |
|
|
|
100.1 |
|
Income
tax payable |
|
|
0.0 |
|
|
|
29.6 |
|
Deferred
revenue |
|
|
504.1 |
|
|
|
466.8 |
|
Current
maturities of long-term debt |
|
|
20.5 |
|
|
|
20.1 |
|
Current
operating lease liabilities |
|
|
24.2 |
|
|
|
0.0 |
|
Current
liabilities attributable to discontinued operations |
|
|
0.0 |
|
|
|
0.9 |
|
Total
current liabilities |
|
|
799.7 |
|
|
|
797.7 |
|
Long-term
debt |
|
|
766.2 |
|
|
|
647.5 |
|
Deferred revenue |
|
|
13.1 |
|
|
|
16.0 |
|
Deferred taxes,
net |
|
|
58.4 |
|
|
|
58.5 |
|
Long-term operating
lease liabilities |
|
|
95.1 |
|
|
|
0.0 |
|
Other liabilities |
|
|
53.8 |
|
|
|
81.4 |
|
Total
liabilities |
|
|
1,786.3 |
|
|
|
1,601.1 |
|
Total Allscripts
Healthcare Solutions, Inc.'s stockholders' equity |
|
|
1,456.1 |
|
|
|
1,551.1 |
|
Non-controlling
interest |
|
|
0.0 |
|
|
|
29.3 |
|
Total
stockholders’ equity |
|
|
1,456.1 |
|
|
|
1,580.4 |
|
Total
liabilities and stockholders’ equity |
|
$3,242.4 |
|
|
$3,181.5 |
|
|
|
|
|
|
|
Table 2 |
Allscripts Healthcare Solutions,
Inc. |
Condensed Consolidated Statements of
Operations |
(In millions, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
2019 |
|
|
|
2018 |
|
Revenue: |
|
|
|
|
Software
delivery, support and maintenance |
|
$275.5 |
|
|
$280.6 |
|
Client
services |
|
|
156.5 |
|
|
|
153.2 |
|
Total
revenue |
|
|
432.0 |
|
|
|
433.8 |
|
Cost of revenue: |
|
|
|
|
Software
delivery, support and maintenance |
|
|
88.1 |
|
|
|
86.0 |
|
Client
services |
|
|
141.6 |
|
|
|
137.1 |
|
Amortization of software development and acquisition-related assets
(a) |
|
|
28.2 |
|
|
|
25.9 |
|
Total
cost of revenue |
|
|
257.9 |
|
|
|
249.0 |
|
Gross
profit |
|
|
174.1 |
|
|
|
184.8 |
|
Selling, general and
administrative expenses |
|
|
100.2 |
|
|
|
120.0 |
|
Research and
development |
|
|
64.3 |
|
|
|
64.8 |
|
Asset impairment
charges |
|
|
0.1 |
|
|
|
0.0 |
|
Amortization of
intangible and acquisition-related assets |
|
|
6.8 |
|
|
|
6.6 |
|
Income
(loss) from operations |
|
|
2.7 |
|
|
|
(6.6 |
) |
Interest expense and
other, net (b) |
|
|
(9.7 |
) |
|
|
(11.7 |
) |
Gain (loss) on sale of
business, net |
|
|
0.0 |
|
|
|
(0.9 |
) |
Recovery (impairment)
on long-term investments |
|
|
1.0 |
|
|
|
(5.5 |
) |
Equity in net income
(loss) of unconsolidated investments |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Income
(loss) before income taxes |
|
|
(6.1 |
) |
|
|
(24.8 |
) |
Income tax (provision)
benefit |
|
|
(1.9 |
) |
|
|
(0.3 |
) |
Income
(loss) from continuing operations, net of tax |
|
|
(8.0 |
) |
|
|
(25.1 |
) |
Income (loss) from
discontinued operations |
|
|
0.0 |
|
|
|
(5.0 |
) |
Income tax effect on
discontinued operations |
|
|
0.0 |
|
|
|
1.6 |
|
Income
(loss) from discontinued operations, net of tax |
|
|
0.0 |
|
|
|
(3.4 |
) |
Net
income (loss) |
|
|
(8.0 |
) |
|
|
(28.5 |
) |
Net (income) loss
attributable to non-controlling interest |
|
|
0.4 |
|
|
|
0.8 |
|
Accretion of redemption
preference on redeemable convertible non-controlling interest -
discontinued operations |
|
|
0.0 |
|
|
|
(12.1 |
) |
Net
Income (loss) attributable to Allscripts Healthcare Solutions, Inc.
