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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

OR

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-35547

 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

36-4392754

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

222 Merchandise Mart, Suite 2024

Chicago, IL 60654

(Address of Principal Executive Offices, Zip Code)

(800) 334-8534

(Registrant's Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Stock, par value $0.01 per share

MDRX

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

☒

 

Accelerated filer

 

☐

 

 

 

 

Non-accelerated filer

 

☐

 

Smaller reporting company

 

☐

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2022, there were 109,259,776 shares of the registrant's $0.01 par value common stock outstanding.

 

1

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

FORM 10-Q

For the Fiscal Quarter Ended September 30, 2022

TABLE OF CONTENTS

 

 

 

 

 

PAGE

PART I. FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements (unaudited)

 

3

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

29

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

38

Item 4.

 

Controls and Procedures

 

38

PART II. OTHER INFORMATION

 

39

Item 1.

 

Legal Proceedings

 

39

Item 1A.

 

Risk Factors

 

39

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

Item 6.

 

Exhibits

 

40

SIGNATURES

 

41

 

 

 

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

 

September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

492,597

 

 

$

132,517

 

Restricted cash

 

 

1,307

 

 

 

1,308

 

Accounts receivable, net of allowance of $12,868 and $13,360 as of
   September 30, 2022 and December 31, 2021, respectively

 

 

169,029

 

 

 

171,622

 

Contract assets, net of allowance of $564 and $576 as of September 30, 2022 and December 31, 2021, respectively

 

 

65,453

 

 

 

63,429

 

Prepaid expenses and other current assets

 

 

74,384

 

 

 

60,511

 

Current assets attributable to discontinued operations

 

 

8,000

 

 

 

331,955

 

Total current assets

 

 

810,770

 

 

 

761,342

 

Fixed assets, net

 

 

11,713

 

 

 

9,819

 

Software development costs, net

 

 

78,103

 

 

 

74,688

 

Intangible assets, net

 

 

145,255

 

 

 

149,690

 

Goodwill

 

 

523,927

 

 

 

506,607

 

Deferred taxes, net

 

 

6

 

 

 

0

 

Contract assets - long-term, net of allowance of $1,201 and $1,534 as of September 30, 2022 and December 31, 2021, respectively

 

 

27,957

 

 

 

28,174

 

Right-of-use assets - operating leases

 

 

14,520

 

 

 

18,324

 

Other assets

 

 

78,408

 

 

 

83,429

 

Long-term assets attributable to discontinued operations

 

 

0

 

 

 

793,156

 

Total assets

 

$

1,690,659

 

 

$

2,425,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)

 

September 30, 2022

 

 

December 31, 2021

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

12,609

 

 

$

5,281

 

Accrued expenses

 

 

82,917

 

 

 

54,518

 

Accrued compensation and benefits

 

 

33,857

 

 

 

31,055

 

Deferred revenue

 

 

98,930

 

 

 

120,748

 

Current operating lease liabilities

 

 

6,166

 

 

 

6,133

 

Current liabilities attributable to discontinued operations

 

 

18,612

 

 

 

329,347

 

Total current liabilities

 

 

253,091

 

 

 

547,082

 

Long-term debt

 

 

200,326

 

 

 

350,062

 

Deferred revenue

 

 

3,060

 

 

 

1,839

 

Deferred taxes, net

 

 

8,082

 

 

 

16,625

 

Long-term operating lease liabilities

 

 

12,315

 

 

 

16,754

 

Other liabilities

 

 

36,762

 

 

 

33,823

 

Long-term liabilities attributable to discontinued operations

 

 

0

 

 

 

50,906

 

Total liabilities

 

 

513,636

 

 

 

1,017,091

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock: $0.01 par value, 1,000 shares authorized,
   no shares issued and outstanding as of September 30, 2022 and December 31, 2021

 

 

0

 

 

 

0

 

Common stock: $0.01 par value, 349,000 shares authorized as of September 30, 2022
   and December 31, 2021; 279,600 and 109,260 shares issued and outstanding
   as of September 30, 2022, respectively; 276,705 and 116,114 shares issued
   and outstanding as of December 31, 2021, respectively

 

 

2,794

 

 

 

2,766

 

Treasury stock: at cost, 170,340 and 160,591 shares as of September 30, 2022 and
   December 31, 2021, respectively

 

 

(1,498,836

)

 

 

(1,321,805

)

Additional paid-in capital

 

 

1,923,559

 

 

 

1,962,386

 

Retained earnings

 

 

753,392

 

 

 

767,556

 

Accumulated other comprehensive loss

 

 

(3,886

)

 

 

(2,765

)

Total stockholders’ equity

 

 

1,177,023

 

 

 

1,408,138

 

Total liabilities and stockholders’ equity

 

$

1,690,659

 

 

$

2,425,229

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

(In thousands, except per share amounts)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Provider

 

$

122,811

 

 

$

118,179

 

 

$

360,415

 

 

$

345,253

 

 

Payer & Life Sciences

 

 

29,111

 

 

 

26,489

 

 

 

85,077

 

 

 

74,273

 

 

Total revenue

 

 

151,922

 

 

 

144,668

 

 

 

445,492

 

 

 

419,526

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Provider

 

 

57,252

 

 

 

61,606

 

 

 

172,595

 

 

 

180,566

 

 

Payer & Life Sciences

 

 

11,234

 

 

 

13,422

 

 

 

36,498

 

 

 

37,984

 

 

