Allscripts announces fourth quarter 2012 results Bookings grow 11.6 percent quarter-over-quarter to $180.7 million

Operating cash flow of $58.1 million for quarter; $222.6 million for full year

CHICAGO, Feb. 19, 2013 /PRNewswire/ -- Allscripts Healthcare Solutions, Inc. (NASDAQ: MDRX) today announced financial results for the three months and year ended December 31, 2012.

Fourth-Quarter Details:

  • Bookings(1) of $180.7 million.  This compares with bookings of $327.4 million in the fourth quarter of 2011 and $161.9 million in the third quarter of 2012.
  • GAAP revenue of $350.9 million and non-GAAP revenue of $368.0 million.  This compares with GAAP and non-GAAP revenue of $388.2 and $389.2 million, respectively, in the fourth quarter of 2011. 
  • GAAP gross profit for the three months ended December 31, 2012, was $136.3 million.  This compares with GAAP gross profit of $175.9 million in the fourth quarter of 2011. 
  • Non-GAAP gross profit was $153.4 million for the three months ended December 31, 2012, or 41.7 percent of total non-GAAP revenue.  This compares with $176.9 million or 45.5 percent of non-GAAP revenue for the prior-year period.
  • GAAP operating loss for the three months ended December 31, 2012, including certain non-cash and one-time charges, was $26.6 million.  This compares with GAAP operating income of $45.6 million in the fourth quarter of 2011. 
  • Non-GAAP operating income, excluding certain non-cash and one-time charges, was $30.7 million for three months ended December 31, 2012, or 8.3 percent of total non-GAAP revenue.  This compares with $78.6 million or 20.2 percent of non-GAAP revenue for the prior year.
  • GAAP net loss for the three months ended December 31, 2012, including certain non-cash and one-time charges, was $24.3 million and GAAP loss per share was $0.14.  This compares with net income of $26.0 million and diluted earnings per share of $0.14 in the fourth quarter of 2011.
  • Non-GAAP net income, after adjustments for certain non-cash and one-time charges, was $28.1 million resulting in non-GAAP diluted earnings per share of $0.16.  This compares with $47.6 million and $0.25, respectively, in the fourth quarter of 2011.
  • Adjusted EBITDA was $53.6 million for three months ended December 31, 2012, or 14.5 percent of total non-GAAP revenue.  This compares with $96.0 million or 24.6 percent of non-GAAP revenue for the prior year period.
  • Fourth quarter 2012 GAAP results include the following items, all on a pre-tax basis:
    • A non-recurring charge against revenue of $16.8 million.  This provision reflects a non-recurring revenue deferral related to clients who have long-aged accounts receivable balances.
    • Acquisition-related amortization expense of $15.3 million.
    • Stock-based compensation expense of $12.7 million.
    • Other non-recurring expenses totaling $12.2 million.
    • Please refer to the Explanation of Non-GAAP Financial Measures section in this news release for further discussion of these items.
  • Allscripts effective tax rate for 2012 on a non-GAAP basis was 23.6 percent. 

Please refer to Table 4 "Condensed Non-GAAP Financial Information" for a complete reconciliation of all GAAP and non-GAAP financial measures discussed in this news release. 

"Our fourth quarter and 2012 financial results did not meet our expectations," said Paul M. Black, President and Chief Executive Officer of Allscripts. "With the conclusion of the strategic alternatives process in late December, we are moving forward to deliver on our mission to transform healthcare delivery globally.  I have been actively engaged with our clients and team members and we have taken initial actions to focus the company on attaining results for our clients and shareholders.

Allscripts offers a wide breadth of solutions and enjoys a large, diverse and loyal client base.  With this foundation in place, we will drive an intense focus on sales and delivering upon our client obligations during 2013."

Liquidity and Cash Flow

During the fourth quarter of 2012, Allscripts repaid approximately $17.6 million of borrowings under its senior secured credit facilities.   As of December 31, 2012, the company had $441.5 million of borrowings outstanding and had approximately $248.7 million of available liquidity under its revolving credit facility.  The company reported cash and marketable securities totaling approximately $105.7 million as of December 31, 2012.

For the three and twelve months ended December 31, 2012, cash flow from operations totaled $58.1 million and $222.6 million, respectively. 

Conference Call

Allscripts will conduct a conference call today, Tuesday, February 19, 2013, at 4:30 PM Eastern Time to discuss the Company's earnings and other information.   Investors can access the conference via the Internet at http://investor.allscripts.com.  Participants also may access the conference call by dialing (877) 303-0543 (toll free in the US) or (973) 935-8787 (international) and requesting Conference ID #33030748.

