Allscripts Healthcare Solutions, Inc. MDRX is well-poised for growth in the coming quarters, backed by its strategic alliances over the past few months. A robust second-quarter 2022 performance and its business model are expected to contribute further. Yet, concerns related to healthcare regulatory changes and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 14.9% against the 49.3% fall of the industry and 14.7% decline of the S&P 500.
The renowned IT solutions and services provider has a market capitalization of $1.86 billion. The company projects 16.3% 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 45.6%.
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Let’s delve deeper:
Strategic Alliances: We are optimistic about Allscripts’ partnerships over the past few months. During the second-quarter 2022 earnings call in August, the company confirmed that its Veradigm Life Sciences’ real world evidence data and analytics team signed numerous multi-year data agreements.
During the same call, Allscripts confirmed that in its provider business, its revenue cycle management team closed two key deals within the quarter, both with orthopedic specialty practices.
Business Model: Allscripts 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. Allscripts helps its clients improve the quality and efficiency of healthcare with solutions that include electronic health records (EHR), 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 Q2 Results: Allscripts’ solid second-quarter 2022 performance buoys optimism regarding the stock. The year-over-year uptick in the top line and revenues from both segments during the quarter is impressive. Allscripts is progressing well via its mergers and acquisitions, which raises our confidence in the stock. Gross margin expansion is another positive.
Healthcare Regulatory Changes: Allscripts 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 deals are affected by such changes.
Stiff Competition: Allscripts operates in a highly competitive industry characterized by rapidly evolving technology and solution standards, user needs as well as frequent introduction of new solutions and services. Some competitors may be more established, benefit from greater recognition and have substantially greater resources than Allscripts. The company competes primarily with various types of organizations, including those providing ambulatory and acute care EHR solutions, among others.
Allscripts is witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 7.6% north to 85 cents per share.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $153 million, suggesting a 58.6% plunge from the year-ago reported number.
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.
AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has lost 10.1% compared with the industry’s 37.4% fall in the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has gained 20.1% against the industry’s 34.1% fall over the past year.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 75% against the industry’s 16.3% fall over the past year.
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