Allscripts' (MDRX) Stock Falls 8.8% Post Q1 Earnings Miss

Shares of Allscripts Healthcare Solutions, Inc. MDRX fell 8.8% till May 9, following the company's first-quarter 2022 results announcement on May 5.

Allscripts delivered adjusted earnings per share (“EPS”) of 13 cents in the first quarter of 2022, up 62.5% year over year. The figure, however, missed the Zacks Consensus Estimate by 35%.

GAAP EPS for the quarter was 17 cents, up by 183.3% year over year.

Revenues in Detail

Allscripts registered revenues of $142.7 million in the first quarter, up 6.7% year over year. The figure lagged the Zacks Consensus Estimate by 61.7%.

For first-quarter 2022, Veradigm revenues were $136.3 million, up 7.8% from the prior-year period.

Segment Details

Allscripts had been deriving revenues from three operating segments — Hospitals and Large Physician Practices, Veradigm, and Certain Products. However, following the inking of the sale agreement of Hospital & Large Physician Practices business segment to Constellation Software, Allscripts has changed its reportable segments during the first quarter of 2022.

In the quarter under review, revenues at the Provider segment amounted to $118.7 million on a reported basis, up 6.7% from the year-ago quarter's tally.

The Payer & Life Sciences segment’s revenues totaled $24 million, up 6.7% 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 16.9% to $73.5 million. Gross margin expanded 446 basis points (bps) to 51.5%.

Selling, general & administrative expenses rose 28.3% to $41.3 million. Research and development expenses climbed 13.6% year over year to $23.4 million. Adjusted operating expenses of $64.7 million increased 22.5% year over year.

Adjusted operating profit totaled $8.8 million, reflecting a 12.9% decline from the prior-year quarter. Adjusted operating margin in the first quarter contracted by 139 bps to 6.2%.

Financial Position

Allscripts exited first-quarter 2022 with cash and cash equivalents of $82.8 million compared with $132.5 million at the end of 2021. Long-term debt at the end of first-quarter 2022 was $377.1 million compared with $350.1 million at the end of 2021.

Net cash provided by operating activities at the end of first-quarter 2022 was $69.3 million compared with net cash provided by operating activities of $4.5 million a year ago.

Allscripts repurchased stocks worth $50 million in the first quarter of 2022.

2022 Guidance

Allscripts has reiterated its consolidated revenue growth projection for full-year 2022, which is likely to be up 1-2% from the comparable 2021 figures. The Zacks Consensus Estimate for revenues currently stands at $1.52 billion.

The company expects to register year-over-year growth of 6-7% in its Veradigm revenues.

Our Take

Allscripts exited the first quarter of 2022 with lower-than-expected results. Contraction of adjusted operating margin in the quarter does not bode well for the stock. Allscripts’ exposure to integration risks is worrying. Intense competition in the niche space is also a concern.

On the positive side, the year-over-year uptick in both the top and the bottom lines during the reported quarter is impressive. Revenues from both segments also rose during the quarter, which is encouraging. In March, the company announced an agreement with the U.S. Social Security Administration. The same month, Allscripts announced the relaunch of its former Application Store as the Allscripts App Expo. These developments raise our confidence in the stock. Expansion of gross margin is another positive.

Zacks Rank and Stocks to Consider

Allscripts currently has a Zacks Rank #4 (Strong Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. OMCL, UnitedHealth Group Incorporated UNH and Alkermes plc ALKS.

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13.4%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently flaunts a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.

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