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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, 2020

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 October 26, 2020, there were 157,981,681 shares of the registrant's $0.01 par value common stock outstanding.

 


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

FORM 10-Q

For the Fiscal Quarter Ended September 30, 2020

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

 

41

Item 4.

 

Controls and Procedures

 

41

PART II. OTHER INFORMATION

 

42

Item 1.

 

Legal Proceedings

 

42

Item 1A.

 

Risk Factors

 

42

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

42

Item 6.

 

Exhibits

 

43

SIGNATURES

 

44

 

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, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

218,701

 

 

$

129,668

 

Restricted cash

 

 

6,209

 

 

 

7,871

 

Accounts receivable, net of allowance of $37,025 and $23,879 as of

   September 30, 2020 and December 31, 2019, respectively

 

 

381,888

 

 

 

459,751

 

Contract assets, net of allowance of $1,068 and $0 as of September 30, 2020 and December 31, 2019, respectively

 

 

101,333

 

 

 

95,982

 

Prepaid expenses and other current assets

 

 

135,869

 

 

 

147,990

 

Assets held for sale

 

 

104,782

 

 

 

0

 

Total current assets

 

 

948,782

 

 

 

841,262

 

Fixed assets, net

 

 

70,027

 

 

 

88,339

 

Software development costs, net

 

 

241,656

 

 

 

243,929

 

Intangible assets, net

 

 

329,011

 

 

 

374,142

 

Goodwill

 

 

1,287,197

 

 

 

1,362,017

 

Deferred taxes, net

 

 

5,881

 

 

 

5,704

 

Contract assets - long-term, net of allowance of $4,273 and $0 as of September 30, 2020 and December 31, 2019, respectively

 

 

42,805

 

 

 

67,559

 

Right-of-use assets - operating leases

 

 

102,217

 

 

 

98,020

 

Other assets

 

 

118,689

 

 

 

124,767

 

Total assets

 

$

3,146,265

 

 

$

3,205,739

 


3


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)

 

September 30, 2020

 

 

December 31, 2019

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

53,627

 

 

$

104,014

 

Accrued expenses

 

 

166,180

 

 

 

270,662

 

Accrued compensation and benefits

 

 

97,515

 

 

 

68,569

 

Deferred revenue

 

 

339,239

 

 

 

379,843

 

Current maturities of long-term debt

 

 

48,293

 

 

 

364,465

 

Current operating lease liabilities

 

 

22,317

 

 

 

23,137

 

Liabilities related to assets held for sale

 

 

17,479

 

 

 

0

 

Total current liabilities

 

 

744,650

 

 

 

1,210,690

 

Long-term debt

 

 

1,026,048

 

 

 

551,004

 

Deferred revenue

 

 

11,570

 

 

 

12,337

 

Deferred taxes, net

 

 

24,534

 

 

 

21,038

 

Long-term operating lease liabilities

 

 

98,866

 

 

 

95,162

 

Other liabilities

 

 

32,210

 

 

 

30,320

 

Total liabilities

 

 

1,937,878

 

 

 

1,920,551

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock: $0.01 par value, 1,000 shares authorized,

   no shares issued and outstanding as of September 30, 2020 and December 31, 2019

 

 

0

 

 

 

0

 

Common stock: $0.01 par value, 349,000 shares authorized as of September 30, 2020

   and December 31, 2019; 274,471 and 157,978 shares issued and outstanding

   as of September 30, 2020, respectively; 272,609 and 162,475 shares issued

   and outstanding as of December 31, 2019, respectively

 

 

2,744

 

 

 

2,725

 

Treasury stock: at cost, 116,493 and 110,134 shares as of September 30, 2020 and

   December 31, 2019, respectively

 

 

(625,246

)

 

 

(571,157

)

Additional paid-in capital

 

 

1,929,396

 

 

 

1,907,348

 

Accumulated deficit

 

 

(94,706

)

 

 

(49,336

)

Accumulated other comprehensive loss

 

 

(3,801

)

 

 

(4,392

)

Total stockholders’ equity

 

 

1,208,387

 

 

 

1,285,188

 

Total liabilities and stockholders’ equity

 

$

3,146,265

 

 

$

3,205,739

 

 

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)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

$

250,547

 

 

$

284,373

 

 

$

770,180

 

 

$

844,908

 

 

Client services

 

 

151,483

 

 

 

159,811

 

 

 

454,786

 

 

 

475,785

 

 

Total revenue

 

 

402,030

 

 

 

444,184

 

 

 

1,224,966

 

 

 

1,320,693

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

 

75,311

 

 

 

83,312

 

 

 

225,879

 

 

 

248,401

 

 

Client services

 

 

131,915

 

 

 

156,275

 

 

 

420,185

 

 

 

452,226

 

 

Amortization of software development and

    acquisition-related assets

 

 

33,207

 

 

 

29,295

 

 

 

95,860

 

 

 

86,547

 

 

Total cost of revenue

 

 

240,433

 

 

 

268,882

 

 

 

741,924

 

 

 

787,174

 

 

    Gross profit

 

 

161,597

 

 

 

175,302

 

 

 

483,042

 

 

 

533,519

 

 

Selling, general and administrative expenses

 

 

97,231

 

 

 

101,152

 

 

 

309,139

 

 

 

306,939

 

 

Research and development

 

 

48,476

 

 

 

63,873

 

 

 

158,913

 

 

 

191,597

 

 

Asset impairment charges

 

 

210

 

 

 

248

 

 

 

210

 

 

 

4,037

 

 

Amortization of intangible and acquisition-related assets

 

 

