- Third quarter record bookings of
$272 million, 22 percent year-over-year growth
- Revenue totals $355 million,
recurring revenue grows 6 percent year over year
- Adjusted EBITDA of $66 million, 44
percent year-over-year growth
Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) (Allscripts)
announced its financial results for the three and nine months ended
September 30, 2015.
Third-Quarter and Nine-Month Bookings
Highlights
Bookings(1) were $272 million, a third-quarter record, compared
with $223 million in the third quarter of 2014, a 22 percent
increase. Sales were strong across core clinical and financial
solutions, population health management and managed services.
Growth was robust across both the ambulatory and acute markets,
including two new client footprints for the Sunrise™ electronic
health record (EHR) solution.
Forty-four percent of third-quarter bookings related to software
delivery, while the remaining 56 percent was derived from client
services. This compares with 52 and 48 percent of bookings
attributable to these revenue categories, respectively, in the
third quarter of 2014. Software delivery bookings increased 4
percent year over year in the third quarter of 2015. Client
services bookings increased 42 percent year over year in the third
quarter of 2015.
For the nine months ended September 30, 2015, bookings totaled
$768 million compared with $679 million in the first nine months of
2014, a 13 percent increase.
Contract revenue backlog as of September 30, 2015, totaled $3.6
billion, a 4 percent increase over the prior-year amount.
Paul M. Black, Chief Executive Officer of Allscripts, stated,
"Allscripts third-quarter and nine-month results illustrate our
momentum in the global health care IT market. Bookings grew 22
percent in the third quarter of 2015 and increased 13 percent
year-to-date. Total bookings were at record levels for a third
quarter, driven by a healthy mix of sales across major software
solution categories and value-added services. We added major new
EHR clients in the US and United Kingdom and expanded strategic
partnerships with key ambulatory clients such as Catholic Health
Initiatives."
Third Quarter 2015 Revenue and Margin
Highlights
Revenue totaled $355 million, an increase of 3 percent compared
with $345 million in the third quarter of 2014.
Software delivery, support and maintenance revenue totaled $231
million in the third quarter of 2015, up 1 percent compared with
the third quarter of 2014. Software delivery, support and
maintenance revenue consists of all software, hardware,
subscription and transaction-related revenue as well as support and
maintenance.
Client services revenue totaled $124 million in the third
quarter of 2015, up 6 percent compared with the third quarter of
2014. Client services revenue consists of recurring managed
services and other project-based client services revenue.
Recurring revenue, consisting of subscriptions, recurring
transactions, support and maintenance, and recurring managed
services, increased $16 million compared with the third quarter of
2014; an increase of 6 percent year over year. Non-recurring
revenue, consisting of systems sales and other project-based client
services revenue, declined $9 million or 9 percent, compared with
the third quarter of 2014.
Gross margin in the third quarter of 2015 was 46.4 percent on a
non-GAAP basis and 43.3 percent on a GAAP basis, compared with 42.3
percent and 38.1 percent, respectively, in the third quarter of
2014. A favorable software mix, improvements in support margins, as
well as improving efficiencies in client services delivery drove
gross margin improvements.
Operating Expense, Earnings and Cash-Flow
Highlights
Operating expenses, consisting of selling, general and
administrative (SG&A) and research and development (R&D)
expenses, declined 2 percent on a non-GAAP basis and 3 percent on a
GAAP basis in the third quarter of 2015 compared with the third
quarter of 2014. This decline reflects a year-over-year decrease in
corporate SG&A expense, partially offset by a slight increase
in R&D expense compared with the third quarter of 2014. GAAP
operating expenses in the third quarter of 2015 included severance
and other non-recurring expenses of $10 million. These are excluded
for purposes of calculating non-GAAP operating expenses.
Reflecting year-over-year revenue growth, gross margin expansion
and management of operating expenses, Adjusted EBITDA increased 44
percent to $66 million in the third quarter of 2015, compared with
$46 million in the third quarter of 2014.
Non-GAAP net income in the third quarter 2015 totaled $25
million compared with $12 million in the third quarter of 2014, a
113 percent increase. GAAP net loss in the third quarter 2015
totaled $5 million compared with a net loss of $26 million in the
third quarter of 2014.
Non-GAAP earnings per share in the third quarter 2015 were $0.13
compared with $0.06 in the third quarter of 2014. GAAP loss
per share in the third quarter 2015 was $0.03 compared with a loss
per share of $0.15 in the third quarter of 2014.
