- Third quarter GAAP diluted EPS of $0.12; non-GAAP diluted
EPS of $0.27, up 145% year-over-year
- Generated $57 million of cash flow from continuing
operations and $35 million of free cash flow in the third
quarter
- Increasing 2021 outlook for Adjusted EBITDA and free cash
flow
Allscripts Healthcare Solutions, Inc. (Nasdaq: MDRX)
(Allscripts) announced its financial results for the three and nine
months ended September 30, 2021.
Bookings(1) were $166 million in the third quarter of 2021. This
result compares with $160 million in the third quarter of 2020.
Contract revenue backlog totaled $3.9 billion as of September 30,
2021.
Third quarter 2021 revenue was $369 million compared with $366
million in the third quarter of 2020.
On a GAAP basis in the third quarter of 2021, income from
operations was $12 million compared with a loss from operations in
the third quarter of 2020 of $11 million. Non-GAAP income from
operations in the third quarter of 2021 was $35 million compared
with $27 million in the third quarter of 2020.
GAAP net income in the third quarter of 2021 totaled $16 million
compared with net income of $1 million in the third quarter of
2020. Non-GAAP net income in the third quarter of 2021 was $35
million compared with $17 million in the third quarter of 2020.
GAAP diluted earnings per share in the third quarter of 2021 was
$0.12 compared with earnings per share of $0.00 in the third
quarter of 2020. Non-GAAP diluted earnings per share in the third
quarter of 2021 was $0.27 compared with $0.11 in the third quarter
of 2020.
Adjusted EBITDA totaled $71 million in the third quarter of
2021, compared with $58 million in the third quarter of 2020.
“Allscripts saw continued success in the third quarter, once
again reporting significant year-over-year growth in net income,
Adjusted EBITDA, EPS and free cash flow. Our solid execution
delivered these results, which enable us to both reinvest in the
business and return substantial amounts of capital to
shareholders,” said Paul M. Black, Allscripts Chief Executive
Officer. “I am thankful that, despite us entering the twentieth
month of a worldwide pandemic, the entire company has remained
focused on our clients’ success while driving shareholder value.
Looking forward, I continue to be optimistic about our performance
in 2021 and beyond.”
2021 Financial Outlook(2)
Allscripts is revising the following expectations:
- Adjusted EBITDA between $275 million and $285 million, an
increase from the prior outlook of between $265 million and $275
million
- Free cash flow between $145 million and $155 million, an
increase from the prior outlook of between $115 million and $125
million
Allscripts is affirming the following expectations:
Conference Call
Allscripts will conduct a conference call today, Thursday,
November 4th, 2021, 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 +1
(888) 428-7458 or +1 (862) 298-0702 (international) and requesting
Conference ID # 13724096.
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 # 13724096.
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 and other client services on a
continuing operations basis.
(2)
In providing financial guidance, the
company does not reconcile Adjusted EBITDA and free cash flow to
the corresponding GAAP financial measures. Allscripts does not
provide guidance for the various reconciling items since certain
items that impact GAAP net income and operating cash flow such as
acquisition-related amortization, asset impairment charges and
restructuring and other costs, any of which may be significant, are
outside of its control and/or cannot be reasonably predicted.
Please see the “Explanation of Non-GAAP Financial Measures” at the
end of this press release for detailed information on calculating
non-GAAP measures. For a reconciliation of other non-GAAP financial
measures, see the non-GAAP financial reconciliation tables in this
release (Tables 4, 5 and 6).
NOTE: All percentage changes described within this press release
are calculated from full dollar amounts as illustrated in the
accompanying financial statements and Allscripts Supplemental
Financial Data Workbook, posted on the Investor Relations website.
Rounding differences may occur when individually calculating
percentages or totals from rounded amounts included within the
press release body compared to full dollar amounts in the
tables.
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.