stockholders |
|
($7.6 |
) |
|
($39.8 |
) |
|
|
|
|
|
Income (loss) from
continuing operations per share - basic |
|
($0.04 |
) |
|
($0.14 |
) |
Income (loss) from
discontinued operations per share - basic |
|
$0.00 |
|
|
($0.08 |
) |
Income (loss) earnings
per share - basic |
|
($0.04 |
) |
|
($0.22 |
) |
|
|
|
|
|
Income (loss) from
continuing operations per share - diluted |
|
($0.04 |
) |
|
($0.14 |
) |
Income (loss) from
discontinued operations per share - diluted |
|
$0.00 |
|
|
($0.08 |
) |
Income (loss) earnings
per share - diluted |
|
($0.04 |
) |
|
($0.22 |
) |
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
Basic |
|
|
170.0 |
|
|
|
179.9 |
|
Diluted |
|
|
170.0 |
|
|
|
179.9 |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
(a) Amortization of
software development and acquisition-related assets includes: |
|
|
|
|
Amortization of capitalized software development costs |
|
$19.2 |
|
|
$15.8 |
|
Amortization of acquisition-related intangible assets |
|
|
9.0 |
|
|
|
10.1 |
|
|
|
$28.2 |
|
|
$25.9 |
|
|
|
|
|
|
(b) Interest expense and other, net are comprised of the
following for the periods presented: |
|
|
|
|
|
Non-cash charges to interest
expense |
|
|
3.3 |
|
|
|
3.1 |
|
Interest
expense |
|
|
6.2 |
|
|
|
7.9 |
|
Amortization of discounts and debt issuance costs |
|
|
0.7 |
|
|
|
0.7 |
|
Other
(income) loss, net |
|
|
(0.5 |
) |
|
|
0.0 |
|
Total interest expense and other, net |
|
$9.7 |
|
|
$11.7 |
|
|
|
|
|
|
|
Table 3 |
Allscripts Healthcare Solutions,
Inc. |
Condensed Consolidated Statements of Cash
Flows |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
2019 |
|
|
|
2018 |
|
Cash flows from
operating activities: |
|
|
|
|
Net
income (loss) |
|
($8.0 |
) |
|
($28.5 |
) |
Less:
Income(loss) from discontinued operations |
|
|
0.0 |
|
|
($3.4 |
) |
Income
(loss) from continuing operations |
|
($8.0 |
) |
|
($25.1 |
) |
Non-cash
adjustments to net income (loss): |
|
|
|
|
Depreciation and amortization |
|
|
50.1 |
|
|
|
47.9 |
|
Operating
right-to-use asset amortization |
|
|
5.3 |
|
|
|
0.0 |
|
Stock-based compensation expense |
|
|
11.7 |
|
|
|
10.0 |
|
Asset
impairment charges |
|
|
0.1 |
|
|
|
0.0 |
|
Impairment (recovery) of long-term investments |
|
|
(1.0 |
) |
|
|
5.5 |
|
(Gain)
loss on sale of businesses, net |
|
|
0.0 |
|
|
|
0.9 |
|
Other,
net |
|
|
0.2 |
|
|
|
(0.2 |
) |
Total non-cash adjustments to net income (loss) |
|
|
66.4 |
|
|
|
64.1 |
|
Cash
impact of changes in operating assets and liabilities |
|
|
(22.6 |
) |
|
|
15.3 |
|
Net cash provided by (used in) operating activities -
continuing operations |
|
|
35.8 |
|
|
|
54.3 |
|
Net cash provided by (used in) operating
activities - discontinued operations |
|
|
(30.0 |
) |
|
|
4.0 |
|
Net cash provide by (used in) operating
activities |
|
|
5.8 |
|
|
|
58.3 |
|
Cash flows from
investing activities: |
|
|
|
|
Capital
expenditures |
|
|
(4.8 |
) |
|
|
(7.5 |
) |
Capitalized software |
|
|
(28.6 |
) |
|