Cash flow from operations in the third quarter 2015 totaled $40
million compared with $14 million in the third quarter of
2014. For the nine months ended September 30, 2015, cash flow
from operations totaled $128 million compared with $52 million for
the nine months ended September 30, 2014, a 147 percent
increase.
For the nine months ended September 30, 2015, free cash flow
totaled $81 million compared with $3 million in the same period of
2014.
Mr. Black concluded, "Allscripts financial performance continues
to improve each quarter across all key financial metrics,
including: recurring revenue, gross margins, Adjusted EBITDA,
non-GAAP earnings per share, cash flow from operations and free
cash flow."
Additional Third Quarter Business
Highlights
- Baptist Health Care Corporation in Pensacola, Fla., selected
Sunrise as the single comprehensive health care record and revenue
cycle management solution for all points of care, including three
hospitals, ambulatory sites and physician practices.
- University Hospital of South Manchester NHS Foundation Trust
(UHSM), a major acute teaching hospital based in Wythenshawe,
Manchester, United Kingdom, selected the Sunrise platform as its
new Electronic Patient Record (EPR) system to enhance care
coordination for healthcare providers, patients and families.
- Allscripts announced a significantly expanded relationship with
Catholic Health Initiatives to provide Allscripts Managed Services™
through its TouchWorks EHR and Allscripts Practice Management
solutions.
- Allscripts earned top scores for its ambulatory EHRs,
Allscripts Professional EHR™, Allscripts TouchWorks® EHR and
Sunrise Ambulatory Care, from research company Black Book™
Rankings.
- Allscripts hosted approximately 3,500 attendees at its annual
user group conference, the Allscripts Client User Experience (ACE)
in Boston.
- On September 30, 2015, Allscripts amended its Credit Agreement,
providing for an increase in loan capacity as well as a lower
interest rate. The amendment consists of a $250 million senior
secured term loan and a $550 million senior secured revolving
facility, or a net increase in borrowing capacity of $150
million. This improvement in Allscripts borrowing terms and
increased credit facility reflects the continued improvement in
Allscripts financial performance over the last two years.
Update to 2015 Guidance
Allscripts adjusted its financial guidance for 2015, reflecting
one quarter remaining in the year:
- Revenue between $1.390 billion and $1.405 billion;
- Adjusted EBITDA between $238 million and $245 million; and
- Non-GAAP earnings per share between $0.45 and $0.47 per diluted
share.
For a complete reconciliation of GAAP and non-GAAP
items, see the explanation of non-GAAP financial measures as well
as the GAAP and non-GAAP reconciliation financial tables in this
release (Tables 4 and 5).
Conference Call:
Allscripts will conduct a conference call today, Thursday,
November 5, 2015, at 4:30 PM Eastern Time to discuss its earnings
release and other information. Participants may access the
conference call via webcast at
http://investor.allscripts.com. Participants also may access
the conference call by dialing (855) 717-7811 or +1 (224) 357-2059
(international) and requesting Conference ID # 55802602.
A replay of the call will be available approximately two hours
after the conclusion of the call, for a period of four weeks, on
the Allscripts Investor Relations website or by calling (855)
859-2056 or +1 (404) 537-3406 - Conference ID # 55802602.
Supplemental and non-GAAP financial information is also
available at http://investor.allscripts.com.
Footnotes
(1) Bookings reflect the value of executed contracts
for software, hardware, other client services, remote hosting,
outsourcing and subscription-based services.
About Allscripts
Allscripts (NASDAQ:MDRX) is a leader in healthcare information
technology solutions that advance clinical, financial and
operational results. Our innovative solutions connect people,
places and data across an Open, Connected Community of Health™.
Connectivity empowers caregivers to make better decisions and
deliver better care for healthier populations. To learn more, visit
www.allscripts.com, Twitter,
YouTube and It Takes A Community: The
Allscripts Blog.
© 2015 Allscripts Healthcare, LLC and/or its affiliates. All
Rights Reserved.
Allscripts, the Allscripts logo, and other Allscripts marks are
trademarks of Allscripts Healthcare, LLC and/or its affiliates. All
other products are trademarks of their respective holders, all
rights reserved. Reference to these products is not intended to
imply affiliation with or sponsorship of Allscripts Healthcare, LLC
and/or its affiliates.
