Allscripts-Misys Healthcare Solutions (MDRX: 15.97 -0.92 -5.45%) reported fourth-quarter and fiscal 2010 adjusted (excluding one-time items) earnings per share of 18 cents and 65 cents, respectively, beating the Zacks Consensus Estimates of 15 cents and 58 cents, and the year-ago figures of 16 cents and 60 cents, respectively.
Revenues
Revenues for the quarter increased 14% year over year to $190.9 million. The growth in revenues indicates that the size of the market continues to expand based on the clarification of the criteria for “meaningful use” of an electronic health record (EHR) by the U.S. Department of Health and Human Resources. In addition, Allscripts continues to gain share in the physician market by selling EHR to various practitioners. Revenues in fiscal 2010 were $709.6 million, up 9% year over year.
Growth was registered in all of Allscripts’ business segments. Maintenance sales shot up 16% year over year to $65.6 million in the fourth quarter reflecting continued growth in Allscripts’ installed base as new clients went online and initiated their software maintenance agreement. Transaction processing and other revenues, consisting of Payerpath Revenue Cycle Management and SaaS sales, increased 6% year over year to $57.5 million.
System sales increased to $43.5 million, up 17% year over year, as Allscripts benefited from higher bookings as well as software license revenue from the implementation of contracts at numerous client locations. Professional services revenues increased sharply by 42% year over year to $23.7 million due to an increase in utilization of its implementation capabilities for professional EHR and enterprise solutions.
Allscripts derived about $21.7 million, or 18% of its revenue in the fourth quarter, from Software as a Service (SaaS) products, which will generate revenue over the coming four years. It expects its SaaS business to grow, as percentage of bookings, as small physician practices choose SaaS products to meet their EHR requirements.
Allscripts enjoyed recurring revenues of 63%, of its maintenance, transaction processing and SaaS revenue base, in the fourth quarter. Total bookings were $118.5 million in the quarter and $415.3 million in fiscal 2010, an increase of 15% and 24%, respectively.Revenues
Revenues for the quarter increased 14% year over year to $190.9 million. The growth in revenues indicates that the size of the market continues to expand based on the clarification of the criteria for “meaningful use” of an electronic health record (EHR) by the U.S. Department of Health and Human Resources. In addition, Allscripts continues to gain share in the physician market by selling EHR to various practitioners. Revenues in fiscal 2010 were $709.6 million, up 9% year over year.
Growth was registered in all of Allscripts’ business segments. Maintenance sales shot up 16% year over year to $65.6 million in the fourth quarter reflecting continued growth in Allscripts’ installed base as new clients went online and initiated their software maintenance agreement. Transaction processing and other revenues, consisting of Payerpath Revenue Cycle Management and SaaS sales, increased 6% year over year to $57.5 million.
System sales increased to $43.5 million, up 17% year over year, as Allscripts benefited from higher bookings as well as software license revenue from the implementation of contracts at numerous client locations. Professional services revenues increased sharply by 42% year over year to $23.7 million due to an increase in utilization of its implementation capabilities for professional EHR and enterprise solutions.
Allscripts derived about $21.7 million, or 18% of its revenue in the fourth quarter, from Software as a Service (SaaS) products, which will generate revenue over the coming four years. It expects its SaaS business to grow, as percentage of bookings, as small physician practices choose SaaS products to meet their EHR requirements.
Margins
Allscripts’ gross margin dropped 150 basis points (bps) year over year to 53.9% in the fourth quarter. The drop was due to a larger proportion of hardware sales and revenue derived from third parties, both of which carry lower margins. The deployment of additional resources in professional services also adversely impacted margin as new personnel tend to have lower utilization rates to start with. Adjusted gross margin declined 230 bps year over year to 54.1% in the quarter.
Selling, general and administrative expenses were down 5% year over year in the reported quarter. Research and development expenses increased 31% year over year, as the company increased investments in both human and physical infrastructure.
Balance Sheet & Cash Flow
Allscripts ended the fourth quarter with cash and cash equivalents of $145.3 million, an increase of 23% on a sequential basis. The company cleared its borrowings under its credit facility by the end of the fourth quarter. Cash flow from operations set a new record of $52 million for the reported quarter while free cash flow was $38 million.
Outlook
Allscripts provided guidance as a stand-alone entity, thereby excluding the financial effect of its merger with Eclipsys and the planned dilution in stake of Misys’ majority holding. The company expects revenue in the range of $780 million to $790 million for fiscal 2011. Adjusted earnings per share are anticipated at 77 cents to 79 cents. Allscripts expects bookings of about $105 million to $110 million for the first quarter of 2011.
Allscripts ended the fourth quarter with cash and cash equivalents of $145.3 million, an increase of 23% on a sequential basis. The company cleared its borrowings under its credit facility by the end of the fourth quarter. Cash flow from operations set a new record of $52 million for the reported quarter while free cash flow was $38 million.
Outlook
Allscripts provided guidance as a stand-alone entity, thereby excluding the financial effect of its merger with Eclipsys and the planned dilution in stake of Misys’ majority holding. The company expects revenue in the range of $780 million to $790 million for fiscal 2011. Adjusted earnings per share are anticipated at 77 cents to 79 cents. Allscripts expects bookings of about $105 million to $110 million for the first quarter of 2011.
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