A replay of the call will be available two hours after the conclusion of the call, for a period of two weeks, at http://www.allscripts.com or by calling (855) 859-2056 or (404) 537-3406 - Conference ID #87002646.

Supplemental and non-GAAP financial information is also available at http://investor.allscripts.com.

Footnotes

     

(1)

Bookings reflect the value of executed contracts for software, hardware, services, remote hosting, outsourcing and SaaS.

About Allscripts

Allscripts (NASDAQ:  MDRX) delivers the insights that healthcare providers require to generate world-class outcomes. The company's Electronic Health Record, practice management and other clinical, revenue cycle, connectivity and information solutions create a Connected Community of Health™ for physicians, hospitals and post-acute organizations.  To learn more about Allscripts, please visit www.allscripts.com, Twitter, YouTube and It Takes A Community: The Allscripts Blog.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements regarding future events or developments, our future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements with the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition. Such risks, uncertainties and other factors include, among other things: the possibility that the expected synergies, efficiencies and cost savings of the merger with Eclipsys Corporation will not be realized, or will not be realized within the expected time period; the impact of the realignment of our sales and services organization; the possibility that our current initiatives focused on product delivery, client experience and financial performance may not be successful; potential difficulties or delays in achieving platform and product integration; competition within the industries in which we operate; failure to maintain interoperability certification pursuant to the Health Information Technology for Economic and Clinical Health Act; the volume and timing of systems sales and installations, the length of sales cycles and the installation process and the possibility that our products will not achieve or sustain market acceptance; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; costs or customer losses relating to the standardization of our small office electronic health record and practice management systems that could adversely affect our results of operations; our ability to establish and maintain strategic relationships; errors or similar problems in our software products or other product quality issues; the outcome of any legal proceeding that has been or may be instituted against us and others; compliance obligations under new and existing laws, regulations and industry initiatives, and future changes in laws or regulations in the healthcare industry; the possibility of product-related liabilities; our ability to attract and retain qualified personnel; the implementation and speed of acceptance of the electronic record provisions of the American Recovery and Reinvestment Act of 2009, as well as elements of the Patient Protection and Affordable Care Act (aka health reform); maintaining our intellectual property rights and litigation involving intellectual property rights; legislative, regulatory and economic developments; risks related to third-party suppliers and our ability to obtain, use or successfully integrate third-party licensed technology; and breach of data security by third parties and unauthorized access to patient health information by third parties.  See our "Risk Factors" in Annual Report on Form 10-K for 2011 and subsequent Quarterly Reports on Form 10-Q for a further discussion of these and other risks and uncertainties applicable to our business. The statements herein speak only as of their date and we undertake no duty to update any forward-looking statement whether as a result of new information, future events or changes in expectations.

 

 

Table 1

Allscripts Healthcare Solutions, Inc.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)








December 31,


December 31,


2012


2011

ASSETS





Current assets:





Cash and cash equivalents


$104.0


$157.8

Accounts receivable, net


337.0


362.8

Deferred taxes, net


56.5


40.6

Prepaid expenses and other current assets (a)


130.0


110.6

Total current assets


627.5


671.8

Long-term marketable securities


1.7


1.7

Fixed assets, net


155.5


122.6

Software development costs, net


95.6


98.4

Intangible assets, net


427.0


489.8

Goodwill


1,039.4


1,039.4

Deferred taxes, net


7.5


5.0

Other assets (a)


30.3


74.9

Total assets


$2,384.5


$2,503.6






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable


$45.9


$41.2

Accrued expenses (a)


93.1


89.7

Accrued compensation and benefits


44.1


31.8

Deferred revenue


290.7


288.9

Current maturities of long-term debt and capital lease obligations


79.3


45.5

Total current liabilities


553.1


497.1

Long-term debt


362.7


322.7

Deferred revenue


19.8


18.9

Deferred taxes, net


125.9


119.7

Other liabilities


38.7


68.5

Total liabilities


1,100.2


1,026.9

Total stockholders' equity


1,284.3


1,476.7

Total liabilities and stockholders' equity


$2,384.5


$2,503.6






(a) Certain prior period amounts have been reclassified to conform to the current period presentation. The amounts reclassed for each period presented are as follows:





From other assets to prepaid expenses and other current assets


$0.0


$4.9

Decrease prepaid expenses and other current assets and accrued expenses


$0.0


$13.7

 

 

 

Table 2

Allscripts Healthcare Solutions, Inc.