© 2021 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, including statements regarding our 2021 outlook,
profitability initiatives, strategic priorities and selling
environment expectations. 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,” “look forward,” “pipeline”
and similar terms. Actual results could differ significantly from
those set forth in the forward-looking statements, and reported
results should not be considered an indication of future
performance or events. Certain factors that could cause our actual
results to differ materially from those described in the
forward-looking statements include, but are not limited to: our
ability to achieve the margin targets associated with our margin
improvement initiatives within the contemplated time periods, if at
all; the magnitude, severity and duration of the COVID-19 pandemic,
including the impacts of the pandemic, along with the impacts of
our responses and the responses by governments and other businesses
to the pandemic, on our business, our employees, our clients and
our suppliers; security breaches resulting in unauthorized access
to our or our clients’ computer systems or data, including
denial-of-services, ransomware or other Internet-based attacks; the
failure by Practice Fusion to comply with the terms of the
settlement agreements with the U.S. Department of Justice (the
“DOJ”); the costs and burdens of compliance by Practice Fusion with
the terms of its settlement agreements with the DOJ; additional
investigations and proceedings from governmental entities or third
parties other than the DOJ related to the same or similar conduct
underlying the DOJ’s investigations into Practice Fusion’s business
practices; our ability to recover from third parties (including
insurers) any amounts paid in connection with Practice Fusion’s
settlement agreements with the DOJ and related inquiries; the
expected financial results of businesses acquired by us; the
successful integration of businesses acquired by us; the
anticipated and unanticipated expenses and liabilities related to
businesses acquired by us, including the civil investigation by the
U.S. Attorney’s Office involving our Enterprise Information
Solutions business; our failure to compete successfully;
consolidation in our industry; current and future laws, regulations
and industry initiatives; increased government involvement in our
industry; the failure of markets in which we operate to develop as
quickly as expected; our or our customers’ failure to see the
benefits of government programs; changes in interoperability or
other regulatory standards; our ability to maintain and expand our
business with existing clients or effectively transition clients to
newer products; the effects of the realignment of our sales,
services and support organizations; market acceptance of our
products and services; the unpredictability of the sales and
implementation cycles for our products and services; our ability to
manage future growth; our ability to introduce new products and
services; our ability to establish and maintain strategic
relationships; risks associated with investments and acquisitions;
the performance of our products; our ability to protect our
intellectual property rights; the outcome of legal proceedings
involving us; our ability to hire, retain and motivate key
personnel; performance by our content and service providers;
liability for use of content; price reductions; our ability to
license and integrate third-party technologies; risks related to
global operations; variability of our quarterly operating results;
risks related to our outstanding indebtedness; changes in tax rates
