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AllScripts (MDRX) Down 15.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for AllScripts Healthcare (MDRX - Free Report) . Shares have lost about 15.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AllScripts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Allscripts Misses on Q3 Earnings, Margins Remain Pressed

Allscripts Healthcare Solutions posted third-quarter 2018 adjusted earnings per share of 18 cents, which missed the Zacks Consensus Estimate by a penny. Earnings also improved 12.5% on a year-over-year basis.

Revenues in the quarter came in at $535.8 million on a non-GAAP basis, which missed the Zacks Consensus Estimate of $546 million. However, the figure improved 18.8% year over year. On a reported basis, revenues totaled $522 million in the quarter, reflecting an increase of 16% year over year.

Bookings in the reported quarter came in at $246 million, significantly down from the prior-year quarter’s tally of $304 million. In fact, management expects to some volatility in bookings in the quarters ahead.

Segment Details

Software delivery, Support and Maintenance

Revenues in the segment grossed $330.4 million on a reported basis, up 14.3% from the year-ago quarter's tally.

Client services

Revenues in the segment came in at $191.9 million, up 19.7% from the year-ago quarter's figure.

Margins

In the quarter under review, gross profit totaled $218.4 million, up 8.1% from the year-ago quarter's level. As a percentage of revenues, gross margin was 41.8%, down from 69.8% in the year-ago quarter. The lackluster performance was primarily caused by decline in non-recurring software license revenues.

Selling, general and administrative expenses in the quarter totaled $133.2 million, up 13.5% year over year. Research and development expenses totaled $69.7 million, up 36.4% year over year.

Adjusted operating income in the quarter was $15.5 million, down 53.7% year over year. Adjusted operating margin was 3%, as a percentage of revenues.

Guidance

On an adjusted basis, Allscripts expects 2018 revenues in the lower end of $2.15 billion and $2.25 billion, up 17-22% year over year. The Zacks Consensus Estimate is pegged at $2.17 billion, within the guided range.

Adjusted earnings per share (EPS) are expected in the lower end of 72 cents and 82 cents, reflecting an increase of 16% to 32% year over year. The Zacks Consensus Estimate is at 75 cents, within the projected range.

Adjusted EBITDA is anticipated between $420 million and $460 million, up 12% to 23% year over year.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

Currently, AllScripts has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

AllScripts has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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