|
(26.2 |
) |
Purchases
of equity securities in partner entities, business
acquisitions, net of cash acquired and other investments |
|
|
0.0 |
|
|
|
(107.2 |
) |
Net cash provided by (used in) investing activities -
continuing operations |
|
|
(33.4 |
) |
|
|
(140.9 |
) |
Net cash provided by (used in) investing activities -
discontinued - operations |
|
|
0.0 |
|
|
|
(8.9 |
) |
Net cash provided by (used in) investing
activities |
|
|
(33.4 |
) |
|
|
(149.8 |
) |
Cash flows from
financing activities: |
|
|
|
|
Repurchase of common stock |
|
|
(65.1 |
) |
|
|
(57.6 |
) |
Proceeds
from sale or issuance of common stock |
|
|
0.0 |
|
|
|
0.2 |
|
Stock-based compensation-related payments, net |
|
|
(5.3 |
) |
|
|
(8.5 |
) |
Credit
facilities and capital lease payments, net |
|
|
114.9 |
|
|
|
145.6 |
|
Other
payments |
|
|
(54.0 |
) |
|
|
(3.2 |
) |
Net cash provided by (used in) financing activities -
continuing operations |
|
|
(9.5 |
) |
|
|
76.5 |
|
Net cash provided by (used in) financing activities -
discontinued operations |
|
|
0.0 |
|
|
|
(3.8 |
) |
Net cash provided by (used in) financing
activities |
|
|
(9.5 |
) |
|
|
72.7 |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
0.2 |
|
|
|
0.1 |
|
Net increase (decrease) in cash and cash
equivalents |
|
|
(36.9 |
) |
|
|
(18.7 |
) |
Cash and cash
equivalents, beginning of period |
|
|
184.8 |
|
|
|
162.5 |
|
Cash and cash
equivalents, end of period |
|
$147.9 |
|
|
$143.8 |
|
Less: Cash and cash
equivalents included in current assets attributable to discontinued
operations |
|
|
0.0 |
|
|
|
(19.1 |
) |
Cash, cash equivalents
and restricted cash, end of period, excluding discontinued
operations |
|
$147.9 |
|
|
$124.7 |
|
|
|
|
|
|
|
Table 4 |
Allscripts Healthcare Solutions,
Inc. |
Condensed Non-GAAP Financial
Information |
(In millions, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedMarch 31,
2019 |
|
Three Months EndedMarch 31,
2018 |
|
|
GAAP |
|
Non-GAAPAdjustments
(1) |
|
Non-GAAP |
|
GAAP |
|
Non-GAAPAdjustments
(1) |
|
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$432.0 |
|
|
$0.6 |
|
|
$432.6 |
|
|
$433.8 |
|
|
$1.6 |
|
|
$435.4 |
|
Gross profit |
|
|
174.1 |
|
|
|
12.4 |
|
|
|
186.5 |
|
|
|
184.8 |
|
|
|
17.1 |
|
|
|
201.9 |
|
Total
Operating Expenses |
|
|
171.4 |
|
|
|
(26.6 |
) |
|
|
144.8 |
|
|
|
191.4 |
|
|
|
(36.0 |
) |
|
|
155.4 |
|
Income
(loss) from operations |
|
|
2.7 |
|
|
|
39.0 |
|
|
|
41.7 |
|
|
|
(6.6 |
) |
|
|
53.1 |
|
|
|
46.5 |
|
Income
(loss) from continuing operations, net of tax, net of
non-controlling interest |
|
($7.6 |
) |
|
$34.5 |
|
|
$26.9 |
|
|
($24.3 |
) |
|
$52.8 |
|
|
$28.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations per share |
|
($0.04 |
) |
|
|
|
$0.16 |
|
|
($0.14 |
) |
|
|
|
$0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
Tax Rate |
|
|
-31 |
% |
|
|
|
|
24 |
% |
|
|
-1 |
% |
|
|
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
170.0 |
|
|
|
|
|
171.8 |