or laws; business disruptions; our ability to maintain proper and
effective internal controls; and asset and long-term investment
impairment charges. Additional information about these and other
risks, uncertainties, and factors affecting our business is
contained in our filings with the Securities and Exchange
Commission, including under the caption “Risk Factors” in our most
recent Annual Report on Form 10-K and subsequent Quarterly Reports
on Form 10-Qs. We do 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 our 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,
2021
2020
ASSETS Current assets: Cash and cash equivalents
$214.2
$531.1
Restricted cash
2.1
6.4
Accounts receivable, net
340.9
347.3
Contract assets
123.3
106.7
Income tax receivable
0.0
25.4
Prepaid expenses and other current assets
124.5
136.3
Total current assets
$805.0
$1,153.2
Fixed assets, net
53.7
72.2
Software development costs, net
176.7
193.2
Intangible assets, net
248.4
286.6
Goodwill
974.4
974.7
Deferred taxes, net
6.1
5.8
Contract assets - long-term
51.1
43.7
Right-of-use assets - operating leases
70.3
96.6
Other assets
98.6
91.6
Total assets
$2,484.3
$2,917.6
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable
$21.8
$35.9
Accrued expenses
93.5
100.2
Accrued compensation and benefits
92.7
118.8
Deferred revenue
337.9
334.8
Current operating lease liabilities
19.3
22.3
Current liabilities attributable to discontinued operations
1.7
322.8
Total current liabilities
566.9
934.8
Long-term debt
373.2
167.6
Deferred revenue
4.5
3.4
Deferred taxes, net
16.5
18.2
Long-term operating lease liabilities
67.1
93.5
Other liabilities
37.5
33.9
Total liabilities
$1,065.7
$1,251.4
Total stockholders’ equity
$1,418.6
$1,666.2
Total liabilities and stockholders’ equity
$2,484.3
$2,917.6
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,
2021
2020
2021
2020
Revenue: Software delivery, support and maintenance
$222.7
$219.9
$670.8
$680.1
Client services
146.5
145.7
440.5
436.2
Total revenue
369.2
365.6
1,111.3
1,116.3
Cost of revenue: Software delivery, support and maintenance
68.4
72.5
208.5
216.7
Client services
122.1
127.3
362.8
406.7
Amortization of software development and acquisition-related assets
(a)
29.9
30.7
89.4
88.2
Total cost of revenue
220.4
230.5
660.7
711.6
Gross profit
148.8
135.1
450.6
404.7
Selling, general and administrative expenses
78.8
93.3
239.6
296.0
Research and development
45.5
46.4
145.9
151.8
Asset impairment charges
6.6
0.2
11.8
0.2
Amortization of intangible and acquisition-related assets
5.9
6.3
17.5
19.3
Income (loss) from operations
12.0
(11.1
)
35.8
(62.6
)
Interest expense, net (b)
(3.4
)
(6.0
)
(8.9
)
(26.2
)
Other
12.6
(0.8
)
29.7
14.5
Income (loss) before income taxes
21.2
(17.9
)
56.6
(74.3
)
Income tax (provision) benefit
(5.1
)
4.0
(10.0
)
6.5
Income (loss) from continuing operations, net of tax
16.1
(13.9
)
46.6
(67.8
)
Income (loss) from discontinued operations
0.0
19.4
0.0
54.5
Gain (loss) on sale of discontinued operations
0.0
0.0
0.6
0.0
Income tax (provision) from discontinued operations
0.0
(5.0
)
(0.1
)
(14.1
)
Income (loss) from discontinued operations, net of tax
0.0
14.4
0.5
40.4
Net Income (loss) attributable to Allscripts Healthcare
Solutions, Inc. stockholders
$16.1
$0.5
$47.1
($27.4
)
Income (loss) from continuing operations per share - basic
$0.13
($0.09
)
$0.35
($0.42
)
Income (loss) from discontinued operations per share - basic
$0.00
$0.09
$0.00
$0.25
Income (loss) per share - basic
$0.13
$0.00
$0.35
($0.17
)
Income (loss) from continuing operations per share - diluted
$0.12
($0.09
)
$0.33
($0.42
)
Income (loss) from discontinued operations per share - diluted
$0.00
$0.09
$0.00
$0.25
Income (loss) per share - diluted
$0.12
