Allscripts' third-quarter revenues rise up 12%

Allscripts-Misys Healthcare Solutions, Inc. (Allscripts or the Company) today announced its financial results for the three and nine months ended February 28, 2010.

Third Quarter Highlights:

• Total revenue of $179.9 million; non-GAAP revenue of $180.4 million
• Earnings per share of $0.12 cents; non-GAAP earnings per share of $0.17 cents
• Net income of $18.5 million; non-GAAP net income of $25.6 million  
• Bookings of $105.5 million, a 25% increase over the third quarter of 2009
• Systems revenue of $44.1 million, up 61% year-over-year
• Gross margin of 56.5% versus 51.8% in the same period last year
• Cash flow from operating activities of $46.5 million

"Our organization achieved exceptional results in the third quarter, led by record sales," said Glen Tullman, Chief Executive Officer of Allscripts.  "Physicians are increasingly embracing the Electronic Health Record and Allscripts is capitalizing today on what we believe will be a rapid industry transformation.  We continue to lead through innovation and a comprehensive solutions portfolio designed to provide healthcare information and connectivity to physicians.  This quarter was particularly notable for the strength we experienced across all segments of our business."

Third Quarter Results

Total revenue for the three months ended February 28, 2010 was $179.9 million, compared to $160.7 million for the same period last year, a 12% increase.  Non-GAAP revenue for the three months ended February 28, 2010 was $180.4 million, compared to non-GAAP revenue of $155.3 million for the same period last year, a 16% increase.  

Gross margin percentage was 56.5% for the third quarter of fiscal 2010, compared to 51.8% for the same period last year. Based on non-GAAP revenue and non-GAAP gross profit for each respective quarter, non-GAAP gross margin percentage was 56.6% for the third quarter of fiscal 2010, compared to 54.5% during the third quarter of fiscal 2009.  

Net income for the three months ended February 28, 2010 was $18.5 million compared to net income of $13.3 million for the same period last year, representing an increase of 39%.  Earnings for the three months ended February 28, 2010 were $0.12 cents per diluted share versus $0.09 cents in the same period last year.

Non-GAAP net income for the three months ended February 28, 2010 was $25.6 million, compared to non-GAAP net income of $21.7 million for the same period last year, representing an increase of 18%.  Non-GAAP earnings for the three months ended February 28, 2010 were $0.17 cents per diluted share, versus $0.14 cents for the same period last year.

As of February 28, 2010 the Company had cash and marketable securities of $117.7 million.

Nine Month Results

Total revenue for the nine months ended February 28, 2010 was $514.2 million, compared to $382.1 million for the nine months ended February 28, 2009.  Non-GAAP revenue for the nine months ended February 28, 2010 was $518.7 million, compared to non-GAAP revenue of $483.4 million for the same period last year.

Gross margin percentage was 55.7% for the nine months ended February 28, 2010 compared to 52.4% for the comparable period a year ago. Based on non-GAAP revenue and non-GAAP gross profit for each respective nine month period, non-GAAP gross margin percentage was 56.1% for the first nine months of fiscal 2010, compared to 54.5% during the first nine months of fiscal 2009.

Net income for the nine months ended February 28, 2010 was $47.2 million compared to net income of $12.7 million for the same period last year. Earnings for the nine months ended February 28, 2010 were $0.31 cents per diluted share.

Non-GAAP net income for the nine months ended February 28, 2010 was $71.7 million compared to non-GAAP net income of $53.2 million for the same period last year.  Non-GAAP earnings for the nine months ended February 28, 2010 were $0.48 cents per diluted share.

"We reported strong financial results across all of our key metrics in our fiscal third quarter," said Bill Davis, Chief Financial Officer of Allscripts. "Bookings of $105.5 million represents 25 percent growth over the same quarter a year ago.  We also experienced 61 percent growth in systems revenue, a notable acceleration versus prior quarters.  Operating margins expanded as we benefit from the natural leverage of our high recurring revenue business model.  We also had an outstanding quarter of cash generation, as cash flow from operations totaled $46.5 million."

Business Outlook

Allscripts is increasing its revenue guidance to a range of $700-$705 million for fiscal year 2010.  The Company is also raising net income guidance for fiscal 2010 to a range of $67.0-$68.5 million, which equates to diluted earnings per share of $0.44-$0.45.    

On a non-GAAP basis, Allscripts is raising fiscal 2010 non-GAAP net income guidance to a range of $97.0-$98.5 million, which equates to non-GAAP diluted earnings per share of $0.64-$0.65 cents.  Allscripts non-GAAP net income guidance assumes the following adjustments from GAAP net income: approximately $22.6 million of annual acquisition-related amortization; $16.5 million in stock-based compensation expense; $4.9 million in deferred revenue adjustments; and $5.3 million of transaction-related expense; all on a pretax basis.  Allscripts 2010 non-GAAP net income and diluted earnings per share guidance assumes a 39% tax rate.

Mr. Tullman concluded, "I am very proud of our third quarter performance.  Looking forward, Allscripts is well positioned as a leader in the healthcare IT industry.  We are at the beginning of what we believe to be the single fastest transformation of an industry in history.  We realize the time is now to rapidly move to a connected system of health and we are partnering with our clients to make that vision a reality."