Allscripts has sold its EPSi business to Strata Decision Technology for $365 million, the company announced during its second-quarter earnings call Thursday.
EPSi is a provider of financial decision support and planning tools for hospitals and health systems.
The transaction is expected to close later in the third quarter once customary closing conditions are satisfied.
Rick Poulton, Allscripts' president and chief financial officer, said the agreement is a triple win for EPSi customers and Allscripts shareholders. The deal enables Allscripts to efficiently recirculate capital, increase its focus on its core businesses and bring its EPSi customers the benefit of continued investment under new and very strong ownership, he said.
The health IT company reported second-quarter 2020 revenue was $406 million, down 9% from revenue of $445 million in the second quarter of 2019. Revenue in the second quarter was down $11 million from the first quarter as the COVID-19 pandemic continued to have an impact on patient volumes, Poulton said during the call with investors Thursday.
Allscripts' second-quarter revenue beat Wall Street estimates as analysts forecast revenue of $399 million.
Bookings were $188 million in the second quarter of 2020. This result compares with $276 million in the second quarter of 2019. Contract revenue backlog totaled $4.4 billion as of June 30.
The sectors of Allscripts' business most impacted by the COVID-19 pandemic are ambulatory revenue cycle management services, its payment clearinghouse and some transactional service lines, he said.
The Chicago-based company reported bookings in the second quarter of $188 million, down 32% compared to $276 million to the same period a year ago.
The company's contract revenue backlog totaled $4.4 billion as of June 30.
"Our second quarter results showed resilience as Allscripts and our clients continued to manage through the COVID-19 pandemic,” said Allscripts CEO Paul Black. "We leveraged both new and existing innovative solutions to support our clients and improve patient outcomes during this challenging time."
Earlier this month, Allscripts announced an extension of its partnership with Microsoft to use the tech giant's cloud technology to enhance its electronic health record (EHR) software.
The new five-year strategic partnership will support Allscripts’ cloud-based Sunrise EHR, making Microsoft the cloud provider for the solution and opening up co-innovation opportunities with a focus on developing smarter, more scalable technology.
The company also has signed a deal with the U.S. Department of State on a major electronic health record contract.
But Allscripts executive also said they are focused on capabilities beyond the core EHR business. Poulton noted that the company's data, analytics and care coordination segments provide multiple streams of high margin growth opportunities.
During the ongoing COVID-19 pandemic, Allscripts also helped many of its provider clients transition to telehealth services.
"Our telehealth offerings continue to see broad adoption," Black said noting that Allscripts' provider clients have conducted 900,000 telehealth visits.
"It is a revenue opportunity for us. In many cases, as we talk to our clients, 70% of their visits on the ambulatory side went to virtual and that's up from 15% of visits before [the pandemic]," Black said. "Many consumers are going to demand that virtual be the primary interaction with their doctor."
More details on Allscripts' Q2 performance
Allscripts reported a second-quarter loss of $8 million compared to a loss of $150 million in the second quarter of 2019.
On a per-share basis, the company said it had a loss of 5 cents in the second quarter of 2020 compared with earnings loss per share of 90 cents in the same period a year ago.
Earnings, adjusted for non-recurring costs and stock option expense, came to 18 cents per share compared to 17 cents in the second quarter of 2019. That topped Street estimates of 12 cents per share for the quarter.
Allscripts hired a financial advisory firm to develop a margin improvement plan to boost its financial performance.
The company has set a long-term target goal of achieving 18% to 20% adjusted EBITDA margin for the core clinical and financial solutions segment of its business. Allscripts also set a goal of achieving an 30% adjusted EBITDA margin for the data, analytics and care coordination segment.
Allscripts' adjusted EBITDA margins were 19% in the quarter, compared to 17% in the second quarter of 2019.
"We remain focused on improving our cost structure to reflect the current revenue environment and we were successful in expanding adjusted EBITDA margins across our business. We expect to remain disciplined around costs while also delivering for our clients as we benefit from a nimble operating model and the investments we have made across our portfolio," Black said.