Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) (Allscripts)
announced its financial results for the three months ended March
31, 2016.
First Quarter Business
Highlights
- Allscripts announced a transaction in March to create a joint
venture that merges Netsmart Technologies, Inc. (Netsmart) with the
Allscripts Homecare™ business. This joint venture establishes
Netsmart as the largest human services and post-acute technology
provider in healthcare. The transaction closed April 19,
2016.
- Black Book Rankings™ named the Sunrise platform as the top
overall inpatient EHR for large hospitals and academic medical
centers for the third consecutive year.
- University Hospitals (UH) significantly expanded and extended
its commitment to Allscripts through 2024 to enhance patient care
and improve population health management. UH will install
Allscripts Sunrise clinical platform in five hospitals it has
acquired in recent years and will add additional Sunrise modules in
nine hospitals that currently use the platform.
- Allscripts announced an expanded relationship with Salford
Royal NHS Foundation Trust to provide CareInMotion™, Allscripts
population health management platform, which will help the
organization make the transition to a new model of integrated care.
Salford Royal is the first UK client to select CareInMotion’s
dbMotion™ solution.
First Quarter Bookings
Highlights
Bookings(1) were $252 million in the first
quarter 2016, a record level for the first quarter of the year.
This result compares with $236 million in the first quarter of
2015, a 7 percent increase. Bookings growth was driven by increased
sales within the company’s client base for managed information
technology services including outsourcing and hosting, revenue
cycle management and population health services. In addition,
multiple clients signed agreements to expand their use of core
electronic health record (EHR) platforms such as Allscripts
Sunrise™ and Allscripts TouchWorks™ EHR. As a result, bookings
increased year-over-year within the acute and ambulatory
markets.
Forty-four percent of first-quarter bookings
related to software delivery, while the remaining 56 percent were
reflected in client services. This compares with 63 and 37 percent
of bookings attributable to these revenue categories, respectively,
in the first quarter of 2015. Bookings mix between software and
services can fluctuate quarter-to-quarter based on
client buying patterns.
Contract revenue backlog as of March 31, 2016,
totaled $3.65 billion, flat compared to the prior quarter-end
amount.
Paul M. Black, Chief Executive Officer of Allscripts, said,
“Allscripts is off to a strong start for the year, executing a
fifth consecutive quarter of record bookings. Additionally, all key
financial metrics grew compared to the first quarter of 2015. Our
financial position continually strengthens as we deliver
innovative, high-value solutions to the market. As a result,
clients are expanding the depth and breadth of their commitment to
Allscripts as a critical long-term strategic partner in delivering
world-class health services.”
First Quarter Financial
Highlights
First quarter 2016 revenue totaled $346 million,
an increase of three percent year-over-year.
Software delivery, support and maintenance
revenue totaled $229.2 million in the first quarter of 2016, a
slight increase compared with the first quarter of 2015. 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 $116.4 million
in the first quarter of 2016, up nine percent compared with the
first quarter of 2015. 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 4 percent compared with the first
quarter of 2015. Non-recurring revenue, comprised of systems sales
and other project-based client services revenue, was flat, compared
with the first quarter of 2015, an improvement from year-over-year
declines in recent quarters.
Gross margin in the first quarter of 2016 was
46.9 percent on a non-GAAP basis and 44.0 percent on a GAAP basis,
compared with 42.3 percent and 38.8 percent, respectively, in the
first quarter of 2015.
Operating expenses, consisting of selling,
general and administrative (SG&A), and research and development
(R&D) expenses, increased four percent on a non-GAAP basis and
increased two percent on a GAAP basis in the first quarter of 2016
compared with the first quarter of 2015. Allscripts first-quarter
non-GAAP SG&A increased six percent from the year ago
period, primarily due to timing of marketing spend and incentive
compensation expenses. Non-GAAP operating expenses also exclude
$3.7 million of transaction–related expenses associated with the
Netsmart joint venture announced in March.