|
|
|
179.9 |
|
|
|
|
|
184.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Please
see table 5 for detail on Non-GAAP adjustments. |
|
|
Table 5 |
Allscripts Healthcare Solutions,
Inc. |
Non-GAAP Financial Information - Non-GAAP
Adjustments |
(In millions, except percentages) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
Income (loss)
from continuing operations, net of tax and net of non-controlling
interest |
($7.6 |
) |
|
($24.3 |
) |
|
|
|
|
|
|
|
|
Acquisition-related deferred revenue
adjustments |
|
0.6 |
|
|
|
3.9 |
|
Revenue |
|
0.6 |
|
|
|
1.6 |
|
Gross
Profit |
|
0.6 |
|
|
|
3.9 |
|
Income
(loss) from operations |
|
0.6 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
Acquisition-related amortization |
|
15.8 |
|
|
|
16.8 |
|
Gross
Profit |
|
9.0 |
|
|
|
10.2 |
|
Income
(loss) from operations |
|
15.8 |
|
|
|
16.8 |
|
|
|
|
|
|
|
|
|
Stock-based compensation
expense |
|
12.8 |
|
|
|
10.9 |
|
Gross
Profit |
|
1.6 |
|
|
|
2.0 |
|
Income
(loss) from operations |
|
12.8 |
|
|
|
10.9 |
|
|
|
|
|
|
|
|
|
Asset impairment charges |
|
0.1 |
|
|
|
0.0 |
|
Income
(loss) from operations |
|
0.1 |
|
|
|
0.0 |
|
|
|
|
|
|
|
|
|
Transaction, legal and other costs |
|
9.7 |
|
|
|
21.5 |
|
Gross
Profit |
|
1.2 |
|
|
|
1.0 |
|
Income
(loss) from operations |
|
9.7 |
|
|
|
21.5 |
|
|
|
|
|
|
|
|
|
Non-cash charges to interest expense and
other |
|
3.3 |
|
|
|
3.6 |
|
(Recovery) impairment on long-term
investments |
|
(1.0 |
) |
|
|
5.5 |
|
(Gain) loss on sale of business, net |
|
0.0 |
|
|
|
0.9 |
|
Equity in net (income) loss of unconsolidated
investments |
|
0.1 |
|
|
|
0.1 |
|
Tax rate alignment |
|
(6.6 |
) |
|
|
(10.1 |
) |
Net (income) loss attributable to non-controlling
interest |
|
(0.3 |
) |
|
|
(0.3 |
) |
Non-GAAP income
(loss) attributable to Allscripts Healthcare Solutions,
Inc. |
$26.9 |
|
|
$28.5 |
|
Non-GAAP
effective tax rate |
|
24 |
% |
|
|
27 |
% |
Weighted shares
outstanding - diluted |
|
171.8 |
|
|
|
184.1 |
|
|
|
|
|
|
Table 6 |
Allscripts Healthcare Solutions,
Inc. |
Non-GAAP Financial Information - Adjusted
EBITDA |
(In millions, except percentages) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months EndedMarch
31, |
|
|
|
2019 |
|
|
|
2018 |
|
Net income
(loss) from continuing operations, as reported |
|
($8.0 |
) |
|
($25.1 |
) |
Plus: |
|
|
|
|
Interest
expense and other, net (a) |
|
|
5.7 |
|
|
|
7.9 |
|
Depreciation and amortization |
|
|
50.1 |
|
|
|
47.9 |
|
Equity in
net (income) loss of unconsolidated investments |
|
|
0.1 |
|
|
|
0.1 |
|
Tax
provision/(benefit) |
|
|
1.9 |
|
|
|
0.3 |
|
EBITDA |
|
$49.8 |
|
|
$31.1 |
|
Plus: |
|
|
|
|
Acquisition-related deferred revenue adjustments |
|
|
0.6 |
|
|
|
3.9 |
|
Stock-based compensation expense |
|
|
12.8 |
|
|
|
10.9 |
|
Transaction, legal and other costs |
|
|
9.7 |
|
|
|
21.5 |
|
Asset
impairment charges |
|
|
0.1 |
|
|
|
- |
|
(Recovery) impairment on long-term investments |
|
|
(1.0 |
) |
|
|
5.5 |