6,301

 

 

 

6,847

 

 

 

19,347

 

 

 

20,376

 

 

Income (loss) from operations

 

 

9,379

 

 

 

3,182

 

 

 

(4,567

)

 

 

10,570

 

 

Interest expense

 

 

(7,662

)

 

 

(10,839

)

 

 

(31,280

)

 

 

(31,447

)

 

Other income (loss), net

 

 

398

 

 

 

781

 

 

 

45

 

 

 

(143,700

)

 

(Impairment) recovery of long-term investments

 

 

(1,025

)

 

 

0

 

 

 

(1,575

)

 

 

1,045

 

 

Equity in net income (loss) of unconsolidated investments

 

 

383

 

 

 

386

 

 

 

17,417

 

 

 

540

 

 

Income (loss) before income taxes

 

 

1,473

 

 

 

(6,490

)

 

 

(19,960

)

 

 

(162,992

)

 

Income tax (provision) benefit

 

 

(931

)

 

 

765

 

 

 

(7,457

)

 

 

(640

)

 

Net income (loss)

 

 

542

 

 

 

(5,725

)

 

 

(27,417

)

 

 

(163,632

)

 

Net loss attributable to non-controlling interests

 

 

0

 

 

 

0

 

 

 

0

 

 

 

424

 

 

Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders

 

$

542

 

 

$

(5,725

)

 

$

(27,417

)

 

$

(163,208

)

 

Net income (loss) attributable to Allscripts Healthcare

   Solutions, Inc. stockholders per share - Basic

 

$

0.00

 

 

$

(0.03

)

 

$

(0.17

)

 

$

(0.97

)

 

Net income (loss) attributable to Allscripts Healthcare

   Solutions, Inc. stockholders per share - Diluted

 

$

0.00

 

 

$

(0.03

)

 

$

(0.17

)

 

$

(0.97

)

 

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)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Net income (loss)

 

$

542

 

 

$

(5,725

)

 

$

(27,417

)

 

$

(163,632

)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

983

 

 

 

(574

)

 

 

(611

)

 

 

(35

)

 

Change in fair value of derivatives qualifying as cash flow hedges

 

 

1,009

 

 

 

(305

)

 

 

1,620

 

 

 

(131

)

 

Other comprehensive income (loss) before income

    tax (expense) benefit

 

 

1,992

 

 

 

(879

)

 

 

1,009

 

 

 

(166

)

 

Income tax (expense) benefit related to items in

    other comprehensive income (loss)

 

 

(260

)

 

 

80

 

 

 

(418

)

 

 

34

 

 

Total other comprehensive income (loss)

 

 

1,732

 

 

 

(799

)

 

 

591

 

 

 

(132

)

 

Comprehensive income (loss)

 

 

2,274

 

 

 

(6,524

)

 

 

(26,826

)

 

 

(163,764

)

 

Comprehensive loss attributable to non-controlling interests

 

 

0

 

 

 

0

 

 

 

0

 

 

 

424

 

 

Comprehensive income (loss), net

 

$

2,274

 

 

$

(6,524

)

 

$

(26,826

)

 

$

(163,340

)

 

 

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)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

274,463

 

 

 

272,472

 

 

 

272,609

 

 

 

270,955

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

8

 

 

 

24

 

 

 

1,862

 

 

 

1,541

 

Balance at end of period

 

 

274,471

 

 

 

272,496

 

 

 

274,471

 

 

 

272,496

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,743

 

 

$

2,724

 

 

$

2,725

 

 

$

2,709

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

1

 

 

 

0

 

 

 

19

 

 

 

15

 

Balance at end of period

 

$

2,744

 

 

$

2,724

 

 

$

2,744

 

 

$

2,724

 

Number of treasury stock shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(111,493

)

 

 

(105,818

)

 

 

(110,134

)

 

 

(99,731

)

Issuance of treasury stock

 

 

0

 

 

 

0

 

 

 

90

 

 

 

61

 

Purchase of treasury stock

 

 

(5,000

)

 

 

(3,459

)

 

 

(6,449

)

 

 

(9,607

)

Balance at end of period

 

 

(116,493

)

 

 

(109,277

)

 

 

(116,493

)

 

 

(109,277

)

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(579,678

)

 

$

(524,767

)

 

$

(571,157

)

 

$

(460,543

)

Issuance of treasury stock

 

 

0

 

 

 

0

 

 

 

1,193

 

 

 

846

 

Purchase of treasury stock

 

 

(45,568

)

 

 

(37,090

)

 

 

(55,282

)

 

 

(102,160

)

Balance at end of period

 

$

(625,246

)

 

$

(561,857

)

 

$

(625,246

)

 

$

(561,857

)

Additional paid-in capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,920,645

 

 

$

1,867,613

 

 

$

1,907,348

 

 

$

1,881,494

 

Stock-based compensation

 

 

8,811

 

 

 

7,773

 

 

 

25,931

 

 

 

29,296

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

(60

)

 

 

9

 

 

 

(5,604

)

 

 

(6,702

)

Capped call transactions

 

 

0

 

 

 

0

 

 

 

797

 

 

 

0

 

Issuance of treasury stock

 

 

0

 

 

 

0

 

 

 

(440

)

 

 

(144

)

Warrants issued

 

 

0

 

 

 

683

 

 

 

1,364

 

 

 

2,047

 

Acquisition of non-controlling interest

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(29,913

)

Balance at end of period

 

$

1,929,396

 

 

$

1,876,078

 

 

$

1,929,396

 

 

$

1,876,078

 

Retained earnings (accumulated deficit)