Allscripts Healthcare Solutions, Inc. ( MDRX Quick Quote MDRX - Free Report) is well poised for growth in the coming quarters, backed by its strategic alliances over the past few months. A robust first-quarter 2021 performance, along with solid prospects in the Sunrise Electronic Health Record (“EHR”) platform, is expected to contribute further. However, stiff competition and consolidation in the healthcare industry persist.
Over the past year, this Zacks Rank #3 (Hold) stock has surged 164.7% compared with 0.2% growth of the
industry and 36.7% rise of the S&P 500 composite.
The renowned IT solutions and services provider has a market capitalization of $2.50 billion. The company projects 9.1% growth for the next five years and expects to maintain its strong performance. Further, it has delivered an earnings surprise of 29.90% for the past four quarters, on average.
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Let’s delve deeper.
Strong Q1 Results: Allscripts’ solid first-quarter 2021 earnings buoy our optimism. The company maintained the momentum in its Provider business on the back of key client wins. It is confident about its near- and long-term outlook as it expects to benefit from a number of differentiated opportunities in its Provider and Veradigm businesses. Gross margin expansion also bodes well. During this period, Allscripts managed to leverage both its new and existing solutions to help clients and boost patient outcomes. Strategic Alliances: We are optimistic about Allscripts’ partnerships over the past few months. The company, in May, announced that Quincy, IL-based not-for-profit healthcare organization Blessing Health System has substantially expanded its Allscripts partnership to three facilities, has acquired Allscripts Managed Services, and has also extended its agreement through 2028.
The same month, Allscripts’ business unit Veradigm collaborated with Lash Group, a part of
AmerisourceBergen Corporation ( ABC Quick Quote ABC - Free Report) . Another partnership of Allscripts is that with Revo Health to provide Allscripts Practice Management and Payerpath to the latter (April 2021). Sunrise EHR Platform Prospects: We believe that the Sunrise EHR platform is an important growth driver for Allscripts. The company, during the first-quarter 2021 earnings call in April, confirmed that its largest client, Northwell Health, is expanding its Sunrise platform at an additional hospital in their system — Peconic Bay Medical Center.
Further, Mercy Iowa City selected Allscripts’ Sunrise platform of health, run on Microsoft Azure, as the core EHR for its community hospital in March 2021. In January, the Gippsland Health Alliance had announced its plans for the expansion of its Allscripts Sunrise EHR across the Victoria, Australia region of Gippsland.
Downsides Healthcare Industry Consolidation: Many healthcare providers are consolidating to create integrated healthcare delivery systems with greater market power. As provider networks and managed care organizations consolidate, the number of market participants decreases. This intensifies the competition to provide products and services like Allscripts’, and highlights the importance of establishing and maintaining relationships with key industry participants. These participants may try to use their market power to negotiate price reductions for Allscripts’ products and services. Stiff Competition: Allscripts operates in a highly competitive industry characterized by rapidly evolving user needs as well as technology and solution standards, and the introduction of new solutions and services. Some of the competitors may be more established, benefit from greater recognition and have substantially greater financial, technical and marketing resources than Allscripts. Estimate Trend
Allscripts is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 4.5% north to 70 cents.
The Zacks Consensus Estimate for the company’s second-quarter 2021 revenues is pegged at $372.4 million, suggesting an 8.3% fall from the year-ago quarter’s reported number.
Some better-ranked stocks from the broader medical space are
Illumina, Inc. ( ILMN Quick Quote ILMN - Free Report) and DaVita Inc. ( DVA Quick Quote DVA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Illumina’s long-term earnings growth rate is estimated at 7%.
DaVita’s long-term earnings growth rate is estimated at 14.4%.
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