Forward-Looking Statements
This earnings release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on the
current beliefs and expectations of Allscripts management, only
speak as of the date that they are made, and are subject to
significant risks and uncertainties. Such statements can be
identified by the use of words such as "future,"
"anticipates," "believes," "estimates," "expects," "intends,"
"plans," "predicts," "will," "would," "could," "can," "may," and
similar terms. Actual results could differ from those set forth in
the forward-looking statements, and reported results should not be
considered an indication of future performance. Certain
factors that could cause Allscripts' actual results to differ
materially from those described in the forward-looking statements
include, but are not limited to: Allscripts' failure to compete
successfully; consolidation in Allscripts' industry; current and
future laws, regulations and industry initiatives; increased
government involvement in Allscripts' industry; the failure of
markets in which Allscripts operates to develop as quickly as
expected; Allscripts' or its customers' failure to see the benefits
of government programs; changes in interoperability or other
regulatory standards; the effects of the realignment of Allscripts'
sales, services, and support organizations; market acceptance of
Allscripts' products and services; the unpredictability of the
sales and implementation cycles for Allscripts' products and
services; Allscripts' ability to manage future growth; Allscripts'
ability to introduce new products and services; Allscripts' ability
to establish and maintain strategic relationships; risks related to
the acquisition of new companies or technologies; the performance
of Allscripts' products; Allscripts' ability to protect its
intellectual property rights; the outcome of legal proceedings
involving Allscripts; Allscripts' ability to hire, retain and
motivate key personnel; performance by Allscripts' content and
service providers; liability for use of content; security breaches;
price reductions; Allscripts' ability to license and integrate
third party technologies; Allscripts' ability to maintain or expand
its business with existing customers; risks related to
international operations; changes in tax rates or laws; business
disruptions; Allscripts' ability to maintain proper and effective
internal controls; and asset impairment charges. Additional
information about these and other risks, uncertainties, and factors
affecting Allscripts' business is contained in Allscripts' filings
with the Securities and Exchange Commission. Allscripts does
not undertake to update forward-looking statements to reflect
changed assumptions, the impact of circumstances or events that may
arise after the date of the forward-looking statements, or other
changes in its business, financial condition, or operating results
over time.
Table 1 |
Allscripts Healthcare
Solutions, Inc. |
Condensed Consolidated
Balance Sheets |
(In millions) |
(Unaudited) |
|
|
|
|
September 30, |
December 31, |
|
2015 |
2014 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$91.4 |
$53.2 |
Accounts receivable, net |
324.6 |
331.6 |
Deferred taxes, net |
35.7 |
35.6 |
Prepaid expenses and other current
assets |
98.5 |
102.4 |
Total current assets |
550.2 |
522.8 |
Long-term marketable securities |
0.0 |
1.3 |
Fixed assets, net |
127.8 |
145.8 |
Software development costs, net |
82.2 |
86.2 |
Intangible assets, net |
360.9 |
403.4 |
Goodwill |
1,222.8 |
1,200.7 |
Deferred taxes, net |
0.7 |
0.7 |
Other assets (a) |
328.7 |
137.8 |
Total assets |
$2,673.3 |
$2,498.7 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$67.4 |
$70.8 |
Accrued expenses |
70.7 |
79.0 |
Accrued compensation and benefits |