Adjusted EBITDA increased to $62 million in the
first quarter of 2016, a 23 percent increase compared with the
first quarter of 2015. Growth in Adjusted EBITDA reflects revenue
growth and gross margin expansion in the quarter.
Non-GAAP net income attributable to Allscripts
stockholders in the first quarter of 2016 totaled $25 million, a 68
percent increase compared with the first quarter of 2015. GAAP net
income attributable to Allscripts stockholders in the first quarter
2016 totaled $2 million compared with a net loss of $10 million in
the first quarter of 2015.
Non-GAAP earnings per share in the first quarter
of 2016 were $0.13, compared with $0.08, an increase of 63 percent
compared with the first quarter of 2015. GAAP earnings per share
were $0.01 compared with a loss per share of $0.06 in the first
quarter of 2015.
Cash flow from operations in the first quarter
of 2016 totaled $76 million compared with $59 million in the first
quarter of 2015. Free cash flow in the first quarter of 2016
totaled $53 million, a 23 percent increase compared to the first
quarter of 2015.
During the first quarter of 2016, Allscripts
repurchased 2.9 million shares of common stock for $37.5 million
pursuant to its previously announced stock repurchase program.
Shares were repurchased at an average price of $12.70 per share. In
November 2015, Allscripts Board of Directors authorized a stock
repurchase program for up to $150 million through December 31,
2018. As of March 31, 2016, there was approximately $112.5 million
remaining under the current authorization.
Mr. Black continued, “Looking ahead, we continue to make
significant investments to enhance Allscripts solutions portfolio,
such as the recently formed joint venture with
Netsmart. Continuous regulatory change and a permanent shift
in reimbursement paradigms that reward value over volume will
create additional demand for our services. We also continue to
invest in Open technology, precision medicine and consumer
strategies, which together will create significant opportunities
for the company.”
2016 Financial Guidance
Allscripts contributed 100% of its Homecare business as partial
consideration for the formation of the Netsmart joint venture,
announced in March 2016.
Allscripts adjusted its prior financial guidance for 2016,
reflecting the consolidation of the Netsmart joint venture for
financial reporting purposes into Allscripts Healthcare Solutions
financial statements, beginning in the second quarter 2016, as
required under GAAP:
- Increasing revenue to between $1.580 billion and $1.610
billion, equal to midpoint range growth of 15 percent,
year-over-year;
- Increasing Adjusted EBITDA to between $280 million and $300
million, equal to midpoint range growth of 20 percent,
year-over-year, and;
- The company reiterated prior non-GAAP earnings per share
guidance of between $0.55 and $0.62 per diluted share, equal to
midpoint range growth of 24 percent, year-over-year.
Note: The consolidation of the Netsmart joint venture into
Allscripts returns 100 percent of the revenue and expenses of that
business, and then deducts minority interest from
profitability.
The Company plans to provide pro forma historical financial
statements in early July as well as additional detail on the impact
of the Netsmart transaction on Allscripts consolidated financial
statements for the remainder of 2016 at that time.
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, 5 and 6).
Conference Call:
Allscripts will conduct a conference call today,
Thursday, May 5, 2016, at 4:30 PM Eastern Standard 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 +1
(877) 269-7756 or +1 (201) 689-7817 (international) and requesting
Conference ID # 13633730.
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 +1 (877) 660-6853 or +1 (201) 612-7415 - Conference
ID # 13633730.
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.
