Allscripts' (MDRX) Q3 Earnings Beat Estimates, Margins Up

Allscripts Healthcare Solutions, Inc. MDRX delivered adjusted earnings per share (EPS) of 27 cents in the third quarter of 2021, up 145.5% year over year. The figure surpassed the Zacks Consensus Estimate by 50%.

GAAP EPS for the quarter was 12 cents a share compared with the year-earlier breakeven EPS.

Revenues in Detail

Allscripts registered revenues of $369.2 million in the third quarter, up 0.9% year over year. The figure, however, lagged the Zacks Consensus Estimate by 1.9%.

For third-quarter 2021, bookings came in at $166 million, up 3.8% from the prior-year quarter.

Segment Details

In the quarter under review, revenues at the Software delivery, support and maintenance segment amounted to $222.7 million on a reported basis, up 1.3% from the year-ago quarter's tally.

The Client services segment’s revenues totaled $146.5 million, up 0.5% from the year-ago quarter's figure.

Allscripts Healthcare Solutions, Inc. Price, Consensus and EPS Surprise

Allscripts Healthcare Solutions, Inc. Price, Consensus and EPS Surprise

Allscripts Healthcare Solutions, Inc. price-consensus-eps-surprise-chart | Allscripts Healthcare Solutions, Inc. Quote

Margin Trend

In the quarter under review, Allscripts’ gross profit rose 7.8% to $179 million. Gross margin expanded 305 basis points (bps) to 48.4%.

Selling, general & administrative expenses fell 15.5% to $78.8 million. Research and development expenses declined 1.9% year over year to $45.5 million. Adjusted operating expenses of $124 million decreased 11% year over year.

Adjusted operating profit totaled $54 million, reflecting a 108.4% surge from the prior-year quarter. Adjusted operating margin in the third quarter expanded a huge 760 bps to 14.7%.

Financial Position

Allscripts exited the third quarter of 2021 with cash and cash equivalents of $214.2 million compared with $229.3 million at the end of the second quarter. Long-term debt at the end of the third quarter of 2021 was $373.2 million compared with $421.3 million at the end of the second quarter.

Cumulative net cash provided by operating activities (continuing operations) at the end of the third quarter was $182 million compared to cumulative net cash provided by operating activities (continuing operations) of $11.3 million a year ago.

2021 Guidance

Allscripts reaffirmed its prior current-year revenue view at $1.50 billion, on par with the Zacks Consensus Estimate.

Our Take

Allscripts exited the third quarter of 2021 with better-than-expected earnings. The year-over-year uptick in the top and the bottom line along with a surge in total bookings during the reported quarter is impressive. Revenues from both the segments also rose during the quarter, which is encouraging. Over the past few months, Allscripts has entered into a slew of collaborations, raising our confidence in the stock. Expansion of both margins is another positive.

On the flip side, lower-than-expected revenues in the reported quarter are worrying. Additionally, Allscripts is exposed to integration risks. Intense competition in the niche space is also a concern.

Zacks Rank and Key Picks

Allscripts currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are West Pharmaceutical Services, Inc. WST, Thermo Fisher Scientific Inc. TMO and Chemed Corporation CHE.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the consensus mark by 3.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently flaunts a Zacks Rank #1.

Chemed reported third-quarter 2021 adjusted EPS of $5.06, which surpassed the Zacks Consensus Estimate by 13.5%. Revenues of $538.7 million outpaced the Zacks Consensus Estimate by 1.3%. It currently has a Zacks Rank #2.

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