|
(Gain)
loss on sale of business, net |
|
|
- |
|
|
|
0.9 |
|
Adjusted
EBITDA |
|
$72.0 |
|
|
$73.8 |
|
|
|
|
|
|
Adjusted EBITDA
margin (b) |
|
|
17 |
% |
|
|
17 |
% |
|
|
|
|
|
(a) Interest expense and other, net has been adjusted from the
amounts presented in the statements of operations in order to
remove the amortization of the fair value of the cash conversion
option embedded in the 1.25% Cash Convertible Notes and deferred
debt issuance costs from interest expense since such amortization
is also included in depreciation and amortization. |
|
|
|
|
|
(b) Adjusted EBITDA margin is calculated by dividing adjusted
EBITDA by non-GAAP revenue. |
|
|
|
|
|
|
Table 7 |
Allscripts Healthcare Solutions,
Inc. |
Non-GAAP Financial Information - Free Cash
Flow |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
2019 |
|
|
|
2018 |
|
Net cash provided by
(used in) operating activities - continuing operations |
|
$35.8 |
|
|
$54.3 |
|
Net cash provided by
(used in) operating activities - discontinued operations |
|
|
(30.0 |
) |
|
|
4.0 |
|
Net cash provided by
(used in) operating activities |
|
|
5.8 |
|
|
|
58.3 |
|
Cash flows from
investing activities: |
|
|
|
|
Capital
expenditures |
|
|
(4.8 |
) |
|
|
(7.5 |
) |
Capitalized software |
|
|
(28.6 |
) |
|
|
(26.2 |
) |
Cash
flows from investing activities - discontinued
operations |
|
|
0.0 |
|
|
|
(7.1 |
) |
Free cash flow |
|
($27.6 |
) |
|
$17.5 |
|
|
|
|
|
|
Explanation of Non-GAAP Financial Measures
Allscripts reports its financial results in
accordance with U.S. generally accepted accounting principles, or
GAAP. To supplement this information, Allscripts presents in this
release non-GAAP revenue, gross profit, gross margin, operating
expense, income from operations, Adjusted EBITDA, effective income
tax rate, net income and earnings per share, which are considered
non-GAAP financial measures under Section 101 of Regulation G under
the Securities Exchange Act of 1934, as amended. The definitions of
non-GAAP financial measures used throughout this document are
presented below:
- Non-GAAP revenue consists of GAAP revenue, as reported, and
adds back recognized deferred revenue from the EIS business,
Practice Fusion, HealthGrid, NantHealth’s provider/patient
solutions business and non-material consolidated affiliates that is
eliminated for GAAP purposes due to purchase accounting
adjustments. Reconciliations to GAAP revenue are found in Tables 4
and 5 within this press release.
- Non-GAAP gross profit consists of GAAP gross profit, as
reported, and excludes acquisition-related deferred revenue
adjustments, acquisition-related amortization, stock-based
compensation expense, non-cash asset impairment charges and
transaction, legal and other costs. Non-GAAP gross margin consists
of non-GAAP gross profit as a percentage of non-GAAP revenue in the
applicable period. Reconciliations to GAAP gross profit are found
in Tables 4 and 5 within this press release.