© 2016 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 press 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: the
response of customers and competitors to the Netsmart joint
venture; the expected financial contribution and results of the
Netsmart joint venture, including the expected consolidation for
financial reporting purposes; 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, including under the caption
“Risk Factors” in the Allscripts Annual Report on Form 10-K and
subsequent Form 10-Qs. 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) |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
100.1 |
|
|
$ |
116.9 |
|
|
Accounts receivable, net |
|
|
340.1 |
|
|
|
327.8 |
|
|
Prepaid expenses and other current
assets |
|
|
99.1 |
|
|
|
93.6 |
|
|
Total current assets |
|
|
539.3 |
|
|
|
538.3 |
|
|
Fixed
assets, net |
|
|
117.7 |
|
|
|
125.6 |
|
|
Software
development costs, net |
|
|
86.1 |
|
|
|
85.8 |
|
|
Intangible
assets, net |
|
|
335.7 |
|
|
|
347.6 |
|
|
Goodwill |
|
|
1,222.3 |
|
|
|
1,222.6 |
|
|
Deferred
taxes, net |
|
|
2.4 |
|
|
|
2.3 |
|
|
Other
assets |
|
|
320.8 |
|
|
|
359.7 |
|
|
Total assets |
|
$ |
2,624.3 |
|
|
$ |
2,681.9 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
71.5 |
|
|
$ |
60.0 |
|
|
Accrued expenses |
|
|
56.0 |
|
|
|
62.0 |
|
|
Accrued compensation and
benefits |
|
|
37.5 |
|
|
|
62.4 |
|
|
Deferred revenue |
|
|
365.4 |
|
|
|
315.9 |
|
|
Current maturities of long-term
debt and capital lease obligations |
|
|
12.4 |
|
|
|
12.6 |
|
|
Total current liabilities |
|
|
542.8 |
|
|
|
512.9 |
|
|
Long-term
debt |
|
|
587.4 |
|
|
|
612.4 |
|
|
Deferred
revenue |
|
|
20.0 |
|
|
|
20.3 |
|
|
Deferred
taxes, net |
|
|
23.3 |
|
|
|
22.2 |
|
|
Other
liabilities |
|
|
61.5 |
|
|
|
95.1 |
|
|
Total liabilities |
|
|
1,235.0 |
|
|
|
1,262.9 |
|
|
Total
Allscripts Healthcare Solutions, Inc.'s stockholders' equity |
|
|
1,378.0 |
|
|
|
1,407.8 |
|
|
Non-controlling interest |
|
|
11.3 |
|
|
|
11.2 |
|
|
Total stockholders’ equity |
|
|
1,389.3 |
|
|
|
1,419.0 |
|
|
Total liabilities and stockholders’
equity |
|
$ |
2,624.3 |
|
|
$ |
2,681.9 |
|
|
|
|
|
|
|
|
Table 2 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Condensed Consolidated Statements of
Operations |
|
(In millions, except per-share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenue: |
|
|
|
|
|
Software delivery, support and
maintenance |
|
$ |
229.2 |
|
|
$ |
227.6 |
|
|
Client services |
|
|
116.4 |
|
|
|
107.0 |
|
|
Total revenue |
|
|
345.6 |
|
|
|
334.6 |
|
|
Cost of revenue: |
|
|
|
|
|
Software delivery, support and
maintenance |
|
|
75.2 |
|
|
|
76.7 |
|
|
Client services |
|
|
100.9 |
|
|
|
107.2 |
|
|
Amortization of software
development and acquisition-related assets (a) |
|
|
17.6 |
|
|
|
20.9 |
|
|
Total cost of revenue |
|
|
193.7 |
|
|
|
204.8 |
|
|
Gross profit |
|
|
151.9 |
|
|
|
129.8 |
|
|
Selling, general and administrative
expenses |
|
|
84.1 |
|
|
|
82.1 |
|
|
Research and development |
|
|
47.0 |
|
|
|
46.7 |
|
|
Asset impairment charges |
|
|
4.7 |
|
|
|
- |
|
|
Amortization of intangible and
acquisition-related assets |
|
|
4.2 |
|
|
|
6.7 |
|
|
Income (loss) from operations |
|
|
11.9 |
|
|
|
(5.7 |
) |
|
Interest expense and other, net
(b) |
|
|
(6.6 |
) |
|
|
(5.4 |
) |
|
Equity in net earnings of
unconsolidated investments |
|
|
(2.6 |
) |
|
|
- |
|
|
Income (loss) before income
taxes |
|
|
2.7 |
|
|
|
(11.1 |
) |
|
Income tax (provision) benefit |
|
|
(0.6 |
) |
|
|
1.0 |
|
|
Net income (loss) |
|
|
2.1 |
|
|
|
(10.1 |
) |
|
Less: Net income attributable to
non-controlling interest |
|
|
(0.1 |
) |
|
|
