Allscripts misses on revenues, earnings

Company to close 12 offices, one warehouse
By Bernie Monegain
03:04 PM
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Allscripts President and CEO Paul Black condensed it all in one sentence: "Our fourth quarter and 2012 financial results did not meet our expectations.”

The company tallied a net loss of $24.3 million for the fourth quarter and a total net loss of $1.2 million for all of 2012. Fourth quarter revenue of $350.9 million was down 9.6 percent compared with the same quarter in 2011.

The Feb. 19 earnings call was Black’s first since he was named CEO of Allscripts – 62 days ago, he pointed out.

[See also: Tullman out at Allscripts, Black in.]

Black, a former Cerner executive, succeeded Glen Tullman in the CEO position. Tullman resigned after several tumultuous months and a shake up at the company.

Black reported a fourth-quarter loss on Feb. 19. However, an increase in bookings over the third quarter provided a bright spot.

Bookings of $180.7 million compared with $161.9 million in the third quarter of 2012 and with bookings of $327.4 million in the fourth quarter of 2011.

It was not enough to instill confidence in research analysts at Piper Jaffrey.

“On the surface the new management team seemed to give the “all clear” sign, with bookings up sequentially, costs being rationalized, and new products being sold to eager clients,” Piper Jaffrey analysts Sean Wieland and Mohan Naidu wrote in a brief this morning. “We also are rooting for a comeback, but we think it’s too soon.”

The bookings growth was driven by a higher SaaS mix, they noted. The “lack of guidance and inability to commit to revenue growth in 2013 gives us pause,” they wrote. “We think there is much work to be done in consolidating legacy products and improving customer satisfaction.”

[See also: Clients seek swift Allscripts turnaround.]

During the conference call with investors and analysts, Black said he had been meeting with clients. “I have been actively engaged with our clients and team members and we have taken initial actions to focus the company on attaining results for our clients and shareholders,” Black said.

Black also announced some belt-tightening measures, including closing 12 offices and one warehouse.

Fourth quarter result details on next page.

Allscripts released these fourth quarter details:

  • Bookings(1) of $180.7 million.  This compares with bookings of $327.4 million in the fourth quarter of 2011 and $161.9 million in the third quarter of 2012.
  • GAAP revenue of $350.9 million and non-GAAP revenue of $368.0 million.  This compares with GAAP and non-GAAP revenue of $388.2 and $389.2 million, respectively, in the fourth quarter of 2011. 
  • GAAP gross profit for the three months ended December 31, 2012, was $136.3 million.  This compares with GAAP gross profit of $175.9 million in the fourth quarter of 2011. 
  • Non-GAAP gross profit was $153.4 million for the three months ended December 31, 2012, or 41.7 percent of total non-GAAP revenue.  This compares with $176.9 million or 45.5 percent of non-GAAP revenue for the prior-year period.
  • GAAP operating loss for the three months ended December 31, 2012, including certain non-cash and one-time charges, was $26.6 million.  This compares with GAAP operating income of $45.6 million in the fourth quarter of 2011. 
  • Non-GAAP operating income, excluding certain non-cash and one-time charges, was $30.7 million for three months ended December 31, 2012, or 8.3 percent of total non-GAAP revenue.  This compares with $78.6 million or 20.2 percent of non-GAAP revenue for the prior year.
  • GAAP net loss for the three months ended December 31, 2012, including certain non-cash and one-time charges, was $24.3 million and GAAP loss per share was $0.14.  This compares with net income of $26.0 million and diluted earnings per share of $0.14 in the fourth quarter of 2011.
  • Non-GAAP net income, after adjustments for certain non-cash and one-time charges, was $28.1 million resulting in non-GAAP diluted earnings per share of $0.16.  This compares with $47.6 million and $0.25, respectively, in the fourth quarter of 2011.
  • Adjusted EBITDA was $53.6 million for three months ended December 31, 2012, or 14.5 percent of total non-GAAP revenue.  This compares with $96.0 million or 24.6 percent of non-GAAP revenue for the prior year period.

Fourth quarter 2012 GAAP results include the following items, all on a pre-tax basis:

  • A non-recurring charge against revenue of $16.8 million.  This provision reflects a non-recurring revenue deferral related to clients who have long-aged accounts receivable balances.
  • Acquisition-related amortization expense of $15.3 million.
  • Stock-based compensation expense of $12.7 million.
  • Other non-recurring expenses totaling $12.2 million.