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Here's Why You Should Retain Veradigm (MDRX) Stock for Now

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Veradigm Inc. (MDRX - Free Report) 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, is expected to contribute further. Yet, concerns related to foreign exchange and healthcare regulatory changes persist.

So far this year, this Zacks Rank #3 (Hold) stock has lost 33.3% compared with the industry’s 0.7% decline. The S&P 500 has increased 8.4% in the same time frame.

This renowned IT solutions and services provider has a market capitalization of $1.29 billion. It 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 surprise being 38.4%.

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 2022, Veradigm and Vytalize Health announced a new agreement, enabling the latter to integrate its solutions and services directly into the Practice Fusion EHR (electronic health record) — a Veradigm Network solution.

Business Model: MDRX delivers IT solutions and services to help healthcare organizations achieve optimal clinical, financial and operational results. This 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 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. The company derives its revenues primarily from sales of proprietary software, support and maintenance services, and managed services.

Strong Q3 Results: MDRX’s solid third-quarter 2022 performance buoys optimism about the stock. The year-over-year uptick in its top and bottom lines, along with robust revenues during the quarter, is impressive. Revenues from both the segments also rose during the reported period, which is quite encouraging. The expansion of both the margins is another positive.


Forex Concerns: Veradigm conducts business in currencies other than the U.S. dollar but reports results in the same. Consequently, the company is exposed to fluctuations in currency exchange rates. Significant fluctuations in exchange rates between the U.S. dollar and foreign currencies may make MDRX’s products and services more expensive for global clients.

Healthcare Regulatory Changes: The company may be subject to pricing pressures with respect to future sales arising from various sources. These include practices of managed care organizations, government action affecting reimbursement levels or any combination thereof under Medicare, Medicaid and other government health programs. Such changes affect MDRX’s clients and other entities linked with the company’s business.

Estimate Trend

Veradigm is witnessing a negative estimate revision trend for 2023. In the past 30 days, its loss per share estimate has narrowed 1 cent to 87 cents per share.

The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $643.97 million, indicating a 57.2% decline from the previous year’s reported number.

Stocks to Consider

Some better-ranked stocks in the broader medical space are AmerisourceBergen , Cardinal Health (CAH - Free Report) and CONMED (CNMD - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AmerisourceBergen has an estimated long-term growth of 8.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.14%.

So far this year, ABC’s shares have gained 3.4% compared with the industry’s 9.2% growth.

Cardinal Health has an estimated long-term growth of 12.4%. Its earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average beat being 12.28%.

So far this year, CAH’s shares have gained 10.3% compared with the industry’s 9.2% growth.

CONMED has an estimated long-term growth of 19.4%. CNMD’s earnings surpassed estimates in two of the trailing four quarters, missed once and met the same in another, the average surprise being 10.54%.

CONMED has gained 37.8% compared with the industry’s 9.2% growth so far this year.

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