- |
|
|
Net income (loss) attributable to
Allscripts Healthcare Solutions, Inc. stockholders |
|
$ |
2.0 |
|
|
($ |
10.1 |
) |
|
|
|
|
|
|
|
Earnings (loss) per share -
basic |
|
$ |
0.01 |
|
|
($ |
0.06 |
) |
|
Earnings (loss) per share -
diluted |
|
$ |
0.01 |
|
|
($ |
0.06 |
) |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
Basic |
|
|
188.6 |
|
|
|
180.6 |
|
|
Diluted |
|
|
190.7 |
|
|
|
180.6 |
|
|
|
|
|
|
|
|
(a) Amortization of
software development and acquisition-related assets includes: |
|
|
|
|
|
Amortization of capitalized
software development costs |
|
$ |
10.2 |
|
|
$ |
11.8 |
|
|
Amortization of acquisition-related
intangible assets |
|
|
7.4 |
|
|
|
9.1 |
|
|
|
|
$ |
17.6 |
|
|
$ |
20.9 |
|
|
|
|
|
|
|
|
(b)
Interest expense and other, net are comprised of the following for
the periods presented: |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
Non-cash amortization of 1.25% Cash
Convertible Notes original issue discount |
|
$ |
2.8 |
|
|
$ |
2.7 |
|
|
Interest expense |
|
|
3.6 |
|
|
|
3.9 |
|
|
Amortization of discounts and debt
issuance costs |
|
|
0.6 |
|
|
|
0.7 |
|
|
Other income, net |
|
|
(0.4 |
) |
|
|
(1.9 |
) |
|
Total interest expense and other,
net |
|
$ |
6.6 |
|
|
$ |
5.4 |
|
|
|
|
|
|
|
|
Table 3 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Condensed Consolidated Statements of Cash
Flows |
|
(In millions) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Cash flows
from operating activities: |
|
|
|
|
|
Net income (loss) |
|
$ |
2.1 |
|
|
($ |
10.1 |
) |
|
Non-cash adjustments to net
loss: |
|
|
|
|
|
Depreciation and amortization |
|
|
34.5 |
|
|
|
41.7 |
|
|
Stock-based compensation
expense |
|
|
9.9 |
|
|
|
9.1 |
|
|
Other non-cash charges, net |
|
|
7.1 |
|
|
|
- |
|
|
Total non-cash adjustments to
income |
|
|
51.5 |
|
|
|
50.8 |
|
|
Cash impact of changes in operating
assets and liabilities |
|
|
22.3 |
|
|
|
17.8 |
|
|
Net cash provided by operating
activities |
|
|
75.9 |
|
|
|
58.5 |
|
|
Cash flows
from investing activities: |
|
|
|
|
|
Capital expenditures |
|
|
(7.8 |
) |
|
|
(6.1 |
) |
|
Capitalized software |
|
|
(15.1 |
) |
|
|
(9.3 |
) |
|
Purchases of non-marketable
securities in partner entities, business acquisition, net of
cash acquired and other investments |
|
|
(0.5 |
) |
|
|
(0.7 |
) |
|
Sales and maturities of marketable
securities and other investments |
|
|
- |
|
|
|
1.3 |
|
|
Net cash used in investing
activities |
|
|
(23.4 |
) |
|
|
(14.8 |
) |
|
Cash flows
from financing activities: |
|
|
|
|
|
Repurchase of common stock |
|
|
(37.5 |
) |
|
|
- |
|
|
Stock-based compensation-related
payments, net |
|
|
(3.9 |
) |
|
|
(2.2 |
) |
|
Senior secured debt borrowings,
net |
|
|
(28.4 |
) |
|
|
(5.7 |
) |
|
Net cash used in financing
activities |
|
|
(69.8 |
) |
|
|
(7.9 |
) |
|
Effect of exchange rate changes on
cash and cash equivalents |
|
|
0.5 |
|
|
|
(0.5 |
) |
|
Net (decrease) increase in
cash and cash equivalents |
|
|
(16.8 |
) |
|
|
35.3 |
|
|
Cash and
cash equivalents, beginning of period |
|
|
116.9 |
|
|
|
53.2 |
|
|
Cash and
cash equivalents, end of period |
|
$ |
100.1 |
|
|
$ |
88.5 |
|
|
|
|
|
|
|
|
Table 4 |
Allscripts Healthcare Solutions,
Inc. |
Condensed Non-GAAP Financial
Information |
(In millions, except per share amounts and
percentages) |
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Total revenue |
$ |
345.6 |
|
|
$ |
334.6 |
|
|
|
|
|
|
|
|
Gross
profit, as reported |
$ |
151.9 |
|
|
$ |
129.8 |
|
|
|
|
|
|
|
|
Acquisition-related
amortization |
|
7.4 |
|
|
|
9.1 |
|
|
Stock-based
compensation expense |
|
2.7 |
|
|
|
2.5 |
|
|
Total non-GAAP gross profit |