47.5 |
51.1 |
Deferred revenue |
291.2 |
293.0 |
Current maturities of long-term debt and
capital lease obligations |
12.7 |
27.5 |
Total current liabilities |
489.5 |
521.4 |
Long-term debt (a) |
642.3 |
539.2 |
Deferred revenue |
22.0 |
23.2 |
Deferred taxes, net |
60.4 |
55.4 |
Other liabilities |
63.5 |
75.3 |
Total liabilities |
1,277.7 |
1,214.5 |
Total Allscripts Healthcare Solutions, Inc.'s
stockholders' equity |
1,384.5 |
1,284.2 |
Non-controlling interest |
11.1 |
0.0 |
Total stockholders' equity |
1,395.6 |
1,284.2 |
Total liabilities and stockholders'
equity |
$2,673.3 |
$2,498.7 |
|
|
|
(a) Deferred debt issuance costs
previously reported in other assets are now included as part of
long-term debt upon the adoption of ASU 2015-03 effective
June 30, 2015. The December 31, 2014 balance sheet was also revised
and reflects the reclassification of approximately $9.5
million of debt issuance costs. |
|
|
Table 2 |
Allscripts Healthcare
Solutions, Inc. |
Condensed Consolidated
Statements of Operations |
(In millions, except per-share
amounts) |
(Unaudited) |
|
|
|
|
|
|
Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
Revenue: |
|
|
|
|
Software delivery, support and
maintenance |
$230.7 |
$228.1 |
$690.8 |
$680.5 |
Client services |
123.8 |
117.3 |
350.0 |
356.5 |
Total revenue |
354.5 |
345.4 |
1,040.8 |
1,037.0 |
Cost of revenue: |
|
|
|
|
Software delivery, support and
maintenance |
70.8 |
77.4 |
223.2 |
235.9 |
Client services |
109.0 |
116.0 |
327.8 |
330.0 |
Amortization of software development and
acquisition-related assets (a) |
21.3 |
20.6 |
63.0 |
61.5 |
Total cost of revenue |
201.1 |
214.0 |
614.0 |
627.4 |
Gross profit |
153.4 |
131.4 |
426.8 |
409.6 |
Selling, general and administrative
expenses |
91.1 |
97.0 |
259.9 |
273.6 |
Research and development |
47.7 |
45.9 |
138.8 |
151.3 |
Asset impairment charges |
0.0 |
0.2 |
0.3 |
2.1 |
Amortization of intangible and
acquisition-related assets |
5.7 |
7.1 |
19.0 |
22.4 |
Income (loss) from operations |
8.9 |
(18.8) |
8.8 |
(39.8) |
Interest expense and other, net (b) |
(8.9) |
(7.4) |
(21.7) |
(21.7) |
Equity in net earnings of unconsolidated
investments |
(1.4) |
0.0 |
(1.3) |
0.0 |
Loss before income taxes |
(1.4) |
(26.2) |
(14.2) |
(61.5) |
Income tax (provision) benefit |
(3.7) |
0.4 |
(4.2) |
(2.8) |
Net loss |
(5.1) |
(25.8) |
(18.4) |
(64.3) |
Less: Net income attributable to
non-controlling interest |
(0.1) |
0.0 |
(0.1) |
0.0 |
Net loss attributable to Allscripts
Healthcare Solutions, Inc. stockholders |
($5.2) |
($25.8) |
($18.5) |
($64.3) |
|
|
|
|
|
Loss per share - basic and diluted |
($0.03) |
($0.15) |
($0.10) |
($0.36) |
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
188.9 |
180.2 |
183.7 |
179.7 |
Diluted |
188.9 |
180.2 |
183.7 |
179.7 |
|
|
|
|
|
(a) Amortization of software development and
acquisition-related assets includes: |
|
|
|
|
Amortization of capitalized software
development costs |
$12.2 |
$11.6 |
$35.6 |
$35.1 |
Amortization of acquisition-related
intangible assets |
9.1 |
9.0 |
27.4 |
26.4 |
|
$21.3 |
$20.6 |
$63.0 |
$61.5 |
|
|
|
|
|
(b) Interest expense and other, net are
comprised of the following for the periods presented: |
|
|
Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Non-cash amortization of 1.25% Cash
Convertible Notes original issue discount |
$ 2.8 |
$ 2.6 |
$ 8.1 |
$ 7.7 |
Non-cash write-off of unamortized
deferred debt issuance costs |
1.4 |
-- |
1.4 |
-- |
Non-cash charges to interest expense and
other, net |
4.2 |
2.6 |
9.5 |
7.7 |
Interest expense |
4.4 |
4.2 |
12.2 |
12.1 |
Amortization of discounts and debt
issuance costs |
0.7 |
0.7 |
2.3 |
2.2 |
Other income, net |
(0.4) |
(0.1) |
(2.3) |
(0.3) |
Total interest expense and other,
net |
$ 8.9 |
$ 7.4 |
$ 21.7 |
$ 21.7 |
