Allscripts Q1 results show slow recovery

May 10, 2013 in Medical Technology

Allscripts announced bookings totalling $178 million and operating cash flow of $39 million for the three months ended March 31, 2013.

“We are making progress in key areas including an unwavering client focus, delivering on our commitments and driving operational effectiveness,” said Allscripts President and CEO Paul M. Black in a statement. “In addition, we took a series of important actions this quarter to advance our Open, Connected Community of Health strategy, enhancing our competitive positioning, including the acquisitions of dbMotion and Jardogs.”

[See also: Allscripts invests in future.]

The company reported GAAP revenue of $347.1 million and non-GAAP revenue of $348.0 million. This compares with GAAP and non-GAAP revenue of $364.7 million and $365.5 million, respectively, in the first quarter of 2012.

It reported GAAP gross profit for the three months ended March 31, 2013, was $134.4 million. This compares with GAAP gross profit of $155.7 million in the first quarter of 2012.

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“The quarter underscores our view that the turnaround is going to take longer and cost more money than the average bull thinks,” wrote Piper Jaffray analysts Sean Wieland and Mohan Naidu in their May 10 analysis.

They wrote that the industry-wide transition to SaaS models and customer attrition would limit Allscripts’ growth over the next 12 months. However, they gave thumbs up to Allscripts’ accelerated spending on research and development.

Allscripts listed these Q1 highlights:

  • Increased gross research and development spending 19 percent year-over-year to support key industry requirements, including Stage 2 meaningful use preparedness and ICD-10 readiness and long-term product investments.
  • Made progress on key client focus areas including executing multiple acute system new activations and upgrades across the client base.
  • Announced the general availability of Allscripts Care Director, a multi-tenant, Web-based solution that coordinates outpatient care across healthcare settings and provides a targeted solution for population health management professionals.
  • Launched several initiatives to improve operational effectiveness including a Centers of Excellence strategy for Solutions Development and a plan to consolidate North American offices. The company continues to expect in excess of $50 million in annualized savings from operational effectiveness initiatives, beginning in 2014.

“We are investing heavily in both our clients and our products and so while our financial results for the quarter are not surprising, they are not satisfactory and not indicative of our long-term potential,” said Black. “This is a rebuilding year for Allscripts and I remain confident we are taking the right steps forward.”

[See also: My first 100 days as Allscripts CEO.]


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