$ |
162.0 |
|
|
$ |
141.4 |
|
|
|
|
|
|
|
|
Income
(loss) from operations, as reported |
$ |
11.9 |
|
|
($ |
5.7 |
) |
|
|
|
|
|
|
|
Acquisition-related
amortization |
|
11.6 |
|
|
|
15.8 |
|
|
Stock-based
compensation expense |
|
10.4 |
|
|
|
9.5 |
|
|
Non-recurring expenses
and transaction-related costs (a) |
|
3.7 |
|
|
|
6.1 |
|
|
Non-cash asset
impairment charges |
|
4.7 |
|
|
|
- |
|
|
Total non-GAAP operating income |
$ |
42.3 |
|
|
$ |
25.7 |
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Allscripts Healthcare Solutions, Inc.
stockholders, as reported |
$ |
2.0 |
|
|
($ |
10.1 |
) |
|
|
|
|
|
|
|
Acquisition-related
amortization |
|
7.5 |
|
|
|
10.3 |
|
|
Stock-based
compensation expense |
|
6.8 |
|
|
|
6.2 |
|
|
Non-recurring expenses
and transaction-related costs |
|
2.4 |
|
|
|
3.9 |
|
|
Non-cash asset
impairment charges |
|
3.1 |
|
|
|
- |
|
|
Non-cash charges to
interest expense and other |
|
1.8 |
|
|
|
1.7 |
|
|
Equity in net earnings
of unconsolidated investments |
|
1.7 |
|
|
|
- |
|
|
Tax rate alignment |
|
(0.3 |
) |
|
|
2.9 |
|
|
Non-GAAP net income attributable to Allscripts Healthcare
Solutions, Inc. |
$ |
25.0 |
|
|
$ |
14.9 |
|
|
|
|
|
|
|
|
Non-GAAP
effective tax rate |
|
35 |
% |
|
|
35 |
% |
|
|
|
|
|
|
|
Weighted
shares outstanding - diluted |
|
190.7 |
|
|
|
182.1 |
|
|
|
|
|
|
|
|
Earnings
(loss) per share - basic and diluted, as reported |
$ |
0.01 |
|
|
($ |
0.06 |
) |
|
|
|
|
|
|
|
Non-GAAP earnings per share - diluted |
$ |
0.13 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
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 March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Severance
and other costs |
|
- |
|
|
$ |
6.0 |
|
|
Transaction-related costs |
|
3.7 |
|
|
|
0.1 |
|
|
Total non-recurring expenses and transaction related
costs |
$ |
3.7 |
|
|
$ |
6.1 |
|
|
|
|
|
|
|
|
Table 5 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Non-GAAP Financial Information - Adjusted
EBITDA |
|
(In millions, except percentages) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March
31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Total
revenue |
|
$ |
345.6 |
|
|
$ |
334.6 |
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported |
|
$ |
2.1 |
|
|
($ |
10.1 |
) |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
34.5 |
|
|
|
41.7 |
|
|
|
Stock-based compensation
expense |
|
|
10.4 |
|
|
|
9.5 |
|
|
|
Non-recurring expenses and
transaction-related costs |
|
|
3.7 |
|
|
|
6.1 |
|
|
|
Non-cash asset impairment
charges |
|
|
4.7 |
|
|
|
- |
|
|
|
Interest expense and other, net
(a) |
|
|
3.2 |
|
|
|
3.7 |
|
|
|
Equity in net earnings of
unconsolidated investments |
|
|
2.6 |
|
|
|
- |
|
|
|
Tax provision/(benefit) |
|
|
0.6 |
|
|
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
61.8 |
|
|
|
49.9 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
attributable to non-controlling interest |
|
|
0.3 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA, net of non-controlling interest |
|
$ |
61.5 |
|
|
$ |
49.9 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
(b) |
|
|
18 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 by total revenue. |
|
|
|
|
Table 6 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Non-GAAP Financial Information - Free Cash
Flow |
|
(In millions) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Net cash
provided by operating activities |
|
$ |
75.9 |
|
|
$ |
58.5 |
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(7.8 |
) |
|
|
(6.1 |
) |
|
|
Capitalized software |
|
|
(15.1 |
) |
|
|
(9.3 |
) |
|
|
Free cash
flow |
|
$ |
53.0 |