|
|
Table 3 |
Allscripts Healthcare
Solutions, Inc. |
Condensed Consolidated
Statements of Cash Flows |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
Cash flows from operating activities: |
|
|
|
|
Net loss |
($5.1) |
($25.8) |
($18.4) |
($64.3) |
Non-cash adjustments to net loss: |
|
|
|
|
Depreciation and amortization |
41.0 |
42.9 |
124.5 |
131.6 |
Stock-based compensation expense |
8.9 |
10.0 |
27.2 |
32.2 |
Other non-cash charges, net |
4.6 |
0.2 |
4.6 |
9.1 |
Total non-cash adjustments to income |
54.5 |
53.1 |
156.3 |
172.9 |
Cash impact of changes in operating
assets and liabilities |
(9.9) |
(13.6) |
(9.6) |
(56.6) |
Net cash provided by operating
activities |
39.5 |
13.7 |
128.3 |
52.0 |
Cash flows from investing activities: |
|
|
|
|
Capital expenditures |
(4.6) |
(3.4) |
(14.2) |
(20.7) |
Capitalized software |
(11.0) |
(10.3) |
(32.7) |
(28.3) |
Purchases of non-marketable securities in
partner entities, business acquisition, net of cash acquired
and other investments |
(2.6) |
(27.6) |
(222.1) |
(41.7) |
Sales and maturities of marketable
securities and other investments |
2.5 |
0.0 |
3.8 |
0.0 |
Proceeds from sale of fixed assets |
0.0 |
0.0 |
0.0 |
0.1 |
Net cash used in investing
activities |
(15.7) |
(41.3) |
(265.2) |
(90.6) |
Cash flows from financing activities: |
|
|
|
|
Proceeds from sale or issuance of common
stock |
0.7 |
0.0 |
102.1 |
1.7 |
Stock-based compensation-related
payments, net |
(0.2) |
(0.3) |
(5.4) |
(6.7) |
Senior secured debt (payments)
borrowings, net |
(8.6) |
26.2 |
79.5 |
17.9 |
Net cash (used in) provided by financing
activities |
(8.1) |
25.9 |
176.2 |
12.9 |
Effect of exchange rate changes on cash
and cash equivalents |
(0.8) |
(0.3) |
(1.1) |
0.0 |
Net increase (decrease) in cash and cash
equivalents |
14.9 |
(2.0) |
38.2 |
(25.7) |
Cash and cash equivalents, beginning of
period |
76.5 |
39.3 |
53.2 |
63.0 |
Cash and cash equivalents, end of period |
$91.4 |
$37.3 |
$91.4 |
$37.3 |
|
|
Table 4 |
Allscripts Healthcare
Solutions, Inc. |
Condensed Non-GAAP
Financial Information |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
Total revenue, as reported |
$354.5 |
$345.4 |
$1,040.8 |
$1,037.0 |
|
|
|
|
|
Deferred revenue and other
adjustments |
0.0 |
2.3 |
0.0 |
9.3 |
Total non-GAAP revenue |
$354.5 |
$347.7 |
$1,040.8 |
$1,046.3 |
|
|
|
|
|
Gross profit, as reported |
$153.4 |
$131.4 |
$426.8 |
$409.6 |
|
|
|
|
|
Deferred revenue and other
adjustments |
0.0 |
2.3 |
0.0 |
9.3 |
Acquisition-related amortization |
9.1 |
9.0 |
27.4 |
26.4 |
Stock-based compensation expense |
1.8 |
1.3 |
6.8 |
4.7 |
Non-recurring expenses and
transaction-related costs (a) |
0.0 |
2.9 |
0.0 |
6.3 |
Total non-GAAP gross
profit |
$164.3 |
$146.9 |
$461.0 |
$456.3 |
|
|
|
|
|
Income (loss) from operations, as
reported |
$8.9 |
($18.8) |
$8.8 |
($39.8) |
|
|
|
|
|
Deferred revenue and other
adjustments |
0.0 |
2.3 |
0.0 |
9.3 |
Acquisition-related amortization |
14.8 |
16.1 |
46.4 |
48.8 |
Stock-based compensation
expense |
9.2 |
10.0 |
28.7 |
32.2 |
Non-recurring expenses and
transaction-related costs (a) |
9.9 |
12.9 |
23.4 |
22.3 |
Non-cash asset impairment charges |
0.0 |
0.2 |
0.3 |
2.1 |
Total non-GAAP operating
income |
$42.8 |
$22.7 |
$107.6 |
$74.9 |
|
|
|
|
|
Net loss attributable to Allscripts
Healthcare Solutions, Inc. stockholders, as reported |
($5.2) |
($25.8) |
($18.5) |
($64.3) |
|
|
|
|
|
Deferred revenue and other
adjustments |
0.0 |
1.5 |
0.0 |
6.1 |
Acquisition-related amortization |
9.6 |
10.5 |
30.2 |
31.7 |
Stock-based compensation
expense |
6.0 |
6.5 |
18.7 |
20.9 |
Non-recurring expenses and
transaction-related costs |
6.3 |
8.4 |
15.2 |
14.5 |
Non-cash asset impairment charges |
0.0 |
0.1 |
0.2 |
1.4 |
Non-cash charges to interest expense and
other |
