We recently reiterated our ‘Neutral’ rating on Allscripts-Misys Healthcare Solutions, Inc. (MDRX) with a target price of $20 based on a P/E of approximately 29.0x our fiscal 2011 EPS estimate of 69 cents. The company’s results for the third quarter fiscal 2010 were mixed.
Third quarter earnings per share of 14 cents were in line with both the Zacks Consensus Estimate and the year-ago earnings per share. However, total revenues in the third quarter increased 11.9% year-over-year to $179.9 million. Non-GAAP revenues in the reported quarter increased 16.2% year-over-year to $180.4 million. Non-GAAP revenues in the third quarter of fiscal 2010 included a deferred revenue adjustment.
Non-GAAP revenues in the third quarter of fiscal 2009 included a deferred revenue adjustment and elimination of prepackaged medications revenue that the company disposed off in March 2009.
Growth was registered across all business segments. Maintenance sales increased 10.7% year-over-year to $62.1 million. Transaction processing and other revenues increased 6.6% year-over-year to $56.3 million. System sales increased 60.9% year-over-year to $44.1 million. Professional services revenues increased 9.4% year-over-year to $17.4 million.
Allscripts reported total bookings of $105.5 million in the third quarter, an increase of 25% year over year.
Gross margin in the third quarter increased 470 basis points (bps) year-over-year to 56.5%. Non-GAAP gross margin increased 210 bps year-over-year to 56.6%. Selling, general and administrative (SG&A) expenses, as a percentage of sales, increased 70 bps year-over-year to 30.4%. Research and development (R&D) expenses as a percentage of sales increased 80 bps year-over-year to 7.0%.
Higher gross margin offset an increase in operating expenses and resulted in a higher operating margin that increased 350 bps year-over-year to 17.7%.
Libertyville, IL-based Allscripts is a leading provider of clinical software and information solutions meant for physicians. In October 2008, the company merged with Misys Plc, a global applications software and services company, to form Allscripts−Misys Healthcare Solutions. Allscripts faces strong competition from Cerner Corp. (CERN), Merge Healthcare Inc. (MRGE), Quality Systems Inc. (QSII) and MedAssets Inc. (MDAS).
Read the full analyst report on “MDRX”
Read the full analyst report on “CERN”
Read the full analyst report on “MRGE”
Read the full analyst report on “QSII”
Read the full analyst report on “MDAS”
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