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Allscripts (MDRX) Inks Divestment Deal to Focus on Core Wing
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Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) recently announced that it has reached an agreement to sell the net assets of Allscripts’ Hospitals and Large Physician Practices business segment to Constellation Software Inc. (CSU) through the latter’s wholly-owned subsidiary N. Harris Computer Corporation (Harris). The transaction is projected to close in the second quarter, subject to fulfillment of regulatory approval and customary closing conditions.
The Sunrise, Paragon, Allscripts TouchWorks, Allscripts Opal, STAR, HealthQuest and dbMotion solutions are part of the Hospitals and Large Physician Practices business segment. It is worth noting that the assets of Allscripts’ Veradigm business segment are not included in this transaction and will remain in Allscripts' possession.
Management at Allscripts believes that this transaction maximizes focus and future opportunity for its shareholders and more than 7,500 associates. Allscripts’ divested solutions will serve as a key strategic component in Harris’ plans to become leaders in digital health.
Financial Terms of the Divestment
The purchase price consideration of the divestment is up to $700 million cash. This includes a fixed price of $670 million paid at closing and a contingent consideration of up to $30 million dependent on the business' performance in the two years after the transaction closes.
Strategic Prospects
The transaction stands to benefit Allscripts’ core business, allowing the company to enhance its focus on the profitable Veradigm business segment -- a leading provider of healthcare data and technology solutions. Allscripts’ Hospitals and Large Physician Practices business segment has been registering declining revenues over the past several quarters, with revenues falling 2% year over year in the last-reported fourth-quarter 2021. Meanwhile, Veradigm saw 9% growth in revenues year over year in the fourth quarter.
Image Source: Zacks Investment Research
The global healthcare information technology market, where MDRX’s Veradigm is a strong player, is expected to see a CAGR of 20.3% during 2021-2026 (per a report published in MarketsandMarkets). Factors such as government mandates and support for healthcare IT solutions, growing use of big data in healthcare, increasing need to curb healthcare costs and rising mHealth, telehealth, and remote patient monitoring markets, are fuelling market growth.
Given the market prospects, Allscripts’ latest decision to divest non-core arm to enhance focus on its core Veradigm business seems well-timed.
Notable Developments
Allscripts engaged in a number of significant developments in March 2022.
The company relaunched its former Application Store as the Allscripts App Expo. This rebranding is anticipated to provide Allscripts clients with an engaging way to identify all applications built and certified through the Allscripts Developer Program, leveraging Allscripts proprietary and Fast Healthcare Interoperability Resources APIs, as well as third-party solutions sold by the company. The App Expo will present the opportunity for all active developers with a certified solution to showcase their solutions online.
The company’s business unit Veradigm entered into an agreement with the United States Social Security Administration (SSA). This agreement will enable SSA to electronically request and receive electronic health records using the Veradigm Network solution and Veradigm eChart Courier, removing the need to allocate time and resources for manual medical record requests.
Share Price Performance
The stock has outperformed its industry over the past year. It has rallied 36.9% against the industry’s 50.9% fall.
Zacks Rank and Other Key Picks
Currently, Allscripts carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Owens & Minor, Inc. (OMI - Free Report) and AmerisourceBergen Corporation .
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Henry Schein has outperformed the industry over the past year. HSIC has gained 27.8% compared with the industry’s 9.1% rise over the past year.
Owens & Minor has a long-term earnings growth rate of 23.6%. Owens & Minor’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 29.5%, on average. It carries a Zacks Rank #2.
Owens & Minor has outperformed the industry over the past year. OMI has gained 9.7% against a 16.2% industry decline in the said period.
AmerisourceBergen has a long-term earnings growth rate of 8.2%. In the trailing four quarters, AmerisourceBergen’s earnings surpassed estimates in three and missed in one, delivering an average surprise of 2.3%. The stock currently sports a Zacks Rank #2.
AmerisourceBergen has outperformed its industry in the past year, gaining 29.1% versus the industry’s 9.1% rise.