2.7 |
1.6 |
6.2 |
4.9 |
Equity in net earnings of unconsolidated
investments |
0.9 |
0.0 |
1.1 |
0.0 |
Tax rate alignment |
4.2 |
8.7 |
9.2 |
24.3 |
Non-GAAP net income attributable to
Allscripts Healthcare Solutions, Inc. |
$24.5 |
$11.5 |
$62.3 |
$39.5 |
|
|
|
|
|
Non-GAAP effective tax rate |
35% |
35% |
35% |
35% |
|
|
|
|
|
Weighted shares outstanding - diluted |
191.2 |
180.2 |
185.1 |
179.7 |
|
|
|
|
|
Loss per share - diluted, as reported |
($0.03) |
($0.15) |
($0.10) |
($0.36) |
|
|
|
|
|
Non-GAAP earnings per share -
diluted |
$0.13 |
$0.06 |
$0.34 |
$0.22 |
|
|
|
|
|
Note: all adjustments to
reconcile GAAP to non-GAAP net income are net of tax. |
(a) Non-recurring expenses and
transaction-related costs included in cost of revenue and operating
expenses are comprised of the following for the periods
presented: |
|
|
Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Cost of revenue: |
|
|
|
|
MyWay and other product consolidation costs
included in cost of revenue |
$0.0 |
$2.9 |
$0.0 |
$6.3 |
Operating expenses: |
|
|
|
|
Severance and other costs |
9.9 |
2.8 |
23.3 |
5.9 |
MyWay product consolidation |
0.0 |
6.4 |
0.0 |
6.4 |
Transaction-related costs |
0.0 |
0.8 |
0.1 |
3.7 |
Total non-recurring expenses and
transaction-related costs included in operating
expenses |
$9.9 |
$10.0 |
$23.4 |
$16.0 |
|
|
|
|
|
Total non-recurring expenses and
transaction related costs |
$9.9 |
$12.9 |
$23.4 |
$22.3 |
|
|
Table 5 |
Allscripts Healthcare
Solutions, Inc. |
Non-GAAP Financial
Information - Adjusted EBITDA |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
Total revenue, as reported |
$354.5 |
$345.4 |
$1,040.8 |
$1,037.0 |
Deferred revenue and other
adjustments |
0.0 |
2.3 |
0.0 |
9.3 |
Total non-GAAP revenue |
$354.5 |
$347.7 |
$1,040.8 |
$1,046.3 |
|
|
|
|
|
Net loss, as reported |
($5.1) |
($25.8) |
($18.4) |
($64.3) |
|
|
|
|
|
Deferred revenue and other
adjustments |
0.0 |
2.3 |
0.0 |
9.3 |
Depreciation and amortization |
41.0 |
42.9 |
124.5 |
131.6 |
Stock-based compensation expense |
9.2 |
10.0 |
28.7 |
32.2 |
Non-recurring expenses and
transaction-related costs |
9.9 |
12.8 |
23.4 |
21.4 |
Non-cash asset impairment charges |
0.0 |
0.2 |
0.3 |
2.1 |
Interest expense and other, net (a) |
5.8 |
3.8 |
13.4 |
11.5 |
Equity in net earnings of unconsolidated
investments |
1.4 |
-- |
1.3 |
-- |
Tax provision/(benefit) |
3.7 |
(0.4) |
4.2 |
2.8 |
|
|
|
|
|
Adjusted EBITDA |
65.9 |
45.8 |
177.4 |
146.6 |
|
|
|
|
|
Adjusted EBITDA attributable to
non-controlling interest |
0.2 |
0.0 |
0.5 |
0.0 |
|
|
|
|
|
Adjusted EBITDA, net of
non-controlling interest |
$65.7 |
$45.8 |
$176.9 |
$146.6 |
|
|
|
|
|
Adjusted EBITDA margin
(b) |
19% |
13% |
17% |
14% |
|
|
|
|
|
(a) Interest expense and other,
net has been adjusted from the amounts presented in the statements
of operations in order to remove the amortization of the fair value
of the cash conversion option embedded in the 1.25% Cash
Convertible Notes and deferred debt issuance costs from interest
expense since such amortization is also included in depreciation
and amortization. |
(b) Adjusted EBITDA margin is
calculated by dividing adjusted EBITDA, net of non-controlling
interest by total non-GAAP revenue. |
Explanation of Non-GAAP Financial Measures
Allscripts reports its financial results in accordance with U.S.
generally accepted accounting principles, or GAAP. To
supplement this information, Allscripts presents in this release
non-GAAP revenue, gross profit, gross margin, operating expense,
net income, including non-GAAP earnings per share, non-GAAP
effective income tax rate, Adjusted EBITDA and free cash flow,
which are also considered non-GAAP financial measures under Section
101 of Regulation G under the Securities Exchange Act of 1934, as
amended.