- Non-GAAP operating expense consists of GAAP selling, general
and administrative expenses (SG&A) and research and development
expense (R&D), as reported, and excludes transaction, legal and
other costs and stock-based compensation expense recorded to
SG&A and R&D. Reconciliations to GAAP operating expense are
found in Table 4 within this press release.
- Non-GAAP income from operations consists of GAAP income from
operations, as reported, and excludes acquisition-related deferred
revenue adjustments, acquisition-related amortization, stock-based
compensation expense, non-cash asset impairment charges and
transaction, legal and other costs. Reconciliations to GAAP income
from operations are found in Tables 4 and 5 within this press
release.
- Adjusted EBITDA is a non-GAAP measure and consists of GAAP net
income/(loss), as reported, and adjusts for: acquisition-related
deferred revenue adjustments; depreciation and amortization;
stock-based compensation expense; transaction, legal and other
costs; non-cash asset and long-term investment impairment charges;
gain on sale of businesses, net; interest expense and other, net;
equity in net earnings of unconsolidated investments; and tax
provision (benefit). Reconciliations to GAAP net income/(loss) are
found in Table 6 within this press release.
- Non-GAAP effective income tax rate is based on non-GAAP pre-tax
earnings and consists of the statutory federal income tax rate,
Allscripts effective state income tax rate and adjustments for
permanent differences.
- Non-GAAP net income consists of GAAP net income/(loss), as
reported, and adds back acquisition-related deferred revenue
adjustments; acquisition-related amortization; stock-based
compensation expense; transaction, legal and other costs; non-cash
asset and long-term investment impairment charges; non-cash charges
to interest expense and other, asset impairment charges; gain on
sale of business, net; and equity in net earnings of unconsolidated
investments and the related tax effect of the aforementioned
adjustments. Non-GAAP net income also includes a GAAP to non-GAAP
tax rate alignment adjustment. Reconciliations to GAAP net
income/(loss) are found in Tables 4 and 5 within this press
release.
- Non-GAAP net income attributable to Allscripts Healthcare
Solutions, Inc. is a non-GAAP measure and consists of non-GAAP net
income, as described above, with an adjustment to reduce non-GAAP
net income for the percentage of non-controlling interest outside
Allscripts ownership position.
- Non-GAAP earnings per share consist of non-GAAP net income, as
defined above, divided by weighted shares outstanding – diluted
during the applicable period.
- Free cash flow consists of GAAP cash flows provided by
operating activities in the applicable period, net of capital
expenditures and capitalized software costs, including those
incurred by businesses presented as discontinued operations.
Reconciliations to GAAP cash flows provided by operating activities
are found in Table 7 within this press release.
Acquisition-Related Deferred Revenue
Adjustments. Deferred revenue adjustments include
acquisition-related deferred revenue adjustments, which reflect the
fair value adjustments to deferred revenue acquired in a business
acquisition. The fair value of acquired deferred revenue represents
an amount equivalent to the estimated cost plus an appropriate
profit margin, to perform services related to the acquiree's
software and product support, which assumes a legal obligation to
do so, based on the deferred revenue balances as of the acquisition
date. Allscripts adds back acquisition-related deferred revenue
adjustments for its non-GAAP financial measures because it believes
the inclusion of this amount directly correlates to the underlying
performance of Allscripts operations.
Acquisition-Related
Amortization. Acquisition-related amortization expense is
a non-cash expense arising primarily from the acquisition of
intangible assets in connection with acquisitions or investments.
Allscripts excludes acquisition-related amortization expense from
non-GAAP gross profit, non-GAAP operating income, and non-GAAP net
income because it believes (i) the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of Allscripts business operations and (ii) such
expenses can vary significantly between periods because of new
acquisitions and full amortization of previously acquired
intangible assets. Investors should note that the use of these
intangible assets contributed to revenue in the periods presented
and will contribute to future revenue generation, and the related
amortization expense will recur in future periods.
