Allscripts and Microsoft to Engage

Allscripts Healthcare Solutions ( MDRX - Analyst Report ) , a leading player in the health care information technology (HCIT) market, recently reported that it is engaged with Microsoft Corporation ( MSFT - Analyst Report ) to develop its Allscripts Application Developer Program to provide greater flexibility for healthcare customers. Their effort to design an open system will permit more players to engage with the Allscripts offering. For its part, Microsoft seeks to leverage its expertise in the health care arena.

The two parties have over a decade of collaboration experience. Recently, at the Allscripts Client Experience, attended by over 4,000 clients, the company showcased a Windows 8 version of its portable Electronic Health Record (EHR) offering.

The health care information technology market is competitive and price sensitive. Among others, Allscripts faces strong competition from Cerner Corp. ( CERN - Analyst Report ) , Quality Systems ( QSII - Analyst Report ) and Athenahealth ( ATHN - Analyst Report ) .

However, optimism about the growth prospects of select HCIT service providers remains high under the Obama administration, which passed a Stimulus package in 2009. Part of the Stimulus package is aimed at increasing the use of EHR systems by medical practitioners. While greenfield opportunities are currently shrinking, the replacement market is growing.

The company has widened its user base after its mergers with Misys and Eclipsys and increased cross-selling opportunities. We believe that Allscripts is well positioned in the fast growing business of selling EHR to physician practices as well as inpatient settings.

We are of the opinion that acute and ambulatory care will continue to converge in future. Also, that Allscripts is positioned to provide integrated clinical applications for health care providers to satisfy HITECH Act requirements and eventually comply with an outcomes-based reimbursement system.

We have a long-term Neutral recommendation on Allscripts. The stock currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.