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Allscripts (MDRX) Inks Divestment Deal to Focus on Core Wing
Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) recently announced that it has reached an agreement to sell the net assets of Allscripts’ Hospitals and Large Physician Practices business segment to Constellation Software Inc. (CSU) through the latter’s wholly-owned subsidiary N. Harris Computer Corporation (Harris). The transaction is projected to close in the second quarter, subject to fulfillment of regulatory approval and customary closing conditions.
The Sunrise, Paragon, Allscripts TouchWorks, Allscripts Opal, STAR, HealthQuest and dbMotion solutions are part of the Hospitals and Large Physician Practices business segment. It is worth noting that the assets of Allscripts’ Veradigm business segment are not included in this transaction and will remain in Allscripts' possession.
Management at Allscripts believes that this transaction maximizes focus and future opportunity for its shareholders and more than 7,500 associates. Allscripts’ divested solutions will serve as a key strategic component in Harris’ plans to become leaders in digital health.
Financial Terms of the Divestment
The purchase price consideration of the divestment is up to $700 million cash. This includes a fixed price of $670 million paid at closing and a contingent consideration of up to $30 million dependent on the business' performance in the two years after the transaction closes.
Strategic Prospects
The transaction stands to benefit Allscripts’ core business, allowing the company to enhance its focus on the profitable Veradigm business segment -- a leading provider of healthcare data and technology solutions. Allscripts’ Hospitals and Large Physician Practices business segment has been registering declining revenues over the past several quarters, with revenues falling 2% year over year in the last-reported fourth-quarter 2021. Meanwhile, Veradigm saw 9% growth in revenues year over year in the fourth quarter.
Image Source: Zacks Investment Research
The global healthcare information technology market, where MDRX’s Veradigm is a strong player, is expected to see a CAGR of 20.3% during 2021-2026 (per a report published in MarketsandMarkets). Factors such as government mandates and support for healthcare IT solutions, growing use of big data in healthcare, increasing need to curb healthcare costs and rising mHealth, telehealth, and remote patient monitoring markets, are fuelling market growth.
Given the market prospects, Allscripts’ latest decision to divest non-core arm to enhance focus on its core Veradigm business seems well-timed.
Notable Developments
Allscripts engaged in a number of significant developments in March 2022.
The company relaunched its former Application Store as the Allscripts App Expo. This rebranding is anticipated to provide Allscripts clients with an engaging way to identify all applications built and certified through the Allscripts Developer Program, leveraging Allscripts proprietary and Fast Healthcare Interoperability Resources APIs, as well as third-party solutions sold by the company. The App Expo will present the opportunity for all active developers with a certified solution to showcase their solutions online.
The company’s business unit Veradigm entered into an agreement with the United States Social Security Administration (SSA). This agreement will enable SSA to electronically request and receive electronic health records using the Veradigm Network solution and Veradigm eChart Courier, removing the need to allocate time and resources for manual medical record requests.
Share Price Performance
The stock has outperformed its industry over the past year. It has rallied 36.9% against the industry’s 50.9% fall.
Zacks Rank and Other Key Picks
Currently, Allscripts carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Owens & Minor, Inc. (OMI - Free Report) and AmerisourceBergen Corporation .
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Henry Schein has outperformed the industry over the past year. HSIC has gained 27.8% compared with the industry’s 9.1% rise over the past year.
Owens & Minor has a long-term earnings growth rate of 23.6%. Owens & Minor’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 29.5%, on average. It carries a Zacks Rank #2.
Owens & Minor has outperformed the industry over the past year. OMI has gained 9.7% against a 16.2% industry decline in the said period.
AmerisourceBergen has a long-term earnings growth rate of 8.2%. In the trailing four quarters, AmerisourceBergen’s earnings surpassed estimates in three and missed in one, delivering an average surprise of 2.3%. The stock currently sports a Zacks Rank #2.
AmerisourceBergen has outperformed its industry in the past year, gaining 29.1% versus the industry’s 9.1% rise.