Stock-Based Compensation
Expense. Stock-based compensation expense is a non-cash
expense arising from the grant of stock-based awards. Allscripts
excludes stock-based compensation expense from non-GAAP gross
profit, non-GAAP operating income, non-GAAP operating expense,
non-GAAP net income and Adjusted EBITDA because it believes (i) the
amount of such expenses in any specific period may not directly
correlate to the underlying performance of Allscripts business
operations and (ii) such expenses can vary significantly between
periods as a result of the timing and valuation of grants of new
stock-based awards, including grants in connection with
acquisitions. Investors should note that stock-based compensation
is a key incentive offered to employees whose efforts contributed
to the operating results in the periods presented and are expected
to contribute to operating results in future periods, and such
expense will recur in future periods.
Transaction, Legal and Other
Costs. Transaction, legal and other costs relate to
certain legal proceedings, consulting, severance, incentive
compensation and other charges incurred in connection with
activities that are considered not reflective of our core
business.
Allscripts excludes transaction, legal and other
costs, in whole or in part, from non-GAAP gross profit, non-GAAP
operating income, non-GAAP operating expense, non-GAAP net income
and Adjusted EBITDA because it believes (i) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of Allscripts business operations and (ii)
such expenses can vary significantly between periods.
Non-Cash Charges to Interest Expense and
Other. Non-cash charges to interest expense include the
amortization of the fair value of the cash conversion option
embedded in the 1.25 percent Cash Convertible Notes issued by
Allscripts during the second quarter of 2013.
Asset impairment charges. Asset
impairment charges include (i) the write-off of purchased
third-party software as a result of our decision to discontinue
several software development projects, (ii) the write-off of
acquired technology and value assigned to commercial agreements,
and (iii) the write-off of the book value of certain fixed assets
that resulted from consolidating business functions and
locations.
Impairment of Long-Term
Investments. Impairment of long-term investments relates
to other-than-temporary non-cash impairment charges associated with
such investments based on management’s assessment of the likelihood
of near-term recovery of the investments’ value. The amounts
recorded during the three months ended March 31, 2018 relate to a
non-cash impairment charge related to one of our cost-method equity
investments and a related note receivable.
Equity in Net loss (income) of
Unconsolidated Investments. Equity in net loss (income) of
unconsolidated investments represents Allscripts share of the
equity earnings of our investments in third parties accounted for
under the equity method, including the amortization of cost basis
adjustments.
Tax Rate Alignment. Tax rate
alignment aligns the applicable period’s effective tax rate to the
expected annual non-GAAP effective tax rate.
Management also believes that non-GAAP revenue,
gross profit, gross margin, operating expense, income from
operations, effective income tax rate, net income, earnings per
share, Adjusted EBITDA, and free cash flow provide useful
supplemental information to management and investors regarding the
underlying performance of Allscripts business operations.
Acquisition accounting adjustments made in accordance with GAAP can
make it difficult to make meaningful comparisons of the underlying
operations of the business without considering the non-GAAP
adjustments provided and discussed herein.
Management also uses this information internally
for forecasting and budgeting, as it believes that these measures
are indicative of core operating results. In addition, management
may use non-GAAP gross profit, operating expense, operating income,
net income, earnings per share and/or Adjusted EBITDA to measure
achievement under Allscripts stock and cash incentive compensation
plans. Note, however, that non-GAAP gross profit, operating income,
net income earnings per share and Adjusted EBITDA are performance
measures only, and they do not provide any measure of cash flow or
liquidity. Allscripts considers free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by the business after
capital expenditures and capitalized software costs. Free cash flow
provides management and investors a valuable measure to determine
the quantity of capital generated that can be deployed to create
additional shareholder value by a variety of means. Non-GAAP
financial measures are not in accordance with, or an alternative
for, measures of financial performance prepared in accordance with
GAAP and may be different from non-GAAP measures used by other
companies. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Allscripts results of
operations as determined in accordance with GAAP. Investors and
potential investors are encouraged to review the definitions and
reconciliations of non-GAAP financial measures with GAAP financial
measures contained within the attached condensed consolidated
financial statements.
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