SEC Filing | Allscripts Healthcare Solutions, Inc.

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mdrx-10q_20200930.htm

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


☐	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.

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

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

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.

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.

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.

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)