Allscripts withdraws financial outlook for 2020 due to uncertainty from COVID-19 pandemic

Allscripts' first-quarter revenue was down $7 million to $10 million due to the impact of lower patient volumes for its provider clients amid the COVID-19 pandemic.

The electronic health record (EHR) vendor reported revenue of $417 million in the first quarter of 2020, down 3% from revenue of $432 million during the same quarter last year.

Allscripts' customers also delayed purchase decisions, which drove lower non-recurring revenue for the company, said Allscripts President and Chief Financial Officer Rick Poulton during the company's first-quarter 2020 earnings call Thursday.

Allscripts' client base includes hospitals, physician practices, post-acute facilities, payers, laboratories and pharmaceutical companies.

Poulson said 82% of the company's revenue comes from recurring revenue, representing "one of the most diverse revenue streams in the healthcare IT market."

"We have a resilient business model, but of course we’re not immune to the impact of COVID on patient volumes and client priorities," he said.

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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.

The Chicago-based company reported bookings in the first quarter of $205 million, down 28% compared to $286 million to the same period a year ago. The company noted that its first-quarter 2020 bookings were above the high end of its outlook range.

The company's contract revenue backlog totaled $4.5 billion as of March 31.

Allscripts reported a first-quarter loss of $20 million compared to a loss of $8 million in the first quarter of 2019.

On a per-share basis, the company said it had a loss of 13 cents in the first quarter of 2020 compared with earnings loss per share of 4 cents in the same period a year ago.  Earnings, adjusted for non-recurring costs and stock option expense, came to 9 cents per share, falling short of Wall Street expectations. Analysts forecasted quarterly earnings of 15 cents per share.

“Our first-quarter results show continued strength in new bookings, which reflects the confidence our clients have in our solutions," said Allscripts CEO Paul Black.

"The COVID-19 pandemic has created challenges for our clients and thus for our business. The pandemic accentuates the importance of mission-critical EMR solutions, and the value of actionable real-time data and analytics to better care for a new cohort of critically ill patients," Black said.

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Looking ahead, Black said Allscripts will likely be impacted as its clients focus on responding to the pandemic and caring for their patients.

"However, we believe Allscripts’ agility and prior strategic platform investments prepare us to handle the challenges resulting from this global uncertainty. We fully intend to align with existing and new clients to capitalize on opportunities to deploy value-added solutions. Allscripts has multiple competitive advantages, including a robust solutions portfolio, a diversified global client base, and high recurring revenues, positioning us well as we chart the path back to a more normalized operating environment," he said.

Given the current uncertainty presented by the COVID-19 pandemic, Allscripts withdrew its prior financial outlook for full-year 2020.

Allscripts' adjusted EBITDA margins were 14% in the quarter, compared to 17% in the first quarter of 2019.

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In its fourth-quarter and year-end 2019 earnings call, Allscripts executives said they expected revenue to be negatively impacted in 2020 by approximately $50 million in year-over-year client attrition from acute care clients.

"Were disappointed in the margin performance for the quarter," Poulson said. "We were slow to right-size the cost structure for the client attrition."

Allscripts has hired a financial advisory firm to develop a margin improvement plan to boost its financial performance, Poulson said.

The company has taken a number of steps to support its provider clients during the pandemic, including helping organizations quickly implement telehealth solutions through its FollowMyHealth patient engagement platform, Black said.

Allscripts' Veradigm business is a founding collaborator of a consortium of healthcare companies that launched the COVID-19 Research Database. The database is a repository of HIPAA-compliant, de-identified and limited patient-level data sets that are intended to be made available to public health and policy researchers, enabling them to extract insights to help combat the COVID-19 pandemic.