$0.00
$0.33
($0.17
)
Weighted average common shares outstanding: Basic
123.9
161.1
133.5
162.1
Diluted
131.4
161.1
142.1
162.1
Three Months Ended September 30, Nine Months Ended
September 30,
2021
2020
2021
2020
(a) Amortization of software development and
acquisition-related assets includes: Amortization of capitalized
software development costs
23.0
22.5
68.8
63.6
Amortization of acquisition-related intangible assets
6.9
8.2
20.6
24.6
Total amortization of software development and acquisition-related
assets
$29.9
$30.7
$89.4
$88.2
(b) Interest expense, net is comprised of the following for
the periods presented: Interest expense
(1.7
)
(4.7
)
(4.1
)
(14.2
)
Interest income
0.1
0.6
0.8
1.4
Non-cash charges to interest expense
(1.8
)
(1.9
)
(5.6
)
(13.4
)
Interest expense, net
($3.4
)
($6.0
)
($8.9
)
($26.2
)
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,
2021
2020
2021
2020
Cash flows from operating activities: Net income (loss)
$16.1
$0.5
$47.1
($27.4
)
Less: Income(loss) from discontinued operations
0.0
14.4
0.5
40.4
Income (loss) from continuing operations
$16.1
($13.9
)
$46.6
($67.8
)
Non-cash adjustments to net income (loss): Depreciation and
amortization
44.3
46.7
133.0
146.0
Non-cash lease expense, net
(0.5
)
0.3
(3.0
)
0.5
Stock-based compensation expense
8.8
8.8
25.9
25.9
Deferred Taxes
(1.6
)
(0.2
)
(1.7
)
2.9
Impairment of assets and long-term investments
6.6
1.2
11.8
1.8
Gain on sale of businesses, net
(8.4
)
0.0
(8.4
)
0.0
Other (income) loss, net
(1.9
)
(2.2
)
(9.5
)
(21.9
)
Total non-cash adjustments to net income (loss)
47.3
54.6
148.1
155.2
Cash impact of changes in operating assets and liabilities: Assets
(8.8
)
33.0
13.1
64.7
Liabilities
2.3
(27.0
)
(25.8
)
(52.1
)
Accrued DOJ settlement
0.0
(15.7
)
0.0
(88.7
)
Total cash impact of changes on operating assets and liabilities
(6.5
)
(9.7
)
(12.7
)
(76.1
)
Net cash provided by (used in) operating activities - Continuing
operations
56.9
31.0
182.0
11.3
Net cash provided by (used in) operating activities - Discontinued
operations
(1.0
)
21.9
(322.5
)
60.6
Net cash provided by (used in) operating activities
55.9
52.9
(140.5
)
71.9
Cash flows from investing activities: Capital expenditures
(1.5
)
(3.0
)
(4.6
)
(7.8
)
Capitalized software
(20.0
)
(20.4
)
(55.5
)
(71.3
)
Sale of businesses and other investments,
net of cash divested, and distributions received
3.3
1.7
7.6
24.9
Purchases of equity securities, other investments and related
intangible assets, net
(2.2
)
(0.1
)
(2.4
)
(3.9
)
Cash provided by (used in) investing activities - Continuing
Operations
(20.4
)
(21.8
)
(54.9
)
(58.1
)
Cash provided by (used in) investing activities - Discontinued
Operations
0.0
(2.3
)
0.0
(6.8
)
Net cash provided by (used in) investing activities
(20.4
)
(24.1
)
(54.9
)
(64.9
)
Cash flows from financing activities: Taxes paid related to net
share settlement of equity awards
0.0
0.0
(13.9
)
(5.5
)
Repayment of Convertible Senior Notes
0.0
(345.0
)
0.0
(352.3
)
Credit facility payments
(50.0
)
(7.5
)
(50.0
)
(175.0
)
Credit facility borrowings, net of issuance costs
0.0
388.6
250.0
673.6
Repurchase of common stock
0.0
(45.6
)
(309.0
)
(55.3
)
Payment of acquisition and other financing obligations
0.0
0.0
(2.4
)
(5.2
)
Net cash provided by (used in) financing activities
(50.0
)
(9.5
)
(125.3
)
80.3
Effect of exchange rate changes on cash and cash equivalents
(0.6
)
0.4
(0.5
)
0.1
Net increase (decrease) in cash and cash equivalents
(15.1
)
19.7
(321.2
)
87.4
Cash, cash equivalents and restricted cash, beginning of period
231.4
205.2
537.5
137.5
Cash, cash equivalents and restricted cash, end of period
$216.3
$224.9
$216.3
$224.9
Table 4 Allscripts Healthcare Solutions, Inc.