- Non-GAAP revenue consists of GAAP revenue as reported and adds
back deferred revenue and other adjustments recorded for GAAP
purposes.
- Non-GAAP gross profit consists of GAAP gross profit as reported
and adds back deferred revenue and other adjustments booked for
GAAP purposes and excludes acquisition-related amortization,
stock-based compensation expense, and non-recurring expenses and
transaction-related costs. Non-GAAP gross margin consists of
non-GAAP gross profit as a percentage of GAAP or non-GAAP revenue
in the applicable period, as defined above. For the third
quarter of 2015, non-GAAP gross margin totaled 46.4 percent,
consisting of non-GAAP gross profit of $164.3 million divided by
revenue of $354.5 million. For the third quarter of 2014,
non-GAAP gross margin totaled 42.3 percent consisting of non-GAAP
gross profit of $146.9 million divided by non-GAAP revenue of
$347.7 million. Reconciliations to non-GAAP revenue and
non-GAAP gross profit are found in Table 4 within this press
release.
- Non-GAAP operating expense consists of GAAP selling, general
and administrative expenses (SG&A) and research and development
expense (R&D), as reported, and excludes non-recurring expenses
and transaction-related costs and stock-based compensation expense
recorded to SG&A and R&D. For the third quarter of
2015, non-GAAP operating expense totaled $121.5 million consisting
of $91.1 million of GAAP SG&A and $47.7 million of GAAP R&D
expense and excludes $9.9 million of total non-recurring expense
and transaction-related costs and $7.4 million of stock-based
compensation expense recorded to SG&A and R&D. For the
third quarter of 2014, non-GAAP operating expense totaled $124.2
million consisting of $97.0 million of GAAP SG&A and $45.9
million of GAAP R&D expense and excludes $10.0 million of total
non-recurring expense and transaction-related costs and $8.7
million of stock-based compensation expense recorded to SG&A
and R&D.
- Adjusted EBITDA is a non-GAAP measure and consists of GAAP net
income (loss) as reported and adjusts for: deferred revenue and
other adjustments; depreciation and amortization; stock-based
compensation expense; non-recurring expenses and
transaction-related costs; non-cash asset impairment charges;
interest expense and other, net; equity in earnings of
unconsolidated investments; and tax provision (benefit).
- Non-GAAP effective income tax rate is based on non-GAAP pre-tax
earnings and consists of the statutory federal income tax rate,
Allscripts effective state income tax rate, and adjustments for
permanent differences.
- Non-GAAP net income consists of GAAP net income/(loss) as
reported, and adds back deferred revenue and other adjustments,
acquisition-related amortization, stock-based compensation expense,
non-recurring expenses and transaction-related costs, non-cash
charges to interest expense and other, and non-cash asset
impairment charges, in each case net of any related tax
effects. Non-GAAP net income also includes a tax rate
alignment adjustment.
- Non-GAAP earnings per share consists of non-GAAP net income, as
defined above, divided by weighted shares outstanding – diluted in
the applicable period.
Deferred Revenue and Other Adjustments.
Deferred revenue and other adjustments includes acquisition-related
deferred revenue adjustments, which reflect the fair value
adjustments to deferred revenues acquired in business acquisitions.
The fair value of deferred revenue represents an amount equivalent
to the estimated cost plus an appropriate profit margin, to perform
services related to the acquiree's software and product support,
which assumes a legal obligation to do so, based on the deferred
revenue balances as of the acquisition date. Also included are
adjustments for the vesting of a warrant issued to a commercial
partner and the effects of straight-lining contractual pricing
adjustments over the performance period. Allscripts adds back
deferred revenue and other adjustments for its non-GAAP financial
measures because it believes the inclusion of this amount directly
correlates to the underlying performance of Allscripts
operations.
Acquisition-Related
Amortization. Acquisition-related amortization
expense is a non-cash expense arising primarily from the
acquisition of intangible assets in connection with acquisitions or
investments. Allscripts excludes acquisition-related amortization
expense from non-GAAP gross profit, non-GAAP operating income and
non-GAAP net income because it believes (i) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of Allscripts business operations and (ii)
such expenses can vary significantly between periods as a result of
new acquisitions and full amortization of previously acquired
intangible assets. Investors should note that the use of these
intangible assets contributed to revenue in the periods presented
and will contribute to future revenue generation, and the related
amortization expense will recur in future periods.
