Allscripts results reflect ARRA stimulus
Recession? What recession?
Allscripts-Misys Healthcare Solutions reported its second quarter financial results Sunday, showing significant improvements in both revenue and income over the same period a year ago. For the quarter ending Nov. 30, the Chicago-based EHR vendor recorded revenues of nearly $170 million, a 30-percent hike over the $128.6 million in revenues for the same period last year.
The company made $15.8 million in net income for the quarter, turning around a $6 million loss for the same period last year. Non-GAAP net income increased 45 percent, from $16.6 million a year ago to $24 million this year.
Bookings for the company increased 16 percent over the same period, to $93.8 million. Company officials said they expect the news to get better in subsequent quarters.
"We believe that 2010 will be the 'Year of the EHR' in which we expect to see significant acceleration in the adoption and utilization of healthcare information technology to improve quality and reduce cost," said Glen Tullman, Allscripts CEO. "This is a once-in-a-lifetime market opportunity, driven by the American Recovery and Reinvestment Act."
ARRA includes incentives for physicians and hospitals that adopt electronic health records and use them in a meaningful way. The incentives, which start in 2011, could reach $44,000 for "eligible providers" such as physicians and a minimum of $2 million for hospitals.
Some industry insiders had cautioned that the government incentives might not spark the uptick that the Obama administration is looking for, since "meaningful use" had yet to be defined. That hurdle was cleared on Dec. 30, 2009, when the Centers for Medicare and Medicaid Services issued a proposed regulation with clear definitions and the measures needed to prove providers were meeting them. (A list of 25 Stage 1 criteria for eligible providers may be found here. The 23 Stage 1 criteria for eligible hospitals may be found here.)
Other experts, such as Piper Jaffrey analyst Sean Wieland, say the incentives have already boosted adoption. The second half of 2010 and all of 2011 are likely to show a large number of EHR deals, Wieland wrote last week. Deals are "picking up pace and might be ahead of schedule – especially with bigger hospitals."
While Allscripts has struck a confident note in the marketplace over the past year, the strong showing seemed to catch even its top officials a little off-guard.
"Second quarter results exceeded our plan," said Bill Davis, the company's chief financial officer. "We are especially pleased with our strong bookings in the first half of our fiscal year. ... In addition, we benefited from an increase in gross and operating margins, while at the same time investing for future stimulus-driven industry growth."
Tullman apparently believes there's market share to be won as late adopters enter the fray, seeking the government incentives. "Looking ahead to the second half of our fiscal 2010, we will accelerate investment spending to further enhance Allscripts' position," he said.