Condensed Non-GAAP Financial Information (In millions,
except per share amounts and percentages) (Unaudited)
Three Months Ended September 30, Nine Months Ended
September 30,
2021
2020
2021
2020
Gross profit, as reported
$148.8
$135.1
$450.6
$404.7
Acquisition-related amortization
6.8
8.2
20.6
24.6
Stock-based compensation expense
1.1
1.8
4.2
4.5
Restructuring and other
0.0
(0.1
)
0.0
2.9
Total non-GAAP gross profit
$156.7
$145.0
$475.4
$436.7
Income (loss) from operations, as reported
$12.0
($11.1
)
$35.8
($62.6
)
Acquisition-related amortization
12.7
14.5
38.1
43.9
Stock-based compensation expense
10.4
10.5
32.5
28.9
Restructuring and other
0.0
13.4
(0.0
)
49.6
Total non-GAAP income from operations
$35.1
$27.3
$106.4
$59.8
Net income (loss) attributable to Allscripts Healthcare
Solutions, Inc. stockholders, as reported
$16.1
$0.5
$47.1
($27.4
)
Loss (income) from discontinued operations
0.0
(19.4
)
0.0
(54.5
)
(Gain) on sale of business, net from discontinued operations
0.0
0.0
(0.6
)
0.0
Income tax provision from discontinued operations
0.0
5.0
0.1
14.1
Income (loss) from continuing operations, net of tax
$16.1
($13.9
)
$46.6
($67.8
)
Acquisition-related amortization
12.7
14.5
38.1
43.9
Stock-based compensation expense
10.4
10.5
32.5
28.9
Restructuring and other
0.0
13.4
0.0
49.7
Non-cash charges to interest expense and other
1.2
2.5
(1.2
)
14.9
Tax rate alignment
(5.9
)
(9.6
)
(20.3
)
(21.9
)
Non-GAAP net income attributable to Allscripts Healthcare
Solutions, Inc.
$34.5
$17.4
$95.7
$47.7
Non-GAAP effective tax rate
24
%
24
%
24
%
24
%
Weighted shares outstanding - basic
123.9
161.1
133.5
162.1
Weighted shares outstanding - diluted
131.4
163.3
142.1
163.7
Less effect of convertible note hedges
(2.8
)
0.0
(2.9
)
0.0
Non-GAAP Weighted shares outstanding - diluted
128.6
163.3
139.2
163.7
GAAP Income (loss) from continuing operations per share -
diluted
$0.12
($0.09
)
$0.33
($0.42
)
Non-GAAP Income (loss) per share - diluted
$0.27
$0.11
$0.69
$0.29
Table 5 Allscripts Healthcare Solutions, Inc.
Non-GAAP Financial Information - Adjusted EBITDA (In
millions, except percentages) (Unaudited)
Three Months
Ended September 30, Nine Months Ended September 30,
2021
2020
2021
2020
Net income (loss) from continuing operations, as reported
$16.1
($13.9
)
$46.6
($67.8
)
Plus: Interest expense and other, net (a)
(11.4
)
5.3
(26.8
)
15.5
Depreciation and amortization
44.3
46.7
133.0
146.0
Asset impairment charges
6.6
0.0
11.8
0.0
Equity in net (income) loss of unconsolidated investments
0.2
(0.4
)
0.3
(17.4
)
Tax provision/(benefit)
5.1
(4.0
)
10.0
(6.5
)
EBITDA
$60.9
$33.7
$174.9
$69.8
Plus: Stock-based compensation expense
10.4
10.5
32.5
28.9
Restructuring and other
0.0
13.4
0.0
49.7
Adjusted EBITDA
$71.3
$57.6
$207.4
$148.4
Adjusted EBITDA margin (b)
19.3
%
15.8
%
18.7
%
13.3
%
(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% and 0.875% 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 revenue.
Table 6
Allscripts Healthcare Solutions, Inc. Non-GAAP Financial
Information - Free Cash Flow (In millions) (Unaudited)
Three Months Ended September 30, Nine Months Ended
September 30,
2021
2020
2021
2020
Net cash provided by (used in) operating activities - continuing
operations
$56.9
$31.0
$182.0
$11.3
Cash flows from investing activities: Capital expenditures
(1.5
)
(3.0
)
(4.6
)
(7.8
)
Capitalized software
(20.0
)
(20.4
)
(55.5
)
(71.3
)
Free cash flow
$35.4
$7.6
$121.9
($67.8
)
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 non-GAAP gross profit, income
from operations, Adjusted EBITDA, Adjusted EBITDA margin, effective
income tax rate, net income, diluted earnings per share 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 definitions of non-GAAP financial measures
are presented below:
- Non-GAAP gross profit consists of GAAP gross profit, as
reported, and excludes acquisition-related amortization;
stock-based compensation expense and restructuring and other costs.
