Allscripts Healthcare Solutions (MDRX - Analyst Report) , a leading player in the health care information technology (HCIT) market, reported second quarter adjusted (excluding one-time items other than stock-based compensation expense) earnings per share of 13 cents, missing the Zacks Consensus Estimate by a penny.
Reported net income for the quarter was $8.0 million (or 4 cents per share) compared with a net income of $15.9 million (or 8 cents per share) in the prior-year quarter.
Revenues came in at $370.0 million, up 3.7% year over year in the second quarter, surpassing the Zacks Consensus Estimate of $369 million. Adjusted revenues were $370.7 million, up 2%. Bookings in the quarter were $194.1 million, a decrease of 20.6%.
The company inked two new Sunrise Clinical Manager agreements in the second quarter. Allscripts also expanded its footprint with one of its larger clients.
Total revenues consisted of System Sales ($46.6 million), Professional Services ($67.4 million), Maintenance ($113.9 million) and Transaction Processing ($142.1 million), which constituted 12.6%, 18.2%, 30.8% and 38.4%, respectively, of total revenues in the second quarter.
Adjusted gross margin declined to 42.7% of sales in the reported quarter, lower than 48.9% in the prior-year quarter. Selling, general and administrative expenses were $92.3 million, down 9.1% year over year while research and development expenditure came to $38.2 million, up 54%. Adjusted operating margin was 13.8% of sales, lower than 20.5% in the year-ago quarter.
Allscripts ended the second quarter with cash and cash equivalents of $120.4 million, up 4.1% on a year-over-year basis. The company had long-term debt of $420.9 million, up 9.5%. Cash flow from operations was $58.8 million, up 12.4%.
Allscripts continues to expect adjusted revenues in the range of $1,480 million to $1,520 million. Adjusted operating margin is projected at about 16% to 17%. However, the company revised its forecast for earnings per share in the range of 77 cents to 83 cents compared to its prior guidance in the range of 74 cents to 80 cents.
The health care information technology market is competitive and price sensitive. Among others, Allscripts faces strong competition from Cerner Corp. (CERN - Analyst Report) , Quality Systems (QSII - Analyst Report) and Athenahealth (ATHN - Analyst Report) .
However, optimism about the growth prospects of select HCIT service providers remains high under the Obama administration, which passed a Stimulus package in May 2009. Part of the Stimulus package is aimed at increasing the use of electronic health record (EHR) systems by medical practitioners.
The company has widened its user base after its mergers with Misys and Eclipsys and increased cross-selling opportunities. We believe that Allscripts is well positioned in the fast growing business of selling EHR/EMR to physician practices as well as inpatient settings.
We are of the opinion that acute and ambulatory care will continue to converge in future. Also, that Allscripts is positioned to provide integrated clinical applications for health care providers to satisfy HITECH Act requirements and eventually comply with an outcomes-based reimbursement system.
We have a long-term Neutral recommendation on Allscripts. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.