Condensed Consolidated Statements of Operations

(In millions, except per-share amounts)

(Unaudited)












Three Months Ended
December 31,


Year Ended
December 31,



2012


2011


2012


2011

Revenue:









System sales (a)


$29.1


$62.5


$145.3


$227.9

Professional services


68.9


71.3


270.5


250.4

Maintenance (a)


122.6


113.6


476.9


439.0

Transaction processing and other


147.1


140.8


570.4


526.8

Total revenue


367.7


388.2


1,463.1


1,444.1

Provision for revenue deferral (c)


(16.8)


0.0


(16.8)


0.0

Total net revenue


350.9


388.2


1,446.3


1,444.1

Cost of revenue: (b)









System sales


31.7


33.7


128.3


144.1

Professional services


61.6


60.3


234.8


210.6

Maintenance


36.5


34.6


145.4


135.6

Transaction processing and other


84.8


83.7


331.3


288.2

Total cost of revenue


214.6


212.3


839.8


778.5

Gross profit


136.3


175.9


606.5


665.6

Selling, general and administrative expenses (d)


104.3


89.7


384.4


387.6

Research and development


50.0


31.3


162.1


104.2

Asset impairment charges (e)


0.0


0.0


11.1


0.0

Amortization of intangible assets


8.6


9.3


35.6


37.3

Income from operations


(26.6)


45.6


13.3


136.5

Interest expense


(4.3)


(4.0)


(16.2)


(20.7)

Interest income and other (expense), net (f)


0.8


0.5


(14.6)


1.7

(Loss) income before income taxes


(30.1)


42.1


(17.5)


117.5

Benefit (provision) for income taxes (g)


5.8


(16.1)


16.3


(43.9)

Net (loss) income


($24.3)


$26.0


($1.2)


$73.6










Earnings (loss) per share - basic and diluted


($0.14)


$0.14


($0.01)


$0.39










Weighted average common shares outstanding:









Basic


171.4


189.7


178.7


189.3

Diluted


171.4


192.3


178.7


191.0










(a) Certain prior period amounts in system sales have been reclassified to maintenance to conform to the current period presentation. The amount reclassed for each period presented is as follows:


$0.0


$3.5


$0.0


$15.0










(b) Includes pre-tax amortization of intangibles for each period presented as follows:


$6.8


$7.2


$28.4


$29.0










(c)  Provision for revenue deferral for the three months and year ended December 31, 2012 reflects a non-recurring revenue deferral related to clients who have long-aged accounts receivable balances.


(d) Selling, general and administrative expenses for the three months and year ended December 31, 2012 includes a $4.2 million charge related to our plan to upgrade MyWay clients electing to migrate to our standardized small office electronic health record and practice management systems.


(e) Non-cash charge related to the impairment of previously capitalized software development costs for MyWay including the net carrying value of a perpetual license for certain software code incorporated in MyWay.


(f) Interest income and other for the year ended December 31, 2012 includes a $16 million pre-tax write-off of a tax indemnification asset due to the settlement of the acquired tax position indemnified by Misys plc for an amount less than the carrying value of the indemnification asset. The write-off is not deductible for tax purposes; therefore, the tax effect of the write-off partially offsets the tax benefit discussed in note (g).


(g) The income tax benefit for the year ended December 31, 2012 includes a $16 million tax benefit related to the settlement of an acquired tax position for an amount less than the carrying value of the tax liability.

 

 

 

Table 3

Allscripts Healthcare Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)










Three Months Ended
December 31,


Year Ended
December 31,


2012


2011


2012


2011

Cash flows from operating activities:








Net (loss) income

($24.3)


$26.0


($1.2)


$73.6

Non-cash adjustments to net (loss) income:








   Depreciation and amortization

39.6


35.2


150.2


132.4

   Stock-based compensation expense

12.7


11.6


39.1


40.8

   Other non-cash (credits) charges, net

(15.0)


4.8


(2.7)


28.1

      Total non-cash adjustments to income

37.3


51.6


186.6


201.3

Cash impact of changes in operating assets and liabilities

45.1


29.8


37.2


(6.1)

Net cash provided by operating activities

58.1


107.4


222.6


268.8

Cash flows from investing activities:








Capital expenditures

(24.7)


(11.0)


(80.1)


(44.3)

Capitalized software

(3.6)


(14.2)


(43.0)


(60.7)

Net (purchases) sales and maturities of marketable securities and other investments

0.0


0.0


0.1


(12.8)