|
|
$ |
43.1 |
|
|
|
|
|
|
|
|
|
|
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 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
considered non-GAAP financial measures under Section 101 of
Regulation G under the Securities Exchange Act of 1934, as amended.
The definition of non-GAAP financial measures used throughout this
document is presented below:
- Non-GAAP gross profit consists of GAAP gross profit as reported
and excludes acquisition-related amortization and stock-based
compensation expense. 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 first quarter of 2016,
non-GAAP gross margin totaled 46.9 percent, consisting of non-GAAP
gross profit of $162.0 million divided by revenue of $345.6
million. For the first quarter of 2015, non-GAAP gross margin
totaled 42.3 percent consisting of non-GAAP gross profit of $141.4
million divided by revenue of $334.6 million. Reconciliations to
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 first quarter of 2016,
non-GAAP operating expense totaled $119.7 million consisting of
$84.1 million of GAAP SG&A and $47.0 million of GAAP R&D
expense and excludes $3.7 million of total non-recurring expenses
and transaction-related costs and $7.7 million of stock-based
compensation expense recorded to SG&A and R&D. For the
first quarter of 2015, non-GAAP operating expense totaled $115.7
million consisting of $82.1 million of GAAP SG&A and $46.7
million of GAAP R&D expense and excludes $6.1 million of total
non-recurring expense and transaction-related costs and $7.0
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: 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 net 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 acquisition-related amortization,
stock-based compensation expense, non-recurring expenses and
transaction-related costs, non-cash charges to interest expense and
other, non-cash asset impairment charges, and equity in net
earnings of unconsolidated investments, 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.
- Free cash flow consists of GAAP cash flows provided by
operating activities in the applicable period, net of capital
expenditures and capitalized software costs.
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 and valuation 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. For the first quarter of
2016, Allscripts incurred $3.7 million of transaction-related
expenses associated with the Netsmart joint venture.
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.
Non-Cash Asset Impairment
Charges. Asset impairment charges relate primarily to
product consolidation activities and the write-down of the carrying
value of equity investments in third parties.
Equity in Net Earnings of Unconsolidated
Investments. Equity in net earnings of unconsolidated
investments relates primarily to Allscripts’ share of net losses
from Nant Health, LLC recorded on a one quarter lag.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 gross
profit, SG&A, operating expense, operating income, net income,
non-GAAP net income on a per share basis, Adjusted EBITDA and free
cash flow, 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
gross profit, 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 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. 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.
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.
For more information contact:
Investors:
Seth Frank
312-506-1213
seth.frank@allscripts.com
Media:
Concetta DiFranco
312-447-2466
concetta.difranco@allscripts.com
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