Allscripts Healthcare Solutions, Inc. ( MDRX Quick Quote MDRX - Free Report) is well-poised for growth in the coming quarters, courtesy of its strategic alliances over the past few months. A robust third-quarter 2022 performance and its business model are expected to contribute further. Yet, concerns related to foreign exchange and consolidation in the healthcare industry persist.
This Zacks Rank #3 (Hold) stock has gained 0.3% against the 65.8% decline of the
industry and 17.2% fall of the S&P 500 so far this year.
This renowned IT solutions and services provider has a market capitalization of $2.04 billion. The company projects 16.3% growth over the next five years and expects to maintain its strong performance. MDRX’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average earnings surprise being 38.35%.
Image Source: Zacks Investment Research
Let’s delve deeper:
Strategic Alliances: We are optimistic about Allscripts’ partnerships over the past few months. During the second quarter, its Veradigm Life Sciences’ real world evidence data and analytics team signed numerous multi-year data agreements. One notable deal among them was a multi-year deal with a top five pharma company to provide data for their research and clinical development teams.
Other notable developments include Valley Oaks Medical Group’s selection of Allscripts’ professional EHR practice management and clearing house and expansion of Allscripts’ relationship with Southeast Medical Group, both confirmed in August.
Business Model: Allscripts delivers IT solutions and services to help healthcare organizations achieve optimal clinical, financial and operational results, which raises our optimism about the stock. The company sells its solutions to physicians, hospitals and governments, to name a few, besides post-acute organizations, such as home health and hospice agencies.
Allscripts helps its clients to improve the quality and efficiency of healthcare with solutions that include electronic health records, information connectivity, private cloud hosting, outsourcing, analytics, patient access and population health management. It derives its revenues primarily from sales of proprietary software, support and maintenance services, and managed services.
Strong Q3 Results: Allscripts’ solid third-quarter 2022 performance buoys optimism regarding the stock. The year-over-year uptick in the top line and revenues from both segments during the quarter is impressive. Allscripts is progressing well via its mergers and acquisitions, which raises our confidence in the stock. The gross margin and operating margin expansion is another positive. Downsides Foreign Exchange Concerns: Allscripts conducts business in currencies other than the U.S. dollar but reports its financial results in U.S. dollars. As a result, the company faces exposure to fluctuations in currency exchange rates. Significant fluctuations in exchange rates between the U.S. dollar and foreign currencies may make its products and services more expensive for global clients. Consolidation in the Healthcare Industry: Many healthcare providers are consolidating to create integrated healthcare delivery systems with greater market power, which decrease the number of market participants. Thus, competition to provide products and services like Allscripts will intensify and the importance of establishing and maintaining relationships with key industry participants will increase. These industry participants may use their market power to negotiate price reductions for Allscripts’ products and services. Estimate Trend
Allscripts is witnessing a positive estimate revision trend for 2022. The Zacks Consensus Estimate for its earnings has moved 2.5% north to 82 cents per share in the past 30 days.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $168.9 million, suggesting a 56.9% plunge from the year-ago reported number.
Some better-ranked stocks in the broader medical space are
AMN Healthcare Services, Inc. ( AMN Quick Quote AMN - Free Report) , ShockWave Medical, Inc. ( SWAV Quick Quote SWAV - Free Report) and McKesson Corporation ( MCK Quick Quote MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 11%.
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 3.8% comparing with the
industry’s 30% decline so far this year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 30.5% against the
industry’s 26.9% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 52.1% against the industry’s 12.8% decline over the past year.