Stock-Based Compensation Expense. Stock-based
compensation expense is a non-cash expense arising from the grant
of stock-based awards. Allscripts excludes stock-based compensation
expense from non-GAAP gross profit, non-GAAP operating income,
non-GAAP net income and Adjusted EBITDA because it believes (i) the
amount of such expenses in any specific period may not directly
correlate to the underlying performance of Allscripts business
operations and (ii) such expenses can vary significantly between
periods as a result of the timing of grants of new stock-based
awards, including grants in connection with acquisitions. Investors
should note that stock-based compensation is a key incentive
offered to employees whose efforts contributed to the operating
results in the periods presented and are expected to contribute to
operating results in future periods and such expense will recur in
future periods.
Non-Recurring Expenses and Transaction-Related
Costs. Non-recurring expenses relate to certain
severance, product consolidation, legal proceedings, consulting,
and other charges incurred in connection with activities that are
considered one-time. Transaction-related costs include
deferred compensation expenses incurred in connection with the
acquisition of dbMotion, Ltd.
Allscripts excludes non-recurring expenses and
transaction-related costs from non-GAAP gross profit, non-GAAP
operating income, non-GAAP net income and Adjusted EBITDA because
it believes (i) the amount of such expenses in any specific period
may not directly correlate to the underlying performance of
Allscripts business operations and (ii) such expenses can vary
significantly between periods.
Non-Cash Charges to Interest Expense and
Other. Non-cash charges to interest expense and other
includes non-cash amortization of the fair value of the cash
conversion option embedded in the 1.25 percent Cash Convertible
Notes issued by Allscripts during the second quarter of
2013. Also included in this amount are non-cash adjustments to
reflect changes in the fair value of derivative financial
instruments related to the 1.25 percent Cash Convertible Notes that
do not qualify for hedge accounting treatment.
Non-Cash Asset Impairment Charges. Asset
impairment charges relate primarily to product consolidation
activities.
Tax Rate Alignment. Tax adjustment aligns
the applicable period's effective tax rate to the expected annual
non-GAAP effective tax rate.
Management also believes that non-GAAP revenue, gross profit,
SG&A, operating expense, operating income, net income and
non-GAAP net income on a per share basis, and Adjusted EBITDA,
provide useful supplemental information to management and investors
regarding the underlying performance of Allscripts business
operations. Acquisition accounting adjustments made in accordance
with GAAP can make it difficult to make meaningful comparisons of
the underlying operations of the business without considering the
non-GAAP adjustments provided and discussed herein. Management
also uses this information internally for forecasting and
budgeting, as it believes that these measures are indicative of
core operating results. In addition, management may use non-GAAP
revenue, SG&A, operating expense, operating income, net income
and/or Adjusted EBITDA to measure achievement under Allscripts
stock and cash incentive compensation plans. Note, however, that
non-GAAP revenue, gross profit, operating income and net income and
non-GAAP net income on a per share basis and Adjusted EBITDA are
performance measures only, and they do not provide any measure of
cash flow or liquidity. Non-GAAP financial measures are not in
accordance with, or an alternative for, measures of financial
performance prepared in accordance with GAAP and may be different
from non-GAAP measures used by other companies. Non-GAAP measures
have limitations in that they do not reflect all of the amounts
associated with Allscripts results of operations as determined in
accordance with GAAP. Investors and potential investors are
encouraged to review the reconciliation of non-GAAP financial
measures with GAAP financial measures contained within the attached
condensed consolidated financial statements.
Free Cash Flow. Free cash flow is
calculated based on GAAP cash flows provided by operating
activities in the applicable period, net of capital expenditures
and capitalized software costs. For the first nine months of
2015, cash flow from operations totaled $128.3 million, capital
expenditures totaled $14.2 million and capitalized software totaled
$32.7 million. For the first nine months of 2014, cash flow
from operations totaled $52.0 million, capital expenditures totaled
$20.7 million and capitalized software totaled $28.3 million.
Allscripts considers free cash flow to be a liquidity measure
that provides useful information to management and investors about
the amount of cash generated by the business after capital
expenditures and capitalized software costs. Free cash flow
provides management and investors a valuable measure to determine
the quantity of capital generated that can be deployed to create
additional shareholder value by a variety of means.
CONTACT: For more information contact:
Investors:
Seth Frank
312-506-1213
seth.frank@allscripts.com
Media:
Concetta DiFranco
312-447-2466
concetta.difranco@allscripts.com
Veradigm (NASDAQ:MDRX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Veradigm (NASDAQ:MDRX)
Historical Stock Chart
From Apr 2023 to Apr 2024