Veradigm Inc. (MDRX Quick QuoteMDRX - Free Report) , formerly known as Allscripts Healthcare Solutions, Inc., is well-poised for growth in the coming quarters, courtesy of its strategic alliances over the past few months. The optimism led by a solid third-quarter 2022 performance and its business model are expected to contribute further. Yet, concerns related to foreign exchange and healthcare regulatory changes persist.

Over the past year, this Zacks Rank #3 (Hold) stock has lost 0.1% compared with the 63.2% decline of the industry and 18.8% fall of the S&P 500.

The renowned IT solutions and services provider has a market capitalization of $1.96 billion. The company projects 16% 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 38.4%.

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Let’s delve deeper:

Strategic Alliances: We are optimistic about Veradigm’s partnerships over the past few months. This month, the company announced an investment in Holmusk. The collaboration fuels the expansion of a leading source of real-world clinical behavioral health data.

In September, Veradigm and Vytalize Health announced a new agreement, which will enable Vytalize Health to integrate its solutions and services directly into the Practice Fusion EHR (electronic health record), a Veradigm Network solution.

Business Model: Veradigm 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.

Veradigm helps its clients improve the quality and efficiency of healthcare with solutions that include EHRs, 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: Veradigm’s solid third-quarter 2022 performance buoys optimism about the stock. The year-over-year uptick in the top and bottom lines, along with robust Veradigm revenues, during the reported quarter is impressive. Revenues from both segments also rose during the quarter, which is encouraging. The expansion of both margins is another positive.

Downsides

Forex Concerns: Veradigm 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.

Healthcare Regulatory Changes: Veradigm may be subject to pricing pressures with respect to future sales arising from various sources, including practices of managed care organizations, government action affecting reimbursement levels or any combination thereof under Medicare, Medicaid and other government health programs. The company’s clients and the other entities with which it has business terms are affected by such changes.

Estimate Trend

Veradigm is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 11.8% north to 85 cents per share.

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.

Key Picks

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN Quick QuoteAMN - Free Report) , Cardinal Health, Inc. (CAH Quick QuoteCAH - Free Report) and Merit Medical Systems, Inc. (MMSI Quick QuoteMMSI - 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 10.9%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has gained 1.6% against the industry’s 30.8% decline in the past year.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.7%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 3%.

Cardinal Health has gained 47.2% against the industry’s 8.2% decline over the past year.

Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.

Merit Medical has gained 17.7% against the industry’s 8.2% decline over the past year.