Non-GAAP gross margin consists of non-GAAP gross profit as a
percentage of revenue in the applicable period. Reconciliations to
GAAP gross profit are found in Table 4 within this press
release.
- Non-GAAP income from operations consists of GAAP income (loss)
from operations, as reported, and excludes acquisition-related
amortization; stock-based compensation expense; and restructuring
and other costs. Reconciliations to GAAP income (loss) from
operations are found in Table 4 within this press release.
- Adjusted EBITDA is a non-GAAP measure and consists of GAAP net
income/(loss), as reported, and adjusts for: depreciation and
amortization; asset impairment charges; stock-based compensation
expense; restructuring and other costs; interest expense and other,
net; equity in net (income) loss of unconsolidated investments; and
tax provision (benefit). Reconciliations to GAAP net income/(loss)
are found in Table 5 within this press release.
- Adjusted EBITDA margin is a non-GAAP measure that is calculated
by dividing Adjusted EBITDA by revenue. See the reconciliations in
Table 5 within this press release with respect to Adjusted
EBITDA.
- 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 attributable to Allscripts Healthcare
Solutions, Inc. consists of GAAP net income/(loss) from continuing
operations, as reported, and adds back acquisition-related
amortization; stock-based compensation expense; restructuring and
other costs; and non-cash charges to interest expense and other.
Non-GAAP net income also includes a GAAP to non-GAAP tax rate
alignment adjustment. Reconciliations to GAAP net income/(loss)
attributable to Allscripts Healthcare Solutions, Inc. are found in
Table 4 within this press release.
- Non-GAAP diluted weighted shares outstanding consists of
diluted weighted shares outstanding, as reported, less the effect
of the capped call hedges related to the 0.875% Convertible
Notes.
- Non-GAAP diluted earnings per share consist of non-GAAP net
income, as defined above, divided by non-GAAP diluted weighted
shares outstanding, as defined above, during the applicable
period.
- Free cash flow consists of GAAP cash flows from continuing
operations in the applicable period, net of capital expenditures
and capitalized software costs. Reconciliations to GAAP cash flows
from continuing operations are found in Table 6 within this press
release.
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 because 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.
Restructuring and Other Costs. Restructuring and other
costs relate to certain legal proceedings and investigations,
consulting, severance, incentive compensation and other charges
incurred in connection with activities that are considered not
reflective of our core business. Other costs also include non-cash
impairment charges based on management’s assessment of the
likelihood of near-term recovery of the investments’ value.
Allscripts excludes restructuring and other costs, in whole or
in part, 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 include the amortization of the fair
value of the conversion option embedded in the 0.875% Convertible
Notes issued by Allscripts during the fourth quarter of 2019. Other
includes certain other income and expense and impairments on
long-term investments.
Tax Rate Alignment. Tax rate alignment 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, income from
operations, effective income tax rate, net income, diluted earnings
per share, Adjusted EBITDA, Adjusted EBITDA margin and free cash
flow provide useful supplemental information to management and
investors regarding the underlying performance of Allscripts
business operations. Acquisition accounting adjustments,
restructuring, and other costs recorded 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, operating income, net income, diluted earnings per
share, Adjusted EBITDA and/or Adjusted EBITDA margin to measure
achievement under Allscripts stock and cash incentive compensation
plans. Note, however, that non-GAAP gross profit, operating income,
net income, diluted earnings per share, Adjusted EBITDA and
Adjusted EBITDA margin 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 definitions and reconciliations of
non-GAAP financial measures with GAAP financial measures contained
within the attached condensed consolidated financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104006221/en/
Investors: Jenny Gelinas
312-506-1237 Jenny.Gelinas@allscripts.com
Media: Tom Lynch 312-386-6765
tom.lynch@allscripts.com
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