Total cost of revenue

 

 

68,486

 

 

 

75,028

 

 

 

209,093

 

 

 

218,550

 

 

    Gross profit

 

 

83,436

 

 

 

69,640

 

 

 

236,399

 

 

 

200,976

 

 

Selling, general and administrative expenses

 

 

32,518

 

 

 

27,392

 

 

 

133,683

 

 

 

87,680

 

 

Research and development

 

 

23,681

 

 

 

21,042

 

 

 

69,851

 

 

 

62,644

 

 

Asset impairment charges

 

 

0

 

 

 

359

 

 

 

0

 

 

 

531

 

 

Amortization of intangible and acquisition-related assets

 

 

2,236

 

 

 

2,363

 

 

 

6,648

 

 

 

7,090

 

 

Income from operations

 

 

25,001

 

 

 

18,484

 

 

 

26,217

 

 

 

43,031

 

 

Interest expense

 

 

(1,246

)

 

 

(3,617

)

 

 

(5,269

)

 

 

(9,709

)

 

Other income, net

 

 

1,655

 

 

 

4,493

 

 

 

3,800

 

 

 

21,819

 

 

Gain on sale of businesses, net

 

 

0

 

 

 

8,363

 

 

 

0

 

 

 

8,363

 

 

Equity in net loss of unconsolidated investments

 

 

(617

)

 

 

(257

)

 

 

(1,222

)

 

 

(321

)

 

Income from continuing operations before income taxes

 

 

24,793

 

 

 

27,466

 

 

 

23,526

 

 

 

63,183

 

 

Income tax (provision) benefit

 

 

(13,868

)

 

 

(7,190

)

 

 

9,132

 

 

 

(12,464

)

 

Income from continuing operations, net of tax

 

 

10,925

 

 

 

20,276

 

 

 

32,658

 

 

 

50,719

 

 

Loss from discontinued operations

 

 

(434

)

 

 

(6,187

)

 

 

(9,252

)

 

 

(6,545

)

 

Gain on sale of discontinued operations

 

 

5,174

 

 

 

0

 

 

 

7,939

 

 

 

647

 

 

Income tax effect on discontinued operations

 

 

(1,137

)

 

 

2,091

 

 

 

(57,986

)

 

 

2,342

 

 

Income (loss) from discontinued operations, net of tax

 

 

3,603

 

 

 

(4,096

)

 

 

(59,299

)

 

 

(3,556

)

 

Net income (loss)

 

$

14,528

 

 

$

16,180

 

 

$

(26,641

)

 

$

47,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.10

 

 

$

0.16

 

 

$

0.29

 

 

$

0.38

 

 

Discontinued operations

 

 

0.03

 

 

 

(0.03

)

 

 

(0.52

)

 

 

(0.03

)

 

Net income (loss) per share - Basic

 

$

0.13

 

 

$

0.13

 

 

$

(0.23

)

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.09

 

 

$

0.15

 

 

$

0.25

 

 

$

0.36

 

 

Discontinued operations

 

 

0.03

 

 

 

(0.03

)

 

 

(0.44

)

 

 

(0.03

)

 

Net income (loss) per share - Diluted

 

$

0.12

 

 

$

0.12

 

 

$

(0.19

)

 

$

0.33

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Net income (loss)

 

$

14,528

 

 

$

16,180

 

 

$

(26,641

)

 

$

47,163

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

59

 

 

 

(805

)

 

 

(808

)

 

 

(285

)

 

Change in fair value of derivatives qualifying as cash flow hedges

 

 

(16

)

 

 

0

 

 

 

(420

)

 

 

(1,509

)

 

Other comprehensive income (loss) before income tax benefit

 

 

43

 

 

 

(805

)

 

 

(1,228

)

 

 

(1,794

)

 

Income tax benefit related to items in other comprehensive income

 

 

5

 

 

 

0

 

 

 

107

 

 

 

390

 

 

Total other comprehensive income (loss)

 

 

48

 

 

 

(805

)

 

 

(1,121

)

 

 

(1,404

)

 

Comprehensive income (loss)

 

$

14,576

 

 

$

15,375

 

 

$

(27,762

)

 

$

45,759

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

279,175

 

 

 

276,668

 

 

 

276,705

 

 

 

274,558

 

Common stock issued under stock compensation plans,
    net of shares withheld for employee taxes

 

 

425

 

 

 

29

 

 

 

2,895

 

 

 

2,139

 

Balance at end of period

 

 

279,600

 

 

 

276,697

 

 

 

279,600

 

 

 

276,697

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,790

 

 

$

2,766

 

 

$

2,766

 

 

$

2,745

 

Common stock issued under stock compensation plans,
    net of shares withheld for employee taxes

 

 

4

 

 

 

0

 

 

 

28

 

 

 

21

 

Balance at end of period

 

$

2,794

 

 

$

2,766

 

 

$

2,794

 

 

$

2,766

 

Number of treasury stock shares

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(168,383

)

 

 

(151,657

)

 

 

(160,591

)

 

 

(134,616

)

Issuance of treasury stock

 

 

0

 

 

 

0

 

 

 

0

 

 

 

33

 

Purchase of treasury stock

 

 

(1,957

)

 

 

0

 

 

 

(9,749

)

 

 

(6,397

)

Accelerated share repurchase program

 

 

0

 

 

 

(2,469

)

 

 

0

 

 

 

(13,146

)

Balance at end of period

 

 

(170,340

)

 

 

(