Proceeds received from sale of fixed assets

0.0


0.0


0.0


20.0

Change in restricted cash

0.0


0.0


0.0


2.2

Net cash used in investing activities

(28.3)


(25.2)


(123.0)


(95.6)

Cash flows from financing activities:








Proceeds from issuance of common stock

1.5


7.6


5.5


35.1

Excess tax benefits from stock-based compensation

2.9


4.1


3.5


8.8

Taxes paid related to net share settlement of equity awards

(5.9)


(9.3)


(10.3)


(11.5)

Debt borrowings (payments) net of financing costs

(17.8)


(10.2)


72.3


(124.6)

Repurchase of common stock

0.0


(1.4)


(225.9)


(51.5)

Net cash used in financing activities

(19.3)


(9.2)


(154.9)


(143.7)

Effect of exchange rate changes on cash and cash equivalents

(0.2)


0.0


1.5


(1.1)

Net increase (decrease) in cash and cash equivalents

10.3


73.0


(53.8)


28.4

Cash and cash equivalents, beginning of period

93.7


84.8


157.8


129.4

Cash and cash equivalents, end of period

$104.0


$157.8


$104.0


$157.8

 

 

 


Table 4

Allscripts Healthcare Solutions, Inc.

Condensed Non-GAAP Financial Information

(In millions, except per-share amounts)

(Unaudited)














Three Months
Ended



Three Months

Ended



Year
Ended


Year
Ended










12/31/12



12/31/11



12/31/12


12/31/11

Total revenue, as reported


$350.9



$388.2



$1,446.3


$1,444.1












Provision for revenue deferral (a)


16.8



0.0



16.8


0.0

     Acquisition-related deferred revenue adjustment


0.3



1.0



2.1


21.1

Total non-GAAP revenue


$368.0



$389.2



$1,465.2


$1,465.2












Gross profit, as reported


$136.3



$175.9



$606.5


$665.6












Provision for revenue deferral (a)


16.8



$0.0



16.8


$0.0

     Acquisition-related deferred revenue adjustment


0.3



1.0



2.1


21.1

Total non-GAAP gross profit


$153.4



$176.9



$625.4


$686.7












Operating income/(loss), as reported


($26.6)



$45.6



$13.3


$136.5












Provision for revenue deferral (a)


16.8



0.0



16.8


0.0

     Acquisition-related deferred revenue adjustment


0.3



1.0



2.1


21.1

     Acquisition-related amortization


15.3



16.5



64.0


66.4

     Stock-based compensation expense 


12.7



11.6



39.1


37.4

Non-recurring and transaction-related costs (b)


12.2



4.0



26.2


36.1

 Asset impairment charge


0.0



0.0



11.1


0.0

Total non-GAAP operating income


$30.7



$78.6



$172.6


$297.6












Net income/(loss), as reported


($24.3)



$26.0



($1.2)


$73.6












 Provision for revenue deferral (a)


17.3



0.0



17.3


0.0

 Acquisition-related deferred revenue adjustment


0.3



0.6



1.6


13.0

     Acquisition-related amortization


15.9



10.5



50.0


41.7

     Stock-based compensation expense 


13.0



7.4



31.6


23.6

Non-recurring and transaction-related costs (b)


12.5



2.5



22.5


23.7

 Asset impairment charge


0.0



0.0



9.4


0.0

     Indemnification asset write-off


0.0



0.0



13.6


0.0

     Tax benefit


0.0



0.0



(16.0)


0.0

     Tax rate alignment


(6.7)



0.6



(8.5)


0.3

Non-GAAP net income


$28.1



$47.6



$120.3


$175.9












Tax Rate


-3%



36%



24%


39%












Weighted shares outstanding - diluted


173.5



192.3



180.3


191.0












Earnings per share - diluted, as reported


($0.14)



$0.14



($0.01)


$0.39












Non-GAAP earnings per share - diluted


$0.16



$0.25



$0.67


$0.92


Note: all adjustments to reconcile GAAP to non-GAAP net income are net of tax


(a) Provision for revenue deferral for the three months and year ended December 31, 2012 reflects a non-recurring revenue deferral related to clients who have long-aged accounts receivable balances.


(b) Non-recurring expenses in the fourth quarter of 2012 relate to certain severance, legal, consulting, and other charges incurred in connection with activities that are considered one-time.  Non-recurring expenses, on a pretax basis, were approximately $12.2 million in the current quarter.  2011 and first nine months of 2012 transaction-related expenses consist of integration expenses incurred in connection with the Eclipsys Merger.