Why Is AllScripts (MDRX) Down 17.1% Since Last Earnings Report?
A month has gone by since the last earnings report for AllScripts Healthcare (MDRX). Shares have lost about 17.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is AllScripts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Allscripts’ Q4 Earnings Miss Estimates, Bookings Rise Y/Y
Allscripts reported fourth-quarter 2018 adjusted earnings per share (EPS) of 20 cents, which missed the Zacks Consensus Estimate by a penny. However, the bottom line improved 11.1% on a year-over-year basis.
On a non-GAAP basis, revenues totaled $538.4 million, which fell short of the Zacks Consensus Estimate by 4.5%. The top line also inched down 1.5% year over year. On a reported basis, revenues amounted to $442.3 million in the quarter, reflecting a 1.4% increase year over year.
Bookings came in at $531 million, significantly up by 69.1% from the prior-year quarter’s tally.
Segment Details
Software delivery, Support and Maintenance
In the quarter under review, revenues at the segment grossed $289.1 million on a reported basis, up 5.3% from the year-ago quarter's tally.
Client Services
At this segment, revenues totaled $153.2 million, down 5.4% from the year-ago quarter's figure.
Margins
Gross profit in the fourth quarter was $188.1 million, up 6.8% from the year-ago quarter's level. As a percentage of revenues, gross margin was 42.5%, up 210 basis points (bps) from the year-ago figure.
Adjusted gross profit amounted to $253.5 million, down 2.9% year over year. Adjusted gross margin was 47.1%, down 70 bps from the prior-year quarter.
Adjusted operating income in the quarter was $68.1 million, down 10% year over year. Adjusted operating margin was 12.6%, as a percentage of revenues.
Guidance
For 2019, adjusted EPS are expected at the lower end of 65-70 cents.
For the first quarter of 2019, adjusted revenues are expected between $430 million and $440 million.
Full-year bookings are expected between $900 million and $1 billion.
Note: The EPS data mentioned in the text of this section differs from the rest of report due to the difference in calculation or consideration of one-time items.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.5% due to these changes.
VGM Scores
Currently, AllScripts has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise AllScripts has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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